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FORM 10-Q
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☒
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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☐
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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American Airlines Group Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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75-1825172
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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4333 Amon Carter Blvd., Fort Worth, Texas 76155
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(817) 963-1234
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(Address of principal executive offices, including zip code)
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(Registrant’s telephone number, including area code)
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American Airlines, Inc.
(Exact name of registrant as specified in its charter)
|
||
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Delaware
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13-1502798
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
4333 Amon Carter Blvd., Fort Worth, Texas 76155
|
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(817) 963-1234
|
(Address of principal executive offices, including zip code)
|
|
(Registrant’s telephone number, including area code)
|
American Airlines Group Inc.
|
☒
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Yes
|
|
☐
|
No
|
American Airlines, Inc.
|
☒
|
Yes
|
|
☐
|
No
|
American Airlines Group Inc.
|
☒
|
Yes
|
|
☐
|
No
|
American Airlines, Inc.
|
☒
|
Yes
|
|
☐
|
No
|
American Airlines Group Inc.
|
☒ Large Accelerated Filer
|
☐ Accelerated Filer
|
☐ Non-accelerated Filer
|
☐ Smaller Reporting Company
|
☐ Emerging Growth Company
|
American Airlines, Inc.
|
☐ Large Accelerated Filer
|
☐ Accelerated Filer
|
☒ Non-accelerated Filer
|
☐ Smaller Reporting Company
|
☐ Emerging Growth Company
|
American Airlines Group Inc.
|
☐
|
|
American Airlines, Inc.
|
☐
|
|
American Airlines Group Inc.
|
☐
|
Yes
|
|
☒
|
No
|
American Airlines, Inc.
|
☐
|
Yes
|
|
☒
|
No
|
American Airlines Group Inc.
|
☒
|
Yes
|
|
☐
|
No
|
American Airlines, Inc.
|
☒
|
Yes
|
|
☐
|
No
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Page
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PART I: FINANCIAL INFORMATION
|
||
Item 1A.
|
||
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||
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||
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||
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||
|
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Item 1B.
|
||
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||
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||
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|
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Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
PART II: OTHER INFORMATION
|
||
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 6.
|
||
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Operating revenues:
|
|
||||||
Passenger
|
$
|
9,480
|
|
|
$
|
8,997
|
|
Cargo
|
227
|
|
|
191
|
|
||
Other
|
694
|
|
|
632
|
|
||
Total operating revenues
|
10,401
|
|
|
9,820
|
|
||
Operating expenses:
|
|
|
|
||||
Aircraft fuel and related taxes
|
1,763
|
|
|
1,402
|
|
||
Salaries, wages and benefits
|
3,017
|
|
|
2,859
|
|
||
Regional expenses
|
1,698
|
|
|
1,573
|
|
||
Maintenance, materials and repairs
|
469
|
|
|
492
|
|
||
Other rent and landing fees
|
462
|
|
|
440
|
|
||
Aircraft rent
|
304
|
|
|
295
|
|
||
Selling expenses
|
356
|
|
|
318
|
|
||
Depreciation and amortization
|
445
|
|
|
405
|
|
||
Special items, net
|
195
|
|
|
119
|
|
||
Other
|
1,261
|
|
|
1,180
|
|
||
Total operating expenses
|
9,970
|
|
|
9,083
|
|
||
Operating income
|
431
|
|
|
737
|
|
||
Nonoperating income (expense):
|
|
|
|
||||
Interest income
|
25
|
|
|
21
|
|
||
Interest expense, net
|
(265
|
)
|
|
(257
|
)
|
||
Other income, net
|
82
|
|
|
34
|
|
||
Total nonoperating expense, net
|
(158
|
)
|
|
(202
|
)
|
||
Income before income taxes
|
273
|
|
|
535
|
|
||
Income tax provision
|
87
|
|
|
195
|
|
||
Net income
|
$
|
186
|
|
|
$
|
340
|
|
|
|
|
|
||||
Earnings per common share:
|
|
|
|
||||
Basic
|
$
|
0.39
|
|
|
$
|
0.67
|
|
Diluted
|
$
|
0.39
|
|
|
$
|
0.67
|
|
Weighted average shares outstanding (in thousands):
|
|
|
|
||||
Basic
|
472,297
|
|
|
503,902
|
|
||
Diluted
|
474,598
|
|
|
507,797
|
|
||
Cash dividends declared per common share
|
$
|
0.10
|
|
|
$
|
0.10
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net income
|
$
|
186
|
|
|
$
|
340
|
|
Other comprehensive loss, net of tax:
|
|
|
|
||||
Pension, retiree medical and other postretirement benefits
|
(16
|
)
|
|
(14
|
)
|
||
Investments
|
(2
|
)
|
|
—
|
|
||
Total other comprehensive loss, net of tax
|
(18
|
)
|
|
(14
|
)
|
||
Total comprehensive income
|
$
|
168
|
|
|
$
|
326
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
||||||
Current assets
|
|
|
|
||||
Cash
|
$
|
297
|
|
|
$
|
295
|
|
Short-term investments
|
4,994
|
|
|
4,771
|
|
||
Restricted cash and short-term investments
|
294
|
|
|
318
|
|
||
Accounts receivable, net
|
1,809
|
|
|
1,752
|
|
||
Aircraft fuel, spare parts and supplies, net
|
1,455
|
|
|
1,359
|
|
||
Prepaid expenses and other
|
824
|
|
|
651
|
|
||
Total current assets
|
9,673
|
|
|
9,146
|
|
||
Operating property and equipment
|
|
|
|
||||
Flight equipment
|
40,662
|
|
|
40,318
|
|
||
Ground property and equipment
|
8,599
|
|
|
8,267
|
|
||
Equipment purchase deposits
|
1,231
|
|
|
1,217
|
|
||
Total property and equipment, at cost
|
50,492
|
|
|
49,802
|
|
||
Less accumulated depreciation and amortization
|
(16,159
|
)
|
|
(15,646
|
)
|
||
Total property and equipment, net
|
34,333
|
|
|
34,156
|
|
||
Other assets
|
|
|
|
||||
Goodwill
|
4,091
|
|
|
4,091
|
|
||
Intangibles, net of accumulated amortization of $632 and $622, respectively
|
2,193
|
|
|
2,203
|
|
||
Deferred tax asset
|
1,581
|
|
|
1,816
|
|
||
Other assets
|
1,409
|
|
|
1,373
|
|
||
Total other assets
|
9,274
|
|
|
9,483
|
|
||
Total assets
|
$
|
53,280
|
|
|
$
|
52,785
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Current maturities of long-term debt and capital leases
|
$
|
2,793
|
|
|
$
|
2,554
|
|
Accounts payable
|
1,953
|
|
|
1,688
|
|
||
Accrued salaries and wages
|
1,178
|
|
|
1,672
|
|
||
Air traffic liability
|
5,549
|
|
|
4,042
|
|
||
Loyalty program liability
|
3,176
|
|
|
3,121
|
|
||
Other accrued liabilities
|
2,359
|
|
|
2,281
|
|
||
Total current liabilities
|
17,008
|
|
|
15,358
|
|
||
Noncurrent liabilities
|
|
|
|
||||
Long-term debt and capital leases, net of current maturities
|
21,946
|
|
|
22,511
|
|
||
Pension and postretirement benefits
|
7,259
|
|
|
7,497
|
|
||
Loyalty program liability
|
5,610
|
|
|
5,701
|
|
||
Other liabilities
|
2,475
|
|
|
2,498
|
|
||
Total noncurrent liabilities
|
37,290
|
|
|
38,207
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity (deficit)
|
|
|
|
||||
Common stock, $0.01 par value; 1,750,000,000 shares authorized, 467,390,481 shares issued and outstanding at March 31, 2018; 475,507,887 shares issued and outstanding at December 31, 2017
|
5
|
|
|
5
|
|
||
Additional paid-in capital
|
5,279
|
|
|
5,714
|
|
||
Accumulated other comprehensive loss
|
(5,172
|
)
|
|
(5,154
|
)
|
||
Accumulated deficit
|
(1,130
|
)
|
|
(1,345
|
)
|
||
Total stockholders’ deficit
|
(1,018
|
)
|
|
(780
|
)
|
||
Total liabilities and stockholders’ equity (deficit)
|
$
|
53,280
|
|
|
$
|
52,785
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net cash provided by operating activities
|
$
|
1,799
|
|
|
$
|
2,250
|
|
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures and aircraft purchase deposits
|
(779
|
)
|
|
(1,714
|
)
|
||
Proceeds from sale of property and equipment and other investments
|
22
|
|
|
32
|
|
||
Purchases of short-term investments
|
(1,252
|
)
|
|
(1,922
|
)
|
||
Sales of short-term investments
|
1,029
|
|
|
1,660
|
|
||
Decrease in restricted short-term investments
|
24
|
|
|
74
|
|
||
Net cash used in investing activities
|
(956
|
)
|
|
(1,870
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
236
|
|
|
899
|
|
||
Payments on long-term debt and capital leases
|
(569
|
)
|
|
(686
|
)
|
||
Deferred financing costs
|
(1
|
)
|
|
(31
|
)
|
||
Treasury stock repurchases
|
(461
|
)
|
|
(484
|
)
|
||
Dividend payments
|
(48
|
)
|
|
(51
|
)
|
||
Other financing activities
|
2
|
|
|
4
|
|
||
Net cash used in financing activities
|
(841
|
)
|
|
(349
|
)
|
||
Net increase in cash
and restricted cash
|
2
|
|
|
31
|
|
||
Cash and restricted cash at beginning of period
|
398
|
|
|
436
|
|
||
Cash and restricted cash at end of period
(a)
|
$
|
400
|
|
|
$
|
467
|
|
|
|
|
|
||||
Supplemental information:
|
|
|
|
||||
Interest paid, net
|
258
|
|
|
255
|
|
||
Income taxes paid
|
3
|
|
|
4
|
|
|
Cash
|
$
|
297
|
|
|
$
|
374
|
|
Restricted cash included in restricted cash and short-term investments
|
103
|
|
|
93
|
|
||
Total cash and restricted cash
|
$
|
400
|
|
|
$
|
467
|
|
|
|
|
New Revenue Standard
|
|
New Retirement Standard
|
|
|
||||||||||||
|
As Reported
|
|
Deferred Revenue Method
|
|
Reclassifications
|
|
Reclassifications
|
|
As Recast
|
||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Passenger
|
$
|
8,155
|
|
|
$
|
170
|
|
|
$
|
672
|
|
|
$
|
—
|
|
|
$
|
8,997
|
|
Cargo
|
172
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
191
|
|
|||||
Other
|
1,297
|
|
|
—
|
|
|
(665
|
)
|
|
—
|
|
|
632
|
|
|||||
Total operating revenues
|
9,624
|
|
|
170
|
|
|
26
|
|
|
—
|
|
|
9,820
|
|
|||||
Total operating expenses
|
9,023
|
|
|
—
|
|
|
26
|
|
|
34
|
|
|
9,083
|
|
|||||
Operating income
|
601
|
|
|
170
|
|
|
—
|
|
|
(34
|
)
|
|
737
|
|
|||||
Total nonoperating expense, net
|
(236
|
)
|
|
—
|
|
|
—
|
|
|
34
|
|
|
(202
|
)
|
|||||
Income before income taxes
|
365
|
|
|
170
|
|
|
—
|
|
|
—
|
|
|
535
|
|
|||||
Income tax provision
|
131
|
|
|
64
|
|
|
—
|
|
|
—
|
|
|
195
|
|
|||||
Net income
|
$
|
234
|
|
|
$
|
106
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
340
|
|
Diluted earnings per common share
|
$
|
0.46
|
|
|
|
|
|
|
|
|
$
|
0.67
|
|
|
As Reported
|
|
New Revenue Standard
|
|
As Recast
|
||||||
Deferred tax asset
|
$
|
427
|
|
|
$
|
1,389
|
|
|
$
|
1,816
|
|
Air traffic liability
|
3,978
|
|
|
64
|
|
|
4,042
|
|
|||
Current loyalty program liability
|
2,791
|
|
|
330
|
|
|
3,121
|
|
|||
Noncurrent loyalty program liability
|
—
|
|
|
5,701
|
|
|
5,701
|
|
|||
Total stockholders' equity (deficit)
|
3,926
|
|
|
(4,706
|
)
|
|
(780
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Fleet restructuring expenses
(1)
|
$
|
82
|
|
|
$
|
63
|
|
Merger integration expenses
(2)
|
59
|
|
|
63
|
|
||
Labor contract expenses
|
13
|
|
|
—
|
|
||
Other operating charges, net
|
41
|
|
|
(7
|
)
|
||
Mainline operating special items, net
|
195
|
|
|
119
|
|
||
|
|
|
|
||||
Regional operating special items, net
|
—
|
|
|
2
|
|
||
|
|
|
|
||||
Debt refinancing and extinguishment charges
|
—
|
|
|
5
|
|
||
Nonoperating special items, net
|
—
|
|
|
5
|
|
||
|
|
|
|
||||
Income tax special items, net
(3)
|
22
|
|
|
—
|
|
|
(1)
|
Fleet restructuring expenses principally included the acceleration of depreciation and impairments for aircraft and related equipment grounded or expected to be grounded earlier than planned.
