American Airlines Group Inc Q3 2024 Earnings Call Transcript

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

Question: Andrew Didora - BofA Global Research (US) - Analyst : Hi, good morning, everyone. First question for Robert. I guess, when I look at your total revenue growth, it's been sort of flattish and for the last six quarters here. Obviously, trailing GDP, but also, I mean, other global carriers. Do you think you can get back to GDP type style top line growth, and what do you need to see to get there from here? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 12:30PM, AAL.OQ - Q3 2024 American Airlines Group Inc Earnings Call

Question: Andrew Didora - BofA Global Research (US) - Analyst : Got it. And, and on that co-brand standpoint, perspective, I guess there was a press article last month that spoke about you potentially consolidating your card program with just Citi. Where do negotiations stand with regards to new economics there? And I think at Investor Day, we're talking about maybe timeline by year end 2024 in terms of potential timeline of getting a deal across the finish line. Does that still seem reasonable? Thank you.

Question: Scott Group - Wolfe Research - Analyst : Hey, thanks, good morning, guys. So, RASM was down 2% in the third quarter. I presumably improved throughout the quarter. The fourth quarter, guide down 1% to 3%, I guess, doesn't really imply any incremental improvement and any color on why and then maybe any regional color. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 12:30PM, AAL.OQ - Q3 2024 American Airlines Group Inc Earnings Call

Question: Scott Group - Wolfe Research - Analyst : Okay. And then just secondly, you made a comment about low single digit capacity growth for '25. What do you think that any early thoughts on what that should mean for CASM? and then, you sound confident about the corporate recovery by the end of '25. What's the revenue opportunity from that?

Question: Michael Linenberg - Deutsche Bank - Analyst : Hey. Good morning, everyone. Robert, I want to touch back on the distribution chart where you show that sequential improvement. I get, maybe every point is about $140 million on an annual basis. Where are we with the $1.5 billion whole? Is that still the hit this year? Despite the fact that, we are starting to see improvement right now, and the fact that we are seeing this type of improvement. It doesn't seem like you're really, incorporating much of it in the fourth quarter, given the fact the flat RASM -- excuse me, the down 1% to 3% RASM guide similar to what you did in the September quarter?

Question: Michael Linenberg - Deutsche Bank - Analyst : Okay, great. And then just a capacity question. I do see that your supply is down a bit in some of your international markets like Transatlantic. And presumably that's being driven by airplanes that are going through a reconfiguration. Can you just talk about that reconfiguration program and maybe how many wide bodies it will take out? If your fleet as you, as you expand your premium offering? Thanks for taking my questions.

Question: Jamie Baker - JPMorgan - Analyst : Hey, good morning, everybody. So, if we look at the third quarter, non-GAAP earnings were, pretty similar to those of last year's third quarter. But on fuel, that was $0.40 a gallon lower. If we look at the guide for the fourth quarter, at the midpoint of EPS, you're obviously up year on year, but on fuel, that's $0.70 lower. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 12:30PM, AAL.OQ - Q3 2024 American Airlines Group Inc Earnings Call The point is, if we normalize for fuel, your core in the fourth quarter year on year, looks like it's doing worse than in the third quarter. What do you think explains that?

Question: Jamie Baker - JPMorgan - Analyst : And second, when we -- and thanks Devon. When we think about management priorities, Robert has said that he's spending a lot of time, helping repair corporate relationships and progress is being made and operations are markedly improved the balance sheet continues to improve. There's a loyalty kicker coming, these are all good things. My question relates to the network. I'm curious what you think your greatest network deficiencies are and more importantly, does the management have the appetite or is it a priority to address those deficiencies? Thanks in advance.

Question: Savi Syth - Raymond James - Analyst : Hey, good morning. I was wondering, if you could just go to follow up on Scott's question earlier. Provide a little bit more color in the fourth quarter trend here and you called out noise, election. I think I'm I was not sure if there was a Milton impact in there. I wonder if you could, just help us understand the unit revenue guide that you provided and what the core trend might be both kind of in the domestic and the various international markets.

