American Airlines Group (AAL) J.P. Morgan Aviation, Transportation & Industrials Brokers Conference (Transcript)

About: American Airlines Group Inc. (AAL)
by: SA Transcripts
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Earning Call Audio

American Airlines Group (NASDAQ:AAL) J.P. Morgan Aviation, Transportation & Industrials Conference March 5, 2018 11:00 AM ET

Company Participants

Doug Parker - Chairman and CEO

Conference Call Participants

Jamie Baker - J.P. Morgan

Jamie Baker

All right, folks. We're staying on time, which is good. You know Doug Parker, the CEO of American and longest-seating CEO of an airline that operates multiple fleet types, which is a nod to Cape Air; longest-standing CEO in the United States, has been a part of this event for several years. I'm sure many of you, the mere fact that we are discussing the Berkshire speculation with Southwest this morning really can be traced back to that initial leap of faith, sort of a secular event in the industry, that speech and then, of course, the follow-up to the leap of faith the following year. So it's always great to be able to have American here and to be able to welcome Doug Parker to our stage. I will let you take over. Good to see you.

Doug Parker

All right, thanks Jamie, and that all of you for being here and your interest in American. Okay, so Jamie referenced leap of faith speech and Dan and the rest of the team wanted to put that slide in again I refused because I thought that we’re grown. So I did not put it in yet this year, but look the point of that slide - the point of that was really two things, one that the industry has been permanently transformed. I feel like we’ve proven that over the last five years. I’m not sure all of our investors feel but certainly - I certainly do. The point we're trying to make was that the industry has been permanently instructionally transformed and that was one important point.

But the bigger point at least for all of us American was once you understand that you have to lead differently and the biggest thing it matters is, we've got to start leading long-term. We got to start thinking long-term prior to this transformation of the business survival was what mattered and we were all just working really hard to make sure we did survive, we are good at that. But that's no way to create value for the long term and we need to get our company and companies thinking long-term aren't thinking long-term. So that was the entire point.

We are doing that. This slide talks about lays out the three long-term strategic objectives. So we've set for ourselves at American Airlines. They are long-term, they're aspiration, they are not going to happen in 2019 not any of one these three things will be complete this year. But as I’m going to walk you through them quickly so you know what it is we’re aspiring to accomplish over the long-term.

First, make culture a competitive advantage. This doesn't just say transform the culture to American Airlines which we are in the midst of doing. What it says is, make culture a competitive advantage. Something we believe we can do. When we get to the point that our culture is so strong, our people are so engaged and have the tools they need to do their jobs, and know how important what they do because they rewarded for it and encouraged and know they work for a company that cares about and that actually that people want to find American over other airlines because of the people we have, that's our job to make happen. We believe we can do that over time.

Second, create a world-class customer experience not just a good customer experience, not just one that's competitive with others but one where people say who we were the best airlines in the world and American Airlines is one of the first names that comes to mind. We're not there yet. We’re making huge progress on that one and we’re not there yet, it probably won't happen in 2019.

And then lastly build American Airlines that thrive forever. We have tremendous pride in this company that we're fortunate to work for and 130,000 people that we are fortunate to work with. They had tremendous pride in this organization. Our goal is to make sure the ones that are getting hired today, know that when they retire 34 years from now that the American Airlines will be as strong and they will be as prideful as American Airlines as we are, because we will have built it to thrive forever. That means we’re financially strong that means we’re thinking forward, leading forward making decisions today in anticipation of what's going to be happening in the future.

So those are the long-term strategic objectives. If you boil them down to one word which I would encourage you to do, those words are important. But if you think of them in one word, what we’re really saying here is we’re going to make decisions over the long-term that do three things, they take care of our team, they take care of our customers, and they take care of American Airlines. And you should always and those are decisions will be making.

