American Airlines CEO Robert Isom

I hope he was an American Airlines pilot, right? He was a generic pilot, but you know, I'll send him the Pilot Cadet Academy. You can't start soon enough, we need all the pilots you can get.

Exactly, excellent.

Well, you know, we're getting ready like everybody else, and I expect a pretty robust travel season, especially over the holidays. People want to get out and want to connect. So domestically we see a lot of strength, and where we're strong internationally, especially across the Atlantic and then into the Caribbean and Central America, you know, a lot of strength there. So we're going to get ready, but you know, for an airline, it's the World Series, it's the Super Bowl, it's all of that combined into one. So a lot of our work right now is all dedicated to make sure we're ready for whatever comes our way. So certainly we're planning for heavy loads, but on top of that, you've got inexperienced travelers and the holiday rush. And of course, let's face it, we're having record-setting low weather here in Texas right now. I didn't expect that we'd have to be de-icing this time of year, but that's the kind of stuff that we have to be ready for. So look, we're going to be all set. American has run the most reliable airline of all the network carriers, certainly over the last year, probably over the last 18 months, and we're going to continue that over the holidays.

Exactly. So it's interesting you talk about it's a good way to run an airline too, by the way. You know, all that rework with lost bags and customer misconnects. So it's one of the things that we pride ourselves on. Look, things are going to happen, let's face it. On the best of days, you can have a 100% completion factor, and we fly 6,000 flights a day. But even on the best of day, we'll be 90% on time. So that means 10% of the time for us, it's 60,000 customers a day. You've got to figure out how you're going to get them back on their way. So one of the other things that we've been spending a lot of time on is how we can be the quickest to recover and make sure that our customers really have the convenience and the tools in their hands to get back on their way without much of an inconvenience.

They flow around. So we did a lot of work before the pandemic. So American and US Airways, they merged way back in 2014. That was when the merger was announced, but it was a pretty complex merger that we really only completed as we got into 2019 prior to the pandemic. Our pilots were merged early on, but our mechanics only signed a joint collective bargaining agreement in 2020 at the start of the pandemic.

Exactly. So a lot of pieces of the puzzle had to be put together, and we did some great work in terms of rationalizing our fleet and getting it to something that I think is pretty simplified. So we have two flavors of narrowbody aircraft. We've got the great A320 family of aircraft, the A319, A320, and A321, and I think we're one of the world's largest operators of that aircraft, and it's a fabulous aircraft. 737s, but on the widebody side, all we operate now are the 787 and Triple 7. So we did a lot of work to try to really simplify. But when you do that, you find that you have aircraft that actually need to fly different places and different missions. So what we do oftentimes is, out of some of these cities that we serve quite a bit, so London Heathrow where we serve 20 times a day, we can use points like that to then help rotate aircraft through the rest of the system. And then the hub network that we've built within the US, which fortunately is in the fastest-growing cities in the United States, it also offers us the ability to actually do some flying that goes from hubs and then allows those hubs to actually then route aircraft elsewhere in the country.

So you know, back at the time of the merger, that was actually something that I sat down with the team and talked about. We wanted to be an airline that was as simplified as possible. And at the time, US Airways was a very large operator of the A320 family, but we had been a V2500 shop. And then the new purchases were all going to be CFM LEAPs. So on that front, we made the decision that even though there had been some moves to go with the geared turbofan, we went ahead and simplified around the CFM product. And that's actually been a really reliable power plant for us. And look, the world needs reliable engines, and Pratt does a wonderful job, and I know that they'll get the GTF in a position where it's as reliable as anything else. But for now, I'm really pleased with the aircraft and the power plants that we have, because let's face it, if you don't have engines, you're not running. So it's really important, and I feel like we're in a pretty good spot.

Well, I'll tell you this though, to give Pratt some props, we are the largest operator of the V2500 engine, and it is a fabulous, fabulous piece of machinery.

Exactly.

Well, look, all I can really talk to is what American sees and how we view the world. This business hasn't changed, and it's much like any other business. It's supply and demand, plain and simple. And at the end of the day, we're going to run our airline to be as profitable as possible. And for us right now, we like the fleet that we have and the capacity that we do have right now and we have coming. The growth American is going to be quite a bit just getting back to where we were. We're not quite back to where we were in 2019. A lot of that is due to the fact that we had some difficulties in getting our fleet back up because of pilot constraints. So on the mainline side of the world, it's just where we are. We had to train a lot of pilots coming out of the pandemic.

