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American Airways Group (NASDAQ:AAL)Q1 2020 Earnings CallApr 30, 2020, 8:30 a.m. ETContents: Ready Remarks Questions and Solutions Name Contributors Ready Remarks: OperatorGood morning, and welcome to the American Airways Group first-quarter 2020 earnings name. At this time’s convention name is being recorded. [Operator instructions] I’d now like to show the convention over to your moderator, managing director of investor relations, Mr. Dan Cravens. Please go forward, sir.Daniel Cravens — Managing Director of Investor Relations Thanks, Cindy. Good morning, everybody, and welcome to the American Airways Group first-quarter 2020 earnings convention name. With us within the room this morning, we have now Doug Parker, our chairman and CEO; Robert Isom, our president; and Derek Kerr, our chief monetary officer. Additionally on the decision for our Q&A session are a number of of our senior execs, together with Maya Leibman, chief info officer; Steve Johnson, our EVP of company affairs; Don Casey, our senior vp of income administration; and Vasu Raja, our senior VP of community planning. The main target of immediately’s name will likely be our response to COVID-19. Like we usually do, Doug will begin the decision with an outline of our quarter and the actions we’re taking. Robert will then comply with with commentary about our staff members, clients and community. Derek will then stroll us by means of the main points on our fleet, price outlook and liquidity.After which after we hear from these feedback, we’ll hear — or we’ll open the decision for analyst questions and lastly, questions from the media. To get in as many questions as attainable, please restrict your self to at least one query and a follow-up. Earlier than we start, we should state that immediately’s name does comprise forward-looking statements, together with statements regarding future revenues, prices, forecast of capability, fleet plans and liquidity. These statements signify our predictions and expectations as to future occasions, however quite a few dangers and uncertainties might trigger precise outcomes to vary from these projected. Details about a few of these dangers and uncertainties could be present in our earnings launch that was issued this morning, together with our Type 10-Q as of March 31, 2020. As well as, we will likely be discussing sure non-GAAP monetary measures this morning, which exclude the influence of bizarre objects. A reconciliation to these numbers to the GAAP monetary measures is included within the earnings launch, and that may be discovered on our web site. A webcast of this may even be archived on our web site and the knowledge that we’re providing you with on the decision is as of immediately’s date, and we undertake no obligation to replace the knowledge subsequently. So thanks once more for becoming a member of us. At this level, I will flip the decision over to our Chairman and CEO Doug Parker. Doug Parker — Chairman and Chief Government Officer Thanks, Dan. Good morning, all people, and thanks for becoming a member of us. Earlier than I am going to the numbers, I need to provide just a few ideas on the difficult instances that we and our total business are dealing with. The spirit and efforts of the American Airways staff throughout this disaster have been nothing wanting extraordinary. The human and financial toll of COVID-19 has been monumental. And like others, we have misplaced members of our personal staff, and our hearts are heavy for his or her households, buddies and coworkers. However within the face of this nice loss, the American staff continues to rise to the problem and meet the wants of our clients and the communities we serve. They’re placing on their uniforms each day and transporting first responders to the place they’re most wanted and different People to the place they really feel most protected. Our staff members are frontline heroes on this battle, and they’re what makes American nice. So on behalf of the whole management staff, I need to thank our staff from what they proceed to do each day. Turning to this quarter’s outcomes. By far, an important latest occasion for our business’s long-term viability has been the passage of the CARES Act, which offers as much as $50 billion of a lot wanted liquidity to U.S. airways. This unprecedented help acknowledges the value that industrial airways present to our nation. It’s designed to maintain our hardworking staff members employed and able to serve the flying public at any time when we begin transferring once more. So I need to once more thank the administration and Congress for his or her distinctive help of airways and our workers. And I believe it is necessary to notice that this might not have been attainable with out a large quantity of labor and advocacy on behalf of airways and our staff members. So I wish to additionally thank Nick Calio and his staff at A4A, in addition to my fellow A4A CEOs: Ed Bastian, Robin Hayes, Peter Ingram, Gary Kelly, Oscar Munoz and Brad Tilden. We work in an intensely aggressive enterprise, however in response to this disaster, we pulled collectively to avoid wasting our business and save jobs, and I am proud to have been part of it. We additionally had nice help from our staff members and the unions that signify. So I wish to additionally publicly thank all of our American Airways union leaders, in addition to those that signify different airline workers. We completely couldn’t have gotten this achieved with out their management and a joint want from all of us to combat for our staff. In order necessary because the CARES Act is, it definitely would not clear up every part. CARES offers the business the respiratory room we have to handle by means of the worst components of the disaster and to pay our staff members that we in any other case would have wanted to furlough. But it surely doesn’t repair the core downside that every one of us have, which is income era. Trade revenues have fallen an estimated 95% 12 months over 12 months in April. And whereas nobody has an ideal crystal ball, I believe all of us anticipate that restoration will likely be gradual and demand for air journey will likely be suppressed for fairly a while. So on this setting, there are three vital points that any airline should handle: First, making certain the protection and luxury of the staff members and clients; second, sustaining ample liquidity to trip by means of a sustained disaster; and third, planning for an unsure future. We at American are taking aggressive steps in every regard. I will present a fast overview, after which Robert and Derek will present extra element on every. First, because it pertains to security, we dramatically elevated the frequency and depth of our plane cleansing. We’re limiting seat gross sales on each flight, together with not permitting half of the principle cabin center seats to be assigned. We have decreased meals and beverage service on planes to restrict contact with others. As of Could 1, we’ll start the gradual ramp-up of offering clients with PPE kits, which embrace masks and sanitizing wipes, in addition to requiring our flight attendants to put on masks in flight. Turning to liquidity. These efforts for all airways are available in two units of initiatives: elevating cash and conserving cash. On the primary, American’s absolute liquidity place could be very sturdy. We ended the primary quarter with $6.Eight billion in liquidity and American’s share of the CARES Act proceeds is $10.6 billion, which leads to $17.Four billion whenever you mix our quarter-end liquidity and CARES Act entry. And importantly, exterior of our just lately organized $1 billion 364-day delayed draw time period loan, we would not have any significant non-aircraft debt amortization funds for greater than two years. So we really feel assured with that stage of liquidity, however on this unsure setting, we’ll proceed in search of further sources. Now we have greater than $10 billion of unencumbered property at our disposal. And that excludes the value of our AAdvantage program. Our plan is to first work with the Treasury Division to safe our CARES Act loan of $4.75 billion at enticing charges after which discover different initiatives as wanted from there. As to conserving cash, Derek will describe our initiatives in additional element. We have enacted a complete cash conservation plan to get rid of all pointless working and capital expenditures. We anticipate it will scale back our every day cash burn price from an anticipated common of $70 million per day within the second quarter to roughly $50 million a day for the month of June. Because of all that, we anticipate to finish this quarter with roughly $11 billion of liquidity and a big quantity of unencumbered property