Q3 2023 American Airlines Group Inc Earnings Call

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Thank you for standing by and welcome to American Airlines group's third quarter 2023 earnings call.

Speaker 1: Thank you for standing by and welcome to American Airlines Group's third quarter 2023 earnings call.

Speaker 1: At this time, all participants are now listening to only mode. After the speaker presentation, there will be a question and answer session.

At this time all participants are in a listen only mode.

After the speaker presentation, there will be a question and answer session to.

Speaker 1: to ask a question during the session, you will need to press star 1 1 on your telephone.

To ask a question during the session you will need to press star one one on your telephone to remove yourself from the queue Press Star one one again.

Speaker 1: To remove yourself from the cube, press star 1 1 again.

Speaker 1: I would now like to hand the call over to Vice President of Investor Relations and Corporate Development, Scott Long. Go ahead.

I would now like to hand, the call over to Vice President of Investor Relations and corporate development Scott Long. Please go ahead.

Speaker 1: Thank you, Latif. Good morning, everyone, and welcome to the American Airlines Group third quarter 2023 earnings conference call. On the call with prepared remarks, we have our CEO Robert Isom and our CFO , Devin May. A number of our other senior executives are also here in the room this morning for the Q&A session.

Thank you Latif and good morning, everyone and welcome to the American Airlines Group third quarter 2023 earnings conference call on.

On the call with prepared remarks, we have our CEO , Robert Isom, and our CFO Devin Mei.

Number of our other senior executives are also here in the room. This morning for the Q&A session.

Robert will start the call with an overview of our performance and Devin will follow with details on the third quarter and will outline our operating plans and outlook going forward.

Speaker 2: Robert will start the call with an overview of our performance, and Devin will follow with details on the third quarter and will outline our operating plans and outlook going forward.

Speaker 2: After our prepared remarks, we'll open the call for analyst questions, followed by questions from the media. To get in as many questions as possible, please limit yourself to one question and one follow-up.

After our prepared remarks, we will open the call for analyst questions followed by questions from the media.

To get in as many questions as possible. Please limit yourself to one question and one follow up.

Speaker 2: Before we begin today, we must state that today's call contains forward-looking statements, including statements concerning future revenues, costs, forecasts of capacity, and fleet planning.

Before we begin today, we must state that today's call contains forward looking statements, including statements concerning future revenues costs forecast of capacity and fleet plans.

These statements represent our predictions and expectations of future events, but numerous risks and uncertainties could cause actual results to differ from those projected.

Speaker 2: These statements represent our predictions and expectations of future events, but numerous risks and uncertainties could cause actual results to differ from those projected.

Speaker 2: 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 10Q for the quarter ended September 30, 2023.

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 September 32023.

In addition, we'll be discussing certain 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.

Speaker 2: In addition, we'll be discussing certain 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.

Speaker 2: A webcast of this call will also be archived on our website. The information we are giving you on the call this morning is as of today's date and we undertake no obligation to update the information subsequently.

A webcast of this call will also be archived on our website and the information we're giving you on the call. This morning is as of today's date and we undertake no obligation to update the information subsequently.

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

Speaker 2: Thank you for your interest and for joining us this morning. And with that, I'll turn the call over to our CEO , Robert Ice.

Thanks, Scott and good morning, everyone. Today American reported an adjusted pretax profit of approximately $362 million for the third quarter and earnings result that was above the high end of our latest EPS guidance range.

Speaker 2: Thanks, Scott, and good morning, everyone. Today, American reported an adjusted pre-tax profit of approximately $362 million for the third quarter. And earnings result that was above the high end of our latest EPS guidance range.

The American Airlines team continues to produce strong results and as we look ahead to the rest of the year, we continue to prioritize reliability profitability accountability and strengthening the balance sheet.

Speaker 3: The American Airlines team continues to produce strong results. And as we look ahead to the rest of the year, we continue to prioritize reliability, profitability, accountability, and strengthening the balance.

Speaker 3: We're also focused on taking care of the team. We are very pleased to finalize a new contract with the Allied Pilots Association in August .

We're also focused on taking care of the team. We are very pleased to have finalized a new contract with the Allied pilots Association in August the <unk>.

Speaker 3: The agreement delivers significant compensation and quality of life improvements to our pilots while allowing us to expand our training capacity to support underutilized aircraft and our future fly.

<unk> deliver significant compensation and quality of life improvements to our pilot, while allowing us to expand our training capacity to support underutilized aircrafts and our future flying.

Speaker 3: We're also working toward new agreements for our flight attendants and agents.

We're also working toward new agreements for our flight attendants and agents.

Speaker 3: We're running a strong and reliable operation, involving our commercial offerings, taking care of our team and customers, producing free cash flow, and strengthening our balance sheet. All of this speaks to our steadfast focus on controlling what we can control. And we are proud to say that we are delivering on our commitments.

We're running a strong and reliable operation.

Following our commercial offerings.

<unk> care of our team and customers producing free cash flow and strengthening our balance sheet. All of this speaks to our steadfast focus on controlling what we can control and we are proud to say that we are delivering on our commitments.

Now before discussing our results in more detail on behalf of all of US at American I want to say, how shocked and saddened we are by the horrific attacks in Israel.

Speaker 3: Now, before discussing our results in more detail, on behalf of all of us at American, I want to say how shocked and saddened we are by the horrific attacks in Israel, and we join the international community in condemning these acts of hate and violence. We are devastated by-

And we joined the international community in condemning these acts of hate and violence.

And we are devastated by the incredible loss of innocent life.

Operator: Thank you for standing by and welcome to American Airlines Group third quarter, 2023 earnings call. At this time, all participants aren't able to listen to only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. To remove yourself from the queue, press star one one again.

We're making every effort to care for our team members, who are impacted by this tragedy and to keep our team members safe. While also working with the U S government to help find safe travel options for customers trying to depart the region.

Speaker 3: We're making every effort to care for our team members who are impacted by this tragedy and to keep our team members safe while also working with the U.S. government to help find safe travel options for customers trying to depart the region.

The safety and security of our team members customers and their families remains our top priority.

Speaker 3: safety and security of our team members, customers and their families remains our top priority.

Turning now to our financial results.

Speaker 3: We produce record third quarter revenues of approximately $13.5 billion driven by a resilient demand environment and record travel rewards program revenue.

Scott Long: I would now like to hand the call over to Vice President of Investor Relations and Corporate Development Scott Long. Please go ahead. Thank you, Ateez. Good morning everyone and welcome to the American Airlines Group third quarter, 2023 earnings conference call. On the call, with prepared remarks, we have our CEO Robert Isom and our CFO, Devon May. A number of our other senior executives are also here in the room this morning for the Q&A session.

We produced record third quarter revenues of approximately $13 5 billion driven by a resilient demand environment and record travel rewards program revenue.

Scott Long: Robert will start the call with an overview of our performance and Devon will follow with details on the third quarter and will outline our operating plans and outlook going forward. After our prepared remarks, we'll open the call for analyst questions, followed by questions from the media. To get in as many questions as possible, please limit yourself to one question and one follow up.

Speaker 3: Domestic demand remains steady, while international demand continues to drive revenue growth, led by the Atlantic, Caribbean, and Central America.

Domestic demand remains steady while international demand continues to drive revenue growth led by the Atlantic Caribbean and Central America.

Speaker 3: During the third quarter, we saw your over-year growth in corporate and government revenue with a return to more traditional seasonality trends.

During the third quarter, we saw year over year growth in corporate and government revenue.

With a return to a more traditional seasonality trends.

We remain encouraged by what we're seeing with demand and revenue from unmanaged business travel.

Speaker 3: We remain encouraged by what we're seeing with demand and revenue from unmanaged business travel.

Importantly, more customers than ever are choosing our travel rewards program by acquiring our co brand credit cards in record numbers and rolling in the advantage program and shopping for our product through our direct channels.

Speaker 3: Importantly, more customers than ever are choosing our Travel Rewards program by acquiring our co-brand credit cards in record numbers, enrolling in the Advantage program, and shopping for our products through our direct channels.

Co brand mileage sales growth continues to outpace airline capacity and GDP growth driving increased levels of loyalty and revenue production from card users.

Speaker 3: Co-brand mileage sales growth continues to outpace airline capacity and GDP growth, driving increased levels of loyalty and revenue production from card users.

Scott Long: Before we begin today, we must state that today's call contains forward looking statements, including statements concerning future revenues, costs, forecasts of capacity and fleet plans. These statements represent our predictions and expectations of future events. The numerous risks and uncertainties could cause actual results 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 September 30, 2023.

In the third quarter, approximately 80% of our bookings came from our own channels and modern retailing technology, which is up approximately 11 points from a year ago.

Speaker 3: approximately 80% of our bookings came from our own channels and modern retailing technology, which is up approximately 11 points from a year ago.

These are the most efficient distribution channels and our ecosystem and we expect to see these trends continue into the fourth quarter and beyond.

Speaker 3: These are the most efficient distribution channels in our ecosystem, and we expect to see these trends continue into the fourth quarter and beyond.

Speaker 3: Looking forward, our Network and Travel Rewards program will continue to be the primary drivers and value for our customers and for Americans.

Looking forward our network in travel rewards program will continue to be the primary drivers of value for our customers and for American.

Scott Long: In addition, we'll be discussing certain non-gap financial measures this morning, which exclude the impact of unusual items. A reconciliation of those numbers to the gap 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. In the information we are giving you on the call this morning is as of today's date, and we undertake no obligations to update the information subsequently.

Speaker 3: and we are focused on operating our business as efficiently as possible.

And we are focused on operating our business as efficiently as possible.

Speaker 3: Our simplified fleet remains the youngest and most efficient among the U.S. network carriers, and we are working to increase the utilization of both our mainline and regional aircraft.

Our simplified fleet remains the youngest and most efficient among the U S network carriers and we are working to increase the utilization of both our mainline and regional aircraft.

In addition, we are identifying opportunities to drive incremental value across the company.

Speaker 3: In addition, we are identifying opportunities to drive incremental value across the company.

Speaker 3: These initiatives and our limited, near and medium-term CAPEX requirements will allow us to continue to generate free cash flow that we can use to reinvest in the business and continue to pay down debt.

These initiatives and our limited near and medium term capex requirements will allow us to continue to generate free cash flow that we can use to reinvest in the business and continue to pay down debt.

Robert Isom: Thank you for your interest and for joining us this morning, and with that, I'll turn the call over to our CEO, Robert Isom. Thanks, Scott, and good morning, everyone. Today, American reported an adjusted pre-tax profit of approximately $362 million for the third quarter, and earnings result that was above the high end of our latest EPS guidance range. The American Airlines team continue to produce strong results, and as we look ahead to the rest of the year, we continue to prioritize reliability, profitability, accountability, and strengthening the balance sheet.

Now turning to our operation.

Speaker 3: The American Airlines team delivered another quarter of a fantastic operational result.

The American Airlines team delivered another quarter of fantastic operational results.

Speaker 3: Our team has produced stellar results from more than a year, including a record setting performance during the peak travel period this summer.

Our team has produced stellar results for more than a year, including a record setting performance during the peak travel period. This summer.

Speaker 3: American operated more than 515,000 flights in the third quarter, and we produced our best ever third quarter completion factor of 98.6%.

American operated more than 515000 flights in the third quarter and we produced our best ever third quarter completion factor of 98, 6%.

Robert Isom: We are also focused on taking care of the team. We are very pleased to finalize the new contract with the Allied Pilots Association in August. The agreement delivers significant compensation and quality of life improvements to our pilots while allowing us to expand our training capacity to support underutilized aircraft and our future flying. We are also working toward new agreements for our flight attendants and agents. We are running a strong and reliable operation involving our commercial offerings, taking care of our team and customers, producing free cash flow, and strengthening our balance sheet. All of this speaks to our steadfast focus on controlling what we can control, and we are proud to say that we are delivering on our commitments.

Speaker 3: American ended the quarter with the best completion factor of the U.S. network carriers while maintaining our first place standing in on-time departures through the first nine months of the year.

American ended the quarter with the best completion factor of the U S network carriers, while maintaining our first place standing in on time departures through the first nine months of the year.

Speaker 3: No network airline is operated more reliably than American over the past 15 months. Our operational performance is better than ever, and it's because of our steadfast focus on reliability and strong execution in an increasingly complex environment.

No network airline is operating more reliably than American over the past 15 months, our operational performance is better than ever and it's because of our steadfast focus on reliability and strong execution and an increasingly complex environment.

Speaker 3: Our commercial and operations teams build a fantastic plan each month. We execute on it and we recover quickly during irregular operation.

Commercial and operations teams build a fantastic plan each month that we execute on it and we recover quickly during irregular operations.

We're building on our momentum and we are committed to delivering a reliable operation for our customers as we approach the holiday season.

Speaker 3: We're building on our momentum and we are committed to delivering a reliable operation for our customers as we approach the holiday season. We're building on our momentum and we are committed to delivering a reliable operation for our customers as we approach the holiday season.

Speaker 3: And now I'll turn it over to Devon to share more about our third quarter financial results and the outlook for the fourth quarter.

Robert Isom: Now, before discussing our results in more detail, on behalf of all of us at American, I want to say how shocked and saddened we are by the horrific attacks in Israel, and we join the international community in condemning these acts of hate and violence. And we are devastated by the incredible loss of innocent life. We're making every effort to care for our team members who are impacted by this tragedy, and to keep our team members safe while also working with the U.S, government to help find safe travel options for customers trying to depart the region. The safety and security of our team members, customers and their families remains our top priority.

And now I'll turn it over to Devin to share more about our third quarter financial results and the outlook for the fourth quarter.

Thank you Robert I would also like to thank the team for delivering another outstanding quarter.

Speaker 2: Thank you Robert. I would also like to thank the team for delivering another outstanding course.

During the third quarter, the average price of jet fuel increased sharply while the rapid increase in fuel prices resulted in lower earnings in the quarter. We continue to stay focused on our priorities as Robert mentioned in the third quarter, we delivered a fantastic operation for our customers, we finalized a new contract for our pilots and we took further action to strengthen our balance.

Speaker 2: During the third quarter, the average price of jet fuel increased sharply. While the rapid increase in fuel prices resulted in lower earnings in the quarter, we continue to stay focused on our priorities. As Robert mentioned, in the third quarter, we delivered a fantastic operation for our customers. We finalized a new contract for our pilots, and we took further action to strengthen our balance.

Pete.

Speaker 2: Excluding net special items, reported third quarter net income of $263 million, or adjusted earnings per diluted share of $0.38. This is above the high end of our most recent guidance update, driven by slightly higher capacity and better ex-fuel unit cost performance in the quarter.

Excluding net special items, we reported third quarter net income of $263 million or adjusted earnings per diluted share of 38.

Robert Isom: Turning now to our financial results. We produce record third quarter revenues of approximately $13.5 billion driven by a resilient demand environment and record travel rewards program revenue. Domestic demand remains steady while international demand continues to drive revenue growth led by the Atlantic, Caribbean, and Central America. During the third quarter, we saw a year over year growth in corporate and government revenue with a return to more traditional seasonality trends. We remain encouraged by what we're seeing with demand and revenue from unmanaged business travel.

This is above the high end of our most recent guidance update driven by slightly higher capacity and better ex fuel unit cost performance in the quarter.

American produced record third quarter revenue of approximately $13 5 billion.

Speaker 2: American produced record third quarter revenue of approximately $13.5 billion. This revenue performance led to adjusted operating income of nearly $730 million dollars, resulting in a third quarter adjusted operating margin of 5.4%.

This revenue performance led to adjusted operating income of nearly $730 million, resulting in a third quarter adjusted operating margin of five 4%.

Our strong operational performance in the third quarter, resulting in capacity there was six 9% higher year over year at the high end of our guidance range revenue for the quarter was in line with what we had shared in July and unit revenue was down six 3% versus a historically strong 2022.

Speaker 2: Our strong operation performance in the third quarter resulted in capacity that was 6.9% higher year over year at the high end of our guidance range. Revenue for the quarter was in line with what we had shared in July . In Unilevenue was down 6.3% versus a historically strong 2022.

Robert Isom: Importantly, more customers than ever are choosing our travel rewards program by acquiring our co-brand credit cards and record numbers and rolling in the advanced program and shopping for our product through our direct channels. Co-brand mileage sales growth continues to outpace airline capacity and GDP growth, driving increased levels of loyalty and revenue production from card users. In the third quarter, approximately 80% of our bookings came from our own channels and modern retailing technology, which is up approximately 11 points from a year ago.

Speaker 2: Unicost, excluding net special items and fuel, was up 3.3% year every year, nearly a point better than the low end of our prior guidance range. This outcome was driven by higher capacity and some expenses that were pushed to the fourth quarter.

Unit costs, excluding net special items and fuel was up three 3% year over year, nearly a point better than the low end of our prior guidance range.

This outcome was driven by higher capacity and some expenses that were pushed to the fourth quarter.

Our significant fleet investments over the past decade allows for relatively modest aircraft Capex. This decade year to date, we have taken delivery of 17 mainline aircraft and we expect four more aircraft to be delivered by year end two narrow body aircraft deliveries have been delayed into 2024. So we now anticipate taking delivery of a total of 21.

Speaker 2: Our significant fleet investments over the past decade allows for relatively modest aircraft caps this decade. Year to date, we have taken delivery of 17 mainline aircraft and we expect four more aircraft to be delivered by year end. Two narrow body aircraft deliveries have been delayed into 2024, so we now anticipate taking delivery of a total of 21 aircraft in 2023. All of our 2023 deliveries have been financed.

Robert Isom: These are the most efficient distribution channels in our ecosystem and we expect to see these trends continue into the fourth quarter and beyond. Looking forward, our network and travel rewards program will continue to be the primary drivers and value for our customers and for American. And we are focused on operating our business as efficiently as possible. Our simplified fleet remains the youngest and most efficient among the US network carriers and we are working to increase the utilization of both our mainline and regional aircraft.

Kraft in 2023, all of our 2023 deliveries have been financed.

Given the continued supply chain challenges the Oems are managing we have been in the used market for younger vintage narrow body aircrafts. We have signed an agreement with Alaska Airlines to purchase 10, Airbus <unk> hundred 21, Neo aircraft that we expect to join the fleet in the fourth quarter of this year in the first quarter of 2024.

Speaker 2: Given the continued supply chain challenges the OEMs are managing, we have been in the used market for younger vintage nearby aircraft. We have signed an agreement with Alaska Airlines to purchase 10 Airbus A321 Neo Aircraft that we expect to join the fleet in the fourth quarter of this year and the first quarter of 2024.

Robert Isom: In addition, we are identifying opportunities to drive incremental value across the company. These initiatives and our limited near and medium-term CAPX requirements will allow us to continue to generate free cash flow that we can use to reinvest in the business and continue to pay down debt.

Speaker 2: Our 2023 aircraft capex is now expected to be approximately $1.9 billion, which includes a portion of the Alaska A321 Neo-Delivery.

Our 2023 aircraft Capex is now expected to be approximately $1 9 billion, which includes a portion of the Alaska <unk> hundred 21, Neo deliveries are 2023 non aircraft Capex is still expected to be approximately $800 million.

Speaker 2: Our 2023 non-aircraft cap X is still expected to be approximately $800 million.

Speaker 2: We anticipate our 2024 total cap-ex to be between $3 billion and $3.3 billion. Slightly below our prior guide as we finalize our 2024 delivery schedule.

We anticipate our 2024 and total capex to be between 3 billion and $3 3 billion.

Robert Isom: Now turning to our operation, the American airline team delivered another quarter of fantastic operational results. Our team has produced stellar results for more than a year, including a record-setting performance during the peak travel period this summer. American operated more than 515,000 flights in the third quarter and we produced our best ever third quarter completion factor of 98.6%. American ended the quarter with the best completion factor of the US network carriers while maintaining our first place standing in on-time departures through the first nine months of the year.

Slightly below our prior guide as we finalize our 2024 delivery schedules.

Speaker 2: Looking beyond 2024, we continue to review our medium and long-term fleet needs, and we are currently engaged with Boeing and Airbus for Narabody Aircraft deliveries in the latter half of this decade and beyond.

Looking beyond 2024, we continue to review our medium and long term fleet needs and we are currently engaged with Boeing and Airbus for narrow body aircraft deliveries in the latter half of this decade and beyond.

Due to the young age of our fleet, we do not have any planned aircraft retirements. This decade as a result, we continue to expect aircraft capex to average approximately $3 $5 billion per year through 2030, we.

Speaker 2: Due to the young age of our fleet, we do not have any planned aircraft retirement this decade. As a result, we continue to expect aircraft capex to average approximately $3.5 billion per year through 2030. We are very pleased to have built our fleet in a low interest rate environment, and at a time when the supply chain wasn't as challenged as it is today.

Robert Isom: No network airline is operated more reliably than American over the past 15 months. Our operational performance is better than ever and it's because of our steadfast focus on reliability and strong execution in an increasingly complex environment. Our commercial and operations teams build a fantastic plan each month, we execute on it and we recover quickly during irregular operations. We're building on our momentum and we are committed to delivering a reliable operation for our customers as we approach the holiday season.

We are very pleased to have built our fleet in a low interest rate environment and at a time when the supply chain wasn't as challenged as it is today.

Our relatively low capital requirements, along with our free cash flow production has allowed for significant progress in strengthening the balance sheet.

Speaker 2: A relatively low capital requirements, along with our free cash flow production, is allowed for significant progress in strengthening the balance.

Speaker 2: We've now reduced total debt by approximately 10.9 billion dollars from peak levels in 2021 and we're more than 70% of the way to our goal of reducing total debt by 15 billion dollars by the end of 2025. By year end, we expect to have paid down approximately 11.5 billion dollars and will be 77% of the way to our total debt reduction goal.

We have now reduced total debt by approximately $10 9 billion from peak levels in 2021, and we are more than 70% of the way to our goal of reducing total debt by $15 billion by the end of 2025.

By year end, we expect to have paid down approximately 11 $5 billion.

Devon May: And now I'll turn it over to Devon to share more about our third quarter financial results and the outlook for the fourth quarter. Thank you Robert. I would also like to thank the team for delivering another outstanding quarter. During the third quarter, the average price of jet fuel increased sharply. While the rapid increase in fuel prices resulted in lower earnings in the quarter, we continue to stay focused on our priorities. As Robert mentioned, in the third quarter, we delivered a fantastic operation for our customers.

And we will be 77% of the way to our total debt reduction goal.

Speaker 2: In addition to paying down regular schedule of death, year to date, we have proactively decreased our 2025 maturities by $2.3 billion through both the refinancing of the $1.8 billion South American term loan in the first quarter and more than $550 million of open market repurchases over the past two.

In addition to paying down regularly scheduled debt year to date, we are proactively decreased our 2025 maturities by $2 3 billion.

Through both the refinancing of the $1 $8 billion, South American term loan in the first quarter and more than $550 million of open market repurchases over the past two quarters.

Devon May: We finalized a new contract for our pilots and we took further action to strengthen our balance. Excluding net special items reported third quarter net income of $263 million or adjusted earnings per diluted share of 38 cents. This is above the high end of our most recent guidance update driven by slightly higher capacity and better X fuel unit cost performance in the quarter. American produced record third quarter revenue of approximately $13.5 billion.

Speaker 2: All three credit rating agencies recognize our progress with upgrades in the third quarter. And we expect further ratings improvements in the coming years as we continue to reduce total debt level.

All three credit rating agencies recognized our progress with upgrades in the third quarter and we expect further ratings improvements in the coming years as we continue to reduce total debt levels.

We ended the third quarter with approximately $13 5 billion of total available liquidity and for the full year, we now expect free cash flow to approach $2 billion.

Speaker 2: We ended the third quarter with approximately 13.5 billion dollars of total available liquidity. And for the full year, we now expect free cash flow to approach $2 billion.

Speaker 2: The reduction from our prior free cash flow estimate is due to slightly higher aircraft cap X related to the Alaska A321 and lower earnings largely due to the recent run up in New York.

The reduction from our prior free cash flow estimate is due to slightly higher aircraft capex related to the Alaska <unk> hundred 20 ones and lower earnings largely due to the recent run up in fuel expense.

Devon May: This revenue performance led to adjusted operating income of nearly $730 million resulting in a third quarter adjusted operating margin of 5.4%. Our strong operation performance in the third quarter resulted in capacity that was 6.9% higher year over year at the high end of our guidance range. Revenue for the quarter was in line with what we had shared in July in unit revenue was down 6.3% versus a historically strong 2022. Unit cost, excluding net special items in fuel, was up 3.3% year over year nearly a point better than the low end of our prior guidance range.

Speaker 2: Now onto the outlook for the fourth quarter. Post-Laborate bookings have been in line with expectations. We have seen steady improvement in business travel with encouraging signs from both managed and unmanaged corporate cuts.

Now onto the outlook for the fourth quarter.

Post labor day bookings have been in line with expectations, we have seen steady improvement in business travel with encouraging signs from both managed and unmanaged corporate customers.

Speaker 2: strong international demand and historically high premium revenue both domestically and international.

Strong international demand and historically high premium revenue, both domestically and internationally.

Speaker 2: Consistent with recent trends, we expect steady demand during the upcoming peak holiday travel season. However, the strong unit revenue environment in 2022 continues to be a difficult comparison. As a result, we expect fourth quarter-trasm to be down five and a half to seven and a half percent, on four and a half to six and a half percent more capacity year-over-year.

Insistent with recent trends, we expect steady demand during the upcoming peak holiday travel season.

However, the strong unit revenue environment in 2022 continues to be a difficult comparison as a result, we expect fourth quarter travelers to be down five five to seven 5% on four five to six 5% more capacity year over year.

Devon May: This outcome was driven by higher capacity and some expenses that were pushed to the fourth quarter. Our significant fleet investments over the past decade allows for relatively modest aircraft cap X this decade. Year to date, we have taken delivery of 17 mainline aircraft and we expect four more aircraft to be delivered by year end. Two narrow body aircraft deliveries have been delayed into 2024, so we now anticipate taking delivery of a total of 21 aircraft in 2023.

We expect fourth quarter, CASM ex to be up 5% to 7% year over year.

Speaker 2: We expect fourth quarter, CASIMax, to be up 5% to 7% year-over-year. This step up in sequential year-over-year CASIMax is driven by the shift of some expenses from the third quarter to the fourth quarter and less year-over-year capacity growth.

This step up in sequential year over year CASM ex is driven by the shift of some expenses from the third quarter to the fourth quarter and less year over year capacity growth.

Our full year CASM ex guide remains unchanged up approximately 3% versus 2022.

Speaker 2: Our full year Catham X Guide remains unchanged, up approximately 3% versus 2022.

Devon May: All of our 2023 deliveries have been financed. Given the continued supply chain challenges the OEMs are managing, we have been in the used market for younger vintage narrow body aircraft. We have signed an agreement with Alaska Airlines to purchase 10 Airbus A321 Neo Aircraft that we expect to join fleet in the fourth quarter of this year and the first quarter of 2024. Our 2023 aircraft cap X is now expected to be approximately $1.9 billion, which includes a portion of the Alaska A321 Neo deliveries.

Speaker 2: Our current forecast for the fourth quarter assumes a fuel price of between $3.1 and $3.11 per gallon. Based on our current demand assumptions and fuel price forecast, we expect to produce an adjusted operating margin of between 2 and 4% in the fourth quarter.

Our current forecast for the fourth quarter assumes a fuel price of between $3 <unk> and $3 11 per gallon based on our current demand assumptions and fuel price forecast, we expect to produce an adjusted operating margin of between two and 4% in the fourth quarter.

We continue to expect our full year capacity to be up approximately six 5% versus 2022.

Speaker 2: We continue to expect our full year capacity to be up approximately six and a half percent versus 2022. Our full year forecast for tourism is to be up approximately one percent year every year. And as I just mentioned, we expect our full year Kazimek to be up approximately three percent versus 2022.

Our full year forecast for <unk> is to be up approximately 1% year over year and as I. Just mentioned, we expect our full year CASM ex to be up approximately 3% versus 2022.

Devon May: Our 2023 non-aircraft cap X is still expected to be approximately $800 million. We anticipate our 2024 total cap X to be between $3 billion and $3.3 billion slightly below our prior guide as we finalize our 2024 delivery schedule. Eagles. Looking beyond 2024, we continue to review our medium and long-term fleet needs, and we are currently engaged with Boeing and Airbus for a narrow-body aircraft deliveries in the latter half of this decade and beyond.

Speaker 2: Our capacity, tourism, and CasmX expectations for the year are all consistent with the guidance we provided in January of this year. This result speaks to the planning, focus, and determination of our team.

Our capacity <unk> and CASM X expectations for the year are all consistent with the guidance. We provided in January of this year. This.

This result speaks to the planning focus and determination of our team.

Based on our demand and fuel cost assumptions, we now expect to produce at full year adjusted operating margin of approximately 7% and adjusted EPS of between $2 25, and $2 50.

Speaker 2: Based on our demand and fuel cost assumptions, we now expect to produce a full year adjusted operating margin of approximately 7%. And adjusted EPS of between $2.25 and $2.50.

Devon May: Due to the young age of our fleet, we do not have any planned aircraft retirement this decade. As a result, we continue to expect aircraft capex to average approximately $3.5 billion per year through 2030. We are very pleased to have built our fleet in a low interest rate environment, and at a time when the supply chain wasn't as challenged as it is today. A relatively low capital requirements, along with our free cash flow production, has allowed for significant progress in strengthening the balance sheet.

Looking ahead to 2024, we continue to expect our capacity to be up mid single digits year over year, largely driven by better overall asset utilization.

Speaker 2: Looking ahead to 2024, we continue to expect our capacity to be up mid-single digits year-over-year, largely driven by better overall asset utilize.

Increases in capacity will be oriented to our strengths with our global partnerships complement our own flying.

Speaker 2: Increases in capacity will be oriented to our strengths with our global partnerships complementing our own fly.

Speaker 2: In 2024, we will have the assets and resources to finally grow beyond our 2019 capacity levels. But we will be nimble and adjust capacity based on the fuel and demand environment we are operating.

In 2024, we will have the assets and resources to finally grow beyond our 2019 capacity levels, but we will be nimble and adjust capacity based on the fuel and demand environment. We are operating in.

Speaker 2: We are pleased with the progress the American Airlines team has made in 2023 and we remain focused on delivering results and pursue inefficiencies to unlock additional value in 2024 and beyond. Now I'll turn it back to Robert for closing remarks.

We are pleased with the progress the American Airlines team has made in 2023, and we remain focused on delivering results and pursuing efficiencies to unlock additional value in 2024 and beyond now I'll turn it back to Robert for closing remarks.

Devon May: We have now reduced total debt by approximately $10.9 billion from peak levels in 2021, and we are more than 70% of the way to our goal of reducing total debt by $15 billion by the end of 2025. By year end, we expect to have paid down approximately $11.5 billion, and will be 77% of the way to our total debt reduction goal. In addition to paying down regularly scheduled debt, year to date, we have proactively decreased our 2025 maturity by $2.3 billion through both the refinancing of the $1.8 billion South American term loan in the first quarter, and more than $550 million of open market repurchases over the past two quarters.

Thanks Devin.

Speaker 3: We're incredibly proud of everything the American Airlines team has accomplished over the past 18 months. We told you we were going to focus on reliability, profitability, and strengthening our balance sheet, and we've done just that.

We're incredibly proud of everything the American Airlines team has accomplished over the past 18 months with.

We told you we are going to focus on reliability profitability and strengthening our balance sheet and we've done just that.

Speaker 3: American had a great summer and has run the most reliable operation of the U.S. Network carriers over the past 15 months.

American had a great summer and has run the most reliable operation of the U S network carriers over the past 15 months.

We're consistently profitable and we've materially improved our balance sheet by reducing total debt by nearly $11 billion since 2021.

Speaker 3: We're consistently profitable and we've materially improved our balance sheet by reducing total debt by nearly $11 billion since 2021.

Devon May: All three credit rating agencies recognize our progress with upgrades in the third quarter, and we expect further ratings improvements in the coming years as we continue to reduce total debt levels. We ended the third quarter with approximately $13.5 billion of total available liquidity, and for the full year, we now expect free cash flow to approach $2 billion. The reduction from our prior free cash flow estimate is due to slightly higher aircraft caps related to the Alaska A321, and lower earnings largely due to the recent run-up in fuel expense.

We will maintain that focus as we move through the fourth quarter and beyond no matter the macroeconomic conditions, we face or the variability of the operating environment.

Speaker 3: We'll maintain that focus as we move through the fourth quarter and beyond. No matter the macro-economic conditions we face or the variability of the operating environment, our team is intent on controlling what we can control over the short term and setting our company up for success over the long run. I'm incredibly-

Our team is intent on controlling what we can control over the short term and setting our company up for success over the long run.

I am incredibly excited by what the future holds for American.

Looking ahead, we will be much more efficient as an airline.

Speaker 3: Looking ahead, we will be much more efficient as an airline.

As an example, even today, we could be flying 5% more with the aircraft we already have in our fleet.

Speaker 3: As an example, even today, we could be flying 5% more with the aircraft we already have in our fleet.

We're eager to restore our regional service to underserved smaller markets that are still feeling the effects of the pandemic.

Speaker 3: We're eager to restore regional service to the underserved smaller markets that are still feeling the effects of the pandemic.

Devon May: Now onto the outlook for the fourth quarter. Post-Laborate bookings have been in line with expectations. We have seen steady improvement in business travel with encouraging signs from both managed and unmanaged corporate customers, strong international demand, and historically high premium revenue, both domestically and internationally. In system with recent trends, we expect steady demand during the upcoming peak holiday travel season. However, the strong unit revenue environment in 2022 continues to be a difficult comparison.

We're building back and expanding our network in an efficient manner that will lead to stronger revenue production.

Speaker 3: We're building back and expanding our network in an efficient manner that will lead to stronger revenue production.

Speaker 3: Our Travel Rewards Program Advantage has already undergone significant change that is helping us grow high margin revenue at a greater rate than GDP. And we anticipate that to continue as we work to make our co-brand credit cards even more valuable to consumers and our partners.

Our travel rewards program advantage has already undergone significant change that is helping us grow high margin revenue at a greater rate than GDP and we anticipate that to continue as we work to make our co brand credit cards, even more valuable to consumers and our partners.

Speaker 3: On top of all that, we continue to innovate in creating a leading, retailing experience, ensuring that anything we offer our customers can be shopped, purchased, and service digitally.

On top of all that we continue to innovate and creating a leading retailing experience ensuring that anything we offer our customers can be shocked.

Devon May: As a result, we expect fourth quarter trasm to be down five and a half to seven and a half percent on four and a half to six and a half percent more capacity year over year. We expect fourth quarter, Kazamax to be up five percent to seven percent year over year. This step up in sequential year over year, Kazamax is driven by the shift of some expenses from the third quarter to the fourth quarter and less year over year capacity growth.

Purchased and service digitally.

It all bodes well for American our team members customers the communities, we serve and especially our investors as we enter 2024 and look to 2025 and beyond.

Speaker 3: It all bodes well for American, our team members, customers, the communities we serve, and especially our investors, as we enter 2024 and look to 2025 and BI.

Speaker 3: And with that operator, please open the line for analyst questions.

And with that operator, please open the line for analyst questions.

Devon May: Our full year Kazamax guide remains unchanged, up approximately three percent versus 2022. Our current forecast for the fourth quarter assumes a fuel price of between $3.01 and $3.11 per gallon. Based on our current demand assumptions and fuel price forecast, we expect to produce an adjusted operating margin of between two and four percent in the fourth quarter. We continue to expect our full-year capacity to be up approximately 6.5% versus 2022. Our full-year forecast for trasm is to be up approximately 1% year every year, and as I just mentioned, we expect our full-year chasm X to be up approximately 3% versus 2022.

As a reminder to ask a question you will need to press star one one on your telephone to remove yourself from the queue. Please press star one one again please.

Speaker 1: As a reminder to ask a question, you will need to press star 11 on your telephone. To remove yourself from the queue, please press star 11 again. Please stand by while we compile the Q&A roster.

Please standby, while we compile the Q&A roster.

Our first question.

Speaker 1: comes from the line of Helene Becker, up Kedi Cohen.

It comes from the line of Helane Becker of Cowen.

Speaker 4: Thanks very much operator. I'm not used to getting the first question, thanks guys. So here's my question. As you think about your heads.

Thanks, very much operator, I'm not used to getting the first question. Thanks guys.

Here's my question as you think about.

Your ear.

Hi.

You've talked about <unk> talked in the past about New York and L. A not really being profitable.

Speaker 4: You've talked Vasu's talked in the past about New York and LA not really being profitable. You know Philadelphia seems to me to be a good connecting hub.

Devon May: Our capacity, trasm, and chasm X expectations for the year are all consistent with the guidance we provided in January of this year. This result speaks to the planning, focus, and determination of our team. Based on our demand and fuel cost assumptions, we now expect to produce a full-year adjusted operating margin of approximately 7% and adjusted EPS of between $2.25 and $2.50. Looking ahead to 2024, we continue to expect our capacity to be up mid-single digits year-to-year, largely driven by better overall asset utilization.

No Philadelphia it seems to me to be a good connecting hub it looks like you're putting a lot of international capacity in the market.

Speaker 4: It looks like you're putting a lot of international capacity in the market.

Speaker 4: So it brings up a couple of points. One is, are there enough captains to handle what you're thinking of doing around the message?

So it brings up a couple of points. One is are there enough captains to handle what youre thinking of doing around the network.

Speaker 4: Charlottes and Dallas have gotten a lot of attention. What about some of your other markets? Like Philly, Chicago, and maybe your coastal location?

Charlotte and Dallas have gotten a lot of attention what about some of your other markets like Philly Chicago and maybe your coastal locations.

Hey, Helane, let me let me start.

Speaker 3: Hey, Helene, let me start and Fasou can talk to you more about exactly where we're focusing our network. And if we need some real expertise, David Seymour can step in.

Devon May: Increases in capacity will be oriented to our strengths with our global partnerships complement in our own flying. In 2024, we will have the assets and resources to finally grow beyond our 2019 capacity levels, but we will be nimble and adjust capacity based on the fuel and demand environment we are operating in. We are pleased with the progress the American Airlines team has made in 2023, and we remain focused on delivering results and pursuing efficiencies to unlock additional value in 2024 and beyond.

So you can talk to you more about exactly where we're focusing our network if we need some real expertise David see Morgan can step in.

Speaker 3: I'll start with this. We're really pleased that we were able to enter into a new agreement with the APA and our pilots back in August . It's a deal that while it certainly comes with increased compensation benefits and expense, but it also is something that puts it in a position where we can train our pilots in a much more efficient manner and more quickly. So one of the issues.

