American Airlines 2005 Annual Report Download

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AMR
CORPORATION
2005 Annual Report

Table of contents

  • Page 1
    AMR CORPORATION 2005 Annual Report

  • Page 2
    ...-K WAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 24, 2006. ADDITIONAL INFORMATION REGARDING, AMONG OTHER THINGS: (A) THE CORPORATION'S BOARD OF DIRECTORS; (B) THE OFFICERS OF THE CORPORATION AND CERTAIN OF ITS SUBSIDIARIES; AND (C) A MEANS OF CONTACTING THE CORPORATION CAN BE...

  • Page 3
    ... number, including area code) _____ Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Common Stock, $1 par value per share 9.00% Debentures due 2016 7.875% Public Income Notes due 2039 Name of Exchange on Which Registered New York Stock Exchange New York Stock Exchange...

  • Page 4
    ...of assets of AMR's U.S. employee benefit plans, as well as AMR's short-term investments. It also serves as the investment manager of the American Beacon Funds, a family of mutual funds with both institutional and retail shareholders, and provides customized fixed income portfolio management services...

  • Page 5
    ...passenger service between any two points within the U.S. and its possessions. Most major air carriers have developed hub-andspoke systems and schedule patterns in an effort to maximize the revenue potential of their service. American operates five hubs: Dallas/Fort Worth (DFW), Chicago O'Hare, Miami...

  • Page 6
    ... member carriers to enhance customer service and smooth connections to the destinations served by the alliance, including linking the carriers' frequent flyer programs and access to the carriers' airport lounge facilities. Several of American's major competitors are members of marketing/operational...

  • Page 7
    ...price of the tickets sold, but also with respect to the amount of special revenue program commissions that may be paid. The Company also establishes incentive programs with corporate customers to increase revenues. The Company believes that its network breadth and local market presence in key cities...

  • Page 8
    ...air carriers are required to file and adhere to international fare and rate tariffs, substantial commissions, fare overrides and discounts to travel agents, brokers and wholesalers characterize many international markets. Airport Access The FAA has designated New York John F. Kennedy (JFK), New York...

  • Page 9
    ... various environmental conditions at the Miami International Airport (MIA) and funding the remediation costs through landing fees and various cost recovery methods. American and AMR Eagle have been named PRPs for the contamination at MIA. See Item 3, Legal Proceedings, for additional information. 6

  • Page 10
    ... reduced the labor costs associated with the employees represented by the unions. In conjunction with the Labor Agreements, American implemented various changes in the pay plans and benefits for non-unionized personnel, including officers and other management (the Management Reductions). While...

  • Page 11
    ...the parties have agreed that contract openers may be exchanged at least 60 days prior to October 1, 2007. Fuel The Company's operations and financial results are significantly affected by the availability and price of jet fuel. The Company's fuel costs and consumption for the years 2003 through 2005...

  • Page 12
    ... by using services of other program participants, including bank credit card issuers, hotels, car rental companies and other retail companies. American sells mileage credits and related services to the other companies participating in the program. American reserves the right to change the AAdvantage...

  • Page 13
    ... situation, American and other air carriers can be required to provide airlift services to the Air Mobility Command under the Civil Reserve Air Fleet program. In the event the Company has to provide a substantial number of aircraft and crew to the Air Mobility Command, its operations could be...

  • Page 14
    ...underway to address our cost and revenue challenges, a number of these initiatives involve significant changes to our business which we may be unable to implement. The adequacy and ultimate success of our initiatives to generate additional revenues and significantly reduce our costs are not known at...

  • Page 15
    ... to pass on increased fuel prices to customers by increasing fares. In fact, recent history would indicate that we have limited ability to pass along the increased costs of fuel. If fuel prices decline in the future, increased fare competition and lower revenues may offset any potential benefit of...

  • Page 16
    ...and fares are at historically low levels. Service over almost all of our routes is highly competitive and fares remain at historically low levels. We face vigorous, and in some cases, increasing competition from major domestic airlines, national, regional, all-cargo and charter carriers, foreign air...

