Management Discussion
Management Discussion
Table of Contents
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Part I, Item 2 of this report should be read in conjunction with Part II, Item 7 of AAG's and American's Annual Report on Form 10-K for the year ended December 31, 2023 (the 2023 Form 10-K). The information contained herein is not a comprehensive discussion and analysis of the financial condition and results of operations of AAG and American, but rather updates disclosures made in the 2023 Form 10-K.
Financial Overview
AAG's Third Quarter 2024 Results
The selected financial data presented below is derived from AAG's unaudited condensed consolidated financial statements included in Part I, Item 1A of this report and should be read in conjunction with those financial statements and the related notes thereto.
Three Months Ended September 30,Increase(Decrease)Percent
Increase (Decrease)
20242023
(In millions, except percentage changes)
Passenger revenue$12,523 $12,421 $102 0.8
Cargo revenue202 193 9 5.0
Other operating revenue922 868 54 6.0
Total operating revenues13,647 13,482 165 1.2
Aircraft fuel and related taxes2,874 3,209 (335)(10.4)
Salaries, wages and benefits4,098 3,974 124 3.1
Total operating expenses13,558 13,705 (147)(1.1)
Operating income (loss)89 (223)(312)nm (2)
Pre-tax loss(256)(690)(434)(62.9)
Income tax benefit(107)(145)(38)(26.0)
Net loss(149)(545)(396)(72.7)
Pre-tax loss - GAAP$(256)$(690)$(434)(62.9)
Adjusted for: pre-tax net special items (1)
527 1,052 (525)(49.9)
Pre-tax income excluding net special items$271 $362 $(91)(25.2)
(1)See "Reconciliation of GAAP to Non-GAAP Financial Measures" below and Note 2 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for details on the components of net special items.
(2)Not meaningful or greater than 100% change.
Pre-Tax Loss and Net Loss
Pre-tax loss and net loss were $256 million and $149 million, respectively, in the third quarter of 2024. This compares to third quarter of 2023 pre-tax loss and net loss of $690 million and $545 million, respectively. The period-over-period decrease in pre-tax loss on a GAAP basis was principally driven by a decrease in pre-tax net special items and lower costs for aircraft fuel and related taxes, offset in part by increases in certain operating expenses including salaries, wages and benefits, maintenance, materials and repairs and other expenses.
Excluding the effects of pre-tax net special items, pre-tax income was $271 million and $362 million in the third quarters of 2024 and 2023, respectively. The period-over-period decrease in our pre-tax income excluding pre-tax net special items was principally driven by increases in certain operating expenses as mentioned above, offset by lower costs for aircraft fuel and related taxes.
In September 2024, American and the Association of Professional Flight Attendants (APFA), the union representing our mainline flight attendants, ratified a new collective bargaining agreement. This five-year agreement provides wage rate increases, quality-of-life benefits and other benefit-related items. The ratified agreement also included a provision for a one-time payment. During the third quarter of 2024, one-time charges resulting from the ratification of this new agreement were recorded as mainline operating special items, net in the condensed consolidated statement of operations, including the one-time payment of $514 million which is expected to be paid in November 2024.
Revenue
In the third quarter of 2024, we reported total operating revenues of $13.6 billion, an increase of $165 million, or 1.2%, as compared to the third quarter of 2023. Passenger revenue was $12.5 billion and remained relatively flat as compared to the third quarter of 2023. In the third quarter of 2024, we experienced a 5.2% decrease in passenger yield on a 3.2% capacity growth year-over-year, as measured by available seat miles (ASMs). Load factor was 86.6% for the third quarter of 2024, compared to 84.0% for the third quarter of 2023. Our passenger revenue performance improved through the third quarter of 2024 as industry domestic capacity growth decelerated from July 2024. While we continue to see the impact of certain commercial initiatives we had previously deployed, we have made progress to regain our share of revenue lost as we continue to reset these initiatives.
Cargo revenue increased $9 million, or 5.0%, in the third quarter of 2024 from the third quarter of 2023, primarily due to a 10.5% increase in cargo ton miles, offset in part by a 5.0% decrease in cargo yield driven by increased air freight capacity.
Other operating revenue increased $54 million, or 6.0%, in the third quarter of 2024 from the third quarter of 2023, driven primarily by higher revenue associated with our loyalty program. During the three months ended September 30, 2024 and 2023, cash payments from co-branded credit card and other partners were $1.4 billion and $1.3 billion, respectively.
Our total revenue per available seat mile (TRASM) was 18.04 cents in the third quarter of 2024, a 2.0% decrease as compared to 18.40 cents in the third quarter of 2023.
Fuel
Aircraft fuel and related taxes was $2.9 billion in the third quarter of 2024, which was $335 million, or 10.4%, lower as compared to the third quarter of 2023. This was primarily due to a 14.0% decrease in the average price per gallon of aircraft fuel including related taxes to $2.50 in the third quarter of 2024 from $2.91 in the third quarter of 2023, offset in part by a 4.1% increase in gallons of fuel consumed due to increased capacity.
As of September 30, 2024, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and other factors. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully exposed to fluctuations in fuel prices. See Part II, Item 1A. Risk Factors - "Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on consumer demand, our operating results and liquidity."
Other Costs
We remain committed to actively managing our cost structure, which we believe is necessary in an industry whose economic prospects are heavily dependent upon two variables we cannot control: general economic conditions and the price of fuel.
Our 2024 third quarter total operating cost per available seat mile (CASM) was 17.92 cents, a decrease of 4.2% from 18.70 cents in the third quarter of 2023.
Our 2024 third quarter CASM excluding net special items and fuel was 13.39 cents, an increase of 2.8% from 13.02 cents in the third quarter of 2023.
For a reconciliation of CASM to CASM excluding net special items and fuel, see "Reconciliation of GAAP to Non-GAAP Financial Measures" below.
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Liquidity
As of September 30, 2024, we had $11.8 billion in total available liquidity, consisting of $8.5 billion in unrestricted cash and short-term investments, and $3.3 billion in total undrawn capacity under revolving credit and other facilities.
During the first nine months of 2024, we completed the following financing transactions (see Note 5 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for further information on 2024 financing activities):
•entered into a revolving credit facility that provides for borrowing capacity of up to $350 million, maturing in March 2027 with an option to extend for an additional year;
•amended the 2013, 2014 and 2023 Credit Agreements to reduce the applicable interest rate margins, and terminated all revolving commitments under the April 2016 Credit Agreement, increasing overall available revolving credit capacity from $2.8 billion to $2.9 billion, maturing in June 2029;
•amended the 2023 Term Loan Facility to reduce the applicable interest rate margin;
•issued $684 million of enhanced equipment trust certificates (EETCs) in connection with the financing of certain aircraft that had been previously delivered; and
•issued $571 million of equipment loans and other notes payable in connection with the financing of certain aircraft.
