Category Archives: American Airlines Group

American’s Doug Parker and Robert Isom issue a letter to the employees on pay

Fellow Team Members:

Today, we are excited to make an announcement that reinforces our commitment to building a foundation of trust at American.

When we merged, we committed that American Airlines team members would be compensated in line with their peers at other airlines. Committing to “pay in line with our peers” is difficult to define in an industry like ours with complex contracts and work rules. American generally has contractual work rules and scope clauses that require us to employ more team members than our competitors, and those add costs to the airline. But we also know that base pay rates are a very visible and meaningful indicator of relative compensation, so we set out to meet our commitment by setting American’s base pay rates at the top of the industry.

With each joint collective bargaining agreement (JCBA) reached, our team has had the highest pay rates in the industry at the time of the signing. For groups who have not reached a joint contract yet, like those represented by the TWU-IAM Association, we implemented pay increases providing the highest average hourly pay rates in the business, even though the other terms of the JCBA have not been resolved yet. These actions have increased the average pay per represented team member by more than 39 percent in the three years since our merger closed.

But as our industry has rapidly evolved and pay increases at other airlines have accelerated, some of our colleagues have fallen behind their peers at other airlines in base pay rates. And, unless their current contracts are modified, they’ll remain far behind for more than two years. Two groups specifically fall into this category today: Our pilots and flight attendants both ratified new five-year contracts in late 2014/early 2015, well in advance of some significant pay increases at our two largest competitors. Today our pilot hourly pay rates are approximately 8 percent lower than the industry’s highest rates, and our flight attendants’ hourly pay rates are approximately 4 percent lower. Absent any action, these gaps would remain at similar levels until those contracts become amendable in December 2019 for flight attendants and January 2020 for pilots.

This doesn’t feel right for the new American, and it doesn’t feel consistent with our commitment. As one of our pilots said after a recent town hall, “We all understood that we would be leapfrogged by other carriers mid-contract, but no one expected this. It is just too much for too long.”

We agree. While the commitment was met when the contract was signed, we never anticipated this large of a gap for this long a period, and we don’t like that it exists, contract or not. Therefore we intend to work with the unions to adjust the hourly base pay rates of all American pilots and flight attendants to levels that are equal to the highest rates currently in place at either Delta or United. We cannot unilaterally implement these increases – APA and APFA must agree to any contractual changes. Because we are not requesting other contractual changes, we do not expect disagreement. If they agree, these changes could be effective as soon as the May crew bid period.

The rest of our contract team members are not affected at this time, either because your pay rates remain at or near industry-leading levels, as they were at the time your JCBAs were reached, or in the case of the TWU-IAM Association, we are still negotiating a JCBA. Specifically for those negotiations, in recent weeks we’ve had productive executive sessions in Washington, D.C., with the assistance of a federal facilitator. And when those talks conclude, our contractual base pay rates will be industry-leading. Regarding our non-contract team members, we assess the market annually and attempt to ensure our compensation is always in line with our competitors, including airlines and other large companies.

But make no mistake: This is a program for everyone at American and these adjustments reflect a real philosophical change that is an important trait of the new American. As we move forward, if we see sizable discrepancies in pay rates between our team members and other major airlines and our contracts are still years away from their amendable dates, we will work to address those discrepancies. Today’s news is not about buying trust because we all know trust cannot be purchased.

Today’s news is about doing the right thing and doing so not because we are contractually required to or because we are locked in a contentious contractual battle. We must continue moving past the days of discontent as we build a new American where team members trust each other and work together with our customers’ care in mind.

We also know pay does not build culture – we have made great progress there but have more work ahead and we must continue to work together to improve the lives of our frontline team members. That work will continue. Today’s action is an important step along that path and we are pleased to be part of an organization that has the courage to take steps like this. We thank the American Airlines Board of Directors and our investors for their long- term focus and their appreciation of the value of supporting our team.

Most importantly, thanks to each of you for all you do for American. Our customers are counting on us to validate the trust they place in us each time they step onboard one of our aircraft. Thanks to the greatest, most professional team in the business, they are always in good hands. It is an honor to work with and for each of you.

