American Airlines Group Inc. today reported its second quarter 2019 results, including these highlights:

• Reported a second quarter 2019 pre-tax profit of $882 million and net profit of $662 million. Excluding net special items, pre-tax profit and net profit rose more than 5% to $1.1 billion and $810 million,¹ respectively.
• Second quarter earnings were $1.49 per diluted share. Excluding net special items, earnings per share grew 10% year over year to $1.82 per diluted share¹.
• Reported record second quarter revenue of $12 billion. Also reported record second quarter total revenue per available seat mile (TRASM) — the 11th consecutive quarter of TRASM growth.

“Our team members did a tremendous job to deliver solid results despite a challenging start to our summer,” said Chairman and CEO Doug Parker. “Their extraordinary efforts led to an increase in earnings and record revenue performance, and we thank our team for their expertise and care for our customers.”

“These strong results in the face of near-term adversity, coupled with our ongoing initiatives, give us great confidence in the future of American Airlines.”

Second Quarter Revenue and Expenses

Pre-tax earnings excluding net special items for the second quarter of 2019 were $1.1 billion, a 5% increase from the second quarter of 2018. Excluding net special items, earnings were $1.82 per diluted share, up 10% year over year.

Continued strength in passenger demand drove a 2.7% year-over-year increase in second quarter 2019 total revenue to $12 billion, a record for the quarter. Driven by a record second quarter total passenger load factor of 86.6%, passenger revenue per available seat mile (PRASM) grew 4% to a record 15.22 cents. Cargo revenue decreased 15.4% to $221 million due primarily to a 16.2% decrease in cargo ton miles. Other revenue was up 2.9% to $728 million due primarily to higher revenue from the company’s loyalty program. Marking the 11th consecutive quarter of growth, second quarter TRASM increased by 3.5% to a record 16.54 cents on a 0.8% decrease in total available seat miles.

Total second quarter 2019 operating expenses were $10.8 billion, up 1.6% year over year. Total operating cost per available seat mile (CASM) was 14.94 cents in the second quarter of 2019, up 2.4% from second quarter 2018. Excluding fuel and special items, second quarter CASM was 11.34 cents, up 4.8% year over year, driven primarily by lower than planned capacity due to the Boeing 737 MAX grounding and operational disruptions related to an illegal work slowdown by our mechanics’ union in an effort to influence contract talks.

Fleet Update

On March 13, the Federal Aviation Administration (FAA) grounded all U.S.-registered Boeing 737 MAX aircraft. The American fleet currently includes 24 MAX aircraft with an additional 76 aircraft on order, of which seven were scheduled to be delivered in the second quarter. The company estimates that the cancellations in the second quarter negatively impacted pre-tax income by approximately $175 million.

The company has removed all MAX flying from its flight schedule through November 2. With the flight cancellations extending an additional two months, the company now expects the MAX cancellations will negatively impact its full year 2019 pre-tax earnings by approximately $400 million.

Strategic Objectives

American’s success is guided by three strategic objectives: Create a world-class customer experience, make culture a competitive advantage and build American Airlines to thrive forever.

Create a world-class customer experience

American has invested more than $28 billion in its people, product and fleet over the past five years — the largest investment of any carrier in commercial aviation history. In the second quarter, American:

• Continued to evolve American’s fleet by taking delivery of 14 new aircraft and operating its first customer flight on the Airbus A321neo, a fuel-efficient aircraft equipped with power at every seat, larger overhead bins and free wireless entertainment to each customer’s own device, including free live television.
• Completed a two-year retrofit of Premium Economy, which offers more legroom, wider seats and enhanced meal service on long-haul international flights and select flights to Alaska and Hawaii. American also took the top spot for Premium Economy service in TripAdvisor’s Travelers’ Choice Awards, beating all other U.S. carriers.
• Opened American’s Flagship Lounge and Flagship First Dining in Terminal D at Dallas Fort Worth International Airport (DFW) providing customers with quiet spaces to rest, luxury showers and a high-end, sit-down dining experience.
• Launched DFW 900, the company’s strategic growth plan that involved the opening of the airline’s new Terminal E Satellite facility with 15 new gates and increased departures at its hub by more than 100 per day.
• Debuted Bang & Olufsen noise-cancelling headsets for customers in first and business class.
• The AAdvantage program was named Best Elite Program for the Americas at the Freddie Awards, for the eighth year in a row.
• Unveiled the new Great Hall in Terminal B at Boston Logan International Airport (BOS), providing customers with a more comfortable airport experience, local flavor and innovative technology.

