UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 19, 2023
(Exact name of registrant as specified in its charter)
| (State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||||||||
Registrant’s telephone number, including area code:
(682 ) 278-9000
(682 ) 278-9000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
— | (1) | |||||||||||||
(1) Attached to the Common Stock
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
| Emerging growth company | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| ITEM 2.02. | RESULTS OF OPERATIONS AND FINANCIAL CONDITION. | ||||
On October 19, 2023, American Airlines Group Inc. (the Company, we, us and our) issued a press release reporting financial results for the three and nine months ended September 30, 2023. The press release is furnished as Exhibit 99.1 to this report.
| ITEM 7.01. | REGULATION FD DISCLOSURE. | ||||
On October 19, 2023, the Company provided a presentation to investors. This investor presentation is located on the Company’s website at www.aa.com under “Investor Relations” and is furnished as Exhibit 99.2 to this report.
Also on October 19, 2023, the Company provided an update for investors presenting information relating to its financial and operational outlook for the fourth quarter and full year 2023. This investor update is located on the Company’s website at www.aa.com under “Investor Relations” and is furnished as Exhibit 99.3 to this report.
The information in Items 2.02 and 7.01 of this Current Report on Form 8-K, including Exhibits 99.1, 99.2 and 99.3, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section and shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
| ITEM 9.01. | FINANCIAL STATEMENTS AND EXHIBITS. | ||||
| (d) Exhibits. | ||||||||
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 99.3 | ||||||||
| 104.1 | Cover page interactive data file (embedded within the Inline XBRL document). | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, American Airlines Group Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AMERICAN AIRLINES GROUP INC. | |||||||||||
| Date: October 19, 2023 | By: | /s/ Devon E. May | |||||||||
| Devon E. May | |||||||||||
| Executive Vice President and Chief Financial Officer | |||||||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, American Airlines, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AMERICAN AIRLINES, INC. | |||||||||||
| Date: October 19, 2023 | By: | /s/ Devon E. May | |||||||||
| Devon E. May | |||||||||||
| Executive Vice President and Chief Financial Officer | |||||||||||
Exhibit 99.1
 | Corporate Communications | |||||||
| mediarelations@aa.com | ||||||||
| Investor Relations | ||||||||
| investor.relations@aa.com | ||||||||
FOR RELEASE: Thursday, Oct. 19, 2023
AMERICAN AIRLINES REPORTS THIRD-QUARTER 2023 FINANCIAL RESULTS
FORT WORTH, Texas –– American Airlines Group Inc. (NASDAQ: AAL) today reported its third-quarter 2023 financial results, including:
•Record third-quarter revenue of approximately $13.5 billion.
•GAAP third-quarter net loss of $545 million, or ($0.83) per diluted share.
•Excluding net special items1, third-quarter net income of $263 million, or $0.38 per diluted share.
•Record third-quarter completion factor, best among U.S. network carriers.
•Ended the third quarter with approximately $13.5 billion of total available liquidity.
•Reduced total debt2 by $1.4 billion in the third quarter.
•Credit rating upgraded by Fitch, Moody's and Standard & Poor's during the third quarter.
“The American Airlines team continues to produce strong results,” said American’s CEO Robert Isom. “Our team is delivering record-setting reliability and operational performance. We are executing on our plans and remain well-positioned for the future, supported by the strength of our network, our young and modern fleet, and our outstanding team.”
Reliability
American delivered a strong operation in the third quarter, including a record-setting performance during the peak travel period this summer. American operated more than 515,000 flights in the third quarter with an average load factor of 84%. The company produced its best-ever third-quarter completion factor and the best completion factor among U.S. network carriers. American is committed to building on this momentum and delivering a reliable operation for customers during the upcoming holiday travel season.
Financial performance
American produced record third-quarter revenues of approximately $13.5 billion, driven by a resilient demand environment and record-setting co-brand credit card and travel rewards program revenue. American saw year-over-year growth in corporate and government revenue in the third quarter and continued strength in demand and revenue from unmanaged business travel.
In the third quarter, the company produced an operating margin of (1.7%) and net loss of $545 million on a GAAP basis. Excluding net special items1, American produced an operating margin of 5.4% and net income of $263 million in the third quarter, exceeding the high end of the company's prior guidance.
American Airlines Reports Third-Quarter 2023 Financial Results
Oct. 19, 2023
Page 2
Liquidity and balance sheet
American reduced total debt2 by $1.4 billion in the third quarter. Strengthening the balance sheet continues to be a top priority, and the company is more than 70% of the way to its goal of reducing total debt by $15 billion by the end of 2025. As of Sept. 30, 2023, American had reduced its total debt by approximately $10.9 billion from peak levels in mid-2021.
American's commitment to strengthening its balance sheet is being recognized, with Fitch, Moody's and Standard & Poor's each upgrading the company's credit rating in the third quarter. The company ended the quarter with approximately $13.5 billion of total available liquidity, comprised of cash and short-term investments plus undrawn capacity under revolving and other short-term credit facilities.
Guidance and investor update
Based on demand trends and the current fuel price forecast and excluding the impact of special items3, the company expects its fourth-quarter 2023 adjusted operating margin to be 2% to 4%. American now expects its full-year 2023 adjusted operating margin to be approximately 7%.
For additional financial forecasting detail, please refer to the company’s investor update, furnished with this press release with the SEC on Form 8-K. This filing will also be available at aa.com/investorrelations.
Conference call and webcast details
The company will conduct a live audio webcast of its financial results conference call at 7:30 a.m. CT today. The call will be available to the public on a listen-only basis at
aa.com/investorrelations. An archive of the webcast will be available on the website through Nov. 19.
Notes
See the accompanying notes in the financial tables section of this press release for further explanation, including a reconciliation of all GAAP to non-GAAP financial information, including the calculation of free cash flow.
1.The company recognized $808 million of net special items in the third quarter after the effect of taxes, which principally included operating net special items of $983 million related to one-time charges resulting from the ratification of a new collective bargaining agreement with American's mainline pilots, as well as nonoperating net special items of $101 million for charges associated with debt extinguishments and mark-to-market net unrealized losses on certain equity investments.
2.All references to total debt include debt, finance leases, operating lease liabilities and pension obligations.
3.The company is unable to reconcile certain forward-looking information to GAAP as the nature or amount of net special items cannot be determined at this time.
About American Airlines Group
To Care for People on Life’s Journey®. Shares of American Airlines Group Inc. trade on Nasdaq under the ticker symbol AAL and the company’s stock is included in the S&P 500. Learn more about what’s happening at American by visiting news.aa.com and connect with American @AmericanAir and at Facebook.com/AmericanAirlines.
American Airlines Reports Third-Quarter 2023 Financial Results
Oct. 19, 2023
Page 3
Cautionary statement regarding forward-looking statements and information
Certain of the statements contained in this report should be considered forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about the company’s plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that are not historical facts. These forward-looking statements are based on the company’s current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the forward-looking statements. These risks and uncertainties include, but are not limited to, those set forth herein as well as in the company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 (especially in Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 1A. Risk Factors), and other risks and uncertainties listed from time to time in the company’s other filings with the Securities and Exchange Commission. Additionally, there may be other factors of which the company is not currently aware that may affect matters discussed in the forward-looking statements and may also cause actual results to differ materially from those discussed. The company does not assume any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these forward-looking statements other than as required by law. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statement.
American Airlines Reports Third-Quarter 2023 Financial Results
Oct. 19, 2023
Page 4
American Airlines Group Inc.
