Good afternoon. My name is Scott Long, and I'd like to welcome you to American Airlines' 2024 Investor Day. As a reminder, before we get started, I get this fancy slide. Today's presentation contains a number of forward-looking statements that represent our expectation of future events. Numerous risks and uncertainties could cause actual results to differ from those projections. Information about some of these risks and uncertainties is included in our SEC filings. In addition, we'll be discussing a number of non-GAAP financial measures. A reconciliation of those numbers is available in the appendix of today's presentation. With that, I would like to thank you for joining us again today and bring up our CEO, Robert Isom, to the stage.
Thanks, Scott, and good afternoon, everyone. I really appreciate the time. So look, it's been seven years since American's last Investor Day, and I've been CEO now for two years. So one of the questions that I get is, why an Investor Day now? And we've been through a lot. Even prior to the pandemic, American was finishing off an integration. We had to go through a recovery. And I'll tell you, the reason why now is the time is because we're ready. I certainly wanted to make sure that before we came out and talked to people about American's future, that, look, demand had returned. And on top of that, I wanted to have a story to tell that American was delivering on our commitments. And we have to have something to really encourage those of you looking at investing in American Airlines about the future.
The time is now. We're ready on all those fronts. I'm going to take you through a few things. First, in terms of demand being back, it's returned. If there's one thing about the pandemic that we've learned, it's that people want to travel. They've come back, and we finally are at a point where you can see on the horizon very favorable trends. It's a backdrop that's good for American Airlines. Next, American is a changed airline. We're very different than we were prior to the pandemic. We're delivering on our commitments, and we're focused on our shareholders. I can't wait to talk to you more about all of that.
And then finally, as we take a look at an investment thesis and looking forward, we think that we have competitive advantages that will propel American to sustainable margin expansion and ultimately delivering free cash flow. So all of this is in store for today. And as I've said before, I'm very excited to be here because the time is now. American is ready. So the first thing I want to go through is just my feelings on demand and why I feel so confident about where we stand now and American's positioning. So one thing that I think all of you know well is that total revenue in the industry has certainly surpassed where we were prior to the pandemic.
Maybe we haven't quite kept up with overall inflation, but we see growth rates in terms of total revenue that now, post-pandemic, are exceeding what they were prior to the pandemic. I feel really good about customers coming back and really wanting to engage what we do best, which is flying them to where they want to go. On top of that, one of the things that we've identified is a propensity for customers to spend more now on experiences than hard goods. This relationship is something that we think is going to continue to go forward into the future. I think that that will help us get back to the historical relationship between GDP and airline revenues, as I'll show you soon. This bodes well for the industry, but it also bodes well for American. People want to travel.
They want experiences which, at the root, you have to get someplace. That's where American really can deliver. As I said, we haven't recovered fully to where we were prior to the pandemic in terms of the historical relationship between GDP and airline industry revenues. Now, I'll tell you that our plan doesn't depend on a full recovery of this relationship. But I think it's important to note, though, that as people return to work, as businesses get back to doing what they do, that I do have confidence that, look, if there is a return, American benefits, and it's in this, one basis point of recovery in this relationship is worth $2.5 billion of industry revenue per year. American accounts for 25% of that revenue. So look, it will benefit American in the event that this relationship returns to where it was.
So I look at the bounce back in demand plus just demographics and consumer spending and the propensity for customers to spend more on what we do. And this historical relationship is being just proof positive that ultimately American benefits in the long run. And I add one thing on top of this, and that's this, that at the heart of it, we're still a supply and demand business. And when demand is back, those that have supply, which American does, I think will do very well. Now, from a demand perspective, I've told you why I think that that's strong and it's going to continue to be that way. But from a supply perspective, there are a number of constraints that I still see shadowing the industry.
Not only do we have aircraft delivery delays from the OEMs, but we also have engine issues and supply chain constraints, all these kind of things that were a pandemic bounce back that are still with us. But on top of that, we have things like people shortages for air traffic controllers and pilots. These are things that we still all have to work out in the industry. And as we see demand coming back, look, American, while we've announced a new aircraft order that is really long out into the future, our fleet plan is pretty well set for the next couple of years. And we have shown that we can deliver capacity to where it needs to go and where we can make profitable use of it. So I'll sum that all up by saying demand is back.
There's industry constraints that are out there that I think benefit a carrier like American going forward. That's a great backdrop to talk about how we've done and why I'm so confident that we can deliver on our commitments. I mentioned we're a changed airline. Back when I became CEO two years ago, we were just coming off of a first quarter of 2022 loss of $2 billion, $15 billion of losses over the pandemic. We knew we had to get really focused. One of the things that we did is put together just a very, very focused plan. My leadership philosophy in terms of running the airline day in and day out says, get the best people around you, have a solid plan, and then put in place a process to ensure just relentless execution.
I took that same mindset back two years ago. As we took a look at our senior leadership team, it was apparent to me that the kind of skills and expertise that were necessary to really merge airlines, which we were merging the US Airways and American Airlines prior to the pandemic, and then working our way through the pandemic, it was clear to me that the skills and expertise was different, and we needed to make sure that we were ready for what's ahead and growing in this airline when demand returned. So on that front, I've rebuilt the senior leadership team, and we have a great group of people not only from within the airline, but also we've brought in expertise from outside the airline. We're really well positioned to make sure that we can deliver on our commitments.
On top of that, we've also refreshed our board of directors. We all have a mindset of delivering and delivering not only for our customers and our team members, but also for our shareholders. On the plan side of things, our long-term strategic objectives have always been about creating a world-class customer experience and making culture a competitive advantage and building an airline that thrives forever. But those are long-term goals. At the time that we put this together, we knew that we had to get back to being able to provide a product to our customers that they could trust. And so we knew reliability was at the heart of it. On top of that, we knew that we had to turn the airline around and start producing profits. There's no way that you can have a sustainable enterprise if you're not producing profits.
Over the long run, we knew we had to hold ourselves accountable as well to strengthening our balance sheet and building an airline that could really survive no matter what comes. A very focused plan, and that's what we've been doing the last couple of years. So how have we done? From a reliability perspective, the thing that matters most to customers is getting them from point A to point B. We're the best in the business. This is a major shift. This past year, we exceeded the completion factor of the other major network airlines. That's something that hadn't been done for a long time. It's certainly not in American Airlines' history. This is something that it's not just this past year, but it's really the last 18 months. We think we've built the airline.
We know that we've built the airline to be able to sustain this. The best way to run an airline efficiently is to make sure you're completing all your flights. We're doing very well on that front. We've returned to profitability as well. You can see where we were in 2019 and then out into 2023 approaching where we were. I want to point out, though, that the profitability that we're achieving in 2023 is very different than the profitability that you saw in 2019. The reason why is this: the profitability in 2023 is actually producing record free cash flow for American Airlines. That's a really important note because we had to do that. During the pandemic, of course, we took on a lot of debt that we knew we had to address.
Fortunately, free cash flow production is something you're going to hear over and over again, and it's key to our future. On that front, we've used some of that free cash flow to really knock down the total debt that we accumulated over the course of the pandemic from the high watermark back in the second quarter of 2021. The goal that we set for ourselves to reduce total debt by $15 billion through 2025, we're really pleased with the progress that we've made. 75% of the way through today. As we take a look out into 2024, we think that we'll be 85%. The overall goal is well within our reach. So look, whether it's reliability, we've done it. We're a different airline from that perspective. Profitability, it comes with free cash flow now. And we're strengthening our balance sheet.
On top of that, we've ensured that any of the debt towers that we have out into the future are certainly manageable. So I feel really good about where we're at. Now, some people may say, "Well, hey, wait a second. Everybody's recovered from the pandemic. And rising tide raises all ships." But I'll just underscore this: not every airline is more reliable than they've ever been in their history. Not every airline has returned to consistent profitability. And not every airline is producing record free cash flow and is deleveraging. And not every airline has proven that they can deliver on their commitments over the last couple of years. So I feel really good about this foundation that we've built. And others are noticing as well. We've received ratings upgrades from the credit rating agencies, and our frequent flyer program has taken note.
Wall Street Journal rankings have improved. We feel really good about where we're at. We have delivered. Now, the exciting part is building on demand coming back and this reputation that we have for executing and taking a look at the opportunities ahead of us. I want to spend some time on that right now. We know that we have compelling value-creating drivers, opportunities for us that really will drive shareholder value. It starts with the investments that we've made over time. When I lay these out, it's not a lot of new news. These are seeds that we've planted that we're harvesting now and that we see tremendous growth being enabled going forward as well. Our fleet, I'll start there.
Look, we have already undergone the largest fleet renewal program in commercial aviation history, not only by bringing on 600 aircraft over the last decade, but also by refurbishing all the other aircraft that we've had in our fleet. And in that process, we've simplified greatly our fleet as well, taking it from our mainline fleet from nine different fleet types down to four. It's an easier airline to run. All of those aircraft were financed at a time that was much more favorable than others are looking at today. And our fleet plan, certainly as we take a look at that through 2026 and 2027, it's not dependent on a big aircraft order. We have this within our control. Now, you've got a great fleet, and we're putting it to even better use.
Every time we fly and we do it in a reliable fashion at the kind of completion factors we're doing, we're enabling ourselves to retain more revenue and also protect our reputation with our customers. So look, completion factor is at the heart of it. And while others struggle, look, I feel really good about how we are able to rebound time and time again. And this is a base to build on. So you've got a great fleet. We're operating it really, really well. It then gives us a chance to lean into those kind of things that are really unique to American Airlines. You'll hear this throughout the day that we're different because of our network. Look, I love what we do. We are focused on the domestic network. We're focused on our regional fleet.
And it enables us to serve more small markets in a way that others can't do. We have wholly owned carriers. We have relationships with others to serve smaller markets. And that all comes together to enable us to serve an international marketplace throughout the world and being able to do it in the most vibrant marketplace as a base, again, in the world. And that's in the U.S. We feel really good about our domestic and short-haul international focus. And that is something that we're leaning into. And I know that we can capitalize on not only with our partners, but also with our own international growth as time goes on. So we've got a great fleet. We're operating it really well. We've got a network that is enviable.
On top of that, we now are looking at our Advantage program and really trying to make sure that we maximize it as a true rewards ecosystem. Now, we're able to do that because we're in the process of renegotiating our co-brand credit card deals right now. But in doing this, this will also unleash tremendous value, not just with the co-brand credit cards, but also by underscoring that life as an Advantage member is best as you can get it in the airline business. Everything about being an Advantage member makes travel easier. And in that, I know that we will be able to attract customers, retain them, and also offer them value for which they're willing to compensate us. Fleet, operational excellence, network, a rewards program.
We're finally at a place, though, where American can unleash its power and its talent on truly reengineering the business. Don't forget, we've been recovering from the pandemic. Even before that, we were merging two airlines. We're at the point now where we have our hands on the wheel, and we're looking at running the airline in a way that is just even more efficient. It's efficiency from a fleet perspective, all of our assets, whether it's gates or aircraft, but it's also our people as well. We've benefited from being able to go and negotiate new labor contracts with many of our labor groups that put us in a position where we can be much more efficient. On top of that, we can do the same thing with our partners, so through procurement.
This is not something that we've focused on in the past, but we spend a lot of money on third parties at American Airlines, and we have the ability as well to take advantage of that. So we're forecasting almost $1 billion, over $1 billion of spending that we're able to take out of our P&L. And all of this is going to lead to value creation for our shareholders. So I'll go to the punchline. What you're going to see for us today, and what we released earlier today, is you're going to see a story here that's all about expanding margins. We're really confident in what we've said for 2024, an EBITDAR margins of 14%.
We're very confident that what we put, the stakes we put in the ground now, are going to produce results that enable us to expand those margins as we go out into 2025 and out into 2026. Now, on top of that, that should continue to produce record free cash flow that grows from roughly $2 billion today in 2024 to more than $3 billion as we move out into 2026. Look, this is where the opportunity is. The network carriers, if you take a look at margins and earnings, you're approaching where we were back in 2019, and yet equity values are still depressed. On top of that, we have opportunity for growth. This is the emphasis today, that there's real opportunity for investors. Certainly, I know that there's an opportunity at American based on those things that we will deliver.
