American Airlines Group Reports Third Quarter Profit
- Third quarter 2016 pre-tax profit of
$1.2 billion , or$1.5 billion excluding special charges, and net profit of$737 million , or$933 million excluding special charges - Third quarter 2016 earnings per diluted share was
$1.40 versus$2.49 for the same period last year. Third quarter 2016 adjusted1 earnings per diluted share was$2.80 versus$2.77 for the third quarter 2015 - As part of its profit sharing plan, the Company accrued
$86 million in the third quarter. This brings the year-to-date accrual for profit sharing to$257 million - Returned
$669 million to stockholders through share repurchases and dividends in the third quarter - Successfully completed the Company’s largest IT cutover since the merger with no disruption to service
The Company reported a Generally Accepted Accounting Principles (GAAP) net profit of $737 million, or
The impact of the year-over-year change in non-cash income tax expense is removed by comparing pre-tax income. The Company reported a third quarter 2016 GAAP pre-tax income of
Adjusted1 third quarter 2016 earnings per diluted share was
“These outstanding results are due to the efforts of our more than 100,000 team members, who are working tirelessly to improve our operations, product, and customer experience,” said
“With integration successes like this behind us, we are even more excited about the future. We are investing in our people and our product and are well along the path to restoring American as the greatest airline in the world.”
Third Quarter 2016 Highlights
GAAP | Non-GAAP | ||||||||||||
3Q16 | 3Q15 | 3Q16 | 3Q15 | ||||||||||
Total operating revenues ($ mil) | $ | 10,594 | $ | 10,706 | $ | 10,594 | $ | 10,706 | |||||
Total operating expenses ($ mil) | 9,163 | 8,707 | 8,869 | 8,542 | |||||||||
Operating income | 1,431 | 1,999 | 1,725 | 2,164 | |||||||||
Pre-tax income ($ mil) | 1,189 | 1,709 | 1,483 | 1,895 | |||||||||
Pre-tax margin | 11.2 | % | 16.0 | % | 14.0 | % | 17.7 | % | |||||
Net income ($ mil) | 737 | 1,693 | 933 | 1,885 | |||||||||
Earnings per diluted share | $ | 1.40 | $ | 2.49 | $ | 1.76 | $ | 2.77 | |||||
Adjusted 1 earnings per diluted share | n/a | n/a | $ | 2.80 | $ | 2.77 | |||||||
Revenue and Cost Comparisons
Total revenue in the third quarter was
Total operating expenses in the third quarter were
Third quarter mainline cost per available seat mile (CASM) was
Fleet
As part of the Company’s ongoing fleet renewal program, the Company invested
Liquidity and Capital Return Program
As of
The Company returned
Share repurchases under the buyback programs may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Any such repurchases will be made from time to time subject to market and economic conditions, applicable legal requirements and other relevant factors. The programs do not obligate the Company to repurchase any specific number of shares or continue a dividend for any fixed period, and may be suspended at any time at the Company's discretion.
The Company also declared a dividend of
Notable Accomplishments
Integration Accomplishments
- On
Oct. 1 , the Company smoothly integrated all 15,000American Airlines pilots and its mainline fleet into a single scheduling system, a crucial step in unlocking the full potential of the Company’s network and airline. The successful completion of this company-wide project allows the Company to schedule pilots and aircraft seamlessly regardless of which pre-merger airline they came from. It will also allow pilots to receive the full benefits of their single seniority list and joint collective bargaining agreement - Reached an agreement with the
TWU-IAM Association for pay increases for mechanics, fleet service and other employees while negotiations continue for a full joint collective bargaining agreement. In September, the Company and theTWU-IAM Association reached a tentative agreement on a new joint collective bargaining agreement for flight simulator engineers - Debuted new uniforms for 80,000 flight crew members, mechanics, and employees at airports, clubs and lounges
- In October, reached an industry-leading tentative agreement with the
Transport Workers Union for a new joint collective bargaining agreement covering flight crew training instructors and simulator instructors
Finance, Marketing, and Network Accomplishments
- Announced new agreements with partners Citi and Barclaycard US to extend their relationships, as well as a new, long-term exclusive agreement with
MasterCard , to provide AAdvantage® miles and other benefits to customers - Took delivery of the Company’s first
Boeing 787-9 aircraft, the first of four 787-9s expected to be delivered this year. These aircraft are the first at a U.S. airline to offer Premium Economy seating, a new class of service on international flights with more legroom and wider seats. International service on these aircraft beginsNov. 3 toSao Paulo and onNov. 4 toMadrid - Launched several financing transactions during the quarter, including the
$814 million 2016-3 Enhanced Equipment Trust Certificates, which consists of both AA and A tranches, and re-priced the Company’s 2014 Credit Facilities, which reduced the interest rate by 25 basis points - Launched new nonstop service between
Los Angeles International Airport andHong Kong onSept. 7 The U.S. Department of Transportation tentatively awarded American a slot pair for service betweenLos Angeles International Airport and Tokyo Haneda, allowing American to shift its service to more favorable daytime hours- Expanded complimentary in-flight entertainment offerings to include premium movies, TV shows, music and games in the Main Cabin on all domestic flights with seatback entertainment and wireless streaming entertainment, giving customers unrestricted access to the largest content library among the U.S. carriers from their seatback entertainment system or their own device
- Began the Company’s first-ever regularly scheduled flights to
Cuba onSept. 7 with nonstop service fromMiami to Cienfuegos and Holguin.Havana service begins in November - Reopened the Company’s
London Heathrow Arrivals Lounge following a multi-million dollar refurbishment that radically changed the overall look and ambiance of the facility. The lounge now features 29 top-notch shower rooms, a business center and meeting room. The Company also re-opened its newAdmirals Club lounge atRio de Janeiro airport - Announced that the Company’s new campus would be named after former Chairman and CEO
Robert Crandall
Community Relations Accomplishments
- Received the top score of 100 on the 2016 Disability Equality Index® and was named a “2016 DEI Best Places to Work”
- Participated in the “Stand Up To Cancer” telecast, which was broadcast live on all major networks and more than 50 cable channels. Funds raised during the broadcast will further groundbreaking research to turn more patients into survivors
- Honored four employee recipients of the eighth annual
Earl G. Graves Award for Leadership in Inclusion and Diversity - Announced a multi-year financial commitment of
$1 million to the Answer ALS research project to help end amyotrophic lateral sclerosis - Brought 180 World War II, Korean and Vietnam War veterans from
Asheville, N.C. toWashington D.C. to spend the day at the memorials to those wars. The flight marked both the 10th anniversary of American’s partnership with the Honor Flight Network and American’s 500th Honor Flight since the first one arrived inWashington in 2006 - Launched a partnership with TurboVote, a non-partisan, nonprofit organization that assists in voter registration, to help its U.S. employees register to vote
Special Items
In the third quarter, the Company recognized
Conference Call / Webcast Details
The Company will conduct a live audio webcast of its earnings call today at 7:30 a.m. CDT, which will be available to the public on a listen-only basis at aa.com/investorrelations. An archive of the webcast will be available on the website through Nov. 20.