Condensed Consolidated Statements of Operations
(In millions, except share and per share amounts)
(Unaudited)
| 3 Months Ended September 30, | Percent Increase (Decrease) | 9 Months Ended September 30, | Percent Increase (Decrease) | ||||||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||||||
| Operating revenues: | |||||||||||||||||||||||||||||||||||
| Passenger | $ | 12,421 | $ | 12,396 | 0.2 | $ | 36,502 | $ | 32,438 | 12.5 | |||||||||||||||||||||||||
| Cargo | 193 | 279 | (30.9) | 613 | 970 | (36.8) | |||||||||||||||||||||||||||||
| Other | 868 | 787 | 10.4 | 2,611 | 2,375 | 10.0 | |||||||||||||||||||||||||||||
| Total operating revenues | 13,482 | 13,462 | 0.1 | 39,726 | 35,783 | 11.0 | |||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
| Aircraft fuel and related taxes | 3,209 | 3,847 | (16.6) | 9,098 | 10,369 | (12.3) | |||||||||||||||||||||||||||||
| Salaries, wages and benefits | 3,974 | 3,384 | 17.4 | 10,891 | 9,773 | 11.4 | |||||||||||||||||||||||||||||
| Regional expenses: | |||||||||||||||||||||||||||||||||||
| Regional operating expenses | 1,089 | 1,093 | (0.5) | 3,224 | 3,058 | 5.5 | |||||||||||||||||||||||||||||
| Regional depreciation and amortization | 79 | 81 | (1.4) | 239 | 240 | (0.5) | |||||||||||||||||||||||||||||
| Maintenance, materials and repairs | 870 | 685 | 26.9 | 2,389 | 1,949 | 22.6 | |||||||||||||||||||||||||||||
| Other rent and landing fees | 745 | 710 | 5.0 | 2,214 | 2,081 | 6.4 | |||||||||||||||||||||||||||||
| Aircraft rent | 342 | 347 | (1.4) | 1,031 | 1,045 | (1.4) | |||||||||||||||||||||||||||||
| Selling expenses | 430 | 495 | (13.2) | 1,357 | 1,331 | 1.9 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 487 | 491 | (0.8) | 1,456 | 1,486 | (2.0) | |||||||||||||||||||||||||||||
| Special items, net | 949 | 37 | nm | (1) | 962 | 189 | nm | ||||||||||||||||||||||||||||
| Other | 1,531 | 1,362 | 12.5 | 4,487 | 4,037 | 11.1 | |||||||||||||||||||||||||||||
| Total operating expenses | 13,705 | 12,532 | 9.4 | 37,348 | 35,558 | 5.0 | |||||||||||||||||||||||||||||
| Operating income (loss) | (223) | 930 | nm | 2,378 | 225 | nm | |||||||||||||||||||||||||||||
| Nonoperating income (expense): | |||||||||||||||||||||||||||||||||||
| Interest income | 168 | 70 | nm | 456 | 107 | nm | |||||||||||||||||||||||||||||
| Interest expense, net | (537) | (499) | 7.8 | (1,626) | (1,430) | 13.7 | |||||||||||||||||||||||||||||
| Other income (expense), net | (98) | 157 | nm | (119) | 274 | nm | |||||||||||||||||||||||||||||
| Total nonoperating expense, net | (467) | (272) | 71.9 | (1,289) | (1,049) | 22.8 | |||||||||||||||||||||||||||||
| Income (loss) before income taxes | (690) | 658 | nm | 1,089 | (824) | nm | |||||||||||||||||||||||||||||
| Income tax provision (benefit) | (145) | 175 | nm | 286 | (148) | nm | |||||||||||||||||||||||||||||
| Net income (loss) | $ | (545) | $ | 483 | nm | $ | 803 | $ | (676) | nm | |||||||||||||||||||||||||
| Earnings (loss) per common share: | |||||||||||||||||||||||||||||||||||
| Basic | $ | (0.83) | $ | 0.74 | $ | 1.23 | $ | (1.04) | |||||||||||||||||||||||||||
| Diluted | $ | (0.83) | $ | 0.69 | $ | 1.16 | $ | (1.04) | |||||||||||||||||||||||||||
| Weighted average shares outstanding (in thousands): | |||||||||||||||||||||||||||||||||||
| Basic | 654,119 | 650,586 | 653,241 | 650,145 | |||||||||||||||||||||||||||||||
| Diluted | 654,119 | 715,985 | 719,956 | 650,145 | |||||||||||||||||||||||||||||||
Note: Percent change may not recalculate due to rounding.
(1)Not meaningful or greater than 100% change.
American Airlines Reports Third-Quarter 2023 Financial Results
Oct. 19, 2023
Page 5
American Airlines Group Inc.
Consolidated Operating Statistics (1)
(Unaudited)
| 3 Months Ended September 30, | Increase (Decrease) | 9 Months Ended September 30, | Increase (Decrease) | ||||||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||||||
| Revenue passenger miles (millions) | 61,561 | 58,499 | 5.2 % | 173,595 | 160,305 | 8.3 % | |||||||||||||||||||||||||||||
| Available seat miles (ASM) (millions) | 73,285 | 68,567 | 6.9 % | 207,950 | 194,264 | 7.0 % | |||||||||||||||||||||||||||||
| Passenger load factor (percent) | 84.0 | 85.3 | (1.3) pts | 83.5 | 82.5 | 1.0 pts | |||||||||||||||||||||||||||||
| Yield (cents) | 20.18 | 21.19 | (4.8) % | 21.03 | 20.23 | 3.9 % | |||||||||||||||||||||||||||||
| Passenger revenue per ASM (cents) | 16.95 | 18.08 | (6.3) % | 17.55 | 16.70 | 5.1 % | |||||||||||||||||||||||||||||
| Total revenue per ASM (cents) | 18.40 | 19.63 | (6.3) % | 19.10 | 18.42 | 3.7 % | |||||||||||||||||||||||||||||
| Cargo ton miles (millions) | 490 | 478 | 2.5 % | 1,339 | 1,514 | (11.6) % | |||||||||||||||||||||||||||||
| Cargo yield per ton mile (cents) | 39.31 | 58.30 | (32.6) % | 45.78 | 64.07 | (28.6) % | |||||||||||||||||||||||||||||
| Fuel consumption (gallons in millions) | 1,102 | 1,031 | 6.9 % | 3,107 | 2,922 | 6.3 % | |||||||||||||||||||||||||||||
| Average aircraft fuel price including related taxes (dollars per gallon) | 2.91 | 3.73 | (22.0) % | 2.93 | 3.55 | (17.5) % | |||||||||||||||||||||||||||||
| Operating cost per ASM (cents) | 18.70 | 18.28 | 2.3 % | 17.96 | 18.30 | (1.9) % | |||||||||||||||||||||||||||||
| Operating cost per ASM excluding net special items (cents) | 17.40 | 18.22 | (4.5) % | 17.49 | 18.21 | (3.9) % | |||||||||||||||||||||||||||||
| Operating cost per ASM excluding net special items and fuel (cents) | 13.02 | 12.61 | 3.3 % | 13.12 | 12.87 | 1.9 % | |||||||||||||||||||||||||||||
| Passenger enplanements (thousands) | 54,608 | 52,564 | 3.9 % | 157,125 | 148,353 | 5.9 % | |||||||||||||||||||||||||||||
| Departures (thousands): | |||||||||||||||||||||||||||||||||||
| Mainline | 296 | 273 | 8.1 % | 860 | 775 | 11.0 % | |||||||||||||||||||||||||||||
| Regional | 223 | 228 | (2.4) % | 633 | 702 | (9.8) % | |||||||||||||||||||||||||||||
| Total | 519 | 501 | 3.3 % | 1,493 | 1,477 | 1.1 % | |||||||||||||||||||||||||||||
| Average stage length (miles): | |||||||||||||||||||||||||||||||||||
| Mainline | 1,166 | 1,175 | (0.7) % | 1,144 | 1,172 | (2.4) % | |||||||||||||||||||||||||||||
| Regional | 461 | 476 | (3.1) % | 464 | 479 | (3.2) % | |||||||||||||||||||||||||||||
| Total | 864 | 857 | 0.8 % | 856 | 842 | 1.6 % | |||||||||||||||||||||||||||||
| Aircraft at end of period: | |||||||||||||||||||||||||||||||||||
Mainline (2) | 950 | 908 | 4.6 % | 950 | 908 | 4.6 % | |||||||||||||||||||||||||||||
Regional (3) | 549 | 553 | (0.7) % | 549 | 553 | (0.7) % | |||||||||||||||||||||||||||||
| Total | 1,499 | 1,461 | 2.6 % | 1,499 | 1,461 | 2.6 % | |||||||||||||||||||||||||||||
| Full-time equivalent employees at end of period: | |||||||||||||||||||||||||||||||||||
| Mainline | 104,300 | 102,200 | 2.1 % | 104,300 | 102,200 | 2.1 % | |||||||||||||||||||||||||||||
Regional (4) | 28,500 | 27,500 | 3.6 % | 28,500 | 27,500 | 3.6 % | |||||||||||||||||||||||||||||
| Total | 132,800 | 129,700 | 2.4 % | 132,800 | 129,700 | 2.4 % | |||||||||||||||||||||||||||||
Note: Amounts may not recalculate due to rounding.