And as I like to point out to our leaders and shout out to my friend and mentor Herb Kelleher we lost earlier this year, what we point out to our leaders is if all those things are important we’ll do the things we need to do to invest in the product. What are the things we need to do to make sure American financially secure. What we need to do is go focus on our team members. If we go take care of our team members, they'll take care of our customers and that will take of American Airlines. Herb thought us that, he was right, and we're working really hard to follow that example.

So can you read that in the back, just kidding, I know you can't. This though is if you would like to read, Dan Cravens will give you a copy. These are our 2019 objectives, the goals we have set for ourselves as a company to make sure that in 2019 we're doing all the things we need to do to make sure that we are on the path to those long-term strategic goals.

So you see them aligned underneath each of those goals. I will walk through them, you don't need to read them right now but know this we produced these and sent them out to the entire team something at least many airlines I have worked for before hasn't done in the past. We did so because we spent a lot of time as a team putting these together, and we want all of our team members to know as well as all of you what we signed up for this year because we think that's important. It also helps us hold our feet to the fire which we’re happy to do.

So again I'll walk through as which you can see again they're designed around making sure that what we plan to accomplish in 2019 as it relates to achieving our long-term objectives, I will tell you advance that we fully anticipate accomplishing these things.

We have plans in place to accomplish each of these objectives and we have a great team in place to make sure it happens. None of them are lapsed, but they are certainly achievable and I feel really good about accomplishing these things and what I know as when we do 2019 is going to be a great year for American Airlines. So we are extremely excited about what lies ahead for 2019 because it is going to move us well ahead on our long-term path.

So even though I just said that we always start with team, I am going to start this presentation with the customer experience for a point I’ll make in a minute, because it allows me to do a better job when I get to the team objective. So starting with the world-class customer objectives for 2019, the first one is running the most reliable operation in American Airlines history. We have - our team has done a phenomenal job since the merger in 2013 of every year getting the operational reliability to improve as you would expect.

Integrating two airlines isn't easy but we were clicking along right along the path, actually slightly ahead of what we would have hoped in terms of improving the operational reliability of our Company. We backslid a little bit in 2018, which we didn't anticipate, didn't want to do and aren't happy about it.

So, we have made a huge goal for ourselves in 2019, to not just do better than we did in 2018, but to get back to doing better than we've ever done before. For us what that means is, these four objectives, AOSs, aircraft out of service in the morning at 0700. D0 means departures within zero minutes of departure time. T0 means turn times within zero minutes - turn time and controllable completion factor means flights that are completed, that are in our control not due to weather.

What we know is if we start the day with the right number of airplanes, if we have those airplanes depart on time, which is D0; if we haven't them turn on time, which is T0; and if we have them stay in service throughout the day, which is control or completion factor everything else works; misconnects go down, mishandled baggage goes down. So we have set objectives for ourselves to make these four objectives the best in our Company's history and we have substantial plans in place around the airline. Robert Isom and his team are doing fantastic work already. We've seen great progress already this year, and feel good about our chances of running the best airline in history as we move through 2019.

Next, we're working to continue to make huge enhancements to our in Flight product. We already have the industry's most modern fleet. We are - in 2019 we will get the premium economy cabin able to sell throughout the fleet in 2019. We are also, by the second quarter, all of our domestic narrow body fleet will have satellite Wi-Fi. This is a game changer. If you haven't experienced it, I encourage you to - this isn't - everyone in the airplane can be streaming at the same time, this is not the Wi-Fi you're used to, and streaming Netflix, streaming live TV all at the same time. You can get - we have live TV channels for free for customers as well.

We're expanding our overhead bins to industry leading overhead bin capacity, something that we'll get in this year alone. Nearly a third of the narrow body fleet that have these new bins and we'll continue to expand as we move forward, so huge improvements still coming in our product.

As to where we fly? We're extremely happy with the global network we have and where we're able to take customers. What we're particularly excited about now is our growth opportunities. As we look forward, we have 15 additional gates coming into Dallas-Fort Worth in 2019. And we get five additional gates in Charlotte by year-end 2019, and another two by 2021.

