American Airlines Group, Inc.

Good morning and welcome to the American Airlines Group first quarter 2021 earnings conference call. Today's call is being recorded. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. And I would now like to turn the conference over to your moderator, Managing Director of Investor Relations, Mr. Dan Craven.

Thanks, Crystal, and good morning, everyone, and welcome to the American Airlines Group First Quarter 2021 Earnings Conference Call. Joining us on the call this morning, we have Doug Parker, Chairman and CEO, Robert Isom, President, and Derek Hurd, Chief Financial Officer. Also on the call for our question and answer session are several of our senior execs, including Maya Liebman, Steve Johnson, Vasi Raja, Allison Taylor, and Devin May. Like we normally do, Doug will start the call with an overview of our quarter and the actions we've taken during this pandemic. Robert will then follow with some remarks about our commercial and other strategic initiatives. After Robert's remarks, Derek will follow with the details on the quarter and our operating plans going forward. After Derek's comments, we'll open the call for analyst questions and lastly, questions from the medium. To get in as many questions as possible, please limit yourself to one question and a follow-up. Before we begin, we must state that today's call does contain forward-looking statements, including statements concerning future revenues, cost, forecast, capacity, fleet plans, and liquidity. These statements represent our predictions and expectations as to 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 In addition, we'll be discussing certain non-GAAP financial measures this morning, which exclude the impact of unusual items. A reconciliation of those numbers to the GAAP financials is included in the earnings release, and that can be found on the investor relations section

Thanks, Dan, and good morning, everybody. This morning, we reported a first quarter pre-tax loss, excluding net special items of $3.5 billion. The loss was driven, of course, by the extreme drop in demand for air travel due to the global pandemic. Our revenues in the quarter were down 62% for the same period in 2019. In the midst of this difficult environment, the American Airlines team produced remarkable results. We flew more customers than any other U.S. airline. We did so reliably and safely. We produced the highest passenger unit revenue of any global U.S. carrier, while having more available seats for sale. We completed the largest financing airline history, a $10 billion transaction, secured by the most valuable loyalty program in the world, the Advantage Frequent Flyer Program. And, excluding debt principle, we were cash positive in the month of March, our first such month since the beginning of the pandemic. These results and more were made possible by our incredible team, without their resiliency, creativity, and capacity. we'd be facing a very different future. Instead, thanks to their hard work and determination, we're starting to see light at the end of this very dark tunnel, and we're on a path that has us well-positioned as demand for air travel returns. That path forward is guided by what we're calling our Green Flag Plan. For our industry, this pandemic has been much like a yellow flag during an auto race, where everyone slows down, takes a pit stop, and gets their cars ready for when the race resumes at full speed. We've used this period to improve and prepare our area so that when the green flag does drop, which appears to be on the horizon, America will be ready. That plan is centered on four initiatives. I'll take a minute to walk through those at a high level, and then Robert and Derek will expand on what we've achieved to date and what we see on the horizon. First, we're doubling down on our commitment to operational excellence. We ran a great operation in the first quarter, carrying more than 24 million passengers on nearly 340,000 flights. During our busiest day of the quarter, we had more than 430,000 customers flying on our aircraft. That's the highest we've had since March of 2020. Our goal is to run the most reliable operations in American Airlines history once everyone's back to a full schedule. And the steps we put in place, including more reliable yet profitable scheduling, new tools and technology to assist our team and customers during irregular operations, and our clean commitment, will ensure we achieve that goal. Second, We're taking this opportunity to reconnect with our customers. Robert will talk more about all we're doing here. As customers return to the skies, they will see an even better American Airlines. One with the broadest and best global network that's now been enhanced by new partnerships. And one with innovative technologies and procedures that make travel more convenient for our customers and ensures they feel safe and comfortable as they return to fly. Third, we're planning to build on the positive momentum we've established with our team. Past years tested our team in ways we couldn't have imagined, but it's also brought us much closer. We worked hand-in-hand with our union leaders to ensure that team members felt cared for, even as we experienced by far the most difficult financial circumstances in our industry's history. We're committed to building on that progress and continue to work together to ensure our team feels cared for every day. On that note, we are very happy to tell 13,000 team members they could tear up their warrant notices following the passage of the COVID-19 relief act. that included an extension of the payroll support program. We will continue to welcome team members back to the operation as we increase our schedule. In fact, earlier this week, we announced we will begin hiring pilots later this year to prepare for 2022 and beyond. Finally, and importantly, we are committed to passionately driving efficiencies across the organization. Derek will elaborate on this, but we are really proud of the aggressive and innovative ways the team has worked to position us to be more efficient on the other side of this pandemic. The efficiencies we've built over the past year will drive more than $1.3 billion of permanent, non-volume-related savings in 2021 and beyond. So before I turn it over to Robert, I'll close with this. We are a long way from where we need to be. This crisis is far from over, and we have to continue fighting to give our customers, shareholders, and team the company they deserve. But there is no doubt the pace of the recovery is accelerating. And thanks to our team and a thoughtful and proactive plan, as the green flag drops, American Airlines is ready.