American Airlines Group Inc at Goldman Sachs Industrials and Materials Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : All right. That's an exciting intro and not to be a Debbie Downer and take us back to some dark times, but this year got off to a rough start, a lot of uncertainty around the economy and trade and 2025 results are going to look really different at American and at the rest of the industry than what we thought in January. Against that backdrop, is there anything underlying the bottom line results that you would highlight that actually went better than planned?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : And maybe just on '26, this year didn't go as planned, but are those issues in the rearview mirror? Are we entering '26 in the place you thought we would be? Like is there any bleed over from 2025 issues in 2026?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : That's great. And maybe you brought up the government shutdown. We've had a mix of updates and non-updaters. You're in the non-update crew. Any thought -- can you just talk about what you saw in terms of booking impact around the shutdown and the FAA flight reduction order? And then where are we today? I know it's only been a couple of weeks, but like would love to just hear about the arc of the recovery.

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : Okay. That's great. Maybe moving to cost performance, which I know has been a bit of a feather in your cap over recent years. My interpretation of your latest comments on the medium-term outlook is that mid-single-digit capacity growth would drive approximately low-single-digit unit cost growth, which will drift higher or lower depending on maintenance timing or labor step-ups. Can you remind us of any headwinds or tailwinds we should be keeping in mind in 2026 against that longer-term framework?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : So on the theme of efficiency, on the last call, you noted that most of your work groups are more productive today than they were in 2019. Can you dig in on what's driving that? Is it work rule changes from latest contracts, technology, something else?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : And that should be a tailwind again in '26?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : Okay. Great. Moving to the fleet. You have one of the youngest fleets of your mainline peers and solid stream of deliveries through the end of the decade. But I'm coming off the GS Aircraft Leasing Conference yesterday, and we talked a lot about lengthy backlogs that are stretching into the 2030s for narrowbodies and widebodies, even starting mid-2030s really after the conversation yesterday. Are you happy with the capabilities of the aircraft you currently have on order? Could there be something incremental that would make sense from what's currently available from the OEMs?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : And when would you have to press the button on the options? Is that like a rolling? Like how flexible is that for you? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 03, 2025 / 8:05PM, AAL.OQ - American Airlines Group Inc at Goldman Sachs Industrials and Materials Conference

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : Okay. Got it. Moving to commercial initiatives. So when I last got to go down and spend some time with the team in September, we talked a lot about product investments that are coming in the large expansion of your premium cabins. I think it's 20% total increase in premiums seats and a 50% increase in lie-flat between now and 2030. I guess maybe more of a philosophical one to start. Back when we started talking about premiumization pre-pandemic, the sell side scoffed. It was quite nervous about this. I guess in the now, the more premium, the better. We're all super excited about that. 50%, why not 75%? Just kidding. But I guess, what do you think has driven the success of the push into more premium for the industry?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : Great. And I guess, I think also back in September, some of these investments in clubs and fleet that would fall into the non-aircraft bucket (inaudible). I think you said you think that's going to be around $1 billion, $1.5 billion over the next couple of years. Is that right?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : Okay. Got it. And then relatedly, from all of this premium seat config increase, what do you think the margin opportunity is for that? Like maybe -- I mean, I don't know if it's too short term to talk about, but like is that a major tailwind you're thinking about into 2026? Like how do we think about it over the next five years? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 03, 2025 / 8:05PM, AAL.OQ - American Airlines Group Inc at Goldman Sachs Industrials and Materials Conference

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : That's great. And we already touched on the Citi agreement a little bit. We got -- was announced at this conference last year. So I guess, I think, the contract was designed to be fairly ratable over the course of the contract. So no big step in year one, followed by a plateau. So could you just maybe talk about how we're going to see that impact the P&L over the next couple of years? And really, how is the -- it seems like to me that the contract was designed more to drive card acquisition, engagement, like any help there?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : Okay. Great. Moving to the balance sheet. At the risk of always asking you what's next versus pausing, but congratulations on what you've accomplished so far. What is your view long term on where airline leverage should be? One of your peers is now targeting 1 times gross leverage. I believe you shared on your last call that getting to gross debt of less than $35 billion will put American about 3 times net debt to EBITDAR. Where do you come outweighing potentially reduced earnings volatility versus balance sheet efficiency?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : All right. We'll be patient, fine. Maybe a follow-up on the last question. At what point on the balance sheet journey does shareholder return start becoming part of the calculus? How much of a focus is returning cash to shareholders for you and the management team?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : Okay. Got it. And as we get closer to the end of '25, I want to talk about the indirect share journey that you have been on. We're on track to get back. I guess maybe two questions. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 03, 2025 / 8:05PM, AAL.OQ - American Airlines Group Inc at Goldman Sachs Industrials and Materials Conference First one, is the margin profile of the revenue that you're going to have recovered by year-end the same as it was before? And I guess, really the question is more, should we be thinking of this as an opportunity that maybe there was a little bit of sweetening the pot to get corporates back on side mid-contract. And so therefore, the revenue is back, but maybe the next leg, there's some sort of margin expansion on top of that.

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : And I guess maybe just a follow-up on that. What do you think drives that incremental share? Is it some of the product improvements you're talking about? Is it regaining share in Chicago? Like is it maybe your old fair share, you don't think it actually was fair share? Like what do you think drives the move from here's our historical share to like whatever the number you come up with higher should be?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : That's great. And maybe just following on the growth in Chicago, Philadelphia. That's been a big focus this year. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 03, 2025 / 8:05PM, AAL.OQ - American Airlines Group Inc at Goldman Sachs Industrials and Materials Conference As we look into next year, is it about annualizing that growth? Is it continuing to densify those markets? I know we've also talked about Miami, Phoenix, like where do you see the growth opportunities for '26 in the network?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : Is the gating factor right now airport constraints driven? Like are we -- I know OEMs -- it sounds like we're delivering below what we thought we would be in 2019, but maybe we're starting to get a little bit more flow through and a little bit more predictability. Like what's the gating factor to growth, I guess, if we go into next year and we have the opposite of this year, and it's an unexpected boom in demand, and we're all super excited about that. What's the opportunity to flex up if there is one?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : Okay. Got it. And maybe just on the opposite of my last question on the downside protection. It sounds like there's a lot of off-ramps on fleet through retirement, through lease returns. How reticent would you be and how to cut non-aircraft CapEx, some of these investments in product? And how much flexibility is there to do so? Like are the seats already being built and they're arriving and there's not really any way to back settle that?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : Okay. Got it. We've got a couple of minutes left. So I always like to close with the same question as I usually wind up getting some good food for thought for the next couple of months here. Is there something that you're really excited about or something or two you're really excited about over the next one, two years? And is there anything -- happy to just hear the punch list, but is there something that's in the back of your head that you really think we on the Street are missing from the punch list of what you're excited about?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : And maybe just to sneak in one last quick one. We talked about it earlier. I think it's well documented. Domestic was a bit of a laggard this year. You're one of the more domestic facing of the Big 3, not too different than Delta, but less than the United. Should we be thinking about -- like based on what trends you're seeing now in the domestic part of your network, should that be another tailwind we should be focused on for next year?

Question: Catherine O'Brien - Goldman Sachs Group Inc - Analyst : All right. Great. I think that's a nice positive note to end off on. So Devon, thank you so much for joining us today.