American Airlines Group Inc. (AAL) Earnings Call Transcript & Summary

Okay. Good morning to the day -- to the Dallas team. Welcome back, everybody, to the JPMorgan Industrials Conference. Mark and I are happy to have you here. We are even more happy to be entertaining the team from American Airlines right now. We clearly have line of sight to Doug Parker, CEO of American; Derek Kerr, the CFO, is also in the room, as I understand; Don Casey, SVP of Revenue Management; Dan Cravens, Managing Director -- or Vice President rather of Investor Relations. You clearly brought the whole bench. Thank you very much for that, Doug, and we're happy to turn the virtual podium over to you.

Sure. Thanks, Jamie. Yes, it's easy to have the whole bench. We all stay in Dallas. Looking forward to being with you in New York next year for this, Jamie. So all right. Well, thanks, everybody for joining. I'll just jump into this. So we can go to Slide 3, please, whoever is in charge of that. Thanks. All right. Look, we had a big week last week and very pleased with the results. First off, as the President signed into law the American Rescue Plan. Included in that was $3 billion -- well, $14 billion for the airline industry, about a little over $3 billion of which will go to American Airlines. In the Payroll Support Program, which pays us to pay our people, really great news for our team. We had sent out up 13,000 warn notices in February, letting people know that if Payroll Support wasn't extended, their jobs were at risk, of them being on furlough, again, which we really didn't want that to happen. Thankfully, we didn't have to. We were able to happily tell everyone they could tear up those warn notices last week. And because, like I say, we're being paid by the government to pay our team and keep them in place. So when the -- as the economy rebounds, we're here to make sure that we're able to do what we do, which is facilitate that by being able to fly people where they want to go. So extremely pleased about that. Also included in that, by the way, was about -- was -- were some changes to pension funding formulas, which for American Airlines reduces our pension funding by about $2 billion over the next 5 years, a little less than $500 million in 2021. And then on top of that, we completed a $10 billion financing of our Advantage program last week. There's a little footnote there from our securities lawyers noting that it's not yet closed, but it will close -- expected to close on March 24. But really pleased with the way that financing came together. Derek and his team did an amazing job, and the market responded accordingly. This is the largest transaction in the history of commercial aviation. And one that came in with pricing much better than where we put it out and much better than it would have been had we done it much earlier in the process. So really pleased with that. The result is, as I'll show later, we've upped our -- we can up our first quarter '21 liquidity estimate now to more than $17 billion. That $10 billion, by the way, replaced $7.5 billion of liquidity that was already in our prior estimates because it was the government. We use that same program, the same Advantage program to fund our secured government loan program transaction. So the net is an increase of $2.5 billion. That's how that number gets to $17 billion at the end of the first quarter. It doesn't include any of the numbers up above because we don't have those in the first quarter numbers. So also worth noting that by doing so, we now are amongst the handful of airlines that don't have a secured loan with the U.S. government. We're really happy about that. We're thankful to the U.S. government for all their support. We certainly wouldn't have gotten here, as I don't think our industry would have without the support of the U.S. government to get us through this crisis. We're also really pleased to be able to take the facility that had helped us put in place about 1 year ago, or a little less than 1 year ago, and have them no longer be a secured lender to American Airlines, which is great. So look, the net-net of all this is for the first time since this crisis hit a little over 1 year ago, we at American are not looking to go raise any money, which is a really nice feeling. I must tell you, we -- Derek and, I guess, the team, I can say, have done an amazing job. It feels really good to, as of last week, gotten to the point that we're not off looking to raise finance anyone. So quick review of 2020. I just need to point out that we're really proud of the team. And I actually never been more proud of a team in all of my career and how the American team responded last -- through the crisis and continue to respond today. We had a country, that was, for a good reason, paralyzed with fear, and the people at American just kept putting their uniforms on, going to work and moving people safely and continue to do so. We moved more people than any other airline did by a wide margin. We did it all very safely. Kept each other safe. Kept our teams safe. Kept our customers safe. And like I said, I could not be prouder of the work that was done by our team. Next slide, please. So here, it's -- when we talk about 2020, those who follow us will recall, as we get to the crisis, we talked about 3 major buckets of initiatives. One, we needed to raise liquidity; two, we need to reduce our cost as much as we possibly could; and then three, we need everything we could to get people flying again. And we did all those things. The first 2 bullets started with the cost. We went and removed about $17 billion of costs, a lot of that due to flying less. But as we'll see in a bit, much of it long-term, sustainable cost reduction. We reduced our daily cash burn as a result, primarily due to the cost savings because revenues did not come back very much during the year. But we reduced our daily cash burn from nearly $100 million a day in the month of April to $30 million by the fourth quarter 2020. And then as I've already noted, we did a really nice job on the