nonetheless in place. And that forecast assumes little to no enhance in demand for air journey all through the quarter. Third, and maybe essentially the most tough factor for airways to do presently, is to correctly plan for the longer term. We’re utilizing this chance to make our airline stronger in plenty of methods, and we anticipate to emerge a extra environment friendly and extra streamlined airline. And to try this most effectively, we have to start making choices quickly about how giant an airline we need to run in the summertime of 2021 and past. As you all know, issues like plane availability, pilot coaching and upkeep packages would not have quick planning horizons. That is at all times been a problem in our enterprise. However immediately, these capability plans are severely difficult by the acute uncertainty concerning the anticipated stage of demand for air journey, not only for the following few months, however for the following few years. So we at American determined to err on the facet of being smaller than we’d like relatively than bigger. As Derek will describe, and as our first-quarter financials point out, we made the choice to retire our total 757, 767 and A330-300 and Embraer 190 fleet, in addition to sure regional plane. These choices alone will scale back our 2021 fleet depend by roughly 100 plane versus our prior plans, and we’ll proceed to evaluate additional reductions as we transfer ahead. So in conclusion for me, these are unprecedented instances for our world, our nation and our business. The uncertainty concerning the future weighs on everybody and for an excellent purpose. There is no method to overstate the gravity of the scenario for the airline business and tough choices lie forward for all of us. However ultimately, the management that obtained us by means of the CARES Act course of would be the management that will get us by means of the approaching months and years, leaders who perceive the significance and the the Aristocracy of what our folks do and, subsequently, work selflessly in help of them and facet by facet with them. I am assured our business will combat by means of this efficiently, and I am significantly assured that American Airways will likely be amongst these main the best way. I’m humbled and honored to be part of the American Airways staff, and I am extremely proud to face alongside them immediately and into the longer term. With that, I’ll flip it over to Robert.Robert Isom — President Thanks, Doug. And good morning, everybody. As Doug mentioned, the downturn in demand for air journey has been dramatic and in contrast to something we have ever skilled. Throughout the business, cancellations have quickly outpaced new bookings. Whereas we have now confronted dire circumstances previously, the American staff has at all times persevered, and I am assured we’ll achieve this once more. The protection of our staff members and clients is paramount. We’re taking a proactive method to make sure that our staff is protected by lowering contact factors, offering private protecting tools like face masks and gloves and provisioning sanitizer and wipes. These steps are vital to make sure our staff feels protected and may instill that confidence in our clients as nicely. Like Doug, I am humbled by our staff’s spirit and proud to face by them in these difficult instances. American continues to offer vital air service to those that must journey in the course of the pandemic. From the outset, we have now met or exceeded CDC tips, and we’ll proceed to coordinate with public well being officers on all well being and security necessities. To boost our already thorough cleansing course of, we have applied further security measures to make sure plane cleanliness and to accommodate social distancing. Particularly, we’re enhancing our cleansing procedures by means of expanded fogging onboard and using EPA-approved disinfectant in high-touch areas. Onboard, this consists of every part from bins and galleys to tray tables, arm rests and seatbelt buckles. In airports, it consists of the gate areas, ticket counters, in addition to different areas frequented by our clients and staff members. We have additionally bought face masks for frontline staff members and made them required for combat attendants beginning Could 1. And we have now began distributing sanitizing wipes or gels and face masks to clients. This may develop on all flights as provides and operational circumstances permit. And to that finish, American Airways strongly encourages clients to put on face masks after they journey. Moreover, we have now briefly relaxed our seating insurance policies and adjusted our airport procedures. Via Could 31, American will restrict the variety of passengers on every plane. We won’t assign 50% of the principle cabin center seats on each flight, and we’ll use these seats solely when crucial. Our staff may even reassign seats to create extra space between clients or to accommodate households who must be seated collectively. We’re additionally utilizing stanchions to encourage social distancing at gates, ticket counters, and we have decreased onboard meals and beverage service to restrict contact. To offer clients as a lot piece of thoughts as attainable with regards to planning journey, we have prolonged waivers to anybody who has journey occurring by means of the top of September, permitting them to vary plans and journey by means of December 2021 with out incurring any change charges. Moreover, we have now waived change charges for purchasers who bought new tickets by Could 31, 2020, for future journey. And for our company clients, we have launched extra versatile journey waivers and free identify modifications. We acknowledge the interruption of journey for most individuals, so we’re making it simpler for our clients to earn AAdvantage Elite standing this 12 months. And we have prolonged 2020 AAdvantage standing into early 2022 for all members. Moreover, we have now prolonged all paid Admirals Membership memberships by six months. We stay dedicated to creating positive that our clients are in a position to fly after they need to fly, they really feel protected and comfy even in these extraordinary instances. We have adjusted our community to fulfill drastically decrease ranges of demand, taking swift motion to rightsize our schedule with systemized capability cuts and flight consolidations throughout our community. We have additionally delayed getting into a number of new markets deliberate for launch later this 12 months. New service between Austin and DFW, Christchurch and Los Angeles, Bangalore and Seattle will all be pushed into 2021. As well as, we have now delayed the beginning of different new routes, together with London Heathrow to Boston, Tel Aviv to Dallas/Fort Value, Casablanca to Philadelphia and Krakow to Chicago. Whereas we have now decreased our schedule dramatically, we have now began working cargo-only flights in March to move vital items between the U.S., Europe, Asia and Latin America. These are the primary cargo-only flights American has operated since at the least 1984. We’re presently in a position to transport greater than 6.5 million kilos of vital items weekly on our cargo-only flights, and we’ll look to additional alternatives to develop this service and produce medical provides and protecting gear to the areas which might be most in want. Whereas we proceed to offer important air service to those that want it most proper now, our staff has additionally prolonged their service exterior the operation. Group members have donated greater than 100 tons of meals in a number of of our hub cities, distributed hundreds of provide kits to sufferers and healthcare employees, and despatched care packages to U.S. army members in quarantine. As well as, by means of our partnership with the American Purple Cross, our staff and clients have helped elevate practically $Three million to help our frontline healthcare employees preventing COVID-19. So in closing, we’re squarely centered on getting by means of this era of uncertainty and we’re intently managing our capability and prices whereas taking good care of our staff members and clients. We will have extra to share within the coming months as we ramp up our operation post-COVID-19. And with that, I will move it on to Derek.Derek Kerr — Chief Monetary Officer Thanks, Robert. And good morning, everybody. I, too, wish to thank our total staff for doing a tremendous job throughout these unsure instances. Their dedication and dedication to get by means of this disaster is inspiring for all of us. As you noticed in our press launch and Type 10-Q this morning, we reported a GAAP web lack of $2.2 billion or $5.26 per share. Excluding web particular objects, we reported a web lack of $1.1 billion or $2.65 per share. We started the