American Airlines 1997 Annual Report Download - page 36

AMR CORPORATION
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AMR Corporation (AMR or the Company) was incorpo-
rated in October 1982. AMR’s principal subsidiary, Amer-
ican Airlines, Inc. (American), was founded in 1934. For
financial reporting purposes, AMR’s operations fall within
three major lines of business: the Airline Group, The
SABRE Group and the Management Services Group.
Airline Group
The Airline Group consists primarily of American’s
Passenger and Cargo divisions and AMR Eagle Holding
Corporation, a separate subsidiary of AMR.
American’s Passenger Division is one of the largest
scheduled passenger airlines in the world. At the end of
1997, American provided scheduled jet service to more
than 165 destinations throughout North America, the
Caribbean, Latin America, Europe and the Pacific.
American’s Cargo Division is one of the largest scheduled
air freight carriers in the world. It provides a full range of
freight and mail services to shippers throughout the air-
line’s system. In addition, through cooperative agree-
ments with other carriers, it has the ability to transport
shipments to virtually any country in the world.
AMR Eagle Holding Corporation (AMR Eagle) owns the
four regional airlines which operate as “American Eagle”
— Executive Airlines, Inc., Flagship Airlines, Inc., Sim-
mons Airlines, Inc. and Wings West Airlines, Inc. The
American Eagle carriers provide connecting service from
six of American’s high-traffic cities to smaller markets
throughout the United States, Canada, the Bahamas and
the Caribbean.
In January 1998, AMR Eagle Holding Corporation
announced plans to merge the four regional airlines into
a single carrier - “American Eagle Airlines, Inc.” The trans-
action will occur in phases beginning in May 1998 and is
expected to be complete by the end of 1998.
The SABRE Group
The SABRE Group is a world leader in the electronic dis-
tribution of travel through its proprietary travel reservation
and information system, SABRE®, and is the largest
electronic distributor of travel in North America. In addi-
tion, The SABRE Group is a leading provider of informa-
tion technology solutions to the travel and transportation
industry and fulfills substantially all of the data processing,
network and distributed systems needs of American and
AMR’s other subsidiaries, Canadian Airlines International
Limited and other customers.
Electronic Travel Distribution SABRE and other global
distribution systems are the principal means of air travel
distribution in the United States and a growing means of
air travel distribution internationally. Through SABRE,
travel agencies, corporate travel departments and individ-
ual consumers can access information on - and book
reservations with - airlines and other providers of travel
and travel-related products and services. As of Decem-
ber 31, 1997, travel agencies with more than 30,000 loca-
tions in over 70 countries on six continents subscribed to
SABRE. SABRE subscribers are able to make reservations
with more than 400 airlines, more than 50 car rental
companies and more than 200 hotel companies covering
approximately 39,000 hotel properties worldwide.
During 1997, more airline bookings in North America
were made through SABRE than through any other glob-
al distribution system. The SABRE Group is actively
involved in marketing SABRE internationally either
directly or through joint venture or distributorship
arrangements. The SABRE Group’s global marketing part-
ners principally include foreign airlines that have strong
relationships with travel agents in such airlines’ primary
markets and entities that operate smaller global distribu-
tion systems or other travel-related network services. In
1997, approximately 67.3 percent of The SABRE Group’s
revenue was generated by the electronic distribution of
travel, primarily through booking fees paid by associates.
In February 1998, The SABRE Group signed long-
term agreements with ABACUS International Holdings
Ltd. which created a Singapore-based joint venture com-
pany to manage travel distribution in the Asia-Pacific
region. The SABRE Group owns 35 percent of the joint
venture company, called ABACUS International Ltd., and
provides it with transaction processing on the SABRE
computer reservations system.
M ANAGEM ENT’ S DISCUSSION AND ANALYSIS