|
|
|
FORM
|
10-Q
|
|
|
☒
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
☐
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
|
|
American Airlines Group Inc.
|
||
(Exact name of registrant as specified in its charter)
|
||
|
|
|
Delaware
|
|
|
75-1825172
|
|
||||||||
(State or other jurisdiction of incorporation or organization)
|
|
|
(I.R.S. Employer Identification No.)
|
|
||||||||
4333 Amon Carter Blvd.,
|
Fort Worth,
|
Texas
|
76155
|
|
|
|
(817)
|
963-1234
|
|
|
||
(Address of principal executive offices, including zip code)
|
|
|
(Registrant’s telephone number, including area code)
|
|
|
|
|
American Airlines, Inc.
|
||
(Exact name of registrant as specified in its charter)
|
||
|
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|
Delaware
|
|
|
13-1502798
|
|
||||||||
(State or other jurisdiction of incorporation or organization)
|
|
|
(I.R.S. Employer Identification No.)
|
|
||||||||
4333 Amon Carter Blvd.,
|
Fort Worth,
|
Texas
|
76155
|
|
|
|
(817)
|
963-1234
|
|
|
||
(Address of principal executive offices, including zip code)
|
|
|
(Registrant’s telephone number, including area code)
|
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Common Stock, $0.01 par value per share
|
|
AAL
|
|
The Nasdaq Global Select Market
|
American Airlines Group Inc.
|
☒
|
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
|
|
|
|
Page
|
PART I: FINANCIAL INFORMATION
|
||
Item 1A.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 1B.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
PART II: OTHER INFORMATION
|
||
Item 1.
|
||
Item 1A.
|
||
Item 6.
|
||
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Operating revenues:
|
|
|
|
||||||||||||
Passenger
|
$
|
11,011
|
|
|
$
|
10,674
|
|
|
$
|
20,669
|
|
|
$
|
20,154
|
|
Cargo
|
221
|
|
|
261
|
|
|
439
|
|
|
488
|
|
||||
Other
|
728
|
|
|
708
|
|
|
1,436
|
|
|
1,402
|
|
||||
Total operating revenues
|
11,960
|
|
|
11,643
|
|
|
22,544
|
|
|
22,044
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Aircraft fuel and related taxes
|
1,995
|
|
|
2,103
|
|
|
3,722
|
|
|
3,866
|
|
||||
Salaries, wages and benefits
|
3,200
|
|
|
3,095
|
|
|
6,290
|
|
|
6,111
|
|
||||
Regional expenses
|
1,886
|
|
|
1,793
|
|
|
3,648
|
|
|
3,490
|
|
||||
Maintenance, materials and repairs
|
575
|
|
|
505
|
|
|
1,136
|
|
|
973
|
|
||||
Other rent and landing fees
|
535
|
|
|
495
|
|
|
1,039
|
|
|
962
|
|
||||
Aircraft rent
|
334
|
|
|
311
|
|
|
661
|
|
|
621
|
|
||||
Selling expenses
|
401
|
|
|
385
|
|
|
771
|
|
|
742
|
|
||||
Depreciation and amortization
|
489
|
|
|
457
|
|
|
969
|
|
|
898
|
|
||||
Special items, net
|
121
|
|
|
182
|
|
|
259
|
|
|
407
|
|
||||
Other
|
1,271
|
|
|
1,313
|
|
|
2,521
|
|
|
2,574
|
|
||||
Total operating expenses
|
10,807
|
|
|
10,639
|
|
|
21,016
|
|
|
20,644
|
|
||||
Operating income
|
1,153
|
|
|
1,004
|
|
|
1,528
|
|
|
1,400
|
|
||||
Nonoperating income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest income
|
35
|
|
|
30
|
|
|
68
|
|
|
55
|
|
||||
Interest expense, net
|
(275
|
)
|
|
(263
|
)
|
|
(546
|
)
|
|
(525
|
)
|
||||
Other income (expense), net
|
(31
|
)
|
|
(15
|
)
|
|
78
|
|
|
64
|
|
||||
Total nonoperating expense, net
|
(271
|
)
|
|
(248
|
)
|
|
(400
|
)
|
|
(406
|
)
|
||||
Income before income taxes
|
882
|
|
|
756
|
|
|
1,128
|
|
|
994
|
|
||||
Income tax provision
|
220
|
|
|
200
|
|
|
281
|
|
|
278
|
|
||||
Net income
|
$
|
662
|
|
|
$
|
556
|
|
|
$
|
847
|
|
|
$
|
716
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.49
|
|
|
$
|
1.20
|
|
|
$
|
1.89
|
|
|
$
|
1.53
|
|
Diluted
|
$
|
1.49
|
|
|
$
|
1.20
|
|
|
$
|
1.88
|
|
|
$
|
1.52
|
|
Weighted average shares outstanding (in thousands):
|
|
|
|
|
|
|
|
||||||||
Basic
|
445,008
|
|
|
463,533
|
|
|
448,479
|
|
|
467,915
|
|
||||
Diluted
|
445,587
|
|
|
464,618
|
|
|
449,508
|
|
|
469,608
|
|
||||
Cash dividends declared per common share
|
$
|
0.10
|
|
|
$
|
0.10
|
|
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income
|
$
|
662
|
|
|
$
|
556
|
|
|
$
|
847
|
|
|
$
|
716
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Pension, retiree medical and other postretirement benefits
|
(18
|
)
|
|
(17
|
)
|
|
(34
|
)
|
|
(33
|
)
|
||||
Investments
|
—
|
|
|
2
|
|
|
3
|
|
|
—
|
|
||||
Total other comprehensive loss, net of tax
|
(18
|
)
|
|
(15
|
)
|
|
(31
|
)
|
|
(33
|
)
|
||||
Total comprehensive income
|
$
|
644
|
|
|
$
|
541
|
|
|
$
|
816
|
|
|
$
|
683
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
||||||
Current assets
|
|
|
|
||||
Cash
|
$
|
319
|
|
|
$
|
275
|
|
Short-term investments
|
5,088
|
|
|
4,485
|
|
||
Restricted cash and short-term investments
|
157
|
|
|
154
|
|
||
Accounts receivable, net
|
1,943
|
|
|
1,706
|
|
||
Aircraft fuel, spare parts and supplies, net
|
1,708
|
|
|
1,522
|
|
||
Prepaid expenses and other
|
635
|
|
|
495
|
|
||
Total current assets
|
9,850
|
|
|
8,637
|
|
||
Operating property and equipment
|
|
|
|
||||
Flight equipment
|
42,437
|
|
|
41,499
|
|
||
Ground property and equipment
|
9,007
|
|
|
8,764
|
|
||
Equipment purchase deposits
|
1,372
|
|
|
1,278
|
|
||
Total property and equipment, at cost
|
52,816
|
|
|
51,541
|
|
||
Less accumulated depreciation and amortization
|
(18,114
|
)
|
|
(17,443
|
)
|
||
Total property and equipment, net
|
34,702
|
|
|
34,098
|
|
||
Operating lease right-of-use assets
|
9,102
|
|
|
9,151
|
|
||
Other assets
|
|
|
|
||||
Goodwill
|
4,091
|
|
|
4,091
|
|
||
Intangibles, net of accumulated amortization of $683 and $663, respectively
|
2,105
|
|
|
2,137
|
|
||
Deferred tax asset
|
792
|
|
|
1,145
|
|
||
Other assets
|
1,325
|
|
|
1,321
|
|
||
Total other assets
|
8,313
|
|
|
8,694
|
|
||
Total assets
|
$
|
61,967
|
|
|
$
|
60,580
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Current maturities of long-term debt and finance leases
|
$
|
3,500
|
|
|
$
|
3,294
|
|
Accounts payable
|
2,118
|
|
|
1,773
|
|
||
Accrued salaries and wages
|
1,304
|
|
|
1,427
|
|
||
Air traffic liability
|
5,956
|
|
|
4,339
|
|
||
Loyalty program liability
|
3,310
|
|
|
3,267
|
|
||
Operating lease liabilities
|
1,639
|
|
|
1,654
|
|
||
Other accrued liabilities
|
2,296
|
|
|
2,342
|
|
||
Total current liabilities
|
20,123
|
|
|
18,096
|
|
||
Noncurrent liabilities
|
|
|
|
||||
Long-term debt and finance leases, net of current maturities
|
21,791
|
|
|
21,179
|
|
||
Pension and postretirement benefits
|
5,641
|
|
|
6,907
|
|
||
Loyalty program liability
|
5,249
|
|
|
5,272
|
|
||
Operating lease liabilities
|
7,818
|
|
|
7,902
|
|
||
Other liabilities
|
1,367
|
|
|
1,393
|
|
||
Total noncurrent liabilities
|
41,866
|
|
|
42,653
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity (deficit)
|
|
|
|
||||
Common stock, $0.01 par value; 1,750,000,000 shares authorized, 445,262,351 shares issued and outstanding at June 30, 2019; 460,610,870 shares issued and outstanding at December 31, 2018
|
5
|
|
|
5
|
|
||
Additional paid-in capital
|
4,386
|
|
|
4,964
|
|
||
Accumulated other comprehensive loss
|
(5,927
|
)
|
|
(5,896
|
)
|
||
Retained earnings
|
1,514
|
|
|
758
|
|
||
Total stockholders’ deficit
|
(22
|
)
|
|
(169
|
)
|
||
Total liabilities and stockholders’ equity (deficit)
|
$
|
61,967
|
|
|
$
|
60,580
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Net cash provided by operating activities
|
$
|
2,387
|
|
|
$
|
2,894
|
|
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures and aircraft purchase deposits
|
(2,323
|
)
|
|
(1,731
|
)
|
||
Proceeds from sale of property and equipment and sale-leaseback transactions
|
537
|
|
|
258
|
|
||
Purchases of short-term investments
|
(2,201
|
)
|
|
(1,184
|
)
|
||
Sales of short-term investments
|
1,611
|
|
|
1,579
|
|
||
Decrease (increase) in restricted short-term investments
|
(2
|
)
|
|
43
|
|
||
Other investing activities
|
(35
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(2,413
|
)
|
|
(1,035
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
2,589
|
|
|
892
|
|
||
Payments on long-term debt and finance leases
|
(1,781
|
)
|
|
(1,884
|
)
|
||
Deferred financing costs
|
(22
|
)
|
|
(28
|
)
|
||
Treasury stock repurchases
|
(625
|
)
|
|
(837
|
)
|
||
Dividend payments
|
(90
|
)
|
|
(94
|
)
|
||
Other financing activities
|
(1
|
)
|
|
(1
|
)
|
||
Net cash provided by (used in) financing activities
|
70
|
|
|
(1,952
|
)
|
||
Net increase (decrease) in cash and restricted cash
|
44
|
|
|
(93
|
)
|
||
Cash and restricted cash at beginning of period
|
286
|
|
|
398
|
|
||
Cash and restricted cash at end of period (1)
|
$
|
330
|
|
|
$
|
305
|
|
|
|
|
|
||||
Non-cash transactions:
|
|
|
|
||||
Right-of-use assets obtained in exchange for lease liabilities:
|
|
|
|
||||
Operating leases
|
$
|
708
|
|
|
$
|
315
|
|
Finance leases
|
4
|
|
|
—
|
|
||
Settlement of bankruptcy obligations
|
7
|
|
|
—
|
|
||
Supplemental information:
|
|
|
|
||||
Interest paid, net
|
559
|
|
|
542
|
|
||
Income taxes paid
|
4
|
|
|
13
|
|
|
Cash
|
$
|
319
|
|
|
$
|
293
|
|
Restricted cash included in restricted cash and short-term investments
|
11
|
|
|
12
|
|
||
Total cash and restricted cash
|
$
|
330
|
|
|
$
|
305
|
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
(Deficit)
|
|
Total
|
||||||||||
Balance at December 31, 2018
|
$
|
5
|
|
|
$
|
4,964
|
|
|
$
|
(5,896
|
)
|
|
$
|
758
|
|
|
$
|
(169
|
)
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
185
|
|
|
185
|
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(13
|
)
|
|||||
Purchase and retirement of 16,947,393 shares of AAG common stock
|
—
|
|
|
(610
|
)
|
|
—
|
|
|
—
|
|
|
(610
|
)
|
|||||
Dividends declared on AAG common stock ($0.10 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
(46
|
)
|
|||||
Issuance of 552,752 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|||||
Share-based compensation expense
|
—
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|||||
Balance at March 31, 2019
|
5
|
|
|
4,371
|
|
|
(5,909
|
)
|
|
897
|
|
|
(636
|
)
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
662
|
|
|
662
|
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
(18
|
)
|
|||||
Dividends declared on AAG common stock ($0.10 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(45
|
)
|
|
(45
|
)
|
|||||
Issuance of 1,046,122 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|||||
Settlement of single-dip unsecured claims held in Disputed Claims Reserve
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|||||
Share-based compensation expense
|
—
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|||||
Balance at June 30, 2019
|
$
|
5
|
|
|
$
|
4,386
|
|
|
$
|
(5,927
|
)
|
|
$
|
1,514
|
|
|
$
|
(22
|
)
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
(Deficit)
|
|
Total
|
||||||||||
Balance at December 31, 2017
|
$
|
5
|
|
|
$
|
5,714
|
|
|
$
|
(5,776
|
)
|
|
$
|
(723
|
)
|
|
$
|
(780
|
)
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
159
|
|
|
159
|
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
(18
|
)
|
|||||
Purchase and retirement of 8,431,150 shares of AAG common stock
|
—
|
|
|
(449
|
)
|
|
—
|
|
|
—
|
|
|
(449
|
)
|
|||||
Dividends declared on AAG common stock ($0.10 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
|
(48
|
)
|
|||||
Issuance of 313,744 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|||||
Share-based compensation expense
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|||||
Impact of adoption of Accounting Standards Update (ASU) 2016-01 related to financial instruments
|
—
|
|
|
—
|
|
|
—
|
|
|
60
|
|
|
60
|
|
|||||
Impact of adoption of ASU 2016-02 related to leases
|
—
|
|
|
—
|
|
|
—
|
|
|
197
|
|
|
197
|
|
|||||
Balance at March 31, 2018
|
5
|
|
|
5,279
|
|
|
(5,794
|
)
|
|
(355
|
)
|
|
(865
|
)
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
556
|
|
|
556
|
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
(15
|
)
|
|||||
Purchase and retirement of 8,175,007 shares of AAG common stock
|
—
|
|
|
(350
|
)
|
|
—
|
|
|
—
|
|
|
(350
|
)
|
|||||
Dividends declared on AAG common stock ($0.10 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(47
|
)
|
|
(47
|
)
|
|||||
Issuance of 1,286,622 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes
|
—
|
|
|
(26
|
)
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
|||||
Share-based compensation expense
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|||||
Balance at June 30, 2018
|
$
|
5
|
|
|
$
|
4,923
|
|
|
$
|
(5,809
|
)
|
|
$
|
154
|
|
|
$
|
(727
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Fleet restructuring expenses (1)
|
$
|
77
|
|
|
$
|
113
|
|
|
$
|
160
|
|
|
$
|
226
|
|
Merger integration expenses (2)
|
39
|
|
|
60
|
|
|
76
|
|
|
120
|
|
||||
Mark-to-market adjustments on bankruptcy obligations, net (3)
|
5
|
|
|
(57
|
)
|
|
5
|
|
|
(56
|
)
|
||||
Intangible asset impairment (4)
|
—
|
|
|
26
|
|
|
—
|
|
|
26
|
|
||||
Litigation settlement (5)
|
—
|
|
|
5
|
|
|
—
|
|
|
45
|
|
||||
Labor contract expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
||||
Other operating charges, net
|
—
|
|
|
35
|
|
|
18
|
|
|
33
|
|
||||
Mainline operating special items, net
|
121
|
|
|
182
|
|
|
259
|
|
|
407
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Mark-to-market adjustments on equity investments, net (6)
|
52
|
|
|
66
|
|
|
(25
|
)
|
|
66
|
|
||||
Debt refinancing and extinguishment charges
|
8
|
|
|
14
|
|
|
8
|
|
|
14
|
|
||||
Other nonoperating charges, net
|
9
|
|
|
—
|
|
|
16
|
|
|
—
|
|
||||
Nonoperating special items, net
|
69
|
|
|
80
|
|
|
(1
|
)
|
|
80
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income tax special items, net (7)
|
—
|
|
|
18
|
|
|
—
|
|
|
40
|
|
|
(1)
|
Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment grounded or expected to be grounded earlier than planned.
|
(2)
|
Merger integration expenses included costs associated with integration projects, principally our technical operations, flight attendant, human resources and payroll systems.
|
(3)
|
Bankruptcy obligations that will be settled in shares of our common stock are marked-to-market based on our stock price.
|
(4)
|
Intangible asset impairment includes a non-cash charge to write-off our Brazil route authority as a result of the U.S.-Brazil open skies agreement.
|
(5)
|
Settlement of a private party antitrust lawsuit. See Note 12 - “Private Party Antitrust Action Related to Passenger Capacity” for further discussion.
|
(6)
|
Mark-to-market adjustments on equity investments relate to net unrealized gains and losses primarily associated with our equity investment in China Southern Airlines Company Limited (China Southern Airlines).
|
(7)
|
Income tax special items for the three months ended June 30, 2018 included an $18 million charge related to an international income tax matter. Additionally, the six months ended June 30, 2018 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 June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Basic EPS:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
662
|
|
|
$
|
556
|
|
|
$
|
847
|
|
|
$
|
716
|
|
Weighted average common shares outstanding (in thousands)
|
445,008
|
|
|
463,533
|
|
|
448,479
|
|
|
467,915
|
|
||||
Basic EPS
|
$
|
1.49
|
|
|
$
|
1.20
|
|
|
$
|
1.89
|
|
|
$
|
1.53
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted EPS:
|
|
|
|
|
|
|
|
||||||||
Net income for purposes of computing diluted EPS
|
$
|
662
|
|
|
$
|
556
|
|
|
$
|
847
|
|
|
$
|
716
|
|
Share computation for diluted EPS (in thousands):
|
|
|
|
|
|
|
|
||||||||
Basic weighted average common shares outstanding
|
445,008
|
|
|
463,533
|
|
|
448,479
|
|
|
467,915
|
|
||||
Dilutive effect of stock awards
|
579
|
|
|
1,085
|
|
|
1,029
|
|
|
1,693
|
|
||||
Diluted weighted average common shares outstanding
|
445,587
|
|
|
464,618
|
|
|
449,508
|
|
|
469,608
|
|
||||
Diluted EPS
|
$
|
1.49
|
|
|
$
|
1.20
|
|
|
$
|
1.88
|
|
|
$
|
1.52
|
|
|
|
|
|
|
|
|
|
||||||||
Restricted stock unit awards excluded from the calculation of diluted EPS because inclusion would be antidilutive (in thousands)
|
3,087
|
|
|
1,690
|
|
|
2,677
|
|
|
845
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Passenger revenue:
|
|
|
|
|
|
|
|
||||||||
Passenger travel
|
$
|
10,217
|
|
|
$
|
9,877
|
|
|
$
|
18,989
|
|
|
$
|
18,507
|
|
Loyalty revenue - travel (1)
|
794
|
|
|
797
|
|
|
1,680
|
|
|
1,647
|
|
||||
Total passenger revenue
|
11,011
|
|
|
10,674
|
|
|
20,669
|
|
|
20,154
|
|
||||
Cargo
|
221
|
|
|
261
|
|
|
439
|
|
|
488
|
|
||||
Other:
|
|
|
|
|
|
|
|
||||||||
Loyalty revenue - marketing services
|
594
|
|
|
582
|
|
|
1,172
|
|
|
1,152
|
|
||||
Other revenue
|
134
|
|
|
126
|
|
|
264
|
|
|
250
|
|
||||
Total other revenue
|
728
|
|
|
708
|
|
|
1,436
|
|
|
1,402
|
|
||||
Total operating revenues
|
$
|
11,960
|
|
|
$
|
11,643
|
|
|
$
|
22,544
|
|
|
$
|
22,044
|
|
|
(1)
|
Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions earned through travel and mileage credits sold to co-branded credit card and other partners.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Domestic
|
$
|
8,009
|
|
|
$
|
7,685
|
|
|
$
|
15,235
|
|
|
$
|
14,648
|
|
Latin America
|
1,241
|
|
|
1,284
|
|
|
2,612
|
|
|
2,729
|
|
||||
Atlantic
|
1,407
|
|
|
1,298
|
|
|
2,080
|
|
|
1,967
|
|
||||
Pacific
|
354
|
|
|
407
|
|
|
742
|
|
|
810
|
|
||||
Total passenger revenue
|
$
|
11,011
|
|
|
$
|
10,674
|
|
|
$
|
20,669
|
|
|
$
|
20,154
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
(In millions)
|
||||||
Loyalty program liability
|
$
|
8,559
|
|
|
$
|
8,539
|
|
Air traffic liability
|
5,956
|
|
|
4,339
|
|
||
Total
|
$
|
14,515
|
|
|
$
|
12,878
|
|
Balance at December 31, 2018
|
$
|
8,539
|
|
Deferral of revenue
|
1,806
|
|
|
Recognition of revenue (1)
|
(1,786
|
)
|
|
Balance at June 30, 2019 (2)
|
$
|
8,559
|
|
|
(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 June 30, 2019, our current loyalty program liability was $3.3 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.
