American Airlines Group, Inc.

Thank you for standing by, and welcome to American Airlines Group's fourth quarter and full year 2023 earnings conference call. 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. To remove yourself from the queue, you may press star 1-1 again. I would now like to hand the call over to Scott Long. VP of Investor Relations and Corporate Development. Please go ahead.

Thank you, Lateef. Good morning and welcome to the American Airlines Group fourth quarter and full year 2023 earnings conference call. On the call with prepared remarks, we have our CEO, Robert Isom, and our CFO, Devin May. A number of our other senior executives are also in the room this morning for the Q&A session. Robert will start the call with an overview of our performance. And Devin will follow with details of the fourth quarter and full year, in addition to outlining our operating plans and outlook going forward. After our prepared remarks, 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. 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 30th, 2023. 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 are giving you on the call this morning is as of today's date, and we undertake no obligation to update the information subsequently. Thank you 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. Today, American reported an adjusted pre-tax profit of $257 million for the fourth quarter and approximately $2.5 billion for the full year, driven by the strength of our network, continued demand for our product, and fantastic execution by our team. I want to thank the American Airlines team for their incredible work to care for our customers and deliver a 2023 that we're proud of. We're running a historically strong operation, driving incremental revenue through our commercial initiatives, managing our costs, producing record free cash flow, and strengthening our balance sheet through debt reduction. This year, we'll continue to prioritize reliability, profitability, and accountability while building an even more efficient and resilient airline. We also remain focused on taking care of our team and continue to make progress on our labor agreements. Our commitment in negotiations has been consistent. reach deals as quickly as possible, and ensure our team is paid as well as their industry peers. We finalized a new contract with the APA in the third quarter last year, and a few weeks ago, we did the same for our customer service team represented by the CWA IBT, giving team members increased pay and quality of life improvements. We continue to negotiate with the APFA with the shared goal of reaching a deal that will pay our flight attendants at the top of the industry. Now let's talk more about our financial results. We produced record full year revenues of approximately $53 billion, driven by strong demand for our product and record revenue from our travel rewards program. Demand remains strong, and we have seen robust bookings to start the year as travel trends have begun to normalize across entities. We're also very encouraged by the trends we're seeing in business travel. Domestic revenues from business travel ended the fourth quarter at approximately 90% of 2019 levels. We're excited about the continued rollout of the Advantage Business Program, and we continue to see strength among small and medium-sized businesses. We see further potential revenue upside as we restore our hubs domestically, enabled in part by the recovery and regional supportability. This year, we expect our system capacity growth to be balanced between domestic and international. More than ever, Our revenue growth is fueled by a growing number of Advantage customers who acquired our co-brand credit cards in record numbers in 2023. Advantage customers represent both our greatest source of value and greatest opportunity going forward. In 2023, two-thirds of our revenue came from Advantage customers. These customers also account for 70% of our upsell, loyalty, and partnership revenue. Over the past year, we have made changes to our distribution strategy to give customers direct, improved access to our best products and enable American to provide better customer service to the individual traveler. We're very encouraged by the results. Customers who shop directly with us have a more enjoyable experience and are 11 points more likely to recommend American than those shopping in traditional outlets. They are purchasing more valuable content and doing so at lower expense. In 2023, our revenue was 15% higher than 2019, while our selling expenses were 10% lower. Our fleet, network, and travel rewards program will continue to drive significant value moving forward, and our limited near-term capital requirements will position us to continue to generate free cash flow. Turning now to the operation, the American Airlines team continues to achieve industry-leading operational results. We produced our best ever performance in the fourth quarter and over the full year, including a record on-time departure rate and completion factor during the busy holiday season. American ranked first among the U.S. network carriers in mainline and regional completion factor in 2023, with our lowest number of cancellations for any year since the merger. All of this led to record likelihood to recommend scores in the fourth quarter and full year. No network airline has operated more reliably than American over the past year and a half. We're running the best operation in our history thanks to a focus on operational excellence and strong collaboration across the entire organization. We'll continue to build on that performance and deliver exceptional service for our customers. Now, I'll turn it over to Devin to share more about our fourth quarter and full year financial results and outlook for the rest of the year.