American Airlines 1999 Annual Report Download - page 4

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1999
FROM THE CHAIRMAN
1999
was a year of promising breakthroughs and
enormous challenge for AMR Corporation. American
achieved an industry first by introducing two new
aircraft types — the Boeing 777 and 737-800 — on
the same day, March 2, 1999.
Sabre Holdings Corp. (Sabre) — AMR’s largest
non-airline business, and the focal point of an
approximately $5 billion transfer of value to our
shareholders — grew in its quest to become the
world’s leading provider of information technology
for the travel and transportation industry.
Unfortunately, AMR’s net earnings of $985
million for the year, including special items, were
25 percent lower than the record earnings AM R
produced in 1998.
At Sabre, revenues increased by 6 percent over
the previous year. But even more important than
its 1999 financial performance were two announce-
ments — one in October and one in December —
about Sabre’s future.
In October, Sabre announced its plan to merge its
online leader, Travelocity, with Preview Travel Inc. to
form a new company called Travelocity.com. The
second and more momentous development was our
decision to spin off AMR’s 83 percent interest in Sabre
by distributing our 107 million common shares of
Sabre stock to AMR’s shareholders.
Sabre is a business that had no separate market
capitalization just three years ago. But at the end of
1999, we were poised to transfer an estimated
$5 billion in market value to the investors who funded
its growth and development — an enormous value
creation by any measure. The Sabre spinoff was com-
pleted after the close of business on March 15, 2000.
We have long believed that AM R’s stock price has
not reflected the full value of both American Airlines
and Sabre. So one clear outcome we expect from this
transaction is stock prices for both AMR and Sabre
that are a truer indication of their value and potential.
Sabre’s independence from AMR will also enable it to
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