Category Archives: American Airlines

American assigns the Boeing 737 MAX 8 to the Miami – Barbados route

MAX 8, first flight on December 13, 2017

American Airlines will assign the new Boeing 737-8 MAX 8 to the Miami – Bridgetown, Barbados route starting on May 4, 2018 according to Airline Route.

Copyright Photo: American Airlines Boeing 737-8 MAX 8 N308RD (msn 44446) BFI (Joe G. Walker). Image: 940368.

American Airlines aircraft slide show:

 

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American Airlines Group reports fourth quarter and full year 2017 profit

American's second Boeing 787-9, delivered on October 5, 2016

American Airlines Group Inc. on January 25, 2018 reported its fourth quarter and full year 2017 results, including these highlights:

  • Reported a full year 2017 pre-tax profit of $3.1 billion, or $3.8 billion excluding net special items1, and a full year net profit of $1.9 billion, or $2.4 billion excluding net special items
  • Reported a fourth-quarter 2017 pre-tax profit of $425 million, or $739 million excluding net special items, and a fourth-quarter net profit of $258 million, or $455 million excluding net special items
  • 2017 earnings were $3.90 per diluted share, or $4.88 per diluted share excluding net special items. Fourth-quarter earnings were $0.54 per diluted share, or $0.95 per diluted share excluding net special items
  • Accrued $241 million for the company’s profit sharing program in 2017, including $46 million in the fourth quarter
  • Returned $1.7 billion to shareholders in 2017, including the repurchase of 33.9 million shares and dividend payments of $198 million

Pre-tax earnings excluding net special items for the fourth quarter of 2017 were $739 million, a $34 million decrease from the fourth quarter of 2016. For the full year 2017, pre-tax earnings excluding net special items were $3.8 billion, a decrease of $1.2 billion from 2016.

“2017 was a remarkable year for American Airlines. We made enormous progress as a company as we continued to make significant investments in our team members, product and operation, and those investments are beginning to pay off,” said Chairman and CEO Doug Parker. “Our operation continues to deliver record-setting performance for the company, and the credit goes to our team members who are simply the best in the business.

“We enter 2018 with strong momentum. Demand for American’s reliable, friendly service remains strong, our network is expanding, and the products we are bringing to market are resonating with customers.”

Fourth-Quarter and Full Year 2017 Revenue and Expenses

Strong close-in demand and improving yields drove an 8.3 percent year-over-year increase in fourth-quarter total revenue, to $10.6 billion. Passenger yields grew in all geographic regions, including 11.0 percent growth in trans-Atlantic and 7.9 percent growth in Latin America. Cargo revenue was up 19.7 percent to $232 million due to higher volumes and a 6.7 percent increase in cargo yield. Other revenue was up 8.1 percent to $1.3 billion. Fourth-quarter total revenue per available seat mile increased by 5.6 percent compared to 2016 on a 2.5 percent increase in total available seat miles.

Total fourth-quarter operating expenses were $9.9 billion, up 9.8 percent year-over-year due primarily to a 23.5 percent increase in consolidated fuel expense and a 7.0 percent increase in salaries and benefits resulting from the company’s investments in its team members. Total fourth-quarter cost per available seat mile (CASM) was 14.71 cents, up 7.1 percent from fourth-quarter 2016. Excluding fuel and special items, total fourth-quarter CASM was 11.25 cents, up 3.8 percent year-over-year.

Strategic Objectives

The company continues to focus on four long-term strategic objectives: Create a World-Class Customer Experience, Make Culture a Competitive Advantage, Ensure Long-Term Financial Strength, and Think Forward, Lead Forward.