Reconciliation of GAAP to Non-GAAP Financial Measures
We sometimes use financial measures that are derived from the condensed consolidated financial statements but that are not presented in accordance with accounting principles generally accepted in the U.S. (GAAP) to understand and evaluate our current operating performance and to allow for period-to-period comparisons. We believe these non-GAAP financial measures may also provide useful information to investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with GAAP. We are providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis.
The following table presents the reconciliation of pre-tax income (loss) (GAAP measure) to pre-tax income excluding net special items (non-GAAP measure). Management uses this non-GAAP financial measure to evaluate our current operating performance and to allow for period-to-period comparisons. As net special items may vary from period-to-period in nature and amount, the adjustment to exclude net special items allows management an additional tool to understand our core operating performance.
Three Months EndedSeptember 30,Nine Months EndedSeptember 30,
2024202320242023
(In millions)
Reconciliation of Pre-Tax Income Excluding Net Special Items:
Pre-tax income (loss) - GAAP$(256)$(690)$359 $1,089
Pre-tax net special items (1):
Mainline operating special items, net554 949 625 962
Regional operating special items, net- 2 - 8
Nonoperating special items, net(27)101 30 146
Total pre-tax net special items527 1,052 655 1,116
Pre-tax income excluding net special items$271 $362 $1,014 $2,205
(1)See Note 2 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for further information on net special items.
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Additionally, the table below presents the reconciliation of total operating costs (GAAP measure) to total operating costs excluding net special items and fuel (non-GAAP measure) and CASM to CASM excluding net special items and fuel. Management uses total operating costs excluding net special items and fuel and CASM excluding net special items and fuel to evaluate our current operating performance and for period-to-period comparisons. The price of fuel, over which we have no control, impacts the comparability of period-to-period financial performance. The adjustment to exclude net special items and fuel allows management an additional tool to understand and analyze our non-fuel costs and core operating performance. Amounts may not recalculate due to rounding.
Three Months EndedSeptember 30,Nine Months EndedSeptember 30,
2024202320242023
Reconciliation of CASM Excluding Net Special Items and Fuel:
(In millions)
Total operating expenses - GAAP$13,558 $13,705 $39,071 $37,348
Operating net special items (1):
Mainline operating special items, net
(554)(949)(625)(962)
Regional operating special items, net
- (2)- (8)
Aircraft fuel and related taxes(2,874)(3,209)(8,916)(9,098)
Total operating expenses, excluding net special items and fuel$10,130 $9,545 $29,530 $27,280
Total available seat miles (ASM)75,665 73,285 221,445 207,950
(In cents)
CASM17.92 18.70 17.64 17.96
Operating net special items per ASM (1):
Mainline operating special items, net (0.73)(1.29)(0.28)(0.46)
Regional operating special items, net- - - -
Aircraft fuel and related taxes per ASM(3.80)(4.38)(4.03)(4.38)
CASM, excluding net special items and fuel13.39 13.02 13.34 13.12
(1)See Note 2 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for further information on net special items.
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AAG's Results of Operations
Operating Statistics
The table below sets forth selected operating data for the three and nine months ended September 30, 2024 and 2023. Amounts may not recalculate due to rounding.
Three Months EndedSeptember 30,Increase(Decrease)Nine Months EndedSeptember 30,Increase(Decrease)
2024202320242023
Revenue passenger miles (millions) (a)
65,502 61,561 6.4%188,120 173,595 8.4%
Available seat miles (millions) (b)
75,665 73,285 3.2%221,445 207,950 6.5%
Passenger load factor (percent) (c)
86.6 84.0 2.6pts85.0 83.5 1.5pts
Yield (cents) (d)
19.12 20.18 (5.2)%19.77 21.03 (6.0)%
Passenger revenue per available seat mile (cents) (e)
16.55 16.95 (2.3)%16.79 17.55 (4.3)%
Total revenue per available seat mile (cents) (f)
18.04 18.40 (2.0)%18.31 19.10 (4.1)%
Fuel consumption (gallons in millions)
1,147 1,102 4.1%3,322 3,107 6.9%
Average aircraft fuel price including related taxes (dollars per gallon)
2.50 2.91 (14.0)%2.68 2.93 (8.3)%
Total operating cost per available seat mile (cents) (g)
17.92 18.70 (4.2)%17.64 17.96 (1.8)%
Aircraft at end of period (h)
1,546 1,499 3.1%1,546 1,499 3.1%
Full-time equivalent employees at end of period
134,200 132,800 1.1%134,200 132,800 1.1%
(a)Revenue passenger mile (RPM) - A basic measure of sales volume. One RPM represents one passenger flown one mile.
(b)Available seat mile (ASM) - A basic measure of production. One ASM represents one seat flown one mile.
(c)Passenger load factor - The percentage of available seats that are filled with revenue passengers.
(d)Yield - A measure of airline revenue derived by dividing passenger revenue by RPMs.
(e)Passenger revenue per available seat mile (PRASM) - Passenger revenue divided by ASMs.
(f)Total revenue per available seat mile (TRASM) - Total revenues divided by ASMs.
(g)Total operating cost per available seat mile (CASM) - Total operating expenses divided by ASMs.
(h)Includes aircraft owned and leased by American as well as aircraft operated by third-party regional carriers under capacity purchase agreements. Excluded from the aircraft count above are 52 regional aircraft in temporary storage as of September 30, 2024 as follows: 51 Embraer 145 and one Embraer 170.
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Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023
Operating Revenues
Three Months EndedSeptember 30,IncreasePercent
Increase
20242023
(In millions, except percentage changes)
Passenger$12,523 $12,421 $102 0.8
Cargo202 193 9 5.0
Other922 868 54 6.0
Total operating revenues$13,647 $13,482 $165 1.2
This table presents our passenger revenue and the period-over-period change in certain operating statistics:
Increase (Decrease)
vs. Three Months Ended September 30, 2023
Three Months EndedSeptember 30, 2024RPMsASMsLoad
Factor
Passenger
Yield
PRASM
(In millions)
Passenger revenue$12,523 6.4%3.2%2.6pts(5.2)%(2.3)%
Passenger revenue remained relatively flat in the third quarter of 2024 from the third quarter of 2023. In the third quarter of 2024, we experienced a 5.2% decrease in passenger yield on a 3.2% capacity growth year-over-year, as measured by ASMs. Load factor was 86.6% for the third quarter of 2024, compared to 84.0% for the third quarter of 2023. Our passenger revenue performance improved through the third quarter of 2024 as industry domestic capacity growth decelerated from July 2024. While we continue to see the impact of certain commercial initiatives we had previously deployed, we have made progress to regain our share of revenue lost as we continue to reset these initiatives.
Cargo revenue increased $9 million, or 5.0%, in the third quarter of 2024 from the third quarter of 2023, primarily due to a 10.5% increase in cargo ton miles, offset in part by a 5.0% decrease in cargo yield driven by increased air freight capacity.