So today, you're going to hear a lot more about that. First off, Vasu Raja, our Chief Commercial Officer, is going to take you through in more detail why we have this confidence in leaning into our network, this domestic network which can really fuel a tremendous amount of growth, and then also layering onto that this rewards ecosystem. Then David Seymour, our Chief Operating Officer, will talk about this operational excellence foundation that we've built, and not only built, but will continue into the future, and why it's a baseline for actually delivering more efficiency. And then Ganesh Jayaram, our Chief Digital Information Officer, will talk about a tech-first mindset at American that's powering our commercial initiatives and also our operational performance.
That tech-first mindset is one that's not about just working harder and throwing more resource at things, but it's about bringing technology to bear on those things that really deserve optimization and can benefit from the application of technology. We feel really good about the opportunities that are ahead of us there. Then Cole Brown, our Chief People Officer, will talk about how American has been able to attract the right people, put them in the right place, make sure that we hold ourselves accountable, and put in place processes to ensure that we hold ourselves accountable and deliver time and time again.
Then finally, Devon May, our Chief Financial Officer, will talk about the reengineering effort, go into more detail about how we're going to use assets better, how we're going to improve the productivity of our team, and then also roll that up and be able to illustrate how that translates into true benefit for our shareholders. We've got a really great day planned, and this is one that I'm so pleased to kick off. At the heart of it is this: that American is well-positioned to create value. We have commercial opportunities in front of us, and again, seeds that have already been planted in our fleet, in our network, in our rewards program. We look to be harvesting those long into the future. But you've got an airline that is different. We deliver on what we say we're going to do.
From that perspective, we're going to continue our reputation for operational excellence. As well, we're going to make sure that we're doing it as efficiently as possible, and there's real value there. Ultimately, that leads to margin expansion and long-term free cash flow generation, which all adds up to really good things for those that are investing in us. What I'd like to do next is welcome Vasu Raja up to the stage and look forward to questions and answers at the end. Thank you.
Thanks. Well done.
Hi. Good afternoon, everybody. It's great to see so many of you in person. Thanks for those of you dialing in via the webcast as well. As Robert mentioned, I'm going to talk about commercial execution, which very simply is who we are going to be for our customers, how it creates value for them, and very importantly, how it creates value for our investors. Now, I'll pick up where Robert left it. Airline revenues tend to trend with GDP. That's not a particularly unique insight, nor is that particularly unique to us. What has been more interesting in the post-pandemic world is that we've seen that our different lines of revenue have grown at different rates. Short-haul has grown at a greater rate than long-haul, and frequent flyer has grown at a greater rate than both of those things. But this, too, is not necessarily unique to American Airlines.
In fact, many people in our space have noted the exact same thing. Where we are different is that we are uniquely positioned in the face of these changing trends. There are two things that position us for that. The first is our short-haul network through which we attract a massive base of customers. It is indeed the foundation for how we create value for our customers and for our investors. The other thing that we do and will do well is AAdvantage, our rewards program whereby we reward customers for using that network. Very importantly, this compounds and multiplies the value that's created just from our network itself. Now, over the next several minutes, I'll talk about each of these two major commercial priorities, starting first and foremost with building the best network. American Airlines is, of course, a global hub-and-spoke carrier.
Our hub-and-spoke system is oriented around the hubs that you see on the screen behind me. Very importantly, its chief function is to build origin and destination markets, or as you'll hear me call it through this presentation, O&D markets or just simply O&Ds. This is not also a unique thing to us. Many people in the airline business also run hub-and-spoke networks. What is different for us is that the scale of O&Ds that we build, the number of unique O&Ds that we build, is very much unique. It's also very much tuned with the landscape that we see today. To better understand our advantage, it's worth it to first understand just how this landscape has changed, starting first and foremost with how the customer landscape has changed. Now, since the pandemic, we, as many people, have observed a shift in population growth.
Population is growing at a greater rate in the Sunbelt states, at a slower rate in all of the other states. But importantly, population is largely flat in four large coastal areas which historically were very central to air travel. These are New York, Boston, Los Angeles, San Francisco. Well, as population is shifting, so too the axis of economic growth is shifting. Increasingly, the Sunbelt states are producing economic growth at a premium to the nation's average, the other states at a deficit, and those four large coastal markets even at a further deficit to that. Well, while the customer landscape is changing, interestingly, the air travel landscape is changing as well.
As so many airlines have upgauged their fleets, have reduced the number of regional jets that they go and operate, have made real structural fleet decisions, what we see is that there is more capacity that is going into the 25 largest cities in the United States. But actually, for the 200 smallest cities, very often of which are the highest growing cities in the US, actually demand or capacity is less than what it was in 2019, materially so, over 10 points less than what it once was. The crux of these changes in the consumer landscape and the competitive landscape creates real opportunity. And this opportunity bears itself out in two phenomena. First and foremost is customers in these small high-growth cities simply pay more. We see this already.
Looking at all of our markets in our system, customers who are in those largest 25 cities tend to pay less than our system average. Customers in those smallest cities pay materially more than what the system average is. That probably stands to reason because their demand is growing and there's an inadequate level of supply for them. This is magnified by another phenomenon. As population and growth shifts out of four major economic centers, it's not shifting into four big cities in the Southeast or the Southwest. It's actually fragmenting. What we see today is that actually 60% of the airports in the United States have less than 500 passengers per day each way worth of demand. Or said more simply, for 60% of the airports in the United States, they couldn't sustain multiple round-trip narrow-body services per day.
Now, you put all of this together, and now the picture of this new landscape starts to emerge. There is a large pool of high-growth, high-value customers whose air travel needs are simply not being met. And that's where American Airlines comes in. Our network is uniquely tailored for this opportunity that's there and will be for the foreseeable future. It starts with our hub structure. By that, we mean the design and the location of our hubs. And it's best illustrated through a for example. In the case here, we've picked El Paso, Texas. El Paso, Texas, of course, is one of the cities in my list of 200. It is a smaller city. It's a high-growth city. It's also very importantly located in close proximity to our hubs of LA, Phoenix, Chicago, and Dallas. We fly 14 times a day from all of these markets to Phoenix.
And in doing so, we create a level of utility for customers in for each of these markets to El Paso, excuse me. We create a level of utility for customers in El Paso that no one else can do. So if you think about a traditional LCC/ULCC type of model, one absolutely could fly from El Paso to DFW. There's someone who does it several times a day right now. But what American Airlines uniquely does is we're able to get customers from El Paso to Louisiana, and El Paso to Montgomery, Alabama, El Paso to Mexico City, and El Paso to Madrid, Spain. So if you are a high-growth customer in El Paso, you will tend to prefer American Airlines over a typical LCC. Importantly and related, our network is also competitively differentiated from other network carriers.
Our El Paso schedule is two times larger than one network carrier's. It's seven times larger than the other network carrier. That means we don't just create a lot of unique markets like Lexington or Madrid. Even in cities that are large cities, Boston, New York, Seattle, we offer more connections, more services than what anyone else does. What that means is if you were a customer in El Paso, high-growth, want to access the global market, American Airlines is the best way to go and do that. Now, this network or this hub structure benefit is really enhanced through our fleet, most critically through the regional jet network that we operate. Our regional jets, for those unfamiliar, is a fleet that is really anchored by the 75-seat regional jet. We operate those in two-class configurations. We have 12 first-class seats. It is a very compelling and competitive product.
Importantly, it's also a very efficient one. When our 75-seaters compete against one of our competitors' 175-seat narrow-body jets, we are competing with the 60% trip cost advantage to what they have. Importantly also, we have 50% more regional jets than what our next largest RJ competitor has. The combination of our hub structure and our fleet structure creates a network advantage at scale, which we have depicted graphically on the image behind me. What you see here, of course, is a picture of the Western Hemisphere. Each of those cities, each of those dots, is a place with service. Importantly, those blue dots are cities where American Airlines has a network advantage, just like what we described in El Paso. Now, the facts bear mentioning. There are 300 cities in the Western Hemisphere with air service.
We have a network advantage in 200 of those cities. We make 30% more O&D markets than our next biggest carrier. 40% of our O&D markets, they are unique. We are the only customer in that market can go and access the global marketplace. Very importantly, this is not a niche part of our business. This is the business. Almost half of our traffic is originating in these cities. That is significantly more than our next biggest competitor. The next biggest network carrier originates about a third of their traffic from these cities. This is a very significant difference between us and them, which is very much a structural advantage that we have in the times that we live in. That advantage is something which has grown and will continue to grow.
So if you go back 10 years' time ago, in roughly 50% of the cities in our system, we had a network advantage along the lines of what I just described. Five years back, that number grew to 60%. As we enter 2024, we have a network advantage in 70% of the cities that we go and serve today. And it is not forgone to think that in the very near future, that number could grow to something even greater than that for a few very simple reasons. First, most all of our competitors will continue to upgage and deprioritize the regional jet network. Two, and as Devon will elaborate on, we still have the ability to better utilize the flight assets that we have today. And three, very critically, all of our major connecting hubs, Phoenix, Chicago, Philadelphia, Charlotte, Miami, and Dallas, can grow on their existing infrastructure.
We don't need to build new gates or do new projects. So we can grow and serve this demand very efficiently in a way that no one else can do. Now, that is why, of course, we say that our short-haul network is the foundation for how we go and create value for our customers, for our investors. But very importantly, when that's our foundation, that creates the opportunity for us to ladder a profitable international network off of it. And as we look at it, of course, the first key thing as we go and build an international network is to link it to the connectivity of this great domestic system. That's very unconventional versus a lot of other carriers who fly out of big coastal markets. But for us, it works. The next step isn't, though, that we go and buy a bunch of jets.
The next step has actually been developing global partnerships. Now, over several years, we've been securing global partnerships around the world. Between our own network and these partners, we cover 90% of the demand that is there, which is important for two very really important, compelling reasons. First and foremost, it de-risks international growth. When we're talking about growing to India, we're talking about deploying $200 million of flight assets to go into a market. But through our partnerships, we get to see customer demand, and we get to actually sell that demand before we enter it, greatly de-risking market entry. But secondly, and importantly, we've constructed these partnerships to be durable. They're not the frail marketing partnerships of times past in our industry. All of our partners very much depend upon our domestic service for their customers. We generate about $3.5 billion of revenue across all of our partners.
For many of our partnerships, certainly for our overseas partnerships, access to American Airlines' customer base and network is the difference between whether their long-haul flights make money or not. So that is very crucial to us because what it enables us to do is then augment the power of our hubs with their hubs. So take London, for example. London doesn't have nearly the level of connectivity of some of the other hubs in Europe. Yet between ourselves and our partner there, we're able to drive a material yield premium compared to other hub complexes. The same applies in Tokyo, which also doesn't have the connectivity of other hubs in Asia. But through it, we can drive a material yield premium. Now, that short-haul network, the connectivity that we generate through it and our partnerships then enables long-haul growth.
And we've been equally focused on a simplified fleet that can be versatile and responsive to long-haul demand. It starts with our wide-body fleet. We have two types, the 787 and the 777. In the case of the 787, we can fly it from any base in our system. We can fly from Philadelphia to transatlantic whenever demand peaks. When demand starts to wane, we can take the exact same airplane, move it to other hubs, and fly to Hawaii, South America, or South Pacific. That gives us 12 months of utilization on the airplane. We can always deploy it to the theater that's most valuable to the customers that are there. We always take advantage of the connectivity of the American Airlines and partnership system that we have. And very importantly, none of it drives any additional expense. There's no further training. There's no additional parts.
There's no unique transition expenses from moving an airplane from Philadelphia to Dallas. That exists across our 787 fleet and our 777 fleet alike. Also important to our plans and building a future profitable long-haul network is the 321 XLR. For those unfamiliar with the 321 XLR, it is a 321 for any and all purposes. It has the same pilots, the same parts, the same sparing, all of those things. But it can fly longer. And we will configure it to have a flatbed first-class product in it. What that enables us to do is launch from the East Coast into transatlantic, where we have a trip cost advantage to a typical wide-body. The 321 XLR has a 30% cost advantage versus a typical wide-body.