(1)Unless otherwise noted, operating statistics include mainline and regional operations. Regional includes wholly-owned regional airline subsidiaries and operating results from capacity purchase carriers.
(2)Excludes one Boeing 737-800 mainline aircraft that was in temporary storage as of September 30, 2023.
(3)Includes aircraft owned and leased by American as well as aircraft operated by third-party regional carriers under capacity purchase agreements. Excluded from the aircraft count above are 75 regional aircraft that were in temporary storage as of September 30, 2023 as follows: 54 Embraer 145, 11 Bombardier CRJ 700, five Embraer 170, and five Bombardier CRJ 900.
(4)Regional full-time equivalent employees only include our wholly-owned regional airline subsidiaries.
American Airlines Reports Third-Quarter 2023 Financial Results
Oct. 19, 2023
Page 6
American Airlines Group Inc.
Consolidated Revenue Statistics by Region
(Unaudited)
| 3 Months Ended September 30, | Increase (Decrease) | 9 Months Ended September 30, | Increase (Decrease) | ||||||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||||||
Domestic (1) | |||||||||||||||||||||||||||||||||||
| Revenue passenger miles (millions) | 40,255 | 39,226 | 2.6 % | 115,764 | 111,346 | 4.0 % | |||||||||||||||||||||||||||||
| Available seat miles (ASM) (millions) | 48,146 | 45,686 | 5.4 % | 138,400 | 131,507 | 5.2 % | |||||||||||||||||||||||||||||
| Passenger load factor (percent) | 83.6 | 85.9 | (2.3) pts | 83.6 | 84.7 | (1.1) pts | |||||||||||||||||||||||||||||
| Passenger revenue (dollars in millions) | 8,616 | 8,786 | (1.9) % | 25,848 | 23,966 | 7.9 % | |||||||||||||||||||||||||||||
| Yield (cents) | 21.40 | 22.40 | (4.4) % | 22.33 | 21.52 | 3.7 % | |||||||||||||||||||||||||||||
| Passenger revenue per ASM (cents) | 17.90 | 19.23 | (6.9) % | 18.68 | 18.22 | 2.5 % | |||||||||||||||||||||||||||||
Latin America (2) | |||||||||||||||||||||||||||||||||||
| Revenue passenger miles (millions) | 7,833 | 8,012 | (2.2) % | 24,767 | 24,088 | 2.8 % | |||||||||||||||||||||||||||||
| Available seat miles (millions) | 8,872 | 9,166 | (3.2) % | 28,582 | 29,278 | (2.4) % | |||||||||||||||||||||||||||||
| Passenger load factor (percent) | 88.3 | 87.4 | 0.9 pts | 86.7 | 82.3 | 4.4 pts | |||||||||||||||||||||||||||||
| Passenger revenue (dollars in millions) | 1,490 | 1,596 | (6.6) % | 5,045 | 4,357 | 15.8 % | |||||||||||||||||||||||||||||
| Yield (cents) | 19.02 | 19.92 | (4.5) % | 20.37 | 18.09 | 12.6 % | |||||||||||||||||||||||||||||
| Passenger revenue per ASM (cents) | 16.80 | 17.41 | (3.5) % | 17.65 | 14.88 | 18.6 % | |||||||||||||||||||||||||||||
| Atlantic | |||||||||||||||||||||||||||||||||||
| Revenue passenger miles (millions) | 11,764 | 10,623 | 10.7 % | 28,274 | 23,273 | 21.5 % | |||||||||||||||||||||||||||||
| Available seat miles (millions) | 14,262 | 12,945 | 10.2 % | 35,328 | 30,955 | 14.1 % | |||||||||||||||||||||||||||||
| Passenger load factor (percent) | 82.5 | 82.1 | 0.4 pts | 80.0 | 75.2 | 4.8 pts | |||||||||||||||||||||||||||||
| Passenger revenue (dollars in millions) | 2,056 | 1,901 | 8.2 % | 4,875 | 3,848 | 26.7 % | |||||||||||||||||||||||||||||
| Yield (cents) | 17.48 | 17.89 | (2.3) % | 17.24 | 16.53 | 4.3 % | |||||||||||||||||||||||||||||
| Passenger revenue per ASM (cents) | 14.41 | 14.68 | (1.8) % | 13.80 | 12.43 | 11.0 % | |||||||||||||||||||||||||||||
| Pacific | |||||||||||||||||||||||||||||||||||
| Revenue passenger miles (millions) | 1,709 | 638 | nm | 4,790 | 1,598 | nm | |||||||||||||||||||||||||||||
| Available seat miles (millions) | 2,005 | 770 | nm | 5,640 | 2,524 | nm | |||||||||||||||||||||||||||||
| Passenger load factor (percent) | 85.2 | 82.9 | 2.3 pts | 84.9 | 63.3 | 21.6 pts | |||||||||||||||||||||||||||||
| Passenger revenue (dollars in millions) | 259 | 113 | nm | 734 | 267 | nm | |||||||||||||||||||||||||||||
| Yield (cents) | 15.16 | 17.74 | (14.5) % | 15.32 | 16.66 | (8.1) % | |||||||||||||||||||||||||||||
| Passenger revenue per ASM (cents) | 12.92 | 14.71 | (12.1) % | 13.01 | 10.55 | 23.3 % | |||||||||||||||||||||||||||||
| Total International | |||||||||||||||||||||||||||||||||||
| Revenue passenger miles (millions) | 21,306 | 19,273 | 10.5 % | 57,831 | 48,959 | 18.1 % | |||||||||||||||||||||||||||||
| Available seat miles (millions) | 25,139 | 22,881 | 9.9 % | 69,550 | 62,757 | 10.8 % | |||||||||||||||||||||||||||||
| Passenger load factor (percent) | 84.7 | 84.2 | 0.5 pts | 83.2 | 78.0 | 5.2 pts | |||||||||||||||||||||||||||||
| Passenger revenue (dollars in millions) | 3,805 | 3,610 | 5.4 % | 10,654 | 8,472 | 25.8 % | |||||||||||||||||||||||||||||
| Yield (cents) | 17.86 | 18.73 | (4.7) % | 18.42 | 17.30 | 6.5 % | |||||||||||||||||||||||||||||
| Passenger revenue per ASM (cents) | 15.14 | 15.78 | (4.1) % | 15.32 | 13.50 | 13.5 % | |||||||||||||||||||||||||||||
Note: Amounts may not recalculate due to rounding.
(1)Domestic results include Canada, Puerto Rico and U.S. Virgin Islands.
(2)Latin America results include the Caribbean.
American Airlines Reports Third-Quarter 2023 Financial Results
Oct. 19, 2023
Page 7
Reconciliation of GAAP Financial Information to Non-GAAP Financial Information
American Airlines Group Inc. (the Company) sometimes uses financial measures that are derived from the condensed consolidated financial statements but that are not presented in accordance with GAAP to understand and evaluate its current operating performance and to allow for period-to-period comparisons. The Company believes these non-GAAP financial measures may also provide useful information to investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with GAAP. The Company is providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis.
