American Airlines Reports First-Quarter 2024 Financial Results

/EIN News/ -- FORT WORTH, Texas, April 25, 2024 (GLOBE NEWSWIRE) -- American Airlines Group Inc. (NASDAQ: AAL) today reported its first-quarter 2024 financial results, including:

• Record first-quarter revenue of approximately $12.6 billion.
• First-quarter net loss of $312 million, or ($0.48) per diluted share. Excluding net special items¹, first-quarter net loss of $226 million, or ($0.34) per diluted share.
• Achieved best-ever first-quarter completion factor.
• Generated operating cash flow of $2.2 billion and free cash flow² of $1.4 billion in the first quarter.
• Reduced total debt³ by nearly $950 million in the first quarter. The company is now more than 80% of the way to its 2025 total debt reduction goal.
  

“The American Airlines team continues to build a reliable, efficient and resilient airline,” said American’s CEO Robert Isom. “While we aren’t satisfied with our first-quarter financial results, we have a strong foundation in place, and we remain on track to deliver on our full-year financial targets. Our team is running a fantastic operation, driving revenue through our commercial initiatives, efficiently managing costs, and producing free cash flow to further strengthen our balance sheet.”

Operational performance
American is running the best operation in its history because of a steadfast commitment to operational excellence and strong collaboration across the entire airline. The company produced its best-ever first-quarter completion factor and improved its mishandled baggage rate year over year. American achieved these results despite air traffic control challenges and significant weather events across its network during the quarter.

Financial performance
American produced results within previously guided ranges for each of its operating metrics despite a significant increase in the cost of fuel in the quarter. The company generated record first-quarter revenue of approximately $12.6 billion and a GAAP operating margin of 0.1%. Excluding the impact of net special items¹, American produced an operating margin of 0.6% in the first quarter.

Balance sheet
Strengthening the balance sheet remains a top priority for American. In the first quarter, the company reduced total debt³ by nearly $950 million and has now achieved more than $12 billion, or over 80%, of its goal of reducing total debt³ by $15 billion by the end of 2025.

Guidance and investor update
Based on present demand trends and the current fuel price forecast and excluding the impact of special items, the company expects its second-quarter 2024 adjusted earnings per diluted share⁴ to be between $1.15 and $1.45. The company continues to expect its full-year adjusted earnings per diluted share⁴ to be between $2.25 and $3.25.

For additional financial forecasting detail, please refer to the company’s investor update, furnished with this press release with the SEC on Form 8-K. This filing is also available at aa.com/investorrelations.

Conference call and webcast details
The company will conduct a live audio webcast of its financial results conference call at 7:30 a.m. CT today. The call will be available to the public on a listen-only basis at aa.com/investorrelations. An archive of the webcast will be available through May 25.

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 and the calculation of free cash flow.

1. The company recognized $86 million of net special items in the first quarter after the effect of taxes, which included operating net special items of $70 million, principally related to one-time charges resulting from the ratification of a new collective bargaining agreement for its passenger service team members represented by the CWA-IBT, as well as nonoperating net special items of $46 million for charges associated with mark-to-market net unrealized losses on certain equity investments.
2. Please see the accompanying notes for the company’s definition of free cash flow, which is a non-GAAP measure.
3. All references to total debt include debt, finance and operating lease liabilities and pension obligations.
4. Adjusted earnings per diluted share guidance excludes the impact of net special items. The company is unable to reconcile certain forward-looking information to GAAP as the nature or amount of net special items cannot be determined at this time.

About American Airlines Group
To Care for People on Life’s Journey^®. Shares of American Airlines Group Inc. trade on Nasdaq under the ticker symbol AAL and the company’s stock is included in the S&P 500. Learn more about what’s happening at American by visiting news.aa.com and connect with American @AmericanAir and at Facebook.com/AmericanAirlines.

Cautionary statement regarding forward-looking statements and information
Certain of the statements contained in this report should be considered forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about the company’s plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that are not historical facts. These forward-looking statements are based on the company’s current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the forward-looking statements. These risks and uncertainties include, but are not limited to, those set forth herein as well as in the company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 (especially in Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 1A. Risk Factors), and other risks and uncertainties listed from time to time in the company’s other filings with the Securities and Exchange Commission. Additionally, there may be other factors of which the company is not currently aware that may affect matters discussed in the forward-looking statements and may also cause actual results to differ materially from those discussed. The company does not assume any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these forward-looking statements other than as required by law. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statement.