When demand starts to wane in the North Atlantic, we can take the exact same airplane and fly it in the US TransCon, where it has a 15% revenue premium to a typical domestic-configured 321 airplane. Now, this will over time create an international network that takes advantage of the strengths of the American Airlines domestic system, its partnership network, and can produce sustainable profitability. In summary, our network is the key to how we go and grow value. Lo and behold, we stand before an opportunity. There's a huge base of customers who are growing, who are contributing more and more to economic growth in our country and beyond. They have inadequate travel options. American Airlines is uniquely positioned to go and serve that.
The first step is going and really maximizing the advantage of our short-haul network, augmenting that with our partnerships, and then building a profitable long-haul franchise on top of it. We've already made a lot of progress on it, and we will continue to do so. But as we say, the network is the foundation of how we create value. And of course, one thing that we build off of it is the long-haul business. But another very crucial thing that we build off of it is AAdvantage, our travel rewards program. Now, before I start talking about AAdvantage, I should be clear in what it is for us. You'll notice in all of our commentary, we don't refer to it as a loyalty program because it is something so much more than a loyalty program. AAdvantage is how we reward customers.
What its mission is, is extremely simple and powerful. We reward customers who purchase higher value products and services by giving them exclusive access to travel. It's as simple as that. But as simple as it is, it is powerful. And its revenue contribution to us is significant. So we'll share with you how we decompose our own revenue. Now, about 20% of our revenue is coming from customer transactions where the customer is buying our cheapest selling fare and is non-AAdvantage, not part of our program. Another 25% of our revenue is a customer buying the cheapest fare that we offer but is a member of AAdvantage. So that means that about 45% of our revenue comes from what we call the core network. That is, the better we are at creating connections for customers in El Paso, the more value we're able to generate.
But there's a base of customers who are right now buying our lowest selling fare. But then it gets interesting. 15% of our revenue comes from customers who are not members of AAdvantage but buy premium content. Let me explain what I mean by premium content. Premium content is effectively anything beyond our lowest selling fare. It's a customer buying first-class premium economy, but also spending money on our branded credit cards or spending more for extra refundability or changeability. It is the highest margin fare products that we truly go and offer. 15% purchase it and aren't part of AAdvantage, which means, importantly, 40% of our revenues are coming from customers buying premium content who are AAdvantage members. Now, there's some important insights to draw here as we think about our customer base going forward. And it's worth it stepping through it in reverse order.
40% of our revenue is coming from customers who will purchase premium content. They're not interested in the lowest selling fare. For them, we have things such as our branded credit cards where they can earn miles for travel just for doing everyday shopping. There's another 15% of our revenue coming from customers who are lookalikes. What we need to do there is introduce them into AAdvantage because clearly they value buying something more than the cheapest fare that we offer. We need to introduce them to a program so they're rewarded for doing it. Then importantly, that next 25% of customers who are next 25% of revenue that's coming from customers that are AAdvantage but not buying premium are telling us something extremely important.
First, they're telling us that they actually value travel because the only reason you sign up for AAdvantage is because you want to travel again and you want to be rewarded to do it. That's the primary reason to go into the program. But what they've also told us is a second thing, which is every bit as important, which is that we haven't made them the right offer that would compel them to buy something more than the lowest selling fare. So if you put all that together, what it actually means is that 80% of revenue is coming from customers who are not interested in buying the lowest selling fare. They want to be rewarded for actually buying higher value products and services. We just have to give them the higher value products and services. Equally compelling is how this has changed over time.
Back in 2017, about 70% of our revenue was coming from customers who were AAdvantage customers or those buying premium content. Of course, today that's grown to 80%. But the entirety of that growth, that 10-point growth, has come from bringing more people into the AAdvantage membership base. The more that grows, those are the customers that take out our branded credit cards, that buy higher margin products. They're the reasons why we go create premium seats. And as we look forward, it doesn't take too much in order to believe that that trend will continue. First and foremost, today we offer more premium seats globally than any other airline. That number is going to grow by 20% in a few years.
Within our long-haul capable fleet alone, we will offer 45% more premium seats than what we do today, which is all the more reason to go be an Advantage customer. Additionally, we have one of the largest branded credit cards in circulation. This is meaningful because, as Robert mentioned, it's been 10 years since we've reconceived, renegotiated, or recommercialized our credit card programs. Despite that, and even despite the fact that most anybody else on this chart has done all of those things, we see continued growth in spend per active account and then acquisition that's there. So there's meaningful upside. And even after all of that, Advantage is an underpenetrated program. Today, Advantage customers constitute about 23% of the total addressable population of people who would be travelers or could be part of the program.
And of that, only 6% of the total addressable population has a co-branded credit card. So we have significantly more opportunity to just acquire people who look like the ones that we have and do better with the customers that we already have. And with that in mind, if one of our commercial focuses is our network, the other one is AAdvantage. And we are very much reimagining AAdvantage to go and drive more value. It starts with making it easy to be our customer and easy to earn miles. We've made a lot of changes to this, but it's this simple. Customers earn more miles when they do one or all of four things. One, buy higher value products and services. Two, shop using one of our branded credit cards. Three, shop using the Internet. Or four, have status already.
If all four of those things are in place, customers will earn more miles on American Airlines than they have before, more miles on American Airlines than any other rewards program or bank credit card program. It is simple. It's easy to manage. It can be done through the app or through the web. But Advantage is not just a direct-to-customer program. We have also made it our premier and only business-to-business program as well. We are making it easier for customers also to shop in a way that's contemporary and tuned to the realities that they're in. It's worth probably understanding just how far things have changed. Now, historically, travel distribution, especially air travel distribution, has been nothing if not complicated, oftentimes for some very good reasons. Airlines were doing contracted travel with corporations in a time before the Internet existed.
In order to solve that problem, airlines created technologies that exist outside of the Internet for a period that is 30, 40, 50 years old. We created chains of intermediaries designed to help facilitate customer transactions. Even despite all of that, even today we are left with a number of manual processes and workarounds. Ultimately, the people who bear that expense are the customer. They see it in a few different ways. The air travel shopping experience is by no means contemporary in a world where so many of our customers can buy a home or a car or a sandwich from their phone. Further, the servicing experience is oftentimes cumbersome. A thing which people should be able to change on the web or via their app oftentimes involves several calls to several different people.
Ultimately, that turns into expense, both in time and money. It's not too far to think that a small business in a high-growth city like El Paso is spending $25 or $35 per ticket to have all of this, which is very detuned with the other realities in their lives. To this problem. Our AAdvantage Business, in which we are trying to solve the customer's modern, contemporary problem. If a company contracts with us through AAdvantage Business, what they enable is their travelers will be able to go and earn miles as a multiplier to what I just shared. So their customer is going to earn even more miles than what I just shared on that prior slide.
Very importantly, we can make all of our content available through any internet-based booking tool there is right now, whether they prefer dot com or a homegrown tool or another thing altogether, so they can get a contemporary retailing shopping experience. 100% of what we sell through AAdvantage Business can be serviced online. So none of their customers has to call anyone. They can do it from their app, from the website. What this means is that the customer, instead of spending $25 or $35 per ticket, spends zero. It's a material savings for them, and it drives a material savings for us. But as customers and companies come direct to us, it's not just that it reduces expenses, it's driving satisfaction. After several quarters of doing this now, what we see is a statistically significant increase in NPS.
Customers who come to us directly or through modern Internet-based retail outlets report Net Promoter Scores that are 9-10 points higher than those who do not. It is our statistically highest Net Promoter Score category. Unsurprisingly, when your customers are happier with you, they're more likely to buy more valuable things. What we also find is that customers who come through our direct channels or modern retailing sites have a 13 points higher propensity to buy a higher value fare when a lower one is available. That's meaningful. We're going to make it easier and easier for customers like this to use our product and be our customer. Earning miles and making it easy to shop is only part of the equation. We need to offer really great benefits through AAdvantage. One part of that equation is redemption.
We are committed in AAdvantage to offer the highest value per mile for redemption of any rewards program, of any bank rewards program that there is. In fact, we're very pleased and proud that so many third-party sites have already identified that your value per mile in AAdvantage is greater than any other program that's out there. As pleased as we are with that, we're not content. We anticipate growing that and creating more availability, more value for customers who do indeed hold the AAdvantage currency. We have a range of partners with more coming online by the day. As crucial as redemption benefits are, the other part of the benefits equation is status benefits.
No matter where you are on the travel journey, shopping, servicing, airports, lounges, in flight, or even in a disruption scenario, we have designed an experience which is convenient, connected, consistent for all of our customers, but differentiated only for Advantage status customers. No matter where you may be, if you're shopping, we have exclusive content for Advantage customers. We offer faster servicing for Advantage customers. We have no lounge visit restrictions or any such thing. It should be valuable to have Advantage status. And no matter what we do going forward, that will be the case. Currently, we've done a number of things to really simplify our program, the way in which customers earn miles, the way in which their benefits are manifested. In the days, weeks, and months ahead, we'll create more opportunities for customers to go and redeem miles at very high value per mile.
But our true north, as Robert referred, is this: that life is better as an AAdvantage customer. It is our only commercial focus, and it is turned into three very core principles that we hold dear. It should be easy to earn miles and be our customer. We should offer the highest value per mile of any rewards program there is. And our status benefits should be unique and unmatched. Now, with that, a crucial part of this is, at long last, renegotiating, reconceiving, recommercializing our credit card programs. And we bring a lot to this, and a lot that didn't exist in prior times when we did it and arguably doesn't exist for many other businesses. First, of course, we have a network which uniquely addresses customers in a very high-growth, high-value segment.
We have AAdvantage, which makes their lives better and rewards them for buying higher value products and services. And third, we have a very bold vision for what our card can be. We envision a partnership with a bank that can create the largest branded credit card in circulation that can bring more people into travel, create more ways for customers to go and spend, even when they're not just engaged in the actual act of flying on an airplane. We envision a partnership that materially improves the cash remuneration that we see today. For the last several years, we've been growing cash remuneration about 7% per year. We are targeting something closer to 10% per year, which would be a material level of growth. And one commensurate with the customer base that we have and what we bring.
So in summary, we are very much focused on building the world's best travel rewards program. And the time is right. 80% of our revenues come from customers who don't want the cheapest fare. They want more quality. AAdvantage is the means through which we go and deliver that to them. And the first big part of it is making our program indeed easy, making life better for an AAdvantage customer through how they earn miles, creating the greatest value for redemption, and creating unique, unmatched status. The next part of it is renegotiating and recommercializing our branded credit cards. We'll have more for that for all of you as the months and quarters continue this year. But we are actively in a process with all of our banks, starting first and foremost with our partners at Citi and Barclays. And we anticipate having more in the very near future.
Now, in conclusion, we are uniquely positioned in these times that we are in to create value, to do it for the foreseeable future, first and foremost through our short-haul network, which is one of a kind and irreplicable. We can grow it through advantage, which is similarly one of a kind and positioned to go deliver a level of growth that we have not been doing prior to the pandemic. But very importantly and consistent with Robert's message, this is a matter of execution. The title of my presentation wasn't Commercial Strategy. It, too, does not require belief in our return to office or our return to travel or guesses about the future of demand or any such thing. It's anchored really in executing.
And if we build a great network, if we reward customers for using it, if we do it reliably and we deliver it efficiently, we grow value for our customers and for our investors alike. So with that, I thank you all for your time. I thank those of you on the webcast, and please enjoy a 10-minute break.
All right. Thank you all again. So next on stage is going to be David Seymour, our Chief Operating Officer. David, welcome to the stage.
Thank you. Good afternoon, everyone. It's great to be here with you all today to talk about how our operational performance is driving value and our financial performance. The best network, the best schedule, the best product are only as good as the way we deliver them. As an operator, my job, our entire team's job, is to ensure that we're delivering a reliable operation for our customers, but we're doing it efficiently and optimally and in a way that ensures we're not adding additional costs. Robert referred to his operational excellence, and he's right. We are not satisfied with just being a strong operator.
We're intently focused on what's next, how we can do it better, smarter, and even more efficiently. Let's start with how we've been doing. The airline business on its own is very complex, but it's been made very complicated here with a number of factors: the pandemic and the ramp-up, air traffic control constraints, supply chain disruptions, aircraft delivery delays, and the list continues. But over the last few years, we've reimagined our approach to operations, and it's delivering incredible operational returns. It's also delivering solid financial returns. The why is simple. We've invested in our operational resilience, and we are more nimble and adaptable. We are structurally and uniquely better prepared for whatever comes our way. We've done that through a relentless focus on planning, executing, and recovering.