liquidity front, particularly after last week's notice. After our last week's raise -- actually that number is just $30 billion of liquidity. If you add the $10 billion from last week, it's over $40 billion now. Again, now $7.5 billion, that's a refinancing, but it still takes the same amount of work actually to do transactions. And again, I can't thank Derek, Meghan Montana, Tom Weir, our former Treasurer, enough for the work they need to do. That $40 billion is 13 separate transactions. So about a transaction a month, getting us to this point, where we're now not having to look for another transaction again. In terms of our customers, we have record-breaking operational performance. That's frankly not that hard to do when there's not as many airplanes flying around the United States, but our team did a fantastic job of running a good airline and making sure that we met the new cleanliness standards of our team. We received this GBAC STAR cleanliness accreditation, and it's just one indication of the great work our team did. Also at the end of the year, we're the first airline to get the MAX back in service and really proud of how our team responded to get that aircraft back flying safely as well. And then lastly, I said -- I noted we flew more than others. This chart off to the right is one that we're proud of. And we didn't just fly more, our team did a phenomenal job of, within a crisis, managing as best we could to generate as much revenue as we could. You can see it in the revenue per ASM. And that's, again, on an airline that flew more than these other 2 global hub-and-spoke carriers. That's hard to do, to produce numbers that are 15% to 20% higher than other network carriers. You don't see it very often, probably you won't see it again. It's not suggesting this is long-term sustainable, but it is an indication of how well I think our team performed. Don Casey is here with me. Vasu Raja and Brian Znotins, who run the -- they run the scheduling group, did a really nice job of keeping our schedule intact and allowing us to connect more passengers than our competitors did, and it shows up in these PRASM numbers. The other way you see it, by the way, is in those cash burn numbers, in fact that American is, when we all talk about cash burn numbers, they we're pretty much on an apples to apples basis, staying in the same range as our 2 large network carriers. That shouldn't happen given that we have a lot higher fixed cost because our debt levels, of course, that's worth $5 million, $6 million a day alone. But we offset that by outperforming. So again, at a time you lose as much money as we all are, sometimes I can get lost, but I don't want to get lost because our team deserves credit for it. They did a really nice job. They have done a really nice job through this crisis of ensuring that we're managing as best we can on the revenue management front. Next slide, please. So looking to 2021, we've been talking at American Airlines about what we call the Green Flag Plan. The analogy, I think, is obviously not -- it's about a car race. And this pandemic is much like a yellow flag, where everyone needs to slow down, go to the pit stop, you can't pass anybody, but you can get really close and close gaps. That's what we're using this for. So that when the green flag drops, we're all running full speed again, that we are running as efficiently and as strong as we possibly can. And we feel very good about the steps we've taken as the green flag is -- feels like it's actually getting really close to dropping. We're in really good position. So the way we talk about doing that is through 4 different initiatives. One, doubling down on operational excellence. We started 2020 with a goal to run the best airline in the history of American Airlines. Again, we did that. But the goal is really to do that when we're running a full operation. And we've done a lot of work during this period to ensure that we're even more comfortable with that statement and expect to run the best airline we've ever run once we're up and running a full airline again in terms of operational reliability metrics. Second, reconnecting with our customers. We have new customers that are starting to come back. And when they do, they're going to see American Airlines is a better airline even than the one that they left. And I'll talk a little more about that. Third, building the team momentum. I talked about how proud we are of how our team performed through this crisis. One of the nice things that's come out of it is how well we've worked together with our labor unions as well, not just the frontline team, but with the unions that represent all of them. So much of what we needed to do to get through this was to pull together, work together, particularly on lobbying for things like the CARES Act. And we've communicated much better than we ever have. We're having biweekly meetings with all of our labor leaders. It's made a huge difference. So we hope to build on that as we go forward. And then fourth, passionately pursuing efficiencies. The teams have been doing that. I'll talk more about that in a minute. So next slide. I know we're all interested in, when we talk about the recovery, where -- when the recovery happens, how quickly it happens. I don't know that I can provide you the precision on that, that some may like, but I can tell you kind of what we see right now and what we'll need to see in order for it to come back. First off, domestic leisure, this is about 45 -- the number I'm going to give by the way are in a steady state here, like in 2019. Domestic leisure in a normal year would be about 45% of our revenue. It's much higher than that, as you can see in these green, yellow and red balls. Those indicate which ones are -- how they're all doing currently. Domestic leisure is performing quite well. That used to be about 45% of our revenues. It is definitely coming back. We've seen -- and I'll show you in a minute what bookings are doing, but huge pent-up demand for domestic leisure travel, and that demand is coming back quickly