|
(2)
|
Merger integration expenses included costs associated with our remaining integration projects, principally our flight attendant, human resources, payroll and technical operations integrations.
|
(3)
|
Income tax special items included a
$22 million
charge to income tax expense to establish a required valuation allowance related to our estimated refund for Alternative Minimum Tax (AMT) credits.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Basic EPS:
|
|
|
|
||||
Net income
|
$
|
186
|
|
|
$
|
340
|
|
Weighted average common shares outstanding (in thousands)
|
472,297
|
|
|
503,902
|
|
||
Basic EPS
|
$
|
0.39
|
|
|
$
|
0.67
|
|
|
|
|
|
||||
Diluted EPS:
|
|
|
|
||||
Net income for purposes of computing diluted EPS
|
$
|
186
|
|
|
$
|
340
|
|
Share computation for diluted EPS (in thousands):
|
|
|
|
||||
Basic weighted average common shares outstanding
|
472,297
|
|
|
503,902
|
|
||
Dilutive effect of stock awards
|
2,301
|
|
|
3,895
|
|
||
Diluted weighted average common shares outstanding
|
474,598
|
|
|
507,797
|
|
||
Diluted EPS
|
$
|
0.39
|
|
|
$
|
0.67
|
|
|
|
|
|
||||
Restricted stock unit awards excluded from the calculation of diluted EPS because inclusion would be antidilutive (in thousands)
|
1
|
|
|
395
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Passenger revenue:
|
|
|
|
||||
Passenger travel
|
$
|
8,630
|
|
|
$
|
8,195
|
|
Loyalty revenue - travel
(1)
|
850
|
|
|
802
|
|
||
Total passenger revenue
|
9,480
|
|
|
8,997
|
|
||
Cargo
|
227
|
|
|
191
|
|
||
Other:
|
|
|
|
||||
Loyalty revenue - marketing services
|
570
|
|
|
514
|
|
||
Other revenue
|
124
|
|
|
118
|
|
||
Total other revenue
|
694
|
|
|
632
|
|
||
Total operating revenues
|
$
|
10,401
|
|
|
$
|
9,820
|
|
|
(1)
|
Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions for air travel awards from mileage credits earned through travel and mileage credits sold to co-branded card and other partners. See discussion of Loyalty Revenue below.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Domestic
|
$
|
6,963
|
|
|
$
|
6,781
|
|
Latin America
|
1,445
|
|
|
1,231
|
|
||
Atlantic
|
669
|
|
|
624
|
|
||
Pacific
|
403
|
|
|
361
|
|
||
Total passenger revenue
|
$
|
9,480
|
|
|
$
|
8,997
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
(In millions)
|
||||||
Loyalty program liability
|
$
|
8,786
|
|
|
$
|
8,822
|
|
Air traffic liability
|
5,549
|
|
|
4,042
|
|
||
Total
|
$
|
14,335
|
|
|
$
|
12,864
|
|
Balance at December 31, 2017
|
$
|
8,822
|
|
Deferral of revenue
|
865
|
|
|
Recognition of revenue
(1)
|
(901
|
)
|
|
Balance at March 31, 2018
(2)
|
$
|
8,786
|
|
|
(1)
|
Principally relates to revenue recognized from the redemption of mileage credits for both air and non-air travel awards. Mileage credits are combined in one homogenous pool and are not separately identifiable. As such, the revenue is comprised of miles that were part of the loyalty program deferred revenue balance at the beginning of the period as well as miles that were issued during the period.
|
(2)
|
Mileage credits can be redeemed at any time and do not expire as long as that AAdvantage member has any type of qualifying activity at least every
18
months. As of
March 31, 2018
, our current loyalty program liability was
$3.2 billion
and represents our current estimate of revenue expected to be recognized in the next twelve months based on historical trends, with the balance reflected in long-term loyalty program liability expected to be recognized as revenue in periods thereafter.
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Secured
|
|
|
|
||||
2013 Credit Facilities, variable interest rate of 3.88%, installments through 2020
|
$
|
1,825
|
|
|
$
|
1,825
|
|
2014 Credit Facilities, variable interest rate of 3.74%, installments through 2021
|
728
|
|
|
728
|
|
||
April 2016 Credit Facilities, variable interest rate of 3.88%, installments through 2023
|
990
|
|
|
990
|
|
||
December 2016 Credit Facilities, variable interest rate of 3.78%, installments through 2023
|
1,238
|
|
|
1,238
|
|
||
Aircraft enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.00% to 9.75%, averaging 4.25%, maturing from 2018 to 2029
|
11,764
|
|
|
11,881
|
|
||
Equipment loans and other notes payable, fixed and variable interest rates ranging from 2.34% to 8.48%, averaging 3.70%, maturing from 2018 to 2029
|
5,062
|
|
|
5,259
|
|
||
Special facility revenue bonds, fixed interest rates ranging from 5.00% to 8.00%, maturing from 2018 to 2035
|
857
|
|
|
857
|
|
||
Other secured obligations, fixed interest rates ranging from 3.81% to 12.24%, maturing from 2021 to 2028
|
755
|
|
|
773
|
|
||
|
23,219
|
|
|
23,551
|
|
||
Unsecured
|
|
|
|
||||
5.50% senior notes, interest only payments until due in 2019
|
750
|
|
|
750
|
|
||
6.125% senior notes, interest only payments until due in 2018
|
500
|
|
|
500
|
|
||
4.625% senior notes, interest only payments until due in 2020
|
500
|
|
|
500
|
|
||
|
1,750
|
|
|
1,750
|
|
||
Total long-term debt and capital lease obligations
|
24,969
|
|
|
25,301
|
|
||
Less: Total unamortized debt discount, premium and issuance costs
|
230
|
|
|
236
|
|
||
Less: Current maturities
|
2,793
|
|
|
2,554
|
|
||
Long-term debt and capital lease obligations, net of current maturities
|
$
|
21,946
|
|
|
$
|
22,511
|
|
2013 Revolving Facility
|
$
|
1,200
|
|
2014 Revolving Facility
|
1,000
|
|
|
April 2016 Revolving Facility
|
300
|
|
|
Total
|
$
|
2,500
|
|
|
2017-2 EETCs
|
||||
|
Series AA
|
|
Series A
|
|
Series B
|
Aggregate principal issued
|
$545 million
|
|
$252 million
|
|
$221 million
|
Remaining escrowed proceeds
|
$39 million
|
|
$18 million
|
|
$16 million
|
Fixed interest rate per annum
|
3.35%
|
|
3.60%
|
|
3.70%
|
Maturity date
|
October 2029
|
|
October 2029
|
|
October 2025
|
|
Fair Value Measurements as of March 31, 2018
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Short-term investments
(1) (2)
:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
14
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate obligations
|
1,712
|
|
|
—
|
|
|
1,712
|
|
|
—
|
|
||||
Bank notes/certificates of deposit/time deposits
|
2,843
|
|
|
—
|
|
|
2,843
|
|
|
—
|
|
||||
Repurchase agreements
|
425
|
|
|
—
|
|
|
425
|
|
|
—
|
|
||||
|
4,994
|
|
|
14
|
|
|
4,980
|
|
|
—
|
|
||||
Restricted cash and short-term investments
(1)
|
294
|
|
|
164
|
|
|
130
|
|
|
—
|
|
||||
Long-term investments
(3)
|
281
|
|
|
281
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
5,569
|
|
|
$
|
459
|
|
|
$
|
5,110
|
|
|
$
|
—
|
|
|
(1)
|
Unrealized gains or losses on short-term investments are recorded in accumulated other comprehensive loss at each measurement date.
|
(2)
|
All short-term investments are classified as available-for-sale and stated at fair value. Our short-term investments mature in one year or less except for
$425 million
of bank notes/certificates of deposit/time deposits and
$145 million
of corporate obligations.
|
(3)
|
Long-term investments primarily include our investment in China Southern Airlines Company Limited and are classified in other assets on our condensed consolidated balance sheets.
