American Airlines Group, Inc.

Thank you for standing by and welcome to American Airlines Group's first quarter 2026 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 11 on your telephone. To remove yourself from the queue, you may press star 11 again. I would now like to hand the call over to Neil Russell, Vice President, Investor Relations. Please go ahead.

Hey, thanks, Lateef. Good morning, everyone, and welcome to the American Airlines Earnings Conference Call. On the call with prepared remarks, we have our CEO, Robert Isom, and our CFO, Devin May. In addition, we have a number of senior executives in the room this morning for the Q&A session. 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. Before we begin, please note that today's call contains forward-looking statements, including statements concerning future events, 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 earlier this morning, Form 10-K for the year ended December 31, 2025, and subsequent quarterly reports on Form 10-Q. Unless otherwise specified, all references to earnings per share are on an adjusted and diluted basis. Additionally, we will 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 and investor presentation, each of which can be found in the investor relations section of our website. A webcast of this call will 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 in American and for joining us this morning. With that, I'll turn the call over to our CEO, Robert Eisen.

Thanks, Neil, and good morning, everyone. I'd like to start my comments this morning by saying that American continues to make significant progress on our objectives to deliver for our investors. American Airlines is a premium global airline that is positioned to win for the long term. Our focus on delivering on our revenue potential this year is guided by our four pillars. elevating our customer experience, growing our global network, driving premium revenue, and leading in loyalty. We're seeing the benefits of our multi-year commercial initiatives come through in our revenue performance. Demand for American's product continues to grow, and during the quarter, we recorded the nine highest revenue intake weeks in our history. First quarter revenue grew 10.8%. And we expect this demand strength to continue as we anticipate the second quarter will deliver revenue growth of approximately 15%. The first quarter also included a few challenges, including a $320 million revenue impact from winter storms and a $400 million increase in fuel expense versus the forward curve in January. Even with those headwinds, our pre-tax margin improved approximately two points year over year. I'm proud of how our team has managed the business through these disruptions with a focus on safety and delivering a world-class customer experience. Thank you to the American Airlines team for your resilience and continued commitment to excellence. It's this dedication that makes American the premium global airline that our customers trust. Moving forward, we're working to take the appropriate actions to drive revenue to offset the increases in fuel costs. Assuming the current Ford fuel curve, we expect to be profitable in 2026. Devin will provide an update on our second quarter and full year outlook in a few minutes, but I'd like to quickly summarize the progress that we've made on our four pillars and my perspective on how these initiatives will come to drive American Ford. Our first pillar, Elevating our customer experience is centered on delivering a consistent and premium experience across every step of the travel journey. We're increasing the number of premium seats across our fleet through new deliveries and fleet retrofits. In the first quarter, live flat and premium economy seats grew more than twice as fast as main cabin seats. American's flagship suite offers customers a luxurious flying experience, and we're expanding this product across our international capable fleet. The flagship suite has delivered leading net promoter scores since its introduction. We're also investing in the customer experience both on the ground and in the air. American offers the industry's leading lounge network with new flagship lounges planned for Miami and Charlotte, bringing our total to 10 premium lounges, the most of any airline. We're investing in new and expanded Admirals Club lounges across our network and have announced 12 new or refreshed lounges over the past year. And there's more to come. We're enhancing our onboard experience through upgraded food and beverage offerings and luxury onboard items, including bedding and duvets, and our centennial-themed products, such as amenity kits and sleepwear. Connectivity in flight is critical to the customer journey. Today, Advantage members enjoy complimentary high-speed satellite Wi-Fi, sponsored by AT&T, on more aircraft than any other carrier globally. Finally, reliability and disruption management are among the most important drivers of customer satisfaction. We're making intentional investments in our schedule and technology to deliver more on-time arrivals, fewer missed connections, and a smoother travel experience. Our largest investment started earlier this month in the form of a new 13-bank structure at DFW. We expect the new structure will support an even more reliable operation as approximately one-third of our aircraft touch DFW every day. Since the re-banking, we've seen improvements in customer connection rates and NPS scores. The DFW operation running smoothly is critical to the success of our entire system, and we anticipate the structure will help to enable effective future growth at our largest and most impactful hub.