American Airlines 1997 Annual Report Download - page 7

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in an essay on page 30 — reported pre-tax earnings
of $55 million. That is a 20 percent decline from
1996 pre-tax earnings, excluding special items.
The financial progress made at American Airlines
and other AMR enterprises in recent years has
enabled us to substantially strengthen the company’s
balance sheet. Since 1994, we have retired more than
$5 billion of debt and lease obligations and lowered
our debt to total capitalization ratio from 84 percent
to approximately 62 percent. This reduction has
translated into dramatically lower interest expense; in
1997, AMR’s interest expense, net of interest income,
was $300 million less than the comparable figure in
1994. Our improved balance sheet has also earned us
better financial ratings, and one of the year’s high-
lights was Standard & Poor’s decision to upgrade
AMR and American to investment grade.
During 1997, we sought to deliver shareholders
value by authorizing the repurchase of 5.75 million
shares of common stock to offset potential dilution
resulting from granting options on the same number
of shares to our pilots in the new contract with the
Allied Pilots Association. We also announced a sepa-
rate $500 million stock buyback plan, which at year’s
end had been about 30 percent completed.
AMR had a strong year in 1997 — a direct result
of our employees’ hard work and dedication — and
the theme of this year’s annual report, “People are the
foundation of our business,” highlights just a few of
their many achievements. It also reflects our long-
held belief that there is a closely linked relationship
between our three key stakeholders: our employees,
customers, and investors. We will continue to stress
the importance of that relationship in the years ahead
as we seek to create value for all three groups by
making each of our enterprises a leader in its field.
Sincerely,
Robert L. Crandall
Chairman, President and Chief Executive Officer
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