Item 5. Market for Registrant’s Common Equity
ITEM 5. MARKET FOR AMERICAN AIRLINES GROUP’S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Stock Exchange Listing
Our common stock is listed on The Nasdaq Global Select Market under the trading symbol “AAL.” There is no trading market for the common stock of American, which is a wholly-owned subsidiary of AAG.
As of February 18, 2022, there were approximately 13,000 holders of record of our common stock. However, because many of the shares of our common stock are held by brokers and other institutions on behalf of stockholders, we believe there are substantially more beneficial holders of our common stock than record holders.
Information on securities authorized for issuance under our equity compensation plans will be set forth in our Proxy Statement for the 2022 Annual Meeting of Stockholders of American Airlines Group Inc. (the Proxy Statement) under the caption “Equity Compensation Plan Information” and is incorporated by reference into this Annual Report on Form 10-K.
Dividends on Common Stock
There were no cash dividend payments during the year ended December 31, 2021. The total cash payment for dividends during the year ended December 31, 2020 was $43 million. In connection with our receipt of financial assistance under PSP1, PSP2 and PSP3, we agreed not to pay dividends on AAG common stock through at least September 30, 2022. If we determine to make any dividends in the future, such dividends that may be declared and paid from time to time will be subject to market and economic conditions, applicable legal requirements and other relevant factors. We are not obligated to continue a dividend for any fixed period, and the payment of dividends may be suspended or discontinued again at any time at our discretion and without prior notice.
63
Table of Contents
Stock Performance Graph
The following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Exchange Act, each as amended, except to the extent that we specifically incorporate it by reference into such filing.
The following stock performance graph compares the cumulative total stockholder returns during the period from December 31, 2016 to December 31, 2021 of our common stock to the New York Stock Exchange (NYSE) ARCA Airline Index and the Standard and Poor’s Financial Services, LLC (S&P) 500 Stock Index. The comparison assumes $100 was invested on December 31, 2016 in our common stock and in each of the foregoing indices and assumes that all dividends were reinvested. The stock performance shown on the following graph represents historical stock performance and is not necessarily indicative of future stock price performance.
12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021
American Airlines Group Inc. (AAL) $ 100 $ 112 $ 70 $ 63 $ 35 $ 40
NYSE ARCA Airline Index (XAL) 100 105 82 99 75 74
S&P 500 Index (GSPC) 100 119 112 144 168 213
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The authority to repurchase $420 million of remaining shares under our most recent $2.0 billion share repurchase program expired on December 31, 2020. In connection with our receipt of financial assistance under PSP1, PSP2 and PSP3, we agreed not to repurchase shares of AAG common stock through at least September 30, 2022.
See Part I, Item 1A. Risk Factors – “ We have ceased making repurchases of our common stock and paying dividends on our common stock as required by the CARES Act, the PSP Extension Law and the ARP. Following the end of those restrictions, if we do decide to make repurchases of or pay dividends on our common stock, we cannot guarantee that we will continue to do so or that our capital deployment program will enhance long-term stockholder value. ”
64
Table of Contents
Ownership Restrictions
AAG’s Certificate of Incorporation and Bylaws provide that, consistent with the requirements of Subtitle VII of Title 49 of the United States Code, as amended (the Aviation Act), any persons or entities who are not a “citizen of the United States” (as defined under the Aviation Act and administrative interpretations issued by the DOT, its predecessors and successors, from time to time), including any agent, trustee or representative of such persons or entities (a non-citizen), shall not, in the aggregate, own (beneficially or of record) and/or control more than (a) 24.9% of the aggregate votes of all of our outstanding equity securities or (b) 49.0% of our outstanding equity securities. Our Certificate of Incorporation and Bylaws further specify that it is the duty of each stockholder who is a non-citizen to register his, her or its equity securities on our foreign stock record and provide for remedies applicable to stockholders that exceed the voting and ownership caps described above.
In addition, to reduce the risk of a potential adverse effect on our ability to use our NOL carryforwards and certain other tax attributes for federal income tax purposes, and in connection with the expiration in December 2021 of certain transfer restrictions applicable to substantial shareholders contained in our Certificate of Incorporation, the Board of Directors of AAG adopted the Tax Benefits Preservation Plan in order to preserve our ability to use our NOLs and certain other tax attributes to reduce potential future income tax obligations. The Tax Benefits Preservation Plan is designed to reduce the likelihood that we experience an "ownership change” for purposes of Section 382 by deterring certain acquisitions of AAG common stock. There is no assurance, however, that the deterrent mechanism will be effective, and such acquisitions may still occur. In addition, the Tax Benefits Preservation Plan may adversely affect the marketability of AAG common stock by discouraging existing or potential investors from acquiring AAG common stock or additional shares of AAG common stock, because any non-exempt third party that acquires 4.9% or more of the then-outstanding shares of AAG common stock would suffer substantial dilution of its ownership interest in AAG. We intend to submit the Tax Benefits Preservation Plan for ratification to our stockholders at the 2022 Annual Meeting of Stockholders of American Airlines Group Inc.
