American Airlines Group - Earnings Call - Q4 2024

Executive Summary

• Record fourth-quarter revenue of $13.66B with adjusted diluted EPS of $0.86, above the high end of December guidance; unit revenue inflected positive (+2% YoY), and adjusted operating margin expanded to 8.4%.
• Geographic mix: Domestic (+3.5% revenue), Atlantic (flat, but PRASM +11.5%), Pacific (+39.4%), offset by Latin America (-0.7%); total TRASM +2.0% YoY as fuel prices fell to $2.34/gal.
• Balance sheet progress: achieved >$15B total debt reduction from mid-2021 peak a year early; year-end total available liquidity $10.3B; record FY2024 free cash flow of $2.2B.
• 2025 outlook: Q1 adjusted EPS loss ($0.20)-($0.40), FY adjusted EPS $1.70–$2.70, revenue growth +4.5%–+7.5%, non-fuel unit cost up mid-single digits; management targets total debt < $35B by 2027 and >$2B FCF in 2025.
• Catalyst set-up: continued recovery in indirect/corporate channels, expanded Citi co-brand partnership (exclusive issuer starting 2026) with 2024 partner cash remuneration of $6.1B; one-time Q4 cash payment had no revenue/EPS impact.

What Went Well and What Went Wrong

What Went Well

• Unit revenue inflected positive: TRASM +2.0% YoY; adjusted operating margin 8.4% and adjusted EBITDA margin 14.9% in Q4.
• Network performance: AAL led U.S. network carriers in YoY Domestic, Atlantic, Pacific, and total passenger unit revenue; premium revenue up ~8% with paid premium load factors +3 pts YoY.
• Balance sheet and cash: record FY free cash flow of $2.2B, total debt reduced by >$15B from peak ahead of schedule; net debt at lowest since 2015.
  • Quote: “We generated record free cash flow of $2.2 billion in 2024… reduced our total debt by more than $15 billion from peak levels… a full year ahead of schedule.” — CEO Robert Isom.

What Went Wrong

• Non-fuel unit cost pressure: Q4 CASM ex fuel and specials +5.7% YoY; Q1 2025 non-fuel unit costs expected up high-single digits on mix (regional up ~17% ASMs), lower capacity, and new CBAs.
• Latin America softness: short-haul Latin unit revenue down YoY in Q4; Latin passenger revenue -0.7% YoY, with yield -3.9%.
• Continued recovery needed in indirect/corporate: management still ~below historical share entering Q4 (though improving), with full restoration targeted by end-2025.
  • Analyst concerns focused on CASM trajectory vs RASM progression and margin trends across hubs.

Transcript

Operator (participant)

Thank you for standing by, and welcome to American Airlines Group's fourth quarter and full year 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press Star 1 1 on your telephone. To remove yourself from the queue, you may press Star 1 1 again. I would now like to hand the call over to Scott Long, VP of Investor Relations and Corporate Development. Please go ahead.

Scott Long (VP of Investor Relations and Corporate Development)

Thank you, Latif. Good morning, and welcome to the American Airlines Group fourth quarter and full year 2024 earnings conference call. On the call with prepared remarks, we have our CEO, Robert Isom, and our CFO, Devon May. In addition to our Vice Chair, Steve Johnson, we have a number of other senior executives in the room this morning for the Q&A session. Robert will start the call with an overview of our performance, and Devon will follow with details on the fourth quarter and full year, in addition to outlining our operating plans and outlook going forward. After our prepared remarks, we will open the call for analyst questions, followed by questions from the media. To get in as many questions as possible, please limit yourself to one question and one follow-up.

Before we begin today, we must state that today's call contains forward-looking statements, including statements concerning future revenues, costs, forecasts of capacity, and fleet plans. These statements represent our predictions and expectations of future events, but numerous risks and uncertainties could cause actual results to differ from those projected. Information about some of these risks and uncertainties can be found in our earnings press release that was issued this morning, as well as our Form 10-Q for the quarter ended September 30, 2024. In addition, we'll be discussing certain non-GAAP financial measures, which exclude the impact of unusual items. A reconciliation of those numbers to the GAAP financial measures is included in the earnings press release, which can be found in the Investor Relations section of our website. A webcast of this call will also be archived on our website.

The information we are giving you on the call this morning is as of today's date, and we undertake no obligation to update the information subsequently. Thank you for your interest and for joining us this morning, and with that, I'll turn the call over to our CEO, Robert Isom.

Robert Isom (CEO)

Thanks, Scott, and good morning, everyone. Earlier today, American reported a fourth quarter adjusted pre-tax profit of $808 million, or an adjusted earnings per diluted share of $0.86, above the high end of the guidance we issued in early December. For the full year, we reported an adjusted pre-tax profit of $1.8 billion, or an adjusted earnings per diluted share of $1.96. I want to thank the American Airlines team for a great year and for their resiliency, continued hard work, and dedication to delivering a safe and reliable operation for our customers. As I've said previously, at American, we're focused on delivering results. As we closed out 2024, we achieved a number of notable milestones.

With the ratification of a contract extension with our mechanics and fleet service team members in October, we now have multi-year agreements in place with all of our largest work groups, providing labor cost certainty through 2027. We delivered nearly $500 million of value through our re-engineering initiatives, nearly $100 million more than expected. We announced a new 10-year agreement with Citi to become the exclusive issuer of the AAdvantage co-branded credit card portfolio in the United States, which we expect will drive substantial incremental value to American over the life of the agreement while unlocking even more value for AAdvantage members. We generated record free cash flow of $2.2 billion in 2024.

I'm excited to report that as of the end of 2024, we have reduced our total debt by more than $15 billion from peak levels in mid-2021, achieving our initial debt reduction goal a full year ahead of schedule. While there's still much work to do, these accomplishments are clear evidence that the American Airlines team is committed to delivering results and achieving our stated objectives. Now, on to our fourth quarter performance. Total revenue grew 4.6% on 2.5% higher capacity year over year. This resulted in our unit revenue inflecting positive in the quarter, up 2% year over year and above the high end of our December guidance. Passenger revenue strength throughout the fourth quarter was broad-based. In the fourth quarter, American's year-over-year domestic, Atlantic, Pacific, and total passenger unit revenue results led U.S. network carriers.

While Latin unit revenue was down on a year-over-year basis, we expect short-haul Latin year-over-year unit revenue to be positive in the first quarter. This strong performance is the result of the actions we have taken, and we're encouraged by the trends we see early in the year. Demand for American's product remains strong, as evidenced by the continued strength of our business, premium, and loyalty revenue performance. In the fourth quarter, managed business revenue was up 8% year over year, a sequential improvement of 2 points versus last quarter, and we continue to see yield strength as we look ahead into the new year. Premium revenue increased approximately 8% year over year. Paid load factor in our premium cabins remains historically high and was up 3 points year over year, with strength in both domestic and international.