The tables below present the reconciliations of the following GAAP measures to their non-GAAP measures:
–Operating Income (Loss) (GAAP measure) to Operating Income Excluding Net Special Items (non-GAAP measure)
–Operating Margin (GAAP measure) to Operating Margin Excluding Net Special Items (non-GAAP measure)
–Pre-Tax Income (Loss) (GAAP measure) to Pre-Tax Income (Loss) Excluding Net Special Items (non-GAAP measure)
–Pre-Tax Margin (GAAP measure) to Pre-Tax Margin Excluding Net Special Items (non-GAAP measure)
–Net Income (Loss) (GAAP measure) to Net Income (Loss) Excluding Net Special Items (non-GAAP measure)
–Basic and Diluted Earnings (Loss) Per Share (GAAP measure) to Basic and Diluted Earnings (Loss) Per Share Excluding Net Special Items (non-GAAP measure)
Management uses these non-GAAP financial measures to evaluate the Company's current operating performance and to allow for period-to-period comparisons. As net special items may vary from period-to-period in nature and amount, the adjustment to exclude net special items allows management an additional tool to understand the Company’s core operating performance.
Additionally, the tables below present the reconciliations of total operating costs (GAAP measure) to total operating costs excluding net special items and fuel (non-GAAP measure) and total operating costs per ASM (CASM) to CASM excluding net special items and fuel. Management uses total operating costs excluding net special items and fuel and CASM excluding net special items and fuel to evaluate the Company's current operating performance and for period-to-period comparisons. The price of fuel, over which the Company has no control, impacts the comparability of period-to-period financial performance. The adjustment to exclude fuel and net special items allows management an additional tool to understand and analyze the Company’s non-fuel costs and core operating performance.
| Reconciliation of Operating Income Excluding Net Special Items | 3 Months Ended September 30, | Percent Increase (Decrease) | 9 Months Ended September 30, | Percent Increase (Decrease) | ||||||||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||||||||
| (in millions) | (in millions) | |||||||||||||||||||||||||||||||||||||
| Operating income (loss) as reported | $ | (223) | $ | 930 | $ | 2,378 | $ | 225 | ||||||||||||||||||||||||||||||
| Operating net special items: | ||||||||||||||||||||||||||||||||||||||
Mainline operating special items, net (1) | 949 | 37 | 962 | 189 | ||||||||||||||||||||||||||||||||||
| Regional operating special items, net | 2 | 2 | 8 | 2 | ||||||||||||||||||||||||||||||||||
| Operating income excluding net special items | $ | 728 | $ | 969 | (24.9%) | $ | 3,348 | $ | 416 | nm | ||||||||||||||||||||||||||||
| Calculation of Operating Margin | ||||||||||||||||||||||||||||||||||||||
| Operating income (loss) as reported | $ | (223) | $ | 930 | $ | 2,378 | $ | 225 | ||||||||||||||||||||||||||||||
| Total operating revenues as reported | $ | 13,482 | $ | 13,462 | $ | 39,726 | $ | 35,783 | ||||||||||||||||||||||||||||||
| Operating margin | (1.7 | %) | 6.9 | % | 6.0 | % | 0.6 | % | ||||||||||||||||||||||||||||||
| Calculation of Operating Margin Excluding Net Special Items | ||||||||||||||||||||||||||||||||||||||
| Operating income excluding net special items | $ | 728 | $ | 969 | $ | 3,348 | $ | 416 | ||||||||||||||||||||||||||||||
| Total operating revenues as reported | $ | 13,482 | $ | 13,462 | $ | 39,726 | $ | 35,783 | ||||||||||||||||||||||||||||||
| Operating margin excluding net special items | 5.4 | % | 7.2 | % | 8.4 | % | 1.2 | % | ||||||||||||||||||||||||||||||
| Reconciliation of Pre-Tax Income (Loss) Excluding Net Special Items | ||||||||||||||||||||||||||||||||||||||
| Pre-tax income (loss) as reported | $ | (690) | $ | 658 | $ | 1,089 | $ | (824) | ||||||||||||||||||||||||||||||
| Pre-tax net special items: | ||||||||||||||||||||||||||||||||||||||
Mainline operating special items, net (1) | 949 | 37 | 962 | 189 | ||||||||||||||||||||||||||||||||||
| Regional operating special items, net | 2 | 2 | 8 | 2 | ||||||||||||||||||||||||||||||||||
Nonoperating special items, net (2) | 101 | (57) | 146 | 34 | ||||||||||||||||||||||||||||||||||
| Total pre-tax net special items | 1,052 | (18) | 1,116 | 225 | ||||||||||||||||||||||||||||||||||
| Pre-tax income (loss) excluding net special items | $ | 362 | $ | 640 | (43.4%) | $ | 2,205 | $ | (599) | nm | ||||||||||||||||||||||||||||
| Calculation of Pre-Tax Margin | ||||||||||||||||||||||||||||||||||||||
| Pre-tax income (loss) as reported | $ | (690) | $ | 658 | $ | 1,089 | $ | (824) | ||||||||||||||||||||||||||||||
| Total operating revenues as reported | $ | 13,482 | $ | 13,462 | $ | 39,726 | $ | 35,783 | ||||||||||||||||||||||||||||||
| Pre-tax margin | (5.1 | %) | 4.9 | % | 2.7 | % | (2.3 | %) | ||||||||||||||||||||||||||||||
| Calculation of Pre-Tax Margin Excluding Net Special Items | ||||||||||||||||||||||||||||||||||||||
| Pre-tax income (loss) excluding net special items | $ | 362 | $ | 640 | $ | 2,205 | $ | (599) | ||||||||||||||||||||||||||||||
| Total operating revenues as reported | $ | 13,482 | $ | 13,462 | $ | 39,726 | $ | 35,783 | ||||||||||||||||||||||||||||||
| Pre-tax margin excluding net special items | 2.7 | % | 4.8 | % | 5.6 | % | (1.7 | %) | ||||||||||||||||||||||||||||||
American Airlines Reports Third-Quarter 2023 Financial Results
Oct. 19, 2023
Page 8
| Reconciliation of Net Income (Loss) Excluding Net Special Items | 3 Months Ended September 30, | Percent Increase (Decrease) | 9 Months Ended September 30, | Percent Increase (Decrease) | ||||||||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||||||||
| (in millions, except share and per share amounts) | (in millions, except share and per share amounts) | |||||||||||||||||||||||||||||||||||||
| Net income (loss) as reported | $ | (545) | $ | 483 | $ | 803 | $ | (676) | ||||||||||||||||||||||||||||||
| Net special items: | ||||||||||||||||||||||||||||||||||||||
Total pre-tax net special items (1), (2) | 1,052 | (18) | 1,116 | 225 | ||||||||||||||||||||||||||||||||||
| Income tax special items, net | — | — | — | (9) | ||||||||||||||||||||||||||||||||||
| Net tax effect of net special items | (244) | 13 | (252) | (39) | ||||||||||||||||||||||||||||||||||
| Net income (loss) excluding net special items | $ | 263 | $ | 478 | (45.0%) | $ | 1,667 | $ | (499) | nm | ||||||||||||||||||||||||||||
| Reconciliation of Basic and Diluted Earnings (Loss) Per Share Excluding Net Special Items | ||||||||||||||||||||||||||||||||||||||
| Net income (loss) excluding net special items | $ | 263 | $ | 478 | $ | 1,667 | $ | (499) | ||||||||||||||||||||||||||||||
| Shares used for computation (in thousands): | ||||||||||||||||||||||||||||||||||||||
| Basic | 654,119 | 650,586 | 653,241 | 650,145 | ||||||||||||||||||||||||||||||||||
| Diluted | 722,087 | 715,985 | 719,956 | 650,145 | ||||||||||||||||||||||||||||||||||
| Earnings (loss) per share excluding net special items: | ||||||||||||||||||||||||||||||||||||||
| Basic | $ | 0.40 | $ | 0.73 | $ | 2.55 | $ | (0.77) | ||||||||||||||||||||||||||||||
Diluted (3) | $ | 0.38 | $ | 0.69 | $ | 2.36 | $ | (0.77) | ||||||||||||||||||||||||||||||
| Reconciliation of Total Operating Costs per ASM Excluding Net Special Items and Fuel | ||||||||||||||||||||||||||||||||||||||
| Total operating expenses as reported | $ | 13,705 | $ | 12,532 | $ | 37,348 | $ | 35,558 | ||||||||||||||||||||||||||||||
| Operating net special items: | ||||||||||||||||||||||||||||||||||||||
Mainline operating special items, net (1) | (949) | (37) | (962) | (189) | ||||||||||||||||||||||||||||||||||
| Regional operating special items, net | (2) | (2) | (8) | (2) | ||||||||||||||||||||||||||||||||||
| Total operating expenses excluding net special items | 12,754 | 12,493 | 36,378 | 35,367 | ||||||||||||||||||||||||||||||||||
| Aircraft fuel and related taxes | (3,209) | (3,847) | (9,098) | (10,369) | ||||||||||||||||||||||||||||||||||
| Total operating expenses excluding net special items and fuel | $ | 9,545 | $ | 8,646 | $ | 27,280 | $ | 24,998 | ||||||||||||||||||||||||||||||
| (in cents) | (in cents) | |||||||||||||||||||||||||||||||||||||
| Total operating expenses per ASM as reported | 18.70 | 18.28 | 17.96 | 18.30 | ||||||||||||||||||||||||||||||||||
| Operating net special items per ASM: | ||||||||||||||||||||||||||||||||||||||
Mainline operating special items, net (1) | (1.29) | (0.05) | (0.46) | (0.10) | ||||||||||||||||||||||||||||||||||
| Regional operating special items, net | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Total operating expenses per ASM excluding net special items | 17.40 | 18.22 | 17.49 | 18.21 | ||||||||||||||||||||||||||||||||||
| Aircraft fuel and related taxes per ASM | (4.38) | (5.61) | (4.38) | (5.34) | ||||||||||||||||||||||||||||||||||
| Total operating expenses per ASM excluding net special items and fuel | 13.02 | 12.61 | 13.12 | 12.87 | ||||||||||||||||||||||||||||||||||
Note: Amounts may not recalculate due to rounding.