Corporate Communications
mediarelations@aa.com

Investor Relations
investor.relations@aa.com

American Airlines Group Inc.
Condensed Consolidated Statements of Operations
(In millions, except share and per share amounts)
(Unaudited)
		3 Months Ended March 31,								Percent Increase
			2024				2023			(Decrease)
Operating revenues:
Passenger		$	11,458			$	11,103			3.2
Cargo			187				223			(16.0	)
Other			925				863			7.2
Total operating revenues			12,570				12,189			3.1
Operating expenses:
Aircraft fuel and related taxes			2,980				3,167			(5.9	)
Salaries, wages and benefits			3,867				3,281			17.8
Regional expenses:
Regional operating expenses			1,122				1,062			5.6
Regional depreciation and amortization			79				80			(1.3	)
Maintenance, materials and repairs			884				712			24.2
Other rent and landing fees			819				708			15.8
Aircraft rent			328				344			(4.8	)
Selling expenses			408				438			(6.8	)
Depreciation and amortization			470				486			(3.3	)
Special items, net			70				13			nm	(1)
Other			1,536				1,460			5.2
Total operating expenses			12,563				11,751			6.9
Operating income			7				438			(98.5	)
Nonoperating income (expense):
Interest income			118				125			(6.2	)
Interest expense, net			(497	)			(540	)		(8.0	)
Other expense, net			(41	)			(6	)		nm
Total nonoperating expense, net			(420	)			(421	)		(0.2	)
Income (loss) before income taxes			(413	)			17			nm
Income tax provision (benefit)			(101	)			7			nm
Net income (loss)		$	(312	)		$	10			nm
Earnings (loss) per common share:
Basic		$	(0.48	)		$	0.02
Diluted		$	(0.48	)		$	0.02
Weighted average shares outstanding (in thousands):
Basic			655,847				652,000
Diluted			655,847				656,707
Note: Percent change may not recalculate due to rounding.
(1) Not meaningful or greater than 100% change.

American Airlines Group Inc.
Consolidated Operating Statistics (1)
(Unaudited)
		3 Months Ended March 31,				Increase
		2024		2023		(Decrease)
Revenue passenger miles (millions)		57,473		52,014		10.5		%
Available seat miles (ASM) (millions)		70,516		65,006		8.5		%
Passenger load factor (percent)		81.5		80.0		1.5		pts
Yield (cents)		19.94		21.35		(6.6	)	%
Passenger revenue per ASM (cents)		16.25		17.08		(4.9	)	%
Total revenue per ASM (cents)		17.83		18.75		(4.9	)	%
Cargo ton miles (millions)		484		422		14.7		%
Cargo yield per ton mile (cents)		38.64		52.75		(26.7	)	%
Fuel consumption (gallons in millions)		1,042		965		8.0		%
Average aircraft fuel price including related taxes (dollars per gallon)		2.86		3.28		(12.8	)	%
Operating cost per ASM (cents)		17.82		18.08		(1.4	)	%
Operating cost per ASM excluding net special items (cents)		17.72		18.06		(1.9	)	%
Operating cost per ASM excluding net special items and fuel (cents)		13.49		13.18		2.3		%
Passenger enplanements (thousands)		52,766		48,232		9.4		%
Departures (thousands):
Mainline		290		275		5.6		%
Regional		219		201		8.9		%
Total		509		476		7.0		%
Average stage length (miles):
Mainline		1,156		1,123		2.9		%
Regional		465		469		(0.8	)	%
Total		858		846		1.4		%
Aircraft at end of period:
Mainline		967		931		3.9		%
Regional (2)		550		533		3.2		%
Total		1,517		1,464		3.6		%
Full-time equivalent employees at end of period:
Mainline		103,600		103,100		0.5		%
Regional (3)		29,200		27,700		5.4		%
Total		132,800		130,800		1.5		%
Note: Amounts may not recalculate due to rounding.
(1) Unless otherwise noted, operating statistics include mainline and regional operations. Regional includes wholly-owned regional airline subsidiaries and operating results from capacity purchase carriers.
(2) Includes aircraft owned and leased by American as well as aircraft operated by third-party regional carriers under capacity purchase agreements. Excluded from the aircraft count above are 71 regional aircraft that were in temporary storage as of March 31, 2024 as follows: 57 Embraer 145, ten Bombardier CRJ 700, three Bombardier CRJ 900, and one Embraer 175.
(3) Regional full-time equivalent employees only include our wholly-owned regional airline subsidiaries.