as vaccinations are being distributed. Short-haul international is largely leisure-oriented. Short-haul international for us is primarily flights to Mexico, flights to foreign -- to non-U.S. islands in the Caribbean. Those are leisure markets. The Americans flying to leisure markets for the most part. It has similar -- or had similar trends as domestic leisure. And then we put in place -- the U.S. government put in place a requirement that any international flight, short-haul or long-haul, require some -- require the customer having a negative COVID test within 72 hours of departure. So that puts some damper on demand for a while. But that's coming back. That's why we're showing that as yellow. That's started to come back largely because the resorts and hotels that Americans are staying and realize that in order to attract that business they need to support the testing requirements and they are. So they're making it very easy and free for our customers to get those tests in order to stimulate -- in order to restore demand and that's working. So we've seen a nice uptick of late in the short-haul international. What we haven't seen much of yet is domestic business or long-haul international. Domestic business. There are some grass shoots there. There are -- we do start to see people talking about traveling again. We have actually seen some business traveling again -- I'm sorry, on these percentages, by the way, the short-haul international in a good year is about 10% -- or in a normal year, it's about 10%; domestic business is about 25%; and long-haul international, [ less ] 20%. So this is an important part of the revenue stream, this domestic business. It's not there yet, like I said, there are grass shoots. It's going to require a relaxation of corporate travel restrictions. People returning to work, et cetera. It will come. It's starting to come. But again, for us to tell you exactly when it comes, frankly, you all would know as well as we do when your own corporations are talking about getting people back flying again. But we know there's huge pent-up demand here as well, just not coming back as quickly as the leisure is. And then long-haul international requires yet again another hurdle to be overcome, and that is countries relaxing their international travel restrictions, which again will come at some point. And countries are starting to talk about that and talk to each other, but it hasn't happened yet. I don't expect it will happen any time in the immediate future. That's all okay. What we know is it's going to come back. When it does, we're going to be ready, and that's what we're prepared -- that's what we're preparing for. So on the next slide, I think talk a little bit about -- this slide on the left every -- is widely disseminated public knowledge the TSA puts out every week, what they're seeing in terms of throughput. So I know you've all seen this. There are more people flying. Still well below, as you can see on the Y-axis, well below what the numbers were in 2019, still not even half of what we flew in the same period in 2019, but well above where it was back and improving steadily. What isn't public is the bookings data, which is improving at a faster rate. This is, again, the one on the left, obviously, showing actual travel. The one on the right showing purchases of tickets for travel in the future. And what we're seeing is certainly in the last few weeks a real uptick in bookings. Those -- our last 3 weeks have been the best 3 weeks since the pandemic hit, and each week has been better than the prior one. And that appears to be continuing here into the fourth week of that period. So we're really getting to a point where bookings are -- bookings, anyway, are coming up very close to what we've seen in the past. That number last week was actually 20% lower than 2019. We're getting really close to 2019 numbers in terms of total bookings. And so not total revenues, by the way, again, because what I just showed you, most of this is largely leisure-based, lower-yielding. We do now get to start working on improving yields, which Don and his team are happy to begin doing. We haven't been doing yield management in airlines for a while. We've just been pricing the product and leaving all the buckets open and taking what we can. We're getting to the point where actually we're going to actually be able to try and start pushing some yield as the loads start to get back to former levels. So that's what we need to start working on is now working on yields. Much of that, again, those are going to take business to return. But also can -- we can also crank up the leisure yields a little bit. So part of our reconnecting with customers, making sure we can fly where they need to fly, our team has not stood still during this crisis. Indeed, we've -- while all this was going on, we were able to negotiate 3 incredibly important strategic relationships. We launched a West Coast International Alliance with Alaska Airlines, we launched our Northeast Alliance with JetBlue and we launched a new codeshare with GOL, all of which just make the American Airlines network, which is already the largest in the world, that much stronger for our customers and something that I think is going to make a big difference as we move forward in terms of our ability to compete with anyone in the world. Next, reconnecting with customers. Much of what -- as customers come back, we need to make sure we -- our IT team hasn't stood still either. We have all sorts of initiatives that our customers that are returning we'll see that weren't there maybe the last time they flew, it's been a while. Those include a lot of things that are very important for the new world. VeriFLY, which allows people to show things like vaccination records and COVID test records. Touchless kiosks, et cetera, but also things like biometrics in a digital wallet that will make it easier for customers to do business with American. Next slide, I talked about passionately pursuing efficiencies. This is a really important piece of what we've done. We