Q2 2024 American Airlines Group Inc Earnings Call

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Operator: Thank you for standing by, and welcome to American Airlines Group's second quarter 2024 Earnings Conference Call.

Operator: At this time, all participants are in a listen-only mode.

Operator: After the speak presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1. To remove yourself from the queue, you may press star 1-1 again.

Scott Long: I would now like to hand the call over to Scott Long, VP of Investor Relations and Corporate Development.

Speaker Change: I would now like to hand, the call over to Scott long VP of Investor Relations and corporate development. Please go ahead.

Scott Long: Please go ahead. Thank you, Lateef.

Scott Long: Thank you Latif and good morning, and welcome to the American Airlines Group second quarter 2024 earnings Conference call.

Scott Long: Good morning and welcome to the American Airlines Group's second quarter 2024 Earnings Conference Call. On the call with prepared remarks, we have our CEO, Robert Isum, and our CFO, Devon May. In addition to our vice chair, Steve Johnson, we have a number of other senior executives in the room this morning for the Q&A session. Robert will start the call with an overview of our performance, and Devon will follow with details on the second quarter in addition to outlining 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.

Operator: On the call with prepared remarks, we have our CEO, Robert Isom, and our CFO, Devon May. Information about some of these risks and uncertainties can be found in our earnings press release that was issued this morning, as well as in our Form 10-Q for the quarter ended June 30, 2024. 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 Change: On the call with prepared remarks, we have our CEO, Robert Isom, and our CFO Devin Mei.

Speaker Change: In addition to our Vice chair, Steve Johnson, we have a number of other senior executives in the room. This morning for the Q&A session.

Speaker Change: Robert will start the call with an overview of our performance Devin will follow with details on the second quarter. In addition to outlining our operating plans and outlook going forward.

Speaker Change: After our prepared remarks, we'll open the call for analyst questions followed by questions from media.

Scott Long: 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, forecasts 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. Information about some of these risks and uncertainties can be found in our earnings press release. It was issued this morning, as well as our Form 10-Q for the quarter ended June 30, 2024.

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

Speaker Change: 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 Change: 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 June 32024.

Scott Long: In addition, we'll be discussing certain non-GAAP financial measures, 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 Change: In addition, we'll be discussing certain non-GAAP financial measures, which exclude the impact of unusual items are.

Speaker Change: 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.

Scott Long: 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.

Speaker Change: A webcast of this call will also be archived on our website. 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.

Robert Isom: Thank you for your interest and for joining us this morning. With that, I'll turn the call over to our CEO, Robert Iceland. Thanks, Scott, and good morning, everyone. This morning, American reported an adjusted pre-tax profit of $1 billion for the second quarter. Driven by record quarterly revenue of $14.3 billion. We finished the quarter in line with our revised guidance, with second quarter adjusted earnings per diluted share of $1.09, despite the impact of significant weather events on our operation in May and June.

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.

Speaker Change: Thank you for your interest and for joining US this morning and with that.

Speaker Change: I will turn the call over to our CEO Robert Isom.

Robert D. Isom: Thanks, Scott and good morning, everyone.

Robert D. Isom: This morning American reported an adjusted pretax profit of $1 billion for the second quarter, driven by record quarterly revenue of $14 $3 billion.

Robert D. Isom: We finished the quarter in line with our revised guidance with second quarter adjusted earnings per diluted share of $1 nine despite.

Robert D. Isom: Despite the impact of significant weather events on our operation in May and June.

Robert D. Isom: Before I get into more detail on our second quarter results and outlook, I want to first acknowledge that our current revenue performance is not where we want it to be. In May, we made a sizable adjustment to our revenue and earnings expectations for the second quarter. Driven by an imbalance in domestic supply and demand and our prior sales and distribution strategy. Strategy. We know we can do better, and we will rise to meet this challenge.

Robert D. Isom: Before I get into more detail on our second quarter results and outlook, I want to first acknowledge that our current revenue performance is not where we want it to be. In May, we made a sizable adjustment to our revenue and earnings expectations for the second quarter. We know we can do better, and we will rise to meet this challenge. The softness in the Domestic Marketplace and our Sales and Distribution Strategy

Robert D. Isom: Before I get into more detail on our second quarter results and outlook I want to first acknowledge that our current revenue performance is not where we want it to be.

Robert D. Isom: In May we made a sizable adjustment to our revenue and earnings expectations for the second quarter.

Robert D. Isom: Driven by an imbalance in domestic supply and demand and our prior sales and distribution strategy.

Robert D. Isom: We know we can do better and we will rise to meet this challenge.

Robert Isom: I'll begin with an update on those two key areas that are impacting our results: the softness and the domestic marketplace, and our sales and distribution strategy. I'll also outline the clear and decisive actions that we're taking to course correct. First, on the softer domestic revenue environment. In the second quarter, we saw the impact of too much industry supply in the domestic market, especially in regions of the country where we have larger operations. That excess capacity led to a higher level of discounted activity in the quarter than we anticipate. As we said we would, to address the domestic softness, we pulled down our plan capacity growth in the back half of the year.

Robert D. Isom: I'll begin with an update on those two key areas that are impacting our results the softness in the domestic marketplace and our sales and distribution strategy.

Robert D. Isom: I'll also outline the clear and decisive actions that we're taking to course correct, especially in regions of the country where we have larger operations, to better align our growth with demand expectations. Second, our sales and distribution strategy. In late May, I said our sales and distribution strategy was not working, and we needed to make a change.

Robert D. Isom: I will also outline a clear and decisive actions that we're taking to course correct.

Robert D. Isom: First on the softer domestic revenue environment.

Robert D. Isom: In the second quarter, we saw the impact of too much industry supply in the domestic market, especially in regions of the country, where we have larger operations.

Robert D. Isom: That excess capacity led to a higher level of discounting activity in the quarter than we had anticipated.

Robert D. Isom: As we said we would to address the domestic softness we pulled down our planned capacity growth in the back half of the year.

Robert Isom: To better align our growth with demand expectations, we now plan to grow capacity by approximately 3.5% in the second half of the year.

Robert D. Isom: To better align our growth with demand expectations, we now plan to grow capacity by approximately three 5% in the second half of the year.

Robert Isom: Second, our sales and distribution strategy. In late May, I said our sales and distribution strategy was not working, and we needed to make a change. We're taking actions that will improve our performance, but a reset will take some time, and we will continue to feel the impact of our prior sales and distribution strategy on revenue and earnings through the remainder of this year, which is reflected in our updated full-year guidance.

Robert D. Isom: Second our sales and distribution strategy.

Robert D. Isom: In late May I said, our sales and distribution strategy was not working and we needed to make a change.

Robert D. Isom: We're taking actions that will improve our performance, but a reset will take some time, and we will continue to feel the impact of our prior sales and distribution strategy on revenue and earnings through the remainder of this year, which is reflected in our updated full-year guidance. Let me outline the three key parts of our plan: leadership and organization, working with the travel agency community, and Addressing the Needs of our Corporate Customers.

Robert D. Isom: We're taking actions that will improve our performance, but a reset will take some time and we will continue to feel the impact of our prior sales and distribution strategy and revenue and earnings through the remainder of this year, which is reflected in our updated full year guidance.

Robert Isom: Let me outline the three key parts of our plan in leadership and organization in working with the travel agency community and in addressing the needs of our corporate customers. With regard to our commercial organization, we immediately took action and changed senior leadership. Steve, our vice chair, second in command, and most seasoned and accomplished executive, has taken charge of our commercial efforts, reorganized the team, completed a deep dive on the issues and opportunities, and laid out a recovery plan that we are executing on quickly. We have also strengthened our revenue forecasting processes. Our near term actions are concentrated on winning back customers in our share of revenue in agency and business channels.

Robert D. Isom: Let me outline the three key parts of our plan and leadership and organization.

Robert D. Isom: And working with the travel agency community.

Robert D. Isom: And in addressing the needs of our corporate customers.

Robert D. Isom: Okay.

Robert D. Isom: With regard to our commercial organization, we immediately took action and changed senior leadership. Steve, our Vice Chair, Second-in-Command, and most seasoned and accomplished executive, has taken charge of our commercial efforts, reorganized the team, completed a deep dive on issues and opportunities, and laid out a recovery plan that we are executing on quickly. We have also strengthened our revenue forecasting processes. Our near-term actions are concentrated on winning back customers and increasing our share of revenue in agency and business channels. To that end, in June, we reinstated fares in the distribution channel traditionally used by travel agencies and corporate managed travel programs.

Robert D. Isom: With regard to our commercial organization, we immediately took action and changed senior leadership.

Robert D. Isom: Approximately $14 billion of our annual revenue was booked through this system in 2023. This action ensures our product is available wherever customers want to buy it and removes the most objected-to pain point of our previous distribution strategy. Additionally, we have eliminated plans to differentiate how customers earn miles based on where they book their travel, removing another significant obstacle impacting booking behavior and business relationships.

Robert D. Isom: Steve Our Vice Chair second in command and most seasoned and accomplished executive has taken charge of our commercial efforts reorganized the team completed a deep dive on the issues and opportunities and laid out a recovery plan that we are executing on quickly.

Robert D. Isom: We have also strengthened our revenue forecasting processes.

Robert D. Isom: Our near term actions are concentrated on winning back customers and our share of revenue in agency and business channels.

Robert Isom: To that end, in June, we reinstated fairs in the distribution channel traditionally used by travel agencies and corporate managed travel programs. Approximately $14 billion of our annual revenue was booked through this system in 2023. This action ensures our product is available wherever customers want to buy it and removes the most objected-to pain point of our previous distribution strategy. Next, we engaged our large TMC partners to put in place new incentive-based agreements to restore our share in those channels. Those efforts have been well received, and we are having good conversations with companies including MXGBT, with which we have a longstanding relationship.

Robert D. Isom: To that end in June we reinstated fares in the distribution channel traditionally used by travel agencies and corporate managed travel programs.

Robert D. Isom: Approximately $14 billion of our annual revenue was booked through the system in 2023.

Robert D. Isom: This action ensures our product is available wherever customers want to buy it and removes the most objected to pinpoint of our previous distribution strategy.

Robert D. Isom: Next we engaged our large TMC partners to put in place new incentive based agreements to restore our share in those channels.

Robert D. Isom: Those efforts have been well received.

Robert D. Isom: We're having good conversations with companies, including Amex, GBT with which we have a longstanding relationship.

Robert D. Isom: We expect agreements with TMC soon, and we will then work to reengage the broader business and leisure agency community. Additionally, we have eliminated plans to differentiate how customers earn miles based on where they booked their travel, removing another significant obstacle impacting booking behavior and business relationships.

Robert D. Isom: We expect agreements with TMC soon and we will then work to re engage the broader business and leisure agency community.

Robert D. Isom: Additionally, we have eliminated plans to differentiate how customers earn miles based on where they book their travel removing another significant obstacle impacting booking behavior and business relationships.

Robert D. Isom: Groups. Our products need to be attractive and easy to engage with. A significant piece of that is our Advantage Business Program, which replaced our previous unmanaged programs for business travelers. Those previous programs generated more than $2.5 billion in revenue in 2023, nearly 75% of which was booked through travel agencies. With recent changes, we have now expanded the Advantage Business Program's benefits so that participating companies will earn miles and end travelers will earn loyalty points wherever they book, including through travel agencies. Several more improvements are on the way to make the program easier for travel matters to use, and we have established a dedicated help desk for Advantage Business Customers.

Robert D. Isom: Our products need to be attractive and easy to engage with a significant piece of that is our advantage business program, which replaced our previous unmanaged programs for business travelers.

Robert D. Isom: Those previous programs generated more than two $5 billion in revenue in 2023, nearly 75% of which was booked through travel agencies.

Robert D. Isom: With recent changes we have now expanded the advantaged business program benefits, so that participating companies will earn miles and end travelers will earn loyalty points wherever they book, including through travel agencies.

Robert D. Isom: Several more improvements are on the way to make the program easier for travel agents to use, and we have established a dedicated help desk for advantaged business customers. Our agency and corporate partners have made it clear they want additional support as they do business with America. In addition to the dedicated Advantage Business Desk, with more to come as we evaluate the appropriate level of staffing going forward. And we are starting to see shares shift back to America.

Robert D. Isom: Several more improvements are underway to make the program easier for travel matters to us and we have established a dedicated helpdesk for advantaged business customers.

Robert Isom: Our agency and corporate partners have made it clear they want additional support as they do business with American. We have prioritized adding resources to our sales and sales support team and have made good progress already. In addition to the dedicated Advantage Business Desk, the team has hired new account managers for corporate customers, with more to come as we evaluate the appropriate level of staff and go on forward. In August, we will significantly increase resources dedicated to sales support to give customers the assistance they need. The agency and corporate customer response to these changes has been positive, and we are starting to see sheer shift back to American.

Robert D. Isom: Our agency and corporate partners have made it clear they want additional support as they do business with American.

Robert D. Isom: We have prioritized, adding resources to our sales and sales support team and have made good progress already.

Robert D. Isom: In addition to the dedicated advantaged business desk.

Robert D. Isom: Team has hired new account managers for our corporate customers with more to come as we evaluate the appropriate level of staffing going forward.

Robert D. Isom: In August we will significantly increase resources dedicated to sales support to give customers the assistance they need.

Robert D. Isom: The agency and corporate customer response to these changes has been positive.

Robert D. Isom: And we are starting to see share shift back to American.

Robert Isom: Our partners are incredibly important to American, and we recognize we have a lot of relationships to repair. I have spoken with more than 30 of my counterparts that are largest corporate customers to get honest and candid feedback, and these meetings and calls are occurring in parallel with our team's efforts to engage with customers at the travel manager level. The feedback we have heard demonstrates that changes we have made are focused on the right areas, and that agencies and corporate customers want to work with us as we continue to adjust our strategy. We will continue to listen and further refine our plans as needed.

Robert D. Isom: Our partners are incredibly important to American and we recognize we have a lot of relationships to repair.

Robert D. Isom: I've spoken with more than 30 of my counterparts that are the largest corporate customers to get honest and candid feedback. And these meetings and calls are occurring in parallel with our team's efforts to engage with customers at the travel manager level.

Robert D. Isom: Spoken with more than 30 of my counterparts at our largest corporate customers to get honest and candid feedback and these meetings and calls are occurring in parallel with our team's efforts to engage with customers at the travel manager level.

Robert D. Isom: The feedback we've heard demonstrates that changes we have made are focused on the right areas and that agencies and corporate customers want to work with us as we continue to adjust our strategy. Success will ultimately be measured by improved revenue performance and earnings, but it will take time. In the near term, we will measure success by tracking our agency and corporate share performance and the adoption of advantaged business, and by the feedback we are hearing from our agency partners and corporate customers.

Robert D. Isom: Feedback we've heard demonstrates that changes we have made are focused on the right areas and the agencies and corporate customers want to work with us as we continue to adjust our strategy.

Robert D. Isom: We will continue to listen and further refine our plans as needed all of these actions and more to come or a sign of our commitment to win back any customers we've lost.

Robert Isom: All of these actions and more to come are a sign of our commitment to win back any customers we have lost. We have made a lot of progress from where we were in late May, but we still have a lot of work ahead of us. Success will ultimately be measured by improved revenue performance and earnings, but it will take time. In the near term, we will measure success by tracking our agency and corporate share performance in the adoption of advanced business, and by the feedback we are hearing from our agency partners and corporate customers. I am confident we will regain the standing in the agency and corporate channel, and that, combined with our direct distribution strength, will put us back on track to producing revenues that will meet and exceed our long-term financial targets.