Create a World-Class Customer Experience

American began 2017 by being named Air Transport World’s Airline of the Year in recognition of its successful integration and significant investment in its product and people. This is a recognition American had not received since 1988. Also in 2017, American:

  • Recorded its best on-time departure and arrival performance since 2003, and its best baggage handling performance since DOT began reporting in 1994
  • Launched new products to meet customer demand, including the expansion of American’s best-in-class lounges by opening Flagship First Dining, a new exclusive experience for customers in First Class on international and A321T transcontinental flights. American now offers Flagship First Dining in Miami, Los Angeles, and New York- JFK. Importantly, American is the only U.S. airline that offers international First Class
  • Operated the youngest fleet among its peers and invested $4.1 billion in new aircraft, including its first Boeing 737 MAX. By the end of 2018, the company expects to induct a total of 20 new MAX aircraft, which will replace older, less fuel efficient aircraft
  • Introduced new streaming-capable satellite-based internet access on the 737 MAX, which will be rolled out across most of the domestic mainline fleet
  • Introduced Basic Economy, a product to compete with ultra low-cost carriers. This product is now offered nationwide and to leisure markets in Mexico and most of the Caribbean
  • Rolled out Premium Economy, which offers a wider seat, more legroom, an amenity kit, and enhanced meal choices on international flights. Currently 64 widebody aircraft offer this product. American expects to offer Premium Economy on most of its widebody fleet by the spring of 2019
  • Expanded the airline’s global footprint by launching Los Angeles-to-Beijing service; and announcing service from Philadelphia to Prague, Czech Republic, and Budapest, Hungary; Dallas-Fort Worth to Reykjavik-Keflavik, Iceland; and Chicago-O’Hare to Venice, Italy, which will start this summer
  • Completed delivery of the last Boeing 737-800 and Airbus A321CEO aircraft
  • Painted the last aircraft in American’s new livery

“Customers are responding positively to the options American offers, from international First Class to Basic Economy,” said American Airlines President Robert Isom. “We are far ahead of our U.S. competitors in offering Premium Economy on our international flights, which comes just as we begin to prepare for the busy summer travel season. Importantly, this highly-differentiated product makes American’s international service consistent with its partners across the Atlantic and the Pacific, so customers can book their international Premium Economy trips seamlessly.

“American’s customers are noticing these significant product and network improvements. 2017 survey scores measuring our customers’ likelihood to recommend American were the highest they’ve been in company history,” Isom said.

Make Culture a Competitive Advantage

American is creating an environment that cares for frontline team members, provides competitive pay, and equips its team with the right tools to support its customers. During 2017, American:

  • Awarded each team member with two complimentary round-trip tickets across American’s global network to commemorate being named Air Transport Worlds 2017 Airline of the Year
  • After hurricanes hit the Caribbean and Florida, American Airlines team members worked together to help the people of San Juan, Puerto Rico and other affected parts of the region. American and its team members have delivered more than 2.5 million pounds of relief supplies and raised almost $2 million for the American Red Cross, in addition to other relief work
  • Invested more than $300 million in facilities and equipment including renovations to team member spaces, mobile devices for pilots and flight attendants, and the ongoing One Campus One Team initiative at the airline’s global support center in Fort Worth
  • Ensured team member pay remained competitive through initiatives such as a mid-contract salary increase for pilots and flight attendants and continued step increases from a mid-contract pay increase for mechanics and fleet service workers
  • Introduced a best-in-industry maternity and adoption benefit program to all team members including union-represented team members
  • Launched the company’s first team member survey in over a decade
  • Provided customer service skills training to 35,000 team members through Elevate the Everyday Experience training, and launched training for leaders that emphasizes supporting team members who directly serve customers
  • Announced that work on its CFM56-5B engines, which power much of American’s Airbus narrowbody fleet, would move in-house to its world-class maintenance team located in Tulsa, Oklahoma beginning later this year
  • Just this month, shared benefits of the recent Tax Cuts and Jobs Act by issuing $1,000 payments to all non-officer team members at American and its wholly-owned regional carriers. While American does not yet pay federal cash income taxes, the new tax law will reduce the company’s future tax bill and allow more investments in equipment and facilities

Ensure Long-Term Financial Strength

American has taken significant steps forward to ensure its long-term competitiveness in the global aviation industry. In the four full years since the merger closed, the company’s cumulative pre-tax earnings excluding net special items were $19.4 billion. American is focused on capturing the efficiencies created by the merger, delivering on its earnings potential, and creating value for its owners. In 2017, American:

  • Returned $1.7 billion to shareholders through share repurchases and dividends, bringing the total since mid-2014 to $11.4 billion. These repurchases have reduced the share count by 37 percent to 475.5 million shares at the end of 2017. As of December 31, 2017, the company had approximately $450 million remaining of its current $2.0 billion share repurchase authority2
  • Announced, at American’s Media & Investor Day last fall, $3.9 billion in revenue and cost initiatives expected to be realized by the end of 2021. These projects are on track and are expected to improve the customer experience, drive revenue improvements, and deliver cost efficiencies
  • Completed several innovative and landmark transactions in 2017 that provided efficient financing for the company. These transactions included repricing approximately $5 billion in term loans at industry-leading rates, extending and increasing its revolving credit facility, and setting a new benchmark rate for subordinated aircraft debt in the EETC market
  • On January 25, 2018, declared a dividend of $0.10 per share, to be paid on February 20, 2018, to stockholders of record as of February 6, 2018

Think Forward, Lead Forward

American is committed to re-establishing itself as an industry leader by creating an action-oriented culture that moves quickly to bring products to market, embraces technological change, and quickly seizes upon new opportunities for its network and product. In 2017, American:

  • Announced a $200 million equity stake in China Southern Airlines, leading to a growing codeshare with the largest airline in China
  • Executed an amended and restated trans-Atlantic Joint Business Agreement that extends the term of the agreement with the company’s partners
  • Adopted next-generation technology such as cloud hosting and machine learning to speed time to value
  • Announced a commitment for more than $1.6 billion for improvements of LAX Terminals 4 and 5, setting the stage for American to receive additional gate space, strengthen its Pacific gateway and to be the pre-eminent airline for Los Angeles
  • Built a five-gate expansion at Chicago O’Hare Terminal 3, which is expected to open in April, giving American a new advantage at this key competitive hub

Parker summarized: “As an airline, we will always operate in a just-in-time environment, however, we recognize we must lead for the long term. This means we must be more nimble in our problem solving and in how we innovate and develop the right products, technology, and network both for customers of today and the future. Ultimately, all of this work will produce a company built for the long term, led by a team that thinks long-term, sees the potential of future opportunities, and brings innovative concepts to market quickly and efficiently.”

Guidance and Investor Update

American expects its first-quarter 2018 TRASM to increase approximately 2.0 to 4.0 percent year-over-year, which reflects expected continued improvement in demand for both business and leisure travel. The company also expects its first-quarter 2018 pre-tax margin excluding special items to be between 2.0 and 4.0 percent.3 In addition, based on the guidance issued today and current business conditions, American presently expects its 2018 diluted earnings per share excluding net special items to be between $5.50 and $6.50. 3

 

Notes

  1. In the fourth quarter, the company recognized $314 million in net special items before the effect of income taxes. Mainline special items principally consisted of a $123 million charge for the $1,000 cash bonus and associated payroll taxes granted to employees in recognition of recent tax reform, $81 million of merger integration expenses, $58 million of fleet restructuring expenses, and a $20 million net charge resulting from fair value adjustments to bankruptcy obligations. Regional special items of $23 million principally consisted of a charge related to the $1,000 cash bonus and associated payroll taxes discussed above for employees at the company’s regional subsidiaries. The company also recognized a nonoperating special charge of $11 million and an income tax net special benefit of $7 million. 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.
  2. 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.
  3. 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.

Copyright Photo: American Airlines Boeing 787-9 Dreamliner N821AN (msn 40640) LAX (Michael B. Ing). Image: 935286.

American Airlines aircraft slide show (Boeing):

 

American Airlines expands network in 2018 and introduces Shuttle Service between Chicago O’Hare and New York LaGuardia

American Airlines Boeing 737-823 WL N815NN (msn 33208) DCA (Brian McDonough). Image: 922222.

American Airlines is delivering on its promise to provide customers the largest and best network by adding more new routes and better connecting opportunities in its 2018 schedule. With the introduction of 52 new nonstop flights and enhanced schedules, customers worldwide will benefit from new options across the American network.