Make culture a competitive advantage

Taking care of team members translates into better customer care. We continue to invest in improved tools, training and support for team members and in the second quarter, American:

• Recognized American’s Maintenance team through systemwide celebrations on Aviation Maintenance Technician Day and launched the new Ken MacTiernan Excellence in Aviation Maintenance Award.
• Opened its 29th domestic Line Maintenance station at Houston’s George Bush Intercontinental Airport (IAH).
• Cut the ribbon on a brand new Terminal 5 ticket counter and break room at Los Angeles International Airport (LAX), the first major milestone toward the completion of the $1.6 billion modernization project for Terminals 4 and 5.
• Began moving team members to the expanded Robert L. Crandall Campus in Fort Worth, Texas.
• Named among the Best-of-the-Best Corporations for Inclusion by the National Gay & Lesbian Chamber of Commerce for the fourth year in a row.
• Contributed $858 million to American’s pension plans, bringing the 2019 contribution total to $1.2 billion — $436 million in excess of the required minimum contribution.
• Awarded $976,000 in scholarships to 360 children of team members at a ceremony in Dallas as part of the American Airlines Education Foundation scholarship program.
• Accrued $67 million for the company’s profit-sharing program, bringing the year-to-date accrual to $87 million.

Build American Airlines to thrive forever

With a nearly 100-year legacy, American is building a company that we expect to be consistently profitable today and in the future. This long-term initiative was furthered during the second quarter as American:

• Launched 50 new routes, including new service to Dubrovnik, Croatia, and Berlin, Germany.
• Awarded tentative approval from the U.S. Department of Transportation (DOT) for additional service to Tokyo’s Haneda (HND) from LAX and DFW, providing American’s customers better access to downtown Tokyo and to the domestic network of its Pacific Joint Business partner, Japan Airlines.
• Received approval from the DOT of its joint business between American and Qantas, allowing for commercial integration between the carriers on routes between the U.S. and Australia and New Zealand.
• Rolled out new technology initiatives for customers, including pre-paid bag functionality, automation to handle operationally driven overbooked flights and instant buy-up opportunities.
• Agreed to purchase 50 Airbus A321XLR aircraft, the new longer-range version of the A321neo, with deliveries scheduled to begin in 2023. The agreement includes the conversion of 30 of American’s existing A321neo slots to A321XLRs and the exercise of options for an additional 20 A321XLRs.
• Announced plans to develop a sixth terminal at DFW that could add up to 24 gates, with the first section of the terminal expected to open as soon as 2025. The plans also include investing in enhancements in Terminal C.

Quarterly Dividend

American declared a dividend of $0.10 per share to be paid on Aug. 21, 2019, to stockholders of record as of Aug. 7, 2019.

Guidance and Investor Update

American expects its third quarter 2019 TRASM to be up 1% to 3% year over year. The company also expects its third quarter 2019 pre-tax margin excluding net special items to be between 5.5% and 7.5%². Based on today’s guidance, American now expects its 2019 diluted earnings per share excluding net special items to be between $4.50 and $6².

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 Second quarter 2019 operating special items principally included $77 million of fleet restructuring expenses (non-cash) and $39 million of merger integration expense. Nonoperating special items principally included $52 million of mark-to-market net unrealized losses (non-cash) primarily associated with the company’s equity investment in China Southern Airlines.
² 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.

