American Airlines Group Inc. ($AAL)

Good morning, and thank you for joining us at 2026 Annual Meeting of Stockholders of American Airlines Group, Inc. I'm Greg Smith, Chairman of the Board. The meeting is now called to order. Joining me today are members of the executive team and the Board of Directors, including our CEO, Robert Isom. We will start with some housekeeping items and then move to the official business of the meeting. After the conclusion of the formal business, we will answer your questions. I would now like to introduce Tony Richmond, our Chief Legal Officer, who will serve as Secretary for this meeting. Tony?

Thanks, Greg. I will first go over a few [indiscernible] today's virtual meeting is a live webcast. You will find the agenda and rules of conduct through the meeting page. A representative of our Inspector of Election is in attendance and has confirmed that a quorum is present. The polls opened for voting today at 9:00 a.m. Central. If you wish to vote at this meeting, you may do so by returning to the page you used to enter the meeting and clicking a vote. Stockholders who have sent in a proxy or voted by telephone or Internet and do not want to change their vote, do not need to take any further action. Stockholders may ask questions in the designated field on the meeting page during the meeting. [Operator Instructions] We will respond to questions later in the meeting. We will consolidate our responses where we have received multiple questions on a given topic, and answers to any relevant questions not addressed will be posted on our Investor Relations website following the meeting. The Board established April 13, 2026 as the record date for determining stockholders entitled to vote at this meeting. An affidavit has been delivered attesting to the fact that the notice of the meeting was mailed commencing on April 27, 2026 to stockholders as of the record date. We have 7 proposals at the meeting: one, the election of 12 directors; two, the ratification of the appointment of KPMG LLP as the company's independent registered public accounting firm for 2026; three, an advisory vote to approve the compensation of the company's named executive officers as disclosed in the proxy statement; four, a proposal to amend our restated [indiscernible] incorporation to limit the liability of our officers as permitted by Delaware law; five, a proposal to approve the amended restated 2023 Incentive Award Plan; six, a stockholder proposal regarding the ability of stockholders to act by written consent, if properly presented; and seven, a stockholder proposal regarding cumulative voting for director elections, if properly presented. Each proposal is described in detail in our 2026 proxy statement including the Board's recommendation for each proposal. No other matters will be considered. I would now like to introduce our director nominees who are in attendance at today's meeting. Adriane Brown, John Cahill, Mary Dillon, Kate Farmer; Matt Hart, Robert Isom, Sue Kronick, Marty Nesbitt, Vicente Reynal, Greg Smith, Doug Steenland and Howard Ungerleider. Also joining this meeting is [ Randy Green ] from KPMG, the company's auditor, who is available to respond to appropriate questions. The next item of business is a stockholder proposal from John [indiscernible]. We will now hear from Mr. [indiscernible] to present the proposal.

Hello. This is John [indiscernible]. Proposal 6, shareholder [indiscernible] by written consent. [indiscernible] request to the Board of Directors take the necessary steps to permit written consent by the shareholders entitled to cast a number of votes that would be necessary to authorize an action at a meeting at which all shows entitled to vote there were present and voting without unnecessary restriction based on a stock ownership or method by which shareholders hold their shares. This includes shareholder ability to initiate any appropriate topic for written consent. This includes that any associated request for a record date shall have the lowest reliable figure. This includes that written consent not includes a [indiscernible] cause mandating a cent of shares to be solicited and less legally required. [indiscernible] acting by writing consent and calling for a special shareholder meeting are 2 means that shareholders of a company can use to put forth their proposal on a timely basis without waiting for the Annual Shareholder Meeting. According to State Law, the American Airlines shareholders can have the right deck by written consent and the right to call for a special shareholder meeting. Both rights allow shareholders to take action between annual meetings. [indiscernible] American Airlines for suggesting had shareholders limit themselves to 1 shareholder right when American Airline shareholders are entitled 2 shareholder rights under state law. American Airlines shareholders are best served when they have both rights. Written consent is they show the right that requires the formal backing of American Airlines majority based on all shares outstanding. This majority support requirement in reality is much more than a majority support because it is not economically possible to contact a significant percent of American Airlines shares to get their formal backing. Thus for an issue to still get majority support based on all shares outstanding, under writing [indiscernible] could easily need more than 60% shares that are economically possible to reach. How can American Airlines be opposed to 60% majority? Being opposed to this proposal means being opposed to decisions by a 60% majority American Airlines' shareholders. Please be in favor of 60% majority decisions and vote for a shareholder write-down by written consent Proposal 6.