See Part I, Item 1A. Risk Factors – “AAG’s Certificate of Incorporation and Bylaws include provisions that limit voting and acquisition and disposition of our equity interests and specify an exclusive forum for certain stockholder disputes” and “ Our ability to utilize our NOLs and other carryforwards may be limited.” Also see AAG’s Certification of Incorporation and Bylaws, which are filed as Exhibits 3.1, 3.2 and 3.3 hereto, for the full text of the foregoing restrictions and AAG’s Description of the Registrants’ Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, which is filed as Exhibit 4.1 hereto, for a more detailed description.
65
Table of Contents
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
Selected Consolidated Financial Data of AAG
The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and “Consolidated Balance Sheet data” for the years ended and as of December 31, 2021, 2020 and 2019, are derived from AAG’s audited consolidated financial statements.
Year Ended December 31,
2021 2020 2019
(In millions, except share and per share amounts)
Consolidated Statements of Operations data:
Total operating revenues $ 29,882 $ 17,337 $ 45,768
Total operating expenses 30,941 27,758 42,703
Operating income (loss) (1,059) (10,421) 3,065
Net income (loss) (1,993) (8,885) 1,686
Earnings (loss) per common share:
Basic $ (3.09) $ (18.36) $ 3.80
Diluted (3.09) (18.36) 3.79
Shares used for computation (in thousands):
Basic 644,015 483,888 443,363
Diluted 644,015 483,888 444,269
Cash dividends declared per common share $ — $ 0.10 $ 0.40
Consolidated Balance Sheet data
(at end of period):
Total assets $ 66,467 $ 62,008 $ 59,995
Debt and finance leases
38,060 32,593 24,315
Pension and postretirement obligations (1)
5,150 7,131 6,081
Operating lease liabilities 8,117 8,428 9,129
Stockholders’ deficit (7,340) (6,867) (118)
(1) Substantially all defined benefit pension plans were frozen effective November 1, 2012. See Note 9 to AAG's Consolidated Financial Statements in Part II, Item 8A for further information on pension and postretirement benefits.
Reconciliation of GAAP to Non-GAAP Financial Measures
We sometimes use financial measures that are derived from the consolidated financial statements but that are not presented in accordance with accounting principles generally accepted in the U.S. (GAAP) to understand and evaluate our current operating performance and to allow for period-to-period comparisons. We believe these non-GAAP financial measures may also provide useful information to investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with GAAP. We are providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis.
66
Table of Contents
The following table presents the components of our total net special items and the reconciliation of pre-tax loss and net loss (GAAP measures) to pre-tax loss excluding net special items and net loss excluding net special items (non-GAAP measures). Management uses these non-GAAP financial measures to evaluate our current operating performance and to allow for period-to-period comparisons. As net special items may vary from period-to-period in nature and amount, the adjustment to exclude net special items allows management an additional tool to understand our core operating performance.
Year Ended December 31,
2021 2020
(In millions)
Components of Total Special Items, Net: (1)
PSP Financial Assistance (2)
$ (4,162) $ (3,710)
Severance expenses (3)
168 1,408
Litigation reserve adjustments (19) —
Mark-to-market adjustments on bankruptcy obligations, net (4)
(3) (49)
Fleet impairment (5)
— 1,484
Labor contract expenses (6)
— 228
Other operating special items, net 10 (18)
Mainline operating special items, net (4,006) (657)
PSP Financial Assistance (2)
(539) (444)
Regional pilot retention program (7)
61 —
Fleet impairment (5)
27 117
Severance expenses (3)
2 18
Regional operating special items, net (449) (309)
Operating special items, net (4,455) (966)
Mark-to-market adjustments on equity and other investments, net (8)
31 135
Debt refinancing, extinguishment and other, net 29 35
Nonoperating special items, net 60 170
Pre-tax special items, net (4,395) (796)
Total special items, net $ (4,395) $ (796)
Reconciliation of Pre-Tax Loss Excluding Net Special Items:
Pre-tax loss – GAAP $ (2,548) $ (11,453)
Adjusted for: Pre-tax special items, net (4,395) (796)
Pre-tax loss excluding net special items $ (6,943) $ (12,249)
Reconciliation of Net Loss Excluding Net Special Items:
Net loss – GAAP $ (1,993) $ (8,885)
Adjusted for: Total special items, net (4,395) (796)
Adjusted for: Net tax effect of net special items 993 170
Net loss excluding net special items $ (5,395) $ (9,511)
(1) See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items.