It starts with building a resilient plan, one that's highly coordinated across the airline with various groups: our commercial team, our IT team, operations, our people team. We relentlessly execute that plan with our customers at the center of our decisions every day. We recover the airline from irregular operations better than anyone in the industry. Running a reliable airline, operating to the plan that we put in place, shows up in our cost performance. It's inherently less expensive to run a reliable airline. Our approach, our investment in operational resilience, is driving results. It's not by luck. It is the result of a relentless focus on operational excellence. A strong indication of how we're doing is Completion Factor. That's the percentage of flights that we schedule that we actually operate.
For simplicity purposes, let's look at these two periods: the average of 2014 through 2019 and last year. American's full-year completion factor continues to climb. We're able to operate 1.5 percentage points more flights system-wide. So what does that translate to? It means we're holding on to more revenue. It means we're operating more revenue-generating flights. We're moving more customers on more ASMs. It means we have lower disruption costs. Not only are we operating at historic levels for American, but we're also leading the major network carriers. What that amounts to is an operation our customers, our shareholders, and our team can count on. Those ASMs, that guidance, or the capacity that we guided to, we are delivering. One of the important ways our customers tell us whether we're delivering on the promise that we made to them is through Net Promoter Score.
There's a strong correlation between these scores and our airline's reliability. Now, what drives these scores? Whether we arrive on time, whether a customer arrives with their bags, and how their interactions go with each and every team member. There's no coincidence that we've been running a more reliable airline, that these scores are higher than ever. The challenge, or really the opportunity, is how do we deliver that 1.5 percentage points and more, but do it utilizing the same number of aircraft, giving Vasu and his commercial team the ability to put more aircraft and more customers in the air? Our strong operational foundation allows us to do just that. We are now freed up to focus on driving further efficiencies to ensuring that we're making the best use of our resources and our assets.
It's a plan that drives greater positive impact to our balance sheet in a way that drives our customers to have a stronger attraction to our product. A few areas I want to update you on: workforce and schedule planning, asset utilization, and decision support tools. Let's start with workforce and schedule planning. They really go hand in hand. As an airline, we want to be able to offer the best network to our customers. We want to plan that network in a way that delivers for them while ensuring that we are efficient, that we're not driving extra costs to the airline. That includes improving our crew schedules to make them more resilient during the day of operation. Ultimately, this delivers the operation while maximizing the productivity of our crew members, meaning we have to hire fewer crew members in the future.
It's not only our team and our schedule, but it's also our aircraft. Now, I know Devon will talk more about aircraft, but let me say this from an ops standpoint. Certainly, a younger and simplified fleet makes us more proficient and efficient at all of our maintenance activities. We have less money tied up in spare parts, and we're able to focus our maintenance team on fewer aircraft types. We're getting ahead of the aircraft by making unscheduled maintenance, scheduled events, and minimizing the time that aircraft are out of service. A few things I want to highlight on that front. We've transitioned our narrow-body fleet to an electronic maintenance logbook, a tremendous partnership with Ganesh and his IT team. He'll share more about what that's meant for our unscheduled maintenance. What if we could predict unscheduled maintenance events and prevent them from being unscheduled?
We can plan for those. That's exactly what our predictive maintenance team is doing right now. With technology advances in in-flight connectivity, we are more data-rich than we've ever been before. With information flowing from our aircraft, our team of engineers uses that data to predict maintenance failures before they actually happen. In a world where there are constraints on maintenance and parts, our in-house base maintenance team is able to deliver shorter and more consistent heavy checks than our supply-constrained third-party vendors. Our Tulsa engine shop is on track to increase capacity to perform engine overhauls by 60%, making us less reliant on the strained engine overhaul market. What that means, what all of these maintenance improvements mean, is fewer aircraft out of service. It means we are operating as we committed to, and we're not driving additional costs.
Two common threads, in addition to safety in everything that we're doing on the operational front, are technology and data. The size and complexity of operating at a peak of more than 6,000 flights a day requires analyzing volumes of data that is beyond the human capacity to solve for optimally. Take the turn process as an example. The turn is a critical moment for us as an airline to keep the schedule on time. It happens thousands of times a day. Lots has to happen in a relatively short period of time: boarding, catering, fueling, loading bags, just to name a few. We've implemented data-driven applications that assist the team in evaluating the execution of the turn. That means we run the airline on time without driving up disruption costs. Over the past year, we've doubled down on accountability across all the airline.
Now, Cole will talk about this more. But from the ops side, we've released performance dashboards to our gate agents and our ramp crew chiefs. The visibility of performance is a game changer for our team. Look, our team wants to perform well. And these tools allow them to understand the contributions they're making to the airline and where the improvement opportunities are. Through digitizing more operational data, we have the ability to roll out performance dashboards to even more team members. And finally, when things outside of our control pop up, we recover the airline quickly. We've invested heavily in our operational resilience by focusing more time, expertise, and technology at irregular ops management and recovery. Let me leave you with this. There is a uniqueness about American. Our operational improvement over the past two years is proof we can and will deliver the network reliably and consistently.
We're running an operation that delivers on the capacity we guided to, one that our customers, our shareholders, and our team can trust. It's an operation built on a strong safety foundation that is bolstered by our industry-leading safety management systems. Importantly, the entire American team is pursuing operational excellence, delivering a reliable travel experience to our customers while also increasing our operating efficiencies and generating improved margins. It's a winning proposition. Thanks for your time today. Let me hand things over to Ganesh.
Hey, good afternoon. It's really exciting to be here with you all today to share how technology plays such a critical role in shaping the business aspirations that Robert, David, and Vasu talked about, as well as the reengineering efforts that have been mentioned here a little bit earlier. Across the airline, we are prioritizing the use of technology in two key areas: to improve productivity across the board, as well as to improve efficiencies. Just as importantly, within the IT organization, we are changing the way we work through the implementation of a new operating model. Now, we started implementing this operating model at the height of the pandemic, but the efforts have started to pick up momentum over the course of the last 12 or so months. The least tenured airline leader that you're going to hear from today, but the opportunity to use technology to make a difference to the airline's aspirations are the reasons I came on board about a year and a half ago.
I came on board from John Deere, where I'd led the IT team to reengineer itself and to shape a very similar transformation effort of the type that we are talking to you here today. We changed within the IT organization how we worked across every layer of the technology stack, from the core infrastructure layer all the way to the way we designed and engineered the front-end applications. We did that partnering with our partners in product management with a focus on customer centricity and value creation. Together, over a period of three years, the results that were delivered were best summarized in the context of doing twice the work in half the time with a significantly more engaged and more technically skilled workforce. We did that by using two key drivers.
First and foremost, we shifted from a project model to a product model, a product model where we have persistent teams that last the entirety of the product development lifecycle. And secondly, we drove a strong alignment with our partners in product management to rethink, reimagine the way we worked using technology to drive differentiated outcomes. That same business model is now here in play at American. And in its early days, it's already starting to drive significant benefits for us. Robert shared earlier that we are a changed airline and operating on a much stronger foundation. Vasu and David provided you some examples, some proof points of how our teams are thinking differently and in a manner very differentiated from our competitors. Core to this innovative spirit is a tech-first mindset.
Unlike times in the past, rather than putting people to solve a problem, we are reimagining how we can use technology to rethink business processes. Over the last year, I've also changed my leadership team. I brought in key leaders to staff key functional areas. We have a first chief technology officer, a first person to lead our infrastructure and core IT operations. These leaders have spent decades working in companies like J.P. Morgan, Cisco, Visa, and IBM, leading similar technical areas. I've complemented them with folks that have decades of experience in the airline industry. Together, we are working in close partnership with our leaders in product management to reimagine the business processes and to drive innovative products that are truly differentiated in the industry. These are not words on the slide.
In fact, over the last couple of years, through investor calls, we've shared with you examples of how American uses the power of big data and analytics, as well as machine learning capabilities, tools such as Smart Gating technology that allows us to optimize, minimize the delays or taxiway congestion that allow then our customers and our crew to make connections on time, or a Hub Efficiency Analytics Tool that is in process today across all of our major hubs that allows us to optimize our operations around weather disruptions. Take that together, and you get that 1.5-point lift in completion factor that David talked about earlier. Today, I wanted to showcase or double-click on the technology that David just talked about, which is electronic maintenance logging, or the EAML technology. We just rolled it out back in October. It is now in effect across 85% of the fleet.
It's already minimized delays and reduced customer disruptions. It replaces the old physical logbook. So today, once the pilot sees an issue, he can use our world-class Wi-Fi network to communicate real-time to our maintenance technicians at the downline stations. That allows our maintenance technicians, while the aircraft is in flight, to research the issue, make sure that they can meet the aircraft with the tools and parts gate-side as soon as the plane arrives, minimize the disruptions, minimize the delays, and turn around the aircraft in time much shorter than in the past. As a technologist, the really cool part is that now we can get to log all this data and learn from these experiences over time and deliver even smarter solutions out in the future. Now, each of these examples that I shared with you today are developed in-house. But we also actively participate.
We partner with best-in-class industry providers in modernizing our core legacy systems, but also in areas like generative AI, which are rapidly changing in the marketplace. Over the past year, we have partnered on many several use cases interior to the airline to use generative AI in two key areas: first and foremost, to improve our internal business processes, to make us more efficient, and secondly, to improve the way that we interact with our customers in a more personalized manner.
When you combine a more satisfactory travel experience with a more direct and seamless relationship, more personalized relationship that we now establish in the customers, it's not hard to imagine why our customers will choose us as a preferred service provider in the future, whether it's designing our customer-facing app or the app that our frontline team members use to manage the turn, the example that David talked about earlier. We use the same principles: a very simple and easy-to-use user interface combined with an architecture that is designed in the cloud for scalability and, most importantly, an agile development mindset so that we can release these features to the marketplace in a rapid manner, take customer input, and redesign it as needed. So to recap, our entire organization has a tech-first mindset.
What used to be solved adding people to the problem is now being reimagined using technology in two different ways: either as an augmentation tool or to automate our tasks. I will share just a few examples today. And I look forward to the opportunity to share even more examples in the future. The added benefit of leveraging technology, obviously, is that it frees up the time of our valuable resources, be it our maintenance technicians or our call service agents, so they can focus on tasks that truly drive value. You'll soon hear from Devon about reengineering efforts and technology as the core at driving these reengineering efforts in the future. Lastly, just like safety is at the core of everything that we do in operations, security is at the core of everything that we do in terms of designing our digital products.
Whether it is AI or generative AI, we use a governance framework that ensures that security, resilience, and customer privacy are at the core of what we do in every product that we bring to the market. We are building industry-leading digital products that are innovative and are resilient and secure at the same time. Thank you all for your attention. With that, I'll turn it over to Cole. Thank you.
Good afternoon. I am so glad to be with you today. I'm really glad that you chose to be here with us. So thank you. You just heard from Ganesh. He certainly described how technology is transforming how it is both accelerating and enabling our commercial and our operational strategic imperatives. The same is absolutely true for human resources. Our charge is clear.
We must enable and foster a high delivery and a high accountability organization. I joined American almost three years ago on this journey. I had one big question when I was thinking about whether to join the team. They were just coming out of the pandemic, recovering from its effects, some of the worst years in the history of aviation. This was an unprecedented challenge. I needed to know. I wanted to know, what was the resolve? What was the resiliency, the aspiration to win after all of that? By winning, I define winning that's determined and defined by business outcomes, financial performance, and shareholder return. After meeting with Robert and other members of the team, the answer came through loudly and clearly.
Not only was there a deep, passionate resolve to win, but there was also a willingness to embrace leaders from other industries with different sets of experiences. We shared different backgrounds because we knew we needed to accelerate our business performance and our outcomes. And so I was excited to join. Coming out of the pandemic in 2022, we certainly had a huge job ahead of us. We knew we needed to have the right talent in the right place to face the charge ahead of us. And it started with our leadership team. Robert spoke earlier about the fact that we had to completely reestablish our senior leadership team over 2 years ago. In addition to that, we restructured our officer team, our senior leadership team as well, in terms of having 65 leaders, an efficient team of 65 leaders across almost 148,000 team members across our airline.
