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American Airlines reports second quarter 2021 financial results

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American Airlines Group Inc. released its financial results for the second quarter of 2021 today, which included:

Net profit of $19 million in the second quarter, or $0.03 per diluted share. Excluding net exceptional items1, the company reported a net loss of $1.1 billion, or ($1.69) per share, in the second quarter.

Revenue of $7.5 billion in the second quarter, rising 87 percent from the first quarter of 2021.

The Company ended the second quarter with about $21.3 billion in total available liquidity, a record for the Company.

The prepayment of a $950 million spare parts term loan has accelerated the deleveraging process.

The company intends to pay off about $15 billion in debt by the end of 2025.

“Through our Green Flag Plan, we have taken a number of actions to solidify our business, and it shows in our second-quarter results,” said American Chairman and CEO Doug Parker. “We have reconfigured our network, simplified our fleet, and reduced our cost structure to build an airline that will beat competition and deliver for customers.” The green flag has been raised, and we are prepared as a result of the incredible work and dedication of the American Airlines team.”

American is committed to growing its business and returning to profitability by concentrating on three strategic goals: create a world-class customer experience, turn culture into a competitive advantage, and construct American to prosper in perpetuity.

American Airlines plans to launch more than 150 new flights this summer, including numerous new destinations and increased connectivity in Miami, Austin, Texas, and Orlando, Florida, in order to provide a world-class customer experience. In comparison to 2019, American aims to fly more over 90% of its domestic seat capacity and 80% of its foreign seat capacity during the summer season.
As a consequence of growing consumer demand, we’ve added ten new domestic and four new foreign destinations from Austin this fall. This fall, American and its partners will provide the most alternatives in Austin, with over 100 peak-day departures.

Regional flight operations at Reagan National Airport were moved from Gate 35X to a new 14-gate concourse, giving customers with a variety of new facilities, including an all-dual-class operation.

COVID-19 testing tools, such as self-administered and packable home tests, have been released in order to make flying safer and easier.
We collaborated with VeriFLY to improve the app’s capabilities to incorporate COVID-19 vaccine verification, which is already accessible in 11 countries and will be expanded in the third quarter. Customer usage of VeriFLY has quadrupled during the first quarter, and the app is now available at most U.S. hub airports’ expedited check-in lanes.

Five Star Essentials have been introduced at Charlotte Douglas International Airport, Dallas Fort Worth International Airport, and Miami International Airport. During the customer’s journey from check-in to the gate, the service provides an extra set of hands.
Admirals Club lounges around the system have continued to welcome customers back with new trademark menu options and the introduction of innovative touchless technology. All Admirals Club lounges will reopen by the end of August, while American’s Flagship Lounges will reopen this fall.

Full beverage service was reintroduced in all domestic premium cabins, while canned beverages, juice, and water were reintroduced in the main cabin.

Redesigned its premium cabin onboard amenity kits in collaboration with Shinola and D.S. & Durga, two firms known for intelligent design and creativity.

Refreshed its in-flight entertainment services with new lifestyle entertainment options and free access to Rosetta Stone and Skillshare, making it the first US airline to tap into online/remote learning from 35,000 feet.

To gain a competitive advantage through culture, Americans:

Completed all required recall pilot training and brought back over 3,000 team members from leaves, with thousands more flight attendants returning from leaves this fall. So far in 2021, American has hired approximately 3,500 new team members, with ambitions to hire 350 pilots this year and over 1,000 pilots and 800 flight attendants in 2022.

In honor of America’s 95th birthday, American Airlines donated 10 million AAdvantage® miles to Make-A-Wish, an organization that grants life-changing wishes to children with serious illnesses, to help grant 95 wishes.

Initiated a new relationship with the National Park Foundation to promote visitors to some of the country’s most iconic natural wonders, historic places, and cultural treasures, as well as to link customers with ways to support the future of America’s national parks. Through the airline’s new Miles for Our Planet project, customers donated over 37 million AAdvantage miles to the National Park Foundation.

Nearly $1.5 million was raised in support of the American Red Cross and Red Crescent Societies’ efforts to combat the COVID-19 pandemic around the world, especially in Brazil, India, and other countries in need of aid. In less than a month, the airline and over 11,000 AAdvantage members raised the entire sum.

We collaborated with the United Way of Miami-Dade to provide travel assistance and aid in the reunification of families affected by the devastating building collapse in Surfside, Florida.

To ensure that America thrives in perpetuity, American:

Committed to developing a science-based target for lowering greenhouse gas emissions by 2035, in support of the airline’s current promise to achieve net-zero emissions by 2050. American has also agreed to buy up to 10 million gallons of carbon-neutral sustainable aviation fuel (SAF) manufactured by Prometheus Fuels, which uses a revolutionary technique to produce net zero carbon transportation fuels such as SAF.

Vertical Aerospace, a leading U.K.-based engineering and aeronautical enterprise creating electric vertical takeoff and landing aircraft, has announced an investment. American is showcasing its attention on future technology to minimize carbon emissions and investing in innovative ways that could improve the customer journey with the investment.

American had $985 million in debt amortization and prepayments during the second quarter.

Balance sheet and liquidity

For the second quarter, the Company’s daily cash burn rate improved to a cash build rate of roughly $1 million per day2. American concluded the second quarter with a record total available liquidity of roughly $21.3 billion. The Company aims to maintain high levels of near-term liquidity, but expects to reduce its target liquidity to $10 billion to $12 billion in 2022.

American is dedicated to strengthening its balance sheet. In comparison to its earlier projection of $8 billion to $10 billion, the company now aims to reduce its debt by more than $15 billion by the end of 2025. American intends to achieve this goal by naturally occurring amortization, the use of extra cash and free cash flow to pay down prepayable debt, and the use of cash rather than debt for certain future aircraft deliveries.

Today, American prepays the whole $950 million spare parts term loan that was due to mature in April 2023, demonstrating the Company’s commitment to deleverage and confidence in the future.

Collaboration and networking

American and JetBlue continue to provide perks to customers in order to provide a more seamless customer experience. Beginning this fall, members of AAdvantage elite and TrueBlue Mosaic will be able to enjoy benefits across both carriers. Priority check-in, security, and boarding, as well as up to two complimentary checked bags, will be included in the next round of benefits. Members of American’s AAdvantage program and JetBlue’s TrueBlue program already earn miles or points when traveling on either carrier. AAdvantage is now the only reward program that lets you to achieve elite status when flying on three different U.S. airlines: American, JetBlue, and Alaska Airlines.

As a result of American’s Northeast Alliance with JetBlue, travelers in New York and Boston have considerably expanded their travel options, with new nonstop service and additional codeshare routes. This winter, American and JetBlue will operate more than 700 daily flights from New York and Boston as part of the alliance, providing customers with more options than any other airline. Customers traveling on a joint American-JetBlue itinerary will also benefit from the fastest secure side connecter at New York — JFK as well as an industry-leading network. The airline’s network expansion will improve worldwide connectivity for growing markets like as Austin, Texas, and Nashville, Tennessee.

Customers returning to travel have access to an unrivaled worldwide network because to American’s extensive network, partnerships, and membership in oneworld.

Guidance and an update for investors

American will continue to match its forward capacity to the booking trends observed. Based on current patterns, the Company anticipates a 15% to 20% decrease in third-quarter capacity compared to the third quarter of 2019. American anticipates a 20% decrease in overall revenue in the third quarter of 2019 compared to the third quarter of 2019. The company also anticipates that its third-quarter pre-tax margin, excluding net special items, will be between -3 and -7 percent.

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