Good morning, and welcome to the American Airlines Group First Quarter 2021 Earnings Conference Call. Today's call is being recorded. At this time, all lines are in a listen only mode. Following the presentation, And I would now like to turn the conference over to your moderator, Managing Director of Investor Relations, Mr. Dan Cravens.
Thanks, Crystal, and good morning, everyone, and welcome to the American Airlines Group First Quarter 2021 Earnings Conference Call. Joining us on the call this morning, we have Doug Parker, Chairman and CEO Robert Isom, President and Derek Kerr, Chief Financial Officer. Also on the call for a question and answer session are several of our senior execs, including Maya Liebmann, Steve Johnson, Vashi Raja, Allison Taylor and Devin May. Like we normally do, Doug will start the call with an overview of our quarter and the actions we've taken during this pandemic. Robert will then follow with some remarks about our commercial and other strategic initiatives.
After Robert's remarks, Derek will follow with the details on the quarter and our operating plans going forward. After Derek's comments, we'll open the call Before we begin, we must state that today's call does contain forward looking statements, including statements concerning future revenues, costs, forecast, capacity, fleet plans and liquidity. These statements represent our predictions and expectations
as to
future events, but numerous risks and uncertainties could cause actual results quarter ended March 31, 2021. In addition, we'll be discussing certain non GAAP financial measures this morning, which exclude the impact of unusual items. A reconciliation of those numbers to the GAAP Financials is included in the earnings release, and that can be found on the Investor Relations section of our website. A webcast of this call will also be archived on our website, and the information that we're giving you on the call is as of today's date, and we undertake no obligation to update the information subsequently. So thanks again for joining us.
At this point, I'd like to turn the call over to our Chairman and CEO, Doug Parker.
Thanks, Dan, and good morning, everybody. This morning, we reported a Q1 pretax loss excluding net special items of $3,500,000,000 The loss was driven, of course, by the extreme drop in demand for air travel due to the global pandemic. Our revenues in the quarter were down 62% for the same period in 2019. In the midst of this difficult environment, the American Airlines team produced remarkable results. We flew more customers than any other U.
S. Airline. We did so reliably and safely. We produced the highest passenger unit revenue of any global U. S.
Carrier, while having more available seats for sale. We completed the largest financing in airline history, a $10,000,000,000 transaction secured by the most valuable loyalty program in the world, The Advantage frequent flyer program. And excluding debt principal, we were cash positive in the month of March, our first such month since the beginning of the pandemic. These results and more were made possible by our incredible team.
Without their resiliency, creativity and compassion,
we'd be facing a very different future. Instead, thanks to their hard work and determination, we're starting to see light at the end of this very long time this very dark time, And we're on a path that has us well positioned as demand for air travel returns. That path forward is guided by what we're calling our green flag plan. For our industry, this pandemic has been much like a yellow flag during an auto race, where everyone slows down, takes a pit stop And get their cars ready for when the race resumes at full speed. We've used this period to improve and prepare our outlook, so that when the green flag does drop, It appears to be on the horizon.
America will be ready. That plan is centered on 4 initiatives. I'll take a minute to walk through those at a high level, and then Robert and Derek will And what we achieved to date and what we see on the horizon. First, we're doubling down on our commitment to operational excellence. We We had a great operation in the Q1 carrying more than 24,000,000 passengers on nearly 340,000 flights.
During our busiest day of the quarter, we had more than 430,000 flying on our aircraft. That's the highest we've had since March of 2020. Our goal is to run the most reliable operations in American Airlines history Once everyone is back to a full schedule and the steps we put in place, including more reliable yet profitable scheduling, New tools and technology to assist our team and customers during irregular operations and our claim commitment will ensure we achieve that goal. 2nd, we're taking this opportunity to reconnect with our customers. Robert will talk more about all we're doing here.
As customers return to the skies, they will see an even better American Airlines. 1 was the broadest and best global network that's now been enhanced by new partnerships And one with innovative technologies and procedures that make travel more convenient for our customers and ensures they feel safe and comfortable as they return to flying. 3rd, we're planning to build on the positive momentum we've established with our team. Past year has tested our team in ways we couldn't have imagined, but it's also brought us much closer. We worked hand in hand with our union leaders to ensure that team members felt cared for, even as we experienced by far the most difficult financial circumstances and our industry's history.
We're committed to building on that progress and continue to work together to ensure our team feels cared for every day. On that note, we are very happy to tell 13,000 team members they could tear up their warrant notices following the passage of the COVID-nineteen relief act that included an extension of the payroll support program. We will continue to welcome team members back to the operation as we increase our schedule. In fact, earlier this week, we announced we will begin hiring pilots later this year to prepare for 2022 and beyond. Finally and importantly, we are committed to passionately driving efficiencies across the organization.
Derek will elaborate on this, We are really proud of the aggressive and innovative ways the team has worked to position us to be more efficient on the other side of this pandemic. The efficiencies we've built into the business over the past year will drive more than $1,300,000,000 of permanent non volume related savings in 2021 and beyond. So before I turn it over to Robert, I'll close with this. We are a long way from where we need to be. This crisis is far from over, And we have to continue fighting to give our customers, shareholders and team the company they deserve.
But there is no doubt the pace of the recovery is accelerating. And thanks to our team and a thoughtful and proactive plan as the green flag drops, American Airlines is ready.
Thanks, Doug, and good morning, everyone. I also want to thank our entire team for everything that they've done for our airline throughout the pandemic. This phenomenal group continues to rise to the occasion and deliver for our customers every day, and we're incredibly grateful. Our first quarter revenue of $4,000,000,000 was effectively flat on a sequential basis versus the Q4 of 2020. However, our demand and revenue trends accelerated significantly as the quarter progressed.
In January, Our total revenue was 34% of what it was in 2019. And by March, it was 46% in 2019. This trend is driven by strong leisure demand in the U. S, Mexico, the Caribbean and Latin America. This momentum has continued as our 7 day rolling average System daily net bookings has reached 2019 levels this week, and this is in spite of business and long haul international demand remaining weak, with net bookings of roughly 20% of their level of their 2019 levels.
That said, There are early signs of recovery for business. Small business demand, which was roughly 17% of our system revenue, has been improving steadily as vaccination rates have increased and as markets reopen. An increasing number of our largest corporate accounts are coming back to the office and indicating that they'll be traveling in the Q3 and confirming in person board meetings, conferences and events for this year. Importantly, we're focused on turning improved bookings and load factors into a leading unit revenue performance. We have continued to shape our network and our customer experience as nimbly and thoughtfully as possible, and we're seeing the results.
The Q1 of 2021 was the 3rd consecutive quarter in which our passenger unit revenue materially outperformed Thanks to our team. Our likelihood to recommend scores have improved for the last three quarters as well. Based on our results in the Q1, we're on track to have our best LTR year since the merger.