Robert D. Isom: We've made a lot of progress from where we were in late may but we still have a lot of work ahead of US success will ultimately be measured by improved revenue performance in earnings, but it will take time in the near term, we will measure success by tracking our agency and corporate share performance and the adoption of advantaged business and died.

Robert D. Isom: The feedback we are hearing from our agency partners and corporate customers.

Robert D. Isom: I'm confident we'll regain the standing in the agency and corporate channel, and that, combined with our direct distribution strength, will put us back on track to producing revenues that will meet and exceed our long-term financial target. Domestic prasm in the second quarter was down 6.4% year over year. We have work to do to get our distribution strategy back on track, but as a global network carrier, we have access to premium and loyalty revenue streams that will continue to perform well.

Robert D. Isom: I am confident we will regain our standing in the agency and corporate channel.

Robert D. Isom: And that combined with our direct distribution strength will put us back on track to producing revenues that will meet and exceed our long term financial targets.

Robert Isom: I want to spend a few minutes discussing our second quarter revenue performance in more detail. Our unit revenue was down 5.6% year over year in the second quarter, in line with our revised guides. Domestic PRASM in the second quarter was down 6.4% year over year. Both short haul and long haul international PRASM performed in line with our initial expectations, with transatlantic unit revenue up year over year on 6.3% higher capacity. Revenue from our large managed corporations was up approximately 3% year over year in the second quarter. This performance is not reflective of our fair share of corporate revenue, and we are addressing it with the actions we're taking.

Robert D. Isom: Now I want to spend a few minutes discussing our second quarter revenue performance in more detail.

Robert D. Isom: Our unit revenue was down five 6% year over year in the second quarter in line with our revised guidance domestic PRASM in the second quarter was down six 4% year over year.

Robert D. Isom: Both short haul and long haul international PRASM performed in line with our initial expectations were.

Robert D. Isom: Trans Atlantic unit revenue up year over year, and six 3% higher capacity.

Robert D. Isom: Revenue from our large managed corporations was up approximately 3% year over year in the second quarter.

Robert D. Isom: This performance is not reflective of our fair share of corporate revenue and we are addressing it with the actions we're taking.

Robert D. Isom: We are work to do to get our distribution strategy back on track, but as a global network carrier we have access to premium and loyalty revenue streams that will continue to form well. Demand for our premium product and overall engagement with the Advantage program remains strong. In the second quarter, premium revenue or revenue from customers seated in first, business, premium economy, and made in cabinet extra increased 9% year over year. Paid load factor in our premium cabins remains historically high and was up more than 6 points year over year, was strengthened in both domestic and international.

Robert D. Isom: We have work to do to get our distribution strategy back on track, but as a global network carrier, we have access to premium and loyalty revenue streams that will continue to perform well.

Robert D. Isom: <unk> for our premium product and overall engagement with the advantage program remains strong.

Robert D. Isom: In the second quarter premium revenue or revenue from customers seated in first business premium economy, and maiden Cameron extra increased 9% year over year.

Robert D. Isom: Paid load factor in our premium cabins remains historically high and was up more than six points year over year with strength in both domestic and international.

Robert Isom: With a planned refresh of existing aircraft and the expected deliveries of new aircraft, premium seating on American fleet is expected to grow by more than 20% by 2026. The Advantage program membership continues to grow. Loyalty revenues were up approximately 8% year over year, and advantage members are responsible for 74% of premium cabins revenue. Total spending on our co-branded credit cards was up double digits year over year in the second quarter, once again highlighting the value of American's loyalty program.

Robert D. Isom: With a planned refresh of existing aircraft and the expected deliveries of new aircraft, premium seating on American's fleet is expected to grow by more than 20% by 2020. Advantage Program membership continues to grow. Loyalty revenues were up approximately 8% year over year, and Advantage members are responsible for 74% of premium cabin revenue.

Robert D. Isom: With the planned refresh of existing aircraft and the expected deliveries of new aircraft premium seating on Americans fleet is expected to grow by more than 20% by 2026.

Robert D. Isom: Advantaged program membership continues to grow.

Robert D. Isom: Royalty revenues were up approximately 8% year over year and advantaged members are responsible for 74% of premium cabin revenue.

Robert D. Isom: Total spending on our co branded credit cards was up double digits year over year in the second quarter once again, highlighting the value of Americans loyalty program.

Robert Isom: Turning now to our operation in the second quarter, the American Airlines team produced strong operational results despite some of the most difficult spring weather conditions we have ever faced and continued challenges with several of our suppliers. Spring is always a good test for our summer preparedness, and the weather we encountered in May and June tested us like never before. Just as we'd ramped up to summer level capacity in mid May, we were faced with severe weather that affected operations at multiple hubs and impacted our operational performance, and the volatility continued into June. By mid June, we'd regained our operational momentum, and it's clear our underlying resilience is strong, and we've made further strides in our ability to recover swiftly from these events.

Robert D. Isom: Turning now to our operation, in the second quarter, the American Airlines team produced strong operational results despite some of the most difficult spring weather conditions we have ever faced and continued challenges with several of our suppliers. Spring is always a good test for our summer preparedness, and the weather we encountered in May and June tested us like never before.

Robert D. Isom: Turning now to our operation in the second quarter, the American Airlines team.

Robert D. Isom: Strong operational results. Despite some of the most difficult spring weather conditions, we've ever faced and continued challenges with several of our suppliers.

Speaker Change: Spring is always a good test for our summer preparedness.

Robert D. Isom: And the weather, we encountered in May and June tested us like never before Jeff.

Robert D. Isom: Just as we had ramped up to summer level capacity in mid May we were faced with severe weather that affected operations at multiple hubs and impacted our operational performance and the volatility continued into June.

Robert D. Isom: By mid June we regained our operational momentum and it's clear our underlying resilience is strong and we've made further strides in our ability to recover swiftly from these events.

Robert Isom: We've done an outstanding job of managing through unexpected weather disruptions, and our frontline team deserves tremendous credit for their efforts to get the airline back on track again and again.

Robert D. Isom: We've done an outstanding job of managing through unexpected weather disruptions and our frontline team deserves tremendous credit for their efforts to get the airlines back on track again and again.

Robert D. Isom: Speaking of disruptions, I'd be remiss if I didn't take a moment to applaud the entire American Airlines team for their work last week to quickly recover from the global CrowdStrike outage that hit businesses and governments worldwide. By Friday evening, Americans operation had recovered and was set up for a strong weekend. On Saturday, we ran a near 99% completion factor and were fully recovered. The best operational performance among U.S. network carriers over the weekend. American recovers from irregular operations better than anyone in the industry, and that was certainly the case following Friday's unprecedented disruption.

Robert D. Isom: Speaking of disruption disruptions I'd be remiss, if I didn't take a moment to applaud the entire American airlines team for their work last week to quickly recover from the global crowd strike outage.

Speaker Change: This isn't governments worldwide.

Speaker Change: By Friday evening, Americans' operation had recovered and we're set up for a strong weekend.

Robert D. Isom: On Saturday, we ran a near 99% completion factor, and we're fully recovered. Finally, and importantly, we're pleased to have reached a tentative agreement on a new contract with our Association of Professional Flight Attendants. Upon ratification, this contract will provide immediate financial quality of life improvements for American's flight attendants, one that we're proud of and one that our flight attendants have earned. I'll come back in a few minutes for some final thoughts, but now I'll turn it over to Devon to talk more about our second quarter financial results and the outlook for the third quarter and full year. We produced record revenue of $14.3 billion in the quarter, up 2% year over year. However, unit revenue was down 5.6% year over year on 8% more capacity.

Robert D. Isom: On Saturday, we ran at near 99% completion factor and we're fully recovered.

Robert D. Isom: The best operational performance among U S network carriers over the weekend.

Robert D. Isom: American recovers from irregular operations better than anyone in the industry and that was certainly the case following friday's unprecedented disruption.

Robert Isom: Finally and importantly, we're pleased to have reached a tentative agreement on a new contract with our association of professional flight attendants. Upon ratification, this contract will provide immediate financial quality of life improvements for American's flight attendants, one that we're proud of and one our flight attendants ever.

Robert D. Isom: Finally, and importantly, we're pleased to have reached a tentative agreement.

Robert D. Isom: On a new contract with our association of professional flight attendants.

Robert D. Isom: Ratification this contract will provide immediate financial quality of life improvements for Americans flight attendants, one that we're proud of and one our flight attendants have earned.

Devon May: I'll come back in a few minutes for some final thoughts, but now I'll turn it over to Devon to talk more about our second quarter financial results and the outlook for the third quarter in full year. Thank you, Robert. Excluding net special items, we reported a second quarter net income of $774 million or adjusted earnings per diluted share of $1.09. We produced record revenue of $14.3 billion in the quarter, up 2% year-over-year. Unit revenue was down 5.6% year-over-year on 8% more capacity. Our adjusted EBITDA margin was 15.7%, and we produced an adjusted operating margin of 9.7%.

Robert D. Isom: I'll come back in a few minutes for some final thoughts, but now I'll turn it over to Devin to talk more about our second quarter financial results and the outlook for the third quarter and full year.

Devon E. May: Thank you Robert.

Devon E. May: Excluding net special items, we reported a second quarter net income of $774 million or adjusted earnings per diluted share of $1 nine.

Devon E. May: We produced record revenue of $14 3 billion in the quarter up 2% year over year.

Devon E. May: Revenue was down five 6% year over year on 8% more capacity.

Devon E. May: Our adjusted EBITDAR margin was 15.7%, and we produced an adjusted operating margin of 9.7%. On our fleet, we now expect to take delivery of 20 new mainline aircraft this year, down slightly from our previous estimate of 22 aircraft. The remaining planned aircraft deliveries this year include 11 Boeing 737 MAX 8s, three 787-9s, and three Airbus A321neos. We've taken delivery of six Embraer E175s this year and expect to take delivery of six more E175s through the remainder of the year.

Devon E. May: Our adjusted EBITDAR margin was 15, 7% and we produced an adjusted operating margin of nine 7%.

Devon May: Our unit cost, excluding net special items and fuel, was down 0.1% year-over-year.

Devon E. May: Our unit cost, excluding net special items and fuel was down <unk>, 1% year over year.

Devon E. May: On our fleet, we now expect to take delivery of 20 new mainline aircraft this year, down slightly from our previous estimate of 22 aircraft. The remaining planned aircraft deliveries this year include 11 Boeing 737 Max, A3 787-9, and 3 Airbus A321 NEOs. We've taken delivery of 6th Ember Air E 175 this year and expect to take delivery of 6 more E 175s through the remainder of the year. With these adjustments to our aircraft delivery schedule, we now expect our 2024 aircraft CAPEX to be approximately $2 billion and our total CAPEX to be approximately $2.9 billion.

Devon E. May: On our fleet, we now expect to take delivery of 20, new mainline aircraft. This year down slightly from our previous estimate of 22 aircrafts the.

Devon E. May: The remaining planned aircraft deliveries. This year include 11, Boeing 737, Max 837 hundred 87 Dash nine and three Airbus <unk> hundred 21 Neo.

Devon E. May: We've taken delivery of six Embraer E 175, this year and expect to take delivery of six more <unk> hundred 75 through the remainder of the year.

Devon E. May: With these adjustments to our aircraft delivery schedule, we now expect our 2024 aircraft CapEx to be approximately $2 billion, and our total CapEx to be approximately $2.9 billion. We continue to expect these moderate levels of capex to remain through the end of the decade, with aircraft CapEx planned to be between $3 billion and $3.5 billion per year from 2025 through 2030. In the second quarter, we produced approximately $850 million of free cash flow and ended the quarter with $11.7 billion in total available liquidity.

Devon E. May: With these adjustments to our aircraft delivery schedule, we now expect our 2024 aircraft capex to be approximately $2 billion.

Devon E. May: And our total capex to be approximately $2 9 billion.

Devon May: We continue to expect these moderate levels of CAPEX to remain through the end of the decade, with aircraft CAPEX plans to be between $3 billion and $3.5 billion per year from 2025 through 2030. In the second quarter, we produced approximately $850 million of free cash flow and ended the quarter with $11.7 billion in total available liquidity. We reduced total debt by approximately $680 million in the second quarter, and we have now reduced total debt by $13 billion from peak levels in mid-2021. We remain on track to reduce total debt by $15 billion from peak levels by the end of 2025.

Devon E. May: We continue to expect these moderate levels of Capex to remain through the end of the decade with aircraft Capex planned to be between 3 billion and $3 $5 billion per year from 2025 through 2030.

Devon E. May: In the second quarter, we produced approximately $850 million of free cash flow and ended the quarter with $11 7 billion and total available liquidity.

Devon E. May: We reduced total debt by approximately $680 million in the second quarter, and we have now reduced total debt by $13 billion from peak levels in mid-2021. We remain on track to reduce total debt by $15 billion from peak levels by the end of 2025. Now, I'd like to walk you through our outlook for the third quarter and provide an update on our full year guidance. In addition to commercial execution, our focus continues to be on delivering a reliable operation, maximizing profitability, and reengineering our business to drive savings and greater productivity and a better experience for our customers and team members.

Devon E. May: We reduced total debt by approximately $680 million in the second quarter and we have now reduced total debt by $13 billion from peak levels in mid 2021.

Devon E. May: We remain on track to reduce total debt by $15 billion from peak levels by the end of 2025.

Devon May: Now I'd like to walk you through our outlook for the third quarter and provide an update on our full year guidance. In addition to commercial execution, our focus continues to be on delivering a reliable operation, maximizing profitability, and re-engineering our business to drive savings in greater productivity and a better experience for our customers and teams. As we have stated in the past and shown with our recent capacity reduction, we will remain nimble in our planning to ensure our growth is in line with our expectations of demand. As Robert mentioned, we lowered our planned capacity growth in the back half of the year and now planned to grow capacity by approximately 3% in the third quarter, with August up approximately 2% and September up less than 1% year over year.

Devon E. May: Now I'd like to walk you through our outlook for the third quarter and provide an update on our full year guidance.

Devon E. May: In addition to commercial execution, our focus continues to be on delivering a reliable operation maximizing profitability and reengineering, our business to drive savings and greater productivity and a better experience for our customers and team members.

Devon E. May: As we have stated in the past and shown with our recent capacity reductions, we will remain nimble in our planning to ensure our growth is in line with our expectations of demand. As Robert mentioned, we lowered our planned capacity growth in the back half of the year and now plan to grow capacity by approximately 3% in the third quarter, with August up approximately 2% and September up less than 1% year over year.

Devon E. May: As we have stated in the past and shown with our recent capacity reductions we will remain nimble and are planning to ensure our growth is in line with our expectations of demand.

Devon E. May: As Robert mentioned, we lowered our planned capacity growth in the back half of the year and now plan to grow capacity by approximately 3% in the third quarter with August up approximately 2% in September up less than 1% year over year.

Devon May: With these adjustments, we expect to produce less capacity in the third quarter of this year than we did in the same period of 2019. We expect third quarter trasm to be down 2.5 to 4.5%. In full year trasm to be down 3 to 5% versus 2023.

Devon E. May: With these adjustments, we expect to produce less capacity in the third quarter of this year than we did in the same period of 2019. Our work to re-engineer the business is progressing well. We are ahead of plan and expect to deliver approximately $400 million in cost savings in 2024.

Robert D. Isom: With these adjustments, we expect to produce less capacity in the third quarter of this year than we did in the same period of 2019.

Speaker Change: We expect third quarter travelers to be down two 5% to four 5% and full year try them to be down 3% to 5% versus 2023.

