American Airlines Group Inc. (NASDAQ:AAL) Q2 2020 Earnings Conference Call - Final Transcript
Jul 23, 2020 • 08:30 am ET
Thank you. [Operator Instructions] Our first question comes from the line of Helane Becker with Cowen. Your line is now open.
Thank you very much operator. Hi, Doug.
Hi, Helane. Do you remember the America West days?
I do. I remember a lot, Doug, just a lot. So okay, this is not something to laugh over because we are experiencing something really horrible in our industry, something I thought honestly between now and retirement, I would never see again. And so I'm going to kind of be a jerk and ask this question. You have a lot of aircraft debt on the balance sheet. Does -- and obviously you have to be a smaller airline for some period of time until we recover to last year levels. So does it make sense to figure out a way to return those aircraft or somehow figure out a way to get out from under that $50 billion in debt that you have on the balance sheet that at some point has to be repaid?
Sure. I'll start, Helane. It's not -- you're not being a jerk at all. It's a fair question. We -- as you know, we have built up a good bit of debt on our balance sheet as we modernized our fleet. The good news is we do have the most modern fleet in the industry and we don't need to continue to that work. We're happy with the fleet we have. We've used this opportunity to accelerate the retirement of a lot of our older aircraft, which will make us even more efficient as we emerge in this crisis. We believe the aircraft that we have remaining in our fleet is about the right size for the network we're going to need as we move into 2021.
If indeed that turns out not to be the case, we will adjust accordingly, of course, but it's -- that's more about the right-size of the network as opposed to the debt levels. But the answer to the debt levels is to get the airline to be cash positive. As I said, again, our goal is to do in 2021 and to use all the cash we generate to reduce the debt burn, which we will do over time. All of us have increased our debt burning through this crisis to fund the losses, and you're right, the management was higher than the others.
I would note, first off, we do have -- the maturity profile is in our favor at least as it relates to the crisis. As Derek stated, we don't have, other than a $750 million term loan that's due in the middle of 2022 is our next large non-aircraft debt payment, which helps, of course, as to what it's done to -- as opposed to the amortization of largely increased interest expense. As we look at our interest expense in 2021 at least right now, the interest expenses would be about $300 million higher than what