Q1 2022 American Airlines Group Inc Earnings Call

April 21, 2022

Okay.

Good morning, and welcome to the American Airlines Group first quarter 2022 earnings Conference call. Today's call is being recorded at this time all lines are in a listen only mode. Following the presentation. We will conduct a question and answer session to ask a question. During this session you will need to press star one on your.

Telephone keypad and now I'd like to turn the conference over to your moderator head of Investor Relations Mr. Scott loan.

Thank you Catherine good morning, everyone and welcome to the American Airlines Group first quarter 2022 earnings Conference call.

On the call. This morning, we have our CEO , Robert <unk>, our CFO Derek Kurt.

Also on the call for the Q&A session, David Seymour off to Roger and a number of other senior executives.

Robert.

I'll start the call. This morning, with an overview of the first quarter and our priorities for the year Derek will follow with the details on the quarter and our operating plan and outlook going forward.

After Doug's comments, we'll open the call for analyst questions.

My questions from the media to get in as many questions as possible. Please limit yourself to one question and a follow up.

Before we begin today.

Today's call contains forward looking statements, including statements concerning future revenues.

Forecast of capacity planning.

These statements represent our predictions and expectations of future events.

And those 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 that was issued this morning as well as our Form 10-Q for the quarter ended March 31 2022.

In addition, we'll be discussing several non-GAAP financial measures. This morning, which exclude the impact of unusual items a reconciliation of those numbers to the GAAP financial measures is included in the earnings press release, which can be found in the Investor Relations section of our website.

A webcast of this call will also be archived on our website information, we're giving you on the call. This morning.

Today's date, and we undertake no obligation to update the information subsequently.

Thank you for your interest and for joining this morning, and with that I'll turn the call over to our CEO Robert Isom. Thanks.

Thanks Scott.

Good morning, everyone. Thank you for joining us today we're.

We're going to keep our comments brief this morning, I'm a strong believer that results speak louder than words and I am confident in the results the American Airlines team will produce.

So let's start by thanking our team Dana that they are on the frontline is taking care of our customers no matter what comes our way and we've certainly seen a lot come our way over the past two years.

And our land team has worked hard to position us well for the recovery by simplifying our fleet modernizing our facilities fine tuning our network developing new partnerships rolling out new tools for our customers and team and hiring thousands of new team members.

All of that while flying the largest airline in the world.

I'm excited to see their work payoff for all of our constituents.

Our customers certainly the communities, we serve our team and notably our shareholders.

It's an honor for me to have the trust of our team and to succeed Doug Parker as CEO .

Again in this position as the industry rebounds, and our company returns to profitability.

I'm extremely grateful for the opportunity.

A fantastic time for the industry and for American Airlines in particular.

For the year.

We're rapidly achieving two key goes above all else.

Running a reliable operation and returning to profitability.

Our team is up to the challenge and we've already seen a lot of great progress.

So let's talk about financials first this morning America reported a first quarter GAAP net loss of $1 6 billion.

Excluding net special items, we reported a net loss of $1 5 billion for the quarter.

Despite the quarterly loss and a difficult January and February due to the effects of Omicron March results were markedly different in March we saw what's possible with surging demand brought on by reduced infection rate relaxed restrictions and tremendous pent up demand for people to travel the.

Despite a sizable increase in the cost of fuel during March American achieved our first monthly net profit excluding special items since July of 2021.

Demand is as strong as we've ever seen at American.

American produced revenues of $8 9 billion in the first quarter, including industry, leading passenger revenues of $7 8 billion.

Domestic leisure travel continued to lead the way far surpassing 2019 levels of traffic and revenue in the month of March.

In addition, we saw strong quarter over quarter improvement in corporate and government travel with revenue for this segment as a percentage of 2019, increasing two seven percentage point from January to March.

System business demand is now about 80% recovered with small and medium business revenue approaching a full recovery in corporate revenue now around 50% recovery.

Corporate bookings are that the highest they've been since the onset of the pandemic and we expect that to continue as more companies reopen their offices, we anticipate overall business revenue to be around 90% recovered in the second quarter.

And finally.

Demand for international travel also picked up considerably during the quarter as travel restrictions were lifted in certain parts of the world.

International revenue was about 50% recovered in the first quarter and around 60% recovered in March.

So theres still a lot of revenue upside as business in international travel continued to return.

The American team has done an incredible job of setting up the airlines take advantage of the rebound where do you think our network to where our customers want to fly establishing partnerships in more challenging areas and making sure efficiency is top of mind as a result, we're very optimistic about the continued recovery and expect to be profitable in the second quarter base.

On current demand trends in fuel price forecast.

Turning to reliability American ended 2021, with our strongest operating performance in the company's history, we committed to maintaining that momentum in the first quarter and we did.

<unk> two difficult winter storms in Dallas Fort worth the team delivered a solid operating performance in the first quarter.

Leading the industry in on time departures and finishing a close second and on time arrivals.

And they did so while flying a considerably larger schedule than our next largest competitor.

More importantly for the month of March peak spring break demand and high load factors, we delivered our best ever combined March completion factor.

Our operation in DFW and Charlotte, our two largest has met or exceeded our expectations and delivered their best on time performance and completion factor in years.

As a result of our team's hard work our likelihood to recommend scores continue to track in line with plan and are near the top of our post merger performance.

Running a reliable operation this summer will be critical to continue to the continued recovery and we've taken numerous steps to ensure we are well prepared to deliver for our customers.

Our summer tiny began last year as demand returned and we haven't slowed down.

Paragon has 12000 more team members in place to support the operation of this summer than in the summer 2021, we've already welcomed more than 600, new pilots. This year exceeding our goal and we will continue to aggressively recruit hire and train across all departments to develop the best pipeline of talent in the industry.

We're ready for the summer and we have sized the airlines for the resources. We have available again, we sized the airlines or the resources that we have available.

We've also made targeted investments in people technology and resources that are yielding promising results for our team members and customers.

So before I hand, it over to Derrick I want to say that I'm really excited about the future of our industry and the future of American Airlines.

There is still a lot of revenue upside going forward given industry revenues are still up from their historical relationship to GDP.

Demand are falling in business and international trends are promising.

There are also certain engine industry constraints on growth in the near term, notably related to pilot an aircraft supply.

And at American we have completed a $1 $3 billion cost reduction program and our unit cost performance will improve throughout the year as utilization approaches historic levels.

No airline is better positioned to operate in this environment that American airlines because of our fleet our network and everything our team has accomplished over the past two years.

And with that I'll turn it over to Derek.

Thanks, Robert and good morning, everyone before I review the results I want to acknowledge Doug for his more than 20 years as an airline CEO Doug's leadership revolutionize the industry and laid the foundation for American success going forward.

I also want to thank the American airlines team their hard work and commitment to our customers and each other is truly extraordinary.

This morning, we reported a first quarter GAAP net loss of $1 $6 billion or a loss of $2 52 per share. Excluding net special items, we reported a net loss of $1 $5 billion or a loss of $2 32 per share.

Revenue in the first quarter outperformed the initial expectations, we outlined on our last call. Despite flying less capacity than planned due to winter weather events that affected our largest hubs our first quarter revenue recovered to 84% compared to the same period in 2019 versus our original.

<unk> guide of 78% to 80% recovery.

Demand recovery from the Omicron variant was swift and while leisure demand remains very strong.

As more companies returned to their offices business demand is growing quickly.

On the cost side. In addition to the efficiencies we've spoken about previously we remain focused on keeping our controllable cost out ensuring we are a more efficient airline as we returned to normalized levels of capacity and utilization.

In fact in the face of increased fuel prices, we were profitable for the month of March excluding net special items due to our strong revenue performance and cost efficiencies.

Our fleet remains the youngest and most fuel efficient among the U S. Global network carriers. This month, we completed our narrow body fleet harmonization project covers more than 500 aircrafts and will ensure a consistent product and better experience for customers along with the improved revenue generation and unit cost production.

Associated with the new seating configurations.

In the first quarter, we took delivery of nine Airbus 321, Nios and reactivated seven previously stored Boeing 737, eight hundreds. We also inducted eight dual class regional aircraft and park III 50 seat Embraer $1 45.

As previously disclosed we made several updates to our fleet order book and the timing of future deliveries, allowing us to better meet the demand strength in domestic and short haul international markets.

We previously announced our plans to exercise purchase options on 3700 37 Max eights.

Are these options are scheduled for delivery in 2023% and 15% in 2024.

Additionally, with the continued uncertainty associated with our 787 deliveries. We are now planning for the delivery of only $7 seven to eight 8% in 2022, all after our summer schedule with the remaining 600 708 eight aircraft being delivered in 2023, the $4 789 aircraft previously planned.

In late 2023 are now planned to be delivered in 2024 with these changes our expected total aircraft Capex is $1 8 billion in 2022 and $2 2 billion in 2023.

We ended the first quarter with $15 5 billion of total available liquidity significantly higher than our initial forecast due to the Ato build of $2 3 billion in the quarter we.

We generated operating cash flow of $1 3 billion and free cash flow of more than $350 million in the first quarter.

Deleveraging our balance sheet remains a top priority and we're committed to significant debt reduction in the years ahead, even in this volatile environment, we remain on track with our target of reducing overall debt levels by $15 billion by the end of 2025.

During the quarter, we made $344 million of scheduled debt payments and completed $317 million in open market repurchases of our $750 million unsecured senior notes maturing in June .

To date, we have reduced our overall debt levels by $4 1 billion from our peak levels in the second quarter of 2021, we expect to make $1 billion of scheduled debt payments in the second quarter, which includes the remaining outstanding balance of the unsecured senior notes.

Lastly, with cost efficient financings caring for all aircraft deliveries through the third quarter of this year. We are now beginning to evaluate financing options for the fourth quarter and first half of 2023.

As we look at the second quarter, we expect to be profitable. Despite the expectation of continued elevated fuel prices pre tax margins are expected to be between three and 5% for the quarter based on the current demand trends and our fuel price forecast.

Based on current demand assumptions, we expect total revenue to be 6% to 8% higher versus the second quarter of 2019, 6% to 8% lower capacity.

That won't be the first time, we have produced total revenue greater than 2019 since the start of the pandemic.

In fact, if we hit the midpoint of this revenue guide the results would be the highest quarterly revenue in the company's history.

On this revenue strength, we expect total revenue per available seat mile to be 14% to 16% higher in the second quarter versus the same period of 2019.

We expect our second quarter CASM, excluding fuel net special items to be up between 8% and 10%.

Our current forecast for the second quarter, which we pegged on Tuesday assumes fuel between three and $3 59.

And $3 64 per gallon increased an increase of more than 60% versus the price of fuel in the second quarter of 2019 and.

In the near term the demand environment is strong but margins are lower than they otherwise would have been given the recent run up in fuel longer term. This industry has proven that it has the ability to recapture increases in the cost of fuel and be profitable and elevated fuel prices. We believe this time is no different.

As for full year 2022 capacity, we now expect to be recovered to 92% to 94% of 2019 levels a reduction in full year capacity from our prior guidance is largely due to 788 delivery delays that I touched on earlier.

This capacity guidance is of course subject to future demand environment and fuel prices. Consequently, with this lower level of capacity. We now expect our full year CASM, excluding fuel special items to be up between 8% to 10% versus 2019.

In conclusion with the actions, we have taken and the commitment of our team we remain very well positioned.

Main focus on running a reliable operation and returning to profitability.

We expect to happen in the second quarter with that we'll open up the line for analyst questions.

Thank you as a reminder to ask a question you will need to press star one on your telephone.

While your question press the pound key.

Our first question comes from Jamie Baker with Jpmorgan. Your line is open.

Okay.

Good morning, I guess, you're starting in the order.

Okay.

The biggest second quarter.

Yes.

Great.

Listen, we're all quite close David.

Alright.

Yeah.

So.

Familiar with that relationship between airline revenue and GDP you brought it up Doug you had a good slide on deck.

Deck last month.

Have you looked at the relationship between leisure demand and GDP and what that relationship might be telling us I know, we could try to back into this with some of the form 41 data, but I don't really trust.

Reporting lag.

It doesn't tell me anything.

Hey, Jamie Thanks, I'm going to let vasu answer that but I don't feel bad. This is a long game, we know youre going to get it right over the long term.

Thanks for the endorsement.

Yeah, Hey, Jamie Thanks for the question.

Very good one and one that we've actually spent a lot of time thinking about.

What I'll say is youre right.

Aggregate like the historical relationship between airline demand and GDP with industry demand at something around just under 1% of GDP does largely seem to hold and when we're seeing that as things start to recover we spent a lot of time on this question about that.