Devon May: Group. Our work to re-engineer the businesses is progressing well. We are ahead of plan and expected to deliver approximately $400 million in cost savings in 2024. Additionally, we continue to find opportunities to improve working capital. By the end of this year, we now expect to have achieved more than $300 million in incremental working capital improvement, which is in addition to the $100 million we achieved in 2023. Third quarter, Kazamax is expected to be up approximately 1% to 3% year every year. We expect our full year, Kazamax, to be up approximately 1% to 3%, consistent with our prior guidance, despite lower planned capacity growth.

Speaker Change: Our work to reengineer the business is progressing well. We are ahead of plan and expect to deliver approximately $400 million in cost savings in 2024.

Devon E. May: Additionally, we continue to find opportunities to improve working capital. By the end of this year, we now expect to have achieved more than $300 million in incremental working capital improvement, which is in addition to the $100 million we achieved in 2023. Our current forecast for the third quarter assumes a fuel price of between $2.55 and $2.75 per gallon.

Speaker Change: Additionally, we continue to find opportunities to improve working capital by the end of this year. We now expect to have achieved more than $300 million.

Devon E. May: And incremental working capital improvement, which is in addition to the $100 million we achieved in 2023.

Devon E. May: Third quarter CASM ex is expected to be up approximately 1% to 3% year over year, we expect our full year CASM ex to be up approximately 1% to 3% consistent with our prior guidance despite lower planned capacity growth.

Devon May: Our current forecast for the third quarter assumes a fuel price of between $2.55 and $2.75 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 a third quarter and approximately break even adjusted earnings per share. We now expect to deliver a full year operating margin of between 3.5 and 5.5%. This guidance is based on our current demand expectations and assumes a fuel price of between $2.65 and $2.75 per gallon. At the midpoint of our full year guidance, we now anticipate producing adjusted earnings per diluted share of approximately $1 and pre-cash flow of approximately $500 million.

Devon E. May: Our current forecast for the third quarter assumes a fuel price of between $2 55, and $2 75 per gallon.

Devon E. May: 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 third quarter and approximately break-even adjusted earnings per share. We now expect to deliver a full-year operating margin of between three and a half and five and a half percent. This guidance is based on our current demand expectations and assumes a fuel price of between $2.65 and $2.75 per gallon.

Devon E. May: 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 third quarter and approximately breakeven adjusted earnings per share.

Devon E. May: We now expect to deliver a full year operating margin of between three five and five 5%.

Devon E. May: This guidance is based on our current demand expectations and assumes a fuel price of between $2 65, and $2 75 per gallon.

Devon E. May: At the midpoint of our full-year guidance, we now anticipate producing adjusted earnings per diluted share of approximately $1 and free cash flow of approximately $500 million. Our team is focused on commercial execution and delivering results, and I'm confident we can close our relative margin gap with our peers and achieve our long-term financial targets. Thanks, Devon.

Devon May: These results are not good enough. Our team is focused on commercial execution and delivery results, and I'm confident we can close our relative margin gap with our peers and achieve our long-term financial targets.

Robert Isom: Now we'll turn it back to Robert for closing remarks. Thanks, Devon. Our airline has designed to deliver results. Results for our shareholders, results for our customers, and results for our team members. We have not met our expectations this year, and our entire team is focused on working with urgency to get us back on track, and prove results, and deliver on our commitments. That will drive value for our shareholders and all of our stakeholders.

Robert D. Isom: Our airline is designed to deliver results. Results for our shareholders, results for our customers, and results for our team members. We have not met our expectations this year, and our entire team is focused on working with urgency to get us back on track, improve results, and deliver on our commitments. That will drive value for our shareholders and all of our stakeholders. As we take a step back, the foundation of our business remains strong, and our priorities remain the same. Our operational reliability continues to perform at a historically strong level.

Robert D. Isom: As we take a step back, the foundation of our business remains strong, and our priorities remain the same. Our operational reliability continues to perform at historically strong levels. Our fleet is the best among U.S. network carriers and drives enormous value for the airline. With this fleet, we have stable and moderate capex through the end of the decade. We've made great progress in strengthening our balance sheet and remain on track to reduce our total debt by $15 billion by the end of next year. Our network is well-positioned, and we are working to finalize our co-branded credit card negotiations.

Speaker Change: Fleet is the best among U S network carriers and drives enormous value for the airlines with this fleet, we have stable and moderate capex through the end of the decade.

Robert D. Isom: We've made great progress in strengthening our balance sheet and remain on track to reduce our total debt by $15 billion by the end of next year. Our network is well positioned, and we are working to finalize our co-branded credit card negotiation. We're ahead of schedule in reengineering our business to operate more efficiently and productively.

Devon E. May: We've made great progress in strengthening our balance sheet and remain on track to reduce our total debt by $15 billion by the end of next year.

Devon E. May: Our network is well positioned and we are working to finalize our co branded credit card negotiations.

Robert D. Isom: We're ahead of planning in re-engineering our business to operate more efficiently and productively, and we're managing our cost better than anyone in the industry. We're committed to delivering on a strategy that maximizes our revenue and profitability, and importantly, one that makes it easy for customers to do business with American. We remain committed to deliver a margin expansion, free cash flow, and continued debt reduction over the long term. When we return to the level of revenue production, we know we can achieve and couple that with our operation reliability and best-in-class cost management. We will unlock significant value.

Devon E. May: We're ahead of plan and reengineering, our business to operate more efficiently and productively and we're managing our costs better than anyone in the industry.

Robert D. Isom: And we're managing our costs better than anyone in the industry. We're committed to delivering on a strategy that maximizes our revenue and profitability and, importantly, one that makes it easy for customers to do business with America. We remain committed to delivering margin expansion, Free Cash Flow, and Continued Debt Reduction Over the Long Term.

Devon E. May: We're committed to delivering on our strategy that maximizes our revenue and profitability and importantly, one that makes it easy for customers to do business with American.

Devon E. May: We remain committed to deliver margin expansion free.

Devon E. May: Free cash flow and continued debt reduction over the long term.

Operator: When we return to the level of revenue production we know we can achieve and couple that with our operational reliability and best-in-class cost management, we will unlock significant value. Operator, you may now 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, you may press star 11 again to allow everyone the opportunity to participate.

Devon E. May: When we return to the level of revenue production. We know we can achieve and couple that with our operational reliability and best in class cost management, we will unlock significant value.

Operator: U.

Operator: Operator, you may now open the lines for analyst questions. As a reminder to ask a question, you will need to press star one-one on your telephone. To remove yourself from the Q, you may press star one-one again. To allow everyone the opportunity to participate, you will be limited to one question and one follow-up. Please stand by while we compile the Q and A roster.

Speaker Change: Operator, you May now open the line for analyst questions.

Speaker Change: As a reminder to ask a question you will need to press star one one on your telephone to.

Speaker Change: To remove yourself from the queue you May press Star one one again.

Speaker Change: To allow everyone. The opportunity to participate you will be limited to one question and one follow up please standby, while we compile the Q&A roster.

Michael John Linenberg: You will be limited to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from the line of Michael Linenberg of Deutsche Bank. Oh, hey, good morning, everybody.

Speaker Change: Our first question.

Michael Linenberg: Our first question comes from the line of Michael Linenberg of Deutsche Bank. Oh, hey, good morning, everybody. Hey, Robert, David.

Robert D. Isom: Hey, Robert and David, I appreciate you giving us the full year TRASM guide. So we actually have a third quarter and a fourth quarter. And just based on that, by inference, it would suggest that the fourth quarter is still going to be under pressure. In fact, it could be negative. And yet, when I think about the D cell and your own capacity growth and what we're seeing around the industry, as we look into that, you know, fourth quarter, is it that, you know, the corporate disruption or, you know, your strategy, your sales and distribution strategy and the impact that it's had on the corporates, that it's going to take a lot longer or is it embedded in that?

Robert Isom: I'm appreciate you getting us the whole year, Trasm Guide. So we actually have third quarter and fourth quarter, and just based on that, by inference it would suggest that fourth quarter is still going to be under pressure. In fact, you could be negative, and yet when I think about the decil and your own capacity grows and what we're seeing around in the industry. As we look into that fourth quarter, is it that the corporate disruption or your strategy or sales and distribution strategy and the impact that it's had on the corporate that it's going to take a lot longer, or embedded in that are there other factors, like maybe more moderate demand, demand sluggishness, whether it's U.S.

Robert Isom: or international, that revenue forecast does seem a bit anemic in the fourth quarter if you could all start. Hey, look, the forecast we produce is based on what we see in the marketplace today. We are known that there's a supply and demand imbalance, and we're taking, you know, swift action to make sure that we are reducing our plan capacity growth in the back half of the year. But it's still a murky environment from that perspective, and we're going to have to see where the industry settles. A lot of our problem is caused by our sales and distribution strategy that we put in place in 2023.

Robert D. Isom: Are there other factors like, you know, maybe more moderate demand, demand sluggishness, whether it's US or international? That revenue forecast does seem a bit anemic in the fourth quarter. If you could drill down into it, that'd be great. Thanks. I have one more.

Robert D. Isom: Hey, Mike, I'll start. Hey, look, the forecast that we produce is based on what we see in the marketplace today. We all know that there's a supply and demand imbalance, and we're taking, you know, swift action to make sure that we are reducing our plant capacity growth in the back half of the year, but it's still a murky environment from that perspective. And we're gonna have to see where the industry settles. A lot of our problem is caused by the sales and distribution strategy that we put in place in 2023.

Speaker Change: Perspective, and we're gonna have to see where the industry settles.

Speaker Change: But a lot of our problem is caused by our sales and distribution strategy that we put in place in 2000 22023.

Robert Isom: We think that it's had about three quarters of a billion dollars impact in the first six months of the year and, you know, we've more or less assumed that that is going to be what happens in the back half. But I'll say this, though; it doesn't take into account what we're going to be doing to try to win back our share. We don't know how long it's going to be; it's going to take. You've heard about some of the things that we've done. We've seen modest improvements in terms of capturing share in the indirect channel based on just making sure that we're fully available within EDIFACT from a content perspective.

Speaker Change: We think that it's had about.

Robert D. Isom: We think that it's had about three quarters of a billion dollars in impact in the first six months of the year. And, you know, we've more or less assumed that that is going to be what happens in the back half. But I'll say this, though: it doesn't take into account what we're going to be doing to try to win back our share. We don't know how long it's gonna take.

Speaker Change: Three quarters of $1 billion impact in the first six months of the year and we've more or less assume that that is going to be what happens in the back half, but I will say this though.

Speaker Change: Take into account, what we're going to be doing to try to win back our share. We don't know how long it's going to be it's going to take.

Robert D. Isom: You've heard about some of the things that we've done. We've seen modest improvements in terms of capturing share in the indirect channel, based on just making sure that we're fully available. From a content perspective, we're renegotiating our agency contracts right now and getting new agreements in place, and we're reaching out to our corporates. So our intent is certainly to do everything we can to get back on a better pace.

Speaker Change: You've heard about some of the things that we've done that we've seen.

Speaker Change: Modest improvements in terms of capturing share in the indirect channel based on just making sure that we're fully available within at a fact from a content perspective, we're renegotiating our agency contracts right now and getting new agreements in place and we're reaching out to our corporate.

Robert D. Isom: We're renegotiating our agency contracts right now and getting new agreements in place. We're reaching out to our corporates. So our intent is certainly to do everything we can to get back on a better pace. But right now, we're building in what we see in the marketplace.

Speaker Change: So our intent is certainly to do everything we can to.

Speaker Change: To get back on a.

Speaker Change: A better pace, but right now we're building and what we see in the marketplace.

Robert D. Isom: But right now, we're building on what we see in the marketplace. Okay, great. And just my second question, just with respect to leadership. You talked about leadership changes. Presumably, Steve's move over to commercial is a temporary one.

Michael Linenberg: Okay, great. In just my second, just with respect to leadership, you talked about leadership changes. Presumably, Steve move over to commercial as a temporary one.

Speaker Change: Okay, Great and just my second just with respect to leadership you talked about leadership changes, presumably Steve move over to commercial as a temporary one have you identified some on or is there a search to actually bring on.

Michael Linenberg: Have you identified someone, or is there a search to actually bring on a commercial officer, chief commercial officer, and/or in your sales side of the business, plans to not only rebuild it, but bring back someone like an Allison Taylor, make it, you know, someone within, you know, a more senior position and a bigger operation. Just a comment on that. Thank you. Thanks for taking my question.

Speaker Change: Commercial officer.

Speaker Change: Chief commercial officer and are in your sales side of the business.

Speaker Change: Plans to not only rebuild it but bring back some of them like analysis tailor make it someone within a more senior position and a bigger operation just comment on that thank you. Thanks for taking my question.

Robert D. Isom: Have you identified someone or is there a search to actually bring on a commercial officer, a Chief Commercial Officer, and or on the sales side of the business plans to not only rebuild it but bring back someone like Allison Taylor, make it, you know, someone within, you know, a more senior position and a bigger operation? Just comments on that. Thank you. Thanks for taking my question. Hey, Mike.

Robert Isom: Hey Mike, I'll just start with this. We know we have to get done. And I've asked Steve to take over the commercial team, and he's doing just that. As I said in my comments, he's our most seasoned and experienced and accomplished executive. His whole career has been dedicated to addressing and solving really complex problems. He knows our company; he knows the business really well. He knows our people. He's reorganized his team. He's done an immediate dive into what we need to take care of right away. We're doing that. We're moving incredibly quickly. And Steve's going to take care of this until we get the job done.

Robert D. Isom: Hey, I'll just start with this. We know what we have to get done. And I've asked Steve to take over the commercial team, and he's doing just that. As I said in my comments, he's our most seasoned, experienced, and accomplished executive. His whole career has been dedicated to addressing and solving really complex problems. He knows our company really well. He knows our people. He's reorganized his team.

Mike: Hey, Mike.

Scott H. Group: He's done an immediate dive into what we need to take care of right away. We're doing that. We're moving incredibly quickly, and Steve's going to take care of this until we get the job done. Thank you. Our next question comes from the line. Scott Group of Wolf Research. Hey, thanks. It's Scott.

Scott Group: Thank you. Our next question comes from the line of Scott Group of Wolf Research. Hey, thanks, it's Scott. So I know you guys are slowing capacity growth, but we're still growing off of a base of a lot of growth in the second half last year. So I guess, why aren't we being more aggressive in reducing capacity? Should we potentially be shrinking capacity right now? And then I guess we're not.

Robert D. Isom: So I know you guys are slowing capacity growth, but we're still growing off of a base of a lot of growth in the second half of last year. So I guess why aren't we being more aggressive in reducing capacity? Should we potentially be shrinking capacity right now? And then, you know, I guess we're not.

Scott Group: So maybe talk, can you talk a little about the capacity plans for 2025? And if I can, I just want to sort of marry that to some of the catbacks' views. Just given the current earnings run rate and implied sort of cash burn, I guess. Can you more materially? Is there opportunities to sort of cut the catbacks that I think is set to go up a bunch next year?

Robert D. Isom: So maybe, can you talk a little about the capacity plans for 2025? And if I can, I just wanna sort of marry that to some of the CapEx views. Just, you know, given the current earnings run rate and implied sort of cash burn, I guess, can you more materially, can we, are there opportunities to sort of cut the CapEx that I think is set to go up a bunch next year? Scott, thanks for the question.

Devon E. May: Just first off, in terms of capacity, again, a reason for adjusting capacity, a supply and demand imbalance that's led to, you know, pricing weakness. From that perspective, we've taken action, you know, as quickly as we can. And from that perspective, you'll see that our total growth in our total capacity in the third quarter is now planned to be a little bit less than where we were in the third quarter of 2019.