Other operating revenue increased $54 million, or 6.0%, in the third quarter of 2024 from the third quarter of 2023, driven primarily by higher revenue associated with our loyalty program. During the three months ended September 30, 2024 and 2023, cash payments from co-branded credit card and other partners were $1.4 billion and $1.3 billion, respectively.
Total operating revenues increased $165 million, or 1.2%, in the third quarter of 2024 from the third quarter of 2023. Our TRASM was 18.04 cents in the third quarter of 2024, a 2.0% decrease as compared to 18.40 cents in the third quarter of 2023.
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Operating Expenses
Three Months EndedSeptember 30,Increase(Decrease)PercentIncrease(Decrease)
20242023
(In millions, except percentage changes)
Aircraft fuel and related taxes$2,874 $3,209 $(335)(10.4)
Salaries, wages and benefits4,098 3,974 124 3.1
Regional expenses1,264 1,168 96 8.2
Maintenance, materials and repairs989 870 119 13.8
Other rent and landing fees861 745 116 15.5
Aircraft rent303 342 (39)(11.4)
Selling expenses468 430 38 8.8
Depreciation and amortization479 487 (8)(1.5)
Mainline operating special items, net554 949 (395)(41.6)
Other1,668 1,531 137 8.8
Total operating expenses$13,558 $13,705 $(147)(1.1)
Aircraft fuel and related taxes decreased $335 million, or 10.4%, in the third quarter of 2024 from the third quarter of 2023, primarily due to a 14.0% decrease in the average price per gallon of aircraft fuel including related taxes to $2.50 in the third quarter of 2024 from $2.91 in the third quarter of 2023, offset in part by a 4.1% increase in gallons of fuel consumed due to increased capacity.
Regional expenses increased $96 million, or 8.2%, in the third quarter of 2024 from the third quarter of 2023, primarily due to an increase in regional flight operations at our wholly-owned regional carriers and higher maintenance, materials and repair costs driven by an increase in the volume of engine overhauls and airframe heavy checks.
Maintenance, materials and repairs increased $119 million, or 13.8%, in the third quarter of 2024 from the third quarter of 2023, primarily due to increased costs for engine overhauls and component part repairs driven by higher volume, as well as airframe heavy checks.
Other rent and landing fees increased $116 million, or 15.5%, in the third quarter of 2024 from the third quarter of 2023, primarily driven by rate increases at certain airports as a result of extensive redevelopment projects at various airports and a 7.6% increase in the number of departures.
Aircraft rent decreased $39 million, or 11.4%, in the third quarter of 2024 from the third quarter of 2023, primarily due to decreased rental payments associated with aircraft operating lease extensions.
Selling expenses increased $38 million, or 8.8%, in the third quarter of 2024 from the third quarter of 2023, primarily due to increases in commissions and advertising expenses.
Other operating expenses increased $137 million, or 8.8%, in the third quarter of 2024 from the third quarter of 2023, primarily driven by increased costs for passenger accommodation, onboard food and catering, crew travel, ground handling and airport lounge operations, as well as certain general and administrative expenses.
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Operating Special Items, Net
Three Months Ended September 30,
20242023
(In millions)
Labor contract expenses (1)
$516 $983
Other operating special items, net38 (34)
Mainline operating special items, net554 949
Regional operating special items, net- 2
Operating special items, net$554 $951
(1)Labor contract expenses for the three months ended September 30, 2024 related to one-time charges resulting from the ratification of a new collective bargaining agreement with our mainline flight attendants, including a one-time payment of $514 million.
Labor contract expenses for the three months ended September 30, 2023 related to one-time charges resulting from the ratification of a new collective bargaining agreement with our mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $229 million.
Nonoperating Results
Three Months Ended September 30,Increase
(Decrease)
PercentIncrease(Decrease)
20242023
(In millions, except percentage changes)
Interest income$117 $168 $(51)(30.3)
Interest expense, net(480)(537)57 (10.7)
Other income (expense), net18 (98)116 nm
Total nonoperating expense, net$(345)$(467)$122 (26.2)
Interest income decreased $51 million, or 30.3%, in the third quarter of 2024 from the third quarter of 2023, primarily due to a decrease in short-term investments subsequent to the third quarter of 2023. Interest expense, net decreased $57 million, or 10.7%, in the third quarter of 2024 from the third quarter of 2023, primarily due to lower outstanding debt subsequent to the third quarter of 2023.
In the third quarter of 2024, other nonoperating income, net primarily included $27 million of non-service related pension and other postretirement benefit plan income and $27 million of net special credits for mark-to-market net unrealized gains associated with certain equity investments, offset in part by $21 million of foreign currency losses.
In the third quarter of 2023, other nonoperating expense, net primarily included $101 million of net special charges for mark-to-market net unrealized losses associated with certain equity investments and debt extinguishments, offset in part by $16 million of non-service related pension and other postretirement benefit plan income.
Income Taxes
In the third quarter of 2024, we recorded an income tax benefit of $107 million. Substantially all of our loss before income taxes is attributable to the United States.
See Note 6 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for additional information on income taxes.
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Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Operating Revenues
Nine Months EndedSeptember 30,Increase(Decrease)PercentIncrease(Decrease)
20242023
(In millions, except percentage changes)
Passenger$37,184 $36,502 $682 1.9
Cargo584 613 (29)(4.7)
Other2,783 2,611 172 6.5
Total operating revenues$40,551 $39,726 $825 2.1
This table presents our passenger revenue and the period-over-period change in certain operating statistics:
Increase (Decrease)
vs. Nine Months Ended September 30, 2023
Nine Months EndedSeptember 30, 2024RPMsASMsLoad
Factor
Passenger
Yield
PRASM
(In millions)
Passenger revenue$37,184 8.4%6.5%1.5pts(6.0)%(4.3)%
Passenger revenue increased $682 million, or 1.9%, in the first nine months of 2024 from the first nine months of 2023. In the first nine months of 2024, we experienced a 6.0% decrease in passenger yield on a 6.5% capacity growth year-over-year, as measured by ASMs. Load factor was 85.0% for the first nine months of 2024, compared to 83.5% for the first nine months of 2023. Our passenger revenue performance improved through the first nine months of 2024 as industry domestic capacity growth decelerated from July 2024. While we continue to see the impact of certain commercial initiatives we had previously deployed, we have made progress to regain our share of revenue lost as we continue to reset these initiatives.
Cargo revenue decreased $29 million, or 4.7%, in the first nine months of 2024 from the first nine months of 2023, primarily due to a 17.2% decrease in cargo yield driven by increased air freight capacity, offset in part by a 15.1% increase in cargo ton miles.
Other operating revenue increased $172 million, or 6.5%, in the first nine months of 2024 from the first nine months of 2023, driven primarily by higher revenue associated with our loyalty program. During the nine months ended September 30, 2024 and 2023, cash payments from co-branded credit card and other partners were $4.4 billion and $4.0 billion, respectively.