  • Page 17
    ...not made available. Moreover, additional laws, regulations, taxes and airport rates and charges have been enacted from time to time that have significantly increased the costs of airline operations, reduced the demand for air travel or restricted the way we can conduct our business. For example, the...

  • Page 18
    ... to operate between airports in the United States and London's Heathrow Airport. Only three airlines besides American are currently allowed to provide that service and Heathrow routes have historically been among our most profitable. The agreement, if approved, would result in our facing increased...

  • Page 19
    ... same time, these insurers significantly increased the premiums for aviation insurance in general. The U.S. government has agreed to provide commercial war-risk insurance for U.S. based airlines until August 31, 2006, covering losses to employees, passengers, third parties and aircraft. In addition...

  • Page 20
    ...aircraft operated by the Company at December 31, 2005 included: Average Average Seating Equipment Type American Airlines Aircraft Airbus A300-600R Boeing 737-800 Boeing 757-200 Boeing 767-200 Extended Range Boeing 767-300 Extended Range Boeing 777-200 Extended Range McDonnell Douglas MD-80 Total AMR...

  • Page 21
    ... and operating leased flight equipment operated by the Company as of December 31, 2005 are: 2011 and Equipment Type American Airlines Aircraft Airbus A300-600R Boeing 737-800 Boeing 757-200 Boeing 767-200 Extended Range Boeing 767-300 Extended Range McDonnell Douglas MD-80 AMR Eagle Aircraft Super...

  • Page 22
    ... reservation offices; and local ticket and administration offices throughout the system. American has entered into agreements with the Tulsa Municipal Airport Trust; the Alliance Airport Authority, Fort Worth, Texas; the New York City Industrial Development Agency; and the Dallas/Fort Worth, Chicago...

  • Page 23
    ... Division (Westways World Travel, Inc. v. AMR Corp., et al.). The lawsuit alleges that requiring travel agencies to pay debit memos to American for violations of American's fare rules (by customers of the agencies): (1) breaches the Agent Reporting Agreement between American and AMR Eagle and the...

  • Page 24
    ... the second quarter of 2001, the County filed a lawsuit against 17 defendants, including American, 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). The Company is vigorously defending the...

  • Page 25
    ... injunction against implementation of the RPA on June 30, 2003. The Marcoux suit alleges various claims against the Union and American relating to the RPA and the ratification vote on the RPA by individual Union members, including: violation of the Labor Management Reporting and Disclosure...

  • Page 26
    ... for two years service as Senior Vice President and Chief Financial Officer of Continental between 1993 and 1995, he has been with the Company in various management positions since 1984. Age 48. Mr. Beer became the Senior Vice President and Chief Financial Officer of AMR and American in January 2004...

  • Page 27
    ... ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The Company's common stock is traded on the New York Stock Exchange (symbol AMR). The approximate number of record holders of the Company's common stock at February 17, 2006 was 16,818. The range of closing market prices...

  • Page 28
    ... to stockholders' equity (deficit) of $379 million for the year ended December 31, 2005. No cash dividends were declared on AMR's common shares during any of the periods above. Information on the comparability of results is included in Item 7, Management's Discussion and Analysis and the notes to...

  • Page 29
    ... in the Company's revenues in 2001 and 2002. This revenue decrease was primarily driven by (i) a steep fall-off in the demand for air travel, particularly business travel, primarily caused by weakness in the U.S. economy, (ii) reduced pricing power, resulting mainly from greater cost sensitivity on...

  • Page 30
    ...international network, where the Company believes that higher revenue generating opportunities currently exist, (vii) the implementation of an on-board food purchase program and new fees for ticketing and baggage services, (viii) lower distribution costs, (ix) the implementation of fuel conservation...

  • Page 31
    ...in the Risk Factors listed in Item 1A. As the Company seeks to improve its financial condition, it must continue to take steps to generate additional revenues and significantly reduce its costs. Although the Company has a number of initiatives underway to address its cost and revenue challenges, the...