New Routes in 2018

American recently announced international service to Budapest, Hungary (BUD); Prague, Czech Republic (PRG); and Reykjavik, Iceland (KEF), starting this summer, and also began selling more than 40 new routes from its nine hubs, including seven routes from Philadelphia International Airport (PHL) and eight from Dallas Fort Worth International Airport (DFW). On Jan. 22, the airline will offer the newest additions to its 2018 schedule for travel beginning June 7:

  • Three routes from PHL to Fort Wayne, Indiana (FWA); Oklahoma City (OKC); and Pensacola, Florida (PNS)
  • New service from both Charlotte Douglas International Airport (CLT) and DFW to Panama City, Florida (ECP) and South Bend, Indiana (SBN)
  • Service from Chicago O’Hare International Airport (ORD) to Wilkes-Barre/Scranton, Pennsylvania (AVP)

In total, American will add 52 new nonstop routes to its domestic and international network.

 

New Shuttle between Chicago O’Hare and New York LaGuardia

Beginning April 4, business travelers looking for a consistent, convenient and easy commute will have a new Shuttle product to fly them between New York LaGuardia (LGA) and ORD. American’s Shuttle will offer hourly flights between the two business centers, giving customers additional flexibility and choice, as well as unique travel benefits such as dedicated gates, 15 flights per weekday and complimentary beer and wine in Main Cabin.

“When you fly frequently for work, anything that can make the regular commute more comfortable is important,” said Alison Taylor, senior vice president, Global Sales and Distribution. “That’s why we’re pleased to offer valuable time-saving opportunities with our Shuttle, including a convenient and consistent schedule and extended check-in times for you and your bag.”

American currently operates Shuttle service between LGA and Boston Logan International Airport (BOS); LGA and Ronald Reagan Washington National Airport (DCA); and DCA and BOS.

New Shuttler Service Animated GIF

Top Copyright Photo: American Airlines Boeing 737-823 WL N815NN (msn 33208) DCA (Brian McDonough). Image: 922222.

American Airlines aircraft slide show (Boeing):

 

American selects Land’s End for its new uniforms

Lands’ End, Inc. has announced that it has been selected as the new uniform supplier for American Airlines Flight Service, Airport Customer Service and Premium Customer Services. The awarded uniform program will allow Lands’ End, known for legendary customer service and high-quality apparel, to outfit 51,000 American Airlines employees, with an estimated 1.8 million apparel items.

“We are thrilled to be partnering with American Airlines as their uniform supplier,” said Jerome Griffith, Chief Executive Officer, Lands’ End. “The two companies share a strong commitment to their loyal customers and hold their employees in the highest regard. This exciting project has combined the strengths of the Lands’ End and American Airlines teams – leveraging Lands’ End’s broad apparel design expertise and renowned quality, value and service, combined with months of valuable input from American Airlines employees, who will be wearing the uniforms with comfort and confidence in their day-to-day roles.”

Lands’ End will partner with the American Airlines uniform committee and union leaders to focus on the next steps of the design and product development process with the goal of rolling out a robust wear test program by October 2018. Wear testers will identify any changes needed to improve fit, comfort and function before the final garments are produced and rolled out, planned to begin in late 2019.

Photo: American Airlines.

CWA: American Airlines bonus no substitute for fair wages

The CWA union has issued this statement:

In late November, CWA President Chris Shelton contacted the CEOs of some of the largest corporations where CWA members work, including American Airlines, to ask them to guarantee the $4,000 wage increase and new jobs promised by the Republican corporate tax cut.

While we are pleased that our request has prompted American to pay employees a one-time $1,000 bonus, it falls short of the permanent wage increase that working families were promised.

American continues to insist on paying poverty-level wages to passenger service agents at its Envoy and Piedmont subsidiaries. Passenger service agents play a critical role in ensuring the safety of thousands of passengers each day, yet many agents at these airlines earn less than $11 an hour and qualify for food stamps and other public assistance.

These agents, represented by CWA, are currently in contract negotiations. Despite American’s continued profitability and the massive windfall from the tax bill, Envoy and Piedmont are refusing to offer fair wages as part of these negotiations.

“Passenger service agents at Envoy and Piedmont serve passengers in communities across this country, from big airports like Dallas-Fort Worth to smaller locations like Knoxville, TN,” said Richard Honeycutt, CWA District 3 Vice President and Chair of CWA’s Passenger Service Airline Council. “It’s time for American to invest in these communities by increasing wages so that working people at Envoy and Piedmont can have family-supporting and community-building careers, instead of living paycheck to paycheck.”

CWA represents more than 25,000 passenger service agents at American Airlines, including its Envoy and Piedmont subsidiaries. Overall, CWA represents 700,000 working people in telecommunications, customer service, media, airlines, public service and manufacturing.