Total operating revenues increased $825 million, or 2.1%, in the first nine months of 2024 from the first nine months of 2023, driven primarily by the increase in passenger revenue as described above. Our TRASM was 18.31 cents in the first nine months of 2024, a 4.1% decrease as compared to 19.10 cents in the first nine months of 2023.
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Operating Expenses
Nine Months EndedSeptember 30,Increase(Decrease)PercentIncrease(Decrease)
20242023
(In millions, except percentage changes)
Aircraft fuel and related taxes$8,916 $9,098 $(182)(2.0)
Salaries, wages and benefits11,917 10,891 1,026 9.4
Regional expenses3,733 3,463 270 7.8
Maintenance, materials and repairs2,823 2,389 434 18.2
Other rent and landing fees2,514 2,214 300 13.5
Aircraft rent945 1,031 (86)(8.3)
Selling expenses1,331 1,357 (26)(1.9)
Depreciation and amortization1,424 1,456 (32)(2.2)
Mainline operating special items, net625 962 (337)(35.1)
Other4,843 4,487 356 7.9
Total operating expenses$39,071 $37,348 $1,723 4.6
Aircraft fuel and related taxes decreased $182 million, or 2.0%, in the first nine months of 2024 from the first nine months of 2023, primarily due to an 8.3% decrease in the average price per gallon of aircraft fuel including related taxes to $2.68 in the first nine months of 2024 from $2.93 in the first nine months of 2023, offset in part by a 6.9% increase in gallons of fuel consumed due to increased capacity.
Salaries, wages and benefits increased $1.0 billion, or 9.4%, in the first nine months of 2024 from the first nine months of 2023, primarily driven by higher wage rates and costs for benefit-related items associated with the ratification of a new collective bargaining agreement with our mainline pilots in August 2023.
Regional expenses increased $270 million, or 7.8%, in the first nine months of 2024 from the first nine months of 2023, primarily due to an increase in regional flight operations at our wholly-owned regional carriers and higher maintenance, materials and repair costs driven by an increase in the volume of engine overhauls and airframe heavy checks.
Maintenance, materials and repairs increased $434 million, or 18.2%, in the first nine months of 2024 from the first nine months of 2023, primarily due to increased costs for engine overhauls, airframe heavy checks and component part repairs driven by higher volume.
Other rent and landing fees increased $300 million, or 13.5%, in the first nine months of 2024 from the first nine months of 2023, primarily driven by rate increases at certain airports as a result of extensive redevelopment projects at various airports and an 8.3% increase in the number of departures, as well as incremental engine leases.
Aircraft rent decreased $86 million, or 8.3%, in the first nine months of 2024 from the first nine months of 2023, primarily due to decreased rental payments associated with aircraft operating lease extensions.
Selling expenses decreased $26 million, or 1.9%, in the first nine months of 2024 from the first nine months of 2023, primarily due to a decrease in commissions expense, offset in part by higher credit card fees driven by the overall increase in passenger revenues, and an increase in advertising expense.
Other operating expenses increased $356 million, or 7.9%, in the first nine months of 2024 from the first nine months of 2023, primarily driven by the increase in flight operations, including increased costs for onboard food and catering, crew travel, passenger accommodation, ground handling and airport lounge operations, as well as certain general and administrative expenses.
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Operating Special Items, Net
Nine Months Ended September 30,
20242023
(In millions)
Labor contract expenses (1)
$573 $983
Severance expenses13 21
Other operating special items, net39 (42)
Mainline operating special items, net625 962
Regional operating special items, net- 8
Operating special items, net$625 $970
(1)Labor contract expenses for the nine months ended September 30, 2024 related to one-time charges resulting from the ratification of a new collective bargaining agreement with our mainline flight attendants, including a one-time payment of $514 million, and from the ratification of a new collective bargaining agreement with our mainline passenger service team members.
Labor contract expenses for the nine months ended September 30, 2023 related to one-time charges resulting from the ratification of a new collective bargaining agreement with our mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $229 million.
Nonoperating Results
Nine Months Ended September 30,Increase(Decrease)PercentDecrease
20242023
(In millions, except percentage changes)
Interest income$363 $456 $(93)(20.4)
Interest expense, net(1,464)(1,626)162 (10.0)
Other expense, net(20)(119)99 (83.0)
Total nonoperating expense, net$(1,121)$(1,289)$168 (13.0)
Interest income decreased $93 million, or 20.4%, in the first nine months of 2024 from the first nine months of 2023, primarily due to a decrease in short-term investments subsequent to the third quarter of 2023. Interest expense, net decreased $162 million, or 10.0%, in the first nine months of 2024 from the first nine months of 2023, primarily due to lower outstanding debt subsequent to the third quarter of 2023.
In the first nine months of 2024, other nonoperating expense, net included $31 million of foreign currency losses and $30 million of net special charges primarily for mark-to-market net unrealized losses associated with certain equity investments, offset in part by $76 million of non-service related pension and other postretirement benefit plan income.
In the first nine months of 2023, other nonoperating expense, net primarily included $146 million of net special charges for debt refinancings and extinguishments and mark-to-market net unrealized losses associated with certain equity investments, offset in part by $32 million of non-service related pension and other postretirement benefit plan income.
Income Taxes
In the first nine months of 2024, we recorded an income tax provision of $103 million. Substantially all of our income before income taxes is attributable to the United States.
See Note 6 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for additional information on income taxes.
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American's Results of Operations
Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023
Operating Revenues
Three Months EndedSeptember 30,IncreasePercentIncrease
20242023
(In millions, except percentage changes)
Passenger$12,523 $12,421 $102 0.8
Cargo202 193 9 5.0
Other920 867 53 6.0
Total operating revenues$13,645 $13,481 $164 1.2
Passenger revenue remained relatively flat in the third quarter of 2024 from the third quarter of 2023. In the third quarter of 2024, American experienced a decrease in passenger yield on higher capacity growth year-over-year, as measured by ASMs. American's passenger revenue performance improved through the third quarter of 2024 as industry domestic capacity growth decelerated from July 2024. While American continues to see the impact of certain commercial initiatives it had previously deployed, American has made progress to regain its share of revenue lost as it continues to reset these initiatives.
Cargo revenue increased $9 million, or 5.0%, in the third quarter of 2024 from the third quarter of 2023, primarily due to an increase in cargo ton miles, offset in part by a decrease in cargo yield driven by increased air freight capacity.
Other operating revenue increased $53 million, or 6.0%, in the third quarter of 2024 from the third quarter of 2023, driven primarily by higher revenue associated with American's loyalty program. During the three months ended September 30, 2024 and 2023, cash payments from co-branded credit card and other partners were $1.4 billion and $1.3 billion, respectively.