were coming through 2019. We knew we had -- and we talked a lot to our investors about how we had the ability, now that we had finally gotten to where we had, 2 fully merged carriers, with our last contract getting done, with our mechanics complete service team that we know we had some ability to continue to drive down cost. We're going to do that over time. We've used this period to get those out. We retired 150 aircraft earlier than we would have otherwise and removed 5 different fleet times. That's a real efficiency. We also used the time to accelerate our cabin standardization program so that we're going to have all the 737s complete by the end of the second quarter, all the A321s complete by the -- by year end 2021. That allows us do a much better job of -- having the same configurations in aircraft allows us to do a much better job of selling the seats we do have in the aircraft and provide better customer service. These new configurations are -- have power to every seat, larger overheads, et cetera, much more customer-friendly aircraft. And as we've done all that, we already had the youngest age airline of the large number of carriers. Ours has just come down, of course. The others have brought theirs down. They've done similar-type things. We're all retiring older aircraft. But we now have far and away the youngest fleet of the large major hub-and-spoke carriers. And what that means is we have lower fleet replacement and CapEx needs as we go forward -- CapEx needs as we go further, as Derek can talk about. So on the efficiency point, a really important point for our investors. We have through, a lot of hard work, gotten to what we feel comfortable is $1.3 billion of permanent cost reductions in 2021. These aren't capacity reductions. This is really -- our estimate is if we go back to 2019 and fly 2019 schedule again, we'd be doing it with $1.3 billion fewer costs. Now a lot of that happens because when I say with the fleet, as Derek said on our first quarter call, we can fly -- we could today, that fleet in addition to being retiring older airplanes, now we've increased the gauge by doing that as well. So we could fly the 2019 level ASMs with about 10% fewer airplanes. That allows a lot of productivity enhancements. Think you don't need as many reserve pilots, for example, if you have [ 5 tier fleet ] types. We don't need as many maintenance and engineering professionals if we have [ 5 tier fleet ] types, we can fly the same system with 10% fewer aircraft. We obviously can be a lot more productive. So $500 million of that is management reductions. We went through a difficult process of reducing our management staff by about 30% during the depth of the crisis. We'll add back some of that, and believe me when we do, we're going to be $500 million lower in costs than we were in 2019 in terms of management cost. $700 million of labor productivity enhancements, like I said, largely driven by the fact we're more efficient with the fleet and also driven by some improvements in technology. These automated crew recovery helps us with our crews. Virtual Assistant allows us to connect with a customer without having to have a live res agent do it. ConnectMe allows our team within airports to communicate so much better with each other that we don't have as many people needing to be running around to communicate with each other. So all that comes together in a way that we feel comfortable that we're going to have $1.3 billion, as I say, real permanent cost reductions as a result of this as the green flag drops. So that gets me to this again, liquidity, which was the ever important measure to look at here for quite some time in our business. We were -- thanks again to the hard work that the team was doing, we really had that growth throughout the year. But now it's going to be even higher for the first quarter of 2021. Like I said, we're up in that number $17 billion, given the $2.5 billion incremental increase from the $10 million advantage financing and the $7.5 billion -- and the retirement of the $7.5 billion government facilities. But not in clear that number, of course, is the other activity I talked about from last week, which was the American Rescue Plan, which has it in another, I guess, a little over $3 billion from Payroll Support and around $400 million for pension relief. So pro forma for those, if those weren't actually closed by the first quarter, which they were -- this number is over $20 billion. So that over $20 billion pro forma is what has us, Derek and I, not spending one second of our time looking to raise money for, hopefully, quite some time. We're going to [ move ], actually going to -- getting through this, getting people flying again and working now to work to actually begin delevering and paying down debt as we go forward, which we can talk about. So look, in summary, really proud of the team. They delivered and they delivered exceptionally well through the crisis. Crisis isn't over, of course. But sure -- we certainly are seeing the beginning of what is a -- feels like a very large uptick. And as that happens, we are well prepared in American. We're well prepared because of the Green Flag Plan we put in place. We've doubled down operational excellence. Our team is out there running a great airline that is both on time and clean. We've got -- when our customers return, they'll see a broader network with 3 new partners that can take them to even more places. They'll also see an airline where we have reduced our flying that was unprofitable, and are targeting into places where we can make money and are ready to grow and expand as they're ready to travel or building on the momentum we built with our team that we built in 2020 throughout that. And the team is engaged in taking care of customers and doing so in an amazing way. And then on top of that, we're going after efficiencies, which the team has already done. The challenge is to make sure we keep them in place, which I know that we will. So that's it, Jamie. We are ready to answer any questions you all might have.

