American Airlines Group Inc (AAL) Q4 2021 Earnings Call Transcript

American Airlines Group Inc (NASDAQ:AAL) Q4 2021 Earnings Call dated Jan. 20, 2022.

Corporate Participants:

Dan Cravens — Head of Investor Relations

Doug Parker — Chairman and CEO

Robert Isom — President

Derek Kerr — Executive Vice President and Chief Financial Officer

Analysts:

Jamie Baker — JPMorgan — Analyst

Vasu Raja — Chief Commercial Officer

Mike Linenberg — Deutsche Bank — Analyst

Helane Becker — Cowen — Analyst

Duane Pfennigwerth — Evercore ISI — Analyst

Hunter Keay — Wolfe Research — Analyst

David Vernon — Bernstein — Analyst

Dan McKenzie — Seaport Global — Analyst

Catherine O’Brien — Goldman Sachs — Analyst

Andrew Didora — Bank of America — Analyst

Alison Sider — Wall Street Journal — Analyst

David Koenig — Associated Press — Analyst

Mary Schlangenstein — Bloomberg News — Analyst

Leslie Josephs — CNBC — Analyst

Unidentified Participant — — Analyst

Dawn Gilbertson — USA Today — Analyst

Presentation:

Operator

Good morning, and welcome to the American Airlines Group Fourth Quarter 2021 Earnings Conference Call. Today’s call is being recorded. At this time, all lines are on a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] Now, I would like to turn the conference over to your moderator, Head of Investor Relations, Mr. Dan Cravens.

Dan Cravens — Head of Investor Relations

Thank you, Liz[Phonetic], and good morning, everyone and welcome to the American Airlines Group Fourth Quarter 2021 Earnings Conference Call. On the call this morning, we have Doug Parker, Chairman and CEO; Robert Isom, President and incoming CEO; and Derek Kerr, Chief Financial Officer. Also on the call for the Q&A session are several of our senior execs, including Maya Leibman, Steve Johnson, Vasu Raja, David Seymour, Nate Gatten, and Devon May.

Like we normally do, Doug will start the call with an overview of our quarter and update the actions we have taken during the pandemic, Robert will then follow with some remarks about our operations, and initiatives for 2022. After Robert’s remarks, Derek will follow with details on the quarter and provide guidance for the year. After Derek’s comments, we’ll open the call for analyst questions, and lastly, questions from the media. To get in as many questions as possible please limit yourself to one question and a followup. Before we begin, we must state that today’s call does contain forward-looking statements, including statements concerning future revenues, costs, forecast, capacity, and fleet plans. These statements represent our predictions and expectations as to future events, but numerous risks and uncertainties could cause actual results to differ from those projected. Information about some of these risks and uncertainties can be found in our earnings press release that was issued this morning as well as our Form 10-Q for the quarter ended September 30, 2021.

In addition, we’ll be discussing certain non-GAAP financial measures this morning, which exclude the impact of unusual items. A reconciliation of those numbers to the GAAP financials is included in the earnings release, and that can be found on the Investor Relations section of our website.

A webcast of this call will also be archived on our website, and the information that we’re giving you on the call is as of today’s date and we undertake no obligation to update the information subsequently. So thanks again for joining us this morning. At this point, I will turn the call over to our Chairman and CEO, Doug Parker.

Doug Parker — Chairman and CEO

Thank you, Dan, and good morning everybody, and thanks for joining the call. We have a lot to cover today but let me start with the big news since last quarter’s call, at least for me, which is that Robert Isom, is going to be the next CEO of American Airlines. That change is effective on March 31. I know remain Chairman of American Board but importantly I have — I will have no executive duties. Robert will be fully in charge.

I will stay as Chairman for as long as Robert and the board find that of value. This is terrific news for our team. Robert is going to be the ninth CEO in the nearly 100-year history of American Airlines, which we believe is the best job in all of aviation and we all are excited for Robert[Phonetic]. As you all know, Robert Isom and I’ve worked alongside for several decades, is an extraordinary team builder who understands the complexities of operating in airline at American. He loves the people [indecipherable] and he brings a fresh perspective for the future of America.

I know he is going to accomplish great things and I’m looking forward to watching that happen along with all of you. Now, what this transition does mean is this is going to be my last earnings call with you all, which is kind of a big deal for me. I’ve had a speaking rule on every quarterly earnings call since I became CFO of America West Airlines in June of 1995. So, by my calculations, this makes this my 107th consecutive quarterly call, so I’m going to try not to speak as much on this one as I have on the first 106 calls, especially as it relates to the Company’s go-forward plans.

Rather, I am going to let those who are leading American in the future and talk about that future. But before [indecipherable] I do have a couple of quick thank yous. First just to you all. The sell-side analysts and the reporters who cover our business. You all have very important job covering this crazy industry that we all loved and you do it extremely well.

I hope, I have great respect for what you do in the challenges you faced and I’ve done my best throughout my career treated you with respect you deserved and [indecipherable] to do your jobs well and you’ve all been extremely fair to me, which I really appreciate it. So thank you very much. That’s a blanket thank you to all of you on the line and also goes to some of the great people who preceded you, former analysts like [indecipherable] and former reporters like Terry Max, Sussan Carrey, and Scott McCartney. Thank you all.

The second thank you is to the American Airlines team which I can’t begin to do adequately on this call, but what I can do is somewhat thank them is to tell you all about the phenomenal job they did in 2021 and[Phonetic] growing back to meet the huge increase in demand was the most important and challenging objective for all the airlines. The American team grew back faster [indecipherable] We served about 25% more customers than any other airlines in 2020 which is phenomenal in our industry.

The last time any US airline was that much larger than the next best — next highest competitor was more than 10 years ago and that was done by merging two existing airlines not through organic growth. This growth in 2021 led us to hire 16,000 new team members last year. We expect to hire another 18,000 in 2022. Our team managed that growth while taking great care of our customers. We posted the best operating performance in our company’s history in 2021 with highest on-time performance and completion factor we’ve ever had.

And we were the second-highest of the four largest airlines in all of those metrics despite the fact we grew back so much further and faster they made it. We are particularly thought how we ended second certainly relative to our competitors. Our team had far more customers than any other airline with holidays and we did so with much less disruptions than our primary competitors. America was the top-performing airline among all airlines in December in each of the key operating metrics.

As our teams perform well our customers have taken it up. Our full-year 2021 likelihood to recommend scores were the highest in American’s history. That’s an incredible testament to our people. [indecipherable] operate the world’s largest airline, but we do so in a way to welcome back our customers with open arms and all of this translated to our shareholders as well in a year of very difficult stock[phonetic] performance for the industry, American stock increased 19%, far more than any other US airlines.

So I wanted to summarize all this to convey my gratitude to the incredible American Airlines team. I want to thank each of them. On behalf of our customers, our shareholders, and everyone who counts on them every day. It is this performance that gives us great confidence and momentum as we head into 2022. So with that, thank you all again, let me now turn it over to our soon-to-be CEO, Robert Isom, to talk about what lies ahead. Robert?

Robert Isom — President

Thanks, Doug and good morning everyone. I want to start by thanking the entire American Airlines team for their effort in the fourth quarter and throughout the entire pandemic and I’d like to reiterate how honored I am to be taking on the role as CEO. I want to express my appreciation for Doug’s partnership and friendship over the years. As you all know Doug leaves behind an incredible legacy having opened many doors for our airline and our industry.