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Secured
|
|
|
|
||||
2013 Credit Facilities, variable interest rate of 4.06%, installments through 2025
|
$
|
1,807
|
|
|
$
|
1,825
|
|
2014 Credit Facilities, variable interest rate of 4.41%, installments through 2021
|
1,215
|
|
|
1,215
|
|
||
April 2016 Credit Facilities, variable interest rate of 4.40%, installments through 2023
|
970
|
|
|
980
|
|
||
December 2016 Credit Facilities, variable interest rate of 4.39%, installments through 2023
|
1,225
|
|
|
1,225
|
|
||
Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.00% to 8.39%, averaging 4.14%, maturing from 2019 to 2029
|
11,448
|
|
|
11,648
|
|
||
Equipment loans and other notes payable, fixed and variable interest rates ranging from 3.43% to 7.31%, averaging 4.06%, maturing from 2019 to 2031
|
5,392
|
|
|
5,060
|
|
||
Special facility revenue bonds, fixed interest rates ranging from 5.00% to 8.00%, maturing from 2019 to 2031
|
798
|
|
|
798
|
|
||
|
22,855
|
|
|
22,751
|
|
||
Unsecured
|
|
|
|
||||
5.50% senior notes, interest only payments until due in October 2019
|
750
|
|
|
750
|
|
||
4.625% senior notes, interest only payments until due in March 2020
|
500
|
|
|
500
|
|
||
5.000% senior notes, interest only payments until due in June 2022
|
750
|
|
|
—
|
|
||
|
2,000
|
|
|
1,250
|
|
||
Total long-term debt
|
24,855
|
|
|
24,001
|
|
||
Less: Total unamortized debt discount, premium and issuance costs
|
216
|
|
|
222
|
|
||
Less: Current maturities
|
3,417
|
|
|
3,213
|
|
||
Long-term debt, net of current maturities
|
$
|
21,222
|
|
|
$
|
20,566
|
|
2013 Revolving Facility
|
$
|
1,000
|
|
2014 Revolving Facility
|
1,543
|
|
|
April 2016 Revolving Facility
|
300
|
|
|
Total
|
$
|
2,843
|
|
|
Fair Value Measurements as of June 30, 2019
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Short-term investments (1), (2):
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
23
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate obligations
|
1,737
|
|
|
—
|
|
|
1,737
|
|
|
—
|
|
||||
Bank notes/certificates of deposit/time deposits
|
3,103
|
|
|
—
|
|
|
3,103
|
|
|
—
|
|
||||
Repurchase agreements
|
225
|
|
|
—
|
|
|
225
|
|
|
—
|
|
||||
|
5,088
|
|
|
23
|
|
|
5,065
|
|
|
—
|
|
||||
Restricted cash and short-term investments (1)
|
157
|
|
|
12
|
|
|
145
|
|
|
—
|
|
||||
Long-term investments (3)
|
214
|
|
|
214
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
5,459
|
|
|
$
|
249
|
|
|
$
|
5,210
|
|
|
$
|
—
|
|
|
(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 $1.2 billion of bank notes/certificates of deposit/time deposits and $197 million of corporate obligations.
|
(3)
|
Long-term investments primarily include our equity investment in China Southern Airlines and are classified in other assets on the condensed consolidated balance sheets.
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
|
Carrying
Value |
|
Fair
Value |
|
Carrying
Value |
|
Fair
Value |
||||||||
Long-term debt, including current maturities
|
$
|
24,639
|
|
|
$
|
25,205
|
|
|
$
|
23,779
|
|
|
$
|
23,775
|
|
|
|
Pension Benefits
|
|
Retiree Medical and Other
Postretirement Benefits |
||||||||||||
Three Months Ended June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
|
176
|
|
|
169
|
|
|
8
|
|
|
9
|
|
||||
Expected return on assets
|
|
(204
|
)
|
|
(226
|
)
|
|
(4
|
)
|
|
(6
|
)
|
||||
Amortization of:
|
|
|
|
|
|
|
|
|
||||||||
Prior service cost (benefit)
|
|
7
|
|
|
7
|
|
|
(59
|
)
|
|
(59
|
)
|
||||
Unrecognized net loss (gain)
|
|
38
|
|
|
36
|
|
|
(8
|
)
|
|
(5
|
)
|
||||
Net periodic benefit cost (income)
|
|
$
|
18
|
|
|
$
|
(13
|
)
|
|
$
|
(62
|
)
|
|
$
|
(60
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Pension Benefits
|
|
Retiree Medical and Other
Postretirement Benefits |
||||||||||||
Six Months Ended June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Interest cost
|
|
352
|
|
|
338
|
|
|
17
|
|
|
17
|
|
||||
Expected return on assets
|
|
(406
|
)
|
|
(452
|
)
|
|
(8
|
)
|
|
(11
|
)
|
||||
Amortization of:
|
|
|
|
|
|
|
|
|
||||||||
Prior service cost (benefit)
|
|
14
|
|
|
14
|
|
|
(118
|
)
|
|
(119
|
)
|
||||
Unrecognized net loss (gain)
|
|
76
|
|
|
72
|
|
|
(16
|
)
|
|
(10
|
)
|
||||
Net periodic benefit cost (income)
|
|
$
|
37
|
|
|
$
|
(27
|
)
|
|
$
|
(123
|
)
|
|
$
|
(121
|
)
|
|
Pension, Retiree
Medical and Other Postretirement Benefits |
|
Unrealized Gain (Loss) on Investments
|
|
Income Tax
Benefit (Provision) (1) |
|
Total
|
||||||||
Balance at December 31, 2018
|
$
|
(4,673
|
)
|
|
$
|
(5
|
)
|
|
$
|
(1,218
|
)
|
|
$
|
(5,896
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
4
|
|
|
(1
|
)
|
|
3
|
|
||||
Amounts reclassified from AOCI
|
(44
|
)
|
|
—
|
|
|
10
|
|
(2)
|
(34
|
)
|
||||
Net current-period other comprehensive income (loss)
|
(44
|
)
|
|
4
|
|
|
9
|
|
|
(31
|
)
|
||||
Balance at June 30, 2019
|
$
|
(4,717
|
)
|
|
$
|
(1
|
)
|
|
$
|
(1,209
|
)
|
|
$
|
(5,927
|
)
|
|
(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
June 30, |
|
Six Months Ended
June 30, |
|
|||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|||||||||||
Amortization of pension, retiree medical and other postretirement benefits:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Prior service benefit
|
|
$
|
(41
|
)
|
|
$
|
(40
|
)
|
|
$
|
(81
|
)
|
|
$
|
(80
|
)
|
|
Nonoperating other income (expense), net
|
Actuarial loss
|
|
23
|
|
|
23
|
|
|
47
|
|
|
47
|
|
|
Nonoperating other income (expense), net
|
||||
Total reclassifications for the period, net of tax
|
|
$
|
(18
|
)
|
|
$
|
(17
|
)
|
|
$
|
(34
|
)
|
|
$
|
(33
|
)
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Aircraft fuel and related taxes
|
$
|
487
|
|
|
$
|
465
|
|
|
$
|
909
|
|
|
$
|
863
|
|
Salaries, wages and benefits
|
439
|
|
|
389
|
|
|
848
|
|
|
772
|
|
||||
Capacity purchases from third-party regional carriers (1)
|
352
|
|
|
364
|
|
|
692
|
|
|
717
|
|
||||
Maintenance, materials and repairs
|
101
|
|
|
89
|
|
|
195
|
|
|
168
|
|
||||
Other rent and landing fees
|
162
|
|
|
153
|
|
|
329
|
|
|
300
|
|
||||
Aircraft rent
|
8
|
|
|
8
|
|
|
15
|
|
|
17
|
|
||||
Selling expenses
|
106
|
|
|
96
|
|
|
197
|
|
|
181
|
|
||||
Depreciation and amortization
|
83
|
|
|
82
|
|
|
162
|
|
|
165
|
|
||||
Other
|
148
|
|
|
147
|
|
|
301
|
|
|
307
|
|
||||
Total regional expenses
|
$
|
1,886
|
|
|
$
|
1,793
|
|
|
$
|
3,648
|
|
|
$
|
3,490
|
|
|
(1)
|
During the three months ended June 30, 2019 and 2018, we recognized $149 million and $144 million, respectively, of expense under our capacity purchase agreement with Republic Airline Inc. (Republic). During the six months ended June 30, 2019 and 2018, we recognized $292 million and $282 million, respectively, of expense under our capacity purchase agreement with Republic. We hold a 25% equity interest in Republic Airways Holdings Inc., the parent company of Republic.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Operating revenues:
|
|
|
|
|
|
||||||||||
Passenger
|
$
|
11,011
|
|
|
$
|
10,674
|
|
|
$
|
20,669
|
|
|
$
|
20,154
|
|
Cargo
|
221
|
|
|
261
|
|
|
439
|
|
|
488
|
|
||||
Other
|
726
|
|
|
705
|
|
|
1,431
|
|
|
1,396
|
|
||||
Total operating revenues
|
11,958
|
|
|
11,640
|
|
|
22,539
|
|
|
22,038
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Aircraft fuel and related taxes
|
1,995
|
|
|
2,103
|
|
|
3,722
|
|
|
3,866
|
|
||||
Salaries, wages and benefits
|
3,198
|
|
|
3,091
|
|
|
6,286
|
|
|
6,105
|
|
||||
Regional expenses
|
1,911
|
|
|
1,784
|
|
|
3,702
|
|
|
3,465
|
|
||||
Maintenance, materials and repairs
|
575
|
|
|
505
|
|
|
1,136
|
|
|
973
|
|
||||
Other rent and landing fees
|
535
|
|
|
495
|
|
|
1,039
|
|
|
962
|
|
||||
Aircraft rent
|
334
|
|
|
311
|
|
|
661
|
|
|
621
|
|
||||
Selling expenses
|
401
|
|
|
385
|
|
|
771
|
|
|
742
|
|
||||
Depreciation and amortization
|
489
|
|
|
457
|
|
|
969
|
|
|
898
|
|
||||
Special items, net
|
121
|
|
|
182
|
|
|
259
|
|
|
407
|
|
||||
Other
|
1,272
|
|
|
1,313
|
|
|
2,522
|
|
|
2,574
|
|
||||
Total operating expenses
|
10,831
|
|
|
10,626
|
|
|
21,067
|
|
|
20,613
|
|
||||
Operating income
|
1,127
|
|
|
1,014
|
|
|
1,472
|
|
|
1,425
|
|
||||
Nonoperating income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest income
|
132
|
|
|
82
|
|
|
258
|
|
|
155
|
|
||||
Interest expense, net
|
(277
|
)
|
|
(254
|
)
|
|
(554
|
)
|
|
(505
|
)
|
||||
Other income (expense), net
|
(31
|
)
|
|
(15
|
)
|
|
79
|
|
|
65
|
|
||||
Total nonoperating expense, net
|
(176
|
)
|
|
(187
|
)
|
|
(217
|
)
|
|
(285
|
)
|
||||
Income before income taxes
|
951
|
|
|
827
|
|
|
1,255
|
|
|
1,140
|
|
||||
Income tax provision
|
237
|
|
|
218
|
|
|
311
|
|
|
322
|
|
||||
Net income
|
$
|
714
|
|
|
$
|
609
|
|
|
$
|
944
|
|
|
$
|
818
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income
|
$
|
714
|
|
|
$
|
609
|
|
|
$
|
944
|
|
|
$
|
818
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Pension, retiree medical and other postretirement benefits
|
(18
|
)
|
|
(17
|
)
|
|
(34
|
)
|
|
(33
|
)
|
||||
Investments
|
—
|
|
|
2
|
|
|
3
|
|
|
—
|
|
||||
Total other comprehensive loss, net of tax
|
(18
|
)
|
|
(15
|
)
|
|
(31
|
)
|
|
(33
|
)
|
||||
Total comprehensive income
|
$
|
696
|
|
|
$
|
594
|
|
|
$
|
913
|
|
|
$
|
785
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash
|
$
|
311
|
|
|
$
|
265
|
|
Short-term investments
|
5,075
|
|
|
4,482
|
|
||
Restricted cash and short-term investments
|
157
|
|
|
154
|
|
||
Accounts receivable, net
|
1,965
|
|
|
1,755
|
|
||
Receivables from related parties, net
|
10,889
|
|
|
10,666
|
|
||
Aircraft fuel, spare parts and supplies, net
|
1,623
|
|
|
1,442
|
|
||
Prepaid expenses and other
|
632
|
|
|
493
|
|
||
Total current assets
|
20,652
|
|
|
19,257
|
|
||
Operating property and equipment
|
|
|
|
||||
Flight equipment
|
42,090
|
|
|
41,180
|
|
||
Ground property and equipment
|
8,675
|
|
|
8,466
|
|
||
Equipment purchase deposits
|
1,372
|
|
|
1,277
|
|
||
Total property and equipment, at cost
|
52,137
|
|
|
50,923
|
|
||
Less accumulated depreciation and amortization
|
(17,776
|
)
|
|
(17,123
|
)
|
||
Total property and equipment, net
|
34,361
|
|
|
33,800
|
|
||
Operating lease right-of-use assets
|
9,052
|
|
|
9,094
|
|
||
Other assets
|
|
|
|
||||
Goodwill
|
4,091
|
|
|
4,091
|
|
||
Intangibles, net of accumulated amortization of $683 and $663, respectively
|
2,105
|
|
|
2,137
|
|
||
Deferred tax asset
|
868
|
|
|
1,280
|
|
||
Other assets
|
1,222
|
|
|
1,219
|
|
||
Total other assets
|
8,286
|
|
|
8,727
|
|
||
Total assets
|
$
|
72,351
|
|
|
$
|
70,878
|
|
LIABILITIES AND STOCKHOLDER’S EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Current maturities of long-term debt and finance leases
|
$
|
2,249
|
|
|
$
|
2,547
|
|
Accounts payable
|
2,052
|
|
|
1,707
|
|
||
Accrued salaries and wages
|
1,239
|
|
|
1,363
|
|
||
Air traffic liability
|
5,956
|
|
|
4,339
|
|
||
Loyalty program liability
|
3,310
|
|
|
3,267
|
|
||
Operating lease liabilities
|
1,625
|
|
|
1,639
|
|
||
Other accrued liabilities
|
2,212
|
|
|
2,259
|
|
||
Total current liabilities
|
18,643
|
|
|
17,121
|
|
||
Noncurrent liabilities
|
|
|
|
||||
Long-term debt and finance leases, net of current maturities
|
21,024
|
|
|
20,650
|
|
||
Pension and postretirement benefits
|
5,597
|
|
|
6,863
|
|
||
Loyalty program liability
|
5,249
|
|
|
5,272
|
|
||
Operating lease liabilities
|
7,779
|
|
|
7,857
|
|
||
Other liabilities
|
1,319
|
|
|
1,345
|
|
||
Total noncurrent liabilities
|
40,968
|
|
|
41,987
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholder’s equity
|
|
|
|
||||
Common stock, $1.00 par value; 1,000 shares authorized, issued and outstanding
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
16,859
|
|
|
16,802
|
|
||
Accumulated other comprehensive loss
|
(6,023
|
)
|
|
(5,992
|
)
|
||
Retained earnings
|
1,904
|
|
|
960
|
|
||
Total stockholder’s equity
|
12,740
|
|
|
11,770
|
|
||
Total liabilities and stockholder’s equity
|
$
|
72,351
|
|
|
$
|
70,878
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Net cash provided by operating activities
|
$
|
2,335
|
|
|
$
|
1,426
|
|
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures and aircraft purchase deposits
|
(2,255
|
)
|
|
(1,703
|
)
|
||
Proceeds from sale of property and equipment and sale-leaseback transactions
|
537
|
|
|
255
|
|
||
Purchases of short-term investments
|
(2,190
|
)
|
|
(1,176
|
)
|
||
Sales of short-term investments
|
1,611
|
|
|
1,579
|
|
||
Decrease (increase) in restricted short-term investments
|
(2
|
)
|
|
43
|
|
||
Other investing activities
|
(35
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(2,334
|
)
|
|
(1,002
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
1,839
|
|
|
892
|
|
||
Payments on long-term debt and finance leases
|
(1,781
|
)
|
|
(1,384
|
)
|
||
Deferred financing costs
|
(13
|
)
|
|
(28
|
)
|
||
Net cash provided by (used in) financing activities
|
45
|
|
|
(520
|
)
|
||
Net increase (decrease) in cash and restricted cash
|
46
|
|
|
(96
|
)
|
||
Cash and restricted cash at beginning of period
|
276
|
|
|
390
|
|
||
Cash and restricted cash at end of period (1)
|
$
|
322
|
|
|
$
|
294
|
|
|
|
|
|
||||
Non-cash transactions:
|
|
|
|
||||
Right-of-use assets obtained in exchange for lease liabilities:
|
|
|
|
||||
Operating leases
|
$
|
708
|
|
|
$
|
293
|
|
Finance leases
|
4
|
|
|
—
|
|
||
Settlement of bankruptcy obligations
|
7
|
|
|
—
|
|
||
Supplemental information:
|
|
|
|
||||
Interest paid, net
|
526
|
|
|
493
|
|
||
Income taxes paid
|
4
|
|
|
12
|
|
|
Cash
|
$
|
311
|
|
|
$
|
282
|
|
Restricted cash included in restricted cash and short-term investments
|
11
|
|
|
12
|
|
||
Total cash and restricted cash
|
$
|
322
|
|
|
$
|
294
|
|
|
Common
Stock |
|
Additional
Paid-in Capital |
|
Accumulated
Other Comprehensive Loss |
|
Retained
Earnings |
|
Total
|
||||||||||
Balance at December 31, 2018
|
$
|
—
|
|
|
$
|
16,802
|
|
|
$
|
(5,992
|
)
|
|
$
|
960
|
|
|
$
|
11,770
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
230
|
|
|
230
|
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(13
|
)
|
|||||
Share-based compensation expense
|
—
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|||||
Balance at March 31, 2019
|
—
|
|
|
16,827
|
|
|
(6,005
|
)
|
|
1,190
|
|
|
12,012
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
714
|
|
|
714
|
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
(18
|
)
|
|||||
Share-based compensation expense
|
—
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|||||
Intercompany equity transfer
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|||||
Balance at June 30, 2019
|
$
|
—
|
|
|
$
|
16,859
|
|
|
$
|
(6,023
|
)
|
|
$
|
1,904
|
|
|
$
|
12,740
|
|
|
Common
Stock |
|
Additional
Paid-in Capital |
|
Accumulated
Other Comprehensive Loss |
|
Retained
Earnings (Deficit) |
|
Total
|
||||||||||
Balance at December 31, 2017
|
$
|
—
|
|
|
$
|
16,716
|
|
|
$
|
(5,873
|
)
|
|
$
|
(955
|
)
|
|
$
|
9,888
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
209
|
|
|
209
|
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
(18
|
)
|
|||||
Share-based compensation expense
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|||||
Impact of adoption of Accounting Standards Update (ASU) 2016-01 related to financial instruments
|
—
|
|
|
—
|
|
|
—
|
|
|
60
|
|
|
60
|
|
|||||
Impact of adoption of ASU 2016-02 related to leases
|
—
|
|
|
—
|
|
|
—
|
|
|
197
|
|
|
197
|
|
|||||
Balance at March 31, 2018
|
—
|
|
|
16,740
|
|
|
(5,891
|
)
|
|
(489
|
)
|
|
10,360
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
609
|
|
|
609
|
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
(15
|
)
|
|||||
Share-based compensation expense
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|||||
Balance at June 30, 2018
|
$
|
—
|
|
|
$
|
16,760
|
|
|
$
|
(5,906
|
)
|
|
$
|
120
|
|
|
$
|
10,974
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Fleet restructuring expenses (1)
|
$
|
77
|
|
|
$
|
113
|
|
|
$
|
160
|
|
|
$
|
226
|
|
Merger integration expenses (2)
|
39
|
|
|
60
|
|
|
76
|
|
|
120
|
|
||||
Mark-to-market adjustments on bankruptcy obligations, net (3)
|
5
|
|
|
(57
|
)
|
|
5
|
|
|
(56
|
)
|
||||
Intangible asset impairment (4)
|
—
|
|
|
26
|
|
|
—
|
|
|
26
|
|
||||
Litigation settlement (5)
|
—
|
|
|
5
|
|
|
—
|
|
|
45
|
|
||||
Labor contract expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
||||
Other operating charges, net
|
—
|
|
|
35
|
|
|
18
|
|
|
33
|
|
||||
Mainline operating special items, net
|
121
|
|
|
182
|
|
|
259
|
|
|
407
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Mark-to-market adjustments on equity investments, net (6)
|
52
|
|
|
66
|
|
|
(25
|
)
|
|
66
|
|
||||
Debt refinancing and extinguishment charges
|
8
|
|
|
14
|
|
|
8
|
|
|
14
|
|
||||
Other nonoperating charges, net
|
9
|
|
|
—
|
|
|
16
|
|
|
—
|
|
||||
Nonoperating special items, net
|
69
|
|
|
80
|
|
|
(1
|
)
|
|
80
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income tax special items, net (7)
|
—
|
|
|
18
|
|
|
—
|
|
|
48
|
|
|
(1)
|
Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment grounded or expected to be grounded earlier than planned.
