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American Airlines reports a record $14.3B revenue in Q2 2024, with net earnings of $717M and significant debt reduction.

American Airlines Group Inc. (NASDAQ: AAL) has announced its financial outcomes for the second quarter of 2024, revealing:

• A record-breaking quarterly revenue of $14.3 billion.
• Net earnings for the quarter stood at $717 million, translating to $1.01 per diluted share. When adjusting for specific exceptional items, net earnings rose to $774 million, or $1.09 per diluted share.
• The company generated roughly $1.1 billion in operating cash flow and around $850 million in free cash flow during the period.
• There was a significant reduction in total debt by about $680 million during the quarter.
• American Airlines is on course to decrease its peak debt levels by $15 billion by the end of 2025.
• Expectations for the full year include adjusted earnings per diluted share ranging from $0.70 to $1.30.

“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,” said American’s CEO Robert Isom. “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 Airlines has revamped its sales and distribution approach, focusing on being customer-centric while integrating feedback from corporate and agency partners. Since May, the airline has prioritized three main objectives:

1. Content Accessibility:

• Restoration of Content: American has reintroduced competitive fares in the distribution channels used by travel agencies and corporate travel programs.
• Uniform Mileage Accrual: The airline has decided against differentiating mileage earnings based on booking channels. Travelers will continue to earn as per the AAdvantage® program regardless of the booking source.

1. Enhancing Business Relations:

• Expansion of AAdvantage Business™: Now, agencies can offer AAdvantage® miles and travelers can earn Loyalty Points regardless of where the business travel is booked.
• Upcoming Enhancements to AAdvantage Business™: These improvements aim to better manage travel and improve the experience for end travelers.

1. Strengthening Partner Relationships:

• Active Feedback Incorporation: American has engaged extensively with customers to update them on changes addressing their concerns.
• Contract Renegotiations: The airline is in the process of updating agreements with corporate clients and travel agencies.
• Enhanced Support: Addition of account managers for corporate clients, a dedicated AAdvantage Business™ customer service team, and increased sales support for agencies are part of these efforts.

Operational Achievements:
Despite severe weather affecting several key hubs in May and June, and a global technology outage on July 19, American Airlines showcased operational resilience. The airline not only managed a strong recovery but also excelled over the Fourth of July holiday, handling 7.2 million customers and achieving a 98.9% completion factor the day after the outage.

Financial Highlights:
American reported a record $14.3 billion in quarterly revenue, a 2% increase year over year, with a 9.7% operating margin for the second quarter, both on a GAAP basis and excluding special items.

Balance Sheet and Liquidity:
American is dedicated to strengthening its financial foundation. It reduced its total debt by approximately $680 million in the second quarter, reaching 87% of its goal to cut total debt by $15 billion by the end of 2025. The company concluded the quarter with around $11.7 billion in total available liquidity.

Forward-Looking Statements:
Despite improvements, previous strategies in sales and distribution may still affect American’s revenue and earnings for the rest of the year. Anticipating these impacts and considering current demand and fuel prices, the airline expects its third-quarter 2024 earnings per diluted share to be approximately breakeven, with full-year earnings projected to be between $0.70 and $1.30 per diluted share.