What is what is the actual trip purpose and how does that change and the reality is it's changing.

And a meaningful enough way, where we know long I think it's starting.

Starting with trend.

For example, historically only about 20% to 25% of the trips in the airline or something that we call blended where somebody was traveling from both business and leisure now for about five or six months about 50% to 55% of the chips and the airlines are blended and as we look forward into the coming months that continues to be the case.

And that's playing out in a lot of different ways for us, which are both opportunities and a little bit unprecedented right. We are seeing.

Different sales days, becoming big sales different traveldays, becoming peak travel days.

The nature of what we call it leisure demand in business demand is changing and the first thing in better understanding exactly how that is but so far it's been promising.

Blended trips that we have in the system are coming on at yields that are <unk>.

75% to 85%.

True business settling the trends, but they are coming through lower comp sale channels and often negotiated discount. So the net yield to them are very often the best things in the system. So this is an evolving thing and one that will keep coming back to you, but the relationship is indeed, changing as you say, even though in aggregate.

A lot of the trends and just out of curiosity, how do you define or how do you tell that a trip.

Blended trip is it.

Booking with a corporate discount and then bringing a family member and then Jason PNR like how do you know that yeah. So.

How many years of dealing this thing we actually.

Come out in two ways. One we have a lot of models that go in and actually predict whether the behavior is business or leisure and we survey customers going to calibrate the model. So overtime. We are really good whenever we you hear us talk about business. We're talking about for example, somebody who travels one person.

On the itinerary, no checked bags and things like that.

It fits the profile of the calibrated again surveys on what the customer actually tells us and it's one of the things that we found is that increasingly.

Surveys are starting to change because people are saying they are flying both for business and leisure.

It's one person in the itinerary, but they're leaving on a Thursday coming back on a Monday and going in Pensacola. So.

A lot of things are starting to change and that's that's actually pretty promising thing.

Fascinating. Thank you for that and then second.

Maybe for Robert as we think about the steps that you're taking to protect the operation heading into the summer peak.

Zero is still the metric that American intends to focus on it I think it was in the past that since I got was that it wasn't.

Hugely popular with the entirety of the airport staff just wondering if with your background.

Robert and having ascended to the top seed is that still the metric that you have prioritized, let's say.

Jamie I'll just start with this which is the outcome.

On time arrival, we know.

The biggest driver of customer satisfaction as I've said before it makes the food tastes better seats more comfortable service service more friendly all of that.

And the best way to ensure on time arrival.

Sure you depart on time, so there's no step away from it but I'll tell you.

We have.

Evolved over time, and we really do want to take into account, making sure things.

Things that we do to get an aircraft out on time.

Compromise other aspects of the operation so credit congestion on the ramp or if we do have inclement weather.

At the end of the day, if we have flights that.

You may be able to get out on time, but you ought to hold for connecting passengers. We do so and so we could go into a lot more detail on that but the answer to it all is for the bulk of the airline.

Yes, it started right.

No aircraft out of service in the morning.

On time departure fast turn and stay that way throughout the day that's great. Thank you Bob I appreciate it take care.

Yes.

Thank you. Our next question comes from David Vernon with Bernstein. Your line is open.

Hey, Thanks, guys. So we ended the other end of the spectrum I guess.

Can you just talk a little bit about what you have in the forecast for business travel recovery as we think about this summer months, what are you seeing in the booking trends.

Trying to get a sense for kind of what the mix is within the guidance that you're giving us.

Hi, David This is Bob I can help with that.

But robert's comments at the beginning.

We closed the.

For the quarter.

System business revenues were about 80% recovery versus 2019, as we look at Q2, we anticipate that number will be about 90% recovery versus 2019.

We have a level of confidence in it because we are indeed, we're seeing many of those bookings start to come in from my comments that Jamie just now.

But also the.

The gap between 90, and 100 is really largely due to long haul international demand in certain pockets of domestic demand.

But we are.

We are continuing to see demand Smith.

Okay, and then maybe just as a quick follow up.

I remember, having a conversation with Doug and Derek out in L. A couple years ago now around.

Denied boarding sort of involuntary denials that kind of stuff.

And you guys have been working on some some technology to help you kind of guys.

We accommodate customers.

Work on this issue.

Hub.

Not having enough seats on the plane over selling that kind of stuff.

Is there any early indication during this period of demand here.

Those efforts are paying off in the denied boardings are coming in a little bit and in line with.

Alright, those expectations you set out a couple years ago.

David we're going to start with my leave and talking about some of the things we've done and if there is some some add on to that.

Hey, David This is Mike yeah over the last several years, we've really improved our technology around essentially pre removing customers. So.

Before I can get to the airport and several days before that.

It is at risk in all of our selling providing them an opportunity to bid.

Ed or two.

Either take compensation or even just move to a different place.

Hopefully a little bit better than they were previously scheduled on.

Sure.

It happened. So there is a last minute schedule change of last minute.

Equipment change so we have to deal with it at the airport, which is in our call we're really trying to deal with it.

We have some pretty neat auction capabilities that allow the customer.

There are opportunities to move around to other plants and so all of those things together have really helped improve our deny boarding statistics.

Yeah.

I'll only add to that.

Throughout the pandemic one of the hardest things to do predictive than the show rate of the airline understandably.

Understandably as the pandemic. We're on we would have periods of time, where everybody showed for a flight in periods of time, where the show rates can be as low as 70% of what was booked.

Encouraged by in large part because of a lot of the technologies that we've got not just in managing over booking but it simply just forecasting show rate, we are getting to a place where we are a lot better in building in predicting what the variability is and.

With the technologies that we've got proactively moving customers off so that we don't have.

At the same level of denied boarding expense that we had in times past and indeed, we're able to generate more revenues through the overbooking flights.

Excellent. Thanks, a lot for that added color guys.

Thank you and our next question comes from Savi <unk> with Raymond James Your line is open.

Hey, good morning.

I was wondering maybe lastly could you provide a little bit of color on what youre seeing across the <unk> on the long haul side across the different entities.

Sure Savi, yes, thanks for the question.

Look we are really encouraged with how long haul demand has come back but it is indeed very different across the three long haul and long haul South America transatlantic and transpacific.

Firstly, we are encouraged because Andy we've seen bookings from from maybe.

Post op omicron low point in January what we're seeing in the last four to six weeks, it's improved by several factors.

Yeah.

In South America, that's a factor of two to three acts in Trans Atlantic, it's something materially larger than that.

And in terms of specific it's grown quite a lot too, but still the bookings are pretty small and insignificant.

The totality of all of our bookings.

We're really encouraged by is.

The manner in which demand is returning person and long haul South America, where we just we have so much.

Capacity.

Increasingly we are seeing not just more customers simply sign on for flights, but we're feeling premium cabins that are at a better and better rate. The same is true the trans Atlantic where so much of the airlines that we brought back there is centered around our partner hubs.

Heathrow in Madrid, and we're encouraged because those are.

To make those flight go they are very premium demand in some depth and we are seeing.

A lot of premium demand, even though we aren't seeing.

Large corporate travel quite come back into international the way we've seen before.

It's understandably challenged because as long as their entry restriction.

Demand remains pretty stubborn to come back but like.

Like I said, we're encouraged that once those restrictions are lifted the demand improved pretty meaningfully.

That's super helpful and if I might ask just a quick question on the seal.

If you have a kind of a few contracts based on kind of the forward curve than crack spreads I think alright like spot prices I mean, I think there's a little bit of confusion on what we're seeing on spot and this is not unique to American, but what's being reflected NCO guidance.

Yes, no thats exactly we just take it two days ago. So at 100 it was 107.

And then we use the crack spread and where that was in the crack spread has increased a little bit.

The difference may be crack spread and then the base that everybody takes the fuel peg but were straight off.

The fuel curve and then it's dependent on where are you buying your fuel are you buying your fuel more of the Gulf Coast L. A new York So there could be differences between each airline just where the where the brunt of the fuel comes from.

Thank you.

Thank you. Our next question comes from Helane Becker with Cowen Your line is open.

Oh, thanks, very much operator, hi, everybody and thank you for the time just two questions. One is on minimum liquidity Derek have you thought about where you want that to go.

Other than I.

I think he said what pay down $15 billion of Jeff by 2020.

And then the other question is I think related to the pilot training pipeline.

Talk about shortage of crew members and limits to capacity growth.

How are you thinking about catching up.

Yes, I can do I can do both and Robert can can add some of that so as far as minimum liquidity.

We're still in the same places we were a couple of calls ago. We're at about $58 5 billion right now.

We are seeing this recovery, we'd like to see it.

Actually be in the actuals. So I think this is a forward guide, which we think is where we're going to get and be profitable for the quarter. If we maintain this level. What we have said is we would take it stepped down to somewhere in the $10 billion to $12 billion range.

And hopefully that happens sometime this year, which can accelerate the debt pay down.

And any further than that we just haven't had the discussions.

Through the board and through the committees, we ran the company at $7 billion.

Minimum that minimum liquidity, which.

I define that was kind of our targeted cash level minimum liquidity is actually much lower than that but our targeted cash level was at $7 billion and so right now we're holding on to the cash and when we see the recovery and it's holding up and the cash is holding up we will use that cash to <unk>.

Pay down debt.

And I think we'll take it down to something there were in the $10 billion to $12 billion range as we look forward.

On the pilot training pipeline.

As Robert said, we've hired 600 pilots at the mainline so it's it really is.

We have the pilots I think.

The industry is it's about trying to hire 2000 pilots this year versus the most we've ever hired in the past.

So we have the simulators coming in we have the trainers coming in so what it is is trying to get everybody through the pipeline and I think we will be fully <unk>.

Utilized and how all of our aircraft flying by the end of the year.

The other side of it is the regional carriers, which we're working on it that hiring is going well also so we're hiring there just the attrition is much greater than.

The hiring at this point in time, we're getting people through the pipeline.

That has slowed which is good.

As all of the mainline carriers have hired from the regional carriers.

We all have a backlog to get through training so.

The regional attrition has slowed which will be good for our regional capacity as we go forward.

But we believe that by the end of the year through the summer, we will be back up and having all the airlines aircraft flying which will be great.

For us from a utilization perspective, it'll be great for us from a cost perspective.

To drive down the unit cost as we bring back all of those aircrafts and get the pilot pipeline moving through.

Well the only thing other helane the only other point that I would add is that look overtime, it's supply and demand.

I am confident.

They.

The quality of life and the compensation for pilots is something that's going to track a lot of people to the industry.

It may take.

Some time to work through but it will happen.

Could you.

In the short term bring back pilots, who might have retired at say 58, or 60, and just have them work for a couple of years to bridge the gap or once they retire.

I'm going to ask David Moore, Chief operating officer to weigh in on that yes, I think the challenge with as many of them have been retired long enough that they would have to go through a re qualification, which would take one of those swaps. So so given that as Derek talked about we have the supply coming in.

And the schoolhouse is really running at full speed here and where we are hitting the objectives that we set for.

To reach the goals that they are talking about for the remainder of the year. So as much as I think obi great idea.

Just takeaway a slot for a new hire that's coming in.

Overall as well we have a great relationship with.

The API and making sure that we're getting as many pilots onboard and creating as many capital positions as we possibly can and anything that would alter something like retirement status.

It would be something that they champion.

Got it okay, great. Thanks, very much guys.

Thanks, Mike.

Thank you. Our next question comes from Mike Lindenberg with Deutsche Bank. Your line is open.

Hey, good morning, just two here I guess my first two vasu.

Historically, I guess sort of a rule of thumb is that the run up in energy prices, usually sort of finds its way into the fare structure with like a lag of three to six months.

It does feel like that it's getting recaptured far more quickly and I just wonder if it's any sort of structural changes and or just by approaching this fuel price cycle.

A bit less capacity, which may give you some leverage in your ability to quickly offset that just your thoughts around that.

Yes, Mike it's an excellent question.

And it looks like Jamie is one that we've actually put a lot of time understandably thinking about.

And look it's really hard to tease out the different effects, because youre right Theres high fuel prices.

Areas limits on capacity as airlines try to size their airlines for the staffing that they can produce and of course demand which has continued.

Accelerated at a pretty unprecedented rate.

So.

We look at it or actually the banners that we American airlines that are out there selling and we're encouraged that indeed, a month to month, we are seeing a greater increase in spares.

Certainly what we saw in 2019, but very importantly, one of the things that we've been looking at is on <unk>.

There is a larger has the rate of increase actually changing and.

In 2019 to 2022 versus the last time the industry went through.

So many cataclysmic crisis, which were.

Big fuel the great recession.

Changes in the industry deconsolidation and indeed the rate the pace of change that we're seeing is growing much greater than what we saw before.