I look forward to continuing to work closely with him over the coming months to ensure a seamless transition. I’m taking on this role at a very important time for American. Over the past few years, our airline and our industry have gone through a period of transformative change and American has made good use of that time, especially in regard to renewing our fleet, facilities and network, and making the company as efficient as possible.

For fleet, we have dramatically simplified. We now operate just four fleet types that gives us operating flexibility, reliability, and efficiency. American fleet remains the youngest in the US network carriers, our aircraft are equipped with industry-leading WiFi, new interiors, and we’ve added seats to our 737 and A321 fleets bring us more in line with rest of the industry.

For facilities, we have expanded the number of gates we operate at our largest hubs in Dallas-Fort Worth and Charlotte and we have inaugurated a wonderful new regional concourse at Reagan National which is historically our most profitable hub. We’ve also invested more than $200 million in lounges over the past five years with new Admirals Club lounges opening at Reagan National La Guardia. New and upgraded airport spaces are underway in New York, Chicago, and Los Angeles, as well.

We’ve also updated maintenance, training and corporate spaces throughout the system to ensure our team can perform at an even higher level. For network, we are fine[phonetic] more to where our customers want to go. Our DFW and Charlotte hubs are primed to operate in more than 900 and 700 flights per day, respectively. Our partnerships with JetBlue in the Northeast, Alaska, and the West Coast want to create an industry-leading presence in markets that have historically been difficult for American and our proposed investments in South American carrier strengthened our already industry-leading position in that region.

The demand continues to recover and we return to full utilization of our assets, American is poised to outperform. We’ve extracted $1.3 billion of efficiencies that we’re operating and economic fleet that will provide CASM, ex tailwinds as capacity is restored. Based on our current assumptions we expect all of this to result in a return to profitability later this year and continued deleveraging as we pay down $15 billion of debt by the end of 2025 and I am excited to hit the ground running in April to build on our momentum to deliver results in 2022. So let’s get to the business in the quarter.

This morning, American reported a fourth quarter GAAP net loss of $931 million in a full year GAAP net loss of $2 billion. Excluding net special items we reported a net loss of $921 million for the quarter and a net loss of $5.4 billion for the full year. Our results for 2021 were significantly improved over 2020, but the impact of the Omicron variant has affected the timing of a full revenue recovery.

We delivered a strong revenue performance in the fourth quarter despite the rise in infections. We reported fourth quarter revenues of $9.4 billion, our highest for any quarter since the start of the pandemic, and a sequential increase of $458 million from the third quarter. Our cargo team continues to do a fantastic work and delivered record cargo revenues of $1.3 billion in 2021, 30% higher than our previous record. As we’ve seen throughout the pandemic each new period and corresponding increase in cases is followed by a faster recovery of demand with fewer regulatory restrictions and changes in travel policies.

Based on what we’re seeing, we expect Omicron to follow the same pattern. Bookings are recovering quickly after dropping off considerably in early December but they are still not backed to pre-Omicron levels. Leisure travel, particularly in the US and short haul international market remains very strong and is approaching a 100% recovery. We expect this trend to continue and interestingly, we’ve seen many of our customers that have historically — we’ve historically called leisure travelers are actually flying for reasons beyond just vacation.

They may fly to a beach or a mountain destination, but they’re actually going to work remotely for the week. The lines between leisure and business travel are definitely blur[phonetic]. The recovery of international and business travel slowed late in the fourth quarter given the Omicron but we remain very bullish on both. The return to international travel is directly linked to travel restrictions around the globe as restrictions fall off we expect international travel to pick up considerably.

We still expect business travel to come back and forth, but it will come back in a different way, and by that I mean the overall mix of business customers how they travel and how we serve them. As we have shared previously small and medium — medium size business travel remains the strongest segment. In the fourth quarter small and medium business travel was roughly 80% recovery, while large corporate travel was only 40% recovery.

In addition, small and medium business revenue had sequential month over month improvement in December in spite of the impact of Omicron. We’re optimistic that as corporate travel — as corporate travel returns in a significant way this year, and as companies come back more fully into the office and get back on the road we’re going to be back on track. But as we’re developing our plans and forecast for this year, we’re working to build an airlines that can be profitable even without the full return of managed corporate travel.

The demand environment has changed a lot through the pandemic because of this, we have to be nimble and responsive. We have built agile processes that allow us to deliver the network, our customers need and want, no matter the environment. The game has changed and our team is ready.

Going back our network the way we did in 2020 is a feat in and of itself, but to do so while running a reliable operation and achieving strong revenue results along the way make it even more impressive. We entered 2022 with tremendous confidence as a result of the way we finished last year and started the new year. As Doug noted, American had the best reliability of all US carriers in December and the highest annual likelihood to recommend scores in our history.

We’re very pleased that 97% of our team has been vaccinated or submitted a request for an accommodation with no one losing their job. We put creative agreements in place with our union partners to support the operations throughout the pandemic and just recently reached new contract extensions for some of our team members to start the year. All of this while flying more flights and more passengers than any other US carrier by a wide margin.

To ensure this momentum continues, we have two sharply focused priorities for this year. Running a reliable airline for our customers and returning to profitability. Returning to profitability is very much tied to the demand revenue environment. But as I mentioned, the work we have done during the pandemic has positioned us very well. This includes our cost efficiency actions which Derek will touch on momentarily as well as the work that we have done to refocus our network around our most profitable clients.

Enhancing our partnerships around the US and around the world and driving value through the AAdvantage program and co-brand cards has been something[phonetic] that we’ve done well and on an absolute basis, new advantage of member of acquisitions in 2021 outpaced 2019 despite lower levels of capacity and our advantage revenues in 2021 closed in on 2019 revenues.

So in summary, we’re grateful for the incredible work of the American Airlines team over the past year. We remain optimistic about the return of demand. We’re very pleased with how American is positioned thanks to the tremendous efforts of our team and now with that, I’ll turn it over to Derek.

Derek Kerr — Executive Vice President and Chief Financial Officer

Thanks, Robert, and good morning everyone. Before I review the results, I would also like to thank the American Airlines team for their outstanding work during the quarter. This pandemic has been relentless and despite the uncertainty our team continued to show its the best in the business. This morning we reported our fourth quarter GAAP net loss of $931 million or a loss of a $1.44 per share, excluding net special items we reported a net loss of $921 million or a loss of $1.42 per share.

For the full year 2021, we reported a GAAP net loss of $2 billion and excluding net special items we reported a net loss of $5.4 billion. Despite the impact of Omicron that we saw in this quarter the trajectory of our revenue recovery continues to be positive and it even exceeded our initial expectations as we outlined on our last call. Our fourth-quarter revenue was down 17% compared with the same period of 2019 versus our original guidance of down 20%. This gradual improvement makes it even clearer to us that despite the uncertain demand environment the steps we have taken over the past 24 months to bolster our network and improve our revenue generating capabilities are working.

On the cost side, we remain focused on keeping our controllable costs down and we actioned $1.3 billion in permanent annual cost initiatives in 2021 providing a new and more efficient baseline for our 2022 budget. During the fourth quarter, we made the decision to invest in the operation with the holiday pay program for our employees, as well as reducing our peak holiday capacity. These actions did put pressure on our unit cost performance in the fourth quarter but they led to a strong operational performance over that period. This included an industry-leading months of operating performance in December when it mattered the most to our customers.

On the fleet side, I’m pleased to report that our fleet harmonization project is now nearly complete with our last A321 going into the shop this quarter. There is a full year ahead of our original schedule and we’re excited to have this project behind us. In addition to a consistent product and better experience for our customers, the operational benefits of having a simplified and streamlined fleet are already being realized. The changes we have made to our A321s in 737s enable us to fly 2% more total capacity than we could have with the old configuration, thus providing a unique cost tailwind as we continue to build back our network.

