FORT WORTH, Texas — American Airlines Group Inc. (NASDAQ: AAL) today reported its second quarter 2019 results, including these highlights
FORT WORTH, Texas — American Airlines Group Inc. (NASDAQ: AAL) 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 $1.82 per diluted share, up 10% year over year.
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GAAP
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Non-GAAP
1
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2Q19
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2Q18
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2Q19
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2Q18
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|
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Operating income ($ mil) |
1,153 |
1,004 |
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1,274 |
1,186 |
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|
Pre-tax income ($ mil) |
882 |
756 |
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1,072 |
1,018 |
Pre-tax margin |
7.4% |
6.5% |
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9.0% |
8.7% |
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Net income ($ mil) |
662 |
556 |
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810 |
770 |
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Earnings per diluted share |
$ |
1.49 |
$ |
1.20 |
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$ |
1.82 |
$ |
1.66 |
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 Nov. 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.
For additional financial forecasting detail, please refer to the company’s investor update, filed with this release with the SEC on Form 8-K. This filing will be available at aa.com/investorrelations.
Conference Call/Webcast Details
The company will conduct a live audio webcast of its earnings call today at 7:30 a.m. CT, which will be available to the public on a listen-only basis at aa.com/investorrelations. An archive of the webcast will be available on the website through Aug. 26.
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.
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American Airlines Group Inc.
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Condensed Consolidated Statements of Operations
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(In millions, except share and per share amounts)
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(Unaudited)
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3 Months Ended June 30, |
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Percent |
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6 Months Ended June 30, |
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Percent |
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2019 |
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2018 (1) |
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Change |
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2019 |
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2018 (1) |
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Change |
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Operating revenues: |
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|
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|
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Passenger |
|
$ |
11,011 |
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$ |
10,674 |
|
3.2 |
|
|
$ |
20,669 |
|
$ |
20,154 |
|
2.6 |
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Cargo |
|
221 |
|
261 |
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(15.4) |
|
|
439 |
|
488 |
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(10.1) |
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Other |
|
728 |
|
708 |
|
2.9 |
|
|
1,436 |
|
1,402 |
|
2.4 |
|
Total operating revenues |
|
11,960 |
|
11,643 |
|
2.7 |
|
|
22,544 |
|
22,044 |
|
2.3 |
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Operating expenses: |
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|
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|
|
|
|
|
|
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Aircraft fuel and related taxes |
|
1,995 |
|
2,103 |
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(5.1) |
