Q2 2021 American Airlines Group Inc Earnings Call
[music].
Hi.
Good morning.
Welcome to the American Airlines group second quarter, 2 power from 'twenty, 1 earnings Conference call. Today's call is being recorded at this time all participants lines are in a listen only mode. Following the presentation. We will conduct a question and answer session. If you have a question at this time, please press the star and <unk>.
And then the number 1 key on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key and now I would like to turn the conference over to your moderator managing director of Investor Relations, Mr. Dan Cravens.
Thanks, Joe and good morning, everyone and welcome to the American Airlines group.
First quarter 2021 earnings conference call on the call Doug. This morning, we have.
Parker, Chairman and CEO, Robert Isom Derek.
Derek our Chief Financial Officer also on the call for Q&A session, our summary of our senior debt.
Maya Leibman, Chief Information Officer, Steve Johnson, our EVP of corporate Affairs.
Bob <unk> Chief revenue Officer Alisa.
Elise eberwein cheap.
On Communications Officer, Alison Taylor, Chief customer Officer, and Kevin <unk>, our senior VP of finance like we normally do Doug will start the call with an overview of our quarter 1 update to the actions we've taken during the pandemic and through the recovery.
Robert will then follow with some remarks about our operations commercial and other strategic initiatives. After Robert remarks, Derek will follow with details on the quarter and our operating plans going forward. After <unk> comments, we'll open the call for analyst questions and lastly questions from the media.
As a reminder to get in as many questions as possible. Please limit yourself to 1 question and a follow up before we begin we must state that today's call does contain forward looking statements, including statements concerning future revenues and costs forecast from capacity fleet plan.
These statements represent our predictions and expectations as to future events, but numerous risks and uncertainties could cause actual results to differ from those projected information about some of these risks and uncertainties can be found in our earnings press release issued this morning.
And our form 10-Q for the quarter ended June 32021.
In addition, we will be discussing certain non-GAAP financial measures. This morning, which exclude the impact of unusual items, a reconciliation of those numbers to the GAAP.
It is included in the earnings release and that can be found in the Investor Relations section of our website a webcast of this call will also be archived on the website. The information that we're giving you on the call is as of today's date and we undertake no obligation to update the information subsequently.
Thanks again for joining us on at this point I'd like to turn the call over to our chairman and CEO Doug Parker.
Dan Good morning, everybody and thanks for joining us. This morning, just wondering American reported second quarter net profit.
$19 million, excluding net special items it was.
Net loss was $1 billion this loss from a large.
This policy that from just started with demand for air travel has improved significantly throughout the court.
Our revenues in the quarter were 80%, 87% higher than they were.
Just last quarter.
At the beginning this year, we outlined our green flag.
Set of initiatives. We are focused on 2 recently airlines make American stronger as we come out on the crisis.
As a reminder, this work focused on 4 key objectives.
I went down on operational excellence, we can actually 1 of their customers.
Moving on the positive momentum, we've established Betsy and passionately driving efficiency.
But keeping our focus on these areas we knew it wasn't pandemic started from side and the green flag drops that American will be revenue.
Robert Derek I can share a lot more details, but the short story is the Green line has dropped we arent being ready.
Airlines team is delivering results on a return.
We put on more customers than any other airlines.
Team safely transporting more than 44 million passengers on nearly 470000 claims reported.
5 times the number of passengers we carried in the second quarter of 2020 and wanted to 5 times. The number of lines, we've ramped up the operation dramatically in response to customer demand and our operational performance continues to improve as we grow into scale on.
He has done a phenomenal job of taking care of our customers. Our on time performance on our completion factor for the quarter was the best in our history. Despite the significant ramp up on operations.
The increases in demand and flying and led to considerable increase in our revenues the fourth consecutive quarter of Americans outperformed our large competitors on passenger unit revenue production.
Importantly, we're producing industry, leading unit revenues, we're also controlling our costs.
All of this has led to a dramatic narrowing of our losses and I noted it begin notably we were profitable excluding net special items from the month of June the first month since December of 2019.
We expect our losses to narrow even more in the third quarter as we continue to March back to sustained profitability.
And from our balance sheet, we on the second quarter with more than $21 billion of total available liquidity as far as the highest in American history.
Generally the cash build in the quarter from the first time from depends on it.
This record liquidity and our confidence in the future.
The government deleveraging of Americans balance sheet.
This morning, we prepaid the entirety of our $950 million term spare parts term loans, which wasn't scheduled to mature until April 2023.
Derek will talk more about our deleveraging plans during his remarks, but I'll just say it feels great.
This is a prepaying debt well before it comes due.
Rather than continuing to incur it.
In summary, I couldn't be prouder of that couldn't be proud of this team.
In response to demand we're building back on the network faster than our largest competitors, we're hearing far more customers than any other airlines and our team is doing so safely with great care for our customers, we reshaped our network simple fired fleet Doug.
Efficiencies into the business that will serve us well for years to come.
And today as the recovery continues we've begun to deleveraging of our balance sheet.
So thanks to the hard work and dedication of the American team and because of that we're on the midst of an unprecedented recovery. It shows on our results and with that I'll turn it over to Robert.
Thanks, Doug and good morning, everyone first I want to acknowledge the tremendous efforts and resilience of the American Airlines team, but.
But we're still in the early stages on the rebound we feel really good about the progress that we've made to build back our business differently and the results its producing assets.
It was only possible because of the outstanding work of our team.
This quarter, we rebuilt the operations from up from pandemic level flying effectively adding an airlines signed to the old U S Airways over the course of just a few months.
We were able to fortify our staffing by completing all required recall pilot training bring them back more than 3000 team members from late with assets more flight attendants. Returning from late this fall and hired nearly 3500 new team members throughout the operation.
We also plan to hire 350 pilots this year and more than a thousand pallet 800 flight attendants next year.
As Doug noted in the second quarter, we operated more than 2 and a half times. The number of flights we operated over the same period last year.
We had a second quarter completion factor of 98, 6% and I'm kind of elaborate of 82, 1% that Robert.
It represents our best ever performance for those 2 metrics in the second quarter.
And our momentum has continued into July and shipped a chart.
Demand for our product remains strong and we're very encouraged by the trends we're seeing in the revenue environment recovery is happening.
Our second quarter passenger revenue more than doubled sequentially to $6.5 billion as demand search on a unit revenue basis, our second quarter PRASM was up 42% sequentially from the first quarter on a 44% sequential increase in capacity.
Despite the industry wide increase in service. This marks the fourth quarter in a row, we have performed our peers on a passenger revenue unit basis.
Our net bookings have recovered on a fully recovered and we're focused on yield managing demand, while bringing back the network going forward.
We've seen no degradation in bookings related to the recent uptick in COVID-19 infection rates.
Leisure demand continues to outperform and in many areas. It has surpassed 2019 levels.
Even more encouraging is vaccinations have increased business travel has started to return on a meaningful way.
Domestic business revenue was approximately.
Nearly 20% of 2019 levels in March from more than doubled to approximately 45% in June.
With revenue from small and medium size business is recovering at a faster pace large corporate accounts.
Looking forward, we expect business recovery to continue and accelerate.
Coming months, our share on bookings and key business channels remains ahead of 2019 and customers are telling us that they're eager to eager to travel.
10 of our largest corporate accounts have already lifted all travel restrictions and many have already to return to the office.
Critically the majority of shared their expectation for travel to pick up moving into the fall.
We now expect our full business travel recovery in 2022.
All of this is great news and the American team is ready and excited to welcome back our corporate customers.
We still expect to international travel, particularly long haul international travel to be slower to fully return.