Total operating revenues increased $164 million, or 1.2%, in the third quarter of 2024 from the third quarter of 2023.
Operating Expenses
Three Months EndedSeptember 30,Increase(Decrease)PercentIncrease(Decrease)
20242023
(In millions, except percentage changes)
Aircraft fuel and related taxes$2,874 $3,209 $(335)(10.4)
Salaries, wages and benefits4,096 3,972 124 3.1
Regional expenses1,268 1,149 119 10.3
Maintenance, materials and repairs989 870 119 13.8
Other rent and landing fees861 745 116 15.5
Aircraft rent303 342 (39)(11.4)
Selling expenses468 430 38 8.8
Depreciation and amortization477 484 (7)(1.5)
Mainline operating special items, net554 949 (395)(41.6)
Other1,665 1,533 132 8.6
Total operating expenses$13,555 $13,683 $(128)(0.9)
Aircraft fuel and related taxes decreased $335 million, or 10.4%, in the third quarter of 2024 from the third quarter of 2023, primarily due to a 14.0% decrease in the average price per gallon of aircraft fuel including related taxes to $2.50 in the third quarter of 2024 from $2.91 in the third quarter of 2023, offset in part by a 4.1% increase in gallons of fuel consumed due to increased capacity.
Regional expenses increased $119 million, or 10.3%, in the third quarter of 2024 from the third quarter of 2023, primarily due to an increase in regional flight operations and costs at American's regional carriers.
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Maintenance, materials and repairs increased $119 million, or 13.8%, in the third quarter of 2024 from the third quarter of 2023, primarily due to increased costs for engine overhauls and component part repairs driven by higher volume, as well as airframe heavy checks.
Other rent and landing fees increased $116 million, or 15.5%, in the third quarter of 2024 from the third quarter of 2023, primarily driven by rate increases at certain airports as a result of extensive redevelopment projects at various airports and an increase in the number of departures.
Aircraft rent decreased $39 million, or 11.4%, in the third quarter of 2024 from the third quarter of 2023, primarily due to decreased rental payments associated with aircraft operating lease extensions.
Selling expenses increased $38 million, or 8.8%, in the third quarter of 2024 from the third quarter of 2023, primarily due to increases in commissions and advertising expenses.
Other operating expenses increased $132 million, or 8.6%, in the third quarter of 2024 from the third quarter of 2023, primarily driven by increased costs for passenger accommodation, onboard food and catering, crew travel, ground handling and airport lounge operations, as well as certain general and administrative expenses.
Operating Special Items, Net
Three Months Ended September 30,
20242023
(In millions)
Labor contract expenses (1)
$516 $983
Other operating special items, net 38 (34)
Mainline operating special items, net$554 $949
(1)Labor contract expenses for the three months ended September 30, 2024 related to one-time charges resulting from the ratification of a new collective bargaining agreement with American's mainline flight attendants, including a one-time payment of $514 million.
Labor contract expenses for the three months ended September 30, 2023 related to one-time charges resulting from the ratification of a new collective bargaining agreement with American's mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $229 million.
Nonoperating Results
Three Months Ended September 30,Increase
(Decrease)
Percent
Increase
(Decrease)
20242023
(In millions, except percentage changes)
Interest income$268 $297 $(29)(9.8)
Interest expense, net(505)(555)50 (9.1)
Other income (expense), net18 (99)117 nm
Total nonoperating expense, net$(219)$(357)$138 (38.7)
Interest income decreased $29 million, or 9.8%, in the third quarter of 2024 from the third quarter of 2023, primarily due to a decrease in short-term investments subsequent to the third quarter of 2023. Interest expense, net decreased $50 million, or 9.1%, in the third quarter of 2024 from the third quarter of 2023, primarily due to lower outstanding debt subsequent to the third quarter of 2023.
In the third quarter of 2024, other nonoperating income, net primarily included $27 million of non-service related pension and other postretirement benefit plan income and $27 million of net special credits for mark-to-market net unrealized gains associated with certain equity investments, offset in part by $21 million of foreign currency losses.
In the third quarter of 2023, other nonoperating expense, net primarily included $101 million of net special charges for mark-to-market net unrealized losses associated with certain equity investments and debt extinguishments, offset in part by $15 million of non-service related pension and other postretirement benefit plan income.
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Income Taxes
American is a member of AAG's consolidated federal and certain state income tax returns.
In the third quarter of 2024, American recorded an income tax benefit of $88 million. Substantially all of American's income before income taxes is attributable to the United States.
See Note 5 to American's Condensed Consolidated Financial Statements in Part I, Item 1B for additional information on income taxes.
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Operating Revenues
Nine Months EndedSeptember 30,Increase(Decrease)PercentIncrease(Decrease)
20242023
(In millions, except percentage changes)
Passenger$37,184 $36,502 $682 1.9
Cargo584 613 (29)(4.7)
Other2,778 2,608 170 6.5
Total operating revenues$40,546 $39,723 $823 2.1
Passenger revenue increased $682 million, or 1.9%, in the first nine months of 2024 from the first nine months of 2023. In the first nine months of 2024, American experienced a decrease in passenger yield on higher capacity growth year-over-year, as measured by ASMs. American's passenger revenue performance improved through the first nine months of 2024 as industry domestic capacity growth decelerated from July 2024. While American continues to see the impact of certain commercial initiatives it had previously deployed, American has made progress to regain its share of revenue lost as it continues to reset these initiatives.
Cargo revenue decreased $29 million, or 4.7%, in the first nine months of 2024 from the first nine months of 2023, primarily due to a decrease in cargo yield driven by increased air freight capacity, offset in part by an increase in cargo ton miles.
Other operating revenue increased $170 million, or 6.5%, in the first nine months of 2024 from the first nine months of 2023, driven primarily by higher revenue associated with American's loyalty program. During the nine months ended September 30, 2024 and 2023, cash payments from co-branded credit card and other partners were $4.4 billion and $4.0 billion, respectively.
Total operating revenues increased $823 million, or 2.1%, in the first nine months of 2024 from the first nine months of 2023, driven primarily by the increase in passenger revenue as described above.
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Operating Expenses
Nine Months EndedSeptember 30,Increase(Decrease)PercentIncrease(Decrease)
20242023
(In millions, except percentage changes)
Aircraft fuel and related taxes$8,916 $9,098 $(182)(2.0)
Salaries, wages and benefits11,911 10,885 1,026 9.4
Regional expenses3,725 3,442 283 8.2
Maintenance, materials and repairs2,823 2,389 434 18.2
Other rent and landing fees2,514 2,214 300 13.5
Aircraft rent945 1,031 (86)(8.3)
Selling expenses1,331 1,357 (26)(1.9)
Depreciation and amortization1,416 1,449 (33)(2.3)
Mainline operating special items, net625 962 (337)(35.1)
Other4,844 4,488 356 7.9
Total operating expenses$39,050 $37,315 $1,735 4.6
Aircraft fuel and related taxes decreased $182 million, or 2.0%, in the first nine months of 2024 from the first nine months of 2023, primarily due to an 8.3% decrease in the average price per gallon of aircraft fuel including related taxes to $2.68 in the first nine months of 2024 from $2.93 in the first nine months of 2023, offset in part by a 6.9% increase in gallons of fuel consumed due to increased capacity.
