American Airlines Group, Inc.

At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. I would now like to hand the call over to Managing Director of Investor Relations, Scott Long. Please go ahead.

Thank you, Lateef. Good morning, everyone, and welcome to the American Airlines Group fourth quarter and full year 2022 earnings conference call. On the call this morning, we have our CEO, Robert Isom, our Vice Chair, President of American Eagle and Strategic Advisor, Derek Kirk, and our new CFO, Devin May. A number of our other senior executives are also on the call for the Q&A session. Robert will start the call this morning with an overview of our performance and our 2023 priorities. Derek will follow with details on the fourth quarter and full year, and Devin will then outline our operating plans and outlook going forward. After Devin's comments, we'll open the call for analyst questions, followed by questions from the media. To get in as many questions as possible, please limit yourself to one question and one follow-up. And before we begin today, we must state that today's call contains forward-looking statements, including statements concerning future revenues, costs, forecasts of capacity, and fleet plans. These statements represent our predictions and expectations of 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 that was issued this morning, as well as our Form 10-Q for the quarter ended September 30, 2022. 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 financial measures is included in the earnings press release, which can be found in the investor relations section of our website. A webcast of this call will also be archived on our website. The information we're giving you on the call this morning is as of today's date, and we undertake no obligation to update the information subsequently. Thanks for your interest and for joining us this morning, and with that, I'll turn the call over to our CEO, Robert Eisen.

Thanks, Scott, and good morning, everyone. Thanks for joining us. This morning, American reported a fourth quarter GAAP net income of $803 million and a full year net income of $127 million. Excluding next net special items, we reported a fourth quarter net income of $827 million and a full year net income of $328 million. Our performance in the fourth quarter and for the full year was driven by continued strength of demand and revenue environment and the incredible efforts of the American Airlines team. We're tremendously proud of what the team has accomplished over the past year. We committed to running a reliable operation and we're delivering. Coming out of the holidays, American had the best completion factor of any major U.S. airline. We also said we would return America to profitability, and we've done that as well. Our team has delivered a third consecutive quarterly profit and fourth quarter margins that are higher than the fourth quarter of 2019, despite our fuel price increasing by approximately 70%. We generated nearly $2.4 billion in pre-tax profits over the past three quarters, And we're pleased to report a full year profit for the first time since 2019. In addition to running a reliable operation and generating sustained profits, we're making significant progress on repairing our balance sheet. We recently prepaid a $1.2 billion term loan a year before its scheduled maturity date. And we have now reduced our total debt by more than $8 billion from peak levels in mid-2021. This puts us well past the halfway point of our $15 billion total debt reduction goal, only 18 months into the program. Derek will talk more about our deleveraging plans in just a few minutes. Let's talk more about the fourth quarter and full year results. We produced revenues of $13.2 billion in the fourth quarter, an increase of 16.6% versus 2019, and the highest fourth quarter revenue in company history. Notably, We achieved this record revenue while flying 6.1% less capacity than we did in the fourth quarter of 2019. American also produced record revenues of $49 billion for the full year, which is a 7% increase over 2019 while flying 8.7% less capacity. Demand remains strong, and our revenue performance is in line with our expectations following our strong holiday performance. Post-holiday bookings are off to a strong start. In fact, This is our best-ever post-holiday booking period, with broad strength across all entities and travel periods. Demand for domestic and short-haul international travel continues to lead the way. We expect the strong demand environment to continue in 2023 and anticipate further improvement in demand for long-haul international travel this year. Now, turning to the operations, the American Airlines team delivered a fantastic performance in the fourth quarter. We operated more than 475,000 flights in the quarter with an average load factor of approximately 84%, and we ranked first in completion factor among the nine largest U.S. carriers. Our team delivered an even stronger performance over the holidays, despite challenging conditions in many parts of the country. American outperformed the industry over the December holiday period, ranking first in completion factor. Qatar's success has been sizing our airline for the resources we have available and the operating conditions we expect to encounter, and we will continue to do that going forward. We're doubling down on our efforts to run a reliable operation in 2023, including investing in our team, our fleet, and technology to support our operation, and we're seeing this work pay off as our operation is off to a strong start just a few weeks into 2023, including the best on-time arrival performance of the nine largest U.S. carriers so far this year. America is proud to operate the simplest, youngest, and most efficient fleet among US network carriers. In August, we began taking deliveries of new 788 aircraft from Boeing for the first time in 15 months. In the fourth quarter, we took delivery of five 788s, and we expect to receive the remaining four in the first half of 2023. Our Boeing 789s are expected to be delivered starting in 2024. During the fourth quarter, Oops, I'm sorry about that. Okay, during the fourth quarter, we also took delivery of 7A321Us, three 175s and five 737-800s from long-term storage. Devin is going to talk more about that. But what I'd like to say is that the results the American Airlines team produced in 2022 and what we are projecting in 2023 are proof positive that the actions we have taken in recent years have put us in a position of strength and allowed us to take full advantage of the recovery. We spent more than five years on the most complex integration in the history of the airline industry, three years navigating the pandemic and making the airline more efficient, and now we're poised to drive the business forward in 2023 and beyond. We have simplified and harmonized our fleet, Modernizing our facilities, fine-tune our network to focus on the most profitable clients, develop new partnerships, introduce new tools for our customers and team, and hire tens of thousands of people. Through it all, the American Airlines team has gone above and beyond to deliver strong operational and financial results. Now, before I turn it over to Derek to provide more detail on our 2022 financial performance, I want to thank him for his partnership over the past 20 years as CFO. He is a great friend and has been a trusted advisor throughout my career. Quite simply, he's the best CFO in the history of the airline industry. His financial leadership has helped create the largest airline in the world through the mergers of America West and U.S. Airways in 2005 and U.S. Airways and American in 2013. Derek was instrumental in raising $25 billion in capital during the pandemic to ensure American would not just survive, but also be in a position to thrive on the other side of it. And I'm very pleased that Derek will remain at American Airways. vice chair, and continue to lead our American Eagle and cargo teams and serve as a strategic advisor to the company. As we look forward to 2023, we remain focused on running a reliable operation, achieving sustained profitability, and reducing debt. We have made tremendous progress at all three of these areas thanks to Derek's leadership, and we will continue to sharpen that focus with Devin May as our CFO. And on behalf of the entire American Airlines team, I want to thank Derek for his leadership and tremendous contributions to the airline as our CFO. And now I'll hand it over to Derek.