We have used the pandemic
to reset our airlines so that it Our team and investors. The first sign of this is in our summer schedule and second quarter capacity plans. We expect to fly approximately 80% of our 2019 system seat capacity in the Q2, and this increases to 90% this summer. We'll continue to devote a larger share of our assets to markets where we can create unique value for our customers and therefore generate Passenger unit revenue premium relative to our competition. When compared to 2019, we expect to find 90% of our domestic capacity during the summer peak and 100% in DFW and Charlotte.
Our domestic network will constitute 85% Our system seat capacity in the summer peak. We expect to operate 80% of our international seat capacity compared to 2019 in our peak. Our organic network in the Americas creates more unique choices for customers and more profitability for the airline. As such, In our summer peak, our Latin American network is expected to be the same size as it was in 2019. Our short and long haul Latin American network will constitute approximately 12% of our system seat capacity in the summer peak.
By contrast, Our operation has been much more challenged in the Atlantic and Pacific as those markets have yet to fully reopen. And as a result, in our peak schedule, seat capacity in those parts of our network will only be 40% of what it was during the same period in 2019. Our Atlantic and Pacific Networks will constitute just 3% of our system seat capacity in the summer peak. We expect to bring these markets back slowly and only when demand conditions warrant. It's important to note there is significant pent up demand for international travel We're seeing it most in markets like Tel Aviv and Athens, where market reopenings are leading to steady increases in demand.
As borders continue to open throughout the world, we'll be ready because of the changes that we made to our fleet and network and the strength
of our partnerships around the world.
Overall, we will deliver any increase in capacity in a more efficient and reliable fashion than we did in 2019. We've accelerated the retirement of over 150 older aircraft in our fleet, leaving American with by far the youngest fleet of our global U. S. Competitors. We intend to have all of our remaining aircraft active this summer and no longer see the Ilan Tarmacs around the country.
As Eric will share in a few minutes, we'll soon complete the harmonization of our Boeing 737 and Airbus A321 fleet, Driving superior cost efficiency, a simpler operation and a better customer experience. Just as we used the past year to adapt our fleet network, we have also developed partnerships to offer our customers a seamless network in markets where we have structurally underperformed. This has been most true on the West Coast and in the Northeast. We have been unable to grow these markets organically due to infrastructure constraints. However, through our recently announced partnerships with Alaska and JetBlue, we can now offer customers the largest network in these two regions and bring a level of competition and choice that has long been lacking.
Of course, to make these partnerships work, the experience must be seamless for our customers. As we like to say, an elite customer anywhere should be treated as an elite customer everywhere. We have several initiatives underway to make that a reality, including our announcement just yesterday to deliver on the next phase of our partnership with JetBlue. As we look toward the recovery, reconnecting with our customers will be centered on being the easiest airline to do business with. Our goal has always been to remove as many friction points as possible.
We've enhanced our travel planning tool to help customers make informed decisions on where they travel and what to expect when they get there. We added new preflight COVID-nineteen testing options, Expanded acceptance of VeriFly, the mobile health wallet that simplifies and verifies travel requirements. VeriFly is now accepted For all of our international flights in the U. S. To the U.
S. And on flights from the U. S. To 11 countries, our partners Aer Lingus, British Airways, Iberia, Japan Airlines Now also accept VERIFI. Building a curb to gate contactless journey will be an ongoing effort as we reimagine Safe and convenient travel in a post COVID era.
At DFW, we have expanded our TOUCH technology trial to allow customers to use biometric scanners To check the bank's prior departure, we will utilize that same technology to allow customers to gain entrance to an Ameluz Club Lounge later this year. And today, as we celebrate Earth Day, I want to highlight some important strides we've made to run a more sustainable airline. The most important thing any airline can do is retire older aircraft and replace them with new, We're fuel efficient aircraft and we've done that at American with $24,000,000,000 of investment over the past 7 years The retirement of more than 650 older aircraft. But we need to do more to reach our goal of net 0 carbon emissions by 2,050. And we have our eye on sustainable aviation fuel, SAF, is the most promising advancement available to us in the near to midterm.
We've been taking delivery of SAP for almost a year. In the first and in the Q1, we reached innovative offsetting agreements with 2 of our customers, Deloitte and Kuna Nagel. We appreciate that the Biden administration and many in Congress have engaged with our industry on climate issues We're encouraged by the fact that we have common goals, especially when it comes to SaaS. So in summary, over the past year, we've Greatly simplified and modernized our fleet, rationalized our network, made many changes to our business and operations to ensure customers have flexibility and peace of mind when they return to travel. We're encouraged by the trends and demand for air travel across all sectors and believe American is well positioned for the recovery in the months years ahead.
And with that, I'll turn it over to Derek.
Thanks, Robert, and good morning, everyone. Before I begin my remarks, I too want to take the opportunity to thank our team. Their leadership and hard work truly embodies what American Airlines team members are known for. This morning, we reported a 1st quarter GAAP net loss of $1,300,000,000 or $1.97 per share. Excluding net special credits, we reported a net loss of $2,700,000,000 or $4.32 per share.
Robert talked about many of the commercial activities we're working on and the trends we're seeing in the demand environment, Well, I'll focus my remarks on the cost side of our P and L and our balance sheet as we look to the future. Throughout the entire pandemic, we have remained focused on keeping our capacity aligned with demand while preserving the maximum amount of flexibility to respond as demand returns. We took aggressive actions to reduce our cost structure and we have reduced our Q1 total operating expense excluding net special items by 26% versus 2020 on a 39% reduction in total capacity. Non fuel operating expenses excluding net special credits We're up 6% sequentially from the 4th quarter as we gradually added back capacity. We ended the Q1 with 17,300,000,000 Total available liquidity, including approximately $3,100,000,000 of PSP2 funds we received from the Treasury Department during the quarter.
We were recently notified that this amount will be increased by approximately $463,000,000 to be received in the 2nd quarter. In addition, we expect to receive $3,300,000,000 of PSP3 funds by the end of the second quarter. We saw positive trends in our daily cash Our average daily cash burn was approximately $27,000,000 per day, which came in better than our guidance of $30,000,000 per day. This happened despite the drop off in demand we saw in January February and a significant increase in fuel prices at the beginning of the quarter. As a reminder, our definition of cash burn includes approximately $9,000,000 per day of regular debt principal and cash severance payments.
