AAL Q3 2022 Earnings

Call Details

• Call Title: American Airlines Group, Inc. Q3 2022 Earnings Call
• Date: October 20, 2022 at 12:30 PM UTC
• Management Team:
  • Robert Isom (Chief Executive Officer)
  • Derek Kerr (Vice Chair and Chief Financial Officer)
  • Scott Long (Head of Investor Relations)
  • Vasu Raja (Executive Vice President)

Call Summary

Financial Performance

• American reported a third quarter GAAP net income of $483 million.
• Excluding net special items, third quarter net income was $478 million, both equating to $0.69 per diluted share.
• Third quarter revenues were $13.5 billion, which the company stated is a record quarter and is up 13% versus 2019.
• The company achieved record revenue while flying nearly 10% less capacity than in third quarter 2019.
• Domestic and short-haul international entities were cited as leading the revenue recovery while long-haul international is expected to improve as capacity grows back.
• Hurricane-related disruption led to more than 1,500 flight cancellations in the last four days of September and an estimated revenue reduction of about $40 million.
• Reported third quarter interest expense was around $494 million and management expects interest expense to be about $530 million in the fourth quarter, representing roughly a $40 million increase quarter-over-quarter.

Guidance

• Fourth quarter operating margin is expected to be between 5.5% and 7.5% based on current demand and fuel forecasts.
• Fourth quarter total revenues are expected to be 11% to 13% higher than fourth quarter 2019 on capacity that is 5% to 7% lower than 2019 levels.
• Fourth quarter total revenue per available seat mile is expected to be 18% to 20% higher than 2019.
• Fourth quarter CASM excluding fuel and net special items is expected to be up 8% to 10% versus 2019 due to inflationary pressure and lower relative asset utilization.
• Fourth quarter fuel is forecast between $3.51 and $3.56 per gallon, which the company stated is approximately 70% higher than 2019 levels.
• Preliminary 2023 capacity is expected to be between 95% and 100% of 2019 levels while the company continues to build 2023 operating plans.
• Based on Boeing guidance, the company now expects 19 737 MAX 8 deliveries in 2023 compared to 27 previously expected, with the company noting that this timing change will shift planned CAPEX out of 2023 into future years.