Okay, Doug, thank you very much. Very strong deck. I want to think about the $1.3 billion in cost reduction, just kind of coming at it from a different angle, because one of the things that we and others cited going into the downturn was that in order to achieve a $45 billion revenue base, it did look like you were long about 200 aircraft and maybe as many as 35,000 to 40,000 headcount relative to at least one of your larger competitors. How should we think about those efficiency numbers now? You're obviously down 150 on fleet. I don't have the headcount numbers in front of me. But if we think about getting back to that $45 billion revenue pie at some point in the future, and we're confident that you will and I assume you share that confidence, how should we think about the relative efficiency versus how you came into the downturn? And if you don't -- follow-up with Derek, but that's the question.

Yes. No, fair enough. I [ can't have ] -- anyway, the -- my short answer to that is, I think, we'll be relatively as efficient as anybody. And the number -- to do the analysis you're doing, we have to help you understand the differences between our airline and others. We have -- we do have more aircraft because we own a couple of regional airlines, and we have more people for the same reason. That's one of the big adjustments. We also do less outsourcing than others, which is, I suppose, some bit of a cost inefficiency. But in terms of number of heads, it's a big difference that we would need just to point out to you as well. But what I know is we'd use this to get as efficient as we possibly can, and we feel really good about that. So again, having not done the analysis you're asking for, but knowing what we've done here, I suspect the result we would be able to prove is that we're as efficient as anybody.

