American Airlines Group Inc Q4 2024 Earnings Call Transcript

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

Question: Scott Group - Wolfe Research - Analyst : So Devon, I think you laid out CASM going from high single to start the year towards low singles ending the year. It doesn't seem like guidance implies a big deceleration in RASM throughout the year. So can you just talk about like how you see the progression of like price cost on like a net basis trending throughout the year?

Question: Scott Group - Wolfe Research - Analyst : Okay. And then can you just talk about maybe the progression of RASM throughout Q4, and then just regionally how you see RASM playing out in Q1, like transatlantic was up 12% in Q4, can that sustain itself in the near term? Just any regional color?

Question: Jamie Baker - JPMorgan Chase & Co - Analyst : Saw an interesting statistic that United throughout yesterday was that the margin gap between its best and worst performing hubs had narrowed to, I guess, the lowest gap in, I think it was 9 or 10 years. We've discussed American's relative performance on these calls and in person for quite some time, but I never asked about the range. Would you be willing to comment on that margin range between your top and bottom hubs and whether it's improving or widening? Obviously, a lot of moving pieces in many of your hubs at the moment.

Question: Jamie Baker - JPMorgan Chase & Co - Analyst : That's helpful. And then while I have you, Robert, when I last saw you, which I think was in September, you mentioned you were spending half your time on efforts to reconcile with corporate accounts. And I think you said that publicly at a conference or two. And I don't know if you actually meant precisely 50% or if that was just sort of metaphorical. But by the way you described the effort in your prepared remarks makes it sound like most of that effort is behind you. Is that the right interpretation? I guess, I'm just confused on exactly where American is on the reconciliation front and how managed corporate recovery trends from here.

Question: Conor Cunningham - Melius Research LLC - Analyst : Hi, everyone. Can you hear me now?

Question: Conor Cunningham - Melius Research LLC - Analyst : Someday I'll figure out how to use this -- someday I'll figure out how to use this phone. Can you -- so I'm just trying to take all this. You sound like there's upside indirect corporate share regains and then the loyalty stuff, as well as just like sequentially improving costs throughout the year. But your full year guidance at the low end suggests a decline year-over-year in earnings. And I'm just trying to understand that part a little bit better. It just seems -- like are you assuming that the main cabin doesn't get any better from here? It just seems really conservative just given what we've heard from you today and what we've heard from others so far. Just trying to understand it a little bit better.

Question: Conor Cunningham - Melius Research LLC - Analyst : Okay. That's helpful. And then on the Citi contract, or Citi, the renegotiation, I'm just trying to understand that a little bit better. So the economics change in '26. But I think that there's a volume and spend-related component in '25. So can you just help bridge the contribution of how that will evolve, earnings contribution, how that evolves over that -- the change from '25 to '26? It just seems again like there's potential for it to surprise, so just about that.

Question: Conor Cunningham - Melius Research LLC - Analyst : Yes. No, that's -- thank you very much.

Question: Ravi Shanker - Morgan Stanley & Co. LLC - Analyst : I just wanted to start with a follow-up on the corporate normalization commentary. I think you said that you adjusted the economics for some of the biggest accounts there. Can you just unpack that a little bit more? How does the profitability of the corporate business compare to where it was before, now that -- or once the share is normalized?

Question: Ravi Shanker - Morgan Stanley & Co. LLC - Analyst : Great. That's a helpful explanation. And maybe as a follow-up, you guys mentioned upgraded WiFi, which is great to hear. But kind of as we kind of enter like a new era of premium cabins, if you will, obviously, you guys have new planes. But how do you think about bring-your-own-device versus screens on seats, and maybe the ability to kind of monetize those screens over time?

Question: Ravi Shanker - Morgan Stanley & Co. LLC - Analyst : So the question was kind of, as we enter a new era of premium cabins, how do you guys think about bring-your-own-device versus having integrated screens on seats, kind of does one versus the other kind of impact your ability to either kind of sell a premium service or monetize that screen over time?

