American Airlines sees value of net special items to be approx. $300M in Q3
The company said in a regulatory filing that it expects the value of its net special items in the third quarter to be approximately $300 million, principally consisting of merger integration expenses relating to re-branding of aircraft, airport facilities and uniforms, information technology, alignment of labor union contracts and fleet restructuring. Mainline CASM excluding fuel and special items is expected to be up approximately 5 percent to 7 percent in 2016. This forecast incorporates the impact of the joint contracts with the Company's customer service and reservation agents and dispatchers, as well as the interim agreement with the Company's fleet service clerks and mechanics and the amended agreement with the Company's regional pilots. This guidance and the CASM guidance in the following pages includes the impact of profit sharing. On March 23, 2016, the Company announced that it would institute a profit sharing program, retrospective to January 1, 2016. As a result, the Company will now accrue 5 percent of its pre-tax profits excluding special items for this program, with an anticipated distribution to employees in early 2017. 2016 total system capacity is expected to be up approximately 1.5 percent vs. 2015. Full year domestic capacity is expected to be up approximately 1.5 percent year-over-year, while international capacity is also expected to be up approximately 1.5 percent vs. 2015. The Company expects to pay an average of between $1.44 and $1.49 per gallon of mainline jet fuel in the third quarter. Following the filing of its annual tax return, the Company had approximately $10.5 billion of federal net operating losses and $4.0 billion of state NOLs, substantially all of which are expected to be available in 2016 to reduce future federal and state taxable income. The increase in the federal NOLs from previous guidance is attributable to the election to take bonus depreciation on eligible assets in the 2015 federal income tax return. The Company expects to recognize a provision for income taxes in 2016 at an effective rate of approximately 38 percent, which will be substantially non-cash. In 2016, the Company expects to take delivery of 55 mainline aircraft including 25 A321 aircraft, 20 B738 aircraft, 2 B773 aircraft, 4 B788 aircraft, and 4 B789 aircraft. The Company expects to retire 75 mainline aircraft, including 4 A320 aircraft, 13 B757 aircraft, 14 B763 aircraft and 44 MD80 aircraft. In 2016, the Company expects to add 60 regional aircraft, including 18 CRJ700 aircraft, 18 CRJ900 aircraft and 24 E175 aircraft. The Company expects to retire 8 CRJ200 aircraft and 5 Dash 8-100 aircraft and place in temporary storage 1 ERJ140 aircraft.