Robert Isom: Scott, thanks for the question. Just first off, in terms of capacity, again, the reason for adjusting capacity, supply and demand imbalance, and it's led to pricing weakness. From that perspective, we take an action as quickly as we can. And from that perspective, you'll see that our total growth in our total capacity in the third quarter is now planned to be actually a little bit less than we were. In the third quarter of 2019, the capacity adjustments that we've made, Devin, can help me with this. You know, in August, we pulled down to, you know, 1% growth.

Speaker Change: In terms of capacity again reason for adjusting capacity.

Speaker Change: Hi, and demand imbalance and it's led to pricing weakness from that perspective, we've taken action as quickly as we can and from from that perspective, you'll see that our to our total growth in our total capacity in the third quarter is now planned to be actually a little bit less than where we were in the third quarter of <unk>.

Devon E. May: The capacity adjustments that we've made, Devon can help me with this, you know, in August, we pulled down to, you know, 1% growth. Yeah, and July capacity was effectively set as we went through and updated guidance in May. But we now have August capacity growing by about 2%, and September will be growing by less than 1%.

Speaker Change: 2019.

Speaker Change: The capacity adjustments that we've made Devin can help me with this in August.

Devon E. May: As we pulled down to 1% growth.

Devon May: Yeah. And July capacity was effectively said as we went through and updated guidance in May. But we now have August capacity grown by about 2% and September will be growing by less than 1%. Scott, as we take a look at into the fourth quarter and then beyond, we're going to react to the marketplace and, you know, making sure that we're competitive, but at the same time, you know, doing what's right for profitability. So as we take a look at in the 2025, we're going to be very diligent in assessing and making sure that we're certainly not outgrowing demand.

Speaker Change: Yes.

Devon E. May: July capacity was effectively said as we went through an updated guidance in may.

Devon E. May: Now of August capacity growing by about 2% in September will be growing by less than 1%.

Devon E. May: Scott, as we take a look at the fourth quarter and then beyond, we're going to react to the marketplace. And, you know, making sure that we're competitive, but at the same time, you're doing what's right for profitability. So as we take a look at 2025, we're going to be very diligent in assessing and making sure that we're certainly not outgrowing demand. Scott, just on your second question around CapEx and where we're at with cash, we still are expecting to produce free cash flow this year. While modest, we expect around 500 million of free cash flow in 2024.

Speaker Change: Scott as we take a look at into the fourth quarter, and then beyond we're going to react to the marketplace.

Scott Long: And making sure that we're competitive but at the same time, you know doing what's right for profitability. So as we take a look out into 2025.

Speaker Change: Be.

Speaker Change: Very.

Speaker Change: Diligent in assessing and making sure that we're certainly not outgrowing demand.

Speaker Change: Yeah.

Devon May: Scott, just on your second question around CAPEX and where we're at with cash, we still are expecting to produce free cash flow this year while modest. We expect around 500 million free cash flow in 2024. If we look out the next year. We do have a step up in CAPEX, but it's not that significant. It's just one of the great things about our fleet and where we're at; we have pretty modest CAPEX going forward. We've talked about CAPEX being in that 3 to 3 and a half billion dollar range for aircraft from 2025 to 2030.

Speaker Change: Scott just on your second question around Capex.

Speaker Change: And where we're at with cash we still are expecting to produce free cash flow. This year, while modest we expect around $500 million of free cash flow in 2024.

Devon E. May: As we look out to next year, we do have a step up in CapEx, but it's not that significant. It's just one of the great things about our fleet and where we're at. We have pretty modest CapEx going forward. We've talked about CapEx being in that $3 to $3.5 billion range for aircraft in 2025 through 2030. I expect 2025 is going to be at the low end of that range and possibly even slightly below that guidance. Thank you. Our next question comes from the line of Jamie Baker of JPMorgan Securities. Oh, hey, good morning, everybody.

Speaker Change: As we look out to next year, we do have a step up in capex, but it's not.

Speaker Change: That significant.

Speaker Change: One of the great things about our fleet and where we're at we have a pretty modest capex going forward, we've talked about capex being in that.

Speaker Change: Three to $3 $5 billion range for aircrafts in 2025 through 2030, I expect 2025 is going to be at the low end of that range and possibly even slightly below that guidance.

Devon May: I expect 2025 is going to be at the low end of that range and possibly even slightly below that.

Speaker Change: Yeah.

Jamie Baker: Thank you. Our next question comes from the line of Jamie Baker, of JP Morgan Securities. Oh, hey, good morning, everybody.

Jamie Nathaniel Baker: So in a perfect world for Americans, let's just, you know, ignore aircraft constraints, you know, for the moment, if you could just snap your fingers. What do you think America's optimal domestic to international balance would be? I mean, it seems like part of the problem, at least from my perspective, is that you're oversized domestically, undersized internationally. Perhaps you don't agree with that, but I was just wondering your thoughts in this regard. Unknown Speaker: Hey, Jamie, thanks for the question. Look, there's there's no perfect world.

Robert Isom: So, in a perfect world for Americans, so let's just ignore aircraft constraints, you know, for the moment, if you could just snap your fingers, what do you think Americans' optimal domestic to international balance would be? I mean, it seems like part of the problem, at least from my perspective, is, you know, that you're oversized domestically, undersized internationally. Perhaps you don't agree with that, but just wondering your thoughts in this regard. Hey, Jamie, thanks for the question.

Robert D. Isom: And, you know, in terms of snapping fingers, we all know that we're the product of, you know, years and years of building our network and our system. I really like where we are from a network perspective. One of the things you everybody needs to be mindful of is that, you know, regional differences in terms of growth and profitability are going to happen. They happen every year.

Robert Isom: Look, there's no perfect world. And, you know, in terms of snapping fingers, we all know that, you know, we're the product of, you know, years and years of building our network and our system. I really like where we are from a network perspective. One of the things everybody needs to be mindful of is that, you know, regional differences in terms of growth and profitability are going to happen every year. And there's differences in terms of international demand versus domestic. When you take a look at our network and where we're strongest, it fits very well with where both population growth and economic demand is forecast now and long into the future.

Robert D. Isom: And there are differences in terms of international demand versus domestic. When you take a look at our network and where we're strongest, it fits very well with where both population growth and economic demand are forecast now and long into the future. The basis for international demand is building our domestic network and our ability to fly into our partners' hubs and into secondary cities in Europe and Asia and South America.

Robert Isom: The basis for international metric is our domestic network and our ability to fly into our partners' hubs and into, you know, secondary cities in Europe and Asia and South America. It's built on the strength of our North American network. And we're really pleased with what we've built over time.

Robert D. Isom: It's built on the strength of our North American network, and we're really pleased with what we've built over time in the short haul international market in MCLA. We're really pleased with what we've built in terms of our hub structure. So my answer to your question is, I love the basis on which we can operate. And as we see where demand strength around the world is going and how it's going to change, we're going to build off of the strength we've put so much time and energy into over the years.

Robert Isom: Short haul international and MCLA. We're really pleased with what we've built in terms of our hub structure. So my answer to your question is, I love the basis on which we can operate. And as we see where demand strength around the world is going and how it's going to change, we're going to build off of the strength that we've put so much time and energy in over the years.

Speaker Change: I loved the basis on which we can operate and as we see where demand strength around the world is going and how it's going to change we're going to build off of.

Speaker Change: That's correct.

Speaker Change: Put so much time and energy in over the years.

Robert D. Isom: Okay, thanks for that perspective. And second, you know, as we think about advantage, you know, given some of the, you know, profit challenges, do you think that that alters your hoped-for improvements in loyalty returns? You know, I'm just putting myself in, let's just say City Bank shoes, you know, for example, if Delta and AMX returns are the gold standard for loyalty, you know, I just have to wonder if City would take your profitability into consideration as you renegotiate. Is that a flawed assumption? All right, I think it is a flawed assumption. Look, loyalty revenue has been one of the bright spots in terms of our revenue performance year over year.

Robert D. Isom: Okay, thanks for that perspective. And second, you know, as we think about advantage, you know, given some of the, you know, profit challenges, do you think that that alters your hoped-for improvements in loyalty returns? I'm just putting myself in, let's just say, Citibank shoes. You know, for example, if Delta and Amex returns are the gold standard for loyalty, you know, I just have to wonder if Citi would take your profitability into consideration as Is that a flawed assumption?

Speaker Change: Okay. Thanks for that perspective, and second as we think about advantage.

Speaker Change: Given some of the.

Speaker Change: Profit challenges do you think that that alters your hoped for improvements and loyalty returns I'm just putting myself in let's just say Citibank shoes. For example, if delta and Amex returns are the gold standard for loyalty.

Speaker Change: I just have to wonder if city would take their profitability into consideration as you renegotiate or is that a flawed assumption.

Robert D. Isom: All right, I think it is a flawed assumption. Look, loyalty revenue has been one of the bright spots in terms of our revenue performance year over year. And I think Devon helped me out. Loyalty revenues grew by 8% year over year. We think that we can do a lot better than that. And it's based not only on what I see in our loyalty program and how attractive it is to our customers but also on our partners. Citi is certainly, you know, at the forefront of that. They absolutely want to get involved in more and deeper ways.

Speaker Change: I think it is a flawed assumptions look at loyalty revenue is has been one of the bright spots in terms of our revenue performance year over year and I think Devin helped me at royalty revenues grew by.

Robert Isom: And I think Devon helped me out. Loyalty revenues grew by 8% year over year over year. We think that we can do a lot better than that. And it's based on not only what I see in our loyalty program and how attractive it is to our customers, but also by our partners. City is certainly, you know, at the forefront of that. They absolutely want to get involved in more and deeper ways. We're going to take advantage of that. And the opportunity for us is actually making up some of the ground versus where other network peers are.

Devon E. May: Eight 8% year.

Devon E. May: Year over year over year, we think that we can do a lot better than that.

Devon E. May: And it's based on.

Speaker Change: Not only what I see in our loyalty program and how attractive it is to our customers, but also by our partners City is certainly.

Speaker Change: At the forefront of that they absolutely want to get involved in more and deeper ways, we're going to take advantage of that and the opportunity for us is actually making up some of the ground versus.

Unknown Attendee: We're going to take advantage of that. And the opportunity for us is actually making up some of the ground versus where our other network peers are. And I have great confidence that we're going to be able to do that because I know that, in terms of the negotiations that we're pursuing, that it's going to be a better deal in the long run and produce results that I think will be very positive. Thank you. Our next question comes from the line by Savi Sith of Raymond James. Hey, good morning, everyone.

Devon E. May: Where are.

Devon E. May: Our other network peers are and I have great confidence, we're going to be doing able to do that because I know that in terms of the negotiations that we're pursuing that it's going to be a better deal on the long run and produce results that I think will be very positive.

Robert Isom: And I have great counsel. We're going to be able to do that because I know that in terms of the negotiations that we're pursuing, that it's going to be a better deal in the long run and produce results that I think will be very positive.

Unknown Attendee: Creative.

Unknown Attendee: Thank you.

Devon E. May: Thank you.

Savi Seth: Our next question comes from the line of Savi Seth of Raymond James. Hey, good morning, everyone. Just kind of wondering on the, on the cross side, the execution has been better and wondering how, you know, what's driving that? And as you can build back your sales force, you know, do you see any changes there? Or, you know, do you expect to continue outperforming on the, on the cross side? Well, we are really proud of our cost performance over the past several years. We have been industry leaders in our, in our unit cost performance, and it's just been focused across the board.

Speaker Change: Next question comes from the line of.

Speaker Change: Savi.

Savi: Of Raymond James.

Robert D. Isom: Just kind of wondering if, on the cost side, the execution has been better, and wondering how, you know, what's driving that. And as you kind of build back your sales force, you know, do you see any changes there? Or, you know, do you expect to kind of continue outperforming on the cost side? Well, we are really proud of our cost performance over the past several years. We have been industry leaders in our unit cost performance, and it's just been focused across the board.

Savi: Hey, good morning, everyone.

Speaker Change: Just kind of wondering on the on the cost side the execution has been better.

Savi: Wondering.

Savi: What's driving that and as you kind of build back your sales force.

Savi: Do you see any changes there or do you expect to kind of continue outperforming on the on the cost side.

Speaker Change: We are really proud of our cost performance over the past several years.

Speaker Change: Have been industry leaders in our unit cost performance than it's just been focused across the board and it starts with a really strong operation.

Robert Isom: It starts with a really strong operation, but we've been talking a lot about how we are reengineering the business for efficiency and leaning in a technology to drive better productivity and a better experience for a team. So, we're continuing on that. I feel we're progressing really well. I do expect some amount of cost pressure as we rebuild the sales staff. There's going to be some cost pressure as commissions go up. I think we're managing cost better than anybody. And as we get into 2025, we'll have the same focus that we've had for the past several years.

Robert D. Isom: It starts with a really strong operation, but we have been talking a lot about how we are reengineering the business for efficiency and leaning into technology to drive better productivity and a better experience for our team members and customers. So we're continuing on that. I feel we're progressing really well. I do expect some amount of cost pressure as we rebuild the sales staff. There's going to be some cost pressure as commissions go up, but I think we're managing costs better than anybody, and as we get into 2025, we'll have the same focus that we've had for the past several years. Hey, and Savi, I'll just add to that.

Savi: But we've been talking a lot about how we are reengineering the business for efficiency and lean in in a technology to drive better productivity.

Savi: Peter experience for our team members and customers. So we're continuing on that I feel we're progressing really well I do expect some amount of cost pressure as we rebuild the sales staff.

Savi: There's going to be some cost pressure as commissions go up but I think we're managing costs better than anybody and as we head into 2025, we will have the same focus that we've had for the past several years.

Robert Isom: Hey, and Savi, I'll just add to that. That's one of the things that gives me a great pride in what the company has done, but also it's the basis on which we're building and building back. We've managed a cost better than any question. It's a name we've run the most reliable airline in terms of completion fact over the last year or so. And it's evidenced by what we were able to do with the CrowdStrike issue. We've got a great fleet, you know, low cap acts. As I mentioned, you know, earlier, we're going to be renegotiating our co-brand credit card relationships.

Robert D. Isom: That's one of the things that gives me great pride in what the company has done. But also, it's the basis on which we're building, building back, we've managed costs better than any, We've run the most reliable airline in terms of completion factor over the last year or so, and that is evidenced by what we were able to do with the CrowdStrike issue. We've got a great fleet, you know; low CAPEX.

Savi: Hey, Savi I'll, just I'll just add to that that's one of the things that gives me.

Savi: Great Pride in what the company has done but also it's the basis on which we're building.

Savi: Building back.

Savi: We manage cost better than anybody.

Savi: Is it the name.

Savi: We've run the most reliable airline in terms of completion factor over the over the last year or so and as evidenced by what we were able to do with the crowd strike issue.

Robert D. Isom: As I mentioned earlier, we're going to be renegotiating our co-brand credit card relationships, and I do think that there are even further things that we're going to be able to do from a cost perspective. What we've got to focus on right now is regaining the share that we ceded from an agency and a corporate perspective. When we get that back, which we will, and you add that to the strength that we have in the other areas that I mentioned, we're going to get back on track with margin expansion, free cash flow production, and then, you know, a continuous path to improving our balance sheet strength. That's helpful.

Savi: <unk> got a great fleet low low capex as I mentioned earlier, we're going to be renegotiating, our co brand credit card <unk>.

Savi: <unk> ships.

Robert D. Isom: And I do think that there's even further things that we're going to be able to do from a cost perspective. But we've got to focus on right now is regaining the share that we've seeded from an agency in a corporate perspective. When we get that back, which we will, and you add that to the strength that we have in the other areas that I mentioned, we're going to get back on track: margin expansion, free cash flow production. And then, you know, continuous path to improving our balance these strengths. That's helpful.

Savi: And I do think that there is even further things that we're going to be able to do from a cost perspective, we've got to focus on right now is regaining the share that we ceded.