For the month of March, our estimated average daily cash burn rate was approximately $4,000,000 per day and excluding approximately $8,000,000 per day Regular debt, principal and cash severance payments made in March, as Doug noted, the company's cash burn rate turned positive for the month. During the quarter, our treasury team did a phenomenal job of continuing to strengthen our liquidity through a series of capital market transactions. Notably, we completed our $10,000,000,000 financing transaction that was backed by the Advantage program at a blended rate of 5.6%, less than half of what we would have been able to do last summer and use those proceeds to repay in full the $550,000,000 secured loan we had with the Treasury Department. We also had $530,000,000 of aircraft amortization payments, Including the maturity of our 20 eleven-one WTC, which together with mortgage maturities resulted in 35 mainline aircraft and 9 regional aircraft becoming unencumbered. During the quarter, we also repaid in full our $2,800,000,000 of revolving credit This was a liquidity neutral transaction that reduced the company's outstanding debt by $2,800,000,000 Importantly, we still retain the flexibility To either draw upon these revolving commitments again as needed or leave them undrawn until October 2024.
During the quarter, we took delivery of 7 Boeing 737 MAX Aircraft, and we expect to take one more delivery later this year. As a reminder, these aircraft were built while the MAX was grounded and were efficiently financed through leasing transactions. In addition, we recently exercised our remaining deferral rights on 18 Boeing 737 MAX Aircraft that were previously scheduled to be delivered in 2021 2022. These deliveries are now expected to occur in 2023 2024. Lastly, we reached an agreement with Boeing related to our remaining 787-eight deliveries.
Under the revised terms of the agreement, We have elected to defer and convert 5,787-eight aircraft to 787-nine aircraft. These deliveries are now expected to occur in 2023, the remaining 14 deliveries of 787-eight aircraft have been rescheduled to occur by the end of the Q1 of 2022 and all these aircraft will retain their existing financings. In January, the company made $241,000,000 in contributions to its pension plans. In March, the new COVID-nineteen relief bill included, among other things, funding relief for single employer pension plans. These new funding rules reduce the company's remaining required cash contribution for 2021 to 0, while lowering our projected required contributions over the next 5 years by over $2,000,000,000 Under these new provisions for funding purposes, the Combined plans are expected to be funded in excess of 90% for planned year 2021.
As Doug and Robert mentioned, we are Starting to see signs of what appears to be a strong economic recovery. This fantastic news makes our $1,300,000,000 of efficiency measures even more important as we repair our business for the return to a more normal environment. On the fleet side, we have talked a lot about our fleet simplification efforts and the elimination of smaller sub fleets, which resulted in the removal of more than 150 older and inefficient aircraft. Many of these aircraft, retired aircraft have already been sold and by May we will have completed disposal Of all of our 767 aircraft and Embraer 190 aircraft generating more than $300,000,000 in proceeds. Our fleet changes are expected to drive significant operational and cost savings in 2021 and beyond.
With only 4 mainline aircraft types remaining, we will see improved aircraft utilization and operational efficiencies in the back half of twenty twenty one through the increase in gauge and reduction in inactive aircraft, including spares and maintenance allocations. Additionally, our fleet harmonization project is picking up steam and we expect to have our entire 737 fleet completed in the Q2 of this year. These aircraft have 172 seats and come with larger overhead bins and in seat power. We expect to have the A321 fleet completed by the end of this year. Aside from a better customer experience, these projects will provide significant opportunities to We'll be able to efficiently fly 2019 levels of capacity with approximately 10% fewer aircraft.
In terms of our balance sheet following our transactions in the Q1, 32% of our outstanding debt is prepayable without penalty. After all the COVID related financings we have completed to date, our average cost of debt is approximately 4.5%. As we have said in the past, we will naturally reduce our debt from where we are today by $8,000,000,000 to $10,000,000,000 over the next 5 years through regularly scheduled debt We know going forward that since we are now starting at a higher debt level on account of the pandemic related debt, We will need to delever even more.
In the near term,
we plan to maintain higher liquidity levels until we are generating sustained positive cash flow. Once this occurs, when combined with our efficiency measures and a lower CapEx profile, we plan to use any excess cash flow to more As part of our plan, we also anticipate resetting our target minimum liquidity level. Overall, we expect 2nd quarter total capacity to be down approximately 20% to 25% versus 2nd quarter of 2019. With these capacity and demand assumptions, we expect to see a significant increase in our revenue versus the 1st quarter with our total revenue to be down approximately 40% versus the Q2 of 2019. These inputs lead to an estimated 2nd quarter pretax Margin excluding net special items of between negative 27% 30%.
We presently expect To end the Q2 with approximately $19,500,000,000 in total available liquidity, which includes the additional PSP2 and PSP3 Funds I mentioned earlier. That would be the highest liquidity position in company history and our 5th Consecutive quarter of increased liquidity despite the demand driven operating losses we have incurred over that period. Given these projected liquidity levels and the positive cash and demand trends, we are no longer looking to raise liquidity in American for the first time since the pandemic struck. For the full year 2021, our debt principal payments will be 2,800,000,000 Excluding the prepayment of our revolving credit facilities, in the second quarter, we expect to pay down $595,000,000 of aircraft and engine debt in addition to the $250,000,000 PDP facility we paid off earlier this month. Our full year CapEx is still expected to remain minimal.
Non aircraft CapEx will be $900,000,000 And due to our negotiated settlements with Boeing, attractive aircraft financing In our already modernized fleet, our net aircraft CapEx, including PDPs, will be an inflow of 1,000,000,000 While we feel great about how much we have accomplished, we recognize that we are still have a long way to go to get our business back to normal. Our team has done an amazing job of bolstering our liquidity, conserving cash and driving efficiencies throughout the organization, and we are very well positioned for the future. And with that, I'll open up the line for analyst questions.
Your first question comes from the line of Joseph DeNardi with Stifel.
Doug, two questions for you on the loyalty program. I wanted to ask you a question I asked a few years ago at your Investor Day. Given how valuable the loyalty program has become and how lucrative the business of selling miles has become, Do you need to reconsider what American Airlines is? Are you an airline or are you a marketing company?
Yes. We're an airline, Joe, and always will be. And the International Program is a big part of that, which helps us To market the airline order.
So Doug, in 2019, your loyalty program generated The same amount of EBITDA as Marriott did. My question is, did you know that? Does that surprise you? And lastly, why don't you allocate 40% of the time on these calls to the loyalty program since that's how much EBITDA it represents for you all? Thank you.
Thanks, Joe. Yes, look, I don't think it's possible to separate the EBITDA, the advantage program from the EBITDA in the airline. They're inextricably linked, and you can't have one without the other. So anyway, That's what I believe so. And therefore, we talk about running the airline, which is what we do every day.
And again, the Advantage program does indeed is an incredibly important part of that. Our Because we do such a good job of running an airline, people want to have miles in our loyalty program, people want to have credit cards That allow them to earn miles as they spend to earn miles so that they can fly more on our airline. Those are all good things, but You can't have one without the other. And I don't think it's right to try and separate one P and L from the other.
Your next question comes from the line of Mike Linenberg with Deutsche Bank.