Doug Parker Robert Isom Chairman and CEO President

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American’s Envoy Air, Piedmont and PSA offer a $15,000 signing bonus for new pilots

American Eagle (2nd)-PSA Airlines (2nd) Bombardier CRJ900 (CL-600-2D24) N576NN (msn 15367) CLT (Jay Selman). Image: 403064.

The three regional airline subsidiaries of American Airlines Group are all offering a $15,000 signing bonus for new pilots:

Envoy Air issued this statement:

Envoy Air Inc., a wholly owned subsidiary of American Airlines Group (AAL), now offers new hire pilots a $15,000 bonus when they join the company.

Through its industry-leading flow-through agreement with American Airlines, Envoy offers pilots a guaranteed path to American Airlines without having to interview again – or compete with the thousands of pilots who apply to American every year. Envoy pilots currently make up half of every American Airlines new hire class – in fact, nearly two thirds of American new hires since 2010 started their career at Envoy.

Piedmont Airlines (2nd) issued this statement:

Piedmont Airlines, a wholly owned subsidiary of the American Airlines Group Inc. (AAL), will pay a $15,000 signing bonus to all new hire pilots, effective immediately. Piedmont employees will also collect $5,000 for every pilot they refer to the airlines.

Pilots who come to Piedmont enjoy a generous benefits package including excellent health care and 401(k) with company match. Piedmont provides hotel rooms for commuting pilots and industry-leading flight benefits on American Airlines.

Piedmont employees can earn some cash, too. Employees who refer a pilot to the company will collect $5,000 if their pilot is hired, passes training and stays with the company for six months. “It’s a great opportunity for all of our employees to participate in our recruiting efforts,” Hogg said. “Any employee can recommend a friend or family member pilot through our Human Resources department and get rewarded with a bonus for doing so. It now means we have 7,000 people recruiting for Piedmont Airlines, and that’s exciting.”

Piedmont plans to hire more than 200 pilots in 2016. Piedmont will hold pilot information sessions and on-site interviews at Philadelphia International Airport on June 17; in Newark, N.J. (Newark Airport Marriott) on June 23 and in New York City (JFK Courtyard Marriott) on June 24. Details are available online at Piedmont-airlines.com.

PSA Airlines (2nd) issued this statement:

PSA Airlines has announced an important enhancement to its pilot recruiting platform by rolling out a $15,000 sign-on bonus for all new-hire pilots. This valuable improvement enriches PSA’s existing top-notch employment opportunities which already offer the highest quality of life in the regional industry and the only true seniority-based pilot flow through program to American Airlines (AAL).

In addition to today’s expanded pilot bonus program, PSA will also be enhancing the value of its employee referral program for pilots by increasing the payout from $1,000 to $5,000 for eligible participants and aims to further reward current employees as ambassadors for the company to attract the best and brightest future aviators. Employee referrals are an important part of pilot recruitment and with this increase, PSA will be materially compensating its workforce for helping identify and onboard future pilot colleagues.

The long-term stability, unmatched career opportunities and quality of life at PSA is something few regional carriers can match. With a young and efficient fleet – including more than 50 brand-new large regional jets, a sustainable cost advantage versus competitors and the experience as a reliable provider of service, PSA is an airline that will remain a vitally important regional provider for American.

PSA is building on the success of its sustained pilot recruitment initiatives, including these two enhanced programs announced today. Earlier this year, the airline implemented an industry-leading Cadet Program which helps the most promising future pilots make a smooth transition from the classroom at top colleges, universities and flight schools to the cockpit and offers various levels of support as the Cadet’s certifications, training and experience evolves.

Copyright Photo: American Eagle (2nd)-PSA Airlines (2nd) Bombardier CRJ900 (CL-600-2D24) N576NN (msn 15367) CLT (Jay Selman). Image: 403064.

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American to add six American Eagle routes

American Eagle Airlines (2nd)-Republic Airlines (2nd) Embraer ERJ 170-200LR (ERJ 175) N115HQ (msn 17000182) CLT (Jay Selman). Image: 402723.

