American Airlines Group, Inc. · NASDAQ:AAL
American Airlines — Debt Investor Presentation (March 2021)
44 slides from American Airlines's debt investor presentation, Mar 8, 2021
Slide 1: American Airlines AAdvantage Investor Presentation March 2021
American Airlines AAdvantage Investor Presentation March 2021 Exhibit 99.1
Slide 2: Disclaimer: Non-GAAP Financial Measures
® Disclaimer Non-GAAP Financial Measures AAG sometimes uses financial measures that are derived from the condensed consolidated financial statements but that are not presented in accordance with GAAP to understand and evaluate its current operating performance and to allow for period to period compa
Slide 3: Disclaimer: Cautionary Statement Regarding Forward-Looking Statements
® Disclaimer Cautionary Statement Regarding Forward-Looking Statements and Information Statements in this Presentation that are not historical facts, including statements about our estimates, expectations, beliefs, intentions, projections or strategies for the future may be “forward-looking statemen
Slide 4: Agenda
4 ® Agenda Transaction Overview 1 American Recent Developments 2 AAdvantage Overview 3 AAdvantage Key Credit Highlights 4 AAdvantage Financial Overview 5
Slide 5: Transaction Overview
5 ® Transaction Overview
Slide 6: Transaction summary and American overview
6 ® • American Airlines Group Inc. (“American” or the “Company”) is the world’s largest airline by revenue passenger miles1 - For the twelve month period ended December 31, 2019, the Company reported revenue and pre-tax income of $45.8 billion and $2.9 billion2, respectively • AAdvantage, American’s
Slide 7: AAdvantage Highlights
7 ® AAdvantage Highlights • AAdvantage builds customer loyalty by offering awards, benefits and services to program participants. Members earn miles by purchasing flights on American and other participating airlines as well as by purchasing goods and services from non-airline partners, including ret
Slide 8: Pro Forma Liquidity and Capitalization
8 ® Pro Forma Liquidity and Capitalization Pro Forma Liquidity Statistics Pro Forma Capitalization (US$ in millions) ($ in billions) Amount 12/31/2020 Liquidity $14.3 Extinguishment of Undrawn CARES Act Loan ($6.95) Repayment of Drawn CARES Act Loan ($0.55) New AAdvantage Financing $7.5 Pro Forma Es
Slide 9: Transaction Structure
9 ® 100% Direct Ownership Transaction Structure Loan / Notes Proceeds Specified Co-Brand Agreements & Other Agreements Third Party Payments Miles Cash payments (1) from American to Loyalty Issuer to purchase miles and (2) from Loyalty Issuer to American for mileage redemption governed by Intercompan
Slide 10: Financing Backed by Mission Critical Asset of American
10 ® Financing Backed by Mission Critical Asset of American 1. First-priority security interest in critical IP, enhanced by bankruptcy-remote IP SPV and pledge of IP license 2. Collection account provides access to cash collections of AAdvantage 3. Collection account structure and cash trap mechanis
Slide 11: American Recent Developments
11 ® American Recent Developments
Slide 12: American Airlines at a Glance
12 ® American Airlines at a Glance $7.5bn Total CARES Act Secured Loan, of which $550mm is drawn3 ~$15bn Estimated Q1 2021 Liquidity $0 Large Non-Aircraft Debt Maturities Until June 20221 ~$30mm Estimated Q1 Daily Cash Burn2 ~$3.6bn Unencumbered Assets4 ~11 years Average Fleet Age Los Angeles, CA Ph
Slide 13: American Airlines Credit Strengths
13 ® American Airlines Credit Strengths Proactive Balance Sheet Management • Prior to COVID-19, American focused on proactive balance sheet management by refinancing and extending tenors of revolvers, term loans, and aircraft debt • Robust liquidity position pre-COVID was bolstered by aggressive cos
Slide 14: Strong Liquidity Position
14 ® $10.2bn $13.6bn $14.3bn $15bn Q2 20 Q3 20 Q4 20 Estimated Q1 2021 • Prior to COVID-19, American focused on maintaining at least $7.0bn in liquidity and entered March 2020 with $8.3bn of liquidity • The Company continues to focus on sustaining a strong liquidity position Strong Liquidity Positio
Slide 15: Swift Management of Cash Burn
15 ® $100 $58 $44 $30 ~$30 Beginning April 2020 Q2 Q3 Q4 2020 Q1 2021E Swift Management of Cash Burn The Road to Cash Breakeven • Continue to make close-in adjustments to the schedule while maximizing the connectivity of the network • Reset the international network for future growth as demand retur