Good morning, everybody. I guess just maybe Robert or Doug. Robert, you talked about International lagging, you talked about Transatlantic calling out Transatlantic. And yet, we are seeing Headlines over the last week or so about the potential opening of at least the U. S.-U.
K. Corridor, maybe as soon as the month of May, maybe Can you just give us an update on what we're hearing and whether or not we're going to see, maybe unfettered access between the U. S. And UK? Thank you.
So we're Mike, we're certainly hopeful, and we encourage Our government to engage with the UK. But look, this is a matter, a bilateral matter, and it's one that First, it has to be predicated on confidence in safety of travel. So we're encouraged and we're certainly ready When the opportunity allows it and we know, as I said, that there's tremendous demand Both from a corporate and from a leisure perspective to take advantage, but we're going to have to make sure that we're coordinated With all parties, governments and government agencies to make sure that we're doing it in an appropriate manner.
Great. And then thanks, Robert. And then just my second call, just to Vasu on JetBlue, American. I mean, I know it's early. Any sort of quick wins with respect to flow traffic between the 2 of you in JFK and Boston?
And then The story I mean, certainly a lot of criticism in at least it seems in the press and from other entities out there. And yet, It feels like the story that's not being told is just the number of new service. And I just think about the phase that was just Launched in the last day or 2, the number of markets that maybe didn't exist before that now exists like a JFK Cali, JFK Boise,
And then the
number of city pairs where you're going from 1 to 2 or 2 to 3 or 3 to 4. For whatever reason, that story doesn't seem to be out there, Because I sort of view that as being enhancing competition, not taking away from it. So any sort of update that you can give on with respect to that alliance. Thank you.
Yes. Hey, Mike, thanks for the question. It's a great question. And look, feel free to start the story about that because you're absolutely right. Indeed, there is, AA and JetBlue together are the fastest growing airlines in the whole Northeast corridor, not just adding new services that Certainly, AIA would have never thought possible such as JFK Daily, but arguably in which, generally wouldn't have thought possible such as Boston to Cincinnati.
And there's a lot of things, but really, here the first part of your question, it's all been enabled. It's really the customers are the true voice of this because if they like it, They'll fly on it. And we've seen that so far. So March was our 1st month in which we turned on the codeshare. We only had about 3 weeks worth of bookings.
And at least for JetBlue on AA, that was only about 25 to 30 markets. The JetBlue has already become our largest global co chair partner. That's a little bit weird because so many of our international partners are flying 5% to 10% of their schedule. But what we do draw some encouragement from is that, our co share scope is vastly smaller with JetBlue than just about any of our major partners. And as we look at these things, we look at not just the total revenue production on us, but how much of that revenue is really incremental that is Coming in higher fares and what we what AA is organically booking are coming in periods where the flights were light.
And we're flying Somewhere between 30% 40% of that is incremental, with similar rates in Alaska and is that compares extremely favorably Our historical global alliances. So that for us as much as anything is an indication of exactly what you said, the customer is voting. And the customer really Likes the new services, likes the service expansion that's there. And as long as that's the case, it's going to be attractive for us financially and so we'll continue To grow and innovate and try things that, would not have been possible without a partnership such as this.
Your next question comes from the line of Duane Pfennigwerth with Evercore ISI.
Hey, thanks. I appreciate it. Can you just bridge us from the current international demand commentary Kind of 20% of normal or maybe that was a March comment, 20% of normal and then getting to 80% from a capacity perspective this summer?
Yes. Hey, this is Vasily. I can help with that. That a big part when we quote international, We're quoting both our long haul business and our short haul international business. Of note, The way we get to 80% is that we are envisioning a long haul business, which will be come our peak summer schedule in July, 40% of its 2019 size, but a short haul international business, which will be north of that, something like 20% larger than what it was 2019, with our long haul Latin American network being something like 80% of the first 2019, right?
So But maybe even the more colorful way to say it is that for us long haul is going to be a very small part of our system this summer. Our total long haul network transatlantic, transpacific and long haul Latin America will roughly will be about 3% to 5% of the seat The capacity of the airline comes the peak July schedule. So a lot of what you see is in our international numbers It's more capacity going into the short haul network, which for us has proven to be the most resilient part of the whole system Ever since the pandemic started, no matter what the headlines have been, no matter how the market turns, we always tend to find Bookings rebounding fastest, soonest and greatest in those markets. And you see that in our RASM results, we're flying to The biggest schedule in short haul international and producing the greatest comparative RASM out there too.
Thanks. And then just a follow-up for Derek. On the net aircraft CapEx inflow of $1,000,000,000 can you just tell us How much of that is sale leaseback proceeds and how much of that is sort of PDP refunds?
Yes. Our net aircraft CapEx is about $185,000,000 So direct sale leaseback of aircraft is about 2.7. So we have about 2.6 of aircraft CapEx, And that's all financed by direct lease and sale leasebacks. And then the net PDPs is about 850,000,000
Sorry, just a small point of follow-up there. Can you give us a sense for where aircraft rent might be kind of exiting this year?
Aircraft rent will exit we have about $350,000,000 in the first quarter, exit around $400,000,000 in the 4th quarter.
Your next question comes from the line of Helane Becker with Cowen.
Thanks very much, operator. Hi, guys. Thanks for the time. So I have two questions. One is, you guys said that you flew more passengers than any other airline.
And I know your cargo revenue was fairly strong as well. But I was looking at your revenue compared to the just your absolute revenue, not your unit revenue. It was lower than that of like delta. And I'm kind of wondering what you think accounts for the difference. And then my follow-up question is related to Are you talking to the Biden administration about reopening borders, Obviously, safely.
But reopening borders this summer to gain at least some summer international
I'll take a second one. Yes, I can just I can try to take first look. I can't I don't know the detail on Delta's number. I can't tell you this, that it's not passenger revenue and it's not cargo revenues.
Anyway, I don't know if we know exactly what it is in theirs. They do have businesses we don't have. On the Biden administration, absolutely, Helane. I mean, as Mike had asked about U. K, U.
S. Corridor, We're heavily involved in that, given our relationship given our how large we are to the UK and our relationship with BA, of course. And we're in regular contact. The look, what we support is a risk based data driven approach to restoring international What we've seen is pre departure testing for international arrivals has been in place since early this year. CDC recently eased the guidance for domestic travel for vaccinated persons, following a lengthy study of that issue.
So all these factors are worth taking into consideration As formal guidance for travel is being developed,
I think I know the administration understands that.
I know they understand the importance of international travel and restoring international Travel to the economy, and we all need to go look at this in a risk based way. No one wants to rush for certain, And no one's pushing that either. So anyway, I think it's going to happen gradually, but we're going to do it in a way It works with our government and works with other governments to ensure that it's done in a way where it's safe. No doubt, there's enormous pent up demand for it. And we see that as some other countries have relaxed their restrictions on things Like quarantine.
