American Airlines 1997 Annual Report Download - page 41

Download and view the complete annual report

Please find page 41 of the 1997 American Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 76

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76

AMR CORPORATION
39
OTHER EXPENSE
Other expense consists of interest income and expense,
interest capitalized and miscellaneous - net.
1997 Compared to 1996 Interest expense, net of
amounts capitalized, decreased 20.7 percent, or $105
million, due primarily to scheduled debt repayments and
the repurchase and/or retirement prior to scheduled
maturity of approximately $469 million and $1.1 billion
of long-term debt in 1997 and 1996, respectively, and a
reduction of $850 million of American’s long-term debt
owed to AMR as a part of the reorganization of The
SABRE Group. Also, in 1996, the Company’s convertible
debentures were converted into AMR common stock,
resulting in an $834 million decrease in long-term debt.
Interest income increased approximately 29.1 percent, or
$30 million, due primarily to higher investment balances.
Miscellaneous - net for 1996 included a $21 million provi-
sion for a cash payment representing American’s share of a
multi-carrier travel agency class action litigation settlement.
1996 Compared to 1995 Interest expense, net of amounts
capitalized, decreased 25.2 percent, or $171 million, due
primarily to scheduled debt repayments and the repur-
chase and/or retirement prior to scheduled maturity of
approximately $1.1 billion of long-term debt in 1996, and
a reduction of $850 million of American’s long-term debt
owed to AMR as a part of the reorganization of The SABRE
Group. Also, the Company’s convertible debentures were
converted into common stock of AMR in May 1996, result-
ing in an $834 million decrease in long-term debt and a
$43 million reduction in interest expense from 1995 to
1996. Interest income increased $29 million, or 39.2 per-
cent, due primarily to higher investment balances. Miscel-
laneous - net for 1996 included a $21 million provision for
a cash payment representing American’s share of a multi-
carrier travel agency class action litigation settlement. Mis-
cellaneous - net for 1995 included a $41 million charge
related to the loss of an aircraft operated by American.
The SABRE Group
Year Ended December 31,
(dollars in millions) 1997 1996 1995
Revenues $ 1,784 $1,622 $ 1,529
Operating Expenses 1,476 1,295 1,149
Operating Income 308 327 380
Other Income (Expense) 16 (21) (10)
Earnings Before Income Taxes $ 324 $306 $ 370
Average number of equivalent employees 8,500 7,900 7,300
REVENUES
1997 Compared to 1996 Revenues for The SABRE
Group increased 10.0 percent, or $162 million. Electron-
ic travel distribution revenues increased approximately
$99 million, or 8.9 percent, primarily due to growth in
booking fees. The growth in booking fees was due to an
increase in booking volumes primarily attributable to
international expansion in Europe and Latin America and
an overall increase in the price per booking charged to
associates. Revenues from information technology solu-
tions increased approximately $63 million, or 12.1 per-
cent. Revenues from unaffiliated customers increased
approximately $39 million due to an increase in software
development, consulting and software license fee rev-
enues. Revenues from other AMR units increased $24
million due to an increase in software development rev-
enue and data processing volumes offset by a decrease in
data network revenue from the sale, in July 1996, of data
network equipment to a third party which began direct
billing certain items to American.
1996 Compared to 1995 Revenues for The SABRE
Group increased 6.1 percent, or $93 million. Electronic
travel distribution revenues increased approximately $95
million, or 9.4 percent, primarily due to growth in book-
ing fees from associates. This growth was driven by an
increase in booking volumes partially attributable to inter-
national expansion in Europe and Latin America, an over-
all increase in the price per booking charged to associates
and a migration of associates to higher participation levels
within SABRE. Revenues from information technology
solutions decreased approximately $2 million. Revenues
from unaffiliated customers increased approximately $27
million, offset by a decrease in revenues from such services
provided to other AMR units of $29 million primarily due
to application of the financial terms of the technology
services agreement signed with American in 1996.