In addition to better unit cost these reconfigured aircraft will also generate more revenue, allowing us to recover from the pandemic even faster. With respect to our wide-body aircraft we continue to have productive conversations with Boeing to determine the timing of our delayed 788 deliveries that were expected to arrive last year. Due to the continued uncertainty of delivery schedule, these aircrafts remain out of our near-term schedule to minimize customer disruption.

We expect to fly four aircraft during our peak summer schedule. We ended the fourth quarter with $15.8 billion of total available liquidity, which is the highest year-end liquidity balance in the company’s history. As we have said in the past the deleveraging of American’s balance sheet remains a top priority and we are committed to significant debt reduction in the years ahead. Even with this volatile demand environment. We remain on track with our target of reducing overall debt levels by $15 billion by the end of 2025.

In fact, as of the end of 2021 we have already reduced our overall debt levels by $3.7 billion from our peak levels in the second quarter of 2021. During the quarter, we made $706 million in scheduled debt payments, which resulted in paying off the 2013-1WTC [indecipherable]. In the first quarter, we expect to make and $337 million of scheduled debt payments, which will include unencumbered[phonetic] 12 aircraft. For our pension, our funded status, improved by 9.2 points[phonetic] to 77.9% in a $2 billion reduction in the underfunded liability on a year-over-year basis.

Lastly, during the fourth quarter, we completed approximately $960 million of WTC financing and we now have financing secured for all our 2022 deliveries during the third quarter. Our 2022 budget reflects our priorities to run a reliable airline for our customers and return to profitability. Our plan includes ongoing investments that will help build upon the positive momentum we’ve seen in our operation while leveraging the cost efficiencies and network enhancements we have talked so much about.

We believe these actions will provide a solid baseline for both profitability and free cash flow production when demand has fully recovered. Looking to the first quarter COVID impacted demand and elevated fuel prices will continue to put pressure on our near-term margins. In this environment, we expect our capacity to be down approximately 8% to 10% versus the first quarter of 2019. Based on current demand assumptions and capacity plans, we expect total revenue to be down approximately 20% to 22% versus the first quarter of 2019.

We expect our first quarter CASM excluding fuel and that special items to be up between 8% and 10%, while we expect to be unprofitable on a pre-tax basis in January and February, we anticipate a material improvement and a return to profitability in March as demand returns. As for 2022 capacity much of our plans are subject to the uncertain timing of deliveries of our 788 aircraft. As I mentioned previously we removed these aircraft from our near-term schedule to protect our customers.

This reduction is worth approximately one to two points of scheduled capacity for 2022. With this adjustment, we expect to add back our capacity throughout the year and to have full year capacity recovered to approximately 95% of 2019 levels. This of course is subject to the future demand environment and we always have the ability to adapt as demand conditions warrant. As we look at our cost like other airlines, we are seeing inflationary pressures in fuel prices, hiring and training for both new hires and existing crews as we brought[phonetic] back our operation, including on the regional side.

We’re also seeing increased starting wages for certain workgroups including vendors. In addition, we are seeing unit cost pressures from the rolling 788 delays as well as the impact from our ramp and mechanical contract that was ratified in early 2020. Even with these unit cost pressures, our fleet simplification strategy enables higher aircraft utilization and higher average gauge, both of which will help alleviate some of these pressures. As such, we expect our full year CASM excluding fuel and special items to be up approximately 5% versus 2019 with the second half of the year, much lower than in the first half as we fly, and more efficient schedule.

For the full year, our projected debt maturities are expected to be $2.6 billion. This includes the cash settlement of our $750 million unsecured notes that matured in June. Without any additional prepayment of debt we project our total debt will be down $5.4 billion at the end of 2022 versus our peak levels in 2021. With respect to capital expenditures we expect full-year 2022 capex to be approximately $2.6 billion, which is significantly lower than in previous years and versus others and our fleet replacement needs are complete.

Net aircraft capex, including pre-delivery deposits is expected to be $1.8 billion and non-aircraft capex is expected to be $800 million. So in conclusion, we are incredibly proud of our team for their continued resilience in a very challenging environment. With the bold actions we’ve taken and steadfast commitment of our team we are well positioned for the future.

Now, before we open up the line to questions, I would like to acknowledge Dan Cravens for a minute. Today is Dan Cravens 62nd call, not quite as many as 107, but 67 is pretty amazing and final earnings call as part of our American Airlines, US Airways and American West team. I’d like to personally thank Dan for his two decades of service as advocacy for both the airline and our investors and for his friendship. The continued — the continuity Dan provided — the continuity, excuse me, Dan provided over 20 years in his role across multiple Airlines, multiple crisis’s, and a global academic is unmatched.

We wish him the best of luck in his next adventure. We will be introducing Scott Long who will be stepping into Dan’s role from our financial planning organization later this month. So with that, I’d like to open up line for analyst questions.

Questions and Answers:

Operator

Thanks. [Operator Instructions] Our first question comes from Jamie Baker with JPMorgan.

Jamie Baker — JPMorgan — Analyst

Hey, good morning. Just quickly, Doug, I loved your prepared remarks, I know the point wasn’t to make me feel old, but Paul, Candice, Sam, I mean, what a throw back. But it really has been a privilege to speak to you on all these calls, all these conferences, all these years. I did want to just add my own, thanks and congratulations. And obviously, same goes to my friend, Dan Cravens.

First question on the air traffic liability Derek, so sequentially from the third quarter to the fourth. It declined by about $360 million granted this is less than the customary seasonal decline but, Delta and United both experienced flat sequential trends and I’m just trying to understand what the nuances, the puts and takes are, whether it’s a network issue, differences in forward bookings, any additional color on the ATL sequential change.

Derek Kerr — Executive Vice President and Chief Financial Officer

No, I mean there is not really any color. I think from a stored value basis though that stayed pretty much the same, future travel dropped from, I think we were at 6.4 in total ATL[phonetic] balance, future travel was 3.6% was down to 3.2%, which is a normal seasonality for us. We did see, a pick up at the end of the month or at the end of the month from normal buying. So I think it’s just normal seasonality for us and we didn’t see as much as the stored value being used and some additions, because as you know, some of the issues with the cancellations and things that were out there we added a little bit to that.

But I would have expected it to drop even more, but it held up just because of the fact that from an operation standpoint there where, we added a little bit in the fourth quarter from issues with the operation, but other than that I think it’s just seasonality of what we normally see. I’m not sure why others were flat or up.

Jamie Baker — JPMorgan — Analyst

Alright. That’s perfect. And then just a quick follow-up. And I don’t want to get bogged down in comparing your guide to that of United and Delta, but you all expect to arrive at a pretty similar first quarter revenue outcome, down 20 plus points for 19, but you have to fly considerably more capacity to arrive at that output, can you just remind us what some of the seasonal and network factors that drive this. I understand there is more seasonality for you in the first quarter, but I’m just trying to figure out what causes that drag.

Vasu Raja — Chief Commercial Officer

Hey, Jamie, this is — this is Vasu. The reality of where we still are in first quarter is that there is still probably a pretty — pretty a large variability in first quarter forecast. And so much like Derek, I won’t comment on what our competitors are looking at, but we have taken a pretty conservative view of what revenue production will be in Q1. We’ve been encouraged by recent trends as case growth spikes. We’re already seeing bookings come in stronger, so we’ll see, but what we — what we’ve come to realize through the pandemic is that we have a lot of levers to plan the airline really flexibly and we can shift things up and down and indeed move capacity from one market to another.