Exactly, looking for anybody. And we should talk about that because becoming a pilot right now is a fantastic career. But we had some constraints, and now the schoolhouse is kind of sized for the need. We'll be in good shape on that front. But from a regional perspective, look, so many experienced pilots were pulled from the regional airlines up to the mainline, and we found ourselves with a shortfall, not necessarily with total number of pilots or first officers, but with captains that are really necessary to help get first officers fully up to speed in their minimum hours. So we find ourselves in a position right now in terms of capacity that a lot of American's capacity growth is just the underutilization of both mainline aircraft and then getting our regional fleet back up. And so as I take a look out into 2024, there's good news for a lot of regional communities that actually saw just massive reductions in terms of capacity. And on that front, look, American's got a fleet of E175s and CRJ 900s and 700s that are just ready to go and get back to serving those communities that lost so much service. So in terms of the kind of growth that we see, we're going to be very judicious about what we bring back. We've got an order book that is fairly modest right now. I think we only have 30 deliveries planned for next year. And then a lot of the growth that we'll bring back is going to be more or less utilization flying, which is really efficient, and it's going to go to places that have actually been underserved.

We will be. It's Roanoke and LEC, and a lot of small cities, Casper and Grand Rapids. It's going to be a lot of small cities throughout the United States, but it's a good place to be.

Well, look, we've had a fairly modest schedule. So much of what we do is really based around our partners. And so we've got a great partner with OneWorld, and then ultimately with IAG, which is Iberia and BA. So a lot of our work is done in complement with those carriers, and we're very mindful of what our hubs can support. So as you take a look into next year, because of some of the issues with being able to provide feed into the hubs, especially like places like Philadelphia...

But as we are able to bring the regional network back and really get the entire system where it needs to be, you'll see places like that getting service re-instituted. So for us, it's modest growth. It's returning to a degree of where we were, but really making sure that the rest of the infrastructure is in position to support it. But even on that front, the kind of cities that we serve really fully, and of course there's some new service that's really interesting, it'll be fun. But at the same time, we're based around the largest business markets in the world. So New York, London, and flying out to Haneda, Tokyo, the exact huge markets.

Look, we're going to fly where we can do so and make money. And with our network, we know what our hubs are capable of doing. We're not necessarily big in some of the coastal hubs where those have been points of distribution throughout the rest of the country for some of the longer-haul markets. We're cognizant of that, but at the same time, what we do is make sure that our network really does work in conjunction with our partners. So we're going to fly where we can, and we have the ability to really serve our customers. And then where we can't do that profitably, we're going to make sure that we have a network of partners that help fill out the rest of the system. So I take a look, and of course I've been in contact with the rest of the OneWorld members, but we have a fantastic relationship with Qatar. The relationship with JAL is wonderful as well. You mentioned Hong Kong, well, Cathay is a founding member of OneWorld, and of course we have the joint businesses with Qantas and BA and JAL as well. So all a really solid network, and one that, look, if there are holes in it, we'll figure out how to plug them.

Well, those friends like to connect through DFW, it's a wonderful place. That Terminal D, you know, where's Sean? Is he out? He's going to be speaking a little bit later. But anyway, no, look, we have a great relationship with DFW, and I think people will hear more about it later, but there's some expansion opportunities being pursued there. And American obviously is the hometown carrier, we're really behind it and have a great partnership. So I agree with your friends, if you want to connect, especially coming from Australia, wonderful place to do it.

Well, hey, look, from a commercial perspective, we start with this, which is we want to have the world's best network, and then complement that with the rewards program that takes care of customers. And then along the way, we want to make sure that customers have the ability to really access those services and amenities that they find valuable, and then also that we can offer them and make a margin on. So let's face it, premium has come back very strong. If you took a look at prior to the pandemic to where we are now, the load factors in all these premium cabins are much higher. And I think customers view that as something that, hey, look, this is something that benefits them, they want to have access to. So we're going to be there with them. And as we take a look out into 2026, we have a growth of almost 45-46% of premium seats. So on the 787-9, you'll see a new Flagship Suite with all the bells and whistles that are just wonderful. We've got the A321XLR that's coming up in 2025 for us, super excited about that, especially from an international perspective. That's going to see work all over our system, but I know this is going to have a fantastic business class cabin, fantastic premium economy cabin, and then a coach cabin as well that's going to serve the needs of customers. So I feel good about how we can serve, especially from an international perspective. And again, some of that will flow into other leisure and even domestic markets as we think about how we best serve from a transcon perspective as well.