|
(2)
|
Merger integration expenses included costs associated with integration projects, principally American's technical operations, flight attendant, human resources and payroll systems.
|
(3)
|
Bankruptcy obligations that will be settled in shares of AAG common stock are marked-to-market based on AAG's stock price.
|
(4)
|
Intangible asset impairment includes a non-cash charge to write-off American's Brazil route authority as a result of the U.S.-Brazil open skies agreement.
|
(5)
|
Settlement of a private party antitrust lawsuit. See Note 11 - “Private Party Antitrust Action Related to Passenger Capacity” for further discussion.
|
(6)
|
Mark-to-market adjustments on equity investments relate to net unrealized gains and losses primarily associated with American's equity investment in China Southern Airlines Company Limited (China Southern Airlines).
|
(7)
|
Income tax special items for the three months ended June 30, 2018 included an $18 million charge related to an international income tax matter. Additionally, the six months ended June 30, 2018 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 June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Passenger revenue:
|
|
|
|
|
|
|
|
|
|
||||||
Passenger travel
|
$
|
10,217
|
|
|
$
|
9,877
|
|
|
$
|
18,989
|
|
|
$
|
18,507
|
|
Loyalty revenue - travel (1)
|
794
|
|
|
797
|
|
|
1,680
|
|
|
1,647
|
|
||||
Total passenger revenue
|
11,011
|
|
|
10,674
|
|
|
20,669
|
|
|
20,154
|
|
||||
Cargo
|
221
|
|
|
261
|
|
|
439
|
|
|
488
|
|
||||
Other:
|
|
|
|
|
|
|
|
|
|
||||||
Loyalty revenue - marketing services
|
594
|
|
|
582
|
|
|
1,172
|
|
|
1,152
|
|
||||
Other revenue
|
132
|
|
|
123
|
|
|
259
|
|
|
244
|
|
||||
Total other revenue
|
726
|
|
|
705
|
|
|
1,431
|
|
|
1,396
|
|
||||
Total operating revenues
|
$
|
11,958
|
|
|
$
|
11,640
|
|
|
$
|
22,539
|
|
|
$
|
22,038
|
|
|
(1)
|
Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions earned through travel and mileage credits sold to co-branded credit card and other partners.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Domestic
|
$
|
8,009
|
|
|
$
|
7,685
|
|
|
$
|
15,235
|
|
|
$
|
14,648
|
|
Latin America
|
1,241
|
|
|
1,284
|
|
|
2,612
|
|
|
2,729
|
|
||||
Atlantic
|
1,407
|
|
|
1,298
|
|
|
2,080
|
|
|
1,967
|
|
||||
Pacific
|
354
|
|
|
407
|
|
|
742
|
|
|
810
|
|
||||
Total passenger revenue
|
$
|
11,011
|
|
|
$
|
10,674
|
|
|
$
|
20,669
|
|
|
$
|
20,154
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
(In millions)
|
||||||
Loyalty program liability
|
$
|
8,559
|
|
|
$
|
8,539
|
|
Air traffic liability
|
5,956
|
|
|
4,339
|
|
||
Total
|
$
|
14,515
|
|
|
$
|
12,878
|
|
Balance at December 31, 2018
|
$
|
8,539
|
|
Deferral of revenue
|
1,806
|
|
|
Recognition of revenue (1)
|
(1,786
|
)
|
|
Balance at June 30, 2019 (2)
|
$
|
8,559
|
|
|
(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 June 30, 2019, American's current loyalty program liability was $3.3 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.
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Secured
|
|
|
|
||||
2013 Credit Facilities, variable interest rate of 4.06%, installments through 2025
|
$
|
1,807
|
|
|
$
|
1,825
|
|
2014 Credit Facilities, variable interest rate of 4.41%, installments through 2021
|
1,215
|
|
|
1,215
|
|
||
April 2016 Credit Facilities, variable interest rate of 4.40%, installments through 2023
|
970
|
|
|
980
|
|
||
December 2016 Credit Facilities, variable interest rate of 4.39%, installments through 2023
|
1,225
|
|
|
1,225
|
|
||
Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.00% to 8.39%, averaging 4.14%, maturing from 2019 to 2029
|
11,448
|
|
|
11,648
|
|
||
Equipment loans and other notes payable, fixed and variable interest rates ranging from 3.43% to 7.31%, averaging 4.06%, maturing from 2019 to 2031
|
5,392
|
|
|
5,060
|
|
||
Special facility revenue bonds, fixed interest rates of 5.00%, maturing from 2019 to 2031
|
769
|
|
|
769
|
|
||
Total long-term debt
|
22,826
|
|
|
22,722
|
|
||
Less: Total unamortized debt discount, premium and issuance costs
|
205
|
|
|
219
|
|
||
Less: Current maturities
|
2,166
|
|
|
2,466
|
|
||
Long-term debt, net of current maturities
|
$
|
20,455
|
|
|
$
|
20,037
|
|
2013 Revolving Facility
|
$
|
1,000
|
|
2014 Revolving Facility
|
1,543
|
|
|
April 2016 Revolving Facility
|
300
|
|
|
Total
|
$
|
2,843
|
|
|
Fair Value Measurements as of June 30, 2019
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Short-term investments (1), (2):
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
11
|
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate obligations
|
1,737
|
|
|
—
|
|
|
1,737
|
|
|
—
|
|
||||
Bank notes/certificates of deposit/time deposits
|
3,102
|
|
|
—
|
|
|
3,102
|
|
|
—
|
|
||||
Repurchase agreements
|
225
|
|
|
—
|
|
|
225
|
|
|
—
|
|
||||
|
5,075
|
|
|
11
|
|
|
5,064
|
|
|
—
|
|
||||
Restricted cash and short-term investments (1)
|
157
|
|
|
12
|
|
|
145
|
|
|
—
|
|
||||
Long-term investments (3)
|
214
|
|
|
214
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
5,446
|
|
|
$
|
237
|
|
|
$
|
5,209
|
|
|
$
|
—
|
|
|
(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 $1.2 billion of bank notes/certificates of deposit/time deposits and $197 million of corporate obligations.
|
(3)
|
Long-term investments primarily include American's equity investment in China Southern Airlines and are classified in other assets on the condensed consolidated balance sheets.
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
|
Carrying
Value |
|
Fair
Value |
|
Carrying
Value |
|
Fair
Value |
||||||||
Long-term debt, including current maturities
|
$
|
22,621
|
|
|
$
|
23,147
|
|
|
$
|
22,503
|
|
|
$
|
22,497
|
|
|
|
Pension Benefits
|
|
Retiree Medical and Other
Postretirement Benefits |
||||||||||||
Three Months Ended June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
|
175
|
|
|
168
|
|
|
8
|
|
|
9
|
|
||||
Expected return on assets
|
|
(203
|
)
|
|
(225
|
)
|
|
(4
|
)
|
|
(6
|
)
|
||||
Amortization of:
|
|
|
|
|
|
|
|
|
||||||||
Prior service cost (benefit)
|
|
7
|
|
|
7
|
|
|
(59
|
)
|
|
(59
|
)
|
||||
Unrecognized net loss (gain)
|
|
38
|
|
|
36
|
|
|
(8
|
)
|
|
(5
|
)
|
||||
Net periodic benefit cost (income)
|
|
$
|
18
|
|
|
$
|
(13
|
)
|
|
$
|
(62
|
)
|
|
$
|
(60
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Pension Benefits
|
|
Retiree Medical and Other
Postretirement Benefits |
||||||||||||
Six Months Ended June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Interest cost
|
|
350
|
|
|
336
|
|
|
17
|
|
|
17
|
|
||||
Expected return on assets
|
|
(405
|
)
|
|
(450
|
)
|
|
(8
|
)
|
|
(11
|
)
|
||||
Amortization of:
|
|
|
|
|
|
|
|
|
||||||||
Prior service cost (benefit)
|
|
14
|
|
|
14
|
|
|
(118
|
)
|
|
(119
|
)
|
||||
Unrecognized net loss (gain)
|
|
76
|
|
|
72
|
|
|
(16
|
)
|
|
(10
|
)
|
||||
Net periodic benefit cost (income)
|
|
$
|
36
|
|
|
$
|
(27
|
)
|
|
$
|
(123
|
)
|
|
$
|
(121
|
)
|
|
Pension, Retiree
Medical and Other Postretirement Benefits |
|
Unrealized Gain (Loss) on Investments
|
|
Income Tax
Benefit (Provision) (1) |
|
Total
|
||||||||
Balance at December 31, 2018
|
$
|
(4,658
|
)
|
|
$
|
(5
|
)
|
|
$
|
(1,329
|
)
|
|
$
|
(5,992
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
4
|
|
|
(1
|
)
|
|
3
|
|
||||
Amounts reclassified from AOCI
|
(44
|
)
|
|
—
|
|
|
10
|
|
(2)
|
(34
|
)
|
||||
Net current-period other comprehensive income (loss)
|
(44
|
)
|
|
4
|
|
|
9
|
|
|
(31
|
)
|
||||
Balance at June 30, 2019
|
$
|
(4,702
|
)
|
|
$
|
(1
|
)
|
|
$
|
(1,320
|
)
|
|
$
|
(6,023
|
)
|
|
(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 June 30,
|
|
Six Months Ended
June 30, |
|
|||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
||||||||||
Amortization of pension, retiree medical and other postretirement benefits:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Prior service benefit
|
|
$
|
(41
|
)
|
|
$
|
(40
|
)
|
|
$
|
(81
|
)
|
|
$
|
(80
|
)
|
|
Nonoperating other income (expense), net
|
Actuarial loss
|
|
23
|
|
|
23
|
|
|
47
|
|
|
47
|
|
|
Nonoperating other income (expense), net
|
||||
Total reclassifications for the period, net of tax
|
|
$
|
(18
|
)
|
|
$
|
(17
|
)
|
|
$
|
(34
|
)
|
|
$
|
(33
|
)
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Aircraft fuel and related taxes
|
$
|
487
|
|
|
$
|
465
|
|
|
$
|
909
|
|
|
$
|
863
|
|
Salaries, wages and benefits
|
85
|
|
|
87
|
|
|
165
|
|
|
169
|
|
||||
Capacity purchases from third-party regional carriers (1)
|
907
|
|
|
825
|
|
|
1,765
|
|
|
1,622
|
|
||||
Maintenance, materials and repairs
|
5
|
|
|
3
|
|
|
9
|
|
|
5
|
|
||||
Other rent and landing fees
|
154
|
|
|
147
|
|
|
313
|
|
|
288
|
|
||||
Aircraft rent
|
8
|
|
|
7
|
|
|
15
|
|
|
14
|
|
||||
Selling expenses
|
105
|
|
|
96
|
|
|
197
|
|
|
181
|
|
||||
Depreciation and amortization
|
71
|
|
|
67
|
|
|
138
|
|
|
135
|
|
||||
Other
|
89
|
|
|
87
|
|
|
191
|
|
|
188
|
|
||||
Total regional expenses
|
$
|
1,911
|
|
|
$
|
1,784
|
|
|
$
|
3,702
|
|
|
$
|
3,465
|
|
|
(1)
|
During the three months ended June 30, 2019 and 2018, American recognized $149 million and $144 million, respectively, of expense under its capacity purchase agreement with Republic Airline Inc. (Republic). During the six months ended June 30, 2019 and 2018, American recognized $292 million and $282 million, respectively, of expense under its capacity purchase agreement with Republic. American holds a 25% equity interest in Republic Airways Holdings Inc., the parent company of Republic.
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
AAG (1)
|
$
|
13,035
|
|
|
$
|
12,808
|
|
AAG’s wholly-owned subsidiaries (2)
|
(2,146
|
)
|
|
(2,142
|
)
|
||
Total
|
$
|
10,889
|
|
|
$
|
10,666
|
|
|
(1)
|
The increase in American’s net related party receivable from AAG is primarily due to American providing the cash funding for AAG’s dividend and share repurchase 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 June 30,
|
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2019
|
|
2018
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Passenger revenue
|
$
|
11,011
|
|
|
$
|
10,674
|
|
|
$
|
337
|
|
|
3.2
|
|
Cargo revenue
|
221
|
|
|
261
|
|
|
(40
|
)
|
|
(15.4
|
)
|
|||
Other operating revenue
|
728
|
|
|
708
|
|
|
20
|
|
|
2.9
|
|
|||
Total operating revenues
|
11,960
|
|
|
11,643
|
|
|
317
|
|
|
2.7
|
|
|||
Mainline and regional aircraft fuel and related taxes
|
2,482
|
|
|
2,568
|
|
|
(86
|
)
|
|
(3.4
|
)
|
|||
Salaries, wages and benefits
|
3,200
|
|
|
3,095
|
|
|
105
|
|
|
3.4
|
|
|||
Total operating expenses
|
10,807
|
|
|
10,639
|
|
|
168
|
|
|
1.6
|
|
|||
Operating income
|
1,153
|
|
|
1,004
|
|
|
149
|
|
|
14.8
|
|
|||
Pre-tax income
|
882
|
|
|
756
|
|
|
126
|
|
|
16.7
|
|
|||
Income tax provision
|
220
|
|
|
200
|
|
|
20
|
|
|
10.5
|
|
|||
Net income
|
662
|
|
|
556
|
|
|
106
|
|
|
18.9
|
|
|||
|
|
|
|
|
|
|
|
|||||||
Pre-tax income
|
$
|
882
|
|
|
$
|
756
|
|
|
$
|
126
|
|
|
16.7
|
|
Adjusted for: Total pre-tax special items, net (1)
|
190
|
|
|
262
|
|
|
(72
|
)
|
|
(27.6
|
)
|
|||
Pre-tax income excluding special items
|
$
|
1,072
|
|
|
$
|
1,018
|
|
|
$
|
54
|
|
|
5.3
|
|
|
(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 of this report for details on the components of special items.
|
•
|
Issued $750 million in aggregate principal amount of 5.000% senior notes due 2022 (the 5.000% senior notes);
|
•
|
Raised $650 million from a spare engine financing;
|
•
|
Raised $740 million from aircraft financings, of which $464 million was used to repay existing indebtedness; and
|
•
|
Raised $167 million from aircraft sale-leaseback transactions.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(In millions)
|
||||||||||||||
Reconciliation of Pre-Tax Income Excluding Special Items:
|
|
|
|
|
|
|
|
||||||||
Pre-tax income - GAAP
|
$
|
882
|
|
|
$
|
756
|
|
|
$
|
1,128
|
|
|
$
|
994
|
|
Pre-tax special items (1):
|
|
|
|
|
|
|
|
||||||||
Operating special items, net
|
121
|
|
|
182
|
|
|
259
|
|
|
407
|
|
||||
Nonoperating special items, net
|
69
|
|
|
80
|
|
|
(1
|
)
|
|
80
|
|
||||
Total pre-tax special items, net
|
190
|
|
|
262
|
|
|
258
|
|
|
487
|
|
||||
Pre-tax income excluding special items
|
$
|
1,072
|
|
|
$
|
1,018
|
|
|
$
|
1,386
|
|
|
$
|
1,481
|
|
|
(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 June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Reconciliation of Total Operating Costs per Available Seat
Mile (CASM) Excluding Special Items and Fuel:
|
|
|
|
|
|
|
|
||||||||
(In millions)
|
|
|
|
|
|
|
|
||||||||
Total operating expenses - GAAP
|
$
|
10,807
|
|
|
$
|
10,639
|
|
|
$
|
21,016
|
|
|
$
|
20,644
|
|
Special items:
|
|
|
|
|
|
|
|
||||||||
Special items, net (1)
|
(121
|
)
|
|
(182
|
)
|
|
(259
|
)
|
|
(407
|
)
|
||||
Fuel:
|
|
|
|
|
|
|
|
||||||||
Aircraft fuel and related taxes - mainline
|
(1,995
|
)
|
|
(2,103
|
)
|
|
(3,722
|
)
|
|
(3,866
|
)
|
||||
Aircraft fuel and related taxes - regional
|
(487
|
)
|
|
(465
|
)
|
|
(909
|
)
|
|
(863
|
)
|
||||
Total operating expenses, excluding special items and fuel
|
$
|
8,204
|
|
|
$
|
7,889
|
|
|
$
|
16,126
|
|
|
$
|
15,508
|
|
(In millions)
|
|
|
|
|
|
|
|
||||||||
Total Available Seat Miles (ASM)
|
72,322
|
|
|
72,893
|
|
|
138,996
|
|
|
138,717
|
|
||||
(In cents)
|
|
|
|
|
|
|
|
||||||||
Total operating CASM
|
14.94
|
|
|
14.59
|
|
|
15.12
|
|
|
14.88
|
|
||||
Special items per ASM:
|
|
|
|
|
|
|
|
||||||||
Special items, net (1)
|
(0.17
|
)
|
|
(0.25
|
)
|
|
(0.19
|
)
|
|
(0.29
|
)
|
||||
Fuel per ASM:
|
|
|
|
|
|
|
|
||||||||
Aircraft fuel and related taxes - mainline
|
(2.76
|
)
|
|
(2.89
|
)
|
|
(2.68
|
)
|
|
(2.79
|
)
|
||||
Aircraft fuel and related taxes - regional
|
(0.67
|
)
|
|
(0.64
|
)
|
|
(0.65
|
)
|
|
(0.62
|
)
|
||||
Total CASM, excluding special items and fuel
|
11.34
|
|
|
10.82
|
|
|
11.60
|
|
|
11.18
|
|
|
(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
June 30, |
|
Increase
(Decrease)
|
|
Six Months Ended
June 30, |
|
Increase
(Decrease)
|
||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|||||||||
Revenue passenger miles (millions) (a)
|
62,658
|
|
|
60,779
|
|
|
3.1
|
%
|
|
117,460
|
|
|
113,725
|
|
|
3.3
|
%
|
Available seat miles (millions) (b)
|
72,322
|
|
|
72,893
|
|
|
(0.8
|
)%
|
|
138,996
|
|
|
138,717
|
|
|
0.2
|
%
|
Passenger load factor (percent) (c)
|
86.6
|
|
|
83.4
|
|
|
3.2
|
pts
|
|
84.5
|
|
|
82.0
|
|
|
2.5
|
pts
|
Yield (cents) (d)
|
17.57
|
|
|
17.56
|
|
|
0.1
|
%
|
|
17.60
|
|
|
17.72
|
|
|
(0.7
|
)%
|
Passenger revenue per available seat mile (cents) (e)
|
15.22
|
|
|
14.64
|
|
|
4.0
|
%
|
|
14.87
|
|
|
14.53
|
|
|
2.4
|
%
|
Total revenue per available seat mile (cents) (f)
|
16.54
|
|
|
15.97
|
|
|
3.5
|
%
|
|
16.22
|
|
|
15.89
|
|
|
2.1
|
%
|
Aircraft at end of period
|
1,579
|
|
|
1,559
|
|
|
1.3
|
%
|
|
1,579
|
|
|
1,559
|
|
|
1.3
|
%
|
Fuel consumption (gallons in millions)
|
1,158
|
|
|
1,147
|
|
|
1.1
|
%
|
|
2,211
|
|
|
2,177
|
|
|
1.6
|
%
|
Average aircraft fuel price including related taxes (dollars per gallon)
|
2.14
|
|
|
2.24
|
|
|
(4.4
|
)%
|
|
2.09
|
|
|
2.17
|
|
|
(3.6
|
)%
|
Full-time equivalent employees at end of period
|
133,800
|
|
|
131,600
|
|
|
1.7
|
%
|
|
133,800
|
|
|
131,600
|
|
|
1.7
|
%
|
Operating cost per available seat mile (cents) (g)
|
14.94
|
|
|
14.59
|
|
|
2.4
|
%
|
|
15.12
|
|
|
14.88
|
|
|
1.6
|
%
|
|
(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 ASMs.