I'll start with US we're really pleased that we were able to enter into a new agreement with the API and our pilots back in August .

It's a deal that whilst it certainly comes with increased.

Compensation and benefits and expense, but it also.

Is something that puts us in a position where we can train our pilots in a much more efficient manner and more quickly.

Robert Isom: Now, I'll turn it back to Robert for closing remarks. Thanks, Devon. We're incredibly proud of everything the American Airlines team has accomplished over the past 18 months. We told you we were going to focus on reliability, profitability, instructing our balance sheet, and we've done just that. American had a great summer and has run the most reliable operation of the U.S, network carriers over the past 15 months. We're consistently profitable, and we've maturedly improved our balance sheet by reducing total debt by nearly $11 billion since 2021.

So one of the issues with getting our fleet fully back restored has been just our ability to move pilots to the schoolhouse.

Speaker 3: getting our fleet fully back restored has been just our ability to move pilots through the schoolhouse. But right now with some of the changes we've made in the contract, we have much more flexibility to actually grow the airline as we need. And so I don't see any issues with being able to support our fleet as we get into 2024 from a mainline perspective.

But right now with some of the changes we've made in the contract we have much more flexibility to actually grow the airline as we need and so I don't see any issues with being able to support our fleet as we get into 2024.

A mainline perspective on the regional side of the World that is something that we're still working through we've seen.

Speaker 3: On the regional side of the world, that is something that we're still working through. We've seen a lot of nice progress, but we're not fully restored. As we look into 2024, you'll see us do some things that I think that will...

Robert Isom: We'll maintain that focus as we move through the fourth quarter and beyond. No matter the macroeconomic conditions we face or the variability of the operating environment, our team is intent on controlling what we can control over the short term and setting our company up for success over the long run. I'm incredibly excited by what the future holds for American. Looking ahead, we will be much more efficient as an airline. As an example, even today, we could be flying 5% more with the aircraft we already have in our fleet.

A lot of nice progress, but were not fully restored and as we look into 2024 Youll see us do some things that I think that will.

Speaker 3: Hason the progress to get our aircraft back up. And from a regional perspective, it's really not a pilot supply issue at this point. It's more of an issue of having first officers with the amount of time, the thousand hours that they need to graduate from right seat to left seat.

Hasten the progress to get our aircraft back up and from a regional perspective, it's really not a pilot supply issue at this point, it's more of an issue of having first officers with the amount of time the SaaS in hours that they need to graduate from from right to left seat and I'm.

Speaker 3: And I'm encouraged by what I see on that front. So Vasu, what about how we focus in the network?

Robert Isom: We're eager to restore regional service to the underserved smaller markets that are still feeling the effects of the pandemic. We're building back and expanding our network in an efficient manner that will lead to stronger revenue production. Our travel rewards program advantage has already undergone significant change that is helping us grow high margin revenue at a greater rate than GDP, and we anticipate that to continue as we work to make our co-brand credit cards even more valuable to consumers and our partners. On top of all that, we continue to innovate in creating a leading retailing experience, ensuring that anything we offer our customers can be shopped, purchased, and serviced digitally. It all bodes well for American.

By what I see on that front, so vasu, what about how do we focus in the networks.

Speaker 5: Yeah, look, just building off of Robert's comments in the opening remarks, as we go forward, we think we have a lot of opportunity there. You know, our hubs and really all of our hubs, but especially our four of our largest and potentially highest capacity hubs in Phoenix, Dallas, Charlotte, and Miami, are located near what are starting to turn out to be the most economically resilient markets there are. And we still have opportunity to go bring back more fleet and we have infrastructure in those places to grow further. And as we see the future unfolding to your point, Halein, we actually see a lot of opportunities to go and grow the performance of the coastal markets and Philadelphia and Chicago specifically in a way that's really complimentary.

Yes, Luke just building off of Robert's comments in the opening remarks, although we look forward. We think we have a lot of opportunity there.

Our hubs.

All of our hubs, but especially our four of our largest and potentially highest capacity hubs in Phoenix Dallas Charlotte Miami are located near what are starting to turn out to be the some of the most economically resilient markets. There are.

We still have opportunity to go bring back more fleet and we have infrastructure in those places to grow further and as we see the future unfolding.

Point, Helane, we actually see a lot of opportunities to go and grow the performance of the coastal markets and Philadelphia and Chicago, specifically in a way that is really complementary to that.

Operator: Our team members, customers, the communities we serve, and especially our investors as we enter 2024 and look to 2025 and And with that, operator, please open the line for analyst questions. As a reminder to ask a question, you will need to press star 1-1 on your telephone. To remove yourself from the queue, please press star 1-1 again. Please stand by while we compile the Q&A roster.

Speaker 4: Okay, and then just for my follow up question on the domestic side, is that I look at your numbers versus your two major competitors? You seem to be decelerating. And I'm just kind of wondering if that's just a function of

Okay and then just for my follow up question on the domestic side.

Is that I look at your numbers versus your two major competitors, who seem to be decelerating.

Just kind of wondering is that just a function of them.

Speaker 4: the size of the aircraft you're flying, not having as many premium seats, or is it just the markets that you're in? Although given what Bhasu just said, it seems like the demand in those markets should still be pretty reasonable.

The size of the aircraft, you're fine not having as many premium seats or.

Helane Becker: Our first question comes from the line of Helane Becker. Up to you, Cohen. Thanks very much operator. I'm not used to getting the first question. Thanks guys. So here's my question. As you think about your, your hubs, you've talked Vasu's talked in the past about New York and LA not really being profitable. You know, Philadelphia seems to me to be a good connecting hub. It looks like you're putting a lot of international capacity in the market.

Is it is it just.

The markets that you're in although given what you just said it seems like the demand in those markets should still be pretty reasonable.

Yes, Helane actually it's.

Speaker 5: Yeah, Halein, actually, none of the above would be the answer to the question. Look in the...

None of the above would be the answer to the question looking at the net.

And this business of ours from one quarter to another it's easy to draw a lot of prognostications, which probably aren't there and as we see it right now.

Speaker 5: In this business of ours, from one quarter to another, it's easy to draw a lot of prognostications, which probably aren't there. And as we see it right now,

We have time.

One because so many so much of the U S airline business is still recovering their networks and the networks that are being recovered.

Helane Becker: So it brings up a couple of points. One is, are there enough captains to handle what you're thinking of doing around the network? Charlotte and Dallas have gotten a lot of attention. What about some of your other markets like Philae, Chicago, and maybe your coastal locations? Hey, Helane, let me start and Vasu can talk to you more about exactly where we're focusing our network. And if we need some real expertise, David Seymour can step in.

Speaker 5: probably never been more divergent, never more different competitively, but also never more different than what was there three or four, certainly five years ago. And so a little bit of what you see is that. And what I would actually say is we, I'll echo the points I made and then Robert made in the opening bit. As we look forward, actually we see a lot of opportunity. First of all, with our network, as we look out there, we serve 300 cities in North America in 200 of them. We have a network advantage. And as we bring back more of the regional jets, because we upgrade to the mainline fleet, that's a real advantage for us because so many of our competitors really won't be there. The customers in those cities are about 50% of our customer base, but they produce about 60% of our revenues. They're the ones who are signing up for the program for our advantage and enrolling in the card. And then the other big opportunity we have really across our enterprise, but it'll play out most notably in the domestic system, is really with advantage, our travel rewards.

Probably never been more divergent never more different competitively, but also never more different than what was there.

Three or four certainly five years ago, and so a little bit of what you see is is that.

And what I would actually say, we I'll echo the point that I made and then Robert mainly in the opening that.

We look forward actually we see a lot of opportunity.

First of all with our network as we look out there. We served 300 cities in North America in 200 of them, we have a network advantage and as we bring back more of the regional jets as we up gauge the mainline fleet.

Helane Becker: I'll start with this. We're really pleased that we were able to enter into a new agreement with the APA and our pilots back in August. It's a deal that while it certainly comes with increased compensation benefits and expense, but it also is something that puts it in position where we can train our pilots in a much more efficient manner and more quickly. So one of the issues with getting our fleet fully back restored has been just our ability to move pilots through the school house.

That's a real advantage for us because so many of our competitors I'm really won't be there.

The customers in those cities are about 50% of our customer base, but they produce about 60% of our revenues.

They're the ones who are signing up for the program for advantage in enrolling in part and then the other big opportunity we have.

Oh really across our entire enterprise, but it'll it'll play out most notably in the domestic system.

Speaker 5: really across our enterprise, but it'll play out most notably in the domestic system, is really with a damage, our travel rewards program. As we see at our Co-Branic Credit Card, is the largest Co-Branic Credit Card in circulation. Our program is one of the most travel programs in the business, but if you look at us, we produce probably $400 million less in frequent revenue than what the industry leader does right now. So the quarter to quarter trends are just a function of things like the recovery. The real thing that we're seeing is the opportunity in the quarters and years ahead.

Helane Becker: But right now, with some of the changes we've made in the contract, we have much more flexibility to actually grow the airline as we need. And so I don't see any issues with being able to support our fleet as we get into 2024 from a mainline perspective. On the regional side of the world, that is something that we're still working through. We've seen a lot of nice progress, but we're not fully restored.

Israeli with advantage our travel rewards program as we see it our Cobranded credit card is the largest co branded credit card in circulation our program is one.

Maybe travel programs in the business, but if you look at us.

We produced probably $400 million lesson frequent flyer revenue and what are the industry leader does right now so.

The quarter to quarter trends or just a function of things like the recovery. The real thing that we're seeing is the opportunity in the quarters and years ahead.

Helane Becker: As we look into 2024, you'll see us do some things that I think that will hasten the progress to get our aircraft back up. And from a regional perspective, it's really not a pilot supply issue at this point. It's more of an issue of having first officers with the amount of time, the thousand hours that they need to graduate from from right seat to left seat. And I'm encouraged by what I see on that front.

Speaker 6: Thanks very much. Thanks to everybody.

Thanks, very much thanks, everybody.

Thank you.

Our next question.

Speaker 1: comes from the line of David Vernon, a burnt...

Comes from the line of David Vernon of Bernstein.

Speaker 7: Hey, good morning guys. So, Devon, can you help try to shape the cost outlook in the cadence by quarter for 2024, or at least talk to some of the headlands are out there? I know it's gonna be pretty noisy just given the way the labor cost of layered in. Can you kind of help us think about 2024 Casamax sort of headwinds in relation to the higher level of Casamax that you're expecting now in fourth quarter?

Hey, good morning, guys.

So Devin can you help try to shape the cost outlook and the cadence by quarter for 2024 or at least talk to some of the headwinds are out there I know, it's going to be pretty noisy just given the way the labor costs of layered in can you kind of help us think about.

Helane Becker: So if I see what about how we focus in the network. Yeah, look, just building off of Robert's comments and in the opening remarks, we look forward. We think we have a lot of opportunity there. Our hubs and really all of our hubs, but especially our four of our largest and potentially highest capacity hubs in Phoenix, Dallas, Charlotte, Miami are located near what are starting to turn out to be the most economically resilient markets there are.

<unk> 2020 for CASM ex sort of headwinds in relation to the higher level of kind of a CASM ex that youre expecting now in fourth quarter.

Speaker 2: Sure, and maybe I'll just start with fourth quarter performance, and then we'll talk a little bit about 2024, and while we're not giving Kazem guidance for the year, I can talk to you about some headwinds and tailwinds. So.

Sure and maybe I'll just start with fourth quarter performance and then we'll talk a little bit about 2024, and while we're not giving CASM guidance for the year I can talk to you about some headwinds in tailwind so starting with fourth quarter of this year.

Helane Becker: And we still have opportunity to go bring back more fleet and we have infrastructure in those places to grow further. And as we see the future unfolding to your point, Elaine, we actually see a lot of opportunities to go and grow the performance of the coastal markets and Philadelphia and Chicago specifically in a way that's really complimentary, and that. Okay.

Speaker 2: Starting with fourth quarter of this year, as Busu said, these numbers do shift around a little bit from quarter to quarter, but our full year, Kazam X Guide, has been unchanged since the start of the year. And we knew at the start of the year the fourth quarter was going to be our toughest comp.

He said these numbers do shift around a little bit from quarter to quarter, but our full year CASM ex guide has been unchanged since the start of the year and we needed to start of the year the fourth quarter was going to be our toughest comp.

Our capacity starts to decelerate our capacity growth starts to decelerate a little bit as we entered the fourth quarter. We also had a couple of one time credits that we got in the fourth quarter 2020 to that.

Speaker 2: Our capacity starts a desalorate or capacity growth starts to desalorate a little bit as we entered the fourth quarter. We also had a couple one-time credits that we got in the fourth quarter, 2022 that aren't happening for us this year. And then there was a shift of some expenses from the third quarter into the fourth quarter adding a little bit more pressure. But we're still really pleased with our full-year result hitting the guide or the midpoint of the guide that we had at the very start of the year. No, I heard that we were using the dashboard, went in, liked that bucket, and they're

Helane Becker: And then just for my follow-up question on the domestic side, is that I look at your numbers versus your two major competitors? You seem to be decelerating? And I'm just kind of wondering if that's just a function of the size of the aircraft you're flying, not having as many premium seats? Or is it, is it just, the markets that you're in, although given what Vasu just said, it seems like the demand in those markets should still be pretty reasonable?

Arent happening for us this year.

And then there was a shift of some expenses from the third quarter into the fourth quarter, adding a little bit more pressure, but we're still really pleased with our full year result, hitting the guide or the midpoint of the guide that we had at the various started the year.

As we look out to 2024.

Speaker 2: The headwinds are where you expect. It's largely around salars and benefits. We have open contracts with our flight attendants and our passenger service reservations group.

The headwinds are where you would expect it's largely around salaries and benefits we have open contracts with our flight attendants and our passenger service reservations groups.

Speaker 2: If we are able to achieve deals of match industry leaders for those work groups, it'll add about a point of chasm pressure year over year. We also just have regular increases for other labor groups that are happening next year. But the tailwinds that Robert talked about, what we're excited about, actually working towards full utilization of our fleet.

Helane Becker: Yeah, Helane, actually, it's none of the above would be the answer to the question. Look in the business of ours from one quarter to another, it's easy to draw a lot of prognostications, which probably aren't there. And as we see it right now, it's a particularly weird time. One, because so many, so much of the U.S, airline business is still recovering their networks. And the networks that are being recovered are probably never been more divergent, never more different competitively, but also never more different than what was there three or four, certainly five years ago.

If we are able to achieve deals that match industry leaders for those work groups that will add about a point of CASM pressure year over year. We also just have regular increases for other labor that are happening in next year, but the tailwind to what Robert talked about what we're excited about actually working towards full utilization of our fleet and this <unk>.

Speaker 2: And this operation we've been running has been incredible for the last year, year and a half. Now we have a real opportunity to go ahead and do some optimization work around this operation. So.

Operation, we've been running has been incredible for the last year year and a half now we have a real opportunity to go ahead and do some optimization work around this operation so.

Speaker 2: We do have some headwinds on showers and benefits. We have some real nice tailwinds as well in 2024 and we'll be able to provide more guidance on what Cazmo look like on a January call.

We do have some headwinds on salaries and benefits we have some real nice tailwind as well into 2024, and we will be able to provide more guidance on what CASM will look like on the January call.

Helane Becker: And so a little bit of what you see is that. And what I would actually say is we, I'll echo the points I made, and then Robert made in the opening bit. As we look forward, actually, we see a lot of opportunity. First of all, with our network, as we look out there, we serve 300 cities in North America, in 200 of them, we have a network advantage. And as we bring back more of the regional jet, as we upgrade to the mainline fleet, that's a real advantage for us, because so many of our competitors really won't be there.

Okay. Thank you for that and then Robert.

Speaker 7: Thank you for that. And then Robert or Vatu maybe, there's a lot of talk right now in the industry about.

Or maybe there's a lot of talk right now in the industry about how segmentation premium products are changing the structure of the industry may be to the to the detriment of domestic oriented or discount carriers can you add your thoughts on this topic here and talk a little bit about how you see American playing in the evolving structure, we didn't hear a lot about <unk>.

Speaker 7: how segmentation premium products are changing the structure of the industry, maybe to the detriment of domestic oriented or discount carriers. Can you add your thoughts on this topic here and talk a little bit about how you see American playing in this evolving structure? We didn't hear a lot about premium and any of the prepared remarks today. I'm just wondering how you guys are thinking about.

Liam and any of the prepared remarks today I'm just wondering how you guys are thinking about.

Speaker 7: you know, what what what some people are calling a is a seismic change in the industry dynamic.

What what some people are calling is a seismic change in the industry dynamic.

Helane Becker: The customers in those cities are about 50% of our customer base, but they produce about 60% of our revenues. They're the ones who are signing up for the program for our advantage and enrolling in the card. And then the other big opportunity we have really across our enterprise, but it'll play out most notably in the domestic system, is really with advantage, our travel rewards program. As we see at our co-brand a credit card is the largest co-brand a credit card in circulation.

Speaker 5: Sure, this is Vasi. I can answer that. In fact, I'd be very, very happy to answer it. Look, what we see and we think that the real causal thing that's happening is the customer itself, as opposed to a fair product or a cabinet service. And what we've certainly seen, and Robert alluded to it, since 2019, our advantage customers are really driving the revenue production of the company. And that's manifesting itself in a range of ways.

Sure. This is vasu I can I can answer that in fact that would be very very happy to answer it.

What we see and we think that the real causal thing that's happening is the customer itself as opposed to a fair product or a cabin of service what we've certainly seen and Robert alluded to in essence 2019 advantage. Our advantage customers are really driving the revenue production of the company and that's manifesting itself in our range.

Of ways, so versus 19, our membership is up 50%.

Speaker 5: So versus 19, our membership is up 50%. Almost two thirds of our revenue, certainly in this last quarter, came from advanced customers.

Helane Becker: Our program is one, maybe travel program in the business. But if you look at us, we produce probably $400 million less in frequent flyer revenue than what the industry leader does right now. So the quarter to quarter trends are just a function of things like the recovery. The real thing that we're seeing is the opportunity in the quarters and years ahead. Thanks very much. Thanks to everybody.

Almost two thirds of our revenue and certainly in this last quarter came from advantage customers.

And what we're finding with them is that those customers are proving to be a much more resilient pool of demand that indeed are willing to engage in behaviors that arent just shopping for the fastest schedule at the cheapest price.

Speaker 5: And what we're finding with them is that those customers are proving to be a much more resilient pool of demand that indeed are willing to engage in behaviors that aren't just shopping for the fastest schedule of the cheapest price. We see that play out in a lot of different ways. One is premium cabin performance where our premium fare products revenue is up 7% from a vantage customers.

We see that play out in a lot of different ways. One is premium cabin performance, where our premium behr products revenue was up 7% from from advantage customers.

David Vernon: Thank you. Next question comes from the line of David Vernon of Bernstein. Hey, good morning, guys. So Devon, can you help try to shape the cost outlook and the cadence by quarter for 2024 or at least talk to some of the headwinds are out there? I know it's going to be pretty noisy, just given the way the labor cost of layered in. Can you kind of help us think about. 2024, Casamax sort of headwinds in relation to the to the higher level of Casamax that you're expecting now in fourth quarter.

Speaker 5: in keeping with our overall seat growth.

In keeping with with our overall seat growth.

Speaker 5: too we see that remuneration on our credit cards is of about 25% from these customers. And then importantly, we find that these customers disproportionately want to shop with us directly. About 85% of all the advantage member revenue in the system is coming through our direct channels.

Two we see that remuneration on our credit cards, it's up about 25% from from these customers.

And then importantly, we find that these customers disproportionately want to shop with us directly about 85% of all the advantage member revenue in the system is coming through our direct channels.

Speaker 5: So we see the causal thing, and that's why it was in our remarks, is what's really happening for our advantage members. There's a real desire to travel. And they're coming to us because they want a great network and a program that rewards them for using it, delivered reliably over and over and over again.

So we we see the causal thing and that's why it was in our remarks is what's really happening is that for our advantaged members. There is a real desire to travel.

David Vernon: Sure, and maybe I'll just start with fourth quarter performance, and then we'll talk a little bit about 2024, and while we're not giving Kazem guidance for the year, I can talk to you about some headwinds and tailwinds. So, starting with fourth quarter of this year, as Vasu said, these numbers do shift around a little bit from quarter to quarter, but our full year Kazem X guide has been unchanged since the start of the year.

And they're coming to us because they want a great network and a program that rewards them for using it delivered reliably over and over and over again.

Speaker 3: Hey, and David, I just want to add one thing to that. It's, look, we're going to be part of and also a driver of premium revenue growth. So one of the things I think is noteworthy, our premium seating is going to grow by 43% between now and in 2026.

And David I, just wanted to add one thing to that.

Look.

We're going to be part of and also a driver of.

Premium revenue growth. So one of the things I think is noteworthy our premium seating is going to grow by 43% between now and 2026 and Thats as a result of bringing on the new XLR and Reconfiguring, our triple seven three hundreds in actually taking a look at even some of the domestic fleet as well.

David Vernon: And we needed to start of the year. The fourth quarter was going to be our toughest comp. Our capacity starts to decelerate or capacity growth starts to decelerate a little bit as we entered the fourth quarter. We also had a couple of one-time credits that we got in the fourth quarter 2022 that aren't happening for us this year. And then there was a shift of some expenses from the third quarter into the fourth quarter adding a little bit more pressure, but we're still really pleased with our full year result hitting the guide or the midpoint of the guide that we had at the very start of the year.

Speaker 3: And that's as a result of, you know, bringing on the new XLR and reconfiguring our triple seven 300s and actually taking a look at even some of the domestic fleet as well, where I know that we'll be adding more first class product or at least reconfiguring to that end. And on that same front, we're really pleased with our regional aircraft. On that front, you know, you take a look at the E 175.

I know that we'll be adding more first class product or at least reconfiguring.

And then on that same front, we're really pleased with our regional aircraft.

On that front.

You take a look at that 175, and they have fantastic cabins that are every bit as nice and appreciated by customers anything we fly on the mainline side. So I look I look forward to participating in.

Speaker 3: And they have fantastic cabins that are every bid is nice and appreciated by customers. Anything we fly on the mainline side. So I look forward to participating in.

David Vernon: As we look out to 2024, the headwinds are where you'd expect. It's largely around sellers and benefits. We have open contracts with our flight attendants and our passenger service reservations groups. If we are able to achieve deals that match industry leaders for those work groups, it'll add about a point of Kazem pressure year over year. We also just have regular increases for other labor groups that are happening next year. But the tailwinds are what Robert talked about, and what we're excited about actually working towards full utilization of our fleet.

Speaker 3: and driving what's going to be going on in terms of premium products. All right, thank you.

And driving what what's going to be going on in terms of our premium products.

Alright, thanks, guys.

Thank you.

Our next question.

Speaker 1: Confident line of Andrew D'Dora, a bank of America.

Comes from the line of Andrew the Dora of Bank of America.

David Vernon: And this operation we've been running has been incredible for the last year, year and a half. Now we have a real opportunity to go ahead and do some optimization work around this operation. So, we do have some headwinds on sellers and benefits. We have some real nice tailwinds as well in 2024, and we'll be able to provide more guidance on what Kazem will look like on a January call.

Speaker 8: Hey, good morning, everyone. Evan, maybe just digging into the 2024 costs a little bit. Given the changes in the pilot contract, I know kind of the new profit sharing now runs through the salaries and wages line. Has to we think about wage growth next year in relation to kind of the mid-single-digit capacity?

Hey, good morning, everyone.

Kevin maybe just digging into the 2024 costs a little bit.

Given the changes in the pilot contract.

No problem with the new profit sharing that runs through the salaries and wages line, how should we think about wage growth next year.

In relation to kind of the mid single digit capacity.

Vasu Raja: Okay, thank you for that. And then Robert, or if I assume maybe there's a lot of talk right now in the industry about how segmentation premium products are changing the structure of the industry, maybe to the detriment of domestic oriented or discount carriers. Can you add your thoughts on this topic here and talk a little bit about how you see Americans playing in this evolving structure? We didn't hear a lot about premium and any of the prepared remarks today.

Speaker 2: We'll give more guidance on 2024 as we...

We'll give more guidance on 2024 is weak.

Okay.

Speaker 2: The sound and the benefits is an area we're going to see the pressure. As I just mentioned, we do have this open agreement with our flight attendants and our passenger service and reservations agents that we hope to get closed and we hope to be able to match industry leading contracts there, which will drive about a point of growth.

Salaries and benefits is an area, we're going to see some pressures as I. Just mentioned, we do have this open agreement with our flight attendants on our passenger service in reservations agents that.

We hope to get closed and we hope to be able to match industry, leading contracts, there, which will drive about a point of growth.

Vasu Raja: I'm just wondering how you guys are thinking about, you know, what some people are calling a seismic change in the industry dynamic. Sure, this is Vasi. I can answer that. In fact, I'd be very happy to answer it. Look, what we see and we think that the real causal thing that's happening is the customer itself, as opposed to a fair product or a cabinet service. And what we've certainly seen and Robert alluded to it is since 2019, our advantage customers are really driving the revenue production of the company.

Speaker 2: And as we get into the year, there will be some lumpiness on year-over-year comps. In the first quarter of 2023, we didn't have an accrual for our pilot agreement. So we'll see a little more cost pressure in the first quarter. But as we get into the last three quarters of the year, that cost pressure is going to ease. And then these efficiencies that we've been talking about, I think, are going to add some nice tailwinds as we go through the year. So let us get back to you in January with a little bit more detail, but that's kind of where we're seeing it right now.

And as we get into the year, there will be lumpiness.

On year over year comps in the first quarter of 2023, we didnt have an accrual for our pilot agreement. So we'll see a little more cost pressure in the first quarter.

But as we get into the last three quarters of the year that cost pressure is going to ease.

And then these efficiencies that we've been talking about I think are going to add some nice tailwind as we go through the year. So let us get back to you in January with a little bit more detail, but that's kind of where we're seeing it right now.

Vasu Raja: That's manifesting itself in a range of ways. So versus 19, our membership is up 50%. Almost two thirds of our revenue, certainly in this last quarter, came from advantage customers. And what we're finding with them is that those customers are proving to be a much more resilient pool of demand that indeed are willing to engage in behaviors that aren't just shopping for the fastest schedule of the cheapest price. We see that play out in a lot of different ways.

Speaker 8: Okay, thank you. And then we assume, can you speak a little bit more in terms of what you're seeing on the corporate side, particularly as it relates to both kind of large and small corporates, particularly, I know you've made some pretty big changes with your corporate sales force. Just curious if you've seen any sort of unexpected share shifts or anything like that, as we moved into this more, a seasonally stronger time period for corporate travel. Thanks.

Okay. Thank you and then great.

Assuming can you speak a little bit more in terms of what youre seeing on the corporate side, particularly as it relates to both kind of the <unk>.

Vasu Raja: One is premium cabin performance where our premium fair products revenue is up 7% from advantage customers in keeping with our overall seat growth. Two, we see that remuneration on our credit card is of about 25% from these customers. And then importantly, we find that these customers disproportionately want to shop with us directly about 85% of all the advantage member revenue in the system is coming throughout direct channels. So we see the causal thing, and that's why it was in our remarks is what's really happening for our advantage members, there's a real desire to travel.

And small corporates, particularly.

I know you've made some pretty big changes with your corporate sales force just curious if you've seen any sort of unexpected share shifts or anything like that as we moved into the seasonally stronger.

Stronger time period for corporate travel yes.

Speaker 5: Yeah, hey, thank you, Andrew. It's another question, which I know is on people's minds. I'm happy to address. And I'll do it in this fashion. We have made a number of changes with our selling and distribution strategy. The purpose of which is very simple. Our customers have been telling us for a very long time now that they want us to do anything that we offer them can be shopped, sold, and a service digitally.

Hey, Thank you Andrew it's another question, which I know is on People's minds, I'm happy to happy to address that and I'll do it in this fashion and we have made a number of changes with our our selling and.

Distribution strategy.

First of which is very simple our customers have been telling us for a very long time now that they want it so that anything that we offer them can be shopped sold and serviced digitally.

Speaker 5: And we've been seeing that that that customer sentiment for a really long time and that's where out to serve And our strategy is this simple in order to go make that happen. We need to distribute our product exclusively through the internet

And we've been seeing that that that customer sentiment for a really long time.

And that's what we're out to serve that our strategy is simple in order to go make that happen, we need to distribute our product exclusively through the internet.

Speaker 5: And that's what you're seeing from us. We're shifting content, a fair product, schedule, things like that, out of legacy technology where we can't provide customers the kind of shopping and service experience they expect. And we're putting it through technologies that can.

And Thats, what youre seeing from us, where we're shifting them content, our behr products scheduled things like that out of legacy technology, where we can't provide customers the kind of shopping and servicing experience. They expect and we're putting it through technologies that can add on that journey.

Vasu Raja: And they're coming to us because they want a great network and a program that rewards them for using it delivered reliably over and over and over again. David, David, I just want to add one thing to that. It's, look, we're going to be part of and also a driver of premium revenue growth. So one of the things that I think is is noteworthy, our premium seating is going to grow by 43% between now and in 2026.

Speaker 5: And on that journey, we've certainly invited all of our retailers to come along with it, but that is a different world than what was there before. And what we've seen before is really encouraging, actually. In the quarter, our total business revenues were up 2%, we actually performed better year over year among contracted corporations.

We invited all of our retailers to come along with it but that is a different world than what was there before and what we've seen before is really encouraging actually.

For the quarter, our total business revenues were up 2%, we actually performed better year over year among contracted corporations.

And then we had in a number of months prior to it but very importantly, our cost of sale is down 13%. So we're finding that we're able to generate more revenues less cost of sale.

Vasu Raja: And on that same front, we're really pleased with our regional aircraft. On that front, you know, you take a look at the E 175 and they have fantastic cabins that are every bid is nice and appreciated by customers anything we find in the mainline side. So I look forward to participating and driving, you know, what's going to be going on in terms of premium products.

Which is very encouraging to us.

And like I said as we go forward.

We intend to continue the momentum that we've got we certainly invite any retailing partner to join us along the journey.

And in fact, most recently, we launched a new business program called advantaged business and advantage is very much the platform upon which we'll build all of our commercial programs.

Speaker 5: and advantages very much the platform upon which will build all of our commercial programs. But through that, through advantage business companies of all sizes can access our content in a way that's cheaper, simpler, better servicing, and a way that's more rewarding for travelers will accelerate their status.

Speaker 1: But through that, through Advantage business, companies of all sizes can access our content in a way that's cheaper, simpler, better servicing, and a way that's more rewarding for travelers, will accelerate their status. So we're actually really encouraged by what we've seen, encouraged by its revenue production, and look forward to continuing the momentum. Great, thanks for that. Thank you. Ok.

But through that do advantaged business companies of all sizes can access our content in a way that's cheaper simpler better servicing and nobody is more rewarding for travelers will accelerate their status. So we're actually really encouraged by what we've seen and encouraged by its revenue production and look forward to continuing the momentum.

Andrew Didora: All right, thank you. Thank you. Our next question comes from the line of Andrew Dodora, a bank of America. Hey, good morning, everyone. David, maybe just digging into the 2024 costs a little bit. Given the changes in the pilot contract, I know kind of profit is the new profit sharing that runs through the salaries and wages line. How do we think about wage growth next year in relation to kind of the mid single digit capacity?

Speaker 5: So we're actually really encouraged by what we've seen, encouraged by its revenue production, and look forward to continuing the momentum.

Great Thanks for that.

Thank you.

Our next question.

Speaker 1: comes from a line of Michael Leningberg of Deutsche Bank.

It comes from the line.

Michael Lindenberg of Deutsche Bank.

Hey, good morning, everyone, Hey, Firstly can I, just I know you sort of called out what the.

Speaker 9: Hey, good morning, everyone. Hey, Vanzou, can I just, I know you sort of called out what the revenue for premium for advantage members was up year over year. If I look at it in its entirety, what year over year was the gain in premium product revenue. And then when we think about sort of the split, where are you, you know, as a percent of your passenger revenue, total passenger revenue, premium versus non-premium, even rough numbers would be fine. Thanks.????? Ja.

Andrew Didora: Hey, we'll give more guidance on 2024 as we. But the selling benefits is an area we're going to see the pressure that as I just mentioned, we do have this open agreement with our flight attendants and our passenger service and reservations agents that we hope to get closed and we hope to be able to match industry leading contracts there, which will drive about a point of growth. And as we get into the year, there will be on lumpiness on year over year comps in the first quarter of 2023, we didn't have an accrual for our pilot agreement.

The revenue for premium for advantage members was up.

Year over year, if I look at it in its entirety what.

Year over year was the gain in premium product revenue and then when we think about sort of the split.

Where are you as a percent of your passenger revenue total passenger revenue premium premium versus non premium even rough numbers would be fine.

Andrew Didora: So we'll see a little more cost pressure in the first quarter. But as we get into the last three quarters of the year, that cost pressure is going to ease. And then these efficiencies that we've been talking about, I think, are going to add some nice tailwinds as we go through the year. So let us get back to you in January with a little bit more detail, but that's kind of where we're seeing it right now.

Hello.

Hello.

Sorry, Mike.

Speaker 5: Sorry, Mike, shame on me, my microphone wasn't on. But I'll repeat. I'll answer the first question. First, in the premium cabin revenues are up across our system, about 67%. Okay.

Shame on me and my microphone wasn't on.

Andrew Didora: Okay, thank you. And then we assume, can you speak a little bit more in terms of what you're seeing on the corporate side, particularly as it relates to both kind of large and small corporates, particularly. I know you've made some pretty big changes with your corporate sales force. Just curious if you've seen any sort of unexpected shareships or anything like that as we moved into this more seasonally stronger, has stronger time period for corporate travel.

But I'll repeat.

I'll answer the first question first.

Indeed premium cabin revenues are up across our system by about 67% okay.

Yeah.

Speaker 5: by advantage members who's registered up about seven percent. Non-members are up about five percent. And then do your questions.

By advantage members.

Revenue is up about 7% non number was around 5% and then to your question.

I should even about.

Speaker 5: I should talk about customer base. Look, one of the things that we certainly noticed is probably more importantly than segmenting based on fair product is by the customers themselves. And so what we do is we look at customers who are buying non-premium products. Those are fairs that are not eligible for discounts, mileage, or things like that are lowest selling products. And we look at it for customers who are non-advanced customers. We tend to be our most transitory customers.

Customer base look one of the things that we certainly noticed is.

Andrew Didora: Thanks. Yeah, hey, thank you, Andrew. It's another question, which I know is on people's minds. I'm happy to have you address and I'll do it in this fashion. We have made a number of changes with our selling and distribution strategy. The purpose of which is very simple. Our customers have been telling us for a very long time now that they want us to do anything that we offer them can be shopped, sold and a service digitally.

Probably more importantly than segmenting based on air products is by the customers themselves.

And so what we do is we look at customers who are buying non premium products as their payers that are not eligible.

Andrew Didora: Agency, and we've been seeing that customer sentiment for a really long time, and that's where out to serve. And our strategy is just simple. In order to go make that happen, we need to distribute our product exclusively through the Internet. And that's what you're seeing for us. We're shifting content, fair product, schedule, things like that out of legacy technology where we can't provide customers the kind of shopping and service experience they expect.

For discounts mileage and things like that are lowest selling products and we look at it for customers, who are non advantage customers, who tend to be almost transitory customers.

Speaker 5: And what we find is the trans-tory customers buying our lowest selling fairs is about 30% of our system revenue. The other 70% is customers who are buying premium quality fairs. And that number is disproportionately weighted to a bin.

What we find is that transitory customers buying our lowest selling fares, it's about 30% of our system revenue.

Other 70% is customers who are buying premium quality fares.

That number is disproportionately weighted to advantage customers.

Speaker 9: Great. Just my second question, you know, I saw that you were applying to fly from JFK, Haneda. And I'm curious because you know, sort of post NEA, I get the sense that maybe you were going to be sort of maybe, I don't know, a downsizing year because the right thing, but the fact is, you know, wide bodies are scarce and for everyone and that would take two frames and you already have gel in that market with the code share. So, you know, what's the rationale behind that? Thanks for taking my question.

Okay, Great and then just my second question on.

So that you are applying for to fly from JFK Haneda.

And I'm curious because you know sort of post NDA I get the sense that maybe you were going to be sort of maybe.

Andrew Didora: And on that journey, we've certainly invited all of our retailers to come along with it, but that is a different world than what was there before. And what we've seen before is really encouraging actually. In the quarter, our total business revenues were up 2%, we actually performed better year over year among contracted corporations than we had in a number of months prior to it. But very importantly, our cost of sale is down 13%.

I don't know if downsizing year, because the right thing, but the fact is wide bodies are scarce and for everyone and that would take two frames and do you already have <unk> in that market with the codeshare. So whats the rationale behind that thanks for taking my questions. Yeah, Thanks, Mike and I'll answer it at <unk> in New York, which I know is probably on a lot of our investors.

Andrew Didora: So we're finding that we're able to generate more revenues, do less cost of sale, which is very encouraging to us. And like I said, as we go forward, we intend to continue the momentum that we've got. We certainly invite any retailing partner to join us along the journey. And in fact, most recently, we launched a new business program called Advantage Business. And Advantage is very much the platform upon which will build all of our commercial programs.

Speaker 5: Yeah, hey, thanks, Mike. I'll answer it through the lens of New York, which I know is probably on a lot of our investors' minds. And I'll answer the native question as part of it. Look, in that the time pre-COVID, and certainly prior to the NEA, American Airlines had a really fundamental problem in New York, which is we were losing our relevance in New York City originating customers. Every year we had declining, originating share. Our advantage enrollments were declining year after year. We didn't have a slot portfolio to compete with the two largest ones. And that was the...

Mine.

And I'll answer the <unk> question and as part of it.

Hmm.

At the time pre Covid and certainly prior to the NDA American Airlines had a really fundamental problem in New York, which is we were losing our relevance in New York City originating customers every year, we had declining.

Originating share our advantage enrollments were declining year after year simply because we didn't have a slot portfolio to compete with the two largest one and that was the the.

Andrew Didora: But through that through Advantage Business, companies of all sizes can access our content in a way that's cheaper, simpler, better servicing, and a way that's more rewarding for travelers will accelerate their status. So we're actually really encouraged by what we've seen, encouraged by its revenue production, and look forward to continuing the momentum.

Speaker 5: the reasons behind doing the NEA. Now in these last several weeks and months, what we've noticed is actually, the New York originating customer has changed what they demand. Send-A business trips are down a lot. There's way fewer people originating New York who are looking to take day trips to Boston or Chicago or Detroit. But that New York City customer is much more interested in flying long haul.