Top Copyright Photo: American Airlines Boeing 737-823 WL N944NN (msn 31185) PHX (Neil D. Rucker). Image: 945663.

American Airlines aircraft slide show:

American Airlines has announced two new destinations: Huatulco (HUX) and Acapulco (ACA).

American will also add a new flight to Chihuahua (CUU) in addition to five new Caribbean and eight new domestic routes.

Mexico

American offers more service between the U.S. and Mexico than any other airline with up to 85 daily flights to 22 cities. On December 18, daily service between Phoenix (PHX) and CUU will begin, complementing existing daily service from Dallas Fort Worth (DFW).

Tuesday and Saturday service from DFW to HUX and ACA begins December 21, adding two new routes to American’s vast footprint in Mexico and the only nonstop service from DFW. These flights will be operated seasonally with an Embraer E175 featuring 12 first class seats, 64 Main Cabin seats, free wireless entertainment and Wi-Fi.

Caribbean/Latin America

As previously announced, service between New York (JFK) and Georgetown, Guyana (GEO), will launch December 18. Customers can also benefit from increased service between DFW and Costa Rica with a second daily flight to San Jose (SJO) and Liberia (LIR) starting the same day.

American’s growth in the region continues December 21, when a series of new Saturday-only flights kick off. St. Thomas, USVI (STT), known for beaches and snorkeling, will welcome wanderers from DFW and Chicago O’Hare (ORD). Seasonal service will also begin between ORD and St. Lucia (UVF).

On the East Coast, customers traveling from New York (LGA) can pack their shorts for Bermuda (BDA), and customers traveling from or through Charlotte, North Carolina (CLT), can spice up their winter on the spice island of Grenada (GND).

These new routes continue a trend of increased service to popular destinations like Nassau, Bahamas (NAS), which welcomed new flights from ORD and LGA in December, and unique destinations like St. Kitts (SKB), which will see new service from DFW beginning May 25.

Domestic

MIA serves as American’s gateway to the Caribbean and Latin America, and the airline will be creating more opportunities for customers to take advantage of the hub this winter. New daily service is planned from Oklahoma City (OKC); Northwest Arkansas (XNA); and Columbia, South Carolina (CAE), starting December 18, with convenient flight times that will connect customers to dozens of warm-weather destinations.

If warmth really isn’t your thing, American has you covered there, too. The only daily service between DFW and St. George, Utah (SGU), launches September 26, and new Saturday service between Philadelphia (PHL) and Eagle/Vail, Colorado (EGE), starts December 21.

Other domestic highlights include PHX–Rapid City, South Dakota (RAP) and ORD–Charleston, West Virginia (CRW), which both start December 18. Business travelers heading to and from New York will also have new options for travel to Richmond, Virginia (RIC), with three daily flights launching from JFK on November 21.

Mexico

Caribbean

Domestic

New international routes are subject to government approval.

Top Copyright Photo: American Airlines Boeing 737-823 WL N823NN (msn 29560) PAE (Nick Dean). Image: 945872.

American aircraft slide show:

American Airlines is planning to add daily Boeing 737-800 service from New York (JFK) to Georgetown, Guyana on December 18, 2019 according to Airline Route.

Above Copyright Photo: Joe G. Walker.

Top Copyright Photo: American Airlines Boeing 737-823 WL N997NN (msn 33250) SNA (Michael B. Ing). Image: 946426.

American Airlines aircraft slide show:

American Airlines will end New York (JFK) – Orlando service on May 2, 2019 according to Airline Route.

The route is currently operated daily with Boeing 737-800s.

In other news, the carrier will operate the new Airbus A321neo on the Orlando – Los Angeles route from May 3 through June 5, 2019.

Top Copyright Photo: American Airlines Boeing 737-823 WL N968NN (msn 33241) LAX (Michael B. Ing). Image: 945664.

American aircraft slide show:

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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.

https://player.vimeo.com/video/251639732

 

New Shuttle between Chicago O’Hare and New York LaGuardia