So we'll keep working on it. Everyone is involved. Working productively, there's no sort of There's certainly no sort of pushback on either sides.
We all want to do
this in a way that makes sense.
Yes. And Helane, the biggest difference on the revenue side is the refinery,
just so you know. Got it.
That's
very helpful. All right. Thank you, guys. Have a nice day.
Thanks, Wayne. Thanks.
Your next question comes from the line of Hunter Mr. Kieh with Wolfe Research.
Hey, thank you. Good morning, everybody.
Good morning.
Hey. So business travel, it's always been obviously A little bit more cyclical and a little risky, a riskier, but higher reward leisure travel tends to sort of endure and recover better. So you knew that, but as you drive out, whatever, dollars 2,000,000,000 in cost, you identify your aircraft. Is there a thought maybe that you don't want as much of that corporate On the other side of this, maybe obviously, I know business travel is important to you, I understand that, but maybe like an eightytwenty leisure Business mix makes more sense for American longer term given your network footprint and the cost savings and the seat densification and and all of the other factors just around the periphery. Does that
make sense? No, we don't think so, Hunter. Again, we think Actually, we're building a network that will serve business better than the other network, and we're excited about that. So as business travel returns, We're building the airline to be there for them, and I think we'll be able to do that as well or better than anybody else.
Okay. Thanks, Doug. And then,
Derek, can you help
If we assume the capacity is at or maybe slightly above 2019 levels.
Yes, from a salary perspective?
Yes, like an absolute SWB, not necessarily unit basis, but on just an absolute salaries basis relative to where you were pre COVID with June, June already And I'll let others start.
Yes. I think we're going to
have a significant amount of retirements as people went out. So When we talk about CASM in 2022 from a cost perspective on all of the groups, we should be down year over year From that perspective, so as we go out throughout the year, we're increasing just because from a salaries perspective, we have Brought everybody back, so it will increase as we go through the Q2, but then we should be pretty flat as we go into the 3rd In Q4, as we have already brought everybody back for the flying that is for the rest of the year. So it should be we should be in pretty good shape as Go forward with that. We all have contracts that are up, so that depends on when those negotiations happen. But in a steady state basis, We'll be pretty flat throughout the rest of the year from a second all the way through the Q4.
Your next question comes from the line of Jamie Baker with JPMorgan.
Hey, good morning, everybody. First one for Robert. So a question I frequently get is how quickly American can ramp up capacity in the event That an incremental market opens up. And in more stable times, it kind of felt like it was about 3 months between something happening Such as a spike in fuel and flown capacity actually reflecting that change. Where are we today?
For example, if the EU announced today that vaccinated passengers are welcome and I'm not suggesting this is going to happen, What month would we see that additional capacity?
So Jamie, I can start and others can chime in. First off, Just in terms of market openings, just realize as well we're dealing with booking curves, right, much different Much different than the domestic where so much of the bookings occur within 30, 60 days. For some of these long haul markets, Even for business related travel, the booking curve is much more extended. So even if markets were to reopen, So much of the actual window for purchasing for the summer has actually passed us by. So we're going to be smart about how we ramp I ask the ups that we make sure that we can match a full demand profile with the aircraft.
And that actually matches pretty well With the kind of timing that's required to get aircraft in position, pilots in position, and Cities that have actually been mothballed in so many parts of the world back up and operating as well. So for us to be actually be able to serve these markets, we're dealing with timelines that are in kind of the 3 to 6 month range.
Tasi, you want to add
anything to that?
The only thing I'll say is to the very specific part of your question, look, in 45 days, We can go and add a market and sell it and operate in a way that we couldn't have done before the pandemic. But to Robert's very good point, that doesn't mean that We should or that we would, because so much of it is especially as markets reopen is what's the best marginal use of the capacity That's out there. And to add a dose of color to it is that, even if so much of Europe opens up right now, The reality is we're, let's call it 60% to 65% of the way through a historical booking curve for Europe. And a lot of the customers that would have gone there have already booked trips to Hawaii or Florida, anyway. So the marginal value of that capacity may be a lot less than what might be the eye, at least in the American system.
Excellent. All good points. Thanks for that. And then second question, and this is related to the 2nd quarter guide. It It feels somewhat reminiscent of last summer's strategy.
And we talked back then about the low marginal cost capacity given PSP and where fuel prices were and why it made sense to fly more than your competitors, This year feels like a more calculated decision, less of a sort of grow or die decision to I think Somewhat paraphrase what Vasu has said in the past, but the question I'm getting from investors is whether this summer's plan is markedly Then when you basically tried something very similar last year, any thoughts on that?
Yes, I'll start and Robert can chime in. Yes, it's dramatically different in that well, first off, last summer, what we saw was What looked to be a real drop in the pandemic rates. And as we saw that, we started to add that. When we got the 2nd spike, demand fell off, and we adjusted accordingly. So All that was the right decision.
It was based on that and nothing else. In this case, we have vaccine and the pandemic and the rates absolutely are falling. And as a result, you see not just us doing this, but virtually every other airline. So anyway, it feels I don't exactly I wouldn't concur exactly what happened last July. Last July, we saw rates falling.
It shows that capacity when they spiked back up, we pulled it back. Now we're seeing vaccinations resolved, something which feels much more permanent. Should that not be the case, you'll see us pull back down again. We can be very flexible, and we will be. Don't think that will be the case.
Nothing about this feels any close to that, but that's the distinction.
Jamie, I would just add one thing to that. Building off of Robert's comments in the section, what you see out there in our Schedule is actually really indicative of where the airline is going. 85% of our capacity this summer will be deployed In domestic, almost 95% of it between domestic and short haul international. And as you look at it, for the last three quarters of the pandemic, Though we've flown relatively more capacity, we've also produced more, in nominal PRASM than certainly what any of our network competitors have. But critically, when you look out there this summer, where the capacity is going is really important.
That's what we call the big four of Dallas, Fort Worth, Charlotte, Phoenix, Miami, are roughly 65% to 70% of our system capacity. And to put a little more color on it, in Q1, while our system produced PRASM that was maybe 16%, 15% to 20% larger than what our network competitors were, Charlotte DFW produced PRASMs that were 30% to 35% larger, with Phoenix and Miami pretty close to the 15% to 20% range So a lot of what you see out there is actually there's some opportunism in there about flying Saturday only trips or leisure heavy trips Things like that, a lot of it is or as Robert said in his opening remarks, orienting the capacity of this network to markets where we can produce
Your next question comes from the line of Dan McKenzie with Seaport Global.
Couple of questions here. Regarding the plan to prepay $8,000,000,000 to $10,000,000,000 in debt through natural amortization, Does that include or exclude the plan to use surplus free cash flow to prepay debt? And the reason I'm asking is it just seems like America could pay down substantially more than $10,000,000,000 over the coming 5 years. And if that's correct, I'm just wondering if you'd be willing to provide sort of a bigger picture number of what that could ultimately look like.