The reasons behind doing the NDA now.

Several weeks and months, what we've noticed is.

Actually the New York originating customer has.

What they demand and.

The business trips are down a lot there is way fewer people originating New York, who are looking to take a trip.

Boston or Chicago, or Detroit, but that New York City customer is much more interested in flying long haul.

Internationally long haul for the West coast.

Speaker 5: The internationally long haul to the West Coast market in Florida. That's a thing that our slot portfolio is much more built to do. And in the last few weeks since the NEA has been terminated, actually what we've seen is that our originating share is stable. New York City.

Michael Lindenberg: Great. Thanks for that. Thank you. Our next question comes from a line of Michael Lindenberg of Deutsche Bank. Hey, good morning, everyone. Hey, Vanzoo. Can I just – I know you sort of called out what the revenue for premium for Advantage members was up year over year. If I look in its entirety, what year over year was the gain in premium product revenue? And then when we think about sort of the split, where are you, you know, as a percent of your passenger revenue, total passenger revenue, premium versus non-premium, even rough numbers would be fine.

Market, Florida, that's a thing that our slot portfolio is much more to do and in the last few weeks since the NDA has been terminated actually what we've seen is that.

Michael Lindenberg: Thanks. Hello? Sorry, Mike. Shame on me. My microphone wasn't on, but I'll repeat. I'll answer the first question first. Indeed, premium, cabin revenues are up across our system about 67 percent by Advantage members who's revenue is up about 7 percent. Non-members are up about 5 percent. And then your question. Question? Question about customer base. Look, one of the things that we've certainly noticed is probably more importantly than segmenting based on fair product is by the customers themselves.

Our originating share is stable on New York City.

The number one market in our system, both for advantage enrollment and for credit card sign ups penetration.

Speaker 9: even number one market in our system, both for a banage enrollment and for credit card sign-up penetration. So we're encouraged by that and you see that. The last thing I'll mention about it is through our global partnership, we're able to offer a thing in New York, which is very unique, both in our T.A. facility, and also being able to go and operate to our major partners, major complexes, whether that's Heathrow or Haneda, or Doha for that matter. We've?-packed the hatches video for about four more steps.

We're encouraged by that and you see that the last thing I'll mention about it.

Through our global partnerships, we're able to offer a thing in New York, which is very unique both in our <unk> facility and also being able to go and operate our major partners major complexes, whether thats Heathrow.

Nader or Doha for that matter.

Okay.

Makes sense. Thank you.

Yes.

Yeah.

Okay. Thank you please standby for our next question.

Speaker 1: Next question comes from the line of Catherine O'Brien of Goldman Sachs.

Our next question comes from the line of Catherine O'brien of Goldman Sachs.

Hey, good morning, everyone. Thanks for the time.

Speaker 10: uh... devon i just want to dig in a bit on the cost performance to date uh... you know you can't go to point below the low end of your of your three key range and i know you mentioned some timing shift you know but you're also sticking with your prior midpoint for failure chasm x despite the you know extra cruel for pilot retropey since you last update that for your cost outlook i guess you know what is going better than expected and then can you just remind us what you originally baked in for the open flight like uh... flight and contract in the second half did that have any impact on three

Kevin I, just wanted to dig in a bit on the cost performance to date.

Came in close to a point below the low end of your of your <unk> range and I know you mentioned some timing shifts.

But you are also sticking with your prior midpoint for full year CASM ex despite the extra accrual for pilot retro pay since your last update that for your cost outlook I guess, what is going better than expected and then can you just remind us what you had originally baked in for the open flake flight attendant contract in the second half did that have any impact on <unk>. Thanks.

Speaker 2: Thanks for questioning Katie. We do have...

Hey, Thanks for the question Katy we do have.

Michael Lindenberg: And so what we do is we look at customers who are buying non-premium products. Those are fairs that are not eligible for discounts, mileage, or things like that are lowest selling products. And we look at it for customers who are non-advantaged customers who tend to be our most trans-tory customers. And what we find is the trans-tory customers buying our lowest selling fairs is about 30% of our system revenue. The other 70% is customers who are buying premium quality fairs. And that that number is disproportionately weighted to advanced customers. Okay, great.

It's largely timing and operational performance with higher ASM is what benefited us in the third quarter and our prior guidance we didn't have.

Speaker 2: It's largely timing and operation performance with higher ASMs is what benefited us in the third quarter. In our prior guidance, we didn't have anything in the third quarter for our

Anything in the third quarter for our.

Speaker 2: Open labor agreements outside of the pilots. We did have something in the fourth quarter and we still have something modest in the fourth quarter just given the time it would take to reach and ratify an agreement.

Open labor agreements outside of the pilots we did have some in the fourth quarter and we still have something modest in the fourth quarter, just given the time it would take to reach and ratify and agreement.

Speaker 2: But generally speaking, everything this year has come in very much in line with what our initial guidance was, which is why for the full year, we're still right around that 3% number. We've seen a little bit of pressure on certain line items. We've gotten some benefits from others, but overall, it's largely in line with our expectations. And like just generally speaking, we are pre-gooded forecasting out expenses.

But generally speaking everything this year has come in very much in line with what our initial guidance for us.

Which is why for the full year, we're still right around that 3% number we've seen a little bit of pressure on certain line items, we've gotten some benefits from others, but overall, it's largely in line with our expectations and like just generally speaking we are pretty good at forecasting out expenses.

Michael Lindenberg: And then just my second question on, you know, I saw that you're applying to fly from JFK, Haneda. And I'm curious because, you know, sort of post NEA, I get the sense that maybe you were going to be sort of maybe, I don't know, downsizing New York is the right thing. But the fact is, you know, wide bodies are scarce and for everyone. And that would take two frames. And you already have Jal in that market with the code share.

Speaker 2: And I think during the COVID years, that became a little bit more challenging, but in 2023, we feel pretty good about our ability to forecast and deliver results.

And I think during the Covid years that became a little bit more challenging.

But in 2023, we feel pretty good about our ability to forecast and deliver results.

Michael Lindenberg: So, you know, what's the rationale behind that? Thanks for taking my questions. Yeah, hey, thanks, Mike. And I'll answer it through the lens of New York, which I know is probably on a lot of our investors mind. And I'll answer the native question as part of it. And at the time pre COVID and certainly prior to the NEA, American Airlines had a really fundamental problem in New York, which is we were losing our relevance in New York City originating customers every year.

Got it that's great. Thanks for the detail and then maybe one for Vasu.

Speaker 10: That's great, thanks for the detail. And then maybe one for VASU. Between the third quarter and second quarter, you experienced a D cell enrasm on your way here in 2019.

Between the third quarter and second quarter, you experienced a T cell in RASM on year over year in 2019 totally understand there's so many moving pieces now.

Speaker 10: totally understand there's so many moving pieces now as the network recovers.

As as is the network recovers and the shape of your network has changed a bit over the years, but.

Speaker 10: but your network has changed a bit over the years. But your fourth quarter-guided supply of things will stabilize in a year-rear basis. Could you walk us through what's driving that stabilization?

But your fourth quarter guidance implies things will stabilize on a year over year basis.

Could you walk us through what's driving that stabilization. Thanks, so much.

Michael Lindenberg: We had declining originating share. Our advantage enrollments were declining year after year simply because we didn't have a slot portfolio to compete with the two largest ones. And that was the reasons behind doing the NEA. Now in these last several weeks and months, what we've noticed is actually the New York originating customer has changed what they demand. And then the business trips are down a lot. There's way fewer people originating New York who are looking to take day trips to Boston or Chicago or Detroit.

Speaker 9: And for my clarity, you mean the quarter to quarter stabilization? Right, just comparing the year.

And for my clarity, you mean, the quarter to quarter stabilization.

Alright, just comparing the year over year as to each other.

Speaker 5: Sure. I will do my best to do. There's a few things that are changing in our system right now between one quarter to the next that has that effect. In Q3, what we find just in terms of how we brought the network back, a lot of what we were flying were off time periods, like off-peak.

Sure.

I will do my best to do Theres, a few things that are changing in our system right now between one quarter to the next that has that effect in Q3, what we find just in terms of how we brought the network back.

A lot of what we were flying where I'm off time periods.

Like off peak flights.

Speaker 5: as we get into Q4, that starts to stabilize a little bit more. We regain a lot more regional supportability into the fourth quarter. And so a little bit of what you see there are just shifting year-over-year trends based on how we brought the airline back and then where the airline is oriented around the line.

Michael Lindenberg: But that New York City customer is much more interested in flying long haul internationally long haul to the West Coast market Florida. That's a thing that our slot portfolio is much more built to do. And in these last few weeks since the NEA has been terminated, actually what we've seen is that our originating share is stable. New York City, even number one market in our system, both for advantage enrollments and for credit card signup and penetration.

If we get into Q4 that starts to stabilize a little bit more we were getting a lot more regional support ability into the fourth quarter.

And so a little bit of what you see there are just shifting year over year trends based on how we brought the airline back and then where where the airline is oriented around flying.

Speaker 5: In the third quarter especially in the the trough seasons of August and September , there's some strange year over year comps where the Northeast was performing better than markets in the Sun Belt when we get into Q4. That's when the Sun Belt and Short Hall and CLA start to change and you see that in our schedules. We have, they are the biggest Miami operation in our history there. So a lot of what you see there is less a function of

In the third quarter, especially that the trough seasons of August and September there are some strange year over year comps were the northeast was performing better than markets in the sunbelt when we get into Q4, that's when the Sun belt in short haul and CLA start to change in and you see that in our schedules, we have I think our biggest Miami.

Michael Lindenberg: So we're encouraged by that. And you see that. The last thing I'll mention about it is through our global partnership, we're able to offer a thing in New York, which is very unique, both in our P.A, facility and also being able to go and operate to our major partners, major complexes, whether that's Heathrow or Haneda or Doha for that matter. Makes sense.

Operation in our history, there so a lot of what you see there is la.

Less a function of something.

Speaker 5: something fundamental, but some really unique quarter to quarter recovery trends.

Nothing fundamental but some really unique quarter to quarter recovery trends.

Great. Thanks for the time.

Thank you.

Operator: Thank you. Please stand by for the next question. Next question comes from the line of Katherine O'Brien, of Goldman Sachs. Hey, good morning, everyone. Thanks for the time. Devon, I just wanted to dig in a bit on the cost performance to date. You came in close to a point below the low end of your 3Q range. I know you mentioned some timing shift. But you're also sticking with your prior midpoint for failure chasm X despite the extra crew for retro pay since you last updated that failure cost outlook.

Our next question.

Comes from the line of Jamie Baker of JP Morgan.

Speaker 1: comes from the line of Jamie Baker, of JP Morton.

Speaker 11: Hey good morning everybody. I'm Vasu and NEA question. You know, we're obviously tracking some of the rebalancing between JFK and Philadelphia. I see that 787 captains in Philly. That number is moving up quite a bit. It looks like JetBlue will continue to operate a portion of your slot.

Hey, good morning, everybody.

Through an NDA question.

We're obviously tracking some of the rebalancing between JFK and Philadelphia.

The 787 captains in Philly that number is moving up quite a bit it looks like Jetblue will continue to operate a portion of your slots through the <unk> summer season next year.

Speaker 11: through the end of IOTA's summer season next year. I reckon, so part of my question is, am I right on that? But more importantly, I recognize networks are fluid, but when should we think about Philadelphia and New York sort of reaching a steady state? Is that a process that will wrap in time for next summer? Or should we think of the NEA unwind as lasting longer than that?

Operator: I guess, you know, what has been going better than expected? And then can you just remind us what you had originally baked in for the open flight flight tenant contract in the second half? Did that have any impact on 3Q? Thanks. Thanks for question, Katie. We do have, it's largely timing and operation performance with higher ASMs is what benefited us in the third quarter in our prior guidance. We didn't have anything in the third quarter for our open labor agreements outside of the pilots.

So part of my question is am I right on that but more importantly, I recognize networks are fluid, but when should we think about Philadelphia, and New York sort of reaching a steady state.

Is that a process that will wrap it in time for next summer or should we think of the NBA unwind as lasting longer than that.

Speaker 5: Hey, Jamie, thanks for the question. We've all been around this business for a while and steady state. It's always a very big thing.

Hey, Jamie Thanks for the question.

We've all been around this business for a while in steady state.

Operator: We did have some in the fourth quarter and we still have something modest in the fourth quarter just given the time it would take to reach and ratify an agreement. But generally speaking, everything this year has come in very much in line with what our initial guidance was, which is why for the full year, we're still right around that 3% number. We've seen a little bit of pressure on certain line items.

As always.

Yes.

Speaker 5: on the hospital. But I will say this, the role of these hubs is

Okay.

I'll say this the role of these hubs.

It's quite complementary and we're seeing it more and more.

Speaker 5: quite complimentary. And we're seeing it more and more from my comments earlier, where New York is a lot of New York originating customers when it goes international. Domestic, it's a mix of New York originating. And as we call it, spoke city, like outside of hub, they're originating in the New York.

<unk> comments earlier, where new York is a lot of New York originating customers. When it goes international domestic it's a mix of New York originating and as we call. It spoke city outside of hub the originating into in the New York.

Operator: We've gotten some benefits from others, but overall it's largely in line with our expectations and like just generally speaking, we are pretty good at forecasting out expenses. And I think during the COVID years, that became a little bit more challenging. But in 2023, we feel pretty good about our ability to forecast and deliver results. That's great. Thanks for the detail. And then maybe one for Vasu. Between the third quarter and second quarter, you experienced diesel and rasm.

And Philadelphia is are our largest connecting complex in the trans Atlantic and so a lot of what you see is just it comes back to what Robert mentioned, we're seeing actually a lot of traction in international and Trans Atlantic better than we have before we're seeing it from both of these markets.

Speaker 5: For the first time since our Atlantic joint venture was created, we're pretty consistently the unit revenue leader amongst the group, which has been very unique in a long time coming. And so we think that these two hubs are very complimentary. We see it every day that they're very complimentary as we bring in the XLR that enables us to do some really unique things in both of those markets. And as we do things like improve the configuration on the triple 7300 or bring in more 787-9, that further augments that. So that's what you see.

The first time.

Since our Atlantic joint venture was created a pretty consistently.

The unit revenue leader amongst the group, which has been very unique in a long time coming and so we think that these two hubs are very complementary we see it every day that they're very complementary as we bring in the XLR that enables us to do some really unique things in both of those markets and as we do things like.

Operator: You know, in year of a year in 2019, totally understand there's so many moving pieces now as the network recovers and in the shape of your network has changed a bit over the years. But your fourth quarter guidance implies things will stabilize in a year or year basis. Can you walk us through what's driving that stabilization? Thanks so much. And for my clarity, you mean the quarter to quarter stabilization? Right, just comparing the year of the years to each other.

Speaker 5: bringing the XLR that enables us to do some really unique things in both of those markets. And as we do things like improve the configuration on the triple seven 300 or bring in more 787 9s, that further augment that.

Improve the configuration on the Triple seven 300 or bring in more 787 nine that further augment that.

Speaker 5: So that's what you see and look in the world of network planning, we can move things around based on where the demand is. We'll continue to do it. There are there are some of that rebalancing and certainly as we go into next year, we do see a lot of opportunity to to bulk up and still a delpia as we get more supportability back because the regional comes back as we take?.

So that's what you see in looking at the World of network planning, we can we can move things around based on where the demand is we'll continue to do it there there'll be some of that rebalancing and certainly as we go into next year, we do see a lot of opportunity to to.

Operator: Sure. I will do my best. There's a few things that are changing in our system right now between one quarter to the next that has that effect. In Q3, what we find just in terms of how we brought the network back, a lot of what we were flying were off time periods, like off peak flights. As we get into Q4, that starts to stabilize a little bit more. We were getting a lot more regional supportability into the fourth quarter.

Bulk up in Philadelphia, as we get more support ability back because the regional comes back as we take wide body deliveries.

Operator: And so a little bit of what you see there are just shifting year over your trends based on how we brought the airline back. And then where where the airline is oriented around flying in the third quarter, especially in the the trough seasons of August and September. There's some strange year over your comps where the Northeast was performing better than markets in the sun belt when we get into in the Q4.

Speaker 11: okay fair enough and then second question now you know for for definite clarification the three and a half billion catacombs figures that you gave or figure that you gave before that was aircraft only correct so all in we should be dialing in something you know closer to four and a half billion going forward I'm assuming I got that right and if so you expect to generate cash next year at current fuel prices

Okay Fair enough and then.

Second question.

For Devin a clarification the $3 5 billion Capex figures that you gave a figure that you gave before that was aircraft only correct. So all in.

We should be dialing in to something closer to $4 5 billion going forward I'm, assuming I got that right and if so do you expect to generate cash next year at current fuel prices.

Speaker 2: Yeah, so just two separate things. So for 2024, our total cat-back is between $3.3 billion. Long-term beyond 2024, you're right that the $3.5 billion number I gave was just aircraft cat-back.

Yes, so just two separate things so for 2024.

Our total Capex is between three and $3 3 billion.

Long term beyond 2024, you are right that the $3 $5 billion number I gave was just aircraft capex.

Operator: That's when the sun belt and short haul and CLA start to change. And you see that in our schedules. We have the biggest Miami operation in our history there. So a lot of what you see there is less a function of something fundamental, but some really unique quarter to quarter recovery trends. Thanks for the time.

Speaker 11: So for 24, I think our capital requirements are such that we certainly have the ability to generate free cash flow and we're absolutely in a different position than some of our peers just given where they are at in terms of fleet renewal program versus where we're at. We spent over $30 billion from 2014 to 2019 on our fleet renewal. Now we're in a nice spot where a capital requirements are slightly less and it does give us the ability to produce free cash flow going forward like we did in this year.

So for 24 I think our.

Our capital requirements are such that we certainly have the ability to generate free cash flow and we're absolutely in a different position.

And then some of our peers, just given where they're at in terms of fleet renewal program versus where we're at we spent over $30 billion from 2014 to 2019 on our fleet renewal.

Jamie Baker: Thank you. Our next question comes from the line of Jamie Baker, of JP Morgan. Hey, good morning, everybody. I'm Vasu and NEA question. You know, we're obviously tracking some of the rebalancing between JFK and Philadelphia. I see that 787 captains in Philly. That number is moving up quite a bit. It looks like JetBlue will continue to operate a portion of your slots through the end of Ayada's summer season next year. I reckon so part of my question is, am I right on that?

Now we're in a nice spot where capital requirements are slightly less and it does give us the ability to produce free cash flow going forward like we did in this year.

Okay. Thank you very much.

Okay.

Thank you please standby for our next question.

Speaker 1: Thank you. Please stand by for a next question.

Our next question comes from the line of Duane <unk> of Evercore ISI.

Speaker 1: Next question comes from the line of Duane Denegriff of Evercore, ISI.

Hey, Thanks, Good morning appreciate the time.

Speaker 12: Kind of an industry question, but we'll go ahead and ask it of you just with respect to.

It kind of an industry question, but but we'll.

We'll go ahead and ask it have you just just with respect to.

Jamie Baker: But more importantly, I recognize networks are fluid, but when should we think about Philadelphia and New York sort of reaching a steady state? Is that a process that will wrap in time for next summer? Or should we think of the NEA unwind as lasting longer than that? Hey, Jamie. Thanks for the question. I guess we've all been around this business for a while and steady state. It's always a very difficult question.

Speaker 12: uh... for key rasm guidance down six and a half uh... at the midpoint which actually a little bit better than what we're modeling uh... and the cost pressures you're outlining into next year what what needs to go right to get that unit revenue back to positive territory i mean that the five percent growth

<unk> RASM guidance down six five at the midpoint, which is actually a little bit better than what we were modeling.

And the cost pressures you were outlining into next year.

What needs to go right to get that unit revenue back to positive territory I mean, the 5% growth.

Speaker 12: that you're outlining. You know, may or may not be crazy relative to GDP. If we're just thinking about it year or year, right, 5% doesn't sound crazy. But if we think about where your margins are exiting here, the X-rayed on your margins.

That you're outlining.

May or may not be crazy relative to GDP.

We're just thinking about it year over year rate, 5% doesn't sound crazy.

Jamie Baker: But I will say this, the role of these hubs is quite complimentary. And we're seeing it more and more. For my comments earlier, where New York is a lot of New York originating customers, when it goes international, domestic, it's a mix of New York originating, and as we call it, spoke city, like outside of hubs originating into New York. And Philadelphia is our largest connecting complex in the trans-Atlantic. And so a lot of what you see is just, it comes back to what Robert mentioned.

But if we think about where your margins are exiting here the exit rate on your margins.

Speaker 12: You know, any thoughts about how we get back to positive rasm, which it appears you'll need to stabilize your margins here? Appreciate the thoughts.

Any thoughts about how we get back to positive RASM, which which it appears you'll need to stabilize your margins here I appreciate the thoughts.

Hey, Thanks for the question look at the answers as both very simple and consistent with the step we have been saying.

Speaker 9: Okay, thanks for the question. Look, and the answer is both very simple and consistent with the stuff we've been saying.

Speaker 5: What we get to do, the stuff we have to do is within our control. It's bringing back our regional jet network, which creates a lot of revenue benefits for us and a lot of unique markets for our customers. And, too, it's growing more, growing the revenues from a vantage, both through our brand of credit cards and how we go issue and enable the redemption of miles. Both of those things are our tops on our plans for next year. We're excited to go and execute all on that. And we see a lot of upside.

What we get today.

We have to do is within our control.

That's bringing back our regional jet network, which creates.

A lot of revenue benefits for us and a lot of unique markets for our customers and to its growing more growing the revenues from from advantage both through our branded credit cards and how we go.

Jamie Baker: And we're seeing actually a lot of traction in international and trans-Atlantic, better than we have before. We're seeing it from both of these markets. For the first time since our Atlantic joint venture was created, we're pretty consistently the unit revenue leader amongst the group, which has been very unique in a long time coming. And so we think these two hubs are very complimentary. We see it every day if they're very complimentary as we bring in the XLR that enables us to do some really unique things in both of those markets.

<unk> and enable the redemption of miles.

Both of those things are are tops on our plans for next year. We're excited to go and execute on that and we see a lot of upside.

Speaker 12: I guess just maybe thinking sequentially, like how patient will you be with sort of break even ash, you know, negative margins. Like is that a one or two quarter phenomenon? Is it a multi-year phenomenon?

I guess, just maybe thinking sequentially like how patient will you be.

With sort of breakeven ish negative negative margins like is that a one or two quarter phenomenon is it a multiyear phenomenon.

Speaker 3: I'll take this. Hey, Dwayne, thanks. Look, we are going to be incredibly focused on making sure that when we deploy assets where we can make money, the kind of things that we're talking about and focusing on our strengths are where we see that happening. And look, I think that we, you know, to the contrary, I think we carry momentum in a lot of the work that we've done this year that that Vasu has been at the center of in terms of making sure that we have the best network and we can sell.

Jamie Baker: And as we do things like improve the configuration on the triple seven 300 or bring in more 787 9s, that further augments that. So that's what you see and look in the world of network planning, we can move things around based on where the demand is. We'll continue to do it. There'll be some of that rebalancing. And certainly as we go into next year, we do see a lot of opportunity to bulk up in Philadelphia as we get more supportability back because the regional comes back as we take wide body deliveries. Okay, fair enough.

No.

Sure I'll take this hey, Duane. Thanks look we are going to be incredibly focused on making sure that we deploy assets, where we can make money the kind of things that we're talking about here.

Yeah.

And focusing on our strengths are where we see that happening and look I think that we to the contrary I think we carry momentum in a lot of the work that we've done this year that Vasu has been at the center of in terms of making sure that we have the best network and we can sell.

Speaker 3: Josh Cell and Service it digitally, you know, is all groundwork for next year. And so as we take a look at not only the regional network, further enhancing premium product, what we will intend to do with advantage and less, you know,

Sell and service it digitally.

Devon May: And then second question, you know, for for definite clarification, the three and a half billion capex figures that you gave or figure that you gave before, that was aircraft only correct. So all in, we should be dialing in something closer to four and a half billion going forward. I'm assuming I got that right. And if so, you expect to generate cash next year at current fuel prices. And yeah, so just two separate things.

As all groundwork for next year and so as we take a look at not only the original network further.

Enhancing premium product.

What we will intend to do with with advantage and less.

Speaker 3: variable revenue. I think that all plays into a lot of strength. And on top of that, look, we

Variable revenue I think that all plays into a lot of strength and on top of that look.

Speaker 3: We're in the midst of recovery still. And so as we go from quarter to quarter, we know that there are things that we could have done differently over the past summer that we're gonna make sure that we're addressing in terms of where we're flying and how we're doing it. But we will have very little tolerance for what you would consider kind of infestment or development flying. We're gonna fly where we make money.

We're in the midst of recovery still.

And so as we go from quarter to quarter, we know that there are things that we could have done differently.

Devon May: So for 2024, our total capex is between three and $3.3 billion. Long term beyond 2024, you're right that the three and a half billion dollar number I gave was just aircraft capex. So for 24, I think our capital requirements are such that we certainly have the ability to generate free cash flow and we're absolutely in a different position than some of our peers, just given where they are at in terms of free renewal program versus where we're at.

Over the past summer that we're going to make sure that we're addressing in terms of where we're flying and how we're doing it but we will have very little tolerance for what you would consider kind of investment or development flying we're gonna Fi, where we make money.

No no it's not an easy question, but I appreciate that I appreciate the thoughts thank you.

Speaker 12: No, it's not an easy question, but I appreciate the thoughts. Thank you.

Yeah.

Thank you.

Speaker 1: Next question comes from the line of Connor Cunningham of Melius Reese.

Our next question.

Comes from the line of Conor Cunningham of Melius research.

Devon May: We spent over $30 billion from 2014 to 2019 on our free renewal. Now we're in a nice spot where capital requirements are slightly less and it does give us the ability to produce free cash flow going forward like we did in this year.

Speaker 7: Hi everyone, thanks for the time. Just your capacity has been pretty stable relative to the industry and a lot of the constraints that we've talked about this year, seem like they're gonna carry forward next year if not get a little bit worse. And so, at the same time, the domestic competitors are really struggling. So I'm just curious on how you may take advantage of that situation next year if those themes continue to play out. Or are you just happy with the current execution of what you're doing?

Hi, everyone. Thank you for the time, just your capacity has been pretty stable relative to the industry and a lot of the constraints that we've talked about this year. It seemed like they're going to carry forward next year, if not get a little bit worse and so.

Duane Pfennigwerth: Okay, thank you very much. Thank you, please stand by for the next question. The next question comes from the line of Duane Pfennigwerth, of Evercore, ISI. Hey, thanks, good morning. I appreciate the time. Kind of an industry question, but we'll go ahead and ask a few of you, just with respect to working you, Rasmguidins, down six and a half at the midpoint, which is actually a little bit better than what we're modeling, and the cost pressures you are outlining into next year.

At the same time the domestic the domestic competitors are really struggling so I'm just curious on how you may take advantage of that situation next year. If those teams continuing to play out or are you just happy with the current execution of what Youre doing right now.

Speaker 3: I'll start, Connor and Vasu can...

I'll start counter and Vasu.

Speaker 3: can join in. Look, you know, when we talk about the kind of capacity that we are going to be, you know, putting back, we've described it over and over again. I think that, you know, first off, we've got assets that on hand today that provide, you know, some some of that benefit, we're certainly going to make sure that that gets deployed in a fashion that is productive. I do think that there are constraints out there.

And joining us look.

When we talk about the kind of capacity that we are going to be putting back. We've described it over and over again I think that first off we've got assets that are on hand today that provide some of that benefit we're certainly going to make sure that that gets deployed in a fashion that is productive I do think that there are constraints out there.

Duane Pfennigwerth: What needs to go right to get that unit revenue back to positive territory? I mean, the 5% growth that you're outlining, you know, may or may not be crazy relative to GDP. If we're just thinking about it year-to-year, right? 5% doesn't sound crazy. But if we think about where your margins are exiting here, the exerate on your margins, you know, any thoughts about how we get back to positive Rasm, which it appears you'll need to stabilize your margins here?

Speaker 3: that continue on and whether that's ATC or it's some of the supply chain, both engines and air framers, I think that that kind of stuff is we're going to have to work through. And then on top of that, look, we're all getting through the pilot shortfalls as well. So there's

They continue on and whether Thats ATC.

Or it's some of the supply chain, both engines and air Framers, I think that that kind of stuff.

As a.

We're going to work through and then on top of that you know look we're all getting through the pilot shortfalls as well so there's.

Speaker 3: you know, ups and downs to that. But overall, you will see us, you know, we're gonna, we're gonna play. You know, we're gonna play.

Ups and downs to that.

But overall.

You will see us.

We're going to we're going to play our game and that means you know find our sunbelt, how some about hubs strengthening the rest of our network through getting capacity back up in the air and doing all the things that <unk> talked about.

Speaker 3: And that means, you know, find our sunbelt held.

Duane Pfennigwerth: Appreciate the thoughts. Hey, thanks for the question. Look, and the answer is both very simple and consistent with stuff we've been saying. What we get to do, the stuff we have to do is within our control. It's bringing back our regional jet network, which creates a lot of revenue benefits for us and a lot of unique markets for our customers, and to you, it's growing more, growing the revenues from a vantage, both through our brand of credit cards and how we go issue and enable the redemption of miles.

Speaker 3: strengthening the rest of our network through getting capacity back up in the air. And doing all the things that Vasu has talked about in terms of taking advantage of advantage and our co-brand deals and then also modern retailing.

And in terms of taking advantage of advantage and.

Our co brand deals and then also.

Modern retailing.

Okay and then.

Speaker 2: Okay. And then you've executed pretty remarkably on your plan, but your margins, maybe to the Helians earlier question, just continue to lag, delking night in. Your operation's been better, all that stuff, and I get it. But when you think about the opportunity ahead to close that gap, is it more a revenue equation or cost? I think historically.

You've executed pretty remarkably on your plan, but your margins maybe to <unk> earlier question, just continuing to lag Delta United.

Duane Pfennigwerth: Both of those things are our tops on our plans for next year. We're excited to go and execute all on that, and we see a lot of upside. I guess just maybe thinking sequentially, like, how patient will you be with sort of breakeven-ish, you know, negative margins? Is that a one or two quarter phenomenon? Is it a multi-year phenomenon? I'll take this. Hey, Dwayne, thanks. Look, we are going to be incredibly focused on making sure that when we deploy assets where we can make money, the kind of things that we're talking about and focusing on our strengths are where we see that happening.

Your operations and better all of that stuff.

I get it but when you think about the opportunity ahead to close that gap is it more a revenue equation our costs I think historically.

Speaker 13: Americans talked a little bit about the revenue gap, but it seems to be that there's more of a cost opportunity here. Just curious and your thoughts there. Thank you.

Americans talked a little bit about the revenue gap, but it seems to be that there's a more of a cost opportunity here just curious on your thoughts there. Thank you.

Yeah.

Hey, Conor, it's Kevin I'll take that.

Speaker 2: And this is certainly something we look at at a quarterly basis, but we do spend a lot of time on benchmarking. And if you want to talk about benchmarking margins, we do think it's important to look at it and look at it on a 12-month basis. And the right margin to be using when you're comparing us to these other network peers is EBITDA, because it just takes out financing decisions. So aircraft rent versus...

And certainly this isn't something we look at it at a quarterly basis, but we do spend a lot of time on benchmarking and if you want to talk about benchmarking margins we.

Duane Pfennigwerth: And look, I think that we, you know, to the contrary, I think we carry momentum in. A lot of the work that we've done this year that Vasu has been at the center of in terms of making sure that we have the best network, and we can sell Josh Cell and service it digitally. You know, it's all groundwork for next year. And so as we take a look at not only the regional network, further enhancing premium product, what we will intend to do with advantage and less, you know, variable revenue, I think that all plays into a lot of strength.

We do think it's important to look at it and look at it on a 12 month basis and the right margin to be using when you're comparing us to these other network peers is EBITDAR because it just takes out financing decisions, so aircraft rent versus depreciation and interest expense and it takes out capital structure, which we just know right now we have a difference, but that's an area we are.

Speaker 2: depreciation interest expense and it takes out capital structure which we just know right now we have a difference But that's an area we also know we're going to improve on going forward so

No we're going to improve on going forward. So.

Speaker 2: Let's talk about that. On EBITDA margins, I think we stack up really well with our competitors. If you look at 12 months ended third quarter, I think we're right on top of one of them and maybe there's a small gap to the other. But I think our progress versus 2019 has been really good. And the opportunity ahead is on both sides. I do think we're going to be able to produce.

Let's talk about that on EBITDAR margins, I think we stack up really well with our competitors. If you look at 12 months ended third quarter I think were right on top of one of them and maybe there's a small gap to the other.

Duane Pfennigwerth: And on top of that, look, we're in the midst of recovery still. And so as we go from quarter to quarter, we know that there are things that we could have done differently, you know, over the past summer, that we're going to make sure that we're addressing in terms of where we're flying and how we're doing it. But we will have very little tolerance for, you know, what you would consider, you know, kind of infestment or development flying. We're going to fly where we make money. No, it's not an easy question, but I appreciate the thoughts.

But I think our progress versus 2019 has been really good and the opportunity ahead is on both sides I do think we're going to be able to produce.

Speaker 2: um capacity at lower unit costs going forward or at least decelerate this unit cost growth and I do think we have top line opportunities as well and the only other thing I'd close on is well I think we're in pretty nice shape on margins um and there's opportunity ahead when it comes to free cash flow I think we are unique amongst our network peers with our capital requirements going forward and we should be able to outproduce on free cash flow um for most of this decade.

Capacity at lower unit costs going forward or at least decelerate. This unit cost growth and I do think we have top line opportunities as well.

The only other thing I'd close on as well I think we're in a pretty nice shape on margins.

And Theres opportunity ahead, when it comes to free cash flow I think we are unique amongst our network peers with our capital requirements going forward and we should be able to help produce on free cash flow for most of the second.

Conor Cunningham: Thank you. Next question comes from the line of Conor Cunningham of Melius Research. Hi, everyone. Thanks for the time. Your capacity has been pretty stable relative to the industry. And you know, a lot of the constraints that we've talked about this year seem like they're going to carry forward next year. If not, get a little bit worse. And so, you know, at the same time, the domestic, domestic competitors are really struggling.

Speaker 3: Yeah, thanks, Devin. And Connor, I'll just underscore, you know, one more time, please take a look at the past year. There's a lot of variability in quarters in terms of, you know, whose network is aligned to do better one to the next. And also a lot of noise in the numbers in terms of just building back the airlines from the pandemic. We feel really confident about how we're

Thanks, Devin and counter I'll, just I'll just underscore one more time. Please take a look at the past year Theres a lot of variability in quarters in terms of you know.

Who whose network is aligned to do better one one to the next and also a lot of noise in the numbers in terms of just building back the airlines from the pandemic, we feel really confident about how we're shipping.

Speaker 14: particularly for especially on a competitive basis against our peers. All right, thank you.

Quick one for especially an uncompetitive basis against our peers.

Conor Cunningham: So I'm just curious on how you may take advantage of that situation. Next year, if those themes continue to play out, are you just happy with the current execution of what you're doing right now? I'll start Conor and Vasu can join in. Look, you know, when we talk about the kind of capacity that we are going to be, you know, putting back. We've described it over and over again. I think that, you know, first off, we've got assets that on hand today that provide, you know, some of that benefit.

Yeah.

Alright, thank you.

Thank you.

Our next question.

Speaker 1: comes from the line of Savi Seif of Raymond James.

It comes from the line of Savi <unk> of Raymond James.

Hey, good morning, everyone.

Speaker 15: Hey good morning everyone. I was kind of curious if you could provide a little color on the international entities. I know you mentioned in transatlantics really strong it seems like LATAM was a little big bit weak one you know wondering what that is and along those lines when you're talking about growing into your strengths do you mean next year kind of most of the growth will be domestic and and not as much in the international?

I'm just kind of curious if you could provide a little color on the international I think he is I know you mentioned.

Conor Cunningham: We're certainly going to make sure that that gets deployed in a fashion that is productive. I do think that there are constraints out there that continue on. And whether that's ATC or it's, you know, some of the supply chain, both engines and air framers. I think that that kind of stuff, you know, is, is, is, you know, we're going to have to work through and then on top of that, you know, look, we're all getting through the pilot shortfalls as well.

In terms of Atlantic fairly strong it seems like Latam, because it'll abate between one and what that is.

Conor Cunningham: So there's, you know, ups and downs to that. But overall, you will see us, you know, we're going to, we're going to play our game. And that means, you know, find our, our sunbelt help, sunbelt helps, you know, strengthening, you know, the rest of our network through getting capacity back up in the air. And you're doing all the things that Vasu has talked about in terms of taking advantage of advantage and our co-brand deals and then also modern retailing.

Along those lines when you're talking about growing into your strengths do you mean next year kind of most of the growth there'll be domestic and then mountain as much into international.

Speaker 5: Yeah, hey Savi, this is Vasu. I can take that and I'll take it in two parts. First, just around the world, yes, we see really strong long haul.

Yeah, Hey, Savi. This is vasu I can I can take that and I'll take it in two parts.

Just around the world, Yes, we see really strong long haul revenue trends, regardless of the entity long haul Atlantic long haul Latin America long haul Pacific.

And as I mentioned earlier.

Versus any prior period of time, whether last year 2019, or really any anything as far back as it goes we've seen uniquely strong revenue performance, but what we're encouraged by is that our revenue performance, though it's not where we wish it to be has never growing at a faster rate than some of our international partners.

Speaker 5: prior period of time, whether last year, 2019, or really anything as far back as it goes, we've seen uniquely strong revenue performance. But what we're encouraged by is that our revenue performance, though it's not where we yet wish it to be, has never grown at a faster rate than some of our international partners. And for many of them, flying to North America is the very best thing that they do. So we're encouraged by the journey we've been on. We see more opportunity ahead as we do simple things, configure airplanes smartly, get low-cost jets like the XLR. And so our future in international is one which is well within our control and very, very practical. It doesn't involve any great prognostications of how the world would change. And then as far as next year goes, look, a lot of our overall entity mix is largely to be similar, where we're going to be about a 70%, 75%.

And for many of them blind in North America is the very best thing that they do so we are encouraged by the journey. We've been on we see more opportunity ahead as we do simple things.

Conor Cunningham: Okay. And then, you know, you've executed, you know, pretty remarkably on your plan, but your margins, maybe to the Netherlands earlier question, just, you know, continue to lag, tilting night in, you know, your operations been better, all that stuff and I get it. But, you know, when you think about the opportunity ahead to close that gap, is it more a revenue equation or cost, I think historically, you know, Americans talked a little bit about the revenue gap, but it seems to be that there's a more of a cost opportunity here.