Slide 16: Proactive Balance Sheet Management
16 ® Proactive Balance Sheet Management Debt Maturity Tower Management • American entered 2020 with a strong focus on proactive balance sheet management • As a result of 2019 and early 2020 transactions, the nearest non-aircraft debt maturity is June 2022 – Extended revolvers one year to 2024 in 4Q1
Slide 17: Fleet right-sizing and youngest fleet
17 ® As part of American’s current initiative to right size the fleet and cost structure, the Company accelerated the retirement of several mainline and regional subfleets: Permanent Retirements These retirements remove operating complexity and bring forward cost savings and efficiencies associated
Slide 18: New Innovative Partnerships
18 ® Prior to COVID-19, American made several significant network enhancements through new codeshare agreements with GOL, Alaska Airlines and Qatar Airways. In July 2020, American announced an additional partnership with JetBlue to enhance connectivity in the US northeast1 New Innovative Partnership
Slide 19: Path To Recovery
19 ® • Expect non-linear recovery with an accelerating pace once we see widespread vaccination and government restrictions ease • Stretching of the booking curve would mean cash leading revenue during recovery Path To Recovery Domestic Leisure Long Haul InternationalRevenue Recovery Timeline • Ongoi
Slide 20: Q4 2020 results and Q1 2021 outlook
20 ® • American reported Q4 2020 revenue of $4.0 billion, down 64% year over year on a 53% year-over-year reduction in total available seat miles (ASMs) • American ended Q4 2020 with approximately $14.3 billion of total available liquidity; expects to end Q1 2021 with approximately $15 billion in to
Slide 21: AAdvantage Overview
21 ® AAdvantage Overview
Slide 22: American's AAdvantage Loyalty Program
22 ® American’s AAdvantage Loyalty Program 61% Of AA Revenue is Contributed by AAdvantage Members3 23mm Active Members4 5mm Avg New Members / Yr7 10 years Avg Tenure of Active Members 20+ Partner Airlines 1,000+ Brand Affiliations How Customers Redeem Miles How Customers Earn Miles (1) Redeem miles
Slide 23: AAdvantage is Recognized as an Industry-Leading Program
23 ® AAdvantage is Recognized as an Industry-Leading Program The Points Guy – Editor’s Choice Award Freddie Awards In 2020 AAdvantage won the inaugural Editor’s Choice Award for loyalty innovation Award acknowledged the customer-friendly initiatives AAdvantage has implemented this year, includin
Slide 24: AAdvantage Pricing and Cash Flow Mechanics
24 ® AAdvantage Pricing and Cash Flow Mechanics American Airlines 3rd Party Redemption PartnersAAdvantage Program Purchase of Miles Redemption of Miles Co-Brand / Accrual Partners 1 1. Monthly purchase of miles by American A. EBITDA margin of 20% B. Perpetual operating agreement from closing of tran
Slide 25: AAdvantage Miles Sales and Redemption Overview
25 ® AAdvantage Miles Sales and Redemption Overview Miles Redeemed Miles Sold oneworld and other partner airlines pay AAdvantage for each mile earned by members for flying with them Innovative program with two card partners who issue co- branded credit cards and pay for miles earned from spend on AA
Slide 26: AAdvantage compared with peer loyalty programs
26 ® American’s AAdvantage Loyalty Program Date Founded 1981 1981 1981 Total Members1 115mm+ 100mm+ 100mm+ Card Issuer Dual Issuer (Citi / Barclays) Sole Issuer (American Express) Sole Issuer (Chase Bank) # of Partner Airlines (Total | Domestic) 20+ | 5 25+ | 0 35+ | 4 Cash Collections $ 5.9bn $ 6.1
Slide 27: Dual Issuer Co-branded Credit Card Model
27 ® AAdvantage Drives Value from Dual Issuer Co-branded Credit Card Model In Airport / In-flightOut of Airport / Clubs / Flagship Lounges Citi Barclays Acquisition Channels Digital / Mobile Direct Mail Admiral’s Club / Flagship Lounges Phone Marketing Above the Line In Airport Tabling
Slide 28: AAdvantage Key Credit Highlights
28 ® AAdvantage Key Credit Highlights
Slide 29: Key Credit Strengths
29 ® Key Credit Strengths AAdvantage is mission-critical to American from both a financial and strategic perspective 1 AAdvantage is core to customer loyalty and consistent customer engagement 2 AAdvantage has a deep ecosystem with longstanding partner relationships, allowing members to earn miles o
Slide 30: AAdvantage is Mission-Critical to American