We knew we wanted to have the best leaders around. We did this by leveraging both internal and external leaders. If you think about it, right now, we have 20% of our leaders who are internal, seasoned incumbents, who we knew that they would step up and continue to lead the charge. Additionally, we have about 60% of our officers who are also internal leaders who stepped up, we believed, and had faith in their ability to take the charge to lead us forward. They are some of the very best in the business, leading some of the most critical functions described by both Vasu and David, whether it's line maintenance, partnerships, airport operations, customer experience, or flight operations. We have a great team in place. The remaining 20% of our officers are external hires like me.
We went out, and we recruited the best of the best, whether it was John Deere, Schneider Electric, Amazon, J.P. Morgan, or Cisco. And you just heard from some of our important external hires, Ganesh, our Chief Digital and Information Officer, our Chief Technology Officer. We have a new Chief Procurement Officer. Overall, this means that since the pandemic, 80% of our leaders are new to role or new to level. We knew it was critical that we had expertise, domain experience to take us forward, as Robert talked about before. But leadership is not the only place where we have people that are new to role. It's across our entire organization, across the airline. Since the pandemic, 25% of our people are new to role. And in order to bring the airline back up, as I was mentioning before, we started an extensive hiring effort for our frontline.
This included the hiring of over 40,000 team members frontline to support our operations and to ensure reliability. The shortage of pilots also required us to have a complete reimagining of how we were going to go to market and redefine our recruitment strategies. We quickly ramped that up. We implemented innovative approaches to ensure that we would be attractive and could hire the next generation of aviators. And during this time, really excited to share, we were able to get a deal with the APA that gives our pilots top-of-pay in the industry and also provided quality of life improvements. We also significantly boosted the pay of our regional pilots to ensure that our regional airlines would also be incredibly attractive in the marketplace. The result was the successful hiring of over 4,200 pilots.
Additionally, we hired 2,300 team members in technical operations as well as onto our team of dispatchers. If this wasn't enough, at the same time, we brought on thousands of flight attendants, customer service agents, and other frontline team members to ensure that we would provide reliability and continue to take great care of our customers. I'm really proud to say we have no problem attracting great talent to American to ensure that we're able to deliver for today and tomorrow. In order to make all of this happen, HR also had to change the way we were doing business. We needed to ensure that we were truly aligned and prioritizing the business objectives and priorities that were outlined by both Vasu and David. Through that, we began to revamp our talent and planning, performance management processes.
We became much more rigorous in how we were assessing, selecting, promoting, and rewarding our talent. We always had to ensure, better ensure, we had alignment with our organizational priorities and our performance expectations. Earlier, you heard David speak about how we are rolling out and have operational scorecards. In addition to partnering with the operations team on that effort, HR also had to introduce scorecards to ensure that we were filling roles, evaluating talent at the pace required by the business. Putting all of this together is leading to a new culture of high performance and high accountability at American. We are a different airline. Our culture has changed to one that is focused on performance, delivery, and accountability. In short, clear priorities are guiding our actions. We are accountable for our priorities. We have unleashed and empowered our team members to deliver on their commitments.
We have incredible focus. We have the right talent in place. We have aligned our compensation programs to ensure that we are rewarding or incentivizing so that we can reward our team members. We also have scorecards now down to the individual level so that we can best understand the performance. With all of that in place, we know, we believe we are truly at a point of creating shareholder value by leveraging our fleet, our network, our rewards programs, constantly driving operational excellence with a focus on reengineering the business. Thank you so much for your time. And with that, I'm going to hand it over to Devon May.
Good afternoon. I've been in the CFO role for a little more than a year now. This is exactly where I hoped we would be when I took the position about a year ago. This is also exactly where I expected we would be when I took the position a year ago because we are focused on delivering for our team, for our customers, and for our shareholders. We have developed a track record of delivering on all of our stated objectives, have become an industry leader in operational performance while meeting the evolving needs of our customers. We are focused on creating value in the near term and over the long term. Now, you've heard from the team about the value drivers and the value-creating initiatives that we are executing on and how we are holding ourselves accountable to achieve them.
We are well-positioned to expand margins and consistently produce strong free cash flow. I'm going to talk about the value of our fleet and today's aircraft order. I'm also going to provide details on how we are reengineering the business to drive savings and greater productivity along with a better experience for our customers and team members. And lastly, I'll review the financial metrics that we expect to deliver on in the coming years. First, on the fleet, I want to review what we have done to get to this point. Over a nine year period from 2014- 2022, 630 aircraft entered our fleet. Over that same period, we retired 580 airplanes. I will tell you, an accelerated fleet renewal program is hard.
But I am glad that we did it prior to the inflationary environment that we have experienced over the past four years and before the supply chain challenges existed that continue to plague the OEMs. And we financed these deliveries in a historically low-interest rate environment. Now, while we're in the midst of this accelerated fleet renewal program in aviation history, we reconfigured over 500 airplanes that had multiple, suboptimal, uncompetitive configurations. So we added premium seats and optimized the configurations to better serve demand and compete more effectively with our network peers. We also installed in-seat power, larger bins, and high-speed Wi-Fi on all of these aircraft to further enhance the customer experience. It took a lot to get to this point. But what we have now is an incredibly consistent, efficient, and flexible fleet that meets the needs of our network, our customers, and our operation.
This is what our fleet looked like as recently as the summer of 2019 when we still had 9 different fleet families. This is the fleet we have today. We have dramatically simplified our mainline fleet, moving from 9 aircraft families down to 4. We can now easily move our fleet around our network, no longer constrained by crew bases or maintenance inventory, spares, or the training requirements that existed to support 9 different fleet families. This fleet is only 13 years old. It's the youngest fleet amongst the U.S. network carriers. To put that into perspective, one of our competitors has 25% of their fleet over 25 years old. We have 22 airplanes over 25 years old. They're all efficient airplanes within these 4 fleet families that will likely continue to fly for at least the next 5-10 years.
Earlier today, we announced an aircraft order for 170 narrowbody airplanes, 85 A321neos and 85 737 MAX 10s, along with a regional order for 90 Embraer E175s. These orders maintain the consistency of our fleet, drive premium capacity growth, increase our average gauge, and further smooth our deliveries and CapEx over the remainder of the decade. Now, as part of this, we move 40 airplanes that were set to deliver in 2025 and 2026 out to 2027, 2028, and 2029. In a majority of this aircraft order, 150 of the 170 airplanes will deliver in 2029 or later. With Airbus, we are already the largest A320 family operator in the world with a fleet of nearly 500 airplanes. We are excited to grow the A321neo fleet. It's a proven airplane that delivers great economics and is loved by our customers and by our team members.
With the Boeing order, the MAX 10 is a new variant for us. It's an airplane that will allow us to continue to upgauge the fleet and will be great for our customers and will provide more flexibility for our network teams to match capacity with demand in a crew-efficient manner. This is a vote of confidence in Boeing. We expect they will be able to deliver the MAX 10 for us starting in 2028. That being said, given some of their recent challenges, we have negotiated for full variant flexibility, financial protections, and we have sufficient Airbus option positions that we will execute if Boeing is delayed in certification or in delivery. Last but certainly not least is the Embraer E175 order. It's an incredible airplane for our customers. It allows us to efficiently increase capacity in the small and medium-sized communities across our network.
These airplanes will start to deliver in 2025. We expect all of them to be operated by our wholly owned regional partners who each continue to deliver incredible operational performance while allowing us to drive strong financial returns. We do expect to retire all of our 50-seat regional jets before the end of the decade. Markets where we operate the 50-seaters today will enjoy an upgrade to dual-class regional jets with first-class cabins, high-speed Wi-Fi, and in-seat power. Here's a look at the fleet plan through 2026. Our baseline fleet plan does not include any mainline aircraft retirements. We do have significant flexibility to reduce the fleet through lease returns or retirements if the demand environment softens. We expect to grow the fleet by 35-40 airplanes a year over this period.
That fleet growth is largely balanced between long-haul aircraft, the 787-9s and the A321XLRs, and narrowbody aircraft. On the regional side, the fleet could grow further. Right now, we are focused on upgauging the fleet and continuing to drive improved regional aircraft utilization. Beyond 2025, you can expect much of the same: mainline growth of 30-40 airplanes a year and the continued upgauging of our regional fleet. What this means for CapEx is exactly what we have been guided to. We continue to plan a steady and consistent investment of $3 billion-$3.5 billion per year of aircraft CapEx through the end of the decade. As I have mentioned, CapEx is relatively modest for this extended period because we don't have any fleet replacement needs. Our fleet is young. We expect to operate most, if not all, of these airplanes into the 2030s.
This is what provides the potential for meaningful free cash flow production every single year. This consistent investment also ensures we are not faced with a CapEx bubble in the next decade. I'm going to close out the fleet overview with some thoughts on utilization and capacity. A simplified and efficient fleet should allow for historically strong utilization. That's exactly what we are achieving in 2024. This year, we will have the highest mainline aircraft utilization in the last decade, up about 3% versus 2023, which is supporting our margin expectations and providing a tailwind to our unit cost performance. As we come out of 2024, we expect to get even more out of the fleet, which I will expand on later in the presentation. Finally, with capacity production, we always seek to match capacity with demand to maximize earnings.
We have developed a flexible fleet plan that allows us to do just that. This year, we plan to grow by mid-single digits as we grow the airline back to or just slightly above our 2019 levels. In 2025 and beyond, we have a fleet that allows for a wide range of growth outcomes depending on the demand environment we are in. But assuming no aircraft retirements and modest improvements to utilization, we can produce mid-single digit capacity growth. But we also have the flexibility to grow at a much slower rate or to not grow at all if we find ourselves in a soft demand environment. We don't have 80 or 100 airplanes a year coming at us. So we won't find ourselves in a position where we are locked in to outsize growth. Our fleet is at the core of everything we are doing.
It allows us to meet the needs of the network while delivering a consistent customer experience. It supports a strong and efficient operation. The work we have done to get to this point allows for the potential of material free cash flow generation year- in and year- out. Moving on to reengineering the business, hopefully, by now, you recognize that when we talk about reengineering the business, we are talking about much more than a simple cost-cutting exercise. It's about utilizing technology and changing process and mindsets to enable an improved customer and team member experience while driving a more efficient business. About 18 months ago, Robert and I sat down with the expectation that we would be delivering operationally and commercially but also knowing we had to be driving a more efficient business going forward than what we had in the past.
So to help with this, we brought in a third party to review nearly every aspect of our business and provide an outsized view or an outside view of the opportunities that exist to drive value. For about six months, they came in and reviewed our technology, our processes, and our spend across the entire organization. At the end of that six-month period, we prioritized every opportunity they brought to us and every opportunity we knew we had and designed an organizational structure to achieve success. Over the last six months, we have been focused on investing, planning, and execution. It starts at the top with weekly CEO-level reviews. It's detailed. We have 500 initiatives, 3,000 milestones, all of which are tracked and managed with defined investments, timelines, and returns. These initiatives are broad-based.
But for today, I will talk about 3 significant areas of opportunity, each of which has dozens, if not hundreds, of initiatives. First, our asset utilization, which on its own doesn't drive savings, but it allows for very efficient capacity production. The next two, the productivity of our team and transforming procurement, together drive over $1 billion in annual run-rate savings. So starting with asset utilization, we have over $30 billion in aircraft assets alone. And we are focused on getting more out of the assets we have. I had a slide earlier showing we are achieving our best-ever utilization in 2024. We're excited about that. But we are expecting to get further improvements in the coming years. So to start, we are underutilizing our regional fleet by about 15%. We expect to get back to historical utilization by 2026.
That will drive about 1.5% of consolidated capacity. That will also drive improvements to our mainline utilization because today, we have mainline aircraft covering regional routes. And as they get back to their historical utilization, it will be a tailwind to margins and an improvement in our overall utilization. Next, you've heard David talk about the IT investments we are making in Tech Ops and across the operation, which will drive improved reliability and productivity. But over time, it's going to allow us to reduce the number of airplanes we have supporting the network and will increase our productive aircraft counts. We are investing heavily in this space right now. And these efforts will improve utilization by about 1% in the coming years.
