We need to continue to stay on the plan that we’re on, return the airline to profitability, return the reliability of the airline, and everything will take care of itself. It doesn’t concern me, but it’s really driven by the balance sheet and the differences between the airlines. Why are those investors betting, in effect, that the stock price is going to fall?Ī. American’s stock is being shorted much more often than the shares of Delta, United or Southwest. But I’m fully confident with the liquidity we have at $15.6 billion that if there is a recessionary environment, that we will be able to withstand anything like that. It might mean that we don’t accelerate paydown of that debt. It doesn’t mean that we’re not going to hit our $15 billion number (the target for debt reduction by the end of 2025). If it does impact revenues, we would hold on to liquidity longer than we have. How would a recession change how you manage American’s finances?Ī. All of our excess liquidity will go to pay off debt. There is no plan to do any share repurchases. What about share repurchases when the prohibition (a condition of federal pandemic aid) expires Sept. We have enough liquidity to make it through any downturn. It’s probably at 100 or 200 basis points bigger than what we have done in the past, but that’s still very attractive financing in this environment.Ī. The market for EETCs is open still right now. We can do market EETCs (publicly traded securities called enhanced equipment trust certificates). Where do you find sources for financing planes?Ī. We’re working hard to finance the back half of the year, and there are a lot of good proposals out there, even in a rising interest environment. Every aircraft we have is financed through the end of the third quarter. The second thing we have to do is finance aircraft. Our next big payment is a $1.2 billion term loan (for work at Reagan National and LaGuardia airports) that comes due at the end of next year. We paid off the $750 million unsecured (senior notes that matured in June). We’re in really good shape that we don’t have any debt that has come due. Can you refinance your debt with interest rates rising?Ī. We are going to take ($15.6 billion of liquidity) down into the $10 (billion) to $12 billion range at some point in time - just not ready to do that yet, but hopefully pretty soon. That’s awesome, it’s great, I’m proud of everybody here that worked to get to that point, but we need to sustain that. Right now we’re going to hold on to that liquidity until we feel like we’ve totally turned the corner. When are you going to use that to pay down debt?Ī. It’s actually the same answer, because obviously that growth will come back at a much cheaper cost because the costs are already here. When will your profit margins return to pre-pandemic levels?Ī. I hope by the beginning of next year, middle of next year, we’ll work through that and we’ll be able to have the whole mainline fleet up. We can bring the pilots on, we have to get them through training. At the mainline, it’s more about a throughput of training. That may take a couple of years to resolve itself.
There is a pilot shortage at the (regional airlines) because the mainline carriers (like American, Delta and United) hire from the regionals. How will you fly more? Do you need more pilots?Ī. We’ve built these airlines, from a cost perspective, to fly more, and we’re not flying more because of the resources that we need to do that.
If we flew our entire fleet, that (cost per seat per mile) would only be up about 2%. It’s not necessarily a cost issue, it’s a utilization of the fleet issue. American predicts nonfuel costs in the third quarter will be up 12% to 14% compared with the third quarter of 2019 on a per seat, per mile basis. We have passed on pretty much the fuel increases that are out there. And then the last thing is you have a natural hedge today - as fuel increases, the industry can raise revenues.
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Plus you put a risk on the company (if oil prices fall). If we all hedged fuel, we’d move the fuel price and actually drive the fuel price up. It’s very expensive, and you can’t insure your entire portfolio of fuel. Some North Texans Part of Federal Lawsuit to Stop Insurance Mandate for HIV Preventative DrugsĪ.
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