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FORM
|
10-Q
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☒
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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☐
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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American Airlines Group Inc.
|
||
(Exact name of registrant as specified in its charter)
|
||
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Delaware
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75-1825172
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||||||||
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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|
||||||||
1 Skyview Drive,
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Fort Worth,
|
Texas
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76155
|
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(817)
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963-1234
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||
(Address of principal executive offices, including zip code)
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(Registrant’s telephone number, including area code)
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American Airlines, Inc.
|
||
(Exact name of registrant as specified in its charter)
|
||
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Delaware
|
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13-1502798
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|
||||||||
(State or other jurisdiction of incorporation or organization)
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|
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(I.R.S. Employer Identification No.)
|
|
||||||||
1 Skyview Drive,
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Fort Worth,
|
Texas
|
76155
|
|
|
|
(817)
|
963-1234
|
|
|
||
(Address of principal executive offices, including zip code)
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|
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(Registrant’s telephone number, including area code)
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|
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.
|
||
|
||
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||
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||
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||
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||
|
||
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,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Operating revenues:
|
|
|
|
||||||||||||
Passenger
|
$
|
1,108
|
|
|
$
|
11,011
|
|
|
$
|
8,788
|
|
|
$
|
20,669
|
|
Cargo
|
130
|
|
|
221
|
|
|
277
|
|
|
439
|
|
||||
Other
|
384
|
|
|
728
|
|
|
1,072
|
|
|
1,436
|
|
||||
Total operating revenues
|
1,622
|
|
|
11,960
|
|
|
10,137
|
|
|
22,544
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Aircraft fuel and related taxes
|
217
|
|
|
1,995
|
|
|
1,612
|
|
|
3,722
|
|
||||
Salaries, wages and benefits
|
2,538
|
|
|
3,200
|
|
|
5,679
|
|
|
6,290
|
|
||||
Regional expenses
|
801
|
|
|
1,886
|
|
|
2,724
|
|
|
3,648
|
|
||||
Maintenance, materials and repairs
|
287
|
|
|
575
|
|
|
915
|
|
|
1,136
|
|
||||
Other rent and landing fees
|
315
|
|
|
535
|
|
|
783
|
|
|
1,039
|
|
||||
Aircraft rent
|
334
|
|
|
334
|
|
|
669
|
|
|
661
|
|
||||
Selling expenses
|
43
|
|
|
401
|
|
|
348
|
|
|
771
|
|
||||
Depreciation and amortization
|
499
|
|
|
489
|
|
|
1,059
|
|
|
969
|
|
||||
Special items, net
|
(1,494
|
)
|
|
121
|
|
|
(362
|
)
|
|
259
|
|
||||
Other
|
568
|
|
|
1,271
|
|
|
1,744
|
|
|
2,521
|
|
||||
Total operating expenses
|
4,108
|
|
|
10,807
|
|
|
15,171
|
|
|
21,016
|
|
||||
Operating income (loss)
|
(2,486
|
)
|
|
1,153
|
|
|
(5,034
|
)
|
|
1,528
|
|
||||
Nonoperating income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest income
|
10
|
|
|
35
|
|
|
31
|
|
|
68
|
|
||||
Interest expense, net
|
(254
|
)
|
|
(275
|
)
|
|
(512
|
)
|
|
(546
|
)
|
||||
Other income (expense), net
|
71
|
|
|
(31
|
)
|
|
(34
|
)
|
|
78
|
|
||||
Total nonoperating expense, net
|
(173
|
)
|
|
(271
|
)
|
|
(515
|
)
|
|
(400
|
)
|
||||
Income (loss) before income taxes
|
(2,659
|
)
|
|
882
|
|
|
(5,549
|
)
|
|
1,128
|
|
||||
Income tax provision (benefit)
|
(592
|
)
|
|
220
|
|
|
(1,241
|
)
|
|
281
|
|
||||
Net income (loss)
|
$
|
(2,067
|
)
|
|
$
|
662
|
|
|
$
|
(4,308
|
)
|
|
$
|
847
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(4.82
|
)
|
|
$
|
1.49
|
|
|
$
|
(10.08
|
)
|
|
$
|
1.89
|
|
Diluted
|
$
|
(4.82
|
)
|
|
$
|
1.49
|
|
|
$
|
(10.08
|
)
|
|
$
|
1.88
|
|
Weighted average shares outstanding (in thousands):
|
|
|
|
|
|
|
|
||||||||
Basic
|
428,807
|
|
|
445,008
|
|
|
427,260
|
|
|
448,479
|
|
||||
Diluted
|
428,807
|
|
|
445,587
|
|
|
427,260
|
|
|
449,508
|
|
||||
Cash dividends declared per common share
|
$
|
—
|
|
|
$
|
0.10
|
|
|
$
|
0.10
|
|
|
$
|
0.20
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Net income (loss)
|
$
|
(2,067
|
)
|
|
$
|
662
|
|
|
$
|
(4,308
|
)
|
|
$
|
847
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Pension, retiree medical and other postretirement benefits
|
(4
|
)
|
|
(18
|
)
|
|
(131
|
)
|
|
(34
|
)
|
||||
Investments
|
21
|
|
|
—
|
|
|
(1
|
)
|
|
3
|
|
||||
Total other comprehensive income (loss), net of tax
|
17
|
|
|
(18
|
)
|
|
(132
|
)
|
|
(31
|
)
|
||||
Total comprehensive income (loss)
|
$
|
(2,050
|
)
|
|
$
|
644
|
|
|
$
|
(4,440
|
)
|
|
$
|
816
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
||||||
Current assets
|
|
|
|
||||
Cash
|
$
|
462
|
|
|
$
|
280
|
|
Short-term investments
|
9,351
|
|
|
3,546
|
|
||
Restricted cash and short-term investments
|
539
|
|
|
158
|
|
||
Accounts receivable, net
|
879
|
|
|
1,750
|
|
||
Aircraft fuel, spare parts and supplies, net
|
1,653
|
|
|
1,851
|
|
||
Prepaid expenses and other
|
905
|
|
|
621
|
|
||
Total current assets
|
13,789
|
|
|
8,206
|
|
||
Operating property and equipment
|
|
|
|
||||
Flight equipment
|
38,672
|
|
|
42,537
|
|
||
Ground property and equipment
|
9,386
|
|
|
9,443
|
|
||
Equipment purchase deposits
|
1,786
|
|
|
1,674
|
|
||
Total property and equipment, at cost
|
49,844
|
|
|
53,654
|
|
||
Less accumulated depreciation and amortization
|
(16,493
|
)
|
|
(18,659
|
)
|
||
Total property and equipment, net
|
33,351
|
|
|
34,995
|
|
||
Operating lease right-of-use assets
|
8,323
|
|
|
8,737
|
|
||
Other assets
|
|
|
|
||||
Goodwill
|
4,091
|
|
|
4,091
|
|
||
Intangibles, net of accumulated amortization of $724 and $704, respectively
|
2,049
|
|
|
2,084
|
|
||
Deferred tax asset
|
1,725
|
|
|
645
|
|
||
Other assets
|
1,216
|
|
|
1,237
|
|
||
Total other assets
|
9,081
|
|
|
8,057
|
|
||
Total assets
|
$
|
64,544
|
|
|
$
|
59,995
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Current maturities of long-term debt and finance leases
|
$
|
2,575
|
|
|
$
|
2,861
|
|
Accounts payable
|
1,175
|
|
|
2,062
|
|
||
Accrued salaries and wages
|
1,518
|
|
|
1,541
|
|
||
Air traffic liability
|
5,119
|
|
|
4,808
|
|
||
Loyalty program liability
|
2,354
|
|
|
3,193
|
|
||
Operating lease liabilities
|
1,804
|
|
|
1,708
|
|
||
Other accrued liabilities
|
3,455
|
|
|
2,138
|
|
||
Total current liabilities
|
18,000
|
|
|
18,311
|
|
||
Noncurrent liabilities
|
|
|
|
||||
Long-term debt and finance leases, net of current maturities
|
28,698
|
|
|
21,454
|
|
||
Pension and postretirement benefits
|
6,019
|
|
|
6,052
|
|
||
Loyalty program liability
|
6,608
|
|
|
5,422
|
|
||
Operating lease liabilities
|
6,972
|
|
|
7,421
|
|
||
Other liabilities
|
1,416
|
|
|
1,453
|
|
||
Total noncurrent liabilities
|
49,713
|
|
|
41,802
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity (deficit)
|
|
|
|
||||
Common stock, $0.01 par value; 1,750,000,000 shares authorized, 508,556,154 shares issued and outstanding at June 30, 2020; 428,202,506 shares issued and outstanding at December 31, 2019
|
5
|
|
|
4
|
|
||
Additional paid-in capital
|
5,377
|
|
|
3,945
|
|
||
Accumulated other comprehensive loss
|
(6,463
|
)
|
|
(6,331
|
)
|
||
Retained earnings (deficit)
|
(2,088
|
)
|
|
2,264
|
|
||
Total stockholders’ deficit
|
(3,169
|
)
|
|
(118
|
)
|
||
Total liabilities and stockholders’ equity (deficit)
|
$
|
64,544
|
|
|
$
|
59,995
|
|
|
Six Months Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
Net cash provided by (used in) operating activities
|
$
|
(1,076
|
)
|
|
$
|
2,387
|
|
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures and aircraft purchase deposits
|
(1,233
|
)
|
|
(2,323
|
)
|
||
Proceeds from sale-leaseback transactions
|
376
|
|
|
518
|
|
||
Proceeds from sale of property and equipment
|
148
|
|
|
19
|
|
||
Purchases of short-term investments
|
(7,936
|
)
|
|
(2,201
|
)
|
||
Sales of short-term investments
|
2,131
|
|
|
1,611
|
|
||
Increase in restricted short-term investments
|
(386
|
)
|
|
(2
|
)
|
||
Other investing activities
|
(61
|
)
|
|
(35
|
)
|
||
Net cash used in investing activities
|
(6,961
|
)
|
|
(2,413
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
9,464
|
|
|
2,589
|
|
||
Payments on long-term debt and finance leases
|
(2,477
|
)
|
|
(1,781
|
)
|
||
Proceeds from issuance of equity
|
1,527
|
|
|
—
|
|
||
Deferred financing costs
|
(84
|
)
|
|
(23
|
)
|
||
Treasury stock repurchases
|
(173
|
)
|
|
(625
|
)
|
||
Dividend payments
|
(43
|
)
|
|
(90
|
)
|
||
Net cash provided by financing activities
|
8,214
|
|
|
70
|
|
||
Net increase in cash and restricted cash
|
177
|
|
|
44
|
|
||
Cash and restricted cash at beginning of period
|
290
|
|
|
286
|
|
||
Cash and restricted cash at end of period (1)
|
$
|
467
|
|
|
$
|
330
|
|
|
|
|
|
||||
Non-cash transactions:
|
|
|
|
||||
Right-of-use (ROU) assets acquired through operating leases
|
$
|
421
|
|
|
$
|
708
|
|
Settlement of bankruptcy obligations
|
56
|
|
|
7
|
|
||
Payroll Support Program Warrants
|
55
|
|
|
—
|
|
||
Deferred financing costs paid through issuance of debt
|
17
|
|
|
—
|
|
||
Property and equipment acquired through finance leases
|
—
|
|
|
4
|
|
||
Supplemental information:
|
|
|
|
||||
Interest paid, net
|
501
|
|
|
559
|
|
||
Income taxes paid
|
2
|
|
|
4
|
|
|
(1)
|
The following table provides a reconciliation of cash and restricted cash to amounts reported within the condensed consolidated balance sheets:
|
Cash
|
$
|
462
|
|
|
$
|
319
|
|
Restricted cash included in restricted cash and short-term investments
|
5
|
|
|
11
|
|
||
Total cash and restricted cash
|
$
|
467
|
|
|
$
|
330
|
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
(Deficit)
|
|
Total
|
||||||||||
Balance at December 31, 2019
|
$
|
4
|
|
|
$
|
3,945
|
|
|
$
|
(6,331
|
)
|
|
$
|
2,264
|
|
|
$
|
(118
|
)
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,241
|
)
|
|
(2,241
|
)
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
(149
|
)
|
|
—
|
|
|
(149
|
)
|
|||||
Purchase and retirement of 6,378,025 shares of AAG common stock
|
—
|
|
|
(145
|
)
|
|
—
|
|
|
—
|
|
|
(145
|
)
|
|||||
Dividends declared on AAG common stock ($0.10 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(44
|
)
|
|
(44
|
)
|
|||||
Issuance of 1,062,052 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|||||
Settlement of single-dip unsecured claims held in Disputed Claims Reserve
|
—
|
|
|
56
|
|
|
—
|
|
|
—
|
|
|
56
|
|
|||||
Share-based compensation expense
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||
Balance at March 31, 2020
|
4
|
|
|
3,861
|
|
|
(6,480
|
)
|
|
(21
|
)
|
|
(2,636
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,067
|
)
|
|
(2,067
|
)
|
|||||
Other comprehensive income, net
|
—
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
17
|
|
|||||
Payroll Support Program Warrants
|
—
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|||||