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
Carrying
Value |
|
Fair
Value |
|
Carrying
Value |
|
Fair
Value |
||||||||
Long-term debt, including current maturities
|
$
|
24,739
|
|
|
$
|
25,286
|
|
|
$
|
25,065
|
|
|
$
|
25,848
|
|
|
|
Pension Benefits
|
|
Retiree Medical and Other
Postretirement Benefits |
||||||||||||
Three Months Ended March 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Service cost
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
|
169
|
|
|
180
|
|
|
9
|
|
|
10
|
|
||||
Expected return on assets
|
|
(226
|
)
|
|
(197
|
)
|
|
(6
|
)
|
|
(5
|
)
|
||||
Amortization of:
|
|
|
|
|
|
|
|
|
||||||||
Prior service cost (benefit)
|
|
7
|
|
|
7
|
|
|
(59
|
)
|
|
(59
|
)
|
||||
Unrecognized net loss (gain)
|
|
36
|
|
|
36
|
|
|
(5
|
)
|
|
(6
|
)
|
||||
Net periodic benefit cost (income)
|
|
$
|
(13
|
)
|
|
$
|
27
|
|
|
$
|
(60
|
)
|
|
$
|
(59
|
)
|
|
Pension, Retiree
Medical and Other Postretirement Benefits |
|
Unrealized Gain (Loss) on Investments
|
|
Income Tax
Benefit (Provision) (1) |
|
Total
|
||||||||
Balance at December 31, 2017
|
$
|
(4,523
|
)
|
|
$
|
(1
|
)
|
|
$
|
(630
|
)
|
|
$
|
(5,154
|
)
|
Other comprehensive loss before reclassifications
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
||||
Amounts reclassified from AOCI
|
(21
|
)
|
|
—
|
|
|
5
|
|
(2)
|
(16
|
)
|
||||
Net current-period other comprehensive income (loss)
|
(21
|
)
|
|
(2
|
)
|
|
5
|
|
|
(18
|
)
|
||||
Balance at March 31, 2018
|
$
|
(4,544
|
)
|
|
$
|
(3
|
)
|
|
$
|
(625
|
)
|
|
$
|
(5,172
|
)
|
|
(1)
|
Relates principally to pension, retiree medical and other postretirement benefits obligations that will not be recognized in net income until the obligations are fully extinguished.
|
(2)
|
Relates to pension, retiree medical and other postretirement benefits obligations and is recognized within the income tax provision on the condensed consolidated statement of operations.
|
|
|
Amounts reclassified from AOCI
|
|
Affected line items on the
condensed consolidated statements of operations |
||||||
AOCI Components
|
|
Three Months Ended March 31,
|
|
|||||||
2018
|
|
2017
|
|
|||||||
Amortization of pension, retiree medical and other postretirement benefits:
|
|
|
|
|
|
|
||||
Prior service benefit
|
|
$
|
(40
|
)
|
|
$
|
(33
|
)
|
|
Nonoperating other income, net
|
Actuarial loss
|
|
24
|
|
|
19
|
|
|
Nonoperating other income, net
|
||
Total reclassifications for the period, net of tax
|
|
$
|
(16
|
)
|
|
$
|
(14
|
)
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Aircraft fuel and related taxes
|
$
|
398
|
|
|
$
|
318
|
|
Salaries, wages and benefits
|
383
|
|
|
345
|
|
||
Capacity purchases from third-party regional carriers
|
354
|
|
|
393
|
|
||
Maintenance, materials and repairs
|
80
|
|
|
69
|
|
||
Other rent and landing fees
|
147
|
|
|
152
|
|
||
Aircraft rent
|
9
|
|
|
9
|
|
||
Selling expenses
|
85
|
|
|
80
|
|
||
Depreciation and amortization
|
82
|
|
|
79
|
|
||
Special items, net
|
—
|
|
|
2
|
|
||
Other
|
160
|
|
|
126
|
|
||
Total regional expenses
|
$
|
1,698
|
|
|
$
|
1,573
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Operating revenues:
|
|
|
|
||||
Passenger
|
$
|
9,480
|
|
|
$
|
8,997
|
|
Cargo
|
227
|
|
|
191
|
|
||
Other
|
691
|
|
|
629
|
|
||
Total operating revenues
|
10,398
|
|
|
9,817
|
|
||
Operating expenses:
|
|
|
|
||||
Aircraft fuel and related taxes
|
1,763
|
|
|
1,402
|
|
||
Salaries, wages and benefits
|
3,014
|
|
|
2,857
|
|
||
Regional expenses
|
1,682
|
|
|
1,569
|
|
||
Maintenance, materials and repairs
|
469
|
|
|
492
|
|
||
Other rent and landing fees
|
462
|
|
|
440
|
|
||
Aircraft rent
|
304
|
|
|
295
|
|
||
Selling expenses
|
356
|
|
|
318
|
|
||
Depreciation and amortization
|
445
|
|
|
405
|
|
||
Special items, net
|
195
|
|
|
119
|
|
||
Other
|
1,261
|
|
|
1,180
|
|
||
Total operating expenses
|
9,951
|
|
|
9,077
|
|
||
Operating income
|
447
|
|
|
740
|
|
||
Nonoperating income (expense):
|
|
|
|
||||
Interest income
|
73
|
|
|
49
|
|
||
Interest expense, net
|
(253
|
)
|
|
(241
|
)
|
||
Other income, net
|
82
|
|
|
33
|
|
||
Total nonoperating expense, net
|
(98
|
)
|
|
(159
|
)
|
||
Income before income taxes
|
349
|
|
|
581
|
|
||
Income tax provision
|
113
|
|
|
212
|
|
||
Net income
|
$
|
236
|
|
|
$
|
369
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net income
|
$
|
236
|
|
|
$
|
369
|
|
Other comprehensive loss, net of tax:
|
|
|
|
||||
Pension, retiree medical and other postretirement benefits
|
(16
|
)
|
|
(14
|
)
|
||
Investments
|
(2
|
)
|
|
—
|
|
||
Total other comprehensive loss, net of tax
|
(18
|
)
|
|
(14
|
)
|
||
Total comprehensive income
|
$
|
218
|
|
|
$
|
355
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash
|
$
|
283
|
|
|
$
|
287
|
|
Short-term investments
|
4,984
|
|
|
4,768
|
|
||
Restricted cash and short-term investments
|
294
|
|
|
318
|
|
||
Accounts receivable, net
|
1,865
|
|
|
1,755
|
|
||
Receivables from related parties, net
|
9,405
|
|
|
8,822
|
|
||
Aircraft fuel, spare parts and supplies, net
|
1,387
|
|
|
1,294
|
|
||
Prepaid expenses and other
|
820
|
|
|
647
|
|
||
Total current assets
|
19,038
|
|
|
17,891
|
|
||
Operating property and equipment
|
|
|
|
||||
Flight equipment
|
40,340
|
|
|
39,993
|
|
||
Ground property and equipment
|
8,329
|
|
|
8,006
|
|
||
Equipment purchase deposits
|
1,230
|
|
|
1,217
|
|
||
Total property and equipment, at cost
|
49,899
|
|
|
49,216
|
|
||
Less accumulated depreciation and amortization
|
(15,860
|
)
|
|
(15,354
|
)
|
||
Total property and equipment, net
|
34,039
|
|
|
33,862
|
|
||
Other assets
|
|
|
|
||||
Goodwill
|
4,091
|
|
|
4,091
|
|
||
Intangibles, net of accumulated amortization of $632 and $622, respectively
|
2,193
|
|
|
2,203
|
|
||
Deferred tax asset
|
1,757
|
|
|
2,071
|
|
||
Other assets
|
1,309
|
|
|
1,283
|
|
||
Total other assets
|
9,350
|
|
|
9,648
|
|
||
Total assets
|
$
|
62,427
|
|
|
$
|
61,401
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDER’S EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Current maturities of long-term debt and capital leases
|
$
|
2,297
|
|
|
$
|
2,058
|
|
Accounts payable
|
1,884
|
|
|
1,625
|
|
||
Accrued salaries and wages
|
1,126
|
|
|
1,613
|
|
||
Air traffic liability
|
5,549
|
|
|
4,042
|
|
||
Loyalty program liability
|
3,176
|
|
|
3,121
|
|
||
Other accrued liabilities
|
2,266
|
|
|
2,209
|
|
||
Total current liabilities
|
16,298
|
|
|
14,668
|
|
||
Noncurrent liabilities
|
|
|
|
||||
Long-term debt and capital leases, net of current maturities
|
20,669
|
|
|
21,236
|
|
||
Pension and postretirement benefits
|
7,214
|
|
|
7,452
|
|
||
Loyalty program liability
|
5,610
|
|
|
5,701
|
|
||
Other liabilities
|
2,429
|
|
|
2,456
|
|
||
Total noncurrent liabilities
|
35,922
|
|
|
36,845
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholder’s equity
|
|
|
|
||||
Common stock, $1.00 par value; 1,000 shares authorized, issued and outstanding
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
16,740
|
|
|
16,716
|
|
||
Accumulated other comprehensive loss
|
(5,269
|
)
|
|
(5,251
|
)
|
||
Accumulated deficit
|
(1,264
|
)
|
|
(1,577
|
)
|
||
Total stockholder’s equity
|
10,207
|
|
|
9,888
|
|
||
Total liabilities and stockholder’s equity
|
$
|
62,427
|
|
|
$
|
61,401
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net cash provided by operating activities
|
$
|
1,262
|
|
|
$
|
1,696
|
|
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures and aircraft purchase deposits
|
(762
|
)
|
|
(1,695
|
)
|
||
Proceeds from sale of property and equipment and other investments
|
19
|
|
|
31
|
|
||
Purchases of short-term investments
|
(1,244
|
)
|
|
(1,920
|
)
|
||
Sales of short-term investments
|
1,029
|
|
|
1,660
|
|
||
Decrease in restricted short-term investments
|
24
|
|
|
74
|
|
||
Net cash used in investing activities
|
(934
|
)
|
|
(1,850
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
236
|
|
|
899
|
|
||
Payments on long-term debt and capital leases
|
(569
|
)
|
|
(686
|
)
|
||
Deferred financing costs
|
(1
|
)
|
|
(31
|
)
|
||
Other financing activities
|
2
|
|
|
4
|
|
||
Net cash provided by (used in) financing activities
|
(332
|
)
|
|
186
|
|
||
Net increase (decrea
se) in cash and restricted cash
|
(4
|
)
|
|
32
|
|
||
Cash and restricted cash at beginning of period
|
390
|
|
|
424
|
|
||
Cash and restricted cash at end of period
(a)
|
$
|
386
|
|
|
$
|
456
|
|
|
|
|
|
||||
Supplemental information:
|
|
|
|
||||
Interest paid, net
|
246
|
|
|
243
|
|
||
Income taxes paid
|
3
|
|
|
4
|
|
|
Cash
|
$
|
283
|
|
|
$
|
363
|
|
Restricted cash included in restricted cash and short-term investments
|
103
|
|
|
93
|
|
||
Total cash and restricted cash
|
$
|
386
|
|
|
$
|
456
|
|
|
|
|
New Revenue Standard
|
|
New Retirement Standard
|
|
|
||||||||||||
|
As Reported
|
|
Deferred Revenue Method
|
|
Reclassifications
|
|
Reclassifications
|
|
As Recast
|
||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Passenger
|
$
|
8,155
|
|
|
$
|
170
|
|
|
$
|
672
|
|
|
$
|
—
|
|
|
$
|
8,997
|
|
Cargo
|
172
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
191
|
|
|||||
Other
|
1,294
|
|
|
—
|
|
|
(665
|
)
|
|
—
|
|
|
629
|
|
|||||
Total operating revenues
|
9,621
|
|
|
170
|
|
|
26
|
|
|
—
|
|
|
9,817
|
|
|||||
Total operating expenses
|
9,017
|
|
|
—
|
|
|
26
|
|
|
34
|
|
|
9,077
|
|
|||||
Operating income
|
604
|
|
|
170
|
|
|
—
|
|
|
(34
|
)
|
|
740
|
|
|||||
Total nonoperating expense, net
|
(193
|
)
|
|
—
|
|
|
—
|
|
|
34
|
|
|
(159
|
)
|
|||||
Income before income taxes
|
411
|
|
|
170
|
|
|
—
|
|
|
—
|
|
|
581
|
|
|||||
Income tax provision
|
148
|
|
|
64
|
|
|
—
|
|
|
—
|
|
|
212
|
|
|||||
Net income
|
$
|
263
|
|
|
$
|
106
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
369
|
|
|
As Reported
|
|
New Revenue Standard
|
|
As Recast
|
||||||
Deferred tax asset
|
$
|
682
|
|
|
$
|
1,389
|
|
|
$
|
2,071
|
|
Air traffic liability
|
3,978
|
|
|
64
|
|
|
4,042
|
|
|||
Current loyalty program liability
|
2,791
|
|
|
330
|
|
|
3,121
|
|
|||
Noncurrent loyalty program liability
|
—
|
|
|
5,701
|
|
|
5,701
|
|
|||
Total stockholder’s equity (deficit)
|
14,594
|
|
|
(4,706
|
)
|
|
9,888
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Fleet restructuring expenses
(1)
|
$
|
82
|
|
|
$
|
63
|
|
Merger integration expenses
(2)
|
59
|
|
|
63
|
|
||
Labor contract expenses
|
13
|
|
|
—
|
|
||
Other operating charges, net
|
41
|
|
|
(7
|
)
|
||
Mainline operating special items, net
|
195
|
|
|
119
|
|
||
|
|
|
|
||||
Regional operating special items, net
|
—
|
|
|
2
|
|
||
|
|
|
|
||||
Debt refinancing and extinguishment charges
|
—
|
|
|
5
|
|
||
Nonoperating special items, net
|
—
|
|
|
5
|
|
||
|
|
|
|
||||
Income tax special items, net
(3)
|
30
|
|
|
—
|
|
|
(1)
|
Fleet restructuring expenses principally included the acceleration of depreciation and impairments for aircraft and related equipment grounded or expected to be grounded earlier than planned.
|
(2)
|
Merger integration expenses included costs associated with American's remaining integration projects, principally its flight attendant, human resources, payroll and technical operations integrations.
|
(3)
|
Income tax special items included a
$30 million
charge to income tax expense to establish a required valuation allowance related to American's estimated refund for Alternative Minimum Tax (AMT) credits.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Passenger revenue:
|
|
|
|
|
|
||
Passenger travel
|
$
|
8,630
|
|
|
$
|
8,195
|
|
Loyalty revenue - travel
(1)
|
850
|
|
|
802
|
|
||
Total passenger revenue
|
9,480
|
|
|
8,997
|
|
||
Cargo
|
227
|
|
|
191
|
|
||
Other:
|
|
|
|
|
|
||
Loyalty revenue - marketing services
|
570
|
|
|
514
|
|
||
Other revenue
|
121
|
|
|
115
|
|
||
Total other revenue
|
691
|
|
|
629
|
|
||
Total operating revenues
|
$
|
10,398
|
|
|
$
|
9,817
|
|
|
(1)
|
Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions for air travel awards from mileage credits earned through travel and mileage credits sold to co-branded card and other partners. See discussion of Loyalty Revenue below.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Domestic
|
$
|
6,963
|
|
|
$
|
6,781
|
|
Latin America
|
1,445
|
|
|
1,231
|
|
||
Atlantic
|
669
|
|
|
624
|
|
||
Pacific
|
403
|
|
|
361
|
|
||
Total passenger revenue
|
$
|
9,480
|
|
|
$
|
8,997
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
(In millions)
|
||||||
Loyalty program liability
|
$
|
8,786
|
|
|
$
|
8,822
|
|
Air traffic liability
|
5,549
|
|
|
4,042
|
|
||
Total
|
$
|
14,335
|
|
|
$
|
12,864
|
|
Balance at December 31, 2017
|
$
|
8,822
|
|
Deferral of revenue
|
865
|
|
|
Recognition of revenue
(1)
|
(901
|
)
|
|
Balance at March 31, 2018
(2)
|
$
|
8,786
|
|
|
(1)
|
Principally relates to revenue recognized from the redemption of mileage credits for both air and non-air travel awards. Mileage credits are combined in one homogenous pool and are not separately identifiable. As such, the revenue is comprised of miles that were part of the loyalty program deferred revenue balance at the beginning of the period as well as miles that were issued during the period.
|
(2)
|
Mileage credits can be redeemed at any time and do not expire as long as that AAdvantage member has any type of qualifying activity at least every
18
months. As of
March 31, 2018
, American's current loyalty program liability was
$3.2 billion
and represents American's current estimate of revenue expected to be recognized in the next twelve months based on historical trends, with the balance reflected in long-term loyalty program liability expected to be recognized as revenue in periods thereafter.
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Secured
|
|
|
|
||||
2013 Credit Facilities, variable interest rate of 3.88%, installments through 2020
|
$
|
1,825
|
|
|
$
|
1,825
|
|
2014 Credit Facilities, variable interest rate of 3.74%, installments through 2021
|
728
|
|
|
728
|
|
||
April 2016 Credit Facilities, variable interest rate of 3.88%, installments through 2023
|
990
|
|
|
990
|
|
||
December 2016 Credit Facilities, variable interest rate of 3.78%, installments through 2023
|
1,238
|
|
|
1,238
|
|
||
Aircraft enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.00% to 9.75%, averaging 4.25%, maturing from 2018 to 2029
|
11,764
|
|
|
11,881
|
|
||
Equipment loans and other notes payable, fixed and variable interest rates ranging from 2.34% to 8.48%, averaging 3.70%, maturing from 2018 to 2029
|
5,062
|
|
|
5,259
|
|
||
Special facility revenue bonds, fixed interest rates ranging from 5.00% to 5.50%, maturing from 2018 to 2035
|
828
|
|
|
828
|
|
||
Other secured obligations, fixed interest rates ranging from 3.81% to 12.24%, maturing from 2021 to 2028
|
754
|
|
|
772
|
|
||
Total long-term debt and capital lease obligations
|
23,189
|
|
|
23,521
|
|
||
Less: Total unamortized debt discount, premium and issuance costs
|
223
|
|
|
227
|
|
||
Less: Current maturities
|
2,297
|
|
|
2,058
|
|
||
Long-term debt and capital lease obligations, net of current maturities
|
$
|
20,669
|
|
|
$
|
21,236
|
|
2013 Revolving Facility
|
$
|
1,200
|
|
2014 Revolving Facility
|
1,000
|
|
|
April 2016 Revolving Facility
|
300
|
|
|
Total
|
$
|
2,500
|
|
|
2017-2 EETCs
|
||||
|
Series AA
|
|
Series A
|
|
Series B
|
Aggregate principal issued
|
$545 million
|
|
$252 million
|
|
$221 million
|
Remaining escrowed proceeds
|
$39 million
|
|
$18 million
|
|
$16 million
|
Fixed interest rate per annum
|
3.35%
|
|
3.60%
|
|
3.70%
|
Maturity date
|
October 2029
|
|
October 2029
|
|
October 2025
|
|
Fair Value Measurements as of March 31, 2018
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Short-term investments
(1) (2)
:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate obligations
|
1,712
|
|
|
—
|
|
|
1,712
|
|
|
—
|
|
||||
Bank notes/certificates of deposit/time deposits
|
2,843
|
|
|
—
|
|
|
2,843
|
|
|
—
|
|
||||
Repurchase agreements
|
425
|
|
|
—
|
|
|
425
|
|
|
—
|
|
||||
|
4,984
|
|
|
4
|
|
|
4,980
|
|
|
—
|
|
||||
Restricted cash and short-term investments
(1)
|
294
|
|
|
164
|
|
|
130
|
|
|
—
|
|
||||
Long-term investments
(3)
|
281
|
|
|
281
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
5,559
|
|
|
$
|
449
|
|
|
$
|
5,110
|
|
|
$
|
—
|
|
|
(1)
|
Unrealized gains or losses on short-term investments are recorded in accumulated other comprehensive loss at each measurement date.
|
(2)
|
All short-term investments are classified as available-for-sale and stated at fair value. American’s short-term investments mature in one year or less except for
$425 million
of bank notes/certificates of deposit/time deposits and
$145 million
of corporate obligations.
|
(3)
|
Long-term investments primarily include American's investment in China Southern Airlines Company Limited and are classified in other assets on its condensed consolidated balance sheets.