|
(g)
|
Operating cost per available seat mile (CASM) – Operating expenses divided by ASMs.
|
|
Three Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2019
|
|
2018
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Passenger
|
$
|
11,011
|
|
|
$
|
10,674
|
|
|
$
|
337
|
|
|
3.2
|
|
Cargo
|
221
|
|
|
261
|
|
|
(40
|
)
|
|
(15.4
|
)
|
|||
Other
|
728
|
|
|
708
|
|
|
20
|
|
|
2.9
|
|
|||
Total operating revenues
|
$
|
11,960
|
|
|
$
|
11,643
|
|
|
$
|
317
|
|
|
2.7
|
|
|
|
|
Increase (Decrease)
vs. Three Months Ended June 30, 2018 |
||||||||||||||
|
Three Months Ended
June 30, 2019 |
|
RPMs
|
|
ASMs
|
|
Load
Factor
|
|
Passenger
Yield
|
|
PRASM
|
||||||
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
||||||
Passenger revenue
|
$
|
11,011
|
|
|
3.1%
|
|
(0.8
|
)%
|
|
3.2
|
pts
|
|
0.1
|
%
|
|
4.0
|
%
|
|
Three Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2019
|
|
2018
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Aircraft fuel and related taxes
|
$
|
1,995
|
|
|
$
|
2,103
|
|
|
$
|
(108
|
)
|
|
(5.1
|
)
|
Salaries, wages and benefits
|
3,200
|
|
|
3,095
|
|
|
105
|
|
|
3.4
|
|
|||
Maintenance, materials and repairs
|
575
|
|
|
505
|
|
|
70
|
|
|
13.9
|
|
|||
Other rent and landing fees
|
535
|
|
|
495
|
|
|
40
|
|
|
8.2
|
|
|||
Aircraft rent
|
334
|
|
|
311
|
|
|
23
|
|
|
7.7
|
|
|||
Selling expenses
|
401
|
|
|
385
|
|
|
16
|
|
|
3.9
|
|
|||
Depreciation and amortization
|
489
|
|
|
457
|
|
|
32
|
|
|
7.0
|
|
|||
Special items, net
|
121
|
|
|
182
|
|
|
(61
|
)
|
|
(33.6
|
)
|
|||
Other
|
1,271
|
|
|
1,313
|
|
|
(42
|
)
|
|
(3.2
|
)
|
|||
Regional expenses:
|
|
|
|
|
|
|
|
|||||||
Aircraft fuel and related taxes
|
487
|
|
|
465
|
|
|
22
|
|
|
4.7
|
|
|||
Other
|
1,399
|
|
|
1,328
|
|
|
71
|
|
|
5.4
|
|
|||
Total operating expenses
|
$
|
10,807
|
|
|
$
|
10,639
|
|
|
$
|
168
|
|
|
1.6
|
|
|
Three Months Ended
June 30, |
|
Percent
Increase
(Decrease)
|
|||||
|
2019
|
|
2018
|
|
||||
|
(In cents, except percentage changes)
|
|||||||
Total CASM:
|
|
|
|
|
|
|||
Aircraft fuel and related taxes
|
2.76
|
|
|
2.89
|
|
|
(4.4
|
)
|
Salaries, wages and benefits
|
4.42
|
|
|
4.25
|
|
|
4.2
|
|
Maintenance, materials and repairs
|
0.80
|
|
|
0.69
|
|
|
14.8
|
|
Other rent and landing fees
|
0.74
|
|
|
0.68
|
|
|
9.1
|
|
Aircraft rent
|
0.46
|
|
|
0.43
|
|
|
8.5
|
|
Selling expenses
|
0.55
|
|
|
0.53
|
|
|
4.8
|
|
Depreciation and amortization
|
0.68
|
|
|
0.63
|
|
|
7.8
|
|
Special items, net
|
0.17
|
|
|
0.25
|
|
|
(33.1
|
)
|
Other
|
1.76
|
|
|
1.80
|
|
|
(2.4
|
)
|
Regional expenses:
|
|
|
|
|
|
|||
Aircraft fuel and related taxes
|
0.67
|
|
|
0.64
|
|
|
5.5
|
|
Other
|
1.93
|
|
|
1.82
|
|
|
6.2
|
|
Total CASM
|
14.94
|
|
|
14.59
|
|
|
2.4
|
|
Special items, net
|
(0.17
|
)
|
|
(0.25
|
)
|
|
(33.1
|
)
|
Aircraft fuel and related taxes:
|
|
|
|
|
|
|||
Aircraft fuel and related taxes - mainline
|
(2.76
|
)
|
|
(2.89
|
)
|
|
(4.4
|
)
|
Aircraft fuel and related taxes - regional
|
(0.67
|
)
|
|
(0.64
|
)
|
|
5.5
|
|
Total CASM, excluding special items and fuel
|
11.34
|
|
|
10.82
|
|
|
4.8
|
|
•
|
Mainline aircraft fuel and related taxes per ASM decreased 4.4% primarily due to a 4.6% decrease in the average price per gallon of fuel including related taxes to $2.13 in the second quarter of 2019 from $2.23 in the second quarter of 2018.
|
•
|
Maintenance, materials and repairs per ASM increased 14.8% in the second quarter of 2019 as compared to the second quarter of 2018, primarily due to a contract change that resulted in certain flight equipment transitioning to a flight hour based contract (referred to as power by the hour) whereby expense is incurred and recognized based on actual hours flown. Previously, this flight equipment was covered by a time and materials based contract whereby expense is incurred and recognized as maintenance is performed. An increase in the volume of component part repairs also drove higher maintenance expenses in the second quarter of 2019.
|
•
|
Other rent and landing fees per ASM increased 9.1% primarily due to rate increases at certain hub airports in the second quarter of 2019 as compared to the second quarter of 2018.
|
•
|
Aircraft rent per ASM increased 8.5% primarily due to 21 leased mainline aircraft delivered subsequent to the second quarter of 2018.
|
•
|
Depreciation and amortization per ASM increased 7.8% due in part to airport facility improvements and the harmonization of interior configurations across the mainline fleet. Depreciation associated with our fleet renewal program also contributed to the increase.
|
•
|
Regional aircraft fuel and related taxes per ASM increased 5.5% primarily due to an 8.8% increase in gallons of fuel consumed, principally due to increased capacity. This increase was offset in part by a 3.7% decrease in the average price per gallon of fuel including related taxes to $2.21 in the second quarter of 2019 from $2.29 in the second quarter of 2018.
|
•
|
Regional other operating expenses per ASM increased 6.2% primarily driven by an 8.1% increase in regional capacity, principally from our wholly-owned regional carriers.
|
|
Three Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(In millions)
|
||||||
Fleet restructuring expenses (1)
|
$
|
77
|
|
|
$
|
113
|
|
Merger integration expenses (2)
|
39
|
|
|
60
|
|
||
Mark-to-market adjustments on bankruptcy obligations, net (3)
|
5
|
|
|
(57
|
)
|
||
Intangible asset impairment (4)
|
—
|
|
|
26
|
|
||
Litigation settlement
|
—
|
|
|
5
|
|
||
Other operating charges, net
|
—
|
|
|
35
|
|
||
Total mainline operating special items, net
|
$
|
121
|
|
|
$
|
182
|
|
|
(1)
|
Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment grounded or expected to be grounded earlier than planned.
|
(2)
|
Merger integration expenses included costs associated with integration projects, principally our technical operations, flight attendant, human resources and payroll systems.
|
(3)
|
Bankruptcy obligations that will be settled in shares of our common stock are marked-to-market based on our stock price.
|
(4)
|
Intangible asset impairment includes a non-cash charge to write-off our Brazil route authority as a result of the U.S.-Brazil open skies agreement.
|
|
Three Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2019
|
|
2018
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Interest income
|
$
|
35
|
|
|
$
|
30
|
|
|
$
|
5
|
|
|
15.2
|
|
Interest expense, net
|
(275
|
)
|
|
(263
|
)
|
|
(12
|
)
|
|
4.5
|
|
|||
Other expense, net
|
(31
|
)
|
|
(15
|
)
|
|
(16
|
)
|
|
97.8
|
|
|||
Total nonoperating expense, net
|
$
|
(271
|
)
|
|
$
|
(248
|
)
|
|
$
|
(23
|
)
|
|
9.0
|
|
|
Six Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2019
|
|
2018
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Passenger
|
$
|
20,669
|
|
|
$
|
20,154
|
|
|
$
|
515
|
|
|
2.6
|
|
Cargo
|
439
|
|
|
488
|
|
|
(49
|
)
|
|
(10.1
|
)
|
|||
Other
|
1,436
|
|
|
1,402
|
|
|
34
|
|
|
2.4
|
|
|||
Total operating revenues
|
$
|
22,544
|
|
|
$
|
22,044
|
|
|
$
|
500
|
|
|
2.3
|
|
|
|
|
Increase (Decrease)
vs. Six Months Ended June 30, 2018 |
||||||||||||
|
Six Months Ended
June 30, 2019 |
|
RPMs
|
|
ASMs
|
|
Load
Factor
|
|
Passenger
Yield
|
|
PRASM
|
||||
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
||||
Passenger revenue
|
$
|
20,669
|
|
|
3.3%
|
|
0.2%
|
|
2.5
|
pts
|
|
(0.7)%
|
|
2.4
|
%
|
|
Six Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2019
|
|
2018
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Aircraft fuel and related taxes
|
$
|
3,722
|
|
|
$
|
3,866
|
|
|
$
|
(144
|
)
|
|
(3.7
|
)
|
Salaries, wages and benefits
|
6,290
|
|
|
6,111
|
|
|
179
|
|
|
2.9
|
|
|||
Maintenance, materials and repairs
|
1,136
|
|
|
973
|
|
|
163
|
|
|
16.7
|
|
|||
Other rent and landing fees
|
1,039
|
|
|
962
|
|
|
77
|
|
|
8.0
|
|
|||
Aircraft rent
|
661
|
|
|
621
|
|
|
40
|
|
|
6.6
|
|
|||
Selling expenses
|
771
|
|
|
742
|
|
|
29
|
|
|
3.9
|
|
|||
Depreciation and amortization
|
969
|
|
|
898
|
|
|
71
|
|
|
8.0
|
|
|||
Special items, net
|
259
|
|
|
407
|
|
|
(148
|
)
|
|
(36.5
|
)
|
|||
Other
|
2,521
|
|
|
2,574
|
|
|
(53
|
)
|
|
(2.0
|
)
|
|||
Regional expenses:
|
|
|
|
|
|
|
|
|||||||
Aircraft fuel and related taxes
|
909
|
|
|
863
|
|
|
46
|
|
|
5.4
|
|
|||
Other
|
2,739
|
|
|
2,627
|
|
|
112
|
|
|
4.2
|
|
|||
Total operating expenses
|
$
|
21,016
|
|
|
$
|
20,644
|
|
|
$
|
372
|
|
|
1.8
|
|
|
Six Months Ended
June 30, |
|
Percent
Increase
(Decrease)
|
|||||
|
2019
|
|
2018
|
|
||||
|
(In cents, except percentage changes)
|
|||||||
Total CASM:
|
|
|
|
|
|
|||
Aircraft fuel and related taxes
|
2.68
|
|
|
2.79
|
|
|
(3.9
|
)
|
Salaries, wages and benefits
|
4.53
|
|
|
4.41
|
|
|
2.7
|
|
Maintenance, materials and repairs
|
0.82
|
|
|
0.70
|
|
|
16.4
|
|
Other rent and landing fees
|
0.75
|
|
|
0.69
|
|
|
7.8
|
|
Aircraft rent
|
0.48
|
|
|
0.45
|
|
|
6.3
|
|
Selling expenses
|
0.55
|
|
|
0.53
|
|
|
3.7
|
|
Depreciation and amortization
|
0.70
|
|
|
0.65
|
|
|
7.8
|
|
Special items, net
|
0.19
|
|
|
0.29
|
|
|
(36.6
|
)
|
Other
|
1.81
|
|
|
1.86
|
|
|
(2.2
|
)
|
Regional expenses:
|
|
|
|
|
|
|||
Aircraft fuel and related taxes
|
0.65
|
|
|
0.62
|
|
|
5.2
|
|
Other
|
1.97
|
|
|
1.89
|
|
|
4.0
|
|
Total CASM
|
15.12
|
|
|
14.88
|
|
|
1.6
|
|
Special items, net
|
(0.19
|
)
|
|
(0.29
|
)
|
|
(36.6
|
)
|
Aircraft fuel and related taxes:
|
|
|
|
|
|
|||
Aircraft fuel and related taxes - mainline
|
(2.68
|
)
|
|
(2.79
|
)
|
|
(3.9
|
)
|
Aircraft fuel and related taxes - regional
|
(0.65
|
)
|
|
(0.62
|
)
|
|
5.2
|
|
Total CASM, excluding special items and fuel
|
11.60
|
|
11.18
|
|
|
3.8
|
|
•
|
Mainline aircraft fuel and related taxes per ASM decreased 3.9% primarily due to a 3.9% decrease in the average price per gallon of fuel including related taxes to $2.08 in the first six months of 2019 from $2.16 in the 2018 period.
|
•
|
Maintenance, materials and repairs per ASM increased 16.4% in the first six months of 2019 as compared to the first six months of 2018, primarily due to a contract change that resulted in certain flight equipment transitioning to a flight hour based contract (referred to as power by the hour) whereby expense is incurred and recognized based on actual hours flown. Previously, this flight equipment was covered by a time and materials based contract whereby expense is incurred and recognized as maintenance is performed. The volume of airframe and engine overhauls performed under time and material based contracts as well as an increase in the volume of component part repairs also drove higher maintenance expenses in the first six months of 2019.
|
•
|
Other rent and landing fees per ASM increased 7.8% primarily due to rate increases at certain hub airports in the first six months of 2019 as compared to the 2018 period.
|
•
|
Aircraft rent per ASM increased 6.3% primarily due to 21 leased mainline aircraft delivered subsequent to the second quarter of 2018.
|
•
|
Depreciation and amortization per ASM increased 7.8% due in part to airport facility improvements, harmonization of interior configurations across the mainline fleet as well as information technology and software development projects associated with our merger integration. Depreciation associated with our fleet renewal program also contributed to the increase.
|
•
|
Regional aircraft fuel and related taxes per ASM increased 5.2% primarily due to an 8.2% increase in gallons of fuel consumed, principally due to increased capacity. This increase was offset in part by a 2.7% decrease in the average price per gallon of fuel including related taxes to $2.17 in the first six months of 2019 from $2.22 in the 2018 period.
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(In millions)
|
||||||
Fleet restructuring expenses (1)
|
$
|
160
|
|
|
$
|
226
|
|
Merger integration expenses (2)
|
76
|
|
|
120
|
|
||
Mark-to-market adjustments on bankruptcy obligations, net (3)
|
5
|
|
|
(56
|
)
|
||
Intangible asset impairment (4)
|
—
|
|
|
26
|
|
||
Litigation settlement (5)
|
—
|
|
|
45
|
|
||
Labor contract expenses
|
—
|
|
|
13
|
|
||
Other operating charges, net
|
18
|
|
|
33
|
|
||
Total mainline operating special items, net
|
$
|
259
|
|
|
$
|
407
|
|
|
(1)
|
Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment grounded or expected to be grounded earlier than planned.
|
(2)
|
Merger integration expenses included costs associated with integration projects, principally our technical operations, flight attendant, human resources and payroll systems.
|
(3)
|
Bankruptcy obligations that will be settled in shares of our common stock are marked-to-market based on our stock price.
|
(4)
|
Intangible asset impairment includes a non-cash charge to write-off our Brazil route authority as a result of the U.S.-Brazil open skies agreement.
|
(5)
|
Settlement of a private party antitrust lawsuit. See Note 12 - “Private Party Antitrust Action Related to Passenger Capacity” to AAG's Consolidated Financial Statements in Part I, Item 1A for further discussion.
|
|
Six Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2019
|
|
2018
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Interest income
|
$
|
68
|
|
|
$
|
55
|
|
|
$
|
13
|
|
|
23.6
|
|
Interest expense, net
|
(546
|
)
|
|
(525
|
)
|
|
(21
|
)
|
|
3.9
|
|
|||
Other income, net
|
78
|
|
|
64
|
|
|
14
|
|
|
22.1
|
|
|||
Total nonoperating expense, net
|
$
|
(400
|
)
|
|
$
|
(406
|
)
|
|
$
|
6
|
|
|
(1.7
|
)
|
|
Three Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2019
|
|
2018
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Passenger
|
$
|
11,011
|
|
|
$
|
10,674
|
|
|
$
|
337
|
|
|
3.2
|
|
Cargo
|
221
|
|
|
261
|
|
|
(40
|
)
|
|
(15.4
|
)
|
|||
Other
|
726
|
|
|
705
|
|
|
21
|
|
|
3.1
|
|
|||
Total operating revenues
|
$
|
11,958
|
|
|
$
|
11,640
|
|
|
$
|
318
|
|
|
2.7
|
|
|
Three Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2019
|
|
2018
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Aircraft fuel and related taxes
|
$
|
1,995
|
|
|
$
|
2,103
|
|
|
$
|
(108
|
)
|
|
(5.1
|
)
|
Salaries, wages and benefits
|
3,198
|
|
|
3,091
|
|
|
107
|
|
|
3.4
|
|
|||
Maintenance, materials and repairs
|
575
|
|
|
505
|
|
|
70
|
|
|
13.9
|
|
|||
Other rent and landing fees
|
535
|
|
|
495
|
|
|
40
|
|
|
8.2
|
|
|||
Aircraft rent
|
334
|
|
|
311
|
|
|
23
|
|
|
7.7
|
|
|||
Selling expenses
|
401
|
|
|
385
|
|
|
16
|
|
|
3.9
|
|
|||
Depreciation and amortization
|
489
|
|
|
457
|
|
|
32
|
|
|
7.0
|
|
|||
Special items, net
|
121
|
|
|
182
|
|
|
(61
|
)
|
|
(33.6
|
)
|
|||
Other
|
1,272
|
|
|
1,313
|
|
|
(41
|
)
|
|
(3.2
|
)
|
|||
Regional expenses:
|
|
|
|
|
|
|
|
|||||||
Aircraft fuel and related taxes
|
487
|
|
|
465
|
|
|
22
|
|
|
4.7
|
|
|||
Other
|
1,424
|
|
|
1,319
|
|
|
105
|
|
|
8.0
|
|
|||
Total operating expenses
|
$
|
10,831
|
|
|
$
|
10,626
|
|
|
$
|
205
|
|
|
1.9
|
|
•
|
Mainline aircraft fuel and related taxes decreased 5.1% primarily due to a 4.6% decrease in the average price per gallon of fuel including related taxes to $2.13 in the second quarter of 2019 from $2.23 in the second quarter of 2018.