  • Page 32
    ... and/or equity-like securities. However, the availability and level of these financing sources cannot be assured, particularly in light of the Company's and American's recent financial results, substantial indebtedness, reduced credit ratings, high fuel prices, historically weak revenues and the...

  • Page 33
    ... debt service on the bonds and a discount of $25 million. See Notes 5 and 6 to the consolidated financial statements for additional information regarding the debt issuances listed above. During the fourth quarter of 2005, the Company issued and sold 13 million shares of its common stock. The Company...

  • Page 34
    ..., American does not guarantee the residual value of the aircraft. As of December 31, 2005, future lease payments required under these leases totaled $2.6 billion. Certain special facility revenue bonds have been issued by certain municipalities primarily to purchase equipment and improve airport...

  • Page 35
    ... 47 Boeing 737-800s and seven Boeing 777200ERs in 2013 through 2016. The Company has pre-arranged backstop financing available for the aircraft scheduled to be delivered in 2006. The table reflects minimum required payments under capacity purchase contracts between American and two regional airlines...

  • Page 36
    ... is similar to its funded status using the ABO methodology. 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, in particular, the...

  • Page 37
    ..., AMR Eagle), and two independent carriers with which American has capacity purchase agreements, Trans States Airlines, Inc. (Trans States) and Chautauqua Airlines, Inc. (Chautauqua). Regional Affiliates' passenger revenues, which are based on industry standard proration agreements for flights...

  • Page 38
    ... to 2003. American's passenger revenues increased by 4.8 percent, or $689 million, on a capacity (available seat mile) (ASM) increase of 5.3 percent. American's passenger load factor increased 2.0 points to 74.8 percent while passenger revenue yield per passenger mile decreased by 3.1 percent...

  • Page 39
    ...due primarily to a 42.1 percent increase in American's price per gallon of fuel (net of the impact of a fuel tax credit and fuel hedging) in 2005 relative to 2004. (in millions) Operating Expenses Wages, salaries and benefits Aircraft fuel Other rentals and landing fees Depreciation and amortization...

  • Page 40
    ...'s fuel consumption. (c) Maintenance, materials and repairs increased primarily due to increased aircraft utilization, the benefit from retiring aircraft subsiding and increases in contractual rates in certain flight hour agreements for outsourced aircraft engine maintenance. (d) Aircraft rentals...

  • Page 41
    ...'s remaining interest in Orbitz. 2004 Compared to 2003 Interest income increased $11 million, or 20.0 percent, to $66 million due primarily to increases in short-term investment balances and interest rates. Interest expense increased $168 million, or 23.9 percent, to $871 million resulting primarily...

  • Page 42
    ...identified the following critical accounting policies and estimates used by management in the preparation of the Company's financial statements: accounting for long-lived assets, passenger revenue, frequent flyer program, pensions and other postretirement benefits, income taxes and tax contingencies...

  • Page 43
    ..., due to changes in the Company's ticket refund policy and changes in the travel profile of customers, historical trends may not be representative of future results. Frequent flyer program - American uses the incremental cost method to account for the portion of its frequent flyer liability incurred...

  • Page 44
    ... markets stocks and bonds and ten percent alternative (private) investments. The expected return on plan assets component of the Company's net periodic benefit cost is calculated based on the fair value of plan assets and the Company's target asset allocation. The Company monitors its actual asset...

  • Page 45
    The health care cost trend rate is based upon an evaluation of the Company's historical trends and experience taking into account current and expected market conditions. Increasing the assumed health care cost trend rate by 100 basis points would increase estimated 2006 postretirement benefits ...

  • Page 46
    ...the Company trades and ships fuel and maintains fuel storage facilities to support its flight operations. The Company also manages the price risk of fuel costs primarily by using jet fuel, heating oil, and crude oil hedging contracts. Market risk is estimated as a hypothetical 10 percent increase in...

  • Page 47
    ... 2004, respectively. The fair values of the Company's long-term debt were estimated using quoted market prices or discounted future cash flows based on the Company's incremental borrowing rates for similar types of borrowing arrangements. Other The Company holds investments in certain other entities...