[indecipherable] we than we had in times past and after so many crisis we thought we were nimble before we got even faster. So there is still a lot yet to do in the first quarter and we’ll see how things come together as demand starts[Phonetic] to get back up.

Jamie Baker — JPMorgan — Analyst

Okay, that’s great. Thanks, gentlemen. Take care.

Derek Kerr — Executive Vice President and Chief Financial Officer

Thank you, Jamie.

Jamie Baker — JPMorgan — Analyst

Our next question comes from Mike Linenberg with Deutsche Bank.

Mike Linenberg — Deutsche Bank — Analyst

Yeah. Hey, good morning everyone. Yeah, really to echo a lot of what Jamie said, Doug. It’s been a privilege really and I’ve learned a lot going all the way back to 2000s and Dan as well, Dan, you’ve been a great friend and it’s been a great supporter, and so Scott, you got some pretty big shoes to fill.

Doug Parker — Chairman and CEO

Thanks, Mike.

Mike Linenberg — Deutsche Bank — Analyst

Just quickly on to questions, I’m sure you’re going to get some along these lines, I just want to hit on sort of this G5 — 5G issue, the FA was out I think yesterday or two days ago something like 62% of the US fleet should be fine. Where do you guys stack up and the way we should think about this is — is this going to be — is this going to blow over the next few weeks or is this going to sort of reappear five or six months down the road when maybe some of these exemptions zones or buffer zones around airports, maybe there is changes there. Like, what should we be concerned about what should we anticipate as this 5G rolls out over time. Thank you.

Doug Parker — Chairman and CEO

Okay. [indecipherable] my last assignment. Anyway, we’ve all been every airline evolved this over the holidays, it wasn’t our finest hour I think as a country to get us to that point, but the good news is we now have what should have been going on for quite some time which manufacturers the telecoms the governance is all sharing information that they need to make sure that this going to be rolled out in a way that all Americans get 5G and all Americans now that they’re quite frank[phonetic] are going to be impacted by 5G, so what we say right now is the way that we — the way that we are all able to upgrade our fleet is because the telecoms have agreed not fully deploy some of the towers near the airport, so with that agreement and [indecipherable] As far as obviously everything fully. We don’t expect really any material disruption whatsoever as long that is in place. If they are going to stay in place we need to get to where they can actually and we want to get to where they actually can support all in place and then we can still do that. But no one is going to do that until we all agree that it could be done without disruption. So while it’s taken a long to get to the right spot [indecipherable] material disruption going forward because of this.

Mike Linenberg — Deutsche Bank — Analyst

Great. That’s what I wanted to hear. And just, Derek a quick one on the non-op expense $360 million for the quarter. Because of where your pension is and maybe the potential gains that you’re anticipating and how you book it into 2022, is there going to be a pension tailwind not only in the March quarter, but for the year in any sort of rough estimate on what we should use from a modeling perspective, Thank you.

Derek Kerr — Executive Vice President and Chief Financial Officer

Yeah, I think there is a pension tailwind into the year. So we ended up the quarter, $380 million for this quarter we’re projecting it to be in $350 million range for non-op and slowly declining as we pay off some debt throughout the quarter. So I would, I would first quarter should be more in the $350 million to $360 million range and declining to about the $340 million range in the fourth quarter.

Mike Linenberg — Deutsche Bank — Analyst

That’s great. Thank you.

Operator

Our next question comes from Helane Becker with Cowen.

Helane Becker — Cowen — Analyst

Thank you very much, operator. Yeah, Doug, it’s been very nice knowing you that hopefully we will continue to stay in touch and Dan, I mean you’ve been a really good supporter actually your whole team has been a really good supporter of our conferences over the year. So thank you very much and best wishes to both of you and I refused to tell you how many of those conference calls.

Doug Parker — Chairman and CEO

I think I know. Thanks, Helane.

Helane Becker — Cowen — Analyst

No worries. So actually I guess, I don’t know maybe Vasu or Robert, can you just address two things. You guys have said, you’re going to hire I guess the gross number of 18,000 people this year and some of those are going to be pilots. We’re seeing United and American or Delta rather cut regional Jack capacity because they don’t have enough pilots. Are you going down that similar path or you in a better position from a training perspective?

Robert Isom — President

So, Helane. Thanks, it’s Robert. Thanks, thanks for that question. So we are going to be doing a lot of hiring this year, we did look a lot of hiring as well last year. So from a product perspective, we had a couple of years of the pandemic in which quite frankly there weren’t a lot of people being trained and given the demand capacity in the industry fell quite a bit. So as we all rebound of course there is a constraint that we’re all dealing with there is not enough production. I do believe that over time that supply and demand imbalance will be remedies, it is incredibly attractive profession when you think about the starting wages in the ultimate compensation for the industry. So we’re doing everything that we can I know other companies as well to encourage those that are looking for a great profession to come into the business, but in the short run from a mainline perspective, but we, we have American is a very, very attractive brand. We’re going to have plenty of funds. The biggest issue that we’re dealing with is the throughput of pilots and getting them — getting them through training. We’ve invested an incredible amount of resources and having training assets ready to go. Those are all coming online and again from a mainline perspective, we’ll be able to supply all that we need. The imbalance is really going to be played out in the regional carriers and on that front, like other carriers we’re going to have issues as well. We have them right now, we’re working very hard on that. It’s impacting us to a certain degree, but we’re going to do everything that we can to make sure that it’s not a material impact over time.

Helane Becker — Cowen — Analyst

Okay, that’s very helpful. Thank you. And then just my follow-up question and I don’t know who wants to answer this one. But when you talk about small and medium-sized businesses and those folks who are traveling because they really have to for their livelihood, can you talk about also whether they’ve got the credit card and if you’re seeing increased credit card acquisition in that category.

Vasu Raja — Chief Commercial Officer

This is Vasu and I’m happy to answer your question. Indeed this is one of our increase was in topics to talk about, you are correct. We see small and mid-market business growth, but look at the diversity of who that customer is really cannot be over stated. Everybody promised starting the business. Sometimes relatively large companies who are seeing growth through the pandemic and get on the road to drive sales or visit factories or whatever the case might see and for us we do very — we have been seen growing acquisitions on our co-branded credit cards. Indeed, in Q4, it’s not just that our spend levels in 2019. But our acquisitions even net of attrition was equal to and very often for some months and some weeks greater than what it was in 2019, which means that where people are coming to the card. That said, we see a real opportunity within the space of a small business, mid-market business. Because the reality is we don’t actually have a true card product or an entire consumer offering for that segment. A lot of things that we have are either tailored for really large corporate accounts or individual travelers. So we see a lot of opportunity as we come out of this and a lot of ways to go and drive a lot more value to the customer and captured it in our P&L.

Helane Becker — Cowen — Analyst

Thanks very much, Vasu. Thanks, everybody.

Vasu Raja — Chief Commercial Officer

Thank you Helane.

Operator

Our next question comes from Duane Pfennigwerth with Evercore ISI.

Duane Pfennigwerth — Evercore ISI — Analyst

Hey, thanks, good morning. I wanted to ask you, both. The same question I asked Gary and Bob at their Investor Day. You have worked together for a long time as a team. But from a change perspective, is there any daylight between the two of you strategically and do you have any examples of issues where you really constructively disagreed over the last decade.