FOOTNOTES:
(1)The 2023 three and nine month period mainline operating special items, net principally included $983 million of one-time charges resulting from the ratification of a new collective bargaining agreement with our mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $229 million.
The 2022 nine month period mainline operating special items, net principally included a non-cash impairment charge to write down the carrying value of the Company's retired Airbus A330 fleet to the estimated fair value due to the market conditions for certain used aircraft. The Company retired its Airbus A330 fleet in 2020 as a result of the decline in demand for air travel due to the COVID-19 pandemic.
(2)Principally included charges associated with debt refinancings and extinguishments as well as mark-to-market net unrealized gains and losses associated with certain equity investments.
(3)The 2023 three and nine month period diluted earnings per share excluding net special items gives effect to, among other things, the Company's outstanding 6.5% senior convertible notes by (a) adding back to earnings $11 million and $33 million of interest expense, respectively, related to such convertible notes, net of estimated profit sharing, short-term incentive and tax effects and (b) including in the diluted shares outstanding, 61.7 million shares issuable in respect to such convertible notes.
American Airlines Reports Third-Quarter 2023 Financial Results
Oct. 19, 2023
Page 9
American Airlines Group Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)(Unaudited)
| 9 Months Ended September 30, | |||||||||||
| 2023 | 2022 | ||||||||||
| Net cash provided by operating activities | $ | 5,154 | $ | 2,331 | |||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures and aircraft purchase deposits | (1,753) | (1,860) | |||||||||
| Proceeds from sale-leaseback transactions and sale of property and equipment | 219 | 83 | |||||||||
| Purchases of short-term investments | (8,323) | (12,113) | |||||||||
| Sales of short-term investments | 6,857 | 13,412 | |||||||||
| Decrease in restricted short-term investments | 39 | 41 | |||||||||
| Purchase of equity investments | — | (205) | |||||||||
| Other investing activities | 300 | (274) | |||||||||
| Net cash used in investing activities | (2,661) | (916) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Payments on long-term debt and finance leases | (4,624) | (2,038) | |||||||||
| Proceeds from issuance of long-term debt | 2,324 | 699 | |||||||||
| Other financing activities | (92) | (8) | |||||||||
| Net cash used in financing activities | (2,392) | (1,347) | |||||||||
| Net increase in cash and restricted cash | 101 | 68 | |||||||||
| Cash and restricted cash at beginning of period | 586 | 408 | |||||||||
Cash and restricted cash at end of period (1) | $ | 687 | $ | 476 | |||||||
(1)The following table provides a reconciliation of cash and restricted cash to amounts reported within the condensed consolidated balance sheets:
| Cash | $ | 577 | $ | 332 | |||||||
| Restricted cash included in restricted cash and short-term investments | 110 | 144 | |||||||||
| Total cash and restricted cash | $ | 687 | $ | 476 | |||||||
American Airlines Reports Third-Quarter 2023 Financial Results
Oct. 19, 2023
Page 10
Free Cash Flow
The Company's free cash flow summary is presented in the table below, which is a non-GAAP measure that management believes is useful information to investors and others in evaluating the Company's ability to generate cash from its core operating performance that is available for use to reinvest in the business or to reduce debt. The Company defines free cash flows as net cash provided by operating activities less net cash used in investing activities, adjusted for (1) net purchases of short-term investments and (2) change in restricted cash. We believe that calculating free cash flow as adjusted for these items is more useful for investors because short-term investment activity and restricted cash are not representative of activity core to our operations.
This non-GAAP measure may not be comparable to similarly titled non-GAAP measures of other companies, and should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with GAAP. Our calculation of free cash flow is not intended, and should not be used, to measure the residual cash flow available for discretionary expenditures because, among other things, it excludes mandatory debt service requirements and certain other non-discretionary expenditures.
| 9 Months Ended September 30, 2023 | |||||
| (in millions) | |||||
| Net cash provided by operating activities | $ | 5,154 | |||
Adjusted net cash used in investing activities (1) | (1,159) | ||||
| Free cash flow | $ | 3,995 | |||
(1)The following table provides a reconciliation of adjusted net cash used in investing activities for the nine months ended September 30, 2023 (in millions):
| Net cash used in investing activities | $ | (2,661) | |||
| Adjustments: | |||||
| Net purchases of short-term investments | 1,466 | ||||
| Decrease in restricted cash | 36 | ||||
| Adjusted net cash used in investing activities | $ | (1,159) | |||
American Airlines Reports Third-Quarter 2023 Financial Results
Oct. 19, 2023
Page 11
American Airlines Group Inc.