American Airlines Group Inc.
Consolidated Revenue Statistics by Region
(Unaudited)
		3 Months Ended March 31,				Increase
		2024		2023		(Decrease)
Domestic (1)
Revenue passenger miles (millions)		38,812		35,750		8.6		%
Available seat miles (ASM) (millions)		47,102		44,554		5.7		%
Passenger load factor (percent)		82.4		80.2		2.2		pts
Passenger revenue (dollars in millions)		8,262		8,037		2.8		%
Yield (cents)		21.29		22.48		(5.3	)	%
Passenger revenue per ASM (cents)		17.54		18.04		(2.8	)	%
Latin America (2)
Revenue passenger miles (millions)		10,096		9,008		12.1		%
Available seat miles (millions)		11,739		10,510		11.7		%
Passenger load factor (percent)		86.0		85.7		0.3		pts
Passenger revenue (dollars in millions)		1,902		1,915		(0.7	)	%
Yield (cents)		18.84		21.26		(11.4	)	%
Passenger revenue per ASM (cents)		16.20		18.22		(11.1	)	%
Atlantic
Revenue passenger miles (millions)		6,455		5,821		10.9		%
Available seat miles (millions)		9,042		8,242		9.7		%
Passenger load factor (percent)		71.4		70.6		0.8		pts
Passenger revenue (dollars in millions)		992		931		6.5		%
Yield (cents)		15.37		16.00		(3.9	)	%
Passenger revenue per ASM (cents)		10.97		11.30		(2.9	)	%
Pacific
Revenue passenger miles (millions)		2,110		1,435		47.1		%
Available seat miles (millions)		2,633		1,700		54.9		%
Passenger load factor (percent)		80.1		84.4		(4.3	)	pts
Passenger revenue (dollars in millions)		302		220		37.5		%
Yield (cents)		14.30		15.30		(6.5	)	%
Passenger revenue per ASM (cents)		11.46		12.91		(11.2	)	%
Total International
Revenue passenger miles (millions)		18,661		16,264		14.7		%
Available seat miles (millions)		23,414		20,452		14.5		%
Passenger load factor (percent)		79.7		79.5		0.2		pts
Passenger revenue (dollars in millions)		3,196		3,066		4.3		%
Yield (cents)		17.13		18.85		(9.1	)	%
Passenger revenue per ASM (cents)		13.65		14.99		(8.9	)	%
Note: Amounts may not recalculate due to rounding.
(1) Domestic results include Canada, Puerto Rico and U.S. Virgin Islands.
(2) Latin America results include the Caribbean.

