American Airlines 2003 Annual Report Download - page 18

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On August 14, 2002, a class action lawsuit was filed against American Airlines, Inc. in the United States District
Court for the Central District of California, Western Division (All World Professional Travel Services, Inc. v.
American Airlines, Inc.). The lawsuit alleges that requiring travel agencies to pay debit memos for refunding tickets
after September 11, 2001: (1) breaches the Agent Reporting Agreement between American and plaintiff; (2)
constitutes unjust enrichment; and (3) violates the Racketeer Influenced and Corrupt Organizations Act of 1970
(RICO). The as yet uncertified class includes all travel agencies who have or will be required to pay moneys to
American for an "administrative service charge," "penalty fee," or other fee for processing refunds on behalf of
passengers who were unable to use their tickets in the days immediately following the resumption of air carrier
service after the tragedies on September 11, 2001. The plaintiff seeks to enjoin American from collecting the debit
memos and to recover the amounts paid for the debit memos, plus treble damages, attorneys' fees, and costs.
The Company intends to vigorously defend the lawsuit. Although the Company believes that the litigation is without
merit, a final adverse court decision could impose restrictions on the Company’s relationships with travel agencies
which could have an adverse impact on the Company.
On August 19, 2002, a class action lawsuit seeking monetary damages was filed, and on May 7, 2003 an amended
complaint was filed in the United States District Court for the Southern District of New York (Power Travel
International, Inc. v. American Airlines, Inc., et al.) against American, Continental Airlines, Delta Air Lines, United
Airlines, and Northwest Airlines, alleging that American and the other defendants breached their contracts with the
agency and were unjustly enriched when these carriers at various times reduced their base commissions to zero.
The as yet uncertified class includes all travel agencies accredited by the Airlines Reporting Corporation “whose
base commissions on airline tickets were unilaterally reduced to zero by” the defendants. The case is stayed as to
United Air Lines, since it filed for bankruptcy. American is vigorously defending the lawsuit. Although the
Company believes that the litigation is without merit, a final adverse court decision awarding substantial money
damages or forcing the Company to pay agency commissions would have an adverse impact on the Company.
Miami-Dade County (the County) is currently investigating and remediating various environmental conditions at the
Miami International Airport (MIA) and funding the remediation costs through landing fees and various cost recovery
methods. American Airlines, Inc. and AMR Eagle have been named as potentially responsible parties (PRPs) for
the contamination at MIA. During the second quarter of 2001, the County filed a lawsuit against 17 defendants,
including American Airlines, Inc., in an attempt to recover its past and future cleanup costs (Miami-Dade County,
Florida v. Advance Cargo Services, Inc., et al. in the Florida Circuit Court). In addition to the 17 defendants named
in the lawsuit, 243 other agencies and companies were also named as PRPs and contributors to the
contamination. American’s and AMR Eagle’s portion of the cleanup costs cannot be reasonably estimated 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 regarding the environmental
agencies that will ultimately supervise the remedial activities and the nature of that supervision. The Company is
vigorously defending the lawsuit.