Robert Isom
Chief Executive Officer at American Airlines Group
Thanks Scott. Good morning, everybody. Thanks for joining us. This morning, American reported a third quarter GAAP net income of $483 million, excluding net special items, a third quarter net income of $478 million. It produced revenues of $13.5 billion, which sets a new record for any quarter in the history of American Airlines. When I took on the CEO role in March, I told you American was going to do two things this year, run a reliable operation and return to profitability. It's taken us a bit longer than we would have liked to get where we want on the operations side, but we're pleased with how the airline is performing to date and we know we're on the right trajectory.
As far As profitability, we've now delivered two profitable quarters in a row and we're forecasting a profitable fourth quarter with continued strength in demand. We cannot have made either of those commitments. We weren't sure we delivered on them if it weren't for the hard work of the American Airlines team. They do a phenomenal job every day taking care of our customers and each other. Their teamwork, resiliency, and determination allow us to continue our focus of running a reliable operation and sustaining profitability.
We keep that focus because in our business reliability is everything. It's the foundation of the service we provide our customers. A predictable solid operation changes [indecipherable] entire work experience of our team. Reliability also enables our long-term profitability and achieving sustained profitability is how we will meet our debt reduction targets and continue to invest in our team and deliver the network products and services our customers want.
With that in mind, let's talk more about the third quarter specifically. Our record quarterly revenue of $13.5 billion is a 13% increase over 2019. Notably, we achieved this record revenue while flying nearly 10% less capacity than we did in the third quarter of 2019. We're pleased to have exceeded our initial guidance on both revenue and pre-tax pre-tax margin in the third quarter despite constraints still facing American and the rest of the industry.
American third quarter results including our record revenue performance are significant considering the macroeconomic uncertainty facing so many people. Demand remains strong and it's clear that our customers in the U.S. and other parts of the world continue to value air travel and the ability to reconnect post pandemic. Importantly, many of the demand trends we saw emerged during the pandemic are becoming more consistent and shaping our commercial focus for 2023 and beyond.
Leisure and business revenue remain incredibly strong again surpassing 2019 levels in the third quarter. Demand for small and medium-sized businesses and customers traveling for a combination of business and leisure continue to outpace the recovery of managed corporate travel. As that revenue continues to build, they'll be additive to an already strong base business demand, let's say, small and medium business and blended trips. That as well as a return of long-haul international travel leaves us very bullish about overall demand even in an uncertain economic environment.
The changing nature demand provides an opportunity to rework our commercial offerings to better meet the needs of all customers and create a more resilient and profitable business. We continue to develop the most comprehensive airline network in the world. As we've shared on previous calls, over the past few years, we have made the decision to sit quietly simplify our fleet and network focusing on our flying and where we can create outsized customer value and working with our partners to create choices and value in areas where it's cost-prohibitive to do so ourselves. This means prioritizing the flying that can best generate a return to date. Now bringing back flying that was only marginally profitable before the pandemic or that we had hoped it would one day generate return. It also means using our partners to fill-in the gaps and deliver a seamless network to our customers. That work continues, particularly with our Northeast alliance with JetBlue, our West Coast international alliance with Alaska, and our Atlantic and Pacific joint businesses.
To better match our product offering to customers and network, we recently announced [indecipherable] our long-haul fleet that will give American an unrivaled premium experience among U.S. carriers. Starting in 2024, customers will see new flagship suite seats and our Boeing 777 300ER aircraft as well as our new Boeing 787-9 and Airbus A321 XLR deliveries. With these new interiors, premium seating on our long-haul aircraft will grow by more than 45% by 2026.
We're working to give our customers better choices and more access to the world's largest and best travel rewards program that's advantage. It's clear that customers want more when they shop for travel more choices and ways to earn and use miles and more incentives to earn miles even when they don't travel.
So turning to our operations, as I mentioned at the outset, operating reliably is critical to everything we do. We have the youngest fleet and the best network and partners in the industry but we can't take full advantage of those assets if we aren't running reliably. That's why we continue to invest in our operation with additional resources and new technology and those efforts are paying off. Despite a challenging operating environment with hurricanes in Florida and the Caribbean, flooding in Dallas-Fort Worth region, we restored our operating reliability to pre-pandemic levels in the third quarter. And we did it while flying a schedule that was 25% larger than our closest competitor. We have delivered record on-time arrival rate and completion factor so far in October and expect to carry that momentum through the upcoming holiday season and beyond.
Hurricanes Fiona and Ian were devastating for so many including the communities we serve and the places our team and customers call home. The American Airlines team stepped up in amazing ways to take care of our customers and each other during very challenging circumstances. Through our advantage program and the partnership with the Red Cross, almost $4 million has been raised to support victims of the storms and American continues to support our team through the American Airlines Family Fund. The storms moved through quickly, but they had an outsized impact on American given the size of our operations in Florida. We had canceled more than 1,500 flights for the last four days of September given the impact of Hurricane Ian. We estimate right now that these storms reduced revenue by about $40 million.
As we close out the year and look to the first quarter, we continue to size the airlines for the resources we have available and the operating conditions we face. This approach in our strong operational performance in September and so far in October give us a lot of confidence as we head to the busy travel holiday season.
In closing, we remain very encouraged by the continued strength and demand and the trends we're seeing across the business. American has the best team and most efficient assets in the industry and we have built-in airline that can be successful in many different demand and economic environments. Looking ahead, we're focused on investing in our operation, our network and our partnerships to ensure we can continue to deliver for our customers and of course we will do so while remaining focused on achieving sustained profitability and reducing our debt. And with that, I'll hand it over to Derek.