Category Archives: American Airlines

American Airlines Group reports fourth quarter and full-year 2019 profit

American Airlines Group Inc. today reported its fourth-quarter and full-year 2019 financial results, including these highlights:

  • Fourth-quarter 2019 earnings were $0.95 per diluted share. Excluding net special items1, earnings were $1.15 per diluted share, up 19% year over year.
  • Full-year 2019 earnings were $3.79 per diluted share. Excluding net special items2, earnings were $4.90 per diluted share, up 8% year over year.
  • Accrued $213 million for the company’s profit-sharing program in 2019, including $74 million in the fourth quarter.
  • Returned $1.3 billion to shareholders in the form of dividends and share repurchases in 2019.

“During the fourth quarter, we made important progress to address the issues that impacted our business in 2019, and, thanks to our incredible team, we ended the year with our strongest operational quarter on record,” said American Airlines Chairman and CEO Doug Parker.

“While our results for the quarter reflect this progress, we know there is more work to be done. Looking to 2020, we are focused on three key areas. First, we will continue to deliver operational excellence and build on our strong fourth-quarter results. Our team has done a tremendous job, and we will keep driving improvement in key operational metrics in the year ahead. Second, we will deliver those results while growing where we have a competitive advantage in our most profitable hubs. And third, these initiatives combined with our capital plan will enable us to drive significant free cash flow in 2020 and beyond.”

Fourth-Quarter Revenue and Expenses

Pre-tax earnings were $571 million in the fourth quarter of 2019. Pre-tax earnings excluding net special items for the fourth quarter of 2019 were $679 million, a $90 million increase from the fourth quarter of 2018, or 15.1% year-over-year increase from the same period last year.

GAAP Non-GAAP1 GAAP Non-GAAP2
4Q19 4Q18 4Q19 4Q18 FY19 FY18 FY19 FY18
Operating income ($ mil) 729 571 876 749 3,065 2,656 3,706 3,449
Pre-tax income ($ mil) 571 394 679 589 2,256 1,884 2,900 2,790
Pre-tax margin 5.0% 3.6% 6.0% 5.4% 4.9% 4.2% 6.3% 6.3%
Net income ($ mil) 414 325 502 448 1,686 1,412 2,179 2,117
Earnings per diluted share $0.95 $0.70 $1.15 $0.97 $3.79 $3.03 $4.90 $4.55

Continued strength in passenger demand and a record passenger load factor drove a 3.4% year-over-year increase in fourth-quarter 2019 total revenue to a record $11.3 billion. Driven by a 2.4% increase in passenger load factor, passenger revenue per available seat mile (PRASM) grew 0.9% to 14.72 cents, a record for the fourth quarter. Cargo revenue was down 18.3% to $216 million due primarily to a 15.6% decline in cargo volume. Other revenue was up 5.4% to $750 million due primarily to higher loyalty revenue. Fourth-quarter total revenue per available seat mile (TRASM) increased by 0.5% compared to the fourth quarter of 2018 on a 2.9% increase in total available seat miles.

Total fourth-quarter 2019 operating expenses were $10.6 billion, up 2.1% year over year, driven primarily by higher salaries and benefits, maintenance, and regional expenses. Total fourth-quarter 2019 cost per available seat mile (CASM) was 15.06 cents, down 0.8% from fourth-quarter 2018. Excluding fuel and net special items, consolidated fourth-quarter CASM was 11.59 cents, up 2% year over year.1

2020 Priorities

In 2020, American is focused on operational excellence, efficient and profitable growth, and generating significant free cash flow.

  • Operational excellence: Running a reliable operation is a significant driver of customers’ likelihood to recommend and American’s goal to become customers’ airline of choice.
  • Efficient and profitable growth: Grow in high-revenue markets that produce at or above average unit revenues, largely due to new gates in Dallas-Fort Worth and Charlotte, North Carolina.
  • Generating significant free cash flow3: Use free cash flow to naturally de-lever the company’s balance sheet and return capital to American’s shareholders.

Operational Excellence

Over the past several months, American’s operational performance has shown significant improvement, including the company’s best-ever performance for both the holiday peak travel period and the entire fourth quarter of 2019. American achieved record results for combined mainline and regional on-time departures, on-time arrivals and completion factor.

“We are very pleased with the trajectory of our operation and are well on our way to delivering operational excellence,” said American Airlines President Robert Isom. “As we look ahead to 2020, we will continue to strengthen our operation and expect to see continued improvements in our reliability metrics.”