Many countries have not rolled out vaccines as quickly as the U S. So travel restrictions and quarantine requirements are still in place in many locations.
Whenever restrictions are lifted we see a quick a dramatic increase in bookings demonstrating that there is significant pent up demand for international travel.
For example, <unk>.
And for travel to Europe has increased considerably in recent weeks with reopening of the EU and.
In our book load factor across the Atlantic is approximately 35 points ahead of the same time last quarter.
Continues to strengthen.
We're committed to building the best and most convenient global network for our customers as they return to the Sky. This includes making improvements in our key hubs bolstering our partnerships growing at an advantage program harmonizing our fleet for consistent customer experience and reopening our clubs on ounces.
We continue to invest in our hubs to improve the experience from our customers that.
Net DSW recently opened 14 gate, which will allow us to continue to grow organically at our largest and most profitable hub.
And we expect to file on larger domestic network at DFW. This August than we did in August of 2019 net.
Charlie We opened 4 new indicates just prior to the pandemic and we expect to open 3 additional gates before the end of this year.
These gains will allow us to grow efficiently at our east coast connecting hub as customers return to trap.
And at TCA, we have officially opened the new regional concourse.
Which offers a significantly improved experience for our customers, including an all dual class regional operation.
Importantly, it also allows us to up gauge the hub to larger aircraft overall.
We continue to develop partnerships that bolster our network and improve the customer journey.
No better example of this and our partnerships with Alaska on the West Coast Jetblue in the northeast.
Those partnerships are already delivering benefits, giving customers more choice and driving revenue in 2 very competitive markets.
American Jetblue now offer the leading network in New York and by making it easier for customers, particularly corporate customers to return to travel on.
Nor can we our northeast Alliance has enabled us to start new service between New York and telling me.
<unk> in Colombia, and we now have Deli service slated to start this winter.
Our domestic partnerships complement an already broad set of relationships American has around the globe.
We have more exciting developments on the horizon and all of these international partnerships will really start to take off as more travel restrictions are lifted.
We continue to focus on growing the advantage program.
Our total number of transacting members is the highest since the start of the pandemic and up 50% year over year.
We've also seen a strong co brand acquisition growth, which has more than doubled since the first quarter and has climbed back to over 80% of 2019 levels.
We're focused on expanding the program itself growing the membership base, making advantaged from south piece of our partnerships going forward.
Our fleet Harmonization program continues which not only delivers a consistent customer experience.
Bruce reliability throughout the operation and gives us a more efficient fleet.
It also enhances the revenue generating capabilities of the aircraft, while giving US a unit cost tailwind.
Our 730 Sevens are now complete and we completed the interior work on dozens of <unk> hundred 20 ones in the second quarter. We now have just over 100 aircraft left before our <unk> hundred 20 ones have a standard on toward product by early next year.
Now that our 737 fleet is fully harmonized our customers will have industry, leading Wi Fi powering on receipt and larger overhead bins. In total we're now flying more than 350 narrow body aircraft with new consistent in tears.
Most importantly, the customer feedback on these aircraft has been exceptional.
Additionally, 1 of the things we know is that lounge space greatly enhances the customer journey.
We opened 37 Admiral Admirals club lounges, and 25 locations and all of them will be opened by the end of August.
Our flagship flash locations will start reopening this fall as premium on corporate traffic returns from the second half of 2021.
Lastly, we continue to make investments to ensure that we're running a more sustainable airlines.
The second quarter, we announced an investment in vertical aerospace.
<unk> electric vertical takeoff and landing aircraft doubling down on our focus on emerging technologies to reduce carbon emissions and investing in innovative ways that could impact that could improve the customer journey.
Last week, we committed to development science based targets for reducing our greenhouse gas emissions by 2035 supporting american's existing commitment to reach net zero emissions by 2050.
We also agreed to terms to purchase up to 10 million gallons of carbon neutral sustainable aviation fuel.
Committed to reducing our carbon footprint and mitigating our most most significant climate related risks so investors should expect to see more developments like these in the future.
In closing as more customers return to fine, we're taking action to strengthen and re imagine our business. This work coupled with the continued efforts of the American Airlines team will have us well positioned for the post pandemic world.
Now I'll turn it over to Derek.
Thanks, Robert and good morning, everyone before I begin my remarks, I want to Echo, Doug and Robert's comments and thank our team members for their hard work over the past quarter.
We've significantly grown our airlines since the first quarter on the process of bringing the world's largest airlines back on line was not an easy task on our team made it happen.
This morning, we reported a second quarter GAAP net profit of $19 million or <unk> <unk> per diluted share. Excluding net special credits, we reported a net loss from $1.1 billion or $1.69 net loss per share.
With a rapid return to demand that Robert discussed our financial performance has continued to improve this trend started in March when we began to see a significant acceleration in demand that continued throughout the second quarter and drove net bookings to 2019 levels.
This improvement in demand led to an 87% sequential increase in total revenue versus the first quarter.
Even more encouraging is that we were able to capture this additional revenue while remaining focused on our cost and efficiency initiatives.
As we have articulated in the past our growth throughout the pandemic was to prudently keep our capacity aligned with demand, while being flexible enough to adapt as needed.
Done just that and move swiftly to lower our cost structure and drive efficiencies throughout the organization with more than $1.3 billion of permanent cost reductions.
This includes $500 million and management head count reductions $600 million in labor productivity initiatives and $200 million and other efficiencies.
Just on our results. It's clear these actions are beginning to pay off as our second quarter CASM, excluding fuel net special items of 12.6 1.
It was up just 11% versus the same period in 2019, despite flying 25% less capacity.
Looking at this from another angle, despite a 44% sequential increase in total capacity, our second quarter total operating expense, excluding fuel and net special items increased by only 11% versus the first quarter of 2021.
In addition to our improved financial results. We also saw improvements on our cash position and liquidity for the first time since the pandemic began we produce quarterly positive cash build in the second quarter of a million per day on a 1 million per day doesn't sound like much we've come a long way from our peak cash burn of approximately $100 per day.
Early in the pandemic.
As a reminder, our definition of cash build includes approximately 12 million per day of regular debt principal and cash severance payments.
As a result, we ended the quarter with approximately $21.3 billion of total available liquidity, which was higher than our original forecast due to the increase in revenues and forward bookings during the quarter.
As we look ahead, we feel confident that our record level of available liquidity is more than enough to allow American to navigate the recovery.
In the near term, we plan to keep liquidity at elevated levels, but expect to step down our target liquidity to approximately $10 billion to $12 billion at some point in 2022.
We will continually assess this liquidity target as we make further progress on the recovery the company returns to sustained profitability, we reduced our net debt levels and we increase our unencumbered asset base.
As we have said previously all liquidity in excess of these targets will be applied to accelerating our deleveraging plans for the foreseeable future.
As we discussed on our last call American will pay down 8% to $10 billion of debt by the end of 2025 through amortization of our existing debt in excess of any additional debt we expect to incur.
However, because of that debt because of the debt we needed to take on during the pandemic. Our plan is to accelerate the reduction of debt beyond that natural deleveraging that will occur.
We now forecast, reducing our debt levels by more than $15 billion by the end of 2025 by using excess cash and free cash flow to pay down pre payable debt.
Even though most of it is efficiently priced and by not adding to our debt levels by potentially using cash instead of debt for some future aircraft deliveries.
This reduction in debt level will be facilitated by the relatively low capital expenditure profile. We have had over the we will have over the next several years because our fleet modernization program is now behind us.
In addition to deleveraging our balance sheet.