Bigger airplanes smartly get low cost jets like the the XLR and so are our future in international as it is.

One which is well within our control and very very practical it doesn't involve any great prognostications of how the world would change and then as far as next year goes.

Speaker 9: And then as far as next year goes...

Speaker 5: Look, a lot of our overall entity mix is largely to be similar, where we're gonna be about a 70, 75% short haul carrier and a 20 to 25% long haul carrier. But those two

Look a lot of our our our overall entity mix is largely to be similar where we're going to be about a 70% to 75% short haul carrier and a 20% to 25% long haul carrier, but those two.

Conor Cunningham: Just curious and your thoughts there. Thank you. Hey, Connor, it's Devon. I'll take that. And certainly this isn't something we look at at a quarterly basis, but we do spend a lot of time on benchmarking. And if you want to talk about benchmarking margins, we do think it's important to look at it and look at it on a 12 month basis. And the right margin to be using when you're comparing us to these other network peers is EBITAR because it just takes out financing decisions, so aircraft rent versus depreciation interest expense, and it takes out capital structure, which we just know right now we have a difference, but that's an area we also know we're going to improve on going forward.

Areas would grow at a similar rate, which is why the mix stays constant.

Speaker 5: areas would grow at a similar rate, which is why the mix.

Yeah.

Speaker 15: But that's helpful. And if I might just next year's growth is it should we assume a lot more kind of regional like a mix next year, just as that regional entity comes back versus mainline as we kind of think through maybe what the pressures on chasm might be, but maybe the kind of benefits to Rasmus.

That's helpful.

If I might just add.

Next year's growth is it should we assume a lot mark in our region.

It makes next year, just as that regional entity comes back versus mainline as we kind of think through maybe what the pressure is on CASM might be that maybe the kind of the benefits to RASM.

Conor Cunningham: So let's talk about that on EBITAR margins. I think we stack up really well with our competitors. If you look at 12 months and a third quarter, I think we're right on top of one of them. And maybe there's a small gap to the other. But I think our progress versus 2019 has been really good. And the opportunity ahead is on both sides. I do think we're going to be able to produce, capacity at lower unit cost going forward or at least decelerate this unit cost growth.

Yes, it's probably a little early to get into too much detail. We do expect to build back the regional network. We're also looking at better utilization on the mainline side. So we'll give a little more detail as we get into January .

Speaker 12: Yeah, it's probably a little early to get in too much detail. We do expect to build back the regional network. We're also looking at better utilization on the mainline side So we'll give a little more detail as we get into January Appreciate it. Thank you

Appreciate it thank you.

Thank you.

Our next question.

It comes from the line of Daniel Mckenzie of Seaport Global.

Speaker 1: comes from the line of Daniel McKenzie of Seaport Global.

Conor Cunningham: And I do think we have top line opportunities as well. And the only other thing I'd close on is, well, I think we're in pretty nice shape on margins. And there's opportunity ahead when it comes to free cash flow, I think we are unique amongst our network peers with our capital requirements going forward and we should be able to out produce on free cash flow for most of this decade. Yeah, that's the same.

Yeah.

Oh, Hey, good morning, guys I wanted to see if I could put a bigger spotlight on the distribution strategy. So I guess vasu building on the prior remarks around direct distribution what percent of Americans revenue has now shifted to direct channels versus say a year ago, how big a change as it Ben.

Speaker 8: Oh, hey, good morning, guys. Um, I wanted to see if I could put a bigger spotlight on the distribution strategy.

Speaker 8: So, I guess, Vasu, building on the prior remarks around direct distribution, what percent of Americans' revenue has now shifted to direct channels versus, say, a year ago? How big a change has that been? What is it that Americans can do today that they couldn't do before? And then, finally, if you can just help us frame what that revenue upside means, not just today, but more importantly, you know, for those investors that invest longer term, what that revenue contribution could look like, say, three years from now?

What is it that American can do today that it couldn't do before and then finally, if you can just help us frame what that revenue upside means not just today, but more importantly for those investors that invest longer term what that revenue contribution could look like say three years from now.

Conor Cunningham: Thanks, Devon. And Conor, I'll just underscore one more time. Please take a look at the past year. There's a lot of variability in quarters in terms of who's network is aligned to do better, one to the next. And also, a lot of noise in the numbers in terms of just building back the airlines from the pandemic. We feel really confident about how we're. Especially on a competitive basis against our peers. All right.

Hey, Dan.

Speaker 5: I appreciate the question and I'll do that, be your answer sequentially, too. Look, first and foremost, like I said, we're very encouraged by the changes that we've gone through, largely because they're simply responsive to the customers. I mean, we're retailing our product the way...

I.

Great question, and I'll do that via answers sequentially too.

Look first and foremost like I said, we're very encouraged by it by the the changes that we've got largely because there simply are responsive to the customers everywhere retailing our product the way customers expect which is really just through the internet.

Savanthi Prelis: Thank you. Our next question comes from the line of savvy site of Raymond James. Hey, good morning, everyone. I was going to curious if you could provide a little color on the international entities. I know you mentioned in transit. The Atlantic is really strong. It seems like Latin was a little bit weak one, you know, during what that is. And along those lines, when you're talking about growing into your strength, you mean next year, kind of most of the growth will be domestic and not as much in the international.

Speaker 5: customers expect which is really just through the Internet. And unsurprisingly customers have responded. So what we saw as we were going through COVID-19 was already without American Airlines making any strategic changes. We went from about selling 50 percent direct to selling about 60 percent direct.

And unsurprisingly customers have responded so what we saw as we were going through Covid was already without American airlines, making any strategic changes, we went from about selling 50% direct selling about 60% direct.

And right now what we're what we're taking in terms of revenue is actually about 80% going through as we call. It Internet based distribution of which about 70 of those 80 point of going through our true direct channels dot com and app and the balance coming through new distribution technologies and back.

Savanthi Prelis: Yeah. Hey, so I mean, this is what I see. I can I can take that and I'll take it in two parts. First, just around the world. Yes, we see really strong long haul revenue trends, regardless of the entity. Long haul Atlantic, long haul Latin America, long haul Pacific. And as I mentioned earlier, versus any prior period of time, whether last year 2019 or really anything as far back as it goes, we've seen uniquely strong revenue performance.

Speaker 5: Our internet-based travel agency technologies is now a bigger source of bookings than any of the legacy global distribution systems are. So we're encouraged by that, but also, very candidly, none of that's a surprise. I mean, customers want that experience, which is the second part of your question. The very simple benefit is through what we do, we can go and create more offers for customers that they value. We've seen this, and we continue to see this, that a number of customers who come to a.com or the app shopping for the cheapest fare that we have end up selling up, like roughly...

Our our Internet based travel agency technologies is now a bigger source of bookings in any of the legacy global distribution system bar.

So we were encouraged by that but also very carefully not not that surprised I mean customers want that experience, which is the second part of your question.

The the very simple benefit is due.

Speaker 5: Through what we do, we can go and create more offers for customers that they value. We've seen this and we continue to see this as a number of customers who come to A.com or the app shopping for the cheapest fare that we have end up selling up. Like roughly 70% of the customers who come to our website actually come looking for the lowest fare but buy something higher than that. And through these new tools, offer them a whole lot more that creates value for them. We can differentiate things like how they're able to redeem miles for different fare products or even how they're able to earn miles.

Through what we do we can go and create.

Savanthi Prelis: But what we're encouraged by is that our revenue performance. So it's not where we yet wish it to be. It has never grown in a faster rate than some of our international partners. And for many of them blind in North America is the very best thing that they do. So we're encouraged by the journey we've been on. We see more opportunity ahead as we do simple things, configure airplanes smartly, get low cost jets like the XLR.

More offers for our customers that they that they value. We've seen this and we continue to see this that a number of customers who come to a dot com or the app shopping for the cheapest fare that that we have and up selling up like roughly 70% of the customers who come to our website actually come looking for the lowest fare but by <unk>.

Higher than that and.

Savanthi Prelis: And so our future and international is one which is as well within our control and very, very practical. It doesn't involve any great prognostications of how the world would change. And then as far as next year goes look, a lot of our overall entity mixes is largely to be similar where we're going to be about a 70 75% short haul carrier and a 20 to 25% long haul carrier. But those two areas would grow at a similar rate, which is why the mix stays constant.

And through the museum.

And offer them a whole lot more of that create value for them.

We can differentiate.

Things like how they are able to redeem miles for a different bear products or even how they're able to earn miles for different air products.

Speaker 16: there us,

Speaker 5: And then the other thing that I would say is, which we're finding to be very, very impactful, as we shift to internet-based distribution, our servicing becomes a whole lot simpler.

And then the other thing that I would say is.

We're finding to be very very impactful and as we shift to internet based distribution.

Our servicing becomes a whole lot simpler.

Speaker 5: So it's hard to do what three years out look like, but I can talk about the next several weeks and quarters and what you will see from us are things where we do much more consciously differentiate all the content we offer will be through internet-based technologies. We will look to do things like offering more miles for buying premium cabins, for shopping through our direct channels, for using our credit card. We will create more redemption opportunities mission and having it ready. ???rt.com

It's hard to do what three years outlook like looks like but I can talk about the next.

Several weeks and quarters, and what you will see from us or things, where we do much more consciously differentiate.

Savanthi Prelis: That's helpful. And if I might just next year's growth is it should be assumed a lot more kind of regional like a mix next year just as that regional entity comes back versus main line as we kind of think through maybe what the pressure on chasm might be, but maybe the kind of benefits to razon. Yeah, it's probably a little early to get into much detail. We do expect to build back the regional network. We're also looking at better utilization on the mainline side. So we'll give a little more detail as we get into January. Appreciate it.

All the content, we offer will be through through Internet based technologies, we will look to do things like offering more miles for buying premium cabin for shopping through our our direct channels for using our credit card, we will create more redemption opportunities.

Speaker 5: But then also what we'll be at a place by the end of this year is that 100% of what we sell will be able to be serviced digitally but only through internet-based technologies. That's the thing which is hugely impactful to our customers. For any of you who're traveling on American Airlines, I encourage you if you're making changes. Please use the app to do so. I think you'll find it to be a much better experience and sometimes fast and an industry leading one as well.

Okay.

But that also.

What will be in place by the end of this year is that a 100% of what we sell we will be able to be serviced digitally but only through internet based technologies. That's the thing which is hugely impactful to our customers for any of us could traveling on American Airlines I encourage you if youre, making changes please use the app to do so.

Daniel Mckenzie: Thank you. Our next question comes from the line of Daniel McKenzie of seaport global. Hey, good morning, guys. I wanted to see if I could put a bigger spotlight on the distribution strategy. So I guess Vasu, building on the prior remarks around direct distribution, what percent of Americans revenue has now shifted to direct channels versus say a year ago? How big a change is that then? What is it that American can do today that it couldn't do before?

You'll find it to be a much better experience in times past and at an industry, leading one as well.

Speaker 8: Very good. Okay. The second question here for Devon, I know on, you know, Robert shared that 75% of the dad is at a fixed rate, but just given the hire for longer, interest rate regime today, how's that changing the way you think about the three-year balance sheet targets and goals? And, you know, can American get to an investment grade rating at some point, and what might a realistic time frame look like to get there?

Very good okay second.

Second question here for Devin I know on Robert shared that 75% of the debt is is at a fixed rate, but just given the higher for longer interest rate regime. [noise] today, how is that changing the way you think about the three year balance sheet targets and goals and Ken American get to an investment grade rating at some point.

Daniel Mckenzie: And then finally, if you can just help us frame what the revenue upside means, not just today, but more importantly, you know, for those investors that invest longer term, what that revenue contribution could look like say three years from now? Hey, Dan, I appreciate the question and I'll do that. Be your answer sequentially to you. The first and foremost, like I said, we're very encouraged by the changes that we've gone through largely because they're simply responsive to the customers.

And what might a realistic timeframe look like to get there.

Speaker 2: Well, I'll just start with right now, our focus on the balance sheet has been really on 2025. And our stated goal is that we are going to reduce $15 billion in total debt by the end of 2025. We still expect to do that at this point. And we think if we get there, that gets us to a double B credit. Beyond 2025, we'll see where it goes, but right now we're focused on the next couple of years. And we're focused on the next couple of years.

Well I'll just start with right now our focus on the balance sheet has been really on 2025 and our stated our stated goal is that we are going to reduce $15 billion in total debt by the end of 2025, we still expect to do that at this point and we think if we get there that gets us to a double.

B credit.

Beyond 2025, we will see where it goes but right now we're focused on the next couple of years.

Daniel Mckenzie: And we're retailing our product the way customers expect, which is really just through the internet and unsurprisingly customers have responded. So what we saw as we were going through COVID was already without American Airlines making any strategic changes, we went from about selling 50% direct to selling about 60% direct. And right now what we're what we're in taking in terms of revenue is actually about 80% going through, as we call it, internet based distribution of which about 70 of those 80 points is going through our true direct channels.

Okay. Thanks, guys.

Thank you.

Speaker 17: Thank you. At this time, the Q&A floor is open to all media questions. Again, the floor is open to all media questions. Please press star 11 on your telephone to ask a question. Again, that's star 11 on your telephone to ask a question.

At this time.

Q&A floor is open to all media questions again, the floor is open to all media questions. Please press star one one on your telephone to ask a question again that star one one on your telephone to ask a question.

Once again Thats star one one.

Daniel Mckenzie: And the balance coming through new distribution technologies. In fact, our internet based travel agency technologies is now a bigger source of bookings than any of the legacy global distribution systems are. So we're encouraged by that, but also very kindly not not surprised. I mean, customers want that experience, which is the second part of your question. The very simple benefit is through through what we do, we can go and create more offers for customers that they value.

Please standby as we compile the Q&A roster.

Our first question.

Comes from the line.

Of Mary <unk> of Bloomberg News.

Speaker 1: of Mary Schlangenstein, a Bloomberg News.

Speaker 18: Hi, good morning. Thank you. I had two quick questions. First is when do you expect to start getting the XLR?

Hi, Good morning. Thank you I had two quick questions. The first is when do you expect to start getting the XLR. My second question is you mentioned that domestic demand is steady, but I wanted to see if you can be more specific on that.

Speaker 18: My second question is you mentioned that domestic demand is steady, but I wanted to see if you could be more specific on that, like how it's increasing into the fourth quarter toward the winter holidays. Also, wondering if on international demand, if you've seen the level of demand that's normally like a summer peak level, has that continued past October and through the end of the year, like some of the other international carriers have said?

Daniel Mckenzie: We've seen this and we continue to see this at a number of customers who come to a.com or the app shopping for the cheapest fair that we have end up selling up, like roughly 70% of the customers who come to our website actually come looking for the lowest fair, but buy something higher than that. And through these tools, they want to offer them a whole lot more that creates value for them.

How it's increasing into the fourth quarter towards the winter holidays.

Also wondering if on international demand, if you've seen the level of demand thats normally like a summer peak level has that continued.

Last October and through the end of the year like some of the other international carriers have said.

Daniel Mckenzie: We can differentiate things like how they're able to redeem miles for different fair products or even how they're able to earn miles for different fair products. And then the other thing that I would say is which we're finding to be very, very impactful. As we shift to internet based distribution, our servicing becomes a whole lot simpler. So it's hard to do what three years out look like, but I can talk about the next several weeks and quarters.

Hey, its Kevin I'll, just start on the <unk> and then hand it over to Sue we expect our first ex Lar delivery to come late next year and then the order stream starts to really pick up in 2025 and 2026.

Speaker 2: Hey, it's Devon, I'll just start on the XLR and then head over to VASU. We expect our first XLR delivery to come late next year and then the order stream starts to really pick up in 2025 and 2026.

Yeah.

Speaker 9: Yeah, and hey Mary, I think that probably the best way to answer your question is kind of taking a long view. Look at it. And as we look at it.

Yeah, and Hey, Mary I think that probably the best way to answer your question. It is kind of taking a long view look at it and as we look at that.

Speaker 9: just overall demand in our system versus 2019, we're seeing like revenue production, which could be 15, 20% higher than what was there before. That's across the industry, but for American Airlines specifically. So when you extract yourself from like the year over year, a quarter to quarter changes, what you do see is that demand for travel is materially larger. Indeed, airline capacity is starting to catch up to what

Just overall demand in our system versus.

Versus 2019, where we're seeing like revenue production, which could be 15%, 20% higher than than what was there before not just across the industry, but for American airlines, specifically, so when you extract yourself from like the year over year or quarter to quarter changes.

Daniel Mckenzie: And what you will see from us are things where we do much more consciously differentiate what all the content we offer will be through through internet based technologies. We will look to do things like offering more miles for buying premium cabins for shopping through our direct channels for using our credit card. We will create more redemption opportunities. For the fans and also, but then also what we will be at a place by the end of this year is that 100% of what we sell will be able to be serviced digitally, but only through Internet-based technologies.

You do see is that <unk>.

Demand for travel is is materially larger.

Indian airline capacity is starting to catch up to what what that is but that's our reason for saying that we see.

Speaker 9: what that is, but that's our reasons for saying that we see a lot of, we see domestic on similar demand trend line as what's been out there. And we certainly see that.

A lot of we see domestic on a similar demand trend line is as what's been out there.

And we certainly see that.

Daniel Mckenzie: That's the thing which is hugely impactful to our customers. For any of you who are traveling on American Airlines, I encourage you, if you're making changes, please use the app to do so. I think you'll find it to be a much better experience in times past and an industry-leading one.

Speaker 5: We're anticipating a characteristically strong peak period.

We are anticipating characteristically.

Strong peak period, and then as far as as long haul International goes yes, we do we do continue to see strength in Q4, a lot of it is.

Speaker 5: And then as far as as long haul international goes, yes, we do we do continue to see strength in Q4. A lot of it is you know domestic was a marketplace that the customers opened up a lot sooner and a lot more Completely and comprehensively than what many of these What many countries outside of the US did so we're still in a period where some of that demand is coming back And we as many of your benefits

Domestic was a marketplace that for customers opened up a lot sooner than a lot more completely and comprehensively than what many of these.

Devon May: Very good. Okay. Second question here for Devon. I know on, you know, Robert shared that 75% of the debt is at a fixed rate, but just given the hire for a longer industry regime today, how's that changing the way you think about the three-year balance sheet targets and goals and, you know, can American get to an investment grade rating at some point and what might a realistic time frame look like to get there?

Countries outside of the U S did so we're still in a period, where some of that demand is coming back and we as many are beneficiaries of that.

Thanks, a lot. Mr. Can you can you just be more specific in terms of the.

Speaker 18: Thank you. Can you just be more specific in terms of the upcoming demand domestically for the holiday period? I mean, really, I don't think there's a lot of interest now in what the comparisons are to 2019. You know, it's just, are you seeing higher demand going into the holidays that you normally would? Is it slower? You know, when you say steady, that doesn't give a necessarily very good impression in terms of what your holiday demand is?

Upcoming demand domestically for the for the holiday period, I mean really I don't think there's a lot of interest now in but the comparisons are to 2019.

Devon May: Well, I'll just start with right now, our focus on the balance sheet has been really on 2025, and our stated goal is that we are going to reduce $15 billion in total debt by the end of 2025. We still expect to do that at this point, and we think if we get there, that gets us to a double B credit. Beyond 2025, you know, we'll see where it goes, but right now we're focused on the next couple of years. Okay. Thanks, guys.

Just are you are you seeing higher demand going into the.

The holidays that you normally would is it slower when you say steady that that doesn't give a necessarily a very good impression in terms of what your holiday demand is.

Speaker 5: Well, look, Mary, in our holidays, we routinely have far more demand than we have seats for, whether you wanna compare it to 2022, 2021, 2019, or probably 2009.

Well look our in our holiday as we.

He routinely have far more demand than we have have a sense for whether you want to compare it to 2022% in 2021 2019 or probably 2009.

Operator: Thank you. At this time, the Q&A floor is open to all media questions. Again, the floor is open to all media questions. Please press star 11 on your telephone to ask a question. Again, that's star 11 on your telephone to ask a question. Once again, that star 11. Please stand by as we can pop the Q&A roster. Our first question comes from the line. Of Mary slengenstein, a Bloomberg news. Hi, good morning.

Speaker 5: So we're in a place right now where actually our holidays are very lightly booked because we know anytime we create more availability and the holiday is to teach go very quick.

And so now we're at a place right now where actually our holidays are very lightly booked because we know anytime we create more availability in the house and the holidays. The seats go very quickly. So we are anticipating.

Speaker 5: So we are anticipating continued like year over year improvement in holiday performance. What we have been seeing are things like the days around the big peak periods also are.

Like year over year, an improvement and holiday performance.

Well, we haven't seen anything like that but the days around.

The Big peak period also are stronger on a year over year booking basis too, but still we're in a place where the entire month of November is less than 40% booked for American airlines that that's deliberate because we're anticipating a really a lot of the continued strength around peaks.

Speaker 5: stronger on a year over year booking basis too. But still we're in a place where the entire month of November is less than 40% booked for American Airlines. That's deliberate because we're anticipating really a lot of the continued strength around peaks.

Great. Thank you very much.

Operator: Thank you. I had two quick questions. First is, when do you expect to start getting the XLR? My second question is you mentioned that domestic demand is steady, but I wanted to see if you could be more specific on that. Like how it's increasing into the fourth quarter toward the winter holidays. Also wondering if on international demand, if you've seen the level of demand that's normally like a summer peak level, has that continued past October and through the end of the year, like some of the other international carriers have said.

Apologies again at this time, we ask that you limit yourself to one question and one follow up our next question either of Wall Street Journal.

Speaker 1: Apologies. Again, at this time we asked to to limit yourself to one question and one follow up. Our next question is, a Wall Street Journal.

Speaker 10: Thank you. Yeah, I'm curious if the latest spirit issues with Boeing are impacting American at all, if you're expecting any kind of delays and the so-so-sex sub will affect schedules and plans.

Thank you.

Operator: Hey, it's Devon. I'll just start on the XLR and then head over to Vasu. We expect our first XLR delivery to come late next year. And then the order stream starts to really pick up in 2025 and 2026. Yeah, and hey, Mary, I think that probably the best way to answer your question is kind of taking a long view, look at it. And as we look at overall demand in our system versus 2019, we're seeing like revenue production, which could be 15, 20% higher than what was there before.

Yeah, I'm curious if the latest spirit issues with Boeing are impacting American at all if youre expecting any kind of delays in the paradox Pavel.

Bob will affect schedules and plans at all.

Hey.

Speaker 3: Hey, Ali, thanks for that. Look, we were close to you with Boeing, and I have to...

Thanks, Thanks for that look we work closely with Boeing and I have to tell you that the.

Speaker 3: Tell you that the Boeing team has been really, really, forthcoming and cooperative with us. You know, certainly they have some issues with supply chain and they're working with us on our order book. You know, we probably anticipate seeing a little bit of slippage as we go into next year, but it's not something that is going to have a material impact on our capacity and we're working very closely with Boeing on that. So thanks for that question.

Boeing team has been really really forthcoming and cooperative with us.

Certainly they have some some issues with supply chain.

And they're working with us on or our order book, we probably anticipate seeing a little bit of slippage as we go into next year, but it's not something that is.

Operator: That's across the industry, but for American Airlines specifically. So when you extract yourself from like the year over year quarter to quarter changes, what you do see is that demand for travel is materially larger. Indeed, airline capacity is starting to catch up to what what that is, but that's our reasons for saying that we see a lot of, we see domestic on similar demand trend line as what's been out there. And we certainly see that.

It's going to have a material impact on our capacity.

We're working very closely with Boeing on that so thanks for that question.

Speaker 10: Thank you. And then I guess I'm pilots, some of their lines are in unions have talked about kind of like an unusual, maybe you were left in for pilots, first off, they're up great to captain, maybe more quality of life that she's coming up. Are you guys seeing that at all?

Thank you and then I guess on pilots some other airlines are and the unions have talked about.

Kind of like an unusual maybe reluctance for pilots first officers to upgrade to captain maybe more quality of life issues coming up are you guys seeing that at all.

Speaker 3: I ask, Alex David Seymour, Chief Operating Officer, to comment.

I'll ask I'll ask David Seymour, our Chief operating officer to to comment yes, no I appreciate the question.

Operator: We're anticipating a characteristically strong peak period. And then as far as as Long Hall International goes, yes, we do we do continue to see strength in Q4. A lot of it is, you know, domestic was a marketplace that the customers opened up a lot sooner and a lot more completely and comprehensively than what many of these, what many countries outside of the US did. So we're still in a piece of a period where some of that demand is coming back.

Speaker 19: Yeah, no, I appreciate the question, Ellie. I think you're probably focusing on the regional operations, you know, where their, you know, first off, I think probably the bigger constraint we have is.

Thank you, you're probably focusing on the regional operations.

First off I think probably the bigger constraint, we have is I'm getting the hours to be able to upgrade to captain.

Speaker 19: them getting the hours to be able to upgrade to Captain

Speaker 3: but we're not seeing any reluctance really overall that first officers don't wanna upgrade the cabinet. Yeah, and hey, David, remind me, you know, first day mayor craft type, when we see first officers.

But we're not seen any reluctance really overall, but that first officers don't want to upgrade to Catherine.

Hey, David remind me.

First name aircraft type when we see first officers upgrading from the F O positioned to cap position.

Speaker 3: upgrading from the FO position to cap position the the the competition increases, you know, roughly 35 40 percent. That's correct. Yeah. So there's there's a strong

Operator: And we as many of your beneficiaries about that. Thanks a lot. Can you, can you just be more specific in terms of the upcoming demand domestically for the, for the holiday period? I mean, really, I don't think there's a lot of interest now and what the comparisons are to 2019, you know, it just are you, are you seeing higher demand going into the holidays, but that you normally would, is it slower?

Competition increases roughly 35% to 40% that's correct.

So there's there's a strong incentive.

Speaker 3: to become a captain at American Airlines.

To become a captain at American Airlines.

Thanks.

Thank you.

Our next question.

Comes from the line of Alexandra scores of Dallas morning News.

Speaker 1: comes from the line of Alexandra Scores, of Dallas Morning News.

Operator: You know, when you say steady, that that doesn't give a necessarily very good impression in terms of what your holiday demand is. Well, look, Mary, our in our holidays, we routinely have far more demand than we have have seats for, whether you want to compare it to 2022, 2021, 2019 or probably 2009. So, so we're in a place right now where actually our holidays are very lightly booked because we know any time we create more availability and the holiday is the seats go very quickly.

Hi, Good morning. Thank you for taking my question I wanted to ask about inflation and how that's impacting.

Speaker 20: Hi, good morning. Thank you for taking my question. I wanted to ask about participation in how that's impacting American customers. And then my second question is what you're seeing in that same vein looking ahead to the winner travel season. Thanks.

American customers and then my second question is what you're seeing in that same vein looking ahead when air travel season. Thanks.

Oh, sorry, we didn't hear your super well in the room and did you say emissions.

Speaker 9: So we didn't hear you super well on the room. And did you see emissions?

Inflation, sorry, [laughter] patient got it got it okay.

Speaker 5: God, it got it. Okay. Yeah, look right now, I'll say this air travel, as I said on a couple of these calls, air travel remains an amazing bargain. Though indeed the price of gas or groceries or clothing or anything is up quite a lot. Air travel is not nearly as much. In fact, I think today in the fall you can fly to Las Vegas for less than $50 in my guess.

Operator: So we are anticipating continued like year over year improvement in holiday performance. What we have been seeing are things like the days around the big peak period also are stronger on a year over year booking basis too, but still we're in a place where, you know, the entire month of November is less than 40% booked for American Airlines. That's that's deliberate because we're anticipating really a lot of the continued strength around peaks.

Look right now I'll say this air travel as I've said on a couple of these calls on air travel remains an amazing bargain, though indeed, the price of gas or groceries or clothing or anything is up quite a lot.

Air travel is not up nearly as much in fact I think.

Day in the fall you can fly to Las Vegas for less than $50 and my guess is just about any place you can go to eat it would cost you more to eat there.

Speaker 5: just about any place you go to eat, it would cost you more to eat there. So we have yet to see something where inflation is a thing that we could go point to as a causal headwind to demand.

So we have yet to see something where inflation is a thing that we could go point he was a causal headwind of demand.

Mary Schlangenstein: Great, thank you very much. Apologies, again, at this time we asked to to limit yourself to one question and one follow up our next question, either of Wall Street Journal. Thank you. Yeah, I'm curious if the latest spirit issues with Boeing are impacting American at all, if you're expecting any kind of delays in the public sub will affect schedules and plans at all. Hey, Ali, thanks, thanks for that. Look, we were closely with Boeing and I have to tell you that the Boeing team has been really, really forthcoming and cooperative with us.

Yeah.

Thank you.

Thank you.

Our next question.

It comes from the line of Leslie Josephs of CNBC.

Speaker 1: comes from the line of Leslie Joseph of CNB.

Hi, good morning.

Speaker 10: Hi, good morning. We've been seeing a lot of discounts, a lot of double digit fairs from you guys midweek, anytime. Can you talk a little bit about it? How much of you have to discount this fall kind of coming off of the peak summer season to fill planes and how confident are you in this break even guide just considering where fuel is now and whether you could drum up fairs enough to cover that.

The King a lot of disparate sort of double digit fare from you guys midweek anytime can you talk a little bit about how much of it you have to discount this fall kind of coming off of the peak summer season to fill plans are and how confident are you in that breakeven guide considering where fuel is now.

And whether you can fill up there is enough to cover that.

Mary Schlangenstein: Certainly, they have some issues with supply chain and they're working with us on order book. We probably anticipate seeing a little bit of slippage as we go into next year, but it's not something that is going to have a material impact on our capacity and we're working very closely with Boeing on that. So thanks for that question. Thank you. And then I guess on pilots, some of their airlines are immune to talked about kind of like an unusual maybe reloft in for pilots for softwares to upgrade to captain, you know, maybe more quality of life that she's coming up.

Speaker 9: I'll answer the first part of it by just simply saying that we don't really comment on fair activity or sale activity for any number of reasons, but I think others can talk a little bit more about going to march.

Hey, I'll answer the first part of it by just simply saying that we don't we don't really comment on fair activity in our sale activity for any number of reasons, but I think others can talk a little bit more about kind of margin performance.

Okay.

Speaker 2: you. Yeah, our fourth quarter guide. We've done it the same way we've done for all the other quarters and throughout the year we have. Confidence in our revenue guide. We provide a range on it. We have a lot of confidence in our cost guide, and, you know, fuel remains volatile, but we did put a range on that as well. So as it sits today, we feel really good about what we have out there for a few four guys.

Our fourth quarter guide we've done it the same way we've done for all the other quarters and throughout the year we have.

Confidence in our revenue guide, we provide a range on it we have a lot of confidence in our cost guide in fuel remains volatile, but we did put a range on that as well so as it sits today, we feel really good about what we have out there for a few forgone.

Speaker 10: Okay, and then, I mean, I guess if you can't comment on fares, but are you losing any pricing power? Broadly compared with last year, or even compared with competitors now.

Okay, and then I mean, I guess, if you can comment on the payers that are you, losing any pricing power.

Broadly compared with last year or even compared with competitors now.

Speaker 5: Well, that's probably an inadvertent way to comment on fairs. And look, what we continue to see is a lot of the same overall demand trends, sequentially day-to-day, week-to-week, et cetera. And as I mentioned, air travel remains an amazing bargain for customers and customers, as we've seen for several years, are arqueing the travel and traveling at a greater rate than what they were in 2019.

But that's probably an inadvertent way to kind of comment on fares and look what we are we continue to see is a lot of the same overall demand trends.

Mary Schlangenstein: Are you guys seeing that at all? First of all, I think probably the bigger constraint we have is them getting the hours to be able to upgrade to captain, but we're not seeing any reluctance really overall that that first officers don't want to upgrade to captain. Yeah, and hey, David, remind me, you know, for same aircraft type, when we see first officers upgrading from the FO position to captain position, the competition increases, you know, roughly 35, 40%. That's correct. Yeah, so there's there's a strong incentive to become a captain at American Airlines. Thanks.

<unk> day to day week to week et cetera, and as I mentioned air travel remains an amazing bargain for customers and customers as we've seen for several years are keen to travel.

And traveling at a greater rate than what they were in 2019.

Okay.

Yes.

Thank you.

Speaker 1: I would now like to turn the conference back to Robert Isom for closing remarks.

I would now like to turn the conference back to Robert Isom for closing remarks.

Thanks, Latif and thank everyone.

Speaker 3: Thanks, Latif, and thank everyone. I'll close with this. There's obviously a lot of short-term sentiment in thinking out there, and we understand why. There's a lot going out in the world today.

I'll close with this there is there's obviously a lot of short term sentiment and thinking out there and we understand why there's a lot going on in the world today.

That said the airline business is one that absolutely requires long term thinking as we navigate even as we navigate shorter term variability.

Speaker 3: That said, the airline business is one that absolutely requires long-term thinking as we navigate, even as we navigate shorter-term variability. The aircraft we buy today are going to be around for 20 years plus.

The aircraft, we buy today youre going to be around for 20 years plus.

Leslie Joseph: Thank you. Our next question comes from the line of Alexandra scores of Dallas morning news. Hi, good morning. Thank you for taking my question. I wanted to ask about is station and how that's impacting American customers. And then my second question is what you're seeing in that same vein, looking ahead to the winter travel season. Thanks. Sorry, we didn't hear you super well in the room. Just a mission. Inflation, sorry. Yeah, look, right now, I'll say this air travel as I've said on a couple of these calls air travel remains an amazing bargain, though indeed the price of gas or groceries or clothing or anything is up quite a lot.

Speaker 3: The leases we signed at airports and the hundreds of billions and billions of dollars we commit to airports. Those are leases that are 10 years plus and in the financing that go out a lot longer than that. And even the labor contracts that we sign are multiple years, four and five years.

The leases we signed at airports.

And the hundreds of billions and billions of dollars that we commit to airports now those are leases that are are 10 years, plus and financings that go out a lot longer than that and even the labor contracts that we sign are multiple years, four and five five years.

Speaker 3: So we have to take that into account as we look to the future and all of us at American have worked tirelessly.

We have to take that into account as we look to the future and all of US at American have worked tirelessly.

Speaker 3: to set the airline up for success in this short term yet long term world. So as we look to 2024 and beyond, look, we have an enviable fleet. We've gone out and...

To set the airline up for success in this short term yet long term world. So as we look to 2024 and beyond look we have an enviable fleet, we've gone out and <unk>.

Leslie Joseph: Air travel is not nearly as much. In fact, I think today in the fall, you can fly to Las Vegas for less than $50 and my guess is just about any place you go to eat. It would cost you more to eat there. So we have yet to see something where inflation is a thing that we could go point to as a causal headwind to demand. Thank you. Our next question comes from the line of Leslie Joseph of CNBC.

Speaker 3: spent $30 billion dollars prior to the pandemic to put ourselves in a position where we are entering into capital spending that is real flat.

Spent $30 billion you know prior to the pandemic to put ourselves in a position where.

We are entering into capital spending that is.

Okay flashing.

Speaker 3: And we're doing it in an environment where others are facing rising interest rates and issues with suppliers.

And we're doing it in an environment, where others are facing rising interest rates and issues with suppliers.

Speaker 3: So while there's a heading the other way, we're set up for success.

So while there's a heading the other way we're set up for success.

Speaker 3: And we look forward to putting all of our assets back to full utilization. And we know we can optimize how we're running the airline as we go forward. And all of that is while we build the best network and work with our customers to make sure that they are rewarded for using it.

And we look forward to putting all of our assets back.

To full utilization and we know we can optimize how we're running the airline.

As we go forward and all of that is while we build the best network and <unk>.

Work with our customers to make sure that they are rewarded for using it. So we've got a great baseline and I'm very confident in the future of travel and demand and I can't wait to talk to you more as we go out to.

Speaker 3: So we've got a great baseline and I'm very confident in the future of travel and demand. And I can't wait to talk to you more as we go out to the next quarters in 2024 about where Americans headed in the story we have to tell. So thank you very much.

Leslie Joseph: Hi, good morning. We've been seeing a lot of discounts, a lot of double digit shares from you guys midweek, anytime. Can you talk a little bit about how much of you have to discount this fall kind of coming off of the peak summer season to fill planes and how confident are you in this break even guide just considering where fuel is now and whether you could throw them up fair enough to cover that.

The next quarter next quarters in 2024 about we're Americans headed in the store we have to tell so thank you very much.

Speaker 1: This concludes today's conference call. Thank you for participating. You may now dis-

This concludes today's conference call. Thank you for participating you may now disconnect.

Leslie Joseph: Thanks. I'll answer the first part of it by just simply saying that we don't we don't really comment on fair activity and or sale activity for any number of reasons, but I think others can talk a little bit more about. Thank you. Performance. Yeah, our fourth quarter guide, we've done it the same way we've done for all the other quarters and throughout the year. We have confidence in our revenue guide, we provide a range on it.

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Leslie Joseph: We have a lot of confidence in our cost guide and you know, fuel remains volatile, but we did put a range on that as well. So as it's it's today, we feel really good about what we have out there for a few four guys. Okay, and then I mean, I guess if you can't comment on parents, but are you losing any pricing power broadly? Compared with last year or even compared with competitors now?

Okay.

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Leslie Joseph: Well, that's probably an inadvertent way to comment on fairs and look what we what we continue to see is a lot of the same overall demand trends sequentially day to day week to week, etc. And as I mentioned, air travel remains an amazing bargain for customers and customers as we've seen for several years or are keen to travel and traveling at a greater rate than what they were in 2019. Thank you.

Sure.

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Robert Isom: I would now like to turn the conference back to Robert Isom for closing remarks. Thanks Latif and thank everyone. I'll close with this. There's there's obviously a lot of short-term sentiment in thinking out there and we understand why there's a lot going on in the world today. That said, the airline business is one that absolutely requires long-term thinking as we navigate even as we navigate shorter term variability, you know, the aircraft we buy today are going to be around, you know, for 20 years plus.

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Robert Isom: The leases we signed at airports and, you know, the hundreds of billions and billions of dollars we commit to airports, you know, those are leases that are our, you know, 10 years plus and in the finance things that, you know, go out, you know, a lot longer than that and even the labor contracts that we sign are, you know, multiple years, you know, four and five, five years. So we have to take that into account as we look to the future and all of us in America have worked tirelessly to set the airline up for success in this short term yet, you know, long term world.

Yes.