quarter on monitor to exceed our steerage, nevertheless, the COVID-19 pandemic and unprecedented drop in demand throughout March radically modified our outlook. Given the unpredictable nature of this occasion, we suspended our steerage for all of 2020. In mild of the present setting, our sole focus is to make sure we have now adequate liquidity. To face up to this disaster, we have now pushed efficiencies in our operation by accelerating our fleet simplification plan, and aligning our price construction to our considerably decrease capability ranges. We are going to proceed to match capability with demand and optimize our price to our stage of flying and determine further methods to enhance our cash burn price transferring ahead. As Doug talked about, the numerous falloff in demand has given us a chance to speed up our long-term fleet technique. Now we have formally retired the Embraer 190 and Boeing 767 fleets, which have been initially scheduled to exit by the top of 2020. Now we have additionally accelerated the retirement of our Boeing 757s and Airbus A330-300. Each fleets have been anticipated to retire over the following few years. As well as, we have now eliminated plenty of smaller, regional plane from our fleet. By eradicating these fleet sorts, we keep away from important future upkeep expense, take away complexity from our operation and produce ahead the efficiencies related to working fewer plane sorts. These financial savings embrace decreased plane sparing, decreased components inventories and crew scheduling efficiencies, all of which could have a big impact on our price construction going ahead. Even with these modifications, we retain the flexibleness to pursue environment friendly progress by means of elevated utilization or additional scale back our fleet to match demand throughout our system and hubs. Now we have decreased our estimated 2020 working and capital expenditures by greater than $12 billion. Along with decrease gas, these financial savings have been achieved by means of a variety of initiatives, together with reductions in flying and heavy upkeep bills. Past simply volume-related reductions, we have now taken a tough line on discretionary expenditures. Particularly, we have now deferred advertising [Inaudible] occasion and coaching bills, consolidated our footprint at airport services, and decreased using contractors. Now we have additionally suspended all nonessential hiring, paused noncontract pay will increase, decreased government and board compensation, and applied voluntary depart and early retirement packages to decrease our near-term and long-term labor prices. Whereas we have now achieved loads to deal with our near-term prices, we’ll proceed to take the mandatory steps to rightsize our price construction for the decrease ranges of capability we anticipate within the close to future. Lastly, on liquidity, we have moved rapidly to protect and bolster our cash place. We ended the quarter with $6.Eight billion in liquidity. Through the first quarter, we raised $2 billion by means of the issuance of a $500 million unsecured notice, a $1 billion 364-day delayed draw time period loan facility and roughly $477 million in plane financings. We have been additionally in a position to scale back the pricing of our $1.2 billion time period loan and lengthen it out till 2027. Through the quarter, we additionally finalized the preliminary phrases of the monetary help we’ll obtain as a part of the CARES Act. This may are available in two varieties: direct monetary help of $4.1 billion, and a low rate of interest loan of $1.7 billion. Individually, we have now utilized for a loan from the Treasury Division of roughly $4.75 billion. These funds, in addition to aid on varied taxes, together with gas tax financial savings, payroll tax deferment and ticket-related taxes, will present much-needed help for us to navigate this extraordinary setting. As Doug referenced, we ended the quarter at $6.Eight billion liquidity and American’s shares of the CARES Act proceeds is $10.6 billion, which leads to $17.Four billion whenever you mix our quarterly ending liquidity and CARES Act entry. Importantly, exterior of our just lately organized $1 billion 364-day delayed draw time period loan, we would not have any giant non-aircraft debt maturities for greater than 24 months. We even have further sources of liquidity. We just lately engaged third-party appraisers to guage a number of the firm’s unencumbered property. Primarily based on these value determinations, we consider the value of our unencumbered property is in extra of $10 billion excluding the loyalty program. And we anticipate to pledge a portion of our property for the secured loan we have now utilized for underneath the CARES Act. With respect to capital expenditures, we presently have dedicated financing for practically all of our 2020 deliveries. Past this, we have now eliminated $500 million from our projected non-aircraft capital spend deliberate in 2020 and one other $200 million in 2021. We’ll proceed to aggressively pursue different alternatives to preserve cash and dealing capital. As for cash burn, our common estimated second-quarter burn price is predicted to be roughly $70 million per day. Nonetheless, as our price initiatives achieve traction, our every day cash burn is predicted to say no over time. We anticipate that burn price to enhance to roughly $50 million per day for the month of June. Primarily based on our present forecast, we anticipate to have roughly $11 billion of liquidity on the finish of the second quarter, which assumes no incremental financing past the federal government loan and little to no enhance in demand for air journey. In accordance with the CARES Act, we have now suspended our capital return program, together with share repurchases and the fee of future dividends. In abstract, we face a problem that’s like not like something we have now ever seen. In a brief time period, our staff did an outstanding job taking prices out of the enterprise and growing liquidity. I could not be extra happy with what they’ve all completed. However we’re in no way achieved, and we’re ready for an extended street to restoration. Whereas the scenario stays fluid, we’ll do every part attainable to guard our enterprise and guarantee American emerges from this disaster extra environment friendly and aggressive than earlier than. And with that, I will flip it again to the operator.Doug Parker — Chairman and Chief Government Officer Thanks, Doug. Thanks, Derek. Operator, we’re prepared for questions. Questions & Solutions:Operator[Operator instructions] Your first query comes from David Vernon from Bernstein. Go forward, Mr. Vernon.David Vernon — Bernstein Analysis — Analyst Sorry about that, guys. Work-from-home enjoyable. So Derek, simply to make clear, the $11 billion of liquidity on the finish of the second quarter, that assumes the influx from each parts of the CARES Act, the grant and the loan, is that proper?Derek Kerr — Chief Monetary Officer Appropriate. There’s a portion of — there’s 10% of the grant that does come within the second quarter. So there’s about $600 million of the grant that reveals up in July. However for essentially the most half, sure, it consists of about $10 billion of the federal government grant and loan after which $600 million when it is available in July.David Vernon — Bernstein Analysis — Analyst OK. After which as we take into consideration the transferring components to get right down to that $50 million burn price, how a lot of the actions that may get you to $50 million can be both non permanent by means of voluntary form of time-off preparations? I am simply making an attempt to get a way for the way a lot of a further form of minimize to the cash burn price you guys are going to want to make in that September time-frame because the CARE loans come off. As a result of $50 million a day, $10 billion left, you bought to — will get you thru the primary a part of subsequent 12 months, nevertheless it looks like there’s nonetheless some work to be achieved on the fee facet there. Are you able to give us a way for the way rather more you will get out of that $50 million a day?Derek Kerr — Chief Monetary Officer Sure. I will inform you how we get there. The distinction between the place we are actually and the place we get to is there’s been a big quantity of refund. In order that has precipitated the quantity to be greater now than it has. As disbursements take maintain, these take a little bit little bit of time. So these are actually beginning to take maintain and can keep in place as we go ahead. The voluntary leaves and early outs, the early outs will likely be there endlessly. The voluntary leaves, we have now some three months, some six months, some 9 months. And we consider if we have to