In the fourth quarter, loyalty revenues were up approximately 14% year over year, with AAdvantage members responsible for 75% of premium cabin revenue. 2024 was a record year for AAdvantage. Throughout the year, we had a record number of customers enroll in the program, with members earning and burning more miles than any year in our history. Spending on our co-branded credit cards was up 9.5% year over year in the fourth quarter, further highlighting the value of our loyalty program. American is proud to have an industry-leading travel rewards program that is frequently acknowledged as providing the best value for its members. Finally, we remain committed to providing a leading customer experience, especially for our premium customers. We're excited to introduce our new state-of-the-art Flagship Suite on our new Boeing 787-9 and Airbus A321XLR aircraft later this year.

Over the course of the next four years, we expect to grow our long-haul international capable fleet from approximately 125 aircraft today to nearly 200 aircraft in 2029. Additionally, American has led the way in introducing premium lounges, and we're on track to open our fifth Flagship Lounge this summer in Philadelphia, which marks the ninth premium lounge across the system. In the fourth quarter, we introduced boarding automation as a first step to improving the boarding process, and customer feedback has been overwhelmingly positive. American was the first airline to offer streaming entertainment on our mainline fleet, and we're proud to offer high-speed Wi-Fi on more aircraft than any other domestic airline. In December, we began the installation of high-speed satellite Wi-Fi on our dual-class regional aircraft. We expect the entire fleet will be retrofitted by the end of this year.

Additionally, we're in the process of redesigning our mobile app, making it easier to navigate and to provide more self-service options for our customers. Building on these customer-focused initiatives is one of our top priorities, and we'll have more to share in the months ahead. Momentum in recovering revenue from indirect channels continued in the fourth quarter, and we remain on track to fully restore our revenue share from indirect channels as we exit this year. Our indirect flown revenue share improvement was driven by sequential gains in corporate revenue share, which has been the primary focus of our recovery efforts. Importantly, forward bookings continue to show strength into the first quarter. As we enter the new year, we're in position to continue recovering share in indirect channels.

We've completed new contracts with all of our agency partners that serve our corporate customers and agreed to new agreements with the leisure agencies that serve our most profitable leisure customers. Additionally, we've reviewed and reworked agreements with our corporate customers most affected by the previous strategy and largely restored share of those travelers in our hub market. Completing these steps provides a strong foundation for us to continue to compete for that business and restore our share in these important distribution channels and with those customers. Last year, we took steps to further grow and optimize AAdvantage. In December, we announced a 10-year agreement with Citi to become the exclusive issuer of the AAdvantage co-branded credit card portfolio in the U.S. American has had a partnership with Citi for more than 37 years.

The strength of that partnership has enabled us to deliver first-class products and customer service to millions of AAdvantage card members, and we're excited to continue to partner with Citi. Our 2024 cash from co-branded credit cards and other partners was $6.1 billion, an increase of 17% versus 2023. The 2024 amount includes a one-time cash payment received in the fourth quarter related to our new credit card agreement. As we disclosed at the time of the announcement, we expect the agreement, set to begin in 2026, will enable cash payments from our co-branded credit card and other partners to grow by approximately 10% annually. As annual cash payments from co-branded credit card and other partners approach $10 billion, we expect annual pre-tax income will benefit by approximately $1.5 billion compared to 2024. Our expanded partnership with Citi will unlock more value and provide exciting new benefits to our customers.

With the agreement completed, the teams have turned toward building the business, and we look forward to making several exciting announcements over the coming year. Turning now to our operation. Thanks to the resiliency of the American Airlines team, we delivered another quarter of strong results despite a difficult operating environment. Operational disruptions are part of the airline business, and at American, we continue to show that operational resiliency and rapid recovery are part of our DNA. In the fourth quarter, American ranked second in completion factor and on-time departures among the four largest U.S. carriers. For the year, we achieved our second-best completion factor since the merger, carrying our largest ever volume of passengers. Looking ahead, continued investment in the operation and the technology that supports it will drive further improvements in our operating reliability and resiliency.

In closing, we've achieved a number of important objectives in 2024, and our performance in the fourth quarter shows what this team and what this airline are capable of. That foundation and the momentum we've built will serve us well in 2025. Before I turn the call over to Devon, I'd like to take a moment to acknowledge those impacted by the devastating wildfires in Southern California. Our hearts go out to those communities. American's AAdvantage members and team members have donated more than $1.7 million in funds to the American Red Cross to support relief efforts, and we've donated supplies and care packages to families and firefighters in the Los Angeles area. With that, I'll turn it over to Devon to share more about our fourth quarter and full-year financial results and our outlook for 2025.

Devon May (CFO)

Thank you, Robert. Excluding net special items, we reported a fourth quarter net income of $609 million, or adjusted earnings per diluted share of $0.86. We produced record fourth quarter revenue of $13.7 billion, up 4.6% year over year, with unit revenue up 2% year over year. Fourth quarter unit cost, excluding fuel and net special items, was up 5.7% year over year. Our adjusted EBITDA margin was 14.9%, and we produced an adjusted operating margin of 8.4%. In 2024, we achieved nearly $500 million of savings from our Re-engineering the Business initiative, exceeding our goal by nearly $100 million. Most of the value in 2024 was due to better workforce management driven by process improvements and technology implementation, along with improved asset utilization and procurement savings.

We also had nearly $350 million of working capital cash release, which exceeded our expectations and helped drive our 2024 free cash flow performance. We remained focused on running the airline as efficiently as possible while enhancing the customer experience. Moving to our fleet. In 2024, we took delivery of 20 new aircraft and 10 used aircraft, resulting in $1.9 billion of aircraft CapEx. Total CapEx for 2024 came in at $2.7 billion. Looking ahead, we expect to take delivery of 40-50 new aircraft in 2025. Based on our current expectation for new deliveries, our 2025 aircraft CapEx, which also includes used aircraft purchases, spare engines, and net PDPs, is expected to be between $2 billion and $2.5 billion, and our total CapEx is expected to be between $3 billion and $3.5 billion.

