American Airlines Group Inc. (NASDAQ:AAL) today reported its
first-quarter 2017 results, including these highlights:
- Recorded a first-quarter 2017 pre-tax profit of $365
million, or $491 million excluding net special items,1 and net
profit of $234 million, or $308 million excluding net special
items
- Reported first-quarter earnings of $0.46 per diluted
share, or $0.61 per diluted share excluding net special
items
- Deferred the first delivery of Airbus A350 XWBs from
2018 to 2020, delaying capital expenditures and providing
additional widebody capacity flexibility
- Announced an unprecedented step to increase hourly base
pay for the airline’s crewmembers outside of contract negotiations,
bringing those workgroups’ base pay levels to the top of the
industry, consistent with other American Airlines
workgroups
“We are excited about the long-term prospects for
American Airlines, and our first-quarter results only serve to
reinforce our enthusiasm. We successfully launched several
important commercial initiatives, including Basic Economy and
Premium Economy, which are designed to provide more choice for our
customers. We expanded our global presence with our planned
investment in China Southern Airlines. We continued to make
significant investments in our product, including taking delivery
of 22 new aircraft. These new deliveries widen our already
significant advantage in average fleet age versus our large
competitors,” said Doug Parker, Chairman and CEO.
“Investing in our product, however, is not enough
to retain our customers’ loyalty if we are not investing in our
team. As a service business, it is our team who will differentiate
American from the competition. Recently we reiterated a commitment
we made when we merged our airlines over three years ago – that
team members would be paid as much as their industry peers. This
commitment will be realized by adjusting the base pay levels for
our flight attendants and pilots outside of contract
negotiations.
“The American team did an amazing job of taking
care of our customers during the quarter. This commitment was
demonstrated in the improvement in our operating reliability,
improved mishandled baggage rates, and improved on-time
performance. All of this work is being recognized by others, too,
as American was named Air Transport World’s Airline of the Year for
2017 and Full Service Airline Brand of the Year by the Harris
Poll.
“The future is very bright and we are well on our
way to validating the trust placed in us by our team members, our
customers and our investors. Today’s results are an affirmation
that we are on the proper path to that long-term objective,” Parker
said.
Revenue and Expenses
- Reported a 2.0 percent increase in total revenue, to
$9.6 billion. First-quarter total revenue per available seat mile
rose 3.1 percent year-over-year
- Accrued approximately $31 million for the company’s
profit sharing plan
|
|
|
|
|
|
|
|
|
|
GAAP |
|
Non-GAAP1 |
|
|
|
1Q17 |
|
1Q16 |
|
1Q17 |
|
1Q16 |
|
|
|
|
|
|
|
|
|
|
Total operating revenues ($ mil) |
$ |
9,624 |
|
|
$ |
9,435 |
|
|
$ |
9,624 |
|
|
$ |
9,435 |
|
|
|
Total operating expenses ($ mil) |
|
9,023 |
|
|
|
8,100 |
|
|
|
8,902 |
|
|
|
7,996 |
|
|
|
Operating income ($ mil) |
|
601 |
|
|
|
1,335 |
|
|
|
722 |
|
|
|
1,439 |
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income ($ mil) |
|
365 |
|
|
|
1,117 |
|
|
|
491 |
|
|
|
1,221 |
|
|
|
Pre-tax margin |
|
3.8 |
% |
|
|
11.8 |
% |
|
|
5.1 |
% |
|
|
12.9 |
% |
|
|
|
|
|
|
|
|
|
|
Net income ($ mil) |
|
234 |
|
|
|
700 |
|
|
|
308 |
|
|
|
765 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per diluted share |
$ |
0.46 |
|
|
$ |
1.14 |
|
|
$ |
0.61 |
|
|
$ |
1.25 |
|
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|
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|
|
|
|
Strong demand and improving yields drove a 2.0 percent increase
in total revenue, to $9.6 billion. Other revenue was up 9.3 percent
primarily due to the new co-branded credit card agreements that
became effective in the third quarter of 2016. Total revenue per
available seat mile increased by 3.1 percent, on a 1.1 percent
decline in total available seat miles.
Total first-quarter operating expenses were $9.0
billion, up 11.4 percent year-over-year due primarily to a 37.8
percent increase in consolidated fuel expense. Total first-quarter
cost per available seat mile excluding fuel and special items was
11.16 cents, up 7.6 percent year-over-year, due primarily to a 6.5
percent increase in salaries and benefits expense and other
investments to improve the operation.