Equity component of convertible debt issued, net of tax and offering costs
|
—
|
|
|
320
|
|
|
—
|
|
|
—
|
|
|
320
|
|
|||||
Issuance of 85,215,000 shares of AAG common stock pursuant to a public stock offering, net of offering costs
|
1
|
|
|
1,112
|
|
|
—
|
|
|
—
|
|
|
1,113
|
|
|||||
Issuance of 454,621 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||
Share-based compensation expense
|
—
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|||||
Balance at June 30, 2020
|
$
|
5
|
|
|
$
|
5,377
|
|
|
$
|
(6,463
|
)
|
|
$
|
(2,088
|
)
|
|
$
|
(3,169
|
)
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
|
|
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
|
)
|
•
|
refinanced the $1.2 billion 2014 Term Loan Facility at a lower interest rate and extended the maturity from 2021 to 2027;
|
•
|
issued $500 million in aggregate principal amount of 3.75% unsecured senior notes due 2025 and repaid $500 million of 4.625% unsecured senior notes that matured in March 2020;
|
•
|
borrowed $750 million under the 2013 Revolving Facility, $1.6 billion under the 2014 Revolving Facility and $450 million under the April 2016 Revolving Facility;
|
•
|
issued $1.0 billion in aggregate principal amount of 6.50% convertible senior notes due 2025;
|
•
|
issued 85.2 million shares of AAG common stock at a price of $13.50 per share pursuant to a public offering of common stock for net proceeds of $1.1 billion;
|
•
|
issued $2.5 billion in aggregate principal amount of 11.75% senior secured notes due 2025 and repaid the $1.0 billion senior secured delayed draw term loan credit facility that we borrowed in March 2020;
|
•
|
issued approximately $360 million in special facility revenue bonds, of which $47 million was used to fund the redemption of certain outstanding bonds;
|
•
|
raised $336 million from aircraft sale-leaseback transactions; and
|
•
|
raised $197 million from aircraft financings, of which $17 million was used to repay existing indebtedness.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
PSP Financial Assistance (1)
|
$
|
(1,803
|
)
|
|
$
|
—
|
|
|
$
|
(1,803
|
)
|
|
$
|
—
|
|
Severance expenses (2)
|
332
|
|
|
—
|
|
|
537
|
|
|
—
|
|
||||
Labor contract expenses (3)
|
10
|
|
|
—
|
|
|
228
|
|
|
—
|
|
||||
Fleet impairment (4)
|
—
|
|
|
—
|
|
|
743
|
|
|
—
|
|
||||
Fleet restructuring expenses (5)
|
—
|
|
|
77
|
|
|
—
|
|
|
160
|
|
||||
Merger integration expenses
|
—
|
|
|
39
|
|
|
—
|
|
|
76
|
|
||||
Mark-to-market adjustments on bankruptcy obligations, net (6)
|
—
|
|
|
5
|
|
|
(49
|
)
|
|
5
|
|
||||
Other operating special items, net
|
(33
|
)
|
|
—
|
|
|
(18
|
)
|
|
18
|
|
||||
Mainline operating special items, net
|
(1,494
|
)
|
|
121
|
|
|
(362
|
)
|
|
259
|
|
||||
|
|
|
|
|
|
|
|
||||||||
PSP Financial Assistance (1)
|
(216
|
)
|
|
—
|
|
|
(216
|
)
|
|
—
|
|
||||
Fleet impairment (4)
|
24
|
|
|
—
|
|
|
117
|
|
|
—
|
|
||||
Severance expenses (2)
|
14
|
|
|
—
|
|
|
14
|
|
|
—
|
|
||||
Regional operating special items, net
|
(178
|
)
|
|
—
|
|
|
(85
|
)
|
|
—
|
|
||||
Operating special items, net
|
(1,672
|
)
|
|
121
|
|
|
(447
|
)
|
|
259
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Mark-to-market adjustments on equity and other investments, net (7)
|
—
|
|
|
61
|
|
|
180
|
|
|
(9
|
)
|
||||
Debt refinancing, extinguishment and other charges
|
11
|
|
|
8
|
|
|
48
|
|
|
8
|
|
||||
Nonoperating special items, net
|
11
|
|
|
69
|
|
|
228
|
|
|
(1
|
)
|
|
(1)
|
PSP Financial Assistance represents recognition of a portion of financial assistance received from Treasury pursuant to the PSP Agreement. See Note 1 for further information.
|
(2)
|
Severance expenses principally include salary and medical costs associated with certain team members who opted in to voluntary early retirement programs offered as a result of reductions to our operation due to COVID-19.
|
(3)
|
Labor contract expenses primarily relate to one-time charges resulting from the ratification of a new contract with the Transport Workers Union and International Association of Machinists & Aerospace Workers for our maintenance and fleet service team members, including signing bonuses and adjustments to vacation accruals resulting from pay rate increases.
|
(4)
|
Fleet impairment resulted from our decision to retire certain aircraft earlier than planned driven by the decline in air travel due to COVID-19. Aircraft retired include Boeing 757, Boeing 767, Airbus A330-300, Embraer 190, certain Embraer 140 and Bombardier CRJ200 aircraft.
|
(5)
|
Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment expected to be retired earlier than planned.
|
(6)
|
Bankruptcy obligations that will be settled in shares of our common stock are marked-to-market based on our stock price.
|
(7)
|
Mark-to-market adjustments on equity and other investments, net primarily relates to net unrealized gains and losses associated with our equity investment in China Southern Airlines Company Limited (China Southern Airlines) and certain treasury rate lock derivative instruments.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Basic EPS:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(2,067
|
)
|
|
$
|
662
|
|
|
$
|
(4,308
|
)
|
|
$
|
847
|
|
Weighted average common shares outstanding (in thousands)
|
428,807
|
|
|
445,008
|
|
|
427,260
|
|
|
448,479
|
|
||||
Basic EPS
|
$
|
(4.82
|
)
|
|
$
|
1.49
|
|
|
$
|
(10.08
|
)
|
|
$
|
1.89
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted EPS:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) for purposes of computing diluted EPS
|
$
|
(2,067
|
)
|
|
$
|
662
|
|
|
$
|
(4,308
|
)
|
|
$
|
847
|
|
Share computation for diluted EPS (in thousands):
|
|
|
|
|
|
|
|
||||||||
Basic weighted average common shares outstanding
|
428,807
|
|
|
445,008
|
|
|
427,260
|
|
|
448,479
|
|
||||
Dilutive effect of stock awards
|
—
|
|
|
579
|
|
|
—
|
|
|
1,029
|
|
||||
Diluted weighted average common shares outstanding
|
428,807
|
|
|
445,587
|
|
|
427,260
|
|
|
449,508
|
|
||||
Diluted EPS
|
$
|
(4.82
|
)
|
|
$
|
1.49
|
|
|
$
|
(10.08
|
)
|
|
$
|
1.88
|
|
Restricted stock unit awards
|
5,781
|
|
|
3,087
|
|
|
5,357
|
|
|
2,677
|
|
PSP Warrants
|
6,368
|
|
|
—
|
|
|
3,184
|
|
|
—
|
|
6.50% convertible senior notes
|
4,070
|
|
|
—
|
|
|
2,035
|
|
|
—
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Passenger revenue:
|
|
|
|
|
|
|
|
||||||||
Passenger travel
|
$
|
1,006
|
|
|
$
|
10,217
|
|
|
$
|
8,085
|
|
|
$
|
18,989
|
|
Loyalty revenue - travel (1)
|
102
|
|
|
794
|
|
|
703
|
|
|
1,680
|
|
||||
Total passenger revenue
|
1,108
|
|
|
11,011
|
|
|
8,788
|
|
|
20,669
|
|
||||
Cargo
|
130
|
|
|
221
|
|
|
277
|
|
|
439
|
|
||||
Other:
|
|
|
|
|
|
|
|
||||||||
Loyalty revenue - marketing services
|
356
|
|
|
594
|
|
|
927
|
|
|
1,172
|
|
||||
Other revenue
|
28
|
|
|
134
|
|
|
145
|
|
|
264
|
|
||||
Total other revenue
|
384
|
|
|
728
|
|
|
1,072
|
|
|
1,436
|
|
||||
Total operating revenues
|
$
|
1,622
|
|
|
$
|
11,960
|
|
|
$
|
10,137
|
|
|
$
|
22,544
|
|
|
(1)
|
Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions, which were earned from travel or co-branded credit card and other partners.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Domestic
|
$
|
1,026
|
|
|
$
|
8,009
|
|
|
$
|
6,806
|
|
|
$
|
15,235
|
|
Latin America
|
34
|
|
|
1,241
|
|
|
1,214
|
|
|
2,612
|
|
||||
Atlantic
|
42
|
|
|
1,407
|
|
|
565
|
|
|
2,080
|
|
||||
Pacific
|
6
|
|
|
354
|
|
|
203
|
|
|
742
|
|
||||
Total passenger revenue
|
$
|
1,108
|
|
|
$
|
11,011
|
|
|
$
|
8,788
|
|
|
$
|
20,669
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(In millions)
|
||||||
Loyalty program liability
|
$
|
8,962
|
|
|
$
|
8,615
|
|
Air traffic liability
|
5,119
|
|
|
4,808
|
|
||
Total
|
$
|
14,081
|
|
|
$
|
13,423
|
|
Balance at December 31, 2019
|
$
|
8,615
|
|
Deferral of revenue
|
1,149
|
|
|
Recognition of revenue (1)
|
(802
|
)
|
|
Balance at June 30, 2020 (2)
|
$
|
8,962
|
|
|
(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 generally do not expire as long as that AAdvantage member has any type of qualifying activity at least every 18 months. As of June 30, 2020, our current loyalty program liability was $2.4 billion and represents our current estimate of revenue expected to be recognized in the next 12 months based on historical trends, with the balance reflected in long-term loyalty program liability expected to be recognized as revenue in periods thereafter. Given the inherent uncertainty of the current operating environment due to COVID-19, we will continue to monitor redemption patterns and may adjust our estimates in the future.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
Secured
|
|
|
|
||||
2013 Term Loan Facility, variable interest rate of 1.93%, installments through 2025
|
$
|
1,788
|
|
|
$
|
1,807
|
|
2013 Revolving Facility, variable interest rate of 2.17%, due 2024
|
750
|
|
|
—
|
|
||
2014 Term Loan Facility, variable interest rate of 1.93%, installments through 2027
|
1,220
|
|
|
1,202
|
|
||
2014 Revolving Facility, variable interest rate of 2.17%, due 2024
|
1,643
|
|
|
—
|
|
||
April 2016 Term Loan Facility, variable interest rate of 2.18%, installments through 2023
|
960
|
|
|
970
|
|
||
April 2016 Revolving Facility, variable interest rate of 2.17%, due 2024
|
450
|
|
|
—
|
|
||
December 2016 Term Loan Facility, variable interest rate of 2.18%, installments through 2023
|
1,213
|
|
|
1,213
|
|
||
11.75% senior secured notes, interest only payments until due in July 2025
|
2,500
|
|
|
—
|
|
||
Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.00% to 8.39%, averaging 4.03%, maturing from 2020 to 2032
|
11,410
|
|
|
11,933
|
|
||
Equipment loans and other notes payable, fixed and variable interest rates ranging from 1.38% to 5.83%, averaging 2.20%, maturing from 2020 to 2032
|
4,610
|
|
|
4,727
|
|
||
Special facility revenue bonds, fixed interest rates ranging from 5.00% to 8.00%, maturing from 2021 to 2036
|
1,064
|
|
|
754
|
|
||
|
27,608
|
|
|
22,606
|
|
||
Unsecured
|
|
|
|
||||
PSP Promissory Note
|
1,540
|
|
|
—
|
|
||
6.50% convertible senior notes, interest only payments until due in July 2025
|
1,000
|
|
|
—
|
|
||
5.000% senior notes, interest only payments until due in June 2022
|
750
|
|
|
750
|
|
||
3.75% senior notes, interest only payments until due in March 2025
|
500
|
|
|
—
|
|
||
4.625% senior notes
|
—
|
|
|
500
|
|
||
|
3,790
|
|
|
1,250
|
|
||
Total long-term debt
|
31,398
|
|
|
23,856
|
|
||
Less: Total unamortized debt discount, premium and issuance costs
|
734
|
|
|
211
|
|
||
Less: Current maturities
|
2,471
|
|
|
2,749
|
|
||
Long-term debt, net of current maturities
|
$
|
28,193
|
|
|
$
|
20,896
|
|
|
June 30, 2020
|
||
Principal amount of 6.50% convertible senior notes
|
$
|
1,000
|
|
Unamortized debt discount
|
(444
|
)
|
|
Net carrying amount of 6.50% convertible senior notes
|
556
|
|
|
Additional paid-in capital
|
415
|
|
|
Fair Value Measurements as of June 30, 2020
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Short-term investments (1), (2):
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
7,853
|
|
|
$
|
7,853
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Bank notes/certificates of deposit/time deposits
|
1,131
|
|
|
—
|
|
|
1,131
|
|
|
—
|
|
||||
Corporate obligations
|
367
|
|
|
—
|
|
|
367
|
|
|
—
|
|
||||
|
9,351
|
|
|
7,853
|
|
|
1,498
|
|
|
—
|
|
||||
Restricted cash and short-term investments (1), (4)
|
539
|
|
|
390
|
|
|
149
|
|
|
—
|
|
||||
Long-term investments (3)
|
128
|
|
|
128
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
10,018
|
|
|
$
|
8,371
|
|
|
$
|
1,647
|
|
|
$
|
—
|
|
|
(1)
|
All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are recorded in accumulated other comprehensive loss at each reporting period. There were no credit losses.