Thank you, Mr. [indiscernible]. The company's response to your proposal can be found in our proxy statement. The next item of business is a stockholder proposal from the National Legal and Policy Center. We will now hear from [ Paul Chesser ] from the NLPC to present the proposal. Mr. Chesser provided the company the following pre-reported remarks.

I'm [ Paul Chester ] of National Legal and Policy Center, speaking in support of Proposal 7, which asks the board to adopt cumulative voting in the election of directors. This is a modest reform with a simple purpose to give shareholders a stronger voice and who represents them on the board. The case for it begins with performance. Over the past 5 years, an investment in this company has lost value while the broader market has nearly doubled. The company was dropped from the S&P 500. And just last month, American Airlines reported another quarterly loss even as its largest competitors performed better. These results matter to the people at this meeting and the investors they represent. Yet through the same period, Executive and Director pay has remained substantial. And the company's largest employee groups have voiced an extraordinary loss of confidence in current leadership. When a board presides over results like [indiscernible] without real change, shareholders are entitled to ask whether they are well represented. This reform offers an answer. It does not hand control to any single group a majority of shares still elects a majority of directors. What it does is let shareholders who hold a minority position to pool their votes and elect at least 1 director who reflects their concerns. That is not a radical idea. It is a basic principle of accountability. A Board that those shareholders can elect a voice of their own is a Board that pays closer attention. For these reasons, I urge my fellow shareholders to vote for Proposal 7. Thank you.

Thank you, Mr. Chesser. The company's response to your proposal can be found in our proxy statement. The time is now 9:08 Central Time, and the polls are now closed. The Inspector of Election has advised that a majority of votes previously cast have been voted for all of the director nominees listed in Proposal 1 and for Proposals 2, 3 and 5. The Inspector of Election has advised further that the required approval threshold for Proposals 4, 6 and 7 has not been met. We will announce final results in a Form 8-K filing with the SEC.

Thank you, Tony. This concludes the formal portion of our meeting and our stockholders meeting now adjourned. We would now like to share a brief update on the business and answer your questions. I will now turn it back to Tony and then to Robert.

Thanks, Greg. I want to note that as with most presentations, the following discussion will include forward-looking statements, and the company's actual results may differ materially from those discussed here. Additional information regarding factors that could cause such a difference can be found in the company's 2025 annual report on Form 10-K and our most recent quarterly report on Form 10-Q. I would now like to ask American CEO, Robert Isom, to share a brief update on the business. Robert?

Thanks, Tony, and good morning, everyone. It's a pleasure to be here with you today. I want to thank the American Airlines team for its strong execution over the past year and particularly as we begin the busy summer travel season. We remain focused on running a reliable operation while advancing our commercial strategy to elevate the customer experience, grow our global network, drive premium revenue and lead in loyalty. Demand for our product remains strong, supported by continued investments in our fleet, onboard experience and digital capabilities. As we build on our recent momentum, we're taking disciplined actions to manage near-term cost pressures, particularly fuel expense and position American to deliver sustainable growth and long-term value.

Thank you, Robert. Now we would like to address several stockholder questions. Please note that only questions germane to the meeting will be addressed. Any relevant questions we don't answer during the meeting will be posted on our Investor Relations website.

Question one. Robert, our first question is about stock price performance and profit margins. American stock price hasn't moved much in recent years and based on the latest guidance for 2026, the company is expected to be slightly profitable for the year, which is similar to the company's 2025 results, do you expect to still be able to expand profit margins?

Our stock price isn't where we want it to be. And frankly, it's not where it should be, given the strength of our value proposition relative to the rest of the sector. The most important action we can take to improve our stock performance, both this year and over the long term is to strengthen our financial performance, particularly our margins. . At the start of the year, the midpoint of our guidance implied earnings of approximately $2.20 per share, equating to roughly -- nearly $7 billion of EBITDAR and more than $2 billion of free cash flow. At current valuation multiples, that level of performance would suggest a stock price of around $20 per share. And absent the sharp increase in fuel costs, we believe we would have exceeded that midpoint as our revenue performance, driven by our commercial initiatives have outperformed initial expectations. That said, the rapid rise in jet fuel prices is materially impacting 2026 earnings which are now expected to be roughly flat relative to 2025 despite an increase in fuel expense of more than $5 billion year-over-year. Importantly, our strong revenue performance has enabled us to offset much of this increase in fuel expense. That strength is being driven by our focus on our 4 commercial pillars, elevating the customer experience, expanding our global network, growing premium revenue and leading in loyalty. Looking ahead, I'm even more confident in our margin expansion potential than I was at the start of the year. As fuel prices normalize and we continue delivering strong top line performance, we expect meaningful margin improvement in 2027 and beyond and in turn, improve share price performance. And over the long run, we're confident this translates into significant upside for our shareholders.