Investor Guidance
For financial forecasting detail, please refer to the Company’s investor relations update, to be filed with the
About
1 Adjusted earnings exclude non-cash income tax provision and special charges where noted. 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.
Cautionary Statement Regarding Forward-Looking Statements and Information
This document includes forward-looking statements within the meaning of 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 future financial and operating results, the Company’s plans, objectives, estimates, expectations and intentions, and other statements that are not historical facts such as, without limitation, statements that discuss the possible future effects of known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. 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 the following: significant operating losses in the future; downturns in economic conditions that adversely affect the Company’s business; the impact of continued periods of high volatility in fuel costs, increased fuel prices and significant disruptions in the supply of aircraft fuel; competitive practices in the industry, including the impact of low-cost carriers, airline alliances and industry consolidation; the challenges and costs of integrating operations and realizing anticipated synergies and other benefits of the merger transaction with
American Airlines Group Inc. | |||||||||||||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||||||||||||
(In millions, except share and per share amounts) | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
3 Months Ended September 30, |
Percent | 9 Months Ended September 30, |
Percent | ||||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||||
Operating revenues: | |||||||||||||||||||||||
Mainline passenger | $ | 7,419 | $ | 7,654 | (3.1 | ) | $ | 21,192 | $ | 22,298 | (5.0 | ) | |||||||||||
Regional passenger | 1,731 | 1,699 | 1.9 | 5,040 | 4,910 | 2.7 | |||||||||||||||||
Cargo | 171 | 180 | (5.1 | ) | 506 | 568 | (10.9 | ) | |||||||||||||||
Other | 1,273 | 1,173 | 8.5 | 3,653 | 3,584 | 1.9 | |||||||||||||||||
Total operating revenues | 10,594 | 10,706 | (1.1 | ) | 30,391 | 31,360 | (3.1 | ) | |||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Aircraft fuel and related taxes | 1,393 | 1,593 | (12.6 | ) | 3,736 | 4,912 | (23.9 | ) | |||||||||||||||
Salaries, wages and benefits | 2,772 | 2,404 | 15.3 | 8,094 | 7,141 | 13.4 | |||||||||||||||||
Regional expenses: | |||||||||||||||||||||||
Fuel | 303 | 310 | (2.4 | ) | 801 | 970 | (17.4 | ) | |||||||||||||||
Other | 1,235 | 1,208 | 2.3 | 3,687 | 3,566 | 3.4 | |||||||||||||||||
Maintenance, materials and repairs | 481 | 456 | 5.3 | 1,352 | 1,452 | (6.9 | ) | ||||||||||||||||
Other rent and landing fees | 463 | 432 | 7.2 | 1,342 | 1,290 | 4.0 | |||||||||||||||||
Aircraft rent | 299 | 308 | (3.0 | ) | 908 | 941 | (3.6 | ) | |||||||||||||||
Selling expenses | 347 | 366 | (5.0 | ) | 990 | 1,051 | (5.9 | ) | |||||||||||||||
Depreciation and amortization | 399 | 336 | 18.6 | 1,128 | 1,013 | 11.4 | |||||||||||||||||
Special items, net | 289 | 163 | 77.8 | 450 | 610 | (26.3 | ) | ||||||||||||||||
Other | 1,182 | 1,131 | 4.5 | 3,386 | 3,278 | 3.3 | |||||||||||||||||
Total operating expenses | 9,163 | 8,707 | 5.2 | 25,874 | 26,224 | (1.3 | ) | ||||||||||||||||
Operating income | 1,431 | 1,999 | (28.4 | ) | 4,517 | 5,136 | (12.0 | ) | |||||||||||||||
Nonoperating income (expense): | |||||||||||||||||||||||
Interest income | 16 | 10 | 70.6 | 45 | 29 | 54.9 | |||||||||||||||||
Interest expense, net | (250 | ) | (219 | ) | 14.3 | (738 | ) | (651 | ) | 13.2 | |||||||||||||
Other, net | (8 | ) | (81 | ) | (90.3 | ) | (25 | ) | (143 | ) | (82.2 | ) | |||||||||||
Total nonoperating expense, net | (242 | ) | (290 | ) | (16.8 | ) | (718 | ) | (765 | ) | (6.2 | ) | |||||||||||
Income before income taxes | 1,189 | 1,709 | (30.4 | ) | 3,799 | 4,371 | (13.1 | ) | |||||||||||||||
Income tax provision | 452 | 16 | nm | 1,412 | 42 | nm | |||||||||||||||||
Net income | $ | 737 | $ | 1,693 | (56.4 | ) | $ | 2,387 | $ | 4,329 | (44.9 | ) | |||||||||||
Earnings per common share: | |||||||||||||||||||||||
Basic | $ | 1.40 | $ | 2.56 | $ | 4.23 | $ | 6.34 | |||||||||||||||
Diluted | $ | 1.40 | $ | 2.49 | $ | 4.20 | $ | 6.17 | |||||||||||||||
Weighted average shares outstanding (in thousands): | |||||||||||||||||||||||
Basic | 525,415 | 661,869 | 564,886 | 682,337 | |||||||||||||||||||
Diluted | 528,510 | 680,739 | 568,679 | 701,760 | |||||||||||||||||||
Note: Percent change may not recalculate due to rounding. | |||||||||||||||||||||||
American Airlines Group Inc. | ||||||||||||||||||