do this sooner or later, we are able to do this once more. The capex reductions are everlasting, and people are out all through the entire time. And a few of that is reductions in departures. So the $50 billion assumes actually very minimal receipts. So the distinction — I believe from a price construction perspective, all of that is in place and may keep in place. The distinction of that burn price, as Doug talked about earlier, the difficulty with the business proper now could be revenues. And to get that burn price from a price perspective, we have now some extra levers to go to carry it down, however the main distinction within the burn price goes to be receipts coming again and having some income coming within the door versus refunds outpacing income and having no receipts come within the door.Doug Parker — Chairman and Chief Government Officer And David, it is Doug. I’d simply add what Derek mentioned in his feedback to your questions, which is that $11 billion at quarter finish does assume the federal government loan, nevertheless it additionally assumes we have achieved no different financing. So we’d anticipate to finish the quarter nonetheless with a big quantity of unencumbered property nonetheless in place. So there will likely be extra to do past that if we have to.David Vernon — Bernstein Analysis — Analyst All proper. Thanks, guys.Doug Parker — Chairman and Chief Government Officer Thanks, David.OperatorYour subsequent query comes from Mike Linenberg from Deutsche Financial institution.Mike Linenberg — Deutsche Financial institution — Analyst Hey, good morning, everybody. Simply a few questions right here. So after I have a look at your capex, I assume, it was $3.Three billion coming in. And Derek, I believe you indicated that $500 million of non-aircraft that will likely be taken out. So I believe it was $1.6 billion. We’re about $1.1 billion of non-aircraft capex. In the event you might simply discuss what that $1.1 billion is. After which the $1.7 billion of plane capex, you indicated that you’ve got already — it is already funded. Presumably, these plane deliveries are literally cash accretive, are you able to discuss possibly how that is structured? Thanks.Derek Kerr — Chief Monetary Officer Yeah. I will take the second first. The reply is sure, they’re cash accretive. They’re 100% financed, if no more. So all of these, we do plan on taking all of these deliveries, and they’re constructive to the 2020 forecast. A lot of the deliveries are within the again half as a result of there are MAXs which were pushed out, however these are all cash accretive as we go ahead. So far as the capex, we’re right down to about $1.1 billion. We have minimize out every part that we are able to. The most important mission that is within the capex is consolidating the fleets and ensuring that the configuration on each of the fleets is identical. That mission goes to proceed, and we’re going to — with the plane on the bottom, we’ll have the power to hurry that up a little bit bit. So we do not plan on pulling again on that mission as a result of I believe it is crucial for our operation, it is crucial for the staff to get that one achieved. And that takes up at the least 40% of that capex. The remainder of it’s simply obligatory stuff we have now to do with components. There are another IT initiatives that we’d nonetheless like to maneuver ahead with, and people are concerned in that. However that is sort of the gist with the place we’re at. Something that does not need to be achieved, any kind of facility issues that do not have to be achieved, have all been taken out of the capital plan for the following two years.Mike Linenberg — Deutsche Financial institution — Analyst OK, nice. After which, simply my second query, simply on the fleet, you are 950 airplanes principal line. I believe you recognized near 100. That mentioned, you’ve gotten a comparatively new fleet. And so after we have a look at the following 850, fleet reductions change into a bit tougher since you’ve gotten loads of new airplanes. And so I am curious, what would you goal subsequent? And simply form of a nuance there, the A330s, you are pulling out the 300s, however you’ve gotten 15 200s. Are these planes subsequent? Is it extra about simply the best way that they are financed and the lease agreements?Derek Kerr — Chief Monetary Officer No. I believe there’s two fleet sorts that we have checked out. It is only a query of the timing of the return, and do they arrive again relying on the place we’re. So the flexibleness, as you talked about, the 33-2s, there’s 15 of these. Now we have 737s. There’s 42 older plane that we have checked out. So these are a few the areas that we’d go. Now we have lease expirations, 26 in 2021 and 21 in 2022. So these are on the market. And we do have some older A320s that you might have a look at. However I believe there’s the levers to go down farther and the 33-2 is extra fleet simplification for positive, if you happen to went down that path. However as you mentioned, they’re financed out a methods. However we’re — these are the fleet sorts that we’re as we go ahead. After which possibly you’ve gotten some lease expirations that you simply let go subsequent 12 months.Robert Isom — President And Derek, 50 ceasures, a corresponding quantity of 50 ceasures as nicely.Mike Linenberg — Deutsche Financial institution — Analyst Yeah, OK. Good level. All proper. Thanks, everybody.Derek Kerr — Chief Monetary Officer Thanks, Mike.OperatorYour subsequent query comes from Jamie Baker with JP Morgan.Jamie Baker — J.P. Morgan — Analyst Hey, good morning, all people. Your negotiations are going nicely otherwise you would not have put the federal government loan in your liquidity construct. However is there a plan B in case the Treasury turns you down? And as a follow-up, have we additionally confirmed with Treasury, and I could have simply neglected this, that 100% of the proceeds may very well be drawn all of sudden?Derek Kerr — Chief Monetary Officer We have been working with Treasury. I imply, the federal government grant course of went very well. We actually admire every part they’ve achieved for this program. We have put in for the loans every week in the past, one and a half weeks in the past. So we have began to have some conversations. However our working with the Treasury staff and the PJT staff has been nice. We have had constructive conversations as we transfer ahead. And with the collateral we have now, we consider that there is — we are able to get a deal achieved and that every part they will be cheap about it. So we’re transferring down that path. We consider we will get it achieved. And in order that’s our No. 1 aim as we transfer ahead, to get that full first. After which with the additional collateral we could have left ultimately is to go down and have a look at different alternatives as we transfer ahead. However I am assured that working with the Treasury Division and the staff that we are able to get the federal government loan put in place.Doug Parker — Chairman and Chief Government Officer Yeah, and Jamie, it is Doug, if you happen to do not thoughts. So simply to — it provides me a pleasant alternative to thank some folks in Treasury as nicely. Look, you and I have been amongst these — have been round in 2001, and I used to be working an airline that wanted assist to get by means of that from the Treasury Division, and it was terribly tough. This feels dramatically totally different than that point. This Treasury Division is working evening and day to do every part they will to get a lot wanted liquidity into the U.S. financial system, to make it possible for the financial system is ready to get working once more. And that features how they’re — definitely consists of how they’re treating this airline help. So it was clear with the payroll help program, I believe, how they dealt with that. They’re doing what they need to do, after all, which is make it possible for the U.S. taxpayer is paid again. So it got here — when it got here to the payroll help program, that they may completely assure have been getting paid again with issues like unemployment saving and better revenue taxes. Some 70% of the grant was certainly a grant. That went right into a loan, however a really low curiosity loan, over 10 years. Because it pertains to the loan program itself, on the time, we talked concerning the payroll help plan, we talked, they have been going to speak to all of us concerning the loan program itself and acknowledged once more that they need to make sure that the taxpayers are repaid. However I believe they know one of the simplest ways to try this is be certain that airways have liquidity to get by means of a liquidity disaster. So what they’ve — once more, we’d nonetheless need to get by means of the work