Question: Duane Pfennigwerth - Evercore ISI - Analyst : Just on your Northern hub build-out, that comment kind of caught our attention. Can you talk about what inning you're in and maybe expand on how much of your footprint transitioned over to JetBlue, how much of that has transitioned back, and basically what your footprint in your Northern hubs looks like now versus pre-pandemic?

Question: Duane Pfennigwerth - Evercore ISI - Analyst : That's helpful. And then I don't know if you have a metric to share, but just on how you measure competitive capacity. How do you see that in 1Q and maybe an early read on 2Q versus what you were seeing maybe in 4Q?

Question: Michael Linenberg - Deutsche Bank - Analyst : Two sort of fleet related questions here. Just on the comment on growing your international fleet from 120 to 200 by 2029. At that point in time, how many A321neo XLRs will you have in your fleet, at that point? And presumably, that's in that 200 number.

Question: Michael Linenberg - Deutsche Bank - Analyst : Right. And then just my second question, as we think about fleets getting old, and I know your fleet is aging and we start and more specifically, wide-bodies and the ability to procure widebodies. I know economically, it makes sense to procure narrow bodies from both OEMs. You guys do that. It's helped you out well with the MAXs and the 321 or 320neos. Are we at a point where the decision to do that with widebody aircraft, whether it's to procure from different OEMs, or even from two different families within the same OEM when you think about your replacement for your wide-bodies probably later this decade?

Question: Brandon Oglenski - Barclays Capital, Inc - Analyst : Robert, I guess if you step back, I mean, because obviously, so much has changed in the past year, especially since the Investor Day, I think, in March of last year. But obviously, you've talked about a lot getting corporate share back. But how would you articulate American's commercial strategy going forward today? And I guess I'm just observing here, but it feels like maybe you're still in a zone of defense. When does that then transition into an offensive front with that strategy?

Question: Brandon Oglenski - Barclays Capital, Inc - Analyst : I appreciate that, Robert. And then, Devon, I know you talked a lot about the cost headwinds this year. But is there any productivity offsets potentially in these new labor agreements and especially in the context of that simplified fleet that Robert was just discussing? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 23, 2025 / 1:30PM, AAL.OQ - Q4 2024 American Airlines Group Inc Earnings Call

Question: Alison Sider - The Wall Street Journal - Analyst : Curious, after the Starship breakup last week, how concerned are you about sort of the operational and safety impacts from space launches? And is there anything you're asking the FAA to do differently in terms of kind of how it handles those?

Question: Alison Sider - The Wall Street Journal - Analyst : Got it. And I mean, do you know or is there anything you want to be done differently for future launches in terms of the sort of perimeter for the closed air space or the timing of launches or anything you're looking to change from a safety perspective? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 23, 2025 / 1:30PM, AAL.OQ - Q4 2024 American Airlines Group Inc Earnings Call

Question: Mary Schlangenstein - Bloomberg News - Analyst : I wanted to ask about the IFE on the premium, Devon, that you're talking about going forward. I'm wondering what was -- what's been responsible for that shift in your approach on IFE? It's just competitive pressure, something that consumers are demanding? Or what's behind that?

Question: Mary Schlangenstein - Bloomberg News - Analyst : Right. But you don't currently have IFE on your international wide-bodies? Or am I wrong on that?

Question: Mary Schlangenstein - Bloomberg News - Analyst : Thank you. Sorry about that. And the other question I wanted to ask was, what changes that you potentially foresee from the Trump administration in terms of either the operations of the FAA and ATC, issues with them trying to step up hiring or make changes faster than the past administration had to change the ATC, issues affecting the airlines?

Question: Leslie Josephs - CNBC - Analyst : Just considering what the Trump administration has said about DEI and how they're extending that ordering changes within the federal government. I was curious where American Airlines stands. I see the website says DEI are foundational to American Airlines culture and that you plan to lead the industry with DEI. Any changes there internally? And do you have any concerns about the review at the FAA that the federal government is doing?