Allow us to smooth, our near term maturity towers and free up high quality collateral.
With this level of debt reduction and continued margin improvement our plan is to achieve the best credit metrics in the history of post merger American by the end of that 4 year period, if not sooner.
As evidence of our commitment to delever or confidence in the future. This morning, we prepaid the entirety of our 950 million spare parts turmoil that was scheduled to mature in April 2023.
As noted had a coupon rate of only LIBOR plus 200 prepaying. It sets the stage for future optimization of our unencumbered collateral pool.
The prepayment also results in an improvement of our first lien capacity from 7.5 to $8.4 billion.
$950 million prepaid today is an ambition to $985 million of debt amortization and prepayments that we made during the second quarter.
During the third quarter, we will also free up 20, Boeing Triple 7 aircrafts that will be released out of the 2013 debt too in 2013 Dash, 1 double ATC trans transactions further improving our unencumbered asset base.
The deleveraging of Americans balance sheet has begun and we are committed to significant steady and continuous debt reduction over the years ahead.
Looking to the third quarter, we expect our capacity to be down approximately 15% to 20% versus the third quarter of 2019 based on current demand assumptions and capacity plans. We expect another significant sequential increase in our revenue and expect total revenue down approximately 20% versus.
The third quarter of 2019.
In total we expect a pre tax margin, excluding net special items of between negative 3.7%.
For the full year, we projected we projected debt principal payments are expected to be $2.8 billion, excluding the repayment of our revolving credit facility that we completed earlier this year.
With respect to capital expenditures, we continue to expect full year 2021, capex to remain minimal non aircraft Capex remains at approximately $900 million and net aircraft capex, including PDP remains an inflow of $1 billion.
Lastly at this stage of the recovery, we no longer feel that daily cash metrics are constructive in understanding the underlying performance of the business as such we will return to guiding to our standard operating and financial metrics as outlined in our Investor update that we issued this morning.
So in conclusion, we continue to feel good about the improving demand and revenue environment. Our team has done an amazing job of managing our liquidity and driving efficiencies throughout the organization and we are very well positioned for the future with that we'll open the line for analyst questions.
Ladies and gentlemen, if you have a question at this time. Please press. The Star then the number 1 key on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the county to your first question comes from Catherine O'brien with Goldman Sachs. Your line is open.
Hey, good morning, everyone and thanks for that.
Okay.
So first question on the deleveraging plan.
You know where you plan to prepay I guess, it's 5 to 7 billion through 2025 on top of that $8 billion to $10 billion in scheduled amortization can you just help US think can you help me think about the pacing of that prepayment you know of course, assuming it'll be tied to free cash flow ramp whether certain profitability metrics. He sees a gating factor or other capital allocation.
Requirements, you should be thinking about that that might influence that piece and then I guess, maybe like a click on the secondary question on the back of that also could it actually be more front end loaded as you stepped down your minimum liquidity next year.
Thanks.
Yeah. Thanks Catherine.
Yeah. It is it's all going to depend on that is as you just said at the end. It's as we've stepped down our cash requirements. We will use the cash to pay off the debt. So the way we're looking at it is if.
We can we're at 21 now and we just paid down $1 billion for 'twenty.
It will take that down to 10 to 12 sometime in 2022, so when we do step it down we will use all of that excess cash to pay off off the debt. We have a significant amount of debt that is pre payable.
A lot of that is efficient debt, but we still believe it's the right move to do so I do think it won't be.
Frontloaded.
As we look at the amortization.
Amortization today, it's pretty even throughout the <unk>.
For years as we look at it.
There is more out in probably 'twenty 3 'twenty 4 because the advantage loans does start to amortize out in those years, so that adds to the amortization.
But I do believe as we stepped down from where we're at today to the 10 to 12 and then if we do step down again.
Over time that all of that cash will go to debt. So I would I would believe that it would be more front end loaded as we as we think about it.
Okay, that's great. Thanks.
And then a question maybe on the co chair agreement.
<unk> demand is starting because he's been corporate demand is starting to rebound here, obviously still in early innings, but can you just talk about how adding the new Jetblue co chair or the enhanced life co chair has influenced your discussions going for right.
Either with corporate accounts, where you might have overlap or in regions, where your partners have had a stronger presence than you have historically.
Yeah, Hey, Katy this is vasu.
I can handle that.
We are really encouraged both with the the progress as a result, we've seen from.
Both of our domestic partnerships, even though it's really only been the better part of 6 to 8 weeks, where Alaska has been up and running and really 3 or 4 weeks, where jetblue codes.
Up and running.
But very much the design of this partnership is to go short on 2 parts, where on the domestic system, where our network was just structurally weaker what is the west coast on the other is the northeast both of which are the.
The largest originating markets for business travel for corporate travel for small mid market travel however, if it might otherwise be.
We had a really encouraging response from corporate customers.
You need to have 1 there's a lot of integration work that must be done still and that's a major focus for us.
We're encouraged by what we see in both cases on the first in the case on Alaska again, while the results are early you know that the key indicators when we put it together what's can ensure 1 more long haul a successful long haul franchise off the west coast.
2 a better network for the West coast originating customer again that that type of business customer, but 3 more utility for all of our customers who are in the Midwest and the South East and are looking to go west.
We haven't seen long haul emerge just because of the trends that are there from what we see right now about 20% ourselves the bookings and the public data is.
Is all from the intrawest customer, which is exactly the kind of business customer that we weren't getting before of royalty on cars that 80% of the bookings way way over performed our expectations are from customers looking to go west.
And we've been able to go on and put more demand through the east coast, while on the feeling on the organic network DSW in Chicago.
We were encouraged by that and we.
To be as we go in and scale up in northeast partnership with check with its well Hey, Alison why don't you give a flavor for what youre hearing directly from the corporates as you've been out on the road.
To add onto what thoughts you said.
Robert I'm, having just on I've talked with most of our.
Large corporate accounts.
City network.
Network arrangement in contracting with us as we do that together with that new alliances and something that really.
Travel manager and travelers.
We have been emphasis on boxes less complex global accounts to both Alaska and Jetblue. It just makes it easier and more seamless than to have a great network and have great operating through our joint loyalty.
On the ships as well and through having a 1 stop shop for the style thought of us as well.
And your next question comes from Andrew <unk> with Bank of America. Your line is open.
Great Good morning, everyone and thanks for the questions.
It's Derek.
On the deleveraging plan can you, maybe just help us a little bit, but maybe the free cash flow build beyond this year.
Can you give us a general idea.
Level I guess net capex can be.
Beyond 2021, and can you remind us what your pension contribution required this year or next.
Well firstly with the pension is going on I mean with the pay down is going to be using the excess cash that we have as we go forward.
We'll have a significant amount of that kind of used to prepay the debt, but as we move forward.
Next year in 2022, we only have about $2.6 million of Capex.
1 billion, we're forecasting about $1 billion in non aircraft Capex for the next 4 years. So we've kind of left to get back.
<unk> come in a little bit below a little bit above that from a gross aircraft Capex. We have about 1.5 billion in 2022 on $1.8 billion in 2023, and then the other thing to look at as cash payments in 2022, we only really have 1 significant net payment which is the unsecured so.
Only about 2.5 billion net payments in 2022 steps up to about 4.4 in 2023.
So each of those 2 years are going to be significant.
If the earnings are aware, we believe they are all ask more free cash flow to pay that off from.
On a pension perspective.
We really don't have any pension contributions in 2022 or 2023 necessary. So there's a small 1 we think in 2023 of about $50 million, but zero in 2022, so not a lot of our cash requirements for either capital.