right here within the subsequent few weeks. However you are proper. We would not have talked about how we’re seeking to that as our subsequent supply of best capital if we did not really feel assured that it could be the following supply of environment friendly capital. However their view is five-year loans, totally different charges for carriers based mostly upon credit standing, as we have been informed. For us, it is LIBOR plus 350. In immediately’s LIBOR, that is a little bit over 4%, five-year cash. That’s the best financing on the market for American Airways. They usually’re in search of — it must be secured, however I believe they’re prepared to be greater than cheap about collateral and in addition seeking to simply — for value determinations that we have now — that we really feel very assured that we can elevate that loan and nonetheless have important unencumbered collateral after it.Jamie Baker — J.P. Morgan — Analyst Received it, Doug, that perspective is definitely actually, actually precious since you’re proper, the United precedent with the ATSB was clearly on my thoughts. So I admire all of that commentary. A fast follow-up to your earlier remark, Doug, about resizing the franchise, and this might need been form of the place Mike was going as nicely. My telephone was slicing out and in. However not in search of a 2021 capability information, until you need to give us one, however my query is how a lot might you shrink relative to the 2019 baseline if you happen to solely put down owned plane and permit leases to run out? I assume, put in a different way, how a lot might you shrink earlier than there begins to be a price when it comes to parking plane? Not fascinated about services, not fascinated about the toll on labor, only a particular plane query.Doug Parker — Chairman and Chief Government Officer Further airplanes above the 100 that we have already introduced?Jamie Baker — J.P. Morgan — Analyst Properly, you continue to have owned and totally depreciated plane. You will have rights expirations developing that I haven’t got significantly good readability. And if you happen to permit these to run out and put down owned plane, there isn’t any actual expense to that. My query is how a lot, on a proportion foundation, might you shrink ASMs earlier than considering placing down an airplane for which there’s nonetheless an possession price or a lease expense? Is that 10% relative to 2019? Is it 20%? And if you do not have the figures, that is positive. I imply, we have achieved some again of the envelope. I used to be simply curious to listen to your take.Vasu Raja — Senior Vice President of Community Planning Hey, Jamie, that is Vasu. The determine is a little bit bit totally different on an airplane foundation versus an ASM base, as a result of our gauge will change. So on an ASM foundation, we estimate that quantity between 15% to 20%, relying on the way you draw that point interval. And my quantity consists of all jets, regional narrowbodies, widebodies. However on an ASM base, that quantity might be extra within the 10% to 15% as a result of, after all, the issues we’d look to do have been take out smaller jets, like 50 seaters, and preserve extra economical issues like greater 737s, 321s, issues like that, proper?Jamie Baker — J.P. Morgan — Analyst Good. That is precisely what I used to be in search of. I will move the mic to the following analyst. Thanks a lot, gents. Good luck.Doug Parker — Chairman and Chief Government Officer Thanks, Jamie.OperatorYour subsequent query comes from Joseph DeNardi from Stifel.Joseph DeNardi — Stifel Monetary Corp. — Analyst Yeah, thanks. Good morning. Derek, are you able to simply discuss concerning the nature of the unencumbered property that you’ve? Sort of realistically, what kind of capital you might elevate in opposition to that? After which what’s the value of the loyalty program, since that is sort of a fairly large moat between — that is nonetheless on the market for you? Thanks.Derek Kerr — Chief Monetary Officer Yeah. I believe going to No. 2, I imply, you are the one which has achieved one of the best work on the loyalty packages by far. And your quantity is fairly good from the place we have now on an appraisal of this system. So I believe the value of that program is excessive. And I believe you’ve gotten pointed that out rightly so. And you’re within the vary of the value determinations that we have gotten again for that. In order that has a really excessive value to us. Of the $10 billion, about $2 billion is plane, spare components, engines, these sort of issues. About $5 billion is slots. So it will get us to $7 million. We have A/R about $1.Eight billion and actual property about $1.2 billion. So there are various things we are able to do with totally different merchandise. So of that $10 billion, 40% possibly loan-to-value on sure issues, 40% to 50%, simply in the truth that I believe some can do greater than others and achieve extra cash from an LTV foundation than different collateral, however possibly the, I’d say, $Four million to $5 million. We even have in our slots, gates and routes, 364 deal that we have now to refinance in some unspecified time in the future in time. There’s $4.Four billion of collateral in there, which will likely be used in some unspecified time in the future in time to refinance and possibly do an even bigger transaction as you mix that with different collateral that we have now.Joseph DeNardi — Stifel Monetary Corp. — Analyst OK, yeah, that is useful. After which possibly for Vasu, what’s getting as a lot smaller as you assume you could be on the opposite facet of this imply for the hub construction of the community? Thanks.Vasu Raja — Senior Vice President of Community Planning Yeah. Thanks for the query, which I will interpret to imply, does this imply that we shrink hubs or get rid of one? So let me be very direct about this. Now we have no plans to shut any hubs. Actually, removed from it. As we see this — look, the core of our buyer proposition is offering connectivity. And certainly, that’s one thing that we don’t simply versus all different airways, however even all different community airways. We’re uniquely good offering connections from clients in small cities throughout the North and South America, however join them to the worldwide market. In order darkish and daunting as this disaster is, that is the second for actual readability. And so this isn’t about dismantling our buyer proposition, however sharpening it and refocusing it. And so with that in thoughts, the best way we’re fascinated about making an attempt to get loads of the identical value that traditionally folks attempt to wring by means of hub closure is, at first, as Derek and Doug talked about, by means of fleet simplification, proper? Which simply — if we simply take out fleet, after all, you are taking out direct expense. So after we simplify away fleets, then you definitely take out extra intractable bills like oblique prices of components and tooling, fastened overheads, issues like that. However importantly, that makes the airline much more lean and much more nimble, much more able to having the ability to transfer fleets round markets, reply to a restoration when and if it comes. I will do lots of the issues which were tough for us to do, frankly, over the past 4 or 5 years. After which, two, the opposite factor that we glance to do with that sort of agility is basically put the capability much more aggressively to the place the demand is. And with out going too far into it, I believe I can very confidently say, you will not see us de-peaking DFW visits this entire course of. Actually, removed from it. After which the third factor, which is basically totally different from previous crises for us is basically the ability of our partnerships right here. As a result of now we have now issues resembling our rising partnership with Alaska on the West Coast, that and loads of markets which might be challenged. Our progress is inhibited due to constraints on slots or gates or routes. What we’re now in a position to do is provide the shopper a a lot bigger community that may compete with their rivaled and oftentimes unwinnable market. In order that signifies that we should always be capable to see that in higher-quality revenues for American Airways, however at a decrease quantity of funding. So we don’t plan for mass-scale kind of closures. Actually, our hubs are a large asset to us as we take into consideration a extremely very centered buyer proposition popping out of this.Joseph DeNardi — Stifel Monetary Corp. — Analyst Thanks.OperatorYour subsequent query comes from Duane Pfennigwerth from Evercore.Duane Pfennigwerth — Evercore ISI — Analyst Hey, thanks, Doug, good morning. Relating to your commentary a couple of multiyear