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|
3,722 |
|
3,866 |
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(3.7) |
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Salaries, wages and benefits |
|
3,200 |
|
3,095 |
|
3.4 |
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|
6,290 |
|
6,111 |
|
2.9 |
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Regional expenses: |
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|
|
|
|
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|
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|
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Fuel |
|
487 |
|
465 |
|
4.7 |
|
|
909 |
|
863 |
|
5.4 |
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Depreciation and amortization |
|
83 |
|
82 |
|
0.5 |
|
|
162 |
|
165 |
|
(1.9) |
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Other |
|
1,316 |
|
1,246 |
|
5.7 |
|
|
2,577 |
|
2,462 |
|
4.7 |
|
Maintenance, materials and repairs |
|
575 |
|
505 |
|
13.9 |
|
|
1,136 |
|
973 |
|
16.7 |
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Other rent and landing fees |
|
535 |
|
495 |
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8.2 |
|
|
1,039 |
|
962 |
|
8.0 |
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Aircraft rent |
|
334 |
|
311 |
|
7.7 |
|
|
661 |
|
621 |
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6.6 |
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Selling expenses |
|
401 |
|
385 |
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3.9 |
|
|
771 |
|
742 |
|
3.9 |
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Depreciation and amortization |
|
489 |
|
457 |
|
7.0 |
|
|
969 |
|
898 |
|
8.0 |
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Special items, net |
|
121 |
|
182 |
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(33.6) |
|
|
259 |
|
407 |
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(36.5) |
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Other |
|
1,271 |
|
1,313 |
|
(3.2) |
|
|
2,521 |
|
2,574 |
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(2.0) |
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Total operating expenses |
|
10,807 |
|
10,639 |
|
1.6 |
|
|
21,016 |
|
20,644 |
|
1.8 |
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
1,153 |
|
1,004 |
|
14.8 |
|
|
1,528 |
|
1,400 |
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9.1 |
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Nonoperating income (expense): |
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Interest income |
|
35 |
|
30 |
|
15.2 |
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|
68 |
|
55 |
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23.6 |
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Interest expense, net |
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(275) |
|
(263) |
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4.5 |
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(546) |
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(525) |
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3.9 |
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Other income (expense), net |
|
(31) |
|
(15) |
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97.8 |
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|
78 |
|
64 |
|
22.1 |
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Total nonoperating expense, net |
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(271) |
|
(248) |
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9.0 |
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(400) |
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(406) |
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(1.7) |
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Income before income taxes |
|
882 |
|
756 |
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16.7 |
|
|
1,128 |
|
994 |
|
13.5 |
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|
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|
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|
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Income tax provision |
|
220 |
|
200 |
|
10.5 |
|
|
281 |
|
278 |
|
0.9 |