  • Page 48
    ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm Consolidated Statements of Operations Consolidated Balance Sheets Consolidated Statements of Cash Flows Consolidated Statements of Stockholders' Equity (Deficit) Notes to Consolidated Financial ...

  • Page 49
    ... Public Accounting Firm The Board of Directors and Stockholders AMR Corporation We have audited the accompanying consolidated balance sheets of AMR Corporation as of December 31, 2005 and 2004 and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows...

  • Page 50
    AMR CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share amounts) Year Ended December 31, 2004 2005 Revenues Passenger - American Airlines - Regional Affiliates Cargo Other revenues Total operating revenues Expenses Wages, salaries and benefits Aircraft fuel Other ...

  • Page 51
    AMR CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except shares and par value) December 31, 2005 Assets Current Assets Cash Short-term investments Restricted cash and short-term investments Receivables, less allowance for uncollectible accounts (2005 - $60; 2004 - $59) Inventories, less ...

  • Page 52
    AMR CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except shares and par value) December 31, 2005 Liabilities and Stockholders' Equity (Deficit) Current Liabilities Accounts payable Accrued salaries and wages Accrued liabilities Air traffic liability Current maturities of long-term debt ...

  • Page 53
    ... Gain on sale of investments Redemption payments under operating leases for special facility revenue bonds Change in assets and liabilities: Decrease (increase) in receivables Decrease (increase) in inventories Increase (decrease) in accounts payable and accrued liabilities Increase in air traffic...

  • Page 54
    AMR CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (in millions, except share amounts) Accumulated Additional Common Stock Balance at January 1, 2003 Net loss Minimum pension liability Changes in fair value of derivative financial instruments Unrealized loss on investments ...

  • Page 55
    ... for maintenance and repair under flight hour maintenance contract agreements, which are accrued based on contractual terms when an obligation exists. Intangible Assets Route acquisition costs and airport operating and gate lease rights represent the purchase price attributable to route authorities...

  • Page 56
    ..., fixtures and other equipment Capitalized software Effective January 1, 2005, in order to more accurately reflect the expected useful life of its aircraft, the Company changed its estimate of the depreciable lives of its Boeing 737-800, Boeing 757-200 and McDonnell Douglas MD80 aircraft from 25 to...

  • Page 57
    ... cost of providing free travel awards is accrued when such award levels are reached. American also accrues a frequent flyer liability for the mileage credits that are expected to be used for travel on participating airlines based on historical usage patterns and contractual rates. American sells...

  • Page 58
    ... Board issued Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment" (SFAS 123(R)). SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values...

  • Page 59
    ... government grant In April 2003, the President signed the Emergency Wartime Supplemental Appropriations Act, 2003 (the Appropriations Act), which included provisions authorizing payment of $2.3 billion to reimburse air carriers for increased security costs in proportion to the amounts each carrier...

  • Page 60
    ... information becomes available concerning the expected claims. 3. Investments Short-term investments consisted of (in millions): December 31, 2005 Overnight investments and time deposits Corporate and bank notes U. S. government agency mortgages U. S. government agency notes Asset backed securities...

  • Page 61
    ... hour fees are designed to cover the American Connection carriers' fully allocated costs plus a margin. Assumptions for certain costs such as fuel, landing fees, insurance, and aircraft ownership are trued up to actual values on a pass through basis. In consideration for these payments, the Company...

  • Page 62
    ... 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. The Company is involved in certain claims and...

  • Page 63
    ... term at fair market value, but generally not to exceed a stated percentage of the defined lessor's cost of the aircraft or a predetermined fixed amount. Certain special facility revenue bonds have been issued by certain municipalities primarily to improve airport facilities and purchase equipment...

  • Page 64
    ... certain trusts that are the lessors under 84 of its aircraft operating leases. These leases contain a fixed price purchase option, which allows American to purchase the aircraft at a predetermined price on a specified date. However, American does not guarantee the residual value of the aircraft. As...

  • Page 65
    ... billion. In November 2005, the New York City Industrial Development Agency issued facilities sublease revenue bonds for John F. Kennedy International Airport to provide reimbursement to American for certain facility construction and other related costs. The Company has recorded the issuance of $775...

