American Airlines 2000 Annual Report Download

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AMR CORPORATION ANNUAL REPORT 200 0
The R ight Thing To D o
AMERICAN AIRLI N ES
More Room Throughout Coach

Table of contents

  • Page 1
    AMR C O RP O RAT I O N AN N U AL REPORT 2 0 0 0 M ore Room T hroughout Coa c h Th e R ig h t Th in g To D o AMERICAN AIRLINES

  • Page 2
    ... find the information that we traditionally have included in the shareholder, customer and employee essays of our printed annual report. $19,703 $17,730 $17,516 $6.38 $4.81 $4.17 $1,988 $1,381 65.3% 62.4% $1,156 64.7% 2000 1999 ($ in millions) 1998 2000 1999 1998 O PERAT I N G R EV EN U ES...

  • Page 3
    ... Ser vice . In 2000, we completely overhauled the American Airlines and American Eagle schedules at our Chicago O'Hare and Dallas/Fort Worth connecting hubs. We also implemented a series of programs throughout our Maintenance and Engineering organization designed to increase the dependability...

  • Page 4
    ... even better customer service. From a marketing perspective, the Internet revolution is creating enormous opportunities for American. In 2000, our Web site, AA.com, was hailed by CIO magazine as one of the top 50 business Internet sites. No other airline site made the list. Kudos are nice, but what...

  • Page 5
    ... and feeding our hubs - and putting hundreds of thousands of customers on American flights - these new aircraft have been effective weapons as we explore new point-to-point opportunities in markets previously considered other airlines' strongholds. At the end of 2000, the Eagle RJ fleet was...

  • Page 6
    ... positive outcome for all three of our constituency groups. For our employees, these are terrific developments. We are growing the airline in a way that will bring a wealth of hiring and promotional opportunities for the people of American. For our customers, the benefits of a much broader network...

  • Page 7
    ...Current Seating Capacity 1 Owned Capital Leased Operating Leased Total Am e ric a n Airc ra ft Airbus A300-600R Boeing 727-200 Boeing 737-800 Boeing 757-200 Boeing 767-200 Boeing 767-200 Extended Range Boeing 767-300 Extended Range Boeing 777-200 Extended Range Fokker 100 McDonnell Douglas MD...

  • Page 8
    ... 1999. American's domestic traffic increased 2.7 percent to 78.5 billion revenue passenger miles (RPMs), while domestic capacity, as measured by available seat miles (ASMs), decreased 1.6 percent. The decrease in domestic capacity was due primarily to the Company's More Room Throughout Coach program...

  • Page 9
    ...Company's More Room Throughout Coach program. Adjusting for this program, American's cost per ASM grew approximately 7.2 percent. Wages, salaries and benefits increased $663 million, or 10.8 percent, primarily due to an increase in the average number of equivalent employees and contractual wage rate...

  • Page 10
    ..., due to an increase in purchase deposits for flight equipment. Miscellaneous - net increased $38 million due primarily to a $57 million gain on the sale of the Company's warrants to purchase 5.5 million shares of priceline common stock in the second quarter of 2000 and a gain of approximately $41...

  • Page 11
    ... 31, The following table provides statistical information for American and AMR Eagle for the years ended December 31, 2000, 1999 and 1998. 2000 Amer ican Air lin es Revenue passenger miles (millions) Available seat miles (millions) Cargo ton miles (millions) Passenger load factor Breakeven load...

  • Page 12
    ...the closing of the transaction, TWA will be integrated into American's operations with a continued hub operation in St. Louis. The Company expects to fund the acquisition of TWA's assets with its existing cash and short-term investments, internally generated cash or new financing depending on market...

  • Page 13
    ... regional airline feed to American by strengthening AMR Eagle with the replacement of turboprop aircraft with RJs and the expansion of connecting service at Chicago O'Hare, DFW and key East Coast cities. The Company has reached agreements with three regional carriers feeding TWA in St. Louis. These...

  • Page 14
    ... its operations assets the Company may acquire in its previously announced transactions with TWA, United/US Airways and DC Air, and plans to develop future codesharing programs and to evaluate new alliances. All forward-looking statements in this report are based upon information available to the...