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Robert Isom: So as we look to 2024 and beyond, look, we have an enviable fleet. We've gone out and spent $30 billion dollars, you know, prior to the pandemic to put ourselves in a position where, you know, we are entering into capital spending that is, is, is, you know, in an environment where others are facing rising interest rates and, and issues with suppliers. So while there's a heading the other way, we're set up for success and, you know, we look forward to putting all of our assets back to full utilization and, and we know we can optimize how we're running the airline as we go forward and all that is while we build the best network and, and work with our customers to make sure that they are rewarded for using it.

Yes.

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Robert Isom: So we've got a great baseline and I'm very confident in the future of travel and demand. And I can't wait to talk to you more as we go out into the next quarter, the next quarters in 2024 about where Americans headed in the story we have to tell. So thank you very much.

Okay.

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Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. . [inaudible] . . [inaudible] I'm not sure if I'm right or not, I'm not[inaudible] Management. These statements represent our predictions and expectations of future events. The numerous risks and uncertainties could cause actual results 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 10Q for the quarter ended September 30th, 2023.

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Speaker 17: I.

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Speaker 1: Thank you for standing by and welcome to American Airlines Group's third quarter, 2023 earnings call.

Thank you for standing by and welcome to American Airlines group's third quarter 2023 earnings call.

Speaker 1: At this time, all participants are nae listened to only mode. After the speaker presentation, there will be a question and answer session.

At this time all participants are in a listen only mode.

After the speaker presentation, there will be a question and answer session.

Speaker 1: To ask a question during the session you will need to press star 1-1 on your tele...

To ask a question during the session you will need to press star one one on your telephone to.

Speaker 1: To remove yourself from the cube, press star 111 again.

To remove yourself from the queue Press star one one again.

Speaker 1: I would now like to hand the call over to Vice President of Investor Relations and Corporate Development, Scott Long. Please go ahead.

I would now like to hand, the call over to Vice President of Investor Relations and corporate development Scott Long. Please go ahead.

Thank you Latif and good morning, everyone and welcome to the American Airlines Group third quarter 2023 earnings conference call on.

Speaker 3: Thank you, Ateef. Good morning, everyone, and welcome to the American Airlines Group 3rd quarter 2023 earnings conference call. On the call, with for paragraph marks, we have our CEO Robert Isom and our CFO Devon May. A number of our other senior executives are also here in the room this morning for the Q&A session.

On the call with prepared remarks, we have our CEO , Robert Isom, and our CFO Devin Mei.

Number of our other senior executives are also here in the room. This morning for the Q&A session.

Speaker 3: Robert will start the call with an overview of our performance. And Devon will follow with details on the third quarter and while outlining our operating plans and outlook going forward.

Robert will start the call with an overview of our performance and Devin will follow with details on the third quarter and will outline our operating plans and outlook going forward.

Speaker 3: After our prepared remarks, we'll open the call for analyst questions, followed by questions from the media. To get in as many questions as possible, please limit yourself to one question and one follow-up.

After our prepared remarks, we will open the call for analyst questions followed by questions from the media.

To get in as many questions as possible. Please limit yourself to one question and one follow up.

Before we begin today, we must state that today's call contains forward looking statements, including statements concerning future revenues costs forecast of capacity and fleet plans.

Speaker 11: Before we begin today, we must state that today's call contains forward looking statements, including statements concerning future revenues, costs, forecasts of capacity and fleet plans.

Speaker 11: These statements represent our predictions and expectations of future events. The numerous risks and uncertainties could cause actual results differ from those projects.

These statements represent our predictions and expectations of future events, but numerous risks and uncertainties could cause actual results to differ from those projected.

Speaker 11: 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 10Q for the quarter ended September 30th, 2023

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 September 32023.

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

Speaker 11: In addition, we'll be discussing certain 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 relation section of our website.

Speaker 11: A webcast of this call will also be archived on our website. The information we are giving you on the call this morning is as of today's date and we undertake no obligations to update the information subsequently.

A webcast of this call will also be archived on our website and the information we're giving you on the call. This morning is as of today's date and we undertake no obligation to update the information subsequently.

Speaker 11: Thank you for your interest and for joining us this morning. And with that, I'll turn the call over to our CEO , Robert Ice.

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

Speaker 3: Thanks, Scott, and good morning, everyone. Today, American reported an adjusted pre-tax profit of approximately $362 million for the third quarter, an earnings result that was above the high end of our latest EPS guidance range.

Thanks, Scott and good morning, everyone. Today American reported an adjusted pretax profit of approximately $362 million for the third quarter and earnings result that was above the high end of our latest EPS guidance range.

Speaker 3: The American Airlines team continued to produce strong results. And as we look ahead to the rest of the year, we continue to prioritize reliability, profitability, accountability, and strengthening the balance.

The American Airlines team continues to produce strong results and as we look ahead to the rest of the year, we continue to prioritize reliability profitability accountability and strengthening the balance sheet.

We're also focused on taking care of the team. We are very pleased to have finalized a new contract with the Allied pilots Association in August the <unk>.

Speaker 3: We're also focused on taking care of the team. We are very pleased to finalize the new contract with the Allied Pilots Association in August .

Speaker 3: The agreement delivers significant compensation and quality of life improvements to our pilots while allowing us to expand our training capacity to support underutilized aircraft and our future flying.

<unk> deliver significant compensation and quality of life improvements to our pilot, while allowing us to expand our training capacity to support underutilized aircraft and our future flying.

We're also working toward new agreements for our flight attendants and agents.

Speaker 3: We're also working toward new agreements for our flight attendants and agents.

We're running a strong and reliable operation.

Speaker 3: We're running a strong and reliable operation, involving our commercial offerings, taking care of our team and customers, producing free cash flow, and strengthening our balance sheet. All of this speaks to our steadfast focus on controlling what we can control. And we are proud to say that we are delivering on our commitment.

Solving our commercial offerings, taking care of our team and customers producing free cash flow and strengthening our balance sheet. All of this speaks to our steadfast focus on controlling what we can control and we are proud to say that we are delivering on our commitments.

Speaker 3: Now, before discussing our results in more detail, on behalf of all of us at American, I want to say how shocked and saddened we are by the horrific attacks in Israel, and we join the international community in condemning these acts of hate and violence. And we are devastated by-

Now before discussing our results in more detail on behalf of all of US at American I want to say, how shocked and saddened we are by the horrific attacks in Israel.

And we joined the international community in condemning these acts of hate and violence.

And we are devastated by the incredible loss of innocent life.

Speaker 3: We're making every effort to care for our team members who are impacted by this tragedy and to keep our team members safe while also working with the U.S. government to help find safe travel options for customers trying to depart the region.

We're making every effort to care for our team members, who are impacted by this tragedy and to keep our team members safe. While also working with the U S government to help find safe travel options for customers trying to parts of the region.

The safety and security of our team members customers and their families remains our top priority.

Speaker 3: safety and security of our team members, customers and their families remains our top priority.

Turning now to our financial results.

Speaker 3: We produce record third quarter revenues of approximately $13.5 billion driven by a resilient demand environment and record travel rewards program revenues.

We produced record third quarter revenues of approximately $13 5 billion driven by a resilient demand environment and record travel rewards program revenue.

Speaker 3: Domestic demand remains steady, while international demand continues to drive revenue growth, led by the Atlantic, Caribbean, and Central America.

Domestic demand remained steady while international demand continues to drive revenue growth led by the Atlantic Caribbean and Central America.

Speaker 3: During the third quarter, we saw your over-year growth in corporate and government revenue with a return to more traditional seasonality trends.

During the third quarter, we saw a year over year growth in corporate and government revenue with a return to more traditional seasonality trends.

Speaker 3: We remain encouraged by what we're seeing with demand and revenue from unmanaged business travel.

We remain encouraged by what we're seeing with demand and revenue from unmanaged business travel.

Importantly, more customers than ever are choosing our travel rewards program by acquiring our co brand credit cards in record numbers and rolling in the advantage program and shopping for our product through our direct channels.

Speaker 3: Importantly, more customers than ever are choosing our travel rewards program by acquiring our co-brand credit cards and record numbers, and rolling in the advanced program, and shopping for our product through our direct channels.

Speaker 3: Co-brand mileage sales growth continues to outpace airline capacity and GDP growth, driving increased levels of loyalty and revenue production from car use.

Co brand mileage sales growth continues to outpace airline capacity and GDP growth driving increased levels of loyalty and revenue production from card users.

Speaker 3: In the third quarter, approximately 80% of our bookings came from our own channels and modern retailing technology, which is up approximately 11 points from a year ago.

In the third quarter, approximately 80% of our bookings came from our own channels and modern retailing technology, which is up approximately 11 points from a year ago.

These are the most efficient distribution channels and our ecosystem and we expect to see these trends continue into the fourth quarter and beyond.

Speaker 3: These are the most efficient distribution channels in our ecosystem, and we expect to see these trends continue into the fourth quarter and beyond.

Speaker 3: Looking forward, our Network and Travel Rewards program will continue to be the primary drivers and value for our customers and for Americans.

Looking forward our network in travel rewards program will continue to be the primary drivers of value for our customers and for American.

Operator: In addition, we'll be discussing certain non-gap financial measures this morning, which exclude the impact of unusual items. A reconciliation of those numbers to the gap 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. The information we are giving you on the call this morning is as of today's date, and we undertake no obligation to update the information subsequently.

And we are focused on operating our business as efficiently as possible.

Speaker 3: and we are focused on operating our business as efficiently as possible.

Our simplified fleet remains the youngest and most efficient among the U S network carriers and we are working to increase the utilization of both our mainline and regional aircraft.

Speaker 3: Our simplified fleet remains the youngest and most efficient among the U.S. network carriers, and we are working to increase the utilization of both our mainline and regional aircraft.

In addition, we are identifying opportunities to drive incremental value across the company.

Speaker 3: In addition, we are identifying opportunities to drive incremental value across the company.

Speaker 3: These initiatives and our limited, near and medium-term CAPEX requirements will allow us to continue to generate free cash flow that we can use to reinvest in the business and continue to pay down debt.

These initiatives and our limited near and medium term capex requirements will allow us to continue to generate free cash flow that we can use to reinvest in the business and continue to pay down debt.

Operator: Thank you for your interest and for joining us this morning, and with that, I'll turn the call over to our CEO, Robert Isom. Thanks, Scott, and good morning, everyone. Today, American reported an adjusted pre-tax profit of approximately $362 million for the third quarter, an earnings result that was above the high end of our latest EPS guidance range. The American Airlines team continues to produce strong results, and as we look ahead to the rest of the year, we continue to prioritize reliability, profitability, accountability, and strengthening the balance sheet.

Now turning to our operation.

Speaker 3: The American Airlines team delivered another quarter of a fantastic operational result.

The American Airlines team delivered another quarter of fantastic operational results.

Speaker 3: Our team has produced stellar results for more than a year, including a record setting performance during the peak travel period this summer.

Our team has produced stellar results for more than a year, including a record setting performance during the peak travel period. This summer.

Speaker 3: American operated more than 515,000 flights in the third quarter, and we produced our best ever third quarter completion factor of 98.6%.

American operated more than 515000 flights in the third quarter and we produced our best ever third quarter completion factor of 98, 6%.

Operator: We are also focused on taking care of the team. We are very pleased to finalize a new contract with the Allied Pilots Association in August. The agreement delivers significant compensation and quality of life improvements to our pilots, while allowing us to expand our training capacity to support underutilize the company. We are also working towards new agreements for our flight attendants and agents. We are running a strong and reliable operation, involving our commercial offerings, taking care of our team and customers, producing free cash flow, and strengthening our balance sheet.

American ended the quarter with the best completion factor of the U S network carriers, while maintaining our first place standing in on time departures through the first nine months of the year.

Speaker 3: American ended the quarter with the best completion factor of the U.S. network carriers while maintaining our first place standing in on-time departures through the first nine months of the year.

Speaker 3: No network airline has operated more reliably than American over the past 15 months. Our operational performance is better than ever, and it's because of our steadfast focus on reliability and strong execution in an increasingly complex environment.

No network airline is operating more reliably than American over the past 15 months, our operational performance is better than ever and it's because of our steadfast focus on reliability and strong execution and an increasingly complex environment.

Speaker 3: Our commercial and operations teams build a fantastic plan each month. We execute on it and we recover quickly during irregular operation.

Commercial and operations teams build a fantastic plant each month that we execute on it and we recover quickly during irregular operations.

Operator: All of this speaks to our steadfast focus on controlling what we can control, and we are proud to say that we are delivering on our commitments. Now, before discussing our results in more detail, on behalf of all of us at American, I want to say how shocked and saddened we are by the horrific attacks in Israel, and we join the international community in condemning these acts of hate and violence. We are devastated by the incredible loss of innocent life.

Speaker 3: We're building on our momentum and we are committed to delivering a reliable operation for our customers as we approach the holiday season.

We're building on our momentum and we are committed to delivering a reliable operation for our customers as we approach the holiday season.

And now I'll turn it over to Devin to share more about our third quarter financial results and the outlook for the fourth quarter.

Speaker 3: And now I'll turn it over to Devon to share more about our third quarter financial results and the outlook for the fourth quarter.

Thank you Robert I would also like to thank the team for delivering another outstanding quarter.

Speaker 2: Thank you, Robert. I would also like to thank the team for delivering another outstanding quarter.

Speaker 2: During the third quarter, the average price of jet fuel increased sharply. While the rapid increase in fuel prices resulted in lower earnings in the quarter, we continue to stay focused on our priorities. As Robert mentioned, in the third quarter, we delivered a fantastic operation for our customers. We finalized a new contract for our pilots, and we took further action to strengthen our balance.

During the third quarter, the average price of jet fuel increased sharply while the rapid increase in fuel prices resulted in lower earnings in the quarter. We continue to stay focused on our priorities as Robert mentioned in the third quarter, we delivered a fantastic operation for our customers, we finalized a new contract for our pilots and we took further action to strengthen our balance.

Operator: We are making every effort to care for our team members, who are impacted by this tragedy, and to keep our team members safe while also working with the U.S, government to help find safe travel options for customers trying to depart the region. The safety and security of our team members, customers and their families, remains our top priority. Turning now to our financial results. We produce record third quarter revenues of approximately $13.5 billion, driven by a resilient demand environment and record travel rewards program revenue.

Pete.

Excluding net special items, we reported third quarter net income of $263 million.

Speaker 2: Excluding net special items, reported third quarter net income of $263 million, for a just-it-ernie-s-per-deluded chair of $0.38. This is above the high end of our most recent guidance update, driven by slightly higher capacity and better X-fuel unit cost performance in the quarter.

Our adjusted earnings per diluted share of 38.

This is above the high end of our most recent guidance update driven by slightly higher capacity and better ex fuel unit cost performance in the quarter.

Speaker 2: American produced record third quarter revenue of approximately $13.5 billion. This revenue performance led to adjusted operating income of nearly $730 million dollars, resulting in a third quarter adjusted operating margin of 5.4%.

American produced record third quarter revenue of approximately $13 5 billion.

Operator: Domestic demand remains steady, while international demand continues to drive revenue growth, led by the Atlantic, Caribbean, and Central America. During the third quarter, we saw your over-year growth in corporate and government revenue, with a return to more traditional seasonality trends. Airlines. We remain encouraged by what we're seeing with demand and revenue from unmanaged business travel. Importantly, more customers than ever are choosing our travel rewards program by acquiring our co-brand credit cards and record numbers and rolling in the advanced program and shopping for our product through our direct channels.

This revenue performance led to adjusted operating income of nearly $730 million, resulting in a third quarter adjusted operating margin of five 4%.

Speaker 2: Our strong operational performance in the third quarter resulted in capacity that was 6.9% higher year over year at the high end of our guidance range. Revenue for the quarter was in line with what we had shared in July . In Unilevenue was down 6.3% versus a historically strong 2022.

Our strong operational performance in the third quarter, resulting in capacity there was six 9% higher year over year at the high end of our guidance range revenue for the quarter was in line with what we had shared in July and unit revenue was down six 3% versus a historically strong 2022.

Unit costs, excluding net special items and fuel was up three 3% year over year, nearly a point better than the low end of our prior guidance range.

Speaker 2: Unicost, excluding net special items and fuel, was up 3.3% year every year, nearly a point better than the low end of our prior guidance range. This outcome was driven by higher capacity and some expenses that were pushed to the fourth quarter.

Operator: Co-brand mileage sales growth continues to outpace airline capacity and GDP growth, driving increased levels of loyalty and revenue production from card users. In the third quarter, approximately 80 percent of our bookings came from our own channels and modern retailing technology, which is up approximately 11 points from a year ago. These are the most efficient distribution channels in our ecosystem and we expect to see these trends continue into the fourth quarter and beyond.

This outcome was driven by higher capacity and some expenses that were pushed to the fourth quarter.

Speaker 19: Our significant fleet investments over the past decade allows for relatively modest aircraft caps this decade. Year to date, we have taken delivery of 17 mainline aircraft and we expect four more aircraft to be delivered by year end. Two narrow body aircraft deliveries have been delayed into 2024, so we now anticipate taken delivery of a total of 21 aircraft in 2023. All of our 2023 deliveries have been financed.

Our significant fleet investments over the past decade allows for relatively modest aircraft Capex. This decade year to date, we have taken delivery of 17 mainline aircraft and we expect four more aircraft to be delivered by year end two narrow body aircraft deliveries have been delayed into 2024. So we now anticipate taking delivery of a total of 21 air.

Operator: Looking forward, our network and travel rewards program will continue to be the primary drivers and value for our customers and for American. And we are focused on operating our business as efficiently as possible. Our simplified fleet remains the youngest and most efficient among the US network carriers and we are working to increase the utilization of both our main line and regional aircraft. In addition, we are identifying opportunities to drive incremental value across the company.

Kraft in 2023, all of our 2023 deliveries have been financed.

Given the continued supply chain challenges the Oems are managing we have been in the used market for younger vintage narrow body aircrafts. We have signed an agreement with Alaska Airlines purchased 10, Airbus <unk> hundred 21 Neo aircraft that we expect a joined fleet in the fourth quarter of this year in the first quarter of 2024.

Speaker 2: Given the continued supply chain challenges the OEMs are managing, we have been in the used market for younger vintage nearby aircraft. We have signed an agreement with Alaska Airlines to purchase 10 Airbus A321 Neo Aircraft that we expect to join fleet in the fourth quarter of this year and the first quarter of 2024.

Speaker 2: Our 2023 aircraft capex is now expected to be approximately $1.9 billion, which includes a portion of the Alaska A321 Neo-Deliber.

Our 2023 aircraft Capex is now expected to be approximately $1 9 billion, which includes a portion of the Alaska <unk> hundred 21, Neo deliveries are 2023 non aircraft Capex is still expected to be approximately $800 million.

Operator: These initiatives and our limited near and medium-term CAPEX requirements will allow us to continue to generate free cash flow that we can use to reinvest in the business and continue to pay down debt. Now turning to our operation. The American Airlines team delivered another quarter of a fantastic operational results. Our team has produced stellar results for more than a year, including a record setting performance during the peak travel period this summer.

Speaker 2: Our 2023 non-aircraft cap X is still expected to be approximately $800 million.

Speaker 2: We anticipate our 2024 total cap-ex to be between $3 billion and $3.3 billion. Slightly below our prior guide as we finalize our 2024 delivery schedule.

We anticipate our 2020 for a total capex to be between 3 billion and $3 3 billion.

Slightly below our prior guide as we finalize our 2024 delivery schedules.

Speaker 2: Looking beyond 2024, we continue to review our medium and long-term fleet needs, and we are currently engaged with Boeing and Airbus for Narabadi Aircraft Deliveries in the latter half of this decade and beyond.

Looking beyond 2024, we continue to review our medium and long term fleet needs and we are currently engaged with Boeing and Airbus for narrow body aircraft deliveries in the latter half of this decade and beyond.

Operator: American operated more than 515,000 flights in the third quarter and we produced our best ever third quarter completion factor of 98.6%. American ended the quarter with the best completion factor of the US network carriers while maintaining our first place standing in on-time departures through the first nine months of the year. No network airline has operated more reliably than American over the past 15 months. Our operational performance is better than ever and it's because of our steadfast focus on reliability and strong execution in an increasingly complex environment.

Speaker 2: Due to the young age of our fleet, we do not have any planned aircraft retirement this decade. As a result, we continue to expect aircraft capex to average approximately $3.5 billion per year through 2030. We are very pleased to have built our fleet in a low interest rate environment and at a time when the supply chain wasn't as challenged as it is today.

Due to the young age of our fleet, we do not have any planned aircraft retirement. This decade as a result, we continue to expect aircraft capex to average approximately $3 $5 billion per year through 2030, we.

We are very pleased to have built our fleet in a low interest rate environment and at a time when the supply chain wasn't as challenged as it is today.

Our relatively low capital requirements, along with our free cash flow production has allowed for a significant progress in strengthening the balance sheet.

Speaker 2: A relatively low capital requirements, along with our free cash flow production, is allowed for significant progress in strengthening the balance.

Operator: Our commercial and operations teams build a fantastic plan each month. We execute on it and we recover quickly during irregular operations. We're building on our momentum and we are committed to delivering a reliable operation for our customers as we approach the holiday season. And now I'll turn it over to Devon to share more about our third quarter financial results and the outlook for the fourth quarter. Thank you Robert. I would also like to thank the team for delivering another outstanding quarter.

Speaker 2: We've now reduced total debt by approximately 10.9 billion dollars from people levels in 2021 and we're more than 70% of the way to our goal of reducing total debt by 15 billion dollars by the end of 2025. By year end, we expect to have paid down approximately 11.5 billion dollars and will be 77% of the way to our total debt reduction goal.

We have now reduced total debt by approximately $10 $9 billion from peak levels in 2021, and we're more than 70% of the way to our goal of reducing total debt by $15 billion by the end of 2025.

By year end, we expect to have paid down approximately $11.5 billion.

And we will be 77% of the way to our total debt reduction goal.

In addition to paying down regulating scheduled debt year to date, we have proactively decreased our 2025 maturities by $2 3 billion.

Speaker 2: In addition to paying down regular schedule of debt, year to date, we have proactively decreased our 2025 maturities by $2.3 billion through both the refinancing of the $1.8 billion South American Term loan in the first quarter and more than $550 million of open market repurchases over the past two.

Operator: During the third quarter the average price of jet fuel increased sharply. While the rapid increase in fuel prices resulted in lower earnings in the quarter, we continue to stay focused on our priorities. As Robert mentioned in the third quarter, we delivered a fantastic operation for our customers. We finalized a new contract for our pilots and we took further action to strengthen our balance sheet. Excluding net special items reported third quarter net income of $263 million or adjusted earnings per diluted share of 38 cents.

Through both the refinancing of the $1 8 billion South American term loan in the first quarter and more than $550 million of open market repurchases over the past two quarters.

Speaker 2: All three credit rating agencies recognize our progress with upgrades in the third quarter. And we expect further ratings improvement in the coming years as we continue to reduce total debt level.

All three credit rating agencies recognized our progress with upgrades in the third quarter and we expect further ratings improvements in the coming years as we continue to reduce total debt levels.

We ended the third quarter with approximately $13 5 billion of total available liquidity and for the full year, we now expect free cash flow to approach $2 billion.

Speaker 2: We ended the third quarter with approximately 13.5 billion dollars of total available liquidity. And for the full year, we now expect free cash flow to approach $2 billion.

Operator: This is above the high end of our most recent guidance update driven by slightly higher capacity and better X fuel unit cost performance in the quarter. American-produced record, third quarter revenue of approximately $13.5 billion. This revenue performance led to a adjusted operating income of nearly $730 million, resulting in a third quarter, a adjusted operating margin of 5.4%. Our strong operating performance in the third quarter resulted in capacity that was 6.9% higher year over year at the high end of our guidance range.

The reduction from our prior free cash flow estimate is due to slightly higher aircraft capex related to the Alaska <unk> hundred 20 ones and lower earnings largely due to the recent run up in fuel expense.

Speaker 2: Now onto the outlook for the fourth quarter. Post-Laborate bookings have been in line with expectations. We have seen steady improvement in business travel with encouraging signs from both managed and unmanaged corporate cuts.

Now onto the outlook for the fourth quarter.

Post labor day bookings have been in line with expectations, we have seen steady improvement in business travel with encouraging signs from both managed and unmanaged corporate customers.

Speaker 2: strong international demand and historically high premium revenue both domestically and international.

Strong international demand and historically high premium revenue, both domestically and internationally.

Operator: Revenue for the quarter was in line with what we had shared in July, in Univer Revenue was down 6.3% versus a historically strong 2022. Unit cost, excluding net special items and fuel, was up 3.3% year over year, nearly a point better than the low end of our prior guidance range. This outcome was driven by higher capacity and some expenses that were pushed to the fourth quarter. Our significant fleet investments over the past decade allows for relatively modest aircraft caps this decade.

Consistent with recent trends, we expect steady demand during the upcoming peak holiday travel season.

Speaker 2: Consistent with recent trends, we expect steady demand during the upcoming peak holiday travel season. However, the strong unit revenue environment in 2022 continues to be a difficult comparison. As a result, we expect fourth quarter-trasm to be down five and a half to seven and a half percent on four and a half to six and a half percent more capacity year over year.

However, the strong unit revenue environment in 2022 continues to be a difficult comparison as a result, we expect fourth quarter travelers to be down five five to seven 5% on four five to six 5% more capacity year over year.

Speaker 2: We expect fourth quarter, CASIMax, to be up 5% to 7% year-over-year. This step up in sequential year-over-year CASIMax is driven by the shift of some expenses from the third quarter to the fourth quarter, and less year-over-year capacity growth.

We expect fourth quarter, CASM ex to be up 5% to 7% year over year.

Operator: Year to date, we have taken delivery of 17 mainline air craft and we expect four more aircraft to be delivered by year end. Two narrow-body aircraft deliveries have been delayed into 2024, so we now anticipate taken delivery of a total of 21 aircraft in 2023. All of our 2023 deliveries have been financed. Given the continued supply chain challenges, the OEMs are managing, we have been in the used market for younger vintage narrow-body aircraft.

This step up in sequential year over year CASM ex is driven by the shift of some expenses from the third quarter to the fourth quarter and less year over year capacity growth.

Speaker 2: Our full year Catham X Guide remains unchanged, up approximately 3% versus 2022.

Our full year CASM ex guide remains unchanged up approximately 3% versus 2022.

Our current forecast for the fourth quarter assumes that fuel price of between $3 <unk> and $3 11 per gallon based on our current demand assumptions and fuel price forecast, we expect to produce an adjusted operating margin of between 2% and 4% in the fourth quarter.

Speaker 2: Our current forecast for the fourth quarter assumes a fuel price of between $3.1 and $3.11 per gallon. Based on our current demand assumptions and fuel price forecast, we expect to produce an adjusted operating margin of between 2 and 4% in the fourth quarter.

Operator: We have signed an agreement with Alaska Airlines to purchase 10 Airbus A321 Neo-Aircraft that would be expected to join fleet in the fourth quarter of this year and the first quarter of 2024. Our 2023 aircraft capex is now expected to be approximately $1.9 billion, which includes the portion of the Alaska A321 Neo-Deliverers. Our 2023 non-aircraft capex is still expected to be approximately $800 million. We anticipate our 2024 total capex to be between $3 billion and $3.3 billion slightly below our prior guide as we finalize our 2024.

Speaker 2: We continue to expect our full year capacity to be up approximately 6.5% versus 2022. Our full year forecast for tourism is to be approximately 1% year every year. And as I just mentioned, we expect our full year casm X to be up approximately 3% versus 2022.

We continue to expect our full year capacity to be up approximately six 5% versus 2022.

Our full year forecast for <unk> is to be up approximately 1% year over year and as I. Just mentioned, we expect our full year CASM ex to be up approximately 3% versus 2022.

Speaker 2: Our capacity, tourism, and Casm expectations for the year are all consistent with the guidance we provided in January of this year. This result speaks to the planning, focus, and determination of our team.

Our capacity <unk> and CASM X expectations for the year are all consistent with the guidance. We provided in January of this year. This.

This result speaks to the planning focus and determination of our team.

Operator: We continue to review our medium and long-term fleet needs and we are currently engaged with Boeing and Airbus for narrow-body aircraft deliveries in the latter half of this decade and beyond. Due to the young age of our fleet, we do not have any planned aircraft retirement this decade. As a result, we continue to expect aircraft capex to average approximately $3.5 billion per year through 2030. We are very pleased to have built our fleet in a low interest rate environment and at a time when the supply chain wasn't as challenged as it is today.

Based on our demand and fuel cost assumptions, we now expect to produce a full year adjusted operating margin of approximately 7% and adjusted EPS of between $2 25, and $2 50.

Speaker 2: Based on our demand and fuel cost assumptions, we now expect to produce a full year adjusted operating margins of approximately 7%. And adjusted EPS of between $2.25 and $2.50.

Speaker 19: Looking ahead to 2024, we continue to expect our capacity to be up mid-single digits year-over-year, largely driven by better overall asset utilize.

Looking ahead to 2024, we continue to expect our capacity to be up mid single digits year over year, largely driven by better overall asset utilization.

Speaker 2: Increases in capacity will be oriented to our strengths with our global partnerships complementing our own fly.

Increases in capacity will be oriented to our strengths with our global partnerships complement our own flying.

Speaker 2: In 2024, we will have the assets and resources to finally grow beyond our 2019 capacity levels, but we will be nimble and adjust capacity based on the fuel and demand environment we are operating.

In 2024, we will have the assets and resources to finally grow beyond our 2019 capacity levels, but we will be nimble and adjust capacity based on the fuel and demand environment. We are operating in.

Operator: A relatively low capital requirements, along with our free cash flow production, has allowed for significant progress in strengthening the balance sheet. We have now reduced total debt by approximately $10.9 billion from peak levels in 2021 and we are more than 70% of the way to our goal of reducing total debt by $15 billion by the end of 2025. By year end, we expect to have paid down approximately $11.5 billion and will be 77% of the way to our total debt reduction goal.

Speaker 12: We are pleased with the progress the American Airlines team has made in 2023 and we remain focused on delivering results and pursuing efficiencies to unlock additional value in 2024 and beyond. Now I'll turn it back to Robert for closing remarks.

We're pleased with the progress the American Airlines team has made in 2023, and we remain focused on delivering results and pursuing efficiencies to unlock additional value in 2024 and beyond now I'll turn it back to Robert for closing remarks.

Thanks Devin.

Speaker 3: We're incredibly proud of everything the American Airlines team has accomplished over the past 18 months. We told you we were going to focus on reliability, profitability, and strengthening our balance sheet, and we've done just that.

Credibly proud of everything the American Airlines team has accomplished over the past 18 months.

We told you we are going to focus on reliability profitability and strengthening our balance sheet and we've done just that.

Operator: In addition to paying down regular schedule of debt, year to date, we have proactively decreased our 2025 maturity by $2.3 billion through both the refinancing of the $1.8 billion South American term loan in the first quarter and more than $550 million of open market repurchases over the past two years. Awards. All three credit rating agencies recognize our progress with upgrades in the third quarter, and we expect further ratings improvements in the coming years as we continue to reduce total debt levels.

Speaker 3: American had a great summer and has run the most reliable operation of the U.S. Network carriers over the past 15 months.

American had a great summer and has run the most reliable operation of the U S network carriers over the past 15 months.

Speaker 3: We're consistently profitable and we've materially improved our balance sheet by reducing total debt by nearly $11 billion since 2021.

We're consistently profitable and we've materially improved our balance sheet by reducing total debt by nearly $11 billion since 2021.

We will maintain that focus as we move through the fourth quarter and beyond no matter the macroeconomic conditions, we face or the variability of the operating environment.

Speaker 3: We'll maintain that focus as we move through the fourth quarter and beyond. No matter the macroeconomic conditions we face or the variability of the operating environment, our team is intent on controlling what we can control over the short term and setting our company up for success over the long run. I'm incredibly-

Our team is intent on controlling what we can control over the short term and setting our company up for success over the long run.

Operator: We ended the third quarter with approximately 13.5 billion dollars of total available liquidity. And for the full year, we now expect free cash flow to approach two billion dollars. The reduction from our prior free cash flow estimate is due to slightly higher aircraft cap X related to the Alaska A321. And lower earnings largely due to the recent run up in fuel expense. Now onto the outlook for the fourth quarter post labor day bookings have been in line with expectations.

I am incredibly excited by what the future holds for American.

Speaker 3: Looking ahead, we will be much more efficient as an airline.

Looking ahead, we will be much more efficient as an airline.

Speaker 3: As an example, even today, we could be flying 5% more with the aircraft we already have in our fleet.

As an example, even today, we could be flying 5% more with the aircraft we already have in our fleet.

We're eager to restore our regional service to underserved smaller markets that are still feeling the effects of the pandemic.

Speaker 3: We're eager to restore regional service to the underserved smaller markets that are still feeling the effects of the pandemic.

We're building back and expanding our network in an efficient manner that will lead to stronger revenue production.

Speaker 3: We're building back and expanding our network in an efficient manner that will lead to stronger revenue products.

Operator: We have seen steady improvement in business travel with encouraging signs from both managed and unmanaged corporate customers. Strong international demand and historically high premium revenue both domestically and internationally. Consistent with recent trends, we expect steady demand during the upcoming peak holiday travel season. However, the strong unit revenue environment in 2022 continues to be a difficult comparison. As a result, we expect fourth quarter trasm to be down five and a half to seven and a half percent on four and a half to six and a half percent more capacity year over year.

Speaker 3: Our Travel Rewards Program Advantage has already undergone significant change that is helping us grow high margin revenue at a greater rate than GDP. And we anticipate that to continue as we work to make our co-brand credit cards even more valuable to consumers and our partners.

Our travel rewards program advantage has already undergone significant change that is helping us grow high margin revenue at a greater rate than GDP and we anticipate that to continue as we work to make our co brand credit cards, even more valuable to consumers and our partners.

On top of all that we continue to innovate and creating a leading retailing experience ensuring that anything we offer our customers can be shopped.

Speaker 3: On top of all that, we continue to innovate in creating a leading, retailing experience, ensuring that anything we offer our customers can be shopped, purchased, and service digitalized.

Purchased and service digitally.

Operator: We expect fourth quarter chasm X to be up five percent to seven percent year over year. This step up in sequential year over year chasm X is driven by the shift of some expenses from the third quarter to the fourth quarter and less year over year capacity growth. Our full year chasm X guide remains unchanged up approximately three percent versus 2022. Our current forecast for the fourth quarter seems a fuel price of between $3.01 and $3.11 per gallon.

Speaker 3: It all bodes well for American, our team members, customers, the communities we serve, and especially our investors, as we enter 2024 and look to 2025 and beyond.

It all bodes well for American our team members customers the communities, we serve and especially our investors as we enter 2024 and look to 2025 and beyond.

Speaker 3: And with that operator, please open the line for analyst questions.

And with that operator, please open the line for analyst questions.

Speaker 1: As a reminder to ask a question, you will need to press star 11 on your telephone. To remove yourself from the queue, please press star 11 again. Please stand by while we compile the Q&A rock.

As a reminder to ask a question you will need to press star one one on your telephone to remove yourself from the queue. Please press star one one again.

Please standby, while we compile the Q&A roster.

Operator: Based on our current demand assumptions and fuel price forecast, we expect to produce an adjusted operating margin of between two and four percent in the fourth quarter. We continue to expect our full year capacity to be up approximately six and a half percent versus 2022. Our full year forecast for trasm is to be up approximately one percent year over year. And as I just mentioned, we expect our full year chasm X to be up approximately three percent versus 2022.

Our first question.

It comes from the line of Helane Becker of Cowen.

Speaker 1: comes from the line of Helene Becker of Kediko.

Thanks, very much operator, I'm not used to getting the first question. Thanks guys.

Speaker 6: Thanks very much operator. I'm not used to getting the first question, thanks guys. So here's my question. As you think about your heads.

Here's my question as you think about it.

Your your hub.

You've talked about <unk> talked in the past about New York and L. A not really being profitable.

Speaker 4: You've talked about Zeus, talked in the past about New York and LA not really being profitable. You know Philadelphia seems to me to be a good connecting hub.

Operator: Our capacity, trasm and chasm X expectations for the year are all consistent with the guidance we provided in January of this year. This result speaks to the planning, focus, and determination of our team. Based on our demand and fuel cost assumptions, we now expect to produce a full year adjusted operating margin of approximately seven percent and adjusted EPS of between $2.25 and $2.50. Looking ahead to 2024, we continue to expect our capacity to be up mid single digits year over year largely driven by better overall asset utilization.

No Phil.

Philadelphia It seems to me to be a good connecting hub. It looks like you are putting a lot of international capacity in the market.

Speaker 4: It looks like you're putting a lot of international capacity in the market.

Speaker 4: So it brings up a couple of points. One is, are there enough captains to handle what you're thinking of doing around the now?

So it brings up a couple of points. One is are there enough captains to handle what youre thinking of doing around the network Charlotte and Dallas have gotten a lot of attention what about some of your other markets like Philly Chicago and maybe your coastal locations.

Speaker 4: Charlottes and Dallas have gotten a lot of attention. What about some of your other markets like Philly, Chicago and maybe your coastal location?

Okay.

Speaker 3: Hey, Elaine, let me start and Fasuke and talk you more about exactly where we're focusing on our network and if we need some real expertise, David Seymour can step in.

Operator: Increases in capacity will be oriented to our strengths with our global partnerships complement in our own flying. In 2024, we will have the assets and resources to finally grow beyond our 2019 capacity levels. But we will be nimble and adjust capacity based on the fuel and demand environment we are operating in. We are pleased with the progress the American Airlines team has made in 2023 and we remain focused on delivering results and pursuing efficiencies to unlock additional value in 2024 and beyond.

Hey, Helane, let me, let me start and.

Faster you can talk to you more about exactly where we're focusing our network if we need some real expertise David see Morgan can step in.

Speaker 3: I'll start with this. We're really pleased that we were able to enter into a new agreement with the APA and our pilots back in August . It's a deal that while it certainly comes with increased compensation benefits and expense, but it also is something that puts it in a position where we can train our pilots in a much more efficient manner and more quickly. So one of the issues with...

Start with US we're really pleased that we were able to enter into a new agreement with the API and our pilots back in August .

It's a deal that whilst it certainly comes with increased.

Compensation and benefits and expense, but it also.

Is something that puts us in a position where we can train our pilots in a much more efficient manner and more quickly so one of the issues.