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: - Operating Income (GAAP measure) to Operating Income Excluding Net Special Items (non-GAAP measure) - Operating Margin (GAAP measure) to Operating Margin Excluding Net Special Items (non-GAAP measure) - Pre-Tax Income (Loss) (GAAP measure) to Pre-Tax Income (Loss) Excluding Net Special Items (non-GAAP measure) - Pre-Tax Margin (GAAP measure) to Pre-Tax Margin Excluding Net Special Items (non-GAAP measure) - Net Income (Loss) (GAAP measure) to Net Income (Loss) Excluding Net Special Items (non-GAAP measure) - Basic and Diluted Earnings (Loss) Per Share (GAAP measure) to Basic and Diluted Earnings (Loss) Per Share Excluding Net 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 net special items may vary from period-to-period in nature and amount, the adjustment to exclude net 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 net special items and fuel (non-GAAP measure) and total operating costs per ASM (CASM) to CASM excluding net special items and fuel. Management uses total operating costs excluding net special items and fuel and CASM excluding net 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 fuel and net special items allows management an additional tool to understand and analyze the Company’s non-fuel costs and core operating performance.
	Reconciliation of Operating Income Excluding Net Special Items		3 Months Ended March 31,								Percent Increase
				2024				2023			(Decrease)
			(in millions)
	Operating income as reported		$	7			$	438
	Operating net special items:
	Mainline operating special items, net (1)			70				13
	Operating income excluding net special items		$	77			$	451			(83.0	%)
	Calculation of Operating Margin
	Operating income as reported		$	7			$	438
	Total operating revenues as reported		$	12,570			$	12,189
	Operating margin			0.1	%			3.6	%
	Calculation of Operating Margin Excluding Net Special Items
	Operating income excluding net special items		$	77			$	451
	Total operating revenues as reported		$	12,570			$	12,189
	Operating margin excluding net special items			0.6	%			3.7	%
	Reconciliation of Pre-Tax Income (Loss) Excluding Net Special Items
	Pre-tax income (loss) as reported		$	(413	)		$	17
	Pre-tax net special items:
	Mainline operating special items, net (1)			70				13
	Nonoperating special items, net (2)			46				15
	Total pre-tax net special items			116				28
	Pre-tax income (loss) excluding net special items		$	(297	)		$	45			nm
	Calculation of Pre-Tax Margin
	Pre-tax income (loss) as reported		$	(413	)		$	17
	Total operating revenues as reported		$	12,570			$	12,189
	Pre-tax margin			(3.3	%)			0.1	%
	Calculation of Pre-Tax Margin Excluding Net Special Items
	Pre-tax income (loss) excluding net special items		$	(297	)		$	45
	Total operating revenues as reported		$	12,570			$	12,189
	Pre-tax margin excluding net special items			(2.40	%)			0.4	%
			3 Months Ended March 31,								Percent Increase
	Reconciliation of Net Income (Loss) Excluding Net Special Items			2024				2023			(Decrease)
			(in millions, except share and per share amounts)
	Net income (loss) as reported		$	(312	)		$	10
	Net special items:
	Total pre-tax net special items (1), (2)			116				28
	Net tax effect of net special items			(30	)			(5	)
	Net income (loss) excluding net special items		$	(226	)		$	33			nm
	Reconciliation of Basic and Diluted Earnings (Loss) Per Share Excluding Net Special Items
	Net income (loss) excluding net special items		$	(226	)		$	33
	Shares used for computation (in thousands):
	Basic			655,847				652,000
	Diluted			655,847				656,707
	Earnings (loss) per share excluding net special items:
	Basic		$	(0.34	)		$	0.05
	Diluted		$	(0.34	)		$	0.05
	Reconciliation of Total Operating Costs per ASM Excluding Net Special Items and Fuel
	Total operating expenses as reported		$	12,563			$	11,751
	Operating net special items:
	Mainline operating special items, net (1)			(70	)			(13	)
	Total operating expenses excluding net special items			12,493				11,738
	Aircraft fuel and related taxes			(2,980	)			(3,167	)
	Total operating expenses excluding net special items and fuel		$	9,513			$	8,571
			(in cents)
	Total operating expenses per ASM as reported			17.82				18.08
	Operating net special items per ASM:
	Mainline operating special items, net (1)			(0.10	)			(0.02	)
	Total operating expenses per ASM excluding net special items			17.72				18.06
	Aircraft fuel and related taxes per ASM			(4.23	)			(4.87	)
	Total operating expenses per ASM excluding net special items and fuel			13.49				13.18
	Note: Amounts may not recalculate due to rounding.
	FOOTNOTES:
(1)	The 2024 first quarter mainline operating special items, net principally included $57 million of one-time charges resulting from the ratification of a new collective bargaining agreement with our mainline passenger service team members, including a one-time signing bonus.
(2)	Principally included mark-to-market net unrealized gains and losses associated with certain equity investments.