  • Page 15
    ... of the hypothetical interest rates on the Company's variable-rate long-term debt, interest rate swap agreements, and cash and short-term investment balances at December 31, 2000 and 1999. Market risk for fixed-rate long-term debt is estimated as the potential increase in fair value resulting from...

  • Page 16
    ...per share amounts) 2000 1999 1998 Reven ues Passenger - American Airlines, Inc. - AMR Eagle Cargo Other revenues Total operating revenues $ 1 6,377 1 ,452 721 1 ,1 53 1 9,703 $ 14,707 1,294 643 1,086 17,730 $ 14,695 1,121 656 1,044 17,516 Ex pen ses Wages, salaries and benefits Aircraft fuel...

  • Page 17
    ...- (1,869) Cash Flow fr om Fin an cin g Activities: Payments on long-term debt and capital lease obligations Proceeds from: Issuance of long-term debt Exercise of stock options Short-term loan from Sabre Holdings Corporation Sale-leaseback transactions Repurchase of common stock Net cash provided by...

  • Page 18
    ... d Pr oper ty Un der Capital Leases Flight equipment Other equipment and property Less accumulated amortization 2,61 8 1 59 2,777 1 ,233 1 ,544 3,141 155 3,296 1,347 1,949 Oth er Assets Route acquisition costs and airport operating and gate lease rights, less accumulated amortization (2000 - $498...

  • Page 19
    ..., except shares and par value) 2000 1999 L I ABI LI T I ES AN D S T OCK H OLDERS ' E QU I T Y Cur r en t Liabilities Accounts payable Accrued salaries and wages Accrued liabilities Air traffic liability Current maturities of long-term debt Current obligations under capital leases Total current...

  • Page 20
    ..., net of tax expense of $2 Total comprehensive income Distribution of Sabre Holdings Corporation shares to AMR shareholders Issuance of 3,817,892 shares from Treasury pursuant to stock option, deferred stock and restricted stock incentive plans, net of tax benefit of $11 1 82 - - - 3,061...

  • Page 21
    ... principal depreciable asset classifications are: Depreciable Life Boeing 727-200 aircraft Other American jet aircraft Regional aircraft and engines Major rotable parts, avionics and assemblies Improvements to leased flight equipment Buildings and improvements (principally on leased land) Furniture...

  • Page 22
    ... receipt as the related services have been provided. Statements of Cash Flows Short-term investments, without regard to remaining maturity at acquisition, are not considered as cash equivalents for purposes of the statements of cash flows. Stock Options The Company accounts for its stock- based...

  • Page 23
    .... Management believes, after considering a number of factors, that the ultimate disposition of these environmental issues is not expected to materially affect the Company's consolidated financial position, results of operations or cash flows. Amounts recorded for environmental issues are based on...

  • Page 24
    ... 65 jet aircraft and 57 turboprop aircraft under capital leases. The aircraft leases can generally be renewed at rates based on fair market value at the end of the lease term for one to five years. Most aircraft leases have purchase options at or near the end of the lease term at fair market value...

  • Page 25
    ...a positive fair value at the reporting date, reduced by the effects of master netting agreements. To manage credit risks, the Company selects counterparties based on credit ratings, limits its exposure to a single counterparty under defined guidelines, and monitors the market position of the program...

  • Page 26
    ... future cash flows. Fuel Pr ice Risk Management American enters into fuel swap and option contracts to protect against increases in jet fuel prices. Under the fuel swap agreements, American receives or makes payments based on the difference between a fixed price and a variable price for certain...

  • Page 27
    ... uments The fair values of the Company's long-term debt were estimated using quoted market prices where available. For long-term debt not actively traded, fair values were estimated using discounted cash flow analyses, based on the Company's current incremental borrowing rates for similar types of...

  • Page 28
    ... be granted stock options, stock appreciation rights, restricted stock, deferred stock, stock purchase rights, other stock-based awards and/or performance-related awards, including cash bonuses. The total number of common shares authorized for distribution under the 1998 Long Term Incentive Plan is...

  • Page 29
    .... In conjunction with the Sabre spin-off, the exercise price was adjusted to $17.59 per share. Pilot Plan option activity was: Year Ended December 31, Shares of deferred stock are awarded at no cost to officers and key employees under the Plans' Career Equity Program and will be issued upon...

