American Airlines 2003 Annual Report Download - page 56

Download and view the complete annual report

Please find page 56 of the 2003 American Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 103

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103

54
2. Special charges and U.S. government grant (Continued)
Other
As part of the Vendor Agreements discussed above, American sold 33 Fokker 100 aircraft (with a minimal net
book value), issued a $23 million non-interest-bearing note, payable in installments and maturing in December
2010, entered into short-term leases on these aircraft and issued shares of AMR common stock as discussed in
Note 9. In exchange, approximately $130 million of debt related to certain of the Fokker 100 aircraft was retired.
However, the agreement contains provisions that would require American to repay additional amounts of the
original debt if certain events occur prior to December 31, 2005, including: (i) an event of default (which generally
occurs only if a payment default occurs), (ii) an event of loss with respect to the related aircraft, (iii) rejection by the
Company of the lease under the provisions of Chapter 11 of the U.S. Bankruptcy Code or (iv) the Company’s filing
for bankruptcy under Chapter 7 of the U.S. Bankruptcy Code. As a result of this transaction, including the sale of
the 33 Fokker 100 aircraft, and the termination of the Company’s interest rate swap agreements related to the
debt that has been retired, the Company recognized a gain of approximately $68 million. If the certain events
described above do not occur, the Company expects to recognize an additional gain of approximately $37 million
in December 2005.
Summary
The following table summarizes the components of these charges and the remaining accruals for future lease
payments, aircraft lease return and other costs, facilities closure costs and employee severance and benefit costs
(in millions):
Aircraft
Charges
Facility
Exit Costs
Employee
Charges Other Total
2001
Special charges $ 1,237 $ 115 $ 71 $ 43 $ 1,466
Non-cash charges (1,179) (93) - - (1,272)
Payments - (2) (71) (43) (116)
Remaining accrual at
December 31, 2001 58 20 - - 78
2002
Special charges 658 3 57 - 718
Non-cash charges (460) (3) - - (463)
Payments (47) (3) (13) - (63)
Remaining accrual at
December 31, 2002 209 17 44 - 270
2003
Special charges 341 62 92 (68) 427
Adjustments (20) - - - (20)
Non-cash charges (264) (17) 23 68 (190)
Payments (69) (6) (133) - (208)
Remaining accrual at
December 31, 2003 $ 197 $ 56 $ 26 $ - $ 279
Cash outlays related to the accruals, as of December 31, 2003, for aircraft charges, facility exit costs and
employee charges will occur through 2014, 2018 and 2004, respectively.