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
Carrying
Value |
|
Fair
Value |
|
Carrying
Value |
|
Fair
Value |
||||||||
Long-term debt, including current maturities
|
$
|
22,966
|
|
|
$
|
23,481
|
|
|
$
|
23,294
|
|
|
$
|
24,029
|
|
|
|
Pension Benefits
|
|
Retiree Medical and Other
Postretirement Benefits |
||||||||||||
Three Months Ended March 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Service cost
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
|
168
|
|
|
180
|
|
|
9
|
|
|
10
|
|
||||
Expected return on assets
|
|
(225
|
)
|
|
(196
|
)
|
|
(6
|
)
|
|
(5
|
)
|
||||
Amortization of:
|
|
|
|
|
|
|
|
|
||||||||
Prior service cost (benefit)
|
|
7
|
|
|
7
|
|
|
(59
|
)
|
|
(59
|
)
|
||||
Unrecognized net loss (gain)
|
|
36
|
|
|
36
|
|
|
(5
|
)
|
|
(6
|
)
|
||||
Net periodic benefit cost (income)
|
|
$
|
(13
|
)
|
|
$
|
27
|
|
|
$
|
(60
|
)
|
|
$
|
(59
|
)
|
|
Pension, Retiree
Medical and Other Postretirement Benefits |
|
Unrealized Gain (Loss) on Investments
|
|
Income Tax
Benefit (Provision) (1) |
|
Total
|
||||||||
Balance at December 31, 2017
|
$
|
(4,508
|
)
|
|
$
|
(1
|
)
|
|
$
|
(742
|
)
|
|
$
|
(5,251
|
)
|
Other comprehensive loss before reclassifications
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
||||
Amounts reclassified from AOCI
|
(21
|
)
|
|
—
|
|
|
5
|
|
(2)
|
(16
|
)
|
||||
Net current-period other comprehensive income (loss)
|
(21
|
)
|
|
(2
|
)
|
|
5
|
|
|
(18
|
)
|
||||
Balance at March 31, 2018
|
$
|
(4,529
|
)
|
|
$
|
(3
|
)
|
|
$
|
(737
|
)
|
|
$
|
(5,269
|
)
|
|
(1)
|
Relates principally to pension, retiree medical and other postretirement benefits obligations that will not be recognized in net income until the obligations are fully extinguished.
|
(2)
|
Relates to pension, retiree medical and other postretirement benefits obligations and is recognized within the income tax provision on the condensed consolidated statement of operations.
|
|
|
Amounts reclassified from AOCI
|
|
Affected line items on the condensed consolidated statements of operations
|
||||||
AOCI Components
|
|
Three Months Ended March 31,
|
|
|||||||
|
2018
|
|
2017
|
|
||||||
Amortization of pension, retiree medical and other postretirement benefits:
|
|
|
|
|
|
|
||||
Prior service benefit
|
|
$
|
(40
|
)
|
|
$
|
(33
|
)
|
|
Nonoperating other income, net
|
Actuarial loss
|
|
24
|
|
|
19
|
|
|
Nonoperating other income, net
|
||
Total reclassifications for the period, net of tax
|
|
$
|
(16
|
)
|
|
$
|
(14
|
)
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Aircraft fuel and related taxes
|
$
|
398
|
|
|
$
|
318
|
|
Salaries, wages and benefits
|
82
|
|
|
75
|
|
||
Capacity purchases from third-party regional carriers
|
798
|
|
|
801
|
|
||
Maintenance, materials and repairs
|
2
|
|
|
1
|
|
||
Other rent and landing fees
|
141
|
|
|
146
|
|
||
Aircraft rent
|
7
|
|
|
7
|
|
||
Selling expenses
|
85
|
|
|
80
|
|
||
Depreciation and amortization
|
68
|
|
|
64
|
|
||
Special items, net
|
—
|
|
|
2
|
|
||
Other
|
101
|
|
|
75
|
|
||
Total regional expenses
|
$
|
1,682
|
|
|
$
|
1,569
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
AAG
(1)
|
$
|
11,540
|
|
|
$
|
10,968
|
|
AAG’s wholly-owned subsidiaries
(2)
|
(2,135
|
)
|
|
(2,146
|
)
|
||
Total
|
$
|
9,405
|
|
|
$
|
8,822
|
|
|
(1)
|
The increase in American’s net related party receivable from AAG is primarily due to American providing the cash funding for AAG’s share repurchase and dividend programs.
|
(2)
|
The net payable to AAG’s wholly-owned subsidiaries consists primarily of amounts due under regional capacity purchase agreements with AAG’s wholly-owned regional airlines operating under the brand name of American Eagle.
|
|
Three Months Ended March 31,
|
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2018
|
|
2017
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Passenger revenue
|
$
|
9,480
|
|
|
$
|
8,997
|
|
|
$
|
483
|
|
|
5.4
|
|
Cargo revenue
|
227
|
|
|
191
|
|
|
36
|
|
|
18.8
|
|
|||
Other operating revenue
|
694
|
|
|
632
|
|
|
62
|
|
|
10.0
|
|
|||
Total operating revenues
|
10,401
|
|
|
9,820
|
|
|
581
|
|
|
5.9
|
|
|||
Mainline and regional aircraft fuel and related taxes
|
2,161
|
|
|
1,720
|
|
|
441
|
|
|
25.7
|
|
|||
Salaries, wages and benefits
|
3,017
|
|
|
2,859
|
|
|
158
|
|
|
5.5
|
|
|||
Total operating expenses
|
9,970
|
|
|
9,083
|
|
|
887
|
|
|
9.8
|
|
|||
Operating income
|
431
|
|
|
737
|
|
|
(306
|
)
|
|
(41.4
|
)
|
|||
Pre-tax income
|
273
|
|
|
535
|
|
|
(262
|
)
|
|
(48.9
|
)
|
|||
Income tax provision
|
87
|
|
|
195
|
|
|
(108
|
)
|
|
(55.4
|
)
|
|||
Net income
|
186
|
|
|
340
|
|
|
(154
|
)
|
|
(45.2
|
)
|
|||
|
|
|
|
|
|
|
|
|||||||
Pre-tax income
|
$
|
273
|
|
|
$
|
535
|
|
|
$
|
(262
|
)
|
|
(48.9
|
)
|
Adjusted for: Total pre-tax net special items
(1)
|
195
|
|
|
126
|
|
|
69
|
|
|
54.8
|
|
|||
Pre-tax income excluding special items
|
$
|
468
|
|
|
$
|
661
|
|
|
$
|
(193
|
)
|
|
(29.2
|
)
|
|
(1)
|
See below
“Reconciliation of GAAP to Non-GAAP Financial Measures”
and Note 2 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for details on the components of special items.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Reconciliation of Pre-Tax Income Excluding Special Items:
|
|
|
|
||||
Pre-tax income - GAAP
|
$
|
273
|
|
|
$
|
535
|
|
Pre-tax special items
(1)
:
|
|
|
|
||||
Operating special items, net
|
195
|
|
|
121
|
|
||
Nonoperating special items, net
|
—
|
|
|
5
|
|
||
Total pre-tax special items, net
|
195
|
|
|
126
|
|
||
Pre-tax income excluding special items
|
$
|
468
|
|
|
$
|
661
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Reconciliation of Total Operating Costs per Available Seat Mile (CASM)
Excluding Special Items and Fuel:
|
|
|
|
||||
(In millions)
|
|
|
|
||||
Total operating expenses - GAAP
|
$
|
9,970
|
|
|
$
|
9,083
|
|
Special items:
(1)
|
|
|
|
||||
Special items, net
|
(195
|
)
|
|
(119
|
)
|
||
Regional operating special items, net
|
—
|
|
|
(2
|
)
|
||
Fuel:
|
|
|
|
||||
Aircraft fuel and related taxes - mainline
|
(1,763
|
)
|
|
(1,402
|
)
|
||
Aircraft fuel and related taxes - regional
|
(398
|
)
|
|
(318
|
)
|
||
Total operating expenses, excluding special items and fuel
|
$
|
7,614
|
|
|
$
|
7,242
|
|
(In millions)
|
|
|
|
||||
Available Seat Miles (ASM)
|
65,823
|
|
|
64,341
|
|
||
(In cents)
|
|
|
|
||||
Total operating CASM
|
15.15
|
|
|
14.12
|
|
||
Special items per ASM:
|
|
|
|
||||
Special items, net
(1)
|
(0.30
|
)
|
|
(0.18
|
)
|
||
Fuel per ASM:
|
|
|
|
||||
Aircraft fuel and related taxes - mainline
|
(2.68
|
)
|
|
(2.18
|
)
|
||
Aircraft fuel and related taxes - regional
|
(0.60
|
)
|
|
(0.49
|
)
|
||
Total CASM, excluding special items and fuel
|
11.57
|
|
|
11.25
|
|
|
(1)
|
See Note 2 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for further information on special items.
|
|
Three Months Ended
March 31, |
|
Increase
(Decrease)
|
|||||
|
2018
|
|
2017
|
|
||||
Revenue passenger miles (millions)
(a)
|
52,945
|
|
|
50,984
|
|
|
3.8
|
%
|
Available seat miles (millions)
(b)
|
65,823
|
|
|
64,341
|
|
|
2.3
|
%
|
Passenger load factor (percent)
(c)
|
80.4
|
|
|
79.2
|
|
|
1.2
|
pts
|
Yield (cents)
(d)
|
17.90
|
|
|
17.65
|
|
|
1.5
|
%
|
Passenger revenue per available seat mile (cents)
(e)
|
14.40
|
|
|
13.98
|
|
|
3.0
|
%
|
Total revenue per available seat mile (cents)
(f)
|
15.80
|
|
|
15.26
|
|
|
3.5
|
%
|
Aircraft at end of period
|
1,539
|
|
|
1,567
|
|
|
(1.8
|
)%
|
Fuel consumption (gallons in millions)
|
1,030
|
|
|
1,013
|
|
|
1.6
|
%
|
Average aircraft fuel price including related taxes (dollars per gallon)
|
2.10
|
|
|
1.70
|
|
|
23.6
|
%
|
Full-time equivalent employees at end of period
|
128,600
|
|
|
124,300
|
|
|
3.5
|
%
|
Operating cost per available seat mile (cents)
(g)
|
15.15
|
|
|
14.12
|
|
|
7.3
|
%
|
|
(a)
|
Revenue passenger mile (RPM) – A basic measure of sales volume. One RPM represents one passenger flown one mile.
|
(b)
|
Available seat mile (ASM) – A basic measure of production. One ASM represents one seat flown one mile.
|
(c)
|
Passenger load factor – The percentage of available seats that are filled with revenue passengers.
|
(d)
|
Yield – A measure of airline revenue derived by dividing passenger revenue by RPMs.
|
(e)
|
Passenger revenue per available seat mile (PRASM) – Passenger revenue divided by ASMs.
|
(f)
|
Total revenue per available seat mile (TRASM) – Total revenues divided by total ASMs.
|
(g)
|
Operating cost per available seat mile (CASM) – Operating expenses divided by ASMs.