Operator: Now I will turn it back to Robert for closing remarks. Marks. Thanks, Devon. We're incredibly proud of everything the American Airlines team has accomplished over the past 18 months. We told you we were going to focus on reliability, profitability, and strengthening our balance sheet, and we've done just that. American had a great summer and has run the most reliable operation of the US network carriers over the past 15 months. We're consistently profitable and we've maturedly improved our balance sheet by reducing total debt by nearly $11 billion since 2020.

Speaker 3: getting our fleet fully back restored has been just our ability to move pilots through the school house. But right now with some of the changes we've made in the contract, we have much more flexibility to actually grow the airline as we need. And so I don't see any issues with being able to support our fleet as we get into 2024 from a mainline perspective.

Getting our fleet fully back restored has been just our ability to move pilots to the schoolhouse.

But right now with some of the changes we've made in the contract we have much more flexibility to actually grow the airline as we need and so I don't see any issues with being able to support our fleet as we get into 'twenty 'twenty four from a mainline perspective on the regional side of the world that is something that we're still.

Speaker 3: On the regional side of the world, that is something that we're still working through. We've seen a lot of nice progress, but we're not fully restored. As we look into 2024, you'll see us do some things that I think that will...

Operator: We'll maintain that focus as we move through the fourth quarter and beyond. No matter the macroeconomic conditions we face or the variability of the operating environment, our team is intent on controlling what we can control over the short term and setting our company up for success over the long run. I'm incredibly excited by what the future holds for American. Looking ahead, we will be much more efficient as an airline. As an example, even today we could be flying 5% more with the aircraft we already have in our fleet.

Working through we've seen.

A lot of nice progress, but were not fully restored and as we look into 2024 Youll see us do some things that I think that will.

Speaker 3: Hacen the progress to get our aircraft back up. And from a regional perspective, it's really not a pilot supply issue at this point. It's more of an issue of having first officers with the amount of time, the thousand hours that they need to graduate from right seat to left seat.

Hasten the progress to get our aircraft back up and from a regional perspective, it's really not a pilot supply issue at this point, it's more of an issue of having first officers with the amount of time the thousand hours that they need to graduate from from right to left seat and I'm in.

Speaker 3: And I'm encouraged by what I see on that front. So Vasu, what about how we focus in the network?

Operator: We're eager to restore regional service to the underserved smaller markets that are still feeling the effects of the pandemic. We're building back and expanding our network in an efficient manner that will lead to stronger revenue production. Our travel rewards program advantage has already undergone significant change that is helping us grow high margin revenue at a greater rate than GDP and we anticipate that to continue as we work to make our co-brand credit cards even more valuable to consumers and our partners.

By what I see on that front, so vasu, what about how do we focus in the networks.

Yes look.

Speaker 5: Yeah, look, just building off of Robert's comments in the opening remarks, as we go forward, we think we have a lot of opportunity there. You know, our hubs and really all of our hubs, but especially our four of our largest and potentially highest capacity hubs and Phoenix Dallas, Charlotte and Miami, are located near what are starting to turn out to be the most economically resilient markets there are. And we still have opportunity to go bring back more fleet and we have infrastructure in those places to grow further. And as we see the future unfolding to your point, Elaine, we actually see a lot of opportunities to go and grow the performance of the coastal markets and Philadelphia and Chicago specifically in a way that's really complimentary.

Building off of Robert's comments in the opening remarks, we look forward. We think we have a lot of opportunity there.

Our our hubs in really all of our hubs, but especially our four of our largest and potentially highest capacity hubs in Phoenix Dallas Charlotte Miami are located near what are starting to turn out to be the some of the most economically resilient markets. There are.

We still have opportunity to go bring back more fleet and we have infrastructure in those places to grow further and as we see the future unfolding to your point Helane, we actually see a lot of opportunities to go and grow the performance of the coastal markets and Philadelphia and Chicago, specifically in a way that is really complementary.

Operator: On top of all that, we continue to innovate in creating a leading retailing experience ensuring that anything we offer our customers can be shopped, purchased and serviced digitally. It all bodes well for American, our team members, customers, the communities we serve and especially our investors as we enter 2024 and look to 2025 and beyond.

Matt.

Scott Long: And with that operator, please open the line for analyst questions. As a reminder to ask a question, you will need to press star 11 on your telephone to remove yourself from the queue, please press star 11 again. Please stand by while we compile the Q&A roster.

Okay and then just for my follow up question on the domestic side.

Speaker 4: Okay, and then just for my follow up question on the domestic side, is that I look at your numbers versus your two major competitors? You seem to be decelerating. And I'm just kind of wondering if that's just a function of

Is that I look at your numbers versus your two major competitors, who seem to be decelerating.

Just kind of wondering is that just a function of.

You.

Speaker 4: the size of the aircraft you're flying, not having as many premium seats or is it just

The size of the aircraft, you're flying not having as many premium seats or.

Helane Becker: Our first question comes from the line of Helene Becker of TD Cohen. Thanks very much operator, I'm not used to getting the first question, thanks guys. So here's my question, as you think about your, your hubs, you've talked about shoes, talked in the past about New York and LA not really being profitable. You know, Philadelphia seems to me to be a good connecting hub, it looks like you're putting a lot of international capacity in the market.

Is it is it just the <unk>.

Speaker 4: the markets that you're in. Although given what Bhasu you just said, it seems like the demand in those markets should still be pretty reasonable.

Markets that you're in although given what you just said it seems like the demand in those markets should still be pretty reasonable.

Yeah, Helane actually it's none of the above would be the answer to the question looking at the net.

Speaker 5: Yeah, Halein, actually, none of the above would be the answer to the question. Looking at the...

Speaker 5: In this business of ours from one quarter to another, it's easy to draw a lot of prognostications, which probably aren't there. And as we see it right now.

This business of ours from one quarter to another and it's easy to draw a lot of prognostications, which which probably aren't there and as we see it right now.

Time.

One because so many so much of the U S airline business is still recovering their networks and the networks that are being recovered.

Helane Becker: So it brings up a couple of points. One is, are there enough captains to handle what you're thinking of doing around the network? Charlotte and Dallas have gotten a lot of attention. What about some of your other markets, like Philly, Chicago, and maybe your coastal locations? Hey Helene, let me start, and Fasou can talk more about exactly where we're focusing our network, and if we need some real expertise, David Seymour can step in.

Speaker 5: never been more divergent, never more different competitively, but also never more different than what was there three or four, certainly five years ago. And so a little bit of what you see is that. And what I would actually say is we, Aleco, the points I made and then Robert made in the opening bit, as we look forward, actually we see a lot of opportunity. First of all, with our network, as we look out there, we serve 300 cities in North America, in 200 of them, we have a network advantage. And as we bring back more of the regional jets, because we upgauge the mainline fleet, that's a real advantage for us, because so many of our competitors really won't be there.

They have never been more divergent never more different competitively, but also never more different than what was there.

Three or four certainly five years ago, and so a little bit of what you see is is that and.

And what I would actually say, we I'll echo the point that I made and then Robert made in the opening that as we look forward actually we see a lot of opportunity.

First of all with our network as we look out there we serve 300 cities in North America in 200 of them, we have a network advantage and as we bring back more of the regional jets as we up gauge the mainline fleet.

Helane Becker: I'll start with this. We're really pleased that we were able to enter into a new agreement with the APA and our pilots back in August. It's a deal that certainly comes with increased compensation benefits and expense, but it also is something that puts it in a position where we can train our pilots in a much more efficient manner and more quickly. So one of the issues with getting our fleet fully back restored has been just our ability to move pilots through the schoolhouse, but right now with some of the changes we've made in the contract, we have much more flexibility to actually grow the airline as we need.

Speaker 5: And as we bring back more of the regional jets because we upgrade to the mainline fleet, that's a real advantage for us because so many of our competitors really won't be there. Those, the customers in those cities are about 50% of our customer base, but they produce about 60% of our revenues. They're the ones who are signing up for the program for our advantage and enrolling in the card. And then the other big opportunity we have,

That's a real advantage for us because so many of our competitors I'm really won't be there.

The customers in those cities are about 50% of our customer base, but they produce about 60% of our revenues.

They're the ones who are signing up for the program for advantage in enrolling in part a and then the other big opportunity we have.

Speaker 5: really across our enterprise, but it'll play out most notably in the domestic system, is really with a damage, our travel rewards program. As we see at our Co-Branic Credit Card, the largest Co-Branic Credit Card in circulation, our program is one of the travel programs in the business. But if you look at us, we produce probably $400 million less in frequent flyer revenue than what the industry leader does right now. So the quarter to quarter trends are just a function of things like the recovery. The real thing that we're seeing is the opportunity in the quarters and years ahead.

Oh really across our entire enterprise, but it'll it'll play out most notably in the domestic system.

Israeli with advantage our travel rewards program as we see it our Cobranded credit card is the largest co branded credit card in circulation our program is one.

Helane Becker: And so I don't see any issues with being able to support our fleet as we get into to 2024 from a mainline perspective on the regional side of the world that is something that we're still working through. We've seen a lot of nice progress, but we're not fully restored as we look into 2024. You'll see us do some things that I think that will hasten the progress to get our aircraft back up.

Maybe travel programs in the business, but if you look at us.

We produced probably $400 million lesson frequent flyer revenue and what are the industry leader does right now so.

The quarter to quarter trends or just a function of things like the recovery. The real thing that we're seeing is the opportunity in the quarters and years ahead.

Speaker 6: Thanks very much. Thanks to everybody.

Thanks, very much thanks, everybody.

Helane Becker: And from a regional perspective, it's really not a pilot supply issue at this point. It's more of an issue of having first officers with the amount of time, the thousand hours that they need to graduate from from right seat to left seat. And I'm encouraged by what I see on that front. So if I see what about how are we focused in the network? Yeah, look, just building off of Robert's comments and in the opening remarks, as we look forward, we think we have a lot of opportunity there.

Thank you.

Our next question.

Speaker 1: comes from the line of David Vernon, uh, uh, Burns.

Comes from the line of David Vernon of Bernstein.

Hey, good morning, guys.

Speaker 7: Hey, good morning guys. So Devin, can you help try to shape the cost outlook in the cadence by quarter for 2024, or at least talk to some of the headlands are out there? I know it's gonna be pretty noisy just given the way the labor cost of layered in. Can you kind of help us think about 2024 Casamax sort of headwinds in relation to the higher level of Casamax you're expecting now in fourth quarter?

So Devin can you help try to shape the cost outlook and the cadence by quarter for 2024 or at least talk to some of the headwinds are out there I know, it's going to be pretty noisy just given the way the labor costs of layered in can you kind of help us think about.

Helane Becker: You know, our hubs and really all of our hubs, but especially our four of our largest and potentially highest capacity hubs in Phoenix, Dallas, Charlotte, Miami are located near what are starting to turn out to be the most economically resilient markets there are. And we still have opportunity to go bring back more fleet and we have infrastructure in those places to grow further. And as we see the future unfolding to your point, Helena, and we actually see a lot of opportunities to go and grow the performance of the coastal markets and Philadelphia and Chicago specifically in a way that's really complimentary to that. Okay, and then just for my follow up question on the domestic side, is that I look at your numbers versus your two major competitors, you seem to be decelerating.

<unk> 2020 for CASM ex sort of headwinds in relation to the higher level of kind of a CASM ex that youre expecting now in fourth quarter.

Sure and maybe I'll just start with fourth quarter performance and then we'll talk a little bit about 2024, and while we're not giving CASM guidance for the year I can talk to you about some headwinds in tailwind so starting with fourth quarter of this year.

Speaker 2: Sure, and maybe I'll just start with fourth quarter performance and then we'll talk a little bit about 2024 and while we're not giving Kazim guidance for the year, I can talk to you about some headwinds and tailwinds. So.

Speaker 2: Starting with fourth quarter of this year, as Basu said, his numbers do shift around a little bit from quarter to quarter, but our full year Casm X Guide has been unchanged since the start of the year. And we needed to start of the year. The fourth quarter was going to be our toughest comp.

Bus, who said these numbers do shift around a little bit from quarter to quarter, but our full year CASM ex guide has been unchanged since the start of the year and we needed to start of the year the fourth quarter was going to be our toughest comp.

Our capacity starts to decelerate our capacity growth starts to decelerate a little bit as we entered the fourth quarter. We also had a couple of one time credits that we got in the fourth quarter 2020 to that.

Speaker 2: Our capacity starts to decelerate or capacity growth starts to decelerate a little bit as we enter the fourth quarter.

Speaker 2: We also had a couple of one-time credits that we got in the fourth quarter, 2022, that aren't happening for us this year. And then there was a shift of some expenses from the third quarter into the fourth quarter, adding a little bit more pressure, but we're still really pleased with our full-year result, hitting the guide or the midpoint of the guide that we had at the very start of the year. As we...

Arent happening for us this year.

Helane Becker: And I'm just kind of wondering if that's just a function of the size of the aircraft you're flying, not having as many premium seats. Or is it is it just the markets that you're in, although given what bus you just said, it seems like the demand in those markets should still be pretty reasonable. Yeah, Helena, actually, it's none of the above would be the answer to the question. Looking at the business of ours from one quarter to another, it's easy to draw a lot of prognostications, which probably aren't there.

And then there was a shift of some expenses from third quarter into the fourth quarter, adding a little bit more pressure, but we're still really pleased with our full year result, hitting the guide or the midpoint of the guide that we had at the various started the year.

As we look out to 2024.

Speaker 2: The headwinds are where you'd expect. It's largely around salars and benefits. We have open contracts with our flight attendants and our passenger service and reservations group.

The headwinds are where you would expect it's largely around salaries and benefits we have open contracts with our flight attendants and our passenger service some reservations groups.

Speaker 2: if we are able to achieve deals of match industry leaders for those work groups, it'll add about a point of chasm pressure year over year. We also just have regular increases for other labor groups that are happening next year. But the tailwinds are what Robert talked about, what we're excited about, actually working towards full utilization of our fleet.

If we are able to achieve deals that match industry leaders for those work groups that will add about a point of CASM pressure year over year. We also just have regular increases for other labor groups that are happening in next year, but the tailwind to what Robert talked about what we're excited about actually working towards full utilization of our fleet in this.

Helane Becker: And as we see it right now, it's a particularly weird time. One because so many so much of the US airline businesses still recovering their networks and the networks that are being recovered are probably never been more divergent, never more different competitively but also never more different than what was there. Three or four, certainly five years ago. And so a little bit of what you see is that. And what I would actually say is we, I'll echo the points I made and then Robert made me in the opening bit.

Speaker 2: And this operation we've been running has been incredible for the last year, year and a half. Now we have a real opportunity to go ahead and do some optimization work around this operation. So

Operation, we'd been running has been incredible for the last year year and a half now we have a real opportunity to go ahead and do some optimization work around this operation so.

Speaker 2: We do have some headwinds on salaries and benefits. We have some real nice tailwinds as well in 2024 and we'll be able to provide more guidance on what Cazmo look like on a January call.

We do have some headwinds on salaries and benefits we have some real nice tailwind as well into 2024, and we will be able to provide more guidance on what CASM will look like on the January call.

Okay. Thank you for that and then Robert.

Speaker 7: Thank you for that. And then Robert or Vatu maybe, there's a lot of talk right now in the industry about.

And we're about to maybe there's a lot of talk right now in the industry about how segmentation premium products are changing the structure of the industry may be to the to the detriment of domestic oriented or discount carriers can you add your thoughts on this topic here and talk a little bit about how you see American playing in the evolving structure, we didn't hear a lot about prime.

Speaker 7: how segmentation premium products are changing the structure of the industry, maybe to the detriment of domestic oriented or discount carriers. Can you add your thoughts on this topic here and talk a little bit about how you see Americans playing in this evolving structure? We didn't hear a lot about premium and any of the prepared remarks today. I'm just wondering how you guys are thinking about, what some people are calling a seismic change in the industry dynamic.

Helane Becker: As we look forward, actually we see a lot of opportunity. First of all, with our network, as we look out there, we serve 300 cities in North America, in 200 of them, we have a network advantage. And as we bring back more of the regional jets, as we upgrade to the mainline fleet, that's a real advantage for us because so many of our competitors really won't be there. The customers in those cities are about 50% of our customer base, but they produce about 60% of our revenues.

And then any of the prepared remarks today I'm just wondering how you guys are thinking about.

What what some people are calling out as a seismic change in the industry dynamic.

Speaker 5: Sure, this is Vasi, I can answer that. In fact, I'd be very, very happy to answer it. Look, what we see, and we think that the real causal thing that's happening is the customer itself, as opposed to a fair product or a cabinet service. And what we've certainly seen, and Robert alluded to it, since 2019, our advantage customers are really driving the revenue production of the company. And that's manifesting itself in a range of ways.

Sure. This is vasu I can answer that in fact, it would be very very happy to answer it.

Helane Becker: They're the ones who are signing up for the program for advantage and enrolling in the card. And then the other big opportunity we have really across our enterprise, but it'll play out most notably in the domestic system, is really with advantage, our travel rewards program. As we see at our co-brand a credit card is the largest co-brand a credit card in circulation. Our program is one, maybe travel program in the business, but if you look at us, we produce probably $400 million less in frequent flyer revenue than what the industry leader does right now. So the quarter to quarter trends are just a function of things like the recovery, the real thing that we're seeing is the opportunity in the quarters and years ahead. Thanks very much. Thanks to everybody.

But what we see and we think that the real causal thing that's happening is the customer itself as opposed to a fair product or a cabin of service Oh, what we've certainly seen and Robert alluded to in essence 2019 advantage. Our advantage customers are really driving the revenue production of the company and that's manifesting itself in our range.

Of ways, so versus 19, our membership is up 50%.

Speaker 5: So versus 19, our membership is up 50%. Almost two thirds of our revenue, certainly in this last quarter, came from advanced customers.

Almost two thirds of our revenue certainly in this last quarter came from advantage customers.

Speaker 5: And what we're finding with them is that those customers are proving to be a much more resilient pool of demand that indeed are willing to engage in behaviors that aren't just shopping for the fastest schedule of the cheapest price. We see that play out in a lot of different ways. One is premium cabin performance where our premium fare products revenue is up 7% from a managed customers.

And what we're finding with them is that those customers are proving to be a much more resilient pool of demand that indeed are willing to engage in behaviors that arent just shopping for the fastest schedule at the cheapest price.

We see that play out in a lot of different ways. One is premium cabin performance, where our premium behr products revenue was up 7% from from advantage customers.

David Vernon: Thank you. Our next question comes from the line of David Vernon of Bernstein. Hey, good morning guys. So Devon, can you help try to shape a cost outlook in the cadence by quarter for 2024 or at least talk to some of the headwinds are out there? I know it's going to be pretty noisy just given the way the labor cost that layered in. Can you kind of help us think about 2024 Casimax sort of headwinds in relation to the to the higher level of Casimax that you're expecting now in fourth quarter?

In keeping with with our overall seat growth.

Speaker 5: in keeping with with our overall seat growth.

Two we see that remuneration on our credit cards, it's up about 25% from from these customers.

Speaker 3: our credit cards is of about 25% from these customers. And then importantly, we find that these customers disproportionately want to shop with us directly. About 85% of all the advantage member revenue in the system is coming throughout direct channels. So we see the causal thing, and that's why it was in our remarks is what's really happening for our advantage members, there's a real desire to travel. And they're coming to us because they want a great network and a program that rewards them for using it delivered reliably over and over and over again. Hey, David, I just want to add one thing to this.

And then importantly, we find that these customers disproportionately want to shop with us directly about 85% of all the advantage member revenue in the system is coming through our direct channels.

So we we see the causal thing and that's why it was in our remarks is what's really happening is that for our advantaged members. There is a real desire to travel.

David Vernon: Sure, and maybe I'll just start with fourth quarter performance and then we'll talk a little bit about 2024 and while we're not giving some guidance for the year, I can talk about some headwinds and tailwinds. So starting with fourth quarter of this year is bus who said these numbers do shift around a little bit from quarter to quarter, but our full year Casimax guide has been unchanged since the start of the year and we knew the start of the year, the fourth quarter was going to be our toughest comp.

And they're coming to us because they want a great network and a program that rewards them for using it delivered reliably over and over and over again.

And David I, just wanted to add one thing to that.

Speaker 3: Hey, and David, I just want to add one thing to that. It's, look, we're going to be part of and also a driver of premium revenue growth. So one of the things I think is noteworthy, our premium seating is going to grow by 43% between now and in 2026.

Look.

We're going to be part of and also a driver of.

Premium revenue growth. So one of the things I think is noteworthy our premium seating is going to grow by 43% between now and 2026 and Thats as a result of bringing on the new XLR and Reconfiguring, our triple seven three hundreds in actually taking a look at even some of the domestic fleet as well.

David Vernon: Our capacity starts to decelerate or capacity growth starts to decelerate a little bit as we entered the fourth quarter. We also had a couple one time credits that we got in the fourth quarter 2022 that aren't happening for us this year. And then there was a shift of some expenses from the third quarter into the fourth quarter adding a little bit more pressure, but we're still really pleased with our full year result hitting the guide or the midpoint of the guide that we had at the very start of the year.

Speaker 3: And that's as a result of bringing on the new XLR and reconfiguring our triple seven 300s. And actually taking a look at even some of the domestic fleet as well, where I know that we'll be adding more first class product or at least reconfiguring to that end. And on that same front, we're really pleased with our regional aircraft. On that front, you take a look at the E175.

I know that we will be adding more first class product or at least reconfiguring.

And then on that same front, we're really pleased with our regional aircraft.

On that front.

You take a look at that 175, and they have fantastic cabins that are every bit as nice and appreciated by customers anything we fly on the mainline side. So I look I look forward to participating in.

David Vernon: As we look out to 2024, the headwinds are where you expect it's largely around sellers and benefits. We have open contracts with our flight attendants and our passenger service and reservations groups. If we are able to achieve deals and match industry leaders for those work groups, it'll add about a point of Casimax pressure year over year. We also just have regular increases for other labor groups that are happening next year. But the tailwinds are where Robert talked about what we're excited about actually working towards full utilization of our fleet and this operation we've been running has been incredible for the last year, year and a half.

Speaker 3: And they have fantastic cabins that are every bid is nice and appreciated by customers. Anything we fly in the mainline side. So I look forward to participating in.

Speaker 11: and driving what's going to be going on in terms of premium products. All right, thank you.

And driving what what's going to be going on in terms of our premium products.

Alright, thanks, guys.

Thank you.

Our next question.

Speaker 1: Concentral line of Andrew D'Dora, a Bank of America.

Comes from the line of Andrew the Dora of Bank of America.

Hey, good morning, everyone.

Speaker 8: Hey, good morning, everyone. David, maybe just digging into the 2024 costs a little bit. Given the changes in the pilot contract, I know the new profit sharing now runs through the salaries and wages line. Hashtag we think about wage growth next year in relation to the mid-single-digit capacity?

Kevin maybe just digging into the 2024, our costs a little bit.

David Vernon: Now we have a real opportunity to go ahead and do some optimization work around this operation. So we do have some headwinds on sellers and benefits. We have some real nice tailwinds as well in 2024 and we'll be able to provide more guidance on what Casimax look like on a January call. Okay, thank you for that.

Given the changes in the pilot contract.

So kind of properties the new profit sharing that runs through the salaries and wages line, how should we think about wage growth next year and.

In relation to kind of the mid single digit capacity.

Vasu Raja: And then Robert or if I assume maybe there's a lot of talk right now in the industry about how segmentation premium products are changing the structure of the industry maybe to the to the detriment of domestic oriented or discount carriers. Can you add your thoughts in the topic here and talk a little bit about how you see American playing in this evolving structure. We didn't hear a lot about premium and any of the prepared remarks today.

Well, we'll give more guidance on 'twenty 'twenty four is weak.

Speaker 2: We'll give more guidance on 2024 as we...

Speaker 2: But, the soundings and benefits is an area we're going to see the pressure. As I just mentioned, we do have this open agreement with our flight attendants and our passenger service and reservations agents that we hope to get closed and we hope to be able to match industry leading contracts there, which will drive about a point of growth.

You bet.

Salaries and benefits is an area, we're going to see some pressures as I. Just mentioned, we do have this open agreement with our flight attendants on our passenger service in reservations agents that we.

We hope to get closed and we hope to be able to match industry, leading contracts, there, which will drive about a point of growth.

Vasu Raja: I'm just wondering how you guys are thinking about, you know, what what what some people are calling a is a seismic change in the industry dynamic. Sure, this is Vasu. I can I can answer that in fact, I'd be very very happy to answer it. Look what we see and we think that the real causal thing that's happening is the customer itself as opposed to a fair product or a cabinet service.

Speaker 2: And as we get into the year, there will be lumpiness on year-over-year comps. In the first quarter of 2023, we didn't have any cruel for our pilot agreement. So we'll see a little more cost pressure in the first quarter. But as we get into the last three quarters of the year, that cost pressure is going to ease. And then these efficiencies that we've been talking about, I think, are going to add some nice tailwinds as we go through the year. So let us get back to you in January with a little bit more detail, but that's kind of where we're seeing it right now.

And as we get into the year, there will be some lumpiness.

Year over year comps in the first quarter of 2023, we didnt have an accrual for our pilot agreement. So we will see a little more cost pressure in the first quarter, but.

But as we get into the last three quarters of the year that cost pressure is going to ease.

Vasu Raja: And what what we've certainly seen and Robert alluded to it is since 2019 advantage our advantage customers are really driving the revenue production of the company that's manifesting itself in a range of ways. So versus 19 our membership is up 50%. Almost two thirds of our revenue certainly in this last quarter came from advantage customers. And and what we're finding with them is that those customers are proving to be a much more resilient pool of demand that indeed are willing to engage in behaviors that aren't just shopping for the fastest schedule of the cheapest price.

And then these efficiencies that we've been talking about I think are going to add some nice tailwind as we go through the year. So let us get back to you in January with a little bit more detail, but that's kind of where we're seeing it right now.

Speaker 8: Okay, thank you. And then, please, I assume, can you speak a little bit more in terms of what you're seeing on the corporate side, particularly as it relates to both kind of the large and small corporates, particularly, I know you've made some pretty big changes with your corporate sales force. Just curious if you've seen any sort of unexpected share shifts or anything like that as we moved into this more, a seasonally stronger time period for corporate travel. To share all sorts of readily entertained artists, include? Call yourself a renon, or? Find the hand sign below.

Okay. Thank you and then great.

Sue can you speak a little bit more in terms of what youre seeing on the corporate side, particularly as it relates to both large.

Large and small corporate.

Particularly.

I know you've made some pretty big changes with your corporate Salesforce, just curious if you've seen any sort of unexpected share shifts or anything like that as we moved into the seasonally stronger.

Vasu Raja: We see that play out in a lot of different ways. One is premium cabin performance where our premium fair products revenue is up 7% from from advantage customers in keeping with with our overall seat growth. Two, we see that remuneration on our credit card is of about 25% from from these customers. And then importantly, we find that these customers disproportionately want to shop with us directly about 85% of all the advantage member revenue in the system is coming throughout direct channels.

Stronger time period for for corporate travel.

Speaker 5: Yeah, hey, thank you, Andrew. It's another question, which I know is on people's minds. I'm happy to address. And I'll do it in this fashion. We have made a number of changes with our selling and distribution strategy. The purpose of which is very simple. Our customers have been telling us for a very long time now that they want us to do anything that we offer them can be shopped, sold, and a service digitally.

Yeah, Hey, Thank you Andrew it's another question, which I know is on People's minds, I'm happy to happy to address that and I'll do it in this fashion and we have made a number of changes with our our selling and distribution strategy. The purpose of which is very simple.

Customers have been telling us for a very long time now that they want it so that anything that we offer them can be <unk>.

<unk> sold and serviced digitally.

Speaker 5: And we've been seeing that that that customer sentiment for a really long time and and that's where I have to serve. And our strategy is this simple in order to go make that happen, we need to distribute our product exclusively through the Internet.

And we've been seeing that that that customer sentiment for a really long time and that's what we're out to serve that our strategy is simple in order to go make that happen, we need to distribute our product exclusively through the internet.

Vasu Raja: So we we see the causal thing and that's why it was in our remarks is what's really happening for our advantage members. There's a real desire to travel and they're coming to us because they want a great network and a program that rewards them for for using it delivered reliably over and over and over again. David, David, I just want to add one thing to that. It's, look, we're going to be part of and also a driver of premium revenue growth.

Speaker 5: And that's what you're seeing from us. We're shifting content, fair product, schedule, things like that, out of legacy technology where we can't provide customers the kind of shopping and service and experience they expect. And we're putting it through technologies that can. And on that journey, we've certainly invited all of our retailers to come along with it, but that is a different world than what was there before. And what we've seen before is really encouraging actually. In the quarter, our total business revenues were up 2%. We actually performed better year over year among contracted corporations than we had in a number of months prior to it. But very importantly, our cost of sale is down 13%. So we're finding that we're able to generate more revenues due less cost of sale, which is very encouraging to us.

And Thats, what youre seeing from us where we are.

Shifting I'm content.

Their products schedule things like that out of legacy technology, where we can't provide customers the kind of shopping and servicing experience. They expect and we're putting it through technologies that can add on that journey certainly invited all of our retailers to come along with it but that is a different world than what was there before and what we've seen before is really encouraging actually.

Vasu Raja: So one of the things I think is is noteworthy. Our premium seating is going to grow by 43% between now and in 2026. And that's as a result of, you know, bringing on the new XLR and reconfiguring our triple seven 300s and actually taking a look at even some of the domestic fleet as well, where I know that we'll be adding more first class product or at least reconfiguring to that end.

In the quarter, our total business revenues were up 2%, we actually performed better year over year among contracted corporations.

And then we had in a number of months prior to it but very importantly, our cost of sale is down 13%. So we're finding that we're able to generate more revenues less cost of sale.

Vasu Raja: And on that same front, we're really pleased with our regional aircraft. On that front, you know, you take a look at the E 175 and they have fantastic cabins that are every bid is nice and appreciated by customers is anything we fly in the mainline side. So I look forward to participating in and driving, you know, what's what's going to be going on in terms of premium products.

Which is very encouraging to us.

Speaker 5: And like I said, as we go forward, we intend to continue the momentum that we've got. We certainly invite any retailing partner to join us along the journey. And in fact, most recently, we launched a new business program called the Banage Business.

Like I said as we go forward.

We intend to continue the momentum that we've got we certainly invite any retailing partner to join us along the journey.

In fact, most recently, we launched a new business program called advantaged business.

Speaker 5: and advantages very much the platform upon which will build all of our commercial programs. But through that, through advantage of business, companies of all sizes can access our content in a way that's cheaper, simpler, better servicing, and a way that's more rewarding for travelers. We'll accelerate their status.

And advantage is very much the platform upon which we'll build all of our commercial programs, but through that do advantage business companies of all sizes can access our content in a way that's cheaper simpler better servicing and.

Andrew Didora: All right, thank you. Thank you. Our next question comes from the line of Andrew Dodora, a bank of America. Hey, good morning, everyone. David, maybe just digging into the 2024 costs a little bit. Given the changes in the pilot contract, I know kind of profit is the new profit sharing that runs through the salaries and wages line. How do we think about wage growth next year in relation to kind of the mid single digit capacity?

In a way that's more rewarding for travelers will accelerate their status. So we're actually really encouraged by what we've seen.

Speaker 5: So we're actually really encouraged by what we've seen, encouraged by its revenue production, and look forward to continuing the momentum.

Courage by its revenue production.

And look forward to continuing the momentum.

Great Thanks for that.

Thank you.

Our next question.

It comes from the line.

Speaker 1: comes from a line, a Michael Lennonberg of Deutsche Bank.

Michael Lindenberg of Deutsche Bank.

Hey, good morning, everyone, Hey, fuzzy could I, just I know you sort of called out what the.

Speaker 21: Hey, good morning, everyone. Hey, Vanzoo, can I just, I know you sort of called out what the revenue for premium for advantage members was up year over year. If I look at it in its entirety, what year over year was the gain in premium product revenue. And then when we think about sort of the split, where are you, you know, as a percent of your passenger revenue, total passenger revenue, premium versus non-premium, even rough numbers would be fine. My children help me and treat these old, lost battery.

Andrew Didora: Hey, we'll give more guidance on 2024 as we. But selling benefits is an area we're going to see the pressure. As I just mentioned, we do have this open agreement with our flight attendants and our passenger service and reservations agents that we hope to get closed and we hope to be able to match industry leading contracts there, which will drive about a point of growth. And as we get into the year, there will be lumpiness on year over year comps in the first quarter of 2023.

The revenue for premium for advantage members was up.

Year over year, if I look at it in its entirety what year over year was the gain in premium product revenue and then when we think about sort of the split where are you as a percent of your passenger revenue total passenger revenue premium premium versus non premium even rough numbers would be fine.

<unk>.

Yeah.

Andrew Didora: We didn't have an accrual for our pilot agreement. So we'll see a little more cost pressure in the first quarter. But as we get into the last three quarters of the year, that cost pressure is going to ease. And then these efficiencies that we've been talking about, I think are going to add some nice tailwinds as we go through the year. So let us get back to you in January with a little bit more detail, but that's kind of where we're seeing it right now.

Hello.

Sorry, Mike.

Speaker 5: Sorry, Mike, shame on me, my microphone wasn't on. But I'll repeat. I'll answer the first question. First, in the premium cabin revenues are up across our system, about 67%. Okay.

Shame on me and my microphone wasn't on.

But I'll repeat.

Andrew Didora: Okay, thank you. And then, can you speak a little bit more in terms of what you're seeing on the corporate side, particularly as it relates to both kind of large and small corporates, particularly. I know you've made some pretty big changes with your corporate sales force, just curious if you've seen any sort of unexpected share shifts or anything like that, as we moved into this more seasonally stronger, has stronger time period for corporate travel.

I'll answer the first question first.

The premium cabin revenues are up across our system of about 7%.

Hey.

By advantage members.

Speaker 5: by advantage members who's read and reached out about seven percent. Non-members are about five percent. And then do your questions.

Revenue was up about 7% non number was up about 5% and then to your question.

I should think about.

Speaker 5: I should be talking about customer base. Look, one of the things that we certainly noticed is probably more importantly than segmenting based on fair products is by the customers themselves. And so what we do is we look at customers who are buying non-premium products. Those are fairs that are not eligible for discounts, mileage, or things like that are lowest selling products. And we look at it for customers who are non-advanced customers. We tend to be our most transitory customers.

Customer base look one of the things that we certainly noticed is.

Andrew Didora: Thanks. Yeah, hey, thank you, Andrew. It's another question, which I know is on people's minds. I'm happy to address and I'll do it in this fashion. We have made a number of changes with our selling and distribution strategy. The purpose of which is very simple. Our customers have been telling us for a very long time now that they want us so that anything that we offer them can be shopped, sold, and a service digitally.

Probably more importantly than segmenting based on air products is by the customers themselves.

So what we do is we look at customers who are buying non premium products as their payers that are not eligible.

Or discounts mileage and things like that are lowest selling products and we look at it for customers, who are non advantage customers, who tend to be almost transitory customers.

Speaker 5: And what we find is the transitory customers buying our lowest selling fairs, it's about 30% of our system revenue. The other 70% is customers who are buying premium quality fairs. And that number is disproportionately weighted to a bin.

What we find is that transitory customers buying our lowest selling fares, it's about 30% of our system revenue.

Andrew Didora: Agency, and we've been seeing that customer sentiment for a really long time. And that's where we're out to serve. And our strategy is just simple. In order to go make that happen, we need to distribute our product exclusively through the internet. And that's what you're seeing for us. We're shifting content, a fair product schedule, things like that out of legacy technology where we can't provide customers the kind of shopping and servicing experience they expect.

Other 70% is customers, who are buying premium quality fares and that number is disproportionately weighted to advantage customers.

Speaker 21: Okay, great. And then just my second question on, you know, I saw that you're applying for, just live from JFK, Haneda. And I'm curious because, you know, sort of post NEA, I get the sense that maybe you were going to be sort of maybe, I don't know, a downsizing year because the right thing, but the fact is, you know, wide bodies are scarce and for everyone. And that would take two frames. And you already have Jal in that market with the code share. So, you know, what's the rationale behind that? Thanks. Take them by question.

Okay, Great and then just my second question on I saw that you're applying for to fly from JFK Haneda and I'm curious because you know sort of post NDA I get the sense that maybe you were going to be sort of maybe.

Andrew Didora: And we're putting it through technologies that can. And on that journey, we've been certainly invited all of our retailers to come along with it. But that is a different world than what was there before. And what we've seen before is really encouraging actually in the quarter, our total business revenues were up 2%. We actually performed better year over year among contracted corporations. Then, then we had in a number of months prior to it, but very importantly, our cost of sale is down 13%.

Andrew Didora: So we're finding that we're able to generate more revenues through less cost of sale, which is very encouraging to us. And like I said, as we go forward, we intend to continue the momentum that we've got. We certainly invite any retailing partner to join us along the journey. And in fact, most recently, we launched a new business program called Advantage Business. And Advantage is very much the platform upon which will build all of our commercial programs.

I don't know if downsizing Eric is the right thing, but the fact is wide bodies are scarce and for everyone and that would take two frames and do you already have gel in that market with the codeshare. So whats the rationale behind that thanks for taking my questions Yeah.

Speaker 5: Yeah, hey, thanks, Mike. I'll answer it through the lens of New York, which I know is probably on a lot of our investors' minds. And I'll answer the NAA question as part of it. But in that, the time pre-COVID, and certainly prior to the NEA, American Airlines had a really fundamental problem in New York, which is we were losing our relevance to New York City originating customers. Every year we had declining, originating share. Our advantage enrollments were declining year after year. Simply because we didn't have a slot portfolio to compete with the two largest ones. And that was the...

Hey, Thanks, Mike and I'll answer it lands in New York, which I know is probably on a lot of our investors mind.

And I'll.

I'll answer the M&A question and that's part of it.

And at the time pre Covid and certainly prior to the NDA American Airlines had a really fundamental problem in New York, which is we were losing a relevant in New York City originating customers every year we had.

Declining originating share our advantage enrollments were declining year after year simply because we didn't have a slot portfolio to compete with the two largest ones and that was the.

Andrew Didora: But through that, through Advantage Business companies of all sizes can access our content in a way that's cheaper, simpler, better servicing, and a way that's more rewarding for travelers will accelerate their status. So we're actually really encouraged by what we've seen, encouraged by its revenue production, and look forward to continuing the momentum. Great. Thanks for that.

Speaker 5: the reasons behind doing the NEA. Now in these last several weeks and months, what we've noticed is actually, the New York originating customer has changed what they demand. Same-day business trips are down a lot. There's way fewer people originating New York who are looking to take day trips to Boston or Chicago or Detroit. But that New York City customer is much more interested in flying long haul, the internationally long haul to the wedding.