Salaries, wages and benefits increased $1.0 billion, or 9.4%, in the first nine months of 2024 from the first nine months of 2023, primarily driven by higher wage rates and costs for benefit-related items associated with the ratification of a new collective bargaining agreement with American's mainline pilots in August 2023.
Regional expenses increased $283 million, or 8.2%, in the first nine months of 2024 from the first nine months of 2023, primarily due to an increase in regional flight operations and costs at American's regional carriers.
Maintenance, materials and repairs increased $434 million, or 18.2%, in the first nine months of 2024 from the first nine months of 2023, primarily due to increased costs for engine overhauls, airframe heavy checks and component part repairs driven by higher volume.
Other rent and landing fees increased $300 million, or 13.5%, in the first nine months of 2024 from the first nine months of 2023, primarily driven by rate increases at certain airports as a result of extensive redevelopment projects at various airports and an increase in the number of departures, as well as incremental engine leases.
Aircraft rent decreased $86 million, or 8.3%, in the first nine months of 2024 from the first nine months of 2023, primarily due to decreased rental payments associated with aircraft operating lease extensions.
Selling expenses decreased $26 million, or 1.9%, in the first nine months of 2024 from the first nine months of 2023, primarily due to a decrease in commissions expense, offset in part by higher credit card fees driven by the overall increase in passenger revenues, and an increase in advertising expense.
Other operating expenses increased $356 million, or 7.9%, in the first nine months of 2024 from the first nine months of 2023, primarily driven by the increase in flight operations, including increased costs for onboard food and catering, crew travel, passenger accommodation, ground handling and airport lounge operations, as well as certain general and administrative expenses.
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Operating Special Items, Net
Nine Months Ended September 30,
20242023
(In millions)
Labor contract expenses (1)
$573 $983
Severance expenses13 21
Other operating special items, net 39 (42)
Mainline operating special items, net$625 $962
(1)Labor contract expenses for the nine months ended September 30, 2024 related to one-time charges resulting from the ratification of a new collective bargaining agreement with American's mainline flight attendants, including a one-time payment of $514 million, and from the ratification of a new collective bargaining agreement with American's mainline passenger service team members.
Labor contract expenses for the nine months ended September 30, 2023 related to one-time charges resulting from the ratification of a new collective bargaining agreement with American's mainline pilots, including a one-time payment of $754 million as well as adjustments to other benefit-related items of $229 million.
Nonoperating Results
Nine Months Ended September 30,Increase(Decrease)PercentDecrease
20242023
(In millions, except percentage changes)
Interest income$805 $810 $(5)(0.7)
Interest expense, net(1,536)(1,668)132 (7.9)
Other expense, net(21)(119)98 (82.3)
Total nonoperating expense, net$(752)$(977)$225 (23.0)
Interest expense, net decreased $132 million, or 7.9%, in the first nine months of 2024 from the first nine months of 2023 primarily due to lower outstanding debt subsequent to the third quarter of 2023.
In the first nine months of 2024, other nonoperating expense, net included $31 million of foreign currency losses and $30 million of net special charges primarily for mark-to-market net unrealized losses associated with certain equity investments, offset in part by $75 million of non-service related pension and other postretirement benefit plan income.
In the first nine months of 2023, other nonoperating expense, net primarily included $146 million of net special charges for debt refinancings and extinguishments and mark-to-market net unrealized losses associated with certain equity investments, offset in part by $31 million of non-service related pension and other postretirement benefit plan income.
Income Taxes
American is a member of AAG's consolidated federal and certain state income tax returns.
In the first nine months of 2024, American recorded an income tax provision of $208 million. Substantially all of American's income before income taxes is attributable to the United States.
See Note 5 to American's Condensed Consolidated Financial Statements in Part I, Item 1B for additional information on income taxes.
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Liquidity and Capital Resources
Liquidity
At September 30, 2024, AAG had $11.8 billion in total available liquidity and $752 million in restricted cash and short-term investments. Additional detail regarding our available liquidity is provided in the table below (in millions):
AAGAmerican
September 30, 2024December 31, 2023September 30, 2024December 31, 2023
Cash$834 $578 $825 $567
Short-term investments7,638 7,000 7,635 6,998
Undrawn facilities3,290 2,862 3,290 2,862
Total available liquidity$11,762 $10,440 $11,750 $10,427
In the ordinary course of our business, we or our affiliates may, at any time and from time to time, seek to prepay, retire or repurchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases, prepayments, retirements or exchanges, if any, will be conducted on such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, legal and contractual restrictions and other factors. The amounts involved may be material.
Certain Covenants
Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among other things, may restrict the ability of us and our subsidiaries to incur additional indebtedness, pay dividends or repurchase stock. Our debt agreements also contain customary change of control provisions, which may require us to repay or redeem such indebtedness upon certain events constituting a change of control under the relevant agreement, in certain cases at a premium. Additionally, certain of our debt financing agreements (including our secured notes, term loans, revolving credit facilities and spare engine EETCs) contain loan to value (LTV) or collateral coverage ratio covenants and certain agreements require us to appraise the related collateral annually or semiannually. Pursuant to such agreements, if the applicable LTV or collateral coverage ratio exceeds or falls below a specified threshold, as the case may be, we will be required, as applicable, to pledge additional qualifying collateral (which in some cases may include cash or investment securities), withhold additional cash in certain accounts, or pay down such financing, in whole or in part, or the interest rate for the relevant financing will be increased. Additionally, a significant portion of our debt financing agreements contain covenants requiring us to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities, and our 5.50% senior secured notes due 2026, 5.75% senior secured notes due 2029 and AAdvantage Term Loan Facility (collectively, the AAdvantage Financing) contain a peak debt service coverage ratio, pursuant to which failure to comply with a certain threshold may result in early repayment, in whole or in part, of the AAdvantage Financing. As of the most recent applicable measurement dates, we were in compliance with each of the foregoing covenants.
Sources and Uses of Cash
AAG
Operating Activities
Our net cash provided by operating activities was $3.6 billion and $5.2 billion for the first nine months of 2024 and 2023, respectively, a period-over-period decrease of $1.6 billion. This decrease in operating cash flows from the 2023 period to the 2024 period was due to lower profitability in the first nine months of 2024 and net working capital changes. In addition, we contributed $296 million to our defined benefit pension plans in the first nine months of 2024 as compared to $68 million in the first nine months of 2023.