|
|
Three Months Ended
March 31, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
||||||||
|
2018
|
|
2017
|
|
|||||||||
|
(In millions, except percentage changes)
|
||||||||||||
Passenger
|
$
|
9,480
|
|
|
$
|
8,997
|
|
|
$
|
483
|
|
|
5.4
|
Cargo
|
227
|
|
|
191
|
|
|
36
|
|
|
18.8
|
|||
Other
|
694
|
|
|
632
|
|
|
62
|
|
|
10.0
|
|||
Total operating revenues
|
$
|
10,401
|
|
|
$
|
9,820
|
|
|
$
|
581
|
|
|
5.9
|
|
|
|
Increase (Decrease)
vs. Three Months Ended March 31, 2017 |
|||||||||||||
|
Three Months Ended
March 31, 2018 |
|
RPMs
|
|
ASMs
|
|
Load
Factor
|
|
Passenger
Yield
|
|
PRASM
|
|||||
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|||||
Passenger revenue
|
$
|
9,480
|
|
|
3.8%
|
|
2.3%
|
|
1.2
|
pts
|
|
1.5
|
%
|
|
3.0
|
%
|
|
Three Months Ended
March 31, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2018
|
|
2017
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Aircraft fuel and related taxes
|
$
|
1,763
|
|
|
$
|
1,402
|
|
|
$
|
361
|
|
|
25.8
|
|
Salaries, wages and benefits
|
3,017
|
|
|
2,859
|
|
|
158
|
|
|
5.5
|
|
|||
Maintenance, materials and repairs
|
469
|
|
|
492
|
|
|
(23
|
)
|
|
(4.8)
|
|
|||
Other rent and landing fees
|
462
|
|
|
440
|
|
|
22
|
|
|
4.9
|
|
|||
Aircraft rent
|
304
|
|
|
295
|
|
|
9
|
|
|
3.2
|
|
|||
Selling expenses
|
356
|
|
|
318
|
|
|
38
|
|
|
12.0
|
|
|||
Depreciation and amortization
|
445
|
|
|
405
|
|
|
40
|
|
|
10.0
|
|
|||
Special items, net
|
195
|
|
|
119
|
|
|
76
|
|
|
64.8
|
|
|||
Other
|
1,261
|
|
|
1,180
|
|
|
81
|
|
|
6.8
|
|
|||
Regional expenses:
|
|
|
|
|
|
|
|
|||||||
Aircraft fuel and related taxes
|
398
|
|
|
318
|
|
|
80
|
|
|
25.0
|
|
|||
Other
|
1,300
|
|
|
1,255
|
|
|
45
|
|
|
3.6
|
|
|||
Total operating expenses
|
$
|
9,970
|
|
|
$
|
9,083
|
|
|
$
|
887
|
|
|
9.8
|
|
|
Three Months Ended
March 31, |
|
Percent
Increase
(Decrease)
|
|||||
|
2018
|
|
2017
|
|
||||
|
(In cents, except percentage changes)
|
|||||||
Total CASM:
|
|
|
|
|
|
|||
Aircraft fuel and related taxes
|
2.68
|
|
|
2.18
|
|
|
23.0
|
|
Salaries, wages and benefits
|
4.58
|
|
|
4.44
|
|
|
3.1
|
|
Maintenance, materials and repairs
|
0.71
|
|
|
0.76
|
|
|
(6.9
|
)
|
Other rent and landing fees
|
0.70
|
|
|
0.68
|
|
|
2.5
|
|
Aircraft rent
|
0.46
|
|
|
0.46
|
|
|
0.9
|
|
Selling expenses
|
0.54
|
|
|
0.49
|
|
|
9.4
|
|
Depreciation and amortization
|
0.68
|
|
|
0.63
|
|
|
7.6
|
|
Special items, net
|
0.30
|
|
|
0.18
|
|
|
61.1
|
|
Other
|
1.92
|
|
|
1.83
|
|
|
4.4
|
|
Regional expenses:
|
|
|
|
|
|
|||
Aircraft fuel and related taxes
|
0.60
|
|
|
0.49
|
|
|
22.2
|
|
Other
|
1.97
|
|
|
1.95
|
|
|
1.2
|
|
Total CASM
|
15.15
|
|
|
14.12
|
|
|
7.3
|
|
Special items, net:
|
|
|
|
|
|
|||
Special items, net
|
(0.30
|
)
|
|
(0.18
|
)
|
|
61.1
|
|
Aircraft fuel and related taxes:
|
|
|
|
|
|
|||
Aircraft fuel and related taxes - mainline
|
(2.68
|
)
|
|
(2.18
|
)
|
|
23.0
|
|
Aircraft fuel and related taxes - regional
|
(0.60
|
)
|
|
(0.49
|
)
|
|
22.2
|
|
Total CASM, excluding special items and fuel
|
11.57
|
|
|
11.25
|
|
|
2.8
|
|
•
|
Aircraft fuel and related taxes per ASM
increase
d
23.0%
primarily due to a
23.8
%
increase
in the average price per gallon of fuel to
$2.09
in the
first
quarter of
2018
from
$1.69
in the
2017
period.
|
•
|
Salaries, wages and benefits per ASM increased
3.1%
primarily due to mid-contract pay rate increases for pilots and flight attendants effective in the second quarter of 2017.
|
•
|
Maintenance, materials and repairs per ASM
decrease
d
6.9%
primarily due to a period-over-period decrease in costs associated with the return of leased aircraft. Additionally, maintenance costs to refurbish certain customer-facing space at airports decreased as that work was completed in 2017.
|
•
|
Selling expenses per ASM
increase
d
9.4%
primarily due to higher commission expense and credit card fees driven by the overall increase in revenues as well as an increase in flown premium tickets, which are subject to higher commission rates.
|
•
|
Depreciation and amortization per ASM
increase
d
7.6%
primarily due to new aircraft purchased in connection with our fleet renewal program. Subsequent to the first quarter of 2017, we took delivery of 44 new mainline aircraft.
|
•
|
Regional aircraft fuel and related taxes per ASM
increase
d
22.2%
primarily due to a
22.8
%
increase
in the average price per gallon of fuel to
$2.15
in the
first
quarter of
2018
from
$1.75
in the
2017
period.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Fleet restructuring expenses
(1)
|
$
|
82
|
|
|
$
|
63
|
|
Merger integration expenses
(2)
|
59
|
|
|
63
|
|
||
Labor contract expenses
|
13
|
|
|
—
|
|
||
Other operating charges, net
|
41
|
|
|
(7
|
)
|
||
Total mainline operating special items, net
|
195
|
|
|
119
|
|
||
Regional operating special items, net
|
—
|
|
|
2
|
|
||
Total operating special items, net
|
$
|
195
|
|
|
$
|
121
|
|
|
(1)
|
Fleet restructuring expenses principally included the acceleration of depreciation and impairments for aircraft and related equipment grounded or expected to be grounded earlier than planned.
|
(2)
|
Merger integration expenses included costs associated with our remaining integration projects, principally our flight attendant, human resources, payroll and technical operations integrations.
|
|
Three Months Ended March 31,
|
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2018
|
|
2017
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Interest income
|
$
|
25
|
|
|
$
|
21
|
|
|
$
|
4
|
|
|
15.4
|
|
Interest expense, net
|
(265
|
)
|
|
(257
|
)
|
|
(8
|
)
|
|
3.0
|
|
|||
Other income, net
|
82
|
|
|
34
|
|
|
48
|
|
|
nm
(1)
|
|
|||
Total nonoperating expense, net
|
$
|
(158
|
)
|
|
$
|
(202
|
)
|
|
$
|
44
|
|
|
(21.6
|
)
|
|
|
Three Months Ended
March 31, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2018
|
|
2017
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Passenger
|
$
|
9,480
|
|
|
$
|
8,997
|
|
|
$
|
483
|
|
|
5.4
|
|
Cargo
|
227
|
|
|
191
|
|
|
36
|
|
|
18.8
|
|
|||
Other
|
691
|
|
|
629
|
|
|
62
|
|
|
10.1
|
|
|||
Total operating revenues
|
$
|
10,398
|
|
|
$
|
9,817
|
|
|
$
|
581
|
|
|
5.9
|
|
|
Three Months Ended
March 31, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2018
|
|
2017
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Aircraft fuel and related taxes
|
$
|
1,763
|
|
|
$
|
1,402
|
|
|
$
|
361
|
|
|
25.8
|
|
Salaries, wages and benefits
|
3,014
|
|
|
2,857
|
|
|
157
|
|
|
5.5
|
|
|||
Maintenance, materials and repairs
|
469
|
|
|
492
|
|
|
(23
|
)
|
|
(4.8
|
)
|
|||
Other rent and landing fees
|
462
|
|
|
440
|
|
|
22
|
|
|
4.9
|
|
|||
Aircraft rent
|
304
|
|
|
295
|
|
|
9
|
|
|
3.2
|
|
|||
Selling expenses
|
356
|
|
|
318
|
|
|
38
|
|
|
12.0
|
|
|||
Depreciation and amortization
|
445
|
|
|
405
|
|
|
40
|
|
|
10.0
|
|
|||
Special items, net
|
195
|
|
|
119
|
|
|
76
|
|
|
64.8
|
|
|||
Other
|
1,261
|
|
|
1,180
|
|
|
81
|
|
|
6.8
|
|
|||
Regional expenses:
|
|
|
|
|
|
|
|
|||||||
Aircraft fuel and related taxes
|
398
|
|
|
318
|
|
|
80
|
|
|
25.0
|
|
|||
Other
|
1,284
|
|
|
1,251
|
|
|
33
|
|
|
2.6
|
|
|||
Total operating expenses
|
$
|
9,951
|
|
|
$
|
9,077
|
|
|
$
|
874
|
|
|
9.6
|
|
•
|
Aircraft fuel and related taxes
increase
d
25.8
% primarily due to a
23.8
%
increase
in the average price per gallon of fuel to
$2.09
in the
first
quarter of
2018
from
$1.69
in the
2017
period.
|
•
|
Salaries, wages and benefits
increase
d
5.5
% primarily due to mid-contract pay rate increases for pilots and flight attendants effective in the second quarter of
2017
.
|
•
|
Maintenance, materials and repairs
decrease
d
4.8
% primarily due to a period-over-period decrease in costs associated with the return of leased aircraft. Additionally, maintenance costs to refurbish certain customer-facing space at airports decreased as that work was completed in 2017.
|
•
|
Selling expenses
increase
d
12.0
% primarily due to higher commission expense and credit card fees driven by the overall increase in revenues as well as an increase in flown premium tickets, which are subject to higher commission rates.