And then in Washington, D.C., which is slot controlled, so we can actually add more flights, we do have the ability to up-cage 14 gates in 2021. So those are our three highest margin hubs. It's not very often that airlines get the ability to expand that much in their best hubs. But we fortunately have that capability.

Moving back to just 2019, I just want to talk about this Dallas-Fort Worth expansion. What we show here is the 10 largest operations by any airline at any airport around the globe. What you see is in 2018, we at American, the DFW hubs 810 departures as we - any higher departures of that is no small thing.

So, 800 to 900 may not sound that impressive. But Lufthansa's operation in Frankfurt is 460 flights a day. 100 flights a day in our largest hub is an enormous deal. Those flights come in and immediately have better than average profitability because they're not really new routes, they're just a new connection to 300 other routes.

So, these don't ramp up, these aren't marginal - this isn't marginal growth. This is above average profitability growth and it happens because we were able to secure 15 new gates at Dallas-Fort Worth and other competent place this summer.

We also are working on expanding what is now by far the best lounge product of any U.S. carrier. Hopefully many of you have never experienced the Flagship Lounge here in JFK, if not in LA or in Miami. We have one coming in Dallas-Fort Worth very soon, making improvements to all of our other clubs as well.

And then if we do all this right, the metric that you'll see in our goals that we used to measure all this to be sure we're doing it right, is likely here direct and then we serve our customers every day, thousands of them and they let us know how likely they are to recommend our product to someone else.

What you see in that chart is it's been improving markedly over time. We had a little dip in 2015, as we went through integration. Then unfortunately in 2018, as I said, this is largely not because all the investments we've made are making a huge difference in the upward trend of that line, but those dips happen when you don't run the airline as well as you did the year before.

So, operation reliability matters to our customers. It's a huge part of their likelihood to recommend as we return to running our best operation we have in our history, we expect likelihood to recommend to follow as well. So, our goal is to have the highest likelihood to recommend scores in the Company's history in 2019 as well.

Moving now to making culture a competitive advantage, this is why I wanted to do this second because it wouldn't have been as effective if I had done it first. It's the exact same objective as we have under our customer objectives. I know most all of us think of operation reliability as a customer objective, and indeed it is. But it's a really big point for our team.

When we don't run - like I said, we've made enormous strides in our Company in restoring trust with our team after all they've been through and doing things that are trustworthy to build that trust but the biggest thing - but if you do all those things and don't provide the tools to them, they need to do their jobs and they know how to do so well, it undermines a good bit of that progress.

So, what we know is we don't run reliable operation that makes a harried team. They get forced overtime. They have customers upset with them about things that they can't control and they end up in places at the end of the day that they weren't planning to be. That's not good, that's not good - that's not taking care of your team. What we know is, what we need to do right now as much as anything to take care of our team is run the most reliable operation in our history. You'll hear a lot about operational reliability from us, but that's because we know it's what our team needs from us right now.

We also - you'll see goals on there about creating an environment that cares for our frontline team members. What that means in general is a continuation of the work we've been doing, making sure that our team knows that they're compensated well for what they do, that they are recognized for what they do, that they have the tools to do their jobs the way they know how to do it so incredibly well.

And they know that they work for a Company that cares about them and leaders that care about them, and let them know that what they do is a really noble profession that matters to the world. So they go home at the end of the day feeling fulfilled. And so they can go take care of our customers the way we take care of them.

We're looking to become leaders in diversity, inclusion, and equality you'll see some of that in the goals including putting in place - we've put in place this year implicit bias training online for all of our team. In 2019 it will be live training for virtually all the team. That's just a part of it though. What we know is this is extremely important objective of ours. We make better decisions, we're a better Company as we become even more - as we'll become leaders in diversity, inclusion, and equality and we intend to do that as well for 2019.