|
(2)
|
Our short-term investments mature in one year or less except for $484 million of bank notes/certificates of deposit/time deposits and $120 million of corporate obligations.
|
(3)
|
Long-term investments primarily include our equity investment in China Southern Airlines, in which we presently own a 1.8% equity interest, and are classified in other assets on the condensed consolidated balance sheet.
|
(4)
|
Restricted cash and short-term investments primarily includes money market funds to be used to finance a substantial portion of the cost of the renovation and expansion of Terminal 8 at JFK and collateral held to support workers' compensation obligations.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||
|
Carrying
Value |
|
Fair
Value |
|
Carrying
Value |
|
Fair
Value |
||||||||
Long-term debt, including current maturities
|
$
|
30,664
|
|
|
$
|
26,081
|
|
|
$
|
23,645
|
|
|
$
|
24,508
|
|
|
|
Pension Benefits
|
|
Retiree Medical and Other
Postretirement Benefits |
||||||||||||
Three Months Ended June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Service cost
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
1
|
|
Interest cost
|
|
154
|
|
|
176
|
|
|
8
|
|
|
8
|
|
||||
Expected return on assets
|
|
(252
|
)
|
|
(204
|
)
|
|
(3
|
)
|
|
(4
|
)
|
||||
Settlements
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Amortization of:
|
|
|
|
|
|
|
|
|
||||||||
Prior service cost (benefit)
|
|
7
|
|
|
7
|
|
|
(52
|
)
|
|
(59
|
)
|
||||
Unrecognized net loss (gain)
|
|
41
|
|
|
38
|
|
|
(5
|
)
|
|
(8
|
)
|
||||
Net periodic benefit cost (income)
|
|
$
|
(45
|
)
|
|
$
|
18
|
|
|
$
|
(50
|
)
|
|
$
|
(62
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Pension Benefits
|
|
Retiree Medical and Other
Postretirement Benefits |
||||||||||||
Six Months Ended June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Service cost
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
2
|
|
Interest cost
|
|
307
|
|
|
352
|
|
|
14
|
|
|
17
|
|
||||
Expected return on assets
|
|
(505
|
)
|
|
(406
|
)
|
|
(6
|
)
|
|
(8
|
)
|
||||
Settlements
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Amortization of:
|
|
|
|
|
|
|
|
|
||||||||
Prior service cost (benefit)
|
|
14
|
|
|
14
|
|
|
(106
|
)
|
|
(118
|
)
|
||||
Unrecognized net loss (gain)
|
|
83
|
|
|
76
|
|
|
(12
|
)
|
|
(16
|
)
|
||||
Net periodic benefit cost (income)
|
|
$
|
(95
|
)
|
|
$
|
37
|
|
|
$
|
(107
|
)
|
|
$
|
(123
|
)
|
|
Pension, Retiree
Medical and Other Postretirement Benefits |
|
Unrealized Loss on Investments
|
|
Income Tax
Benefit (Provision) (1) |
|
Total
|
||||||||
Balance at December 31, 2019
|
$
|
(5,238
|
)
|
|
$
|
(2
|
)
|
|
$
|
(1,091
|
)
|
|
$
|
(6,331
|
)
|
Other comprehensive income (loss) before
reclassifications |
(152
|
)
|
|
(1
|
)
|
|
34
|
|
|
(119
|
)
|
||||
Amounts reclassified from AOCI
|
(17
|
)
|
|
—
|
|
|
4
|
|
(2)
|
(13
|
)
|
||||
Net current-period other comprehensive income
(loss) |
(169
|
)
|
|
(1
|
)
|
|
38
|
|
|
(132
|
)
|
||||
Balance at June 30, 2020
|
$
|
(5,407
|
)
|
|
$
|
(3
|
)
|
|
$
|
(1,053
|
)
|
|
$
|
(6,463
|
)
|
|
(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 (benefit) 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, |
|
|||||||||||||
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|||||||||||
Amortization of pension, retiree medical
and other postretirement benefits: |
|
|
|
|
|
|
|
|
|
|
||||||||
Prior service benefit
|
|
$
|
(34
|
)
|
|
$
|
(41
|
)
|
|
$
|
(71
|
)
|
|
$
|
(81
|
)
|
|
Nonoperating other income (expense), net
|
Actuarial loss
|
|
30
|
|
|
23
|
|
|
58
|
|
|
47
|
|
|
Nonoperating other income (expense), net
|
||||
Total reclassifications for the period,
net of tax |
|
$
|
(4
|
)
|
|
$
|
(18
|
)
|
|
$
|
(13
|
)
|
|
$
|
(34
|
)
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Aircraft fuel and related taxes
|
$
|
92
|
|
|
$
|
487
|
|
|
$
|
480
|
|
|
$
|
909
|
|
Salaries, wages and benefits
|
368
|
|
|
439
|
|
|
838
|
|
|
848
|
|
||||
Capacity purchases from third-party regional carriers (1)
|
179
|
|
|
352
|
|
|
533
|
|
|
692
|
|
||||
Maintenance, materials and repairs
|
56
|
|
|
101
|
|
|
171
|
|
|
195
|
|
||||
Other rent and landing fees
|
104
|
|
|
162
|
|
|
257
|
|
|
329
|
|
||||
Aircraft rent
|
3
|
|
|
8
|
|
|
8
|
|
|
15
|
|
||||
Selling expenses
|
14
|
|
|
106
|
|
|
94
|
|
|
197
|
|
||||
Depreciation and amortization
|
84
|
|
|
83
|
|
|
168
|
|
|
162
|
|
||||
Special items, net
|
(178
|
)
|
|
—
|
|
|
(85
|
)
|
|
—
|
|
||||
Other
|
79
|
|
|
148
|
|
|
260
|
|
|
301
|
|
||||
Total regional expenses
|
$
|
801
|
|
|
$
|
1,886
|
|
|
$
|
2,724
|
|
|
$
|
3,648
|
|
|
(1)
|
During the three months ended June 30, 2020 and 2019, we recognized $61 million and $149 million, respectively, of expense under our capacity purchase agreement with Republic Airline Inc. (Republic). During the six months ended June 30, 2020 and 2019, we recognized $211 million and $292 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,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Operating revenues:
|
|
|
|
|
|
||||||||||
Passenger
|
$
|
1,108
|
|
|
$
|
11,011
|
|
|
$
|
8,788
|
|
|
$
|
20,669
|
|
Cargo
|
130
|
|
|
221
|
|
|
277
|
|
|
439
|
|
||||
Other
|
384
|
|
|
726
|
|
|
1,071
|
|
|
1,431
|
|
||||
Total operating revenues
|
1,622
|
|
|
11,958
|
|
|
10,136
|
|
|
22,539
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Aircraft fuel and related taxes
|
217
|
|
|
1,995
|
|
|
1,612
|
|
|
3,722
|
|
||||
Salaries, wages and benefits
|
2,538
|
|
|
3,198
|
|
|
5,676
|
|
|
6,286
|
|
||||
Regional expenses
|
756
|
|
|
1,911
|
|
|
2,647
|
|
|
3,702
|
|
||||
Maintenance, materials and repairs
|
287
|
|
|
575
|
|
|
915
|
|
|
1,136
|
|
||||
Other rent and landing fees
|
315
|
|
|
535
|
|
|
783
|
|
|
1,039
|
|
||||
Aircraft rent
|
334
|
|
|
334
|
|
|
669
|
|
|
661
|
|
||||
Selling expenses
|
43
|
|
|
401
|
|
|
348
|
|
|
771
|
|
||||
Depreciation and amortization
|
499
|
|
|
489
|
|
|
1,059
|
|
|
969
|
|
||||
Special items, net
|
(1,494
|
)
|
|
121
|
|
|
(362
|
)
|
|
259
|
|
||||
Other
|
568
|
|
|
1,272
|
|
|
1,765
|
|
|
2,522
|
|
||||
Total operating expenses
|
4,063
|
|
|
10,831
|
|
|
15,112
|
|
|
21,067
|
|
||||
Operating income (loss)
|
(2,441
|
)
|
|
1,127
|
|
|
(4,976
|
)
|
|
1,472
|
|
||||
Nonoperating income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest income
|
92
|
|
|
132
|
|
|
196
|
|
|
258
|
|
||||
Interest expense, net
|
(255
|
)
|
|
(277
|
)
|
|
(515
|
)
|
|
(554
|
)
|
||||
Other income (expense), net
|
72
|
|
|
(31
|
)
|
|
(33
|
)
|
|
79
|
|
||||
Total nonoperating expense, net
|
(91
|
)
|
|
(176
|
)
|
|
(352
|
)
|
|
(217
|
)
|
||||
Income (loss) before income taxes
|
(2,532
|
)
|
|
951
|
|
|
(5,328
|
)
|
|
1,255
|
|
||||
Income tax provision (benefit)
|
(564
|
)
|
|
237
|
|
|
(1,191
|
)
|
|
311
|
|
||||
Net income (loss)
|
$
|
(1,968
|
)
|
|
$
|
714
|
|
|
$
|
(4,137
|
)
|
|
$
|
944
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Net income (loss)
|
$
|
(1,968
|
)
|
|
$
|
714
|
|
|
$
|
(4,137
|
)
|
|
$
|
944
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Pension, retiree medical and other postretirement benefits
|
(4
|
)
|
|
(18
|
)
|
|
(131
|
)
|
|
(34
|
)
|
||||
Investments
|
21
|
|
|
—
|
|
|
(1
|
)
|
|
3
|
|
||||
Total other comprehensive income (loss), net of tax
|
17
|
|
|
(18
|
)
|
|
(132
|
)
|
|
(31
|
)
|
||||
Total comprehensive income (loss)
|
$
|
(1,951
|
)
|
|
$
|
696
|
|
|
$
|
(4,269
|
)
|
|
$
|
913
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash
|
$
|
452
|
|
|
$
|
267
|
|
Short-term investments
|
9,349
|
|
|
3,543
|
|
||
Restricted cash and short-term investments
|
539
|
|
|
158
|
|
||
Accounts receivable, net
|
901
|
|
|
1,770
|
|
||
Receivables from related parties, net
|
9,147
|
|
|
12,451
|
|
||
Aircraft fuel, spare parts and supplies, net
|
1,558
|
|
|
1,754
|
|
||
Prepaid expenses and other
|
851
|
|
|
584
|
|
||
Total current assets
|
22,797
|
|
|
20,527
|
|
||
Operating property and equipment
|
|
|
|
||||
Flight equipment
|
38,346
|
|
|
42,213
|
|
||
Ground property and equipment
|
9,024
|
|
|
9,089
|
|
||
Equipment purchase deposits
|
1,786
|
|
|
1,674
|
|
||
Total property and equipment, at cost
|
49,156
|
|
|
52,976
|
|
||
Less accumulated depreciation and amortization
|
(16,150
|
)
|
|
(18,335
|
)
|
||
Total property and equipment, net
|
33,006
|
|
|
34,641
|
|
||
Operating lease right-of-use assets
|
8,278
|
|
|
8,694
|
|
||
Other assets
|
|
|
|
||||
Goodwill
|
4,091
|
|
|
4,091
|
|
||
Intangibles, net of accumulated amortization of $724 and $704, respectively
|
2,049
|
|
|
2,084
|
|
||
Deferred tax asset
|
1,786
|
|
|
689
|
|
||
Other assets
|
1,098
|
|
|
1,164
|
|
||
Total other assets
|
9,024
|
|
|
8,028
|
|
||
Total assets
|
$
|
73,105
|
|
|
$
|
71,890
|
|
LIABILITIES AND STOCKHOLDER’S EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Current maturities of long-term debt and finance leases
|
$
|
2,578
|
|
|
$
|
2,358
|
|
Accounts payable
|
1,108
|
|
|
1,990
|
|
||
Accrued salaries and wages
|
1,454
|
|
|
1,461
|
|
||
Air traffic liability
|
5,119
|
|
|
4,808
|
|
||
Loyalty program liability
|
2,354
|
|
|
3,193
|
|
||
Operating lease liabilities
|
1,789
|
|
|
1,695
|
|
||
Other accrued liabilities
|
3,216
|
|
|
2,055
|
|
||
Total current liabilities
|
17,618
|
|
|
17,560
|
|
||
Noncurrent liabilities
|
|
|
|
||||
Long-term debt and finance leases, net of current maturities
|
25,339
|
|
|
20,684
|
|
||
Pension and postretirement benefits
|
5,975
|
|
|
6,008
|
|
||
Loyalty program liability
|
6,608
|
|
|
5,422
|
|
||
Operating lease liabilities
|
6,940
|
|
|
7,388
|
|
||
Other liabilities
|
1,367
|
|
|
1,406
|
|
||
Total noncurrent liabilities
|
46,229
|
|
|
40,908
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholder’s equity
|
|
|
|
||||
Common stock, $1.00 par value; 1,000 shares authorized, issued and outstanding
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
17,008
|
|
|
16,903
|
|
||
Accumulated other comprehensive loss
|
(6,555
|
)
|
|
(6,423
|
)
|
||
Retained earnings (deficit)
|
(1,195
|
)
|
|
2,942
|
|
||
Total stockholder's equity
|
9,258
|
|
|
13,422
|
|
||
Total liabilities and stockholder’s equity
|
$
|
73,105
|
|
|
$
|
71,890
|
|
|
Six Months Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
Net cash provided by operating activities
|
$
|
2,295
|
|
|
$
|
2,335
|
|
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures and aircraft purchase deposits
|
(1,208
|
)
|
|
(2,255
|
)
|
||
Proceeds from sale-leaseback transactions
|
376
|
|
|
518
|
|
||
Proceeds from sale of property and equipment
|
148
|
|
|
19
|
|
||
Purchases of short-term investments
|
(7,936
|
)
|
|
(2,190
|
)
|
||
Sales of short-term investments
|
2,131
|
|
|
1,611
|
|
||
Increase in restricted short-term investments
|
(386
|
)
|
|
(2
|
)
|
||
Other investing activities
|
(62
|
)
|
|
(35
|
)
|
||
Net cash used in investing activities
|
(6,937
|
)
|
|
(2,334
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
6,868
|
|
|
1,839
|
|
||
Payments on long-term debt and finance leases
