American rises as CEO sees cash flow poised for takeoff

Bloomberg

American Airlines Group Inc surged as executives sketched out a robust outlook for 2020 after two punishing years for investors.
Profit and cash flow are poised to rise as the company improves operations and reaches the end of heavy investments in new jets, Chief Executive Officer Doug Parker said. That will enable the
company to cut debt even if earnings are flat, he said, signaling relief for a major concern for investors.
“We are confident we will begin to produce significant free cash flow for our investors in 2020 and beyond,’’ Parker said on a conference call with analysts to discuss earnings. “As we generate that significant free cash flow, we will naturally deleverage our balance sheet.”
American is trying to engineer a turnaround after a summer plagued by flight delays and cancellations, and a widening lag with rivals in shareholder returns. On-time performance in September was the best in almost two years, American said, and the results of an aggressive expansion plan at the company’s Dallas hub are exceeding expectations.
“We just know we’re excited about our prospects to grow and to grow efficiently and profitably,’’ Parker said.
American fell 12% this year, the only decline on a Standard & Poor’s index of major US airlines. The carrier brought up the rear last year, with a 38% tumble. Even if earnings are unchanged from 2019 levels during the next two years, it should generate $2.5 billion in free cash flow in 2020 and $3 billion in 2021, said CEO.