Debt paydown or pension contributions over the next couple of years, which will enable us to have a significant free cash flow to start to delever along with the excess liquidity that we believe we will have over that factor.
That's great color. Thank you. Thank you for that and then my second question, maybe Robert or Sue and you're down 20% revenue outlook for <unk> can you maybe provide.
Provides a little color on how you see the domestic yields environment progressing throughout the quarter.
If you can can you give us what percentage of your expected <unk> revenues are already booked now and how does that compare to pre COVID-19 levels.
Yeah.
I feel I can I can help with both.
And when you look at that.
On <unk> really.
We continue to see a lot of the same trends that we're seeing in June and July on the first half of August.
Schools go back to return in the second half of August and following Labor day.
Theyre yesterday, there's a net.
Natural lightening in the.
Leisure demand that we're seeing and.
And so as we look out there we're actually really encouraged by the yield environment. We're seeing yields that are in that period, 95% to 105% of where they were in 2019 as far as on how much they're booked loans, we get out into the September we're still only about 35%, 40% booked out there.
On a little bit of of of room out there.
On the way, we consciously built the airlines as we go into that period.
It is very much that that it'll be a maybe a little bit less of the opportunistic leisure stuff that we've been doing a little bit more on starting to worry on Uh huh.
We're seeing it.
The return of business travel.
We're encouraged by the trends that we see out there, but we really are planning that that a material amount of business travel won't come back until after the October period.
Alright. Thank you. Your next question comes from David Vernon with Bernstein. Your line is open.
Hey, good morning, guys. Thanks for that on a bus who maybe could you talk a little bit about how the dynamic on on on business fares or is behaving kind of relative to normal pre COVID-19 level I'm, just trying to get a sense for whether you're starting to see from some close in bookings or I know the activity levels have improved but how is the sphere dynamic working on their end.
If you could also comment a little bit on kind of where you are in and getting the traditional sort of revenue management.
Algorithms to kick in.
Yeah.
That's an excellent question and probably.
The second 1 helps get context for the first 1 so I'll answer them in reverse order.
When the pandemic began we talked about this thing as a reset we are for planning purposes, we take that very very seriously that we describe the business on a year over 2 years basis. When it goes to planning the business. We work here and now and what are the benefits of having more capacity out there as it enabled us to go and observed a math.
We realize on the early days of this that on the pandemic was going to be so big and so devastating to our historical.
<unk> forecast wouldn't work for probably a few years into the future.
So we've been pretty actively over the last year rebuilding our forecasting system.
And clearly do I keep the results Doug there's some great it back and did a great work of our revenue management team.
When we came in in January and there is still a lot of uncertainty 1 of the things that they noticed with that.
Every single peak period, we had had more more travel demands and what was there before and it was actually the booking curves are actually.
Shifting further and further out with more people willing to pay also high stairs closer in so.
So we're very actively set up the summer for that and if you don't just look at the public data is there.
We very consciously built the airlines to try to try to take as much demand as we could.
Close to departure and indeed, our market share inside a 14 day.
The Q2 period was much greater than what it was outside of 14 days, so even though the fare environment was depressed right, even though yields were at 80% to 85% of historical levels. We were taking a lot more share inside of 2014 demand, where we did indeed observed higher fares more willingness to pay.
More business style itineraries that were there.
That led to a lot of the result that you see where I'm, even though we have more capacity than others. We also have higher Roes anhydride.
And it's also enabled us to do we've got a much better handle on the on the nature of business travel and we do see a lot of changes.
Changes in trends and patterns that are there.
And we believe that that's really well positioned into the fall, but we have seen the booking curve shift outward, we do see people engaging in business style itineraries single day trips.
On overnight with with no back things like that and we're encouraged by buyback and return.
So with that in mind, we remain encouraged for how much business travel can start to rebound and certainly when we when we're more corporations returned to work, we think there'll be a 4 to 6 week lag a pretty material pickup there as well.
But that's that's extraordinarily helpful. Thanks for that detail I guess, maybe just as a quick follow up with you. If you think about the partnerships with Jetblue and Alaska, Obviously that executive order came out there was some commentary on there on the airlines and Fox and Fox and things like that have you guys been directly kind of.
Approached by the boj to kind of revisit any of that stuff are you worried about that happened on can you kind of comment on the partnership on the context of the recent executive order.
Steve Johnson.
Hi, Thanks for the question.
We've got as we've said we've been in discussions with the Doj about.
On the NDA really since we announced it.
And I think the real answer to this question is fast foods and Allison's comments earlier, but let me just.
Summarizing reframe those.
We designed the NDA for our customers, we designed it to be competitive we designed it to allow us to do.
Do you think to allow Jetblue and American to do things in the northeast and in.
In particular, Boston and New York that we couldn't do on our own.
And we designed it to allow us to grow and offer options to our customers that otherwise wouldn't be available.
We're committed to that idea I think what we've done with the NDA so far demonstrates that.
But that is going to be the case.
I just.
Really excited about the announcement that we made on earlier this week about the MTA.
And we're.
Confident that at the end of the day, the regulators are going to see the value to customers and really that increase in competition that results from it.
Couple of quarters are going to ask similar question.
And I said that we have with the Doj in this case doesn't have a deadline for taking action like it would've been Casey merger.
We expected them to.
Watch as the NDA was implemented and over time make a decision about whether it was in the best interest of consumers on that.
That seems to be what they are doing now and we expect that to continue.
And your next question comes from Savi <unk> with Raymond James Your line is open.
Hey, good morning, everyone.
Could you just provide on the on the fleet harmonization side with this kind of.
So it says you are having with getting that done just wondering if you could share what that cost and revenue benefits timing and what that might look like relative to 2019.
Yeah, sorry, this is Derek.
I mean, the cost dissolve in the capital plan. So we'll be done with all of those projects within the $900 million on aircraft Capex because as you can imagine most of that stuff was purchase.
Earlier and now we're just putting it in the aircraft all of the 730 Sevens are done.
And as Robert said, the 821 that will be done by the end of the end of the month. So so the cost perspective is already in and it's already a complaint.
On what it will do is from an asset perspective, as it will increase as it sounds.
So it should help the CASM ex.
As we go forward, because we're adding adding those extra seats to the aircraft.
That's all built into the into the CASM guidance that we have as we go forward from a revenue perspective.
Again remember that on.
On the 730 Sevens, we effectively took the seat count from 160 to 172 seats and on the <unk> hundred 20 ones, which we still have 100.100 plus left.
Reconfigure, where taking the configuration up to 190 seats from from either.
187 feet to 183 seats so.
It's it's it's.
Again, I'll refresh reframe. This in terms of those aircrafts have all new seats, all new bins. They have new lighting have power of course, they already have.
First in terms of semi Wi Fi.
So we have more seats to sell with a better product for our customers to win overall, it's something that we really haven't had the ability to go out and market you know over the last year. So this is something we're excited to do as we finish off 2021 and moving into 2022.
Savi from an operating perspective for the airports to have the consistency of aircrafts as swap them to move around has been.
Very very helpful from a operating perspective also.
Got it so we should see some kind of margin benefit as we head into next year.
GAAP into 'twenty.
That's combined.
Correct.
Great and if I might quickly just follow up on on the business at corporate.
Demand recovery.
I appreciate you kind of thinking a full recovery next year curious what you were thinking you might see kind of exiting this quarter and then into the fourth quarter.
Hey, this is off to a really.
We go through their 3 Q we're.
We're not seeing if these alteration to the trends that we've seen sequentially, so far and if we're not.
Corporate revenues are about 45%.