|
(1,971
|
)
|
|
(1,781
|
)
|
||
Deferred financing costs
|
(75
|
)
|
|
(13
|
)
|
||
Net cash provided by financing activities
|
4,822
|
|
|
45
|
|
||
Net increase in cash and restricted cash
|
180
|
|
|
46
|
|
||
Cash and restricted cash at beginning of period
|
277
|
|
|
276
|
|
||
Cash and restricted cash at end of period (1)
|
$
|
457
|
|
|
$
|
322
|
|
|
|
|
|
||||
Non-cash transactions:
|
|
|
|
||||
Right-of-use (ROU) assets acquired through operating leases
|
$
|
412
|
|
|
$
|
708
|
|
Settlement of bankruptcy obligations
|
56
|
|
|
7
|
|
||
Deferred financing costs paid through issuance of debt
|
17
|
|
|
—
|
|
||
Property and equipment acquired through finance leases
|
—
|
|
|
4
|
|
||
Supplemental information:
|
|
|
|
||||
Interest paid, net
|
469
|
|
|
526
|
|
||
Income taxes paid
|
2
|
|
|
4
|
|
|
(1)
|
The following table provides a reconciliation of cash and restricted cash to amounts reported within the condensed consolidated balance sheets:
|
Cash
|
$
|
452
|
|
|
$
|
311
|
|
Restricted cash included in restricted cash and short-term investments
|
5
|
|
|
11
|
|
||
Total cash and restricted cash
|
$
|
457
|
|
|
$
|
322
|
|
|
Common
Stock |
|
Additional
Paid-in Capital |
|
Accumulated
Other Comprehensive Loss |
|
Retained
Earnings
(Deficit)
|
|
Total
|
||||||||||
Balance at December 31, 2019
|
$
|
—
|
|
|
$
|
16,903
|
|
|
$
|
(6,423
|
)
|
|
$
|
2,942
|
|
|
$
|
13,422
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,169
|
)
|
|
(2,169
|
)
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
(149
|
)
|
|
—
|
|
|
(149
|
)
|
|||||
Share-based compensation expense
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||
Intercompany equity transfer
|
—
|
|
|
56
|
|
|
—
|
|
|
—
|
|
|
56
|
|
|||||
Balance at March 31, 2020
|
—
|
|
|
16,977
|
|
|
(6,572
|
)
|
|
773
|
|
|
11,178
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,968
|
)
|
|
(1,968
|
)
|
|||||
Other comprehensive income, net
|
—
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
17
|
|
|||||
Share-based compensation expense
|
—
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|||||
Balance at June 30, 2020
|
$
|
—
|
|
|
$
|
17,008
|
|
|
$
|
(6,555
|
)
|
|
$
|
(1,195
|
)
|
|
$
|
9,258
|
|
|
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
|
|
•
|
refinanced the $1.2 billion 2014 Term Loan Facility at a lower interest rate and extended the maturity from 2021 to 2027;
|
•
|
borrowed $750 million under the 2013 Revolving Facility, $1.6 billion under the 2014 Revolving Facility and $450 million under the April 2016 Revolving Facility;
|
•
|
issued $2.5 billion in aggregate principal amount of 11.75% senior secured notes due 2025 and repaid the $1.0 billion senior secured delayed draw term loan credit facility that American borrowed in March 2020;
|
•
|
issued approximately $360 million in special facility revenue bonds, of which $47 million was used to fund the redemption of certain outstanding bonds;
|
•
|
raised $336 million from aircraft sale-leaseback transactions; and
|
•
|
raised $197 million from aircraft financings, of which $17 million was used to repay existing indebtedness.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
PSP Financial Assistance (1)
|
$
|
(1,803
|
)
|
|
$
|
—
|
|
|
$
|
(1,803
|
)
|
|
$
|
—
|
|
Severance expenses (2)
|
332
|
|
|
—
|
|
|
537
|
|
|
—
|
|
||||
Labor contract expenses (3)
|
10
|
|
|
—
|
|
|
228
|
|
|
—
|
|
||||
Fleet impairment (4)
|
—
|
|
|
—
|
|
|
743
|
|
|
—
|
|
||||
Fleet restructuring expenses (5)
|
—
|
|
|
77
|
|
|
—
|
|
|
160
|
|
||||
Merger integration expenses
|
—
|
|
|
39
|
|
|
—
|
|
|
76
|
|
||||
Mark-to-market adjustments on bankruptcy obligations, net (6)
|
—
|
|
|
5
|
|
|
(49
|
)
|
|
5
|
|
||||
Other operating special items, net
|
(33
|
)
|
|
—
|
|
|
(18
|
)
|
|
18
|
|
||||
Mainline operating special items, net
|
(1,494
|
)
|
|
121
|
|
|
(362
|
)
|
|
259
|
|
||||
|
|
|
|
|
|
|
|
||||||||
PSP Financial Assistance (1)
|
(216
|
)
|
|
—
|
|
|
(216
|
)
|
|
—
|
|
||||
Fleet impairment (4)
|
13
|
|
|
—
|
|
|
106
|
|
|
—
|
|
||||
Regional operating special items, net
|
(203
|
)
|
|
—
|
|
|
(110
|
)
|
|
—
|
|
||||
Operating special items, net
|
(1,697
|
)
|
|
121
|
|
|
(472
|
)
|
|
259
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Mark-to-market adjustments on equity and other investments, net (7)
|
—
|
|
|
61
|
|
|
180
|
|
|
(9
|
)
|
||||
Debt refinancing, extinguishment and other charges
|
11
|
|
|
8
|
|
|
48
|
|
|
8
|
|
||||
Nonoperating special items, net
|
11
|
|
|
69
|
|
|
228
|
|
|
(1
|
)
|
|
(1)
|
PSP Financial Assistance represents recognition of a portion of financial assistance received from Treasury pursuant to the PSP Agreement. See Note 1 for further information.
|
(2)
|
Severance expenses principally include salary and medical costs associated with certain team members who opted in to voluntary early retirement programs offered as a result of reductions to American's operation due to COVID-19.
|
(3)
|
Labor contract expenses primarily relate to one-time charges resulting from the ratification of a new contract with the Transport Workers Union and International Association of Machinists & Aerospace Workers for American's maintenance and fleet service team members, including signing bonuses and adjustments to vacation accruals resulting from pay rate increases.
|
(4)
|
Fleet impairment resulted from American's decision to retire certain aircraft earlier than planned driven by the decline in air travel due to COVID-19. Aircraft retired include Boeing 757, Boeing 767, Airbus A330-300, Embraer 190, certain Embraer 140 and Bombardier CRJ200 aircraft.
|
(5)
|
Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment expected to be retired earlier than planned.
|
(6)
|
Bankruptcy obligations that will be settled in shares of AAG common stock are marked-to-market based on AAG's stock price.
|
(7)
|
Mark-to-market adjustments on equity and other investments, net primarily relates to net unrealized gains and losses associated with American's equity investment in China Southern Airlines Company Limited (China Southern Airlines) and certain treasury rate lock derivative instruments.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Passenger revenue:
|
|
|
|
|
|
|
|
|
|
||||||
Passenger travel
|
$
|
1,006
|
|
|
$
|
10,217
|
|
|
$
|
8,085
|
|
|
$
|
18,989
|
|
Loyalty revenue - travel (1)
|
102
|
|
|
794
|
|
|
703
|
|
|
1,680
|
|
||||
Total passenger revenue
|
1,108
|
|
|
11,011
|
|
|
8,788
|
|
|
20,669
|
|
||||
Cargo
|
130
|
|
|
221
|
|
|
277
|
|
|
439
|
|
||||
Other:
|
|
|
|
|
|
|
|
|
|
||||||
Loyalty revenue - marketing services
|
356
|
|
|
594
|
|
|
927
|
|
|
1,172
|
|
||||
Other revenue
|
28
|
|
|
132
|
|
|
144
|
|
|
259
|
|
||||
Total other revenue
|
384
|
|
|
726
|
|
|
1,071
|
|
|
1,431
|
|
||||
Total operating revenues
|
$
|
1,622
|
|
|
$
|
11,958
|
|
|
$
|
10,136
|
|
|
$
|
22,539
|
|
|
(1)
|
Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions, which were earned from travel or co-branded credit card and other partners.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Domestic
|
$
|
1,026
|
|
|
$
|
8,009
|
|
|
$
|
6,806
|
|
|
$
|
15,235
|
|
Latin America
|
34
|
|
|
1,241
|
|
|
1,214
|
|
|
2,612
|
|
||||
Atlantic
|
42
|
|
|
1,407
|
|
|
565
|
|
|
2,080
|
|
||||
Pacific
|
6
|
|
|
354
|
|
|
203
|
|
|
742
|
|
||||
Total passenger revenue
|
$
|
1,108
|
|
|
$
|
11,011
|
|
|
$
|
8,788
|
|
|
$
|
20,669
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(In millions)
|
||||||
Loyalty program liability
|
$
|
8,962
|
|
|
$
|
8,615
|
|
Air traffic liability
|
5,119
|
|
|
4,808
|
|
||
Total
|
$
|
14,081
|
|
|
$
|
13,423
|
|
Balance at December 31, 2019
|
$
|
8,615
|
|
Deferral of revenue
|
1,149
|
|
|
Recognition of revenue (1)
|
(802
|
)
|
|
Balance at June 30, 2020 (2)
|
$
|
8,962
|
|
|
(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 generally do not expire as long as that AAdvantage member has any type of qualifying activity at least every 18 months. As of June 30, 2020, American's current loyalty program liability was $2.4 billion and represents American's current estimate of revenue expected to be recognized in the next 12 months based on historical trends, with the balance reflected in long-term loyalty program liability expected to be recognized as revenue in periods thereafter. Given the inherent uncertainty of the current operating environment due to COVID-19, American will continue to monitor redemption patterns and may adjust its estimates in the future.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
Secured
|
|
|
|
||||
2013 Term Loan Facility, variable interest rate of 1.93%, installments through 2025
|
$
|
1,788
|
|
|
$
|
1,807
|
|
2013 Revolving Facility, variable interest rate of 2.17%, due 2024
|
750
|
|
|
—
|
|
||
2014 Term Loan Facility, variable interest rate of 1.93%, installments through 2027
|
1,220
|
|
|
1,202
|
|
||
2014 Revolving Facility, variable interest rate of 2.17%, due 2024
|
1,643
|
|
|
—
|
|
||
April 2016 Term Loan Facility, variable interest rate of 2.18%, installments through 2023
|
960
|
|
|
970
|
|
||
April 2016 Revolving Facility, variable interest rate of 2.17%, due 2024
|
450
|
|
|
—
|
|
||
December 2016 Term Loan Facility, variable interest rate of 2.18%, installments through 2023
|
1,213
|
|
|
1,213
|
|
||
11.75% senior secured notes, interest only payments until due in July 2025
|
2,500
|
|
|
—
|
|
||
Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.00% to 8.39%, averaging 4.03%, maturing from 2020 to 2032
|
11,410
|
|
|
11,933
|
|
||
Equipment loans and other notes payable, fixed and variable interest rates ranging from 1.38% to 5.83%, averaging 2.20%, maturing from 2020 to 2032
|
4,610
|
|
|
4,727
|
|
||
Special facility revenue bonds, fixed interest rates ranging from 5.00% to 5.38%, maturing from 2021 to 2036
|
1,040
|
|
|
725
|
|
||
Total long-term debt
|
27,584
|
|
|
22,577
|
|
||
Less: Total unamortized debt discount, premium and issuance costs
|
277
|
|
|
205
|
|
||
Less: Current maturities
|
2,474
|
|
|
2,246
|
|
||
Long-term debt, net of current maturities
|
$
|
24,833
|
|
|
$
|
20,126
|
|
|
Fair Value Measurements as of June 30, 2020
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Short-term investments (1), (2):
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
7,851
|
|
|
$
|
7,851
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Bank notes/certificates of deposit/time deposits
|
1,131
|
|
|
—
|
|
|
1,131
|
|
|
—
|
|
||||
Corporate obligations
|
367
|
|
|
—
|
|
|
367
|
|
|
—
|
|
||||
|
9,349
|
|
|
7,851
|
|
|
1,498
|
|
|
—
|
|
||||
Restricted cash and short-term investments (1), (4)
|
539
|
|
|
390
|
|
|
149
|
|
|
—
|
|
||||
Long-term investments (3)
|
128
|
|
|
128
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
10,016
|
|
|
$
|
8,369
|
|
|
$
|
1,647
|
|
|
$
|
—
|
|
|
(1)
|
All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are recorded in accumulated other comprehensive loss at each reporting period. There were no credit losses.