Robert Isom — President

Hey, Duane. Thanks. I’ll start. Look, Doug — Doug and I are different leaders and we got about how we lead the company in a different way. I’ll tell you that in terms of the strategic direction of American now I worked with Doug. I’ve been part of every major decision in this company over the last, since the merger. And so from that perspective we’re doing the right things. I’m excited about the positioning of American, the assets that we put in place, whether it’s fleet airport, alliances, our network, we’re ready to go as demand recovers, and we can put our assets to full utilization, we’re poised to outperform. So from that perspective, I don’t expect to hear a lot of of difference in terms of the way that Doug does things. Right now I am solely focused on making sure that we deliver a great product for our customers and that’s running a reliable airline and getting back to profitability.

Duane Pfennigwerth — Evercore ISI — Analyst

Thanks for that thoughts and appreciate it. It’s a tricky question. Maybe one for Vasu. How different would March quarter capacity have been if we never had Omicron. May be this is an unfair observation but it feels like American’s plans relative to the industry are very static in what is obviously a very dynamic world. I appreciate you taking the questions.

Vasu Raja — Chief Commercial Officer

Yeah, absolutely. And I appreciate the question. Look, it’s sort of hard to do what hypotheticals would be, but what I’d say is this the part of the reason why maybe there’s probably less volatility in our schedules is where our airlines are naturally positioned. We — not only do we operate a lot more of our capacity in domestic we generate a lot more of the value for customers and RASM results from buying in domestic. So for most of the pandemic certainly last several months we’ve oriented, about 85%ish percent of our ASM capacity in the domestic and short haul operations as we go in the first quarter, it will be about 80% in those with another 5% or so constituting major international markets like London Heathrow for example so for us so much of our network is there and it shows 65% of our network is and we’ve call Sunbelt hubs, Phoenix, DFW, Charlotte DC, Miami that have been extremely robust through the pandemic and any one of those hubs produce unit revenues which are well in excess of what our competitors do. So a little bit of what you see is a network composition difference quite frankly as we go out in the first quarter quite frankly, we are applying the things where we can most directly create value for the customer and outperform. We’re not doing the things that dont. So our long-haul schedules are 70% of what they’ve historically been, our short-haul schedules are a lot closer to what flat is, so what would be like when demand is back, remains to be seen, but for us the real opportunity when we said, all through the pandemic is less about driving volume, the capacity base, the cost base of the airline change is only very marginally whether we fly 95% or 92% of the airline. The really big thing for us is domestic yield performance and as we look out, I mean if indeed demand comes back where we see it is less about how we go and capacity around the system and more about how we captured in yield growth.

Duane Pfennigwerth — Evercore ISI — Analyst

I appreciate the thoughts.

Vasu Raja — Chief Commercial Officer

Thanks, Duane.

Operator

Our next question comes from Hunter Keay with Wolfe Research.

Hunter Keay — Wolfe Research — Analyst

Good morning. Robert as you think about taking over the CEO role. What are some of the things you want to accomplishing in your first 100 days. Maybe when your ability to put your stamp on things is at its highest.

Robert Isom — President

I am going to just be really clear and focused — focused on that. Our goal right now is to get back to profitability as soon as possible deliverable product kind of just plain and simple as I take a look forward, we’ve got a great opportunity ahead of us and everything come together is the right time. I do think that we’re in a position where demand is poised to rebound. Everything that we see suggests that there is a pent up desire for people to get up out on the road, whether it’s for leisure or business demand. And I think I’ve got a special — special opportunity. One that brings together, everything that we can bring working so hard to do throughout the pandemic and bringing that — bringing that to fruition. So if I take a look at the middle of the year. I do think that we’re going to get back to profitability. I do think that American is going to continue to run a very reliable airline. And I think we’re going to be very, very competitive in all the markets that we serve.

Hunter Keay — Wolfe Research — Analyst

Okay. And we talked about capacity being driven by demand and fuel costs occasionally but what if you’re not able to hire people and what if you’re unable to hire the right people that fit the culture that you want to build at American. Is there a decision where you would decide to be smaller, as opposed to hiring people that might not be great cultural fits.

Robert Isom — President

So Hunter, thanks for that question, because, look, this is something that I’m really proud of. Yeah, last year, as we — as we’ve built back the entire economy all industries had struggled with finding the right people, getting them in the right positions, but you know what American as we grew back we really quickly remedied any issues that we had and what we found is American is a very, very attractive place to work. American Airlines sells itself in terms of attracting people to it. So whether it’s the new flight attendant classes that are now graduating, whether it’s the thousands of people that we’re bringing on to work in our reservations and agent ranks and those pilots and mechanics that we’re bringing. We at American, get a chance to really choose, those that get to be part of the team and that’s a great position to be in. Over time I think that we’re going to have to do a lot of work to make sure that the supply of pilots into our regional carriers is as strong as we needed to be, but you’ll see us on the forefront of that as well.

Hunter Keay — Wolfe Research — Analyst

Thank you.

Doug Parker — Chairman and CEO

Thanks, Hunter.

Operator

Our next question comes from David Vernon with Bernstein.

David Vernon — Bernstein — Analyst

Hey, good morning everybody and congratulations to everybody on their next chapters here. Derek, first question for you on cash flow. If we’re looking out at the full year guidance you’ve laid out capex of 2.6, should we be expecting cash from operations to cover that. I’m just going to get a sense for how secure, we should be looking at the balance sheet and liquidity that you have on there we’re going be dividended out from an operating standpoint, are we going to be able to cover that based on which [indecipherable].

Derek Kerr — Executive Vice President and Chief Financial Officer

We’ll definitely be able to cover that.

David Vernon — Bernstein — Analyst

Excellent. Short and sweet. I like it. The second question maybe for Robert or Derek as you look at the capacity and the CASM, ex guidance you’ve giving for 2022 down five, up five. How do we think about in broad brushes 2022 to 2023, if we’re up a little relative to 2019 and is that — is that just going to be kind of a one for one thing, or is there more beta to that, like how should we be thinking about the operating leverage coming back into the business as demand gets restored.

Derek Kerr — Executive Vice President and Chief Financial Officer

Yeah, I think exactly what you’re saying. I think we — we are under-utilizing our fleet without a doubt at this point in time. I think as we add back our assets. Robert talked about pilot supportability and making sure the throughput happens and gets a throughput through. So if we and with [indecipherable] so you have two opportunities to grow this airline at a very cheap cost. I think the cost headwind, there’s probably 3 or 4 points of cost headwind, we have in place right now in our assets and making sure that when those aircraft get back and we can use them as much as we can. We do not need to add cost, we do not need to add aircraft. So we could — we could in today’s world, we can fly the airline and probably 5% more with the cost structure, we have today. So it’s pretty close to one for one, it might be a little bit sticky in there a little bit, but it’s pretty darn close to one for one, on the first 5% that we could add back.

David Vernon — Bernstein — Analyst

Alright, thanks, guys.

Operator

Our next question comes from Dan McKenzie with Seaport Global.

Dan McKenzie — Seaport Global — Analyst

Okay. Good morning. Congrats to both Doug and Dan on what an amazing run it’s been, it’s really been a pleasure. A couple of questions here. One housekeeping question. Well, just one follow-up on small and medium-sized businesses. Vasu what’s factored into the first quarter revenue outlook with respect to the timing of international returning. Are you just sort of straight-lining current trends or did you factor in some kind of escalation in March, potentially.