Good. No, it definitely helps. Mark, you said you had a question?

Yes. Doug, so when we sort of take a step back and look at last summer, when the industry was focused on everyone's liquidity, but particularly Americans, they were focused on your debt burden, and many of them at least thought that perhaps a restructuring could be in the cards. Fast forward to today, right, and I agree with you. Derek, Tom and now Meghan, you've done a fantastic job raising liquidity. That's no longer an issue, right? And clearly, that outlook going forward for liquidity in the near-term looks good, too. The one thing that hasn't changed, though, is you still have this massive debt burden relative -- in absolute size and larger relative to your peers. So there are still investors out there that still come to Jamie and me and say, well, isn't some sort of an American restructuring inevitable? And we can point to the liquidity and so forth, and we can highlight that, but there's still concern about the size of the debt burden. Maybe you can -- we'd like your updated thoughts as to how you're going to manage this and why simply restructuring just isn't on the cards and how the liquidity and the cash burn is going to lead to debt repayment to get you back to a position where you can handle the next bump in the road, if you will.

Yes, sure, Mark. I'll try. The -- anyway, we went into 2020 with going into delever, of course, and talked about how we're going to, over time, reduce our -- over 5 years, it was...

$8 billion to $10 billion.

$8 billion to $10 billion. That, frankly, was a lot of natural -- that was entirely natural, that's just the repayment and not adding additional financing. We weren't able to do it in 2020, of course. But we actually looked at what we -- first off, a point I'd make is the additional debt. I just want to be clear, when we say we raised $40 billion of financing, again, that's about [ $32 billion ] net. Of that, $11 billion of that's in grants and equity. So you take those numbers out and you're down to about $22 billion of debt that increased. A large percentage of which, by the way is [ 10-year ] 1% unsecured government loans. But then if we're at $20 billion pro forma cash when we used to be at $7 billion pro forma cash, when you fight through all that, the net debt is up $8 billion, $9 billion, not something to sneeze at. But nothing close to the numbers we were talking about. So I just want to make sure everybody understands that. That number may increase or -- as we have to fund some losses with the $20 billion of cash, but I don't think it's going to be going very much longer. So we're going to find ourselves quickly in a position of wanting to figure out what to do with that cash, is where I expect we're going to be, and the answer to that, of course, is going to be we're going to delever. We're going to go work to retire debt, the highest cost we can -- debt that we can, and we're going to do that. And a lot of it, by the way, happens naturally within our -- just in our P&L cost. There's some -- how much for -- $4 billion per year, something, Derek -- or I'm sorry $2 billion per year?

$2.5 billion.

$2.5 billion per year just in our P&L that is paying down debt. So I'll let Derek give you some better numbers on this. But the long and the short of it is, and any other point I'd make is, I just struggle so much with the question to tell you the truth, Mark, because we just ask people to do the analysis. The -- our net interest expense as a result of all this, in 2021 numbers is some -- I don't know, $500 million, $600 million higher. That's offset by $1.3 billion in real cost reductions. So it doesn't come close to -- it's essentially funded by manager payroll reductions. So anyway, we feel really good about our ability to do all this, and we will. So we'll be able to be nicely profitable again -- when the industry is back, to be nicely profitable again because we've taken out more costs than we've added industry expense. And we will absolutely be working to delever because that was always the plan. Anything to add, Derek?