Commercial Initiatives
- Launched Basic Economy for sale on 10 routes, for
travel that began March 1. We also began selling Premium Economy
seats on select international routes, for travel beginning May
4
- Entered into an arrangement with Scandinavian Airlines
to obtain two slot pairs at London’s Heathrow Airport,
strengthening American’s presence at a key international gateway
for American and joint business partner British
Airways
- Simplified the boarding process, using intuitive group
numbers to streamline and speed up the boarding process and improve
the experience for customers
We are continuing to expand Basic Economy and
Premium Economy as we add new options to offer the right fare for
each customer. Each new 787-9 delivery includes Premium Economy, a
new class of service between the Main Cabin and Business Class on
international flights. We expect to have 14 of these aircraft by
the end of 2017. In addition, a retrofit program to add Premium
Economy to most of our other widebody aircraft begins later this
year and will be completed by the end of 2018.
“While it’s still early, the initial results from
our new Basic and Premium Economy products are encouraging.
Approximately 50 percent of customers who are presented with a
choice for Basic Economy end up choosing a Main Cabin fare, showing
that they understand their options and are choosing the ticket
that’s the right fit for their travel,” said Robert Isom, American
Airlines President.
“We also moved quickly on the opportunity to add
two new slot pairs at Heathrow, which we will use to improve
service to and from one of the world's most important business
markets,” Isom said.
“We expect second-quarter TRASM to rise
approximately 3.0 to 5.0 percent, which reflects improving customer
demand in both corporate and leisure travel. We also expect
second-quarter pre-tax margin excluding special items to be between
11.0 and 13.0 percent,”2 Isom said.
People Accomplishments
- Distributed its first annual profit-sharing payment as
a combined airline for 2016
- Contributed $279 million to the company’s defined
benefit plan in April
- Began offering 10 weeks of maternity pay and
reimbursements for $4,000 in adoption expenses regardless of
workgroup or representation status
In addition, the company yesterday disclosed on
form 8-K with the Securities Exchange Commission that it has
offered a mid-contract hourly base pay rate adjustment for its
flight attendants and pilots of an average of approximately five
percent and an average of eight percent, respectively.
Capital Investments, Fleet, and Shareholder
Return
- Returned $563 million to stockholders through
repurchases of 11.7 million shares for $512 million and dividends
of $51 million in the first quarter
- Declared a dividend of $0.10 per share, to be paid on
May 30, 2017, to stockholders of record as of May 16,
2017
American plans to invest $4.1 billion in new
aircraft this year, as it continues to renew its fleet. During the
quarter, the company invested $1.2 billion as it took delivery of
17 mainline aircraft and five regional aircraft. These new
deliveries will replace aircraft that are expected to leave the
fleet. In addition, the company expects to invest $1.6 billion in
non-aircraft capital expenditures in 2017 focused on integrating
the airline, product enhancements, and operational
improvements.
To provide widebody capacity flexibility, the
company reached an agreement with Airbus to defer delivery of the
A350 XWB. Under the new delivery schedule, American expects to
receive its first A350 aircraft in late 2020 instead of 2018 as
previously planned. American now expects to receive 22 A350s from
2020 through 2024, with an average deferral of two years. In
addition, the company reached an agreement with Boeing to defer the
delivery of two 787-9 aircraft from the second quarter of 2018 to
the first quarter of 2019.
These changes as well as the impact of changes to
net pre-delivery payments reduce the company’s planned capital
expenditures by $500 million in 2018 and $300 million in 2019 and
in 2020.
Since mid-2014, the company has returned more than
$10.2 billion to stockholders primarily through share repurchases
and dividends, and reduced the share count by 34 percent to 495.7
million shares. As of March 31, the company had approximately $1.5
billion remaining of its $2.0 billion share repurchase
authority.3
Investor Update
For additional financial forecasting detail, please
refer to the company’s investor relations update, filed with the
Securities and Exchange Commission on Form 8-K. This filing will be
available at aa.com/investorrelations.
Conference Call / Webcast
Details
The company will conduct a live audio webcast
of its earnings call today at 7:30 a.m. CT, which 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 May 27.
Notes
- In the first quarter, the company recognized $126 million in
net special items before the effect of income taxes, principally
consisting of merger integration expenses relating to information
technology, professional fees, rebranding of aircraft and airport
facilities and training, as well as fleet restructuring expenses
driven by the merger. 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.
- American is unable to reconcile certain forward-looking
projections to GAAP as the nature or amount of special items cannot
be determined at this time.
- Share repurchases under the buyback program may be made through
a variety of methods, which may include open market purchases,
privately negotiated transactions, block trades or accelerated
share repurchase transactions. Any such repurchases will be made
from time to time subject to market and economic conditions,
applicable legal requirements and other relevant factors. The
program does not obligate the company to repurchase any specific
number of shares or continue a dividend for any fixed period, and
may be suspended at any time at the company's discretion.
About American Airlines Group
American Airlines and American Eagle offer an
average of nearly 6,700 flights per day to nearly 350 destinations
in more than 50 countries. American has hubs in Charlotte, Chicago,
Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia,
Phoenix, and Washington, D.C. American is a founding member of
the oneworld® alliance, whose members serve
more than 1,000 destinations with about 14,250 daily flights to
over 150 countries. Shares of American Airlines Group Inc. trade on
Nasdaq under the ticker symbol AAL. In 2015, its stock joined the
S&P 500 index. Connect with American on Twitter @AmericanAir
and at Facebook.com/AmericanAirlines.