restoration and what this appears like in the long run, simply curious if you happen to might share what the monetary targets are that may form your plan. In order we take into consideration the disaster right here and now burning over $6 billion in cash simply this quarter, your exit price implies a couple of $4.5 billion burn price into 3Q, web debt on its method to maybe $40 billion this 12 months. What are the monetary targets that may form your 2021 plans? Burn much less cash?Doug Parker — Chairman and Chief Government Officer Yeah. Thanks, Duane. At this level, we’re working once more, as I believe all of us are, getting by means of the present liquidity disaster relatively than constructing 2021 plans. However for sure, as we come out previous to this, American had gotten to the purpose the place we have been fortunately by means of a big capex program, and we’re transferring aggressively towards utilizing our free cash circulation to delever the stability sheet. That can definitely be the case as we come out of this now. As we do transfer to producing free cash circulation sooner or later, the proceeds of that free cash circulation will likely be going to pay down debt and to pay down as aggressively as we are able to. So that is what you may anticipate to see after we get to that time. However nothing extra concrete than that when it comes to estimates or metrics for 2021 at this level.Duane Pfennigwerth — Evercore ISI — Analyst After which simply on the $11 billion liquidity goal, what are you assuming for the working capital headwind associated to the air site visitors legal responsibility? We had loads of questions round this for plenty of airways, not simply American. However are you able to stroll us by means of the mechanics of why the ATO didn’t decline within the March quarter and the outlook for that into the June quarter, contemplating issues like cancellations, and so forth.? Thanks for taking the questions.Derek Kerr — Chief Monetary Officer Yeah. I imply, the ATO did not decline within the quarter as a result of it was constructive by about — our ATO for the quarter was constructive 665. We had constructive 785 in January, constructive 487 in February and unfavourable 618 in March. That’s the time when ATO does construct for us. No, this did not even actually hit till center of March. So these two occurred. We did have refunds in the course of the quarter of about $900 million. So we did have ATO develop. We had refunds of $900 million, actually pushed by gross sales within the first two months of the time interval. We do consider that ATO will decline within the second quarter. Our projections, I believe April, we had refunds — we have not finalized it but, however we predict it is within the $600 million vary, if no more. And we do mission about $400 in Could and about $200 million extra in June. So the quarter goes to be hit by some $1.2 billion to $1.Three billion worth of refunds, and that’s constructed into the every day cash burn numbers that we gave you. That is why we talked about receipts being actually low in a 50 — or the $70 million a day every day burn. So that’s inbuilt. We do have an ATO that we predict goes to be unfavourable. However within the first quarter, it was constructive often because as we entered March, issues appeared actually good from the place we have been. And I believe for all folks, that was just about the identical image. We simply had the burn coming in, in March.Duane Pfennigwerth — Evercore ISI — Analyst Very clear. Thanks, Derek.OperatorYour subsequent query comes from Hunter Keay from Wolfe Analysis.Hunter Keay — Wolfe Analysis — Analyst Good morning. Thanks for getting me on. That is sort of a follow-on to the query. You do not need to discuss ’21. However I imply, how do you propose on digging out of this debt pile right here, Doug? I imply, based mostly on what Vasu mentioned, it would not look like you guys are going to be actually gutting prices. So I imply, pragmatically talking, like how do you dig out of this debt pile? How do you generate that free cash circulation when you get by means of this disaster?Doug Parker — Chairman and Chief Government Officer Via earnings. Once more, so we have been properly forecasting constructive free cash circulation previous to this. We have to get again to a degree the place we’re producing free cash circulation sooner or later. And as we do this, such as you say, we’ll use that to pay down the debt over time. As Derek famous, whereas we do certainly come out of this with extra debt than we’d have preferred, because it pertains to the precise cash circulation scenario concerning the debt, we haven’t any main amortizations for the following couple of years. And I can say, as we come out of this, like all carriers and get to a degree — we have to get to a degree once more the place we’re producing constructive cash circulation, which we definitely will in some unspecified time in the future. And after we do this, we use that to pay down the debt as we go ahead.Derek Kerr — Chief Monetary Officer And Hunter, we’re actually good. I imply, the work that is been achieved to get the fee construction the place it’s proper now. It is solely starting. So Vasu and his staff are working by means of what the schedule goes to appear to be in 2021. The entire function of retiring fleets was to simplify issues and to drive the fee construction the place it must be, and we’re nonetheless different alternatives to try this. So we’ll undergo a complete have a look at the bills of the airline over the following few months right here to rightsize the bills to the place Vasu goes from a community perspective.Hunter Keay — Wolfe Analysis — Analyst OK. After which of the 39,000 volunteers for early retirement and the like, what number of of these 39,000 are completely retired?Derek Kerr — Chief Monetary Officer There’s 4,500 early outs.Hunter Keay — Wolfe Analysis — Analyst Thanks, Derek.OperatorYour subsequent query comes from Myles Walton from UBS.Myles Walton — UBS — Analyst Thanks. Good morning. Doug, I simply had a query for you on buyer conduct and particularly as you alter a number of the procedures for security onboard the aircraft. And one thing like blocking the center seat. How lengthy do you assume one thing like that lasts if clients get used to it? I imply, is it doubtlessly that you simply’re placing it in there and it has to remain by means of the vaccine growth subsequent 12 months? And simply how is that going to feed into your constructing of 4Q kind of projections and scheduling?Doug Parker — Chairman and Chief Government Officer Yeah, a extremely good query. All that is quickly evolving. And immediately, it isn’t a lot of a problem, clearly. Now we have over 80% of our flights are going out with decrease than 25% load elements in order that constraint comes into play on a really, very uncommon foundation. So we predict it is the proper factor at this time limit. Once more, I am unable to actually reply your query apart from to inform you it’ll proceed to evolve over time. At this time, what we’re seeing is rather more of a push towards facial coverings to offer clients a stage of consolation. We definitely are strongly encouraging that. And certainly, as we mentioned, we’ll quickly — tomorrow start offering clients with masks to strongly encourage that they use them. So we’ll see. Proper now, we predict that is an necessary a part of the message to our clients to know that we’re not going to have each seat on the airplane crammed. There will likely be some seats out there for people who require — and so we predict we, as different airways proper now, assume that is an necessary a part of the messaging. However once more, we’ll see the place that evolves over time. I do not know if I can reply any higher than that.Myles Walton — UBS — Analyst No, that is positive. It is only a slippery slope whenever you begin to put one thing in place. You do not know precisely when to peel it again. I simply puzzled the way you have been fascinated about it. After which there’s the clarification on the CARES loan. How a lot of the encumbered property are you proposing to pledge in opposition to that, so we are able to know sort of quarter finish, what your unencumbered property are? Thanks.Derek Kerr — Chief Monetary Officer We do not know but. I imply, we’re nonetheless working with the Treasury to finalize that. So it hasn’t been decided, and we’ll simply proceed to work with them on what the proper collateral value is for the $4.75 billion loan.Doug Parker — Chairman and Chief Government Officer Sure, however again to what earlier what we mentioned. Of the $10 billion plus the AAdvantage program that we have now out there immediately, we definitely anticipate that we’ll have ample collateral out there for the Treasury