American Airlines Group Inc Q1 2025 Earnings Call Transcript

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

Question: David Scott Vernon - Sanford C. Bernstein & Co., LLC. - Analyst : Robert, so I guess the first question I have for you, the earnings release and materials didn't make much mention around sort of capacity moderation given the weakness that we're seeing in demand. Can you talk about kind of how you're thinking about sizing the network as we get through the second half of the year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 12:30PM, AAL.OQ - Q1 2025 American Airlines Group Inc Earnings Call I mean, clearly, with the financial leverage in the business, I'm sure this is something you guys are looking at it. I'd just like to hear from you kind of what you're thinking about on the capacity front as we look at 2H.

Question: David Scott Vernon - Sanford C. Bernstein & Co., LLC. - Analyst : All right. Maybe just as a follow-up, as you think about the corporate sort of share recovery, is that coming in at the yields you would have expected to be coming in? Or is there a little bit of reinvestment required in terms of recapturing some of that the business here?

Question: Savi Syth - Raymond James Financial - Analyst : I know you mentioned -- it sounds like in 2Q, you're expecting kind of international premium to continue leading the way. But I was curious if you can provide a little bit more color across the four entities on how you -- what's in guidance in terms of performance there?

Question: Savi Syth - Raymond James Financial - Analyst : I appreciate that. And if I could -- on the domestic side, are you expecting much of a deceleration? Or what's the trend into 2Q there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 24, 2025 / 12:30PM, AAL.OQ - Q1 2025 American Airlines Group Inc Earnings Call

Question: Scott Group - Wolfe Research, LLC - Analyst : So just to follow up there, that subset of the business that you're talking about that I guess, maybe domestic, main cabin or indirect, what percentage of the total business is that? And if international is staying. It sounds like international is positive, but correct me if I'm wrong, like are we thinking -- is this business down? Is this a high down? High single-digit kind of RASM right now on this more domestic main cabin part of the business?

Question: Scott Group - Wolfe Research, LLC - Analyst : Okay. And then I guess, are we seeing any signs of that stabilize? Or is it continuing to get worse? And then maybe just like bigger picture. A year ago in Q2, you guys underperformed on RASM, and we heard about while we lost a lot of corporate. We're now getting the corporate back. Why aren't we seeing the RASM benefit of that, at least relative to some of the others?

Question: Conor Cunningham - Melius Research LLC - Analyst : Just going back to the US domestic market. I realize this is a short-term question, and I hate to ask it. But can you talk about how you've changed your revenue management systems? Are you doing what Delta and United are doing essentially in opening up basic economy earlier? And the question -- the reason why I asked that is like the industry in general has a lot more seats to sell in June versus April. So are you seeing incremental discounting into a month like that relative to the month of April in general?

Question: Conor Cunningham - Melius Research LLC - Analyst : Okay. And then United spent a lot of time on their call talking about share shift in Chicago. And I'm just trying to understand from your corporate travel expectation as you exit this year. Like can you talk about the importance of rebuilding New York in Chicago in general and how that correlates to getting back the corporate share that you lost from the distribution changes in general?

Question: Jamie Baker - JPMorgan Securities - Analyst : First one for Devon. So you're obviously not buying back stack at the moment, which is a good thing. But curious how we should think about your approach to minimum liquidity and CapEx if operating cash flow deteriorates from here. So which bucket or buckets, plural, collateral would you consider easiest to tap, given where market yields are right now?

Question: Jamie Baker - JPMorgan Securities - Analyst : Okay. And then following on Conor's question and it wouldn't be an American earnings call, I suppose if I didn't ask about one of your hubs. But looking at Chicago, it seems that a pretty material portion of the capacity restoration is really early in the morning or pretty late at night. Can you comment on how RASM sort of at the edges of the Workday, however you define that, compares to that of, I don't know, daylight hours for lack of a better term, although I suppose that's not a good term for the summer, but you get the idea.

Question: Duane Pfennigwerth - Evercore ISI - Analyst : Just on the corporate share recapture, it's hard to find that in your guidance and understand it's a dynamic backdrop for sure. But what would be offsetting the share recapture if you're winning back corporates from a margin and from a, I guess, implied RASM perspective?