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 Act), the
Securities Exchange Act of 1934, as amended (the Exchange Act), 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
our 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 our
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 in our Quarterly Report on Form 10-Q
for the quarter ended March 31, 2017 (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 in
our other filings with the Securities and Exchange Commission (the
SEC), and other risks and uncertainties listed from time to time in
our other filings with the SEC. There may be other factors of which
we are 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. We do 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 statements.
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|
American Airlines Group Inc. |
Condensed Consolidated
Statements of Operations |
(In millions, except share and per share
amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
3 Months Ended March 31, |
|
Percent |
|
|
|
2017 |
|
|
|
2016 |
|
|
Change |
|
|
|
|
|
|
|
|
Operating
revenues: |
|
|
|
|
|
|
Mainline
passenger |
$ |
6,607 |
|
|
$ |
6,564 |
|
|
0.6 |
|
|
Regional
passenger |
|
1,548 |
|
|
|
1,523 |
|
|
1.7 |
|
|
Cargo |
|
172 |
|
|
|
162 |
|
|
6.3 |
|
|
Other |
|
1,297 |
|
|
|
1,186 |
|
|
9.3 |
|
|
Total
operating revenues |
|
9,624 |
|
|
|
9,435 |
|
|
2.0 |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
Aircraft
fuel and related taxes |
|
1,402 |
|
|
|
1,029 |
|
|
36.2 |
|
|
Salaries,
wages and benefits |
|
2,825 |
|
|
|
2,652 |
|
|
6.5 |
|
|
Regional
expenses: |
|
|
|
|
|
|
Fuel |
|
318 |
|
|
|
219 |
|
|
45.2 |
|
|
Other |
|
1,255 |
|
|
|
1,213 |
|
|
3.4 |
|
|
Maintenance, materials and repairs |
|
492 |
|
|
|
419 |
|
|
17.5 |
|
|
Other
rent and landing fees |
|
440 |
|
|
|
422 |
|
|
4.4 |
|
|
Aircraft
rent |
|
295 |
|
|
|
306 |
|
|
(3.8 |
) |
|
Selling
expenses |
|
318 |
|
|
|
308 |
|
|
3.2 |
|
|
Depreciation and amortization |
|
405 |
|
|
|
355 |
|
|
14.1 |
|
|
Special
items, net |
|
119 |
|
|
|
99 |
|
|
19.8 |
|
|
Other |
|
1,154 |
|
|
|
1,078 |
|
|
7.1 |
|
|
Total
operating expenses |
|
9,023 |
|
|
|
8,100 |
|
|
11.4 |
|
|
|
|
|
|
|
|
|
Operating
income |
|
601 |
|
|
|
1,335 |
|
|
(55.0 |
) |
|
|
|
|
|
|
|
|
Nonoperating income
(expense): |
|
|
|
|
|
|
Interest
income |
|
21 |
|
|
|
13 |
|
|
63.6 |
|
|
Interest
expense, net |
|
(257 |
) |
|
|
(239 |
) |
|
7.6 |
|
|
Other,
net |
|
- |
|
|
|
8 |
|
|
nm |
|
|
Total
nonoperating expense, net |
|
(236 |
) |
|
|
(218 |
) |
|
8.3 |
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
365 |
|
|
|
1,117 |
|
|
(67.4 |
) |
|
|
|
|
|
|
|
|
Income tax
provision |
|
131 |
|
|
|
417 |
|
|
(68.7 |
) |
|
|
|
|
|
|
|
|
Net
income |
$ |
234 |
|
|
$ |
700 |
|
|
(66.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share: |
|
|
|
|
|
|
Basic |
$ |
0.46 |
|
|
$ |
1.15 |
|
|
|
|
Diluted |
$ |
0.46 |
|
|
$ |
1.14 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding (in thousands): |
|
|
|
|
|
|
Basic |
|
503,902 |
|
|
|
606,245 |
|
|
|
|
Diluted |
|
507,797 |
|
|
|
611,488 |
|
|
|
|
|
|
|
|
|
|
|
Note: Percent change may not recalculate due to
rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American Airlines Group Inc. |
|
Consolidated Operating
Statistics |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended March 31, |
|
|
|
|
|
|
|
2017 |
|
2016 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline |
|
|
|
|
|
|
|
|
|
Revenue passenger miles
(millions) |
|
45,211 |
|
46,220 |
|
(2.2 |
) |
% |
|
|
Available seat miles
(ASM) (millions) |
|
56,564 |
|
57,564 |
|
(1.7 |
) |
% |
|
|
Passenger load factor
(percent) |
|
79.9 |
|
80.3 |
|
(0.4 |
) |
pts |
|
|
Yield (cents) |
|
14.61 |
|
14.20 |
|
2.9 |
|
% |
|
|
Passenger revenue per
ASM (cents) |
|
11.68 |
|
11.40 |
|
2.4 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Passenger enplanements
(thousands) |
