American To Lay Off 656 Employees, Reports Fourth Quarter And 2023 Results

Republished By Plato

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American Airlines has announced that it will lay off 656 employees to reorganize and improve its customer service team. The layoffs will eliminate 8.2% of its 8,000 customer service-related positions for a total of 656 employees, who are not represented by a union. The impacted includes 335 who work in Phoenix and 321 in Dallas-Fort Worth. These workers currently assist passengers with their lost luggage and AAdvantage loyalty program service groups.

The company also reported its fourth-quarter and full-year 2023 financial results, including:

Record full-year revenue of approximately $53 billion.
GAAP fourth-quarter and full-year net income of $19 million and $822 million, or $0.03 and $1.21 per diluted share, respectively.
Excluding net special items¹, fourth-quarter and full-year net income of $192 million and $1.9 billion, or $0.29 and $2.65 per diluted share, respectively.
Achieved best-ever fourth-quarter and full-year completion factor.
Generated GAAP operating cash flow of $3.8 billion and the airline’s highest full-year free cash flow² of $1.8 billion.
Reduced total debt³ by $3.2 billion in 2023. The company is more than 75% of the way to its 2025 total debt reduction goal.

“The American Airlines team produced an exceptionally strong performance in 2023,” said American’s CEO Robert Isom. “We are delivering on our commitments and remain well-positioned for the future, supported by the strength of our network and travel rewards program, our young and simplified fleet, our operational reliability, and our outstanding team. As we look forward, we remain focused on delivering a reliable operation for our customers and reengineering the business to build an even more efficient airline.”

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Operational reliability

American and its regional partners operated nearly 2 million flights in 2023, with an average load factor of 83.5%. The company produced its best-ever fourth-quarter and full-year completion factor, with the lowest number of cancellations annually since the merger in 2013.

The airline’s strong operational momentum continued through the holiday travel period. American achieved its best-ever completion factor and on-time departures as well as its lowest mishandled baggage rate over the holidays.

Financial performance

For the full year, American produced record revenue of nearly $53 billion. In the fourth quarter, the company generated revenue of more than $13 billion and an operating margin of 5.0% on a GAAP basis. Excluding the impact of net special items¹, American produced an operating margin of 5.1% in the fourth quarter, exceeding the high end of the company’s prior guidance. These results were driven by continued strong demand for American’s product, record revenue from its travel rewards program, strong operational performance and effective cost control.

Liquidity and balance sheet

Strengthening the balance sheet remains a top priority for the company. American reduced total debt³ by more than $500 million in the fourth quarter and by approximately $3.2 billion in 2023. The company is more than 75% of the way to its goal of reducing total debt³ by $15 billion by the end of 2025. As of Dec. 31, 2023, American had reduced its total debt³ by approximately $11.4 billion from peak levels in mid-2021.

The company ended the year with approximately $10.4 billion of total available liquidity, comprised of cash and short-term investments plus undrawn capacity under revolving and other short-term credit facilities.

Guidance and investor update

Based on present demand trends and the current fuel price forecast and excluding the impact of special items⁴, the company expects its first-quarter 2024 adjusted loss per diluted share⁴ to be between ($0.15) and ($0.35). American expects its full-year 2024 adjusted earnings per diluted share⁴ to be between $2.25 and $3.25.

Notes

See the accompanying notes in the financial tables section of this press release for further explanation, including a reconciliation of all GAAP to non-GAAP financial information, including the calculation of free cash flow.

The company recognized $173 million of net special items in the fourth quarter after the effect of taxes, which principally included $216 million of nonoperating net special items for charges associated with debt extinguishments and mark-to-market net unrealized losses on certain equity investments. The company recognized $1.0 billion of net special items in 2023 after the effect of taxes, which included operating net special items of $979 million principally related to one-time charges resulting from the ratification of a new collective bargaining agreement with American’s mainline pilots, as well as nonoperating net special items of $362 million for charges associated with debt extinguishments and mark-to-market net unrealized losses on certain equity investments.
Please see the accompanying notes for the company’s definition of free cash flow, a non-GAAP measure.
All references to total debt include debt, finance and operating lease liabilities and pension obligations.
Adjusted earnings per diluted share guidance excludes the impact of net special items. The company is unable to reconcile certain forward-looking information to GAAP as the nature or amount of net special items cannot be determined at this time.

American Airlines aircraft photo gallery (Boeing):