Efficient and Profitable Growth

American is committed to growing its network efficiently and profitably. In 2019, the company added 15 new gates at Dallas Fort Worth International Airport. This growth resulted in a 21% increase in city pairs served and strong unit revenue. The company also added four new gates at Charlotte Douglas International Airport, with plans for three additional gates beginning in 2020. In addition, the company expects to upgauge 14 gates at Ronald Reagan Washington National Airport with dual-class regional jets when the new regional concourse opens in 2021.

Significant Free Cash Flow, Share Repurchases and Dividends

With American’s historic fleet renewal program winding down, the company’s level of capital investment is expected to decline. The company is committed to generating significant free cash flow for its shareholders in 2020 and beyond and presently expects to generate approximately $6 billion in free cash flow3 over the next two years.

In the fourth quarter of 2019, American returned $285 million to shareholders through the repurchase of 9.9 million shares of common stock and also paid $44 million in dividends. As of Dec. 31, 2019, the company had $565 million remaining of its existing $2 billion share repurchase authorization.4 In aggregate, American has returned more than $13.5 billion to shareholders over the past five years through share repurchases and dividends, including $1.3 billion in 2019.

American declared a dividend of $0.10 per share to be paid Feb. 19, 2020, to stockholders of record as of Feb. 5, 2020.

Fleet Update

On March 13, 2019, a directive from the Federal Aviation Administration grounded all U.S.-registered Boeing 737 MAX aircraft. American’s fleet currently includes 24 MAX aircraft with an additional 76 aircraft on order. As a result of this directive, American canceled approximately 10,000 flights in the fourth quarter of 2019.

The company has removed all MAX flying from its flight schedule through June 3, 2020, and will continue to asses this timeline.

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.

1 In the fourth quarter of 2019, the company recognized $108 million in net special items before the effect of income taxes. The 2019 fourth quarter mainline operating special items, net principally included $85 million of merger integration expenses and $39 million of fleet restructuring expenses. These were partially offset by nonoperating net special items of $39 million primarily related to mark-to-market net unrealized gains associated with certain equity and other investments.
2 For the full year 2019, the company recognized $644 million in net special items before the effect of income taxes. Total operating special items totaled a net charge of $641 million, which principally included $271 million of fleet restructuring expenses, a $213 million non-cash impairment charge principally related to the planned retirement of the company’s Embraer E190 fleet, and $191 million of merger integration expenses, offset in part by a $53 million credit to reduce certain litigation reserves. The company also recognized $3 million of nonoperating net special items.
3 Free cash flow is defined as operating cash flow minus total capital expenditures plus proceeds from sale-leaseback transactions.
4 Share repurchases under the company’s repurchase programs 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 that may be made from time to time will be subject to market and economic conditions, applicable legal requirements and other relevant factors. The company is not obligated to repurchase any specific number of shares and its repurchase of AAG common stock may be limited, suspended or discontinued at any time at its discretion and without prior notice.
5 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.

 

American’s Miami hub reaches record passenger numbers in 2019

In 2019, American Airlines set new records at its hub at Miami International Airport (MIA). Last year the airline carried a record 30.3 million passengers through MIA, marking an increase of 1.7% compared to the previous year.

“For the first time since establishing the Miami hub 30 years ago, we transported more than 30 million passengers,” said Juan Carlos Liscano, Vice President – Miami Hub Operations. “We also had a record operational performance at MIA with our best baggage handling numbers as well as our second best on-time performance in our history, all impressive metrics that highlight our focus on operational excellence.

“Our more than 13,000 team members at MIA are already hard at work ready to set new records, just earlier this month achieving our best holiday performance in our history. We look forward to another record-breaking year in 2020.”

The airline operates more than 340 daily flights from MIA to nearly 130 destinations, including service to more than 80 cities across Latin America and the Caribbean.

American’s hub at MIA, the airline’s largest international gateway, has continued strengthening its footprint in Latin America and the Caribbean since being established 30 years ago and will continue its growth in 2020. Set to begin this year are additional frequencies to Lima, Peru (LIM); Santiago, Chile (SCL), and São Paulo, Brazil (GRU).

American is a critically important economic engine for Miami and South Florida. The airline is the third-largest private employer in Miami-Dade County with an annual payroll of $1.8 billion, contributing more than $21.8 billion annually to South Florida’s economy.

American Airlines adds flights to Miami for the Super Bowl

American Airlines Boeing 737-823 WL N841NN (msn 30914) MIA (Bruce Drum). Image: 105229.