|
33,755 |
|
34,547 |
|
(2.3 |
) |
% |
|
|
Departures
(thousands) |
|
262 |
|
272 |
|
(3.4 |
) |
% |
|
|
Aircraft at end of
period |
|
944 |
|
942 |
|
0.2 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Block hours
(thousands) |
|
819 |
|
845 |
|
(3.1 |
) |
% |
|
|
Average stage length
(miles) |
|
1,201 |
|
1,205 |
|
(0.3 |
) |
% |
|
|
Fuel consumption
(gallons in millions) |
|
831 |
|
855 |
|
(2.8 |
) |
% |
|
|
Average
aircraft fuel price including related taxes (dollars per
gallon) |
1.69 |
|
1.20 |
|
40.1 |
|
% |
|
|
Full-time equivalent
employees at end of period |
|
102,900 |
|
100,200 |
|
2.7 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating cost per ASM
(cents) |
|
13.17 |
|
11.58 |
|
13.7 |
|
% |
|
|
Operating cost per ASM
excluding special items (cents) |
|
12.96 |
|
11.41 |
|
13.6 |
|
% |
|
|
Operating cost per ASM
excluding special items and fuel (cents) |
|
10.48 |
|
9.62 |
|
8.9 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Regional
(A) |
|
|
|
|
|
|
|
|
|
Revenue passenger miles
(millions) |
|
5,773 |
|
5,551 |
|
4.0 |
|
% |
|
|
Available seat miles
(millions) |
|
7,777 |
|
7,500 |
|
3.7 |
|
% |
|
|
Passenger load factor
(percent) |
|
74.2 |
|
74.0 |
|
0.2 |
|
pts |
|
|
Yield (cents) |
|
26.82 |
|
27.44 |
|
(2.2 |
) |
% |
|
|
Passenger revenue per
ASM (cents) |
|
19.91 |
|
20.31 |
|
(2.0 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Passenger enplanements
(thousands) |
|
12,605 |
|
12,368 |
|
1.9 |
|
% |
|
|
Aircraft at end of
period |
|
623 |
|
597 |
|
4.4 |
|
% |
|
|
Fuel consumption
(gallons in millions) |
|
182 |
|
178 |
|
2.6 |
|
% |
|
|
Average
aircraft fuel price including related taxes (dollars per
gallon) |
1.75 |
|
1.24 |
|
41.5 |
|
% |
|
|
Full-time equivalent
employees at end of period (B) |
|
21,400 |
|
20,000 |
|
7.0 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating cost per ASM
(cents) |
|
20.23 |
|
19.10 |
|
5.9 |
|
% |
|
|
Operating cost per ASM
excluding special items (cents) |
|
20.19 |
|
19.03 |
|
6.1 |
|
% |
|
|
Operating cost per ASM
excluding special items and fuel (cents) |
|
16.10 |
|
16.11 |
|
(0.1 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Total Mainline
& Regional |
|
|
|
|
|
|
|
|
|
Revenue passenger miles
(millions) |
|
50,984 |
|
51,771 |
|
(1.5 |
) |
% |
|
|
Available seat miles
(millions) |
|
64,341 |
|
65,064 |
|
(1.1 |
) |
% |
|
|
Cargo ton miles
(millions) |
|
619 |
|
543 |
|
13.9 |
|
% |
|
|
Passenger load factor
(percent) |
|
79.2 |
|
79.6 |
|
(0.4 |
) |
pts |
|
|
Yield (cents) |
|
16.00 |
|
15.62 |
|
2.4 |
|
% |
|
|
Passenger revenue per
ASM (cents) |
|
12.67 |
|
12.43 |
|
2.0 |
|
% |
|
|
Total revenue per ASM
(cents) |
|
14.96 |
|
14.50 |
|
3.1 |
|
% |
|
|
Cargo yield per ton
mile (cents) |
|
27.77 |
|
29.77 |
|
(6.7 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Passenger enplanements
(thousands) |
|
46,360 |
|
46,915 |
|
(1.2 |
) |
% |
|
|
Aircraft at end of
period |
|
1,567 |
|
1,539 |
|
1.8 |
|
% |
|
|
Fuel consumption
(gallons in millions) |
|
1,013 |
|
1,033 |
|
(1.8 |
) |
% |
|
|
Average
aircraft fuel price including related taxes (dollars per
gallon) |
1.70 |
|
1.21 |
|
40.4 |
|
% |
|
|
Full-time equivalent
employees at end of period (B) |
|
124,300 |
|
120,200 |
|
3.4 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating cost per ASM
(cents) |
|
14.02 |
|
12.45 |
|
12.6 |
|
% |
|
|
Operating cost per ASM
excluding special items (cents) |
|
13.84 |
|
12.29 |
|
12.6 |
|
% |
|
|
Operating cost per ASM
excluding special items and fuel (cents) |
|
11.16 |
|
10.37 |
|
7.6 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) Regional includes wholly owned
regional airline subsidiaries and operating results from capacity
purchase carriers. |
|
|
(B) Regional full-time equivalent
employees only include our wholly owned regional airline
subsidiaries. |
|
|
|
|
|
|
|
|
|
|
|
|
Note: Amounts