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Net income |
|
$ |
662 |
|
$ |
556 |
|
18.9 |
|
|
$ |
847 |
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$ |
716 |
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18.4 |
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Earnings per common share: |
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Basic |
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$ |
1.49 |
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$ |
1.20 |
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$ |
1.89 |
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$ |
1.53 |
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Diluted |
|
$ |
1.49 |
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$ |
1.20 |
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|
|
|
$ |
1.88 |
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$ |
1.52 |
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Weighted average shares outstanding (in thousands): |
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Basic |
|
445,008 |
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463,533 |
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448,479 |
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467,915 |
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Diluted |
|
445,587 |
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464,618 |
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449,508 |
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469,608 |
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(1) In the fourth quarter of 2018, the company adopted Accounting Standards Update (ASU) 2016-02: Leases (Topic 842) (the New Lease Standard) as of January 1, 2018. In accordance with the New Lease Standard, the company has recast its 2018 financial information included herein to reflect the effects of adoption. For additional information, see Note 1(b) to AAG’s Consolidated Financial Statements in Part II, Item 8A of its 2018 Form 10-K filed on February 25, 2019. |
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Note: Percent change may not recalculate due to rounding.
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American Airlines Group Inc.
|
Consolidated Operating Statistics
|
(Unaudited)
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3 Months Ended June 30, |
|
|
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6 Months Ended June 30, |
|
|
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|
|
2019 |
|
2018 |
|
Change |
|
|
2019 |
|
2018 |
|
Change |
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Mainline
|
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Revenue passenger miles (millions) |
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55,277 |
|
54,118 |
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2.1 |
% |
|
103,758 |
|
101,126 |
|
2.6 |
% |
Available seat miles (ASM) (millions) |
|
63,195 |
|
64,452 |
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(2.0) |
% |
|
121,518 |
|
122,416 |
|
(0.7) |
% |
Passenger load factor (percent) |
|
87.5 |
|
84.0 |
|
3.5 |
pts |
|
85.4 |
|
82.6 |
|
2.8 |
pts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger enplanements (thousands) |
|
40,007 |
|
38,574 |
|
3.7 |
% |
|
76,553 |
|
73,414 |
|
4.3 |
% |
Departures (thousands) |
|
279 |
|
280 |
|
(0.4) |
% |
|
550 |
|
543 |
|
1.2 |
% |
Aircraft at end of period |
|
966 |
|
955 |
|
1.2 |
% |
|
966 |
|
955 |
|
1.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Block hours (thousands) |
|
877 |
|
900 |
|
(2.6) |
% |
|
1,712 |
|
1,731 |
|
(1.1) |
% |
Average stage length (miles) |
|
1,219 |
|
1,254 |
|
(2.8) |
% |
|
1,199 |
|
1,236 |
|
(3.0) |
% |
Fuel consumption (gallons in millions) |
|
938 |
|
944 |
|
(0.6) |
% |
|
1,791 |
|
1,789 |
|
0.1 |
% |
Average aircraft fuel price including related taxes (dollars per gallon) |
|
2.13 |
|
2.23 |
|
(4.6) |
% |
|
2.08 |
|
2.16 |
|
(3.9) |
% |
Full-time equivalent employees at end of period |
|
106,100 |
|
106,600 |
|
(0.5) |
% |
|
106,100 |
|
106,600 |
|
(0.5) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regional
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passenger miles (millions) |
|
7,381 |
|
6,661 |
|
10.8 |
% |
|
13,702 |
|
12,599 |
|
8.8 |