Investing Activities
Our net cash used in investing activities was $1.8 billion and $2.7 billion for the first nine months of 2024 and 2023, respectively.
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Our principal investing activities in the first nine months of 2024 included $1.9 billion of capital expenditures, which primarily related to the purchase of 12 Embraer 175 aircraft, three Boeing 737 MAX aircraft, three Boeing 737-800 aircraft lease repurchases, two Airbus A321neo aircraft, 39 aircraft engines and aircraft purchase deposits. Additionally, we had $627 million in net purchases of short-term investments. These cash outflows were offset in part by $598 million of proceeds from sale-leaseback transactions and sale of property and equipment, which primarily related to the modernization of Terminals 4 and 5 at Los Angeles International Airport (LAX).
Our principal investing activities in the first nine months of 2023 included $1.8 billion of capital expenditures, which primarily related to the purchase of 11 Boeing 737 MAX aircraft, six Embraer 175 aircraft, three used Bombardier CRJ 900 aircraft, two Airbus A321neo aircraft and 22 spare engines. Additionally, we had $1.5 billion in net purchases of short-term investments. These cash outflows were offset in part by $219 million of proceeds from sale-leaseback transactions and sale of property and equipment.
Financing Activities
Our net cash used in financing activities was $1.5 billion and $2.4 billion for the first nine months of 2024 and 2023, respectively.
Our principal financing activities in the first nine months of 2024 included $2.7 billion in scheduled repayments of debt and finance lease obligations. These cash outflows were offset in part by $1.3 billion of proceeds from issuance of long-term debt, consisting of $684 million from the issuance of EETCs in connection with the financing of certain aircraft that had been previously delivered and $571 million from the issuance of equipment loans and other notes payable.
Our principal financing activities in the first nine months of 2023 included $2.3 billion in net repayments of debt and finance lease obligations primarily due to scheduled debt repayments. We refinanced approximately $1.8 billion in aggregate principal amount of term loans outstanding under the 2013 Term Loan Facility by extending the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility and issuing $750 million in aggregate principal amount of the 7.25% Senior Secured Notes. In addition, we borrowed $663 million in connection with the financing of certain aircraft and repurchased $552 million of secured and unsecured notes in the open market.
American
Operating Activities
American's net cash provided by operating activities was $3.5 billion and $5.1 billion for the first nine months of 2024 and 2023, respectively, a period-over-period decrease of $1.6 billion. This decrease in operating cash flows from the 2023 period to the 2024 period was due to lower profitability in the first nine months of 2024 and net working capital changes. In addition, American contributed $292 million to its defined benefit pension plans in the first nine months of 2024 as compared to $67 million in the first nine months of 2023.
Investing Activities
American's net cash used in investing activities was $1.8 billion and $2.6 billion for the first nine months of 2024 and 2023, respectively.
American's principal investing activities in the first nine months of 2024 included $1.9 billion of capital expenditures, which primarily related to the purchase of 12 Embraer 175 aircraft, three Boeing 737 MAX aircraft, three Boeing 737-800 aircraft lease repurchases, two Airbus A321neo aircraft, 39 aircraft engines and aircraft purchase deposits. Additionally, American had $626 million in net purchases of short-term investments. These cash outflows were offset in part by $598 million of proceeds from sale-leaseback transactions and sale of property and equipment, which primarily related to the modernization of Terminals 4 and 5 at LAX.
American's principal investing activities in the first nine months of 2023 included $1.7 billion of capital expenditures, which primarily related to the purchase of 11 Boeing 737 MAX aircraft, six Embraer 175 aircraft, three used Bombardier CRJ 900 aircraft, two Airbus A321neo aircraft and 22 spare engines. Additionally, American had $1.5 billion in net purchases of short-term investments. These cash outflows were offset in part by $219 million of proceeds from sale-leaseback transactions and sale of property and equipment.
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Financing Activities
American's net cash used in financing activities was $1.5 billion and $2.4 billion for the first nine months of 2024 and 2023, respectively.
American's principal financing activities in the first nine months of 2024 included $2.7 billion in scheduled repayments of debt and finance lease obligations. These cash outflows were offset in part by $1.3 billion of proceeds from issuance of long-term debt, consisting of $684 million from the issuance of EETCs in connection with the financing of certain aircraft that had been previously delivered and $571 million from the issuance of equipment loans and other notes payable.
American's principal financing activities in the first nine months of 2023 included $2.3 billion in net repayments of debt and finance lease obligations primarily due to scheduled debt repayments. American refinanced approximately $1.8 billion in aggregate principal amount of term loans outstanding under the 2013 Term Loan Facility by extending the maturity of $1.0 billion in term loans under the 2013 Term Loan Facility and issuing $750 million in aggregate principal amount of the 7.25% Senior Secured Notes. In addition, American borrowed $663 million in connection with the financing of certain aircraft and repurchased $539 million of secured notes in the open market.
Commitments
Significant Indebtedness
As of September 30, 2024, AAG had $31.4 billion in long-term debt, including current maturities of $5.3 billion. As of September 30, 2024, American had $26.2 billion in long-term debt, including current maturities of $3.8 billion. All material changes in our significant indebtedness since our 2023 Form 10-K are discussed in Note 5 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A and Note 4 to American's Condensed Consolidated Financial Statements in Part I, Item 1B.
Aircraft and Engine Purchase Commitments
As of September 30, 2024, we had definitive purchase agreements for the acquisition of the following new aircraft (1):
Remainderof 202420252026202720282029 and ThereafterTotal
Airbus
A320neo Family3 7 28 34 14 64 150
Boeing
737 MAX Family (2)
- 17 23 - 20 95 155
787 Family1 10 4 5 5 5 30
Embraer
1753 15 18 15 15 30 96
Total7 49 73 54 54 194 431
(1)Delivery schedule represents our best estimate as of the date of this report as described in footnote (d) to the "Contractual Obligations" table below. Actual delivery dates are subject to change, which could be material, based on various potential factors including production delays by the manufacturer and regulatory concerns. See Part II, Item 1A. Risk Factors - "We depend on a limited number of suppliers for aircraft, aircraft engines and parts. Delays in scheduled aircraft deliveries, unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or other loss of anticipated fleet capacity, and failure of new aircraft to receive regulatory approval, be produced or otherwise perform as and when expected, adversely impacts our business, results of operations and financial condition."
(2)As of the date of this report, due to a strike action affecting certain of its production facilities, The Boeing Company (Boeing) has suspended production of 737 MAX Family aircraft.
In addition, we have committed to purchase 14 used Bombardier CRJ 900 aircraft which are scheduled to be delivered from 2024 through 2026. We also have agreements for 61 spare engines to be delivered in the fourth quarter of 2024 and beyond. The "Contractual Obligations" table below reflects these commitments.