We continue to expect moderate levels of CapEx moving forward, with aircraft CapEx averaging between $3 billion and $3.5 billion for the remainder of the decade. We ended 2024 with $10.3 billion of total available liquidity and produced record free cash flow of $2.2 billion. During the fourth quarter, we prepaid $750 million of near-term debt maturities and strategically repriced two-term loans. We ended the year with total debt of $38.6 billion and net debt of $31.6 billion, our lowest level of net debt since 2015. With these actions, we achieved our total debt reduction goal of $15 billion from peak levels in mid-2021, a full year ahead of schedule. We are thrilled to have delivered on this commitment, and we remain focused on continuing to strengthen our balance sheet as we work toward our stated credit rating goal of BB.

Previously, we committed to reducing total debt to less than $35 billion by year-end 2028. We are now committing to achieve that goal by the end of 2027. Now on to the outlook for 2025. In the first quarter, we expect capacity to be flat to down 2% year over year. This capacity is driven by lower capacity in the off-peak months of January and February, which combined are down approximately 3%, followed by growth of 3%-4% in the peak travel period in March. We continue to expect full-year capacity to be up low single digits, in line with expected economic growth and our prior guidance. Our growth in 2025 is focused on improving our schedule in markets that are not yet fully restored to historical levels, primarily in our northern hubs. We expect our year-over-year capacity growth rates to be fairly balanced between domestic and international operations.

We will remain flexible and will adjust capacity in response to demand and the competitive environment in which we operate. We expect first-quarter revenue to be up 3%-5%, and for the full year, we expect revenue growth of approximately 4.5%-7.5% versus 2024. This is driven by continued indirect revenue recapture, strong demand for our product, and a constructive industry backdrop with supply in line with expected demand. First-quarter non-fuel unit costs are expected to be up high single digits year over year. This unit cost growth is driven by the reduction in year-over-year capacity, the mix of that capacity, and the new collective bargaining agreements that were reached in the second half of 2024. In the first quarter, regional ASMs will be up approximately 17% as we return to full utilization, and mainline capacity will be down 2%-3%.

Based on the timing of our labor agreements and the shape of capacity, we expect unit costs to improve sequentially throughout the year, from high single digits in the first quarter to low single digits as we exit the year. For the full year, we expect non-fuel unit costs to be up mid-single digits year over year, with a large majority of the cost growth coming from higher salaries and benefits. As we look out to 2026, we have certainty in our labor costs, and the rate pressure from our new collective bargaining agreements will ease. We expect that in 2026, our year-over-year growth of our salaries and benefits per ASM will be well inside of inflation. We continue to focus on re-engineering the business to become more efficient.

Through best-in-class workforce management, efficient asset utilization, and procurement transformation, we expect more than $200 million of incremental cost savings in 2025. Additionally, we are investing in a multi-year transformation in our IT and tech ops organizations to modernize technology, improve operations, and optimize staffing costs. We anticipate continuing to productively utilize our workforce, with mainline full-time employee counts staying approximately flat to 2024. This year, we also expect more than $100 million in additional working capital improvements. Based on our current demand assumptions and fuel price forecast, we expect a first-quarter loss of approximately $0.20-$0.40 per diluted share. For the full year, we are expecting to deliver adjusted earnings per diluted share of approximately $1.70-$2.70. We expect another year of record free cash flow generation in 2025 and are currently forecasting more than $2 billion of free cash flow for the full year.

Now, I'll turn it back to Robert for closing remarks.

Robert Isom (CEO)

Thanks, Devon. As we start 2025, the long-term targets we outlined last March remain our focus: growing margins, generating sustainable free cash flow, and continuing to strengthen our balance sheet. Our priorities for this year will continue the momentum we built in the back half of last year and further our progress toward achieving our long-term targets. In 2025, we plan to operate with excellence and efficiently deliver a safe and reliable operation, take a fresh look at our product and service as we sharpen our focus on the customer experience, continue to strengthen our network both organically and through our airline partnerships. Our December announcement with Citi was an important milestone for American. It will allow us to enhance Advantage and further strengthen our leading travel rewards and co-branded credit card program ecosystem.

All of these priorities, including the restoration of our core sales and distribution initiatives, will allow us to deliver on our revenue potential and will continue our work to Re-engineer the Business as we build a more efficient airline. We know that by delivering on our commitments, we'll unlock significant value for our shareholders. Operator, please open the line for questions.

Operator (participant)

As a reminder, to ask a question, you will need to press Star 1 1 on your telephone. To remove yourself from the queue, you may press Star 1 1 again. To allow everyone the opportunity to participate, you will be limited to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first caller, Catherine, your line is open, Catherine.

Catherine O'Brien (Equity Analyst)

Good morning, everyone. Thanks so much for the time. So, you know, we don't know exactly what low single-digit capacity growth means for the year, but if I just use 2%, that means RASM growth about 4% for the year versus the 5% I'm getting in 1Q on your guidance. You know, I understand capacity growth accelerates over the year, but can you talk about your assumptions on indirect revenue improvement and the industry outlook underlying that full-year guide? And just really wondering, like, what could go better than your base case?

Robert Isom (CEO)

So, Catherine, thanks. I'll start on our expectations for indirect revenue recovery, and Devon can speak to capacity, and Steve can add anything that he thinks is important as well. We're on track for recovering what we had lost. I feel really good about the progress we've made in a short six-month period. And as we take a look, and you can see from our notes, as we take a look at forward bookings, it really suggests that we've got traction in the marketplace. So I have great confidence that we're going to recover fully as we move through the year. And then, you know, I just also, you know, note this: that we also believe that from a revenue performance perspective, even outside of indirect channels, we think that we're poised to perform and outperform. You saw it in our fourth quarter results.

And, you know, I can't speak to others' assumptions, but in an environment where the economy is improving, I think that we're going to improve faster than our largest competitors. Devon?

Devon May (CFO)

Yeah, and I don't think there's any big moves in the quarterly capacity numbers. We got it at first quarter, which will be down 0-2%. The remaining quarters will probably be all up in the neighborhood of 3% per quarter in terms of ASM capacity, which gets you about to that midpoint on low single-digit capacity for the year.

Stephen Johnson (Vice Chair and Chief Strategy Officer)

Catherine, this is Stephen. I'll just follow up with you. You asked about sources of potential upside from our base case. I'll just offer three. First, I think that there's a decent chance that we could restore our sales and distribution revenue faster than Robert's by the end of 2025. I think that's an upside. Second, I would point you to both the third quarter and especially the fourth quarter. You know, ultimately, we're going to be judged on everything and certainly revenue by our results. And I think the fourth quarter shows what we're capable of. And then finally, I'd just point to our agreement with Citi. The new agreement doesn't start until 2026. And so the growth that we focus on will start until then.

But there is, you know, to get to that, there is a ramp-up effort underway that I think could provide upside in our co-brand revenue during the year.