Vasu Raja — Chief Commercial Officer

Great question and you’re absolutely correct. We are — our straight line current trends with the lone exception of our short-haul business. Tends to peak in the March-April time period as North America goes on spring breaks and Easter vacations.

Dan McKenzie — Seaport Global — Analyst

Okay, very good. Secondly just following up on Helane’s question on small and medium-size businesses. I’m wondering if you can elaborate on kind of their purchase behavior versus a typical leisure traveler delayed book further out closer in its presumably higher margin business. I’m just trying to get a sense of what that means. And I guess I didn’t in the PowerPoint I guess or I didn’t catch what that revenue from small and medium-sized business was as a percent of 2019 revenue and how you’re thinking about that trending potentially here in 2022.

Vasu Raja — Chief Commercial Officer

Sure. Maybe let me answer those slightly different order. First small — as we ended December what we call small and mid-market business was 80% recovery large corporate business people who bought big managed program was 40% recovered ballpark, interestingly what that means for us had historically and 40% of our revenues came from business about 15 points of that were from large corporates and the balance were from small and mid-market companies. Through the pandemic that shifted a lot, where less than 10 comes from managed corporates. As we think about next year we absolutely anticipate a rebound of business travel, but something where, something a lot closer to 30 points of the 40 or so is coming from small and mid-market and managed corporates come down a little. This is something which is certainly an opportunity that we look upon very favorably in many would be unique to American Airlines because so much of that small business growth, to your question about its profile does actually book in a very similar booking window as large corporate travel. It’s much shorter days to departure than what leisure is but very critically it’s originating and markets that are in the center of the country being Oklahoma City or Austin and San Antonio places like that. It engages and trip behavior, which is very different with managed corporates, people are willing to go stay Saturday night and fly on a lower load factor flight but very importantly it comes in at the same level as yields as our large corporate businesses but a fraction of the cost of sales. Cost of sales, it’s a lot more like what leisure is. So we view this as a sign of real opportunity. And indeed as we, as we look out there and if you think about things. We see that as Robert’s comments earlier the nature of this travel is starting to change that as we see small businesses traveling there more people traveling for a blended business leisure purposes, more people willing to go by themselves into a premium product where cheaper one is available. So we see a lot of opportunity as the world changes. And we are going to organize and position ourselves to execute on that.

Dan McKenzie — Seaport Global — Analyst

That’s terrific. Thanks.

Operator

Our next question comes from Catherine O’Brien with Goldman Sachs.

Catherine O’Brien — Goldman Sachs — Analyst

Hey, good morning everyone. And just want to echo to my peers. Congratulations to Doug and Dan, it’s really been a pleasure working with you, the last I guess almost 12 years now. So, thanks — thanks for all the good times. Question maybe just on your 2022 growth outlook for that 5%. I understand with the uncertainty around the 77 this makes it more difficult. But can you share high level what you’re thinking the breakout between domestic and international growth is, based on your current 70 assumption and what’s driving the decision on where to allocate that capacity. Thanks.

Vasu Raja — Chief Commercial Officer

Yeah, hey, this is Vasu. I can I can help with that. We are — as we see first question we anticipate that with the 787 will be a materially smaller internationally airline than what we would otherwise like to be operating something which is probably this call it 75% to 85% of the scale we had in 2019. But our short-haul network domestic and the narrow bodies we fly and Mexico, Caribbean, Latin America, were going to be a lot closer to what what 2019 is. But there is a couple of other important things to note there of course, first, we have a very conservative view of what happens with the 787 and indeed our pretty conservative view about how international demand even recovers to the course of the year. So a big mix of our international flying and already see it published schedules is oriented around markets where we can go drive a lot of the connectivity through whether it’s Heathrow or other partner hubs still things like that, that we might not in times. The other thing that’s out there is to an earlier comment I made, we have a lot more flexibility with the airline and indeed through the pandemic, we’ve come to realize it is much easier. With that I have few points. We have a lot of flexibility in how we go and plan the airline. And so we are consciously trying to build the airline. So that we can be really efficient in how we utilize our assets and make moves around the system, so that we can go fly the markets of customers’ demand even if it’s relatively late in the booking curve, so while those are broad strokes, of where capacity is still things may change and realistically, they will change as demand comes back.

Catherine O’Brien — Goldman Sachs — Analyst

Got it and then maybe one more for you again Vasu. Just to dig into your short-term revenue outlook a bit more understand there’s a lot of moving pieces, but your RASM performance versus 19 improved each quarter of 2021, but it looks like it’s going to get worse in the first quarter per guidance of course you call out impact of Omicronm, but you help us think of the drivers that a bit more and anything we should know about cargo or other revenue trends or is that really just your conservative view as you noted on loads and pricing on the passenger side. Thanks for the time.

Vasu Raja — Chief Commercial Officer

Look, it’s very much the conservative view and having gone through multiple waves of the pandemic, one of the things that we’ve come to more reliably build forecast on is the amount of time it takes from the cases peaking to demand recovery and that’s shortened through every wave in the delta wave, it was about a seven week spread between case peaking demand bottoming out and growing again. So a lot of our outlook is based on a slightly shortened version of that occurring but indeed, what we’ve been seeing as cases have peaked, wherever they peaked in the world. Israel you pay more recently in domestic. It’s not a seven-week span. It’s now four week span, it’s something a lot more like a seven-day span. So, it’s still early to tell. As I mentioned earlier, 85% of our capacity is in domestic and. And if you presume last week was the peak of cases across the country. We’ve been encouraged by the last few days of bookings, but a lot of our first quarter forecast is based on the conservatism that we’ve had, for having seen prior waves before. We anticipate that January and February will remain challenging because historically, they are seasonally, some of the weakest month in our business. So we’ll see, but we remain encouraged for how strong demand comes back. And we are certainly reserving every seat. There is a customer that wants to travel and once going assume.

Robert Isom — President

Let’s move on to the next question.

Operator

Our next question comes from Andrew Didora with Bank of America.

Andrew Didora — Bank of America — Analyst

Hi, good morning everyone. Doug, just want to extend my congratulations as well. And the same goes to Dan. It’s been a pleasure working with both of you over the years. First question around costs, I guess, Derek, does the 5% CASM guide include anything from current labor negotiations and then just secondly on costs. When you factor in kind of new labor deals all the kind of the inflation in the economy that you were discussing earlier. So even as capacity comes back. Do you think getting back to pre-pandemic has a mix is a realistic expectation over the next, next few years.

Derek Kerr — Executive Vice President and Chief Financial Officer

Yeah, it does not include. I mean, it includes year-over-year deals that were already done. So any deal that is already done is built in as Robert talked about, we got some real, we got some deals done in the past few weeks that work huge impact on the cost but really good opportunity to get those deals done and could have done quick with some of our groups, but it does not include any new contract negotiations that are complete today. So that’s number one. Number two, I do think we had expected 2022 to get back to 2019 levels, but with the — with the variant and us pulling down the flying from 788s not being there and also demand not quite being there. We will now get to the 2019 levels. As we get into 2023 it’s definitely possible. It depends on the growth of the airline and other things that we do. If we don’t get there we will get very close, but it is that way. So I think in 2023 we’ve kind of I’ve always talked about being pretty flat in 2022 that’s not happening really driven by not fully utilizing our assets. As we fully utilize those assets, and we plan in 2023 I think we can get to that level or pretty close. We might not get all the way down to 2019, but we’ll get pretty close.