% |
Available seat miles (millions) |
|
9,127 |
|
8,441 |
|
8.1 |
% |
|
17,478 |
|
16,301 |
|
7.2 |
% |
Passenger load factor (percent) |
|
80.9 |
|
78.9 |
|
2.0 |
pts |
|
78.4 |
|
77.3 |
|
1.1 |
pts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger enplanements (thousands) |
|
15,457 |
|
14,486 |
|
6.7 |
% |
|
28,845 |
|
27,272 |
|
5.8 |
% |
Aircraft at end of period |
|
613 |
|
604 |
|
1.5 |
% |
|
613 |
|
604 |
|
1.5 |
% |
Fuel consumption (gallons in millions) |
|
220 |
|
203 |
|
8.8 |
% |
|
420 |
|
388 |
|
8.2 |
% |
Average aircraft fuel price including related taxes (dollars per gallon) |
|
2.21 |
|
2.29 |
|
(3.7) |
% |
|
2.17 |
|
2.22 |
|
(2.7) |
% |
Full-time equivalent employees at end of period (2) |
|
27,700 |
|
25,000 |
|
10.8 |
% |
|
27,700 |
|
25,000 |
|
10.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Mainline & Regional
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passenger miles (millions) |
|
62,658 |
|
60,779 |
|
3.1 |
% |
|
117,460 |
|
113,725 |
|
3.3 |
% |
Available seat miles (millions) |
|
72,322 |
|
72,893 |
|
(0.8) |
% |
|
138,996 |
|
138,717 |
|
0.2 |
% |
Passenger load factor (percent) |
|
86.6 |
|
83.4 |
|
3.2 |
pts |
|
84.5 |
|
82.0 |
|
2.5 |
pts |
Yield (cents) |
|
17.57 |
|
17.56 |
|
0.1 |
% |
|
17.60 |
|
17.72 |
|
(0.7) |
% |
Passenger revenue per ASM (cents) |
|
15.22 |
|
14.64 |
|
4.0 |
% |
|
14.87 |
|
14.53 |
|
2.4 |
% |
Total revenue per ASM (cents) |
|
16.54 |
|
15.97 |
|
3.5 |
% |
|
16.22 |
|
15.89 |
|
2.1 |
% |
Cargo ton miles (millions) |
|
644 |
|
768 |
|
(16.2) |
% |
|
1,269 |
|
1,455 |
|
(12.8) |
% |
Cargo yield per ton mile (cents) |
|
34.29 |
|
34.00 |
|
0.8 |
% |
|
34.57 |
|
33.54 |
|
3.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger enplanements (thousands) |
|
55,464 |
|
53,060 |
|
4.5 |
% |
|
105,398 |
|
100,686 |
|
4.7 |
% |
Aircraft at end of period |
|
1,579 |
|
1,559 |
|
1.3 |
% |
|
1,579 |
|
1,559 |
|
1.3 |
% |
Fuel consumption (gallons in millions) |
|
1,158 |
|
1,147 |
|
1.1 |
% |
|
2,211 |
|
2,177 |
|
1.6 |
% |
Average aircraft fuel price including related taxes (dollars per gallon) |
|
2.14 |
|
2.24 |
|
(4.4) |
% |
|
2.09 |
|
2.17 |
|
(3.6) |
% |
Full-time equivalent employees at end of period |
|
133,800 |
|
131,600 |
|
1.7 |
% |
|
133,800 |
|
131,600 |
|
1.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cost per ASM (cents) |
|
14.94 |
|
14.59 |
|
2.4 |
% |
|
15.12 |
|
14.88 |
|
1.6 |
% |
Operating cost per ASM excluding special items (cents) |
|
14.78 |
|
14.34 |
|
3.0 |
% |
|
14.93 |
|
14.59 |
|
2.4 |
% |
Operating cost per ASM excluding special items and fuel (cents) |
|
11.34 |
|
10.82 |
|
4.8 |
% |
|
11.60 |
|
11.18 |
|
3.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Regional includes wholly owned regional airline subsidiaries and operating results from capacity purchase carriers. |
|
|
|
|
|
|
|
(2) Regional full-time equivalent employees only include our wholly owned regional airline subsidiaries. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Amounts may not recalculate due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American Airlines Group Inc.
|
Consolidated Revenue Statistics by Region
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended June 30, |
|
|
|
|
6 Months Ended June 30, |
|
|
|
|
|
|
2019 |
|
2018 |
|
Change |
|
|
2019 |
|
2018 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passenger miles (millions) |
|
41,477 |
|
40,067 |
|
3.5 |
% |
|
79,194 |
|
76,328 |
|
3.8 |
% |
Available seat miles (ASM) (millions) |
|
47,050 |
|
46,817 |
|
0.5 |
% |
|
92,332 |
|
90,709 |
|
1.8 |
% |
Passenger load factor (percent) |
|
88.2 |
|
85.6 |
|
2.6 |
pts |
|
85.8 |
|
84.1 |
|
1.7 |
pts |
Passenger revenue (dollars in millions) |
|
8,009 |
|
7,685 |
|
4.2 |
% |
|
15,235 |
|
14,648 |
|
4.0 |
% |
Yield (cents) |
|
19.31 |
|
19.18 |
|
0.7 |
% |
|
19.24 |
|
19.19 |
|
0.2 |
% |
Passenger revenue per ASM (cents) |
|
17.02 |
|
16.41 |
|
3.7 |
% |
|
16.50 |
|
16.15 |
|
2.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passenger miles (millions) |
|
7,829 |
|
7,903 |
|
(0.9) |
% |
|
16,179 |
|
15,988 |
|
1.2 |
% |
Available seat miles (millions) |
|
9,157 |
|
9,894 |
|
(7.4) |
% |
|
19,364 |
|
20,133 |
|
(3.8) |
% |
Passenger load factor (percent) |
|
85.5 |
|
79.9 |
|