Catherine O'Brien (Equity Analyst)

That's great. Thanks for that additional clarification, Steve. Devon, maybe one more for you. You know, as you've reached your medium-term debt goal, can you speak to how you're thinking about cap allocation between now and that longer-term goal in 2027? You know, understand you have more deleveraging to do to hit that 2027 goal. And then you mentioned a BB credit rating. But, you know, what's the gating factor to consider shareholder returns? Thanks so much for all the time.

Devon May (CFO)

Hi, thanks, Katie. To start, we are really proud of achieving the $15 billion goal that we set out to do two or three years ago at this point, and we achieved it a year early. Our focus still remains on improving the balance sheet. We've set another near-term goal here to have it total debt down another $4 billion to around $35 billion by 2027. We'll focus on that. We'll continue to focus on reinvesting in the business. As we continue to improve free cash flow and improve the balance sheet, we'll come back and talk more about other capital allocation priorities.

Operator (participant)

Thank you. Our next question comes from the line of Connor Cunningham of Melius Research. Your question, please, Connor. Our next question comes from the line of Connor Cunningham of Melius Research. Your line is open, Connor. Connor, please make sure your line isn't muted. And if you're on a speakerphone, lift your hands up. We'll go to the next question. Our next question comes from the line of Scott Group, Wolfe Research. Your question, please, Scott.

Scott Group (Transportation Analyst)

Hey, thanks. Good morning. So, Devon, I think you laid out CASM going from high singles to start the year towards low singles ending the year. It doesn't seem like guidance implies a big deceleration in RASM throughout the year. So can you just talk about, like, how you see the progression of, like, price cost on, like, a net basis trending throughout the year?

Devon May (CFO)

I'll just start by talking a little bit about our cost performance because, you know, right now we are seeing some more pressure in the first quarter than we are during the rest of the year. To start, we are really proud of our cost performance over the last several years. I'm excited about what the company's doing to re-engineer the business and drive more efficiencies. I think we're making really nice investments in technology. The operations team is really leaning into this, and I think we're delivering a more efficient operation and a better operation for our customers. In the first quarter, though, we are seeing unit costs up high single digits. It's a handful of things. We have less capacity in the first quarter than we did a year ago. That starts to change as we grow capacity in the last three quarters of the year.

We have a ton of regional capacity coming online. As you know, that's higher cost capacity than the mainline capacity. It's actually driving average gauge to be down, you know, 4%-5% in the first quarter year over year. Stage length is down as well. And then, of course, the labor agreements that were signed in the back half of last year weren't in our base for this year. So we see a lot of cost pressure in the first quarter. It eases throughout the year. We feel we're incredibly well positioned as we get into 2026. And we know we run the business as efficiently as anybody. On the margin side, I don't think there's any quarter that shows outsized margin improvement year over year. We've guided EPS to a midpoint of $2.20.

So, we are seeing nice EPS improvement year over year, but I don't think you're going to see any one quarter pop really materially versus what we performed versus how we performed in 2024.

Scott Group (Transportation Analyst)

Okay. And then can you just talk about maybe the progression of RASM throughout Q4 and then just regionally how you see RASM playing out in Q1? Like, Transatlantic was up 12% in Q4. Can that sustain itself in the near term? Just any regional color. Thank you.

Devon May (CFO)

Well, Scott, thanks for that. You know, I just point to, you know, the fourth quarter in which we had, you know, strong performance across the board. So Atlantic, Pacific, and then also domestic, you know, in terms of year over year improvement, led our network competitors. And overall, we led it as well. As we take a look out into this year, I see continued strength domestically. And the strong dollar is absolutely going to have an impact on buying and travel to Europe this summer. So we take a look to March, and as we look to some of our peak periods, you know, spring break and getting into the summer, you know, I see robust demand across the board.

You know, we've talked about premium traffic as being wind behind our sales and also something that I think that we're going to be able to do even better in. And Steve mentioned some of the things that are going to be additive as well in terms of potential for even better performance. So overall, really confident about the year and, you know, like what we see and how we can operate in this environment.

Operator (participant)

Thank you. Our next question comes from the line of James Baker of JPMorgan Securities. Your line is open, James.

Jamie Baker (Equity Analyst)

Hey, good morning, everybody. So an interesting statistic that I noted throughout yesterday was that the margin gap between its best and worst performing hubs had narrowed to, I guess, the lowest gap in, I think it was nine or 10 years. We've discussed Americans' relative hub performance on these calls and in person for, you know, quite some time. But I never asked about the range. Would you be willing to comment on that margin range between your top and bottom hubs and whether it's improving or widening? Obviously, a lot of moving pieces in many of your hubs at the moment. Thanks.

Robert Isom (CEO)

Okay. Hey, thanks, Jamie. And I'll start. Devon and Stephen can add in. Look, it's no secret that we've had to build back our network. And we have a large portion of our network that is supported by our regional fleet. I feel great that in 2025, we're going to have our regional fleet fully deployed. And what that's going to allow us to do is, you know, better fill out some of the hubs that, quite frankly, you know, are ready and I think willing to support the network in a different way. But we've got to put the capacity there. So you're going to see the largest schedules that we've ever had in places like DFW, in Charlotte, Miami. In its peak will be bigger than it's ever been.

DCA, which had been, you know, a laggard coming out of the pandemic, is now getting back to the performance levels that we had hoped. And we've talked about, you know, some of the work that we're going to be doing in Chicago. So across the board, we see performance improving. Some of the weaker points in our network, you know, as we take a look to the coast in New York and out in Los Angeles. And I'd say this: that the schedule changes that we've made in LaGuardia, the largest schedule that we've run since the pandemic, I believe, you know, just as we closed out the fourth quarter, we're really seeing nice results in terms of where we put that capacity. And so from that perspective, I believe that we have improved considerably our New York performance.

I hope and have confidence that that will be something that we can maintain going forward. In Los Angeles, you know, from that perspective, there are some capacity restrictions. But on that front, you know, that's one where we really do, you know, partner well with our oneworld partner, Alaska Airlines. And we look forward to continuing that progress. So when you take a look at American, you've always known that DFW, Charlotte, DCA, and now DCA getting back into the ranks have performed well. Philadelphia is getting back to where it should be. Phoenix has historically been strong. And then, as I mentioned, we've got a focus on the coasts in Chicago.