And lastly, our IT Ops planning and network planning teams are collaborating to build advanced tools that allow for more efficient schedules and hub structures. It doesn't take much. Modest improvements in how we build our schedules can drive meaningful improvements in efficiency. There are a lot of initiatives to execute on. The early results give us confidence that we will see significant improvements in our schedule efficiency, which will drive real improvements to our aircraft utilization over time. And while I'm focused on aircraft utilization here, we are looking at all of our assets: gates, hangars, ground service equipment, inventory, even our corporate space. We are going to be more efficient in each of these areas. Next, on the productivity of our team, this year, we are going to spend over $16 billion on mainline salaries and benefits alone. It's going to go up.
But as you have heard, we have an incredible opportunity to utilize technology and improve processes to allow for a stronger operation while improving our productivity. And to get there, we are investing heavily: best-in-class tools that are focused on end-to-end solutions for every workgroup. This includes everything from workforce planning and scheduling tools to how we onboard and train new team members, all while automating and optimizing our day-of decision-making tools. We are making these efforts while developing more and more self-service tools for our customers that will allow for a better customer experience with less demands on our team members. And while most of the opportunity is ahead of us, we are really pleased with what we have accomplished over the past couple of years. From 2014 to 2019, we grew our headcount at a faster rate than capacity. That obviously wasn't sustainable.
As Robert mentioned, we were largely focused on integration, not optimization. In 2023 and now in 2024, we have made real progress. Last year, we grew capacity at nearly three times the rate of our headcount growth. This year, we expect to grow by mid-single digits while growing our headcount by less than 1%. I expect these charts to look the same or better as our productivity initiatives take hold. The last big focus area I'm going to talk about is procurement. Since the merger, we have had a decentralized procurement organization. While these separate procurement organizations have done an outstanding job supporting our operation and getting us through integration, we haven't been set up organizationally with a consistent set of goals or an organizational structure to drive savings. Now is the time to transform our procurement function.
We have over $30 billion a year in external spend. We are going to industrialize our purchasing process to improve working capital and drive sustainable long-term savings. We've already brought in some of the best experts in the world to help us with this. The early results are outstanding. More recently, we hired our first Chief Procurement Officer, Dan Bartel, who comes to us with nearly 30 years of experience in the space. Dan has helped transform procurement functions at big, complex industrial companies. He is having an immediate impact here at American. This is another area where we will focus on process and training and technology to bolster the operation while driving financial improvements. Over time, I expect the working capital opportunity and the savings we achieve to both be measured in the hundreds of millions of dollars.
As for cost performance, before I get into what this means for us going forward, I want to take a minute to highlight our recent cost performance. We have been in a challenging operating environment for the past several years with a tight labor market, high inflation, and real supply chain constraints. But despite these challenges, American has been able to manage unit costs inside of inflation. We didn't do it through growth. In fact, we were smaller in 2023 than we were in 2019. We accomplished this because of our efficient fleet, an incredible operation, and a thoughtful approach to investment. We did it better than anyone else. I am proud of how we've performed over the past four years. I'm also proud that in 2023, we were the only U.S. airline to beat the midpoint of our initial cost guidance.
And through our reengineering efforts, we are going to do even better. Given that backdrop, here's the outlook in cost. As I just said, from 2019 to 2023, we grew unit costs at a CAGR of 3.5%. The midpoint of our 2024 guidance has a step down with CASM-ex up 2%. And as we look out further, we believe that with a capacity growth rate of 3%-4%, our CASM-ex will be inside of inflation. At higher growth rates, our CASM-ex will be closer to flat. And if we have to pull back on growth, our CASM-ex would move up. But all of that said, we have produced the best unit costs in the industry over the past four years. We have the ability and the plans in place to continue that trend.
I'm going to close this out by showing the financial targets we expect to deliver on with continued operational strength, commercial innovation, and unit cost efficiency. Starting with margins, we expect to expand our margins. We are guiding to EBITDAR margins because we think it's the best measure of the core performance of an airline. With our deleveraging, we do expect interest expense to fall in the coming years as revenue grows. So net margins will improve at a faster rate than EBITDAR margins. But when we discuss margins and margin expansion, we are focused on our core performance exclusive of our expected improvements on the balance sheet or the financing decisions we make. The midpoint of our 2024 guidance implies an EBITDAR margin of approximately 14%. In 2025, we expect to deliver an EBITDAR margin of between 14% and 16%. And beyond 2025, we expect continued margin expansion.
We plan to produce an EBITDAR margin of between 15%-18%. Until we are a cash taxpayer, which we don't expect to be until late this decade, a single point of EBITDAR margin improvement will produce approximately $500 million in annual free cash flow. Speaking of free cash flow, American defines free cash flow simply as our operating cash flows less our investing cash flows with no other adjustments. Our balanced approach to capital investment allows for the potential of consistent and sustainable free cash flow production. We expect to produce approximately $2 billion of free cash flow in 2024, greater than $2 billion of free cash flow in 2025, growing to over $3 billion of free cash flow per year beyond 2025. In the near term, we are using all of the cash we generate to further strengthen the balance sheet.
By the end of this year, our total debt is expected to be down from peak levels by $13 billion. We fully expect to hit our stated goal of $15 billion of debt reduction by the end of 2025. Beyond 2025, we expect to continue to reduce debt. We are setting a longer-term goal of total debt to be below $35 billion by the end of 2028. At that point, we will have net debt below $30 billion and net debt to EBITDAR of below 3x. The progress we have made in strengthening the balance sheet was recognized by all three credit rating agencies in 2023. I'm confident that we will continue to make progress in the coming years towards achieving and maintaining double B credit metrics.
The last point I want to make on the balance sheet is the progress that has been made in smoothing our debt maturities. In 2023, we worked to smooth our maturities throughout the decade. We now have very manageable maturities with flexible refinancing options. We expect that by the end of 2024, we will have around $6 billion of unencumbered assets and more than $15 billion of first lien capacity. Based on all of the value-creating initiatives we are employing, we are confident we can produce these outcomes, which show margin expansion, consistent and growing free cash flow generation, and continued meaningful debt reduction. We are committed to value creation and will manage the airline to grow margins over time. Thank you for your time and attention. We are going to take a quick 10-minute break
Okay, if everybody could find their seats, we'll get started again . All right, look how efficient everybody's getting back. Okay, so Robert's going to come up here in just a second, a couple of quick closing remarks, and then we will get into analyst Q&A. For Q&A, we have mics around the room. Just raise your hands. We'll get to you for questions. Try to keep it to one question and a follow-up so we can try to get to everybody. Wait for a mic before you ask a question so that the folks on the webcast can hear you. And then for Q&A, I'll just say this. It may be obvious.
Given the theme of the day [regarding] questions, what we'll address is going to be kind of associated with the content we talked about today, longer-term rather than very near-term news, just because we really want to focus on the things we've talked about today. So anyway, with that, Robert, welcome back up, and then we'll bring the rest of the team up for Q&A.
Great. Thanks, Scott. I appreciate everybody's time and attention today. I hope from where I started asking the question, why invest today now, I hope you can all see why I'm so excited. The time is right for American. Demand is back. We have an airline that's been delivering, and there's really tangible opportunities in front of us that we think that we can deliver. All that adds up to margin expansion and long-term free cash flow delivery.
For us, we feel really great about it. We've got a team that's set and ready to go, a mindset that's changed, a frontline team that is delivering every day in and day out. I looked at the opportunities in terms of fleet. You've heard our story about how we've made the investments already, and what we have ahead of us is really taking advantage of that. We have a network in which we're. This idea of domestic and regional and short-haul international that really exposes us to the world. We've got the opportunity with our rewards ecosystem that Vasu talked about. We're always going to be known for operating exceptionally well. We now have the chance to really re-engineer this business for the future. So I appreciate the time today.
What I'd like to do now is welcome up Vasu and Devon, and we'll take any questions that you might have. Scott will go ahead and call on folks. So guys, come on up. All right.
Thanks. Hey, David Vernon with Bernstein. So Vasu, the slides that you put up on the co-brand program, it sort of looked like you're going from number three to number first. Can you think about maybe telling us how your loyalty program matches up from a compensation standpoint from the banks relative to your peers? How big is that gap? And then if you could talk about how much of that closing that gap is actually in the margin targets that you've laid out for us today.
Well, look, I will say, and Devon can speak a little bit more about how we size our gap versus peers, but a major part of it is, of course, having the very best customer card, customer offering that's out there, and being compensated for it as well. We have arguably the largest rewards program and AAdvantage. Maybe there's one or two of similar size. We have one of the largest credit cards, and we haven't renegotiated the card program in 10 years. Certainly, if you were to ask any of our card partners, they have very few cards, if any, in their portfolio that are exhibiting the kind of growth and spend per active account and total acquisition growth as what ours has done.
So we very much are targeting something where we materially grow our remuneration and puts us really in kind of a leadership position in the space. But Devon may have more to add.
Not a lot to add. I would just say that our margin expectations do assume that we close some of the gap we have to our network peers. And I would say if we exceed those margin targets, it's because we're doing everything Vasu just talked about, closing the entirety of that gap. All right. Scott.
Thanks. It's Scott Group from Wolfe. So when you talk about margin improvement, ultimately, you're just saying price is going to grow faster than cost. And so I guess I'm curious, how much of that is just an industry view? What's your visibility to price?
And then is there any way to quantify anything company-specific here that says, "Here's why we should either outperform on cost or outperform on price versus industry"? And then maybe just a separate just follow-up, Devon. You've got CapEx growing a bit, but free cash flow growing. So maybe just talk about that dynamic. Thanks. Yeah.
Do you want to start? Either which way. I'll get into it, Scott. And first and foremost, though it is a simple formulation, the optimization is profit. And in our business, especially where we have hubs such as Phoenix, Dallas, others, where we can grow it at a really attractive cost base, as Devon talked about, we can utilize the fleet and the team that we have increasingly better. We have lots of ways to be able to grow profit.
As Robert mentioned, our plan doesn't require big estimates of how travel demand recovers or things like that. It is one that's prudent and kind of tuned to the realities that are there. I don't think it's as simple of a formulation as price versus cost. It's really, what's the best way to grow incremental profit? And for us, that's all the things that we talked about here, a network which is resilient, a rewards program that can drive revenue from the customer base that we've got, and continuing to produce all of that reliably and efficiently.
Yeah. Sorry, just maybe moving on to your question around free cash flow production. We do have a bit of a step up in our aircraft CapEx going forward. It's still relatively modest between $3 billion-$3.5 billion. It's from where you'd expect. It starts with margin expansion.
So as I mentioned earlier, a point of EBITDAR is worth about $500 million in free cash flow. It's also the growth of the airline. So as the airline continues to grow, we get a margin on that growth as well. And then its improvements to working capital is what largely is going to be driving our improvements to free cash flow production.
Yeah. And Scott, I'll just sum it up. Look, at the end of the day, we have to grow revenue at a faster rate than we're growing expense. You know the expense side of the story. We feel really, really good about that. Then from a revenue perspective, the kind of things that Vasu talked about, not just the domestic aspect of how we'll grow, but also doing things with the rewards program, I think brings a level of income to the airline that we really haven't been able to achieve in the past. And I do think that that altogether adds up to outperformance.
Conor?
Everyone, Conor Cunningham. I'm at Melius. Just on the not a lot of discussion on international. Just curious on the viewpoint in that market now. You spent a lot of time talking about the Sunbelt, but just curious on the long-term strategy there. And then Devon, on productivity, was hoping if you could get a little bit more granular there and break down some real-life aspects of what's happening. Because from my standpoint, it just seems that training was up a lot. Now that's normalizing. Just if you could give the puts and takes, that would be helpful. Thank you.
Yeah. Thanks for the question, Conor. I'll start. Long-haul international is very much part of our plan. If you look at the presumed departures in our fleet plan, what Devon shared, the first thing that comes back from the 2023 base is, "We grow the RJ fleet. We will upgauge the mainline fleet." That really solidifies and takes full advantage of this competitive advantage that we've got in short-haul. Commensurate with that, our long-haul international fleet will grow at roughly the same rate as that RJ putback. That's not coincidental. It's intentional. What's really different about us is long-haul works for us because it works off of the connectivity of our system.
For so many years, when we struggled with long-haul profitability, it was because we were launching it out of markets, think Chicago to China or things like that, that might have been high in RASM, but it was deeply unprofitable. By contrast, we've flown DFW to Asia. Many of our partners fly DFW to some global capitals out there, and everyone is stunned at the kind of profits they're able to generate from it. That's entirely due to the connecting power of our network. It's a thing that we do uniquely well. And really, what you see in all of our network is being the best version of us there is. And our customers value it. There's a high-growth, high-value customer that has inadequate access to not just domestic, but to international. And we are that. We provide that for them.
