American Airlines 2004 Annual Report Download - page 29

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26
5 Includes noncancelable commitments to purchase goods or services, primarily
construction related costs at the John F. Kennedy International Airport and information
technology related support. The Company has made estimates as to the timing of
certain payments primarily for construction related costs. The actual timing of payments
may vary from these estimates. Substantially all of the Company’s purchase orders
issued for other purchases in the ordinary course of business contain a 30-day
cancellation clause that allows the Company to cancel an order with 30 days notice.
6 Includes expected other postretirement benefit payments through 2014.
7 Excludes a $2.4 billion accident liability, related to the Terrorist Attacks and flight 587,
recorded in Other liabilities and deferred credits, as discussed in Note 2 to the
consolidated financial statements. This liability is offset in its entirety by a receivable,
recorded in Other assets, which the Company expects to receive from insurance
carriers as claims are resolved.
In addition to the commitments summarized above, the Company is required to make contributions to its defined
benefit pension plans. These contributions are required under the minimum funding requirements of the
Employee Retirement Income Security Act (ERISA). The Company’s estimated 2005 contributions to its defined
benefit pension plans are approximately $310 million. This estimate reflects the provisions of the Pension Funding
Equity Act of 2004. (The effect of the Pension Funding Equity Act was to defer a portion of the minimum required
contributions that would have been due for the 2004 and 2005 plan years.) Due to uncertainties regarding
significant assumptions involved in estimating future required contributions to its defined benefit pension plans,
such as interest rate levels, the amount and timing of asset returns, and the impact of proposed legislation, the
Company is not able to reasonably estimate its future required contributions beyond 2005. However, based on the
current regulatory environment and market conditions, the Company expects that its 2006 minimum required
contributions will exceed its 2005 expected contributions.
Results of Operations
AMR’s net loss in 2004 was $761 million, or $4.74 per share, an improvement of $467 million over AMR’s net loss
in 2003 of $1.2 billion, or $7.76 per share. The year-over-year improvement in the Company’s 2004 operating
results reflects the benefit of the cost reduction initiatives in the Company’s restructuring program, which is
described above, dampened by the weak revenue environment and the increase in fuel costs. The Company’s
2004 results include a $146 million gain on the sale of the Company’s remaining investment in Orbitz and $11
million in special charges. The Company’s 2003 results include several special items which are discussed in detail
in the notes to the consolidated financial statements, including (i) $358 million in security cost reimbursements
received under the Appropriations Act (see Note 2 to the consolidated financial statements), (ii) $407 million in
special charges (see Note 2 to the consolidated financial statements), (iii) $150 million in gains on the sale of the
Company’s investments in Hotwire and Orbitz (see Note 3 to the consolidated financial statements) and (iv) a $164
million reduction in previously accrued federal income taxes and related interest. In addition, the Company did not
record a tax benefit associated with its 2004 or 2003 losses.