Jamie Baker (Equity Analyst)

Yeah. That's helpful. And then, you know, while I have you, Robert, you know, when I last saw you, which I think was in September, you mentioned you were spending half your time on efforts to reconcile with corporate accounts. And I, you know, I think you said that publicly in a, you know, at a conference or two. And I don't know if you actually meant precisely 50% or if that was just, you know, sort of metaphorical. But by the way you describe the effort in your prepared remarks, makes it sound like most of that effort is behind you. Is that the right interpretation? I guess I'm just confused on exactly where American is on the reconciliation front and how managed corporate recovery trends from here. Thanks in advance.

Robert Isom (CEO)

Thanks, Jamie. Look, I will give a ton of credit to our commercial team led by Stephen Johnson for the enormous amount of work that had to be put in. And they absolutely enlisted me in that effort. And I will say, I don't know if it was 50% of the time, I spent a considerable amount of my time, you know, making sure that I was up to speed and talking to our corporate customers and agencies as well. That work is paying off. It's foundational in that, don't forget, you know, these contracts are set up over a period of time. Revenue doesn't show up right away. But we're not resting on that. We're learning from, you know, certainly the issues associated with our past strategy. And that, I believe, you know, bodes well for the future.

So Stephen, why don't you spend some time talking about progress and how you feel about where things are headed?

Stephen Johnson (Vice Chair and Chief Strategy Officer)

Sure, James. And let me start by saying the team and I feel good about that, as Robert said in his opening remarks. And again, just a second ago, you know, we're on track to achieve the commitment that he's made to fully recover our share by the end of 2025. As I said earlier, I think we can beat that. But it's not a linear process. And it's kind of event-driven, if you know what I mean. We saw in the third quarter, you know, Robert's comments at Bernstein when he said that we were abandoning the old strategy, that had an impact on share. The restoration of content into EDIFACT had an impact on share.

The engagement with our partners in the third quarter, you know, what Robert was just talking about, that sometimes referred to around here as the apology tour, you know, that had an impact on share. The fourth quarter was, you know, lots of work done in the fourth quarter, but a little bit different, and maybe that, you know, accounts for the, you know, the non-acceleration that you might have been looking for over the course of the last three months, but the fourth quarter task was actually infrastructure. It was making new agreements with all of our partners in the indirect community. It's an arduous task, kind of counterparty by counterparty. While it was going on, you know, understandably, we were negotiating, so you didn't see a lot of share shift during that period of time. Indeed, some of our partners sent us even stronger messages during those negotiations.

You know, but it was ultimately successful. And we now have new agreements with 30 of the most important TMCs and agencies. And as Robert said earlier, you know, we've modified the economics for all of our significant corporate customers who were impacted by our old strategy. And, you know, as we say, and our partners say even more frequently, you know, three airlines are better than one. And those agreements create real incentives to move business to American. And indeed, the agreements with the TMCs and the agencies create real incentives to reestablish the share equilibrium that existed, you know, at the beginning of 2023. So I expect those agreements are going to be big drivers of share shift in the first and second quarter. And so you'll see continued progress.

Operator (participant)

Thank you. Our next question comes from the line of Conor Cunningham of Melius Research. Please go ahead, Conor.

Conor Cunningham (Travel & Transports Analyst)

Hi everyone. Can you hear me now?

Robert Isom (CEO)

We've got you, Conor.

Conor Cunningham (Travel & Transports Analyst)

Can you hear me?

Robert Isom (CEO)

Go ahead, Connor.

Conor Cunningham (Travel & Transports Analyst)

Someday I'll figure out how to use the phone. Can you, so I'm just trying to take all this. You sound like there's upside in indirect corporate share regains and then the loyalty stuff, as well as just like sequentially improving costs throughout the year. But your full year guidance at the low end suggests a decline year over year in earnings. And I'm just trying to understand that part a little bit better. It just seems like, are you assuming that the Main Cabin doesn't get any better from here? It just seems really conservative, just given what we've heard from you today and what we've heard from others so far. Just trying to understand it a little bit better. Thank you.

Robert Isom (CEO)

Okay, Connor, I'll start. Devon, can I add in here. Look, again, we can only forecast based on what we know and what we see right now. We don't know, you know, what others are putting into their models. We've told you that we think that there's continued strength and that in terms of revenue performance, especially given the capacity that we're putting in, we see significant growth in our unit revenues. Now, if there is a better, you know, overall performance in the industry, as I said, I think that we'll continue to show outperformance because of the things that we've been doing. So that's, you know, my comment in terms of, you know, questions about, you know, how is your forecast versus, you know, what the assumptions others are making. Devon, anything you want to add?

Devon May (CFO)

Yeah, I'll just say midpoint of our guide is $2.20. That's up more than 10% versus what we did in 2024. There's obviously variability in earnings. We think the midpoint is what we seek to achieve. We'd like to do better than that. But we put a range of outcomes because there is still some volatility that's there in things like fuel or, you know, some amount of economic risk at a macro level. But right now, we feel really good about the midpoint on the guide, and it's nice year over year improvement, and we hope to exceed that.

Conor Cunningham (Travel & Transports Analyst)

Okay, that's helpful. And then on the Citi contract or Citi, you know, the renegotiation, I'm just trying to understand that a little bit better. So the economics change in 2026. But I think that there's a volume and spend related component in 2025. So can you just help, you know, bridge the contribution of how that will evolve, you know, earnings contribution, how that evolves over that, the change from 2025 to 2026? It just seems, again, like there's this potential for it to surprise. So just thoughts there. Thank you.

Stephen Johnson (Vice Chair and Chief Strategy Officer)

Sure. Let me see if I understand the question. Our existing agreement includes minimums for new accounts and new business that Barclays and Citi have committed to. Those, we expect them to overperform on those as part of the ramp up into 2026. Is that helpful?

Conor Cunningham (Travel & Transports Analyst)

Yeah, no, that's it. Thank you very much.

Operator (participant)

Thank you. Our next question comes from the line of Ravi Shanker of Morgan Stanley. Your question, please, Ravi.

Ravi Shanker (Head of India Equity Sales)

Great. Thanks. Good morning. Just wanted to start with a follow-up on the corporate normalization commentary. I think you said that you adjusted the economics for some of the biggest accounts there. Can you just unpack that a little bit more? How does the profitability of the corporate business compare to what it was before now that, like, or once the share is normalized?

Stephen Johnson (Vice Chair and Chief Strategy Officer)

Sure. The adjustments, we evolved our business with our corporate customers over the course of the last seven or eight months. We, you know, talked about this on the last earnings call. We, you know, some of this had to do with macro changes that we made, like reestablishing what we call corporate experience, but a certain set of unique corporate experience advantages for our traveling corporate customers, employees, waivers and favors, allowing travel agents to, in certain cases, you know, book flights or change tickets that are, you know, not completely consistent with the general rules that apply. So some of that was, I think, very helpful. But as part of the former strategy, we had created a kind of one-size-fits-all discounting system for corporations that, across the board, for anyone who was impacted by that, that reduced discounts to, I think, an uncompetitive level.