|
(2)
|
American’s short-term investments mature in one year or less except for $484 million of bank notes/certificates of deposit/time deposits and $120 million of corporate obligations.
|
(3)
|
Long-term investments primarily include American's equity investment in China Southern Airlines, in which American presently owns a 1.8% equity interest, and are classified in other assets on the condensed consolidated balance sheet.
|
(4)
|
Restricted cash and short-term investments primarily includes money market funds to be used to finance a substantial portion of the cost of the renovation and expansion of Terminal 8 at JFK and collateral held to support workers' compensation obligations.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||
|
Carrying
Value |
|
Fair
Value |
|
Carrying
Value |
|
Fair
Value |
||||||||
Long-term debt, including current maturities
|
$
|
27,307
|
|
|
$
|
23,284
|
|
|
$
|
22,372
|
|
|
$
|
23,196
|
|
|
|
Pension Benefits
|
|
Retiree Medical and Other
Postretirement Benefits |
||||||||||||
Three Months Ended June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Service cost
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
1
|
|
Interest cost
|
|
153
|
|
|
175
|
|
|
8
|
|
|
8
|
|
||||
Expected return on assets
|
|
(251
|
)
|
|
(203
|
)
|
|
(3
|
)
|
|
(4
|
)
|
||||
Settlements
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Amortization of:
|
|
|
|
|
|
|
|
|
||||||||
Prior service cost (benefit)
|
|
7
|
|
|
7
|
|
|
(52
|
)
|
|
(59
|
)
|
||||
Unrecognized net loss (gain)
|
|
41
|
|
|
38
|
|
|
(5
|
)
|
|
(8
|
)
|
||||
Net periodic benefit cost (income)
|
|
$
|
(45
|
)
|
|
$
|
18
|
|
|
$
|
(50
|
)
|
|
$
|
(62
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Pension Benefits
|
|
Retiree Medical and Other
Postretirement Benefits |
||||||||||||
Six Months Ended June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Service cost
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
2
|
|
Interest cost
|
|
306
|
|
|
350
|
|
|
14
|
|
|
17
|
|
||||
Expected return on assets
|
|
(503
|
)
|
|
(405
|
)
|
|
(6
|
)
|
|
(8
|
)
|
||||
Settlements
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Amortization of:
|
|
|
|
|
|
|
|
|
||||||||
Prior service cost (benefit)
|
|
14
|
|
|
14
|
|
|
(106
|
)
|
|
(118
|
)
|
||||
Unrecognized net loss (gain)
|
|
83
|
|
|
76
|
|
|
(12
|
)
|
|
(16
|
)
|
||||
Net periodic benefit cost (income)
|
|
$
|
(95
|
)
|
|
$
|
36
|
|
|
$
|
(107
|
)
|
|
$
|
(123
|
)
|
|
Pension, Retiree
Medical and Other Postretirement Benefits |
|
Unrealized Loss on Investments
|
|
Income Tax
Benefit (Provision) (1) |
|
Total
|
||||||||
Balance at December 31, 2019
|
$
|
(5,218
|
)
|
|
$
|
(2
|
)
|
|
$
|
(1,203
|
)
|
|
$
|
(6,423
|
)
|
Other comprehensive income (loss) before
reclassifications |
(152
|
)
|
|
(1
|
)
|
|
34
|
|
|
(119
|
)
|
||||
Amounts reclassified from AOCI
|
(17
|
)
|
|
—
|
|
|
4
|
|
(2)
|
(13
|
)
|
||||
Net current-period other comprehensive income
(loss) |
(169
|
)
|
|
(1
|
)
|
|
38
|
|
|
(132
|
)
|
||||
Balance at June 30, 2020
|
$
|
(5,387
|
)
|
|
$
|
(3
|
)
|
|
$
|
(1,165
|
)
|
|
$
|
(6,555
|
)
|
|
(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 (benefit) 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, |
|
|||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
||||||||||
Amortization of pension, retiree medical
and other postretirement benefits: |
|
|
|
|
|
|
|
|
|
|
||||||||
Prior service benefit
|
|
$
|
(34
|
)
|
|
$
|
(41
|
)
|
|
$
|
(71
|
)
|
|
$
|
(81
|
)
|
|
Nonoperating other income (expense), net
|
Actuarial loss
|
|
30
|
|
|
23
|
|
|
57
|
|
|
47
|
|
|
Nonoperating other income (expense), net
|
||||
Total reclassifications for the period,
net of tax |
|
$
|
(4
|
)
|
|
$
|
(18
|
)
|
|
$
|
(14
|
)
|
|
$
|
(34
|
)
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Aircraft fuel and related taxes
|
$
|
92
|
|
|
$
|
487
|
|
|
$
|
480
|
|
|
$
|
909
|
|
Salaries, wages and benefits
|
71
|
|
|
85
|
|
|
155
|
|
|
165
|
|
||||
Capacity purchases from third-party regional carriers (1)
|
570
|
|
|
907
|
|
|
1,483
|
|
|
1,765
|
|
||||
Maintenance, materials and repairs
|
1
|
|
|
5
|
|
|
6
|
|
|
9
|
|
||||
Other rent and landing fees
|
98
|
|
|
154
|
|
|
242
|
|
|
313
|
|
||||
Aircraft rent
|
3
|
|
|
8
|
|
|
8
|
|
|
15
|
|
||||
Selling expenses
|
14
|
|
|
105
|
|
|
94
|
|
|
197
|
|
||||
Depreciation and amortization
|
71
|
|
|
71
|
|
|
141
|
|
|
138
|
|
||||
Special items, net
|
(203
|
)
|
|
—
|
|
|
(110
|
)
|
|
—
|
|
||||
Other
|
39
|
|
|
89
|
|
|
148
|
|
|
191
|
|
||||
Total regional expenses
|
$
|
756
|
|
|
$
|
1,911
|
|
|
$
|
2,647
|
|
|
$
|
3,702
|
|
|
(1)
|
During the three months ended June 30, 2020 and 2019, American recognized $61 million and $149 million, respectively, of expense under its capacity purchase agreement with Republic Airline Inc. (Republic). During the six months ended June 30, 2020 and 2019, American recognized $211 million and $292 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, 2020
|
|
December 31, 2019
|
||||
AAG (1)
|
$
|
11,229
|
|
|
$
|
14,597
|
|
AAG’s wholly-owned subsidiaries (2)
|
(2,082
|
)
|
|
(2,146
|
)
|
||
Total
|
$
|
9,147
|
|
|
$
|
12,451
|
|
|
(1)
|
The decrease in American’s net related party receivable from AAG is primarily due to cash received from the proceeds of AAG financing transactions including the PSP Promissory Note, the 6.50% convertible senior notes and the issuance of 85.2 million shares of AAG common stock pursuant to a public stock offering.
|
(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.
|
•
|
refinanced the $1.2 billion 2014 Term Loan Facility at a lower interest rate and extended the maturity from 2021 to 2027;
|
•
|
issued $500 million in aggregate principal amount of 3.75% unsecured senior notes due 2025 and repaid $500 million of 4.625% unsecured senior notes that matured in March 2020;
|
•
|
borrowed $750 million under the 2013 Revolving Facility, $1.6 billion under the 2014 Revolving Facility and $450 million under the April 2016 Revolving Facility;
|
•
|
issued $1.0 billion in aggregate principal amount of 6.50% convertible senior notes due 2025;
|
•
|
issued 85.2 million shares of AAG common stock at a price of $13.50 per share pursuant to a public offering of common stock for net proceeds of $1.1 billion;
|
•
|
issued $2.5 billion in aggregate principal amount of 11.75% senior secured notes due 2025 and repaid the $1.0 billion senior secured delayed draw term loan credit facility that we borrowed in March 2020;
|
•
|
issued approximately $360 million in special facility revenue bonds, of which $47 million was used to fund the redemption of certain outstanding bonds;
|
•
|
raised $336 million from aircraft sale-leaseback transactions; and
|
•
|
raised $197 million from aircraft financings, of which $17 million was used to repay existing indebtedness.
|
|
Three Months Ended June 30,
|
|
Decrease
|
|
Percent
Decrease
|
|||||||||
|
2020
|
|
2019
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Passenger revenue
|
$
|
1,108
|
|
|
$
|
11,011
|
|
|
$
|
(9,903
|
)
|
|
(89.9
|
)
|
Cargo revenue
|
130
|
|
|
221
|
|
|
(91
|
)
|
|
(41.0
|
)
|
|||
Other operating revenue
|
384
|
|
|
728
|
|
|
(344
|
)
|
|
(47.2
|
)
|
|||
Total operating revenues
|
1,622
|
|
|
11,960
|
|
|
(10,338
|
)
|
|
(86.4
|
)
|
|||
Mainline and regional aircraft fuel and related taxes
|
309
|
|
|
2,482
|
|
|
(2,173
|
)
|
|
(87.6
|
)
|
|||
Salaries, wages and benefits
|
2,538
|
|
|
3,200
|
|
|
(662
|
)
|
|
(20.7
|
)
|
|||
Total operating expenses
|
4,108
|
|
|
10,807
|
|
|
(6,699
|
)
|
|
(62.0
|
)
|
|||
Operating income (loss)
|
(2,486
|
)
|
|
1,153
|
|
|
(3,639
|
)
|
|
nm (2)
|
|
|||
Pre-tax income (loss)
|
(2,659
|
)
|
|
882
|
|
|
(3,541
|
)
|
|
nm
|
|
|||
Income tax provision (benefit)
|
(592
|
)
|
|
220
|
|
|
(812
|
)
|
|
nm
|
|
|||
Net income (loss)
|
(2,067
|
)
|
|
662
|
|
|
(2,729
|
)
|
|
nm
|
|
|||
|
|
|
|
|
|
|
|
|||||||
Pre-tax income (loss) – GAAP
|
$
|
(2,659
|
)
|
|
$
|
882
|
|
|
$
|
(3,541
|
)
|
|
nm
|
|
Adjusted for: Pre-tax net special items (1)
|
(1,661
|
)
|
|
190
|
|
|
(1,851
|
)
|
|
nm
|
|
|||
Pre-tax income (loss) excluding net special items
|
$
|
(4,320
|
)
|
|
$
|
1,072
|
|
|
$
|
(5,392
|
)
|
|
nm
|
|
|
(1)
|
See below “Reconciliation of GAAP to Non-GAAP Financial Measures” and Note 2 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for details on the components of net special items.
|
(2)
|
Not meaningful or greater than 100% change.
