American Airlines Group Inc.
CEO : Mr. Robert D. Isom Jr.
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 39.9% YoY | -277.5% | -185.4% | 2023-01-26 |
Robert Isom says,
Constraints on Aircraft and Engines
- American is facing constraints in terms of regional aircraft and some mainline aircraft due to engine and aircraft shortages.
- American is also experiencing a pilot constraint, particularly in the regional sector.
Pilot Shortage
- American had a shortfall in pilots due to a lack of attraction to the business for a couple of years, resulting in a need to stabilise the pilot ranks at their regionals.
- American increased regional pilot pay last year, which is attracting more people into the business and stabilising the pilot ranks at the regionals.
- American is also going through its greatest training cycle of pilots ever experienced, with almost 900 retirements last year and a similar number expected this year.
Training Needs
- American has the equipment resources such as simulators in place for its training, but needs to ensure it has enough people resources, particularly check pilots, to address all of its training needs.
- American is hopeful that a new contract with APA will provide it with more flexibility to address its training needs.
Leadership and Investment for the Future
- The large airports all have constraints at the gate or on the airfield.
- Aerospace issues need to be addressed, and this will require leadership and investment for the future.
- American is working with the DOT and FAA, and the Secretary Buttigieg has an interest in making sure that they can invest for the future.
Overall Environment
- Despite constraints on aircraft and pilots, American is managing through these issues and sees potential growth as they progress through the year.
- American is confident that they can achieve profitability and maintain a business model that works in any demand environment with any set of constraints.
Vasu Raja says,
Revenue Forecast
- AAL does not assume any change in airline demand fundamentals in their revenue forecast.
- They presume that airline industry revenues will regain its historical relationship with GDP, roughly about a point of percent.
- They also presume the same historical relationship between revenue and fuel prices.
Network Changes
- AAL has materially changed their network, partnerships, and fleet in the last few years.
- They have taken 5 points of capacity out of their lowest RASM, lowest-margin long-haul flights, and grown 5 points of capacity in their highest-margin short-haul flights.
- Within the short-haul system, they have taken 5 points of capacity from some of their lowest performing, lowest RASM market and redeployed it into their Sunbelt hub, which are some of the highest RASM markets in the industry.
- AAL has reworked 10 points of capacity mix, which is larger than just about any airline hub with the exception of DFW, Charlotte, and maybe one or two other hubs that their competitors operate.
Fleet Simplification
- AAL has shed 50 long-haul capable airplanes, many of which were really inefficient, like the 757 to 767.
- They have up-gauged both the regional jet and the main lines that they have got.
- AAL has simplified the airline down to four fleet types.
- They can much more dynamically alter schedules to follow where the demand is.
- AAL can produce schedules that are a lot more operable and efficient, which benefits their recent and anticipated revenue performance.
Q & A sessions,
Network Restructuring and Profitability
- American Airlines has restructured its network, seeing improvement in many hubs.
- 300 cities are served in their network, with a material schedule advantage to other airlines in 200 of those cities.
- Hub profitability has changed materially through the pandemic, and scheduling has been adjusted to make the best use of available gates.
Q1 Capacity Management
- American Airlines has been conscious of capacity usage in Q1, peaking the airline a lot less than what it has historically been.
- This is to enable the airline to have as much capacity as possible for the summer peak.
Unique Offerings and Revenue Performance
- In the airline network business, offering something unique to customers helps command a premium.
- American Airlines has a unique advantage in 65% to 70% of origin and destination markets, driving revenue performance.
- Trends show growth in markets in the Sunbelt and interiors of the country, which is beneficial for American Airlines.
Corporate Travel and Layoffs
- Business travel has shifted to more blended trips, with non-contracted business fully recovered and contracted business at 75% recovery.
- Most contracted corporations are not fulfilling the terms of their contracts due to the pandemic.
- Layoffs are not significantly impacting demand as non-contracted business is fully recovered.
Focus on Reliability and Profitability
- American Airlines will continue to focus on reliability and profitability, with greater planning and day-to-day execution.
- Investments will be made in technology to further digitalize operations and customer experience.
- The ultimate goal is to create a more efficient business model with improved margins and reduced debt.
No bad stock 