American Airlines Group (Dallas/Fort Worth) on April 5, 2016 is adding six new daily American Eagle-branded routes per Airline Route:

Charlotte – Madison (CRJ700s, PSA Airlines)

Chicago (O’Hare) – Norfolk (CRJ700s, Envoy Air)

Chicago (O’Hare) – Providence (CRJ700s, Envoy Air)

New York (LaGuardia) – Kansas City (ERJ 170s, Republic Airlines)

Washington (Reagan National) – Cleveland (CRJ200s, Air Wisconsin)

Washington (Reagan National) – Minneapolis/St. Paul (ERJ 170/175s, Republic Airlines)

Copyright Photo: Jay Selman/AirlinersGallery.com. Republic Airlines’ (2nd) Embraer ERJ 170-200LR (ERJ 175) N115HQ (msn 17000182) departs from the Charlotte hub.

American Eagle-Republic aircraft slide show: AG Airline Slide Show

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American Airlines Group reports the highest quarterly profit in company history

 

 

American Airlines Group Inc. (American Airlines) (Dallas/Fort Worth) today reported its third quarter 2015 results:

American Airlines Group logo

  • Reported record quarterly net profit of $1.9 billion excluding net special charges, a 54 percent increase versus the third quarter 2014. This is the highest quarterly profit in the Company’s history
  • Reported quarterly GAAP net profit of $1.7 billion, an 80 percent increase versus last year’s third quarter
  • Repurchased $1.56 billion of common stock, or 38.4 million shares, during the third quarter and authorized a new $2.0 billion share repurchase program to be completed by the end of 2016
  • Passed a critical merger milestone earlier this week by successfully integrating its passenger reservations system with no operational impact

American Airlines Group’s third quarter 2015 net profit, excluding net special charges, was a record $1.9 billion, or $2.77 per diluted share versus a third quarter 2014 net profit excluding net special charges of $1.2 billion, or $1.66 per diluted share. This is the highest quarterly profit in the Company’s history. The Company’s third quarter 2015 pretax margin excluding net special charges was a record 17.7 percent, up 6.7 percentage points from the same period last year.

On a GAAP basis, the Company reported a net profit of $1.7 billion, or $2.49 per diluted share. This compares to a GAAP net profit of $942 million in the third quarter 2014, or $1.28 per diluted share.

The Company continues to make significant investments in the airline through its extensive fleet renewal program, giving it the youngest fleet of the U.S. network airlines. In the third quarter, the Company took delivery of 16 new mainline and 15 new regional aircraft and retired 36 mainline and nine regional aircraft.

In the third quarter, the Company recognized $192 million in net special charges, including:

  • $165 million in operating special charges, primarily including $198 million in merger related integration expenses and a $38 million special charge in connection with the Company’s dissolution of its Texas Aero Engine Service joint venture. These charges were offset in part by a $66 million credit related to proceeds received from a legal settlement
  • $21 million in nonoperating special charges, principally related to non-cash write offs of unamortized debt discount and debt issuance costs associated with the remarketing of the special facility revenue bonds discussed above
  • $6 million in tax special charges related to certain indefinite-lived assets

Read the full report: CLICK HERE

Copyright Photo: Michael B. Ing/AirlinersGallery.com. American is gradually phasing out its aging McDonnell Douglas DC-9-82s and DC-9-83s including some that have been donated to aviation schools. The MD-80s are expected to be gone by late 2017. None will be repainted in the new 2013 flag livery. Ex-TWA DC-9-83 (MD-83) N965TW (msn 53615) departs from Los Angeles International Airport (LAX).

American Airlines aircraft slide show (current livery): AG Airline Slide Show

American Airlines aircraft slide show (historic liveries): AG Airline Slide Show

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American Airlines Group reports its highest quarterly profit in company history

American Airlines Group (American Airlines and US Airways) today (July 24) issued this financial statement for the second quarter:

American Airlines Group logo

American Airlines Group Inc. (AAL) today reported its second quarter 2015 results.