Short way to say it is and we are seeing a lot of strength in their environment with customers, who frankly value and quality of product that we have and are willing to pay us.

The Florida. So we're encouraged by that we see those trends going forward into the summer and of course that's.

The revenue guide you see before you.

Great and then just my second.

With respect to the NDA and I guess the test this is concern about potential consumer harm.

Have you put out any numbers about what you have done from a consumer benefit perspective, since it's now been up and running I think for some time or is that something that we just won't find out about until September . Thank you.

Hey.

I can start and others can Ken can add.

Well look we can talk about the consumer benefit of the NAA enough to and indeed.

You can already see it in just what's published out there in the first quarter, we brought in the northeast back faster than any of our competition and arguably through bringing it back and encourage competition, whether frankly wasn't any before.

Where do we think that we have full flat beds on all of our transcon markets, which is the thing that American Airlines has long dreamed of announcing this partnership with Jetblue, we're able to make happen, we brought jetblue into laguardia, which they long to make happen, putting a new level of price competition on the incumbent carrier there.

So we're encouraged by the structural things that there, but what we're really encouraged by is the way consumers are responding to it so.

So right now.

For the first time and as long as we have recorded it advantage enrollments. Our loyalty program enrollments are growing in New York, and Boston, a greater rate than anything in the system.

On an absolute size, which is greater than anything that the system. New York is on a percentage of 2019, we're acquiring more credit card customers there.

Then than we did in 2019 and at a greater rate than any other parts of our system.

All of which is to say that.

The consumer is clearly responding to it and we see those benefits and we keep rolling things out.

We there's a lot that we've kind of worked through as we kind of.

Trying to staff up a connecting operation at JFK.

Never to go slow in order to make it happen I hope for a minute and say that we're all the way to achieving what we want there to be.

We're really encouraged.

By what it's doing for consumers the level of competition that it's bringing.

And indeed, I mean, we can't talk about it enough and then maybe when you talk about it more.

Great.

I'll, just I'll, just add and I know, our chief legal officer pretty IR will agree with me.

Youre welcome.

Scrutiny.

We know that this is producing the benefits we said it would.

It's doing exactly what we had hoped and we're confident we're going to prevail no matter, what we face going forward.

With that.

Hey, guys. Thanks.

Thanks, everyone.

Thank you. Our next question comes from Dan Mckenzie with Seaport Global Your line is open.

Oh, Hey, good morning, Thanks, guys.

A couple of questions here first a clarification in the guide.

Maybe for Vasu, what level of restoration and international flying does the revenue guide embed. So does it include the relaxation of the 24 hour testing requirement in may sometime and what conversations as the government, having with you about the travel restrictions internationally.

So you can handle that first part and then let's have Nate.

Cover.

Pulled out of testing yes.

Yes.

Thanks for the question.

We.

So large we broadly anticipate to be 100% recovered and indeed.

Not far from that right now, but but.

The question earlier from from Savi <unk>.

International.

And a lot of different states of play right now.

Never forget that for us in the second quarter, roughly 90% of our airline is on <unk>.

Flying in the Western Hemisphere and Heathrow.

So.

Lot of our recovery is due to the fact that.

Our short haul international network is recovering at rates that are probably greater than what we see in domestic.

And those markets, such as London, and long haul South America recovering pretty quickly.

And Thats, where we have all of our capacity.

Just one note international.

International revenue not 100% recovered go ahead go ahead.

A long haul perspective, correct, yes correct.

Yes.

Would you say that long haul revenue isn't all the way there, but total international is that.

Okay. Okay. Yes. This is Dave I would just say on the on the regulatory side. Obviously the testing is something that we continue to engage on with our industry partners. We believe that the U S. Can can safely follow countries that are progressing through the pandemic, including Canada, UK and Ireland.

Have we think safely evolve the scope of their entry requirements and moved away from pre departure testing.

We've learned by at this point in the pandemic however, not to speculate on what may or may not happen. So we don't have.

Specific timeframe in mind, it's just something we continue to work on.

The decision is going to be up to the federal authorities and public health experts.

Forever.

Nick.

<unk>.

Head of corporate and government affairs, so thanks Nate.

Yes. Thanks.

Second question here looking at slide five the simple math is it looks like there's roughly $7 billion of revenue that was missing.

On an annualized basis relative to the first quarter.

But I believe the head count is already in place. So we're left with variable cost I think so but if you could flush this out the fixed versus variable cost as you add back.

Some of this higher margin international flying.

Yes, I think Dan is there.

As we have talked about we have the airline and the.

Cost in place to run.

Our much greater airline.

So as we go and as Robert as Robert said in his comments, our CASM will get better and better throughout the year as we add back to flying.

An example is our salaries Inc.

It stayed pretty flat throughout the year, even though we are growing growing ASM throughout the year.

Most of most everything is in place to fly. The example is the 780 Sevens. We thought we had the 780 sevens coming in beginning of this year. So we have the pilots we have the crews we have everything ready to go we're not going to train them back down to 700 threes or other aircraft, we're going to leave them there for when they come so Rx our X.

<unk> as we move forward.

And we bring back the aircraft and utilize our fleet and get us back to a 100% of 2019 that it comes at a significant.

The reduction in the CASM calculation as we go forward.

Thanks for the time you guys.

Okay.

Thank you our next question comes from.

Duane <unk> with Evercore ISI your line is open.

Hey, Thanks, good morning.

Alright, congrats congrats Robert on the on the formal handoff.

I wanted to follow up to Mike's question.

Just with respect to jet.

Lose the bid for spirit has.

As it relates to the NDA.

Do you see any relationship between the two initiatives and what is Americans perspective on the proposed acquisition.

Steve you want to comment.

Comment here.

Sure Hi, Thanks for the question this is Steve Johnson.

First I think it's important.

Recognize that.

Jetblue is acquisition of spirit is not.

Hum.

Those jetblue experience as near as we can tell are discussing that now and we'll ultimately find out which direction that's going to go but.

Yeah.

I would put it.

Joanna.

Robin we're very quick to call Robert as good as the as soon as the story leak.

They were steadfast in their view that NDA was.

Extraordinarily important and a priority to jetblue.

Do everything we could to maintain it and is that part of their good for spirit.

Contemplated keeping in keeping the strength.

Right.

Great. Thanks, Thanks for that perspective.

With respect to the RASM guidance.

Vasu can you just contrast for us maybe how leisure fares are tracking.

<unk> 2019.

Versus close in business fares, and I understand regions et cetera make that more complicated, but maybe if we just look at it on a per say domestic.

He is the closing of zero to three.

Better yet.

Relative to the 19, thanks for taking the questions.

Yeah, Hey, thanks for the question and the one that we look at very closely.

It's kind of interesting we look at it both and what is out there selling but importantly, what what is netted back to us after we deduct the cost of sales from it.

And so we are seeing first and foremost we look at it really outside of 14 versus inside of 14 outside of 14. Indeed, there is a significant level of strength.

Across any any competitive OND grouping there might be inside of 14, we see the same level of fare strength, but as we look at it right now.

Leisure trips, our blended business leisure trips are coming in yield.

Yield levels that are anywhere from 75% to 80% in aggregate of what.

Inside the <unk>.

Corporate negotiated trips are coming in that and that's a really meaningful number because that means that on a net basis sometimes these.

These barriers, which are coming to us oftentimes through our direct channel.

Through some pretty unprecedented sources on a net basis are actually really really valuable to listen really valuable RPM departure.

That said.

The bears are high what we are encouraged by is as we have rolled through March there is simply more demand inside of 2014, and more business and business and leisure demand. So so yes, we see a lot of strength in the fare environment a lot more strength outside of 2014, but progressively greater strength in greater demand.

Inside the 14th.

Thank you for that I guess, maybe just to.

To put a finer point on it do you think zero to three it's still an opportunity and thank you for taking the questions.

Yes, it is but not quite the same way that it was before.

Thank you.

Thank you. Our next question comes from Catherine O'brien with Goldman Sachs. Your line is open.

Hey, good morning, everyone. Thank you so much for the time.

So maybe just one on the 787, when we think about your Capex over the next couple of years as the 787.

Rules into future years should we just be thinking about rolling forward that associated capex or are we reaching a point, where we should be thinking about maybe some late penalties potentially lowering your overall capex profile as we look across the next couple of years on an aggregated basis I think you might have mentioned that that.

It was already paying a penalty to prior years, just trying to get a sense to the read through to <unk>.

American free cash flow in future years. Thank you.

Yes.

Catherine.

Just from a Capex perspective, I would just roll it without a doubt.

Any kind of <unk>.

Settlement that we have will be separate.

The Boeing management team have assured us that they will cover us for the damages on the 780 sevens and the deliveries of the 780 Sevens.

How that comes I don't know because we haven't talked about it there is no no reason to discuss damages on the 780 <unk> until they deliver.

And we know when those are going to be so so that can be calculated so.

The model is today I would move the Capex and just just shove out the capex.

But I would put there is upside to the cash flow or something for a settlement.

With the Boeing team as they've said they will they will cover.

The damages that we are incurring for those aircraft to be delayed and deferred.

Okay got it and then maybe one for Vasu, just coming a little bigger picture here can you just update us on the hub strategy are working through pre pandemic gross opportunities at DFW, Charlotte DC and you add back capacity are you, adding proportionately more flying into those hubs you had in 2019.

Or do you need to first for store pre pandemic network overall, and then you look to those growth opportunities just trying to get a sense of I know those are the most profitable hub. So are we already.

Starting to blend in that higher proportion of of more profitable flying or is that on the comments. Thank you. So much for the time.

It's a great question and yes, we are absolutely blending it in now.

As we've said through the pandemic, we had no no intention of waste in the crisis and we didn't.

We massively simplified the fleet rich.

Reduced frankly, a number of long haul airplanes.

We're amongst applying some of our most unprofitable routes.

Lots of new partnerships, where where we can create more value for the customer offer more network in places like the west coast.

New York, where we're weaker but very importantly, we put a lot more capacity into our hubs.

In two ways, one we've concentrated more flying there, but we've updated the airlines as well where were 8% more seats per departure, then as we go forward than what we were at the same time last year.

But for us.

Does R&D quite meaningful right now if you go look at and published schedules.

About 65, 70% of the airlines flying.

Really what we call our sunbelt hubs and short haul Caribbean kinds of markets, where the airline has unique level of strength.

To put that in perspective, I was reading through everyone's Prince last night.

In Q1, our core Sunbelt hub DFW, Charlotte Miami, Phoenix, we're somewhere between 70% to 80% of our competitors full network, but we're producing unit revenues between 5% to 10% greater than that then those network. So very much that is a major thing.

A big part as we've talked about here of returning to profitability and frankly running a better operation is focusing hard in those markets, where we create really unique and disproportionate value and really getting all of our assets working there.

Thank you so much.

Yeah.

Thank you our next question comes from.

Cunningham with MK M partners. Your line is open.

Hi, everyone. Thank you for your time.

And our United and Delta, who talk to generating.

Generating a profit in 2020 to just get more demanding.

I realize you guys have stopped short of saying that today, but.

Question that we're getting is just around the sustainability of like RASM production. So do you expect to generate a profit for the remaining three quarters of this year, assuming no massive change.

And coil or anything like that.

Okay.

Derek can add into this look.

We're really pleased to be here talking about record revenues and producing a profit in the second quarter, but those are forecast.

What our job here is to make those forecast a reality, so we're going to get to that business and.

To achieve profitability for the year.

I guess I can't yet we need to be profitable in the second quarter and we're going to get started on that and we'll update you as time goes on.

Anything else you want to add.

Okay great.

Okay. Okay.

And I know you said you Upsized the airlines and the resources you have.

There's been some struggles with operations.

The last year.

Do you assume any incentive pay above and beyond what you've historically contemplate that.

In your 2022, CASM excellent walking and have you viewed incentive pay any differently than.

And then you have in the past just given some of the staffing issue for industrial space in general Thank you.

Okay. Thanks, Thanks for that I'll start with this is it.

Just like the rest of the world.

We're all getting back up to speed Unfortunately for America.

We do.

Did what the government asked us to when they provide us with the payroll support program. We ran the airline and we ran it to serve people that had to get.

The business.

And leisure activities and <unk>.

Name it.

We go for that chunk that we have to take to get to the kind of capacity.

Cassidy that Eric has mentioned in our forecast, it's not that sizable of a jump.

We're way ahead of it.

Certainly learn from issues were really focused on other parts of what I consider the airlines supply chain and Thats our partners.

But we're very well prepared we have topped out for more team members that are ready to fly the summer spree.

Spring and summer schedule.