The reasons behind doing the NDA now.

Several weeks and months, what we've noticed is.

Actually the New York originating customer has.

Changed what they demand and a business trips are down a lot.

Way fewer people originating New York, who are looking to take day trips to Boston or Chicago, or Detroit, but that New York City customer is much more interested in flying long haul.

Internationally long haul for the West Coast, all market, Florida, That's a thing that our slot portfolio is much more to do and in the last few weeks since the NDA has been terminated actually what we've seen is that our.

Speaker 5: All markets in Florida. That's a thing that our slot portfolio is much more built to do. And in the last few weeks since the NEA has been terminated, actually what we've seen is that our originating share is stable. New York City.

Michael Lindenberg: Thank you. Our next question comes from a line of Michael Lindenberg of Deutsche Bank. Hey, good morning, everyone. Hey, Vasu. Can I just, I know you sort of called out what the revenue for premium for Advantage members was up year over year. If I look at it in its entirety, what year over year was the gain in premium product revenue? And then when we think about sort of the split, where are you as a percent of your passenger revenue, total passenger revenue, premium versus non-premium, even rough numbers would be fine.

Our originating share is stable New York City.

Speaker 5: even number one market in our system, both for advantage enrollment and for credit card sign-up penetration. So we're encouraged by that and you see that. The last thing I'll mention about it is through our global partnership, we're able to offer a thing in New York, which is very unique, both in our P8 facility, and also being able to go and operate to our major partners, major complexes, whether that P-throw or Haneda, or Doha for that matter. Make sense.

The number one market in our system, both for advantage enrollment and for credit card sign ups and penetration.

So we're encouraged by that and you see that the last thing I'll mention about it.

Through our global partnerships, we're able to offer a thing in New York, which is very unique both in our <unk> facility and also being able to go and operate our major partners major complex says, whether that's heathrow or haneda or Doha for that matter.

Yeah.

Makes sense. Thank you.

Yeah.

Okay. Thank you please standby for our next question.

Speaker 1: Next question comes from the line of Catherine O'Brien of Goldman Sachs.

Our next question comes from the line of Catherine O'brien of Goldman Sachs.

Michael Lindenberg: Thanks. Hello. Sorry, Mike. Shame on me. My microphone wasn't on. But I'll repeat. I'll answer the first question first. Indeed, premium cabin revenues are up across our system, about 67% by Advantage members, who's registered up about 7%. Non-members are up about 5%. And then your question. Question about customer base. Look, one of the things that we certainly noticed is probably more importantly than segmenting based on fair product is by the customers themselves.

Hey, good morning, everyone. Thanks for the time.

Speaker 10: uh... devon i just wanted to get a bit on the cost performance to date uh... you know you can't go to point below the low end of your of your three key range and i know you mentioned some timing shift you know but you're also sticking with your prior midpoint for failure chasm x despite the you know extra cruel for pilot retropey since you last update that for your cost outlook i guess you know what is going better than expected and then and then can you just remind us what you originally baked in for the open flight right second because of that happened on three

Kevin I, just wanted to dig in a bit on the cost performance to date.

He came in close to a point below the low end of your of your <unk> range and I know you mentioned some timing shifts.

But you are also sticking with your prior midpoint for full year CASM ex despite the extra accrual for pilot retro pay since your last update that for your cost outlook. I guess, you know what is going better than expected and then can you just remind us what you had originally baked in for the open flake flight attendant contract in the second half did that have any impact on <unk>. Thanks.

Speaker 2: Thanks for question Katie. We do have...

Hey, Thanks for the question Katy we do have.

Michael Lindenberg: And so what we do is we look at customers who are buying non-premium products. Those are fairs that are not eligible for discounts, mileage, or things like that are lowest selling products. And we look at it for customers who are non-advantage customers, who tend to be our most transitory customers. And what we find is transitory customers buying our lowest selling fairs is about 30% of our system revenue. The other 70% is customers who are buying premium quality fairs.

It's largely timing and operational performance with higher ASM is what benefited us in the third quarter and our prior guidance we didn't have.

Speaker 2: It's largely timing and operation performance with higher ASMs is what benefited us in the third quarter. In our prior guidance, we didn't have anything in the third quarter for our...

Anything in the third quarter for our.

Speaker 2: Open labor agreements outside of the pilot. We did have something in the fourth quarter and we still have something modest in the fourth quarter just given the time it would take to reach and ratify an agreement.

Open labor agreements outside of the pilots we did have some in the fourth quarter and we still have something modest in the fourth quarter, just given the time it would take to reach and ratify and agreement.

Speaker 2: But generally speaking, everything this year has come in very much in line with what our initial guidance was, which is why for the full year, we're still right around that 3% number. We've seen a little bit of pressure on certain line items. We've gotten some benefits from others, but overall, it's largely in line with our expectations. And like just generally speaking, we are pre-gooded forecasting out expenses.

But generally speaking everything this year has come in very much in line with what our initial guidance was.

Which is why for the full year, we're still right around that 3% number we've seen a little bit of pressure on certain line items, we've gotten some benefits from others, but overall, it's largely in line with our expectations and like just generally speaking we are pretty good at forecasting out expenses.

Michael Lindenberg: And that number is disproportionately weighted to advance. Okay, great. And then just my second question on, you know, I saw that you're applying for, just live from JFK, Haneda, and I'm curious because, you know, sort of post NEA, I get the sense that maybe you were going to be sort of maybe, I don't know, downsizing New York is the right thing, but the fact is, you know, wide bodies are scarce and for everyone and that would take two frames and you already have jail in that market with the code share.

Speaker 2: And I think during the COVID years, that became a little bit more challenging. But in 2023, we feel pretty good about our ability to forecast and deliver results.

And I think during the Covid era that became a little bit more challenging.

But in 2023, we feel pretty good about our ability to forecast and deliver results.

Michael Lindenberg: So, you know, what's the rationale behind that? Thanks to my questions. Yeah, hey, thanks, Mike. And I'll answer it through the lens of New York, which I know is probably on a lot of our investors' minds. And I'll answer the native question as part of it. And at the time, pre-COVID, and certainly prior to the NEA, American Airlines had a really fundamental problem in New York, which is we were losing our relevance in New York City originating customers every year.

Got it that's great. Thanks for the detail and then maybe one for Vasu.

Speaker 10: That's great, thanks for the detail. And then maybe one for VASU, you know, between the third quarter and second quarter, you experienced a D cell and a RASM, you know, in your year of a year and 20 nights.

Between the third quarter and second quarter, you experienced a T cell in RASM on year over year in 2019 totally understand there's so many moving pieces now.

Speaker 10: totally understand so many moving pieces now as the network recovers.

Michael Lindenberg: We had declining, originating share, our advantage enrollments were declining year after year, simply because we didn't have a slot portfolio to compete with the two largest ones. And that was the reasons behind doing the NEA. Now in these last several weeks and months, what we've noticed is actually the New York originating customer has changed what they demand. And then the business trips are down a lot. There's way fewer people originating New York who are looking to take day trips to Boston or Chicago or Detroit.

As as is the network recovers and the shape of your network has changed a bit over the years, but.

Speaker 10: but your network has changed a bit over the years. But your fourth quarter-guide supply seems to stabilize in a year-rear basis. Could you walk us through what's driving that stabilization?

But your fourth quarter guidance implies things will stabilize on a year over year basis.

Could you just walk us through what's driving that stabilization. Thanks, so much.

Speaker 21: And for my clarity, you mean the quarter to quarter stabilization? Right, just comparing the year.

And for my clarity, you mean, the quarter to quarter stabilization.

Alright, just comparing the year over year as to each other.

Speaker 5: Sure. I will do my best to do. There's a few things that are changing in our system right now between one quarter to the next that has that effect. In Q3, what we find just in terms of how we brought the network back, a lot of what we were flying were off time periods, like off-peak.

Sure.

I will do my best to do that.

Michael Lindenberg: But that New York City customer is much more interested in flying long haul, the internationally long haul, to the West Coast, all markets, Florida. That's a thing that our slot portfolio is much more built to do. And in these last few weeks, since the NEA has been terminated, actually what we've seen is that our originating share is stable. New York City, even number one market in our system, both for advantage enrollments and for credit card signups and penetration.

Few things that are changing in our system right now between one quarter to the next that has that effect in Q3, what we find just in terms of how we brought the network back a lot of what we were flying where I'm off time periods.

<unk> like off peak flights.

Speaker 5: as we get into Q4, that starts to stabilize a little bit more. We regain a lot more regional supportability into the fourth quarter. And so a little bit of what you see there are just shifting year over year trends based on how we brought the airline back. And then where the airline is oriented around a few years ago we left the

If we get into Q4 that starts to stabilize a little bit more we were getting a lot more regional support ability into the fourth quarter.

And so a little bit of what you see there are just shifting year over year trends based on how we brought the airline back and then where where the airline is oriented around flying.

Speaker 5: in the third quarter especially in the the trough seasons of August and September . There's some strange year-over-year comps where the Northeast was performing better than markets in the Sun Belt when we get in the Q4. That's when the Sun Belt and Short Hall and CLAs start to change and and you see that in our schedules. We have, they are the biggest Miami operation in our history there. So a lot of what you see there is less a function of

In the third quarter, especially that the trough seasons of August and September there are some strange year over year comps were the northeast was performing better than markets in the Sun belt, when we get into Q4, that's when the Sun belt in short haul and CLA start to change in and you see that in our schedules, we have I think our biggest Miami.

Michael Lindenberg: So we were encouraged by that and you see that. The last thing I'll mention about it is through our global partnerships. We're able to offer a thing in New York, which is very unique, both in our P8 facility and also being able to go and operate to our major partners, major complexes, whether that's Heathrow or Haneda or Doha for that matter. Makes sense.

Operation in our history, there so a lot of what you see there is.

That's a function of something fundamental but some really unique quarter to quarter recovery trends.

Speaker 5: something fundamental, but some really unique quarter to quarter recovery trends.

Great. Thanks for the time.

Thank you.

Michael Lindenberg: Thank you. Okay. Thank you. Please stand by for an next question. Next question comes from the line of Catherine O'Brien of Goldman Sachs. Hey, good morning, everyone. Thanks for the time. Devon, I just wanted to dig in a bit on the cost performance to date. You came in close to a point below the low end of your 3Q range. I know you mentioned some timing shift. But you're also sticking with your prior midpoint for failure, Kazamax, despite the extra crew for retro pay since you last updated that failure cost outlook.

Our next question.

Speaker 1: comes from the line of Jamie Baker, of JP Morton.

Comes from the line of Jamie Baker of JP Morgan.

Hey, good morning, everybody.

Speaker 11: Hey, good morning everybody. I'm Vasu and NEA question. You know, we're obviously tracking some of the rebalancing between JFK and Philadelphia. I see that 787 captains in Philly. That number is moving up quite a bit. It looks like JetBlue will continue to operate a portion of your slot.

Through an NDA question.

We're obviously tracking some of the rebalancing between JFK and Philadelphia.

The 787 captains in Philly that number is moving up quite a bit it looks like Jetblue will continue to operate a portion of your slots through the <unk> summer season next year.

Speaker 22: through the end of IOTA's summer season next year. I reckon, so part of my question is, am I right on that? But more importantly, I recognize networks are fluid, but when should we think about Philadelphia and New York sort of reaching a steady state? Is that a process that will wrap in time for next summer or should we think of the NEA unwind as lasting longer than that?

Michael Lindenberg: I guess, you know, what has been going better than expected? And then can you just remind us what you originally baked in for the open flight flight tenant contract in the second half? Did that have any impact on 3Q? Thanks. Thanks for question, Katie. We do have, it's largely timing and operation performance with higher ASMs is what benefited us in the third quarter. In our prior guidance, we didn't have anything in the third quarter for our open labor agreements outside of the pilot.

I record. So part of my question is am I right on that but more importantly, I recognize networks are fluid, but when should we think about Philadelphia, and New York sort of reaching a steady state.

Is that a process that will wrap it in time for next summer or should we think of the NBA unwind as lasting longer than that.

Speaker 9: Hey, Jamie, thanks for the question. We've all been around this business for a while and steady state. It's always a very...

Hey, Jamie Thanks for the question.

I guess, we've all been around this business for a while in steady state.

Michael Lindenberg: We did have something in the fourth quarter and we still have something modest in the fourth quarter just given the time it would take to reach and ratify an agreement. But generally speaking, everything this year has come in very much in line with what our initial guidance was, which is why for the full year, we're still right around that 3% number. We've seen a little bit of pressure on certain line items.

And as always.

Speaker 5: but I will say this, the role of these hubs is

But I will say this the role of these hubs.

Yes.

Speaker 5: quite complimentary. And we're seeing it more and more from my comments earlier, where New York is a lot of New York originating customers when it goes international. Domestic, it's a mix of New York originating. And as we call it, spoke city, like outside of hub, they're originating into New York.

Quite complementary and we're seeing it more and more.

My comments earlier, where new York is a lot of New York originating customers. When it goes international domestic it's a mix of New York originating and as we call. It spoke city outside of hub the originating into in the New York.

Michael Lindenberg: We've gotten some benefits from others, but overall it's largely in line with our expectations. And like just generally speaking, we are pretty good at forecasting out expenses. And I think during the COVID years, that became a little bit more challenging, but in 2023, we feel pretty good about our ability to forecast and deliver results. That's great. Thanks for the detail. And then maybe one for Vasu, you know, between the third quarter and second quarter, you experience diesel and rasm, you know, in year of a year in 2019, totally understand there's so many moving pieces now, as the network recovers and in the shape of your network has changed a bit over the years, you know, but your fourth quarter-guide supply of things will stabilize in a year of your basis.

And Philadelphia is our largest connecting complex in the Trans Atlantic and so a lot of what you see is just it comes back to what Robert mentioned.

We're seeing actually a lot of traction in international and Trans Atlantic better than we have before we're seeing it from both of these markets.

Speaker 5: market. For the first time since our Atlantic joint venture was created, we're pretty consistently the unit revenue leader amongst the group, which has been very unique in a long time coming. And so we think these two hubs are very complimentary. We see it every day that they're very complimentary as we bring in the XLR that enables us to do some really unique things in both of those markets. And as we do things like improve the configuration on the triple seven 300 or bring in more 787 9s, that further augments that. So that's what you see.

For the first time.

Since our Atlantic Joint venture was created we're pretty consistently.

The unit revenue leader amongst the group, which has been very unique in a long time coming and so we think that these two hubs are very complementary we see it every day that they're very complementary as we bring in the XLR that enables us to do some really unique things in both of those markets and as we do things like <unk>.

Speaker 5: bringing the XLR that enables us to do some really unique things in both of those markets. And as we do things like improve the configuration on the triple seven, 300 or bring in more seven, eighty seven, nine, that further augments that.

Michael Lindenberg: Could you walk us through what's dry? May not stabilization. Thanks so much. And for my clarity, you mean the quarter to quarter stabilization? Right, just comparing the year of the years to each other. Sure. I will do my best. There's a few things that are changing in our system right now between one quarter to the next that has that effect. In Q3, what we find just in terms of how we brought the network back.

The configuration on the Triple seven 300 or bring in more 787 nine that further augments that.

Speaker 5: So that's what you see and look in the world of network planning, we can move things around based on where the demand is. We'll continue to do it. There'll be some of that rebalancing. And certainly as we go into next year, we do see a lot of opportunity to bulk up in Philadelphia as we get more supportability back because the regional comes back as we take wide-body.

So that's what you see in the World of network planning, we can we can move things around based on where the demand is we'll continue to do it there there'll be some of that rebalancing.

As we go into next year, we do see a lot of opportunity to.

Bulk up in Philadelphia, as we get more support ability back because the regional comes back as we take wide body deliveries.

Michael Lindenberg: A lot of what we were flying were off time periods, like off peak flights, as we get into Q4, that starts to stabilize a little bit more. We were getting a lot more regional support ability into the fourth quarter. And so a little bit of what you see there are just shifting year over your trends based on how we brought the airline back. And then where where the airline is oriented around flying in the third quarter, especially in the the trough seasons of August and September.

Speaker 22: okay fair enough and then second question now you know for for definite clarification the three and a half billion cataclet figures that you gave or figure that you gave before that was aircraft only correct so all in we should be dialing in something you know closer to four and a half billion going forward I'm assuming I got that right and if so you expect to generate cash next year at current fuel prices

Okay Fair enough and then.

Second question.

Devin a clarification the $3 5 billion Capex figures that you gave a figure that you gave before that was aircraft only correct. So all in we should be dialing in to something closer to $4 5 billion going forward.

Assuming I got that right and if so do.

Do you expect to generate cash next year at current fuel prices.

Speaker 2: Yeah, so just two separate things. So for 2024, our total cat-back is between $3.3 billion. Long-term beyond 2024, you're right that the $3.5 billion number I gave was just aircraft cat-back.

Yes, so just two separate things so for 2024.

Michael Lindenberg: There are some strange year over your comps where the Northeast was performing better than markets in the Sun Belt when we get into Q4. That's when the Sun Belt and short haul in COA starts to change. And you see that in our schedules. We have the biggest Miami operation in our history there. So a lot of what you see there is less a function of something fundamental, but some really unique quarter to quarter recovery trends. Great. Thanks for the time.

Our total capex is between 3% and $3 3 billion.

Long term beyond 2024, you are right that the $3 $5 billion number I gave was just aircraft capex.

Speaker 22: So for 24, I think our capital requirements are such that we certainly have the ability to generate free cash flow. And we're absolutely in a different position than some of our peers just given where they are at in terms of flea renewal program versus where we're at. We spent over $30 billion from 2014 to 2019 on our flea renewal. Now we're in a nice spot where a capital requirement are slightly less and it does give us the ability to produce free cash flow going forward like we did in this year.

So for 24 I think our.

Our capital requirements are such that we certainly have the ability to generate free cash flow and we're absolutely in a different position.

And then some of our peers, just given where they're at in terms of fleet renewal program versus where we're at we spent over $30 billion from 2014 to 2019 on our fleet renewal.

Operator: Thank you. Our next question comes from the line of Jamie Baker of JP Morgan. Hey, good morning everybody. I'm Vasu and NEA question. You know, we're obviously tracking some of the rebalancing between JFK and Philadelphia. I see that 787 captains in Philly. That number is moving up quite a bit. Looks like JetBlue will continue to operate a portion of your slots through the end of Ayada summer season next year. I reckon so part of my question is am I right on that, but more importantly, I recognize networks are fluid.

Now we're in a nice spot where capital requirements are slightly less and it does give us the ability to produce free cash flow going forward like we did in this year.

Operator: But when should we think about Philadelphia and New York, sort of reaching a steady state? Is that a process that will wrap in time for next summer, or should we think of the NEA unwind as lasting longer than that? Hey, Jamie, thanks for the question. I guess we've all been around this business for a while and steady state. It's always a very difficult question. But I will say this, the role of these hubs is quite complimentary.

Okay. Thank you very much.

Okay.

Speaker 1: Thank you. Please stand by for our next question.

Thank you please standby for our next question.

Our next question comes from the line of Duane <unk> of Evercore ISI.

Speaker 1: Next question comes from the line of Duane Fenigworth of Evercore, ISI.

Hey, Thanks, Good morning appreciate the time.

Speaker 12: Kind of an industry question, but we'll go ahead and ask it of you just with respect to.

It kind of an industry question, but but we'll.

We'll go ahead and ask it have you just just with respect to.

Speaker 12: uh... for key rasm guidance down six and a half uh... at the midpoint uh... which actually a little bit better than what we're modeling uh... and the cost pressures you're outlining into next year what what needs to go right to get that unit revenue back to positive territory i mean that the five percent growth

<unk> RASM guidance down $6 five at the midpoint, which is actually a little bit better than what we were modeling.

And the cost pressures you were outlining into next year.

What needs to go right to get that unit revenue back to positive territory.

5% growth.

Speaker 12: that you're outlining. You know, may or may not be crazy relative to GDP. If we're just thinking about it year-to-year, right? 5% doesn't sound crazy. But if we think about where your margins are exiting here, the X-rayed on your margins.

That you're outlining.

May or may not be crazy relative to GDP.

We're just thinking about it year over year rate, 5% doesn't sound crazy.

But if we think about where your margins are exiting here the exit rate on your margins.

Operator: And we're seeing it more and more. My comments earlier, where New York is a lot of New York originating customers, when it goes international domestic, it's a mix of New York originating. And as we call it, spoke city, like outside of hubs originating into New York. And Philadelphia is our largest connecting complex in the trans-Atlantic. And so a lot of what you see is just it comes back with what Robert mentioned.

Speaker 12: You know, any thoughts about how we get back to positive rasm, which it appears you'll need to stabilize your margins here? Appreciate the thoughts.

Any thoughts about how we get back to positive RASM, which which it appears you'll need to stabilize your margins here I appreciate the thoughts.

Hey, Thanks for the question I look at the answers as both very simple and consistent with the step we have been saying.

Speaker 21: Thanks for the question. Look at the answers. Is both very simple and consistent with the stuff we've been saying.

Speaker 5: What we get to do is we have to do is within our control. It's bringing back our regional jet network, which creates a lot of revenue benefits for us and a lot of unique markets for our customers. And to you, it's growing more, growing the revenues from a vantage, both through our brand of credit cards and how we go issue and enable the redemption of miles. Both of those things are our tops on our plans for next year. We're excited to go and execute all on that. And we see a lot of upside.

What we get today.

We have to do is within our control.

It's bringing back our regional jet network, which creates.

A lot of revenue benefits for us and a lot of unique markets for our customers and to its growing or growing the revenues from from advantage both through our branded credit cards and how we go.

Operator: We're seeing actually a lot of traction in international and trans-Atlantic better than we have before. We're seeing it from both of these markets. For the first time since our Atlantic joint venture was created, we're pretty consistently the unit revenue leader amongst the group, which has been very unique in a long time coming. And so we think these two hubs are very complimentary. We see it every day that they're very complimentary as we bring in the XLR that enables us to do some really unique things in both of those markets.

<unk> and enable the redemption of miles.

Both of those things are are tops on our plans for next year. We're excited to go and execute on that and we see a lot of upside.

Speaker 12: I guess just maybe thinking sequentially like how patient will you be with sort of break even ash, you know, negative margins. Like is that a one or two quarter phenomenon? Is it a multi-year phenomenon?

I guess, just maybe thinking sequentially like how patient will you be.

With sort of breakeven ish negative negative margins like is that a one or two quarter phenomenon is it a multiyear phenomenon.

Yeah.

Operator: And as we do things like improve the configuration on the triple seven 300 or bring in more 787 9s, that further augments that. So that's what you see and look in the world of network planning, we can we can move things around based on where the demand is, we'll continue to do it. There are there are some of that rebalancing. And certainly as we go into next year, we do see a lot of opportunity to to bulk up in Philadelphia. As we get more supportability back as the regional comes back as we take wide bites. Deliveries. Okay, fair enough.

Speaker 3: Hey, Vosu, I'll take this. Hey, Duane, thanks. Look, we are going to be incredibly focused on making sure that when we deploy assets where we can make money, the kind of things that we're talking about and focusing on our strengths are where we see that happening. And look, I think that we, to the contrary, I think we carry momentum in. A lot of the work that we've done this year, that Vosu has been at the center of in terms of making sure that we have the best network and we can sell

No.

I'll take this hey, Duane. Thanks look we are going to be incredibly focused on making sure that we deploy assets, where we can make money the kinds of things that we're talking about here.

Yeah.

And focusing on our strengths are where we see that happening and look I think that we to the contrary I think we carry momentum in a lot of the work that we've done this year.

Vasu has been at the center of in terms of making sure that we have the best network and we can sell.

Sell and service it digitally.

Speaker 3: Josh, Josh, Dell, and service it digitally, you know, is all groundwork for next year. And so as we take a look at not only the regional network, further enhancing premium product, what we will intend to do with advantage and less, you know.

Alexandra Scorers: And then second question, you know, for Devon, a clarification, the three and a half billion capex figures that you gave or figure that you gave before, that was aircraft only correct. So all in, we should be dialing in something, you know, closer to four and a half billion going forward. I'm assuming I got that right. And if so, you expect to generate cash next year at current fuel prices. Yeah, so just two separate things.

As all groundwork for next year and so as we take a look at not only the original networks.

Enhancing premium product.

What we will intend to do with with advantage and less.

Speaker 3: variable revenue. I think that all plays into a lot of strength. And on top of that look we

Variable revenue I think that all plays into a lot of strength and on top of that look we were in the midst of recovery still.

Speaker 3: We're in the midst of recovery still. And so as we go from quarter to quarter, we know that there are things that we could have done differently over the past summer that we're gonna make sure that we're addressing in terms of where we're flying and how we're doing it. But we will have very little tolerance for what you would consider kind of infestment or development flying. We're gonna fly where we make money.

And so as we go from quarter to quarter, we know that there are things that we could have done differently.

Alexandra Scorers: So for 2024, our total capex is between three and $3.3 billion. Long term beyond 2024, you're right that the three and a half billion dollar number I gave was just aircraft capex. So for 24, I think our, our capital requirements are such that we certainly have the ability to generate free cash flow and we're absolutely in a different position. Then some of our peers just given where they are at in terms of free renewal program versus where we're at.

Over the past summer that we're going to make sure that we're addressing in terms of where we're flying and how we're doing it but we will have very little tolerance for what you would consider kind of investment or development flying we're gonna Fi, where we make money.

No no it's not an easy question, but I appreciate that I appreciate the thoughts thank you.

Speaker 12: No, it's not an easy question, but I appreciate the thoughts. Thank you.

Yeah.

Thank you.

Speaker 1: Next question comes from the line of Connor Cunningham of Melius Reese.

Our next question.

Comes from the line of Conor Cunningham of Melius research.

Alexandra Scorers: We spent over $30 billion from 2014 to 2019 on our free renewal. Now we're in a nice spot where capital requirements are slightly less and it does give us the ability to produce free cash flow going forward like we did in this year.

Speaker 13: Hi everyone, thanks for the time. Just your capacity has been pretty stable relative to the industry. And a lot of the constraints that we've talked about this year seem like they're going to carry forward next year if not get a little bit worse. And so at the same time, the domestic competitors are really struggling. So I'm just curious on how you may take advantage of that situation. Next year, those themes continue to play out. Are you just happy with the current execution of what you're doing?

Hi, everyone. Thank you for the time, just your capacity has been pretty stable relative to the industry and a lot of the constraints that we've talked about this year. It seemed like they are going to carry forward next year, if not get a little bit worse and so.

Ali: Okay, thank you very much. Thank you, please stand by for our next question. Next question comes from the line of Dwayne Fenigworth of Evercourt, ISI. Hey, thanks. Good morning. Appreciate the time. Kind of an industry question, but, but we'll go ahead and ask it of you. Just just with respect to 4 key Rasmguidance down six and a half at the midpoint, which is actually a little bit better than what we're modeling and the cost pressures you're outlining into next year.

At the same time the domestic the domestic competitors are really struggling so I'm just curious on how you may take advantage of that situation next year. If those teams continue to play out or are you just happy with the current execution of what Youre doing right now.

Speaker 3: I'll start Connor and Vasu.

I'll I'll start counter and Vasu.

Speaker 3: can join in. Look, you know, when we talk about the kind of capacity that we are going to be, you know, putting back, we've described it over and over again. I think that, you know, first off, we've got assets that on hand today that provide, you know, some of some of that benefit. We're certainly going to make sure that that gets deployed in a fashion that is is productive. I do think that there are constraints out there.

And joining us look.

When we talk about the kind of capacity that we are going to be putting back. We've described it over and over again I think that first off we've got assets that are on hand today that provide some of that benefit we're certainly going to make sure that that gets deployed in a fashion that is productive I do think that there are constraints out there.

Speaker 11: that they continue on and whether that's ATC or it's some of the supply chain both engines and air framers I think that that kind of stuff is you know we're going to have to work through and then on top of that you know look we're all getting through the pilot shortfalls as well so there's

Ali: What needs to go right to get that unit revenue back to positive territory? I mean the 5% growth that you're outlining, you know, may or may not be crazy relative to GDP. If we're just thinking about it year over year, right? 5% doesn't sound crazy. But if we think about where your margins are exiting here, the x-rayed on your margins, you know, any thoughts about how we get back to positive rasm, which it appears you'll need to stabilize your margins here.

They continue on and whether Thats ATC.

Or it's some of the supply chain, both engines and air Framers, I think that that kind of stuff.

As you know we're going to work through and then on top of that look we're all getting through the pilot shortfalls as well so there's.

Speaker 3: you know, ups and downs to that. But overall, you will see us, you know, we're gonna, we're gonna play a-

Ups and downs to that but.

But overall.

You will see us.

We're going to we're going to play our game and that means you know find our sunbelt, how some about hubs strengthening.

Speaker 3: And that means, you know, find our sunbelt held.

Ali: Appreciate the thoughts. Hey, thanks for the question. Look at the answers is both very simple and consistent with the stuff we've been saying. What we get to do is that we have to do is within our control. It's bringing back our regional jet network, which creates a lot of revenue benefits for us and a lot of unique markets for our customers. And to you, it's growing more growing the revenues from a banage, both through a brand of credit cards and how we go issue and enable the redemption of miles.

Speaker 3: strengthening the rest of our network through getting capacity back up in the air. And doing all the things that Vasu has talked about in terms of taking advantage of advantage and our co-brand deals, and then also modern retailing.

The rest of our network through getting capacity back up in the air.

And doing all the things that foster who has talked about.

And in terms of taking advantage of advantage and.

Our co brand deals and then also.

Modern retailing.

Speaker 13: Okay. And then, you know, you've executed, you know, pretty remarkably on your plan, but your margins, maybe to the Hullands earlier question, just, you know, continue to lag, delting night in, you know, your operation's been better, all that stuff, and I get it, but, you know, when you think about the opportunity ahead to close that gap, is it more a revenue equation or cost? I think historically.

Okay, and then you know.

You've executed pretty remarkably on your plan, but your margins maybe to <unk> earlier question, just continuing to lag Delta United.

Ali: Both of those things are our tops on our plans for next year. We're excited to go and execute all on that. And we see a lot of upside. I guess just maybe thinking sequentially like how patient will you be with sort of breakeven-ish, you know, negative margins. Like is that a one or two quarter phenomenon? Is it a multi-year phenomenon? Vasu, I'll take this. Hey Duane, thanks. Look, we are going to be incredibly focused on making sure that when we deploy assets where we can make money, the kind of things that we're talking about and focusing on our strengths are where we see that happening.

Our operations and better all of that stuff.

I get it but when you think about the opportunity ahead to close that gap is it more a revenue equation our costs I think historically you know.

Speaker 13: Americans talked a little bit about the revenue gap, but it seems to be that there's more of a cost opportunity here. Just curious any thoughts there. Thank you.

Americans talked a little bit about the revenue gap, but it seems to be that there's a more of a cost opportunity here just curious on your thoughts there. Thank you.

Hey, Conor, it's Kevin I'll take that.

And certainly this isn't something we look at it at a quarterly basis, but we do spend a lot of time on benchmarking and if you want to talk about benchmarking margins we.

Speaker 2: And this is certainly something we look at at a quarterly basis, but we do spend a lot of time on benchmarking. And if you want to talk about benchmarking margins, we do think it's important to look at it and look at it on a 12-month basis. And the right margin to be using when you're comparing us to these other network peers is EBITDA, because it just takes out financing decisions, so aircraft rent versus...

Ali: And look, I think that we, you know, to the contrary, I think we carry momentum in. A lot of the work that we've done this year, that Vasu has been at the center of in terms of making sure that we have the best network. And we can sell and service it digitally, you know, is all groundwork for next year. And so as we take a look at not only the regional network, further enhancing premium product, what we will intend to do with advantage and less, you know, variable revenue.

We do think it's important to look at it and look at it on a 12 month basis and the right margin to be using when you're comparing us to these other network peers is EBITDAR because it just takes out financing decision so aircraft rent versus depreciation and interest expense and it takes out capital structure, which we just know right now we have a difference, but that's an area we are.

Speaker 2: depreciation interest expense and it takes out capital structure which we just know right now we have a difference But that's an area we also know we're going to improve on going forward. So

No we're going to improve on going forward. So.

Speaker 2: Let's talk about that. On EBITDA margins, I think we stack up really well with our competitors. If you look at 12 months ended third quarter, I think we're right on top of one of them, and maybe there's a small gap to the other. But I think our progress versus 2019 has been really good. And the opportunity ahead is on both sides. I do think we're going to be able to produce.

Let's talk about that on EBITDAR margins, I think we stack up really well with our competitors. If you look at 12 months ended third quarter I think were right on top of one of them and maybe there's a small gap to the other.

Ali: I think that all plays into a lot of strength. And on top of that, look, we're in the midst of recovery still. And so as we go from quarter to quarter, we know that there are things that we could have done differently, you know, over the past summer that we're going to make sure that we're addressing in terms of where we're flying and how we're doing it. But we will have very little tolerance for, you know, what you would consider, you know, kind of investment or development flying. We're going to fly where we make money.

But I think our progress versus 2019 has been really good and the opportunity ahead is on both sides I do think we're going to be able to produce.

Capacity at lower unit costs going forward or at least decelerate. This unit cost growth and I do think we have top line opportunities as well.

Speaker 2: capacity at lower unit cost going forward or at least decelerate this unit cost growth and I do think we have top line opportunities as well. And the only other thing I'd close on is I think we're in pretty nice shape on margins and there's opportunity ahead when it comes to free cash flow. I think we are unique amongst our network peers with our capital requirements going forward and we should be able to out produce on free cash flow for most of this decade.

The only other thing I'd close on as well I think we're in a pretty nice shape on margins.

And Theres opportunity ahead, when it comes to free cash flow I think we are unique amongst our network peers with our capital requirements going forward and we should be able to help produce on free cash flow for most of the second.

David Seymour: No, no, it's not an easy question, but appreciate, appreciate the thoughts. Thank you. Next question comes from the line of Connor Cunningham of Melius research. Hi, everyone. Thanks for the time. Just your capacity has been pretty stable relative to the industry. And, you know, a lot of the constraints that we've talked about this year, seem like they're going to carry forward next year. If not, get a little bit worse. And so, you know, at the same time, the domestic domestic competitors are really struggling.

David Seymour: So I'm just curious on how you may take advantage of that situation. Next year, those themes continue to play out. Are you just happy with the current execution of what you're doing right now? No, no, I'll start Connor and Vasu can join in. Look, you know, when we talk about the kind of capacity that we are going to be, you know, putting back, we've described it over and over again. I think that, you know, first off, we've got assets that on hand today that provide, you know, some of some of that benefit.

Speaker 3: Thanks, Devon. And, in kind of, I'll just underscore one more time. Please take a look at the past year. There's a lot of variability in quarters in terms of, you know, who's a network is aligned to do better one to the next. And also, a lot of noise in the numbers in terms of just building back the airlines from the pandemic. We feel really confident about how we're safe.

Yeah, Thanks, Devin and counter I'll, just I'll just underscore one more time. Please take a look at the past year Theres a lot of variability in quarters in terms of you know.

Whose network is aligned to do better one to the next and also a lot of noise in the numbers in terms of just building back the airlines from the pandemic, we feel really confident about how we're shipping.

David Seymour: We're certainly going to make sure that that gets deployed in a fashion that is is productive. I do think that there are constraints out there that continue on. And whether that's ATC or it's, you know, some of the supply chain, both engines and air framers. I think that that kind of stuff, you know, is is, you know, we're going to have to work through. And then on top of that, you know, look, we're all getting through the pilot shortfalls as well.

Speaker 14: for especially on a competitive basis against our peers. All right, thank you.

Quick one for especially an uncompetitive basis against our peers.

Alright, thank you.

Thank you.

Our next question.

Speaker 1: comes from the line of Savi Saith of Raymond James.

Comes from the line of Savi site of Raymond James.

Hey, good morning, everyone.

Speaker 15: Hey, good morning, everyone. I was kind of curious if you could provide a little color on the international entities. I know you mentioned in transatlantic, really strong. It seems like Latin was a little bit weak when you're talking about growing into your strengths. You mean next year, most of the growth will be domestic and not as much international.

I'm just kind of curious if you could provide a little color on the international I think he is I know you mentioned.

And Trans Atlantic surely Schein seems like Latam, because it'll abate between one and what that is.

And along those lines when you're talking about growing into your strengths do you mean next year kind of most of the growth there'll be domestic and then mountain.

And international.

Yeah, Hey, Savi. This is vasu I can I can take that and I'll take it in two parts.

Speaker 9: Yeah, Hey, so I mean, this is what I see. I can take that and I'll take it in two parts. First, just around the world. Yes, we see really strong long haul.

Just around the world, Yes, we see really strong long haul revenue trends, regardless of the entity long haul Atlantic long haul Latin America long haul Pacific.

David Seymour: So there's, you know, ups and downs to that. But overall, you will see us, you know, we're going to, we're going to play our game. And that means, you know, find our, our sunbelt help, sunbelt helps, you know, strengthening, you know, the rest of our network through getting capacity back up in the air. And, you know, doing all the things that Vasu has talked about in terms of taking advantage of advantage and our co-brand deals and then also modern retailing.

And as I mentioned earlier.

Versus any prior period of time, whether last year 2019, or really any anything as far back as it goes we've.

Speaker 5: prior period of time, whether last year 2019, or really anything as far back as it goes, we've seen uniquely strong revenue performance, but what we're encouraged by is that our revenue performance, though it's not where we yet wish it to be, has never grown in a faster rate than some of our international partners, and for many of them blind in North America, it is the very best thing that they do. So we're encouraged by the journey we've been on, we see more opportunity ahead as we do simple things, configure airplanes smartly, get low cost jets like the XLR, and so our future and international is one which is well within our control and very practical. It doesn't involve any great prognostications of how the world would change. And then as far as next year goes, a lot of our overall entity mixes is largely to be similar, where we're going to be about a 70-75.

We've seen uniquely strong revenue performance, but what we're encouraged by is that our revenue performance, though it's not where we wish it to be has never growing at a faster rate than some of our international partners and for many of them blind in North America is the very best thing that they do so we're encouraged by the journey we've been on we see more opportunity ahead.

David Seymour: Okay. And then, you know, you've executed, you know, pretty remarkably on your plan, but your margins, maybe to Helane's earlier question, just, you know, continue to lag, adulting night in, you know, your operation's been better, all that stuff, and I get it. But, you know, when you think about the opportunity ahead to close that gap, is it more a revenue equation or cost? I think historically, you know, Americans talked a little bit about the revenue gap, but it seems to be that there's more of a cost opportunity here.