Savi: From an agency and a corporate perspective, when we get that back, which we will and you add that to the strength that we have in the other areas that I mentioned, we're going to get back on track margin expansion and free cash free cash flow production and then.

Savi: Continuous path to improving our balance sheet strength.

Robert D. Isom: And if I might, on the capacity side, just kind of follow up Scott's question there. What's your domestic capacity kind of growth run right here versus international? Because I'm guessing with the fleet delays, it's still a lot more domestic capacity growth where you're seeing more of the pressure as well. Hey, sorry about that.

Speaker Change: That's helpful and if I might on the capacity side, just kind of follow up Scott question. There, let's see what's your domestic capacity kind of gross run rate here versus international because I'm guessing with the fleet delays.

Robert Isom: And if I'm on the capacity side, just going to follow up the question there. What's your domestic capacity kind of growth run right here versus international because I'm guessing with the fleet delays, it's still a lot more domestic capacity growth where you're seeing more of the pressure as well. Hey, sorry about that. The domestic details year every year. We do have domestic capacity up in the third quarter by about three and a half percent. It'll be probably closer to 3% as we look out to the fourth quarter as we sit here today. But as Robert mentioned earlier, fourth quarter schedules are finalized, and we'll continue to adjust based on the demand environment that we're seeing.

Speaker Change: It's still a lot more domestic capacity growth, where youre seeing more of the pressure as well.

Devon E. May: The domestic details year over year, we do have domestic capacity up in the third quarter by about three and a half percent. It'll probably be closer to 3% as we look out to the fourth quarter as we sit here today. But, as Robert mentioned earlier, fourth quarter schedules aren't finalized, and we'll continue to adjust based on the demand environment that we're seeing. Thank you. The next question comes from the line of Conor Cunningham of Milius Research.

Speaker Change: Hey, sorry about that yeah, the domestic details year over year, we do have domestic capacity up in the third quarter.

Speaker Change: By about three 5% it'll be probably closer to 3% as we look out to the fourth quarter as we sit here today, but as Robert mentioned earlier fourth quarter schedules aren't finalized and we will continue to adjust based on the demand environment that we're seeing.

Speaker Change: Yeah.

Connor Cunningham: Thank you. Our next question comes from the line of Connor, cutting him off millions. Search, however, one of the thank you send me. You mentioned that you're starting to win back some share from the on the business side. I'm just curious on how you're doing that, and is there a cost headwind associated with it? And just I'm just trying to understand the margin profile as it's kind of won back from others out there. Thank you.

Speaker Change: Thank you. Our next question comes from the line of Conor Cunningham of Melius research.

Conor Cunningham: Hi everyone. Thank you. You mentioned that you're starting to win back some share on the business side. I'm just curious how you're doing that, and is there a cost headwind associated with it?

Conor Cunningham: Hi, everyone and thank you.

Speaker Change: You mentioned that you are starting to win back some share from the loss on the on the business side.

Conor Cunningham: I'm just curious on how you're doing that and is there a cost headwind associated with it and just I'm just trying to understand the margin profile as it is kind of one back from.

Speaker Change: From other from others out there. Thank you.

Robert D. Isom: And I'm just trying to understand the margin profile as it's kind of won back from others out there. Thank you. Hey, Conor. I'll start with, look, the actions we've taken so far have been, you know, really straightforward. And that is making sure that American content and products are available to any channel that wants to access them. That's done.

Robert Isom: Hey Connor, I'll start with the actions that we've taken so far have been, you know, really, you know, straightforward, and that is making sure that Americans' content and product is available to any channel that wants to access it. That's on, and that's just that alone has resulted in us winning back past and your share. Now the next steps to that are then going to be making sure that we reestablish productive relationships with the travel management companies and agencies. We're doing that, and I believe that that will unlock further share growth. And then on top of that, as I've mentioned, you know, in my comments, I've talked to dozens of corporations, and after getting content available and then also making sure that we have appropriate relationships in agreements in place with travel management companies.

Speaker Change: Hey, counter I'll start with look the actions that we've taken so far have been really straightforward and that is making sure that Americans content product is available to any channel that wants to access it.

Robert D. Isom: And that alone has resulted in us winning back passenger share. Now, the next steps to that are then going to be making sure that we reestablish productive relationships with the travel management companies and agencies. We're doing that. And I believe that that will unlock further share growth. And then on top of that, as I mentioned, you know, in my comments, I've talked to dozens of corporations.

Speaker Change: That's one and Thats just just that alone has resulted in us winning back passenger share now. The next step to that are then going to be making sure that we reestablish productive relationships with the travel management companies and agencies, we're doing that and I believe that that.

Speaker Change: Will unlock further share growth and then on top of that as I've mentioned.

Speaker Change: In my comments I've talked to dozens of <unk>.

Speaker Change: Corporations.

Speaker Change: And after getting content available and then also making sure that we have appropriate relationships and agreements in place with travel management companies. The next just to make sure that we're doing everything we can to have the right agreements in place with our corporate customers and to support them in a way that they feel valued I know that we've started down that path.

Robert D. Isom: After getting content available and then also making sure that we have appropriate relationships and agreements in place with travel management companies, the next step is to make sure that we're doing everything that we can to have the right agreements in place with our corporate customers and to support them in a way that they feel valued. I know that we've started down that path, and everything that we're doing is about winning back that share.

Robert Isom: The next is to make sure that we're doing everything we can to have the right agreements in place with our corporate customers and to support them in a way that they feel valued. I know that we've started down that path, and everything that we're doing is about winning back that share.

Speaker Change: And everything that we're doing is about winning back that share.

Connor Cunningham: I'll just, you know, be just be frank. We over-indexed on direct, and we've got to find a way to play in the richer pool of indirect revenue, and that starts with having content, having relationships, positive relationships with travel management companies and agencies, and then supporting our corporate customers in the ways that they feel valued. Okay, helpful. And then I get that your make and change the distribution and your network orientation isn't one for one. But you know, in the past, you've talked about how you're pleased with the network, product, and the onboard experience. You mentioned that you've planned on closing the margin gap.

Speaker Change: I'll just be just be Frank we over indexed on direct.

Robert D. Isom: I'll just, you know, be frank; we overindexed on direct. And we've got to find a way to play in the richer pool of indirect revenue. And that starts with having content, having relationships, positive relationships with travel management companies and agencies, and then supporting our corporate customers in ways that they feel valued. Okay, helpful.

Speaker Change: And we've got to find a way to play in the richer pool of indoor.

Speaker Change: Indirect revenue and that starts with having content having relationships.

Speaker Change: <unk> relationships with travel management companies and agencies and then <unk>.

Speaker Change: Porting, our corporate customers in ways that they feel valued.

Conor Cunningham: And then I understand that you're making changes to distribution, and your network orientation isn't one for one. But, you know, in the past, you've talked about how you're pleased with the network product, the onboard experience. You mentioned that you plan on closing the margin gap. I just struggle to see how that happens without a more holistic look at the product and networking. The reason why I ask is there continues to be an ongoing concern just around liquidity for you guys as cash flow kind of continues to be where it is today. Thank you. Thanks, Conor.

Speaker Change: Okay helpful. And then I get that you are making changes to distribution in your network orientation isn't one for one but you know in the past you've talked about how you are pleased with the network product bar experience.

Speaker Change: You mentioned that you plan on closing the margin gap.

Connor Cunningham: I just struggle to see how that happens without a more wholesome look at the product in that working.

Speaker Change: I just struggled to see how that happens without a more wholesome look at the product and network and the reason I ask is there continues to be.

Robert Isom: The reason why I ask is that continues to be a non-going concern just around liquidity for you guys. It's Kashmir and kind of continues to be where it is today. Thank you.

Speaker Change: An ongoing concern just around liquidity for you guys as cash burn kind of continues to continues to be where it is today. Thank you.

Robert D. Isom: Look, I'll start with this. You know, up until, you know, through 2023, we had been closing the margin gap with our top competitors. The one thing that we did differently than others in 2023 is we put in place a new sales and distribution strategy. We've recognized that that's not working, and we're making immediate adjustments to that. I've sized it for you in terms of its impact, which is large, and that is, I think it's had an impact of about $750 million in the first six months of the year.

Robert Isom: Thanks, Connor.

Speaker Change: Thanks counter look I'll start with this.

Devon May: Look, I'll start with this. You know, up until, you know, through 2023, we had been closing the margin gap with our top competitors. The one thing that we did different differently than others in 2023 is we put in place a new sales and distribution strategy. We've recognized that that's not working, and we're making immediate adjustments to that. I've sized it for you in terms of, you know, the impact, which is large. And that is, you know, I think it's had an impact of about $750 million in the first six months of the year. That is something that we know that we can reverse and get back on the track of where we had been, which was, you know, up until the first quarter of this year, seven consecutive quarters of profitability, really, you know, doing a nice job of hitting guides and closing margin gap.

Speaker Change: Up until.

Speaker Change: Through 2023, we had been closing the margin gap with our top competitors. The one thing that we did different differently than others in 2023, as we put in place a new sales and distribution strategy.

Speaker Change: We recognize that that's not working and we're making immediate adjustments to that I have sized it for you in terms of the impact which is which is large and that is I think it's had an impact of about $750 million in the first six months of the year that is something that we know that we can reverse.

Robert D. Isom: That is something that we know that we can reverse and get back on the track of where we had been, which was, you know, up until the first quarter of this year, seven consecutive quarters of profitability, really, you know, doing a nice job of hitting guidance and closing the margin gap. That is something that's still all in front of us. Our product is, our network is certainly well positioned. Our product is as well.

Speaker Change: And get back on the track of.

Speaker Change: Where we had been which was up until the first quarter. This year.

Speaker Change: One consecutive quarters of profitability.

Speaker Change: Really doing a nice job of hitting guidance and.

Speaker Change: Clothing margin gap.

Robert Isom: That is something that's still all in front of us. Our product is; our network is certainly well positioned. Our product is as well. That said, you know, just like the rest of the industry, there's a supply and demand in balance. We're taking action. I think that's going to help considerably. But you'll see us get back on track as we capture our share, as I said before, margin expansion, free cash flow production, and making sure that we have a solid balance sheet.

Speaker Change: That is something Thats still all in front of US our product is our network is certainly well positioned our product is as well that said.

Robert D. Isom: That said, you know, just like the rest of the industry, there's a supply and demand imbalance. We're taking action. I think that's going to help considerably, but you'll see us get back on track as we capture our share of, as I said before, margin expansion, free cash flow production, and making sure that we have a solid balance sheet. Devin?

Speaker Change: Just like the rest of the industry.

Speaker Change: There is a supply and demand imbalance, we're taking action I think that's going to help considerably.

Speaker Change: But youll see us get back on track.

Speaker Change: As we capture our share.

Devon: As I said before margin expansion free cash flow production and making sure that we have a solid balance sheet Devon.

Devon May: Devon? Yeah, trying to just on your question on where cash is, and you mentioned cash burn. As we talked about in the script, we don't have cash burn this year; we're producing free cash flow. We had the second quarter with over $11 billion of liquidity; we have reduced total debt by $13 billion from peak levels. Our net debt is lower today than it was at the end of 2019, so from a cash perspective, we feel we're in a really good shape. We expect to continue to deliver as we go through 2025, and we expect to get our 2025 target of total debt reduction of $15 billion.

Devon E. May: Yeah, Conor, just on your question about where cash is, and you mentioned cash burn. As we talked about in the script, we don't have cash burn this year. We're producing free cash flow. We ended the second quarter with over $11 billion of liquidity. We have reduced total debt by $13 billion from peak levels.

Speaker Change: Yeah.

Speaker Change: Just on your question on where cash is and you mentioned cash burn.

Speaker Change: We talked about in the script, we don't have cash burn this year, we're producing free cash flow. We ended the second quarter with over $11 billion of liquidity.

Speaker Change: We have reduced total debt by $13 billion from peak levels. Our net debt is lower today than it was at the end of 2019. So from a cash perspective, we feel we're in really good shape. We expect to continue to Delever as we go through 2025, and we expect to hit our 2025 target a total debt reduction.

Devon E. May: Our net debt is lower today than it was at the end of 2019, so from a cash perspective, we feel we're in really good shape. We expect to continue to de-lever as we go through 2025, and we expect to hit our 2025 target of total debt reduction of $15 billion. Our next question comes from the line of Tom Fitzgerald, of T.D. Cohen: Hi everyone. Thanks very much for the time. Could you talk about the PSP loans resetting to a much higher variable rate, you know, 18-20 months, and just how you're thinking about balancing those needs? Okay, yeah, sorry, for the PSP loans. They do reset as we're going forward. I think they're so for plus 200.

Speaker Change: Of $15 billion.

Speaker Change: Yeah.

Thomas Fitzgerald: Thank you. An ex-question comes from the line of Tom Fitzgerald of TD Cohen. Hi everyone, thanks very much for the time. Could you talk about the PSP loans resetting to a much higher variable rate in the coming, you know, 18, 20 months, and just how you're thinking about balancing those needs. Okay, yeah, sorry for the PSP loans that they do reset as we're going forward. I think they're so for so for plus 200, so still a pretty good rate for us, but we'll continue to watch the market, and if the marketplace allows for a refinancing of better rates, we'd look to do that.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line.

Speaker Change: Of Tom Fitzgerald of TD Cohen.

Tom Fitzgerald: Hi, everyone. Thanks, very much for the time.

Tom Fitzgerald: Could you talk about the PSP loans resetting to a much higher variable rate and they come in.

Speaker Change: 18 to 20 months and just how youre thinking about balancing those needs.

Speaker Change: Oh, sorry, Okay, yes, sorry for the PSP loans, they do reset as we're going forward.

Speaker Change: I think they are so for sulfur plus 200, so it's still a pretty good rate for us, but we'll continue to watch the market and the.

Devon E. May: So still a pretty good rate for us, but we'll continue to watch the market. And if the marketplace allows for refinancing and better rates, we'd look to do that. But for now, we'd see them remaining outstanding until maturity. Okay, thanks very much.

Tom Fitzgerald: The marketplace.

Tom Fitzgerald: Allows for a refinancing at better rates, we'd look to do that but for now.

Thomas Fitzgerald: But for now, we'd see them remaining outstanding in Tom Fitzgerald. Okay, thank you very much. Go ahead, Tom. Oh, I was just going to follow up, so if you have more to go there, Robert, I'm happy to pause. No, go ahead. Okay.

Tom Fitzgerald: We'd see them remaining outstanding until maturity.

Tom Fitzgerald: Okay. Thank you very much.

Tom Fitzgerald: Right.

Unknown Attendee: Go ahead, Tom. Oh, I was gonna switch to follow up. So if you have more to go there, Robert, I'm happy to. No, go ahead.

Tom Fitzgerald: Go ahead Tom.

Tom Fitzgerald: If I could follow up.

Unknown Attendee: Have you ever.

Tom Fitzgerald: More to go there Robert.

Speaker Change: Yes.

Robert D. Isom: Okay, I'm just curious on the network side, how you guys are thinking about the hub structure and whether you need to maybe pull back in any of the coastal gateway markets or how you're thinking about the fortress hubs like CLP or DFW. There's talk about, you know, south one of your neighbors in Dallas expanding more in DFW. I'm just curious how you're thinking about your network strategy overall. Thank you. We're very pleased with our positions in both the DFW and Charlotte.

Speaker Change: No go ahead, okay, I'm, just kind of curious on the network side. How you guys are thinking about the hub structure and whether you need to maybe pull back in any of the coastal gateway markets are.