I feel really great about it.

Now im very very confident that we're going to fire a reliable airline as we did and we proved over the year end holidays better than a lot of our competition and as we have the first three months of this year too.

Great. Thank you.

Thank you. Our next question comes from Andrew <unk> with Bank of America. Your line is open.

Hey, good morning, everyone.

First of all Andrew.

So Derek just to confirm the updated CASM outlook isn't.

It does not include any knee.

Labor day labor deals.

Deals excuse me.

And then just kind of a follow up to that given the labor market in your operational plans, where do you think kind of tagged any bench really shakes out relative to the 2019 once only $7.

One is yes the.

Our CASM guide does not have any new labor deals and we're in negotiations with a lot of our unions at this point in time, but we don't.

But we will put those in our CASM guide when they occur and when we know where those are but thats not in the CASM guide for the rest of the year.

Getting back to 2019 levels depends on growing back in when do we grow back fully from a capacity.

The perspective.

And also as you alluded to when do those labor deals go into effect in.

In 2019, we did the mechanic deal when we completed the mechanics deal during 2019.

So that year over year is now into our numbers.

As we grow the airline back.

Getting ourselves back to 2019 CASM levels.

It will take us to get our utilization back to where it was before and get all the aircraft back flying.

To get closer to that 2019 level.

Got it thank you and then.

Two.

Fully appreciate the historical relationship with GDP.

In response to one of the earlier questions I guess, we get a lot of investor questions on inflation and the health of the consumer.

Do you have any historical perspective on consumer demand.

Levels of inflation and at what point do you begin to anticipate some sort of consumer slowing if at all in this type of environment.

Yes excellent question.

And there's a lot that we're seeing today, which which is kind of breaking from a lot of historical trends is much like the the question earlier about.

How fuel prices are bleeding in the parent it's right now it's really difficult to tease out what is what is causing what.

As an industry there hasn't been a great great history of how inflation is turned into changes in demand but.

We're so far encouraged by by what we see right now in two ways.

<unk> demand continues.

To grow and grow at a meaningful pace.

How long lasting it is remains to be seen but if we've learned anything in the last 20 years to 24 months, we can adjust to just about anything and do it pretty quickly and the other thing which is really encouraging is frankly spending by our co branded credit cards.

That is one where the.

Throughout the pandemic, even though airline revenue spell a cobranded <unk>.

Revenues never never felt nearly to the same degree and indeed, we're encouraged right now because there are acquisitions are higher than before.

Our spend on the card is keeping pace with inflation indeed on our card with.

With Barclays. Our spend is growing at a greater rate than inflation. So we're encouraged by that and there's clearly a level of demand for our product in future anticipation of travel, which is very promising and we'll just see how it plays out.

Great. Thanks, everyone.

Yeah.

Thank you and Thats all the time, we have for analysts we open the queue for your media.

Again, if you would like to ask a question press. The Star then the one key on your Touchtone telephone.

Okay, and our first question.

It comes from Alison Sider with Wall Street Journal Your line is open.

Oh, hi, thanks, so much.

Curious what you are seeing any response to Covid cases, starting to rise again that you know are you seeing that reflected at all in consumer demand or sort of your staffing are you seeing higher rates of absences and is that something you're kind of planning around.

Yes, it's Robert the answer is both.

Okay.

And I just wanted to on the math I guess a couple of days is that our policy of change have you seen any.

Evidence of any kind of shift in bookings increased bookings or decrease is there any evidence yet that there will be any change to demand as a result of the massive anything with it.

Hey, Al <unk>.

Very early to tell.

And it really difficult to draw a very much of a conclusion, but.

So far there is nothing to indicate that it's materially up or materially down.

Okay, so not like when other international travel restrictions get lifted and there's an immediate response has certainly not on that order of magnitude at all.

Got it thanks.

Thank you. Our next question comes from David Koenig with associated.

Socio depress your line is open.

One moment.

Okay. David Your line is open.

Yes.

Hey, Robert and Derek close aggressiveness on the pilot you gave pilot figure figures for pilot hires I was hoping for a net number is 600 enough to offset the 865 requirements and other attrition.

What's the net number and bottom line are you going to have enough pilots to fly this summer.

Let me.

Start David see more kit can join in the dance the answer is yes.

As I've said repeatedly for sizing the airlines for the resources that we have.

From a pilot perspective, all of this hiring is meant to match up to a schedule, but also schedule that we are making sure that we felt had safety factors. So we have tremendous confidence that we can fly in addition to that.

We're scheduling the airline.

Tools.

That are different than we had before and.

My confidence only grows.

As we make our way into.

A year, David do you have anything else you might have Robert let me just add to that I mean, I think the numbers Eric talked about the 600 that was this year alone. So last year, we had a target of hiring 350, we hired.

Over 500, so the 600 is just for this year and that's well ahead of pace of where we set our expectations to have in the pilot training right now, we're actually hitting our goals and our throughput that we expect and don't foresee any problems going forward, but making those numbers. So we can hit the goal quite all of our aircraft by the end of.

This year.

Thank you. Our next question comes from Mary <unk>.

<unk> <unk> with Bloomberg News your line is open.

Alright, thanks, very much I had a couple of quick questions. One Robert you had said this morning, I think that you're not doing as much regional flying as you would like to be and I wanted to see if you could comment in terms of have you got planes par can be suspended any routes and is that all related to the shortage of pilots on the regional level.

Yeah. So.

Thanks, Matt it's Derek.

<unk> noted, we're not find the full regional schedule, we'd like to.

We're going to get those aircraft back up over time, but it's related to our pilots that are being hired from the regional airlines for an increased level of attrition.

And the time it takes to actually backfill those pilot so while the regional carriers are able to source. Our pilots at this time, we just can't get them up to speed.

Physician staffing.

Over the long term, we do need to work on original pilot to pop supply.

And.

Out in front of that with our cadet program.

I'm trying to insert a phy.

People to come into the business and I know I am confident that over the long term prospects of quality of life for compensation or something that can attract people to the business. So it may take some time to work out but as Derek said over the course of the next year or so we anticipate being able to get that.

Not only mainline back up to full utilization by the end of the year the regionals.

Sometime thereafter.

How much how much down as you're flying your regional flying.

Departures in the second quarter.

Down about 20% versus 2019.

The airline mainline is down about 5%, so maybe 15% different than <unk>.

More than what the mainline is.

Okay.

Hey, Barry I wanted to note on that we're not just look while we have aircraft that we're not flying.

Eric I would you like to we're not chasing that we're simply.

Size of the Airlines was passed we have and so our confidence in the summer is rooted in we've already taken a look we've already made sure that we have appropriate confidence level and what we can do so.

No need for any type of concern over the summer.

Okay and then the second question I had if we could go back to the NDA for a minute. If the government tells jetblue it can acquire spirit, but it wont big changes in the NDA.

What's the prospect for American at that time is that something that you could have to walk away from with Jetblue.

Hey, Barry Thanks.

Speculation on speculation that speculation on speculation by Sue was.

I think well really articulate his comments about how <unk>.

Pro consumer and pro competitive the NDA is.

I mean, we could go on and on about that.

If you assume that that.

That jetblue actually figures out a way to acquire spirit.

And we get to that point.

Jeff Blue Spirit combination doesn't change.

Impact to consumers that it's not going to change one bit.

The value that we create for consumers in New York and Boston So.

I think it's there's a lot of runway to go over the bridge, obviously with respect to.

Frontier and spirit and Jetblue, but I think.

That kind of speculation is probably premature and we feel really excited.

Excited about the prospects of moving our lawsuit with the Doj.

And.

We're looking forward to continue.

Hum.

<unk>.

In perpetuity.

Yes, Steve.

Are there any discussions underway on settling with the Doj over the NDA or do you expect that that's going to go to trial in September .

I expect it will go to trial in September .

Thank you.

Okay.

Thank you. Our next question comes from Dawn Gilbertson with USA today. Your line is open.

Hi, good morning, two questions on masks.

For <unk>, given the Doj appeal do you foresee any scenario in which the math mandate plane is reinstated as swiftly as it was removed and the second thing is how is American handling.

Traveler request for refund given.

How quickly the maths mandate was lifted or are you.

Someone doesn't want to fly their immunocompromised are you just giving refunds what's your policy. Thank you.

Thanks go ahead. Thanks.

Yes, I can take the first part of that question. This is Nate obviously, we're aware that the Doj is appealing the Florida ruling although they have not asked for a stay.

The District Court judge.

Beyond that as I mentioned earlier, we've learned throughout the pandemic not to speculate on what the government may or may not do.

I would I would emphasize though that in keeping with our commitment to creating a welcoming environment for everyone, who traveled with us customers and team members.

May of course choose to continue to wear masks at their own discretion and we expect that many will continue to do so.

But especially considering the steps that we've taken.

For the last couple of years regarding cleanliness.

And air flow, we don't feel that.

Reinstating of the mandate is necessary at this time.

And Don Thanks. Thanks for the question overall, just just write off we haven't we haven't had much.

Interaction with customers that have said they want to do anything different.

But like we do in all of these events, where we're taking a look at our policies.

We are certainly.

With customers open and.

Asking them to get in touch with our reservations office and we'll make sure that we accommodate them in an appropriate fashion.

Thank you.

Thank you. Our next question comes from Leslie Joseph with CNBC Youre line is open.

Hi, good morning, everyone.

I was wondering how.

How are you guys are thinking about.

During the summer and <unk>.

No.

We need clear capacity.

He handled the bookings and how you're addressing that and just kind of how the overall labor landscape look not just pilots but customer.

Customer service ground.

Another place.

Yes, I appreciate the question certainly one that we spent a lot of time thinking through and working on what I would tell you we've actually implemented a number of tools.

The loans are going to be high as we go into the summer welcome back.

Lot more customers.

These tools, we've actually been utilizing.

And thats showing good promise here in terms of.

Ensure that we're not canceling and working our airline through a delay as this weather does develop and we work our way through it and Thats really the key for US is making sure that we're canceling the SKU twice as possible for a lot of the traffic to continue to move through but we're again, we're very focused on that we know that the weather is going to be out there. We're certainly not taking anything for granted.

Hey, David I'll, just add with look we have dropped out of the new gym team members who do.

That's a lot more than 600 pilots that we have actually.

That 12000, net new that we hired I think almost 20000 people, but those people.

The team members are working and reservations there at our airports.

Throughout the system. So we picked up our capacity to be able to handle and then Mike do you want to say about any anything more about other technology that we're using.

David hit on it you know the goal is to prevent the cancellations in the first place. So that we don't have to re accommodate people given the high levels and we expect this summer and we've got some pretty cool new technology that really focuses on how we manage.

To do that.

In addition, really helping with.

Improving our technology around crew recovery and optimization technology that will really help reduce our taxi times, our turn times at airports and all of those things together are going to be in place by next summer in order to make sure that we have a better approach to irregular operations.

Okay. Thank you and then I think.

Good question really quick does it still makes sense for American Airlines to have an award chart, just given where demand is and kind of how hard against decline seats with awards. These days with miles these days.

Yeah. Thanks for the question actually what's been really interesting to us even though we are seeing.

And improving air environment is actually are.

Our redemptions are up both in margin as we go forward.

As far as the award chart goes that is certainly something which.

Our top tier loyalty customers very much value.

And they see a lot of opportunities for it to go and secure.

Our traffic, which many of them have been long anticipated through the pandemic.

As it stands today, we're still really encouraged by having an award chart and encourage that frankly, even though we aren't as rising environment.

Creating the right level of availability for up for redemption.

Thank you.

Thank you. Our next question comes from no Raj Chuck <unk> with New York Times. Your line is open.

So I think most of my questions were answered already I guess, one question I had on masks, what do you anticipate it affecting hiring at all maybe potential.

People, you might hire might be nervous about.

Some of the shifts that drop the requirement.

And Raj.

Now and then and just so everybody is aware.

If our customers and team members want to wear masks, we encourage them.

Welcome that and we see that as a practice that's going to continue forward.

Thank you.

Okay.

Thank you. Our next question comes from Catherine quick Nick with the CBS News your line is open.

Hey, guys. Thanks, so much for doing this today.

This is the last time that we have to talk about unruly passengers, but do you have a count how many that American is bad and what are you going to deal with those.

Our band are you going to do what your competitors are doing and doing case by case basis.

Yes.

As Nate we don't give account for how many passengers we banned specifically for mask noncompliance.

In most cases.

The passengers who were added to our internal refused lift as a result of noncompliance.

<unk> will be permitted to resume travel at some point in time.

In cases, where an incident may have started with face mask noncompliance and escalated into anything involving.

