American Airlines Group, Inc.

Thank you for standing by and welcome to American Airlines Group's third 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 the American Airlines Group Third Quarter 2024 Earnings Conference Call. On the call with prepared remarks, we have our CEO, Robert Isom, and our CFO, Devon May. In addition to our Vice Chair, Steve Johnson, we have a number of other senior executives in the room this morning for the Q&A session. Robert will start the call with an overview of our performance. Devin will follow with details on the third quarter, in addition to outlining our operating plans and outlook going forward. After our prepared remarks, we will 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. Now, 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, which was issued this morning, as well as our Form 10-Q for the quarter ended September 30th, 2024. In addition, we'll be discussing certain non-GAAP financial measures, 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 Isom.

Thanks, Scott, and good morning, everyone. Before we begin, I want to acknowledge the devastation caused by the recent hurricanes in the eastern United States. Hurricanes Helene and Milton have had a significant impact on so many, and I'm proud of the way the American Airlines team has stepped up to help. We had a thousand seats into and out of the impacted areas and cap fares for customers traveling to get out of the path of the hurricanes. Additionally, our cargo team has moved more than eight tons of critical supplies to impacted regions. And our team and Advantage members have donated more than $5 million to the American Red Cross to help out those impacted by Helene, Milton, and other significant weather events this year. Our thoughts are with the communities affected by these disasters, and we'll continue to support recovery efforts. Now to the results. Today, American reported a third quarter adjusted pre-tax profit of $271 million. This earnings result is higher than our guidance issued in July, with third quarter adjusted earnings per diluted share of 30 cents. I'm especially proud of this result, given the operational challenges the team faced in the quarter, most notably the impact of Hurricanes Debbie and Helene and the CrowdStrike outage. The estimated net impact of these disruptions reduced our third quarter earnings by approximately $90 million, or 12 cents per diluted share. Our remarks this morning will focus on our revenue performance, operational reliability, and cost execution in the third quarter. Notably, We hit or exceeded our prior guidance on every financial metric in the quarter while also running a reliable operation. We're intently focused on delivering on our commitments. In this quarter, we did just that. On to our third quarter revenue performance. TRASM was down 2% in the quarter, 1.5 points better than the midpoint of our prior guidance. This improvement in the quarter was primarily driven by the steps we've taken to adjust domestic and short haul international capacity, which helped improve the balance of supply and demand. Domestic PRASM was down 3.1% year over year, with performance improving through the quarter as industry capacity growth decelerated from July. Importantly, flown yields in September were positive year over year, and we were able to narrow the competitive load factor gap we saw in the third quarter of last year. Long-haul international continued to perform well in the third quarter, with positive year-over-year unit revenue growth driven by strength in the Atlantic and South America. While short-haul Latin RASM was negative for the quarter, the region drove the largest sequential improvement from the second quarter to the third quarter, driven by the improving industry supply backdrop. Demand for American's product remains strong, as evidenced by the continued strength of our business premium and loyalty revenue performance. Managed business revenue was up 6% year-over-year and we continue to see yield strength in the segment. Premium revenue increased by approximately 8% year-over-year on 3% more capacity. Paid load factor in our premium cabins remains historically high and was up more than four points year-over-year with strength in both domestic and international. Loyalty revenues were up approximately 5% year-over-year, with Advantage members responsible for 72% of premium cabin revenue. Spending on our co-branded credit cards was up approximately 7% year-over-year in the third quarter, highlighting the value of American's loyalty program today and moving forward. In July, we committed to report on progress in regaining our share of revenue lost as a result of our prior sales and distribution strategy. We know success ultimately will be measured by improved revenue and earnings. In the near term, we're tracking our progress by measuring our agency and corporate booking performance, tracking the growth of our new advantage business program, and listening to the feedback from our agency partners and corporate customers. Our third quarter indirect flown revenue share improved modestly compared with our performance in the second quarter. However, the booking trajectory through the quarter is encouraging. American's corporate and agency flown revenue share bottomed at 11% below our historical share. Since then, our share of indirect bookings has started to recover, and we estimate we are currently at 7% below historical levels, and we expect to see continued improvement in the months ahead. In the third quarter, we continued negotiations for new incentive-based agreements with the largest TMCs and agencies. We now have new competitive agreements in place with more than half of those and are in advanced negotiations with the rest. We rebuilt our agency support capability and based on the team's NPS scores, they're providing world-class service. These agreements combined with the support enhancements are major steps towards restoring our share in these important distribution channels. In September, we announced the relaunch of our corporate experience program to address feedback from our corporate customers. The program provides meaningful benefits, including priority boarding, access to preferred seats, and priority reaccommodations during disruptions. Additionally, we have amended agreements with many of our top corporate customers. Adoption of Advantage Business, our program tailored for small and medium-sized businesses, continued to build during the quarter. Our actions to expand the benefits, which include bookings through agencies, enhanced program support, and a more simplified enrollment process are clearly working. We expect to accelerate the growth of the program going forward. Concurrently, we've been engaged with our corporate and agency partners to ensure we're addressing the issues that matter most to our customers. We've heard universally that their worlds are better with three airlines rather than two because of the network and travel rewards program that America delivers. Based on this feedback, we're confident we're taking the right actions. We know full restoration of our revenue will take some time. But with the progress we're seeing and the actions underway, we aim to fully restore our revenue from indirect channels as we exit 2025. We will continue our relentless focus on reestablishing relationships with our business customers, re-embracing the agency channel, and making it easier to do business with American. Now, turning to our operations. The American Airlines team delivered strong operational results in the third quarter, including outperforming our network peers over the peak summer travel period. These results were accomplished despite extended periods of difficult weather and several key hubs and continued supply chain challenges. Despite these obstacles, American led the U.S. network carriers in completion factor in the third quarter. This is a testament to our team's ability to plan and deliver a safe, reliable, and consistent product for our customers. Earlier, I mentioned the financial impact of the CrowdStrike outage and Hurricanes Debbie and Helene. The cost of those disruptions could have been far greater if not for our team's quick recovery, which was a result of our focus and investment in the resiliency of our operation. As we close the quarter in September and have transitioned into the fall, we're seeing some of the best operational performance of the year. And as promised at our investor day, American is delivering strong operational results, and moving forward, we expect to produce the same operational reliability even more efficiently. Now, I'll turn it over to Devin to share more about our third quarter financial results and the fourth quarter outlook.