It's important as we do this work that we are training our leaders appropriately. I talked about how you need to lead differently. In some cases that requires - in a lot of cases, in all cases actually, it means we need to go make sure that we're training leaders accordingly for a new world. We've developed a course called Inspire Like a Leader. In 2019 we want to ensure that everyone that has someone in their care at American Airlines goes through that two day training course.

You've seen the investment we made in clubs, in the airports and in our product. We made - we've had to make similar enhancements to the work space just like - as airlines didn't invest in their product, we also didn't invest in our team, we didn't invest in the places where they worked. We spent $10s million over the years and we'll continue to do so to make sure that our team has workspaces that they're proud of and we're proud to have them working in.

And then last on these, building American Airlines to thrive forever. I’ll focus mainly for this crowd on the financial points. But please look at the goals, you'll see there are number things about Think Forward Lead Forward that we expect to do in 2019 as well, including working on delivery transformation for our IT products.

Our CIO, Maya Leibman is doing great work for the team there in helping us to get products to market much faster, things like making sure we get our work done in terms of strategic alliances with a number of partners including LATAM and Qantas.

But on the financial piece, we've talked for a while now about our profitability and improvement initiatives. We are on track with those. They've worked so far. A lot of those products - a lot of that is driven, a lot of the revenue improvement that I've talked about, we've had growth in unit revenue in American for nine consecutive quarters.

As we can move forward, those objectives that that we first try talking about in 2018 when we’re $3.2 billion 2018 to 2021 a good chunk of that comes in 2019. We expect about $1 billion in 2019 due to the issues laid out here and again that we talked about a good some of that’s network the DFW 900 is what I talked about international restructures is taking some canceling some flights they just weren’t doing very well for us at all and putting those into places where we can’t do well segmentation we talked a good bit about, but I am not sure I talked only about the premium economy expansion, basic economy will be is really just annualization of a product that’s done extremely well for us.

We’re working to do a better job of merchandising all this, we have products in place that we don't as well as we can and as well as some other airlines do about putting - about getting that product in front of customers and make it easier for them and we have plans in place to do that working through improving our revenue management capabilities as well as our loyalty initiatives all that again worth of $1 billion versus where we would be if we didn't do those items.

On the cost side, we continue to work through our $1 billion cost initiatives $300 million of that 2019 primarily this is working through making sure as we get the airlines integrated that we don't have what we needed to have in some cases which were redundancies, but also making sure that now that we were largely through integration and not complete but largely through it. We have the ability to do more in terms of innovation as opposed to just integrating. So that's worth another 300 million we believe.

You'll see on our goals key 2019 financial objectives that include that $1.3 billion in profitability enhancements. We set a goal for ourselves largely due to that $1 billion in revenue enhancements which we think is more than the rest of the industry we will be able to produce. We have more room there. We believe, we've set a goal for ourselves to have our unit revenue growth be higher than industry average.

We set a goal for ourselves - unit cost, ex-fuel and labor contracts to grow 2% or lower. We’re working to ensure we have a strong balance sheet what that means is maintaining a target liquidity of $7 billion or higher which is an enormous amount of liquidity for a company our size.

While reducing our debt and returning excess cash to our shareholders and we set a goal for our self improving our EPS growth of approximately 40%. We gave guidance earlier this year for earnings per share of 2019 of between 5.50 and 7.50 the midpoint of that would slightly over 40% EPS growth. So those are objectives one thing that is not in the objective but I do want to point out to all these investors is that we are nearing the end of what has been an unbelievably extraordinary set of capital we are proud of. Couldn’t be proud of the team of what we've accomplished so quickly.

All that I just said that we've accomplished not to mention integration takes a lot cost a lot of capital as does renewing a fleet. We've gone through I mean we have – we don’t the exact number Dan can help me, but we brought in well over 500 aircraft over the last five years and retired over 500 air points. That takes a lot of capital, result as we don't need to spend as much going forward we've gotten to a point where what you see on the slide is the 2014 to 2018 average that five years we averaged over $5 billion a capital a year. No airlines ever come close to those type of numbers over a five-year period.