|
•
|
Maintenance, materials and repairs increased 13.9% in the second quarter of 2019 as compared to the second quarter of 2018, primarily due to a contract change that resulted in certain flight equipment transitioning to a flight hour based contract (referred to as power by the hour) whereby expense is incurred and recognized based on actual hours flown. Previously, this flight equipment was covered by a time and materials based contract whereby expense is incurred and recognized as maintenance is performed. An increase in the volume of component part repairs also drove higher maintenance expenses in the second quarter of 2019.
|
•
|
Other rent and landing fees increased 8.2% primarily due to rate increases at certain hub airports in the second quarter of 2019 as compared to the second quarter of 2018.
|
•
|
Aircraft rent increased 7.7% primarily due to 21 leased mainline aircraft delivered subsequent to the second quarter of 2018.
|
•
|
Depreciation and amortization increased 7.0% due in part to airport facility improvements and the harmonization of interior configurations across the mainline fleet. Depreciation associated with American's fleet renewal program also contributed to the increase.
|
•
|
Regional aircraft fuel and related taxes increased 4.7% primarily due to an 8.8% increase in gallons of fuel consumed, principally due to increased capacity. This increase was offset in part by a 3.7% decrease in the average price per gallon of fuel including related taxes to $2.21 in the second quarter of 2019 from $2.29 in the second quarter of 2018.
|
•
|
Regional other operating expenses increased 8.0% primarily driven by an increase in regional capacity.
|
|
Three Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(In millions)
|
||||||
Fleet restructuring expenses (1)
|
$
|
77
|
|
|
$
|
113
|
|
Merger integration expenses (2)
|
39
|
|
|
60
|
|
||
Mark-to-market adjustments on bankruptcy obligations, net (3)
|
5
|
|
|
(57
|
)
|
||
Intangible asset impairment (4)
|
—
|
|
|
26
|
|
||
Litigation settlement
|
—
|
|
|
5
|
|
||
Other operating charges, net
|
—
|
|
|
35
|
|
||
Total mainline operating special items, net
|
$
|
121
|
|
|
$
|
182
|
|
|
(1)
|
Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment grounded or expected to be grounded earlier than planned.
|
(2)
|
Merger integration expenses included costs associated with integration projects, principally American's technical operations, flight attendant, human resources and payroll systems.
|
(3)
|
Bankruptcy obligations that will be settled in shares of AAG common stock are marked-to-market based on AAG's stock price.
|
(4)
|
Intangible asset impairment includes a non-cash charge to write-off American's Brazil route authority as a result of the U.S.-Brazil open skies agreement.
|
|
Three Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2019
|
|
2018
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Interest income
|
$
|
132
|
|
|
$
|
82
|
|
|
$
|
50
|
|
|
61.1
|
|
Interest expense, net
|
(277
|
)
|
|
(254
|
)
|
|
(23
|
)
|
|
9.0
|
|
|||
Other expense, net
|
(31
|
)
|
|
(15
|
)
|
|
(16
|
)
|
|
101.0
|
|
|||
Total nonoperating expense, net
|
$
|
(176
|
)
|
|
$
|
(187
|
)
|
|
$
|
11
|
|
|
(6.3
|
)
|
|
Six Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2019
|
|
2018
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Passenger
|
$
|
20,669
|
|
|
$
|
20,154
|
|
|
$
|
515
|
|
|
2.6
|
|
Cargo
|
439
|
|
|
488
|
|
|
(49
|
)
|
|
(10.1
|
)
|
|||
Other
|
1,431
|
|
|
1,396
|
|
|
35
|
|
|
2.5
|
|
|||
Total operating revenues
|
$
|
22,539
|
|
|
$
|
22,038
|
|
|
$
|
501
|
|
|
2.3
|
|
|
Six Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2019
|
|
2018
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Aircraft fuel and related taxes
|
$
|
3,722
|
|
|
$
|
3,866
|
|
|
$
|
(144
|
)
|
|
(3.7
|
)
|
Salaries, wages and benefits
|
6,286
|
|
|
6,105
|
|
|
181
|
|
|
3.0
|
|
|||
Maintenance, materials and repairs
|
1,136
|
|
|
973
|
|
|
163
|
|
|
16.7
|
|
|||
Other rent and landing fees
|
1,039
|
|
|
962
|
|
|
77
|
|
|
8.0
|
|
|||
Aircraft rent
|
661
|
|
|
621
|
|
|
40
|
|
|
6.6
|
|
|||
Selling expenses
|
771
|
|
|
742
|
|
|
29
|
|
|
3.9
|
|
|||
Depreciation and amortization
|
969
|
|
|
898
|
|
|
71
|
|
|
8.0
|
|
|||
Special items, net
|
259
|
|
|
407
|
|
|
(148
|
)
|
|
(36.5
|
)
|
|||
Other
|
2,522
|
|
|
2,574
|
|
|
(52
|
)
|
|
(2.0
|
)
|
|||
Regional expenses:
|
|
|
|
|
|
|
|
|||||||
Aircraft fuel and related taxes
|
909
|
|
|
863
|
|
|
46
|
|
|
5.4
|
|
|||
Other
|
2,793
|
|
|
2,602
|
|
|
191
|
|
|
7.3
|
|
|||
Total operating expenses
|
$
|
21,067
|
|
|
$
|
20,613
|
|
|
$
|
454
|
|
|
2.2
|
|
•
|
Mainline aircraft fuel and related taxes decreased 3.7% primarily due to a 3.9% decrease in the average price per gallon of fuel including related taxes to $2.08 in the first six months of 2019 from $2.16 in the 2018 period.
|
•
|
Maintenance, materials and repairs increased 16.7% in the first six months of 2019 as compared to the first six months of 2018, primarily due to a contract change that resulted in certain flight equipment transitioning to a flight hour based contract (referred to as power by the hour) whereby expense is incurred and recognized based on actual hours flown. Previously, this flight equipment was covered by a time and materials based contract whereby expense is incurred and recognized as maintenance is performed. The volume of airframe and engine overhauls performed under time and material based contracts as well as an increase in the volume of component part repairs also drove higher maintenance expenses in the first six months of 2019.
|
•
|
Other rent and landing fees increased 8.0% primarily due to rate increases at certain hub airports in the first six months of 2019 as compared to the 2018 period.
|
•
|
Aircraft rent increased 6.6% primarily due to 21 leased mainline aircraft delivered subsequent to the second quarter of 2018.
|
•
|
Depreciation and amortization increased 8.0% due in part to airport facility improvements, harmonization of interior configurations across the mainline fleet as well as information technology and software development projects associated with American's merger integration. Depreciation associated with American's fleet renewal program also contributed to the increase.
|
•
|
Regional aircraft fuel and related taxes increased 5.4% primarily due to an 8.2% increase in gallons of fuel consumed, principally due to increased capacity. This increase was offset in part by a 2.7% decrease in the average price per gallon of fuel including related taxes to $2.17 in the first six months of 2019 from $2.22 in the 2018 period.
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(In millions)
|
||||||
Fleet restructuring expenses (1)
|
$
|
160
|
|
|
$
|
226
|
|
Merger integration expenses (2)
|
76
|
|
|
120
|
|
||
Mark-to-market adjustments on bankruptcy obligations, net (3)
|
5
|
|
|
(56
|
)
|
||
Intangible asset impairment (4)
|
—
|
|
|
26
|
|
||
Litigation settlement (5)
|
—
|
|
|
45
|
|
||
Labor contract expenses
|
—
|
|
|
13
|
|
||
Other operating charges, net
|
18
|
|
|
33
|
|
||
Total mainline operating special items, net
|
$
|
259
|
|
|
$
|
407
|
|
|
(1)
|
Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment grounded or expected to be grounded earlier than planned.
|
(2)
|
Merger integration expenses included costs associated with integration projects, principally American's technical operations, flight attendant, human resources and payroll systems.
|
(3)
|
Bankruptcy obligations that will be settled in shares of AAG common stock are marked-to-market based on AAG's stock price.
|
(4)
|
Intangible asset impairment includes a non-cash charge to write-off American's Brazil route authority as a result of the U.S.-Brazil open skies agreement.
|
(5)
|
Settlement of a private party antitrust lawsuit. See Note 11 - “Private Party Antitrust Action Related to Passenger Capacity” to American's Consolidated Financial Statements in Part I, Item 1B for further discussion.
|
|
Six Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2019
|
|
2018
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Interest income
|
$
|
258
|
|
|
$
|
155
|
|
|
$
|
103
|
|
|
66.7
|
|
Interest expense, net
|
(554
|
)
|
|
(505
|
)
|
|
(49
|
)
|
|
9.8
|
|
|||
Other income, net
|
79
|
|
|
65
|
|
|
14
|
|
|
22.3
|
|
|||
Total nonoperating expense, net
|
$
|
(217
|
)
|
|
$
|
(285
|
)
|
|
$
|
68
|
|
|
(24.0
|
)
|
|
AAG
|
|
American
|
||||||||||||
|
June 30, 2019
|
|
December 31, 2018
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||
Cash
|
$
|
319
|
|
|
$
|
275
|
|
|
$
|
311
|
|
|
$
|
265
|
|
Short-term investments
|
5,088
|
|
|
4,485
|
|
|
5,075
|
|
|
4,482
|
|
||||
Undrawn revolving credit facilities
|
2,843
|
|
|
2,843
|
|
|
2,843
|
|
|
2,843
|
|
||||
Total available liquidity
|
$
|
8,250
|
|
|
$
|
7,603
|
|
|
$
|
8,229
|
|
|
$
|
7,590
|
|
|
(1)
|
On June 19, 2019, we entered into an amendment of a purchase agreement with Airbus pursuant to which we converted the firm purchase of 30 A321neo aircraft and options to purchase 20 A320neo aircraft into the firm purchase of 50 A321XLR aircraft. Deliveries of the A321XLR aircraft are scheduled to commence in 2023 and continue through 2025.
|
(2)
|
On March 13, 2019, the FAA grounded all U.S.-registered Boeing 737 MAX aircraft. We currently have 76 Boeing 737 MAX Family aircraft on order and the table above reflects the contractual delivery schedule. However, we have not taken delivery of any Boeing 737 MAX Family aircraft since the grounding, and the timing of future deliveries cannot presently be forecasted.
|
|
Payments Due by Period
|
||||||||||||||||||||||||||
|
Remainder
of 2019 |
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024 and Thereafter
|
|
Total
|
||||||||||||||
American
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Principal amount (a), (c)
|
$
|
1,299
|
|
|
$
|
1,917
|
|
|
$
|
3,489
|
|
|
$
|
1,527
|
|
|
$
|
3,974
|
|
|
$
|
10,620
|
|
|
$
|
22,826
|
|
Interest obligations (b), (c)
|
463
|
|
|
811
|
|
|
702
|
|
|
578
|
|
|
498
|
|
|
1,182
|
|
|
4,234
|
|
|||||||
Finance lease obligations
|
58
|
|
|
122
|
|
|
118
|
|
|
122
|
|
|
105
|
|
|
282
|
|
|
807
|
|
|||||||
Aircraft and engine purchase
commitments (d)
|
1,282
|
|
|
1,872
|
|
|
941
|
|
|
1,348
|
|
|
1,543
|
|
|
7,422
|
|
|
14,408
|
|
|||||||
Operating lease commitments (e)
|
924
|
|
|
1,975
|
|
|
1,922
|
|
|
1,749
|
|
|
1,567
|
|
|
5,428
|
|
|
13,565
|
|
|||||||
Regional capacity purchase agreements (f)
|
573
|
|
|
1,087
|
|
|
969
|
|
|
832
|
|
|
700
|
|
|
1,209
|
|
|
5,370
|
|
|||||||
Minimum pension obligations (g)
|
—
|
|
|
625
|
|
|
671
|
|
|
939
|
|
|
909
|
|
|
1,263
|
|
|
4,407
|
|
|||||||
Retiree medical and other postretirement benefits
|
12
|
|
|
17
|
|
|
17
|
|
|
17
|
|
|
23
|
|
|
280
|
|
|
366
|
|
|||||||
Other purchase obligations (h)
|
1,000
|
|
|
1,289
|
|
|
1,106
|
|
|
562
|
|
|
91
|
|
|
153
|
|
|
4,201
|
|
|||||||
Total American Contractual Obligations
|
$
|
5,611
|
|
|
$
|
9,715
|
|
|
$
|
9,935
|
|
|
$
|
7,674
|
|
|
$
|
9,410
|
|
|
$
|
27,839
|
|
|
$
|
70,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
AAG Parent and Other AAG Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Principal amount (a)
|
$
|
750
|
|
|
$
|
505
|
|
|
$
|
2
|
|
|
$
|
752
|
|
|
$
|
2
|
|
|
$
|
18
|
|
|
$
|
2,029
|
|
Interest obligations (b)
|
54
|
|
|
51
|
|
|
39
|
|
|
21
|
|
|
1
|
|
|
4
|
|
|
170
|
|
|||||||
Minimum pension obligations (g)
|
5
|
|
|
4
|
|
|
5
|
|
|
5
|
|
|
5
|
|
|
13
|
|
|
37
|
|
|||||||
Operating lease commitments
|
10
|
|
|
16
|
|
|
15
|
|
|
13
|
|
|
7
|
|
|
22
|
|
|
83
|
|
|||||||
Total AAG Contractual Obligations
|
$
|
6,430
|
|
|
$
|
10,291
|
|
|
$
|
9,996
|
|
|
$
|
8,465
|
|
|
$
|
9,425
|
|
|
$
|
27,896
|
|
|
$
|
72,503
|
|
|
(a)
|
Amounts represent contractual amounts due. Excludes $205 million and $11 million of unamortized debt discount, premium and issuance costs as of June 30, 2019 for American and AAG Parent, 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 June 30, 2019.
|
(c)
|
Includes $11.4 billion of future principal payments and $2.3 billion of future interest payments, respectively, as of June 30, 2019, related to EETCs associated with mortgage financings of certain aircraft and spare engines.
|
(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 22 787-8 aircraft to be delivered in 2020 and 2021. This financing is reflected in the operating lease commitments line above.
|
(e)
|
Includes $248 million of future minimum lease payments related to EETC leveraged lease financings of certain aircraft as of June 30, 2019.
|
(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. Rental payments under operating leases for certain aircraft flown under these capacity purchase agreements are reflected in the operating lease commitments line above.
|
(g)
|
Includes minimum pension contributions based on actuarially determined estimates as of December 31, 2018 and is based on estimated payments through 2028. During the first six months of 2019, we made $1.2 billion in contributions to fund our pension plans. These contributions exceeded the $786 million in minimum required contributions for 2019.
|
(h)
|
Includes purchase commitments for jet fuel, construction projects and information technology support.
|
•
|
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; and
|
•
|
contain restrictive covenants that could, among other things:
|
◦
|
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 fares offered or 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, including increases in such disasters and related costs caused by more severe weather due to climate change.
|
•
|
macro-economic conditions, including the price of fuel;
|
•
|
changes in market values of airline companies as well as general market conditions;
|
•
|
our operating and financial results failing to meet the expectations of securities analysts or investors;
|
•
|
changes in financial estimates or recommendations by securities analysts;
|
•
|
changes in our level of outstanding indebtedness and other obligations;
|
•
|
changes in our credit rating;
|
•
|
material announcements by us or our competitors;
|
•
|
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;
|
•
|
public sales of a substantial number of shares of AAG common stock or issuances of AAG common stock upon the exercise or conversion of restricted stock unit awards, stock appreciation rights, or other securities that may be issued from time to time;
|
•
|
increases or decreases in reported holdings by insiders or other significant stockholders; and
|
•
|
fluctuations in trading volume.
|
•
|
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;
|
•
|
stockholders are restricted from calling a special meeting unless they hold at least 20% of our outstanding shares and follow the procedures 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.
|
Exhibit
Number
|
Description
|
|
|
4.1
|
|
4.2
|
|
10.1
|
|
10.2
|
|
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: July 25, 2019
|
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: July 25, 2019
|
By:
|
|
/s/ Derek J. Kerr
|
|
|
|
Derek J. Kerr
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Duly Authorized Officer and Principal Financial Officer)
|
Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
|
Location of References*
|
Articles 1, 2, 3 (all sections), 4 (all sections), and Section 5.1 of the Basic Articles
|
Exhibit C(R1), Definitions of “Aircraft” and “Engine”
|
Section 1 of Supplemental Exhibit AE1
|
Section 1 (definition of “Firm Aircraft”) and Attachment C(R4) of Letter Agreement 6-1162-TRW-0664R2 entitled “Aircraft Purchase Rights and Substitution Rights”
|
Section 1.1 of LA 6-1162-TRW-0672R1 entitled “Promotional Support Agreement”
|
Section 9.2 of Letter Agreement 6-1162-TRW-0674R4 entitled “Business Considerations”
|
Section 1.1 of Letter Agreement AAL-PA-3219-LA1802492 entitled “Open Configuration Matters”
|
Sections 6 and 7 of Supplemental Agreement No. 11
|
Supplemental Exhibit EE2
|
Reference
|
Replacement Reference
|
Exhibit A2(R4)
|
Exhibit A2(R5)
|
Letter Agreement AAL-PA-3219-LA-1802262
|
Letter Agreement AAL-PA-3219-LA-1802262R1
|
AGREED AND ACCEPTED
|
||
|
|
|
May 29, 2019
|
|
|
Date
|
|
|
|
|
|
THE BOEING COMPANY
|
|
AMERICAN AIRLINES, INC.
|
|
|
|
/s/ The Boeing Company
|
|
/s/ American Airlines, Inc.
|
Signature
|
|
Signature
|
|
|
|
The Boeing Company
|
|
American Airlines, Inc.
