The U.S. mega-carrier has released details of its performance during the last quarter, which show the carrier scored its highest-ever quarterly revenue of over $14 billion.
- Highest-ever quarterly revenue of $14.3 billion.
- Second-quarter net income of $717 million, or $1.01 per diluted share. Excluding net special items1, second-quarter net income of $774 million, or $1.09 per diluted share.
- Generated operating cash flow of approximately $1.1 billion and free cash flow2 of approximately $850 million in the second quarter.
- Reduced total debt3 by approximately $680 million in the second quarter.
- On track to reduce total debt3 from peak levels by $15 billion by year-end 2025.
- Full-year adjusted earnings per diluted share4 expected to be between $0.70 and $1.30.
American’s CEO Robert Isom said: "American has a fleet, network and product built to deliver results, but during the second quarter, we did not perform to our initial expectations due to our prior sales and distribution strategy and an imbalance of domestic supply and demand. We are taking this challenge head-on, with clear and decisive actions to deliver on a strategy that maximizes our revenue and profitability, and importantly, one that makes it easy for customers to do business with American. When we return to the level of revenue generation we know we can achieve, and we couple that with our operational reliability and best-in-class cost management, we will unlock significant value."
American has taken swift and aggressive action to reorient its sales and distribution strategy in ways that continue to be customer-centric while addressing feedback from corporate and agency partners. Since May, the airline has focused its near-term efforts in three areas:
Ensuring content availability
Restored content. American has reinstated competitive fares in the distribution channel traditionally used by travel agencies and corporate managed travel programs.
Removed plans to differentiate mileage earn by channel. Travelers continue to earn in the AAdvantage® program as usual, no matter where they book.
Making it easy, attractive and rewarding to do business with American
Expanded availability of AAdvantage Business™ benefits to agencies. Companies will earn AAdvantage® miles and travelers will earn Loyalty Points anywhere business travel is booked, including when booked through travel agencies.
Announced new features coming to AAdvantage Business™. Improvements will enhance the travel management and end-traveler experience.
Strengthening relationships and regaining the trust of partners
Listening to feedback. The company has conducted extensive outreach to customers to inform them of changes being made to address pain points.
Updating agreements. American is renegotiating contracts with corporate customers and travel agencies.
Improving support. The airline is adding account managers for corporate customers, has established a dedicated AAdvantage Business™ customer service team and is increasing sales support for agencies.
Operational performance
The American Airlines team continues to produce strong operational results and demonstrate its resilience in recovering from irregular operations, as evidenced by its second-quarter performance, despite significant storms that impacted several key hubs in May and June. The airline also delivered a fantastic operation over the Fourth of July holiday, carrying 7.2 million customers and operating its largest-ever schedule while producing its best-ever combined completion factor over the holiday period. American quickly rebounded from the technology outage that impacted businesses worldwide on July 19. By that evening, its operation had fully recovered, and the airline delivered a 98.9% completion factor the next day — the best operational performance among U.S. network carriers.
Financial performance
American produced record quarterly revenue of $14.3 billion in the second quarter, an increase of 2% year over year. On both a GAAP basis and excluding the impact of net special items1, the company produced an operating margin of 9.7% in the quarter.
Balance sheet and liquidity
American remains committed to strengthening its balance sheet. In the second quarter, the company reduced total debt3 by approximately $680 million and is now more than $13 billion, or approximately 87%, toward its goal of reducing total debt3 by $15 billion by the end of 2025. The company ended the quarter with approximately $11.7 billion of total available liquidity, comprised of cash and short-term investments plus undrawn capacity under revolving credit facilities.
Guidance and investor update
American has taken aggressive action to improve its revenue performance, however, the company’s previous sales and distribution strategy will continue to impact its revenue performance and earnings through the remainder of the year. Accounting for these impacts and based on present demand trends, the current fuel price forecast and excluding the impact of special items, the company expects its third-quarter 2024 adjusted earnings per diluted share4 to be approximately breakeven. The company now expects its full-year 2024 adjusted earnings per diluted share4 to be between $0.70 and $1.30.
For additional financial forecasting detail, please refer to the company’s investor update, furnished with this press release with the SEC on Form 8-K. This filing is also available at aa.com/investorrelations.
Notes
- The company recognized $57 million of net special items in the second quarter after the effect of taxes, which principally included nonoperating net special items for charges associated with debt refinancings and mark-to-market net unrealized losses on certain equity investments.
- Please see the accompanying notes for the company’s definition of free cash flow, which is a non-GAAP measure.
- All references to total debt include debt, finance and operating lease liabilities and pension obligations.
- Adjusted earnings per diluted share guidance excludes the impact of net special items. The company is unable to reconcile certain forward-looking information to GAAP as the nature or amount of net special items cannot be determined at this time.