Question: Savi Syth - Raymond James - Analyst : I appreciate that. And then just on the, I know it's very early days on the 2025 capacity growth and I appreciate the color there. Just curious, in connection to the unit cost, headwinds mentioned maybe a little bit more regional growth than mainline. I was curious if you can talk about how high level how you're thinking about kind of domestic growth versus maybe near international versus international?

Question: Conor Cunningham - Melius Research LLC - Analyst : Hi everyone. Thank you. Maybe following up to Jamie's question. On the product side, you're talking to your corporates now pretty in depth and I imagine you're engaging with regular customers in general, but just have preferences changed at all in terms of on-board experience. Now, you have United talking about free WiFi, you have Southwest rolling out their premium experience. Just curious on how you view you -- how American's product kind of stacks up to the industry at this point. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 12:30PM, AAL.OQ - Q3 2024 American Airlines Group Inc Earnings Call

Question: Conor Cunningham - Melius Research LLC - Analyst : Super detailed. Appreciate that, Robert. And then, you're talking about renegotiation, with corporates and engaging with them again, is that in line with your expectations, the exit rate and then the word that caught me by surprise, I think was just you dropped the word competitive as you renegotiate the contract. Does that mean that the revenue recapture that you're seeing is coming in at a lower margin going forward? Thank you.

Question: Duane Pfennigwerth - Evercore ISI - Analyst : Hey, good morning. Thanks. Just a couple. On the fleet delays, I'm just wondering how impactful these are to your 2025 planning if you have any sense for what your 2025 growth. Might have looked like absent any fleet delays or is this more about delaying aircraft retirements and then relatedly in a follow up to, how are you thinking about utilization expansion next year? Which I think was a big theme entering this year.

Question: Duane Pfennigwerth - Evercore ISI - Analyst : Thanks for that. And then, in terms of corporate share recovery, I don't know if you're willing to speak to this. But where do you think the old strategy hurt you the most geographically was the share loss really even across your network in places like DFW and Charlotte and Steve, maybe your Dodgers shout out, gives us a clue. I don't want to read too much into it. But, where do you think this pivot will help you most.

Question: Stephen Trent - Citi Investment Research (US) - Analyst : Yes, good morning, gentlemen, and thanks for taking my time -- taking the time for my questions and to the other Steve on the call. We're quite baseball focused here as well. So, appreciate that. Just a bit of a follow up when I think about maintenance. I know you guys have a relatively young fleet. But have you thought about maybe other strategies, engine module swaps or using drones or these kinds of things when you think about your aircraft maintenance strategy? Thank you.

Question: Stephen Trent - Citi Investment Research (US) - Analyst : Very helpful. Thank you very much. And just a quick follow up as well. All the changes you're making with corporate and what have you. Have you contemplated making any adjustments or any other adjustments in your frequent flyer program? For example, some of your competitors have mileage programs where their points don't expire. Thank you.

Question: Tom Fitzgerald - TD Cowen - Analyst : Thank you so much for the time, everyone. Thinking about the WiFi and is that free WiFi starts to become table stakes across the industry? Are you concerned at all about the revenue headwind that could present?

Question: Tom Fitzgerald - TD Cowen - Analyst : That's really helpful. Thanks. And then just quickly on the with the CapEx, some of that shifting to the right, would you look to accelerate any debt pay down? Thanks again for the time.

Question: Daniel Mckenzie - Seaport Global Securities LLC - Analyst : Hey, thanks, good morning, guys. Going back to technology being a key item and your comment on IT investments. I understand I can drive improved maintenance, but on revenue, is there a revenue opportunity from getting the right offer in front of the customer at the right time? And for those with a longer time frame, what does the upside look from look like from that potential upsell?

Question: Daniel Mckenzie - Seaport Global Securities LLC - Analyst : Yeah. And if I could just follow up with one more on AI driving improved efficiency because that's exactly what I was getting. At bigger picture, what do you want the efficiency metrics to look like, say one or two years from now? And what kind of cost savings could that potentially imply?