|
•
|
Depreciation and amortization
increase
d
10.0
% primarily due to new aircraft purchased in connection with American's fleet renewal program. Subsequent to the first quarter of 2017, American took delivery of 44 new mainline aircraft.
|
•
|
Regional aircraft fuel and related taxes increased 25.0% primarily due to a 22.8% increase in the average price per gallon of fuel to $2.15 in the first quarter of 2018 from $1.75 in the 2017 period.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Fleet restructuring expenses
(1)
|
$
|
82
|
|
|
$
|
63
|
|
Merger integration expenses
(2)
|
59
|
|
|
63
|
|
||
Labor contract expenses
|
13
|
|
|
—
|
|
||
Other operating charges, net
|
41
|
|
|
(7
|
)
|
||
Total mainline operating special items, net
|
195
|
|
|
119
|
|
||
Regional operating special items, net
|
—
|
|
|
2
|
|
||
Total operating special items, net
|
$
|
195
|
|
|
$
|
121
|
|
|
(1)
|
Fleet restructuring expenses principally included the acceleration of depreciation and impairments for aircraft and related equipment grounded or expected to be grounded earlier than planned.
|
(2)
|
Merger integration expenses included costs associated with American's remaining integration projects, principally its flight attendant, human resources, payroll and technical operations integrations.
|
|
Three Months Ended March 31,
|
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2018
|
|
2017
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Interest income
|
$
|
73
|
|
|
$
|
49
|
|
|
$
|
24
|
|
|
50.1
|
|
Interest expense, net
|
(253
|
)
|
|
(241
|
)
|
|
(12
|
)
|
|
5.1
|
|
|||
Other income, net
|
82
|
|
|
33
|
|
|
49
|
|
|
nm
|
|
|||
Total nonoperating expense, net
|
$
|
(98
|
)
|
|
$
|
(159
|
)
|
|
$
|
61
|
|
|
(38.2
|
)
|
|
|
AAG
|
|
American
|
||||||||||||
|
|
March 31, 2018
|
|
December 31, 2017
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||
Cash
|
|
$
|
297
|
|
|
$
|
295
|
|
|
$
|
283
|
|
|
$
|
287
|
|
Short-term investments
|
|
4,994
|
|
|
4,771
|
|
|
4,984
|
|
|
4,768
|
|
||||
Undrawn revolving credit facilities
|
|
2,500
|
|
|
2,500
|
|
|
2,500
|
|
|
2,500
|
|
||||
Total available liquidity
|
|
$
|
7,791
|
|
|
$
|
7,566
|
|
|
$
|
7,767
|
|
|
$
|
7,555
|
|
|
Current Rating
|
S&P Local Issuer Credit Rating
|
BB-
|
Fitch Issuer Default Credit Rating
|
BB-
|
Moody’s Corporate Family Rating
(1)
|
Ba3
|
|
(1)
|
This rating is for AAG only. The credit agency does not rate this category for American.
|
|
Remainder of 2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023 and Thereafter
|
|
Total
|
|||||||
Airbus
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
A320neo Family
|
—
|
|
|
22
|
|
|
25
|
|
|
25
|
|
|
20
|
|
|
8
|
|
|
100
|
|
Boeing
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
737 MAX Family
|
13
|
|
|
20
|
|
|
10
|
|
|
10
|
|
|
—
|
|
|
40
|
|
|
93
|
|
787 Family
|
5
|
|
|
2
|
|
|
12
|
|
|
10
|
|
|
—
|
|
|
25
|
|
|
54
|
|
Embraer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
E175
(3)
|
5
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
Total
|
23
|
|
|
49
|
|
|
47
|
|
|
45
|
|
|
20
|
|
|
73
|
|
|
257
|
|
|
(1)
|
In April 2018, American and Airbus agreed to terminate the parties’ A350 XWB purchase agreement and cancel the parties’ obligations thereunder. American was scheduled to acquire 22 Airbus A350 aircraft with deliveries commencing in 2020 and continuing through 2024. The table above reflects the termination of this agreement. In addition, the termination of this agreement is reflected below in the Contractual Obligations table.
|
(2)
|
In April 2018, American agreed with Boeing to acquire an additional 47 Boeing 787 aircraft, consisting of 22 787-8 aircraft and 25 787-9 aircraft with deliveries scheduled to commence in 2020 and continue through 2026. Additionally, American agreed with Boeing to defer the delivery of 40 737 MAX aircraft currently scheduled for delivery in 2020, 2021 and 2022. These aircraft are now scheduled to be delivered in 2025 and 2026. The table above reflects the additional 47 Boeing 787 aircraft deliveries as well as the revised delivery schedule for the 40 737 MAX aircraft. In addition, the future payments in the Contractual Obligations table below reflect these transactions.
|
(3)
|
These aircraft may be operated by wholly-owned regional subsidiaries which would operate the aircraft under capacity purchase arrangements.
|
|
Payments Due by Period
|
||||||||||||||||||||||||||
|
Remainder of 2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023 and Thereafter
|
|
Total
|
||||||||||||||
American
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Debt and capital lease obligations
(a) (c)
|
$
|
1,554
|
|
|
$
|
2,131
|
|
|
$
|
3,576
|
|
|
$
|
2,867
|
|
|
$
|
1,299
|
|
|
$
|
11,762
|
|
|
$
|
23,189
|
|
Interest obligations
(b) (c)
|
745
|
|
|
939
|
|
|
824
|
|
|
686
|
|
|
558
|
|
|
1,457
|
|
|
5,209
|
|
|||||||
Aircraft and engine purchase
commitments
(d)
|
1,482
|
|
|
2,552
|
|
|
1,744
|
|
|
1,407
|
|
|
1,340
|
|
|
6,168
|
|
|
14,693
|
|
|||||||
Operating lease commitments
(e)
|
1,501
|
|
|
1,965
|
|
|
1,820
|
|
|
1,507
|
|
|
1,350
|
|
|
4,829
|
|
|
12,972
|
|
|||||||
Regional capacity purchase agreements
(f)
|
1,100
|
|
|
1,289
|
|
|
1,059
|
|
|
862
|
|
|
696
|
|
|
2,064
|
|
|
7,070
|
|
|||||||
Minimum pension obligations
(g)
|
309
|
|
|
890
|
|
|
484
|
|
|
495
|
|
|
581
|
|
|
1,476
|
|
|
4,235
|
|
|||||||
Retiree medical and other postretirement benefits
|
72
|
|
|
92
|
|
|
80
|
|
|
75
|
|
|
70
|
|
|
314
|
|
|
703
|
|
|||||||
Other purchase obligations
(h)
|
1,421
|
|
|
1,859
|
|
|
1,038
|
|
|
1,037
|
|
|
34
|
|
|
10
|
|
|
5,399
|
|
|||||||
Total American Contractual Obligations
|
$
|
8,184
|
|
|
$
|
11,717
|
|
|
$
|
10,625
|
|
|
$
|
8,936
|
|
|
$
|
5,928
|
|
|
$
|
28,080
|
|
|
$
|
73,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
AAG and Other AAG Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Debt and capital lease obligations
(a)
|
$
|
500
|
|
|
$
|
750
|
|
|
$
|
506
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
20
|
|
|
$
|
1,780
|
|
Interest obligations
(b)
|
70
|
|
|
67
|
|
|
14
|
|
|
2
|
|
|
2
|
|
|
6
|
|
|
161
|
|
|||||||
Minimum pension obligations
(g)
|
3
|
|
|
4
|
|
|
3
|
|
|
3
|
|
|
4
|
|
|
15
|
|
|
32
|
|
|||||||
Operating lease commitments
|
18
|
|
|
9
|
|
|
9
|
|
|
6
|
|
|
5
|
|
|
14
|
|
|
61
|
|
|||||||
Total AAG Contractual Obligations
|
$
|
8,775
|
|
|
$
|
12,547
|
|
|
$
|
11,157
|
|
|
$
|
8,949
|
|
|
$
|
5,941
|
|
|
$
|
28,135
|
|
|
$
|
75,504
|
|
(a)
|
Amounts represent contractual amounts due. Excludes
$223 million
and
$230 million
of unamortized debt discount, premium and issuance costs as of
March 31, 2018
for American and AAG, respectively. For additional information, see Note 6 and Note 4 to AAG’s and American’s Condensed Consolidated Financial Statements in Part I, Items 1A and 1B.
|
(b)
|
For variable-rate debt, future interest obligations are estimated using the current forward rates at
March 31, 2018
.
|
(c)
|
Includes
$11.8 billion
of future principal payments and
$2.7 billion
of future interest payments, as of
March 31, 2018
, related to EETC debt financings of certain aircraft.
|
(d)
|
See Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “
Liquidity and Capital Resources”
for additional information about these obligations. Boeing has committed to provide sale-leaseback financing (in the form of operating leases) for the 22 787-8 aircraft to be delivered in 2020 and 2021. This financing is reflected in the operating lease commitments line above.
|
(e)
|
Includes
$441 million
of future minimum lease payments related to EETC leveraged lease financings of certain aircraft as of
March 31, 2018
.
|
(f)
|
Represents minimum payments under capacity purchase agreements with third-party regional carriers. These commitments are estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and our actual payments could differ materially.
|
(g)
|
Includes minimum pension contributions based on actuarially determined estimates and is based on estimated payments through 2027. The total expected pension contribution of $312 million for the remainder of 2018 assumes a supplemental contribution of $309 million in addition to the $3 million minimum required contribution.
|
(h)
|
Includes purchase commitments for jet fuel, facility construction projects and information technology support.