The next question is on the topic of M&A activity. There's been a lot of discussion about M&A in the airline industry recently. What are your views about the potential for M&A for American?

American Airlines today is the product of several significant mergers, and this management team has deep experience both evaluating and executing on M&A. That said, as we look at potential opportunities, our focus is always grounded in what creates value for our stockholders, customers, team members and other stakeholders. At the same time, we have to be realistic about the regulatory and legal environment. Any potential transaction must be viewed through the lens of what is achievable from an antitrust standpoint. As it relates to recent statements made around a potential combination with United, we did the work to understand what might be legally feasible and engage with regulators across multiple levels of government. The consistent feedback from the administration to state attorney general and across the entire political spectrum is that such a transaction would be a nonstarter. The greatest and quickest path to creating value for American and its shareholders is by us executing on our plan to improve profitability. The progress we've made over the past year shows us that the plan is working and we'll see significant improvement once fuel stabilizes. American has a long history of being aggressive and creative in forming partnerships that are strategically sound, achievable within legal and regulatory environments and that bring benefits to our customers, team and shareholders. It's how you create a 100-year-old brand and approach today and well into the future where it makes sense.

We now have a question related to the operation. How does American ensure operational reliability, transparent communications and quick recovery from our regular operations.

Operational reliability is a core component within our commercial initiative to elevate the customer experience. We've made meaningful investments in both our operation and digital capabilities to improve performance and better support customers, team members when disruptions occur. This includes enhancements to American's mobile app that provide real-time updates and seamless self-service options for our customers. We're also making structural improvements to the operation by building more time into our schedules. These changes are improving completion rates and helping us to recover more effectively when disruptions do occur. Finally, we're seeing meaningful benefits from targeted network changes. At DFW, our largest hub, the introduction of a 13 bank schedule has reduced delays, misconnects and game changes. Given the scale of DFW within our system, these improvements are driving the broader positive impact across the network. We're also seeing significant benefits from the scheduled changes we made this year in Philadelphia, our primary gateway to Europe, that allowed us to significantly increase long-haul North Atlantic capacity.

Next question about long-term investments. What long-term investments company making to improve the business.

We've been making several long-term investments to improve the business. One good example is the work we're doing right now to shape the future of our wide-body fleet. We currently have an RFP in the market and are actively engaging with both Airbus and Boeing as we evaluate our next order for wide-body aircraft. This builds on the disciplined fleet strategy we've established over the past several years. In 2024, we set up our narrow-body and regional fleet plans for well into the next decade with an order of 260 aircraft and options for another 193 aircraft. We currently have 19 wide-body aircraft on order with options for 28 more. But given the long lead times associated with wide-body deliveries and expected Boeing 777 retirements in the 2030s, now is the right time to define what comes next as we continue to expand and modernize our internationally capable rate. Apart from the fleet, we continue to invest in our airport facilities our product and our team. We have major terminal projects underway in Dallas-Fort Worth, Los Angeles and Miami, and we're also expanding our Admirals Club and flagship lounge footprint across the system. And we're focused on expanding our premium offerings throughout the travel journey, and we're investing in the team member experience to ensure our team has the technology and tools they need to serve our customers. These investments are designed to drive margin improvement and are aligned with our 4 commercial pillars of elevating the customer experience, growing our global network, driving premium revenue and leading in loyalty.

Thank you, Robert. That concludes the Q&A section of the meeting.

And thanks, Tony. Before we close, the Board and I would like to take a moment to acknowledge 1 of our directors, Denise [indiscernible], who will be retiring from the Board at the conclusion of this meeting. Denise has been an integral part of the Board for many years, helping to guide the company through mergers and other pivotal moments. American has benefited from her extensive experience as an investor and public company director, along with thoughtful perspective shaped by many years of leadership across a wide range of industries, including aviation. On behalf of the entire Board, I'd like to express our thanks to Denise for her many years of dedicated service, thoughtful counsel and steadfast commitment to the company. And as I said in my earlier comments, we feel very good about how American is positioned. As fuel prices normalize, we're set up to deliver meaningful margin expansion. At the same time, we're actively driving structural improvements across the business, driven by our 4 pillars: enhancing the customer experience, growing our global network, driving premium revenue and leading and loyalty. These initiatives are already translating into stronger revenue performance. And that, in turn, will mean significant free cash flow generation, creating the flexibility to reinvest, strengthen the balance sheet and enhanced long-term shareholder returns. Taken together, that means significant upside for American Airlines. I'd like to thank our stockholders for attending today. We appreciate your continued support and the confidence you've placed in our Board and the team. The meeting is now closed.