2019 is going to be similar not dramatically lower 4.7 billion as we go through yet one more addition of aircrafts some of our regional jets that we’re excited about. But then we’re largely complete. Of course you need to continue to invest in the company but this extraordinary need that we've gone through to invest papers automatically about 3 billion in 2020 we think we are 2 billion in 2021 where it goes after that it’s not a number where we’re really ready to project long-term yet but it sure feels like you get to the $2.5 billion to $3 billion number for this company certainly for the foreseeable future.

Simply because we invested so much, one of our larger shareholder said is it seems low most companies has been 10% of their revenues and you guys are 40 billion. So I’m going to put it at four on it, fine if you want to we don’t think we are going to spend that because we spent a lot more than that for five years in a row and we don't need to.

We don’t need to continue to invest at steady state rates you might see at other airlines because we have done a lot more then stayed investing for now what we’ll be six years now. So we view that as an important point to make to our investors as we look to cash flow going forward.

So, look I like the ways investors let you know why I think you should invest in American. First, this industry remains under value. I haven’t seen any time on that you guys can make your conclusion on that it’s my own personal view I’ll let the rest of the other airlines make the point for us.

But I’m happy to let any of you explain to me why it is this business is producing these types returns trades at such lower valuations then other industries do that's ours to go fix we’ll fix it one day, but it sure seems undervalue to us. But within that industry whether you believe that or not we believe American's best position.

We’re focused on the long-term strategic initiative, we’re focused on those initiatives because we know they will create long-term sustainable value for our investors as well as our team members and our customers. We have $1.3 billion of profitability initiatives in 2019 alone that we are executing upon indeed they're all well underway and many of them are just anniversaring projects that were completed in 2018. We are focused on improving operational reliability in 2019 which will both be great for our team members and our customers, but also help us with cost.

We have growth opportunities ahead that are most profitable hub airports and we are nearing the end of what has been an extraordinary need for capital. So that's my presentation I’m happy to take any questions from the crowd or I’m happy to leave. Jamie?

Jamie Baker

So, thank you Doug on the CapEx question and as it relates to fleet and recognizing that you inherited that order in your hands we’re largely tied. I know there been some nuances that that you've articulate to the order book over time, but traditionally airlines design a network and then optimize a fleet strategy for that network. It feels here as if American by nature of inheriting a fleet plan it may not be the optimal fleet plan for where you have taken the network post merger is it?

Doug Parker

We feel really good about where the fleet is, I mean look we have a really large network and 1500 airplanes – that we’re using. If you we’re to put those two merger join together and said what's the right order book it wouldn’t been exactly what we had of course not. But it wasn't there was nothing you looked and that has to be fixed.

We had an issue with 350 we've addressed that. They get nothing wrong with that airplane it was just that we moved ahead 787 order. And a larger one that we didn't needed more wide-body lift and that weren’t enough for the 350 so we worked through that issue.

We worked through some RJ issues so again and we had to work on some timing. We had too many airplanes coming as fast as those are okay about 80 a year, we had some years of more than that. So we work to the manufacturers to smooth out some timing but we feel really good about the fleet that we have in place now and how it works missions that we fly.

Question-and-Answer Session

Q - Unidentified Analyst

Doug two questions, first one I think industry perception used to be that management labor relationships at United were most confrontational? At United were most confrontational, but now there seems to be a growing perception that management relationships with labor at American are on the confrontation scale maybe leading the way here. So I’m just sort of wondering if you can comment on the state of union leadership at American and how cooperative the discussions are about several of these initiatives that you're talking about here?