With productivity, it is every single workgroup with every single phase of what a team member does. And so it starts with some technology to actually take work away from team members, so better tools for our customers. And so you see groups like a reservations group or a passenger service group. We need to equip them with better tools to take care of our customers and equip our customers with real self-service tools. But it's across every single workgroup. We are developing better tools, starting with planning to day-of-decision-making tools that are driving efficiency on all of these workgroups.
Thank you.
Thanks, Duane Pfennigwerth, Evercore. Thanks for putting on the event today. Just a couple of questions. Going on, now that Spirit is kind of formally terminated, to what extent does it make sense to re-engage with a JetBlue and maybe recreate a less coordinated partnership like you have with Alaska on the West Coast? To what extent is that of interest to you?
Thanks, Duane. I'll kick this one off. Of course, we're appealing the NEA decision because we don't necessarily agree with the judge's ruling. We thought that it proved out that customers actually benefited. But look, we're appealing that on our own, and hopefully, we're successful in that. We want to address that from a precedent perspective. Now, in regard to JetBlue and Spirit, look, we had a relationship with JetBlue. Right now, we'll see how things play out. If there's an o
pportunity down the road, we'll take it. Yeah.
I'll only add that the circumstances that led to the NEA and the circumstances here today are very different. Certainly, as we see it, at the time when we were doing the NEA, we had years of declining AAdvantage enrollment in New York City. You could see from the presentation today, just imagine just how critical that was. Since the NEA, it has continued to grow. Since the NEA's termination, it has continued to grow as well. So much of what customers in New York City are flying today are not day trips and short-haul markets, but markets that we tend to do really well, such as Oklahoma or Austin or places like that. For the circumstances here today, maybe there's something else. We are just focused on how do we create the most value for the New York-originating customer.
We're encouraged that we see such growth of AAdvantage customers buying premium content, purchasing tickets to India and Doha and London and Tulsa alike. So we're open to whatever makes things better for our customers, but there's certainly nothing inherent right now.
Thanks. And I'll just maybe stay with you, Vasu. We all have to spend a little bit more time in El Paso coming out of this presentation. You should. So I plan on doing that. But if we think about the dots on the map and your network advantage in what, 200 of 300 small markets, can you just help us benchmark? What did that look like pre-pandemic? Is that drastically different? And is this just a timing advantage given just maybe a different approach some of the other network carriers took in domestic restoration?
That's a great question. And no, it is not just a timing advantage. 10 years ago, we were still serving 300 or so cities, but it was only about 150 or so in which we had a network advantage. What has changed is not so much us in 300 cities, but first, we continue to grow in those cities. Frankly, many of our competitors continue to retreat from them. As people move away from regional jets at large, and many can't operate the same number of regional jets that we can, some cities are just simply losing service. In other cases, as more and more people upgauge, well, it's hard to go take a 200-seat narrowbody and fly it from El Paso to any number of cities that are there. And pretty much every place where people can do that, they've already done it.
So the incremental, let's call it, customer value is uniquely fulfilled by American and through the connectivity of our hubs. Our hubs connect very well.
Brandon.
Thank you. Good afternoon. Thanks for hosting us here. Brandon Oglenski from Barclays. Robert, I guess, can I ask, in the context of very low sector valuations, your stock included? I think investors are worried here, A, about cost inflation, which a lot of investors view as controllable. Devon, I hope you could speak to your longer-term cost inflation expectations here today. But I guess, more importantly, Robert, from your perspective, what do you do in an environment like this year where margins are flat? If we're looking into 2025 again, still at 14% EBITDAR levels, what levers do you pull to drive margin improvement longer-term here? At what point do you say this plan isn't working, so we need to change pace?
Well, let me start with this. We're confident this plan is going to work because we're already seeing the signs of it paying off. Okay? And so Devon mentioned our cost performance in 2023, which was industry-leading. We have great confidence that that's going to be the case because of all the things that we've done, including the re-engineering of the business. So as I take a look out into 2025 and 2026, I have great confidence in everything that we've laid out here. And if things were to change in the dynamics of the industry, well, we'd respond to it. We'd respond to it in the fashion that we've done in the past. Don't forget, we've just come out of probably the biggest calamity that's ever hit the airline industry.
We've come out of it in a fashion where we're back to profitability, and we're back to serving customers' needs in a way that they find value in. The steps that we're taking, focusing on the domestic network, where we do exceptionally well, and we think is some of the highest-yielding traffic that's out there, the fleet that we have to deploy against it, and then the efficiencies that we bring from a team perspective are all fantastic. And look, this work is not done. Right? When we take a look out into 2026, our attention is fully on delivering those numbers. But from there, I have great confidence that there's going to be a re-engineering 2.0. And we'll take full advantage of the fleet that we have coming in as well, and also all the marketing opportunities and potential upside that comes from our rewards program.
Thanks very much. It's Helane Becker with TD Cowen. So I have two questions. One is on your cost guidance. Devon, are you including a flight attendant contract? And Robert, how are you thinking about getting that deal done? Because I think, of all your contracts that were open, it's the last one and covers a significant amount of people. And then my other question really has to do with ancillary versus fares. And what percent is how do you think about raising fares versus raising ancillary fees, which you just did with bag fees? Thank you.
Yeah. I can start with the cost guidance. In 2024, our guidance does include an assumed agreement with our flight attendants. Our longer-term guidance also assumes that we get new agreements with our mechanics and fleet service agents when they become amendable next year. So yeah, all of the guidance does include some assumption for future labor agreements.
And in regard to our flight attendants, I have great confidence that we'll get to a deal. And the reason I do is because we're using the same philosophy with our flight attendants that we've used with our pilots, our dispatchers, our agents, which just recently ratified a deal. And that is to, look, we'll match the best in the industry in terms of wages. And we've done that, and we've been successful. And our flight attendants know as well that we need a successful company to be able to pay these kind of compensation levels over the long run. And we're intent on getting it to them. So we have an industry-best matching contract proposal that's on the table. And we're going to keep working with our flight attendants. It's in our interest to get them to a deal. I know that we will because there's tremendous value there for them as well. It just might take a little bit of time, but I'm confident that we're going to get there.
And then to your question about ancillaries, look, our philosophy is simple. Life should be better as an AAdvantage customer. And even in bag fees, though they are higher, if you have a credit card, they don't exist. It's free. And for so many of the things that we charge that are airline-specific services, the only way in fact, very often, you're able to get either reduced rates or pay no rates at all by being an AAdvantage customer and especially a cardholder. But that's just one form of ancillary. A lot of what our ancillaries are targeted doing is indeed providing more value to customers. One of the things that we recently introduced was something that we internally call the Basic Economy buyout, where we had a number of people who would buy Basic Economy .
This is a product which, in a bygone time, we once tried to make it so that customers would never buy it. But actually, it's now become our entry-level product. We find that customers purchase Basic Economy , but then they want to be able to do things like choose seats or check bags or earn miles. And so now, for $99 and by becoming an AAdvantage customer, they can do all of that, and they get the full flexibility for the Basic Economy fare. We're finding that to be very, very successful. It's something which is introducing more people, not just to travel, but traveling as an AAdvantage customer. So our strategy is very much that, to make life better for an AAdvantage customer, to create more products, more offers in front of them that make them want to actually pursue something more than the cheapest possible thing we do.
Thank you.
Thank you, Sheila Kahyaoglu from Jefferies. I wanted to ask, can you give us some revenue guidance? You said capacity is up mid-single digits. Fleet growth is 2%. How much comes from upgauging in price? And maybe related to that, on your margin expansion of 400 basis points on the high end, can you talk to us how much is from pricing? How much is from the regional network optimization, cost optimization efforts?
I can start. Sure. Well, I'll start just by taking a look at what's in our guidance. And what's in our guidance is everything that we talked about today. We expect to deliver on $1 billion of savings through re-engineering our business. And that sits in the guidance. We put a range out there of expectations because some of these initiatives may take a little bit longer to come in. Some may come in a little bit better than what we are assuming to start with. So we have a range on EBITDAR margin of 15%-18%.
And if we do things like the renegotiation of our rewards agreements and they come in better than what we're expecting, we'll probably come in closer to the higher end of that range. But for the most part, we're not kind of separating out what's yield versus what's volume. A lot of it is initiative-driven and it's driven based on the fleet and the re-engineering efforts.
Michael Linenberg, Deutsche Bank. Thanks for the presentations today. I have two. One, I congratulate you on having a very young fleet. Obviously, it gives you you're coming from a very good position. Although there is a portion of your wide-body fleet that is getting a little bit long in the tooth. And so the question is, at what point do you have to make the decision on the 777-200ERs? Is that later this decade? And/or do you have to invest in them over the time being in order to keep those planes around, say, for another five or 10 years? What's that going to do on CapEx? And then I have a second. Thanks.
Yeah. We have a bit of time on the wide-bodies still. And you're right. Of the wide-bodies we do have, we have an older 777-200 fleet. But it is also a fleet that still has a long, useful life ahead of it. But we do, in the next handful of years, need to start thinking about what a replacement is going to look like for that fleet. That's probably three years down the road or so before we're having to put an order in.
Okay. Great. And then just my second question. There has been, I think, some commentary. I'm not sure if it's from the company or actually from the work groups about potentially merging the seniority groups of regional and mainline on the pilot side. You come from a position where you own Envoy. You own Piedmont. You own PSA. You do serve a lot of small cities. You probably have more O&Ds than any carrier on the planet. Does that actually make financial sense? Thank you.
Hey, Mike. I'll kick that one off. Look, we have a great regional network, some wholly owned and some partner airlines. But that regional network operates because of its cost structure. And that's the way that we're able to serve smaller markets and then ultimately build our hubs and the mainline fleet. So I don't see any changes happening on that front. It wouldn't work. And ultimately, we've set these up as separate subsidiaries and separate and distinct of themselves. And we operate with them in that kind of relationship. And that preserves their relative independence.
Mike, I'll add to it. We say internally, "The little planes make the big planes go," which is to say that we actually don't just operate the largest RJ fleet. We operate the largest narrow-body gauge too. We were upgauging before upgauging was a thing. And that is very much a part of what we do. And so much of our narrow-body growth, what we're anticipating driving upgauging is because we have RJs to go feed into these big hubs where then we can fly big jets in these trunks. So it's actually very complementary to what we do at the mainline.
Hi. Good afternoon. Andrew Didora at Bank of America. Robert, I think you opened the presentation just talking about a lot of the constraints out there in the industry right now. I guess one that wasn't really a focus was pilot shortage. It was something that was a big topic of conversation last year. Just curious, where do you stand with pilots? Is the shortage still an issue? And is it something that could be more of a constraint as you try to build back your RJ fleet as opposed to mainline?
Yeah. Well, thanks, Andrew. 2023 and certainly 2022, we had pilot constraints both on the mainline side, mainly because of training, and also on the regional side because of supply. From a mainline perspective, we're back up full speed. We can deliver on the capacity that we're putting into the schedule. Our training department's doing a great job. Last year, we hired, I think, 2,300 pilots. This year, it'll be roughly 1,300, 1,300. That's slowing down a little bit. We have a considerable number of retirements. We will be hiring for the foreseeable future at levels like that. From a regional side of things, look, we've underutilized our fleet now to a considerable degree for a number of years. Can't wait to get back to being able to fully utilize that fleet.
We took the dramatic step, because it's so important to us, of really changing the construct of regional pilot contracts a few years ago. We did so with great effect. It has actually paid off for us. It's brought people into the industry. It's attracted people to the regionals. It has enabled us to retain pilots for a longer period of time. As we get into 2026, I think that we'll get back to a point where we're organically able to produce the number of first officers and captains to really fly whatever we need to. The order book that Devon talked about and the fleet levels that we've illustrated, I don't anticipate issues with providing pilots as we get out past 2025.
That's great. Thank you. Just a quick follow-up of the second question for Devon. Just in terms of your free cash flow targets, you spoke about kind of steadying out some of your aircraft CapEx. How are you thinking about non-aircraft CapEx and that number? Thank you.