  • Reported record quarterly net profit of $1.9 billion excluding net special charges, a 27 percent increase versus the second quarter 2014
  • Reported record quarterly GAAP net profit of $1.7 billion, a 97 percent increase versus last year’s second quarter
  • Repurchased over $750 million of common stock and authorized an additional $2 billion share repurchase program
  • Declared a dividend of $0.10 per share to be paid on August 24, 2015, to shareholders of record as of August 10, 2015

American Airlines Group’s second quarter 2015 net profit, excluding net special charges, was a record $1.9 billion, or $2.62 per diluted share versus a second quarter 2014 net profit excluding net special charges of $1.5 billion, or $1.98 per diluted share. The Company’s second quarter 2015 pretax margin excluding net special charges was a record 17.2 percent, up 4.4 percentage points from the same period last year.

On a GAAP basis, the Company reported a record net profit of $1.7 billion, or $2.41 per diluted share. This compares to a GAAP net profit of $864 million in the second quarter 2014, or $1.17 per diluted share.

See the accompanying notes in the Financial Tables section of this press release for further explanation, including a reconciliation of GAAP to non-GAAP financial information.

“Reporting the highest quarterly profit in our history is another indication that our team is on the path to restoring American as the greatest airline in the world,” said Chairman and CEO Doug Parker. “These results are especially remarkable considering the significant and successful work underway to integrate two airlines. The more than 100,000 dedicated team members of American Airlines are doing a phenomenal job and we are grateful for their commitment to our customers.”

Revenue and Cost Comparisons

Total revenue in the second quarter was $10.8 billion, a decrease of 4.6 percent versus the second quarter 2014 on a 1.9 percent increase in total available seat miles (ASMs). Consolidated passenger revenue per ASM (PRASM) was 13.57 cents, down 6.9 percent versus the second quarter 2014. Consolidated passenger yield was 16.28 cents, down 6.1 percent year-over-year.

Total operating expenses in the second quarter were $8.9 billion, a decrease of 10.5 percent compared to the second quarter 2014, due primarily to a 36.9 percent decrease in consolidated fuel expense. Second quarter mainline cost per available seat mile (CASM) was 11.87 cents, down 12.8 percent on a 1.5 percent increase in mainline ASMs versus the second quarter 2014. Excluding net special charges and fuel, mainline CASM was 8.77 cents, up 2.5 percent compared to the second quarter 2014. Regional CASM excluding special charges and fuel was 16.02 cents, up 1.4 percent on a 5.5 percent increase in regional ASMs versus the second quarter 2014.

Cash and Investments

As of June 30, 2015, the Company had approximately $9.7 billion in total cash and short-term investments, of which $747 million was restricted. The Company also had an undrawn revolving credit facility of $1.8 billion.

American continues to invest in its product. As part of an extensive fleet renewal plan that has made American’s fleet the youngest of any U.S. network airline, the Company expects to spend $5.4 billion on new aircraft this year. During the second quarter, the Company took delivery of 24 new mainline aircraft and nine new regional aircraft and retired 34 older mainline and eight older regional aircraft. In addition to this fleet renewal program, American is in the midst of investing $2 billion to further enhance its product, including improvements to aircraft interiors, international Wi-Fi connectivity and upgrades to its Admirals Club lounges.

In the second quarter, the Company returned $823 million to its shareholders through the payment of $70 million in quarterly dividends and the repurchase of $753 million of common stock, or 17.3 million shares, at an average price of $43.53 per share. When combined with the dividends and shares repurchased during the first quarter, the Company has returned approximately $1.1 billion to its shareholders in the first half of 2015, including $943 million of shares repurchased under the existing $2 billion share repurchase program approved in January 2015.

Due to the Company’s strong financial performance, its projected cash flow and the repurchase activity to date, the American Airlines Group Board of Directors has authorized an additional $2 billion share repurchase program to be completed by December 31, 2016. This brings the total amount of share repurchase programs authorized in 2015 to $4 billion. The Company also declared a dividend of $0.10 per share to be paid on August 24, 2015, to shareholders of record as of August 10, 2015.

Share repurchases under the share repurchase 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.