Consolidated Operating Statistics | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
3 Months Ended September 30, |
9 Months Ended September 30, |
|||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | |||||||||||||
Mainline | ||||||||||||||||||
Revenue passenger miles (millions) | 53,472 | 54,667 | (2.2 | ) | % | 151,619 | 151,148 | 0.3 | % | |||||||||
Available seat miles (ASM) (millions) | 63,751 | 63,459 | 0.5 | % | 183,985 | 181,232 | 1.5 | % | ||||||||||
Passenger load factor (percent) | 83.9 | 86.1 | (2.2 | ) | pts | 82.4 | 83.4 | (1.0 | ) | pts | ||||||||
Yield (cents) | 13.87 | 14.00 | (0.9 | ) | % | 13.98 | 14.75 | (5.3 | ) | % | ||||||||
Passenger revenue per ASM (cents) | 11.64 | 12.06 | (3.5 | ) | % | 11.52 | 12.30 | (6.4 | ) | % | ||||||||
Passenger enplanements (thousands) | 37,584 | 38,909 | (3.4 | ) | % | 109,830 | 110,683 | (0.8 | ) | % | ||||||||
Departures (thousands) | 282 | 286 | (1.3 | ) | % | 837 | 841 | (0.5 | ) | % | ||||||||
Aircraft at end of period | 922 | 943 | (2.2 | ) | % | 922 | 943 | (2.2 | ) | % | ||||||||
Block hours (thousands) | 905 | 908 | (0.3 | ) | % | 2,650 | 2,643 | 0.3 | % | |||||||||
Average stage length (miles) | 1,258 | 1,259 | (0.1 | ) | % | 1,235 | 1,231 | 0.3 | % | |||||||||
Fuel consumption (gallons in millions) | 953 | 954 | (0.2 | ) | % | 2,739 | 2,736 | 0.1 | % | |||||||||
Average aircraft fuel price including related taxes (dollars per gallon) | 1.46 | 1.67 | (12.4 | ) | % | 1.36 | 1.80 | (24.0 | ) | % | ||||||||
Full-time equivalent employees at end of period | 101,200 | 99,700 | 1.5 | % | 101,200 | 99,700 | 1.5 | % | ||||||||||
Operating cost per ASM (cents) | 11.96 | 11.33 | 5.6 | % | 11.62 | 11.97 | (2.9 | ) | % | |||||||||
Operating cost per ASM excluding special items (cents) | 11.51 | 11.07 | 3.9 | % | 11.38 | 11.63 | (2.2 | ) | % | |||||||||
Operating cost per ASM excluding special items and fuel (cents) | 9.32 | 8.56 | 8.9 | % | 9.35 | 8.92 | 4.8 | % | ||||||||||
Regional (A) | ||||||||||||||||||
Revenue passenger miles (millions) | 6,447 | 6,199 | 4.0 | % | 18,406 | 17,729 | 3.8 | % | ||||||||||
Available seat miles (millions) | 8,160 | 7,633 | 6.9 | % | 23,741 | 22,050 | 7.7 | % | ||||||||||
Passenger load factor (percent) | 79.0 | 81.2 | (2.2 | ) | pts | 77.5 | 80.4 | (2.9 | ) | pts | ||||||||
Yield (cents) | 26.85 | 27.40 | (2.0 | ) | % | 27.38 | 27.69 | (1.1 | ) | % | ||||||||
Passenger revenue per ASM (cents) | 21.21 | 22.25 | (4.7 | ) | % | 21.23 | 22.27 | (4.7 | ) | % | ||||||||
Passenger enplanements (thousands) | 14,288 | 14,413 | (0.9 | ) | % | 40,908 | 41,032 | (0.3 | ) | % | ||||||||
Aircraft at end of period | 599 | 584 | 2.6 | % | 599 | 584 | 2.6 | % | ||||||||||
Fuel consumption (gallons in millions) | 196 | 186 | 5.3 | % | 565 | 536 | 5.4 | % | ||||||||||
Average aircraft fuel price including related taxes (dollars per gallon) | 1.55 | 1.67 | (7.3 | ) | % | 1.42 | 1.81 | (21.6 | ) | % | ||||||||
Full-time equivalent employees at end of period (B) | 20,600 | 19,300 | 6.7 | % | 20,600 | 19,300 | 6.7 | % | ||||||||||
Operating cost per ASM (cents) | 18.85 | 19.89 | (5.2 | ) | % | 18.91 | 20.57 | (8.1 | ) | % | ||||||||
Operating cost per ASM excluding special items (cents) | 18.79 | 19.85 | (5.3 | ) | % | 18.85 | 20.48 | (8.0 | ) | % | ||||||||
Operating cost per ASM excluding special items and fuel (cents) | 15.08 | 15.78 | (4.5 | ) | % | 15.48 | 16.08 | (3.8 | ) | % | ||||||||
Total Mainline & Regional | ||||||||||||||||||
Revenue passenger miles (millions) | 59,919 | 60,866 | (1.6 | ) | % | 170,025 | 168,877 | 0.7 | % | |||||||||
Available seat miles (millions) | 71,911 | 71,092 | 1.2 | % | 207,726 | 203,282 | 2.2 | % | ||||||||||
Cargo ton miles (millions) | 601 | 569 | 5.6 | % | 1,754 | 1,716 | 2.2 | % | ||||||||||
Passenger load factor (percent) | 83.3 | 85.6 | (2.3 | ) | pts | 81.9 | 83.1 | (1.2 | ) | pts | ||||||||
Yield (cents) | 15.27 | 15.37 | (0.6 | ) | % | 15.43 | 16.11 | (4.2 | ) | % | ||||||||
Passenger revenue per ASM (cents) | 12.72 | 13.16 | (3.3 | ) | % | 12.63 | 13.38 | (5.6 | ) | % | ||||||||
Total revenue per ASM (cents) | 14.73 | 15.06 | (2.2 | ) | % | 14.63 | 15.43 | (5.2 | ) | % | ||||||||
Cargo yield per ton mile (cents) | 28.42 | 31.63 | (10.2 | ) | % | 28.86 | 33.11 | (12.8 | ) | % | ||||||||
Passenger enplanements (thousands) | 51,872 | 53,322 | (2.7 | ) | % | 150,738 | 151,715 | (0.6 | ) | % | ||||||||
Aircraft at end of period | 1,521 | 1,527 | (0.4 | ) | % | 1,521 | 1,527 | (0.4 | ) | % | ||||||||
Fuel consumption (gallons in millions) | 1,149 | 1,140 | 0.7 | % | 3,304 | 3,272 | 1.0 | % | ||||||||||
Average aircraft fuel price including related taxes (dollars per gallon) | 1.48 | 1.67 | (11.6 | ) | % | 1.37 | 1.80 | (23.6 | ) | % | ||||||||