American Airlines Group Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)(Unaudited)
				3 Months Ended March 31,
				2024				2023
	Net cash provided by operating activities			$	2,180			$	3,333
	Cash flows from investing activities:
	Capital expenditures and aircraft purchase deposits			(824		)		(505		)
	Purchases of short-term investments			(3,287		)		(5,131		)
	Sales of short-term investments			2,585				2,666
	Decrease in restricted short-term investments			12				29
	Other investing activities			(2		)		145
	Net cash used in investing activities			(1,516		)		(2,796		)
	Cash flows from financing activities:
	Payments on long-term debt and finance leases			(873		)		(2,326		)
	Proceeds from issuance of long-term debt			248				1,824
	Other financing activities			(17		)		(37		)
	Net cash used in financing activities			(642		)		(539		)
	Net increase (decrease) in cash and restricted cash			22				(2		)
	Cash and restricted cash at beginning of period			681				586
(1)	Cash and restricted cash at end of period			$	703			$	584
(1)	The following table provides a reconciliation of cash and restricted cash to amounts reported within the condensed consolidated balance sheets:
	Cash			$	604			$	452
	Restricted cash included in restricted cash and short-term investments			99				132
	Total cash and restricted cash			$	703			$	584

Free Cash Flow
The Company's free cash flow summary is presented in the table below, which is a non-GAAP measure that management believes is useful information to investors and others in evaluating the Company's ability to generate cash from its core operating performance that is available for use to reinvest in the business or to reduce debt. The Company defines free cash flows as net cash provided by operating activities less net cash used in investing activities, adjusted for (1) net purchases of short-term investments and (2) change in restricted cash. We believe that calculating free cash flow as adjusted for these items is more useful for investors because short-term investment activity and restricted cash are not representative of activity core to our operations. This non-GAAP measure 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. Our calculation of free cash flow is not intended, and should not be used, to measure the residual cash flow available for discretionary expenditures because, among other things, it excludes mandatory debt service requirements and certain other non-discretionary expenditures.
		3 Months Ended March 31, 2024
		(in millions)
	Net cash provided by operating activities	$	2,180
	Adjusted net cash used in investing activities (1)	(810		)
	Free cash flow	$	1,370
(1)	The following table provides a reconciliation of adjusted net cash used in investing activities for the three months ended March 31, 2024 (in millions):
	Net cash used in investing activities	$	(1,516	)
	Adjustments:
	Net purchases of short-term investments	702
	Decrease in restricted cash	4
	Adjusted net cash used in investing activities	$	(810	)

American Airlines Group Inc.
Condensed Consolidated Balance Sheets
(In millions, except shares)
	March 31, 2024				December 31, 2023
	(unaudited)
Assets
Current assets
Cash	$	604			$	578
Short-term investments		7,696				7,000
Restricted cash and short-term investments		895				910
Accounts receivable, net		2,070				2,026
Aircraft fuel, spare parts and supplies, net		2,500				2,400
Prepaid expenses and other		777				658
Total current assets		14,542				13,572
Operating property and equipment
Flight equipment		42,074				41,794
Ground property and equipment		10,397				10,307
Equipment purchase deposits		1,126				760
Total property and equipment, at cost		53,597				52,861
Less accumulated depreciation and amortization		(22,440	)			(22,097	)
Total property and equipment, net		31,157				30,764
Operating lease right-of-use assets		7,899				7,939
Other assets
Goodwill		4,091				4,091
Intangibles, net		2,049				2,051
Deferred tax asset		2,986				2,888
Other assets		1,660				1,753
Total other assets		10,786				10,783
Total assets	$	64,384			$	63,058
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities
Current maturities of long-term debt and finance leases	$	4,102			$	3,632
Accounts payable		2,927				2,353
Accrued salaries and wages		1,726				2,377
Air traffic liability		8,526				6,200
Loyalty program liability		3,618				3,453
Operating lease liabilities		1,273				1,309
Other accrued liabilities		2,821				2,738
Total current liabilities		24,993				22,062
Noncurrent liabilities
Long-term debt and finance leases, net of current maturities		28,228				29,270
Pension and postretirement benefits		2,709				3,044
Loyalty program liability		5,994				5,874
Operating lease liabilities		6,457				6,452
Other liabilities		1,503				1,558
Total noncurrent liabilities		44,891				46,198
Stockholders' equity (deficit)
Common stock, 656,045,635 shares outstanding at March 31, 2024		7				7
Additional paid-in capital		7,371				7,374
Accumulated other comprehensive loss		(4,877	)			(4,894	)
Retained deficit		(8,001	)			(7,689	)
Total stockholders' deficit		(5,500	)			(5,202	)
Total liabilities and stockholders’ equity (deficit)	$	64,384			$	63,058