|
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(In millions)
|
||||||||||||||
Reconciliation of Pre-Tax Income (Loss) Excluding Net Special Items:
|
|
|
|
|
|
|
|
||||||||
Pre-tax income (loss) - GAAP
|
$
|
(2,659
|
)
|
|
$
|
882
|
|
|
$
|
(5,549
|
)
|
|
$
|
1,128
|
|
Pre-tax net special items (1):
|
|
|
|
|
|
|
|
||||||||
Operating special items, net
|
(1,672
|
)
|
|
121
|
|
|
(447
|
)
|
|
259
|
|
||||
Nonoperating special items, net
|
11
|
|
|
69
|
|
|
228
|
|
|
(1
|
)
|
||||
Total pre-tax net special items
|
(1,661
|
)
|
|
190
|
|
|
(219
|
)
|
|
258
|
|
||||
Pre-tax income (loss) excluding net special items
|
$
|
(4,320
|
)
|
|
$
|
1,072
|
|
|
$
|
(5,768
|
)
|
|
$
|
1,386
|
|
|
(1)
|
See Note 2 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for further information on net special items.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Reconciliation of Total Operating Costs per Available Seat
Mile (CASM) Excluding Net Special Items and Fuel:
|
|
|
|
|
|
|
|
||||||||
(In millions)
|
|
|
|
|
|
|
|
||||||||
Total operating expenses - GAAP
|
$
|
4,108
|
|
|
$
|
10,807
|
|
|
$
|
15,171
|
|
|
$
|
21,016
|
|
Operating net special items:
|
|
|
|
|
|
|
|
||||||||
Mainline operating special items, net (1)
|
1,494
|
|
|
(121
|
)
|
|
362
|
|
|
(259
|
)
|
||||
Regional operating special items, net
|
178
|
|
|
—
|
|
|
85
|
|
|
—
|
|
||||
Fuel:
|
|
|
|
|
|
|
|
||||||||
Aircraft fuel and related taxes - mainline
|
(217
|
)
|
|
(1,995
|
)
|
|
(1,612
|
)
|
|
(3,722
|
)
|
||||
Aircraft fuel and related taxes - regional
|
(92
|
)
|
|
(487
|
)
|
|
(480
|
)
|
|
(909
|
)
|
||||
Total operating expenses, excluding net special items and fuel
|
$
|
5,471
|
|
|
$
|
8,204
|
|
|
$
|
13,526
|
|
|
$
|
16,126
|
|
(In millions)
|
|
|
|
|
|
|
|
||||||||
Total Available Seat Miles (ASM)
|
17,081
|
|
|
72,322
|
|
|
79,180
|
|
|
138,996
|
|
||||
(In cents)
|
|
|
|
|
|
|
|
||||||||
Total operating CASM
|
24.05
|
|
|
14.94
|
|
|
19.16
|
|
|
15.12
|
|
||||
Operating net special items per ASM:
|
|
|
|
|
|
|
|
||||||||
Mainline operating special items, net (1)
|
8.75
|
|
|
(0.17
|
)
|
|
0.46
|
|
|
(0.19
|
)
|
||||
Regional operating special items, net
|
1.04
|
|
|
—
|
|
|
0.11
|
|
|
—
|
|
||||
Fuel per ASM:
|
|
|
|
|
|
|
|
||||||||
Aircraft fuel and related taxes - mainline
|
(1.27
|
)
|
|
(2.76
|
)
|
|
(2.04
|
)
|
|
(2.68
|
)
|
||||
Aircraft fuel and related taxes - regional
|
(0.54
|
)
|
|
(0.67
|
)
|
|
(0.61
|
)
|
|
(0.65
|
)
|
||||
Total operating CASM, excluding net special items and fuel
|
32.04
|
|
|
11.34
|
|
|
17.08
|
|
|
11.60
|
|
|
(1)
|
See Note 2 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for further information on net special items.
|
|
Three Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Six Months Ended
June 30, |
|
Increase
(Decrease)
|
||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|||||||||
Revenue passenger miles (millions) (a)
|
7,231
|
|
|
62,658
|
|
|
(88.5
|
)%
|
|
52,402
|
|
|
117,460
|
|
|
(55.4
|
)%
|
Available seat miles (millions) (b)
|
17,081
|
|
|
72,322
|
|
|
(76.4
|
)%
|
|
79,180
|
|
|
138,996
|
|
|
(43.0
|
)%
|
Passenger load factor (percent) (c)
|
42.3
|
|
|
86.6
|
|
|
(44.3
|
)pts
|
|
66.2
|
|
|
84.5
|
|
|
(18.3
|
)pts
|
Yield (cents) (d)
|
15.32
|
|
|
17.57
|
|
|
(12.8
|
)%
|
|
16.77
|
|
|
17.60
|
|
|
(4.7
|
)%
|
Passenger revenue per available seat mile (cents) (e)
|
6.48
|
|
|
15.22
|
|
|
(57.4
|
)%
|
|
11.10
|
|
|
14.87
|
|
|
(25.4
|
)%
|
Total revenue per available seat mile (cents) (f)
|
9.50
|
|
|
16.54
|
|
|
(42.6
|
)%
|
|
12.80
|
|
|
16.22
|
|
|
(21.1
|
)%
|
Aircraft at end of period (g)
|
1,394
|
|
|
1,579
|
|
|
(11.7
|
)%
|
|
1,394
|
|
|
1,579
|
|
|
(11.7
|
)%
|
Fuel consumption (gallons in millions)
|
275
|
|
|
1,158
|
|
|
(76.3
|
)%
|
|
1,246
|
|
|
2,211
|
|
|
(43.6
|
)%
|
Average aircraft fuel price including related taxes (dollars per gallon)
|
1.13
|
|
|
2.14
|
|
|
(47.5
|
)%
|
|
1.68
|
|
|
2.09
|
|
|
(19.8
|
)%
|
Full-time equivalent employees at end of period
|
107,400
|
|
|
133,800
|
|
|
(19.7
|
)%
|
|
107,400
|
|
|
133,800
|
|
|
(19.7
|
)%
|
Operating cost per available seat mile (cents) (h)
|
24.05
|
|
|
14.94
|
|
|
61.0
|
%
|
|
19.16
|
|
|
15.12
|
|
|
26.7
|
%
|
|
(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)
|
Includes aircraft owned and leased by American as well as aircraft operated by third-party regional carriers under capacity purchase agreements. Excludes 22 mainline and 20 regional aircraft that are in temporary storage as follows: 15 Airbus A330-200, 13 Embraer 175, seven Boeing 737-800, four Embraer 145 and three Bombardier CRJ700 aircraft.
|
(h)
|
Operating cost per available seat mile (CASM) – Operating expenses divided by ASMs.
|
|
Three Months Ended
June 30, |
|
Decrease
|
|
Percent
Decrease
|
|||||||||
|
2020
|
|
2019
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Passenger
|
$
|
1,108
|
|
|
$
|
11,011
|
|
|
$
|
(9,903
|
)
|
|
(89.9
|
)
|
Cargo
|
130
|
|
|
221
|
|
|
(91
|
)
|
|
(41.0
|
)
|
|||
Other
|
384
|
|
|
728
|
|
|
(344
|
)
|
|
(47.2
|
)
|
|||
Total operating revenues
|
$
|
1,622
|
|
|
$
|
11,960
|
|
|
$
|
(10,338
|
)
|
|
(86.4
|
)
|
|
|
|
Decrease
vs. Three Months Ended June 30, 2019 |
||||||||||||||
|
Three Months Ended
June 30, 2020 |
|
RPMs
|
|
ASMs
|
|
Load
Factor
|
|
Passenger
Yield
|
|
PRASM
|
||||||
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
||||||
Passenger revenue
|
$
|
1,108
|
|
|
(88.5)%
|
|
(76.4
|
)%
|
|
(44.3
|
)pts
|
|
(12.8
|
)%
|
|
(57.4
|
)%
|
|
Three Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2020
|
|
2019
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Aircraft fuel and related taxes
|
$
|
217
|
|
|
$
|
1,995
|
|
|
$
|
(1,778
|
)
|
|
(89.1
|
)
|
Salaries, wages and benefits
|
2,538
|
|
|
3,200
|
|
|
(662
|
)
|
|
(20.7
|
)
|
|||
Maintenance, materials and repairs
|
287
|
|
|
575
|
|
|
(288
|
)
|
|
(50.1
|
)
|
|||
Other rent and landing fees
|
315
|
|
|
535
|
|
|
(220
|
)
|
|
(41.2
|
)
|
|||
Aircraft rent
|
334
|
|
|
334
|
|
|
—
|
|
|
—
|
|
|||
Selling expenses
|
43
|
|
|
401
|
|
|
(358
|
)
|
|
(89.1
|
)
|
|||
Depreciation and amortization
|
499
|
|
|
489
|
|
|
10
|
|
|
1.9
|
|
|||
Mainline operating special items, net
|
(1,494
|
)
|
|
121
|
|
|
(1,615
|
)
|
|
nm
|
|
|||
Other
|
568
|
|
|
1,271
|
|
|
(703
|
)
|
|
(55.3
|
)
|
|||
Regional expenses:
|
|
|
|
|
|
|
|
|||||||
Aircraft fuel and related taxes
|
92
|
|
|
487
|
|
|
(395
|
)
|
|
(81.1
|
)
|
|||
Other
|
709
|
|
|
1,399
|
|
|
(690
|
)
|
|
(49.3
|
)
|
|||
Total operating expenses
|
$
|
4,108
|
|
|
$
|
10,807
|
|
|
$
|
(6,699
|
)
|
|
(62.0
|
)
|
|
Three Months Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
PSP Financial Assistance (1)
|
$
|
(1,803
|
)
|
|
$
|
—
|
|
Severance expenses (2)
|
332
|
|
|
—
|
|
||
Labor contract expenses (3)
|
10
|
|
|
—
|
|
||
Fleet restructuring expenses (4)
|
—
|
|
|
77
|
|
||
Merger integration expenses
|
—
|
|
|
39
|
|
||
Mark-to-market adjustments on bankruptcy obligations, net (5)
|
—
|
|
|
5
|
|
||
Other operating special items, net
|
(33
|
)
|
|
—
|
|
||
Mainline operating special items, net
|
(1,494
|
)
|
|
121
|
|
||
|
|
|
|
||||
PSP Financial Assistance (1)
|
(216
|
)
|
|
—
|
|
||
Fleet impairment (6)
|
24
|
|
|
—
|
|
||
Severance expenses (2)
|
14
|
|
|
—
|
|
||
Regional operating special items, net
|
(178
|
)
|
|
—
|
|
||
Operating special items, net
|
$
|
(1,672
|
)
|
|
$
|
121
|
|
|
(1)
|
PSP Financial Assistance represents recognition of a portion of financial assistance received from Treasury pursuant to the PSP Agreement. See Note 1 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for further information.
|
(2)
|
Severance expenses principally include salary and medical costs associated with certain team members who opted in to voluntary early retirement programs offered as a result of reductions to our operation due to COVID-19.
|
(3)
|
Labor contract expenses primarily relate to one-time charges resulting from the ratification of a new contract with the Transport Workers Union and International Association of Machinists & Aerospace Workers (the TWU-IAM Association) for our maintenance and fleet service team members, including signing bonuses and adjustments to vacation accruals resulting from pay rate increases.
|
(4)
|
Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment expected to be retired earlier than planned.
|
(5)
|
Bankruptcy obligations that will be settled in shares of our common stock are marked-to-market based on our stock price.
|
(6)
|
Fleet impairment resulted from our decision to retire certain aircraft earlier than planned driven by the decline in air travel due to COVID-19. Aircraft retired include certain Embraer 140 and Bombardier CRJ200 aircraft. The three months ended June 30, 2020 primarily included a non-cash write-down of regional aircraft and spare parts. See Note 13 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for further information related to these charges.
|
|
Three Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2020
|
|
2019
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Interest income
|
$
|
10
|
|
|
$
|
35
|
|
|
$
|
(25
|
)
|
|
(72.5
|
)
|
Interest expense, net
|
(254
|
)
|
|
(275
|
)
|
|
21
|
|
|
(7.5
|
)
|
|||
Other income (expense), net
|
71
|
|
|
(31
|
)
|
|
102
|
|
|
nm
|
|
|||
Total nonoperating expense, net
|
$
|
(173
|
)
|
|
$
|
(271
|
)
|
|
$
|
98
|
|
|
(36.1
|
)
|
|
Six Months Ended
June 30, |
|
Decrease
|
|
Percent
Decrease
|
||||||||
|
2020
|
|
2019
|
|
|||||||||
|
(In millions, except percentage changes)
|
||||||||||||
Passenger
|
$
|
8,788
|
|
|
$
|
20,669
|
|
|
$
|
(11,881
|
)
|
|
(57.5)
|
Cargo
|
277
|
|
|
439
|
|
|
(162
|
)
|
|
(36.9)
|
|||
Other
|
1,072
|
|
|
1,436
|
|
|
(364
|
)
|
|
(25.4)
|
|||
Total operating revenues
|
$
|
10,137
|
|
|
$
|
22,544
|
|
|
$
|
(12,407
|
)
|
|
(55.0)
|
|
|
|
Decrease
vs. Six Months Ended June 30, 2019 |
||||||||||||
|
Six Months Ended
June 30, 2020 |
|
RPMs
|
|
ASMs
|
|
Load
Factor
|
|
Passenger
Yield
|
|
PRASM
|
||||
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
||||
Passenger revenue
|
$
|
8,788
|
|
|
(55.4)%
|
|
(43.0)%
|
|
(18.3
|
)pts
|
|
(4.7)%
|
|
(25.4
|
)%
|
|
Six Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||
|
2020
|
|
2019
|
|
||||||||
|
(In millions, except percentage changes)
|
|||||||||||
Aircraft fuel and related taxes
|
$
|
1,612
|
|
|
$
|
3,722
|
|
|
(2,110)
|
|
(56.7)
|
|
Salaries, wages and benefits
|
5,679
|
|
|
6,290
|
|
|
(611)
|
|
(9.7)
|
|
||
Maintenance, materials and repairs
|
915
|
|
|
1,136
|
|
|
(221)
|
|
(19.4)
|
|
||
Other rent and landing fees
|
783
|
|
|
1,039
|
|
|
(256)
|
|
(24.6)
|
|
||
Aircraft rent
|
669
|
|
|
661
|
|
|
8
|
|
1.2
|
|
||
Selling expenses
|
348
|
|
|
771
|
|
|
(423)
|
|
(54.8)
|
|
||
Depreciation and amortization
|
1,059
|
|
|
969
|
|
|
90
|
|
9.2
|
|
||
Mainline operating special items, net
|
(362
|
)
|
|
259
|
|
|
(621)
|
|
nm
|
|
||
Other
|
1,744
|
|
|
2,521
|
|
|
(777)
|
|
(30.8
|
)
|
||
Regional expenses:
|
|
|
|
|
|
|
|
|||||
Aircraft fuel and related taxes
|
480
|
|
|
909
|
|
|
(429)
|
|
(47.2)
|
|
||
Other
|
2,244
|
|
|
2,739
|
|
|
(495)
|
|
(18.1)
|
|
||
Total operating expenses
|
$
|
15,171
|
|
|
$
|
21,016
|
|
|
(5,845)
|
|
(27.8)
|
|
|
Six Months Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
PSP Financial Assistance (1)
|
$
|
(1,803
|
)
|
|
$
|
—
|
|
Fleet impairment (2)
|
743
|
|
|
—
|
|
||
Severance expenses (3)
|
537
|
|
|
—
|
|
||
Labor contract expenses (4)
|
228
|
|
|
—
|
|
||
Fleet restructuring expenses (5)
|
—
|
|
|
160
|
|
||
Merger integration expenses
|
—
|
|
|
76
|
|
||
Mark-to-market adjustments on bankruptcy obligations, net (6)
|
(49
|
)
|
|
5
|
|
||
Other operating special items, net
|
(18
|
)
|
|
18
|
|
||
Mainline operating special items, net
|
(362
|
)
|
|
259
|
|
||
|
|
|
|
||||
PSP Financial Assistance (1)
|
(216
|
)
|
|
—
|
|
||
Fleet impairment (2)
|
117
|
|
|
—
|
|
||
Severance expenses (3)
|
14
|
|
|
—
|
|
||
Regional operating special items, net
|
(85
|
)
|
|
—
|
|
||
Operating special items, net
|
$
|
(447
|
)
|
|
$
|
259
|
|
|
(1)
|
PSP Financial Assistance represents recognition of a portion of financial assistance received from Treasury pursuant to the PSP Agreement. See Note 1 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for further information.