Something more serious or certainly a salt and assault on one of our team members our customers.

Those passengers are going to remain on our permanent internal refused list and we will never be allowed to travel with US again I would just add in this vein, we're very grateful to our partners in the federal government, who have prioritized the safety of our crews both our grand crews on our crews in the year during this.

Period end.

Are really appreciative of the announcement yesterday from the FAA administrator, Billy Noland, who said that to zero tolerance policy against unruly passengers is here to stay as we anticipate.

Unfortunately that these cases will continue although as Robert noted earlier today hopefully with.

Fewer cases.

Thanks.

Thank you.

Thank you and that's all the time, we have for Q&A I'd like to turn the call back to Robert Isom for closing remarks.

Thank you I'll just close with this but we've worked really hard as a company to get this point to be able to take advantage of an environment, where demand is improving generalized structured.

Really great fashion I want to thank our team members for working so hard to get us through the.

The pandemic and to be in a position to actually realize.

Everything that we want to make.

About American and in terms of the transition as well. This is my first earnings call I want to thank our board of directors, especially Doug Parker for making things really work stealing put us in a position to be talking about things that are very very.

Favorable and so far our team you have heard from a lot of a lot of players here today I couldn't be more proud and confident in the team that we have from our senior leadership perspective, you're going to hear more from them as time goes on and our job right now.

Just to make the second quarter forecast a reality that is what we're focused on so wanted to get out there and make it happen.

I want to thank everybody for the time today.

Thank you. This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

[music].

Yeah.

[music].

Okay.

[music].

Okay.

[music].

And now I'd like to turn the conference over to your moderator head of Investor Relations Mr. Scott long.

Thank you Catherine good morning, everyone and welcome to the American Airlines Group first quarter 2022 earnings call.

On the call. This morning, we have our CEO , Robert Isom and his CFO Derek.

Also on the call for the Q&A session, David skew more to Roger and a number of other senior executives.

We'll start the call. This morning, with an overview of the first quarter and our priorities for the year Derek will follow with the details on the quarter and our operating plans and outlook going forward.

After Doug's comments, we'll open the call for analyst questions.

Questions from the media to get in as many questions as possible, we will lend yourself to one question and a follow up.

And then must state that today's call contains forward looking statements.

Statements concerning future revenues.

Capital capacity.

These statements represent our predictions and expectations and 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 that was issued this morning as well as our Form 10-Q for the quarter ended March 31 2022.

A webcast of this call will also be archived on our website. The information we're giving you on the call. This morning as of today's date.

To take no obligation to update the information subsequently.

Thank you for your interest and for joining this morning, and with that I'll turn the call over to our CEO Robert Isom.

Thanks Scott.

Good morning, everyone. Thank you for joining us today we're.

We're going to keep our comments brief this morning, I'm, a strong believer that results speak louder than words.

And the result, the American Airlines team will produce.

Let's start by thanking our team day in day out they are on the frontline is taking care of our customers no matter what comes our way and we've certainly seen a lot come our way over the past two years.

American Airlines team has worked hard to position us well for the recovery by simplifying our fleet modernizing our facilities fine tuning our network developing new partnerships rolling out new tools for our customers and team and hiring thousands of new team members.

All of that offline the largest airline in the world.

I'm excited to see their work pay off for all of our constituents.

Our customers certainly the communities, we serve our team and notably our shareholders.

It's an honor for me to have the trust of our team and to succeed Doug Parker as CEO and to begin in this position as the industry rebounds.

The company returns to profitability.

I'm extremely grateful for the opportunity.

A fantastic time for the industry and for American Airlines in particular.

We're rapidly achieving two key goes above all else.

Running a reliable operation and returning to profitability.

Our team is up to the challenge and we've already seen a lot of great progress.

So let's talk about financials first this morning America reported a first quarter GAAP net loss of $1 6 billion.

Excluding net special items, we reported a net loss of $1 $5 billion for the quarter.

Despite the quarterly loss and a difficult January and February due to the effects of Omicron March results were markedly different in March we saw it's possible. We're starting demand brought on by reduced infection rates relaxed restrictions and tremendous pent up demand for people to travel.

Quite a sizable increase in the cost of fuel during March American achieved our first monthly net profit excluding special items since July of 2021.

Demand is as strong as we've ever seen it.

American produced revenues of $8 $9 billion in the first quarter, including industry, leading passenger revenues of $7 8 billion.

Domestic leisure travel continued to lead the way far surpassing 2019 levels of traffic and revenue in the month of March.

In addition, we saw a strong quarter over quarter improvement in corporate and government travel with revenue for this segment as a percentage of 2019, increasing two seven percentage points from January through March.

So some business demand is now about 80% recovered with small to medium business revenue approaching a full recovery in corporate revenue now around 50% recovery.

And finally <unk>.

Demand for international travel also picked up considerably during the quarter as travel restrictions were lifted in certain parts of the world.

International revenue was about 50% recovered in the first quarter and around 60% recovered in March.

There's still a lot of revenue upside as business in international travel continued return.

The Americas team has done an incredible job of setting up the airlines to take advantage of the rebound what do you think our network to where our customers want to fly establishing partnerships in more challenging areas and making sure efficiency is top of mind as a result, we're very optimistic about the continued recovery and expect to be profitable in the second quarter based on.

On current demand trends in fuel price forecast.

Turning to reliability American enter 2021, with our strongest operating performance in the Companys history.

Committed to maintaining that momentum in the first quarter and we did.

Despite two difficult winter storms in Dallas Fort worth the team delivered a solid operating performance in the first quarter.

Leading the industry in on time departures and finishing a close second and on time arrivals.

And they did so while flying a considerably larger schedule than our next largest competitor.

More importantly for the month of March and then peak spring break demand and high load factors, we delivered our best ever combined March completion factor.

Our operation in DFW, and Charlotte, our two largest test met or exceeded our expectations and delivered their best on time performance and completion factor in years.

As a result of our team's hard work our likelihood to recommend scores continue to track in line with plan and are near the top of our post merger performance.

Running a reliable operation this summer will be critical to continue to the continued recovery and we have taken numerous steps to ensure we are well prepared to deliver for our customers.

Our summer time, I began last year as demand returned and we haven't slowed down.

American has 12000 more team members in place to support the operation of the summer than in the summer 2021, we've already welcomed more than 600, new pilots. This year exceeding our goal and we will continue to aggressively recruit hire and train across all departments to develop the best pipeline of talent in the industry.

We're ready for the summer and we have sized the airlines for the resources. We have available again, we saw zero lines of the resources that we have available.

We have also made targeted investments in people technology and resources that are yielding promising results for our team members and customers.

So before I hand, it over to Derrick I want to say that I'm really excited about the future of our industry and the future of American Airlines.

Theres still a lot of revenue upside going forward given industry revenues are still off from their historical relationship to GDP.

Demand are falling in business and international trends are promising.

There are also certain agency industry constraints on growth in the near term, notably related to pilot an aircraft supply and.

At American we have completed a $1 $3 billion cost reduction program and our unit cost performance will improve throughout the year as utilization approaches historic levels.

No airline is better positioned to operate in this environment and American Airlines because of our fleet our network and everything our team has accomplished over the past two years.

And with that I'll turn it over to Derek.

Thanks, Robert and good morning, everyone before I review the results I want to acknowledge Doug for his more than 20 years at an airline CEO Doug's leadership revolutionize the industry and laid the foundation for American <unk> success going forward.

I also want to thank the American airlines team their hard work and commitment to our customers and each other is truly extraordinary.

This morning, we reported a first quarter GAAP net loss of $1 6 billion or a loss of $2 52 per share. Excluding net special items, we reported a net loss of $1 $5 billion or a loss of $2 32 per share.

Original guide of 78% to 80% recovery.

Demand recovery from the Omicron variant was swift and while leisure demand remains very strong.

As more companies returned to their offices business demand is growing quickly on.

In fact in the face of increased fuel prices, we were profitable for the month of March excluding net special items due to our strong revenue performance and cost efficiencies.

Our fleet remains the youngest and most fuel efficient among the U S. Global network carriers. This month, we completed our narrow body fleet harmonization project covers more than 500 aircraft and we will ensure a consistent product and better experience for customers along with the improved revenue generation and unit cost production.

Associated with the new seating configurations.

In the first quarter, we took delivery of nine Airbus <unk> hundred 21, Nios and reactivated seven previously stored Boeing 737, eight hundreds. We also inducted a dual class regional aircraft and park III 50 seat Embraer 145.

We previously announced our plans to exercise purchase options on 3700 37, Max 815 of these options are scheduled for delivery in 2023% and 15% in 2024.

Additionally, with the continued uncertainty associated with our 787 deliveries. We are now waiting for the delivery of only $7 seven to eight 8% in 2022, all after our summer schedule with the remaining six 788 aircraft being delivered in 2023, the $4 789 aircraft previously planned.

In late 2023 are now planned to be delivered in 2024 with these changes our expected total aircraft Capex is $1 8 billion in 2022 and $2 2 billion in 2023.

We ended the first quarter with $15 5 billion of total available liquidity significantly higher than our initial forecast due to the Ato build of $2 3 billion in the quarter we.

We generated operating cash flow of $1 3 billion and free cash flow of more than $350 million in the first quarter.

During the quarter, we made $344 million of scheduled debt payments and completed $317 million in open market repurchases of our $750 million unsecured senior notes maturing in June .

Lastly, with cost efficient financings Karen for all aircraft deliveries through the third quarter of this year. We are now beginning to evaluate financing options for the fourth quarter and first half of 2023.

Based on current demand assumptions, we expect total revenue to be 6% to 8% higher versus the second quarter of 2019, and 6% to 8% lower capacity.

That will be the first time, we have produced total revenue greater than 2019 since the start of the pandemic.

In fact, if we hit the midpoint of this revenue guide the results would be the highest quarterly revenue in our company's history.

On this revenue strength, we expect total revenue per available seat mile to be 14% to 16% higher in the second quarter versus the same period of 2019.

We expect our second quarter CASM, excluding fuel and net special items to be up between 8% and 10%.

Our current forecast for the second quarter, which we pegged on Tuesday assumes fuel between three and $3 59.

And $3 64 per gallon increased an increase of more than 60% versus the price of fuel in the second quarter of 2019 and.

As for full year 2022 capacity, we now expect to be recovered to 92% to 94% of 2019 levels. The reduction in full year capacity from our prior guidance largely due to 788 delivery delays that I touched on earlier.

In conclusion with the actions, we have taken and the commitment of our team we remain very well positioned.

Main focus on running a reliable operation and returning to profitability.

We expect to happen in the second quarter with that we'll open up the lines for analysts questions.

Thank you as a reminder to ask a question you will need to press star one on your telephone.

While your question press the pound key.

Our first question comes from Jamie Baker with Jpmorgan. Your line is open.

Okay.

Good morning, I guess, you're starting in the order.

Okay.

The biggest second quarter.

Yes.

Great.

Listen, we're all familiar with my close David.

All right cool.

Yeah.

So.

Familiar with that relationship between airline revenue and GDP you brought it up Doug I had a good slide on NASDAQ last month.

You looked at the relationship between leisure demand and GDP and what that relationship might be telling us I know, we could try to back into this with some of the form 41 data, but I don't really trust that Theres a reporting lag. It just doesn't tell me anything.

Sure Hey, Jamie Thanks, I'm going to let Vasu answer that.

Don't feel bad this is a long game, we know youre going to get it right over the long term.

Alright, thanks for the endorsement.

Yeah, Jamie Thanks for the question.

A very good one one that we've actually spent a lot of time thinking about.

What I'll say is youre right in aggregate like historical relationship between airline demand and GDP with industry demand at something around just under 1% of GDP does largely seem to hold and when we're seeing that as things start to recover.

Spent a lot of time on this question about that.

What is what is the actual trip purpose and how does that change and the reality is it's changing.

And a meaningful enough way, where we know long I think experience starting with trend.

Example, historically.

Only about 20% to 25% of the tricks and the airline were something that we call blended where somebody was traveling from both business and leisure now for about five or six months about 50% to 55% of the chips and the airlines are blended and as we look forward into the coming months that continues to be the case.

It's playing out in a lot of different ways for us, which are both opportunities and a little bit unprecedented right. We are seeing.

Sales days, becoming big sales of different travel dates for connected travel days.

The nature of what we call it leisure demand in business demand is changing.

And the pricing and better understanding exactly how that is but so far it's been promising those blend in trips that we have in the system are coming on at yields that are 75% to 85%.

True business settling these trends, but they are coming through lower cost of sale channels and often negotiated discount. So the net yields of them are very often the best things in the system.