|
Printed name
|
|
Printed name
|
|
|
|
Attorney-in-Fact
|
|
MD Fleet
|
Title
|
|
Title
|
TABLE OF CONTENTS, continued
|
|||
LETTER AGREEMENTS
|
|
SA
NUMBER
|
|
3219-01
|
[****]
|
|
|
3219-02
|
Special Terms – Seats and In-Flight Entertainment
|
|
|
3219-04
|
[****]
|
|
|
3219-05R1
|
Spare Parts Commitments
|
SA-3
|
|
3219-06R1
|
Spare Parts Initial Provisioning
|
SA-3
|
|
3219-08R2
|
Open Configuration Matters WITHDRAWN
|
SA-8
|
|
6-1162-AKP-071R1
|
[****]
Terminated per AAL-PA-1977-LA-1105595 |
|
|
6-1162-AKP-072R2
|
[****]
Terminated per AAL-PA-1977-LA-1105595 |
|
|
6-1162-AKP-073R1
|
Accident Claims and Litigation
|
|
|
6-1162-CLO-1031R1
|
[****] WITHDRAWN
|
SA-2
SA-3
|
|
6-1162-CLO-1032R1
|
[****]
Terminated |
SA-3
|
|
6-1162-CLO-1039
|
[****]
|
|
|
6-1162-CLO-1042
|
[****]
|
|
|
6-1162-CLO-1043R1
|
787 Inspection Process
|
SA-3
|
|
6-1162-CLO-1045R1
|
[****]
|
SA-2
|
|
6-1162-CLO-1046
|
SA-eE, COTS Software and End User License Matters
WITHDRAWN
|
SA-3
|
|
6-1162-CLO-1047R4
|
[****]
|
SA-11
|
|
6-1162-CLO-1048
|
Final Matters WITHDRAWN
|
SA-2
|
|
6-1162-CLO-1049R2
|
CS1 Matters
|
SA-6
|
|
6-1162-TRW-0664R2
|
Aircraft Purchase Rights and Substitution Rights
|
SA-11
|
|
|
Attachment A(R2) – MADP Exercise Dates WITHDRAWN
|
SA-11
|
|
|
Attachment B(R2) – QADP Exercise Dates WITHDRAWN
|
SA-11
|
|
|
Attachment C(R3) – MADP & QADP Rights Aircraft:
Description/Price Data Attachment C(R4)
|
SA-11
|
TABLE OF CONTENTS, continued
|
|||
|
Attachment D – Form of Purchase Agreement Supplement
|
SA-11
|
|
Attachment E – Letter Agreements To Be Included In Purchase Agreement Supplement
|
SA-6
|
||
LETTER AGREEMENTS
|
NUMBER
|
|
|
6-1162-TRW-0665
|
[****] WITHDRAWN
|
SA-3
|
|
6-1162-TRW-0666
|
[****] WITHDRAWN
|
SA-3
|
|
6-1162-TRW-0667R3
|
[****]
|
SA-11
|
|
6-1162-TRW-0668R1
|
Special Matters Relating to COTS Software and End User License Agreements
|
SA-3
|
|
6-1162-TRW-0670R1
|
Miscellaneous Commitments for Model 787 Aircraft
|
SA-3
|
|
6-1162-TRW-0671
|
[****]
WITHDRAWN
|
SA-3
|
|
6-1162-TRW-0672R1
|
Promotional Support Agreement
|
SA-3
|
|
6-1162-TRW-0673R1
|
Confidentiality
|
SA-3
|
|
6-1162-TRW-0674R4
|
Business Considerations
|
SA-11
|
|
AAL-PA-3219-LA-08836R2
|
[****]
|
SA-11
|
|
AAL-PA-3219-LA-08837R1
|
[****]
|
SA-6
|
|
AAL-PA-3219-LA-08838
|
[****]
|
SA-3
|
|
AAL-LA-1106678
|
Assignment Matters
|
SA-3
|
|
|
|
|
|
AAL-PA-3219-LA-1302236R1
|
[****]
|
SA-6
|
|
AAL-PA-3219-LA-1604503R1
|
787 [****] Matters
|
SA-8
|
|
AAL-PA-03219-LA-1701988
AAL-PA-03219_LA-1804779
AAL-PA-03219-LA-1802262R1
AAL-PA-03219-LA-1802492
|
[****]
[****]
[****]
Open Configuration Matters
|
SA-10
SA-11
SA-12
SA-11
|
|
ATTACHMENTS
|
|
|
|
Attachment 1
|
Schedule for [****] of 787-9 MADP Rights
|
SA-11
|
TABLE OF CONTENTS, continued
|
|||
Attachment 2
|
Schedule for [****] of 787-9 QADP Rights
|
SA-11
|
|
Attachment 3
|
787-9 Purchase Rights Aircraft [****] Schedule
|
SA-11
|
Engine Model/Thrust:
|
GENX-1B70
|
[****] pounds
|
Airframe Price Base Year/Escalation Formula:
|
[****]
|
|
[****]
|
Airframe Price:
|
|
$[****]
|
Engine Price Base Year/Escalation Formula:
|
[****]
|
|
[****]
|
Optional Features:
|
|
$[****]
|
|
|
|
|
Sub-Total of Airframe and Features:
|
$[****]
|
Airframe Escalation Data:
|
|
|
|
|
Engine Price (Per Aircraft):
|
|
$[****]
|
Base Year Index (ECI):
|
|
[****]
|
|
Aircraft Basic Price (Excluding BFE/SPE):
|
$[****]
|
Base Year Index (CPI):
|
|
[****]
|
|
|
Buyer Furnished Equipment (BFE) Estimate:
|
$[****]
|
Engine Escalation Data:
|
|
|
|
|
//Seller Purchased Equipment (SPE)/In-Flight Ent
|
$[****]
|
Base Year Index (ECI):
|
|
[****]
|
|
|
LIFT Seats Provided by Boeing (Estimate):
|
$[****]
|
Base Year Index (CPI):
|
|
[****]
|
|
|
Deposit per Aircraft:
|
|
$[****]
|
|
|
|
|
Delivery Date
|
Number of Aircraft
|
Escalation
Factor (Airframe)
|
Escalation Factor (Engine)
|
|
Escalation Estimate Adv Payment Base Price Per A/P
|
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
|
|||
At Signing
[****]
|
[****]
|
[****]
|
Total [****]
|
||||||
[****]-2020
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2020
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2020
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2020
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2020
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2020
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2020
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2020
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2020
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2020
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
Delivery Date
|
Number of Aircraft
|
Escalation Factor (Airframe)
|
Escalation Factor (Engine)
|
|
Escalation Estimate Adv Payment Base
Price Per A/P
|
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
|
|||
At Signing
[****]
|
[****]
|
[****]
|
Total [****]
|
||||||
[****]-2020
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2020
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2021
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2021
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2021
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2021
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2021
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2021
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2021
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2021
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2021
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]-2021
|
1
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
Exhibit A To
|
||
Boeing Purchase Agreement
|
||
Configuration Item Number
|
Title
|
[****] Dollars Price Per A/C
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
Exhibit A To
|
||
Boeing Purchase Agreement
|
||
Configuration Item Number
|
Title
|
[****] Dollars Price Per A/C
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
Exhibit A To
|
||
Boeing Purchase Agreement
|
||
Configuration Item Number
|
Title
|
[****] Dollars Price Per A/C
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
Exhibit A To
|
||
Boeing Purchase Agreement
|
||
Configuration Item Number
|
Title
|
[****] Dollars Price Per A/C
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
|
|
|
|
[****]
|
[****]
|
Subject:
|
[****]
|
Reference:
|
Purchase Agreement No. 03219 (Purchase Agreement) between The Boeing Company (Boeing) and American Airlines, Inc. (Customer) relating to Model 787 aircraft (Aircraft)
|
[****]
|
[****]
|
THE BOEING COMPANY
|
||
|
||
By:
|
/s/ The Boeing Company
|
|
|
||
Its:
|
Attorney-In-Fact
|
|
|
ACCEPTED AND AGREED TO this
|
|
|
||
|
|
|
||
Date: May 29, 2019
|
|
|
||
|
|
|
||
AMERICAN AIRLINES, INC.
|
|
|
||
|
|
|
||
By:
|
/s/ American Airlines, Inc.
|
|
|
|
|
|
|
||
Its:
|
MD Fleet
|
|
|
|
|
|
|
Engine Model/Thrust:
|
GENX-1B70
|
[****] pounds
|
Airframe Price Base Year/Escalation Formula:
|
[****]
|
|
[****]
|
Airframe Price:
|
|
$[****]
|
Engine Price Base Year/Escalation Formula:
|
[****]
|
|
[****]
|
Optional Features:
|
|
$[****]
|
|
|
|
|
Sub-Total of Airframe and Features:
|
$[****]
|
Airframe Escalation Data:
|
|
|
|
|
Engine Price (Per Aircraft):
|
|
$[****]
|
Base Year Index (ECI):
|
|
[****]
|
|
Aircraft Basic Price (Excluding BFE/SPE):
|
$[****]
|
Base Year Index (CPI):
|
|
[****]
|
|
|
Buyer Furnished Equipment (BFE) Estimate:
|
$[****]
|
Engine Escalation Data:
|
|
|
|
|
//Seller Purchased Equipment (SPE)/In-Flight Ent
|
$[****]
|
Base Year Index (ECI):
|
|
[****]
|
|
|
LIFT Seats Provided by Boeing (Estimate):
|
$[****]
|
Base Year Index (CPI):
|
|
[****]
|
|
|
Non-Refundable Deposit/Aircraft at Def Agreemt:
|
$[****]
|
|
|
|
|
Delivery Date
|
Number of Aircraft
|
Escalation Factor
(Airframe)
|
Escalation Factor
(Engine)
|
|
Escalation Estimate Adv Payment Base
Price Per A/P
|
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
|
|||
At Signing
[****]
|
[****]
|
[****]
|
Total [****]
|
||||||
[****]
|
[****]
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
Delivery Date
|
Number of Aircraft
|
Escalation Factor
(Airframe)
|
Escalation Factor
(Engine)
|
|
Escalation Estimate Adv Payment Base
Price Per A/P
|
Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
|
|||
[****]
|
[****]
|
[****]
|
Total [****]
|
||||||
[****]
|
[****]
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
$[****]
|
Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed
|
1.
|
DEFINITIONS
|
1.1
|
Clause 0 of the Agreement is amended to modify or add, as applicable, the following defined terms quoted in alphabetical order:
|
1.2
|
Clause 0 of the Agreement is amended by deleting the definitions of Irrevocable SCNs, New Engine Option or NEO, Sharklets, Engine P Base Price and Engine P Reference Price in their entirety.
|
2.
|
SPECIFICATION
|
2.1
|
Clause 2.1 of the Agreement is deleted in its entirety and replaced with the following quoted text:
|
2.2
|
The header of Clause 2.1.1 of the Agreement is amended to read “A320 Family NEO Aircraft”.
|
2.3
|
Clauses 2.1.1.1 and 2.1.1.2 of the Agreement are deleted in their entirety and replaced with the following quoted text:
|
2.4
|
The following Clause 2.1.2 is added to the Agreement: QUOTE
|
2.1.2.3 In addition to the A321 XLR Standard Specification, [****]: (i)
|
[****];
|
2.5
|
Clause 2.4.4 of the Agreement is deleted in its entirety and replaced with the following quoted text:
|
2.6
|
Clause 2.4.6 of the Agreement is deleted in its entirety and replaced with the following quoted text:
|
2.7
|
The following Clauses 2.4.8 and 2.4.9 are added to the Agreement: QUOTE
|
2.4.8
|
Each A321 XLR Airframe will be equipped with a set of two CFM International LEAP-1A32, LEAP-1A33 or LEAP-1A33B2 engines or Pratt & Whitney PW1133G-JM engines (such set, upon selection, an “A321 XLR Propulsion System”).
|
2.4.9
|
The Buyer will notify the Seller of [****].
|
2.8
|
Clause 2.5.1 of the Agreement is deleted in its entirety and replaced with the following quoted text:
|
2.9
|
Clause 2.5.2 of the Agreement is deleted in its entirety and replaced with the following quoted text:
|
3.
|
PRICE
|
3.1
|
Clauses 3.1.1.4 through 3.1.1.9 of the Agreement are deleted in their entirety and replaced with the following quoted text:
|
3.1.1.4
|
Base Price of the A319 NEO Group 1 Airframe
|
(i)
|
the base price of the A319 NEO Airframe as defined in the A319 Standard Specification (excluding Buyer Furnished Equipment), including nacelles and thrust reversers, which is:
|
(ii)
|
the sum of the base prices of any and all SCNs set forth in Exhibit A-5, which is:
|
(iii)
|
the base price of the Master Charge Engine, which is:
|
3.1.1.5
|
Base Price of the A319 NEO Group 2 Airframe
|
(i)
|
the base price of the A319 NEO Airframe as defined in the A319 Standard Specification (excluding Buyer Furnished Equipment), including nacelles and thrust reversers, which is:
|
(ii)
|
the sum of the base prices of any and all SCNs set forth in Exhibit A-5, which is:
|
3.1.1.6
|
Base Price of the A320 NEO Group 1 Airframe
|
(i)
|
the base price of the A320 NEO Airframe as defined in the A320 Standard Specification (excluding Buyer Furnished Equipment), including nacelles and thrust reversers, which is:
|
(ii)
|
the sum of the base prices of any and all SCNs set forth in Exhibit A-6, which is:
|
(iii)
|
the base price of the Master Charge Engine, which is:
|
3.1.1.7
|
Base Price of the A320 NEO Group 2 Airframe
|
(i)
|
the base price of the A320 NEO Airframe as defined in the A320 Standard Specification (excluding Buyer Furnished Equipment), including nacelles and thrust reversers, which is:
|
(ii)
|
the sum of the base prices of any and all SCNs set forth in Exhibit A-6, which is:
|
3.1.1.8
|
Base Price of the A321 NEO Group 1 Airframe
|
(i)
|
the base price of the A321 NEO Airframe as defined in the A321 Standard Specification (excluding Buyer Furnished Equipment), including nacelles and thrust reversers, which is:
|
(ii)
|
the sum of the base prices of any and all SCNs set forth in Exhibit A-7, which is:
|
(iii)
|
the base price of the Master Charge Engine, which is:
|
(iv)
|
in the event the Buyer selects the LEAP-1A33B2 as the A321 NEO Propulsion System pursuant to Clause 2.4 hereof, the base price of the airframe SCN related thereto, which is:
|
3.1.1.9
|
Base Price of the A321 NEO Group 2 Airframe
|
(i)
|
the base price of the A321 NEO Airframe as defined in the A321 Standard Specification (excluding Buyer Furnished Equipment), including nacelles and thrust reversers, which is:
|
(ii)
|
the sum of the base prices of any and all SCNs set forth in Exhibit A-7, which is:
|
3.2
|
The following Clauses 3.1.1.10 and 3.1.1.11 are added to the Agreement: QUOTE
|
3.1.1.10
|
Base Price of the A321 XLR Group 1 Airframe
|
(i)
|
the base price of the A321 XLR Airframe as defined in the A321- 200NX standard specification [****], which is:
|
(ii)
|
the base price of the [****] SCN, if selected by the Buyer, which is:
|
(iii)
|
the sum of the base prices of any and all SCNs set forth in Exhibit A-8, which is:
|
(iv)
|
the base price of the Master Charge Engine, which is:
|
(v)
|
in the event the Buyer selects the LEAP-1A33B2 as the A321 XLR Propulsion System pursuant to Clause 2.4 hereof, the base price of the airframe SCN related thereto, which is:
|
3.1.1.11
|
Base Price of the A321 XLR Group 2 Airframe
|
(i)
|
the base price of the A321 XLR Airframe as defined in the A321- 200NX standard specification [****], which is:
|
(ii)
|
the base price of the [****] SCN, if selected by the Buyer, which is:
|
(iii)
|
the sum of the base prices of any and all SCNs set forth in Exhibit A-8, which is:
|
3.3
|
Clause 3.1.2.16 of the Agreement is deleted in its entirety.
|
3.4
|
Clause 3.2 (ii) of the Agreement is deleted in its entirety and replaced with the following quoted text:
|
4.
|
DELIVERY
|
4.1
|
The following thirty (30) firm A321 NEO Aircraft are each converted into a firm A321 XLR Aircraft, subject to the terms and conditions of the Agreement, as amended:
|
Original Aircraft Type
|
Revised Aircraft Type
|
[****]
|
Original Scheduled Delivery Quarter
|
Revised Scheduled Delivery Quarter
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 NEO Aircraft
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
4.2
|
Notwithstanding anything to the contrary in the Agreement, the Buyer and the Seller hereby agree that the twenty (20) [****] Option Aircraft which, [****], are hereby converted into twenty (20) firm A321 XLR Aircraft for sale and delivery by the Seller and purchase by the Buyer under the Agreement:
|
[****]
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 XLR Aircraft
|
[****]
|
[****]
|
[****]
|
A321 XLR Aircraft
|
[****]
|
[****]
|
4.3
|
Schedule I to the Agreement is deleted in its entirety and replaced with the “Schedule I to the Agreement” attached as Exhibit 1 hereto.
|
4.4
|
The following Clause 9.1.3 is added to the Agreement: QUOTE
|
5.
|
INEXCUSABLE DELAY
|
5.1
|
Clause 11.1 of the Agreement is deleted in its entirety and replaced with the following text quoted:
|
(i)
|
If the Seller notifies the Buyer in writing pursuant to Clauses 11 and 22.2 of [****]; or
|
(ii)
|
If the Seller either [****].
|
(iii)
|
If the Seller provides the Buyer [****]: (a) [****];
|
(i)
|
the Seller will notify the Buyer in writing of such Inexcusable Delay as soon as practicable after becoming aware of the same; and
|
(ii)
|
the Seller will, as soon as is practicable after the removal of the cause of such delay, resume performance of its obligations under this Agreement and in particular will notify the Buyer of the revised Scheduled Delivery Month or Scheduled Delivery Quarter, [****].
|
6.
|
TABLE OF CONTENTS
|
6.1
|
Clause 10.1 of Amendment No. 9 to the Agreement is deleted in its entirety and replaced with the following quoted text:
|
6.2
|
The portion of the Table of Contents of the Agreement listing the Exhibits to the Agreement is deleted in its entirety and replaced with the following quoted text:
|
Exhibit C-3
|
CFM INTERNATIONAL PROPULSION SYSTEM PRICE REVISION FORMULA
|
Exhibit C-4
|
INTERNATIONAL AERO ENGINES PROPULSION SYSTEM PRICE REVISION FORMULA
|
Exhibit C-5
|
PRATT & WHITNEY PROPULSION SYSTEM PRICE REVISION FORMULA
|
Exhibit D-1
|
FORM OF CERTIFICATE OF ACCEPTANCE (MOBILE DELIVERIES)
|
Exhibit D-2
|
FORM OF CERTIFICATE OF ACCEPTANCE (BLAGNAC/HAMBURG DELIVERIES)
|
7.
|
EXHIBITS
|
7.1
|
Exhibits A-1, A-5, A-6 and A-7 to the Agreement are deleted in their entirety and replaced with Exhibits A-1, A-5, A-6 and A-7 attached in Exhibit 2 hereto.
|
7.2
|
Exhibit A-8 and Exhibit A-9 are hereby added to the Agreement as “Exhibit A-8” and “Exhibit A-9”, the content of which is set out in Exhibit 2 hereto.
|
7.3
|
Clause 1.1 of Exhibit C-5 is hereby deleted in its entirety and replaced with the following quoted text:
|
8.1
|
Clause 1.6 of Amendment No. 10 to the Agreement is deleted in its entirety and replaced with the following quoted text:
|
8.2.1
|
Notwithstanding anything to the contrary in the Agreement, with respect [****]. The Seller [****].
|
9.
|
OPTION AIRCRAFT
|
9.1
|
Option aircraft
|
9.1.1
|
The definitions of “[****]” and “[****]” are deleted in their entirety and replaced with the following quoted text:
|
9.1.2
|
Schedule IIA and Schedule III to Letter Agreement No.4 are deleted in their entirety and replaced with Schedule IIA and Schedule III to Letter Agreement No.4 attached as Exhibit 3 hereto.
|
9.2.1
|
The following language in Clause 2.5.3 of Letter Agreement No. 4 is hereby numbered as Clause 2.5.3.1:
|
9.2.2
|
The following Clause 2.5.3.2 is added to Letter Agreement No.4: QUOTE
|
2.5.3.2 The Buyer may purchase [****]: (i)
|
[****];
|
9.2.3
|
Paragraph 2.5.4.2 of Letter Agreement No.4 is deleted in its entirety and replaced with the following quoted text:
|
(i)
|
[****]: [****]
|
(ii)
|
[****]: [****]
|
10.
|
SUPPORT MATTERS
|
10.1
|
With respect to each A321 XLR Aircraft, [****].
|
10.2
|
Clause 14.6 of the Agreement is deleted in its entirety and replaced with the following quoted text:
|
14.6
|
Revision Service
|
(i)
|
With respect to each [****];
|
(ii)
|
With respect to each of the [****];
|
11.
|
PERFORMANCE GUARANTEES
|
11.1
|
Letter Agreement No. 11C-1 dated as of November 25, 2014 is deleted in its entirety.
|
11.2
|
Letter Agreement No. 11K-1 dated as of November 25, 2014 is deleted in its entirety.
|
11.3
|
Clause 2.9 of Amendment No. 7 to the Agreement is deleted in its entirety and replaced with the following quoted text:
|
12.
|
[****] SUPPORT
|
12.1
|
Clause 21.5 is hereby deleted in its entirety and replaced by the following quoted text:
|
21.5
|
Aircraft Financing [****]
|
(i)
|
The Seller [****];
|
(ii)
|
The Seller [****]; and
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(iii)
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The Seller will [****].