may not recalculate due to rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American Airlines Group Inc. |
Consolidated Revenue Statistics by
Region |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended March 31, |
|
|
|
|
|
|
2017 |
|
2016 |
|
Change |
|
|
|
|
|
|
|
|
|
|
Domestic - Mainline |
|
|
|
|
|
|
|
Revenue
passenger miles (millions) |
|
29,530 |
|
30,391 |
|
(2.8 |
) |
% |
Available
seat miles (ASM) (millions) |
|
35,805 |
|
36,543 |
|
(2.0 |
) |
% |
Passenger
load factor (percent) |
|
82.5 |
|
83.2 |
|
(0.7 |
) |
pts |
Yield
(cents) |
|
15.31 |
|
14.72 |
|
4.1 |
|
% |
Passenger
revenue per ASM (cents) |
|
12.63 |
|
12.24 |
|
3.2 |
|
% |
|
|
|
|
|
|
|
|
|
Domestic Consolidated - Mainline and |
|
|
|
|
|
|
|
Total Regional (A) |
|
|
|
|
|
|
|
Revenue
passenger miles (millions) |
|
35,303 |
|
35,942 |
|
(1.8 |
) |
% |
Available
seat miles (ASM) (millions) |
|
43,582 |
|
44,043 |
|
(1.0 |
) |
% |
Passenger
load factor (percent) |
|
81.0 |
|
81.6 |
|
(0.6 |
) |
pts |
Yield
(cents) |
|
17.20 |
|
16.68 |
|
3.1 |
|
% |
Passenger
revenue per ASM (cents) |
|
13.93 |
|
13.61 |
|
2.3 |
|
% |
|
|
|
|
|
|
|
|
|
Latin America |
|
|
|
|
|
|
|
Revenue
passenger miles (millions) |
|
7,490 |
|
8,054 |
|
(7.0 |
) |
% |
Available
seat miles (ASM) (millions) |
|
9,775 |
|
10,480 |
|
(6.7 |
) |
% |
Passenger
load factor (percent) |
|
76.6 |
|
76.9 |
|
(0.3 |
) |
pts |
Yield
(cents) |
|
14.88 |
|
13.78 |
|
8.0 |
|
% |
Passenger
revenue per ASM (cents) |
|
11.41 |
|
10.59 |
|
7.7 |
|
% |
|
|
|
|
|
|
|
|
|
Atlantic |
|
|
|
|
|
|
|
|
Revenue
passenger miles (millions) |
|
4,500 |
|
4,801 |
|
(6.3 |
) |
% |
Available
seat miles (ASM) (millions) |
|
6,415 |
|
6,893 |
|
(6.9 |
) |
% |
Passenger
load factor (percent) |
|
70.1 |
|
69.7 |
|
0.4 |
|
pts |
Yield
(cents) |
|
13.51 |
|
14.46 |
|
(6.6 |
) |
% |
Passenger
revenue per ASM (cents) |
|
9.47 |
|
10.07 |
|
(5.9 |
) |
% |
|
|
|
|
|
|
|
|
|
Pacific |
|
|
|
|
|
|
|
|
Revenue
passenger miles (millions) |
|
3,691 |
|
2,974 |
|
24.1 |
|
% |
Available
seat miles (ASM) (millions) |
|
4,569 |
|
3,648 |
|
25.3 |
|
% |
Passenger
load factor (percent) |
|
80.8 |
|
81.5 |
|
(0.7 |
) |
pts |
Yield
(cents) |
|
9.80 |
|
9.68 |
|
1.3 |
|
% |
Passenger
revenue per ASM (cents) |
|
7.92 |
|
7.89 |
|
0.4 |
|
% |
|
|
|
|
|
|
|
|
|
Total International |
|
|
|
|
|
|
|
Revenue
passenger miles (millions) |
|
15,681 |
|
15,829 |
|
(0.9 |
) |
% |
Available
seat miles (ASM) (millions) |
|
20,759 |
|
21,021 |
|
(1.2 |
) |
% |
Passenger
load factor (percent) |
|
75.5 |
|
75.3 |
|
0.2 |
|
pts |
Yield
(cents) |
|
13.29 |
|
13.22 |
|
0.6 |
|
% |
Passenger
revenue per ASM (cents) |
|
10.04 |
|
9.95 |
|
0.9 |
|
% |
|
|
|
|
|
|
|
|
|
(A) Revenue statistics for all
Regional flying are included herein. |
|
|
|
|
|
|
|
|
|
|
Note: Amounts may not recalculate due to
rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 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 measure: - Pre-Tax Income (GAAP Measure) to Pre-Tax
Income Excluding Special Items (non-GAAP Measure) - Pre-Tax Margin
(GAAP Measure) to Pre-Tax Margin Excluding Special Items (non-GAAP
Measure) - Net Income (GAAP Measure) to Net Income Excluding
Special Items (non-GAAP Measure) - Basic and Diluted Earnings Per
Share (GAAP Measure) to Basic and Diluted Earnings Per Share
Excluding Special Items (non-GAAP Measure) - Operating Income (GAAP
Measure) to Operating Income Excluding 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 special items may vary from
period-to-period in nature and amount, the adjustment to exclude
special items allows management an additional tool to better
understand the Company’s core operating performance. Additionally,
the tables below present the reconciliations of mainline, regional
and total operating costs (GAAP measure) to mainline, regional and
total operating costs excluding special items and fuel (non-GAAP
measure). Management uses mainline, regional and total operating