Full-time equivalent employees at end of period (B) | 121,800 | 119,000 | 2.4 | % | 121,800 | 119,000 | 2.4 | % | ||||||||||
Operating cost per ASM (cents) | 12.74 | 12.25 | 4.0 | % | 12.46 | 12.90 | (3.4 | ) | % | |||||||||
Operating cost per ASM excluding special items (cents) | 12.33 | 12.02 | 2.6 | % | 12.23 | 12.59 | (2.8 | ) | % | |||||||||
Operating cost per ASM excluding special items and fuel (cents) | 9.97 | 9.34 | 6.8 | % | 10.05 | 9.70 | 3.6 | % | ||||||||||
(A) Regional includes wholly owned regional airline subsidiaries and operating results from capacity purchase carriers. | ||||||||||||||||||
(B) Regional full-time equivalent employees only include our wholly owned regional airline subsidiaries. | ||||||||||||||||||
Note: Amounts may not recalculate due to rounding. | ||||||||||||||||||
American Airlines Group Inc. | ||||||||||||||||||||
Consolidated Revenue Statistics by Region | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
3 Months Ended September 30, |
9 Months Ended September 30, |
|||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | |||||||||||||||
Domestic - Mainline | ||||||||||||||||||||
Revenue passenger miles (millions) | 33,487 | 34,259 | (2.4 | ) | % | 97,296 | 97,014 | 0.3 | % | |||||||||||
Available seat miles (ASM) (millions) | 39,051 | 38,882 | 0.4 | % | 114,294 | 112,875 | 1.3 | % | ||||||||||||
Passenger load factor (percent) | 85.8 | 88.1 | (2.3 | ) | pts | 85.1 | 85.9 | (0.8 | ) | pts | ||||||||||
Yield (cents) | 14.36 | 14.19 | 1.2 | % | 14.51 | 15.09 | (3.8 | ) | % | |||||||||||
Passenger revenue per ASM (cents) | 12.31 | 12.51 | (1.5 | ) | % | 12.35 | 12.97 | (4.8 | ) | % | ||||||||||
Domestic Consolidated - Mainline and | ||||||||||||||||||||
Total Regional (A) | ||||||||||||||||||||
Revenue passenger miles (millions) | 39,934 | 40,458 | (1.3 | ) | % | 115,701 | 114,743 | 0.8 | % | |||||||||||
Available seat miles (ASM) (millions) | 47,211 | 46,515 | 1.5 | % | 138,036 | 134,926 | 2.3 | % | ||||||||||||
Passenger load factor (percent) | 84.6 | 87.0 | (2.4 | ) | pts | 83.8 | 85.0 | (1.2 | ) | pts | ||||||||||
Yield (cents) | 16.37 | 16.22 | 1.0 | % | 16.56 | 17.03 | (2.8 | ) | % | |||||||||||
Passenger revenue per ASM (cents) | 13.85 | 14.10 | (1.8 | ) | % | 13.88 | 14.49 | (4.2 | ) | % | ||||||||||
Latin America | ||||||||||||||||||||
Revenue passenger miles (millions) | 7,382 | 7,920 | (6.8 | ) | % | 22,857 | 23,673 | (3.4 | ) | % | ||||||||||
Available seat miles (ASM) (millions) | 8,944 | 9,542 | (6.3 | ) | % | 28,894 | 30,031 | (3.8 | ) | % | ||||||||||
Passenger load factor (percent) | 82.5 | 83.0 | (0.5 | ) | pts | 79.1 | 78.8 | 0.3 | pts | |||||||||||
Yield (cents) | 13.97 | 13.65 | 2.3 | % | 13.47 | 14.87 | (9.4 | ) | % | |||||||||||
Passenger revenue per ASM (cents) | 11.53 | 11.33 | 1.8 | % | 10.66 | 11.72 | (9.1 | ) | % | |||||||||||
Atlantic | ||||||||||||||||||||
Revenue passenger miles (millions) | 9,027 | 9,661 | (6.6 | ) | % | 21,707 | 22,654 | (4.2 | ) | % | ||||||||||
Available seat miles (ASM) (millions) | 11,533 | 11,754 | (1.9 | ) | % | 29,103 | 29,075 | 0.1 | % | |||||||||||
Passenger load factor (percent) | 78.3 | 82.2 | (3.9 | ) | pts | 74.6 | 77.9 | (3.3 | ) | pts | ||||||||||
Yield (cents) | 13.49 | 14.46 | (6.7 | ) | % | 14.01 | 14.45 | (3.0 | ) | % | ||||||||||
Passenger revenue per ASM (cents) | 10.56 | 11.88 | (11.2 | ) | % | 10.45 | 11.26 | (7.2 | ) | % | ||||||||||
Pacific | ||||||||||||||||||||
Revenue passenger miles (millions) | 3,576 | 2,827 | 26.5 | % | 9,759 | 7,807 | 25.0 | % | ||||||||||||
Available seat miles (ASM) (millions) | 4,223 | 3,281 | 28.7 | % | 11,694 | 9,251 | 26.4 | % | ||||||||||||
Passenger load factor (percent) | 84.7 | 86.2 | (1.5 | ) | pts | 83.5 | 84.4 | (0.9 | ) | pts | ||||||||||
Yield (cents) | 10.13 | 11.11 | (8.9 | ) | % | 9.79 | 11.13 | (12.0 | ) | % | ||||||||||
Passenger revenue per ASM (cents) | 8.58 | 9.58 | (10.5 | ) | % | 8.17 | 9.39 | (13.0 | ) | % | ||||||||||
Total International | ||||||||||||||||||||
Revenue passenger miles (millions) | 19,985 | 20,408 | (2.1 | ) | % | 54,323 | 54,134 | 0.4 | % | |||||||||||
Available seat miles (ASM) (millions) | 24,700 | 24,577 | 0.5 | % | 69,691 | 68,357 | 2.0 | % | ||||||||||||
Passenger load factor (percent) | 80.9 | 83.0 | (2.1 | ) | pts | 77.9 | 79.2 | (1.3 | ) | pts | ||||||||||
Yield (cents) | 13.06 | 13.68 | (4.5 | ) | % | 13.03 | 14.15 | (8.0 | ) | % | ||||||||||
Passenger revenue per ASM (cents) | 10.57 | 11.36 | (7.0 | ) | % | 10.15 | 11.21 | (9.4 | ) | % | ||||||||||
(A) Revenue statistics for all Regional flying are included herein. | ||||||||||||||||||||
