American Airlines Group, Inc.

Group's first quarter 2024 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 American Airlines Group first quarter 2024 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 the details on the first quarter. 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 March 31, 2024. 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. Thank you for your interest and for joining us this morning. And with that, I'll turn the call over to our CEO, Robert Isom.

Thanks, Scott, and good morning, everyone. The American Airlines team continues to build a more reliable, efficient, and resilient airline. I'd like to thank our team for running a fantastic operation. We're driving revenue through our commercial initiatives, efficiently managing costs, and producing free cash flow to further strengthen our balance sheet. Let's talk about our financial results for the first quarter. This morning, we reported an adjusted net loss of $226 million for the quarter, or an adjusted loss of $0.34 per diluted share. This outcome was within our originally guided range, despite a significant increase in fuel expense in the quarter, which was approximately $100 million higher than the midpoint of our initial guidance. We remain on track to deliver our full year EPS guidance, and we continue to expect to produce approximately $2 billion of free cash flow this year. we produced record first quarter revenues of $12.6 billion. Business travel has continued to recover with particular strength in small and medium-sized businesses. Additionally, we have seen sequential improvement in the recovery of managed corporate travel and domestic business revenue growth outpaced capacity growth in the first quarter. Additionally, our focus on delivering premium content that our customers desire is paying off. In the first quarter, upsell, loyalty and partnership revenue, what we define as premium content, made up 61% of our revenue and increased 17% year over year. As we have outlined in the past, our revenue growth is increasingly fueled by Advantage customers who continue to acquire our co-branded credit cards at historically high levels. Advantage customers account for 72% of our premium content revenue. And in the first quarter, our premium cabins saw a 10% increase in revenue versus 2023. We expect these trends to continue, which is why we're investing in our product and premium customer experience. And just last week, we announced several new premium onboard enhancements. And customers will have an increasingly elevated experience with the introduction of our new state-of-the-art flagship suite seats on our long-haul aircraft. including our retrofitted Boeing 777-300s and future Airbus 321XLR and Boeing 787-9 deliveries. Our fleet network and travel rewards program will continue to enable significant upside moving forward, and our limited near-term capital requirements position us to continue to generate meaningful free cash flow this year and in the years to come. We continue to make progress on our commercial initiatives, and we are always looking to improve our performance and drive additional revenue. We see meaningful opportunities to improve upon our results, much of which will be captured as we progress through the year. First, we continue to believe in the value that our distribution strategy provides to our customers and to American. Engaging directly with our customers through modern internet-based technology is where the industry is headed, and we're leading the way. That being said, there are near-term actions we can take to optimize our efforts in advance of hitting steady state on this long-term strategic initiative, and those are underway. Second, our network was uniquely impacted by increased industry capacity in the first quarter, but we see that moderating in the quarters ahead. This will be a tailwind for us going forward. Third, increasing the utilization of our fleet is a priority, but we can improve the deployment of our own capacity to better match supply and demand throughout the year. And finally, our team is laser-focused on executing well on these and all of our commercial initiatives day in and day out. Turning now to the operation, American continues to produce industry-leading operational results. We're running the best operation in our history because of our steadfast commitment to operational excellence and strong collaboration across the entire airline. We continue to minimize our cancellations, resulting in our best ever first quarter completion factor. We delivered these results despite air traffic control challenges during the quarter and significant weather events across our network. Our strong completion factor performance enabled American to achieve eight combined mainline and regional zero cancellation days in the first quarter and improve our mishandled baggage rate by 10% year over year. Our outstanding recovery efforts have become the hallmark of our operation as we minimize cancellations and shorten the recovery time for our airline and customers. As our attention shifts to the summer operation, we're focused on safety, reliability, and continuing to provide a great experience for our customers. We continue to find ways to improve the travel experience for our customers, especially ahead of the busy summer travel period. Through investments in technology, we have made significant progress in our digital servicing capabilities. American is now able to sell and digitally service approximately 95% of transactions, which greatly simplifies and enhances the experience of our customers and team members. We're also seeing tangible benefits from our re-engineering efforts. We are using our assets more productively across the airline and our total aircraft utilization improved approximately 4% year over year in the first quarter, primarily driven by improvements in our regional supportability. And now I'll turn it over to Devon to share more about our first quarter financial results and second quarter outlook.