Question: Duane Pfennigwerth - Evercore ISI - Analyst : Okay. And then apologies, I really don't want to ask another Chicago question, but I'll venture down the path. Again, it might be hard to parse in this backdrop. But can you contrast, presumably, some of this was about taking pressure off of a market like Charlotte versus the investment that you're making in a market like Chicago. Can you just help us size the relative benefit in Charlotte from a RASM and margin perspective versus the relative investment in Chicago. And I guess, when are we done? What inning are we in of that rebuild in Chicago?

Question: Catherine O'Brien - Goldman Sachs - Analyst : Maybe just one more on the 2Q revenue guidance if you allow it. Steve, I think you were talking about you're expecting to see momentum in international through the summer, that's looking strong, offsetting some of that being cabin. So I guess underlying your revenue guidance, are you expecting each international geography to see PRASM improve relative to its 1Q performance and the decel is all domestic? Or have I got that scrambled.

Question: Catherine O'Brien - Goldman Sachs - Analyst : Understood. And maybe one for Devon. You guys understandably pulled for your EPS in this very uncertain backdrop, and you know there's downside bias to your capacity outlook. But if you wind up growing low single digits as was your plan back in January, are you still thinking CASM would be up mid-singles or with the incremental cost savings you highlighted earlier, could you do better than that?

Question: Stephen Trent - Citi Investment Research - Analyst : First, I was kind of curious when we think about 2026, I know it seems like an eternity from now. But looking at sort of the World Cup event on the horizon. Would you guys expect any flux vis-a-vis what we saw in the transatlantic for the Paris Olympics last year? Or do you guys have a, let's say, a relative advantage versus other pairs because of a high US point of sale?

Question: Stephen Trent - Citi Investment Research - Analyst : Okay. Super, Robert. Really appreciate that. And just as a quick follow-up to that. Could you sort of refresh my memory approximately where is your -- the percentage of US point of sale for your international?

Question: Ravi Shanker - Morgan Stanley - Analyst : Just a follow-up on the normalization of share in indirect distribution and corporate. How macro sensitive or agnostic is that share recovery?

Question: Ravi Shanker - Morgan Stanley - Analyst : That's helpful. And maybe as a follow-up, apologies if I missed this, but can you talk about book away following the tragic accident and whether or not that has normalized since?

Question: Michael Linenberg - Deutsche Bank AG - Analyst : I just want to go back with -- Steve, you talked about corporate trending up or being up. I mean if we look at managed business revenue, that was up 8% in the March quarter. Based on what you're seeing now and the fact that you also have a fairly easy comp because of the sort of the distribution strategy from a year ago and the fact that you are gaining back share, is that increase -- should we expect that increase to be higher in the June quarter? That managed business revenue will be better than up 8% given kind of the underlying kind of factors that I just mentioned?

Question: Michael Linenberg - Deutsche Bank AG - Analyst : Okay. Great. And then just on a second question here. Obviously, there's -- it seems like there's a lot of movement around with respect to the real estate in Chicago. If we think about your gate position today and where we are over the next, call it, six months or so as gates are reallocated, where are you on a net basis on a -- I mean, I think it's been reported that you lose gates, but then there's the offset -- or there's the opportunity to use common use gates. So on a net basis, what happens to your gate position in Chicago? Are you down or are you flat? Any color there would be great.

Question: Andrew Didora - Bank of America Securities - Analyst : Most of my questions around certainly 2Q have been asked and answered. But just one question from me for Devon. On the sub-$35 billion of debt by the end of 2027. Just curious what you are assuming for liquidity over that time frame as I know you have a lot of debt coming due over the next few years. So just curious how you're thinking about liquidity.

Question: Tom Fitzgerald - TD Cowen - Analyst : I'm just kind of curious on corporate generally, both large managed accounts and the small and medium-sized enterprises, if there's any pockets of green shoots or any sectors that are demand is looking a little more resilient than some of the sectors like autos or agriculture that we hear about in the news.

Question: Tom Fitzgerald - TD Cowen - Analyst : Okay. That's really helpful. And then just going back to the topic about international travel and cross-border flows. What have your conversations been like with your government relations team or your contacts in D.C. about conveying the importance of smooth cross-border flows to policymakers?