No. I think, Mark, I mean, as we -- the other thing, as you know, from a debt stack perspective, this year, we don't really have anything other than our aircraft debt to pay down, which is about $2 billion a year, as Doug said. So that will pay down, and that's the natural delevering that we will have. And that's built into -- everybody else has a cash calculation number of daily cash. We put that in our daily cash number. So that $30 million a day is also -- includes our paying off of debt. So that's in there. 2022 has the $750 million unsecured, which we expect to pay out in cash. 2023 right now is $2.8 billion in the revolver, which, as we said, as part of this transaction, we will actually take that extra liquidity we got and we'll pay off the revolver, which will actually continue to stay as a liquidity, but it won't be debt on the books. And then you get to 2024. So we're all the way out to 2024 before we actually have any -- actually 2023 before we have anything with the term loans and things that we have to deal with. So in that time, as Doug said, we'll look at liability management. We'll look at it as we go forward. If we have the cash that we have, we could do a lot of things with it. We could pay cash for our aircraft next year and not add to debt. Or we'll figure out the best way to take down the high cost debt. But the one thing that Tom and Meghan have done is there's not a lot of high-cost debt on our balance sheet that was on our balance sheet prior to the pandemic. So we'll be -- we'll figure out what's the best way, what's the best assets to pay off that can be used later. So I think we've got some time. We'll look at the liability management side of things. But we're in really good shape the way the balance sheet and the debt stack is set up to, number one, naturally delever like we were going to do and also be opportunistic if, hopefully, at the end of the year where this liquidity is, we'll have chances to pay off other debt.

And Mark -- I'm sorry, just [ fun facts ]. I have some fun fact Dan's given me. 40% of our debt is pre-payable. 2/3 of our debt amortizes. So that's built into our cash burn numbers when you're looking at those. And then the average cost of the debt right now is 4.1%. So it's relatively cheap. It amortizes over time. So it'll delever just as we go through the year. And if we choose to prepay those, some of that cheap debt, because we just have so much cash on hand, we can do that as well. And look, that is absolutely the intent of the company.

Great. Well, the quick follow-up for me is this. You mentioned that you're not raising incremental liquidity. So how long are we in this holding pattern here, Derek, maybe for you as well, until you sort of flip the switch on aggressively going after the debt? Really what I'm looking at is, what are the goalposts for that? What do you need to see? Is it getting to true sort of daily cash burn positive and then you tell the treasury team, Derek, it's time to go after this debt load? What are we going to need to see?

Well, when we get to cash burn positive, that will mean we're delevering because we have that in our numbers. That's number one. Number 2 is we have Don here on the side. We need to make sure we're out of the pandemic, right? We need to -- we've got ourselves in a liquidity position that is we know we can make it through and it's not an issue, but you also want to see where is the recovery. Is the recovery going to be in the back half of this year? Is the recovery going to be next year? When is that recovery going to happen? And we want to see a little bit more into that. We're seeing the bookings increase now. We're seeing things look a lot better. But you still got to wait just a little bit until we make sure we're out of it before you use the cash to start paying off some efficient -- really efficient debt that's out there today.

Jamie, back over to you.

Yes, that's great. [indiscernible] networks. So Doug, you and I have discussed in the past, the real top laggards were Los Angeles, Miami and JFK. Chicago and Phoenix were sort of industry average. And then Charlotte, Dallas and DC is where you really outperform the industry. The Alaska fix in L.A., the JetBlue solution in New York, is that enough to completely erode lost production at those facilities? Is it merely a band aid? And what's the solution for Miami?

I'll go real quick and then Don can fill in. Look, it's much more than a band aid. We certainly think it's going to -- it allows us to compete with the other large carriers there. The combination of American and JetBlue in New York is as large as our competition there. And we have a real connecting relationship and incentive to connect customers there. So we certainly believe we can make our New York operation profitable. And then the L.A. with Alaska is similar, not to mention Seattle, so the upper Northwest. So it undoubtedly makes them better, it's much more than a band aid. Those are important strategic relationships. And the Miami issue is primarily a cyclical issue. Just -- that's just -- so much of that South America, and the South American economy is, prior to the pandemic, we're not doing really well. We have a huge presence -- we have a larger presence there. It's done very well in prior cycles. It will do well again. And the GOL relationship just makes it much stronger. So Don, anything else?

No. [ Just a picture of ] JetBlue in Alaska, right? These kinds of transactions have never existed before in the domestic market but we were actually able to align our incentives. So this is way beyond just a culture relationship in terms of what we're able to do. And we do think that this is really quite fundamental in terms of the -- our network going forward. I mean we are far and away going to have the most compelling proposition for customers for any kind of domestic travel. And if you win in domestic, you would overall, right, because so much of the business sits in domestic.