  • Page 30
    ... extraordinary loss assuming the Company had accounted for its employee stock options using the fair value method (in millions, except per share amounts): Year Ended December 31, 2000 Outstanding at January 1 Sabre adjustment Granted Issued Awards settled in cash Canceled Outstanding at December 31...

  • Page 31
    ...and makes contributions to match employee prefunding. The following table provides a reconciliation of the changes in the plans' benefit obligations and fair value of assets for the years ended December 31, 2000 and 1999, and a statement of funded status as of December 31, 2000 and 1999 (in millions...

  • Page 32
    ... the quoted market closing price of Sabre Class A common stock on the New York Stock Exchange, was approximately $5.2 billion. In addition, effective March 15, 2000, the Effective January 1, 2001, American established a defined contribution plan for non-contract employees in which the Company will...

  • Page 33
    ... The Company has two primary operating segments, consisting primarily of American and AMR Eagle, which represent one reportable segment. American is one of the largest scheduled passenger airlines in the world. At the end of 2000, American provided scheduled jet service to more than 169 destinations...

  • Page 34
    ... $36 million from the sale of the Company's warrants to purchase 5.5 million shares of priceline common stock (see Note 2). During the third quarter of 2000, the Company recorded a $9 million after-tax extraordinary loss on the repurchase prior to scheduled maturity of long-term debt (see Note...

  • Page 35
    ... of the previously announced merger between United and US Airways. In addition to the acquisition of these assets, American will lease a number of slots and gates from United so that American may operate half of the northeast Shuttle (New York/Washington DC/Boston). United will operate the...

  • Page 36
    ... position of AMR Corporation at December 31, 2000 and 1999, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. 2121 San Jacinto Dallas...

  • Page 37
    REPORT OF M ANAGEMENT The management of AMR Corporation is responsible for the integrity and objectivity of the Company's financial statements and related information. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States and ...

  • Page 38
    ...accounting changes: 2 Basic Diluted Net earnings (loss) per common share: 2 Basic Diluted Total assets Long-term debt, less current maturities Obligations under capital leases, less current obligations Convertible preferred stock, common stock... 3 No dividends ha ve been pa id on common stock for a ...

  • Page 39
    1997* 16,957 15,362 1,595 809 985 1996 17,364 15,557 1,807 1,083 1,016 1995 16,910 15,895 1,015 191 162 1994 16,137 15,131 1,006 228 228 1993 15,816 15,126 690 (96) (110) 1992 14,396 14,421 (25) (475) (935) ...

  • Page 40
    ... in 1994 Edw ar d A. Br en n an Retired Chairman, President and Chief Executive Officer Sears, Roebuck and Co. (Merchandising) Chicago, Illinois Elected in 1987 Don ald J. Car ty Chairman, President and Chief Executive Officer AMR Corporation/ American Airlines, Inc. (Air Transportation) Fort Worth...

  • Page 41
    ... J. Aue Vice President - Capacity Planning James A. Beer Vice President - Corporate Development and Treasurer David R. Br ooks President - American Airlines Cargo Division Jeffr ey J. Br un dage Vice President - Employee Relations David L. Campbell Vice President - Alliance Base Maintenance Jeffr ey...

  • Page 42
    ... New York 101 Barclay Street New York, NY 10286 Citibank, N.A. 111 Wall Street New York, NY 10043 AMR Corporation Mail Drop 5675 P.O. Box 619616 Dallas/Fort Worth Airport, TX 75261-9616 (817) 963-1234 Payin g Agen ts Chase Manhattan Bank Corporate Trust Securities Window Room 234 - North Building...

  • Page 43
    ... the New York Stock Excha nge a fter the ma rket close on Ma rch 15, 2000 to exclude the va lue of Sa bre. The pre-Ma rch 15, 2000 stock prices in the a bove ta ble ha ve not been a djusted to give effect to this distribution. Shareholders can also visit AMR's Internet site on the World Wide Web at...

  • Page 44
    AMR C O RP O RAT I O N P. O . B O X 6 1 9 6 1 6 , D A L L A S / F O R T W O R T H , T E X A S 7 5 2 6 1 - 9 6 1 6 T HE AMERICAN AIRLINES I NTERNET T HE AM R I NTERNET A D D R E S S I S W W W. A A . C O M A D D R E S S I S W W W . A M R C O R P. C O M