Note: Amounts may not recalculate due to rounding. | ||||||||||||||||||||
Reconciliation of GAAP Financial Information to Non-GAAP Financial Information | |||||||||||||||||||||||||
American Airlines Group Inc. (the "Company") is providing the reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis. The Company believes that the non-GAAP financial measures provide investors the ability to measure financial performance excluding special items, which is more indicative of the Company’s ongoing performance and is more comparable to measures reported by other major airlines. The Company believes that the presentation of mainline and regional CASM excluding fuel is useful to investors because both the cost and availability of fuel are subject to many economic and political factors beyond the Company’s control. Management uses mainline and regional CASM excluding special items and fuel to evaluate the Company's operating performance. | |||||||||||||||||||||||||
3 Months Ended September 30, |
Percent Change |
9 Months Ended September 30, |
Percent Change | ||||||||||||||||||||||
Reconciliation of Pre-Tax Income Excluding Special Items | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||
(in millions, except per share amounts) | (in millions, except per share amounts) | ||||||||||||||||||||||||
Pre-tax income as reported | $ | 1,189 | $ | 1,709 | $ | 3,799 | $ | 4,371 | |||||||||||||||||
Pre-tax special items: | |||||||||||||||||||||||||
Special items, net (1) | 289 | 163 | 450 | 610 | |||||||||||||||||||||
Regional operating special items, net | 5 | 2 | 13 | 20 | |||||||||||||||||||||
Nonoperating special items, net (2) | - | 21 | 36 | 2 | |||||||||||||||||||||
Total pre-tax special items | 294 | 186 | 499 | 632 | |||||||||||||||||||||
Pre-tax income excluding special items | $ | 1,483 | $ | 1,895 | -22 | % | $ | 4,298 | $ | 5,003 | -14 | % | |||||||||||||
Calculation of Pre-Tax Margin | |||||||||||||||||||||||||
Pre-tax income as reported | $ | 1,189 | $ | 1,709 | $ | 3,799 | $ | 4,371 | |||||||||||||||||
Total operating revenues as reported | $ | 10,594 | $ | 10,706 | $ | 30,391 | $ | 31,360 | |||||||||||||||||
Pre-tax margin | 11.2 | % | 16.0 | % | 12.5 | % | 13.9 | % | |||||||||||||||||
Calculation of Pre-Tax Margin Excluding Special Items | |||||||||||||||||||||||||
Pre-tax income excluding special items | $ | 1,483 | $ | 1,895 | $ | 4,298 | $ | 5,003 | |||||||||||||||||
Total operating revenues as reported | $ | 10,594 | $ | 10,706 | $ | 30,391 | $ | 31,360 | |||||||||||||||||
Pre-tax margin excluding special items | 14.0 | % | 17.7 | % | 14.1 | % | 16.0 | % | |||||||||||||||||
Reconciliation of Net Income Excluding Special Items | |||||||||||||||||||||||||
Net income as reported | $ | 737 | $ | 1,693 | $ | 2,387 | $ | 4,329 | |||||||||||||||||
Special items: | |||||||||||||||||||||||||
Total pre-tax special items | 294 | 186 | 499 | 632 | |||||||||||||||||||||
Income tax special items | - | 6 | - | 22 | |||||||||||||||||||||
Net tax effect of special items (3) | (98 | ) | - | (188 | ) | - | |||||||||||||||||||
Net income excluding special items | $ | 933 | $ | 1,885 | -51 | % | $ | 2,698 | $ | 4,983 | -46 | % | |||||||||||||
Reconciliation of Net Income Excluding Special Items and Non-Cash | |||||||||||||||||||||||||
Income Tax Provision (4) | |||||||||||||||||||||||||
Net income as reported | $ | 737 | $ | 1,693 | $ | 2,387 | $ | 4,329 | |||||||||||||||||
Total pre-tax special items | 294 | 186 | 499 | 632 | |||||||||||||||||||||
Total non-cash income tax provision | 449 | 6 | 1,403 | 22 | |||||||||||||||||||||
Net income excluding special items and non-cash income tax provision | $ | 1,480 | $ | 1,885 | -21 | % | $ | 4,289 | $ | 4,983 | -14 | % | |||||||||||||
Reconciliation of Basic and Diluted Earnings Per Share Excluding | |||||||||||||||||||||||||
Special Items | |||||||||||||||||||||||||
Net income excluding special items | $ | 933 | $ | 1,885 | $ | 2,698 | $ | 4,983 | |||||||||||||||||
Shares used for computation (in thousands): | |||||||||||||||||||||||||
Basic | 525,415 | 661,869 | 564,886 | 682,337 | |||||||||||||||||||||
Diluted | 528,510 | 680,739 | 568,679 | 701,760 | |||||||||||||||||||||
Earnings per share excluding special items: | |||||||||||||||||||||||||
Basic | $ | 1.77 | $ | 2.85 | $ | 4.78 | $ | 7.30 | |||||||||||||||||
Diluted | $ | 1.76 | $ | 2.77 | $ | 4.74 | $ | 7.10 | |||||||||||||||||
Reconciliation of Basic and Diluted Earnings Per Share Excluding | |||||||||||||||||||||||||
Special Items and Non-Cash Income Tax Provision (4) | |||||||||||||||||||||||||
Net income excluding special items and non-cash income tax provision | $ | 1,480 | $ | 1,885 | $ | 4,289 | $ | 4,983 | |||||||||||||||||
