American Airlines CEO Doug Parker opened the call by thanking “the entire America West Airlines team.” Oops. The airline is often criticized for being America West operating under the American Airlines brand, and that doesn’t help. Parker took over America West days before 9/11, got a government bailout, went on to acquire US Airways and then merge it into the larger American with legacy US Airways executives at the helm.

Following that miscue, which he later said CIO Maya Leibman pointed out to him, he offered that “Black Lives Matter” before getting into quarter’s results and the airline’s plans for dealing with and emerging from the pandemic. 13 things – aside from the actual financial results – stood out to me that help to understand where the airline is going.

1. Break-even is a long way off. While United Airlines has previously said they could be cash positive or at least breaking even by the end of the year, American hopes to turn cash positive “in 2021.”

2. They don’t see layering on debt as a big deal. Mirroring previous internal comments I’ve reported on Doug Parker doesn’t see $500 million in interest expense as a huge liability, which he breaks down between 300 million from new liquidity and 200 million from aircraft debt, “management head count saves that.” Of course offering bigger employee buy outs could be done for that amount, likely turning cash positive within two years, but that $500 million is viewed as too expensive even though it would ultimately become revenue accretive.

3. Don’t expect travel to recover soon even accounting for knowing that travel doesn’t seem to be recovering, the airline reported “net bookings down 75% – 80%” which they flagged as “a marked difference from where we were in June and even in May.”

   Senior Vice President Vasu Raja reported that “business bookings are going to be very different” acknowledging that “bigger companies won’t resume economic life” (by which he means travel) and there’s “uncertainty around smaller companies” too so the airline will have to “adapt .. to the changing customer base.” How bad is business travel? Corporate bookings didn’t grow at all April to June, while small business bookings went from 1% to 3% of where they’d been previously.

4. Business isn’t worst in the cities you think it is though the travel pullback is largely attributed to a resurgence in Covid-19 cases, American reports that “Sun Belt bookings still outpace the rest of the system.” Everywhere else is worse!

5. Their credit card deal expires in 2022. Analyst Joe DeNardi asked whether conversations renewing credit card deals have started with Citi and Barclays. I’ve previously written that discussions on re-upping were already happening before the pandemic. Airline President Robert Isom says they’ll achieve “economics [that] will be equal to or better than they are today.” He isn’t seeing a big increase in money from card issuers this time around.

6. The airline made money on CARES Act payroll support. American says they received 76% of payroll from the Treasury Department. Of course they were never going to lay off 76% of employees. Now they’re looking at perhaps 30%.

   Unions are asking for the federal government to provide a straight extension of payroll support funds, which would be an even bigger cash influx this time straight to equity and debt holders because there are already fewer employees left at the airline.

7. JetBlue and Alaska partnerships are about consolidation. Vasu Raja says 22% – 23% of airline capacity was on the West Coast, producing below industry average revenue, and offered that ‘so many airlines can’t compete for diminishing premium customer business’ as one explanation for the partnerships, linking up with JetBlue and Alaska. Raja is describing partnerships as consolidation, sharing the revenue from premium passengers among fewer airlines.

   Raja claims that when you exclude the places they perform badly, they perform perfectly well – a 10% – 12% premium against the industry ‘excluding West Coast + NY/Boston’. In the Northeast and on the West Coast American has had a 10% revenue per seat mile deficit. He describes them as “too small to win, too big to exit” New York and recognizes a massive customer base they need to attract revenue from.

   By the way he’s making an implicit argument against further government subsidies for the airlines, because if there’s not enough business to go around for the airlines continuing to prop them all up means more losses for everyone, which will delay the businesses from recovering, paying back creditors, becoming profitable again and investing in growth and customer experience.

8. Seattle is now an American Airlines hub in much the same way they consider London Heathrow to be a hub. Raja says that with their Alaska Airlines partnership they will continue to build “our Seattle hub.”

9. The JetBlue deal should mean replacing small regional jets with mainline flying. The Jetblue partnership is ‘pretty broad’ with ‘extensive codesharing back and forth, frequent flyer benefits,” and corporate deal-sharing. Expect some slot deals between the two airlines that allow American to replace 50 seat regional jets in New York and Boston with more mainline flights.

10. They’re jealous of the creative funding deal United Airlines pulled together to borrow against MileagePlus. United Airlines raised $5 billion against MileagePlus while American Airlines intends to use their AAdvantage program as collateral against a CARES Act subsidized loan.

    They say that if the Treasury Department deal falls through they could copy United’s more innovative transaction, but it would take time because unlike the MileagePlus program AAdvantage isn’t set up as a separate company. There was also discussion of whether the government transaction could preclude a forward mileage sale (presumably raising around a billion dollars by pre-selling miles to their credit card partners).

11. There’s no clear vision for American Airlines’ future. Analyst Hunter Keay asked Doug Parker for his ‘3 year vision for American Airlines.’ Parker stumbled, suggesting that’s “not the easiest thing to do” and then offered getting through this crisis and back to generating cash and noting the crisis gives the airline the opportunity to shut down the airline and “start it from scratch.”

    But what does starting it from scratch mean? Re-envisioning it, with a bold vision? No, just reducing employee headcount, getting older aircraft retired, and cutting routes that didn’t make money. The vision is make money and cuts, it’s not about who or what they want the business to be (“relative to our competitors, our relative performance will be improved.”).

12. American doesn’t see a problem cancelling flights after selling them to customers. Expect August schedule reductions even during August. They can pull down capacity at the last minute as circumstances change on the group, which doesn’t offer much certainty for the customer.

13. They’ll keep taking new Boeing 737 MAXs even though they have plenty of planes they aren’t flying. There are 30 Boeing 737 MAXs between those currently built and that are scheduled to be taken this year as long as they’re financed. American is not pushing back new aircraft deliveries the way United reported they are doing with Boeing.