Yes. It does not include anything extra. That's just what we have in amortization going forward. We're not ready to say, but I agree with your premise That our liquidity is sitting at $19,500,000,000 at the end of the quarter. We're going to go through the process Figuring out where we need our liquidity in the short term and where we need it in the long term.
And it's not it doesn't need to be at 19 $8,500,000,000 But as we said, until we see sustainable cash production, We're going to hold the cash where we're at and keep our cash levels higher than we need. We will then use that to go do that. So as I said, we have a lot So once we're ready, we will go down that process and be able to delever more than the $10,000,000,000 But I just wanted to make sure that, that $8,000,000,000 to $10,000,000,000 number, but it's going to happen. It has to happen as we go forward and pay off the debt that's due. Aircraft debt, unsecured, things that are going to come due over the next few years.
But you're right, Dan, it's It can be a bigger number. It's just we want to wait till we get through everything and we're comfortable to move forward.
Understood. Okay. Thanks. Vasu, a fleet that is 10% smaller, so call it 10% less flying. I'm wondering if you can provide some insight on the overhang to margins, say in 2019, with that portion of the fleet.
And the reason I'm asking this question is just based on what Merrickin has done on the cost side, based on what you're doing on the revenue side, it just Seems like normalized earnings in this next cycle are going to be higher than they were in the last cycle. And I'm just wondering if you guys would agree with that or what do we need to keep in mind?
Well, yes, some others can Speak to what our earnings profile might look like, but you are on to something that we have made this airline materially more efficient due to pandemic year. This summer will be almost 150 airplanes down, but in the schedule will only be about 80 or 85 airplanes So all of that delta is efficiency. It's inefficient airplane that went away. It's Superior gauge economics, superior utilization wherever we have it. So if you went back half twenty nineteen, we could fly Roughly that same airline with materially fewer jets, and the network would be oriented a lot more to places where we could produce an outsized RASM.
So that is very much the conscious design. The whole point that in the earlier remarks about the green flag plan is to deliver an airline that can outperform in the future. And we think we've done that, but the proof will be when we do.
Your next question comes from the line of Savi Syth with Raymond James.
Good morning, everybody. I wonder if you could talk about how you're thinking about the cadence of capacity As you kind of move away from the summer and kind of I know there's a lot of uncertainty, but right now a lot of the demand is being driven by leisure. But Should we expect that this level of capacity or better as we move into the Q4?
Savi, I'll just Look, we're
going to be incredibly flexible as we go forward. I mean, we've given a lot of detail as to what we intend to fly this summer. If things progress as we hope with vaccinations increasing and then hopefully international markets opening up and based on what we're hearing from Our corporate customers in coming back to work, back into the office and setting meetings and events, We're optimistic, but it really is dependent on the continued containment of COVID And people getting back to business.
This is Jamie's question. We just have enormous flexibility in this regard. The schedule we have, though, is designed for the current For current leisure based travel, that's why we have April 7s flying around the United States. They're not made to do that. It's not going to happen a year from now.
So as international markets open up, that's where those aircraft will be deployed. And but We're going to wait for the demand to come back before we deploy the aircraft there. But right now, I think the team is doing a really nice job Deploying airplanes where the existing demand is.
Great. And then if I may just follow-up on Partly your response to Hunter's question, just how much of kind of the 2Q costs are related to kind of getting capacity back online versus kind of actually The capacity can be produced in the quarter. I'm just wondering as that kind of how much is in the number today that might wind down as you kind of increase capacity going ahead?
There's really not I mean, we don't have a lot of costs built into the 2nd quarter for to get the capacity back up. Most of the aircraft have been Ready to go. We will have higher costs, but the higher costs in the second quarter are really due to volume driven Costs. So our maintenance costs will be up because our Power by the Hour costs will be up and things like that. But there's Built in cost to retrain, there's no big built in cost to get the fleet back up because the fleet is ready to go.
Our team has done an incredible job of maintaining those aircraft over the last year and having them ready. We didn't mothball any aircraft. We didn't put them in the desert. We don't have to bring them back and spend a lot of money on engine costs and anything like that. So there's not a lot, I would say in the second Quarter, to build the airline back up other than volume.
Your next question comes from the line of David Vernon with Bernstein.
Hey, good morning guys. Robert, I've asked you, maybe could you help us understand The cadence of sort of leisure fares, what I'm trying to get at is where we are today in sort of 1Q on a sort of like for like distance Neutral basis, the per fares versus kind of a pre crisis level and then how the fare environment is changing as we move into the summer months? Obviously, we're adding a bunch of capacity, a bunch of demands coming in. I'm just trying to get a sense for how the revenue management systems are working in terms Of setting fares, what would be expecting to see in sort of 2Q, 3Q?
Hey, Vasu, you can help me with the real specifics. I'll just
say this though to kick it off, which is
Being able to leverage yield is dependent on having base bookings. And from that perspective, as I said in my remarks, Fortunately, we're seeing not only bookings, but real load factors that actually allow for
Some optimism about where pricing is going. Subhasu? Yes, that's right, David. We I have seen an inflection point with yield, which is for us maybe the thing that we most draw on in terms of encouragement. To put some context to it, when we came into the Q1 of this year, Our selling spares were roughly half of what they were a year ago.
That is for half of last year's price, you could gain access to the American Airlines As we go out into the summer, there's something like 90% of where they were a year ago. And indeed, in our leisure markets, And by leisure, to be really specific here, we count that as a short haul international and also all the obvious domestic markets, Vegas, Orlando, Florida, things like that. Our seat capacity there is up about 25%, but there our yields are about 95% to 100 Our book deals are up 90% to 100% of what we were taking a year ago. And so that for us as much as anything is really key because We are at a place now. If you'll notice the commentary, we're not spending a lot of time talking about bookings because in our system, Engineering bookings is not the issue anymore.
So much of it is about getting yields back and getting RASMs back, especially in our domestic system. As big as we are historically in our network and the way we're shaping it this summer, domestic rousing is key to our success. And given what's happening with traffic, yield is super important. So we are doing all we can to go in and I yield up wherever we see it.
So just to clarify, were you referring to 95% of 2020 levels or 2019 levels?
2019 level, sorry. All my comments are after 2019. I apologize.
Yes, that was slightly frightening. Just as maybe a follow-up, Derek, you mentioned before managing the airlines to a little bit lower level of leverage. How do you think about talking to your Board about the financial liability risk when you've got all these unencumbered assets? I think one of the things That maybe surprised a lot of us is that there were a lot of assets that you can tap into for debt and credit. How do you think about managing and Measuring that or maybe communicating that to the market going forward, so that we maybe have some visibility into additional liquidity that you could tap Outside of like the traditional kind of debt to EBITDA metric, just given the fungibility of the assets that are in the network, Particularly if you buy down more aircraft with cash.