costs excluding 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 aircraft fuel and special items allows
management an additional tool to better understand and analyze the
Company’s non-fuel costs and core operating performance. |
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended March 31, |
|
Percent Change |
|
Reconciliation of Pre-Tax Income Excluding Special
Items |
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
income as reported |
|
$ |
365 |
|
|
$ |
1,117 |
|
|
|
|
Pre-tax special
items: |
|
|
|
|
|
|
|
Special
items, net (1) |
|
|
119 |
|
|
|
99 |
|
|
|
|
Regional
operating special items, net |
|
|
2 |
|
|
|
5 |
|
|
|
|
Nonoperating special items, net (2) |
|
|
5 |
|
|
|
- |
|
|
|
|
Total pre-tax special
items |
|
|
126 |
|
|
|
104 |
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
excluding special items |
|
$ |
491 |
|
|
$ |
1,221 |
|
|
-60 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Pre-Tax Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income as
reported |
|
$ |
365 |
|
|
$ |
1,117 |
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
revenues as reported |
|
$ |
9,624 |
|
|
$ |
9,435 |
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax margin |
|
|
3.8 |
% |
|
|
11.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Pre-Tax Margin Excluding Special
Items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
excluding special items |
|
$ |
491 |
|
|
$ |
1,221 |
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
revenues as reported |
|
$ |
9,624 |
|
|
$ |
9,435 |
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax margin
excluding special items |
|
|
5.1 |
% |
|
|
12.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income Excluding Special
Items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income as reported |
|
$ |
234 |
|
|
$ |
700 |
|
|
|
|
Special items: |
|
|
|
|
|
|
|
Total
pre-tax special items (1) (2) |
|
|
126 |
|
|
|
104 |
|
|
|
|
Net tax
effect of special items |
|
|
(52 |
) |
|
|
(39 |
) |
|
|
|
Net income excluding
special items |
|
$ |
308 |
|
|
$ |
765 |
|
|
-60 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Basic and Diluted Earnings Per Share
Excluding |
|
3 Months Ended March 31, |
|
|
|
Special Items |
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
(in millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
Net income excluding
special items |
|
$ |
308 |
|
|
$ |
765 |
|
|
|
|
|
|
|
|
|
|
|
|
Shares used for
computation (in thousands): |
|
|
|
|
|
|
|
Basic |
|
|
503,902 |
|
|
|
606,245 |
|
|
|
|
Diluted |
|
|
507,797 |
|
|
|
611,488 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
excluding special items: |
|
|
|
|
|
|
|
Basic |
|
$ |
0.61 |
|
|
$ |
1.26 |
|
|
|
|
Diluted |
|
$ |
0.61 |
|
|
$ |
1.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Operating Income Excluding Special
Items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income as reported |
|
$ |
601 |
|
|
$ |
1,335 |
|
|
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
Special
items, net (1) |
|
|
119 |
|
|
|
99 |
|
|
|
|
Regional
operating special items, net |
|
|
2 |
|
|
|
5 |
|
|
|
|
Operating income
excluding special items |
|
$ |
722 |
|
|
$ |
1,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Operating Cost per ASM Excluding
Special |
|
3 Months Ended March 31, |
|
|
|
Items and Fuel - Mainline only |
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses as reported |
|
$ |
9,023 |
|
|
$ |
8,100 |
|
|
|
|
Less regional expenses
as reported: |
|
|
|
|
|
|
|
Fuel |
|
|
(318 |
) |
|
|
(219 |
) |
|
|
|
Other |
|
|
(1,255 |
) |
|
|
(1,213 |
) |
|
|
|
Total mainline
operating expenses as reported |
|
|
7,450 |
|
|
|
6,668 |
|
|
|
|
|
|
|
|
|
|
|
|
Special
items, net (1) |
|
|
(119 |
) |
|
|
(99 |
) |
|
|
|
Mainline operating
expenses, excluding special items |
|
|
7,331 |
|
|
|
6,569 |
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft
fuel and related taxes |
|
|
(1,402 |
) |
|
|
(1,029 |
) |
|
|
|
Mainline operating
expenses, excluding special items and fuel |
|
$ |
5,929 |
|
|
$ |
5,540 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in cents) |
|
|
|
|
|
|
|
|
|
|
|
Mainline operating
expenses per ASM as reported |
|
|
13.17 |
|
|
|
11.58 |
|
|
|
|
|
|
|
|
|
|
|
|
Special
items, net per ASM (1) |
|
|
(0.21 |
) |
|
|
(0.17 |
) |
|
|
|
Mainline operating
expenses per ASM, excluding special items |
|
|
12.96 |
|
|
|
11.41 |
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft
fuel and related taxes per ASM |
|
|
(2.48 |
) |
|
|
(1.79 |
) |
|
|
|
Mainline operating
expenses per ASM, excluding special items |
|
|
|
|
|
|
|
and fuel |
|
|
10.48 |
|
|
|
9.62 |
|
|
|
|
|
|
|
|
|
|
|
|
Note: Amounts
may not recalculate due to rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Operating Cost per ASM Excluding
Special |
|
3 Months Ended March 31, |
|
|
|
Items and Fuel - Regional only |
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
Total regional
operating expenses as reported |
|
$ |
1,573 |
|
|
$ |
1,432 |
|
|
|
|
|
|
|
|
|
|
|
|
Regional
operating special items, net |
|
|
(2 |
) |
|
|
(5 |
) |
|
|
|
Regional operating
expenses, excluding special items |
|
|
1,571 |
|
|
|
1,427 |
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft
fuel and related taxes |
|
|
(318 |
) |
|
|
(219 |
) |
|
|
|
Regional operating
expenses, excluding special items and fuel |
|
$ |
1,253 |
|
|
$ |
1,208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in cents) |
|
|
|
|
|
|
|
|
|
|
|
Regional operating
expenses per ASM as reported |
|
|
20.23 |
|
|
|
19.10 |
|
|
|
|
|
|
|
|
|
|
|
|
Regional
operating special items, net per ASM |
|
|
(0.04 |
) |
|
|
(0.07 |
) |
|
|
|
Regional operating
expenses per ASM, excluding special items |
|
|
20.19 |
|
|
|
19.03 |
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft
fuel and related taxes per ASM |
|
|
(4.09 |
) |
|
|
(2.92 |
) |
|
|
|
Regional operating
expenses per ASM, excluding special items and fuel |
|
|
16.10 |
|
|
|
16.11 |
|
|
|
|
|
|
|
|
|
|
|
|
Note: Amounts
may not recalculate due to rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Operating Cost per ASM Excluding
Special |
|
3 Months Ended March 31, |
|
|
|
Items and Fuel - Total Mainline and Regional |
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses as reported |
|
$ |
9,023 |
|
|
$ |
8,100 |
|
|
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
Special
items, net (1) |
|
|
(119 |
) |
|
|
(99 |
) |
|
|
|
Regional
operating special items, net |
|
|
(2 |
) |
|
|
(5 |
) |
|
|
|
Total operating
expenses, excluding special items |
|
|
8,902 |
|
|
|
7,996 |
|
|
|
|
|
|
|
|
|
|
|
|
Fuel: |
|
|
|
|
|
|
|
Aircraft
fuel and related taxes - mainline |
|
|
(1,402 |
) |
|
|
(1,029 |
) |
|
|
|
Aircraft
fuel and related taxes - regional |
|
|
(318 |
) |
|
|
(219 |
) |
|
|
|
Total operating
expenses, excluding special items and fuel |
|
$ |
7,182 |
|
|
$ |
6,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in cents) |
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses per ASM as reported |
|
|
14.02 |
|
|
|
12.45 |
|
|
|
|
|
|
|
|
|
|
|
|
Special items per
ASM: |
|
|
|
|
|
|
|
Special
items, net (1) |
|
|
(0.18 |
) |
|
|
(0.15 |
) |
|
|
|
Regional
operating special items, net |
|
|
- |
|
|
|
(0.01 |
) |
|
|
|
Total operating
expenses per ASM, excluding special items |
|
|
13.84 |
|
|
|
12.29 |
|
|
|
|
|
|
|
|
|
|
|
|
Fuel per ASM: |
|
|
|
|
|
|
|
Aircraft
fuel and related taxes - mainline |
|
|
(2.18 |
) |
|
|
(1.58 |
) |
|
|
|
Aircraft
fuel and related taxes - regional |
|
|
(0.49 |
) |
|
|
(0.34 |
) |
|
|
|
Total operating
expenses per ASM, excluding special items |
|
|
|
|
|
|
|
and fuel |
|
|
11.16 |
|
|
|
10.37 |
|
|
|
|
|
|
|
|
|
|
|
|
Note: Amounts
may not recalculate due to rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOOTNOTES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