Doug Parker

We have great leadership of our unions at American Airlines. Anyway I don't feel like that at all. Look we’re in contract negotiations that have taken far too long with our MTW and that you certainly would hear noise from unions in situations like that and we agree with them. We are on contract on that's what the NMB now I expect we’ll get that done hopefully before too long. But we certainly like to see that get done. Look otherwise and again as long the relationships that’s all about negotiations.

And I mean we have great relationships with all of our union leaders. They have our jobs and they’re elected officials that need to be elected if you work for a long time in a company we haven't fully restored the trust, sometimes what that means is to stay elected you need to make sure that you're making sure that you're saying things about the company that reflects what your membership feels about the company.

So, one day that'll change. I hope we’re going to see at all airlines that even in negotiation times, we're sitting down talking about okay what's the right number here instead of trying to make sure we're saying things that you speak to our base if you will. So, but anyway know this, what we're focused on is making sure we're taking care of the team. We make sure that while we have great relationships in our unions, what's most important is we don't advocate the responsibility of leadership and communication through the unions and that we're out talking to our team all the time, which we do.

Our union is doing a great job of that. They care about our team but they know we do too. And we're - we make sure that the message that our team members hear comes from us as much as anybody else as it should.

Unidentified Analyst

Then just another line of thinking here, you've been on the stage for years now as Jamie mentioned, and you've talked about the investment in the fleet and the fact that there's a reason for the debt. But you also I remember last year we were talking about this and you sort of said but you're willing to admit that you're willing to run with more leverage than your peers, you're more comfortable with that.

And I'm just sort of wondering in your conversation since last year and with the financial community and with your shareholders if when you sit down with your team and you talk about financial policies and so forth, I mean Americans always been a little reluctant to put out debt leverage targets and so forth. You're really focused on liquidity more than anything else. Has your mindset at all shifted, are you still just looking at that CapEx chart and the fact that you're going to have that fleet sort of replacement program behind you and improve free cash flow outlook, is that still what sort of driving sort of the mentality when you think about risk-reward of how you're managing the balance sheet?

Doug Parker

Yes, let me clarify. Your question is our thinking hasn't shifted at all, but let me clarify. So our view has been this, which is, well, first off - where do I start? On the debt levels itself - themselves, with the existing debt, what I think one would see if debt levels were causing an issue and the actual leverages was causing an issue, you'd see borrowing rates higher than they would be otherwise. All this debt that we brought on is for long lived grade assets aircraft, and we borrow against those aircraft within a single digit basis points versus investment grade delta. So, that doesn't seem to be an issue. We wouldn't lower our borrowing costs by something moving closer to investment grade.

Now, you might say it's that because the assets are strong, that's not about your corporate risk, which fair enough. But we look out to the corporate risk in a similar point and indeed that's what the $7 billion is for, that's why we hold $7 billion of liquidity more than our peers do. That's the cost to our shareholders.

At some point our shareholders are going to start asking as they should not about the debt but about the $7 billion, why you're holding so much cash, that's ours, give it back to us. The answer to that question right now is, we've got a bunch of airplanes coming in, we're bringing on debt as a result. Because of that we need to make sure that we're - while we don't anticipate anything cataclysmic, we're going to be sure we're prepared for if it happens and what we know because I have been very long time is if those events happen, having a lot of unsecured aircraft isn't really helpful. What's helpful is a lot of cash. And we'll have more than anybody else.

$7 billion isn't a minimum cash, $2 billion is a minimum cash. We're all right with $5 billion of cushion for a downturn. So go model the worst thing you could think of and we're going to be completely fine.

So, I'm not worried about the credit risk, certainly not worried about borrowing costs as it relates to debt. Not having settled with that, we didn't go lever up like that just because of those points. The leverage came on because you said, because we brought on these airplanes. And when faced with a choice of either paying cash for those airplanes or availing ourselves of 4% of lower interest rates, I firmly believe the best thing for our shareholders is to go borrow at 4%.