American Airlines, Miami’s hometown airline and the largest carrier serving Miami International Airport (MIA), is adding special flights from Kansas City, Missouri (MCI), and San Francisco (SFO) and San Jose (SJC), California, for football fans to cheer on their favorite teams at the big game. American has also added larger aircraft — Boeing 777-200s — from its hubs in New York (JFK), Dallas-Fort Worth (DFW), Los Angeles (LAX) and Chicago (ORD) to accommodate additional traffic to Miami for the game.

American operates more than 340 daily flights to nearly 130 destinations from MIA, and last year connected more than 30 million passengers through the hub. As the airline’s premier gateway into Latin America and the Caribbean, American provides service to more than 70 cities in the region.

Departure City Arrival City Date Departure Time Arrival Time Aircraft
Kansas City, Missouri (MCI) Miami (MIA) Jan. 31 9:05 a.m. 1:13 p.m. Boeing 757
11:50 a.m. 3:50 p.m. 737-800
5:45 p.m. 9:44 p.m. 757
8:05 p.m. 12:03 a.m. (next day) 737-800
Departure City Arrival City Date Departure Time Arrival Time Aircraft
MIA MCI Feb. 3 8 a.m. 10:27 a.m. 737-800
10:45 a.m. 1:20 p.m. 757
4:25 p.m. 6:51 p.m. 737-800
5:45 p.m. 8:15 p.m. 757

 

Departure City Arrival City Date Departure Time Arrival Time Aircraft
San Jose (SJC) MIA Jan. 31 8:15 a.m. 4:41 p.m. Airbus A321
10:10 p.m. 6:28 a.m. (next day) A321
San Francisco (SFO) 11 a.m. 7:38 p.m. 737-800
Departure City Arrival City Date Departure Time Arrival Time Aircraft
SFO MIA Feb. 1 1:30 a.m. 10 a.m. 737-800
9:45 a.m. 6:18 p.m. 767
Departure City Arrival City Date Departure Time Arrival Time Aircraft
MIA SFO Feb. 3 8 a.m. 11:24 a.m. A321
10:10 p.m. 1:38 a.m. (next day) A321
SJC 8 a.m. 11:24 a.m. A321
5:45 p.m. 9:08 p.m. A321

Top Copyright Photo: American Airlines Boeing 737-823 WL N841NN (msn 30914) MIA (Bruce Drum). Image: 105229.

American Airlines aircraft photo gallery (Airbus):

American Airlines aircraft slide show (Airbus):

American Airlines provides an update on the Boeing 737 MAX

American Airlines made this announcement:

Based on the latest guidance, American Airlines anticipates that the resumption of scheduled commercial service on American’s fleet of Boeing 737 MAX aircraft will occur June 4, 2020.

American Airlines remains in continuous contact with the Federal Aviation Administration, Department of Transportation and Boeing. Based on the latest guidance, the airline anticipates that the resumption of scheduled commercial service on American’s fleet of Boeing 737 MAX aircraft will occur June 4, 2020.

Once the aircraft is certified, American will run flights for American team members and invited guests.

Frequently asked questions

Question: When will American run a schedule change and inform customers who were booked on a MAX from April 7 through June 3?
Answer: American had previously canceled service on the MAX through April 6. On Jan. 19, American will run a formal schedule change, and customers who were previously booked on a MAX through June 3 will see their reservation updated on aa.com. Additional refinements to our schedule through June 3 will also occur in February 2020.

Question: Will there be additional changes to the schedule once the MAX returns to commercial service?
Answer: American expects to gradually phase in the MAX for commercial service and will increase flying on the aircraft throughout the month of June. Since American will gradually phase the MAX into our operation over the course of a month, additional refinements to our schedule may occur. Affected customers will be contacted directly.

Question: My flight wasn’t scheduled to be on a MAX. Will it be canceled?
Answer: A flight that was not scheduled as a MAX flight might be canceled to enable our team to cover a MAX route with a different aircraft, in order to affect the smallest number of customers. In total, approximately 140 flights will be canceled per day through June 3.

Question: How will customers know if they are impacted?
Answer: American’s Reservations team will contact affected customers directly by email or telephone beginning Jan. 19. Customers who booked through a travel agent will be contacted by their agency directly.

Question: What is American’s rebooking policy for when the MAX returns?
Answer: Details regarding policies and procedures for customers who do not wish to fly on the MAX once the aircraft enters scheduled service June 4 will be released in the coming weeks.

Question: My flight was canceled and I don’t want to rebook. Can I get a refund?
Answer: Yes. If a flight is canceled and a customer chooses to not be rebooked, they may request a full refund by visiting aa.com/refunds.