5.6 |
pts |
|
83.6 |
|
79.4 |
|
4.2 |
pts |
Passenger revenue (dollars in millions) |
|
1,241 |
|
1,284 |
|
(3.4) |
% |
|
2,612 |
|
2,729 |
|
(4.3) |
% |
Yield (cents) |
|
15.85 |
|
16.25 |
|
(2.5) |
% |
|
16.14 |
|
17.07 |
|
(5.4) |
% |
Passenger revenue per ASM (cents) |
|
13.55 |
|
12.98 |
|
4.4 |
% |
|
13.49 |
|
13.55 |
|
(0.5) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Atlantic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passenger miles (millions) |
|
9,763 |
|
8,855 |
|
10.3 |
% |
|
14,806 |
|
13,521 |
|
9.5 |
% |
Available seat miles (millions) |
|
11,898 |
|
11,306 |
|
5.2 |
% |
|
18,724 |
|
18,052 |
|
3.7 |
% |
Passenger load factor (percent) |
|
82.1 |
|
78.3 |
|
3.8 |
pts |
|
79.1 |
|
74.9 |
|
4.2 |
pts |
Passenger revenue (dollars in millions) |
|
1,407 |
|
1,298 |
|
8.4 |
% |
|
2,080 |
|
1,967 |
|
5.8 |
% |
Yield (cents) |
|
14.41 |
|
14.66 |
|
(1.7) |
% |
|
14.05 |
|
14.55 |
|
(3.4) |
% |
Passenger revenue per ASM (cents) |
|
11.83 |
|
11.48 |
|
3.0 |
% |
|
11.11 |
|
10.90 |
|
2.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pacific
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passenger miles (millions) |
|
3,589 |
|
3,954 |
|
(9.2) |
% |
|
7,281 |
|
7,888 |
|
(7.7) |
% |
Available seat miles (millions) |
|
4,217 |
|
4,876 |
|
(13.5) |
% |
|
8,576 |
|
9,823 |
|
(12.7) |
% |
Passenger load factor (percent) |
|
85.1 |
|
81.1 |
|
4.0 |
pts |
|
84.9 |
|
80.3 |
|
4.6 |
pts |
Passenger revenue (dollars in millions) |
|
354 |
|
407 |
|
(13.1) |
% |
|
742 |
|
810 |
|
(8.5) |
% |
Yield (cents) |
|
9.86 |
|
10.29 |
|
(4.3) |
% |
|
10.18 |
|
10.27 |
|
(0.9) |
% |
Passenger revenue per ASM (cents) |
|
8.39 |
|
8.35 |
|
0.5 |
% |
|
8.65 |
|
8.25 |
|
4.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passenger miles (millions) |
|
21,181 |
|
20,712 |
|
2.3 |
% |
|
38,266 |
|
37,397 |
|
2.3 |
% |
Available seat miles (millions) |
|
25,272 |
|
26,076 |
|
(3.1) |
% |
|
46,664 |
|
48,008 |
|
(2.8) |
% |
Passenger load factor (percent) |
|
83.8 |
|
79.4 |
|
4.4 |
pts |
|
82.0 |
|
77.9 |
|
4.1 |
pts |
Passenger revenue (dollars in millions) |
|
3,002 |
|
2,989 |
|
0.4 |
% |
|
5,434 |
|
5,506 |
|
(1.3) |
% |
Yield (cents) |
|
14.17 |
|
14.43 |
|
(1.8) |
% |
|
14.20 |
|
14.72 |
|
(3.6) |
% |
Passenger revenue per ASM (cents) |
|
11.88 |
|
11.46 |
|
3.6 |
% |
|
11.64 |
|
11.47 |
|
1.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Domestic results include Canada, Puerto Rico and U.S. Virgin Islands. |
(2) Latin America results include the Caribbean. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Amounts may not recalculate due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Financial Information to Non-GAAP Financial Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American Airlines Group Inc. (the company) sometimes uses financial measures that are derived from the condensed consolidated financial statements but that are not presented in accordance with GAAP to understand and evaluate its current operating performance and to allow for period-to-period comparisons. The company believes these non-GAAP financial measures may also provide useful information to investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with GAAP. The company is providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis.
The tables below present the reconciliations of the following GAAP measures to their non-GAAP measures:
- Pre-Tax Income (GAAP measure) to Pre-Tax Income Excluding Special Items (non-GAAP measure) - Pre-Tax Margin (GAAP measure) to Pre-Tax Margin Excluding Special Items (non-GAAP measure) - Net Income (GAAP measure) to Net Income Excluding Special Items (non-GAAP measure) - Basic and Diluted Earnings Per Share (GAAP measure) to Basic and Diluted Earnings Per Share Excluding Special Items (non-GAAP measure) - Operating Income (GAAP measure) to Operating Income Excluding Special Items (non-GAAP measure)
Management uses these non-GAAP financial measures to evaluate the company's current operating performance and to allow for period-to-period comparisons. As special items may vary from period-to-period in nature and amount, the adjustment to exclude special items allows management an additional tool to understand the company’s core operating performance.