Shares used for computation (in thousands): | |||||||||||||||||||||||||
Basic | 525,415 | 661,869 | 564,886 | 682,337 | |||||||||||||||||||||
Diluted | 528,510 | 680,739 | 568,679 | 701,760 | |||||||||||||||||||||
Adjusted earnings per share (excludes special items and non-cash income tax provision): | |||||||||||||||||||||||||
Basic | $ | 2.82 | $ | 2.85 | $ | 7.59 | $ | 7.30 | |||||||||||||||||
Diluted | $ | 2.80 | $ | 2.77 | $ | 7.54 | $ | 7.10 | |||||||||||||||||
3 Months Ended September 30, |
9 Months Ended September 30, |
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Reconciliation of Operating Income Excluding Special Items | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||||
Operating income as reported | $ | 1,431 | $ | 1,999 | $ | 4,517 | $ | 5,136 | |||||||||||||||||
Special items: | |||||||||||||||||||||||||
Special items, net (1) | 289 | 163 | 450 | 610 | |||||||||||||||||||||
Regional operating special items, net | 5 | 2 | 13 | 20 | |||||||||||||||||||||
Operating income excluding special items | $ | 1,725 | $ | 2,164 | $ | 4,980 | $ | 5,766 | |||||||||||||||||
Reconciliation of Operating Cost per ASM Excluding Special | 3 Months Ended September 30, |
9 Months Ended September 30, |
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Items and Fuel - Mainline only | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||||
Total operating expenses as reported | $ | 9,163 | $ | 8,707 | $ | 25,874 | $ | 26,224 | |||||||||||||||||
Less regional expenses as reported: | |||||||||||||||||||||||||
Fuel | (303 | ) | (310 | ) | (801 | ) | (970 | ) | |||||||||||||||||
Other | (1,235 | ) | (1,208 | ) | (3,687 | ) | (3,566 | ) | |||||||||||||||||
Total mainline operating expenses as reported | 7,625 | 7,189 | 21,386 | 21,688 | |||||||||||||||||||||
Special items, net (1) | (289 | ) | (163 | ) | (450 | ) | (610 | ) | |||||||||||||||||
Mainline operating expenses, excluding special items | 7,336 | 7,026 | 20,936 | 21,078 | |||||||||||||||||||||
Aircraft fuel and related taxes | (1,393 | ) | (1,593 | ) | (3,736 | ) | (4,912 | ) | |||||||||||||||||
Mainline operating expenses, excluding special items and fuel | $ | 5,943 | $ | 5,433 | $ | 17,200 | $ | 16,166 | |||||||||||||||||
(in cents) | (in cents) | ||||||||||||||||||||||||
Mainline operating expenses per ASM as reported | 11.96 | 11.33 | 11.62 | 11.97 | |||||||||||||||||||||
Special items, net per ASM (1) | (0.45 | ) | (0.26 | ) | (0.24 | ) | (0.34 | ) | |||||||||||||||||
Mainline operating expenses per ASM, excluding special items | 11.51 | 11.07 | 11.38 | 11.63 | |||||||||||||||||||||
Aircraft fuel and related taxes per ASM | (2.18 | ) | (2.51 | ) | (2.03 | ) | (2.71 | ) | |||||||||||||||||
Mainline operating expenses per ASM, excluding special items | |||||||||||||||||||||||||
and fuel | 9.32 | 8.56 | 9.35 | 8.92 | |||||||||||||||||||||
Note: Amounts may not recalculate due to rounding. | |||||||||||||||||||||||||
Reconciliation of Operating Cost per ASM Excluding Special | 3 Months Ended September 30, |
9 Months Ended September 30, |
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Items and Fuel - Regional only | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||||
Total regional operating expenses as reported | $ | 1,538 | $ | 1,518 | $ | 4,488 | $ | 4,536 | |||||||||||||||||
Regional operating special items, net | (5 | ) | (2 | ) | (13 | ) | (20 | ) | |||||||||||||||||
Regional operating expenses, excluding special items | 1,533 | 1,516 | 4,475 | 4,516 | |||||||||||||||||||||
Aircraft fuel and related taxes | (303 | ) | (310 | ) | (801 | ) | (970 | ) | |||||||||||||||||
Regional operating expenses, excluding special items and fuel | $ | 1,230 | $ | 1,206 | $ | 3,674 | $ | 3,546 | |||||||||||||||||
(in cents) | (in cents) | ||||||||||||||||||||||||
Regional operating expenses per ASM as reported | 18.85 | 19.89 | 18.91 | 20.57 | |||||||||||||||||||||
Regional operating special items, net per ASM | (0.06 | ) | (0.04 | ) | (0.05 | ) | (0.09 | ) | |||||||||||||||||
Regional operating expenses per ASM, excluding special items | 18.79 | 19.85 | 18.85 | 20.48 | |||||||||||||||||||||
Aircraft fuel and related taxes per ASM | (3.71 | ) | (4.07 | ) | (3.38 | ) | (4.40 | ) | |||||||||||||||||
Regional operating expenses per ASM, excluding special items and fuel | 15.08 | 15.78 | 15.48 | 16.08 | |||||||||||||||||||||
Note: Amounts may not recalculate due to rounding. | |||||||||||||||||||||||||
Reconciliation of Operating Cost per ASM Excluding Special | 3 Months Ended September 30, |
9 Months Ended September 30, |
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Items and Fuel - Total Mainline and Regional | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||||||
