American Airlines Group, Inc. · NASDAQ:AAL
American Airlines — Bank of America Merrill Lynch 2018 Transportation Conference
27 slides from American Airlines's conference presentation, May 15, 2018
Slide 1: Bank of America Merrill Lynch 2018 Transportation Conference
American Airlines Group Inc. Bank of America Merrill Lynch 2018 Transportation Conference Derek Kerr Chief Financial Officer Exhibit 99.1
Slide 2: Cautionary Statement Regarding Forward-Looking Statements and Information
Cautionary Statement Regarding Forward-Looking Statements and Information This document includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” “intend
Slide 3: Current Overview
Current Overview We are making significant investments in our team and product, and those investments are working Continued operational improvement Fleet and network transformation Product enhancements Revenue and cost initiatives American is playing the long game – we will continue to be innovative
Slide 4: Operational Performance
Operational Performance Trailing twelve month averages
Slide 5: Fleet Transformation - Investments in Our Fleet
Fleet Transformation - Investments in Our Fleet Our aggressive aircraft replacement program since the merger has given us the youngest fleet of the major airlines, as well as the highest asset values Source: Company filings and Ascend data
Slide 6: Fleet Transformation – Modified Delivery Schedule
Fleet Transformation – Modified Delivery Schedule Over the past few weeks we have made a number of changes to our aircraft order book to better match deliveries with the needs of our fleet, including Deferred 40 Boeing 737 MAX aircraft scheduled for delivery between 2020 and 2022 to 2025/6 Cancelled
Slide 7: Fleet Transformation
Fleet Transformation Over the next three years our seat harmonization project will complete our fleet transformation giving us a more efficient fleet, better suited to the needs of our network
Slide 8: Fleet Transformation – Reducing Sub-fleets
Fleet Transformation – Reducing Sub-fleets We will reduce the number of aircraft sub-fleets. Improving the customer experience and reducing the complexity of our operation 42% Reduction
Slide 9: Aircraft Deliveries
Aircraft Deliveries Since the merger, we have inducted more than 500 new replacement aircraft into the fleet Note: New aircraft deliveries by type. 2018 2019 2020 2021 2022 Beyond 2022 A320 Family / Neo - 22 25 25 20 8 B737-800 / Max 16 20 10 10 - 40 B787 Family 6 2 12 10 - 25 Mainline Total 22 44 4
Slide 10: Network Transformation - Growth at Our Hubs
Network Transformation - Growth at Our Hubs More flights at our highest margin hubs drives future earnings growth Access to new gates at terminal E in DFW airport will allow American to add up to 100 more flights a day Construction at Charlotte will allow American to add up to 75 additional daily de
Slide 11: Product Enhancements - Widebody Retrofits
Product Enhancements - Widebody Retrofits All Lie-flat Widebodies Premium Economy Retrofits
Slide 12: Product Enhancements - New Flagship Lounges
Product Enhancements - New Flagship Lounges ORD DFW lounge is an artist rendering JFK MIA DFW LAX T4
Slide 13: Product Enhancements - Self-Service Tools
Product Enhancements - Self-Service Tools Notify All Customer Bag Notification Dynamic Rebooking Book on App
Slide 14: Product Enhancements - Commercial Initiatives
Product Enhancements - Commercial Initiatives Value Based AAdvantage Program Increased Focus on Sales Enhanced Revenue Management Tools
Slide 15: Product Enhancements - Satellite WiFi
Product Enhancements - Satellite WiFi 93% Complete1 13% Complete1 Widebody Installation Progress Narrowbody Installation Progress Estimated Completion 2Q18 Estimated Completion 2Q19 1. As of 1Q 2018
Slide 16: 2017 Investor Day Initiatives Remain On Track
2017 Investor Day Initiatives Remain On Track At our investor day in September, we outlined $2.9 billion in revenue and $1.0 billion in cost opportunities by 2021 We estimated that $1.35 billion of these would be achieved from revenue initiatives in 2018 and these remain on track Major revenue initi
Slide 17: Revenue Improvement
Revenue Improvement 1. On January 1, 2018, the Company adopted Accounting Standard Update (ASU): ASU 2014-09: Revenue from Contracts with Customers (the “New Revenue Standard”). The 2017 data presented above for the Company and the industry does not reflect the effects of adopting the New Revenue St
Slide 18: Cost Growth is Trending Lower
Consolidated CASM growth is expected to be up approximately 2 percent in 2018 and 2019 Cost Growth is Trending Lower 1. On January 1, 2018, the Company adopted two new accounting standards: the New Revenue Standard and ASU 2017-07: Compensation Retirement Benefits (the “New Retirement Standard”). Th
Slide 19: Best Liquidity Amongst Network Airlines
Best Liquidity Amongst Network Airlines American continues to maintain the highest liquidity level of the network airlines 1. Total liquidity consists of unrestricted cash and short term investments, plus available undrawn revolving credit facilities. On January 1, 2018, the Company adopted the New
Slide 20: Our Long-Term Vision
Our Long-Term Vision ~~ Create a World Class Make Culture a Customer Experience Competitive Advantage Deliver value to all customers, especially premium customers Drive operational excellence an environment that eres for frontline team member: ‘Make Culture a Competitive Advantage - Strengthen our n
Slide 21: Create a World-Class Customer Experience
Create a World-Class Customer Experience Filed an application along with Qantas seeking approval to form a new joint business between North America, Australia and New Zealand Re-branded LGA-ORD as part of our Shuttle portfolio Expanded Basic Economy to certain trans-Atlantic routes, including DFW-LH
Slide 22: Make Culture a Competitive Advantage
Make Culture a Competitive Advantage Brought 7,000 leaders from around the company to Dallas for the Annual Leadership Conference Honored 103 team-members at the Annual Chairman’s Award celebration Completed the transition to a new HR/People system allowing seamless integration of all HR-related mat
Slide 23: Ensure Long-Term Financial Strength
Ensure Long-Term Financial Strength Returned $498 million to shareholders through share repurchases and dividends in the quarter Announced an order for 47 new Boeing 787s, which will replace B767s, A330-300s and some older B777-200s Deferred 40 B737 MAX aircraft and 3 A321neos to better align narrow
Slide 24: Think Forward, Lead Forward
Think Forward, Lead Forward Reached an agreement with the City of Chicago to speed the construction of three common use gates at ORD that will allow American to begin to close the competitive gate gap at that airport Completed all customer renovations at DFW Terminal B Opened five new gates at ORD T
Slide 25: Looking Forward
Looking Forward The investments we have made are paying off… Six consecutive quarters of positive unit revenue growth, record first quarter revenue Youngest fleet of the big four airlines Transformed customer experience product Successful roll out of Basic and Premium Economy, with more to come AAL
Slide 26: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations
Slide 27: Reconciliation of Total Operating Cost per ASM Excluding Special Items
GAAP to non-GAAP Reconciliations Reconciliation of Total Operating Cost per ASM Excluding Special Items and Fuel 2017 2016 2018 2017 Total operating expenses per ASM as reported 13.80 12.76 15.15 14.12 Special items per ASM: Total operating special items, net (0.27) (0.27) (0.30) (0.18) Total operat
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