Approximately $629 million of the Company’s unrestricted cash and short-term investment balance was held in Venezuelan bolivars. This balance includes approximately $621 million valued at 6.3 bolivars per U.S. dollar and approximately $8 million valued at 12.8 bolivars per U.S. dollar, with the rate depending on the date the Company submitted its repatriation request to the Venezuelan government. These rates are materially more favorable than the exchange rates currently prevailing for other transactions conducted outside of the Venezuelan government’s currency exchange system.

During 2014, the Company significantly reduced capacity in the Venezuelan market and is no longer accepting bolivars as payment for airline tickets. The Company is monitoring this situation closely and continues to evaluate its holdings of Venezuelan bolivars for additional foreign currency losses or other accounting adjustments, which could be material, particularly in light of the additional uncertainty posed by the recent changes to the foreign exchange regulations and the continued deterioration of economic conditions in Venezuela. More generally, fluctuations in foreign currencies, including devaluations, cannot be predicted by the Company and can significantly affect the value of its assets located outside the United States. These conditions, as well as any further delays, devaluations or imposition of more stringent repatriation restrictions, may materially adversely affect the Company’s business, results of operations and financial condition.

Special Items

In the second quarter, the Company recognized $150 million in net special charges, including:

  • $231 million in merger related integration expenses, including $221 million in mainline special charges and $10 million in regional special charges
  • $77 million in net special credits, including a $68 million credit for bankruptcy related items, principally consisting of fair value adjustments for bankruptcy settlement obligations
  • $11 million non-operating net special credits comprised of a $22 million gain associated with the sale of an investment, offset in part by $11 million in charges principally related to non-cash write offs of unamortized debt discount and debt issuance costs associated with refinancing the Company’s secured term loan facilities
  • $7 million in tax special charges related to certain indefinite-lived intangible assets

Notes:

(1) The 2015 second quarter mainline operating special items totaled a net charge of $144 million, which principally included $221 million of merger integration expenses related to information technology, professional fees, severance, share-based compensation, fleet restructuring, re-branding of aircraft and airport facilities, relocation and training. These charges were offset in part by a net $68 million credit for bankruptcy related items primarily consisting of fair value adjustments for bankruptcy settlement obligations. The 2015 six month period mainline operating special items totaled a net charge of $447 million, which principally included $437 million of merger integration expenses as described above and a net $99 million charge related to the Company’s new pilot joint collective bargaining agreement. These charges were offset in part by a net $73 million credit for bankruptcy related items primarily consisting of fair value adjustments for bankruptcy settlement obligations.

The 2014 second quarter mainline operating special items totaled a net charge of $251 million, which principally included $163 million of merger integration expenses related to information technology, professional fees, severance, share-based compensation, re-branding of aircraft and airport facilities, relocation and training as well as a net $38 million charge for bankruptcy related items primarily consisting of fair value adjustments for bankruptcy settlement obligations and $37 million in charges related to the buyout of leases associated with certain aircraft. The 2014 six month period mainline operating special items totaled a net charge of $114 million, which principally included $365 million of merger integration expenses, $40 million in charges primarily related to the buyout of leases associated with certain aircraft and a net $5 million charge for bankruptcy related items, all as described above. These charges were offset in part by a $309 million gain on the sale of Slots at Ronald Reagan Washington National Airport.

(2) The 2015 and 2014 second quarter and six month period regional operating special items principally related to merger integration expenses.

(3) The 2015 second quarter nonoperating special items totaled a net credit of $11 million and primarily included a $22 million gain associated with the sale of an investment, offset in part by $11 million in charges principally related to non-cash write offs of unamortized debt discount and debt issuance costs associated with refinancing the Company’s secured term loan facilities. The 2015 six month period nonoperating special items totaled a net credit of $19 million and principally included the $22 million gain associated with the sale of an investment as described above and a $17 million early debt extinguishment gain associated with the repayment of American’s AAdvantage loan with Citibank. These special credits were offset in part by $20 million in charges principally related to non-cash write offs of unamortized debt discount and debt issuance costs associated with the debt refinancing as described above and the prepayment of certain aircraft financings.