Yeah. I think non-aircraft CapEx will be pretty similar to what it is today. We've kind of been in that $800 million-$1 billion range. It may bump up a little bit, but it would be plus or minus $100 million or so from where it's at right now. And any reason for that bump-up will be because of the projects that we're doing. Like we announced today around the A319 or A320 reconfigurations, we're doing work on our 777-300s as well. But it'll largely be within the range we've experienced the past couple of years.
Thank you. Christopher Stathoulopoulos , Susquehanna . So I think it's pretty clear with the initiatives around the loyalty program. And it doesn't sound like you're contemplating any meaningful shifts in RTO policies and regional population demographics. But what's not clear, at least to me here, as we think about, there's certainly a debate within the investment community, I would say, around where capacity might look to move from some of your lower-cost peers. So in that context, as you talk about growing in the smaller markets, I just want to understand that mix, if that shifts in response to what's happening here competitively.
Or is it more about growth in your core or Fortress hubs and driving connectivity there, which would imply some resiliency to yields given your share? Just want to understand how that as we think about the RASM and margin opportunity, that emphasis on the smaller markets, if this sort of dynamic shifts in the industry, is it more about just growing in your core hubs and protecting that yield going forward? Thanks.
It is about growing in our core hubs. That is exactly what it is. And look, when we talk about El Paso, El Paso is able to gain utility in our system because we connect it to Dallas, Fort Worth, and L.A. and Chicago and places such as that. So when we're flying a market like that nine times a day in a 737 to Dallas, just as a for example, it's connecting to another 175 cities on the other side of it. And in Dallas, it meets a connecting hub structure of 900 flights and Chicago, 400 flights and Phoenix, 300.
At one point in time, we actually flew it to Charlotte. The only reason Charlotte's not in there was because of how we were utilizing our regional fleet. When that comes back, it meets 700 flights in Charlotte. When we talk about El Paso, very much the effect that it has is it fortifies the hubs that we have. It's doing what we do best. We do it really without much regard to what our competitors do. It's squarely focused on what our customers want.
Hi. Catie O'Brien with Goldman Sachs. Maybe one for you, first, Vasu. You highlighted the 25% of your revenue that comes from passengers that are AAdvantage members, but not yet purchasers of premium content. And I think your comment was, "We don't have a premium product that appeals to them yet." Is that on the list of initiatives going forward, creating new premium content or driving that premium content higher? Is that part of the margin walk? And then maybe one for Devon after that.
Absolutely. And look, what I would tell you is one of our flagship products for it is what we call the Basic Economy buyout. The vast majority of that 25% are AAdvantage customers who, when they're buying our lowest, cheapest fare, they were buying a Basic Econom y fare. And very often, they were realizing, "Wait a minute. I don't get so many of the benefits that come from AAdvantage." Or actually, there was something more than this that I wanted.
And we see different flavors of that. The other thing I'll mention is so much of what we have done is building a nimble commercial organization where, in bygone times, it would have taken us a year to go do something like the Basic Economy buyout. We came up with that idea one day. We did an analysis for one week. We tested it for one week. We scaled it out. The idea behind it is not that we go through long lists of initiatives. We're a contemporary digital business. Not only can humans do it, in some cases, the robots can actually identify where the opportunities are.
That's great. And then just Devon, you introduced a longer-term target around, I think, 2028, you'll be below $35 billion total debt, below 3x net debt to EBITDAR. Is that the North Star you need to reach before you start talking about allocating free cash flow to shareholders? Or is that just or could it happen while we're on our way there?
I'd say it could happen while we're on the way there. But for now, we are focused on deleveraging. And through 2025, all of our free cash flow is going towards deleveraging. Beyond that point, though, to get to that 2028 goal of $35 billion of total debt and less than $30 billion of net debt, we will likely have opportunities and decisions to make on capital allocation. And I look forward to getting to that spot. But we'll have a decision to make. Do we want to further delever or delever at a quicker rate? Or do we want to make other decisions with our capital allocation?
Good afternoon. Thank you again for hosting us. Stephen Trent from Citi. Two questions for me. I looked at that map of your global alliances. I think, with the exception of GOL, everybody on that was a oneworld Alliance member. Do you see, over the long term, any possibility to kind of take the next step, maybe do a JBA with one of them, antitrust immunity on some of those corridors?
Look, potentially, for us, for all of our partnerships, they have two objectives. One, increase the connectivity for our customers. And two, increase the value of redemption for AAdvantage customers. In fact, in many cases, it's not just that we're giving our partners $3.5 billion of revenue from our domestic system. Very often, the cash that we pay for redemption is itself the largest partnership that they have, larger than any of their own corporate accounts or whatever the case might be.
So those are our two very simple objectives. Every partnership we have is, first and foremost, a commercial partnership, not some other sort of investment. And if, as a product of that, it makes sense to do something different in terms of antitrust immunity so we can create more value for customers, we'll never rule anything out. But we are squarely focused on most value through our customers, through our network, our augmented network, and AAdvantage.
Hey, Vasu, I'd add this. Vasu's been serving as the interim chair of oneworld . And look, we are really proud of what we've done with oneworld . But we think that there's so much more. So from a oneworld perspective, one of the first steps is we've actually moved the oneworld headquarters to Dallas, Fort Worth. On top of that, we've just hired a new CEO, Nat Pieper. He comes from Alaska Airlines. And I do see the opportunity, short of JBs and things like that, for much, much more cooperation.
And because we have these extensive relationships with BA and IAG Group and JAL and Qantas, it forms the basis on taking a look at the way we do things in a different fashion. And so I think that there's opportunity there. That certainly hasn't been something we've spent a lot of time on yet. But we've set it up so that that will be a next frontier.
Appreciate that, gentlemen. And just as a quick follow-up, kind of a follow-up on Andrew's question earlier on CapEx, any high-level view as to how we should think about the maintenance CapEx level over the next couple of years?
I guess by maintenance CapEx, you're just really talking to our non-aircraft CapEx as well?
Yes.
Yeah. Same thing. Aircraft CapEx is going to be in that $3 billion-$3.5 billion range through the entirety of the rest of the decade. Non-aircraft CapEx is probably going to be in a similar range to what we've seen over the past couple of years. Call it like $800 million- $1.1 billion.
Hey, good afternoon, Dan McKenzie from Seaport Global. Thanks for the presentation today. Just given the importance of top-line revenue to achieving these margins, I wonder if we can just put a little finer point on revenue growth, Vasu. I'm just wondering where your confidence is greatest. Is it the merchandising upsell from the 200 smaller markets, potentially levered by AI? Is it international O&D that comes back? And as we think about corporate travel, as it layers into this, is it just a continued recovery in corporate travel? When do we get back to 100%? Or is it premium seats? So as you kind of think about all the buckets of revenue opportunities, where do you have the greatest confidence? And how do you rank these?
Look, our greatest confidence is selling premium content, primarily through AAdvantage. It's not guesswork that's there. As I alluded to, we have not renegotiated nor kind of reconceived our branded credit card partnerships. Years ago, we made a lot of changes to our program, how people earn miles, how people are rewarded. And since then, we have continued to see that spend-per-active growth has grown. Now, prior to the pandemic, spend-per-active account would basically be flat over the, let's call it, 25-30 years of having a card partnership. In the last three or so years coming out of the pandemic, that number has grown at something like 3%-5% per year, a meaningful amount of spend-per-active growth. We've also grown the number of active accounts that we have.
So what all of that really is, is that's an AAdvantage customer who sees the utility in being able to earn miles to travel, even when they're not flying as much. This has been uniquely rewarding because so many of our customers are the exact same business customers that were flying in 2019. But their work doesn't compel them to travel as much anymore. But they're earning miles at, very often, the exact same rate. They're just putting the spending onto their cards. So we've seen that. We've been able to capitalize upon it. We have more ways yet that we can go and do it. And with the right kind of banking partnerships in place, we really think that there's a lot of opportunity there. And so we probably have the greatest confidence. And the last thing, I would be remiss if I didn't say it.
But that and all of that is enabled by the short-haul network, right? Because what the network does, it fundamentally brings customers in, whether it is in El Paso. And I would encourage you all to go to El Paso and Oklahoma City and San Antonio, Texas, and Nashville, where growth is real. It's happening from small businesses that are contributing and hiring and spending. And they want to travel. And American Airlines is the choice. That brings the customers in. And AAdvantage is what rewards them. So we feel the most confidence in AAdvantage because it's fortified by the network.
Understood. Second question here. You guys referenced generative machine learning, AI, a few times throughout the presentations. But I really don't understand what that means to top-line revenue, what it means to cost. And so first off, should we think about generative, say, or machine learning or AI as evolutionary to the business, revolutionary to the business? And does that come from the cloud? Does it come from American Airlines hardware? If you can just help us connect the dots.
Yeah. I can probably start. And others can chime in. Look, I think there's a lot and sometimes a lot of buzzwords that surround machine learning and artificial intelligence, online and offline models. Suffice to say, before there were such a thing as that, an airline called American Airlines created a thing called pricing and yield management, which is the first means of being able to actually go and automate a very complex problem of creating multiple price points for the same SKU, right? And so it is a thing that is actually very core to who we are. We've spent a lot of time on it. Though we spend less time talking about it externally, it's only for the reason that it only has value if our customers see it. And we're encouraged by the fact that more of that is happening.
As Ganesh and David pointed out, we see more applications of it across the entirety of the operation. And very critically, opportunities to be able to connect things like the automatic creation of a schedule and the automatic forecasting of how reliable it is altogether. So there's a lot of opportunities out there for us. I think it's a little bit of hubris to say that anybody is far along in this journey. But we are starting in it. And we are nothing if not assiduous about it.
So Vasu, the only thing I'd add is we do know this. Look, we know that we are a rich environment because we collect so much data, right? So 6,000 flights a day, 600,000 customers. And every aspect of our flight is tracked, identified, and recorded. And just about everything else we do is as well. So we know that our environment is rich with data. And if there's one thing I know about AI, it's those are the environments in which you can put it to use. And so for us, whether it's the kind of things that we've talked about well, it's Vasu talked about with revenue management. But look, it's also what we do every day in terms of recovering the airline and designing our schedules. So all of that is opportunity for us. I look forward to being able to be a fertile ground for application.
Thanks.
All right. Last one here, Kathryn.
Kathryn Bell, Morgan Stanley. Thanks for taking my question. Just kind of digging deeper into some of the premium questions, there's a lot of good charts and data. But now that virtually almost every domestic carrier is kind of going into that segment, do you think there's a risk that that could get overcrowded? And it sounds like the network is kind of how you're differentiating yourself. But also curious if American kind of stand out from other domestic carriers in the premium segment. Thanks.
Yeah. Thanks for the question. And look, though other people may be using the same words, I think sometimes we're using the same words for different things. Because first and foremost, the customer base is different, right? When we're drawing 50% of the traffic base in American Airlines from cities like Oklahoma City or San Antonio, Texas, or New Bern, North Carolina, well, part of it is that they don't have any, those customers are coming to us because the other airlines aren't particularly great options for them. And when they come to us, even frankly, if everybody went and matched advantage such as it is, the fundamental thing is that the network creates such value for them. And then through advantage, they have access to a raft of partnerships that are there. So look, could other people go and match it? Perhaps.
But for us, the lone commercial focus is a great network and a great advantage. There's not a point at which we would go and do things where we would undercut advantage with any other commercial program or policy that's there. We remain very resolutely focused on ensuring that that customer in New Bern, North Carolina, has access to some of the very best redemption opportunities. If our competitors do that for our customers in one of their hub cities or something like that, that really competitively has very little to do with how we go and serve our customers. So increasingly, we are a very customer-focused company. And what other words others do or however others may choose to copy us is up to them.
All right. Well, thank you for the questions. Thanks for the interest. I'll just close with this, that it's a competitive business. But we really like the assets that we have. We like the plan that we have ahead of us. We're really proud of the reputation we have of being able to deliver. For those that are interested in investing in us, and absolutely, we have a great storyline here, we're going to hit the numbers that we put out for 2024. We're confident in that. We're confident in what we're taking a look at in 2025 and 2026. That creates tremendous value for those that are part of what we're doing now. So I have great confidence in the future. I know that those that are with us today are going to be rewarded. So thanks for the time. Look forward to coming back and talking more later.