That impacted about 24% of our corporate customers. Those were the ones that, over the course of the strategy, you know, their contracts came up and we were able to change them. So with respect to those customers, we've gone back, worked with them, negotiated with them, and established economics that are more consistent with the past and more competitive. In all cases, the revenue from those agreements, even with a little bit better discounting, is going to be very accretive.

Robert Isom (CEO)

Yeah. And Stephen, I think we've said this that, you know, when we talk about sales expense and, you know, bringing back a sales team and, you know, potential impact on some of the things that we're doing, that overall cost impact is going to be a little less than a point of CASM. But again, all of this is going to be highly beneficial to the company.

Ravi Shanker (Head of India Equity Sales)

Great. That's a helpful explanation. And maybe as a follow-up, you guys mentioned upgraded Wi-Fi, which is great to hear. But kind of as we kind of enter like a new era of premium cabins, if you will, obviously you guys have new planes. But how do you think about bringing your own device versus screens on seats and maybe the ability to kind of monetize those screens over time?

Robert Isom (CEO)

So Ravi, can you say that one more time? I missed a part of that question.

Ravi Shanker (Head of India Equity Sales)

So the question was kind of as we enter a new era of premium cabins, how do you guys think about bringing your own device versus having integrated screens on seats? Kind of does one versus the other kind of impact your ability to either kind of sell a premium service or monetize that screen over time?

Robert Isom (CEO)

Oh, no. So Ravi, thanks for that question. And let me, you know, talk about, you know, some of the things that we anticipate regarding, you know, product going forward. We're really pleased to announce the introduction of our new Flagship Suite. And that's going to be coming on the 787-9s and the A321XLRs. And one of the things you'll note is those are, you know, let's face it, those are international aircraft, long haul. And one of the things that we're going to make sure is our customers, especially in the premium cabins and, you know, from that perspective, you know, any international seats, that they have access to screens in addition to, you know, the latest in terms of Wi-Fi and streaming entertainment. So those aircraft are going to be fully equipped.

You'll see that we're doing reconfigurations on our 777-300s and adding Flagship Suites to that and offering more premium seating overall. Same with that, that will come with the latest in terms of technology in seatback as well. Now, from a domestic perspective, we've said that, you know, we're really interested in making sure that our customers have access to Wi-Fi, satellite-based Wi-Fi on everything that they fly. And while we can't offer it on the smallest regional jets, you note that we will have streaming Wi-Fi installed as part of our initiative this year so that all of our larger regional aircraft will have satellite-based Wi-Fi by the end of the year. And with that, once you've got that kind of comprehensive approach, it allows us to do some different offerings.

Devon May (CFO)

So you'll hear more from us as the year progresses in terms of how we can take even better care of our customers, especially, you know, those that are the highest tier. And as well, you'll see more in terms of partnerships and relationships. You know, our relationship with Apple Plus is really something, you know, industry record-setting. And we anticipate that that is just the start of where things will go.

Operator (participant)

Thank you. Our next question comes from the line of Duane Pfennigwerth of Evercore ISI. Please go ahead, Duane.

Duane Pfennigwerth (Equity Analyst Global Airlines & Lodging)

Hey, thanks. Good morning. Just on your northern hub build-out, that comment kind of caught our attention. Can you talk about what end you're in and maybe expand on how much of your footprint, you know, transitioned over to JetBlue? How much of that has transitioned back? And basically what your footprint in your northern hubs looks like now versus pre-pandemic?

Robert Isom (CEO)

Duane, I'll start and Stephen can elaborate further. But I'll just note, you know, two points right off, and that's LaGuardia and DCA. We're going to be back to, you know, our largest schedules, largest number of seats offered in both LaGuardia and DCA since the pandemic, and, you know, that I believe, you know, is indicative of the focus that we're putting on. And by the way, we're seeing really nice results with that added capacity. In terms of Philadelphia, that had been one of the markets that had been most difficult for us given the pull-down of regional aircraft, and the same holds true for Chicago. As we restore our regional aircraft lift, the beneficiaries of that are going to be Philadelphia and Chicago.

In Philadelphia, Steve, I don't quite know the size of Philadelphia compared to prior times, but I think we're getting close back to where we were.

Stephen Johnson (Vice Chair and Chief Strategy Officer)

Yeah, and that's the intention to have Philadelphia more or less the same size as it was pre-pandemic.

Duane Pfennigwerth (Equity Analyst Global Airlines & Lodging)

That's helpful, and then I don't know if you have a metric to share, but just on, you know, how you measure competitive capacity, you know, how do you see that in 1Q and maybe an early read on 2Q versus what you were seeing maybe in 4Q? Thanks for taking the questions.

Robert Isom (CEO)

Duane, I'll start with this. Look, competitive capacity, it's important, but it's all important, you know, to the extent that it drives profitability. We're focused on margins and we're focused on making sure that we take advantage of the assets and the strengths that we have. We're focused on that, but obviously, you know, keeping track of what's going on in the marketplace. And if there is an impact in any one of the places that, you know, we fly, you know, we're going to adjust accordingly. The good thing about the fleet that we've built up, despite the difficulties that we have with supply chain and aircraft deliveries throughout, is that we spent, you know, since the merger, you know, $30 billion plus in terms of new aircraft. We have the youngest fleet. We don't anticipate any big retirements coming up.

And we have the ability to flex this fleet in a very economic fashion should we find that conditions warrant expansion. So you'll see us with moderate growth based on, you know, expectations for this year as we get out into latter stages of 2025 and 2026. If demand and profitability warrant an adjustment, we'll be ready to go.

Stephen Johnson (Vice Chair and Chief Strategy Officer)

I just add that, you know, to the extent that you're asking that question based on an ASM growth comparison, I just also look at the growth and departures and recognize that as we grow, we're going to have our growth in the most competitive time channels and most competitive places possible. So I don't know that ASMs is the perfect measure for comparing.

Operator (participant)

Thank you. Our next question comes from the line of Michael Lindenberg of Deutsche Bank. Your question, please, Michael.

Michael Lindenberg (Managing Director and Airline Analyst)

Yeah, hey, good morning. Two sort of fleet-related questions here. Just on the comment on growing your international fleet from 120 to 200 by 2029. At that point in time, how many A321neo XLRs will you have in your fleet at that point? And presumably that's in that 200 number.

Devon May (CFO)

Yeah, that is in the 200 number. And we expect to have 40 neos at that point.