Condensed Consolidated Balance Sheets
(In millions, except shares)
| September 30, 2023 | December 31, 2022 | ||||||||||
| (unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash | $ | 577 | $ | 440 | |||||||
| Short-term investments | 10,005 | 8,525 | |||||||||
| Restricted cash and short-term investments | 925 | 995 | |||||||||
| Accounts receivable, net | 2,021 | 2,138 | |||||||||
| Aircraft fuel, spare parts and supplies, net | 2,461 | 2,279 | |||||||||
| Prepaid expenses and other | 719 | 892 | |||||||||
| Total current assets | 16,708 | 15,269 | |||||||||
| Operating property and equipment | |||||||||||
| Flight equipment | 40,934 | 39,703 | |||||||||
| Ground property and equipment | 10,156 | 9,913 | |||||||||
| Equipment purchase deposits | 799 | 613 | |||||||||
| Total property and equipment, at cost | 51,889 | 50,229 | |||||||||
| Less accumulated depreciation and amortization | (21,571) | (20,029) | |||||||||
| Total property and equipment, net | 30,318 | 30,200 | |||||||||
| Operating lease right-of-use assets | 7,878 | 8,094 | |||||||||
| Other assets | |||||||||||
| Goodwill | 4,091 | 4,091 | |||||||||
| Intangibles, net | 2,053 | 2,059 | |||||||||
| Deferred tax asset | 2,875 | 3,099 | |||||||||
| Other assets | 1,788 | 1,904 | |||||||||
| Total other assets | 10,807 | 11,153 | |||||||||
| Total assets | $ | 65,711 | $ | 64,716 | |||||||
| Liabilities and Stockholders’ Equity (Deficit) | |||||||||||
| Current liabilities | |||||||||||
| Current maturities of long-term debt and finance leases | $ | 3,767 | $ | 3,274 | |||||||
| Accounts payable | 2,123 | 2,149 | |||||||||
| Accrued salaries and wages | 3,262 | 1,713 | |||||||||
| Air traffic liability | 7,673 | 6,745 | |||||||||
| Loyalty program liability | 3,491 | 3,169 | |||||||||
| Operating lease liabilities | 1,387 | 1,465 | |||||||||
| Other accrued liabilities | 2,677 | 2,981 | |||||||||
| Total current liabilities | 24,380 | 21,496 | |||||||||
| Noncurrent liabilities | |||||||||||
| Long-term debt and finance leases, net of current maturities | 29,722 | 32,389 | |||||||||
| Pension and postretirement benefits | 2,929 | 2,837 | |||||||||
| Loyalty program liability | 5,834 | 5,976 | |||||||||
| Operating lease liabilities | 6,329 | 6,559 | |||||||||
| Other liabilities | 1,653 | 1,258 | |||||||||
| Total noncurrent liabilities | 46,467 | 49,019 | |||||||||
| Stockholders' equity (deficit) | |||||||||||
Common stock, 653,504,063 shares outstanding at September 30, 2023 | 7 | 6 | |||||||||
| Additional paid-in capital | 7,353 | 7,291 | |||||||||
| Accumulated other comprehensive loss | (4,788) | (4,585) | |||||||||
| Retained deficit | (7,708) | (8,511) | |||||||||
| Total stockholders' deficit | (5,136) | (5,799) | |||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | 65,711 | $ | 64,716 | |||||||
Exhibit 99.2
Certain of the statements contained in this presentation should be considered forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward- looking statements may be identified by words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about the Company’s plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that are not historical facts. These forward-looking statements are based on the Company’s current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the forward-looking statements. These risks and uncertainties include, but are not limited to, those set forth herein as well as in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 (especially in Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 1A. Risk Factors), and other risks and uncertainties listed from time to time in the Company’s other filings with the Securities and Exchange Commission. Additionally, there may be other factors of which the Company is not currently aware that may affect matters discussed in the forward-looking statements and may also cause actual results to differ materially from those discussed. The Company does not assume any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these forward-looking statements other than as required by law. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statement. Forward-looking statements
Third-quarter results • Record third quarter revenue of ~$13.5 billion • Excluding net special items1, third quarter net income of $263 million • Record third-quarter completion factor • Best third-quarter completion factor of the U.S. network carriers • Ended the third quarter with ~$13.5 billion of total available liquidity • Credit ratings upgraded by Fitch, Moody’s and Standard & Poor’s during the third quarter 1. See GAAP to non-GAAP reconciliations at the end of this presentation.
3Q 2019 3Q 2023 New AAdvantage® member accounts AAdvantage® remains strong • AAdvantage® continues to grow, with enrollments up 50% vs. 3Q 2019 + 50% vs. 3Q 2019
53% 67% 78% 47% 33% 22% 3Q 2019 3Q 2022 3Q 2023 Booking Contribution by Distribution Technology Modern Distribution Technology Legacy Technology Third-quarter bookings contribution • American continues to see an increase in bookings from modern distribution technology Note: May not recalculate due to rounding. 1. Modern Distribution Technology includes website, mobile app and NDC direct bookings. 1
Financial update
Third-quarter financial results Note: May not recalculate due to rounding. 1. See GAAP to non-GAAP reconciliation at the end of this presentation. GAAP Non-GAAP1 (in millions, except share and per share amounts) 3Q 2023 3Q 2022 3Q 2023 3Q 2022 Operating Income (Loss) ($223) $930 $728 $969 Pre-Tax Income (Loss) ($690) $658 $362 $640 Net Income (Loss) ($545) $483 $263 $478 Earnings (Loss) per common share: Basic ($0.83) $0.74 $0.40 $0.73 Diluted ($0.83) $0.69 $0.38 $0.69 Weighted average shares outstanding (in thousands): Basic 654,119 650,586 654,119 650,586 Diluted 654,119 715,985 722,087 715,985
Deleveraging supported by moderate capex Younger fleet drives lower capex Note: May not recalculate due to rounding. 1. Source: Company filings. 2021 includes net inflows from return of PDPs. $5.2 $2.0 $0.2 $2.5 $2.7 ~ $3.0 - $3.3 20 14 - 20 19 A vg . 20 20 A 20 21 A 20 22 A 20 23 E 20 24 E Total capex1 (in billions) Most flexible balance sheet the airline has had since the merger: • Well-laddered, moderate capex profile through the end of the decade • Sizable, high quality borrowing capacity (>$11B) and unencumbered asset base (>$5B) that allows proactive approach to 2025 maturities
54 (0.8) (1.0) (1.2) (0.6) ~(3.5) ~(4.4) 43 2Q 2021 Total Debt 2019 Unsecured Spare Parts Term Loan LGA/DCA Term Loan 2020 Secured / Unsecured Amortizing Debt Lease & Pension YE 2023E Total Debt Balance sheet strengthening continues ~11.5B Peak • On track to reduce total debt1 from peak levels by ~$11.5 billion by the end of 2023 ($ in billions) 1. Total debt includes debt, finance leases, operating lease liabilities and pension obligations. 2. Net of new financings. 2 Total debt1 reduction
Fourth-quarter and full-year outlook 1. CASM-ex is cost per available seat mile (CASM) excluding fuel and net special items and is a non-GAAP measure. All adjusted operating margin and adjusted earnings per diluted share guidance excludes the impact of net special items and are non-GAAP measures. The Company is unable to reconcile certain forward-looking information to GAAP as the nature or amount of net special items cannot be determined at this time. 2. Consumption of ~1,050 million gallons in 4Q 2023, based on October 12, 2023 forward fuel curve. 4Q 2023 FY 2023 Total capacity (ASMs) (vs. 2022) ~ +4.5% to +6.5% ~ +6.5% TRASM (vs. 2022) ~ -5.5% to -7.5% ~ +1% CASM-ex1 (vs. 2022) ~ +5% to +7% ~ +3% Fuel ($/gallon)2 ~ $3.01 to $3.11 Adjusted operating margin1 ~ 2% to 4% ~ 7% Adjusted earnings per diluted share1 ~ Breakeven ~ $2.25 to $2.50
Visit our new Robert L. Crandall Campus website at aa.com/campus October 19, 2023
GAAP to non-GAAP reconciliation Reconciliation of GAAP Financial Information to Non-GAAP Financial Information American Airlines Group Inc. (the Company) sometimes uses financial measures that are derived from the condensed consolidated financial statements but that are not presented in accordance with GAAP to understand and evaluate its current operating performance and to allow for period-to-period comparisons. The Company believes these non-GAAP financial measures may also provide useful information to investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with GAAP. The Company is providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis. The tables below present the reconciliations of the following GAAP measures to their non-GAAP measures: - Operating Income (Loss) (GAAP measure) to Operating Income Excluding Net Special Items (non-GAAP measure) - Operating Margin (GAAP measure) to Operating Margin Excluding Net Special Items (non-GAAP measure) - Pre-Tax Income (Loss) (GAAP measure) to Pre-Tax Income (Loss) Excluding Net Special Items (non-GAAP measure) - Pre-Tax Margin (GAAP measure) to Pre-Tax Margin Excluding Net Special Items (non-GAAP measure) - Net Income (Loss) (GAAP measure) to Net Income (Loss) Excluding Net Special Items (non-GAAP measure) - Basic and Diluted Earnings (Loss) Per Share (GAAP measure) to Basic and Diluted Earnings (Loss) Per Share Excluding Net Special Items (non-GAAP measure) Management uses these non-GAAP financial measures to evaluate the Company's current operating performance and to allow for period-to-period comparisons. As net special items may vary from period-to-period in nature and amount, the adjustment to exclude net special items allows management an additional tool to understand the Company’s core operating performance. Additionally, the tables below present the reconciliations of total operating costs (GAAP measure) to total operating costs excluding net special items and fuel (non-GAAP measure) and total operating costs per ASM (CASM) to CASM excluding net special items and fuel. Management uses total operating costs excluding net special items and fuel and CASM excluding net special items and fuel to evaluate the Company's current operating performance and for period-to-period comparisons. The price of fuel, over which the Company has no control, impacts the comparability of period-to-period financial performance. The adjustment to exclude fuel and net special items allows management an additional tool to understand and analyze the Company’s non-fuel costs and core operating performance.