And Don, while I have you, Doug talked before about you firming up yields. And I'm trying to understand if that's an automated process or if it's a human process. I mean on one hand, I'm very encouraged by the Chase credit card spend. I'm encouraged by TSA. But I'm still getting e-mails for $29 [ one-way deals ], not necessarily from American. Help me understand better the process by which yields firm commensurate with the demand surge that we're beginning to see.

Okay. Well, first of all, the recovery right now we're seeing is domestic -- domestically-driven, right? It's not going to be [ attuned to ] the fall when we start -- we expect to see some recovery in the business demand. And so there are 2 aspects to how we think about yields. One is just a nominal level of the fares, right? So we have, in any given market, we have a list of prices that go from a low price to a higher price. And if you go look at the list of prices that are sitting out there right now as we look towards the summer, they look very similar to what they were in 2019. So the nominal levels of pricing in '20 for the coming summer travel period, like very similar to where they were in 2019. In order to be able to get average prices up, we need to be able to sell up through that fare structure, right? And we sell up that fare structure and we will start to get some load factor pressure, right, for us and for the industry. And as I said, it really is load factor that's going to kind of drive assumptions that fare ladder. And right now, as we look at kind of demand coming forward, March ended up coming in quite strongly. Doug mentioned that we've seen, over the last 3 weeks, making increase kind of in our daily intakes. Every month going forward looks better than the previous one. So we're seeing sequential improvement, not only in load factor but in yields. If you think about the rollout right now of the vaccination program and the continued reduction in cases, the meat of our booking curve for domestic and short-haul international, which is where 85% of our capacity is, is really going to be in April and May, for the summer peak. And then June, July and August. And we expect to have very, very strong demand in leisure demand as we had in summer peak. That's going to push our load factors up. They are going to allow us to [ somewhat ] through the fare ladder. So we're quite optimistic about our ability to get both the yield environment and the load factor where it was as head on the peak summer travel for leisure.

That's helpful. And last question for Doug, and I know we're coming up against the hard stop here, but looking back, Berkshire Hathaway, cut and run, at the very bottom of the market. They bottom ticked it. And I think there's a growing body of evidence that the industry could very well be in a better structural place post-COVID, in terms of international rationalization, your disclosures that your cost savings, your operating cost savings clearly exceed that of the added interest burden, and recognizing that you were sort of the architect with the leap of faith speech at our event several years ago, are you reengaging with long onlys? Do you still have a dialogue with Berkshire Hathaway? I mean what else do you need to do to start winning that confidence back, which I would argue that confidence perhaps shouldn't have capitulated in the first place but [indiscernible]. Any thoughts on that? And then we'll wrap.

Well, yes. Look, [ it's hard ] for me to question Berkshire Hathaway and their investor or any of us. So look, what I remember, one of my favorite quotes from when that investor came out, is Ted Weschler telling me one of Warren Buffett's quotes is you get the shareholders you deserve. And they're right. So they viewed our airline as one that deserves shareholders like them a few years ago, and we are proud of that. They decided that during the crisis, that's -- that we were not, and we certainly respect that. So look, that's up to them. But to your real question, they weren't alone. We got done to really one kind of real institutional shareholder there for a while. We've -- and Dan will tell you, we're starting. Again, you can tell us. We're starting to hear more interest. So I hope it's -- we plan to be -- we plan to prove we deserve better shareholders long-term -- and again, not suggesting our current shareholders aren't good, but long-term institutional shareholders that want to invest in the long term. We know we got to get through this to prove that, but we intend to. And one day, that will return. So that's what happened. It's not about us engaging with anybody so much as us going out and proving it and they're deciding that this is a safe investment for their long-term holdings.

That's great. Really strong deck today. Thanks for bringing the entire team. Good luck with the one-on-ones. And Mark and I hope to see all of you in person before too long. Thanks.

Thanks, Jamie. Thanks, Mark.

Okay. Thanks, Jamie. Take care.

Bye-bye.