American Airlines Group, Inc. · NASDAQ:AAL
American Airlines — 2018 Cowen Global Transportation Conference
30 slides from American Airlines's conference presentation, Sep 5, 2018
Slide 1: American Airlines Group Inc. 2018 Cowen Global Transportation Conference
American Airlines Group Inc. 2018 Cowen Global Transportation Conference Robert Isom President September 5, 2018 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: Overview
Overview Integration successful and continuing; well positioned to execute on transformative initiatives: Fleet changes to reduce complexity and enable efficient, low-cost growth Network optimization adds margin-accretive flying at our most profitable hubs Product improvements to ensure industry-lea
Slide 4: Transformational Change - Integration
Achieved a single operating certificate on schedule Combined frequent flier programs and merged reservation systems with zero customer impact Opened state-of-the-art combined integrated operations center Re-banked DFW, MIA and ORD hubs Signed JCBAs with six unionized groups Adjusted compensation for
Slide 5: Transformational Change – Investments
500 new replacement aircraft; youngest average fleet age of the network airlines at 10 yrs Investments in product include: All lie-flat seating on international widebody aircraft New and refurbished clubs Revenue-based AAdvantage program Over $1.0 billion in pension contributions Transformational Ch
Slide 6: Fleet Transformation – Optimized Fleet Mix
Fleet Transformation – Optimized Fleet Mix Aircraft order book now better matches deliveries with fleet needs Deferred 40 Boeing 737 MAX aircraft and 22 A321neo aircraft Cancelled order with Airbus for 22 A350 aircraft Other actions: Acquired an additional 15 Embraer E175 regional jets for delivery
Slide 7: Fleet Transformation
Fleet Transformation Network growth plans enabled by fleet growth of only 14 aircraft between 2014 and 2020 Two year seat harmonization project completes fleet transformation, resulting in a more efficient fleet better suited to the network
Slide 8: Fleet Transformation – Reducing Sub-fleets
Fleet Transformation – Reducing Sub-fleets Less fleet complexity improves customer experience and reduces operational friction 42% Reduction
Slide 9: Network Transformation – International Changes
Network Transformation – International Changes Strong alliance network serves key destinations and enables route prioritization to improve our overall profitability Network profitability always under review Recent Reductions (include) Chicago – Beijing Chicago – Shanghai Miami – Belo Horizonte DFW –
Slide 10: Network Transformation – International Changes
Network Transformation – International Changes International changes re-allocate capacity and create a more profitable and focused network International network adjustments designed to improve margins *Combined pre-tax margin contribution of cancellations and projected margin contribution of network
Slide 11: Network Transformation – Play to Our Strengths
Network Transformation – Play to Our Strengths Post merger, network strength and growth was primarily focused outside core hubs 2019 and beyond, growth opportunity at most profitable hubs: Dallas-Fort Worth, Charlotte, and Washington, D.C. *Combined pre-tax margin of DFW, CLT and DCA and pre-tax mar
Slide 12: Network Transformation – Play to Our Strengths
Network Transformation – Play to Our Strengths Uniquely positioned to grow feed at our most profitable hubs, adding high margin flying to the network Los Angeles Phoenix Miami New York Washington, D.C. Philadelphia Chicago Dallas-Fort Worth Charlotte
Slide 13: Network Transformation – Play to Our Strengths
Network Transformation – Play to Our Strengths Uniquely positioned to grow feed at our most profitable hubs, adding high margin flying to the network Dallas-Fort Worth Charlotte Washington, D.C. Access to 15 additional gates in 2019 Access to 7 additional gates in 2020 14 upgauged gates in 2021
Slide 14: Network Transformation – Play to Our Strengths
Network Transformation – Play to Our Strengths Uniquely positioned to grow feed at our most profitable hubs, adding high margin flying to the network Dallas-Fort Worth Charlotte OAK FLG TUS DRT CYS MSO CMI ECP SRQ EYW AVL ACK HVN AVP ITH BUF SBN New routes added in 2018 from CLT and DFW to the conti
Slide 15: Network Transformation – Play to our Strengths
Network Transformation – Play to our Strengths Improving feed at CLT and DFW produces superior margins New 2018 hub additions generate above system median RASM Network changes fund profitable opportunities from less profitable strategic flying *Estimated pre-tax margin of new flights compared to sys