Yes. I think number 1, we're not looking for more liquidity.
So that's
The good news now is, I come in every day and not have to go look for liquidity. But we will keep everybody up to date on the unencumbered assets. And as We look forward, and if we have excess cash, we're going to manage it properly to We need to figure out what is the best thing to pay down as we move forward. So we are going to have conversations with the Board on liability management that we're going to Discuss what are we going to do over the next year or 2 years, that if we have excess cash, What do we pay off and what's the best things to unencumber as we move forward? In today's environment, our unencumbered assets are $3,700,000,000 They grow So we have the ability to do more, but the good news is, we're not looking to do more right now, as We go forward.
So I think the key is as we move forward, what is the liquidity levels we need to be at? What are the Ratios, we want to be at as we move forward and how do we best do that over the time period with any excess cash that we have above the amount that we need. And so we'll be having those discussions over the next Every board meeting and we'll be discussing that with our board for a period of time as we move forward through this recovery.
Your next question comes from the line of Myles Walton with UBS.
Thank you, Martin. I was wondering
to clarify on the longer looking to raise liquidity, would you also
be comfortable saying that you have no interest at this point accelerating the deleverage with additional equity. And then maybe if you can just give us a bit of Color on the walk from 17.3 to 19.5 and the PSP contribution in there and if that's as simple as sort of a $1,000,000,000 Underlying cash burn offsetting the PSP. Thanks.
I'll take the I think I can do the second one, but Derek
might be able to do it better.
So anyway, on the first point, yes, when we say we're not looking to raise an answer, we're not looking to raise financing And as Derek said, we believe we know that we have just through Our normal amortization schedule $8,000,000,000 to $10,000,000,000 of debt going down over the next 5 years. And as was noted by Dan McKenzie, we We'll have the ability to do a good bit more than that so long as the recovery continues in the path that it appears to because we'll end up with more cash than we needed. So That's how we would choose to delever over time. And then again, I'll try to show quick because I'm already talking, but Derek can probably do it better. Yes.
I think what you're asking is if you have the PSB payments and you look at our cash, You actually see that it's not as much as the PSP. The reason for that is seasonality of First off, the seasonality of sales is not as strong in the second quarter as the first. And we also and the debt payments are Larger in the second than the first, but even if you exclude debt payments, we're still cash positive in the second quarter excluding debt payments On that forecast, all that That is interesting. That is interesting. Thanks, Terry.
So that's where it is, seasonality. I'll use this to get on my little soapbox. This is why, by the way, There are GAAP principles. It's because cash flow has a lot of seasonality. So We're going to be having there was a real reason at some point when we were talking about cash burn, cash burn, cash burn because the market had real interest in where people's cash flows were and how much cash they were burning, we're well past that.
And if we keep talking about cash burn, we're going to keep confusing people because There's huge seasonality in cash in airlines. There's huge seasonality in debt payments. And when we were when All of us were being large profits. We still have quarters where we had declines in cash. So that's why you go back to GAAP principles.
Include things like accruals and smoothing and matching principles, so that you can keep yourself actually know what's going on in the airline. So anyway, that's one of those soapbox. I'm glad we're going to stop
Your next question comes from the line of Stephen Trent with Citi.
Good morning, everybody, and thanks very much for taking my question. Most were answered, but I was just curious what you guys are seeing. If you could give a little more color, I think you mentioned that you're going to Hire some pilots later this year. Any color with respect to what this could mean from a headcount perspective? And is American planning to apply any ESG type filters on the hiring as some of your competitors have telegraphed They want to diversify their base.
So yes, look,
it's great news that we're looking at Hiring pilots later this year. And it's due to a number of factors, most notably that we've had So this is going to put us in position to fly and be flexible where we need to be. From bringing pilots on, we're incredibly excited about the work that we've been doing both at the mainline airline and within our Regional Airlines as well. We also have been marching down the path to ensure That those that are coming into our regional airlines, our wholly owned and also our mainline really represents the face of the country, Most notably, ensuring that we have more women and people of color that are taking the ranks of this of the pilot ranks. And so you'll see that we have a debt program and it now has Over 350 people in it, that's just going to grow in the future.
And as we look forward, We anticipate getting a substantial number of our total pilots brought in through that program. So very excited about where we're headed. And that program is by and large designed to bring in again people of color and females into the Very helpful. Appreciate the color. Thank you.
Sure.
This completes our analyst portion of the Q and A. We will now move to media Your first question comes from the line of Alison Feiner with Wall Street Journal.
Yes, I was wondering if you could talk a little bit about the latest issue with the 737 MAX and Whether that creates any challenges for you all in kind of rebuilding confidence in the plane that something else has come off after all the setting that happened, failed to find The latest
problem. Ali, it's Robert. Look, I am Really pleased with Boeing and the industry. We coalesce around safety. And so with the MAX and with any aircraft, it's Critically, it's important that we take the right steps when there's any potential concerns.
And in the case of the 737 MAX And these at least for us, these 18 aircraft, we have a pretty good idea of exactly what the issue is and the remedies So the work that we're doing is with Boeing and the FAA. We're waiting on Service bowls to be developed, airworthiness direct us to be dropped and then getting the work done in those aircraft back up in the air. We hope that that's just in a matter of weeks and not longer. In terms of the impact on our schedule, look, we've been flying the MAX now for 4 months back and incredibly successfully, passenger reaction has Really, they like the product. They like the aircraft.
And as we take a look going forward, even with 18 aircraft Out of service right now, there is virtually no impact to our schedule. We've been able to use other aircraft to fund The needs for the airlines. So overall, I think we've as an industry with Boeing and certainly with the FAA, we've made all the right moves. And I have great confidence that this aircraft is going to be in the skies and the safest and most reliable for years to come. Thanks.
I mean, have you seen any increase in book away on the MAXs that are still flying? Like, is there any sign that customers have any elevated concerns?
None at all.
Thank you.
Your next question comes from the line. Your next question comes from the line of Leslie Joseph with CNBC.
Hi, Leslie.
You mentioned that bookings were ticking up. Of course, it looks like a much stronger summer than last year. What are your projections for after summer vacation season starts To wane, do you expect a lot of that leisure demand to go away? And do you think there's going to be enough business demand to replace it?
Hey Leslie, this is Vasu. Thanks for
the question. Look, it remains to be seen, throughout the pandemic, it's always Difficult to forecast or prognosticate that far out and those things are recovering, that difficulty remains. So it remains to be seen as Robert and Doug mentioned earlier, though for us, the real lever is our capacity. And if things change, we can change with it. And Over the last year, we have any number of tools and techniques to go and make the airline pretty nimble
and
responding to it. So First things first is to manage the summer and then we'll treat the fall as it gets closer.