But where they were in 2019 from.
From January to June we've seen that build about 7 to 10 points.
<unk> kind of month to month, and we don't really see anything between now and September were 7 to 10 points will either be materially higher nor lower in October where we.
We believe frankly believes there's going to be a change is that as we.
We've seen companies return to work, especially across the sunbelt typically on a 4 to 8 week lag period. After that we start seeing them come back to travel and on.
With so many areas.
Right now some of the lowest booking points of commencement or the New York Court.
Our DC and the greater Chicago area with that would flow through returning back to school and back to work around Labor day, and we anticipate that really it'll be early to mid October when that demand starts coming back and ask Alison to that more but that that's still probably pretty consistent with what we're hearing from our corporate absolutely.
You just said about our customers.
Travel restrictions and she said it's already planned to return to the offices by the end of 2021.
Well for us.
Continuing on corporate travel and won't let me saw in Q1 and Q2.
Largest corporate accounts based on 80% increase from Q on Q2.
So it's been a steady mccullough and it's been interesting for us to say from travel patents or 90 day.
Different from my point of pre Covid and some of it reminds us signing on for example.
It's from this at all on travel remains less concentrated on peak days, a week, but the booking because of Covid our traffic continues to normalize.
2019 level.
And your next question comes from Duane <unk> with Evercore ISI. Your line is open.
Hey, thanks.
Your your revenue outlook and margin outlook is better than what we were hoping for.
<unk>, which is which is consistent with peers that have reported thus far.
I wanted to ask you about your ability to influence our relative margins.
You're guiding to kind of mid single digit negative.
Pre tax margins in the third quarter.
Both your network peers are guiding to positive at least 1 is guiding to mid single digit positive.
So just thinking back to 2019, you're starting from a lower margin baseline.
So the same RASM in the same CASM trajectory is going to result in the same ranking.
On the other side of this pandemic. My question is what is your plan to change the ranking.
Do you expect American to be an industry, plus RASM story or an industry minus CASM story and I appreciate your thoughts.
Oh, no hasn't gone from us.
So first off on.
Now looking at relative margins right now.
It's hard to do it's so volatile.
How small the province on how.
How 1 airlines drivers of other income that's rubbish.
For example on it.
Well.
You are right I guess or 2 large competitors are forecasting.
To have margins better than on better than on our forecast next quarter.
<unk> this quarter.
10 points better.
For example, so.
1 should not take that demand that we think we're going to have 10 point better margins on you know you got my point is just that.
Whether or not you know.
Someone who's maybe forecast finance.
Yes.
So maybe 4 months from now.
On the more mature than others.
We're just on what we see.
But to your broader question.
As to going forward and what do we think about relative margin performance.
I firmly believe what you're going to see from us as well.
Look.
When we all get to real profitability.
You can actually compare these types of numbers say 2022.
Americans margin versus our 2 large competitors versus where it wasn't 2019 will be there.
If not exceeding 1 of them.
That's what vessel, but we certainly would expect we'd expect that given what we're seeing today, we expect that given the 1.
On a $5 billion.
Cost efficiencies built into the airlines today.
So.
More to come on that but I would really really caution anybody from trying to look at margins today.
And comparing relative margins.
Any sort of indication on whether it'd be on future calls.
They are moving every quarter.
It's been 3 quarters, not moving well.
We don't take huge comfort message towards the noise.
I appreciate the thoughts Doug.
Sure.
And your next question comes from Helane Becker with Cowen Your line is open.
Thanks, very much operator, hi, everybody on thank you very much for the time this morning.
As you guys start to think about them.
Opportunities to grow the network.
Where do you think the next and that's the new aircraft to come on because I think you're still getting a few aircraft, especially 7.8 seventh where do you think the next best markets are for those aircraft.
Helane, Thanks, I'll I'll start and perhaps you can add on so look we've we've done some great work to put in place from new partnerships that have been talked about that allows us to to really optimize the fleet overall and as we take a look at growth.
You'll see that some of the things I talked about new gates and and.
Charlotte New gates at DFW.
The updating of 14 regional gate.
In DCA those are going to be first on the list for us.
And we're really happy with the set of assets that we ask because they do enable us for some growth and some of the fastest growing metro areas. But in addition to that they are really efficient connecting operations as well. So ex first order of business not true Yeah, Robert said, it really well.
When I say very simply.
This pandemic and everything we've seen for the vast majority of cities all across the domestic U S and even South American Hugh.
American Airlines has the best network.
Globally Vik with its network and.
And so we envision that a lot of where we would organically put assets is there and then as we start building back international was built back.
In a way where it really rolls off, but where we're strongest organically on places like Chicago, and Philadelphia, and Miami and Dallas Fort worth, but also we envision being able to launch price had in New York and Seattle.
And we've been really encouraged so far with what we've seen through those partnerships. So a big chunk of our growth wherever it is going to be focused on things that really drive the performance of this company and are positive for us and our customers.
Okay. That's very helpful. Thanks, Vasu and.
Robert and then the other question I had and I think you may have answered this.
I might have missed it.
It is the revenue being driven by higher load factors are higher yields or a combination thereof.
Yeah, Hi.
This is not to again and the reality is is both.
But as we go back and look at look at this when we when we look at it internally, we actually index at our March 2020, when things kind of were at their lowest point and <unk>.
Look at that and just index on our results coming out of there on our traffic.
Like our traffic just slowly still have capacity and the next thing. The next the fact that we've been seeing as you look at that sequentially as growth in yield on them.
So the reality is is both but what we have been more encouraged about.
To my earlier comments to that.
As we get into peak days of week peak travel period things like that we are able to go in and drive yields in a way that really was nonexistent to us in 2020. So the reality is it's both but increasingly on deals are taking over and thats very encouraging for us because of course in the way our R. R.
It sounds from distributed on the more and more we see domestic yield recoveries or more of our business with larger customers.
Thank you.
And your next question comes from the line of Mike Lindenberg with Deutsche Bank. Your line is open.
Yeah, Hey, just 2 here Robert I wanted to go back to the point that you made about a full business travel recovery in 2022, now or are you specifically, referring to your domestic business revenue, which I think is about 25% or are we looking at on a system wide basis, which is probably a number that's probably 10 to 15 percentage points higher than.
I just want a clarification on that.
Domestic.
Okay and on Earth.
Our national and international as we said in our comments is there's still a ways is still a ways off but as that Apache soon announcing a talk you know everything we see in terms of trends from our domestic business perspective, and boding well for international as well as we go out and we talk to Ceos and also.
In insurance and in financials and in consulting and accounting firms everything tells us that business is going to come back.
On to where we had seen it before maybe it's some different ways, but feel.
We feel really confident starting with domestic in 2022, great very helpful. And then I just vasu I wanted to ask you not that long ago I want to say a few months back I think you are at sort of publicly saying that you are bracing for maybe a bit of a falloff in demand when we got into the fall largely.
Back to school families parent's back to work that you would see some impact on 1 hand on the other hand, when you think about may.
Maybe Europeans coming to the U S getting pushed back into the fall the cruise industry, just starting to reopen Broadway opens I think on September 14th are we going to see a potential leisure bump.
Because of just reopening that are happening around the world and have you sort of rethought that that that prognostication about a potential demand sluggishness, maybe on the leisure side when we get into September October what's your latest thoughts on that thank you.
Thanks, Mike.
Let me clarify my Prognostication I think its taken on.
Colors that I didnt originally needed for that Investor Conference.
Really what it is is that.
First and foremost as long haul international consistent with with Robert's comments, a moment ago right now.
I'll use Europe as the example, as markets that have reopened.