Andrew Didora — Bank of America — Analyst

Got it. That’s helpful and then just lastly for me, for Robert. I guess as you assume the CEO role here, what do you think American needs to do better in, I’ll call it this new world post pandemic to help drive American’s margins back towards pre-pandemic levels. Thanks.

Robert Isom — President

Yeah. Thanks, Andrew. Hey, look, we need to, we need to put all the pieces together all the things that we’ve been working on over the last three years and then bring — bring them about and execute, execute very well running reliably for this airline. I know you know pays off in terms of unit revenues pays off in terms of unit costs and it definitely pays off in terms of customer satisfaction. Again, American as invest in all the right places. When we talk about the aircraft in airports and lounges. And what– and that’s money that has been spent. It’s in place and now it’s time to bring it about and put it into action, and so we do that, I’m quite confident as Derek said, I’m quite confident in all aspects American is poised to outperform.

Doug Parker — Chairman and CEO

Thanks, Andrew.

Operator

That concludes the analyst Q&A. We will now take questions from the media. [Operator Instructions] Please standby while we compile the Q&A roster. Our first question comes from Alison Sider with Wall Street Journal.

Alison Sider — Wall Street Journal — Analyst

Hi, everyone. Hi. I mean I just was wondering if you could talk a little bit more about your expectations for 787 deliveries and how confident you are anything new, you’re hearing from Boeing about what they might expect in terms of the schedule on that.

Derek Kerr — Executive Vice President and Chief Financial Officer

Yeah, hi, this is Derek. We’re still on the same schedule mid-April is what we’re talking about for our first delivery that has been locked in on those dates for probably the last couple of months and we’re still planning on that happening. So we haven’t got any different information in the past couple of months. I think we’re still on target for those and that we would take all 13 throughout the year, but we have been conservative only put four in the schedule for the summer. We had originally thought we could get all 13 in the summer, but we pulled that down to four and we’ve had really good discussions with Boeing and I think they’re on track as of today to hit that mid-April timeframe and we’re hopeful that’s still the case and nothing else comes up.

Alison Sider — Wall Street Journal — Analyst

Got it. And is this something that, is this a situation where you would seek any kind of compensation from Boeing for the delays you know if there was a further delay, is that something you would discuss.

Derek Kerr — Executive Vice President and Chief Financial Officer

Yeah, we’re in discussions with Boeing where we’re at. There are delayed penalties that are paid and Boeing is paying the delayed penalties and everything is happening as we speak today. If there are further delays and it really does impact the summer much more than what we think it is then we’ve had good discussions with Boeing that they will, they will compensate us for the losses that we’ve had for the delay of those aircraft.

Alison Sider — Wall Street Journal — Analyst

Thank you.

Doug Parker — Chairman and CEO

Thanks Alison.

Operator

Our next question comes from David Koenig with the Associated Press.

David Koenig — Associated Press — Analyst

Yeah, thanks. Hi, Doug. Congratulations as well. Hope you have a great retirement and you mentioned 5G IN this week’s agreement with Verizon and AT&T, I wondered how long do you get a signal to how long they’re willing to delay their full rollout and why did this have to come down to 11 power crisis like this.

Derek Kerr — Executive Vice President and Chief Financial Officer

Yeah, thanks David. We get the sense that they are again the right people are talking to each other and everyone agrees then it doesn’t make sense to deploy to any more 5G until we’re certain that it’s not going to have a disruptive effect on airlines. So, again, that’s where we stand at this point and I hope that is where we stay. I feel really good about those because we have the right people are talking to each other. Why it took this long for the right people to talk to each other. We can do a post on it later. I’m not quite certain. Frankly, we are the end user of this dysfunction. Well it was the fact that our customers are one of the ones affected. And as you know, it was getting ready to be deployed, and we were therefore being told what that was going to mean to our operations. We scream design as we could and fortunately people listen. So that’s where we are today and what should have happened prior to this is happening now. The technical experts that are working on tell us, it’s really not that complicated once they — once they are able to share information and work on it. So they seem encouraged that we’ll be able to address this in a way that allows for 5G including near airports and again, with whatever is required and also doesn’t allow for it doesn’t require any disruption. So that’s where we are. I don’t expect until we get to the point that everyone is really comfortable with that. You’ll see that you’ll see anything turned on your efforts because no one wants to go through this, again.

David Koenig — Associated Press — Analyst

So are the airlines talking directly to the telecoms. Are you going through the regulators.

Derek Kerr — Executive Vice President and Chief Financial Officer

But it’s much more about the manufacturers. Our OEM talking directly to the telecoms which is happening. So the Boeing’s, the Airbus’s, the palaces, Honeywell, Cowen, et cetera talking to their counterparts at AT&T and Verizon obviously with involvement, but it’s what needed to happen and is now happening as you knew that those organization those companies able to talk to each other and share information because when you that we can get results because [indecipherable] we have government entities talking to each other. That can be less productive.

David Koenig — Associated Press — Analyst

Thank you.

Doug Parker — Chairman and CEO

Thanks David.

Operator

Our next question comes from Mary Schlangenstein with Bloomberg News.

Mary Schlangenstein — Bloomberg News — Analyst

Good morning and congratulations. Doug and Robert both. I wanted to ask you if you could talk a little bit about how much of a delay. You see the Omicron flare up having on the return to more near normal travel, one of your competitors said it pushes it out 60 days, but I wonder how that ties in with Sue’s comments about the shortening time between a peak and a bottoming out in a recovery in demand.

Derek Kerr — Executive Vice President and Chief Financial Officer

Yeah, hey, Mary. We don’t see a lot different. Look, I think that we were recovering nicely after the delta variant as we took a look into the Thanksgiving timeframe. But then Omicron hit, demand dropped off fairly, fairly rapidly. And yes, demand is recovering faster than it had in previous ways. But I think we don’t view the demand as anything more than delayed. We don’t think it is diminished and if you’re taking a look and kind of the one of the two or three-month time frame of how demand the rebound is pushed out, I think that that’s the appropriate timeframe and for us as Vasu as mentioned I know you’re Doug earlier said as well look as we take a look at in February especially as we see a lot of demand and a lot of strength in the bookings that we’re seeing already. So I do think that as Omicron it could come out strong.

Mary Schlangenstein — Bloomberg News — Analyst

Thank you. And if I can quickly ask and discussing the increase wage levels going forward and as you try to hire more people, is American contemplating it all potentially get another unilateral pay increase for unionized workers either any particular groups or maybe on a more broader basis.

Derek Kerr — Executive Vice President and Chief Financial Officer

As I mentioned earlier in the call. American have a very attractive brand. We have incredibly generous compensation benefits programs we attract people right now with the positions that the compensation structure that we have in various pockets throughout the country positions like in regional carriers. We take the appropriate action that we have to, but I feel really confident in where we are today and what will, what we were contemplating in being able to attract the right people in the right numbers and getting in front of it too.

Mary Schlangenstein — Bloomberg News — Analyst

Okay, thank you very much.

Operator

Our next question comes from Leslie Josephs with CNBC.

Leslie Josephs — CNBC — Analyst

Hi, good morning. I was just wondering what you could think the impact is going to be of the multiple labor negotiations you have going on now. We’ve seen complaints about issues of quality of life perpetual changes so curious if that changes, how you think about scheduling the airline going forward and what sort of like what Mary was saying pay increases in 2022 and beyond. How do you see that going.