Division to be ok with their $4.75 billion loan being secured and nonetheless have important unencumbered property after that course of.Myles Walton — UBS — Analyst All proper. Thanks.OperatorYour subsequent query is from Andrew Didora from Financial institution of America.Andrew Didora — Financial institution of America Merrill Lynch — Analyst Hello. Good morning, everybody. Thanks for getting me in right here on the finish. Simply need to sort of really return to the CARES Act. I assume, my understanding of the federal government loan program is that authorities’s sort of right here to be a lender of final resort, and you must exhaust loads of your different avenues of financing earlier than accessing this system. Primarily based in your clarification, I believe it is honest to imagine, would you agree that I am possibly off on this interpretation? After which as a follow-up to Myles’ query. In your discussions with the Treasury, have they indicated the kind of collateral that they’d be prepared to take? As a result of simply making an attempt to get a way of what you might have left if you must go to the general public markets. Thanks.Doug Parker — Chairman and Chief Government Officer Yeah. Positive, Andrew. Let me begin after which Derek can fill in with particulars. I imply, as to the lender of final resort level, once more, I haven’t got the laws in entrance of me. But it surely says one thing to the impact of service has to indicate that they do not have cheap entry to different public markets or one thing like that. And once more, in discussions with them, and I am unable to stress sufficient once more how exceptionally cheap and useful they’re being to all of us. We suggest issues. We talked about it in issues resembling, for instance, in February or someday earlier this 12 months, Derek, we have been in a position to do a C-tranche on a EETC at –Derek Kerr — Chief Monetary Officer Properly, we did unsecured at 3.7.Doug Parker — Chairman and Chief Government Officer We did an unsecured deal at 3.7, so we might do a C-tranche on a EETC. It is one thing decrease than that. At this time, if we try to do a C-tranche on a EETC, it is a double-digit quantity. They’re definitely not saying go do this. They view that as financing not being — cheap financing not being out there in cheap phrases. So once more, it is for them to establish, however definitely, their view appears to be not that you must go elevate — use all of the collateral you’ve gotten and are available to them solely when there’s nothing else you are able to do regardless of the fee. And so once more, which I believe is, one, the proper factor to do for what they’re making an attempt to perform, which is make sure the business has liquidity it wants at cheap charges and what we have been informed we will do. So once more, I will use this chance to thank them, not simply Secretary Mnuchin, we thanked loads, however Undersecretary Brent McIntosh, Deputy Secretary Justin Muzinich. The complete staff has simply been actually very useful about this. After which as to the collateral, once more, all we are able to say is that is what we have to work by means of with them. Now we have $10 billion of unencumbered property plus the AAdvantage program, which has appraised of, as Derek indicated, awfully excessive. So given all that, we be ok with what we have now mentioned, which is that we’ll go elevate the federal government loan and nonetheless have important unencumbered property, not excellent. After which let me use this chance, yet one more, give credit score the place credit score is due, to Derek and the Treasury staff. These numbers we’re providing you with, $11 billion at year-end — sorry, at quarter finish with the federal government loan has us to this point, the costliest debt we could have raised in that evaluation is that this authorities loan. So to not say that we can’t must do different issues sooner or later, however we have been going about this going to go to essentially the most environment friendly supply of financing all through. And I believe we have achieved so very well. Be ok with that, and we’ll proceed to try this. And proper now, that is the following best tranche to go after. In order that’s the place we anticipate to go to the extent. Past that, if we have to do different issues, we, clearly, will achieve this. I believe Gary Kelly on Southwest name mentioned this nicely, there’s an asymmetrical threat proper now for cash. Not having sufficient is basically costly, having an excessive amount of could also be considerably costly, however you simply use that to pay down the debt sooner. That is definitely the best way we view it, and we’re going about it in a method of elevating that which is best first and getting to those who are much less environment friendly later.Andrew Didora — Financial institution of America Merrill Lynch — Analyst Nice. Thanks for that, Doug. And lastly, Derek, only a fast modeling query right here. Within the $50 million every day cash burn price in June and past, what are you assuming? What’s EETC amortization assumptions in that quantity? Thanks.Derek Kerr — Chief Monetary Officer So the EETC amortizations for 2020 is about $2.2 billion for the total 12 months.Andrew Didora — Financial institution of America Merrill Lynch — Analyst Nice. Thanks.OperatorAt this time, we’ll take questions from the media. [Operator instructions] Your first query comes from Alison Sider from Wall Road Journal.Alison Sider — Wall Road Journal — Analyst Hello. Thanks a lot. Yeah, I used to be questioning if you happen to might inform us something about form of any provide chain points you are seeing for masks. Like the place are you getting all these masks for crew and for passengers? And is it getting simpler to search out them?Robert Isom — President Ali, it is Robert. I will offer you what we all know. Look, there’s loads of planning that goes into provisioning masks and sanitizers. And after we contemplated making modifications to our cleansing packages and in addition any kind of facilities for our clients, issues have modified quickly in simply two or three weeks. In order we have a look ahead, with sanitizer, we see ample provides. With masks, it’s a logistical subject of getting inventories to the proper place. However we have now adequate portions for our staff, and as our dedication to supply masks and sanitizer to clients in flight, you will see us rolling that out in our provide chain. It should take plenty of weeks, nevertheless it’s not a problem of months at this level. And so I am unable to level you to the precise sources of provide. However I’ll say that issues have definitely eased — constraints have definitely eased over the previous couple of weeks to the purpose that we’re in a position to make commitments like we have now to each our staff and our clients.Alison Sider — Wall Road Journal — Analyst Received it. Thanks. And I imply, we have heard — I do know you may’t say precisely the place, however we have heard of different airways having to go to Asia or to China, specifically, to get masks. Is that sort of the place a number of the sourcing is?Robert Isom — President We’re sourcing wherever we are able to get high quality product that meets our wants all through the nation. However I haven’t got the specifics on what proportion comes from the place.Alison Sider — Wall Road Journal — Analyst OK. Thanks.OperatorYour subsequent query comes from Kyle Arnold from Dallas Morning Information.Kyle Arnold — Dallas Morning Information — Analyst Hey, thanks for taking my name. You talked about the 39,000 workers that took the early out, depart and decreased hours. Are you able to discuss a little bit bit about what your everlasting workforce scenario would possibly appear to be after that CARES Act restrictions sundown? And the way are you going to be wanting on the instant from the scale of the airline in the course of the subsequent few months?Doug Parker — Chairman and Chief Government Officer Yeah, Kyle, it is Doug. Look, clearly, onerous to inform given the uncertainty round demand, the place we will likely be and how briskly the buyer returns and the way a lot we need to fly. However definitely, I imply, given what we introduced immediately with the retirement of all these plane, we’ll emerge from this within the fall with a smaller airline than we had anticipated previous to the virus, after all, and go into 2021 as a smaller airline. So we’ll certainly — nicely, definitely, regardless of the place demand is, go into the autumn with extra staff members than we have now labored for, which is a problem for sure. We hope to get by means of that very same method we have gotten so far, the truth that we had 39,000 of our staff members volunteer for leaves and early retirement, I believe, is a sign