This is an evolving thing and one that will keep coming back to you, but the relationship is indeed, changing as you say, even though in aggregate a lot of the triangle and just out of curiosity, how do you define or how do you tell that a trip is a blended trip is it somebody booking with a corporate discount and then bringing a family.

And then adjacent PNR like how do you know that yes.

The year to viewing this thing we actually.

Come out in two ways. One we have models that go in and actually predict whether the behavior and business or leisure and we survey customers scale and calibrate the model. So overtime. We are really good so whenever we talk about business.

Talking about for example, somebody who travels one person on the itinerary no checked bags and things like that.

It fits the profile of the calibrated again surveys on what the customer actually tells us.

One of the things that we found is that increasingly the surveys are starting to change because people are saying they are flying both for business and leisure.

It's one person in the itinerary, but they're leaving on a Thursday coming back on a Monday and going to pass the call. So a lot of things are starting to change and that's that's actually pretty promising bank.

Fascinating. Thank you for that and then second and.

Maybe for Robert as we think about the steps that you're taking to protect the operation you know heading into the summer peak.

Zero still the metric that American intends to focus on it I think it was in the past that since I got was that it wasn't.

Hugely popular with the entirety of the airport staff just wondering if with your background.

Robert and having ascended to the top seat is that still the metric that you have prioritized, let's say.

Jamie I'll just start with this which is the hour.

Tom.

On time arrival, we know yes.

Is the biggest driver of customer satisfaction as I've said before it makes the food taste better seats more comfortable service service more friendly all that and the best way to ensure on time arrival.

Sure you depart on time, so there is no stepping away from it but I will tell you.

We have.

Evolved over time, and we really do want to take into account, making sure that the things that we do to get an aircraft out on time.

Compromise other aspects of the operation so credit congestion on the ramp or if we do have the inclement weather.

At the end of the day, if we have flights.

You may be able to get out on time, but you ought to hold for connecting passengers we do so.

And so we could go into a lot more detail on that but the answer to it all is for the bulk of the airline.

Did it started right.

No aircraft out of service in the morning.

On time departure of SaaS turn and stay that way throughout the day. That's great. Thank you both I appreciate it take care.

Thank you. Our next question comes from David Vernon with Bernstein. Your line is open.

Hey, Thanks, guys. So we ended the other end of the spectrum I guess.

Could you talk a little bit about what you have in the forecast for business travel recovery as we think about this summer months, what are you seeing in the booking trends.

I'm, just trying to get a sense for kind of what the mix is within the guidance that you're giving us.

Hey, David This is vasu I can help with that.

Robert comment at the beginning.

As we close.

The quarter system business revenues were about 80% recovery versus 2019, as we look at Q2.

Dissipate that number will be about 90% recovery versus 2019.

We have a level of confidence in it because we are indeed, we're seeing many of those bookings start to come in from my comments that Jamie just now.

But also.

The gap between 90, and 100 is really largely due to long haul international demand in certain pockets of domestic demand.

We are.

We are continuing to see demand.

Okay, and then maybe just as a quick follow up.

I remember, having a conversation with Doug and Derek out in L. A couple years ago now around.

Denied boarding sorta involuntary denials that kind of stuff.

And you guys have been working on some technology to help you guys comment.

We accommodate customers.

Work on this issue.

<unk>.

Not having enough seats on the plane over selling that kind of stuff.

Is there any early indication during this period of demand here.

Those efforts are paying off in the denied boardings are coming in a little bit in line with.

Alright, those expectations that you set out a couple years ago.

David we're going to start with that <unk> been talking about some of the things we've done and if there is some some add on to that Marcio will do it.

Hey, David This is Mike yes over the last several years, we've really improved our technology around essentially pre removing customer.

Before they get to the airport and several days before and that's why as we know that slide is that the risks are selling providing them an opportunity.

Did or to either.

Our take compensation or even just move to a different place, that's probably a little bit better than the prices that were previously scheduled on.

Sure.

And so there is a last minute schedule J&J last minute.

Equipment change so we have to deal with it at the airport, which is in our call. We're really trying to deal with it before they get to the airport.

We have some pretty neat option capabilities that allow the customer.

Opportunities to move around to other flights and so all of those things together have really helped improve the onboarding statistics.

Yes.

Not only add to that.

The pandemic one of the hardest things to do to predict there's been the show rate of the airline.

Understandably as the pandemic. We're on we would have periods of time, where everybody showed for a flight in periods of time, where the show rates can be as low as 70% of what was booked.

We're encouraged by in large part because of a lot of the technologies that we've got not just in managing over booking but simply just forecasting show rate. We are getting to a place where we are a lot better in building in predicting what the variability is.

With the technologies that we've got proactively moving customers off so that we don't have the <unk>.

Same level of denied boarding expense that we had in times past.

Indeed, we're able to generate more revenues through the overbooking flights.

Excellent. Thanks, a lot for that added color guys.

Thank you and our next question comes from Savi <unk> with Raymond James Your line is open.

Hey, good morning.

I was wondering maybe lastly could you provide a little bit of color on what youre seeing across the <unk> on the long haul side across the different entities.

Sure Savi, yes, thanks for the question.

We're really encouraged with how long haul demand has come back.

It is indeed very different across the three long haul and long haul South America, Trans Atlantic and Trans Pacific.

We are encouraged because Andy we've seen bookings from from maybe.

Post op omicron low point in January kind of what we're seeing in the last four to six weeks as it improved by several factors.

And in South America, that's a factor of two to react and training Atlantic at something materially larger than that and in terms of specific it's grown quite a lot too but still on the bookings are pretty small and insignificant in that that that totality of all of our bookings.

Really encouraged by is.

The manner in which demand is returning.

And long haul South America, where we just where we have so much.

Capacity.

Increasingly we are seeing not just more customers simply sign on for flight, but what billing premium cabins. It at a better and better rate. The same is true in trend Atlantic where so.

So much of the airlines that we brought back there is centered around our partner hubs.

Throw in Madrid.

Carriage because those are.

To make those slides go they are very premium demand in some depth and we are seeing.

A lot of premium demand, even though we aren't seeing.

Large corporate travel quite come back into international the way we've seen before.

It's understandably challenged because as long as their entry restriction.

Demand remains pretty stubborn to come back but like.

Like I said, we're encouraged once those restrictions are lifted the demand improved pretty meaningfully.

Okay.

And if I might ask Nick just a quick question on the.

Phil.

Is your kind of fuel contracts based on kind of the forward curve than crack spreads I think David alright, like spot prices I mean, I think there's a little bit of confusion on what we're seeing on slot and this is not unique to American, but whats being reflected in <unk> guidance.

Yes, no thats exactly we just take it two days ago. So at 100, there was 107.

And then we use the crack spread and where that was in the crack spread has increased a little bit. So the difference maybe crack spread and in the days that everybody takes the fuel peg but were straight off.

The fuel curve and then it's dependent on where are you buying your fuel is are you buying your fuel more of the Gulf Coast L. A new York So there could be differences between each airline just where the where the brunt of the fuel comes from.

Thank you.

Thank you. Our next question comes from Helane Becker with Cowen Your line is open.

Thanks, very much operator, hi, everybody and thank you for the time just two questions. One is on minimum liquidity Derek have you thought about where you want that to go.

Other than that I think you said, one pay down $15 billion of Jeff by 2020.

And then the other question is I think related to the pilot training pipeline.

Can you talk about a shortage of crew members and limits to capacity growth. So how are you thinking about catching up.

Yes, I can do I can do both and Robert can can add some of that so as far as minimum liquidity.

We're still in the same places we were a couple of calls ago, we're at about $58 $5 billion right now.

We are seeing this recovery, we'd like to see it.

Actually be in the actuals. So I think this is a forward guide, which we think is where we're going to get and be profitable for the quarter. If we maintain this level. What we have said is we would take a step down to somewhere in the $10 billion to $12 billion range.

And hopefully that happens sometime this year, which can accelerate the debt pay down.

And any further than that we just haven't had the discussions.

The board and through the committees, we ran the company at $7 billion.

Minimum minimum liquidity, which.

I define that was kind of our targeted cash level minimum liquidity is actually much lower than that but our targeted cash level was at $7 billion and so right now we're holding on to the cash and then when we see the recovery and it's holding up and the cash is holding up we will use that cash to pay.

Down debt.

And I think we'll take it down to some than there were in the $10 billion to $12 billion range as we look forward.

On the pilot training pipeline.

As Robert said, we've hired 600 pilots at the mainline so it's it really is.

We have the pilots I think.

The industry is it's about trying to hire 2000 pilots this year versus the most we've ever hired in the past is 1000. So we have the simulators coming in we have the trainers coming in so what it is is trying to get everybody through the pipeline and I think we will be fully utilized in an hour.

Of our aircraft flying by the end of the year.

On the other side of it is the regional carriers, which we're we're working on is that that hiring is going well also so we're hiring there just the attrition is much greater than the.

The hiring at this point in time, we're getting people through the pipeline.

That has slowed which is good.

All of the mainline carriers have hired from the regional carriers.

We all have a backlog to get through training so.

The regional attrition has slowed which will be good for our regional capacity as we go forward.

But we believe that by the end of the year or through the summer, we will be back up and having all the airlines aircraft flying which will be great.

For us from a utilization perspective, it'll be great for us from a cost perspective.

To drive down the unit cost as we bring back all of those aircrafts and get the pilot pipeline moving through.

Well said that the only thing other helane the only other point that I would add is that look overtime, it's supply and demand.

I am confident.

Yes.

Your life and the compensation for pilots is something thats going to track a lot of people from the industry.

It may take.

Some time to work through but it will happen.

Could you in the short term bring back pilots, who might have retired at say 58 or 60.

And just have them work for a couple of years to bridge the gap or once they retire.

Scott.

Hi, and I'm going to ask.

David Moore, Chief operating officer to weigh in on that yes, I think the challenge with that is many of them have been retired long enough that they would have to go through a re qualification, which would take one of those swaps. So given that as Derek talked about rehab the supply coming in.

The schoolhouse is really running at full speed here and we're making sure we're hitting the objectives that we've set forward.

To reach the goal that Derek talked about for the remainder of the year so as.

As much as I think Obi a great idea and you just take away a slot for a new hire that's coming in.

Yes.

Overall as well we have a great relationship with.

The API and making sure that we're getting as many pilots onboard and credit as many capital positions as we possibly can anything that would alter something like retirement status would have to be something that they.

They champion.

Got it okay, great. Thanks, very much guys.

Thanks, Mike.

Thank you. Our next question comes from Mike Lindenberg with Deutsche Bank. Your line is open.

Yeah, Hey, good morning, just two here I guess my first two vasu historically, I guess sort of a rule of thumb is that the run up in energy prices, usually sort of find its way into the fare structure with like a lag of three to six months.

It does feel like that it's getting recaptured far more quickly and I just wonder if it's any sort of structural changes and or just by approaching this fuel price cycle.

A bit less capacity, which may give you some leverage in your ability to quickly offset that just your thoughts around that.

Yes, Mike it's an excellent question and it looks like Jamie is one that we've actually spent a lot of time understandably thinking about.

Look it's really hard to tease out the different effects is youre right Theres high fuel prices.

Various limits on capacity as airlines try to size their airlines for the staffing that they can produce and of course demand, which just continues.

Accelerated at a pretty unprecedented rate.

So we look at it or actually the banners that we American airlines are out with Sterling.

Courage that indeed month to month, we are seeing a greater increase in spares.

That is certainly what we saw in 2019, but very importantly, one of the things that we've been looking at is on healthcare that larger I think it has the rate of increase actually changing and.

In 2019 to 2022 versus the last time the industry went through.

So many cataclysmic crises, which were.

Big fuel the great recession.

Changes in the industry deconsolidation and indeed the rate the pace of change that we're seeing is growing much greater than what we saw before.

Short way to say it is and we are seeing a lot of strength in.

In our environment with customers, who frankly value and quality of product that we have and are willing to pay us.

Florida. So we're encouraged by that we see those trends going forward into the summer and of course, that's <unk>.

The revenue guide you see before you.

Great and then just my second.

With respect to the NDA and I guess, the justices concern about potential consumer harm.

Hey.

I can start and others can add.

Well look we can talk about the consumer benefit of the NAA enough to and indeed.

Where do we think that we have full flat beds on all of our transcon markets, which is a thing that American airlines has long dreamed of and now through this partnership with Jetblue, we're able to make happen, we brought jetblue into laguardia, which they have long to make happen, putting a new level of price competition on the incumbent carrier there.

So we're encouraged by some of the structural things there, but we're really encouraged by is the way consumers are responding to it so right now.