GAAP to non-GAAP reconciliation Percent Increase Percent Increase 2023 2022 (Decrease) 2023 2022 (Decrease) Operating income (loss) as reported (223)$ 930$ 2,378$ 225$ Operating net special items: Mainline operating special items, net (1) 949 37 962 189 Regional operating special items, net 2 2 8 2 Operating income excluding net special items $ 728 $ 969 (24.9%) $ 3,348 $ 416 nm Calculation of Operating Margin Operating income (loss) as reported $ (223) $ 930 $ 2,378 $ 225 Total operating revenues as reported $ 13,482 $ 13,462 $ 39,726 $ 35,783 Operating margin (1.7%) 6.9% 6.0% 0.6% Calculation of Operating Margin Excluding Net Special Items Operating income excluding net special items $ 728 $ 969 $ 3,348 $ 416 Total operating revenues as reported $ 13,482 $ 13,462 $ 39,726 $ 35,783 Operating margin excluding net special items 5.4% 7.2% 8.4% 1.2% Reconciliation of Pre-Tax Income (Loss) Excluding Net Special Items Pre-tax income (loss) as reported (690)$ 658$ 1,089$ (824)$ Pre-tax net special items: Mainline operating special items, net (1) 949 37 962 189 Regional operating special items, net 2 2 8 2 Nonoperating special items, net (2) 101 (57) 146 34 Total pre-tax net special items 1,052 (18) 1,116 225 Pre-tax income (loss) excluding net special items 362$ 640$ (43.4%) 2,205$ (599)$ nm Calculation of Pre-Tax Margin Pre-tax income (loss) as reported $ (690) $ 658 $ 1,089 $ (824) Total operating revenues as reported $ 13,482 $ 13,462 $ 39,726 $ 35,783 Pre-tax margin (5.1%) 4.9% 2.7% (2.3%) Calculation of Pre-Tax Margin Excluding Net Special Items Pre-tax income (loss) excluding net special items $ 362 $ 640 $ 2,205 $ (599) Total operating revenues as reported $ 13,482 $ 13,462 $ 39,726 $ 35,783 Pre-tax margin excluding net special items 2.7% 4.8% 5.6% (1.7%) (in millions) (in millions) 9 Months Ended September 30, 3 Months Ended September 30, Reconciliation of Operating Income Excluding Net Special Items
GAAP to non-GAAP reconciliation Percent Increase Percent Increase Reconciliation of Net Income (Loss) Excluding Net Special Items 2023 2022 (Decrease) 2023 2022 (Decrease) Net income (loss) as reported (545)$ 483$ 803$ (676)$ Net special items: Total pre-tax net special items (1), (2) 1,052 (18) 1,116 225 Income tax special items, net - - - (9) Net tax effect of net special items (244) 13 (252) (39) Net income (loss) excluding net special items 263$ 478$ (45.0%) 1,667$ (499)$ nm Reconciliation of Basic and Diluted Earnings (Loss) Per Share Excluding Net Special Items Net income (loss) excluding net special items 263$ 478$ 1,667$ (499)$ Shares used for computation (in thousands): Basic 654,119 650,586 653,241 650,145 Diluted 722,087 715,985 719,956 650,145 Earnings (loss) per share excluding net special items: Basic 0.40$ 0.73$ 2.55$ (0.77)$ Diluted (3) 0.38$ 0.69$ 2.36$ (0.77)$ Reconciliation of Total Operating Costs per ASM Excluding Net Special Items and Fuel Total operating expenses as reported 13,705$ 12,532$ 37,348$ 35,558$ Operating net special items: Mainline operating special items, net (1) (949) (37) (962) (189) Regional operating special items, net (2) (2) (8) (2) Total operating expenses excluding net special items 12,754 12,493 36,378 35,367 Aircraft fuel and related taxes (3,209) (3,847) (9,098) (10,369) Total operating expenses excluding net special items and fuel 9,545$ 8,646$ 27,280$ 24,998$ Total operating expenses per ASM as reported 18.70 18.28 17.96 18.30 Operating net special items per ASM: Mainline operating special items, net (1) (1.29) (0.05) (0.46) (0.10) Regional operating special items, net - - - - Total operating expenses per ASM excluding net special items 17.40 18.22 17.49 18.21 Aircraft fuel and related taxes per ASM (4.38) (5.61) (4.38) (5.34) Total operating expenses per ASM excluding net special items and fuel 13.02 12.61 13.12 12.87 Note: Amounts may not recalculate due to rounding. FOOTNOTES: (1) (2) (3) (in millions, except share and per share amounts) (in millions, except share and per share amounts) The 2023 three and nine month period diluted earnings per share excluding net special items gives effect to, among other things, the Company's outstanding 6.5% senior convertible notes by (a) adding back to earnings $11 million and $33 million of interest expense, respectively, related to such convertible notes, net of estimated profit sharing, short-term incentive and tax effects and (b) including in the diluted shares outstanding, 61.7 million shares issuable in respect to such convertible notes. (in cents) Principally included charges associated with debt refinancings and extinguishments as well as mark-to-market net unrealized gains and losses associated with certain equity investments. (in cents) The 2023 three and nine month period mainline operating special items, net principally included $983 million of one-time charges resulting from the ratification of a new collective bargaining agreement with our mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $229 million. The 2022 nine month period mainline operating special items, net principally included a non-cash impairment charge to write down the carrying value of the Company's retired Airbus A330 fleet to the estimated fair value due to the market conditions for certain used aircraft. The Company retired its Airbus A330 fleet in 2020 as a result of the decline in demand for air travel due to the COVID-19 pandemic. 3 Months Ended September 30, 9 Months Ended September 30,
Exhibit 99.3
Investor Relations Update
October 19, 2023
General Overview
| ● | Capacity - The Company expects its fourth-quarter capacity to be up approximately 4.5% to 6.5% versus the fourth quarter of 2022. Consistent with the mid-point of the guidance we have provided throughout the year, the Company expects its full-year capacity to be up approximately 6.5% year over year. | ||||
| ● | TRASM - The Company expects its fourth-quarter total revenue per available seat mile (TRASM) to be down approximately 5.5% to 7.5% versus the fourth quarter of 2022. The Company expects its full-year TRASM to be up approximately 1% year over year. | ||||
| ● | CASM-ex1 - The Company expects its fourth-quarter CASM-ex to be up approximately 5% to 7% versus the fourth quarter of 2022. The step-up in sequential year over year CASM-ex is driven by the shift of certain expenses from the third quarter to the fourth quarter and less year over year capacity growth expected in the fourth quarter. Consistent with the mid-point of the guidance we have provided throughout the year, the Company continues to expect its full-year CASM-ex to be up approximately 3% year over year. | ||||
| ● | Fuel - Based on the October 12, 2023, forward fuel curve, the Company expects to pay an average of between $3.01 and $3.11 per gallon of jet fuel (including taxes) in the fourth quarter and expects to consume approximately 1,050 million gallons of jet fuel. | ||||
| ● | Adjusted operating margin1 - The Company expects an adjusted operating margin of approximately 2% to 4% for the fourth quarter. The Company expects a full-year adjusted operating margin of approximately 7%. | ||||
| ● | Adjusted nonoperating expense1 - The Company expects its total adjusted nonoperating expense to be approximately $400 million in the fourth quarter. | ||||
| ● | Taxes - The Company expects a provision for income taxes at an effective rate of approximately 25% for the full year, which is expected to be substantially non-cash. | ||||
| ● | Adjusted EPS1 - Based on the assumptions outlined above, the Company expects its fourth-quarter adjusted earnings per diluted share to be approximately breakeven using a share count of 658.9 million shares2. Based on current assumptions, the Company now expects its full-year adjusted earnings per diluted share to be between $2.25 and $2.50 using a share count of 720.1 million shares2. | ||||
Notes:
| 1. | CASM-ex is cost per available seat mile (CASM) excluding fuel and net special items and is a non-GAAP measure. Adjusted operating margin, adjusted nonoperating expense and adjusted earnings per diluted share exclude the impact of net special items and are non-GAAP measures. The Company is unable to reconcile certain forward-looking information to GAAP as the nature or amount of net special items cannot be determined at this time. Please see GAAP to non-GAAP reconciliation at the end of this document. | ||||
| 2. | The Company's fourth-quarter 2023 diluted share count for purposes of computing adjusted earnings per share excludes 61.7m shares attributed to the Company's 6.5% convertible notes as they are expected to be antidilutive. Such shares are expected to be dilutive for the full-year 2023 adjusted earnings per share calculation. | ||||
Please refer to the footnotes and the forward-looking statements page of this document for additional information.