We saw it a lot of bookings come in what would be historically late in the European booking curve, which is great, but the vast majority of them are sales visiting friends and relative style bookings.
On leisure oriented bookings.
And so as we look out there theres really not a lot of a lot to indicate that real long haul business travel is going to be coming back following labor day and again to continue My European example.
It really was what buffers the European network into the fall is indeed business travel now.
It is an unknown to US is if these reopening continues there probably is going to be some more marginal demand for Europeans coming to leisure markets and the U S and Latin America.
But for all intents and purposes, we're presuming that that's going to be relatively small items can very little.
To encourage its otherwise earned upon on Alison made them and Robert.
And then as we think about our short haul network, both in domestic and on and then.
Mexico, Caribbean and Latin America on Derek.
We do indeed anticipate that are visiting friends and relative style markets will actually be.
Seasonally and sequentially stronger than what it would've been in 2019 or 2018, we do anticipate there's going to be more.
We can do oriented leisure demand 3 day weekend things like that and what we might have otherwise seen.
But the reality is what we have in June on what Theres going to be in September is likely to be really different you know right now in June we see travel where people will go to them. The dual on Montana on a Tuesday and returned the following Wednesday, it's pretty unlikely that a trip like that is going to happen on the same degree of frequency. When you get when people are going back to school, but that's okay.
We can go on configure our airline network to go on match the demand that's there and that's indeed why why certainly in our published schedules you see is flying more things in the D C, New York and starting to add back multi frequency business markets.
And on 3 day weekend patterns and things like that.
And your next question comes from Jamie Baker with J P. Morgan from me now ask a question.
Hey, good morning, everybody I'm My first question related to wind Broadway, it's gonna open but might be resumed at lunch.
Oh.
A question probably for Robert.
The third quarter capacity guide down 15 to 20, that's a bit more aggressive than some of your competitors. It is what it is but what what didnt turn on calculus went into that I mean is that a function of.
Loss minimization.
Driven by the maximum amount of staffing that you have particularly on the pilot side on what you need to operate to avoid ceding share to competitors. Just curious why that figure is down 15 to 20 as opposed to something different.
I'll start and Derek can join in as well, but look we're planning the airlines for where demand is we're planning to airlines to maximize profitability.
And it doesn't make sense right now to have assets on the ground. We've got the staff to go out and fly them.
And we think that what we're doing is its profit maximizing for mass minimizing for the airlines right now that's cash.
Go ahead, Yeah, Hey, Jamie this is box sales.
I'll pick up right, where Robert laptop is exactly right. We plan to maximize the marginal economics of the business and you see that day.
What you see in Q3 as extension quite frankly of Q2. So if you look at Q2 for example.
Reading to other airlines.
Print.
And for the best performing airlines their domestic PRASM. We've produced exact same domestic PRASM, they did but our airline was 65% or 70% larger 6% net more capacity.
It's to be able to be that much larger and produce the exact same revenue is a really really great marginal economic decision.
In our system, we're able to go in and create that kind of leverage and so the only difference between breast flying at 80, and something more or less and that is that as we go out there. Its a continuation and you can see on the published schedules of exactly what's there right now.
We're about 90 ish percent of the ASM capacity of the company.
Is doing the things that that are really working right now which is flying a lot in the Americas growth in Northern South America.
The remaining 10% is flying transatlantic and transpacific.
And that's the best marginal economics decision to make right now and should that change we have ample ways to go and respond to that.
Okay. That's helpful. And then on Slide 16, you talk about steady state Capex.
I think the problem American had and and I guess now the challenge United States thing is that you know capex really runs through peaks and valleys.
So sort of a theoretical question is there a way to smoothed those trends over time.
For our airlines simply perpetually beholden to the product cycle from the Oems I'm trying to understand if 3 billion is truly a steady state number or if that's just shorthand for short term run rate until the next school so anything that comes along.
That's fine I'll ask Mike.
Good day.
No Jamie I was I was going to say I think it may fluctuate up and down a little bit on that.
But you know if you're if you have a.
Do not get into the state of where we did before where we had $5.6 billion and we were taking 100 aircrafts.
On a year.
We need to try to smooth it out a little bit better.
You know, but the other the other way to do that is just take you know not take new aircraft take older aircrafts do different things like that so as you as you look at that but if we're going to take.
No I don't think it has anything to do with the manufacturers it has to do with it.
How do we want to smooth things out over the next 2025 years from an aircraft capital perspective.
Because as you know aircraft.
Can only last a certain point in time so on.
Our view is that we're going to need to replace some each year, we're going to need a little bit for growth each year.
That's where that Capex comes from.
Yeah, it's harder to go Okay, we're going to order a bunch and get them all within a 3 or 5 year period, we'd like to smoothed that out a little bit more so Doug do you have any day.
Joining me on.
But I think what you're seeing is a.
Pent up replacement issue.
That's driving this right now it's largely.
So.
Moving on.
What's happening is airlines need to eventually replace aircraft of course.
American did that.
Pre merger American did it with a big order.
I remember that was 2012 or 13.
U S Airlines already was in the middle of that so combined.
That's why we do have the day, because we have much.
We're in a better aircraft in assets.
1 of our competitors and they now have to go through the same thing so.
While we were going through the trouble of be true going through you know people hold on airplanes longer than we have.
So I think it's on.
Anything related to the to the Oems and entirely related to airlines.
So now you have just held onto airplanes long enough that they have to be reported.
American has not been situationally anymore.
You know in delta or what you're seeing.
With lower Capex from the futures, if you'll excuse me on with larger futures.
Once we get through that industry as long as Derek said much more steady kind of.
Adding capital for growth as opposed to handicap on for replacement.
And then your next question comes from Hunter Keay with Wolfe Research. Your line is open.
Good morning by the way it Doug that aircraft order was almost 10 years ago almost to the day by the way.
Bob.
And on flights.
I know.
Derek are you planning on revenue in 'twenty, 2 to be above or below 2019.
Revenue above or below 2019.
Oh above.
[laughter].
I was wondering 19th.
I just want to clarify that question that Youre planning on 22 revenue to be above 2019.
Right.
Well number 1 we haven't done our plan yet November so we havent, we havent picked up I do I do.
I think from what we do know is we will probably have.
Growth.
Little bit we should be back to 2019 levels from a growth perspective.
In 2022, CASM should be lower than where we are.
From a 2019 perspective.
And revenue is going to be dependent on the recovery. So I would I won't take back my comment and just say it depends on the corporate recovery and it depends on the international coming back, let's see whether we can get to that level, but I do know from a cost perspective.
Planning.
Perspective from an ASM, we would plan to be pretty close to 2019 levels from an asset perspective and CASM.
Pretty flat on those on those levels okay.
And then another quick free Derek on the the $1.5 billion in gross Capex next year and I think you said 1.8 in 'twenty..3 is there 77 gross capex in that or are those just operating leases and what is the latest on the expectation of timing of delivery on those 19 planes. Yes. The 787, there is growth the only gross capex, we only have.
A few left in 2000.22022.
So there is no growth capex in that number that's all.
Other than ex 787.
We have 14, 7.8 H better third pain that are still left to deliver on this year, but 8 of them are delayed at this point in time. So we really don't know the timing of those coming.
<unk> of them were supposed to come in 2021 on.
On 11, excuse me were supposed to come in 2021 and only 2 in 2022, so the capex for those.
Those 2 aircrafts is very small in 2022 and as you noted we do have sale leaseback financing and they're all they're all financed in there so the capex would be very minimal.