Michael Lindenberg (Managing Director and Airline Analyst)

Great.

Devon May (CFO)

Sorry, 40 XLRs at that point.

Michael Lindenberg (Managing Director and Airline Analyst)

Great. And then just my second question, you know, as we think about, you know, fleets getting old, and I know your fleet is aging, and, you know, we start, you know, and more specifically wide bodies and the ability to procure wide bodies. You know, I know economically it makes sense to procure narrow bodies from both OEMs. You guys do that, and it's helped you out well with the Maxes and the 321 or 320 neos. Are we at a point where, you know, the decision to do that with wide body aircraft, whether it's, you know, to procure from different OEMs or even from two different families within the same OEM, when you think about, you know, your replacement for your wide bodies, you know, probably later this decade? Thanks for taking my question.

Robert Isom (CEO)

Thanks, Michael. And I'll start. Others can chime in. I really like where we're at in terms of our fleet. We're the operator of the world's largest fleet of A320 family aircraft. You know, we're one of the world's largest operators of 737 aircraft. We've got the MAX 8s, and fortunately those are being delivered. And we've got this order out for the MAX 10s. Now, the benefit in having these large fleets and kind of one flavor, it's really helpful from an efficiency perspective, right? You know, we're not out there with, you know, a dozen different aircraft types. Our pilots, our flight attendants, our catering, our servicing, you know, our maintenance, you know, engines, supply chain, you think about it, it greatly simplifies what we're doing. We had that same philosophy from a wide-body perspective. And we love the 787 model.

The 8s and then the 9s are going to be the real workhorses as we go forward. We know that our customers love it as well. As we take a look at the 777s, the 777-300 is going to be around for some time, and they're going to be getting a refresh, and starting this year, we'll see the benefit of the flagship suites coming out. Those are going to be in the fleet for a long time. We've got a decision to make about 777-200s at some point in time, whether we reconfigure or do something else, and we're in contact with Airbus. We're in contact with Boeing as well, and we're also mindful of the benefits that we get by having a simplified fleet, and with fleet types, that give you great flexibility depending on range and demand.

And the comment about, you know, your fleet's getting older, that's true. It's just, you know, nature of time. But the fact of the matter is we're starting from a much better spot than any of our competitors. As Devon has said, you know, our anticipated capital spending over the long run, and this is to provide virtually any level of growth that we want, especially if we have the ability to keep older aircraft around and hold off the retirements, it is very modest. So $3.5 billion type range as we take a look out into 2026 and beyond. 2025 is a real low spot in terms of capital spending. So we already have the lowest average age for our fleet. We don't have retirements coming up.

I see that as others have to invest in their fleet and are talking about, you know, numbers that are more than double of those kind of capital expenditures and, you know, the difficulty in at least with delivery of aircraft these days. I really like where we're at.

Operator (participant)

Thank you. Our next question comes from the line of Brandon Oglenski of Barclays. Your question, please, Brandon.

Brandon Oglenski (Director, Senior Equity Analyst)

Hey, good morning, everyone. And thank you for taking the question. Robert, I guess if you step back, I mean, because obviously so much has changed in the past year, especially, you know, since the investor day, I think in March of, you know, last year. But obviously you've talked about a lot getting corporate share back. But how would you articulate American's commercial strategy going forward today? And I guess I'm just observing here, but it feels like maybe you're still in a zone of defense. When does that then transition into an offensive front with that strategy?

Robert Isom (CEO)

Thanks for that question, and, you know, our investor day commitments, we stand by them. You know, I don't like that we haven't grown margins. And as I take a look out into the future, and as Devon has said, I do believe that we're set up well to grow margins, especially because of everything that we've done from an efficiency perspective, and I'm going to get back to the other side of the equation because it's not just a cost perspective. But you combine, you know, the record free cash flow production that we've produced, we've done a really nice job of getting this airline set up so that we're not worried about, you know, balance sheet issues, and that puts us in a very different position. I've talked to you about our fleet.

And as we take a look going forward, you are going to see this year American absolutely spend a lot more time and focus on energy in terms of improving our customer experience in a way that we can monetize. So from that perspective, we have a foundation built that I think others are trying to catch up on, whether it's, you know, establishment of satellite Wi-Fi across all fleets, ultra premium lounges, which we're going to be introducing a new Philadelphia lounge to add to the complement that we already have. This collection of premium seating on our aircraft and whether it's the new flagship suites and 787-8s or 787-9s and the XLRs, or whether it's just the domestic product where we're so strong, we have a regional product that others can't touch in terms of the E175s.

And in terms of the rest of the fleet, you'll see that the older aircraft that we have, whether it's the 320s and 319s, they're going to be both getting upgraded. And so I feel like we have all the pieces of the puzzle in place to really take off. Now, we've got some work to do putting that together and selling and telling our story better. But we are the largest and the best market in the world here in the U.S. We've got an enviable position in the biggest business markets. When you think about London Heathrow and Tokyo, we've got the best set of partners around the world in those biggest markets. America's got a lot of momentum as we look forward.

Brandon Oglenski (Director, Senior Equity Analyst)

I appreciate that, Robert. And then, Devon, I know you talked a lot about, you know, the cost headwinds this year. But is there any productivity offsets potentially in these new labor agreements and especially, you know, in the context of that simplified fleet that Robert was just discussing?

Devon May (CFO)

You know, not necessarily offsets related to the labor agreements themselves. I think the offsets were fine and is just a lot of work on efficiency and investing in the right technologies. As we've talked about last year, our re-engineering of the business efforts generated about $500 million in value. This year, we think we're going to generate a couple hundred million dollars, but that's net of some really meaningful investments that we're making in our IT shop, that we're making in our tech ops organization to digitalize all the work that they are doing.

So I feel great about the investments we're making. It doesn't all necessarily pay back in this calendar year, but we look out to 2026. I think our cost profile is going to look really good. I've always said I look back over the last several years, I think we perform better than anybody when it comes to unit cost delivery. So, you know, we're not necessarily seeing any things in the labor agreements. That's not what we were going after in those labor agreements. But we are running a more efficient business right now. And I think we're going to run a more efficient business a year from now than we are today.

Operator (participant)

Thank you. At this time, we will be taking questions from media. Media, please press star 1 1 on your telephone to remove yourself from the queue. You may press star 1 1 again to allow everyone the opportunity to participate. You will be limited to one question and one follow-up. Again, we are taking media questions at this time. Please stand by while we compile the Q&A roster. Our first question comes from the line of Alison Sider of Wall Street Journal. Your question, please, Alison.