American Airlines to become the first airline to test the Google Assistant’s interpreter mode

American Airlines made this announcement:

American Airlines is using technology to remove one of the stresses of traveling for foreign language-speaking customers by being the first airline to introduce the Google Assistant’s interpreter mode technology in its airport lounges.

American began testing the new technology last week at Admirals Club lounges at Los Angeles International Airport (LAX).

With the ability to translate in real-time, the Assistant’s interpreter mode will help Premium Customer Service representatives provide more personalized service to customers. Running on a Google Nest Hub, interpreter mode will be used to assist customers only when a multilingual team member is not available. The device can translate 29 languages, including Arabic, French, German, Japanese, Russian, Spanish and Vietnamese.

The Google Assistant is the latest in a long line of new technology enhancements American has introduced to make travel easier for customers. Other recent introductions include mobile passport scanning, boarding notifications, online virtual 3D aircraft tours, a redesigned self-service kiosk menu that simplifies the check-in process and an improved family seating approach, which ensures adults and kids under 14 are seated together. And with three Admirals Club lounges and the addition of Flagship Lounge and Flagship First Dining, American offers the most premium amenities of any carrier at LAX.

Google and American announced their partnership at this year’s CES, the world’s largest and leading consumer electronics show.

American Airlines provides an update on the grounded Boeing 737 MAX

American Airlines today shared with its team that the company has reached a confidential agreement with Boeing on compensation for financial damages incurred in 2019 due to the grounding of the airline’s Boeing 737 MAX aircraft.

“Despite the ongoing challenges the grounding has brought, American Airlines team members continue to do an incredible job caring for our customers,” said American’s Chairman and CEO Doug Parker. “Our ability as an airline to weather these unprecedented times is thanks to our phenomenal team, and it was important to us that we get a deal done this year. On behalf of the Board of Directors, we are proud to take the step of including this compensation in our 2019 profit-sharing program, even though the compensation will be received over several years.”

Given the projected reduction in annual operating income for 2019 as a result of the MAX groundings, American’s Board of Directors has authorized a discretionary portion of the settlement to be returned to American Airlines team members through the company’s 2019 profit-sharing program. The profit-sharing award is based on the company’s estimate of projected full-year 2019 financial damages for the MAX groundings. An additional accrual of more than $30 million will be made to the airline’s 2019 profit-sharing program, which is expected to be distributed to American’s team members in March 2020. Additional information will be shared at that time. The incremental dollar amount is in accordance with the company’s profit-sharing plan details.

American currently does not expect any material financial impact of the agreement to be realized in its fourth-quarter 2019 earnings. The company anticipates accounting for substantially all of the compensation as a reduction in cost basis of grounded MAX aircraft and certain future MAX aircraft deliveries. American will continue its conversations with Boeing regarding compensation for damages related to the MAX grounding beyond 2019, and any future compensation will be similarly shared with its team members.

American Airlines remains in continuous contact with the Federal Aviation Administration, Department of Transportation and Boeing. Based on the latest guidance, American anticipates that the resumption of scheduled commercial service on American’s fleet of Boeing 737 MAX aircraft will occur April 7, 2020. Once the aircraft is certified, American will run flights for American team members and invited guests only prior to April 7.

Frequently asked questions

Question: When will American run a schedule change and inform customers who were booked on a MAX from March 5 through April 6?
Answer: American had previously canceled service on the MAX through March 4. On Dec. 22, American will run a formal schedule change, and customers who were previously booked on a MAX through April 6 will see their reservation updated on aa.com.

Question: Will there be additional changes to the schedule once the MAX returns to commercial service?
Answer: American expects to gradually phase in the MAX for commercial service and will increase flying on the aircraft throughout the month of April. Since American will gradually phase the MAX into our operation over the course of a month, additional refinements to our schedule may occur. Affected customers will be contacted directly.

Question: My flight wasn’t scheduled to be on a MAX. Will it be canceled?
Answer: A flight that was not scheduled as a MAX flight might be canceled to enable our team to cover a MAX route with a different aircraft, in order to affect the smallest number of customers. In total, approximately 140 flights will be canceled per day through April 6.

Question: How will customers know if they are impacted?
Answer: American’s Reservations team will contact affected customers directly by email or telephone beginning Dec. 22. Customers who booked through a travel agent will be contacted by their agency directly.

Question: What is American’s rebooking policy for when the MAX returns?
Answer: Details regarding policies and procedures for customers who do not wish to fly on the MAX once the aircraft enters scheduled service April 7 will be released in the coming weeks.

Question: My flight was canceled and I don’t want to rebook. Can I get a refund?
Answer: Yes. If a flight is canceled and a customer chooses to not be rebooked, they may request a full refund by visiting aa.com/refunds.