|
|
|
|
New Revenue Standard
|
|
New Retirement Standard
|
|
|
||||||||||||
|
As Reported
|
|
Deferred Revenue Method
|
|
Reclassifications
|
|
Reclassifications
|
|
As Recast
|
||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Passenger
|
$
|
8,155
|
|
|
$
|
170
|
|
|
$
|
672
|
|
|
$
|
—
|
|
|
$
|
8,997
|
|
Cargo
|
172
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
191
|
|
|||||
Other
|
1,297
|
|
|
—
|
|
|
(665
|
)
|
|
—
|
|
|
632
|
|
|||||
Total operating revenues
|
9,624
|
|
|
170
|
|
|
26
|
|
|
—
|
|
|
9,820
|
|
|||||
Total operating expenses
|
9,023
|
|
|
—
|
|
|
26
|
|
|
34
|
|
|
9,083
|
|
|||||
Operating income
|
601
|
|
|
170
|
|
|
—
|
|
|
(34
|
)
|
|
737
|
|
|||||
Total nonoperating expense, net
|
(236
|
)
|
|
—
|
|
|
—
|
|
|
34
|
|
|
(202
|
)
|
|||||
Income before income taxes
|
365
|
|
|
170
|
|
|
—
|
|
|
—
|
|
|
535
|
|
|||||
Income tax provision
|
131
|
|
|
64
|
|
|
—
|
|
|
—
|
|
|
195
|
|
|||||
Net income
|
$
|
234
|
|
|
$
|
106
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
340
|
|
Diluted earnings per common share
|
$
|
0.46
|
|
|
|
|
|
|
|
|
$
|
0.67
|
|
|
As Reported
|
|
New Revenue Standard
|
|
As Recast
|
||||||
Deferred tax asset
|
$
|
427
|
|
|
$
|
1,389
|
|
|
$
|
1,816
|
|
Air traffic liability
|
3,978
|
|
|
64
|
|
|
4,042
|
|
|||
Current loyalty program liability
|
2,791
|
|
|
330
|
|
|
3,121
|
|
|||
Noncurrent loyalty program liability
|
—
|
|
|
5,701
|
|
|
5,701
|
|
|||
Total stockholders' equity (deficit)
|
3,926
|
|
|
(4,706
|
)
|
|
(780
|
)
|
•
|
may make it more difficult for us to satisfy our obligations under our indebtedness;
|
•
|
may limit our ability to obtain additional funding for working capital, capital expenditures, acquisitions, investments, integration costs, and general corporate purposes, and adversely affect the terms on which such funding can be obtained;
|
•
|
require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness and other obligations, thereby reducing the funds available for other purposes;
|
•
|
make us more vulnerable to economic downturns, industry conditions and catastrophic external events, particularly relative to competitors with lower relative levels of financial leverage;
|
•
|
contain covenants requiring us to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities;
|
•
|
contain restrictive covenants that could:
|
•
|
limit our ability to merge, consolidate, sell assets, incur additional indebtedness, issue preferred stock, make investments and pay dividends;
|
•
|
significantly constrain our ability to respond, or respond quickly, to unexpected disruptions in our own operations, the U.S. or global economies, or the businesses in which we operate, or to take advantage of opportunities that would improve our business, operations, or competitive position versus other airlines;
|
•
|
limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing business and economic conditions; and
|
•
|
result in an event of default under our indebtedness.
|
•
|
changes in law that affect the services that can be offered by airlines in particular markets and at particular airports, or the types of fees that can be charged to passengers;
|
•
|
the granting and timing of certain governmental approvals (including antitrust or foreign government approvals) needed for codesharing alliances, joint businesses and other arrangements with other airlines;
|
•
|
restrictions on competitive practices (for example, court orders, or agency regulations or orders, that would curtail an airline’s ability to respond to a competitor);
|
•
|
the adoption of new passenger security standards or regulations that impact customer service standards;
|
•
|
restrictions on airport operations, such as restrictions on the use of slots at airports or the auction or reallocation of slot rights currently held by us; and
|
•
|
the adoption of more restrictive locally-imposed noise restrictions.
|
•
|
actual or potential changes in international, national, regional and local economic, business and financial conditions, including recession, inflation, higher interest rates, wars, terrorist attacks and political instability;
|
•
|
changes in consumer preferences, perceptions, spending patterns and demographic trends;
|
•
|
changes in the competitive environment due to industry consolidation, changes in airline alliance affiliations, and other factors;
|
•
|
actual or potential disruptions to the ATC systems;
|
•
|
increases in costs of safety, security, and environmental measures;
|
•
|
outbreaks of diseases that affect travel behavior; and
|
•
|
weather and natural disasters.
|
•
|
AAG’s operating and financial results failing to meet the expectations of securities analysts or investors;
|
•
|
changes in financial estimates or recommendations by securities analysts;
|
•
|
material announcements by us or our competitors;
|
•
|
movements in fuel prices;
|
•
|
expectations regarding our capital deployment program, including any existing or potential future share repurchase programs and any future dividend payments that may be declared by our Board of Directors, or any determination to cease repurchasing stock or paying dividends;
|
•
|
new regulatory pronouncements and changes in regulatory guidelines;
|
•
|
general and industry-specific economic conditions;
|
•
|
changes in our key personnel;
|
•
|
distributions of shares of AAG common stock pursuant to the Plan, including distributions from the disputed claims reserve established under the plan of reorganization upon the resolution of the underlying claims;
|
•
|
public sales of a substantial number of shares of AAG common stock or issuances of AAG common stock upon the exercise or conversion of convertible securities, options, warrants, restricted stock unit awards, stock appreciation rights, or similar rights;
|
•
|
increases or decreases in reported holdings by insiders or other significant stockholders;
|
•
|
fluctuations in trading volume; and
|
•
|
changes in market values of airline companies as well as general market conditions.
|
•
|
advance notice procedures for stockholder proposals to be considered at stockholders’ meetings;
|
•
|
the ability of our Board of Directors to fill vacancies on the board;
|
•
|
a prohibition against stockholders taking action by written consent;
|
•
|
a prohibition against stockholders calling special meetings of stockholders (although our Board of Directors has approved, subject to stockholder approval at the annual meeting, amendments to our Certificate of Incorporation and Bylaws that contemplate the ability of holders of at least 20% of our outstanding shares to call a special meeting, subject to the procedures to be provided for in the amended Bylaws);
|
•
|
a requirement that holders of at least 80% of the voting power of the shares entitled to vote in the election of directors approve any amendment of our Bylaws submitted to stockholders for approval; and
|
•
|
super-majority voting requirements to modify or amend specified provisions of our Certificate of Incorporation.
|
Period
|
|
Total number of
shares purchased
|
|
Average price
paid per share
|
|
Total number of shares
purchased as part of
publicly announced
plan or program
|
|
Maximum dollar value of shares
that may be purchased under
the plan or program
(in millions)
|
January 2018
|
|
526,854
|
|
$54.39
|
|
526,854
|
|
$421
|
February 2018
|
|
4,741,543
|
|
$52.45
|
|
4,741,543
|
|
$172
|
March 2018
|
|
3,162,753
|
|
$54.45
|
|
3,162,753
|
|
$—
|
Exhibit
Number
|
Description
|
|
|
10.1
|
|
12.1
|
|
12.2
|
|
31.1
|
|
31.2
|
|
31.3
|
|
31.4
|
|
32.1
|
|
32.2
|
|
101.1
|
Interactive data files pursuant to Rule 405 of Regulation S-T.
|
|
|
|
|
|
|
|
American Airlines Group Inc.
|
|
|
|
|
Date: April 26, 2018
|
By:
|
|
/s/ Derek J. Kerr
|
|
|
|
Derek J. Kerr
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Duly Authorized Officer and Principal Financial Officer)
|
|
|
|
|
|
|
|
American Airlines, Inc.
|
|
|
|
|
Date: April 26, 2018
|
By:
|
|
/s/ Derek J. Kerr
|
|
|
|
Derek J. Kerr
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Duly Authorized Officer and Principal Financial Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Bank
|
Revolving Commitment
|
LC Commitment
|
Citibank, N.A.
|
[*CTR]
|
$300,000,000
|
Bank of America, N.A.
|
[*CTR]
|
--
|
Barclays Bank PLC
|
[*CTR]
|
--
|
Credit Suisse AG, Cayman Islands Branch
|
[*CTR]
|
--
|
Deutsche Bank AG New York Branch
|
[*CTR]
|
--
|
Goldman Sachs Bank USA
|
[*CTR]
|
--
|
Industrial and Commercial Bank of China Limited, New York Branch
|
[*CTR]
|
--
|
JPMorgan Chase Bank, N.A.
|
[*CTR]
|
--
|
Morgan Stanley Bank, N.A.
|
[*CTR]
|
--
|
Morgan Stanley Senior Funding, Inc.
|
[*CTR]
|
--
|
BNP Paribas
|
[*CTR]
|
--
|
Credit Agricole Corporate and Investment Bank
|
[*CTR]
|
--
|
Standard Chartered Bank
|
[*CTR]
|
--
|
Sumitomo Mitsui Banking Corporation
|
[*CTR]
|
--
|
U.S. Bank National Association
|
[*CTR]
|
--
|
Texas Capital Bank, N.A.
|
[*CTR]
|
--
|
Total
|
$1,000,000,000
|
$300,000,000
|
|
|
Three Months Ended
March 31, 2018 |
||
Income before income taxes
|
|
$
|
273
|
|
Add: Total fixed charges (per below)
|
|
518
|
|
|
Less: Interest capitalized
|
|
17
|
|
|
Total earnings before income taxes
|
|
$
|
774
|
|
Fixed charges:
|
|
|
||
Interest
|
|
$
|
282
|
|
Portion of rental expense representative of the interest factor
|
|
236
|
|
|
Total fixed charges
|
|
$
|
518
|
|
Ratio of earnings to fixed charges
|
|
1.5
|
|
|
|
Three Months Ended
March 31, 2018 |
||
Income before income taxes
|
|
$
|
349
|
|
Add: Total fixed charges (per below)
|
|
503
|
|
|
Less: Interest capitalized
|
|
17
|
|
|
Total earnings before income taxes
|
|
$
|
835
|
|
Fixed charges:
|
|
|
||
Interest
|
|
$
|
270
|
|
Portion of rental expense representative of the interest factor
|
|
233
|
|
|
Total fixed charges
|
|
$
|
503
|
|
Ratio of earnings to fixed charges
|
|
1.7
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of American Airlines Group Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ W. Douglas Parker
|
|
|
Name: W. Douglas Parker
|
|
|
Title: Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of American Airlines Group Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ Derek J. Kerr
|
|
|
Name: Derek J. Kerr
|
|
|
Title: Executive Vice President and Chief
|
|
|
Financial Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of American Airlines, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ W. Douglas Parker
|
|
|
Name: W. Douglas Parker
|
|
|
Title: Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of American Airlines, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ Derek J. Kerr
|
|
|
Name: Derek J. Kerr
|
|
|
Title: Executive Vice President and Chief
|
|
|
Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ W. Douglas Parker
|
Name: W. Douglas Parker
|
Title: Chief Executive Officer
|
Date: April 26, 2018
|
|
/s/ Derek J. Kerr
|
Name: Derek J. Kerr
|
Title: Executive Vice President and Chief Financial Officer
|
Date: April 26, 2018
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ W. Douglas Parker
|
Name: W. Douglas Parker
|
Title: Chief Executive Officer
|
Date: April 26, 2018
|
|
/s/ Derek J. Kerr
|
Name: Derek J. Kerr
|
Title: Executive Vice President and Chief Financial Officer
|
Date: April 26, 2018
|