(2) The 2021 PSP Financial Assistance represents recognition of a portion of the financial assistance received from Treasury pursuant to the PSP2 and PSP3 Agreements. See Note 1(b) to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information. The 2020 PSP Financial Assistance represents recognition of a portion of the financial assistance received from Treasury pursuant to the PSP1 Agreement.
67
Table of Contents
(3) Severance expenses include salary and medical costs primarily associated with certain team members who opted into voluntary early retirement programs offered as a result of reductions to our operation due to the COVID-19 pandemic. Cash payments primarily associated with our voluntary early retirement programs were approximately $520 million and $365 million in 2021 and 2020, respectively.
(4) Bankruptcy obligations that will be settled in shares of our common stock are marked-to-market based on our stock price.
(5) Fleet impairment charges resulted from the retirement of certain aircraft earlier than planned driven by the severe decline in air travel due to the COVID-19 pandemic. In 2021, we retired our remaining Embraer 140 fleet resulting in a non-cash write-down of these regional aircraft. See Note 1(g) to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information related to these charges.
In 2020, we retired our entire Airbus A330-200, Boeing 757, Boeing 767, Airbus A330-300 and Embraer 190 fleets as well as certain Embraer 140 and Bombardier CRJ200 aircraft resulting in a $1.5 billion non-cash write-down of mainline and regional aircraft and associated spare parts and $109 million in cash charges primarily for impairment of right-of-use (ROU) assets and lease return costs.
(6) The 2020 labor contract expenses primarily related to one-time charges due to the ratification of a new contract with the TWU-IAM Association for our maintenance and fleet service team members, including signing bonuses and adjustments to vacation accruals resulting from pay rate increases.
(7) Our regional pilot retention program provides for, among other things, a cash retention bonus paid in the fourth quarter of 2021 to eligible captains at our wholly-owned regional airlines included on the pilot seniority list as of September 1, 2021.
(8) Mark-to-market adjustments on equity and other investments, net primarily related to net unrealized gains and losses associated with our equity investments in China Southern Airlines and in 2021, Vertical Aerospace Ltd. (Vertical), and certain treasury rate lock derivative instruments.
68
Table of Contents
Additionally, the table below presents the reconciliation of total operating expenses (GAAP measure) to total operating costs excluding net special items and fuel (non-GAAP measure) and total operating cost per available seat mile (CASM) to CASM excluding net special items and fuel. Management uses total operating costs excluding net special items and fuel and CASM excluding net special items and fuel to evaluate our current operating performance and for period-to-period comparisons. The price of fuel, over which we have no control, impacts the comparability of period-to-period financial performance. The adjustment to exclude fuel and net special items allows management an additional tool to understand and analyze our non-fuel costs and core operating performance. Amounts may not recalculate due to rounding.
Year Ended December 31,
2021 2020
Reconciliation of CASM Excluding Net Special Items and Fuel:
(In millions)
Total operating expenses – GAAP $ 30,941 $ 27,758
Operating net special items (1) :
Mainline operating special items, net
4,006 657
Regional operating special items, net
449 309
Aircraft fuel and related taxes (6,792) (3,402)
Total operating expenses, excluding net special items and fuel $ 28,604 $ 25,322
(In millions)
Total Available Seat Miles (ASM) 214,535 143,167
(In cents)
CASM 14.42 19.39
Operating net special items per ASM (1) :
Mainline operating special items, net 1.87 0.46
Regional operating special items, net 0.21 0.22
Aircraft fuel and related taxes per ASM (3.17) (2.38)
CASM, excluding net special items and fuel 13.33 17.69
(1) See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items.
69
Table of Contents
Selected Consolidated Financial Data of American
The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and “Consolidated Balance Sheet data” for the years ended and as of December 31, 2021, 2020 and 2019, are derived from American’s audited consolidated financial statements.
Year Ended December 31,
2021 2020 2019
(In millions)
Consolidated Statements of Operations data:
Total operating revenues $ 29,880 $ 17,335 $ 45,761
Total operating expenses 30,841 27,559 42,714
Operating income (loss) (961) (10,224) 3,047
Net income (loss) (1,777) (8,450) 1,972
Consolidated Balance Sheet data
(at end of period):
Total assets $ 71,145 $ 69,215 $ 71,890
Debt and finance leases
32,094 28,982 23,042
Pension and postretirement obligations (1)
5,117 7,089 6,037
Operating lease liabilities 8,074 8,380 9,083
Stockholder’s equity 3,826 4,348 13,422
(1) Substantially all defined benefit pension plans were frozen effective November 1, 2012. See Note 8 to American's Consolidated Financial Statements in Part II, Item 8B for further information on pension and postretirement benefits.
70
Table of Contents