Additionally, the tables below present the reconciliations of total operating costs (GAAP measure) to total operating costs excluding special items and fuel (non-GAAP measure). Management uses total operating costs excluding special items and fuel to evaluate the company's current operating performance and for period-to-period comparisons. The price of fuel, over which the company has no control, impacts the comparability of period-to-period financial performance. The adjustment to exclude aircraft fuel and special items allows management an additional tool to understand and analyze the company’s non-fuel costs and core operating performance. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended June 30, |
|
Percent Change |
|
6 Months Ended June 30, |
|
Percent Change |
|
Reconciliation of Pre-Tax Income Excluding Special Items
|
|
2019 |
|
2018 |
|
|
2019 |
2018 |
|
|
|
(in millions, except per share amounts) |
|
|
|
(in millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income as reported |
|
$ |
882 |
|
$ |
756 |
|
|
|
$ |
1,128 |
|
$ |
994 |
|
|
|
Pre-tax special items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Special items, net (1) |
|
121 |
|
182 |
|
|
|
259 |
|
407 |
|
|
|
Nonoperating special items, net (2) |
|
69 |
|
80 |
|
|
|
(1) |
|
80 |
|
|
|
Total pre-tax special items |
|
190 |
|
262 |
|
|
|
258 |
|
487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income excluding special items |
|
$ |
1,072 |
|
$ |
1,018 |
|
5.3% |
|
$ |
1,386 |
|
$ |
1,481 |
|
-6.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Pre-Tax Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income as reported |
|
$ |
882 |
|
$ |
756 |
|
|
|
$ |
1,128 |
|
$ |
994 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues as reported |
|
$ |
11,960 |
|
$ |
11,643 |
|
|
|
$ |
22,544 |
|
$ |
22,044 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax margin |
|
7.4% |
|
6.5% |
|
|
|
5.0% |
|
4.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Pre-Tax Margin Excluding Special Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income excluding special items |
|
$ |
1,072 |
|
$ |
1,018 |
|
|
|
$ |
1,386 |
|
$ |
1,481 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues as reported |
|
$ |
11,960 |
|
$ |
11,643 |
|
|
|
$ |
22,544 |
|
$ |
22,044 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax margin excluding special items |
|
9.0% |
|
8.7% |
|
|
|
6.1% |
|
6.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income Excluding Special Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income as reported |
|
$ |
662 |
|
$ |
556 |
|
|
|
$ |
847 |
|
$ |
716 |
|
|
|
Special items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pre-tax special items (1), (2) |
|
190 |
|
262 |
|
|
|
258 |
|
487 |
|
|
|
Income tax special items, net (3) |
|
- |
|
18 |
|
|
|
- |
|
40 |
|
|
|
Net tax effect of special items |
|
(42) |
|
(66) |
|
|
|
(58) |
|
(120) |
|
|
|
Net income excluding special items |
|
$ |
810 |
|
$ |
770 |
|
5.1% |
|
$ |
1,047 |
|
$ |
1,123 |
|
-6.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Basic and Diluted Earnings Per Share Excluding Special Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income excluding special items |
|
$ |
810 |
|
$ |
770 |
|
|
|
$ |
1,047 |
|
$ |
1,123 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used for computation (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
445,008 |
|
463,533 |
|
|
|
448,479 |
|
467,915 |
|
|
|
Diluted |
|
445,587 |
|
464,618 |
|
|
|
449,508 |
|
469,608 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share excluding special items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.82 |
|
$ |
1.66 |
|
|
|
$ |
2.33 |
|
$ |
2.40 |
|
|
|
Diluted |
|
$ |
1.82 |
|
$ |
1.66 |