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12.2
|
Exhibit K to the Agreement is hereby added to the Agreement as “Exhibit K”, the content of which is set out in Exhibit 4 hereto.
|
13.
|
FLYAWAY
|
13.1
|
Clause 9.3.2 of the Agreement is hereby deleted in its entirety and replaced with the following quoted text:
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14.
|
ADDITION TO TAXES PROVISION
|
14.1
|
The following Clause 5.5.6 is added to the Agreement: QUOTE
|
15.1
|
The following Clause 20.5 is added to the Agreement: QUOTE
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16.
|
LETTER AGREEMENT No. 6 [****]
|
16.1
|
Letter Agreement No. 6 is hereby amended to add new Paragraphs 1.3 and 1.4 as follows:
|
1.3
|
Notwithstanding anything to the contrary in this Letter Agreement No. 6 to the Agreement, the parties agree that [****].
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17.
|
AIRCRAFT-[****]
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17.1
|
The following Clauses 14.19 and 14.20 are added to the Agreement: QUOTE
|
14.19
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For the avoidance of doubt, Aircraft-[****] is designated as confidential under Clause 22.11, and [****].
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14.20
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Notwithstanding anything to the contrary in this Agreement, the Buyer shall [****].
|
17.2
|
Clause 22.1 of the Agreement is deleted in its entirety and replaced with the following quoted text:
|
18.
|
AGREEMENT
|
19.
|
ASSIGNMENT
|
20.
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CONFIDENTIALITY
|
21.
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COUNTERPARTS
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Aircraft Rank
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Type
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Scheduled Delivery Month/Year or
Scheduled Delivery Quarter/Year
|
CAC ID No.
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
|
Aircraft Rank
|
Type
|
Scheduled Delivery Month/Year or
Scheduled Delivery Quarter/Year
|
CAC ID No.
|
[****]
|
[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
|
Aircraft Rank
|
Type
|
Scheduled Delivery Month/Year or
Scheduled Delivery Quarter/Year
|
CAC ID No.
|
[****]
|
[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
|
[****]
|
Aircraft Rank
|
Type
|
Scheduled Delivery Month/Year or
Scheduled Delivery Quarter/Year
|
CAC ID No.
|
[****]
|
[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
|
Aircraft Rank
|
Type
|
Scheduled Delivery Month/Year or
Scheduled Delivery Quarter/Year
|
CAC ID No.
|
[****]
|
[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
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[****]
|
Aircraft Rank
|
Type
|
Scheduled Delivery Month/Year or
Scheduled Delivery Quarter/Year
|
CAC ID No.
|
[****]
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[****]
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[****]
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[****]
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[****]
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[****]
|
[****]
|
Aircraft Rank
|
Type
|
Scheduled Delivery Month/Year or
Scheduled Delivery Quarter/Year
|
CAC ID No.
|
[****]
|
[****]
|
[****]
|
[****]
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[****]
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[****]
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[****]
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[****]
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[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
Aircraft Rank
|
Type
|
Scheduled Delivery Month/Year or
Scheduled Delivery Quarter/Year
|
CAC ID No.
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
Batch consisting of [****] Option Aircraft bearing rank
|
Scheduled Delivery Quarter
|
[****] Option Exercise Notice Date
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
Batch consisting of [****]Option Aircraft bearing rank
|
Scheduled Delivery Quarter
|
[****] Option Exercise Notice Date
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
1.1
|
Definitions
|
1.2
|
Interpretation
|
(i)
|
in the case of the [****];
|
(ii)
|
in the case of the [****]; and
|
3.
|
[****]: [****]
|
3.
|
[****]: [•]
|
3.
|
[****]:
|
1
|
A319 AIRCRAFT
|
1.1
|
In respect of each A319 Aircraft that is sold by the Seller and purchased by the Buyer, the Seller will provide to the Buyer the following [****]:
|
(iii)
|
[****], and
|
2
|
A320 AIRCRAFT
|
2.1
|
In respect of each A320 Aircraft that is sold by the Seller and purchased by the Buyer, the Seller will provide to the Buyer the following [****]:
|
3
|
A321 AIRCRAFT
|
3.1
|
In respect of each A321 Aircraft that is sold by the Seller and purchased by the Buyer, the Seller will provide to the Buyer the following [****]:
|
4
|
A319 NEO AIRCRAFT
|
4.1
|
In respect of each A319 NEO Aircraft, the Seller will provide to the Buyer the following [****]: (i) [****],
|
5
|
A320 NEO AIRCRAFT
|
5.1
|
In respect of each A320 NEO Aircraft, the Seller will provide to the Buyer the following [****]: (i) [****],
|
6
|
A321 NEO AIRCRAFT
|
6.1
|
In respect of each A321 NEO Aircraft, the Seller will provide to the Buyer the following [****]: (i) [****],
|
7.1.3
|
Paragraph 1.5.4 [****] to the Agreement is deleted and replaced with the following quoted text: [****]
|
7.2.1
|
Paragraph 1.4 [****] to the Agreement is deleted and replaced with the following quoted text: [****]
|
7.2.3
|
Paragraph 1.5.4 [****] to the Agreement is deleted and replaced with the following quoted text: [****]
|
7.3.1
|
For each Aircraft that is sold by the Seller and delivered to the Buyer on or before [****]: (i) [****];
|
7.3.2
|
Except for the fifty (50) A321 XLR Aircraft [****] (i) [****]:
|
7.3.3
|
For all purposes of [****].
|
7.3.4
|
For the avoidance of doubt, all references in the Agreement to [****].
|
7.3.5.1
|
Each reference to [****].
|
7.3.5.2
|
With respect to each A320 Family NEO Aircraft [****]: (a) [****]
|
8
|
A321 XLR AIRCRAFT
|
8.1
|
In respect of each A321 XLR [****]: (i) [****],
|
8.2
|
In addition to the A321 XLR [****]: (i) [****],
|
8.3
|
The A321 XLR Aircraft [****].
|
8.4
|
The A321 XLR Aircraft [****].
|
9
|
ASSIGNMENT
|
10
|
CONFIDENTIALITY
|
11
|
COUNTERPARTS
|
1
|
DEFINITIONS
|
2
|
COMMITMENT FEE
|
3
|
PREDELIVERY PAYMENTS
|
3.1
|
Clauses 5.3.1, 5.3.2, 5.3.3 and 5.3.4 of the Agreement are deleted in their entirety and replaced with the following quoted text:
|
5.3.1
|
Except as expressly set forth in the Agreement, Predelivery Payments are [****].
|
5.3.2
|
INTENTIONALLY LEFT BLANK
|
5.3.3
|
The Buyer has paid or will pay Predelivery Payments to the Seller [****] in accordance with the following schedule, as applicable (the “Predelivery Payments”):
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
[****]
|
3.2
|
Clause 5.3.5 is deleted in its entirety and replaced with the following quoted text: QUOTE
|
5.3.5
|
Leased Aircraft Matters The Buyer will pay [****]. [****].
|
3.3
|
The following Clause 5.3.6 is added to the Agreement: QUOTE
|
4
|
ASSIGNMENT
|
5
|
CONFIDENTIALITY
|
6
|
COUNTERPARTS
|
1
|
DEFINITIONS
|
2
|
TYPE FLEXIBILITY
|
2.1
|
Conversion Rights
|
2.1.1
|
The Seller grants the Buyer a one-time right to (A) convert A320 Family Aircraft to [****] type (with respect to each such Aircraft, a “Conversion Right”) and (B) convert A320 Family NEO Aircraft to [****] (with respect to each such Aircraft, a “NEO Conversion Right”), subject to the following limitations:
|
(vi)
|
The NEO Conversion Right will not apply to [****].
|
(vii)
|
In connection with the Buyer’s exercise of the Conversion Right or the NEO Conversion Right with respect to any Aircraft, [****].
|
(viii)
|
The NEO Conversion Right will not apply to any [****].
|
(ix)
|
For the avoidance of doubt, the NEO Conversion Right does not [****].
|
2.1.2
|
Conversion Right Exercise
|
(i)
|
The Buyer must give written notice to the Seller of its desire to exercise any Conversion Right or NEO Conversion Right no later than: [****]. Each such notice received from the Buyer will specify the type of Aircraft selected by the Buyer.
|
3
|
RESCHEDULING RIGHTS
|
3.3
|
INTENTIONALLY LEFT BLANK
|
3.4
|
INTENTIONALLY LEFT BLANK
|
3.4.1
|
INTENTIONALLY LEFT BLANK
|
3.4.2
|
INTENTIONALLY LEFT BLANK
|
3.4.3
|
INTENTIONALLY LEFT BLANK
|
3.4.3.1
|
INTENTIONALLY LEFT BLANK
|
3.4.3.2
|
INTENTIONALLY LEFT BLANK
|
3.4.3.3
|
INTENTIONALLY LEFT BLANK
|
5.1
|
Nothing contained in this Letter Agreement will oblige the Seller to [****].
|
5.2
|
Notwithstanding any provision of the Agreement or this Letter Agreement, [****].
|
7
|
CONFIDENTIALITY
|
8
|
COUNTERPARTS
|
1
|
AIRCRAFT CONFIGURATION
|
1.1
|
Basic Configuration (not applicable to Paragraph 3.2) i) [****]
|
ii)
|
the following design weights:
|
1.2
|
Optional Configuration i) [****]
|
ii)
|
the following design weights:
|
2
|
GUARANTEED PERFORMANCE
|
2.1
|
Take-Off
|
2.1.1
|
Take-Off Field Length
|
2.1.2
|
Take-Off Weight
|
2.2
|
Landing Field Length
|
3
|
MISSION GUARANTEES
|
3.1
|
Mission Payload [****]
|
3.1.1
|
The departure airport conditions are such as to allow the required Take-Off Weight to be used without restriction. [****].
|
3.1.2
|
An allowance of [****].
|
3.1.3
|
An allowance of [****].
|
3.1.5
|
An allowance of [****].
|
3.1.6
|
An allowance of [****].
|
3.1.8
|
At the end of approach and landing [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.2
|
Mission Payload [****]
|
3.2.1
|
The departure airport conditions [****] are as follows: [****]
|
3.2.2
|
An allowance of [****].
|
3.2.3
|
An allowance of [****].
|
3.2.5
|
An allowance of [****].
|
3.2.6
|
An allowance of [****].
|
3.2.8
|
At the end of approach and landing [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.3
|
Mission Block Fuel
|
3.3.1
|
The departure airport conditions are such as to allow the required Take-Off Weight to be used without restriction. [****].
|
3.3.2
|
An allowance of [****].
|
3.3.3
|
An allowance of [****].
|
3.3.5
|
An allowance of [****].
|
3.3.6
|
An allowance of [****].
|
3.3.8
|
At the end of approach and landing [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
4
|
MANUFACTURER'S WEIGHT EMPTY GUARANTEE
|
5
|
NOISE GUARANTEE
|
5.2
|
[****] Noise [****].
|
5.3
|
Interior Noise in Flight
|
5.3.1
|
Cockpit
|
5.3.2
|
Cabin
|
5.4
|
Ramp Noise
|
6
|
GUARANTEE CONDITIONS
|
6.1
|
The certification requirements for the A319 NEO Aircraft, except where otherwise noted, will be as stated in Section 02 of the Specification.
|
6.2
|
For the determination of FAR take-off and landing performance [****].
|
6.4
|
Where applicable the Guarantees assume the use of an approved fuel having a density of [****].
|
6.5
|
Sound levels are to be specified in decibels (dB), at a reference pressure of [****].
|
7.1
|
Compliance with the Guarantees will be demonstrated [****].
|
7.2
|
Compliance with the take-off and landing elements of the Guarantees will be demonstrated [****].
|
7.3
|
Compliance [****] will be demonstrated by [****].
|
7.4
|
Compliance with the Manufacturer's Weight Empty guarantee will be demonstrated [****].
|
7.5
|
The [****] will be used to demonstrate compliance with the guarantees of certification noise levels.
|
7.6
|
Data [****] will be adjusted as required [****] accordance with established aeronautical practices to show compliance with the Guarantees.
|
7.8
|
The Seller undertakes to furnish the Buyer with [****] demonstrating compliance with the Guarantees [****].
|
8
|
ADJUSTMENT OF GUARANTEES
|
8.1
|
In the event of any change to any law, governmental regulation or requirement or interpretation thereof (“Rule Change”) by any governmental agency made subsequent to the date of the Agreement and such Rule Change affects the A319 NEO Aircraft configuration or performance or both required to obtain certification the Guarantees will be appropriately modified to reflect the effect of any such change.
|
8.2
|
The Guarantees apply to the A319 NEO Aircraft as described in Paragraph 1 above and may be adjusted in the event of:
|
a)
|
Any further configuration change which is the subject of an SCN
|
b)
|
Changes required to obtain certification which cause changes to the performance or weight of the A319 NEO Aircraft.
|
9
|
EXCLUSIVE GUARANTEES
|
10
|
UNDERTAKING REMEDIES
|
10.3
|
The Seller's maximum liability in respect of deficiency in performance of any A319 NEO Aircraft will be [****].
|
11
|
DUPLICATE REMEDIES
|
12
|
ASSIGNMENT
|
13
|
CONFIDENTIALITY
|
14
|
COUNTERPARTS
|
By:
|
/s/ Airbus S.A.S. Name: /s/ Airbus S.A.S.
|
By:
|
/s/ American Airlines, Inc. Name: American Airlines, Inc. Title: Vice President and Treasurer
|
1
|
AIRCRAFT CONFIGURATION
|
1.1
|
Basic Configuration (not applicable to Paragraph 3.2) i) [****]
|
1.2
|
Optional Configuration i) [****]
|
2
|
GUARANTEED PERFORMANCE
|
2.1
|
Take-Off
|
2.1.1
|
Take-Off Field Length
|
2.1.2
|
Take-Off Weight
|
2.2
|
Landing Field Length
|
3
|
MISSION GUARANTEES
|
3.1
|
Mission Payload [****]
|
3.1.1
|
The departure airport conditions are such as to allow the required Take-Off Weight to be used without restriction. [****].
|
3.1.2
|
An allowance of [****].
|
3.1.3
|
An allowance of [****].
|
3.1.5
|
An allowance of [****].
|
3.1.6
|
An allowance of [****].
|
3.1.8
|
At the end of approach and landing [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.2
|
Mission Payload [****]
|
3.2.1
|
The departure airport conditions [****] are as follows: [****]
|
3.2.2
|
An allowance of [****].
|
3.2.3
|
An allowance of [****].
|
3.2.5
|
An allowance of [****].
|
3.2.6
|
An allowance of [****].
|
3.2.8
|
At the end of approach and landing [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.3
|
Mission Block Fuel
|
3.3.1
|
The departure airport conditions are such as to allow the required Take-Off Weight to be used without restriction. [****].
|
3.3.2
|
An allowance of [****].
|
3.3.3
|
An allowance of [****].
|
3.3.5
|
An allowance of [****].
|
3.3.6
|
An allowance of [****].
|
3.3.8
|
At the end of approach and landing [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
4
|
MANUFACTURER'S WEIGHT EMPTY GUARANTEE
|
5
|
NOISE GUARANTEE
|
5.2
|
[****] Noise [****].
|
5.3
|
Interior Noise in Flight
|
5.3.1
|
Cockpit
|
5.3.2
|
Cabin
|
5.4
|
Ramp Noise
|
6
|
GUARANTEE CONDITIONS
|
6.1
|
The certification requirements for the A319 NEO Aircraft, except where otherwise noted, will be as stated in Section 02 of the Specification.
|
6.2
|
For the determination of FAR take-off and landing performance [****].
|
6.4
|
Where applicable the Guarantees assume the use of an approved fuel having a density of [****].
|
6.5
|
Sound levels are to be specified in decibels (dB), at a reference pressure of [****].
|
7.1
|
Compliance with the Guarantees will be demonstrated [****].
|
7.2
|
Compliance with the take-off and landing elements of the Guarantees will be demonstrated [****].
|
7.3
|
Compliance [****] will be demonstrated by [****].
|
7.4
|
Compliance with the Manufacturer's Weight Empty guarantee will be demonstrated [****].
|
7.5
|
The [****] will be used to demonstrate compliance with the guarantees of certification noise levels.
|
7.6
|
Data [****] will be adjusted as required [****] accordance with established aeronautical practices to show compliance with the Guarantees.
|
8
|
ADJUSTMENT OF GUARANTEES
|
8.1
|
In the event of any change to any law, governmental regulation or requirement or interpretation thereof (“Rule Change”) by any governmental agency made subsequent to the date of the Agreement and such Rule Change affects the A319 NEO Aircraft configuration or performance or both required to obtain certification the Guarantees will be appropriately modified to reflect the effect of any such change.
|
8.2
|
The Guarantees apply to the A319 NEO Aircraft as described in Paragraph 1 above and may be adjusted in the event of:
|
a)
|
Any further configuration change which is the subject of an SCN,
|
b)
|
Changes required to obtain certification which cause changes to the performance or weight of the A319 NEO Aircraft.
|
9
|
EXCLUSIVE GUARANTEES
|
10
|
UNDERTAKING REMEDIES
|
10.3
|
The Seller's maximum liability in respect of deficiency in performance of any A319 NEO Aircraft will be [****].
|
11
|
DUPLICATE REMEDIES
|
12
|
ASSIGNMENT
|
13
|
CONFIDENTIALITY
|
14
|
COUNTERPARTS
|
By:
|
/s/ Airbus S.A.S. Name: /s/ Airbus S.A.S.
|
CT1001520_Second Amended & Restated LA11D_AAL_A320Family
|
LA11D - 10 of 10 [****]=[CONFIDENTIAL PORTION HAS BEEN OMITTED BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE
|
1
|
AIRCRAFT CONFIGURATION
|
ii)
|
the following design weights: [****]
|
iii)
|
[****]
|
2
|
GUARANTEED PERFORMANCE
|
2.1
|
Take-Off
|
2.1.1
|
Take-Off Field Length
|
2.1.2
|
Take-Off Weight
|
2.2
|
Landing Field Length
|
3
|
MISSION GUARANTEES
|
3.1
|
Mission Payload [****]
|
3.1.1
|
The departure airport conditions are such as to allow the required Take-Off Weight to be used without restriction. [****].
|
3.1.2
|
An allowance of [****].
|
3.1.3
|
An allowance of [****].
|
3.1.5
|
An allowance of [****].
|
3.1.6
|
An allowance of [****].
|
3.1.8
|
At the end of approach and landing [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.2
|
Mission Payload [****]
|
3.2.1
|
The departure airport conditions are such as to allow the required Take-Off Weight to be used without restriction. [****].
|
3.2.2
|
An allowance of [****].
|
3.2.3
|
An allowance of [****].
|
3.2.5
|
An allowance of [****].
|
3.2.6
|
An allowance of [****].
|
3.2.8
|
At the end of approach and landing [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.3
|
Mission Payload [****]
|
3.3.1
|
The departure airport conditions [****] are as follows: [****]
|
3.3.2
|
An allowance of [****].
|
3.3.3
|
An allowance of [****].
|
3.3.5
|
An allowance of [****].
|
3.3.6
|
An allowance of [****].
|
3.3.8
|
At the end of approach and landing [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.4
|
Mission Block Fuel
|
3.4.1
|
The departure airport conditions are such as to allow the required Take-Off Weight to be used without restriction. [****].
|
3.4.2
|
An allowance of [****].
|
3.4.3
|
An allowance of [****].
|
3.4.5
|
An allowance of [****].
|
3.4.6
|
An allowance of [****].
|
3.4.7
|
Stage distance is defined as the distance [****]. Block fuel is defined as the fuel [****].
|
3.4.8
|
At the end of approach and landing [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
5
|
NOISE GUARANTEE
|
5.3
|
Interior Noise in Flight
|
5.3.1
|
Cockpit
|
5.3.2
|
Cabin
|
6.1
|
The certification requirements for the A321 NEO Aircraft, except where otherwise noted, will be as stated in Section 02 of the Specification.