 

American Airlines and British Airways mark the official start of the JFK Redevelopment Plan

Today, Atlantic Joint Business partners American Airlines and British Airways joined New York Gov. Andrew Cuomo and the Port Authority of New York and New Jersey (PANYNJ) to announce the start of construction on a $344 million investment at New York’s John F. Kennedy International Airport (JFK) Terminal 8 at the Association for a Better New York luncheon in Midtown.

“Our investment will put the 14 daily flights from JFK to London that we offer in partnership with British Airways in the same terminal and give customers premium check-in space, new joint lounges and a larger variety of retail and dining options,” said Robert Isom, President of American. “We will be adding more than 70,000 square feet to customer and operational spaces to create a truly world-class experience at JFK.”

Additionally, airline team members who power the terminal operations will also benefit from closer, faster and easier connections to American’s joint business partner British Airways by the additional co-located long-haul aircraft gates and an enhanced baggage system.

“As we progress with the JFK modernization project, we are giving Terminal 8 a new look and layout in line with the modern, world-class standards that will define the airport’s ultimate transformation,” Cuomo said. “When this work is completed, Terminal 8 will accommodate more passengers who will be able to enjoy a better travel experience and will make the work of airport staff more efficient and more seamless.”

American and British Airways are the first airlines to mark the start of the transformation of JFK into a state-of-the-art global hub. The upgrades and additions at Terminal 8 will bring improvements in the overall customer experience, including the addition of five widebody gates and four adjacent widebody hard stands (ramp parking where customers are transported to/from terminal via bus), enhanced baggage systems, new lounges, premium check-in space and upgraded concessions and retail options. Additionally, customers arriving in New York will enjoy the ability to more conveniently connect onto other American Airlines flights, and customers departing New York will gain the flexibility of 14 daily flights to London all departing from the same terminal. Construction is scheduled to be completed in 2022.

American and British Airways offer the most flights between JFK and London’s Heathrow Airport (LHR), a route Business Traveller calls “the most important and lucrative route for business in the world,” in addition to up to 70 flights a day to London from 26 destinations in the United States.

“This is an exciting development in our move to Terminal 8, alongside American Airlines, our Atlantic joint-business partner,” British Airways’ Chairman and CEO Alex Cruz said. “We are one step closer to offering an even better customer experience for passengers traveling to, from and through JFK. We look forward to our continued work with the Port Authority and American Airlines in order to build a world-class transatlantic travel experience.”

American in New York

New York is a key hub for American, with the airline serving three New York-area airports — JFK, LaGuardia Airport (LGA) and Newark Liberty International Airport (EWR). At JFK, American flies up to 115 peak day departures that serve 40 destinations in nearly 20 countries. LGA offers an additional 167 daily flights that serve more than 38 destinations, including American’s popular Shuttle service between LGA and Boston (BOS), Chicago (ORD) and Washington, D.C. (DCA). American also announced extended summer seasonal service from LGA to Aruba (AUA) and continuing service to high-end leisure destinations like Glacier National Park Airport in Kalispell (FCA), and Bozeman, Montana (BZN), based on this year’s success. Collectively, the airline flies more than 300 daily flights between the three New York airports.

Last month, American started new nonstop service from JFK to Georgetown, Guyana (GEO). The new route follows the recent addition of service to Montego Bay, Jamaica (MBJ); San Jose, Costa Rica (SJO); and Liberia, Costa Rica (LIR).

Last year, the airline announced the expansion of its exclusive Five Star Service options for its top customers traveling through JFK. American also offers an unmatched premium travel experience on flights between JFK and Los Angeles International Airport (LAX) on its Airbus A321T aircraft that features fully lie-flat seats, a chef-curated menu, as well as premium wines and amenity kits in Flagship First and Flagship Business.

More than 8,000 American team members call New York home and help support a variety of community and civic programs, including City Year New York, the Michael J. Fox Foundation and the Stephen Siller Tunnel to Towers Foundation. Since 2017, American has increased corporate giving to charitable organizations across the city by nearly 40 percent.

Investment in hub airports across the United States

American’s JFK hub is not alone in getting an upgrade. American and its airport partners have spent and committed billions of dollars to projects in its other hubs at Dallas Fort Worth International Airport (DFW), Miami International Airport (MIA), DCA and ORD. Recent investments at Charlotte Douglas International Airport (CLT) added more gates and an upgraded Admirals Club lounge. At LAX, the airline broke ground on a $1.6 billion project in October 2018.