Total operating expenses as reported | $ | 9,163 | $ | 8,707 | $ | 25,874 | $ | 26,224 | |||||||||||||||||
Special items: | |||||||||||||||||||||||||
Special items, net (1) | (289 | ) | (163 | ) | (450 | ) | (610 | ) | |||||||||||||||||
Regional operating special items, net | (5 | ) | (2 | ) | (13 | ) | (20 | ) | |||||||||||||||||
Total operating expenses, excluding special items | 8,869 | 8,542 | 25,411 | 25,594 | |||||||||||||||||||||
Fuel: | |||||||||||||||||||||||||
Aircraft fuel and related taxes - mainline | (1,393 | ) | (1,593 | ) | (3,736 | ) | (4,912 | ) | |||||||||||||||||
Aircraft fuel and related taxes - regional | (303 | ) | (310 | ) | (801 | ) | (970 | ) | |||||||||||||||||
Total operating expenses, excluding special items and fuel | $ | 7,173 | $ | 6,639 | $ | 20,874 | $ | 19,712 | |||||||||||||||||
(in cents) | (in cents) | ||||||||||||||||||||||||
Total operating expenses per ASM as reported | 12.74 | 12.25 | 12.46 | 12.90 | |||||||||||||||||||||
Special items per ASM: | |||||||||||||||||||||||||
Special items, net (1) | (0.40 | ) | (0.23 | ) | (0.22 | ) | (0.30 | ) | |||||||||||||||||
Regional operating special items, net | (0.01 | ) | - | (0.01 | ) | (0.01 | ) | ||||||||||||||||||
Total operating expenses per ASM, excluding special items | 12.33 | 12.02 | 12.23 | 12.59 | |||||||||||||||||||||
Fuel per ASM: | |||||||||||||||||||||||||
Aircraft fuel and related taxes - mainline | (1.94 | ) | (2.24 | ) | (1.80 | ) | (2.42 | ) | |||||||||||||||||
Aircraft fuel and related taxes - regional | (0.42 | ) | (0.44 | ) | (0.39 | ) | (0.48 | ) | |||||||||||||||||
Total operating expenses per ASM, excluding special items | |||||||||||||||||||||||||
and fuel | 9.97 | 9.34 | 10.05 | 9.70 | |||||||||||||||||||||
Note: Amounts may not recalculate due to rounding. | |||||||||||||||||||||||||
FOOTNOTES: | |||||||||||||||||||||||||
(1 | ) | The 2016 third quarter mainline operating special items totaled a net charge of $289 million, which principally included $225 million of merger integration expenses and a $39 million net charge for bankruptcy related items principally consisting of fair value adjustments for bankruptcy settlement obligations. The 2016 nine month period mainline operating special items totaled a net charge of $450 million, which principally included $467 million of merger integration expenses, offset in part by a $22 million net credit for bankruptcy related items principally consisting of fair value adjustments for bankruptcy settlement obligations. For the 2016 third quarter and nine month periods, merger integration expenses included costs related to re-branding of aircraft, airport facilities and uniforms, information technology, alignment of labor union contracts, fleet restructuring, professional fees, relocation and training, as well as severance. The 2015 third quarter mainline operating special items totaled a net charge of $163 million, which principally included $198 million of merger integration expenses and a $38 million charge in connection with the dissolution of a joint venture. These charges were offset in part by a $66 million credit related to proceeds received from a legal settlement. The 2015 nine month period mainline operating special items totaled a net charge of $610 million, which principally included $741 million of merger integration expenses and a $38 million charge in connection with the dissolution of a joint venture. These charges were offset in part by a $75 million net credit for bankruptcy related items principally consisting of fair value adjustments for bankruptcy settlement obligations and a $66 million credit related to proceeds received from a legal settlement. For the 2015 third quarter and nine month periods, merger integration expenses included costs related to information technology, fleet restructuring, alignment of labor union contracts, professional fees, severance, relocation and training, re-branding of aircraft, airport facilities and uniforms, as well as share-based compensation. |