Okay. And then the bookings that you have so far, are you seeing that They drop off after August or July or is there any one point where you see kind of a slowdown?
We're seeing pretty consistent Bookings growth throughout periods indeed, where bookings are falling, it is a conscious decision on the part of the airline So that we don't do things like, for example, sell out Thanksgiving week too soon. But we see continued strong bookings as we go out there. We just want to make sure they're coming in, at fair to make the home sustainable.
Your next question comes from the line of Mary Schlangenstein with Bloomberg News.
Hi, how are you?
I want
to ask first real quick, if I can go Alison's question on the MAX. I wanted to see if you have any information or can comment on if there's the frustration level on the fact that you haven't Yes, gotten a service bulletin on that repair, which originally the talk was that those repairs would be fairly simple and straightforward. But now it's been weeks and you don't have anything yet from Boeing.
Not at all. It's been the FAA's job. And they do it well, and we work really well with them. And as Robert said, we all call us around safety, and that's part of the process. We're not pleased they're frustrated.
Okay. Thank you. And if I can also ask, Vasu, if you could talk a little bit about the wide bodies domestically and what planes you're flying where domestically? Yes.
Mary, I could talk a little bit about it, but really the bigger story on the Wi Fi is just how Frankly, how dynamic the airline has gotten in managing capacity around the system, which is frankly easy to do in the world of Scheduling, it's a lot harder to actually deliver it for our customers and do so reliably in a way that they like. And so through the pandemic, as international Demand this call and sometimes even as close to 45 or 60 days from departure, we've been taking out international flights. But as we've seen strong bookings, say, Miami or what have you, we've been putting those wide bodies in there. So a big part of it is very dynamic and it changes a lot. What we're most encouraged about is wherever we've seen them, Indeed, we've been able to deliver it on short notice and per our earlier comments, made aware of customers like our customer satisfaction Scores have indeed never been higher.
The only real method beyond that to where the wide bodies go this summer is they are Concentrated disproportionately and we call hub to hub markets, those are markets like Miami, the DFW and also our big Sunbelt market, Especially in Miami. So we're now in a place where Miami to New York is all on wide bodies, Miami to Los Angeles all on wide bodies, Miami to Boston, Largely on wide bodies too. So we don't anticipate very many material changes versus what you see in the schedule. But If things change in international, that's a real lever for us. The marginal capacity of that is probably better spent at domestic right now than what it is in Mr.
Waltham.
Great. Thank you very much.
Your next question comes from the line of David Koning with The Associated Press.
Thank you. Good morning, folks. I guess this is for Vasu. I wanted to follow-up on what you were saying to David Vernon On fares, the 90% as you approach this summer, the 90% of 2019 levels, Is that due in any part to more business travelers or is it pretty much just that you can get higher fares from leisure travelers? And then to follow-up on that, Is that pretty much leisure fares across your system, domestic and short haul international?
Hi, thanks for the question. And look, to be clear that 90% of the book yields we're taking right now, there could be any number of factors that impact what they actually come in at once The summer is all said and done. But yes, it is primarily driven by leisure demand growth. We are seeing signs of business growth, but it is it's coming off of Small base and it's still a pretty small part of our system total. So most of the yield growth we're seeing is from the leisure travel segment.
And frankly, a lot of what yield growth is there is just because, we're seeing a lot of cases where especially on peak holidays and things like that, Where frankly, the demand for seats is greater than supply of seats. And so that's what produces higher yields.
And then that's pretty much system wide?
No, it's not. Our system is really uneven. It's much more heavily concentrated among Our Domestic Leisure and Short Haul International Markets.
Yes.
Okay. Thanks.
Your next question comes from the line of Dawn Gilbertson with USA TODAY.
Hey, Dawn.
Hey, good morning. I want to ask
a question for you Vasu. State Department earlier this week Raised the travel alerts to their highest level for most countries. I'm wondering if you have seen or expect to see Any impact on bookings? And if not, why not?
Hey, John, good to hear from you. I'll start and others can add. But It remains to be seen in the last, whatever, it's been 48 hours, maybe 96 hours since it's happened. It's been too early to tell what's going on and what its impact that the bookings might be. If indeed there is one, we have ample tools to be able to adjust the airline, should it come to pass.
But then also the last thing I'll add to it is, for us, for my earlier comments, the way we've configured the airline this summer It's very much to make it resilient to just these kinds of changes where 85% of our capacity is in the domestic system In large part because we realized that the recovery is not just going to be choppy from a demand perspective, but choppy from a market opening perspective as well. And so By building the plan like that, it's something that we can deliver upon for our team and our customers and create a lot more Resilience
as the world recovers.
Thank you.
Your next question comes from the line of Kyle Arnold with Dallas Morning News.
Good morning, guys.
I appreciate it. Yes, I know you have some plans and you announced the plans to Hi, guys. Hi, good morning.
Hi, good morning. Hi, good morning. I'm going to start hiring some pilots. Do you
guys have any will there be any need going into the year for other employee groups, flight attendants or ground workers or gate agents?
The answer to that is yes. And you'll see that throughout our network. And it's especially from a Passenger service team member or those folks that work on the fleet side of things, we're going to have needs throughout the network, but it's really Just based on location needs more than anything else. And too soon to say anything about where we stand with I'll fight it, Dennis, but I can tell you that I anticipate that there will be a need there as well.
The part of this is kind of we have so many of our presidents This opportunity to take leaves, that what we're doing rather than hiring new fire tenants is bringing fire tenants back from leave earlier than And their leave would have extended. So having them come back off of leave certainly would have otherwise. Once we get through that, we'll need to hire, but we're not there yet. Thanks.
Your next question comes from the line of Edward Russell with SkyWest.
Hi, thank you for taking my question. Robert, could you tell me a bit more about how many aircraft America needs to reactivate Why all of it's fleet this summer and what types are still needing to be reactivated?
We have aircraft that are Ready to go. Of course, we have we're as Derek mentioned in his comments, we're accelerating our reconfiguration programs, Our harmonization programs on the 737 and A321. So we'll have some aircraft that are caught up in that. But the way to look at our fleet is that they're all out there And maybe not utilized as much as they will be, but we feel great about the work that our maintenance team has done to keep everything ready to Fine, when necessary.
So just a follow-up, you don't have any aircraft temporarily Stored any more at this point? Is that the way to characterize it?
Correct. Yes.
Okay. Thank you.
And at this time, I would now like to turn the conference back to Doug Parker for closing remarks.
Fantastic. Thanks for your interest. If you have any further questions, please let us know. Appreciate your time.
Ladies and gentlemen, this concludes today's conference. Thank you for participating. Have a wonderful day. You may all disconnect.