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We currently have financing commitments in place for all new aircraft scheduled to be delivered in 2024. Our ability to draw on the financing commitments we have in place is subject to (1) the satisfaction of various terms and conditions including, in some cases, on our acquisition of the aircraft by a certain date and (2) the performance by the relevant financing counterparty of its obligations thereunder.
Off-Balance Sheet Arrangements
An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity under which a company has (1) made guarantees, (2) a retained or a contingent interest in transferred assets, (3) an obligation under derivative instruments classified as equity or (4) any obligation arising out of a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or that engages in leasing, hedging or research and development arrangements with us.
There have been no material changes in our off-balance sheet arrangements as discussed in our 2023 Form 10-K.
Labor Contracts
In January 2024, a new five-year collective bargaining agreement was ratified by the Communications Workers of America and International Brotherhood of Teamsters for our mainline passenger service team members, which is amendable in 2029.
In September 2024, a new five-year collective bargaining agreement was ratified by the APFA for our mainline flight attendants, which is amendable in 2029.
Also in September 2024, the Transport Workers Union and International Association of Machinists & Aerospace
Workers announced a tentative agreement for a two-year contract extension for our mainline maintenance and fleet service team members. The tentative agreement remains subject to ratification by the union's membership, which we expect to occur in the fourth quarter of 2024.
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Contractual Obligations
The following table provides details of our estimated material cash requirements from contractual obligations as of September 30, 2024 (in millions). The table does not include commitments that are contingent on events or other factors that are uncertain or unknown at this time and is subject to other conventions as set forth in the applicable accompanying footnotes.
Payments Due by Period
Remainderof 202420252026202720282029 and ThereafterTotal
American
Long-term debt:
Principal amount (a), (c)
$979 $3,866 $4,748 $4,957 $5,278 $6,369 $26,197
Interest obligations (b), (c)
379 1,429 1,088 786 500 553 4,735
Finance lease obligations45 155 129 89 54 198 670
Aircraft and engine purchase commitments (d)
328 2,774 4,044 3,505 3,365 12,396 26,412
Operating lease commitments427 1,652 1,495 1,325 1,188 4,452 10,539
Regional capacity purchase agreements (e)
616 2,001 1,708 1,477 697 1,343 7,842
Minimum pension obligations (f)
- 251 244 165 140 65 865
Retiree medical and other postretirement benefits
31 131 137 137 135 606 1,177
Other purchase obligations (g)
1,109 2,611 1,557 1,073 264 3,300 9,914
Total American Contractual Obligations3,914 14,870 15,150 13,514 11,621 29,282 88,351
AAG Parent and Other AAG Subsidiaries
Long-term debt:
Principal amount (a)
- 1,487 - - - 3,746 5,233
Interest obligations (b)
- 145 152 188 190 392 1,067
Operating lease commitments5 13 13 8 7 46 92
Minimum pension obligations (f)
- 2 2 1 1 3 9
Total AAG Contractual Obligations$3,919 $16,517 $15,317 $13,711 $11,819 $33,469 $94,752
(a)Amounts represent contractual amounts due. Excludes $313 million and $7 million of unamortized debt discount, premium and issuance costs as of September 30, 2024 for American and AAG Parent, respectively. For additional information, see Note 5 and Note 4 to AAG's and American's Condensed Consolidated Financial Statements in Part I, Items 1A and 1B, respectively.
(b)For variable-rate debt, future interest obligations are estimated using the current forward rates at September 30, 2024.
(c)Includes $7.6 billion of future principal payments and $948 million of future interest payments as of September 30, 2024, related to EETCs associated with mortgage financings of certain aircraft and spare engines.
(d)See "Aircraft and Engine Purchase Commitments" above for additional information about the firm commitment aircraft delivery schedule, in particular the footnotes to the table thereunder as to potential changes to such delivery schedule. Due to uncertainty surrounding the timing of delivery of certain aircraft, the amounts in the table represent our most current estimate based on contractual delivery schedules adjusted for updates and revisions to such schedules communicated to management by the applicable equipment manufacturer. However, the actual delivery schedule may differ, potentially materially, based on various potential factors including production delays by the manufacturer and regulatory concerns. Additionally, the amounts in the table exclude one and four Boeing 787 Family aircraft scheduled to be delivered in 2024 and 2025, respectively, in each case for which we have obtained committed lease financing. This financing is reflected in the operating lease commitments line above.
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(e)Represents minimum payments under capacity purchase agreements with third-party regional carriers. These commitments are estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and American's actual payments could differ materially. Rental payments under operating leases for certain aircraft flown under these capacity purchase agreements are reflected in the operating lease commitments line above.
(f)Represents minimum pension contributions based on actuarially determined estimates as of December 31, 2023 and is based on estimated payments through 2033. During the first nine months of 2024, we made required contributions of $284 million and a supplemental contribution of $12 million to our defined benefit pension plans.
(g)Includes purchase commitments for aircraft fuel, flight equipment maintenance and information technology support and excludes obligations under certain fuel offtake agreements or other agreements for which the timing of the related expenditure is uncertain, or which are subject to material contingencies, such as the construction of a production facility.
Capital Raising Activity and Other Possible Actions
In light of our significant financial commitments related to, among other things, the servicing and amortization of existing debt and equipment leasing arrangements and new flight equipment, we and our subsidiaries will regularly consider, and enter into negotiations related to, capital raising and liability management activity, which may include the entry into leasing transactions and future issuances of, and transactions designed to manage the timing and amount of, secured or unsecured debt obligations or additional equity or equity-linked securities in public or private offerings or otherwise. The cash available from operations (if any) and these sources, however, may not be sufficient to cover our cash obligations because economic factors may reduce the amount of cash generated by operations or increase costs. For instance, an economic downturn or general global instability caused by military actions, terrorism, disease outbreaks (such as the COVID-19 pandemic), natural disasters or other causes could reduce the demand for air travel, which would reduce the amount of cash generated by operations. See Part II, Item 1A. Risk Factors - "Downturns in economic conditions could adversely affect our business" for additional discussion. An increase in costs, either due to an increase in borrowing costs caused by a reduction in credit ratings or a general increase in interest rates, or due to an increase in the cost of fuel, maintenance, aircraft, aircraft engines or parts, could decrease the amount of cash available to cover cash contractual obligations. Moreover, certain of our financing arrangements contain significant minimum cash balance or similar liquidity requirements. As a result, we cannot use all of our available cash to fund operations, capital expenditures and cash obligations without violating these requirements.
In the past, we have from time to time refinanced, redeemed or repurchased our debt and taken other steps to reduce or otherwise manage the aggregate amount and cost of our debt, lease and other obligations or otherwise improve our balance sheet. Going forward, depending on market conditions, our cash position and other considerations, we may continue to take such actions, and the amounts involved may be material.
Critical Accounting Policies and Estimates
For information regarding our critical accounting policies and estimates, see disclosures in the Consolidated Financial Statements and accompanying notes contained in our 2023 Form 10-K.