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(2 | ) | In connection with a bond refinancing, the Company recorded a $36 million nonoperating special charge in the 2016 nine month period related to non-cash write offs of unamortized bond discounts and issuance costs as well as payments of redemption premiums and fees. The 2015 third quarter nonoperating special items totaled a net charge of $21 million, which was primarily due to non-cash write offs of unamortized debt discount and debt issuance costs associated with the purchase and subsequent remarketing of certain special facility revenue bonds. The 2015 nine month period nonoperating special items totaled a net charge of $2 million, which principally included $40 million in charges primarily related to non-cash write offs of unamortized debt discount and debt issuance costs associated with refinancing the Company’s secured term loan facilities, prepayments of certain aircraft financings and the purchase and subsequent remarketing of certain special facility revenue bonds. These charges were offset in part by a $22 million gain associated with the sale of an investment and a $17 million early debt extinguishment gain associated with the repayment of American’s AAdvantage loan with Citibank. |
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(3 | ) | In the 2015 periods, there was no net tax effect associated with special items. During the 2015 periods, the Company’s net deferred tax asset, which includes its net operating losses (NOLs), was subject to a full valuation allowance. Accordingly, the Company’s NOLs offset its taxable income and resulted in the release of a corresponding portion of valuation allowance, which offset the tax provision dollar for dollar. | |||||||||||||||||||||||
(4 | ) | As a result of the Company's profitability and the reversal of the valuation allowance on its deferred tax assets at December 31, 2015, the Company was required to recognize a $452 million and $1.4 billion provision for income taxes in the 2016 third quarter and nine month period, respectively, on a Generally Accepted Accounting Principles basis. Of these amounts, $449 million and $1.4 billion in the 2016 third quarter and nine month period, respectively, were non-cash due to the utilization of NOLs. For periods prior to 2016, the Company recognized a nominal tax provision for certain states and international jurisdictions where NOLs were limited or not available to be used. Accordingly, amounts reported in the 2016 third quarter and nine month period for income tax provision and net income are not comparable to the respective 2015 periods. Therefore, the Company is presenting net income and earnings per share excluding special items and non-cash income tax provision in order to provide more meaningful period-over-period comparisons. | |||||||||||||||||||||||
American Airlines Group Inc. | |||||||
Condensed Consolidated Balance Sheets | |||||||
(In millions) | |||||||
(Unaudited) | |||||||
September 30, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Current assets | |||||||
Cash | $ | 381 | $ | 390 | |||
Short-term investments | 6,374 | 5,864 | |||||
Restricted cash and short-term investments | 635 | 695 | |||||
Accounts receivable, net | 1,703 | 1,425 | |||||
Aircraft fuel, spare parts and supplies, net | 1,100 | 863 | |||||
Prepaid expenses and other | 855 | 748 | |||||
Total current assets | 11,048 | 9,985 | |||||
Operating property and equipment | |||||||
Flight equipment | 36,259 | 33,185 | |||||
Ground property and equipment | 6,915 | 6,402 | |||||
Equipment purchase deposits | 1,149 | 1,067 | |||||
Total property and equipment, at cost | 44,323 | 40,654 | |||||
Less accumulated depreciation and amortization | (14,019 | ) | (13,144 | ) | |||
Total property and equipment, net | 30,304 | 27,510 | |||||
Other assets | |||||||
Goodwill | 4,091 | 4,091 | |||||
Intangibles, net | 2,189 | 2,249 | |||||
Deferred tax asset | 1,524 | 2,477 | |||||
Other assets | 1,952 | 2,103 | |||||
Total other assets | 9,756 | 10,920 | |||||
Total assets | $ | 51,108 | $ | 48,415 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities | |||||||
Current maturities of long-term debt and capital leases | $ | 1,798 | $ | 2,231 | |||
Accounts payable | 1,673 | 1,563 | |||||
Accrued salaries and wages | 1,365 | 1,205 | |||||
Air traffic liability | 4,513 | 3,747 | |||||
Loyalty program liability | 2,950 | 2,525 | |||||
Other accrued liabilities | 2,234 | 2,334 | |||||
Total current liabilities | 14,533 | 13,605 | |||||
Noncurrent liabilities | |||||||
Long-term debt and capital leases, net of current maturities | 21,545 | 18,330 | |||||
Pension and postretirement benefits | 7,387 | 7,450 | |||||
Deferred gains and credits, net | 554 | 667 | |||||
Other liabilities | 2,698 | 2,728 | |||||
Total noncurrent liabilities | 32,184 | 29,175 | |||||
Stockholders' equity | |||||||
Common stock | 5 | 6 | |||||
Additional paid-in capital | 7,761 | 11,591 | |||||
Accumulated other comprehensive loss | (4,778 | ) | (4,732 | ) | |||
Retained earnings (deficit) | 1,403 | (1,230 | ) | ||||
Total stockholders' equity | 4,391 | 5,635 | |||||
Total liabilities and stockholders’ equity | $ | 51,108 | $ | 48,415 | |||
Corporate Communications 817-967-1577 mediarelations@aa.com