Robert Isom
Chief Executive Officer at American Airlines Group
Thanks, Scott, and good morning, everyone. Thanks for joining us. I want to start by thanking the American Airlines team, which has done an amazing job of running our airline, especially during very challenging operating conditions in the past few months. They managed significant weather, both thunder storms and extreme heat in many parts of the country. Customers continue to come back to travel in record numbers. And our team has adapted to one of the busiest summers that we've ever experienced and they've done so with grace, professionalism and a level of commitment to our customers and each other, it is second to none. Every single day, I hear from our customers about something incredible that our team has done. We're so proud of their work and grateful for their support. I also want to thank and acknowledge our key partners in the US government. Secretary Mayorkas, Secretary Buttigieg and their teams at the FAA, TSA, CVP as well as the air traffic controllers at NATCA. They've been right there with us and have worked through these difficult operating conditions. The extraordinary surge in demand for air travel has significantly impacted them as well, and we appreciate their consistency and professionalism. All of us have to acknowledge that there are challenges in the National Airspace, particularly in high traffic locations like Florida and the Northeast, but I'm grateful for the sheer commitment that we have in the public and private sectors and management on the front line to facilitate the efficient return of travel. American served 53 million customers in the quarter, and we couldn't have done that without everyone pulling together. As we have shared previously, we have two primary goals this year; running a reliable operation, and returning to profitability, and that's the entirety of our focus. We've made a lot of progress on running a reliable airline, but we have still some work to do, and I'll touch on that more in a moment.
The big news is this: we're really pleased to report a quarterly profit for the first time since the start of the pandemic, that's two-and-a-half years, that's driven by the strong demand environment and the hard work of our team. We're also pleased to have hit our pretax margin guidance despite a challenging end of the quarter and a significant run-up in oil prices. American reported a second quarter GAAP net income of $476 million. Excluding net special items, we reported a second quarter net income of $533 million. American produced revenues of $13.4 billion in the second quarter and that's an increase of 12.2% versus 2019 and a record for any quarter in the company's history. And let me repeat that: That's a record for any quarter in our company's history. These results were achieved while flying 8.5% less capacity than we did in 2019. Importantly, these results are an indication that our actions are producing the expected results. Early in the pandemic, we made a conscious decision to simplify our fleet and network, focusing our flying where we could create outsized customer value and using partnerships to augment that service. In the second quarter, some 70% of our flying was in American's areas of strength, our Sunbelt hubs, Mexico, Caribbean, Latin America and London. This flying outperformed the industry as we offer customers more options than any other airline. Our domestic partnerships are also producing for our customers and for us. As a matter of fact, our unit revenue performance in JFK and Los Angeles outperformed the system in the second quarter. Customers are flying in different patterns than they have previously, and that's creating opportunities for us.
System business revenue is now fully recovered compared to 2019, with revenue from small and medium businesses and customers exhibiting a blended behaviors that were traditionally associated with both business and leisure continuing to outpace the recovery of our managed corporate revenue. The majority of this revenue growth has come directly through our website, bypassing traditional channels. Further, leisure demand surpassed 2019 levels in the second quarter, and customers continue to show us their increasing appetite for travel. Enrollments in our loyalty program continue at record levels, and spend on our co-brand cards is growing at a greater rate than ever before. Looking forward, we will limit capacity to the resources we have and the operating conditions we face. We will continue to orient our flying to create value for our customers. And as always, we will remain nimble to ensure that we are best positioned to capitalize on continued demand strength. Now turning back to reliability. After running a solid operation in April and May, headlined by a strong Memorial Day, we had challenges in June. June was a difficult month for the entire industry from an operational perspective, with extreme weather impacting every major hub and air traffic control challenges in certain parts of the country. At American, we encountered significant weather on 27 of the 30 days in June. That weather resulted in ramp closures, ground stops, ground delay programs, airspace flow programs, which had a ripple effect throughout our operations.
Despite the challenging operating environment in June, or D0, as departures on time, A14, arrivals within 14 minutes and completion factor for the full quarter were better than the second quarter of 2019. Our team achieved this while flying a second quarter schedule that was more than 25% larger than our closest competitor on a departure basis. American operated more than 0.5 million flights in the quarter. That's an 8% increase over the second quarter of 2021 with a load factor of 87%, which is 10 points higher than the second quarter of 2021. While June was challenging, we have seen improvements so far in July, including over the busy Independence Day weekend. American finished the holiday period with a combined D0 A14 in completion factor, all above goal and in line with our pre-pandemic performance, while operating a July four holiday schedule that was 30% larger than our competitors as measured by total departures. Our operational performance for the full quarter and the results we have delivered in the first few weeks of July give us confidence moving forward, but we still aren't where we need to be. And we have a lot of flying ahead of us still in the summer. So we are investing in our operations to ensure we meet our reliability goals and deliver for our customers. We've taken proactive steps to build additional buffer into our schedule for the rest of the year. As I said a minute ago, we're sizing the airline for the resources we have available and the operating conditions we face, and we will make other changes as needed. Even with these adjustments, American still offers customers the largest network of any US airline with an average of more than 5,400 daily departures.
So I want to close by reiterating that I'm tremendously excited about what lies ahead for American. We're encouraged by the trends we're seeing across the business, and we've built an airline that can be successful in a number of different demand and economic environments. Our second quarter results and strong revenue production despite challenging conditions demonstrates that our plan to return to profitability and deliver a good operation for our customers is working. We have the strongest assets in the industry, and the work that our team has accomplished to build and deliver the most comprehensive network and the business is paying off. And with that, I'll turn it over to Derek.
