American Airlines 2003 Annual Report Download - page 32

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(h) Special charges for 2003 included approximately (i) $341 million in aircraft charges offset by a $20
million credit to adjust prior accruals, (ii) $92 million in employee charges, (iii) $62 million in facility exit
costs and a (iv) $68 million gain resulting from a transaction involving 33 of the Company’s Fokker
100 aircraft and related debt. Special charges for 2002 are described on the following page. See a
further discussion of Special charges in Note 2 to the consolidated financial statements.
(i) U.S. government grant includes a $358 million benefit recognized for the reimbursement of security
service fees from the U.S. government under the Act in 2003. See a further discussion of U.S.
government grant in Note 2 to the consolidated financial statements.
2002 Compared to 2001 The Company’s operating expenses decreased 3.2 percent, or $689 million, to $20.8
billion. American's mainline operating expenses per ASM decreased 1.5 percent to 11.14 cents, including the
impact of special charges and the U.S. government grant. The decrease in operating expenses and operating
expenses per ASM is largely due to cost savings initiatives implemented in late 2001 and 2002.
(in millions)
Operating Expenses
Year ended
December 31,
2002
Change
from 2001
Percentage
Change
Wages, salaries and benefits $ 8,392 $ 360 4.5% (a)
Aircraft fuel 2,562 (326) (11.3) (b)
Depreciation and amortization 1,366 (38) (2.7)
Other rentals and landing fees 1,198 1 0.1
Commissions, booking fees and credit
card expense 1,163 (377) (24.5) (c)
Maintenance, materials and repairs 1,108 (57) (4.9)
Aircraft rentals 840 11 1.3
Food service 698 (80) (10.3) (d)
Other operating expenses 2,715 (281) (9.4) (e)
Special charges 718 (748) (51.0) (f)
U.S. government grant (10) 846 (98.8) (g)
Total operating expenses $ 20,750 $ (689) (3.2)%
(a) Wages, salaries and benefits increased, primarily due to (i) higher salaries, largely offset by a
decrease in the average number of equivalent employees and (ii) increases in the Company’s pension
and health insurance costs, the latter reflecting rapidly rising medical care and prescription drug costs.
(b) Aircraft fuel expense decreased due to a 3.3 percent decrease in the Company’s fuel consumption
and a 6.4 percent decrease in the Company’s average price per gallon.
(c) Commissions, booking fees and credit card expense decreased due primarily to a 7.8 percent
decrease in passenger revenues and commission structure changes implemented in March 2002.
(d) Food service decreased due primarily to the Company’s reduced operating schedule and reductions in
the level of food service.
(e) Other operating expenses decreased due primarily to decreases in contract maintenance work that
American performs for other airlines, and decreases in travel and incidental costs, advertising and
promotion costs, and data processing expenses, which were partially offset by higher insurance and
security costs.
(f) Special charges for 2002 included approximately (i) $658 million related to aircraft charges, (ii) $57
million in employee charges and (iii) $3 million in facility charges. Special charges for 2001 included
approximately (i) $1.2 billion related to aircraft charges, (ii) $115 million in facility charges, (iii) $71
million in employee charges and (iv) $43 million in other charges. See a further discussion of Special
charges in Note 2 to the consolidated financial statements.
(g) U.S. government grant includes a $10 million and $856 million benefit recognized for the
reimbursement from the U.S. government under the Air Transportation Safety and System
Stabilization Act for 2002 and 2001, respectively. See a further discussion of U.S. government grant
in Note 2 to the consolidated financial statements.