Robert Isom: I'm just curious on the network side, how are you guys thinking about the home structure and whether you need to maybe pull back and in any of the coastal gateway markets or. And how you're thinking about the fortress on the CLT or DFW, you know, there's there's talk about, you know, self one of your, your neighbor in Dallas expanding more in DFW. It's just curious how you're thinking about your network strategy overall. Thank you. Oh, yeah, we're worse, very pleased with our positions in both in DFW and Charlotte. You know, you'll see that the majority of our growth this past year has been in those hubs.

Speaker Change: And how youre thinking about the fortress <unk>.

Speaker Change: DFW and others talk about.

Speaker Change: So one of your neighbor in Dallas expanding more in DFW. So just curious how youre thinking about your network strategy overall, thank you.

Speaker Change: We're very pleased with.

Speaker Change: Our positions in both the DFW and Charlotte Youll see that the majority of our growth. This past year has been in those hubs, we really look forward to.

Robert D. Isom: You'll see that the majority of our growth this past year has been in those hubs. We really look forward to reestablishing them as we are able to, as we're bringing our regional network fully back up to speed. We're very much looking forward to filling out our presence in both Philadelphia and Chicago as well. I like what I see at DCA, Reagan National, and how that is coming back. And again, while there's been pressure in short haul Latin, Miami and Phoenix have all done fairly well for us as well.

Robert Isom: We really look forward to reestablishing as we are able to, as we're bringing our regional network fully back up to speed. We're very much looking forward to filling out our presence in both Philadelphia and in Chicago as well. I like what I see in DCA, Reagan National, and how that is coming back. And again, while there's been pressure in short haul, Latin Miami and in Phoenix have evolved done fairly well. Force is as well. So, in regard to our system, we're making sure that we're flying where we can produce the greatest level of profitability. And one of the things that I'll just underscore again is that, you know, business traffic is something that, you know, travels throughout the country, throughout the world.

Speaker Change: Reestablishing as we are able to as we are bringing our regional network fully back up to speed.

Speaker Change: I'm very much looking forward to to filling out our presence in both Philadelphia and Chicago as well.

Speaker Change: I like what I see in DCA Reagan national and how that is coming back in again.

Speaker Change: While there's been pressure in short haul Latin.

Speaker Change: Miami and Phoenix have all done fairly well for us as well so in regard to our system.

Robert D. Isom: So, in regard to our system, we're making sure that we fly where we can produce the greatest level of profitability. And one of the things that I'll just emphasize again is that business traffic is something that travels throughout the country and throughout the world. We're poised with our network to serve, I think, almost 90% of the places that you might want to go in the world. We've got a network that is going to appeal, and right now, we've got to go back and win back our business share.

Speaker Change: We're making sure that we're flying where we can produce the greatest level of profitability.

Speaker Change: One of the things that I'll, just underscore again is that <unk>.

Speaker Change: Traffic is something that you know.

Speaker Change: Travels throughout the country throughout the World, we are poised with our network to serve I think almost 90% of the.

Robert Isom: War poised with our network to serve, I think almost 90% of, you know, the places that you might want to go in the world. We've got a network that is going to appeal, and right now we've got to go back and win back our business here.

Speaker Change: Places that you might want to go in the world.

Tom Fitzgerald: We've got a network that is going to appeal and right now we've got to go back and went back our business sure. So Tom.

Robert D. Isom: So, Tom, thanks for the question. But what I wanted to say, though, was... I want to just take a quick moment to recognize your predecessor, Helane Becker, for her accomplished career and valuable work and contributions to our industry over the past 40 years. And I'm pleased to say that I've known Helane for a lot of those 40 years.

Unknown Attendee: So, Tom, thanks for the question, but what I wanted to say, though, was. I want to just take a quick moment to recognize your predecessor, Helane Becker, for her accomplished career and valuable work and contributions to our industry over the past 40 years. And I'm pleased to say that I've known Helane for a lot of those 40 years. So, from all of us at American, Helane will miss working with you. We wish you the very best in your new advisory role, and Tom, best of luck to you as well. Thank you.

Tom Fitzgerald: Tom Thanks for the question, but what I wanted to say, though was.

Speaker Change: I want to just take a quick moment to recognize your predecessor Helane Becker.

Speaker Change: For her accomplished career and valuable work and contributions to our industry over the past 40 years and I am pleased to say that I've known <unk> for a lot of those 40 years.

Robert D. Isom: So from all of us at American, Helane, we'll miss working with you. We wish you the very best in your new advisory role and, Tom, best of luck to you as well. Thank you. Thank you. Our next question comes from the line of Duane Pfennigwerth of Evercore ISI. Hey, thanks.

Tom Fitzgerald: From all of US at American Helane, we'll Miss working with you. We wish you the very best in your new advisory role and Tom.

Unknown Attendee: Best of luck to you as well thank you.

Unknown Attendee: Yeah.

Unknown Attendee: Thank you.

Duane Pfennigwerth: Our next question comes from the line of Duane Pfennigwerth of Evercore ISI. Hey, thanks. Just on the, I guess, the mismatch of domestic supply demand.

Speaker Change: Our next question comes from the line.

Duane Thomas Pfennigwerth: Duane setting worth of Evercore ISI.

Duane Thomas Pfennigwerth: Just on the, I guess, the mismatch of domestic supply and demand, if we could, tracked back to earlier this year, maybe maybe to investor day, what was the thinking on 9% domestic growth in 2Q? It feels like at any point, that would have been really out of sync with the GDP, even stable GDP, and trying to better understand what the company was solving for. Was it chasm goals or sheer goals?

Speaker Change: Hey, thanks.

Duane Thomas Pfennigwerth: Just on the I guess, the mismatch of domestic supply demand if we could.

Robert Isom: If we could track back to earlier this year, maybe, maybe to Investor Day, what was the thinking on nine percent? Domestic growth in 2Q, it feels like at any point that would have been really attestant with the GDP, even stable GDP and trying to better understand what the company was solving for. Was it cashm goals or share goals? And with the change in leadership, do you now have an opportunity to put more of a weighting on what the economy may actually be doing from a network planning perspective? Duane, thanks.

Duane Thomas Pfennigwerth: Track back to earlier this year, maybe maybe to Investor day, what was the thinking on 9% domestic growth and <unk> it feels like at any point.

Speaker Change: That would've been really out of sync with the GDP, even stable GDP in and trying to better understand what the company was solving for.

Duane Thomas Pfennigwerth: Was it CASM goes or share goals and.

Robert D. Isom: And with the change in leadership, do you now have an opportunity to put more of a weighting on what the economy may actually be doing from a network planning perspective? Duane, thanks. I'll start, and Devon certainly can fill any blanks.

Speaker Change: And with the change in leadership do you now have an opportunity to put more of a waiting on what the economy may actually be doing.

Speaker Change: From a network planning perspective.

Robert D. Isom: Look, we anticipated obviously a stronger, more robust demand environment, plain and simple. There was tremendous growth in 2023, and as we entered into 2024, we simply anticipated that demand would perform and allow prices to perform a lot better than they did. As we've taken a look since that time, you know, we certainly understand that we're in a marketplace that couldn't absorb all that capacity.

Duane Thomas Pfennigwerth: Duane Thanks, I'll start and Devon, certainly can fill any blanks.

Robert Isom: I'll start, and Devon certainly can fill any blanks. Look, we anticipated obviously a more a stronger, more robust demand environment. You know, plain and simple. There was tremendous growth in 2023. And as we entered into 2024, we simply anticipated that demand would perform and allow pricing to perform a lot better than it did. As we've taken a look from that time, you know, we certainly understand that we're in a marketplace that couldn't absorb all that capacity. And so, as we've said, we're making those immediate adjustments, but you'll see us be very, very conscious as we go forward.

Devon: We anticipated that obviously are more.

Devon: A stronger more robust.

Devon: Manned environment plain plain and simple.

Devon: There was tremendous growth in 2023, and as we entered into 2024, we simply anticipated that.

Devon: Demand would perform and allow pricing to perform a lot better than it did.

Devon: As we've taken a look from that time, we certainly understand that we're in a marketplace that couldn't absorb all that capacity and so we're as we've said, we're making those immediate adjustments, but youll see us be very very conscious as we go forward.

Robert D. Isom: And so, as we've said, we're making those immediate adjustments, but you'll see us be very, very careful as we go forward. But I'm going to underscore again the biggest issue that we've had in terms of disappointment was our misstep in our sales and distribution strategy. That would have accounted for a considerable amount of additional revenue, and it's something that we're going to make sure that we gain back. Okay, I mean, maybe just to come at it from a different perspective.

Robert Isom: But I'm going to underscore again, the biggest issue that we've had in terms of disappointment was our misstep in our sales and distribution strategy. That would have accounted for a considerable amount of additional revenue. And it's something that we're going to make sure that we gain back.

Devon: But I'm going to underscore again, the biggest issue that we've had in terms of disappointment was our misstep in our sales and distribution strategy that would have accounted for a considerable amount of additional revenue.

Devon: And it's something that we're going to make sure that we gained back.

Robert Isom: Okay, I mean, maybe just to come at it from a different perspective, you know, the margins are what they are over the last 12 months. As you analyze your own network, even with this distribution change, do you have similar margins hiding somewhere in your network? Are there portions of your network where you say, "geez, we're at least as profitable, maybe more profitable in portions of our network." And if so, why isn't the answer to cut more unprofitable capacity?

Speaker Change: Okay, I mean, maybe just to come at it from a different perspective.

Speaker Change: The margins are what they are over the last 12 months.

Robert D. Isom: You know, the margins are what they are over the last 12 months. As you analyze your own network, even with this distribution change, do you have similar margins hiding somewhere in your network? You know, are there portions of your network where you say, geez, we're at least as profitable, maybe, you know, maybe more profitable in portions of our network? And if so, why isn't the answer to cut more unprofitable capacity? Hey, Duane, it's Devon.

Speaker Change: As you analyze your own network, even with this distribution change.

Speaker Change: Do you have similar margins hiding somewhere in your network are there portions of your network, where you say geez, we're at least as profitable maybe you know maybe more profitable and portions of our network and if so why isn't the answer to cut more unprofitable capacity.

Robert D. Isom: Hey, doing it seven. I just maybe we'll start by following up on your first question as well. The first half capacity was at least in part the rebuild still of our 2019 capacity. We'd added less capacity back than anyone else. We had some hubs that were still far below their historical capacity levels. That slowed in the second half as we put the product fast. University. On your second question around unprofitable components of the network, this is something that we're always looking to move capacity into our most profitable parts of the network and to improve on areas of the network that are softer.

Devon E. May: I'd maybe we'll start by following up on your first question as well. The first half of capacity was, at least in part, the rebuild of our 2019 capacity. We've added less capacity back than anyone else. We had some hubs that were still far below their historical capacity levels.

Speaker Change: Hey, Duane it's Devin I, just maybe we will start by following up on your first question as well the first half the capacity was at least in part the rebuild still of our 2019 capacity. We've added less capacity back than anyone else. We had some hubs that were still are below their historical capacity.

Speaker Change: <unk> levels.

Devon E. May: That slowed in the second half as we got that capacity. On your second question about unprofitable components of the network, this is something that we're always looking to move capacity into our most profitable parts of the network and to improve on areas of the network that are softer. But we have a fantastic hub network. There's always going to be the best performers and performers at the other end. We think all of our hubs can be solidly profitable.

Speaker Change: That slowed in the second half as we put out that capacity.

Speaker Change:

Speaker Change: On your second question around unprofitable components of the network. This is something that we're always looking to move capacity into our most profitable parts of the network and to improve on areas of the network that are softer, but we have a fantastic hub network theres always going to be best performers and performers at the other end.

Robert D. Isom: But we have a fantastic hub network. There's always going to be best performers and performers at the other end. We think all of our hubs can be solidly profitable. And while there are some lagers today, we have a revenue team that has a strategy to improve on.

Speaker Change: We thank all of our hubs can be solidly profitable.

Devon E. May: And while there are some laggards today, we have a revenue team that has a strategy to improve on. Thank you. Our next question comes from the line of Andrew Didora, from Bank of America. Hi, good morning, everyone.

Speaker Change: While there are some laggards today, we have.

Speaker Change: A revenue team that has a strategy to improve on.

Speaker Change: Yeah.

Unknown Attendee: Thank you.

Speaker Change: Thank you.

Andrew Didora: Our next question comes from the line of Andrew Didora, a Bank of America. Hi, good morning, everyone. I guess just touching on demand, you know, given what transpired with the promo environment over the last few months, you know, have your thoughts around the demand back crop changed at all.

Speaker Change: Our next question.

Speaker Change: Comes from the line of Andrew the door of Bank of America.

Andrew George Didora: I guess just touching on demand, you know, given what transpired with the promotion environment over the last few months, have your thoughts around the demand backdrop changed at all? And are you seeing any areas of demand softness? Or, you know, are there any geographies where maybe the promotional environment did not stimulate demand the way that you would have thought?

Speaker Change: Hi, good morning, everyone.

Speaker Change: I guess, just touching on demand given what transpired with the promo environment over the last few months.

Speaker Change: Thoughts around the demand backdrop changed at all and are you seeing any areas of demand softness or.

Robert Isom: And are you seeing any areas of demand softness or, you know, are there any geographies where maybe the promotional environment did not stimulate the man the way that you would have thought. I'll start Andrew. So look, you know, from a regional perspective, you know, a lot of the capacity that has come into the industry has been in places that, you know, we've been traditionally strong, but I also expect that as we take a look going forward, that the adjustments to capacity will likewise be in places that potentially benefit us as well. But, as you know, we've seen, you know, significant pressure in parts of our network that have been profitable and continue to be, you know, quite profitable, but just less so.

Speaker Change: Are there any geographies, where maybe the promotional environment did not stimulate demand the way that you would have thought.

Speaker Change: Uh huh.

Robert D. Isom: So I'll start, Andrew. So, from a regional perspective, you know, a lot of the capacity that has come into the industry has been in places that, you know, we've been traditionally strong. But I also expect that as we take a look going forward, the adjustments to capacity will likewise be in places that, you know, potentially benefit us as well. But, as you know, we've seen significant pressure on parts of our network that have been profitable and continue to be, you know, quite profitable, but just less so.

Speaker Change: I'll.

Speaker Change: Start Andrew so look.

Speaker Change: From.

Andrew: A regional perspective.

Andrew: A lot of the capacity that has come in.

Andrew: To the industry has been in places that we've been traditionally strong, but I also expect that as we take a look going forward.

Andrew: Adjustments to capacity will likewise be in places that potentially benefit us as well.

Andrew: But as you know we've seen significant pressure.

Andrew: Parts of our network.

Speaker Change: Have been profitable and continue to be.

Speaker Change: Quite profitable, but just less so so things like our short haul international M CLA.

Robert D. Isom: So things like our short-haul international MCLA, you know, we've seen some pressure in other places, a lot of it again due to the fact that we've missed out on a pool of premium revenue and business traffic that we're going to win back. As I take a look overall, I don't see a lot of variability in terms of impact throughout our system other than what I've noted. Okay, thank you for that.

Robert Isom: So things like our short haul international MCLA; you know, we've seen some pressure in other places. A lot of it again due to the fact that we've missed out on a pool of premium revenue. And in business traffic that we're going to win back, because I take a look overall, I don't see a lot of variability in terms of impact throughout our system other than what I've noted.

Speaker Change: We've seen some pressure in other places a lot of it again due to the fact that we've missed out on a pool of premium revenue and business traffic that we're going to we're going to win back but as I take a look overall I don't see a.

Speaker Change: A lot of.

Speaker Change: Variability in terms of impact.

Speaker Change: Throughout our system other than what I've noted.

