American Airlines 2000 Annual Report Download - page 23

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approximately 400,000 Equant depository certificates
from other airlines. In addition, based upon a realloca-
tion between the owners of the certificates in July 1999,
the Company received an additional 2.6 million certifi-
cates, of which approximately 2.2 million certificates
were held for the benefit of Sabre. In connection with
two secondary offerings by Equant in February and
December 1999, the Company sold approximately 2.7
million depository certificates for a net gain of approxi-
mately $118 million, after taxes and minority interest.
Of this amount, approximately $75 million is included
in Miscellaneous – net and approximately $71 million,
net of taxes and minority interest, related to depository
certificates held by the Company on behalf of Sabre, is
included in income from discontinued operations on
the accompanying consolidated statements of operations.
As of December 31, 2000 and 1999, the Company
holds approximately 1.2 million depository certificates
with an estimated market value of approximately
$32 million and $136 million, respectively. The
carrying value of the Company’s investment in the
depository certificates as of December 31, 2000 and
1999, was approximately $20 million, and is included
in other assets on the accompanying consolidated bal-
ance sheets.
In December 1999, the Company entered into an
agreement to sell its investment in the cumulative
mandatorily redeemable convertible preferred stock
of Canadian Airlines International Limited (Canadian)
for approximately $40 million, resulting in a gain of
$40 million, which is included in Miscellaneous – net
on the accompanying consolidated statements of opera-
tions. In addition, the Company recognized a tax bene-
fit of $67 million resulting from the tax loss on the
investment, representing the reversal of a deferred tax
valuation allowance since it is more likely than not that
the tax benefit will be realized. The valuation allowance
was established in 1996 when the investment was writ-
ten-off because, at that time, it was not more likely than
not that the tax benefit of the write-off would be real-
ized. During 2000, the Company recorded a gain of
approximately $41 million from the recovery of start-up
expenses (previously written-off) from the Canadian
services agreement entered into during 1995, which is
included in Miscellaneous – net on the accompanying
consolidated statements of operations.
3. COMM IT M ENT S AND CONT IN GENCIES
At December 31, 2000, the Company had commitments
to acquire the following aircraft: 66 Boeing 737-800s,
23 Boeing 757-200s, 20 Boeing 777-200ERs, 146
Embraer regional jets and 25 Bombardier CRJ-700s.
Deliveries of all aircraft extend through 2006. Future
payments for all aircraft, including the estimated
amounts for price escalation, will approximate $2.7 bil-
lion in 2001, $1.6 billion in 2002, $900 million in 2003
and an aggregate of approximately $1.3 billion in 2004
through 2006. In addition to these commitments for air-
craft, the Company’s Board of Directors has authorized
expenditures of approximately $2.8 billion over the
next five years for modifications to aircraft, renovations
of – and additions to – airport and off-airport facilities,
and the acquisition of various other equipment and
assets. AMR expects to spend approximately $855 mil-
lion of this authorized amount in 2001.
The Miami International Airport Authority is cur-
rently remediating various environmental conditions at
the Miami International Airport (the Airport) and fund-
ing the remediation costs through landing fee revenues
and other cost recovery methods. Future costs of the
remediation effort may be borne by carriers operating
at the Airport, including American, through increased
landing fees and/or other charges since certain of the
potentially responsible parties are no longer in busi-
ness. The future increase in landing fees and/or other
charges may be material but cannot be reasonably esti-
mated due to various factors, including the unknown
extent of the remedial actions that may be required, the
proportion of the cost that will ultimately be recovered
from the responsible parties, and uncertainties regard-
ing the environmental agencies that will ultimately
supervise the remedial activities and the nature of that
supervision. In addition, the Company is subject to
environmental issues at various other airport and non-
airport locations. Management believes, after consider-
ing 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 the Company’s
current assessments of the ultimate outcome and,
accordingly, could increase or decrease as these
assessments change.