|
(2)
|
Fleet impairment resulted from our decision to retire certain aircraft earlier than planned driven by the decline in air travel due to COVID-19. Aircraft retired include Boeing 757, Boeing 767, Airbus A330-300, Embraer 190, certain Embraer 140 and Bombardier CRJ200 aircraft.
|
(3)
|
Severance expenses principally include salary and medical costs associated with certain team members who opted in to voluntary early retirement programs offered as a result of reductions to our operation due to COVID-19.
|
(4)
|
Labor contract expenses primarily relate to one-time charges resulting from the ratification of a new contract with the TWU-IAM Association for our maintenance and fleet service team members, including signing bonuses and adjustments to vacation accruals resulting from pay rate increases.
|
(5)
|
Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment expected to be retired earlier than planned.
|
(6)
|
Bankruptcy obligations that will be settled in shares of our common stock are marked-to-market based on our stock price.
|
|
Six Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
||||||||
|
2020
|
|
2019
|
|
|||||||||
|
(In millions, except percentage changes)
|
||||||||||||
Interest income
|
$
|
31
|
|
|
$
|
68
|
|
|
$
|
(37
|
)
|
|
(54.7)
|
Interest expense, net
|
(512
|
)
|
|
(546
|
)
|
|
34
|
|
|
(6.2)
|
|||
Other income (expense), net
|
(34
|
)
|
|
78
|
|
|
(112
|
)
|
|
nm
|
|||
Total nonoperating expense, net
|
$
|
(515
|
)
|
|
$
|
(400
|
)
|
|
$
|
(115
|
)
|
|
28.6
|
|
Three Months Ended
June 30, |
|
Decrease
|
|
Percent
Decrease
|
|||||||||
|
2020
|
|
2019
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Passenger
|
$
|
1,108
|
|
|
$
|
11,011
|
|
|
$
|
(9,903
|
)
|
|
(89.9
|
)
|
Cargo
|
130
|
|
|
221
|
|
|
(91
|
)
|
|
(41.0
|
)
|
|||
Other
|
384
|
|
|
726
|
|
|
(342
|
)
|
|
(47.1
|
)
|
|||
Total operating revenues
|
$
|
1,622
|
|
|
$
|
11,958
|
|
|
$
|
(10,336
|
)
|
|
(86.4
|
)
|
|
Three Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2020
|
|
2019
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Aircraft fuel and related taxes
|
$
|
217
|
|
|
$
|
1,995
|
|
|
$
|
(1,778
|
)
|
|
(89.1
|
)
|
Salaries, wages and benefits
|
2,538
|
|
|
3,198
|
|
|
(660
|
)
|
|
(20.6
|
)
|
|||
Maintenance, materials and repairs
|
287
|
|
|
575
|
|
|
(288
|
)
|
|
(50.1
|
)
|
|||
Other rent and landing fees
|
315
|
|
|
535
|
|
|
(220
|
)
|
|
(41.2
|
)
|
|||
Aircraft rent
|
334
|
|
|
334
|
|
|
—
|
|
|
—
|
|
|||
Selling expenses
|
43
|
|
|
401
|
|
|
(358
|
)
|
|
(89.1
|
)
|
|||
Depreciation and amortization
|
499
|
|
|
489
|
|
|
10
|
|
|
1.9
|
|
|||
Mainline operating special items, net
|
(1,494
|
)
|
|
121
|
|
|
(1,615
|
)
|
|
nm
|
|
|||
Other
|
568
|
|
|
1,272
|
|
|
(704
|
)
|
|
(55.4
|
)
|
|||
Regional expenses:
|
|
|
|
|
|
|
|
|||||||
Aircraft fuel and related taxes
|
92
|
|
|
487
|
|
|
(395
|
)
|
|
(81.1
|
)
|
|||
Other
|
664
|
|
|
1,424
|
|
|
(760
|
)
|
|
(53.4
|
)
|
|||
Total operating expenses
|
$
|
4,063
|
|
|
$
|
10,831
|
|
|
$
|
(6,768
|
)
|
|
(62.5
|
)
|
|
Three Months Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
PSP Financial Assistance (1)
|
$
|
(1,803
|
)
|
|
$
|
—
|
|
Severance expenses (2)
|
332
|
|
|
—
|
|
||
Labor contract expenses (3)
|
10
|
|
|
—
|
|
||
Fleet restructuring expenses (4)
|
—
|
|
|
77
|
|
||
Merger integration expenses
|
—
|
|
|
39
|
|
||
Mark-to-market adjustments on bankruptcy obligations, net (5)
|
—
|
|
|
5
|
|
||
Other operating special items, net
|
(33
|
)
|
|
—
|
|
||
Mainline operating special items, net
|
(1,494
|
)
|
|
121
|
|
||
|
|
|
|
||||
PSP Financial Assistance (1)
|
(216
|
)
|
|
—
|
|
||
Fleet impairment (6)
|
13
|
|
|
—
|
|
||
Regional operating special items, net
|
(203
|
)
|
|
—
|
|
||
Operating special items, net
|
$
|
(1,697
|
)
|
|
$
|
121
|
|
|
(1)
|
PSP Financial Assistance represents recognition of a portion of financial assistance received from Treasury pursuant to the PSP Agreement. See Note 1 to American's Condensed Consolidated Financial Statements in Part I, Item 1B for further information.
|
(2)
|
Severance expenses principally include salary and medical costs associated with certain team members who opted in to voluntary early retirement programs offered as a result of reductions to American's operation due to COVID-19.
|
(3)
|
Labor contract expenses primarily relate to one-time charges resulting from the ratification of a new contract with the TWU-IAM Association for American's maintenance and fleet service team members, including signing bonuses and adjustments to vacation accruals resulting from pay rate increases.
|
(4)
|
Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment expected to be retired earlier than planned.
|
(5)
|
Bankruptcy obligations that will be settled in shares of AAG common stock are marked-to-market based on AAG's stock price.
|
(6)
|
Fleet impairment resulted from American's decision to retire certain aircraft earlier than planned driven by the decline in air travel due to COVID-19. Aircraft retired include certain Embraer 140 and Bombardier CRJ200 aircraft. The three months ended June 30, 2020 primarily included a non-cash write-down of regional aircraft and spare parts. See Note 12 to American’s Condensed Consolidated Financial Statements in Part I, Item 1B for further information related to these charges.
|
|
Three Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2020
|
|
2019
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Interest income
|
$
|
92
|
|
|
$
|
132
|
|
|
$
|
(40
|
)
|
|
(30.6
|
)
|
Interest expense, net
|
(255
|
)
|
|
(277
|
)
|
|
22
|
|
|
(8.1
|
)
|
|||
Other income (expense), net
|
72
|
|
|
(31
|
)
|
|
103
|
|
|
nm
|
|
|||
Total nonoperating expense, net
|
$
|
(91
|
)
|
|
$
|
(176
|
)
|
|
$
|
85
|
|
|
(48.1
|
)
|
|
Six Months Ended
June 30, |
|
Decrease
|
|
Percent
Decrease
|
|||||||||
|
2020
|
|
2019
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Passenger
|
$
|
8,788
|
|
|
$
|
20,669
|
|
|
$
|
(11,881
|
)
|
|
(57.5
|
)
|
Cargo
|
277
|
|
|
439
|
|
|
(162
|
)
|
|
(36.9
|
)
|
|||
Other
|
1,071
|
|
|
1,431
|
|
|
(360
|
)
|
|
(25.2
|
)
|
|||
Total operating revenues
|
$
|
10,136
|
|
|
$
|
22,539
|
|
|
$
|
(12,403
|
)
|
|
(55.0
|
)
|
|
Six Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2020
|
|
2019
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Aircraft fuel and related taxes
|
$
|
1,612
|
|
|
$
|
3,722
|
|
|
$
|
(2,110
|
)
|
|
(56.7
|
)
|
Salaries, wages and benefits
|
5,676
|
|
|
6,286
|
|
|
(610
|
)
|
|
(9.7
|
)
|
|||
Maintenance, materials and repairs
|
915
|
|
|
1,136
|
|
|
(221
|
)
|
|
(19.4
|
)
|
|||
Other rent and landing fees
|
783
|
|
|
1,039
|
|
|
(256
|
)
|
|
(24.6
|
)
|
|||
Aircraft rent
|
669
|
|
|
661
|
|
|
8
|
|
|
1.2
|
|
|||
Selling expenses
|
348
|
|
|
771
|
|
|
(423
|
)
|
|
(54.8
|
)
|
|||
Depreciation and amortization
|
1,059
|
|
|
969
|
|
|
90
|
|
|
9.2
|
|
|||
Mainline operating special items, net
|
(362
|
)
|
|
259
|
|
|
(621
|
)
|
|
nm
|
|
|||
Other
|
1,765
|
|
|
2,522
|
|
|
(757
|
)
|
|
(30.0
|
)
|
|||
Regional expenses:
|
|
|
|
|
|
|
|
|||||||
Aircraft fuel and related taxes
|
480
|
|
|
909
|
|
|
(429
|
)
|
|
(47.2
|
)
|
|||
Other
|
2,167
|
|
|
2,793
|
|
|
(626
|
)
|
|
(22.4
|
)
|
|||
Total operating expenses
|
$
|
15,112
|
|
|
$
|
21,067
|
|
|
$
|
(5,955
|
)
|
|
(28.3
|
)
|
|
Six Months Ended June 30,
|
||||||
|
2020
|
|
2019
|
||||
|
(In millions)
|
||||||
PSP Financial Assistance (1)
|
$
|
(1,803
|
)
|
|
$
|
—
|
|
Fleet impairment (2)
|
743
|
|
|
—
|
|
||
Severance expenses (3)
|
537
|
|
|
—
|
|
||
Labor contract expenses (4)
|
228
|
|
|
—
|
|
||
Fleet restructuring expenses (5)
|
—
|
|
|
160
|
|
||
Merger integration expenses
|
—
|
|
|
76
|
|
||
Mark-to-market adjustments on bankruptcy obligations, net (6)
|
(49
|
)
|
|
5
|
|
||
Other operating special items, net
|
(18
|
)
|
|
18
|
|
||
Mainline operating special items, net
|
$
|
(362
|
)
|
|
$
|
259
|
|
|
|
|
|
||||
PSP Financial Assistance (1)
|
(216
|
)
|
|
—
|
|
||
Fleet impairment (2)
|
106
|
|
|
—
|
|
||
Regional operating special items, net
|
(110
|
)
|
|
—
|
|
||
Operating special items, net
|
$
|
(472
|
)
|
|
$
|
259
|
|
|
(1)
|
PSP Financial Assistance represents recognition of a portion of financial assistance received from Treasury pursuant to the PSP Agreement. See Note 1 to American's Condensed Consolidated Financial Statements in Part I, Item 1B for further information.
|
(2)
|
Fleet impairment resulted from American's decision to retire certain aircraft earlier than planned driven by the decline in air travel due to COVID-19. Aircraft retired include Boeing 757, Boeing 767, Airbus A330-300, Embraer 190, certain Embraer 140 and Bombardier CRJ200 aircraft.