Devon May: Okay, thank you for that. And then having just a housekeeping question, you know, can you remind us is the new flight attendance deal in your guide and have you been occurring for that over the first half of 24. There has not been a crew and a cruel for it through the first half of 2024. It isn't the guide starting in September when we assume ratification, and then it's in our fourth quarter outlook as well. Thank you.

Robert D. Isom: And then, Devon, just a housekeeping question. Can you remind us of the new flight attendance deal in your guide, and have you been accruing for that over the first half of 24? There has not been an accrual for it through the first half of 2024.

Speaker Change: Okay. Thank you for that and then Devin just housekeeping question can you remind us is the new flight attendant deal in your guide and have you been accruing for that over the first half of 'twenty four.

Devon E. May: There has not been accrued and accrual for it through the first half of 2024. It is in the guide starting in September when we assume ratification.

Devon E. May: It is in the guide starting in September when we assume ratification, and then it's in our fourth quarter outlook as well. Thank you. Our next question comes from the line of Sheila Kahyaoglu of Jeff. Hi, this is Kyle and Chloe at Gone4Sheila. I wanted to ask the cash picture question a little differently as free cash was down, you know, a billion and a half on the year and if we look in the 25, the guide was greater than two billion, presumably handicapped and was on a like for like basis the amount of debt that was supposed to come out next year.

Speaker Change: And then it's in our fourth quarter outlook as well.

Speaker Change: Thank you. Our next question comes from the line.

Kyle and Chloe Akon: Our next question comes from a line of Sheila Kajaglu of Jeffries. Hi, this is Kyle and Chloe Akon for Sheila. I wanted to ask the cash picture question a little differently as free cash was down, you know, a billion and a half on the year. And if we look into 25, the guide was greater than two billion, which is presumably handicapped and was on a. Blake Prelis, the amount of debt that was supposed to come out next year. So just wondering how you bridge that give in you, Priya Aiyar, did the $35 billion in an out year's year.

Speaker Change: Sheila <unk> of Jefferies.

Speaker Change: Hi, This is Kyle and clawing back on for Sheila.

Kyle: I wanted to ask the cash picture question, a little differently as free cash flow is down you know a 1 billion and a half on the year and if we look into 'twenty five the guide was greater than 2 billion, which is presumably handicap them was on the <unk>.

Speaker Change: Like for like basis, the amount of debt that was supposed to come out next year. So just wondering how you bridge given you reiterated the 35 billion and in the out years here.

Devon May: Sorry, a little bit of trouble here on the question, but we're on cash and cash outlook for 2025. Yeah, we had been projecting greater than $2 billion of free cash flow in 2025. We're not updating our 25 Outlook right now. Obviously, we expect to perform better on top line, but we'll give guidance as we get into next year. As it relates to our total debt reduction expectations, we were tracking ahead of our $15 billion plan before we have a lot of liquidity. We have the ability to go ahead and raise additional debt if we need to, but right now, the expectation of 2025 is that we will produce free cash flow.

Speaker Change: Sorry, there's a little bit of trouble hearing the question, but.

Sheila Karin Kahyaoglu: We're on cash and cash outlook for 2025. Yeah, we had been projecting greater than $2 billion of free cash flow in 2025. We're not updating our 25 outlook right now, but obviously, we expect to perform better on the top line. But we'll give guidance as we get into next year. As it relates to our total debt reduction expectations, we were tracking ahead of our $15 billion plan before. We have a lot of liquidity.

Speaker Change #100: Cash and cash outlook for 2025, yes, we had been projecting greater than $2 billion of.

Speaker Change: Free cash flow in 2025, we are we're not updating our 25 outlook right. Now obviously, we expect to perform better on top line, but we'll give guidance as we get into next year.

Speaker Change: Is it <unk>.

Speaker Change #102: Relates to our total debt reduction expectations.

Speaker Change: We were tracking ahead of our $15 billion plan before.

Speaker Change: We have a lot of liquidity.

Speaker Change:

Sheila Karin Kahyaoglu: We have the ability to go ahead and raise additional debt if we need to, but right now, the expectation for 2025 is that we will produce free cash flow. We will meet our $15 billion debt reduction target, and we'll have solid liquidity as we get through the year. Okay, thanks.

Speaker Change: We have the ability to.

Speaker Change: So go ahead and raise additional debt if we need to but right now the expectation in 2025 is that we will produce free cash flow, we will meet our $15 billion of debt reduction target and we will have solid liquidity as we get through the year.

Devon May: We will meet our $15 billion debt reduction target, and we'll have solid liquidity as we get through the year.

Kyle and Chloe Akon: Okay, thanks.

Devon E. May: And then just my follow-up question is on the commercial strategy, given your, you know, large Texas pier today announced some changes around what will be more premium-like seating. So maybe just initial impressions as it relates to the commercial strategy and the share changes that you guys are hoping to see. Thank you. Well, I'll just start with, look, the premium business is important to us. And as I mentioned, it's one of the bright spots that we've seen year over year.

Speaker Change #106: Okay. Thanks, and then just my follow up is on the commercial strategy given your large Texas peer today announced some changes around will be more premium like C. Then so maybe just the initial impressions as it relates to the commercial strategy and the share changes that you guys are hoping to see thank you.

Robert Isom: And then just my follow up is on the commercial strategy given your, you know, large taxes peer today, and now some changes around what will be more premium like seeding. So maybe just in this one press, as it relates to the commercial strategy and the share changes that you guys are hoping to see. Thank you. Well, I'll just start with look premium businesses. It is important to us. And, as I mentioned, it's one of the bright spots that we've seen year over year, and that we anticipate that that strength is going to continue. It's going to continue.

Speaker Change: Well I'll just start with look.

Speaker Change: Premium business is.

Speaker Change: <unk> to us and as I mentioned, that's one of the bright spots.

Robert D. Isom: And we anticipate that that strength is going to continue. And it's going to continue, and we're going to invest in it. We're going to invest in it with, you know, real product, real hard product. And it's not something that we have to talk about.

Speaker Change: We've seen year over year, and we anticipate that that strength is going to continue.

Speaker Change: And it's going to continue we're going to invest in it we're going to invest in it with real product real hard product and it's not something that we have to talk about it's something that we have and will continue to grow in our fleet. So.

Robert Isom: We're going to invest in it. We're going to invest in it with, you know, real product, real hard product. And it's not something that we have to talk about; it's something that we have and we'll continue to grow in our fleet. So not only do we have the most premium seats of any carrier in the marketplace today, but we anticipate growing those by 20% as we go out to 2026, headlining that is. New 321 XLRs that will come in 2025 that will be a great product for things like short haul Europe, as well as is augmenting our transcontinental fleet, our operations.

Robert D. Isom: It's something that we have and will continue to grow in our fleet. So, not only do we have the most premium seats of any carrier in the marketplace today, but we anticipate growing those by 20% as we go out into 2026. Headlining that is the new 321XLRs that will come in 2025.

Speaker Change: Not only do we have the most premium seats of any carrier in the marketplace today, but we anticipate growing those by 20% as we go out into 2026 headlining that is.

Speaker Change: New <unk> hundred 21, <unk> that will come in 2025.

Robert D. Isom: That will be a great product for things like short-haul Europe, as well as for augmenting our transcontinental fleet operations. We're going to be redoing our 777-300s, which will add premium seating, new flagship suites, and then add to that deliveries of 787-9s as well with flagship suites. So overall, I feel really good about what we can do. Now, I'll just say as well, you know, look, we've been operating a premium network, a worldwide network, for, you know, decades, all the way back to, you know, our early days.

Speaker Change: We'll be a great product for things like short haul Europe as well as augmenting our transcontinental flight our operations, we're going to be redoing, our triple seven three hundreds that will add premium seeding new flagship suites, and then add to that deliveries of seven eights or nines as well with with.

Robert Isom: We're going to be redoing our triple seven 300s that will add premium seating, new flagship sweets, and then add to that deliveries of 7879s as well with flagship sweets. So overall, I feel really good about what we can do. Now to say as well, you know, look, we've been operating a premium network, a worldwide network for, you know, decades. All the way back to, you know, our early days. We feel really confident about our ability to operate against any type of competition. And, you know, I really like where our fleet, our product, and our ability to service that stands right now.

Speaker Change: Flagship suites, so overall I feel really good about what we can do now I'll just say as well.

Speaker Change: We've been operating our premium network of worldwide network.

Speaker Change: For decades.

Speaker Change: Way back to our early days, we feel really confident about.

Robert D. Isom: We feel really confident about our ability to operate against any type of competition, and, you know, I really like where our fleet, our product, and our ability to service it stands right now. Thanks. Our next question comes on the line from Stephen Trent of Citi. First, if I may.

Speaker Change: Our ability to operate against any type of competition and.

Speaker Change: I really like where our fleet, our product and our ability to service that stands right now.

Speaker Change: Yeah.

Speaker Change #103: Thank you.

Stephen Trent: Thank you.

Stephen Trent: Any question? Come from the line of the Stephen Trent of City.

Speaker Change #107: Our next question.

Speaker Change #104: Comes from the line of Stephen Trent of Citi.

Stephen Trent: Good morning, everybody, and thanks very much for taking my question. The first, if I may, I know, sort of follow up to Jimmy's earlier question. I can appreciate that, you know, you guys sort of hit the reset button on your co-branded card agreement. And from a high level, when we think about.

Stephen Trent: Good morning, everybody and thanks very much for taking my question.

Speaker Change #113: First if I may.

Stephen Trent: I know, in sort of a follow-up to Jamie's earlier question, I can appreciate that, you know, you guys sort of hit the reset button on your co-branded card agreement. And from a high level, when we think about the timeline and when you can finalize the agreement, you know, to use a baseball analogy, are we in kind of the second inning or the fifth inning? I would love your color on that, if I may please, Steve. Sure, thanks for the question. We've been in discussions with our partners about our next co-grant arrangement for a while now. Maybe the fifth inning is a pretty good analogy.

Speaker Change #115: I know.

Speaker Change #113: Follow up to Jamie's earlier question I can appreciate that.

Speaker Change #105: You guys sort of hit the reset button on your co branded card agreement.

Speaker Change #105: And from a high level when we think about.

Stephen Trent: The timeline and when you can finalize the agreement, you know, to use a baseball analogy, a reading kind of the second inning, like the fifth inning, just what would love your pillow on that if I may please, thanks. Steve. Sure, thanks for the question. We've been in discussions with our partners about our next co-brand arrangement for a while now; maybe the fifth inning is probably a pretty good analogy, but long enough to know that we and they are really enthusiastic about what we can do next, and so we're really excited about getting to the eighth inning and getting it wrapped up.

Speaker Change #105:

Robert D. Isom: But long enough to know that we and they are really enthusiastic about what we can do next. And so we're really excited about getting to the eighth and ninth inning and getting it wrapped up. Okay, I appreciate that. And also, just kind of a follow-up.

Speaker Change #114: Timeline on when you can finalize the agreement.

Speaker Change #105: Yeah.

Speaker Change #109: <unk> analogy already in kind of the second inning or the fifth getting just would love your color on that if I may please thanks.

Speaker Change #105: Steve.

Speaker Change #131: Sure. Thanks for the question.

Speaker Change #105: We.

Speaker Change #105: We've been in discussions with our partners about our next.

Speaker Change #105: Co branded arrangement for a while now maybe the fifth inning is probably a pretty good analogy.

Speaker Change #122: <unk> long enough to know that we.

Speaker Change #105: And they are really enthusiastic about what we can do next.

Speaker Change #105: So we're really excited about getting to the eight.

Speaker Change #110: Are you getting it ramped up.

David G. Seymour: Okay, I appreciate that, and also just kind of a follow-up. We had, of course, Friday the global network outage and what have you, where, you know, you guys didn't seem to be much impacted at all. I'm curious if you might be able to give a little color what you guys are doing technologically. That perhaps might need to avoid the issue of something to it is to just have a different supply or just not to understand. Thank you. Thanks, Steven.

Stephen Trent: We had, of course, Friday, the global network outage and what have you, where, you know, you guys didn't seem to be much impacted at all. And I'd be curious if you might be able to give a little color to what you guys are doing technologically, and that, perhaps, allowing you to avoid the issue. Is it something gratuitous?

Speaker Change #108: Okay I appreciate that.

Speaker Change #108: And I'd also just kind of.

Speaker Change #105: A follow up.

Speaker Change #121: Of course, Friday that global network outage, and what have you where.

Speaker Change #111: You guys didn't seem to be much impacted at all.

Speaker Change #126: Curious if you might be able to give a little color what you got.

Speaker Change #112: So drilling technologically.

Speaker Change #119: And that perhaps.

Speaker Change #116: Let me to avoid the issue or is it something to it as we get sort of a different supplier.

Speaker Change #117: It just would just love to understand thank you.

Robert D. Isom: You just have a different supplier, or you know, we'd love to understand. Thank you. Thanks, Stephen. Yeah, I'll hand it off to our Chief Operating Officer, David Seymour. But I'll just say this, we're super proud of our ability to really react to any type of disruption. This was notable, and I think it just shows how strong we are in terms of our operating prowess. David?

Speaker Change #125: Thanks, Steven I'll hand, it off to our Chief operating officer, David C. More but I'll, just say, that's where we're really super proud of our ability to really react to any type of disruption. This was notable and I think it just shows how strong we are in terms of our operating prowess David Yeah no. Thanks for the question.

David Seymour: Yeah, I'll hand it off to our Chief Operating Officer David Seymour, but I just say this: we're super proud of our ability to really react to any type of disruption. This was notable, and I think it just shows, you know, how strong we are in terms of our operating prowess. David. Yeah, no, thanks for the question, and like Robert talked about, really proud of what the team did. But just like other airlines and businesses worldwide, they were impacted by crowds like many of our operating systems did. Be we're taking off line. But within an hour of that outage, we assembled the right operating teams and IT experts have developed an executive plan to get our systems back online and the aircraft moving again, and that allowed us to return to normal operations by the end of Friday.

David G. Seymour: Yeah, no, thanks for the question. And like Robert talked about, I am really proud of what the team did. But just like other airlines and businesses worldwide that were impacted by CrowdStrike, many of our operating systems were taken offline. But within an hour of that outage, we assembled the right operating teams and IT experts to develop and execute a plan to get our systems back online and the aircraft moving again, and that allowed us to return to normal operations by the end of Friday. Uh, that is a key differentiator that has really become the hallmark of our operation, and that is swift recovery from any significant disruption that the airline feels.

David: Robert talked about really proud of what the team did but just like other airlines and businesses worldwide. There were impacted by crowd like many of our operating systems.

David: Were taken offline.

David: But within an hour of that outage, we assembled the right operating teams.

David: Experts to develop and execute a plan to get our systems back online and the aircraft moving again and that allowed us to return to normal operations by the end of Friday.

David Seymour: There are key differentiators really become the hallmark of our operation, and that is swift recovery from any significant disruption that the airline feels. So Robert talked about we see a lot of weather, and you see this focus on that and lead the industry in recovery for the last several years, and we're going to continue to do that.

Speaker Change #120: Our key differentiator is really become the hallmark of our operations and that a swift recovery from any significant disruptions at the airline feels it's Robert talked about we see a lot of weather.

David G. Seymour: As Robert talked about, we see a lot of weather, and you've seen us focus on that and lead the industry in recovery for the last several years, and we're going to continue to do that, and we'll open the line to media questions at this time. To ask a question, please press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again.

Robert D. Isom: You've seen us focus on that and lead the industry in recovery for the last several years and we're going to continue to do that.

Speaker Change #117: Yeah.

Operator: Thank you, ladies and gentlemen. At this time, we like to pause and open the line to media questions again. We'll open the line to media questions at this time. To ask a question, please press star 11 on your telephone to remove yourself in the queue. You may press star 11 again. Again, we will be taking media questions. Please stand by while we compile the Q&A roster.