The 2017 first quarter mainline operating special items
totaled a net charge of $119 million, which principally included
$63 million of merger integration expenses and $63 million of fleet
restructuring expenses. The 2016 first quarter mainline operating
special items totaled a net charge of $99 million, which
principally included $104 million of merger integration expenses
and $26 million of fleet restructuring expenses. Merger integration
expenses included costs related to information technology,
professional fees, re-branding of aircraft and airport facilities
and training. Additionally, the 2016 period also included merger
integration expenses related to alignment of labor union contracts,
re-branded uniforms, severance and relocation. Fleet restructuring
expenses driven by the merger included the acceleration of aircraft
depreciation, impairments, remaining lease payments and lease
return costs for aircraft currently grounded or expected to be
grounded earlier than planned. |
|
|
|
|
|
|
|
|
|
|
(2 |
) |
The 2017 first quarter nonoperating special charges primarily
consisted of debt issuance and extinguishment costs associated with
a term loan refinancing. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American Airlines Group
Inc. |
Condensed Consolidated Balance
Sheets |
(In millions) |
(Unaudited) |
|
|
|
|
|
March 31, 2017 |
|
December 31, 2016 |
Assets |
|
|
|
|
|
|
|
Current assets |
|
|
|
Cash |
$ |
374 |
|
|
$ |
322 |
|
Short-term investments |
|
6,302 |
|
|
|
6,037 |
|
Restricted cash and short-term investments |
|
543 |
|
|
|
638 |
|
Accounts
receivable, net |
|
1,397 |
|
|
|
1,594 |
|
Aircraft
fuel, spare parts and supplies, net |
|
1,154 |
|
|
|
1,094 |
|
Prepaid
expenses and other |
|
856 |
|
|
|
639 |
|
Total
current assets |
|
10,626 |
|
|
|
10,324 |
|
|
|
|
|
Operating property and
equipment |
|
|
|
Flight
equipment |
|
38,352 |
|
|
|
37,028 |
|
Ground
property and equipment |
|
7,332 |
|
|
|
7,116 |
|
Equipment
purchase deposits |
|
1,247 |
|
|
|
1,209 |
|
Total
property and equipment, at cost |
|
46,931 |
|
|
|
45,353 |
|
Less
accumulated depreciation and amortization |
|
(14,640 |
) |
|
|
(14,194 |
) |
Total
property and equipment, net |
|
32,291 |
|
|
|
31,159 |
|
|
|
|
|
Other assets |
|
|
|
Goodwill |
|
4,091 |
|
|
|
4,091 |
|
Intangibles, net |
|
2,236 |
|
|
|
2,173 |
|
Deferred
tax asset |
|
1,379 |
|
|
|
1,498 |
|
Other
assets |
|
2,004 |
|
|
|
2,029 |
|
Total
other assets |
|
9,710 |
|
|
|
9,791 |
|
|
|
|
|
Total
assets |
$ |
52,627 |
|
|
$ |
51,274 |
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
Current
maturities of long-term debt and capital leases |
$ |
1,714 |
|
|
$ |
1,855 |
|
Accounts
payable |
|
1,882 |
|
|
|
1,592 |
|
Accrued
salaries and wages |
|
1,064 |
|
|
|
1,516 |
|
Air
traffic liability |
|
5,298 |
|
|
|
3,912 |
|
Loyalty
program liability |
|
3,056 |
|
|
|
2,789 |
|
Other
accrued liabilities |
|
2,272 |
|
|
|
2,208 |
|
Total
current liabilities |
|
15,286 |
|
|
|
13,872 |
|
|
|
|
|
Noncurrent
liabilities |
|
|
|
Long-term
debt and capital leases, net of current maturities |
|
22,829 |
|
|
|
22,489 |
|
Pension
and postretirement benefits |
|
7,808 |
|
|
|
7,842 |
|
Deferred
gains and credits, net |
|
494 |
|
|
|
526 |
|
Other
liabilities |
|
2,753 |
|
|
|
2,760 |
|
Total
noncurrent liabilities |
|
33,884 |
|
|
|
33,617 |
|
|
|
|
|
Stockholders'
equity |
|
|
|
Common
stock |
|
5 |
|
|
|
5 |
|
Additional paid-in capital |
|
6,726 |
|
|
|
7,223 |
|
Accumulated other comprehensive loss |
|
(5,097 |
) |
|
|
(5,083 |
) |
Retained
earnings |
|
1,823 |
|
|
|
1,640 |
|
Total
stockholders' equity |
|
3,457 |
|
|
|
3,785 |
|
|
|
|
|
Total
liabilities and stockholders’ equity |
$ |
52,627 |
|
|
$ |
51,274 |
|
|
|
|
|
|
|
|
|
Corporate Communications
817-967-1577
mediarelations@aa.com
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