|
6.2
|
For the determination of FAR take-off and landing performance [****].
|
6.4
|
Where applicable the Guarantees assume the use of an approved fuel having a density of [****].
|
6.5
|
Sound levels are to be specified in decibels (dB), at a reference pressure of [****].
|
7
|
GUARANTEE COMPLIANCE
|
7.1
|
Compliance with the Guarantees will be demonstrated [****].
|
7.2
|
Compliance with the take-off and landing elements of the Guarantees will be demonstrated [****].
|
7.3
|
Compliance [****] will be demonstrated by [****].
|
7.4
|
Compliance with the Manufacturer's Weight Empty guarantee will be demonstrated [****].
|
7.5
|
The [****] will be used to demonstrate compliance with the guarantees of certification noise levels.
|
7.6
|
Data [****] will be adjusted as required [****] accordance with established aeronautical practices to show compliance with the Guarantees.
|
7.7
|
The Seller undertakes to furnish the Buyer with [****] demonstrating compliance with the Guarantees [****].
|
8.1
|
In the event of any change to any law, governmental regulation or requirement or interpretation thereof (“Rule Change”) by any governmental agency made subsequent to the date of the Agreement and such Rule Change affects the A321 NEO Aircraft configuration or performance or both required to obtain certification the Guarantees will be appropriately modified to reflect the effect of any such change.
|
8.2
|
The Guarantees apply to the A321 NEO Aircraft as described in Paragraph 1 above and may be adjusted in the event of:
|
a)
|
Any further configuration change which is the subject of an SCN
|
b)
|
Changes required to obtain certification which cause changes to the performance or weight of the A321 NEO Aircraft.
|
10
|
UNDERTAKING REMEDIES
|
11
|
DUPLICATE REMEDIES
|
12
|
ASSIGNMENT
|
13
|
CONFIDENTIALITY
|
14
|
COUNTERPARTS
|
By:
|
/s/ Airbus S.A.S. Name: /s/ Airbus S.A.S.
|
By:
|
/s/ American Airlines, Inc. Name: American Airlines, Inc. Title: Vice President and Treasurer
|
1
|
AIRCRAFT CONFIGURATION
|
ii)
|
the following design weights: [****]
|
iii)
|
[****]
|
2
|
GUARANTEED PERFORMANCE
|
2.1
|
Take-Off
|
2.1.1
|
Take-Off Field Length
|
2.1.2
|
Take-Off Weight
|
2.2
|
Landing Field Length
|
3
|
MISSION GUARANTEES
|
3.1
|
Mission Payload [****]
|
3.1.1
|
The departure airport conditions are such as to allow the required Take-Off Weight to be used without restriction. [****]
|
3.1.2
|
An allowance of [****].
|
3.1.3
|
An allowance of [****].
|
3.1.5
|
An allowance of [****].
|
3.1.6
|
An allowance of [****].
|
3.1.8
|
At the end of approach and landing [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.2
|
Mission Payload [****]
|
3.2.1
|
The departure airport conditions are such as to allow the required Take-Off Weight to be used without restriction. [****]
|
3.2.2
|
An allowance of [****].
|
3.2.3
|
An allowance of [****].
|
3.2.5
|
An allowance of [****].
|
3.2.6
|
An allowance of [****].
|
3.2.8
|
At the end of approach and landing [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.3
|
Mission Payload [****]
|
3.3.1
|
The departure airport conditions [****] are as follows: [****]
|
3.3.2
|
An allowance of [****].
|
3.3.3
|
An allowance of [****].
|
3.3.5
|
An allowance of [****].
|
3.3.6
|
An allowance of [****].
|
3.3.8
|
At the end of approach and landing [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.4
|
Mission Block Fuel
|
3.4.1
|
The departure airport conditions are such as to allow the required Take-Off Weight to be used without restriction. [****].
|
3.4.2
|
An allowance of [****].
|
3.4.3
|
An allowance of [****].
|
3.4.5
|
An allowance of [****].
|
3.4.6
|
An allowance of [****].
|
3.4.7
|
Stage distance is defined as the distance [****]. Block fuel is defined as the fuel [****].
|
3.4.8
|
At the end of approach and landing [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.5
|
The Mission Payload and Block Fuel guarantees are based on an [****] (see Appendix A).
|
5
|
NOISE GUARANTEE
|
5.2
|
[****] Noise [****].
|
5.3
|
Interior Noise in Flight
|
5.3.1
|
Cockpit
|
5.3.2
|
Cabin
|
5.4
|
Ramp Noise
|
6.1
|
The certification requirements for the A321 NEO Aircraft, except where otherwise noted, will be as stated in Section 02 of the Specification.
|
6.2
|
For the determination of FAR take-off and landing performance [****].
|
6.4
|
Where applicable the Guarantees assume the use of an approved fuel having a density of [****].
|
6.5
|
Sound levels are to be specified in decibels (dB), at a reference pressure of [****].
|
7
|
GUARANTEE COMPLIANCE
|
7.1
|
Compliance with the Guarantees will be demonstrated [****].
|
7.2
|
Compliance with the take-off and landing elements of the Guarantees will be demonstrated [****].
|
7.3
|
Compliance [****] will be demonstrated by [****].
|
7.4
|
Compliance with the Manufacturer's Weight Empty guarantee will be demonstrated [****].
|
7.5
|
The [****] will be used to demonstrate compliance with the guarantees of certification noise levels.
|
7.6
|
Data [****] will be adjusted as required [****] accordance with established aeronautical practices to show compliance with the Guarantees.
|
7.8
|
The Seller undertakes to furnish the Buyer with [****] demonstrating compliance with the Guarantees [****].
|
8.1
|
In the event of any change to any law, governmental regulation or requirement or interpretation thereof (“Rule Change”) by any governmental agency made subsequent to the date of the Agreement and such Rule Change affects the A321 NEO Aircraft configuration or performance or both required to obtain certification the Guarantees will be appropriately modified to reflect the effect of any such change.
|
8.2
|
The Guarantees apply to the A321 NEO Aircraft as described in Paragraph 1 above and may be adjusted in the event of:
|
a)
|
Any further configuration change which is the subject of an SCN
|
b)
|
Changes required to obtain certification which cause changes to the performance or weight of the A321 NEO Aircraft.
|
10
|
UNDERTAKING REMEDIES
|
10.3
|
The Seller's maximum liability in respect of deficiency in performance of any A321 NEO Aircraft will be [****].
|
11
|
DUPLICATE REMEDIES
|
12
|
ASSIGNMENT
|
13
|
CONFIDENTIALITY
|
14
|
COUNTERPARTS
|
By:
|
/s/ Airbus S.A.S. Name: /s/ Airbus S.A.S.
|
By:
|
/s/ American Airlines, Inc. Name: American Airlines, Inc. Title: Vice President and Treasurer
|
1
|
AIRCRAFT CONFIGURATION
|
2
|
GUARANTEED PERFORMANCE
|
2.1
|
Take-Off Field Length guarantee
|
2.2
|
Take-Off Weight guarantee [****]
|
2.3
|
Take-Off Weight guarantee [****]
|
2.4
|
Take-Off Weight guarantee [****]
|
2.5
|
Take-Off Weight guarantee [****]
|
2.6
|
Landing Field Length guarantee
|
3
|
MISSION GUARANTEES
|
3.1
|
Mission payload [****]
|
3.1.1
|
Departure airport conditions are assumed [****].
|
3.1.2
|
An allowance of [****].
|
3.1.3
|
An allowance of [****].
|
3.1.5
|
An allowance of [****].
|
3.1.6
|
An allowance of [****].
|
3.1.8
|
At the end of approach and landing, [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.2
|
Mission Block Fuel [****]
|
3.2.1
|
Departure airport conditions are assumed as [****]
|
3.2.2
|
An allowance of [****].
|
3.2.3
|
An allowance of [****].
|
3.2.5
|
An allowance of [****].
|
3.2.6
|
An allowance of [****].
|
3.2.8
|
At the end of approach and landing, [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.3
|
Operating Weight Empty [****]
|
3.4
|
Mission payload [****]
|
3.4.1
|
Departure airport conditions are assumed as [****].
|
3.4.2
|
An allowance of [****].
|
3.4.3
|
An allowance of [****].
|
3.4.5
|
An allowance of [****].
|
3.4.6
|
An allowance of [****].
|
3.4.8
|
At the end of approach and landing, [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.5
|
Mission Block Fuel [****]
|
3.5.1
|
Departure airport conditions are assumed as [****].
|
3.5.2
|
An allowance of [****].
|
3.5.3
|
An allowance of [****].
|
3.5.5
|
An allowance of [****].
|
3.5.6
|
An allowance of [****].
|
3.5.8
|
At the end of approach and landing, [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
4
|
MANUFACTURER'S WEIGHT EMPTY GUARANTEE
|
5
|
NOISE GUARANTEES
|
5.1
|
Exterior Noise
|
5.2
|
Interior Noise in Flight
|
5.2.1
|
Cockpit
|
5.2.2
|
Cabin
|
5.3
|
Ramp Noise
|
6
|
PERFORMANCE GUARANTEES CONDITIONS
|
6.1
|
The performance certification requirements for the A321 XLR Aircraft, except where otherwise stated, are as stated in Section 02 of the Standard Specification.
|
6.2
|
For the determination of FAR take-off and landing performance [****].
|
6.3
|
When establishing take-off performance [****].
|
6.5
|
Where applicable the Performance Guarantees assume the use of an approved fuel with a density of [****].
|
6.6
|
Sound levels are to be specified in decibels (dB), at a reference pressure of [****].
|
6.7
|
The definition of dB(A) shall be [****].
|
6.8
|
The Speech Interference Level (SIL) is defined as [****].
|
7.1
|
Compliance with the Performance Guarantees shall be demonstrated [****].
|
7.2
|
Compliance with the take-off and landing elements of the Performance Guarantees shall be demonstrated [****].
|
7.3
|
Compliance with those parts of the Performance Guarantees [****] shall be demonstrated [****].
|
7.4
|
Compliance with the Manufacturer's Weight Empty guarantee shall be demonstrated [****].
|
7.5
|
The [****] shall be used to demonstrate compliance [****].
|
7.6
|
Compliance with the APU noise and interior noise guarantees shall be demonstrated [****].
|
7.7
|
Data [****] shall be adjusted as required using [****] accordance with established aeronautical practices to show compliance with the Performance Guarantees.
|
7.8
|
The Seller undertakes to provide the Buyer with [****] demonstrating compliance with the Performance Guarantees [****].
|
8
|
ADJUSTMENT OF PERFORMANCE GUARANTEES
|
8.1
|
In the event of any change to any law, governmental regulation or requirement or interpretation thereof by the Aviation Authority made subsequent to the date of the Agreement (the “Change in Law”), and such a Change in Law affects the A321 XLR Aircraft configuration or performance or both, the Performance Guarantees shall be appropriately modified to reflect the effect of any such change.
|
8.2
|
The Performance Guarantees apply to the A321 XLR Aircraft as described in the Performance Specification and may be adjusted in the event of:
|
a)
|
Any further configuration change which is the subject of a SCN,
|
b)
|
Variation in actual weights of items defined in Section 13-10 of the Standard Specification.
|
9
|
EXCLUSIVE PERFORMANCE GUARANTEES
|
10
|
UNDERTAKING REMEDIES
|
10.1
|
Should an A321 XLR Aircraft fail to meet the Performance Guarantees specified in this Letter Agreement, the Seller shall [****].
|
10.3
|
In the event the Seller [****].
|
10.4
|
The Seller's maximum liability in respect of deficiency in performance of an A321 XLR Aircraft shall be [****].
|
13
|
CONFIDENTIALITY
|
14
|
COUNTERPARTS
|
By:
|
/s/ Airbus S.A.S. Name: /s/ Airbus S.A.S.
|
By:
|
/s/ American Airlines, Inc._ Name: American Airlines, Inc. Title: Vice President and Treasurer
|
1
|
AIRCRAFT CONFIGURATION
|
2
|
GUARANTEED PERFORMANCE
|
2.1
|
Take-Off Field Length guarantee
|
2.2
|
Take-Off Weight guarantee [****]
|
2.3
|
Take-Off Weight guarantee [****]
|
2.4
|
Take-Off Weight guarantee [****]
|
2.5
|
Take-Off Weight guarantee [****]
|
2.6
|
Landing Field Length guarantee
|
3
|
MISSION GUARANTEES
|
3.1
|
Mission payload [****]
|
3.1.1
|
Departure airport conditions are assumed [****].
|
3.1.2
|
An allowance of [****].
|
3.1.3
|
An allowance of [****].
|
3.1.5
|
An allowance of [****].
|
3.1.6
|
An allowance of [****].
|
3.1.8
|
At the end of approach and landing, [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.2
|
Mission Block Fuel [****]
|
3.2.1
|
Departure airport conditions are assumed as [****]
|
3.2.2
|
An allowance of [****].
|
3.2.3
|
An allowance of [****].
|
3.2.5
|
An allowance of [****].
|
3.2.6
|
An allowance of [****].
|
3.2.8
|
At the end of approach and landing, [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.3
|
Operating Weight Empty [****]
|
3.4
|
Mission payload [****]
|
3.4.1
|
Departure airport conditions are assumed as [****]
|
3.4.2
|
An allowance of [****].
|
3.4.3
|
An allowance of [****].
|
3.4.5
|
An allowance of [****].
|
3.4.6
|
An allowance of [****].
|
3.4.8
|
At the end of approach and landing, [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
3.5
|
Mission Block Fuel [****]
|
3.5.1
|
Departure airport conditions are assumed as [****]
|
3.5.2
|
An allowance of [****].
|
3.5.3
|
An allowance of [****].
|
3.5.5
|
An allowance of [****].
|
3.5.6
|
An allowance of [****].
|
3.5.8
|
At the end of approach and landing, [****] of fuel will remain in the tanks. This represents the estimated fuel required for:
|
5.1
|
Exterior Noise
|
5.2
|
Interior Noise in Flight
|
5.2.1
|
Cockpit
|
5.2.2
|
Cabin
|
5.3
|
Ramp Noise
|
6
|
PERFORMANCE GUARANTEES CONDITIONS
|
6.1
|
The performance certification requirements for the A321 XLR Aircraft, except where otherwise stated, are as stated in Section 02 of the Standard Specification.
|
6.2
|
For the determination of FAR take-off and landing performance [****].
|
6.3
|
When establishing take-off performance [****].
|
6.5
|
Where applicable the Performance Guarantees assume the use of an approved fuel with a density of [****].
|
6.6
|
Sound levels are to be specified in decibels (dB), at a reference pressure of [****].
|
6.7
|
The definition of dB(A) shall be [****].
|
6.8
|
The Speech Interference Level (SIL) is defined as [****].
|
7.1
|
Compliance with the Performance Guarantees shall be demonstrated [****].
|
7.2
|
Compliance with the take-off and landing elements of the Performance Guarantees shall be demonstrated [****].
|
7.3
|
Compliance with those parts of the Performance Guarantees [****] shall be demonstrated [****].
|
7.4
|
Compliance with the Manufacturer's Weight Empty guarantee shall be demonstrated [****].
|
7.5
|
The [****] shall be used to demonstrate compliance [****].
|
7.6
|
Compliance with the APU noise and interior noise guarantees shall be demonstrated [****].
|
7.7
|
Data [****] shall be adjusted as required using [****] accordance with established aeronautical practices to show compliance with the Performance Guarantees.
|
7.8
|
The Seller undertakes to provide the Buyer with [****] demonstrating compliance with the Performance Guarantees [****].
|
8
|
ADJUSTMENT OF PERFORMANCE GUARANTEES
|
8.1
|
In the event of any change to any law, governmental regulation or requirement or interpretation thereof by the Aviation Authority made subsequent to the date of the Agreement (the “Change in Law”), and such a Change in Law affects the A321 XLR Aircraft configuration or performance or both, the Performance Guarantees shall be appropriately modified to reflect the effect of any such change.
|
8.2
|
The Performance Guarantees apply to the A321 XLR Aircraft as described in the Performance Specification and may be adjusted in the event of:
|
a)
|
Any further configuration change which is the subject of a SCN,
|
b)
|
Variation in actual weights of items defined in Section 13-10 of the Standard Specification.
|
9
|
EXCLUSIVE PERFORMANCE GUARANTEES
|
10
|
UNDERTAKING REMEDIES
|
10.1
|
Should an A321 XLR Aircraft fail to meet the Performance Guarantees specified in this Letter Agreement, the Seller shall [****].
|
10.3
|
In the event the Seller [****].
|
10.4
|
The Seller's maximum liability in respect of deficiency in performance of an A321 XLR Aircraft shall be [****].
|
12
|
ASSIGNMENT
|
13
|
CONFIDENTIALITY
|
14
|
COUNTERPARTS
|
By:
|
/s/ Airbus S.A.S. Name: /s/ Airbus S.A.S.
|
2.1
|
If the Buyer [****]:
|
2.2
|
If the Buyer [****]:
|
3.1
|
The Seller hereby grants the Buyer the [****]:
|
(i)
|
All the A321 XLR Aircraft [****];
|
(ii)
|
The Buyer [****].
|
(iii)
|
[****].
|
(iv)
|
No later than [****]. [****].
|
(v)
|
Without prejudice to [****].
|
(vi)
|
The Seller shall [****].
|
3.2
|
For the avoidance of doubt, the [****].
|
4
|
ASSIGNMENT
|
5
|
CONFIDENTIALITY
|
6
|
COUNTERPARTS
|
1
|
A321XLR DEVELOPMENT [****]
|
1.1
|
Until certification of the A321-200NX XLR model aircraft has been achieved by the Seller, [****], [****]. This [****] will be [****]:
|
1.2
|
The [****] that the Seller [****] under this Letter Agreement will include, at a minimum, the following elements pertaining to the A321-200NX XLR model aircraft:
|
1.3
|
If the Buyer [****].
|
1.4
|
The Seller will notify the Buyer promptly in writing [****].
|
2.1.2
|
With respect only to the [****]:
|
2.1.3
|
For purposes of this Paragraph 2.1, [****]:
|
(i)
|
Upon Seller determining that [****].
|
(ii)
|
Upon Seller determining that [****].
|
(iii)
|
Upon Seller determining that [****].
|
2.1.4
|
The A321 XLR [****] is subject to the following conditions:
|
(ii)
|
In connection with the Buyer’s [****];
|
(iii)
|
Any [****];
|
(iv)
|
Any A321 XLR Aircraft [****].
|
2.1.5
|
For purposes of this Paragraph 2.1, each of the following [****]:
|
(i)
|
[****];
|
2.1.6
|
For purposes of this Paragraph 2.1, [****] means:
|
(i)
|
As related to the [****];
|
(ii)
|
As related to the [****];
|
(iii)
|
As related to the [****].
|
2.1.7
|
In the event that the Buyer [****].
|
2.2
|
In the event that there is a [****]:
|
(a)
|
[****];
|
2.3
|
The Buyer’s [****]:
|
(i)
|
[****], or
|
2.4
|
For avoidance of doubt, [****]
|
3
|
ASSIGNMENT
|
4
|
CONFIDENTIALITY
|
5
|
COUNTERPARTS
|
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
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(b)
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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.
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/s/ W. Douglas Parker
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Name: W. Douglas Parker
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|
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Title: Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of American Airlines Group Inc.;
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2.
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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;
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3.
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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;
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4.
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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.
|
|
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/s/ Derek J. Kerr
|
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Name: Derek J. Kerr
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|
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Title: Executive Vice President and Chief
|
|
|
Financial Officer
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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: July 25, 2019
|
|
/s/ Derek J. Kerr
|
Name: Derek J. Kerr
|
Title: Executive Vice President and Chief Financial Officer
|
Date: July 25, 2019
|
(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: July 25, 2019
|
|
/s/ Derek J. Kerr
|
Name: Derek J. Kerr
|
Title: Executive Vice President and Chief Financial Officer
|
Date: July 25, 2019
|