30 ® AAdvantage is Mission-Critical to American 1 Contribution of AAdvantage Members to AA Ticket Revenue 51% 54% 58% 2015 2016 2017 2018 • In 2019, AAdvantage members contributed nearly 61% of American’s ticket revenue • Average yield premiums 44% higher than non- AAdvantage Members • In 2019, AAdv
Slide 31: AAdvantage is Core to Customer Loyalty and Retention
31 ® 19 21 23 2017 2018 2019 Active Members (mm) AAdvantage is Core to Customer Loyalty and Retention 2 On average, new members contribute 56% more flight revenue in their first year than a non- member After 5+ years in program, co-brand revenue per active member is more than double the co-brand
Slide 32: Deep Ecosystem with Entrenched Partner Relationships
32 ® Deep Ecosystem with Entrenched Partner Relationships 3 Air Partnerships Strategic and focused partnerships allow members to earn with 80 partners and redeem with 52 partners across the globe Americas Asia-Pacific EMEA Non-Air Partnerships +others A cc o m . C ar s R e ta il & O th e r In t’ l C
Slide 33: Deep Ecosystem with Entrenched Partner Relationships: Structure and Rationale
33 ® Deep Ecosystem with Entrenched Partner Relationships Structure Strategic Rationale 3 • Alaska and American loyalty members will enjoy benefits across both airlines including: — Ability to earn and use miles on both airlines’ full networks — Elite status reciprocity — Lounge access to American A
Slide 34: Diversity of Cash Flows with Long-Term Track Record
34 ® AAdvantage Offers Significant Diversity of Cash Flows to American with Long-Term Track Record of Stable Performance 4 $ 3,510 $ 3,861 $ 2,908 $ 1,419 $ 1,513 $ 529 $ 557 $ 538 $ 213 $ 5,486 $ 5,912 $ 3,650 2018 2019 2020 Sales to Third Parties Sales to American and Other Airlines Other Cash Flo
Slide 35: Flexibility in the Business Model to Manage Costs
35 ® • AAdvantage flight awards represent the largest share of rewards claimed by members • AAdvantage manages the cost of fulfilling these awards by leveraging member elasticity to steer reward demand to optimal flights based on cash displacement risk • Deep integration with the airline’s inventory
Slide 36: AAdvantage Financial Overview
36 ® AAdvantage Financial Overview
Slide 37: AAdvantage Summary Pro-Forma Financial Profile
37 ® AAdvantage Summary Pro-Forma Financial Profile 3 Note: Prepared assuming that the Contribution Transactions and Intercompany Loan were consummated on January 1, 2018. Does not give effect to the Financings. EBITDA margin of 20% applied only to sale of miles to American and not any other cash fl
Slide 38: AAdvantage Summary Quarterly Pro-Forma Cash Flow Profile
38 ® AAdvantage Summary Quarterly Pro-Forma Cash Flow Profile Note: Prepared assuming that the Contribution Transactions and Intercompany Loan were consummated on January 1, 2018. Does not give effect to the Financings. EBITDA margin of 20% applied only to sale of miles to American and not any other
Slide 39: Appendix
39 ® Appendix
Slide 40: American Airlines AAdvantage Citi Cards
40 ® American Airlines AAdvantage Citi Cards AAdvantage MileUp℠ card Citi® / AAdvantage® Platinum Select® Card Citi® / AAdvantage® Executive Card CitiBusiness® / AAdvantage® Platinum Select® World Elite Mastercard® Annual Fee • $0 • $0 first year, then $99 • $450 • $0 first year, then $99 Acquisitio
Slide 41: American Airlines AAdvantage Aviator Barclays Cards
41 ® American Airlines AAdvantage Aviator Barclays Cards AAdvantage® Aviator® Mastercard® AAdvantage® Aviator® Blue Mastercard® AAdvantage® Aviator® Red Mastercard® AAdvantage® Aviator® Silver Mastercard® AAdvantage® Aviator® Business Mastercard® Annual Fee • $0 • $49 • $99 • $199 • $95 Acquisition
Slide 42: Annex A
42 ® Annex A
Slide 43: Annex A (1/2): Basis of Presentation and Related Disclaimers
® Annex A (1/2) Basis of Presentation of AAdvantage Summary Financial Information and Related Disclaimers The pro forma financial information of AAdvantage provided in the accompanying presentation (the “Presentation”) represents unaudited pro forma consolidated financial information of AAdvantage H
Slide 44: Annex A (2/2): Components of financial line items
® Annex A (2/2) Set forth below is additional information regarding the components of certain line items provided with the financial information included in the Presentation: • Cash received from sales to American and other airlines. Pursuant to the Contribution Transactions and the Intercompany Agr
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