Alison Sider (Air travel reporter)

Hey, thanks so much. Curious, after the Starship breakup last week, you know, how concerned are you about sort of the operational and safety impacts from, you know, from space launches? And, you know, is there anything you're asking the FAA to do differently in terms of kind of how it handles those?

Robert Isom (CEO)

Ali, thanks for the question. We're in constant contact with DOT and FAA. No doubt, you know, launches do have an impact on our network, especially, you know, given the airspace issues that are, you know, impacted. So what we do, we coordinate closely. I've got David Seymour here, our Chief Operating Officer. I think what he'll tell you is that the coordination effort is better than it's ever been. That, you know, one of the things that we try to do is work with any launches to make sure that they're as least impactful in terms of time of day that they take place. David, you want to add anything?

David Seymour (COO)

Yeah, I think Robert, you said the right things in our coordination with them. And I think it's just the FAA is going to be very mindful of those launches. And they executed their strategy in locking out a containment zone for that launch. You know, and you know, it was disruptive to us in terms of diversions that we had to do holding aircraft on the ground. But we recovered well. But as Robert said, the coordination right now that we have with the FAA and air traffic side has never been better. And you know, we're going to continue to work with them on that.

Alison Sider (Air travel reporter)

Got it. And I mean, do you know, or is there anything you want to be done differently, you know, for future launches in terms of, you know, the sort of perimeter for the closed airspace or the timing of launches or anything you're looking to change from a safety perspective?

David Seymour (COO)

We're still waiting for, you know, the FAA to continue their review of that. But on the surface right now, I don't see anything different that we're going to see. They've done a lot of work over the last several years of actually continuing to manage that. So we have not as impacted as we were in the past. But we're going to work with them. But I think they need to continue their review of that situation. And then we'll get back and see if we need to adjust plans.

All right, thanks.

Operator (participant)

Thank you. Our next question comes from the line of Mary Schlangenstein of Bloomberg News. Your question, please, Mary.

Mary Schlangenstein (Airlines reporter)

Hi, thanks. I wanted to ask about the IFE on the premium cabin that you're talking about going forward. I wondered what was the, what's been responsible for that shift in your approach on IFE? It's just competitive pressure, something that consumers are demanding, or what's behind that?

Robert Isom (CEO)

Oh, hey, Mary, just you might have mistaken something. In terms of our IFE strategy, seatback entertainment on our international-based wide-body aircraft, or, you know, in the case of the A321XLRs, those will be equipped to take care of our customers. The rest of our fleet will have satellite-based Wi-Fi, except for the smallest of the regional jets.

Mary Schlangenstein (Airlines reporter)

Right, but you don't currently have IFE on your international wide-bodies, or am I wrong on that?

Robert Isom (CEO)

We currently have IFE on our international-based aircraft.

Mary Schlangenstein (Airlines reporter)

Thank you. Sorry about that. So the other question I wanted to ask was what changes that you potentially foresee from the Trump administration in terms of either the operations of the FAA and ATC issues with, you know, them trying to step up hiring or make changes faster than the past administration had to change the ATC issues affecting the airlines?

Robert Isom (CEO)

As I said in some earlier comments, I think President Trump and the administration, they recognize the importance of aviation to commerce. They certainly did that during the first Trump administration in response to COVID and the support that was provided to the industry. It's a reason why the industry is as strong as it is today. And credit really does go to the first Trump administration and the quick reaction. Now, in regard to what we do next, I do believe that it's imperative that we look at investing in air traffic control. We know that there's a huge tax put on, you know, efficiency for the airlines on our customers in terms of the time it takes to fly. And ultimately, you know, we've got to address it because, you know, there's a lot of growth that I think is possible and hoped for in the industry.

But we can't keep on jamming, you know, more aircraft into the skies in a way that, you know, can't be serviced efficiently. So, you know, today, it takes a lot longer to fly from Chicago to New York or Washington to New York than it did 20 years ago. There's no reason for that. There's plenty of room in the sky. There's technology that we can be deploying that would be helpful from an overall control perspective. And also, our aircraft are actually equipped to handle and to perform in a different system. So we've got a lot of work to do. It's going to take investment, but I have great confidence that that will be the type of work that we're able to engage on.

And the last thing I'll just say is I also believe that the administration will be very, you know, cognizant of regulatory issues that can benefit both the airlines and our customers as well. And we'll be working closely with them on that. So I'm very, very optimistic about the future.

Operator (participant)

Thank you. Our next question comes from the line of Leslie Josephs of CNBC. Please go ahead, Leslie.

Leslie Josephs (Airlines reporter)

Hi, good morning, everyone. Just considering what the Trump administration has said about DEI and how they're extending that, ordering changes within the federal government, I was curious where American Airlines stands. I see the website says DEI are foundational to American Airlines culture and that you plan to leave the industry with DEI. Any changes there internally? And do you have any concerns about the review at the FAA that the federal government's doing? Thanks.

Robert Isom (CEO)

Thanks, Leslie. I can't speak to, you know, anything going on at the FAA. I'll just say that at American, we've always had a philosophy of hiring the best team members that we can possibly bring into the company. We serve 650,000 plus on peak days customers, 650,000 plus customers of all backgrounds and places throughout the world. We have 130,000 team members that, you know, work in, you know, all parts of the globe. Our efforts here are going to be focused on caring for people on life's journey. And in that, we're going to do that in a way that it's beneficial for our customers and profitable for our airline. That's going to be our guiding factor as we go forward in looking for ways to better take care of our customers and better take care of our team members. That's front and center.

That is, you know, where American is headed.

Operator (participant)

Thank you. This concludes the Q&A portion of the call. I would now like to turn the conference back to Robert Isom for closing remarks. Sir?

Robert Isom (CEO)

Thanks, Latif. I appreciate everybody's interest and time today, and I'd just like to reiterate that the fourth quarter was a quarter for us in which we laid down some incredibly important milestones. It was important for us to outperform the industry in terms of revenue production year over year. It was important for us to achieve record free cash flow that put us in place to take advantage of a lot of other things that we've been doing in this company to make sure that our balance sheet is as strong as possible, and we're excited about the challenges that we've taken on, not only to restore our revenue performance, but also to expand upon that and take advantage of everything that we've built in this airline over the last several years.

And so I'll reiterate our commitment to our customers to take care of them in the best possible fashion. And then I'll also reiterate our commitment to our investors. We are intent on growing margins, producing sustainable free cash flow, further continuing to strengthen our balance sheet. And there's a tremendous amount of upside in American right now. When you take a look at our performance and what we're capable of doing as we look out into 2025 and going into 2026, American is poised to outperform. Thank you for your time.