American Airlines Group, Inc.

Good morning and welcome to the American Airlines Group third 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, you would need to press star then one on your telephone. If anyone should require further assistance, please press star then zero. And now, I would like to turn the conference over to your moderator, Have amidst the relations, Mr. Dan Cravens.

Thanks, Sarah, and good morning, everyone, and welcome to the American Airlines Group third quarter 2021 earnings conference call. On the call this morning, we have Doug Parker, chairman and CEO. revenue officer. Like we normally do, Doug will start the call with an overview of our quarter. before we begin,

Thank you, Dan, and thank you everyone for being with us. Good morning. So our third quarter started out very strong. Our domestic business revenue, which had climbed from 27% of our 2019 levels in March to 52% in June, jumped even more in July. It actually jumped to 64% as companies began to return to work and their employees began to return to the skies. And as a result, we at American produced a profit in the month of July. But then the Delta variant led to a rebound in pandemic fears, of course. Companies deferred return to work plans. And that domestic revenue, the domestic business revenue, fell back to 57% of 2019 in August and 47% in September. Now, I know some people find that trend discouraging, but we actually think it's encouraging. The spike in business revenue in the month of July shows that business travel does want to return. There is enormous pent-up demand. And once this pandemic's behind us, it should resume its prior rapid trajectory to recovery. And as to how that all gets reflected in the financial results, that profit in July, followed by larger losses in August and September, added up to a cumulative loss. On a GAAP basis, we actually reported a net profit of $169 million. But when we exclude net special items, we recorded a net loss of $641 million. And while we obviously don't like reporting losses, This is our smallest quarterly loss since the pandemic began in early 2020. What we're most proud of is how well the American Airlines team is performing. No one is managing through this pandemic and into the recovery better than the people of America, and it shows in the results. At a time when airlines are struggling to build back service and response to demand, no one has built back further and faster than Americans. We flew greater than 80% of our 2019 capacity in the third quarter. while our large competitors have restored only 70%. As a result, we flew 13% more seat miles in the quarter than our next closest competitor. And our team safely transported more than 48 million passengers in the quarter. Our team did this while doing an excellent job of taking care of our customers. We struggled with growth ourselves as we entered the quarter, but we responded quickly and aggressively. We ended the quarter flying by far the largest airline in the world, with the best September operational performance in America's history. That great performance by our team has led to strong customer acceptance, as evidenced by our industry-leading passenger accounts and our revenue trends. For the quarter, revenues were significantly improved over 2020 and were down 25% in the third quarter versus the same period in 2019, whereas they were down 37.5% in the second quarter on the same year-over-two-year basis. And notably, our passenger unit revenues in the quarter were down 10% versus 2019, versus 12% declines of the other large international U.S. carriers, despite our higher capacity production. On the cost front, we've reshaped our network, simplified our fleet, and built operational and cost efficiencies into the business that will serve us well for years to come. We accelerated the retirement of more than 150 older aircraft, and American continues to operate the youngest and most fuel-efficient fleet of the U.S. network carriers. And importantly, we've actioned more than $1.3 billion of permanent annual cost reductions into the business through our green flag initiative. And as we've navigated through the crisis, we've been careful to think and look long-term. We've announced a series of strategic relationships with other airlines around the world that strengthen the American network, adding additional utility to our customers and long-term value for our shareholders. The most notable of these are our Northeast Alliance with JetBlue and our West Coast International Alliance with Alaska, which we continue to implement and grow in the third quarter. Looking forward, we feel great about where America is positioned. Given the deferred business demand, and the recent rise in fuel prices, the fourth quarter will be challenging. But that's a near-term issue fighting a longer-term bullish trend. We're encouraged by the upside that exists in demand for business and international travel, and our confidence is reinforced by the incredible work the American Airlines team has done throughout this pandemic and continues to do today. And we're particularly excited about the future that lies ahead for American and our team. With that, I'll turn it over to Robert.