Speaker Change #124: Thank you, ladies and gentlemen at this time, we'd like to pause and open the line to media questions again, we'll open the line to media questions. At this time to ask a question. Please press star one one on your telephone to remove yourself from the queue. You May press Star one one the game again, we will be taking media questions.

Operator: Again, we will be taking media questions. Please stand by while we compile the Q&A roster. Hi, thanks so much.

Speaker Change #124: Please standby, while we compile the Q&A roster.

Alison Sider: Our first question comes from the line of Alice and the cider of Wall Street Journal. Hi, thanks so much. I'm a sales strategy cylinder distribution. I'm curious you can tell you things about what you were hearing from partner airlines with British Airways, other One World airlines, you know, kind of during all this. You know, were you getting negative feedback from them and kind of power those conversations now? Thanks, Alex. Look, you know, our partners, you know, look, we go to market with them. And so the feedback that we're hearing from them is similar to what we're hearing from our customers, which is they want us back and available in every place that we can be sold.

Speaker Change #127: Our first question comes from the line.

Speaker Change #124: Alison Sider of Wall Street Journal.

Unknown Speaker: On the sales strategy, sales, and distribution, I'm curious if you can share things about what you were hearing from partner airlines, British Airways, other One World airlines, you know, kind of during all this. You know, were you getting negative feedback from them, and how are those conversations now? Thanks, Sally. Look, you know, our partners, you know, look, we go to market with them. And so the feedback that we're hearing from them is similar to what we're hearing from our customers, which is that they want us back and available in every place that we can.

Alison Sider: Hi, Thanks, so much.

Speaker Change #129: Sales strategy.

Alison Sider: I'm curious if you can share anything about what you are hearing from partner Airlines British Airways.

Speaker Change #136: Other one world airline.

Speaker Change #138: During all of it.

Speaker Change #138: Where are you getting negative feedback from them and kind of how are those conversations now.

Sally: Thanks, Thanks Sally.

Speaker Change #137: Our partners look we go to market with them and so the feedback that we're hearing from them is similar to what we're hearing from our customers, which is they want us back and available in every place that we can we can be sold they want to participate in a Richard.

Unknown Speaker: They want to participate in a richer mix of business. They want to certainly be attentive to the way our product is sold in the U.S. And so from that perspective, they are encouraging us, number one, to get content back out. Second, to make sure that we have agreements in place that facilitate the sale of our product through travel management companies and agencies and that they want to have great relationships with corporates. They're incredibly supportive.

Robert Isom: They want to participate in a richer mix of business. They want to certainly be attentive to the way our product is sold in the US. And so from that perspective, they are encouraging us, number one, to get content back out. Second, to make sure that we have agreements in place that facilitate the sale of our product through travel management companies and agencies. And that they want to have great relationships with corporates. They're incredibly supportive. We're in it together. And in the case of the A, we have a decade-long business with them as a joint business across the Atlantic.

Speaker Change #137: Mix of business, they want to certainly be attentive to the.

Speaker Change #137: The way our product is sold in the U S and so from that perspective.

Speaker Change #137: They are encouraging us number one to get the content back out second to make sure that we have agreements in place that facilitate the sale of our product through the travel management companies and agencies and that they want to have great relationships with corporates, they're incredibly supportive we're in it together and in the case of <unk>.

Robert D. Isom: We're in it together. And in the case of BA, we have had a decades-long business with them, a joint business across the Atlantic. And I know that they are incredibly interested in us getting back on track. And I'm a CrowdStrike Analyst. I know you've just touched on some of it and have written about it, but, Ali, I'll take this. I'll save David from patting himself on the back. Look, David has assembled an incredible team.

Speaker Change #137: We have now.

Speaker Change #137: A decades long business with them.

Speaker Change #137: Joint business across the Atlantic and I know that they are incredibly interested in us getting back on track.

David G. Seymour: And I know that they are incredibly interested in us getting back on track.

Robert Isom: And I'm the Crowd Strike out. I know you just, David, you just touched on some of this and have written about it. But, you know, like, what was it that kind of allowed you to move so quickly when one other online thing to not be able to. I mean, did you have more redundancies or systems that were able to keep operating during the outage or, you know, kind of backup plans in place or systems that are exposed to Windows. Yeah, just curious what you think the differentiator was.

Speaker Change #132: And on that contract that is I know you just maybe just a question on some of it and have written about it but.

Speaker Change #133: Like what like what was it that kind of allowed you to to move so quickly.

Speaker Change #139: One other airlines.

Speaker Change #142: Be able to I mean did you have system more redundancies or systems that were able to keep operating during.

Speaker Change #133: During the outage or kind of backup plans in place or systems that aren't exposed to windows.

Speaker Change #135: Just curious what you think a differentiator with.

Robert D. Isom: So, Ali, I'll take this; I'll save David from patting himself on the back. Look, David has assembled an incredible team. And I feel like we have more experience from an operations perspective overall than just about anyone in the business. And what we have to go through, just in terms of weather, you know, across our network, it gives us great experience in terms of disruptions. And one of the things that we've learned is that, in terms of any disruption, you better keep track of your aircraft certainly, but also your crews wherever they are. And you probably ought to take action as quickly as possible to make sure that you don't lose visibility for the purpose of recovery.

Robert D. Isom: And I feel like we have more experience from an operations perspective overall than just about anyone in the business. And what we have to go through just in terms of weather, you know, across our network gives us great experience in terms of disruption. And one of the things that we've learned is that in terms of any disruption, you better keep track of your aircraft, certainly, but also your crews, wherever they are, and you probably ought to take action as quickly as possible to make sure that you don't lose visibility for the purpose of recovery.

Ali: So Ali I'll take this I'll say, David for me from Pat himself on the back look David has assembled an incredible team.

Speaker Change #144: And I feel like we have more experience.

Speaker Change #153: From an operations perspective overall than just about anyone in the business and what we have to go through just in terms of weather across our network.

Ali: It gives us great experience in terms of disruption.

Ali: And one of the things that we've learned is that in terms of any disruption you better keep track of your aircraft certainly but also your crews wherever they are and you probably ought to take action as quickly as possible to make sure that you.

Ali: Don't lose.

Ali: Visibility.

Robert D. Isom: We've built technology, and we've done the right things to ensure that we take early precautions, and early steps, and that ultimately results in a better outcome. All that said, I do think we also benefit by making sure that we have devices and means of communicating with our team members out in the field. That certainly facilitates it, but it starts with having people that really know the business and the steps to take. All that said, I'd mention that technology today is something that we're going to have to continue to make sure that we build resilience around and ensure against. A patch being, you know, put in place that can knock out so much of the world's communication. Thank you. Our next question comes from the line of Mary Schlangenstein. Hey, good morning.

Ali: For the purpose of recovery, we've built technology.

Robert Isom: We've built technology, and we've done the right things to ensure that we take early precautions, early steps. And that ultimately results in a better outcome. All that said, I do think we're also benefited by making sure that we have, you know, devices and means of communicating with our team members out in the field. That certainly facilitates. But it starts with having people that really know the business and the steps to take.

Ali: And we've done the right things to ensure that we take early precautions early steps.

Ali: And that ultimately results in a better outcome all that said I do think we're also benefited by making sure that we have.

Ali: Devices and means of communicating with our team members out in the field.

Speaker Change #140: Certainly facilitates.

Speaker Change #140: But it starts with having people that really know the business and the steps to take all.

Robert Isom: All that said, I just, I, I, I mentioned technology today; it's something that we're going to have to continue to, to make sure that we build resilience around and ensure, again, you know. The patch being, you know, put in place that cannot, you know, so much of the world's, you know, communications.

Speaker Change #140: All that said I just.

Speaker Change #140: I had mentioned.

Speaker Change #140: Technology today, it's something that we're going to have to continue to to make sure that we build resilience around and ensure against.

Speaker Change #140: A patch being put in place that can knockout.

Speaker Change #140: So much of.

Speaker Change #140: The world's communications.

Unknown Attendee: Thank you.

Speaker Change #140: Thank you.

Mary Schlangenstein: Annex question, comes from the line of Mary Schlengenstein, of Bloomberg News. Hey, good morning. I wanted to follow up just a little bit on Ali's first question when you said that the feedback you got from your one-world and other partner airlines was similar to what you're hitting from corporate customers.

Speaker Change #141: Our next question.

Speaker Change #151: It comes from the line of Mary Schlangen steam of Bloomberg News.

Mary Schlangenstein: I wanted to follow up just a little bit on Ali's first question when you said that the feedback you got from your Oneworld and other partner airlines was similar to what you're hearing from corporate customers. Did you also hear from them about some frustration and displeasure at the results of your change in corporate strategy? We're in constant communication with our partners, you know, constantly, and what they are interested in seeing us do is to take quick action when we see any type of issue.

Speaker Change #143: Hey, good morning, I wanted to follow up just a little bit on <unk> first question. When you said that the feedback you got from your one world and other partner Airlines.

Speaker Change #152: With similar to what Youre hearing from corporate customers.

Robert Isom: Did you also hear from them from some frustration and displeasure at the results of your change in corporate strategy? We're in communication with our partners, you know, constantly, and what they, you know, are interested in seeing us do is to take quick action when we see any type of issues. We've been alongside them, you know, as I've said. We identified deviation in terms of our revenue performance versus some of our large network peers in the first quarter. We thought that was going to reverse itself. It didn't. We identified that we needed to make a change.

Speaker Change #147: We will also hear from them from some frustration and displeasure.

Speaker Change #141: From your change in corporate strategy.

Speaker Change #146: We're in communication with our partners constantly and what they are.

Speaker Change #141: Are interested in seeing US do is to take quick action when we see any type of of issues, we've been alongside them.

Mary Schlangenstein: We've been alongside them. You know, as I've said, we identified a deviation in terms of our revenue performance versus some of our large network peers in the first quarter. We thought that was going to reverse itself. It didn't.

Speaker Change #141: As I've said, we identified a deviation in terms of our revenue performance versus.

Speaker Change #141: Some of our large network peers in the first quarter, we thought that was going to reverse itself. It didnt.

Speaker Change #141: And we identified that we needed to make a change we were really quick and we've kept our partners in touch.

Robert D. Isom: When we identified that we needed to make a change, we were really quick. And we've kept our partners in touch all along, and they know our plans and are certainly supportive. Okay, and on the one and a half billion dollar impact that you see for the year, is that an impact on income or revenue? And do you expect it to stretch out into 2025 as well? It's revenue based, and so it is, but it's a rich revenue.

Robert Isom: We were really quick, and we've kept our partners in touch all along, and they know our plans and certainly our support of.

Speaker Change #141: All along and they know our plans and certainly are supportive.

Robert Isom: Okay, and on the one and a half billion dollar impact that you see for the year, is that an impact to income, to revenue, and do you expect it to stretch out into 2025 as well? It's revenue based, and so, but it's rich revenue, so it, you know, absolutely positively has a big impact on contribution. As I said, we're taking steps immediately to reverse, you know, some of the reaction in terms of getting content that we'll see the benefits of new agreements with travel management companies and agencies in the coming months. Work with corporations may take a little bit longer, but we're addressing that as quickly as we can. And so, as I take a look at, we're going to try to get a good, good spot to kick off 2025, but we'll have our work will have work to do.

Speaker Change #145: Okay and on the.

Speaker Change #148: $1 5 billion dollar impact that you see for the year is that an impact to income to revenue and do you expect it to stretch out into 2025 as well.

Robert D. Isom: So it absolutely positively has a big impact on contribution. As I said, we're taking steps immediately to reverse some of the reaction in terms of getting content out. We'll see the benefits of new agreements with travel management companies and agencies in the coming months. Work with corporations may take a little bit longer.

Speaker Change #150: Its revenue base and so but its rich revenue. So it absolutely positively has a big impact on contribution.

Speaker Change #141: As I said, we're taking steps immediately to reverse.

Speaker Change #141: Some of the reaction in terms of getting content that we'll see the benefits of new agreements with travel management companies and agencies in the coming months.

Speaker Change #154: <unk> worked with corporations may take a little bit longer.

Speaker Change #141: But we're addressing that as quickly as we can and so as I take a look at we're going to try to get in a.

Speaker Change #141: A good spot to kick off 2025.

Speaker Change #141: But we will have our work we will have work to do.

Robert D. Isom: But I'll bet all that said, I am confident that overtime will recapture our share.

Speaker Change #141: But I'll bet all of that said I am confident that overtime will.

Speaker Change #141: Recapture our share.

Speaker Change #141: Okay.

Operator: This concludes the Q&A portion of the call.

Robert D. Isom: But we're addressing that as quickly as we can. And so, as I take a look out, we're going to try to get in a good spot to kick off 2025. But we'll have our work; we'll have work to do. But all that said, I am confident that over time, we'll recapture our share. This concludes the Q&A portion of the call. I would now like to turn the conference back to Robert Isom for closing remarks, sir. Thanks Lateef.

Speaker Change #141: This concludes the Q&A portion of the call I would now like to turn the conference back to Robert Isom for closing remarks, Sir.

Robert Isom: I would now like to turn the conference back to Robert Eisen for closing remarks, sir. Thanks, Lateef. I appreciate everybody's time. We take the situation in terms of revenue production very seriously. As I said before, we've taken immediate action to address the supply and demand imbalance. As we look into the back half of the year, we will be very focused on it as we do our planning for 2025. As in regard to our sales and distribution strategy, we're taking the steps to get back on track. We're doing that very quickly. We've talked a lot about that.

Robert D. Isom: I appreciate everybody's time. The situation in terms of revenue production is very serious, as I said before. We've taken immediate action to address it. As we look into the back half of the year, and we will be very focused on it as we do our planning for 2025. As in regard to our sales and distribution strategy, we're taking steps to get back on track. We're doing that very quickly. We've talked a lot about that.

Robert D. Isom: Thanks Latif.

Robert D. Isom: I appreciate everybody's time.

Robert D. Isom: We take.

Robert D. Isom: The situation in terms of revenue production very seriously as I said before we've taken immediate action to address.

Robert D. Isom: The supply and demand imbalance.

Robert D. Isom: As we look into the back half of the year and we will be very focused on it as we do our planning for 2025.

Robert D. Isom: As in regard to our sales and distribution strategy, we're taking the steps to get back on track. We're doing that very quickly we've talked a lot about that and I'm confident.

Robert D. Isom: And I'm confident that as we look into the future and America's plans, our network, our fleet, our product, plus regaining our share is going to put us back on track. And that track is to improve margins, that track is to produce free cash flow, and ultimately, you know, strengthening our balance sheet and our position in the industry.

Robert Isom: And I'm confident that as we look into the future in American's plans, our, our network, our fleet, our product. That plus regaining our share is going to put us back on track. And that track is to improve margins. That track is to produce free cash flow. And ultimately, you know, strengthening our balance sheet and our position in the industry. We're committed to that. We're going to get back to work on it right away.

Robert D. Isom: That as we look into the future and Americans plants are our network our fleet our product.

Robert D. Isom: We're committed to that. We're going to get back to work on it right away. Thanks. This concludes today's conference call. Thank you for participating. You may now disconnect.

Robert D. Isom: That plus regaining our share is going to put us back on track in that track is to improve margins that track is to produce free cash flow and ultimately strengthening our balance sheet and our position in the industry. We're committed to that we're going to get back to work on it right away.

Operator: Thanks.

Operator: This concludes today's conference call. Thank you for participating.

Speaker Change #149: This concludes today's conference call. Thank you for participating you may now disconnect.

Operator: You may now disconnect.

Speaker Change #149: [music].

Robert D. Isom: Okay.

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Robert D. Isom: [music].

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Thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today, thank you so much for joining us today.

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