Derek Kerr — Executive Vice President and Chief Financial Officer

Hey, Leslie. Thanks for the question. So one thing I know is that everybody at American is joined in the goal and objective of running a really reliable airline. One that returns to profitability as soon as possible. So I know that our labor leaders. Our team members they want is a profitable and successful American Airlines as we go forward. So as we take a look into any negotiations. I know took a while taking. It has to be a mindset of taking care of our team members, certainly, but also making sure we take care of the company and our shareholders, and that’s a balance that we’ve always been able to maintain and we’ll do going forward. So as I think look going forward. As said before, I know that we can attract team members to American Airlines and there’s ways we can get better and better it means running an airline that this is more reliable too, I know everybody joined in that goal.

Leslie Josephs — CNBC — Analyst

Okay, thanks. And if I could just ask one follow-up on the 787 Derek, did you say that Boeing is definitely paying compensation now and they could pay even more if the summer schedule is affected.

Derek Kerr — Executive Vice President and Chief Financial Officer

The first answer is yes. I mean there is delayed penalties that are always in all of these contracts and Boeing is paying the delayed penalties for each one of these contract, for each one of these aircraft. And then the rest of it will be negotiation, as we talk to them. I mean hopefully, we don’t have to do anything, and hopefully they get the schedule that they have and we don’t have any disruption as we go forward, but we’ve been told from the highest level of the Boeing team that if there is compensation needed to come to the airline that they are fully abreast to help us and to overcome the cost that 787 has caused us over these last the delay in those aircraft has caused us over the last few years and that’s the negotiation, we’ll have with the — with the Boeing team.

Leslie Josephs — CNBC — Analyst

In addition to what they’re already paying for the existing delay. Correct. Got it. Thank you.

Operator

Our next question comes from [indecipherable].

Unidentified Participant — — Analyst

Good morning. Thank you for the question, and congratulations Doug. Robert during your prepared remarks, you mentioned something about a blurring of line between business and leisure travel. I was wondering if you could elaborate on that a bit. Does it translate to higher yields more premium cabin sales et cetera.

Robert Isom — President

Vasu is going to take this. Go ahead.

Vasu Raja — Chief Commercial Officer

Yeah. Hey, David. Great to hear from you. Yes. We plan to be a really encouraging trend, we see a blurring of lines where the trick patterns are changing Thursday, which is still our biggest business day of the week is also becoming one of our biggest leisure days of the week. We’re having more people who by business style their products travel as if it’s a business trip. But they’re going to place, these are destinations Fort Walton Beach, things like that. So that behavior is starting to change and we can trace the things where people work Friday remotely and spend a week or two at a time working from some place that is not where they live. So all that’s creating a lot more variation in how we’ve historically thought about business and leisure. But in that is a lot of opportunity. But clearly, as we go through the pandemic customers have a lot more flexibility with their time. There’s a lot more savings that are out there and travel has always been one of the most aspirational things for US consumers. So we see a lot of that and we benefit, a lot of from a lot of that in our short-haul network the most. Our premium cabin sales have been the most robust in places like the Caribbean and leisure destinations in the US more so than it had been and more products difficult business destinations like the transcon markets or London Heathrow. So we really encouraged by that trend. We think that it’s going to lead to a lot of things. That’s why we have done a lot of things where we are increasingly rewarding travel, which is not just for how frequently people fly but or simply spending on our credit cards or spending all across the airline and from my earlier comments, we think there’s even more to more to do, which can be really great for our customers and what’s really great to the airlines too.

Unidentified Participant — — Analyst

Thanks, Vasu and just the follow-up, do you see the impact of inflation. We didn’t anything involving higher ticket fares, higher prices for customers.

Vasu Raja — Chief Commercial Officer

Look it remains to be seen. I mean this industry has a long history with inflation where it has always [indecipherable] so we’ll make any future commentary about pricing, but it’s early to how and whether this level of inflation stays or not even early to go and get that.

Unidentified Participant — — Analyst

Great, thank you very much.

Doug Parker — Chairman and CEO

Thank you, David.

Operator

Our next question comes from Dawn Gilbertson with USA Today.

Dawn Gilbertson — USA Today — Analyst

Hi, good morning. Got to say, Doug, I’m really jealous. This is your last call. But I’m very happy for you and your family. I have a couple of questions of first for Vasu following up on Mary’s question about kind of the lag in bookings because of Omicron and spring break and summer, I’m wondering whether you guys are considering extending the expiration date for tickets and for current travel credits. And my second question is probably for Robert. But maybe not your call times like a lot of airlines still are pretty high as recently as Friday it was four hours plus. Can you give any specifics on what you’re doing to address this persistent problem and what’s behind that. Thanks very much.

Vasu Raja — Chief Commercial Officer

Hey, it’s good to hear from you Dawn. I’ll start and then others can add into. So first of all, we are assessing different options for what we call stored value. What do with people who have COVID related credits that are out there. We’ve been really encouraged by what we’ve seen, we’re the only airline that allows customers to do name changes and reassigned because of that. We’ve seen a lot of consumers go and take advantage of that flexibility. And so that combined with the fact that we flow to bigger airline has led us to believe that we may be seeing this is probably different than others, but we’re assessing what our options are and we’ll have more in the not distant future.

Robert Isom — President

Hey, Dawn, [indecipherable] help me out with this with reservations right now with so many changes that are going on in the environment, whether it’s travel restrictions, quarantine requirements, schedule changes, you name it the level of calls that we’re getting right now is really unprecedented for good reasons and what we’re trying to do to make sure is that not only do we have all of the resources from reservations perspective available, but we’re also investing in things like chat and then call back functions as well. And what do you think that I’m really proud of is that while we have had some extended call back times as of late. I’m really proud of the way we’ve performed throughout the pandemic. American has consistently performed better than a lot of our competitors. And as we come out of this huge call buying the spike and I expect us to get back to really reasonable and satisfactory times. [Indecipherable] do you want to add anything else.

Vasu Raja — Chief Commercial Officer

Yeah. Just following up on some of the technologies that we’ve implemented around virtual assistant which is sort of artificial intelligence that can respond to some of the easier questions without the customer having to interact with an agent and that’s a win-win, because the customer can really do that asynchronously and get their answer, in short order and then move on to chat for more difficult questions. Our agents are now trained. We have hundreds now trained to be able to handle a chat and again this allows them to handle more than one interaction at a time, which is better for our customers and more productive agents and then you know, but like Robert said, that really helps defray some of the impact reservations. But at the end of the day, the nature of the questions that we’re getting are so complex where people are really wanting to fully understand what are the COVID restrictions and traveling, what kind of vaccination that is going on, how do I use this [indecipherable] combined with this form of payment. And in those cases we still need our fabulous agents to be able to handle those.

Dawn Gilbertson — USA Today — Analyst

Thank you very much.

Doug Parker — Chairman and CEO

I think before you sign off with everyone listening in, you would have absolutely been in my prepared remarks, it’s if you’re still on the line. But look, of all the unit. Those who don’t know are Airlines, Arizona Republic. We started America less [indecipherable] risen to the level that I’ve chosen actually hang on to be more of [indecipherable] anybody else. So thank you very much. Really, really appreciate.

Dawn Gilbertson — USA Today — Analyst

Thanks Doug. It’s been a pleasure.

Doug Parker — Chairman and CEO

Thank you.

Operator

That concludes today’s question-and-answer session. I’d like to turn the call back to management for closing remarks.

Doug Parker — Chairman and CEO

I think we’re done. Thank you all very much. I really appreciate it. I’ve enjoyed this immensely maybe my favorite of the 107. So thank you all very much. Congratulations to Robert, congratulations to Dan and we’ll be in touch. Thanks again.

Operator

[Operator Closing Remarks]