As we do simple things.

Bigger airplanes smartly get low cost jets like the XLR and so are our future in international as it is one which is well within our control and very very practical it doesn't involve any great prognostications of how the world would change and then as far as next year goes.

Speaker 9: And then as far as next year goes...

Speaker 5: Look, a lot of our overall entity mix is largely to be similar, where we're gonna be about a 70, 75% short haul carrier and a 20 to 25% long haul carrier, but those two, you're gonna have to, you're gonna have to.

A lot of our our our overall entity mix is largely to be similar where we.

David Seymour: Just curious on your thoughts there. Thank you. Hey Conor, it's Devon. I'll take that. And certainly this isn't something we look at at a quarterly basis, but we do spend a lot of time on benchmarking. And if you want to talk about benchmarking margins, we do think it's important to look at it and look at it on a 12 month basis. And the right margin to be using when you're comparing us to these other network peers is EBITAR, because it just takes out financing decisions.

We're going to be about a 70% to 75% short haul carrier and a 20% to 25% long haul carrier, but those two.

Areas would grow at a similar rate, which is why the mix stays constant.

Speaker 5: areas would grow at a similar rate, which is why the

That's helpful and if I might just add.

Speaker 15: That's helpful. And if I might just next year's growth it should be assumed a lot more kind of regional, like a mix next year just as that regional and it becomes back versus manline as we kind of think through maybe what the pressure on chasm might be, but maybe the kind of benefits to razors.

David Seymour: So aircraft rent versus depreciation interest expense. And it takes out capital structure, which we just know right now we have a difference, but that's an area we also know we're going to improve on going forward. So let's talk about that. On EBITAR margins, I think we stack up really well with our competitors. If you look at 12 months and a third quarter, I think we're right on top of one of them.

Next year's growth is it should we assume a lot mark in our region.

It makes next year, just as that regional entity comes back versus mainline as we kind of think through maybe what the pressure is on CASM might be that maybe the kind of the benefits to RASM.

Yes.

Speaker 12: Yeah, it's probably a little early to get into much detail. We do expect to build back the regional network. We're also looking at better utilization on the main line side. So we'll give a little more detail as we get into January . Appreciate it. Thank you.

Probably a little early to get into too much detail, we do expect to build back the regional network. We're also looking at better utilization on the mainline side. So we'll give a little more detail as we get into January .

David Seymour: And maybe there's a small gap to the other. But I think our progress versus 2019 has been really good. And the opportunity ahead is on both sides. I do think we're going to be able to produce capacity at lower unit cost going forward or at least decelerate this unit cost growth. And I do think we have top line opportunities as well. And then the only other thing I'd close on is, well, I think we're in pretty nice shape on margins.

I appreciate it thank you.

Thank you.

Our next question.

It comes from the line of Daniel Mckenzie of Seaport Global.

Speaker 1: comes from the line of Daniel McKinsey of Seaport Global.

Oh, Hey, good morning, guys I wanted to see if I could put a bigger spotlight on the distribution strategy. So I guess vasu building on the prior remarks around direct distribution what percent of Americans revenue has now shifted to direct channels versus say a year ago, how big a change as it Ben.

Speaker 8: Hey, good morning guys. I wanted to see if I could put a bigger spotlight on the distribution strategy.

David Seymour: And there's opportunity ahead when it comes to free cash flow. I think we are unique amongst our network peers with our capital requirements going forward. And we should be able to produce on free cash flow for most of this decade. Yeah. Thanks, Devon. And Connor, I'll just underscore one more time. Please take a look at the past year. There's a lot of variability in quarters in terms of, you know, who's network is aligned to do better one, one to the next.

Speaker 8: So I guess Vos who building on the prior remarks around direct distribution, what percent of Americans revenue has now shifted to direct channels versus say a year ago? How big a change is that then? What is it that Americans can do today that it couldn't do before? And then finally, if you can just help us frame what that revenue upside means, not just today, but more importantly, you know, for those investors that invest longer term, what that revenue contribution could look like say three years from now.

What is it that American can do today that it couldn't do before and then finally, if you can just help us frame what that revenue upside means not just today, but more importantly.

For those investors that invest longer term what that revenue contribution could look like say three years from now.

David Seymour: And also a lot of noise in the numbers in terms of just building back the airlines from the pandemic. We feel really confident about how we're, particularly on competitive basis against our peers. All right. Thank you.

Hey, Dan.

Speaker 5: I appreciate the question and I'll do that be your answer sequentially too. Look first and foremost, like I said, we're very encouraged by the changes that we've gone through largely because they're simply responsive to the customers. And we're retailing our product the way.

Uh huh.

I appreciate the question and I'll do that do your answers sequentially too.

First and foremost like I said, we're very encouraged by by the the changes that we thought largely because there simply are responsive to the customers everywhere retailing our product the way customers expect which is really just through the internet at.

Operator: Our next question comes from the line of savvy site of Raymond James. Hey, good morning, everyone. I was going to curious if you could provide a little color on the international entities. I know you mentioned in transatlantic's really strong. It seems like Latin was a little bit weak one, you know, during what that is. And along those lines when you're talking about growing into your strengths, you mean next year, kind of most of the growth will be domestic and not as much in the international.

Speaker 5: customers expect, which is really just through the internet. And unsurprisingly, customers have responded. So what we saw as we were going through COVID was already without American Airlines making any strategic changes, we went from about selling 50% direct to selling about 60% direct.

And unsurprisingly customers have responded so what we saw as we were going through Covid was already without American airlines, making any strategic changes, we went from about selling 50% direct selling about 60% direct.

Speaker 5: And right now what we're in taking in terms of revenue, it's actually about 80% going through, as we call it, internet-based distribution, of which about 70 of those 80 points is going through our true direct channels.com and app, and the balance coming through new distribution technologies. In fact, our internet-based travel agency technologies is now a bigger source of bookings than any of the legacy global distribution systems are. So we're encouraged by that, but also very kindly, not not that surprised. Customers want that experience, which is the second part of your question. The very simple benefit is...

And right now what we're what we're taking in terms of revenue, it's actually about 80% going through as we call. It Internet based distribution of which about 70 of those 80 point of going through our true direct channels dot com and app and the balance coming through new distribution technologies and back.

Operator: Yeah. Hey, Savi. This is Vasu. I can take that and I'll take it in two parts. First, just around the world. Yes, we see really strong long haul revenue trends regardless of the entity, long haul Atlantic, long haul Latin America, long haul Pacific. And as I mentioned earlier, versus any prior period of time, whether last year 2019 or really anything as far back as it goes, we've seen uniquely strong revenue performance.

Operator: But what we're encouraged by is that our revenue performance, though, it's not where we yet wish it to be, has never grown in a faster rate than some of our international partners. And for many of them, blind in North America is the very best thing that they do. So we're encouraged by the journey we've been on. We see more opportunity ahead as we do simple things, configure airplanes smartly, get low cost jets like the XLR.

Operator: And so our future in international is one, which is well within our control and very practical. It doesn't involve any great prognostications of how the world would change. And then as far as next year goes, look, a lot of our overall entity mixes is largely to be similar, where we're going to be about a 70, 75% short haul carrier and a 20 to 25% long haul carrier. But those two areas would grow at a similar rate, which is why the mix Space Council.

Our our Internet based travel agency technologies is now a bigger source of bookings in any of the legacy global distribution systems are.

So we were encouraged by that but also very carefully not not that surprised I mean customers want that experience, which is the second part of your question.

The the very simple benefit is due.

Speaker 5: Through what we do, we can go and create more offers for customers that they value. We've seen this and we continue to see this as a number of customers who come to AADOT Comer, the app shopping for the cheapest fare that we have end up selling up. Like roughly 70% of the customers who come to our website actually come looking for the lowest fare, but buy something higher than that. And through these new tools, we'll go and offer them a whole lot more that creates value for them. We can differentiate things like how they're able to redeem miles for different fare products or even how they're able to earn miles.

Through what we do we can go and create.

More offers for our customers that they that they value. We've seen this and we continue to see this that a number of customers who come to a dot com or the app shopping for the cheapest fare that that we have and up selling up like roughly 70% of the customers who come to our website actually come looking for the lowest fare but by <unk>.

Higher than that and.

And through these.

I'll go and offer them a whole lot more of that create value for them.

We can differentiate.

Things like how they are able to redeem miles for a different fare products or even how they're able to earn miles for different air products.

Speaker 5: their products. And then the other thing that I would say is, which we're finding to be very, very impactful, as we shift to internet-based distribution, our servicing becomes a whole lot simple.

And then the other thing that I would say is.

Finding to be very very impactful.

As we shift to Internet based distribution.

Our servicing becomes a whole lot simpler.

Speaker 5: So it's hard to do what three years out look like, looks like, but I can talk about the next several weeks and quarters and what you will see from us are things where we do much more consciously differentiate what all the content we offer will be through internet-based technologies. We will look to do things like offering more miles for buying premium cabins, for shopping through our direct channels, for using our credit card. We will create more redemption opportunities and bond centers???? thya failed to volujoneira deferral 2.??? if test

It's hard to do what three years outlook like looks like but I can talk about the next several.

Several weeks and quarters, and what you will see from us or things, where we do much more consciously differentiate what all the content we offer will be through through Internet based technologies, we will look to do things like offering more miles for buying premium cabin for shopping through our our direct channels for using our cash.

Operator: That's helpful. And if I might just next year's growth, it should be assumed a lot more kind of regional, like a mix next year, just as that regional entity comes back versus manline as we kind of think through maybe what the pressure on chasm might be, but maybe the kind of the benefits to razon. Yeah, it's probably literally to get into much detail. We do expect to build back the regional network. We're also looking at better utilization on the mainline side. So we'll give a little more detail as we get into January. Appreciate it. Thank you.

Card, we will create more redemption opportunities.

Speaker 5: But then also what we'll be at a place by the end of this year is that 100% of what we sell will be able to be serviced digitally, but only through internet-based technologies. That's the thing which is hugely impactful to our customers. For any of you who're traveling on American Airlines, I encourage you if you're making changes. Please use the app to do so. I think you'll find it to be a much better experience than time has passed and an industry leading one as well.

But that also.

What will be in place by the end of this year is that 100% of what we sell we will be able to be serviced digitally but only through internet based technologies. That's the thing which is hugely impactful to our customers for any of you traveling on American Airlines I encourage you if youre, making changes please use the app to do so.

Dan: Our next question comes from the line of Daniel McKinsey of Seaport Global. Hey, good morning, guys. I wanted to see if I could put a bigger spotlight on the distribution strategy. So I guess Vasu, building on the prior remarks around direct distribution. What percent of Americans revenue has now shifted to direct channels versus say a year ago? How big a change is that then? What is it that American can do today that it couldn't do before?

You'll find it to be a much better experience in times past and at an industry, leading one as well.

Very good okay.

Speaker 8: Very good. Okay. Second question here for Devon. I know on you know, Robert shared that 75% of the debt is at a fixed rate But just given the hire for longer interest rate regime today How's that changing the way you think about the three-year balance sheet targets and goals and you know Can American get to an investment grade rating at some point and what might a realistic time frame look like to get there?

Second question here for Devin I know on Robert shared that 75% of the debt is is at a fixed rate, but just given the higher for longer interest rate regime. Today, how is that changing the way you think about the three year balance sheet targets and goals and Ken American get to an investment grade rating at some point.

Dan: And then finally, if you can just help us frame what that revenue upside means, not just today, but more importantly, you know, for those investors that invest longer term, what that revenue contribution could look like say three years from now? Hey, Dan. I appreciate the question. And I'll do that. Be your answer sequentially to look first and foremost, like I said, we're very encouraged by the changes that we've gone through largely because they're simply responsive to the customers.

And what might a realistic timeframe look like to get there.

Well I'll just start with right now our focus on the balance sheet has been really on 2025 and our stated goal is that we are going to reduce $15 billion in total debt by the end of 2025, we still expect to do that at this point and we think if we get there that gets us to a dumb.

Speaker 2: Well, I'll just start with right now, our focus on the balance sheet has been really on 2025. And our stated goal is that we are going to reduce $15 billion in total debt by the end of 2025. We still expect to do that at this point. And we think if we get there, that gets us to a double B credit. Beyond 2025, we'll see where it goes, but right now we're focused on the next couple of years.

B credit.

And 2025, we will see where it goes but right now we're focused on the next couple of years.

Dan: And we're retailing our product the way customers expect, which is really just through the internet. And unsurprisingly, customers have responded. So what we saw as we were going through COVID was already without American Airlines making any strategic changes, we went from about selling 50% direct to selling about 60% direct. And right now what we're what we're in taking in terms of revenue is actually about 80% going through, as we call it, internet based distribution of which about 70 of those 80 points is going through our true direct channels.com and app and the balance coming through new distribution technologies.

Okay. Thanks, guys.

Thank you.

Speaker 17: Thank you. At this time, the Q&A floor is open to all media questions. Again, the floor is open to all media questions. Please press star 11 on your telephone to ask a question. Again, that's star 11 on your telephone to ask a question. Canada's

At this time the Q&A floor is open to all media questions again, the floor is open to all media questions. Please press star one one on your telephone to ask a question again that star one one on your telephone to ask a question.

Once again Thats star one one.

Please standby as we compile the Q&A roster.

Dan: In fact, our internet based travel agency technologies is now a bigger source of bookings than any of the legacy global distribution systems are. So we're encouraged by that, but also very kindly not not surprised. I mean, customers want that experience, which is the second part of your question. The very simple benefit is through through what we do we can go and create more offers for customers that they that they value. We've seen this and we continue to see this at a number of customers who come to a.com or the app shopping for the cheapest fair that that we have end up selling up like roughly 70% of the customers who come to our website actually come looking for the lowest fair but buy something higher than that.

Our first question.

Comes from the line.

Of Mary second steam a balloon.

Speaker 1: of Mary Schlangenstein, a Bloomberg News.

Bloomberg news.

Hi, Good morning, Thank you I had.

Speaker 18: Hi, good morning. Thank you. I had two quick questions. First is when do you expect to start getting the XLR?

Two quick questions. The first is when do you expect to start getting the XLR.

Dan: And through these tools, they want to offer them a whole lot more that creates value for them. We can differentiate things like how they're able to redeem miles for different fair products or even how they're able to earn miles for different fair products. And then the other thing that I would say is which we're finding to be very, very impactful. As we shift to internet based distribution, our servicing becomes a whole lot simpler.

Speaker 18: My second question is you mentioned that domestic demand is steady, but I wanted to see if you could be more specific on that, like how it's increasing into the fourth quarter toward the winter holidays. Also, wondering if on international demand, if you've seen the level of demand that's normally like a summer peak level, has that continued past October and true the end of the year, like some of the other international carriers have said?

My second question is you mentioned that domestic demand is steady, but I wanted to see if you can be more specific on that.

Dan: So it's hard to do what three years out look like, but I can talk about the next several weeks and quarters and what you will see from us are things where we do much more consciously differentiate what all the content we offer will be through through internet based technologies. We will look to do things like offering more miles for buying premium cabins for shopping through our direct channels for using our credit card.

It's increasing into the fourth quarter towards the winter holidays.

So wondering if on international demand, if you've seen the level of demand thats normally like a summer peak level has that continued.

Past October and through the end of the year like some of the other international carriers have said.

Yeah.

Hey, its Kevin I'll, just start on the <unk> and then hand it over to Sue we expect our first ex Lar delivery to come late next year and then the order stream starts to really pick up in 2025 and 2026.

Speaker 2: Hey, it's Devon, I'll just start on the XLR and then head over to Vosu. We expect our first XLR delivery to come late next year and then the order stream starts to really pick up in 2025 and 2026.

Yeah, and Hey, Mary I think that's probably the best way to answer your question. It is kind of taking a long view look at it and as we look at that.

Speaker 9: Yeah, and hey Mary, I think that probably the best way to answer your question is kind of taking a long view look at it. And as we look at that.

Just overall demand in our system.

Speaker 9: just overall demand in our system versus 2019, we're seeing like revenue production, which could be 15, 20% higher than what was there before. That's just across the industry, but for American Airlines specifically. So when you extract yourself from like the year over year, a quarter to quarter changes, what you do see is that demand for travel is materially larger. Indeed, airline capacity is starting to catch up up to what."

Versus 2019, where we're seeing like revenue production, which could be 15% to 20% higher than than what was there before not just across the industry, but for American Airlines, specifically, so when you extract yourself from like the year over year or quarter to quarter changes.

You do see is that demand for travel is is materially larger.

Dan: And we will create more redemption opportunities. For the fans and also, but then also what we'll be at a place by the end of this year is that 100% of what we sell will be able to be serviced digitally, but only through internet-based technologies. That's the thing which is hugely impactful to our customers. For any of you who are traveling on American Airlines, I encourage you, if you're making changes, please use the app to do so. I think you'll find it to be a much better experience than times passed and an industry-leading one.

Indian airline capacity is starting to catch up to what what that is but that's our reason for saying that we see.

Speaker 5: what that is, but that's our reasons for saying that we see a lot of, we see domestic on a similar demand trend line as what's been out there. And we certainly see that.

A lot of we see domestic on a similar demand trend line as to what's been out there.

And we certainly see that.

Speaker 9: We're anticipating characteristically strong people.

We are anticipating a characteristically.

Strong peak period, and then as far as as long haul International goes yes, we do we do continue to see strength in Q4, a lot of it is.

Speaker 5: And then as far as as long haul international goes, yes, we do we do continue to see strength in Q4. A lot of it is you know domestic was a marketplace that the customers opened up a lot sooner and a lot more Completely incomprehensible even what many of these What many countries outside of the US did so we're still in a period where some of that demand is coming back And we as many of your benefits

Domestic was a marketplace that for customers opened up a lot sooner and a lot more completely and comprehensively than what many of these.

Dan: Very good. Okay. Second question here for Devon. I know on, you know, Robert shared that 75% of the debt is at a fixed rate, but just given the hire for longer industry regime today, how's that changing the way you think about the three-year balance sheet targets and goals? And, you know, can American get to an investment grade rating at some point? And what might a realistic timeframe look like to get there?

Countries outside of the U S did so we're still in a period, where some of that demand is coming back and we as as many are beneficiaries of that.

Speaker 18: Thanks a lot. Let's see. Can you, can you just be more specific in terms of the upcoming demand domestically for the holiday period? I mean, I really, I don't think there's a lot of interest now in what the comparisons are to 2019. You know, it just are you, are you seeing higher demand going into the holidays that you normally would? Is it slower? You know, when you say steady, that doesn't give a necessarily very good impression in terms of what your holiday demand is?

Thanks, a lot, let's say can you can you just be more specific in terms of the.

Upcoming demand domestically for the for the holiday period, I mean, I really I don't think there's a lot of interest now and what.

Dan: Well, I'll just start with right now. Our focus on the balance sheet has been really on 2025. And our stated goal is that we are going to reduce $15 billion in total debt by the end of 2025. We still expect to do that at this point. And we think if we get there, that gets us to a double B credit. Beyond 2025, you know, we'll see where it goes, but right now we're focused on the next couple of years. Okay.

The comparisons are to 2019.

Just are you seeing higher demand going into.

The holidays that you normally would is it slower when you say steady that that doesn't give a necessarily a very good impression in terms of what your holiday demand is.

Speaker 21: Well, look, Mary, in our holidays, we routinely have far more demand than we have seats for, whether you wanna compare it to 2022, 2021, 2019, or probably 2009.

Well look at our in our holiday as we.

He routinely have far more demand than we have had a sense for whether you want to compare it to 2022% in 2021 2019 or probably 2009.

Devon May: Thanks guys. Thank you. At this time, the Q&A floor is open to all media questions. Again, the floor is open to all media questions. Please press star 11 on your telephone to ask a question. Again, that's star 11 on your telephone to ask a question. Once again, that's star 11. Please stand by as we can pop the Q&A roster. Our first question comes from the line. Of Mary slengenstein of Bloomberg news.

Speaker 5: So we're in a place right now where actually our holidays are very lightly booked because we know anytime we create more availability and the holidays the seats go very quick.

So we're in a place right now where actually our holidays are very lightly booked because we know anytime we create more availability in the house and the holidays that seats go very quickly. So we are anticipating continued.

Speaker 5: So we are anticipating continued, like year over year, improvement in holiday performance.

Continued year over year, an improvement and holiday performance.

Speaker 5: What we have been seeing are things like the days around the big peak period also are stronger on a year over year booking basis too. But still we're in a place where the entire month of November is less than 40% booked for American Airlines. That's deliberate because we're anticipating really a lot of the continued strength around peaks.

What we haven't seen anything like that that the days around.

The Big peak periods also are our stronger on a year over year booking basis too, but still we're in a place where the entire month of November is less than 40% booked for American airlines that that's deliberate because we're anticipating a really a lot of the continued strength around peaks.

Great. Thank you very much.

Devon May: Hi, good morning. Thank you. I had two quick questions. First is, when do you expect to start getting the XLR? My second question is you mentioned that domestic demand is steady, but I wanted to see if you could be more specific on that. Like how it's increasing into the fourth quarter toward the winter holidays. Also wondering if on international demand, if you've seen the level of demand that's normally like a summer peak level has that continued past October and through the end of the year, like some of the other international carriers have said.

Apologies again at this time, we ask that you limit yourself to one question and one follow up. Our next question comes from the line of Allison Slider of Wall Street Journal.

Speaker 1: Apologies. Again, at this time we asked to to limit yourself to one question and one follow up. Our next question comes from a line of Alison Slider of Wall Street Journal.

Devon May: Hey, it's Devon. I'll just start on the XLR and then had it over to Vassu. We expect our first XLR delivery to come late next year. And then the order stream starts to really pick up in 2025 and 2026. Yeah, and Hey, Mary, I think that probably the best way to answer your question is kind of taking a long view look at it. And as we look at overall demand in our system.

Hey, Thank you.

Speaker 10: Thank you. Yeah, I'm curious if the latest spirit issues with Boeing are impacting American at all, if you're expecting any kind of delays and the phoenix bubble effect schedules and plans.

Yeah I was curious if the latest spirit issues with Boeing are impacting American at all if youre expecting any kind of delays and that those.

Bob will affect schedules and plans at all.

Speaker 3: Hey, Ali, thanks for that. Look, we were close to you with Boeing, and I have to...

Hey.

Thanks, Thanks for that look we work closely with Boeing and I have to tell you that the Boeing team has been really really forthcoming and cooperative with us.

Speaker 3: Tell you that the Boeing team has been really, really, forthcoming and cooperative with us. Certainly they have some issues with supply chain and they're working with us on our order book. We probably anticipate seeing a little bit of slippage as we go into next year, but it's not something that is gonna have a material impact on our capacity and we're working very closely with Boeing on that. So thanks for that question.

Certainly they have some some issues with supply chain.

Devon May: Versus 2019, you know, we're seeing like revenue production, which could be 15, 20% higher than than what was there before. That's across the industry, but for American Airlines specifically. So when you extract yourself from like the year over year, a quarter to quarter changes, what you do see is that demand for travel is materially larger. Indeed, airline capacity is starting to catch up to what what that is, but that's our reasons for saying that we see a lot of, we see domestic on similar demand trend line as what's been out there.

And they're working with us on.

Our order book, we probably anticipate seeing a little bit of slippage as we go into next year, but it's not something that Oh.

It's going to have a material impact on our capacity.

We're working very closely with Boeing on that.

Thanks for that question.

Thank you and then I guess on <unk>.

Speaker 10: Thank you. And then I guess on pilots, some other airlines are immune to talked about kind of like an unusual, maybe reloctant for pilots, first off, they're so upgraded to captain, you know, maybe more quality of life that she's coming up. Are you guys seeing that at all?

Highlights some of the airlines and the unions have talked about.

Kind of like an unusual maybe reluctance for pilots.

First off just upgrade to captain maybe more quality of life issues coming up are you guys seeing that at all.

Devon May: And we certainly see that. We're anticipating a characteristically strong peak period. And then as far as a long haul international goes, yes, we do continue to see strength in Q4. A lot of it is, you know, domestic was a marketplace that the customers opened up a lot sooner and a lot more completely incomprehensely than what many of these, what many countries outside of the US did. So we're still in a piece of a period where some of that demand is coming back.

I'll ask I'll ask David <unk>, our Chief operating officer to comment Yes, no I. Appreciate the question I think you're probably focusing on the regional operations.

Speaker 3: Alex David Seymour, Chief Operating Officer to comment.

Speaker 19: Yeah, no, I appreciate the question, Ali. I think you're probably focusing on the regional operations, you know, where they're, you know, first off, I think probably the bigger constraint we have is them getting the hours to be able to upgrade to Captain.

First off I think probably the bigger constraint, we have is I'm getting the hours to be able to upgrade to captain.

Speaker 3: But we're not seeing any reluctance really overall that first officers don't want to upgrade the cabinet. Yeah, and hey, David, remind me, you know, first day mayor craft type, when we see first officers.

But we're not seeing any reluctance really overall, but that first officers don't want to upgrade to Catherine Yeah, and Hey, David remind me.

First name aircraft type when we see first officers upgrading from the CFO position to cap position.

Speaker 3: upgrading from the FO position to cap position, the competition increases roughly 35, 40%. That's correct. So there's a strong interest.

Devon May: And we have as many of your beneficiaries of that. Thanks a lot. Can you can you just be more specific in terms of the upcoming demand domestically for the for the holiday period? I mean, really, I don't think there's a lot of interest now in what the comparisons are to 2019. You know, just are you, are you seeing higher demand going into the holidays that you normally would? Is it slower? You know, when you say steady that doesn't give a necessarily very good impression in terms of what your holiday demand is.

The compensation increases roughly 35% to 40% that's correct yeah. So there's there's a strong incentive.

Speaker 3: to become a captain at American Airlines.

To become a captain at American Airlines.

Thanks.

Thank you.

Our next question.

Speaker 1: comes from the line of Alexandra Scores, of Dallas Morning News.

It comes from the line of Alexandra scores of Dallas morning News.

Devon May: Well, look, Mary, our in our holidays, we routinely have far more demand than we have have seats for whether you want to compare it to 2022, 2021, 2019 or probably 2009. So, so we're in a place right now where actually our holidays are very lightly booked because we know any time we create more availability and the holidays the seats go very quickly. So we are anticipating continued like year over year improvement in holiday performance.

Hi, Good morning. Thank you for taking my question I wanted to ask you about it.

Speaker 20: Hi, good morning. Thank you for taking my question. I wanted to ask about his invitation and how that's impacting American customers. And then my second question is what you're seeing in that same vein looking ahead to the winter travel season. Thanks.

And how that's impacting.

American customers.

And then my second question is what you're seeing in that same vein looking ahead to a linear travel season.

Speaker 21: So we didn't hear you super well on the room. Do you see emissions?

Oh, sorry, we didn't hear your super well in the room and did you say emissions.

Inflation, sorry [laughter].

Speaker 5: situation. God it. God it. Okay. Yeah. Look right now, I'll say this air travel, as I've said on a couple of these calls, air travel remains an amazing bargain. Though indeed the price of gas or groceries or clothing or anything is up quite a lot. Air travel is not nearly as much. In fact, I think today in the fall, you can fly to Las Vegas for less than $50 in my guess.

Got it got it okay.

Yeah look right now I'll say this air travel as I've said on a couple of these calls on air travel remains an amazing bargain, though indeed, the price of gas or groceries or clothing or anything is up quite a lot.

Devon May: What we have been seeing are things like the days around the big peak period also are stronger on a year over year booking basis too. But still we're in a place where the entire month of November is less than 40% booked for American Airlines. That's deliberate because we're anticipating really a lot of the continued strength around peaks.

Air travel is not up nearly as much in fact I think today in the fall you can fly to Las Vegas for less than $50 and my guess is just about any place you can go to eat it would cost you more to eat there. So we have yet to see something where inflation is the thing that we could go point he was a causal headwind of demand.

Speaker 5: just about any place you go to eat, it would cost you more to eat there. So we have yet to see something where inflation is a thing that we could go point to as a causal headwind to demand. So we have yet to see something where inflation is a thing that we could go point to as a causal headwind to demand.

Yeah.

Thank you.

Thank you.

Our next question.

It comes from the line of Leslie Josephs of CNBC.

Speaker 1: comes from the line of Leslie Joseph of CNBC.

Hi, good morning.

Speaker 10: Hi, good morning. We've been seeing a lot of discounts, a lot of double digit fairs from you guys midweek, anytime. Can you talk a little bit about it? How much of you have to discount this fall kind of coming off of the peak summer season to fill planes and how confident are you in this break even guide just considering where fuel is now and whether you could drum up fairs enough to cover that.

A lot of just cares a lot of double digit fare from you guys midweek anytime can you talk a little bit about how much have you had to discount this fall kind of coming off of the peak summer season.

Operator: Great, thank you very much. Apologies. Again, at this time, we asked to to limit yourself to one question and one follow up. Our next question comes from a line of Alison Slider of Wall Street Journal. Thank you. Yeah, I'm curious if the latest spirit issues with Boeing are impacting American at all, if you're expecting any kind of delays in the public sub will affect schedules and plans at all. Hey, Ali, thanks, thanks for that.

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Are you in that breakeven guide just considering where fuel is now and whether you can.

Sure enough there is enough to cover that.

Hey, I'll answer the first part of it by just simply saying that we don't we don't really comment on fair activity in our sale activity for any number of reasons, but I think others can talk a little bit more about kind of margin performance.

Speaker 9: I'll answer the first part of it by just simply saying that we don't really comment on fair activity or sale activity for any number of reasons, but I think others can talk a little bit more about kind of more.

Operator: Look, we were closely with Boeing and I have to tell you that the Boeing team has been really, really forthcoming and cooperative with us. Yes, certainly they have some some issues with supply chain. And they're working with us on on our order book. We probably anticipate seeing a little bit of slippage as we go into next year, but it's not something that is going to have a material impact on our capacity and we're working very closely with Boeing on that.

Speaker 2: Yeah, our fourth quarter guide, we've done it the same way we've done for all the other quarters and throughout the year. We have confidence in our revenue guide, we provide a range on it, we have a lot of confidence in our cost guide and you know, fuel remains volatile, but we did put a range on that as well. So as it's it's today, we feel really good about what we have out there for a Q4 guy.

Okay.

Our fourth quarter guide we've done it the same way we've done for all the other quarters and throughout the year we have.

Confidence in our revenue guide, we provide a range on it we have a lot of confidence in our cost guide in fuel remains volatile, but we did put a range on that as well so as it sits today, we feel really good about what we have out there for Q4 guide.

Okay, and then I mean, I guess, if you can comment on the payers that are you, losing any pricing power.

Speaker 10: Okay, and then I mean, I guess if you can't comment on the pair, but are you losing any pricing power? broadly compared with last year or even compared with competitors now?

Operator: So thanks for that question. Thank you. And then I guess on pilots, some of their airlines are immune to talked about kind of like an unusual maybe reluctance for pilots for softwares to upgrade to captain, you know, maybe more quality of life that she's coming up. Are you guys seeing that at all? First of all, I think probably the bigger constraint we have is them getting the hours to be able to upgrade to captain, but we're not seeing any reluctance really overall that that first officers don't want to upgrade to captain.

Broadly as compared with last year, or even compared with competitors, though.

Well, that's probably an inadvertent oriented kind of a comment on fares and look what we what we continue to see is a lot of the same overall demand trends.

Speaker 5: Well, that's probably an inadvertent way to comment on fairs. And look, what we continue to see is a lot of the same overall demand trends, sequentially day-to-day, week-to-week, et cetera. And as I mentioned, air travel remains an amazing bargain for customers and customers, as we've seen for several years, are arqueing the travel and traveling at a greater rate than what they were in 2019.

Sequentially day to day week to week et cetera, and as I mentioned air travel remains an amazing bargain for customers and customers as we've seen for several years are keen to travel.

And traveling at a greater rate than what they were in 2019.

Okay.

Yeah.

Thank you.

Speaker 1: I would now like to turn the conference back to Robert Isom for closing remarks.

I would now like to turn the conference back to Robert Isom for closing remarks.

Operator: Yeah, and hey, David, remind me, you know, first name aircraft type when we see first officers upgrading from the FO position to captain position, the competition increases, you know, roughly 35, 40%. That's correct. Yeah, so there's there's a strong incentive to become a captain at American Airlines. Thanks.

Speaker 3: Thanks, Latif, and thank everyone. I'll close with this. There's obviously a lot of short-term sentiment in thinking out there, and we understand why. There's a lot going out in the world today.

Thanks, Latif and thank everyone.

I'll close with this there is there's obviously a lot of short term sentiment and thinking out there and we understand why there's a lot going on in the world today.

Speaker 3: That said, the airline business is one that absolutely requires long-term thinking as we navigate, even as we navigate shorter-term variability. The aircraft we buy today are going to be around for 20 years plus.

That said the airline business is one that absolutely requires long term thinking as we navigate even as we navigate shorter term variability.

The aircraft, we buy today youre going to be around for 20 years plus.

Robert Isom: Thank you. Our next question comes from the line of Alexandra scores of Dallas morning news. Hi, good morning. Thank you for taking my question. I wanted to ask about is station and how that's impacting American customers. And then my second question is what you're seeing in that same vein, looking ahead to the winner travel season. Thanks. Sorry, we didn't hear you super well on the room on just a mission. Inflation, sorry.

Speaker 3: The leases we signed at airports and the hundreds of billions and billions of dollars we commit to airports. Those are leases that are 10 years plus and in the financing that go out a lot longer than that. And even the labor contracts that we sign are multiple years, four and five years.

The leases we signed in airports.

And the hundreds of billions and billions of dollars we commit to airports now those are leases that are are 10 years, plus and financings that go out a lot longer than that and even the labor contracts that we sign are multiple years, four and five five years.

Speaker 3: So we have to take that into account as we look to the future and all of us at American have worked tirelessly.

So we have to take that into account as we look to the future and all of US at American that have worked tirelessly.

Speaker 3: to set the airline up for success in this short term yet long term world. So as we look to 2024 and beyond, look, we have an enviable fleet. We've gone out and...

To set the airline up for success in this short term yet long term world. So as we look to 2024 and beyond.

Look we have an enviable fleet, we've gone out and.

Spent $30 billion you know prior to the pandemic to put ourselves in a position where.

Speaker 3: spent $30 billion dollars prior to the pandemic to put ourselves in a position where we are entering into capital spending that is real flat.

No.

We are entering into capital spending that is.

Okay flashing.

Speaker 3: And we're doing it in an environment where others are facing rising interest rates and issues with suppliers.

And we're doing it in an environment, where others are facing rising interest rates and issues with suppliers.

Robert Isom: We can fly to Las Vegas for less than $50 and my guess is just about any place you go to eat, it would cost you more to eat there. So we have yet to see something where inflation is a thing that we could go point to is a causal headwind to demand. Thank you. Our next question comes from the line of Leslie Joseph of CNBC. Hi, good morning. We've been seeing a lot of discounts, a lot of double digit shares from you guys midweek, anytime.

Speaker 3: So while there's a heading the other way, we're set up for success.

So while there's a heading the other way we're set up for success.

Speaker 3: And we look forward to putting all of our assets back to full utilization. And we know we can optimize how we're running in the airline as we go forward. And all of that is while we build the best network and work with our customers to make sure that they are rewarded for using it.

And we look forward to putting all of our assets back to.

To full utilization and we know we can optimize how we're running the airline.

As we go forward and all of that is while we build the best network and <unk>.

Robert Isom: Can you talk a little bit about how much of you have to discount this fall kind of coming off of the peak summer season to fill planes and how confident are you in this break even guide just considering where fuel is now and whether you could throw them up fair enough to cover that. Thanks. Hey, I'll answer the first part of it by just simply saying that we don't we don't really comment on fair activity and or sale activity for any number of reasons, but I think others can talk a little bit more about.

Work with our customers to make sure that they are rewarded for using it. So we've got a great baseline and I'm very confident in the future of travel and demand and I can't wait to talk to you more as we go out.

Speaker 3: So we've got a great baseline and I'm very confident in the future of travel and demand. And I can't wait to talk to you more as we go out to the next quarters in 2024 about where Americans headed in the story we have to tell. So thank you very much.

The next court next quarters in 2024 about we're Americans headed in the store we have to tell so thank you very much.

Speaker 1: This concludes today's conference call. Thank you for participating. You may now just...

This concludes today's conference call. Thank you for participating you may now disconnect.

Robert Isom: Yeah, our fourth quarter guide, we've done it the same way we've done for all the other quarters throughout the year. We have confidence in our revenue guide, we provide a range on it, we have a lot of confidence in our cost guide, and you know, fuel remains volatile, but we did put a range on that as well, so as it's it's today we feel really good about what we have out there for a few four guys.

Robert Isom: Okay, and then, I mean, I guess if you can't comment on fairs, but are you losing any pricing power broadly? Compared with last year or even compared with competitors? Well, that's probably an inadvertent way to comment on fairs and look what we continue to see is a lot of the same overall demand trends, sequentially day to day, week to week, etc. And as I mentioned, air travel remains an amazing bargain for customers and customers, as we've seen for several years or are keen to travel and traveling at a greater rate than what they were in 2019.

Robert Isom: Thank you. I would now like to turn the conference back to Robert Isom for closing remarks. Thanks, Latif, and thank everyone. I'll close with this. There's obviously a lot of short-term sentiment in thinking out there, and we understand why there's a lot going out in the world today. That said, the airline business is one that absolutely requires long term thinking as we navigate even as we navigate shorter term variability. You know, the aircraft we buy today are going to be around, you know, for 20 years plus.

Robert Isom: The leases we signed at airports and the hundreds of billions and billions of dollars we commit to airports, those are leases that are 10 years plus and in the finance things that go out a lot longer than that. And even the labor contracts that we signed are multiple years, four and five years. So we have to take that into account as we look to the future, and all of us at American have worked tirelessly to set the airline up for success in this short term yet long term world.

Robert Isom: So as we look to 2024 and beyond, look, we have an enviable fleet. We've gone out and spent $30 billion dollars prior to the pandemic to put ourselves in a position where, you know, we are entering into capital spending that is. And we're doing it in an environment where others are facing rising interest rates and issues with suppliers. So while there's a heading the other way, we're set up for success. And, you know, we look forward to putting all of our assets back to full utilization.

Robert Isom: And we know we can optimize how we're running the airline as we go forward. And all of that is while we build the best network and work with our customers to make sure that they are rewarded for using it. So we've got a great baseline. And I'm very confident in the future of travel and demand. And I can't wait to talk to you more as we go out into the next quarters in 2024 about where Americans headed in the story we have to tell. So thank you very much. This concludes today's conference call. Thank you for participating. You may now[inaudible]