Still working with Boeing on those deliveries. Unfortunately, a lot of them are delayed we don't quite know when they'll come in.
But we're working with Boeing to try to get those and we'd like to get them as soon as possible, but I know, they're having issues trying to get those aircraft out.
Got it thank you Derek.
Your next question comes from Conor Cunningham with key partners. Your line is open.
Yes.
Hey, everyone. Thanks for the time.
Might be a strange question, but does your acceleration of debt pay down allow you to be a little bit more aggressive with your network.
And then some pushback in the past just like that your debt burden is hurting you guys from being a little bit more tactical. So I'm. Just curious if you can be if they're going to be more nimble kind of going forward as you start to repay debt.
Yes.
Thanks for asking.
Okay.
I can't think of a lunch meeting we've ever made around here that we said all we can do.
Mark.
We haven't made 1 so not too.
But were being nimble because we were burned.
We certainly never felt zone.
Sure.
What we what we have always on.
Prior to 2020.
As I said.
Evan.
The fleet modernization the airlines have gone through and fairly rapidly.
I've gone through your income from a position, where we have more debt on the balance sheet.
We thought it made sense on a going forward basis.
So we had put forward a plan to reduce that over time.
As we went on to 2020 the pandemic obviously.
Not only have delayed the ability to do that but maybe even just added work done because we haven't had debt on.
On the operating losses.
Now we need to redouble our efforts there Doug we're going to do that.
Not 1 day.
Right.
Oh gosh, we can we can.
We can do what others are doing what we can do what we wanted to do.
Because we haven't done.
We've never found ourselves in situations, where we couldn't.
And ask more of reviews, if we wanted to our investment income.
This is where we wanted to and we've been doing.
Certainly the case going forward.
Great.
And then okay.
And just you know a.
A couple of months ago, you're on a conference or I think it was about so that was there.
And you talked about how're, you weren't going to bring back international ex the returns are so much of your domestic market and I thought that was somewhat interesting. So so should we assume that the 60.35 split that you've historically had.
Going to skew more domestic on the others I mean, obviously when things start to normalize on everything is open like how do you view.
On your International network.
On forward.
Hey, this is vasu and Ed and thanks for the question.
I'll clarify that.
Hi earlier comments.
And then it was a big reset for us.
Higher to the pandemic.
Our margins internationally were certainly trailed our competitors have struggled a lot, especially outside of the time, we got the peak summer and a big part of it was that we had a lot of wide bodies that until they were put there really good use in the summer really could not earn their carrying on cost as we got into in the.
Trough season.
On a major part of that is that we didn't have big gateways in markets, such as New York or on the west coast to be able to launch price a big part of it was just the nature of the day unique and very <unk>.
<unk> small fleets of wide bodies that we have and if so why.
When I say that a lot of cutting back on.
<unk> has been it has been changing that materially we have some 80 fewer wide body capable on long haul capable airplanes on the lead as we enter.
The fourth quarter and as we start to go and build it back.
The things that we're focused on on things that can produce real annual return on much as we do with our short haul and on narrow body.
And we're seeing that increasingly as you go out there.
You look out our different published.
Published schedules.
We have never been larger in Mexico, Caribbean and Latin America.
We are almost twice as large as on any of our traditional network competitors in the area and we see more opportunities to be able to grow indeed were it not for restrictions on.
On customer entry, we'd be a lot bigger than just about every 1 of the countries in South America them on what we are in a day.
Generally we see a lot of opportunities.
Through partnerships that we've envisioned and created since the pandemic.
With not just with Jetblue, and Alaska, which create really a great jumping off points for international but also with Qatar Airways to very quickly become our largest long haul a codeshare partner and we think that will continue beyond that.
Through that partnership it will open up new markets for us.
That wouldn't have been on viable for our customers or for us financially. It prior to this so when we talk about bringing it back we do anticipate growing growing in long haul, but we need to be able to grow on long haul where we can earn the type of returns that we earn at the domestic business.
Ladies and gentlemen, we will now.
The media question. If you have questions at this time. Please press Star then the number 1 key on your Touchtone telephone. If your question has been answered or you be starting move yourself from the queue. Please press the pound key.
Alright, and your first question comes from Leslie Josephs with CNBC Your line's open.
Hi, Thanks, everyone for taking my question.
When you started this big hiring push in the last few months are those employees coming in at lower average pay rates on people that left the company to buyouts et cetera, and then can you talk a little bit about the booking pace for kind of post peak summer I think somebody mentioned, 35% for Sept.
Temporary I wasn't sure if that was just a business traveler, what and then through the end of the year, what you're seeing there. Thanks.
Let me start off I'll take the first 1 day.
Indeed zone.
People will come back will come in by definition, they're lower.
It's still very high pay rates.
Yes, 90% Union on so they come in on a unit on.
Contract scale based upon seniority.
People are coming back on lower earnings come in at the peak.
Lower end web scale on progressing through scripts on a third.
Oh, Yeah, Hey, Leslie could you just repeat that question I want to make sure I understood. It right. This is positive.
Yeah. If you can just give some detail on what you're seeing with booking the peak summer period. So I don't know if that's half mid August and then through the end of the year.
I think you had mentioned before 35% for September I didn't know if that.
75% network wide or just business traveler.
Yeah, Okay. Thanks, Thanks Robert.
That context is super helpful. Yeah look we were continuing to be encouraged by the the booking trends that we see on September.
September of course, as we can be on Labor day September is our most booked them on its books at about 35% for that not all that surprising to us and factor by design because.
For us at this point the booking curves are expand its still about 50% to 60% of our demand comes in inside of 45 days.
So it's gonna be a while before we really see how how booking curve shapes up but.
We are very much encouraged at what we see we think that traffic will continue to recover and critically we've been encouraged that has.
Markets reopen as companies returned to work then shortly thereafter or business travel comes back, especially business travel.
First short haul.
Sectors. So we're encouraged as we go on labor.
Labor day, and beyond and added cautiously optimistic for what lies ahead.
Okay. Thanks.
Okay.
And your next question comes from Larry Slag in spine with Bloomberg News Your line is open.
Thank you good morning, I wanted to see if you could give us an update on your vendors staffing situation. I think you had talked before about maybe having shortfalls on our provisioning and perhaps airport.
Please and certain job categories and I wanted to see if you could give us the current status of that and whether you're still asking employees to volunteer for any jobs.
Hey, Mary Thanks, It's Robert So Hey, Doug.
The Great news is that we're running a really nice operation in July and so some of the places that were the most difficult to Iran and some of the things you speak speak of like catering and people to assist with wheelchairs.
Really.
Great luck with.
To get back on track and so when we take a look at catering issues, where we're right where we need to be.
We have the airport staffed fully above and below that below the window, we're going to keep it that way. So we've been working closely with our vendors and feel good about.
So are you then not having any further issues, especially as it pertains to the catering on your aircraft I mean does that back to a 100%.
So, yes, we're back to where we need to be.
As I said, there's always issues and in certain places throughout the system, but we've.
We're running the airlines that we need to right now and as I said, we're going on we'll continue to work with with vendors on any potential shortfall certainly from an airline perspective, you know American has.
On the great ability to attract team members.
Paid great wages and didn't have.
Great contracts and benefits.
So we've been able to get back to where we need to go in June was the month in which.
We saw the issues associated with trying to ramp up as quickly as we did but we've addressed those and we're on the right track.
And our next question comes from Alison Sider with Wall Street Journal.
Lines open.
Hi, Thanks, Yeah, I wanted to ask.
Editors, Hasbro talking about focusing more on the premium side of the business and I guess, just given that I'm curious where you see yourself positioned.