that we hopefully can be capable to handle by means of that with out having to do furloughs. That is definitely will likely be our aim, to undergo and make it possible for we have now the airline rightsized, correctly sized, an excellent bit smaller than it’s immediately, however do that in a method that takes care of our staff, which has been entrance of thoughts for this complete course of. So we’ll look to try this. However sure, these choices are issues we will need to make after we get to that time. And that is a aim at this level, one which I hope we are able to meet, however not a certainty. So once more, this isn’t distinctive to American. I believe we’re all working by means of this at this level. As for proper now, we’re working by means of the summer season and thru the phrases and circumstances of the CARES Act itself. And as we get into the autumn, we will definitely be working productively with our staff to verify we’re proper sized.OperatorYour subsequent query comes from Mary Schlangenstein from Bloomberg Information.Mary Schlangenstein — Bloomberg Information — Correspondent Good morning. I wished to ask, whenever you all have been mentioning the AAdvantage program as not being included in your unencumbered property, are you able to discuss your willingness or your unwillingness to have to make use of that as collateral?Doug Parker — Chairman and Chief Government Officer Derek, are you able to reply for Mary?Derek Kerr — Chief Monetary Officer Properly, I believe, nicely, there’s willingness to make use of all of our collateral that’s crucial for us to extend the liquidity to the place we’d like it to be.Doug Parker — Chairman and Chief Government Officer Yeah. We’re not placing constraints on this system, if that is what you are asking. I imply, like that, if certainly that’s an asset that we are able to use to boost a lot want liquidity on this time, we’re completely prepared to contemplate it.Mary Schlangenstein — Bloomberg Information — Correspondent OK. And if I also can ask on the employee leaves, do you’ve gotten any info when it comes to — since they’re three, six, 9, what proportion of these of us can be coming again proper round September 30 when the restrictions on the CARES Act loan go away?Doug Parker — Chairman and Chief Government Officer I do not know if we have now that info, Mary. I do not assume we have now that.Mary Schlangenstein — Bloomberg Information — Correspondent OK. Simply questioning if that is going to complicate your resolution going ahead on whether or not you must have furloughs or not, if you happen to’ve obtained a bunch of oldsters coming again off of depart at the moment. So if that turns into out there, and I might get that, I’d admire it.Doug Parker — Chairman and Chief Government Officer Yeah. Properly, anyway, Ali, do you need to reply?Ali Taylor — Senior Vice President of World Gross sales and Distribution Sure. Mary, I can name you on-line about that. I’d inform you that a few of these leaves, the three, six, 9 months, we’ll be going again out and extending these wherever we are able to, if wanted.Mary Schlangenstein — Bloomberg Information — Correspondent OK, thanks.OperatorYour subsequent query is from Leslie Josephs from CNBC.Leslie Josephs — CNBC — Airline Reporter Hello. Good morning. Thanks for taking my query. On the open labor agreements, how does coronavirus after which this must be a smaller airline have an effect on these? And as you concentrate on furloughs, how do any of the present labor contracts have an effect on these discussions?Doug Parker — Chairman and Chief Government Officer The present labor negotiations, the flight attendants and pilots, we’re in negotiations on. These negotiations, clearly, it has an influence on us as all of us work on the tempo of these negotiations. We’ll nonetheless proceed to speak and work by means of these to the extent we are able to. However proper now, all of our staff is working to make this — is working to deal with our staff members by means of this subject. So definitely, nothing to report about these transferring ahead past the place they have been at this level. And once more, because it pertains to the labor contracts, as I mentioned, our aim is to get by means of this with out furloughs to our staff. I am positive our unions would help that aim. And we’ll work collectively to determine hopefully ways in which we are able to do this in order that we have now the workforce rightsized, however have people who need to avail themselves of leaves or early outs, doing so; and people who must be working, doing that as nicely. So we’ll work with them on that, I’ll notice once more. Sure, go forward.Leslie Josephs — CNBC — Airline Reporter On the leaves, do you’ve gotten any sense of why so many individuals are taking these leaves? Is it baby care? I am unable to go to a different airline now, however –Elise Eberwein — Government Vice President, Folks and Communications Yeah. Leslie, it is Elise. It is a mixture of issues from baby care must eager to take the summer season away from flying. So it is a wide range of wants. All of it will depend on the person.Leslie Josephs — CNBC — Airline Reporter Thanks.OperatorYour subsequent query comes from Edward Russell, TPG.Edward Russell — The Factors Man — Senior Aviation Enterprise Reporter Thanks for taking my query. Vasu, I used to be questioning if you happen to might go a bit extra into your assertion on all of the hubs coming again. Ought to we anticipate some hubs to come back again quicker or extra robustly than others? I do know you have been speaking in the previous couple of years about Charlotte, Dallas and Washington being the strongest hubs.Vasu Raja — Senior Vice President of Community Planning Hey, Ed, thanks for the query. It stays to be seen, fairly frankly. As Derek talked about, we’re simply now beginning sort of a clear sheet train for what 2021 would possibly appear to be. And so I could not inform you with loads of readability. However for proper now, as you have a look at our schedule, clearly, we have now our greatest connecting complexes which might be on the market, primarily in order that we are able to serve the overwhelming majority of communities underneath the CARES Act with a minimal of useful resource expenditure. And in order that’s all you sort of see in our current schedule immediately, and every part past it stays to be seen but.Edward Russell — The Factors Man — Senior Aviation Enterprise Reporter Nice. Thanks. After which one level of clarification. Robert, you talked about some older 737 that may very well be retired. What number of have been they? Have been they 42? I missed that quantity.Robert Isom — President Sure, 42.Edward Russell — The Factors Man — Senior Aviation Enterprise Reporter Nice. Thanks.Doug Parker — Chairman and Chief Government Officer Operator, I believe we’re achieved taking questions.OperatorThat is right, sir. There aren’t any additional questions presently.Doug Parker — Chairman and Chief Government Officer Wonderful. All proper. Properly, thanks, all people, on your time and a focus. I’ll shut the place I closed my feedback with is — clearly, it is a tough time for our business and our nation. However we could not be extra happy with how our staff and our business is managing by means of this. We are going to get by means of this, I am sure of that. I do know our business will get by means of this. We’ll combat by means of this efficiently. And I am significantly assured that American Airways will likely be amongst these main the best way. We are going to preserve you apprised as we transfer ahead. When you have any additional questions, please contact the investor relations or company communications. Thanks loads.Operator[Operator signoff] Length: 71 minutesCall members:Daniel Cravens — Managing Director of Investor RelationsDoug Parker — Chairman and Chief Government OfficerRobert Isom — PresidentDerek Kerr — Chief Monetary OfficerDavid Vernon — Bernstein Analysis — AnalystMike Linenberg — Deutsche Financial institution — AnalystJamie Baker — J.P. Morgan — AnalystVasu Raja — Senior Vice President of Community PlanningJoseph DeNardi — Stifel Monetary Corp. — AnalystDuane Pfennigwerth — Evercore ISI — AnalystHunter Keay — Wolfe Analysis — AnalystMyles Walton — UBS — AnalystAndrew Didora — Financial institution of America Merrill Lynch — AnalystAlison Sider — Wall Road Journal — AnalystKyle Arnold — Dallas Morning Information — AnalystMary Schlangenstein — Bloomberg Information — CorrespondentAli Taylor — Senior Vice President of World Gross sales and DistributionLeslie Josephs — CNBC — Airline ReporterElise Eberwein — Government Vice President, Folks and CommunicationsEdward Russell — The Factors Man — Senior Aviation Enterprise Reporter
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