For the first time and as long as we have recorded it advantage enrollments. Our loyalty program enrollments are growing in New York and Boston, a greater rate than anything in the system at an absolute size, which is greater than anything of the system.

New York is on a percentage of 2019, we're acquiring more credit card card customers there.

And then we did in 2019 and at a greater rate than any other parts of our system.

All of which is to say that on the consumer is clearly responding to it and we see those benefits and we keep rolling things out.

We there's a lot that we've kind of worked through as we kind of tried to staff up a connecting operation at JFK, we have endeavored to go slow in order to make it happen on mobile.

For a minute and say that we're all the way to achieving what we want there to be but we are really encouraged by what it's doing for consumers the level of competition that is bringing.

And indeed, I mean, we can't talk about it enough and then maybe when you talk about it more.

Fashion.

I'll, just I'll, just add and I know, our chief legal officer pre IR will agree with me.

Youre welcome.

Scrutiny.

We know that this is producing the benefits we said it would.

It's doing exactly what we had hoped and we're confident we're going to prevail no matter, what we face going forward.

Yes.

Gary.

Hey, guys. Thanks.

Thanks, everyone.

Thank you. Our next question comes from Dan Mckenzie with Seaport Global Your line is open.

Hey, good morning, Thanks, guys.

Couple of questions here first a clarification the guide.

Maybe for Vasu, what level of restoration and international flying does the revenue guide Embeds. So does it include the relaxation of the 24 hour testing requirement in May sometime and you know what conversations as the government having with you about the end of the travel restrictions internationally.

So im not sure you can handle that first part and then let's have Nate.

Cover.

Pulled out of testing.

Hey, Thanks for the question.

International at large we broadly anticipate to be 100% recovered in Indiana.

Not far from that right now, but but.

The question earlier from Savi International.

And a lot of different pace of play right now.

Never forget that for us in the second quarter, roughly 90% of our airline is on <unk>.

Lying in the western Hemisphere and Heathrow.

A lot of our recovery is due to the fact that our.

Our short haul international network is recovering at rates that are probably greater than what we see in domestic.

And those markets, such as London, and long haul South America recovering pretty quickly.

And Thats, where we have all of our capacity.

So just one note.

International revenue not 100% recovered Anthony go ahead go ahead in the latter half of it from a long haul perspective, correct, yes correct.

Yes.

Would you say that long haul revenue isn't all the way there, but total international is that okay. Okay. Yeah. This is Dave I would just say on the on the regulatory side. Obviously the testing is something that we continue to engage on with our industry partners. We believe that the U S. Can can safely followed countries that are progressed.

Going through the pandemic, including Canada, UK, and Ireland, which have we think safely evolve the scope of their entry requirements and moved away from pre departure testing.

We've learned by at this point in the pandemic however, not to speculate on what may or may not happen. So we don't have.

Specific timeframe in mind is just something we continue to work on obviously the decision is going to be up to the federal authorities and public health experts.

And thanks for everybody Thats, Nick Nick.

Head of corporate and government affairs, so thanks Nick.

Yes. Thanks.

And the second question here looking at slide five the simple math is it looks like there's roughly $7 billion of revenue that was missing.

On an annualized basis relative to the first quarter, but.

But I believe the head count is already in place. So we're left with variable cost I think so but if you could flush this out the fixed versus variable cost as you add back some of this higher margin.

International flying.

Yes.

Eric.

As we as we have talked about we have the airline and the cost in place to run.

A much greater airline.

So as we go and as Robert as Robert said in his comments.

Our CASM will get better and better throughout the year as we add back to fly and.

An example is our salaries, Inc stay pretty flat throughout the year, even though we're growing growing ASM throughout the year. So most of that most everything is in place to fly. The example is the 780 Sevens. We thought we had the 780 sevens coming in beginning of this year. So we have the pilots we have the crews we have everything.

Ready to go we're not going to train them back down to 700 threes or other aircraft, we're going to leave them there for when they come so Rx our expectation as we move forward.

And we bring back the aircraft and utilize our fleet and get us back to a 100% of 2019 that it comes at a significant.

Reduction in the CASM calculation as we go forward.

Thanks for the time you guys.

Thank you our next question comes from.

Semigloss with Evercore ISI your line is open.

Hey, Thanks, good morning.

Hi, everyone Congrats.

Perhaps Robert on the on the formal handoff.

I wanted to follow up to Mike's question.

Just with respect to.

Lose the bid for spirit.

As it relates to the NDA.

Do you see any relationship between the two initiatives and what as Americans perspective on the proposed acquisition.

Steve do you want to comment.

Comment here.

Sure Hi, Thanks for the question this is Steve Johnson.

First I think it's important.

Recognize that.

Jetblue is acquisition of spirit does not.

<unk>.

Those jetblue experience as near as we can tell are discussing that now and we'll ultimately find out which direction thats going to go right.

Yeah.

I would tell you.

Sure.

Joanna and.

Robin we're very quick to call Robert So to speak as soon as the story league than.

They were steadfast in their view that NDA was.

Extraordinarily reported a priority to jetblue.

Do everything we could to maintain in that part of their fees for spirit.

Contemplated keeping <unk> strength.

Yeah.

Great. Thanks, Thanks for that perspective.

With respect to the RASM guidance.

Vasu can you just contrast for us maybe how leisure fares are tracking.

<unk> 2019.

Versus closing business fares, and I understand regions et cetera make that more complicated, but maybe if we just look at it on a per say domestic.

Is the closing of zero to three getting better yet.

Relative to 19, thanks for taking the questions.

Yeah, Hey, thanks for the question and the one that we look at very closely.

It's kind of interesting we look at it both in what is out there selling but importantly, what is netted back to us after we deduct the cost of sales from it.

So we are seeing first and foremost we look at it really outside of 14 versus inside of 14 outside of 14. Indeed, there is a significant level of strength.

Across any any competitive OND grouping there might be an inside of where can we see the same level of air strength.

But as we look at it right now.

Leisure trips, our blended business leisure trends are coming in yield.

Yield levels that are anywhere from 75% to 80% in aggregate of what.

Inside <unk>.

Corporate negotiated rates are coming in and that's a really meaningful number because that means that on a net basis sometimes these.

These barriers, which are coming to us oftentimes through our direct channel.

Through some pretty unprecedented sources on a net basis are actually really really valuable to us and really valuable <unk> departure.

That said.

The bears are high what we are encouraged by as we have rolled through March there is simply more demand inside of 2014, and more business and business and leisure demand. So so yes, we see a lot of strength in the fare environment a lot more strength outside of 2014, but progressively greater strength in greater demand.

Inside of <unk>.

Thank you for that I guess, maybe just to.

Put a finer point on it do you think zero to three it's still an opportunity and thank you for taking the questions.

Yes, it is but not in quite the same way that it was before.

Thank you.

Thank you. Our next question comes from Catherine O'brien with Goldman Sachs. Your line is open.

Hey, good morning, everyone. Thank you so much for the time.

So maybe just one on the 787, when we think about your Capex over the next couple of years as the 787.

It was already paying a penalty to prior years, just trying to get a sense to the read through to American free cash flow in future years. Thank you.

Yes.

Catherine.

Just from a Capex perspective, I would just roll it without a doubt.

Any kind of settlement that we have will be separate.

The Boeing management team have assured us that they will cover us for the damages on the 787 the deliveries of the 780 Sevens.

How that comes I don't know because we haven't talked about it there is no no reason to discuss damages on the 788 until they deliver.

We know when those are going to be so so that can be calculated so in our models today.

Move the Capex and just just shove out the capex.

But I would put it.

There is upside to the cash flow or something for a settlement.

With the Boeing team as they've said they will they will cover.

The damages that we are incurring for those aircraft to be delayed and deferred.

Okay got it and then maybe one for Vasu, just coming a little bigger picture here can you just update us on the hub strategy are working through pre pandemic gross opportunities at DFW Charlotte DC as you add back capacity are you, adding proportionately more flying into those hubs you had in 2019.

Or do you need to first for store.

Pandemic network overall, and then you look to those growth opportunities just trying to get a sense of I know those are your most profitable hub. So are we already.

Starting to blend in that higher proportion of of more profitable flying or is that on the call. Thank you. So much for the time.

It's a great question and yes, we are absolutely blending it in now.

As we said to the pandemic, we had no intention of waste in the crisis and we didn't.

We massively simplified our fleet re.

<unk> reduced the number of long haul airplanes.

We're amongst the buying in some of our most unprofitable risks.

Lots of new partnerships, where we can create more value for the customer offer more network in places like the west coast.

New York, where we're weaker but very importantly, we've put a lot more capacity into our hubs.

In two ways, one we concentrated more flying there, but we've updated the airlines as well where were 8% more seats per departure, then as we go forward than what we were at the same time last year.

But for us.

Does R&D quite meaningful right now if you go looking and published schedules.

About 65, 70% of the airlines flying.

Really what we call our sunbelt hubs and short haul Caribbean kinds of markets, where the airline has unique level of strength and just.

To put that in perspective, I was reading through everyone's printers last night.

In Q1, our core Sunbelt hub, DFW, Charlotte, Miami, Phoenix, or somewhere between 70% to 80% of our competitors all network, but we are producing unit revenues.

Between 5% to 10% greater than that then those network. So very much that is a major thing.

As we've talked about here of returning to profitability and frankly running a better operation is focusing hard in those markets, where we create really unique and disproportionate value and really getting all of our assets working there.

Thank you so much.

Thank you our next question comes from.

Cunningham with <unk> partners. Your line is open.

Hi, everyone. Thank you for your time.

And our United and Delta talk too.

Generating a profit in 2020 to just get more demand.

I realize you guys have stopped short of saying that today, but yes.

Question that we're getting is just around the sustainability of like RASM production. So do you expect to generate a profit for the remaining three quarters of this year, assuming no massive change.

And oil or anything like that.

Thanks Conor.

I'll start and Derek can add into this look.

We're really pleased to be here talking about record revenues and producing a profit in the second quarter, but those are forecast.

Our job here is to make those forecast a reality, so we're going to get to that business.

<unk>.

To achieve profitability for the year.

I guess I can assure you we need to be profitable in the second quarter and we're going to get started on that and we'll update you as time goes on.

Eric anything else you want to add.

Okay great.

Okay. Okay.

And I know you said you've sized the airlines and the resources you have.

There's been some struggles with operations demand surged in the last year.

Do you assume any incentive pay above and beyond what you've historically contemplated.

In your 2022, CASM excellent walking and have you viewed incentive pay any differently.

And then you have in the past just given some of the staffing issue for industrial space in general.

Okay. Thanks, Thanks for that but I'll start with this is it just.

Just like the rest of world.

We're all getting back up to speed and Unfortunately for America.

We do.

Did what the government asked us to when they provide us with the payroll support program. We ran the airline and we ran it to serve people that had to get.

The business.

And leisure activities and you name it.

We go for the jump that we have to take to get to the kind of.

Capacity.

Capacity that Derek and as mentioned in our forecast, it's not that sizable of a jump.

We're way ahead of it.

Certainly learn from issues, we're really focused on other parts of what I consider the airlines supply chain and Thats our partners.

But we're very well prepared we have 12000 more team members on our ready to fly the summer.

Spring and summer schedule.

I feel really great about it.

Now I'm very very confident that we're going to fire a reliable airline as we did and we proved over the year end holidays better than a lot of our competition and as we have for the first three months of this year too.

Great. Thank you.

Thank you. Our next question comes from Andrew <unk> with Bank of America. Your line is open.

Hey, good morning, everyone.

First of all Andrew.

Just to confirm the updated CASM outlook.

Indeed, any new any new labor deals.

Excuse me.

And then just kind of a follow up to that given the labor market in your operational plans.

Where do you think kind of casual eventually shakes out relative to 2019 once all is said and done.

One is yes.

Our CASM guide does not have any new labor deals that we are in negotiations with a lot of our unions at this point in time, but we don't.

But we will put those in our CASM guide when they occur and when we know where those are but that's not in the CASM guide for the rest of the year.

Getting back to 2019 levels depends on growing back in when do we grow back fully from a capacity perspective.

And also as you alluded to when do those labor deals go into effect.

In 2019, we did the mechanic deal when we completed the mechanics deal during 2019.

So that year over year is now into our numbers.

As we grow the airline back.

Getting ourselves back to 2019, CASM levels will take us to get our utilization back to where it was before and get all the aircraft back flying.

Closer to that 2019 level.

Got it thank you and then.

To fully appreciate.

<unk> historical relationship with GDP.

In response to one of the earlier questions I guess, we get a lot of investor questions on inflation and the health of the consumer.