Slide 16: Product Transformation – Premium Product
Product Transformation – Premium Product Only major US airline with long-haul international and transcontinental First Class Largest widebody fleet among U.S. carriers, with fully-flat, 100% aisle access business class seats First to offer premium economy, with the largest premium economy fleet Only
Slide 17: Product Transformation - Satellite WiFi
Product Transformation - Satellite WiFi Complete1 32% Complete* Widebody Installation Progress Narrowbody Installation Progress Estimated Completion 2Q19 *As of August 2018
Slide 18: Product Transformation: Segmentation
Product segmentation offers right product at right price for every potential customer Product Transformation: Segmentation First Lie-Flat All Aisle Access Premium Markets Business Lie-flat Privacy Premium service Premium Economy More room Amenities Better seat Main Cabin Customizable Access to prefe
Slide 19: Product Transformation: Segmentation – Premium Economy
Premium Economy installed on 87 aircraft; expected completion in 2Q19 Average Premium Economy seat sells for more than double the main cabin fare First Lie-Flat All Aisle Access Premium Markets Business Lie-flat Privacy Premium service Premium Economy More room Amenities Better seat Main Cabin Custo
Slide 20: Product Transformation: Segmentation – Main Cabin Extra
Relaunched Main Cabin Extra with enhanced attributes, including a free drink and dedicated bin space First Lie-Flat All Aisle Access Premium Markets Business Lie-flat Privacy Premium service Premium Economy More room Amenities Better seat Main Cabin Customizable Access to preferred Seats Upgradeable
Slide 21: Product Transformation: Segmentation – Basic Economy
Trans-Atlantic Basic Economy rolled out in the second quarter Eliminated carry-on bag restriction domestically in the third quarter First Lie-Flat All Aisle Access Premium Markets Business Lie-flat Privacy Premium service Premium Economy More room Amenities Better seat Main Cabin Customizable Access
Slide 22: Product Transformation – Loyalty Program
Product Transformation – Loyalty Program AAdvantage program can be further leveraged and monetized, helping American win customer preference in both the short and long term Launched new elite tier – Platinum Pro More members qualifying for elite status despite higher requirements Revenue growth cont
Slide 23: Product Transformation - Ancillaries
Product Transformation - Ancillaries Executing on a number of opportunities to grow revenue Post-purchase opportunities for customers Includes upsell to premium cabins Already rolled out by peers Ancillary bundles and third party placements Sale of bundled ancillary add-ons Better enabling sale of t
Slide 24: Pursuing Efficiencies
One Airline project to manage costs over the next few years Pursuing Efficiencies $250 million $300 million $200 million $250 million Estimated opportunity of $1.0 billion by 2021 Integrated Ops Customer Experience New airport ramp technologies New cargo operating system Strategic Planning Other New
Slide 25: Efficiencies Drive CASM Growth Lower
Consolidated CASM now projected to be up approximately 1.5 percent in 2018 Efficiencies Drive CASM Growth Lower *On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”): ASU 2014-09: Revenue from Contracts with Customers (the “New Revenue Standard”) and ASU 2017-07: Compensation
Slide 26: Investor Day Initiatives - Update
Investor Day Initiatives - Update We still expect significant benefits from our investor day initiatives 200 300 200 1,000 300 Total Cost Opportunity from One Airline Projects 695 990 425 3,245 1,135 Total Revenue Opportunity from Commercial Projects 20/19 19/18 21/20 Total 18/17 Estimated Program/P
Slide 27: 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 28: Looking Forward
Looking Forward American achievements post merger… Successful integration Significant investment Transformed product offering Investments in our team …now well-positioned for future success Youngest fleet of the network carriers enables very low-cost future growth Network optimization around most pr
Slide 29: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations
Slide 30: GAAP to non-GAAP Reconciliations
GAAP to non-GAAP Reconciliations Note: On January 1, 2018, the Company adopted the New Revenue Standard and the New Retirement Standard. The 2017, 2016 and 2015 data presented above does not reflect the effects of adopting the New Revenue Standard and the New Retirement Standard. For additional info
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