And whether you have any concerns about your product and you know.
Specifically Steve.
Seatback screens, if theres been any regret about taking those operating reevaluation of that.
Okay I can start we can all chime in here.
We like to focus on what we've done.
Which is really exciting over the last 5.5 years or so we've brought in nearly 600, new aircrafts. So while others may be talking about what they might do we have that on.
All right, Brian that end as well.
And our narrow body that we talked about with our 770 <unk> hundred 20 category configuration programs, that's all about making whatever else wasn't already do go back in to really great shape, what kind of a similar thing similar thing on the regional side, where we've brought in new double class.
Dual class RJ is especially that you won 70, fives, which get a really great.
Reviews from our customers.
With all that we've had and attention to making sure that we've got the right product no matter, where it's at in the cabin. We were 1 of the first carriers to get out there and and provision are Wi Fi the aircraft with premium economy seats.
Which is some of the most profitable real estate on the aircrafts.
This week, we take a look on port in regard to the product in flight we feel.
Really good about focusing on what customers want most.
To that end, we were the first in the business to get out and make sure that our.
Our aircraft are.
Equipped with the highest in high speed Wi Fi satellite Wi Fi.
Net offers full streaming capability on our narrow body on all of our narrow body aircraft. We've got it on our widebody aircraft as well even on our 2 class regionals, we have ground based Wi Fi. So we feel great about that because customers have said, we want to stay connected and <unk>.
Right.
As we take a look forward, we're intent on making sure that are stored content product on the aircraft offers customers the ability to pulp whenever they want to and we're also going to be getting back into a live entertainment.
As well.
From a technology perspective, we know that customers bring just.
Just firstly, everybody, 90% of our customers bring their own devices those devices have capabilities and higher definition in terms of.
Screen capabilities, then we can put on aircraft right now.
And as we take a look going forward, we're going to stay abreast of whatever it is that our customers need and every day that we take a look on for technology improves.
And we're gonna be at the forefront of whatever comments. So right now we feel really good about where we're at.
I like what our product does for customers.
What it means from a sustainability perspective, what we're doing in terms of our in flight entertainment and making it satellite Wi Fi base. It's lighter it's it's it's more efficient and ultimately it can keep up to speed with what customers want so feel really good about.
Thanks.
Thanks Alan.
And your next question comes from David Kenny with that sales needed price your line's open.
Oh, hi, everybody.
And that's I guess that's.
Good good Robert and Vasu and else touched on this but I wonder on on business Affairs.
In business travel on but I wonder if you can say whether business yields.
Business passengers will be paying the same level of affairs, they paid before the pandemic or something more or less and how quickly that that's going to happen.
Hey, this is this is vasu.
And the short answer to your question is that right now on what we observed business customers are paying a similar error, but very importantly, as we're building. This airline we want to make it as easy as possible for customers to return to travel and fly with us and and that means the more value we give them through our <unk>.
Product the more willing they are to go on a and work for the product.
Well, they're just the same the reality is that the product that the business customers going to come back to you in the fall, it's going to be way different.
Perhaps the big part of the product is the network and the network.
We will be selling and marketing to customers, which is not just a flight AA slides, but those that jetblue flies in Alaska on goal in Qatar Airways.
In just north and South America loans that network is 2 times larger than any of our our competitors offer.
That's already on much more compelling thing and so the simple way to think of it as for paying the same periods of 2019 on you get a much more expansive network.
We are working really really actively and diligently to ensure that that's delivered.
The most reliable way in a way, it's really easy for customers to go in and understand if he visits with.
I guess I was wondering if you're having to offer concessions on price to bring them back.
No no thats not being part of a process, it's about building confidence in returning to travel and making it easy for them.
And half day travel journey with us and so we work with on our travel partners and the travel managers tend to get that done.
And your next question comes from Dawn Gilbertson with USA today.
It's open.
Hi, Good morning. This question is for Doug or Robert I'm wondering if you could give us an update on what youre hearing on the federal mats mandate, whether the tone of those conversations have changed given the spike in cases and also I'm curious as to what your stance is on that do you think it should stay on.
Thank you.
Doug we're going to ecommerce, where we havent been involved makeup, especially from a mandate is in place on scripts.
Members of our team has put in place on federal government.
Specifically.
That's where we that's where we stand a day I don't know.
What their view is.
On to whether opening extended or whether they were allowed to expire on September 30.
Inside will enforce.
<unk>.
We will continue to do so.
It's not for us to opine as to whether or not.
It should be.
That's their job, it's a federal mandate.
And we will enforce whatever they put in place.
If I could do 1 quick follow up stairs lifted vasu or anybody is there any concern at all if it's lifted that especially as we look ahead to holiday travel that you know maybe families with that could hurt bookings with families. In unvaccinated children that maybe don't want to get on an airplane and that's mandate.
Yes, we're not going to speculate on that.
We don't know if you've looked at or not I don't again.
We certainly haven't seen any either seen or heard of any of our customers indicated that day.
It's sort of a view that way.
We certainly don't know, but this is William.
Really hard to speculate on something so we could do.
That's 1.
And your next question comes from Edward.
Awful with Scott Your line is open.
Alright. Thank you I was wondering Doug if you could comment on on the American deal. The payroll support program that was coming off I know last year, you were talking about how it would allow American keep it stopped as well as ramp up quickly on the recovery that we've seen some.
Operational she's the summer so I just wanted to get your view on the relative success or otherwise of the program.
Thanks, Doug.
I think it's from me.
Overwhelming success.
To the extent there have been issues on growth I think those are indicative.
How successful the program was on because it not getting for PSP.
You wouldn't see airlines trying to grow like we are 45% on the corner.
As you know on shutdown.
On industry shut down.
I don't know when and where we'd be at this point on the Oregon views in terms of our economy at this point.
Literally none.
But are you able to continue flying.
The entire industry without the support of the cares program.
And by having it in place by keeping it in place.
On the pandemic.
As the pandemic continued what it allowed all of us wants to keep on him what's the.
To keep on to your point on the run off line from cortisol.
On but they were being paid.
We were paying parent to pay them on a government. So as we need it and we need of course to get them back into training.
They were American on volume.
Right.
There were people that were on leave recall leased so if it weren't for P&C now that wasn't all those people on furlough.
Okay.
New employees as they would've gone on to do other things I can't imagine on.
Hum.
In terms of not just here on the industry, but for our entire economy.
For the PSP program on what it did to.
To maintain the infrastructure necessary to meet the demands on here.
Great. Okay. Thank you very much.
Yeah.
And that concludes the media question and answer session.
Would I like to turn the conference back to the chairman and CEO, Doug Parker for any closing remarks.
Okay. Thanks, everybody for your interest and look we're just really excited about the momentum we're seeing on it.
It's in the numbers that you can see each day with 87% revenue growth versus last quarter, 45% ASM growth was less cash of $21 million 3 times, where it was when we entered 2019.
And that continues if it continues into this quarter and.
And we just couldn't be prouder of our team the job, they're doing to take care of people.
And I, just I can't think of a better indicator of how.
Quickly and drastically the world has changed and you pointed out the American airlines they prepaid affiliates.
Of <unk>.
The low interest notes that are due for 2 more years. After all we've been through from <unk>.
You're spot on.
Now looking to go raise money wherever we could to make sure we had enough to fund the operating losses that we saw going forward, we'd knock on ourselves to a position where we're using cash to pay off debt that doesn't come due for 2 more years. It was really good.
We're excited about where we are we're really excited about the future moving forward to talking to you as we go forward.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day you may all disconnect.
Okay.
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