And indeed if we will - we now here's what we're going for, as debt matures, I expect we'll pay as it comes due. We're certainly not going to prepay any of this, that would be a terrible use of our shareholders cash. But as it comes due, we'll pay as it comes due. Derek mentioned on our earnings call that we expect net adjusted - unadjusted debt whatever that means, to be down like $1 billion or net adjusted debt.

Jamie Baker

Adjusted debt.

Doug Parker

So, $1 billion, again, that's not because of a change in our strategy. That's just because we don't have budget airplanes coming on. And because we have debt coming due in pays comes in due, so I would expect you would see us de-lever as we go forward not because we're worried about the leverage, just because we don't have a need to go keep borrowing. So that's what I think about all this. And indeed that hasn't changed, so…

Unidentified Analyst

It's actually a follow-up question on the fleet. In your decision to run with higher leverage, certainly makes sense given the age of the fleet being so much lower than the rest of your peers. Can you comment on how less that look - I couldn't see that bear fruit in the fuel usage? And like, is that something that will happen over time and we'll begin to see the benefit of the - on the operating side of the younger fleet and what should be a more efficient fleet?

Doug Parker

Yes, it's there. It is probably hard to see because we all fly different winks, and stage links. So doing it per as -or per departure may not sure if you take the same aircraft same mission, you certainly see it. You see lower maintenance costs as well, you see higher rents and ownership costs offset that. But it's there. Maybe we can work to show that a little better but absolutely happens.

Unidentified Analyst

Actually I have somewhat of a follow-up to that. I'm just sitting here trying to reconcile industry leading CapEx, which you've spoken to and makes sense. But RASM trends that have like some of your competitors because I remember a few years ago one of your presentations where you address the potential to close the margin gap with some of your peers, new aircraft were going to be a part of that. And certainly a part of that from a fuel burn perspective, from a maintenance cost perspective, but also from a potential rise in premium. Youngest most modern fleet in the country in theory should pay revenue benefits as well, at least conceptually. And we've given you, I've given you nothing but praise for the flagship product and what you growing internationally.

But we're hearing more and more particularly the oasis experience that maybe it's the configuration of the aircraft that is holding you back from a revenue perspective. How do we just kind of reconcile RASM here in CapEx up there?

Doug Parker

Yes, okay. We'll start with facts, which - look, the reality is we've; one, you're right. The way we close margin gap is going to be with - because if you look at it, stage adjusted our CASM isn't where the gap is. It's on revenue per ASM versus Delta or United we have about the same margins. So you need to close that RASM gap. We were making enormous progress 2015, 2016, 2017. Thos are the facts I wanted to get on. You're right, 2018 we trailed those two, the United and Delta.

United, again, if you look versus 2016, on a two years basis we're actually still ahead of them. They acknowledge they had a really rough year in the 2017 and only been good for them, they rebounded in 2018. But that's - it's impossible to 2017 to do better than that because we're so much under performance to get corrected from 2016.

But if you look at that trend line versus United to a extent there was a gap there, hasn't widened a bit and it is now. And Delta it's narrowed, it was narrowing every single year, wind in 2018. That we don't like. As we look at that part of its structural point as much as we do in Latin American in 2018 versus what they fire, doesn't help.

But that's not all of it. And much of what we see is a lot of things I just talked about and what we believe it is, is a lot we talked about. Some of it was being uncompetitive on basic economy but a lot of it is their ability to their products in place of the merchandising a lot better than we do.

So I guess I know you understand. But it's just we put the product in placement, it's harder for consumers to purchase them on American. We feel particularly bad about that, they've done a really nice job and they're ahead of us, as we work through integration but we're getting through that. That's a big piece. That's what - again what gives me great confidence in this $1 billion of revenues is because it doesn't take heroic stuff, it just takes doing what we know exist elsewhere and what we know we can do.

Doug Parker

Anything else? All right. Thank you very much for your interest. We appreciate.