|
|
|
$ |
2.33 |
|
$ |
2.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended June 30, |
|
|
|
6 Months Ended June 30, |
|
|
|
Reconciliation of Operating Income Excluding Special Items
|
|
2019 |
|
2018 |
|
|
|
2019 |
|
2018 |
|
|
|
|
|
(in millions) |
|
|
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income as reported |
|
$ |
1,153 |
|
$ |
1,004 |
|
|
|
$ |
1,528 |
|
$ |
1,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Special items, net (1) |
|
121 |
|
182 |
|
|
|
259 |
|
407 |
|
|
|
Operating income excluding special items |
|
$ |
1,274 |
|
$ |
1,186 |
|
|
|
$ |
1,787 |
|
$ |
1,807 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Total Operating Cost per ASM Excluding Special Items and Fuel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses as reported |
|
$ |
10,807 |
|
$ |
10,639 |
|
|
|
$ |
21,016 |
|
$ |
20,644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Special items, net (1) |
|
(121) |
|
(182) |
|
|
|
(259) |
|
(407) |
|
|
|
Total operating expenses, excluding special items |
|
10,686 |
|
10,457 |
|
|
|
20,757 |
|
20,237 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft fuel and related taxes - mainline |
|
(1,995) |
|
(2,103) |
|
|
|
(3,722) |
|
(3,866) |
|
|
|
Aircraft fuel and related taxes - regional |
|
(487) |
|
(465) |
|
|
|
(909) |
|
(863) |
|
|
|
Total operating expenses, excluding special items and fuel |
|
$ |
8,204 |
|
$ |
7,889 |
|
|
|
$ |
16,126 |
|
$ |
15,508 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in cents) |
|
|
|
(in cents) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses per ASM as reported |
|
14.94 |
|
14.59 |
|
|
|
15.12 |
|
14.88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special items per ASM: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Special items, net (1) |
|
(0.17) |
|
(0.25) |
|
|
|
(0.19) |
|
(0.29) |
|
|
|
Total operating expenses per ASM, excluding special items |
|
14.78 |
|
14.34 |
|
|
|
14.93 |
|
14.59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel per ASM: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft fuel and related taxes - mainline |
|
(2.76) |
|
(2.89) |
|
|
|
(2.68) |
|
(2.79) |
|
|
|
Aircraft fuel and related taxes - regional |
|
(0.67) |
|
(0.64) |
|
|
|
(0.65) |
|
(0.62) |
|
|
|
Total operating expenses per ASM, excluding special items and fuel |
|
11.34 |
|
10.82 |
|
|
|
11.60 |
|
11.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Amounts may not recalculate due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOOTNOTES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The 2019 second quarter mainline operating special items principally included $77 million of fleet restructuring expenses and $39 million of merger integration expenses. The 2019 six month period mainline operating special items principally included $160 million of fleet restructuring expenses and $76 million of merger integration expenses.
The 2018 second quarter mainline operating special items principally included $113 million of fleet restructuring expenses, $60 million of merger integration expenses, a $26 million non-cash charge to write-off the company's Brazil route authority intangible asset as a result of the U.S.-Brazil open skies agreement, offset in part by a $57 million net credit resulting from mark-to-market adjustments on bankruptcy obligations. The 2018 six month period mainline operating special items principally included $226 million of fleet restructuring expenses, $120 million of merger integration expenses, a $45 million litigation settlement and the $26 million non-cash Brazil route impairment charge mentioned above, offset in part by a $56 million net credit resulting from mark-to-market adjustments on bankruptcy obligations.
Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment grounded or expected to be grounded earlier than planned. Merger integration expenses included costs associated with integration projects, principally the company's technical operations, flight attendant, human resources and payroll systems. |
|
. |
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
The 2019 second quarter nonoperating special items principally included $52 million of mark-to-market net unrealized losses primarily associated with the company's equity investment in China Southern Airlines. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The 2018 second quarter and six month period nonoperating special items principally included $66 million of mark-to-market net unrealized losses primarily associated with the company's equity investment in China Southern Airlines. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
The 2018 second quarter income tax special items included an $18 million charge related to an international income tax matter. In addition to this charge, the 2018 six month period included a $22 million charge to income tax expense to establish a required valuation allowance related to the company's estimated refund for Alternative Minimum Tax (AMT) credits. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American Airlines Group Inc.
|
Condensed Consolidated Balance Sheets
|
(In millions)
|
|
|
|
|
|
|
June 30, 2019 |
|
December 31, 2018 (1) |
|
(unaudited) |
|
|
Assets |
|
|
|
|
|
|
|
Current assets |
|
|
|
Cash |
$ |
319 |
|
$ |
275 |
Short-term investments |
5,088 |
|
4,485 |
Restricted cash and short-term investments |
157 |
|
154 |
Accounts receivable, net |
1,943 |
|
1,706 |
Aircraft fuel, spare parts and supplies, net |
1,708 |
|
1,522 |
Prepaid expenses and other |
635 |
|
495 |
Total current assets |
9,850 |
|
8,637 |
|
|
|
|
Operating property and equipment |
|
|
|
Flight equipment |
42,437 |
|
41,499 |
Ground property and equipment |
9,007 |
|
8,764 |
Equipment purchase deposits |
1,372 |
|
1,278 |
Total property and equipment, at cost |
52,816 |
|
51,541 |
Less accumulated depreciation and amortization |
(18,114) |
|
(17,443) |
Total property and equipment, net |
34,702 |
|
34,098 |
|
|
|
|
Operating lease right-of-use assets |
9,102 |
|
9,151 |
|
|
|
|
Other assets |
|
|
|
Goodwill |
4,091 |
|
4,091 |
Intangibles, net |
2,105 |
|
2,137 |
Deferred tax asset |
792 |
|
1,145 |
Other assets |
1,325 |
|
1,321 |
Total other assets |
8,313 |
|
8,694 |
|
|
|
|
Total assets |
$ |
61,967 |
|
$ |
60,580 |
|
|
|
|
Liabilities and Stockholders’ Equity (Deficit) |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
Current maturities of long-term debt and finance leases |
$ |
3,500 |
|
$ |
3,294 |
Accounts payable |
2,118 |
|
1,773 |
Accrued salaries and wages |
1,304 |
|
1,427 |
Air traffic liability |
5,956 |
|
4,339 |
Loyalty program liability |
3,310 |
|
3,267 |
Operating lease liabilities |
1,639 |
|
1,654 |
Other accrued liabilities |
2,296 |
|
2,342 |
Total current liabilities |
20,123 |
|
18,096 |
|
|
|
|
Noncurrent liabilities |
|
|
|
Long-term debt and finance leases, net of current maturities |
21,791 |
|
21,179 |
Pension and postretirement benefits |
5,641 |
|
6,907 |
Loyalty program liability |
5,249 |
|
5,272 |
Operating lease liabilities |
7,818 |
|
7,902 |
Other liabilities |
1,367 |
|
1,393 |
Total noncurrent liabilities |
41,866 |
|
42,653 |
|
|
|
|
Stockholders' equity (deficit) |
|
|
|
Common stock |
5 |
|
5 |
Additional paid-in capital |
4,386 |
|
4,964 |
Accumulated other comprehensive loss |
(5,927) |
|
(5,896) |
Retained earnings |
1,514 |
|
758 |
Total stockholders' deficit |
(22) |
|
(169) |
|
|
|
|
Total liabilities and stockholders’ equity (deficit) |
$ |
61,967 |
|
$ |
60,580 |
|
|
|
|
(1) On January 1, 2019, the company adopted ASU 2018-02: Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. In accordance with the transition provisions of this new standard, the company has recast its 2018 balance sheet to reflect the effects of adoption. For additional information, see Note 1(b) to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A of its second quarter 2019 Form 10-Q filed on July 25, 2019. |