 

American Airlines to distribute $1,000 to each team member

In a letter to team members, CEO Doug Parker and President Robert Isom are pleased to announce that in light of the new tax structure and in recognition of our outstanding team members, American will distribute $1,000 to each team member (excluding Officers) at our mainline and wholly owned regional carriers. Read the letter below:

 


Dear Fellow Team Members,

It’s been another amazing year for American Airlines, for our country, and for the world at large. What a privilege it is for all of us at American whose jobs are all about transporting people to the most important moments in their lives. The importance of our purpose is especially felt this time of year.

Recent tax reform has received much publicity. While the company does not yet pay cash taxes due to our enormous losses in the past, there is no doubt that our country’s new tax structure will have positive long-term benefits for American. We will be able to invest even more in aircraft and facilities, and we will be able to do so with even greater confidence about the future. As we analyze those potential future benefits, our leadership team, backed by our Board of Directors, considered how a portion of that positive impact might be directly shared with the very people who produce the profits at American—all of you.

We are pleased to announce that in light of this new tax structure and in recognition of our outstanding team members, American will distribute $1,000 to each team member (excluding Officers) at our mainline and wholly owned regional carriers. These distributions will total approximately $130 million and will be made in the first quarter of 2018.

This is not an action we take lightly when balanced against the returns our shareholders/owners demand and deserve. But we believe it is the right thing to do for our team, which ultimately benefits our shareholders too. This is one more proof point that working at American is to be part of a team that recognizes taking care of those who take care of our customers is the cornerstone of our competitive advantage. In short, it doesn’t feel right to receive the positive impacts of this historic tax reform without making sure, in the clearest most direct way possible, that those benefits are shared with the very people who matter the most to our customers and shareholders.

The engine of American Airlines is our team, and the energy and enthusiasm each of you choose to bring to your jobs every day defines the American Airlines experience for our customers. Let’s keep making sure each and every customer is thankful they choose American throughout the year ahead. That attitude will give American a competitive advantage others will find hard to replicate. We are incredibly proud and humble to work with all of you—here’s to a successful and happy 2018.

 

Doug Parker

 

American to end its relationship with WestJet

American Airlines Boeing 737-823 WL N947AN (msn 29536) LAX. Image: 933336.

Earlier this month, Delta Air Lines and WestJet agreed to deepen their existing partnership by entering into a comprehensive transborder joint venture that will increase travel choices between the U.S. and Canada.

According to the announcement, “Delta and WestJet have entered into a preliminary memorandum of understanding (MOU) regarding their intention to deepen their existing partnership to form a commercial joint venture arrangement, which will offer customers access to an extensive transborder route network, world-class airline products, enhanced frequent flyer benefits, shared airport facilities and amenities, and a more seamless travel experience.”

Probably as a result of this agreement, American Airlines is ending its codeshare relationship with WestJet effective on January 15, 2018.

In addition, both American and WestJet will end their frequent flyer partnership effective on July 31, 2018. American Airlines has announced July 31, 2018 will be the last day to fly and earn miles on WestJet.

Previously American Airlines and WestJet Airlines had launched a comprehensive codeshare agreement that gave customers of both airlines more choices and greater connectivity when travelling between the United States and Canada, as well as across American’s worldwide network.

This codeshare relationship allowed American to place its AA* code on WestJet flights, and WestJet to place its WS* code on flights of American Airlines. It is all ending because of Delta’s new interest in WestJet.

Bottom Line: United is aligned with Air Canada. Delta is now aligned with WestJet. American is out in the cold in Canada. Will American now look at some of the newly proposed Canadian carriers including Jetlines?

Top Copyright Photo: American Airlines Boeing 737-823 WL N947AN (msn 29536) LAX. Image: 933336.

American Airlines aircrat slide show (Boeing and Embraer):

Westjet:

Bottom Copyright Photo: WestJet Airlines Boeing 737-8CT SSWL C-FKRF (msn 60123) YYC (Ken Petersen). Image: 939576.

WestJet Airlines Boeing 737-8CT SSWL C-FKRF (msn 60123) YYC (Ken Petersen). Image: 939576.