|
(3)
|
Severance expenses principally include salary and medical costs associated with certain team members who opted in to voluntary early retirement programs offered as a result of reductions to American's operation due to COVID-19.
|
(4)
|
Labor contract expenses primarily relate to one-time charges resulting from the ratification of a new contract with the TWU-IAM Association for American's maintenance and fleet service team members, including signing bonuses and adjustments to vacation accruals resulting from pay rate increases.
|
(5)
|
Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment expected to be retired earlier than planned.
|
(6)
|
Bankruptcy obligations that will be settled in shares of AAG common stock are marked-to-market based on AAG's stock price.
|
|
Six Months Ended
June 30, |
|
Increase
(Decrease)
|
|
Percent
Increase
(Decrease)
|
|||||||||
|
2020
|
|
2019
|
|
||||||||||
|
(In millions, except percentage changes)
|
|||||||||||||
Interest income
|
$
|
196
|
|
|
$
|
258
|
|
|
$
|
(62
|
)
|
|
(24.2
|
)
|
Interest expense, net
|
(515
|
)
|
|
(554
|
)
|
|
39
|
|
|
(7.1
|
)
|
|||
Other income (expense), net
|
(33
|
)
|
|
79
|
|
|
(112
|
)
|
|
nm
|
|
|||
Total nonoperating expense, net
|
$
|
(352
|
)
|
|
$
|
(217
|
)
|
|
$
|
(135
|
)
|
|
62.1
|
|
|
AAG
|
|
American
|
||||||||||||
|
June 30, 2020
|
|
December 31, 2019
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||
Cash
|
$
|
462
|
|
|
$
|
280
|
|
|
$
|
452
|
|
|
$
|
267
|
|
Short-term investments
|
9,351
|
|
|
3,546
|
|
|
9,349
|
|
|
3,543
|
|
||||
Undrawn revolving credit facilities
|
400
|
|
|
3,243
|
|
|
400
|
|
|
3,243
|
|
||||
Total available liquidity
|
$
|
10,213
|
|
|
$
|
7,069
|
|
|
$
|
10,201
|
|
|
$
|
7,053
|
|
|
Remainder
of 2020 |
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
2025 and Thereafter
|
|
Total
|
|||||||
Airbus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
A320 Family (2)
|
10
|
|
|
16
|
|
|
26
|
|
|
8
|
|
|
22
|
|
|
20
|
|
|
102
|
|
Boeing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
737 MAX Family (3)
|
16
|
|
|
10
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|
76
|
|
787 Family
|
7
|
|
|
13
|
|
|
—
|
|
|
6
|
|
|
6
|
|
|
13
|
|
|
45
|
|
Embraer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
E175
|
6
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
Total
|
39
|
|
|
44
|
|
|
36
|
|
|
14
|
|
|
28
|
|
|
73
|
|
|
234
|
|
|
(1)
|
Delivery schedule represents our best estimate as of the date of this report. Actual delivery dates are subject to change based on many potential factors including production delays by the manufacturer.
|
(2)
|
In October 2019, the Office of the U.S. Trade Representative announced a 10% tariff on new Airbus aircraft imported from Europe. Effective March 18, 2020, this tariff rate increased to 15%. We continue to take every effort to mitigate the effect of these tariffs on our Airbus deliveries. See Part II, Item 1A. Risk Factors - “We operate a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control.”
|
(3)
|
On March 13, 2019, a directive from the Federal Aviation Administration (FAA) grounded all U.S.-registered Boeing 737 MAX aircraft. Our fleet currently includes 24 Boeing 737 MAX aircraft with an additional 76 on order. We have removed all Boeing 737 MAX aircraft flying from our flight schedule through September 9, 2020 and continue to assess this timeline. In addition, we have not taken delivery of any Boeing 737 MAX Family aircraft since the grounding. The extent of the delay to the scheduled deliveries of the Boeing 737 MAX aircraft included in the table above is expected to be impacted by the length of time the FAA order remains in place, Boeing's production rate and the pace at which Boeing can deliver aircraft following the lifting of the FAA order, among other factors. The above table reflects our estimate of future Boeing 737 MAX aircraft deliveries based on information currently available to us; however, the actual delivery schedule may differ from the table above, potentially materially.
|
|
Payments Due by Period
|
||||||||||||||||||||||||||
|
Remainder
of 2020 |
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
2025 and Thereafter
|
|
Total
|
||||||||||||||
American
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Principal amount (a), (c)
|
$
|
1,220
|
|
|
$
|
2,531
|
|
|
$
|
1,644
|
|
|
$
|
4,110
|
|
|
$
|
4,373
|
|
|
$
|
13,706
|
|
|
$
|
27,584
|
|
Interest obligations (b), (c)
|
375
|
|
|
1,004
|
|
|
903
|
|
|
832
|
|
|
735
|
|
|
1,300
|
|
|
5,149
|
|
|||||||
Finance lease obligations
|
70
|
|
|
128
|
|
|
132
|
|
|
110
|
|
|
116
|
|
|
171
|
|
|
727
|
|
|||||||
Aircraft and engine purchase
commitments (d)
|
843
|
|
|
849
|
|
|
1,688
|
|
|
1,538
|
|
|
2,573
|
|
|
4,848
|
|
|
12,339
|
|
|||||||
Operating lease commitments
|
1,044
|
|
|
1,967
|
|
|
1,817
|
|
|
1,639
|
|
|
1,258
|
|
|
4,680
|
|
|
12,405
|
|
|||||||
Regional capacity purchase agreements (e)
|
360
|
|
|
993
|
|
|
1,014
|
|
|
1,028
|
|
|
1,038
|
|
|
3,479
|
|
|
7,912
|
|
|||||||
Minimum pension obligations (f)
|
193
|
|
|
493
|
|
|
607
|
|
|
618
|
|
|
654
|
|
|
413
|
|
|
2,978
|
|
|||||||
Retiree medical and other postretirement benefits
|
12
|
|
|
18
|
|
|
18
|
|
|
17
|
|
|
29
|
|
|
265
|
|
|
359
|
|
|||||||
Other purchase obligations (g)
|
1,303
|
|
|
2,465
|
|
|
1,249
|
|
|
686
|
|
|
258
|
|
|
1,105
|
|
|
7,066
|
|
|||||||
Total American Contractual Obligations
|
$
|
5,420
|
|
|
$
|
10,448
|
|
|
$
|
9,072
|
|
|
$
|
10,578
|
|
|
$
|
11,034
|
|
|
$
|
29,967
|
|
|
$
|
76,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
AAG Parent and Other AAG Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Principal amount (a)
|
—
|
|
|
2
|
|
|
752
|
|
|
2
|
|
|
2
|
|
|
3,056
|
|
|
3,814
|
|
|||||||
Interest obligations (b)
|
35
|
|
|
140
|
|
|
120
|
|
|
101
|
|
|
100
|
|
|
325
|
|
|
821
|
|
|||||||
Operating lease commitments
|
8
|
|
|
16
|
|
|
14
|
|
|
9
|
|
|
5
|
|
|
19
|
|
|
71
|
|
|||||||
Minimum pension obligations (f)
|
3
|
|
|
4
|
|
|
4
|
|
|
4
|
|
|
5
|
|
|
13
|
|
|
33
|
|
|||||||
Total AAG Contractual Obligations
|
$
|
5,466
|
|
|
$
|
10,610
|
|
|
$
|
9,962
|
|
|
$
|
10,694
|
|
|
$
|
11,146
|
|
|
$
|
33,380
|
|
|
$
|
81,258
|
|
|
(a)
|
Amounts represent contractual amounts due. Excludes $277 million and $457 million of unamortized debt discount, premium and issuance costs as of June 30, 2020 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, respectively.
|
(b)
|
For variable-rate debt, future interest obligations are estimated using the current forward rates at June 30, 2020.
|
(c)
|
Includes $11.4 billion of future principal payments and $2.1 billion of future interest payments as of June 30, 2020, related to EETCs associated with mortgage financings of certain aircraft and spare engines.
|
(d)
|
See "Aircraft and Engine Purchase Commitments" in Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information about the firm commitment aircraft delivery schedule, in particular the footnotes to the table thereunder as to potential changes to such delivery schedule. Due to uncertainty surrounding the timing of delivery of certain aircraft, the amounts in the table represent our current best estimate, including with respect to the delivery of Airbus A320 Family and Boeing 737 MAX aircraft; however, the actual delivery schedule may differ from the table above, potentially materially. Additionally, the amounts in the table exclude 20 787-8 aircraft to be delivered in 2020 and 2021 for which we have obtained committed lease financing. This financing is reflected in the operating lease commitments line above.
|
(e)
|
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.
|
(f)
|
Includes minimum pension contributions based on actuarially determined estimates as of December 31, 2019 and is based on estimated payments through 2029. Pursuant to the CARES Act passed in March 2020, minimum required pension contributions to be made in the calendar year 2020 can be deferred to January 1, 2021, with interest accruing from the original due date to the new payment date. We expect to defer our $196 million 2020 minimum required contributions to January 1, 2021, which we intend to pay on December 31, 2020.
|
(g)
|
Includes purchase commitments for aircraft fuel, construction projects, flight equipment maintenance and information technology support.
|
•
|
make it more difficult for us to satisfy our obligations under our indebtedness;
|
•
|
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;
|
•
|
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;
|
•
|
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; and
|
◦
|
if breached, result in an event of default under our indebtedness.
|
•
|
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 United States National Airspace System (the ATC system);
|
•
|
increases in costs of safety, security, and environmental measures;
|
•
|
outbreaks of diseases that affect travel behavior; and
|
•
|
weather and natural disasters, including increases in frequency, severity or duration of such disasters, and related costs caused by more severe weather due to climate change.
|
•
|
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;
|
•
|
the adoption of more restrictive locally-imposed noise restrictions; and
|
•
|
restrictions on travel or special guidelines regarding aircraft occupancy or hygiene related to COVID-19.
|
•
|
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 ratings;
|
•
|
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 (which we have suspended for an indefinite period in accordance with the applicable requirements under the CARES Act);
|
•
|
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, including warrants we have or will issue in connection with our receipt of funds under the CARES Act;
|
•
|
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
|
|
4.3
|
|
4.4
|
|
4.5
|
|
4.6
|
|
4.7
|
|
10.1
|
|
10.2
|
|
10.3
|
|
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, formatted in Inline XBRL (eXtensible Business Reporting Language).
|
104.1
|
Cover page interactive data file (formatted in Inline XBRL and contained in Exhibit 101.1).
|
|
|
|
|
|
|
|
American Airlines Group Inc.
|
|
|
|
|
Date: July 23, 2020
|
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 23, 2020
|
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.
|
1.
|
OPTION AIRCRAFT
|
1.1
|
The definitions of “[****]” and “[****]” are deleted in their entirety and replaced with the following quoted text:
|
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, each dated as of the date of this Amendment and attached as Exhibit 1 hereto.
|
1.3
|
Clause 1.1 and 1.2 of this Amendment has the effect of [****] of [****] and [****], as defined in the Agreement prior to the date of this Amendment, by [****] from the Agreement [****] and [****] (collectively the “[****]”). As such, Buyer shall have [****] to and the [****] with respect to such [****]. Notwithstanding any to the contrary in the Agreement, the [****] and [****] by the Buyer to the Seller [****] in respect of such [****] (collectively, the “[****]”) are [****] by, and [****] of, the Seller as [****] thereof and the Buyer [****].
|
2.
|
EFFECT OF THE AMENDMENT
|
3.
|
AGREEMENT
|
6.
|
ASSIGNMENT
|
7.
|
CONFIDENTIALITY
|
8.
|
COUNTERPARTS
|
AIRBUS S.A.S
|
||
|
||
|
||
By:
|
/s/ Airbus S.A.S
|
|
|
||
|
||
Title:
|
Senior Vice President, Contracts
|
|
|
||
|
||
|
||
|
||
|
||
AMERICAN AIRLINES, INC.
|
||
|
||
|
||
By:
|
/s/ American Airlines, Inc.
|
|
|
||
|
||
Title:
|
Vice President and Treasurer
|
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.
|
I have reviewed this Quarterly Report on Form 10-Q of American Airlines Group Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ W. Douglas Parker
|
|
|
Name: W. Douglas Parker
|
|
|
Title: Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of American Airlines Group Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ Derek J. Kerr
|
|
|
Name: Derek J. Kerr
|
|
|
Title: Executive Vice President and
|
|
|
Chief Financial Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of American Airlines, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ W. Douglas Parker
|
|
|
Name: W. Douglas Parker
|
|
|
Title: Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of American Airlines, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ Derek J. Kerr
|
|
|
Name: Derek J. Kerr
|
|
|
Title: Executive Vice President and
|
|
|
Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ W. Douglas Parker
|
Name: W. Douglas Parker
|
Title: Chief Executive Officer
|
Date: July 23, 2020
|
|
/s/ Derek J. Kerr
|
Name: Derek J. Kerr
|
Title: Executive Vice President and Chief Financial Officer
|
Date: July 23, 2020
|
(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 23, 2020
|
|
/s/ Derek J. Kerr
|
Name: Derek J. Kerr
|
Title: Executive Vice President and Chief Financial Officer
|
Date: July 23, 2020
|