The 2014 second quarter and six month period nonoperating special items were primarily due to non-cash interest accretion of $2 million and $33 million, respectively, on bankruptcy settlement obligations.

(4) The 2015 second quarter and six month period tax special items were the result of a non-cash deferred income tax provision related to certain indefinite-lived intangible assets.

During the 2014 second quarter, the Company sold its portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. In connection with this sale, the Company recorded a special non-cash tax provision of $330 million in the second quarter of 2014 that reversed the non-cash tax provision which was recorded in other comprehensive income (OCI), a subset of stockholders’ equity, principally in 2009. This provision represents the tax effect associated with gains recorded in OCI principally in 2009 due to a net increase in the fair value of the Company’s fuel hedging contracts. In accordance with Generally Accepted Accounting Principles, the Company retained the $330 million tax provision in OCI until the last contract was settled or terminated. In addition, the Company recorded a special $7 million non-cash deferred income tax provision related to certain indefinite-lived intangible assets in the 2014 second quarter. The 2014 six month period included the $330 million non-cash tax provision related to the settlement of fuel hedges discussed above as well as a special $15 million non-cash deferred income tax provision related to certain indefinite-lived intangible assets.

Read the full report: CLICK HERE

Copyright Photo: Ken Petersen/AirlinersGallery.com. American Airlines and US Airways are already operating under a single AOC. However the last US-coded flight will be flight US 434, a red-eye flight from San Francisco to Philadelphia, on October 17, 2015. After that date, all mainline flights will operate under the AA code. Former US Airways Airbus A319-112 N741UW (msn 1269), operated under the US code but now painted in American’s new 2013 livery, approaches the runway at Raleigh-Durham International Airport (RDU).

American Airlines (current livery only): AG Airline Slide Show

US Airways aircraft slide show: AG Airline Slide Show

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AFA union calls on American CEO Doug Parker to “treat all employees equally”

Association of Flight Attendants (AFA) has issued this statement about the recent flight attendant base closures of Envoy Air in Los Angeles, Miami, San Juan and now New York City. Envoy Air has been shrinking in size, both in the number of bases and employees. Here is the full statement by AFA:

AFA Logo

Flight Attendant leaders from 18 airlines, representatives of the Association of Flight Attendants-CWA, AFL-CIO (AFA), unanimously adopted a resolution in support of Envoy Air Flight Attendants. Envoy is a wholly owned subsidiary of the American Airlines Group (AAG). The AFA Flight Attendant leaders from across the aviation industry called on American CEO Doug Parker and Envoy Air President Pedro Fabregas to work with AFA to mitigate the impact of several Flight Attendant base closures on the hard-working Envoy Flight Attendants.

“Closures in Los Angeles, Miami, San Juan, and now New York City have displaced hundreds of Flight Attendants, uprooted them from their families and friends, and without any consideration from the AAG management team,” said Envoy AFA MEC President Robert Barrow. “We’re calling on American CEO Doug Parker and Envoy President Pedro Fabregas to act in the best interest of the airline and its dedicated employees by providing reasonable opportunities for Flight Attendants at Envoy Air.”

AAG is making record setting profits, but yet refuses to honor their frontline employees’ contributions to the success of the Envoy operation. While Doug Parker announced a 4% wage increase for Flight Attendants and other employees working American’s mainline operation, the Flight Attendants serving the same passengers for American Eagle at Envoy have been asked for cuts from their contract.

“At our board meeting last week, we passed a resolution in solidarity with our sisters and brothers at Envoy Air,” said AFA International President Sara Nelson. “With our union’s backing, we’re calling for equal treatment, an option of a Voluntary Separation Package, and that management stop their heavy-handed actions towards employees and their hard-earned collective bargaining rights.”

As the world’s largest Flight Attendant union, AFA supports Flight Attendants, as well as Flight Attendants around the world, in their fight to secure fair and equitable working conditions.

“Mr. Fabregas says he’s working to minimize the impact on Flight Attendants following the base closures, but true leadership would result in making good on that statement in a way that is meaningful to Envoy Air’s first responders – its Flight Attendants,” said Barrow.

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