Financial Update
October 19, 2023
4Q 20231 | ||||||||||||||||||||
| Available seat miles (ASMs) | ~ + 4.5% to + 6.5% (vs. 4Q 22) | |||||||||||||||||||
| TRASM | ~ - 5.5% to - 7.5% (vs. 4Q 22) | |||||||||||||||||||
| CASM excluding fuel and net special items | ~ + 5% to + 7% (vs. 4Q 22) | |||||||||||||||||||
| Average fuel price (incl. taxes) ($/gal) | ~ $3.01 to $3.11 | |||||||||||||||||||
| Fuel gallons consumed (mil) | ~ 1,050 | |||||||||||||||||||
Adjusted operating margin | ~ 2% to 4% | |||||||||||||||||||
| Adjusted nonoperating expense ($ mil) | ~ $400 | |||||||||||||||||||
| Adjusted earnings per diluted share ($/share) | ~ Breakeven | |||||||||||||||||||
| 4Q 2023 Shares Forecast | ||||||||||||||||||||
Shares (mil)2 | ||||||||||||||||||||
| Earnings Level ($ mil) | Basic | Diluted | Addback ($ mil)3 | |||||||||||||||||
| Earnings above $115 | 654.7 | 720.6 | $11 | |||||||||||||||||
| Earnings up to $115 | 654.7 | 658.9 | — | |||||||||||||||||
| Net loss | 654.7 | 654.7 | — | |||||||||||||||||
FY 20231 | ||||||||||||||||||||
| Available seat miles (ASMs) | ~ + 6.5% (vs. 2022) | |||||||||||||||||||
| TRASM | ~ + 1% (vs. 2022) | |||||||||||||||||||
| CASM excluding fuel and net special items | ~ + 3% (vs. 2022) | |||||||||||||||||||
Adjusted operating margin | ~ 7% | |||||||||||||||||||
| Adjusted earnings per diluted share ($/share) | ~ $2.25 to $2.50 | |||||||||||||||||||
| FY 2023 Shares Forecast | ||||||||||||||||||||
Shares (mil)2 | ||||||||||||||||||||
| Earnings Level ($ mil) | Basic | Diluted | Addback ($ mil)3 | |||||||||||||||||
| Earnings above $474 | 653.6 | 720.1 | $44 | |||||||||||||||||
| Earnings up to $474 | 653.6 | 658.4 | — | |||||||||||||||||
| Net loss | 653.6 | 653.6 | — | |||||||||||||||||
Notes:
| 1. | Includes guidance on certain non-GAAP measures, which exclude, among other things, net special items. The Company is unable to reconcile certain forward-looking information to GAAP as the nature or amount of net special items cannot be determined at this time. Please see the GAAP to non-GAAP reconciliation at the end of this document. Numbers may not recalculate due to rounding. | ||||
| 2. | Shares outstanding are based upon several estimates and assumptions, including average per share stock price and stock award activity. The number of shares in actual calculations of earnings per share will likely be different from those set forth above. | ||||
| 3. | Interest addback for earnings per diluted share calculation for 6.5% convertible notes, net of estimated profit sharing, short-term incentive, and tax effects. | ||||
Please refer to the footnotes and the forward-looking statements page of this document for additional information.
GAAP to Non-GAAP Reconciliation
October 19, 2023
The Company sometimes uses financial measures that are derived from the condensed consolidated financial statements or otherwise provided in the form of guidance but that are not presented in accordance with GAAP to understand and evaluate its current operating performance and to allow for period-to-period comparisons. The Company believes these non-GAAP financial measures may also provide useful information to investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with GAAP. The Company is providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis. The table below presents the reconciliation of total operating costs (GAAP measure) to total operating costs excluding fuel and net special items (non-GAAP measure) and total operating costs per ASM (CASM) to CASM excluding fuel and net special items. Management uses total operating costs excluding fuel and net special items and CASM excluding fuel and net special items to evaluate the Company's current operating performance and for period-to-period comparisons. The price of fuel, over which the Company has no control, impacts the comparability of period-to-period financial performance. Additionally, net special items may vary from period-to-period in nature and amount. These adjustments to exclude fuel and net special items allow management an additional tool to understand and analyze the Company’s non-fuel costs and core operating performance.
GAAP to Non-GAAP Reconciliation of Total Operating Costs and CASM ($ mil, except ASM and CASM data) | ||||||||||||||||||||||||||
4Q 2023 Range1 | FY 2023 Range1 | |||||||||||||||||||||||||
| Low | High | Low | High | |||||||||||||||||||||||
| Total operating expenses | $12,352 | $12,812 | $49,701 | $50,160 | ||||||||||||||||||||||
| Less fuel expense | 3,161 | 3,266 | 12,259 | 12,364 | ||||||||||||||||||||||
Less operating net special items2 | — | — | 970 | 970 | ||||||||||||||||||||||
| Total operating expense excluding fuel and net special items (non-GAAP) | $9,192 | $9,546 | $36,472 | $36,827 | ||||||||||||||||||||||
| Total CASM (cts) | 17.92 | 18.24 | 17.95 | 18.03 | ||||||||||||||||||||||
| Total CASM excluding fuel and net special items (cts) (non-GAAP) | 13.34 | 13.59 | 13.17 | 13.24 | ||||||||||||||||||||||
| Percentage change compared to 2022 (%) | ~ 5% | ~ 7% | ~ 3% | ~ 3% | ||||||||||||||||||||||
| Total ASMs (bil) | 68.9 | 70.2 | 276.9 | 278.2 | ||||||||||||||||||||||
| Amounts may not recalculate due to rounding. | |||||
Notes:
| 1. | The Company is unable to reconcile certain forward-looking information to GAAP as the nature or amount of net special items cannot be determined at this time. | ||||
| 2. | The 2023 operating net special items principally includes one-time charges resulting from the ratification of a new collective bargaining agreement with the Company’s mainline pilots. | ||||
Please refer to the footnotes and the forward-looking statements page of this document for additional information.
Forward-Looking Statements
October 19, 2023
Cautionary Statement Regarding Forward-Looking Statements
Certain of the statements contained in this report should be considered forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about the Company’s plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that are not historical facts. These forward-looking statements are based on the Company’s current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the forward-looking statements. These risks and uncertainties include, but are not limited to, those set forth herein as well as in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 (especially in Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 1A. Risk Factors), and other risks and uncertainties listed from time to time in the Company’s other filings with the Securities and Exchange Commission. Additionally, there may be other factors of which the Company is not currently aware that may affect matters discussed in the forward-looking statements and may also cause actual results to differ materially from those discussed. The Company does not assume any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these forward-looking statements other than as required by law. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statement.
Please refer to the footnotes and the forward-looking statements page of this document for additional information.