Do you have any historical perspective on consumer demand at these levels of inflation and at what point do you begin to anticipate some sort of consumer slowing if at all in this type of environment.

Yes excellent question.

And there's a lot that we're seeing today, which which is kind of breaking from a lot of historical trends is much like the the question earlier about.

How fuel prices are bleeding into fair.

Now, it's really difficult to tease out what is what is causing what.

Yes.

As an industry there hasn't been a great great history of how inflation is turned into changes in demand but.

We're so far encouraged by.

By what we see right now in two ways.

Demand continues to grow and grow at a meaningful pace.

How long lasting it is remains to be seen but if we've learned anything in the last 20 years to 24 months, we can adjust to just about anything and do it pretty quickly.

Other thing, which is really encouraging and it's frankly spending on our co branded credit cards.

That is one where the.

Throughout the pandemic, even though airline revenue style, our cobranded <unk>.

Revenues never never felt nearly to the same degree and indeed, we're encouraged right now because there are acquisitions are higher than before.

Our spend on the card is keeping pace with inflation indeed on our card with.

With Barclays. Our spend is growing at a greater rate than inflation. So we're encouraged by that and there is clearly a level of demand for our product in future anticipation of travel, which is very promising and we'll just see how it plays out.

Great. Thanks, everyone.

Thank you and Thats all the time, we have for analysts we open the queue for your media.

Again, if you would like to ask a question press. The Star then the one key on your Touchtone telephone.

Okay, and our first question.

It comes from Alison Sider with Wall Street Journal Your line is open.

Oh, hi, thanks, so much.

Curious what you are seeing any response to Covid cases, starting to rise again, you've seen that reflected at all in consumer demand or.

Of your staffing are you seeing higher rates of absences and is that something you are kind of planning around.

Yes, it's Robert answered about this now.

Okay.

I just wanted to on the <unk>.

Matt I guess in a couple of days since that policy has changed have you seen any evidence of any kind of shift in bookings to increase bookings or decrease is there any evidence yet that there will be any changes to demand as a result of the massive anything with it.

Hey, Alex this is vasu.

Still very early to tell.

And it really difficult to draw a very much of a conclusion, but.

So far there is nothing to indicate that it's materially up or materially down.

Okay, so not like when other international travel restrictions get lifted and there's an immediate response has certainly not on that order of magnitude at all.

Got it thanks.

Thank you. Our next question comes from David Koenig with associated.

Associated press your line is open.

One moment.

Hey, David Your line is open.

Yes.

Robert and Derek close aggressiveness on the pilot you gave pilots figure figures for pilot hires.

Net number is 600 enough to offset the 865 retirements and other attrition whats the net number and bottom line are you going to have enough pilots to fly this summer.

Let me in.

Start David C more Curt joining us the.

The answer is yes.

I've said repeatedly we're sizing the airlines for the resources that we have.

From a pilot perspective all of this hiring.

It's meant to match up to a schedule, but also a schedule that we are making sure that we felt had safety factors. So we have tremendous confidence that we can fly in addition to that were.

Our scheduling the airline endpoint tools.

Are different than we had before and my confidence only grows.

As we as we make our way in the year David.

Robert Let me just add to that I mean.

The numbers Eric talked about the 600 that was this year alone. So last year, we had.

Targeted hiring 350, we hired.

Over 500 600 is just for this year and Thats well ahead of where we set our expectations too.

The pilot training right now, we're actually hitting our goals and our throughput that we expect and don't foresee any problems going forward, but making those numbers. So we can hit the goal quite all of our aircraft by the end of this year.

Okay.

Thank you. Our next question comes from Murray.

Schlangen Stene with Bloomberg News your line is open.

Alright, thanks, very much I had a couple of quick questions. One Robert you had said this morning, I think that you're not doing as much regional flying as you would like to be and I wanted to see if you could comment in terms of have you got planes park to be suspended any routes and is that all related to the shortage of pilots on the regional level.

Yes.

Thanks, Thanks, Brian It's Eric.

Rick noted, we're not find the full regional schedule, we'd like to.

We're going to get those aircraft back up over time, but it's related to our pilots that are being hired from the regional airlines for an increased level of attrition and the time it takes to actually backfill those pilot so while the regional carriers are able to source pilots at this time, we just can't get them up to speed and it positions.

Fast fashion.

SaaS over the long term, we do need to work on original pilots part supply.

And.

Not in front of that with our connect program.

Trying to incentive Fi.

People to come into the business and I know I'm confident that over the long term prospects of quality of life and compensation or something that can attract people to the business. So it may take some time to work out but as Derek said over the course of the next year or so we anticipate being able to get that.

Not only mainline back up to full utilization by the end of the year the regionals.

Sometime thereafter.

How much how much down as you're flying your regional flying.

Departures in the second quarter are probably down about 20% versus 2019 or the airline mainline is down about 5%, so maybe 15% different than.

More than what the mainline is.

Okay.

Hey, Barry I want to note on that we're not just look while we have aircrafts that were not flying.

Eric I would you like to rack chasing that we're simply.

Size of the airlines for the past and so our confidence in this summer is rooted in we've already taken a look we've already made sure that we have appropriate confidence level and what we can do so.

No need for any type of concern over the summer.

Okay and then the second question I had if we could go back to the NDA for a minute if the government tells you.

Jetblue it can acquire spirit, but it wont big changes in the NDA.

What's the prospect for American at that time is that something that you could have to walk away from with Jetblue.

Hey, Barry Thanks.

Speculation on speculation on speculation on speculation by Sue was.

I think well really articulate his comments about how.

Pro consumer and pro competitive the NDA is.

I mean, we could go on and on about that.

If you assume that that.

That jetblue actually figures out a way to acquire spirit.

And we get to that point.

And Jeff Who's Spirit combination doesn't change.

Impact to consumers of EMEA, it's not going to change one bit.

The value that we create for consumers in New York and Boston So.

I think it's there's a lot of runway to go over to the bridge, obviously with respect to.

Frontier and spirit and Jetblue.

That kind of speculation is probably premature and we feel really I think.

Lighted about the prospects within our lawsuit with the Doj.

And.

We're looking forward to continue with EMEA.

Just.

In perpetuity.

Yes, Steve.

Are there any discussions underway on settling with the Doj over the EMEA or do you expect that that's going to go to trial in September .

I expect we will go to trial in September .

Thank you.

Okay.

Thank you. Our next question comes from Dawn Gilbertson with USA today. Your line is open.

Hi, Good morning, two questions on masks do you foresee given the Doj appeal do you foresee any scenario in which the mass mandate on claim is reinstated as swiftly as it was removed and the second thing is how is American handling.

Traveler.

Quest for refund given.

How quickly the maths mandate was lifted or are you.

Someone doesn't want to fly their immuno compromise are you just giving refunds what's your policy. Thank you.

Thanks go ahead take reverse yes, I can take the first part of that question. This is Nate obviously, we're aware that the Doj is appealing the Florida ruling although they have not asked for a stay.

The District Court judge.

Beyond that as I mentioned earlier, we've learned throughout the pandemic not to speculate on what the government may or may not do.

I would I would emphasize though that in keeping with our commitment to creating a welcoming environment for everyone, who traveled with us customers and team members.

You may of course choose to continue to wear masks at their own discretion and we expect that many will continue to do so.

But especially considering the steps that we've taken.

For the last couple of years regarding cleanliness.

And airflow, we don't feel that.

Reinstating of the mandate is necessary at this time.

Yes.

John Thanks, Thanks for the question overall just.

Just write off we haven't we haven't had much.

Interaction with customers that have said they want to do anything different.

Like we do in all of these events, we are taking a look at our policies.

We are certainly.

With customers open.

Asking them to get in touch with our reservations office and we will make sure that we accommodate them in an appropriate fashion.

Thank you.

Thank you. Our next question comes from Leslie Joseph with CNBC. Your line is open.

Hi, good morning, everyone.

Wondering how.

How are you guys are thinking about Iraq, starting this summer and if you have enough capacity and clear capacity.

To handle rebuild things and how you are addressing that and just kind of how the overall labor landscape looks not pilots but.

Customer service ground.

Another place.

Yes, I appreciate the question certainly one that we spent a lot of time thinking through and working on what I would tell you we've actually implemented a number of tools.

Knowing the loads are going to be high as we go into the summer welcome back.

A lot more customers.

Those tools actually you've been utilizing.

And thats good.

Good promise here in terms of.

Ensuring that we're not canceling and working our airline through a delay as this weather does develop and we work our way through it and Thats really the key for US is making sure that we're canceling the SKU twice as possible while the traffic to continue to move through but we're again, we're very focused on that we know that the weather is going to be out there. We're certainly not taking anything for granted.

Hey, David I'll, just add with look we have dropped out of the new gym team members at so that's a lot.

More than 600 pilots that we have nationally.

That 12000, net new that we hired I think almost 20000 people, but those people.

The team members are working and reservations there at our airports.

Throughout the system. So we picked up our capacity to be able to handle and then Mike do you want to say about any anything more about other technology that we're using yes, I think David hit on it you know the goal is to prevent the cancellations in the first place. So that we don't have to re accommodate.

Given the high levels and we expect this summer and we've got some pretty cool new technology that really focuses on how we manage to.

To that end.

In addition, really helping with.

Moving our technology around crew recovery and some optimization technology that will really help reduce our cash in times, our turn times in airports and all of those things together are going to be in place in order to ensure that we have a better approach to irregular operations.

Okay. Thank you and then my second question really quick does it still makes sense for American Airlines to have an award chart, just given where demand is and kind of how hard against decline seats with awards. These days with my all these days.

Yes. Thanks for the question actually what's been really interesting to us even though we are seeing.

On improving air environment is actually our our redemptions are up both in margin as we go forward.

As far as the award chart goes that is certainly something which are a top tier loyalty customers.

Much value.

And they see a lot of opportunities for it to go and secure.

Traffic, which many of them have been borrowing anticipating through the pandemic.

As it stands today, we're still really encouraged by having an award chart and encourage that frankly, even though we are in this rising environment, we're creating the right level of availability for up for redemption.

Thank you.

Thank you. Our next question comes from no Raj Touchy with New York Times. Your line is open.

Sure.

So I think most of my questions were answered already I guess, one question I had on masks.

Do you anticipate it affecting hiring at all maybe potential.

People, you might hire might be nervous about.

Some of the shifts the drop of the requirement.

Hey, Noah.

Now and then and just so everybody is aware.

If our customers and team members want to wear masks, we encourage them.

Welcome that and we see that as a practice thats going to continue forward.

Thank you.

Okay.

Thank you. Our next question comes from Catherine quick Nick with CBS News Your line is open.

Hey, guys. Thanks, so much for joining us today.

This is the last time that we have to talk about unruly passengers, but do you have a count on how many that American is bad and what are you going to deal with those.

Our band are you going to do what your competitors are doing and doing case by case basis.

This is Nate we don't give account for how many passengers we banned specifically for mask noncompliance.

In most cases.

Passengers, who were added to our internal refused lift as a result of mask noncompliance.

Will be permitted to resume travel at some point in time.

In cases, where an incident may have started with face mask noncompliance and escalated into anything involving.

Something more serious or certainly a salt and assault on one of our team members our customers.

Passengers are going to remain on our permanent internal refused list and we will never be allowed to travel with US again I would just add in this vein, we're very grateful to our partners in the federal government, who have prioritized the safety of our crews both our grand crews on our crews in the year during this.

Period end.

We are really appreciative of the announcement yesterday from the FAA administrator, Billy Nolan, who said that to zero tolerance policy against unruly passengers is here to stay.

We anticipate.

Unfortunately that this cases will continue although as Robert noted earlier today hopefully with.

Fewer leases.

Okay.

Thank you.

Thank you and that's all the time, we have for Q&A I'd like to turn the call back to Robert Isom for closing remarks.

Thank you I'll just close with this like we've worked really hard as a company to get this point to be able to take advantage of an environment, where demand is improving mineralized structured in a really great fashion I want to thank our team members for working so hard to get us through the <unk>.

Pandemic and to be in a position to actually realize.

Anything that we want to make.

American.

And in terms of the transition as well. This is my first earnings call I want to thank our board of directors, especially Doug Parker for making things really work.

Work smoothly and put us in a position to be talking about things that are very very.

Favorable and so far our team you've heard from a lot of a lot of players here today I couldn't be more proud and confident in the team that we have from a senior leadership perspective, youre going to hear more from them as time goes on and our job right now.

Just to make the second quarter forecast a reality that is what we're focused on so we're going to get out there and make it happen and I want to thank everybody for the time today.

Thank you. This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

Q1 2022 American Airlines Group Inc Earnings Call

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