  • Page 66
    ...Facility are guaranteed by AMR, and AMR's guaranty is secured by a pledge of all the outstanding shares of common stock of American. The Credit Facility contains a covenant (the Liquidity Covenant) requiring American to maintain, as defined, unrestricted cash, unencumbered short term investments and...

  • Page 67
    ... American. If the holders of the 4.50 Notes or the 4.25 Notes require the Company to repurchase all or any portion of the notes on the repurchase dates, it is the Company's present intention to satisfy the requirement in cash. Certain debt is secured by aircraft, engines, equipment and other assets...

  • Page 68
    ...a positive fair value at the reporting date, reduced by the effects of master netting agreements. To manage credit risks, the Company selects counterparties based on credit ratings, limits its exposure to a single counterparty under defined guidelines, and monitors the market position of the program...

  • Page 69
    ...The fair values of the Company's long-term debt were estimated using quoted market prices where available. For long-term debt not actively traded, fair values were estimated using discounted cash flow analyses, based on the Company's current incremental borrowing rates for similar types of borrowing...

  • Page 70
    ...and resolution of certain tax contingencies. The recording of other comprehensive income items, primarily the minimum pension liability, resulted in changes to the deferred tax asset and the related valuation allowance. The total increase in the valuation allowance was $506 million, $170 million and...

  • Page 71
    ... Plan (the 2003 Plan) to provide equity awards to employees (from the above shares authorized for issuance) in connection with the Labor Agreements and Management Reductions. Under the 2003 Plan, employees may be granted stock options, restricted stock and deferred stock. The total number of shares...

  • Page 72
    ... Long Term Incentive Plan, as amended, officers and key employees of AMR and its subsidiaries may be granted stock options, stock appreciation rights (SARs), restricted stock, deferred stock, stock purchase rights, other stock-based awards and/or performance-related awards, including cash bonuses...

  • Page 73
    ... value per share (calculated using a Black-Scholes option pricing model) of all stock option awards granted during 2005, 2004 and 2003 was $6.28, $4.23 and $2.32, respectively. Shares of deferred stock were awarded at no cost to officers and key employees under the LTIP Plans' Career Equity Program...

  • Page 74
    ...service in the defined benefit plan as of January 1, 2001 and begin participation in the defined contribution plan. Effective January 1, 2002, all new non-contract employees of the Company become members of the defined contribution plan. In addition to pension benefits, other postretirement benefits...

  • Page 75
    ...'s defined benefit plans. At December 31, 2005 and 2004, pension benefit plan assets of $48 million and $116 million, respectively, and other benefits plan assets of approximately $159 million and $149 million, respectively, were invested in shares of mutual funds managed by a subsidiary of AMR...

  • Page 76
    ...): Pension Benefits 2004 2005 Components of net periodic benefit cost Defined benefit plans: Service cost Interest cost Expected return on assets Amortization of: Transition asset Prior service cost Unrecognized net loss Curtailment loss Net periodic benefit cost for defined benefit plans Defined...

  • Page 77
    ...-term historical returns, actual returns on plan assets achieved over the last ten years, current and expected market conditions, and expected value to be generated through active management, currency overlay and securities lending programs. The Company's annualized ten-year rate of return on plan...

  • Page 78
    ... point change in the assumed health care cost trend rates would have the following effects (in millions): One Percent Increase Impact on 2005 service and interest cost Impact on postretirement benefit obligation as of December 31, 2005 $ $ 26 241 One Percent Decrease $ $ (25) (232) The Company...

  • Page 79
    ... following tables provide information relating to the Company's amortized intangible assets as of December 31 (in millions): 2005 Accumulated Amortization $ $ 241 90 331 $ $ Cost Amortized intangible assets: Airport operating rights Gate lease rights Total $ $ 517 179 696 Net Book Value 276 89 365...

  • Page 80
    ... Reclassification of derivative financial instruments into earnings Change in fair value of derivative financial instruments Balance at December 31, 2005 $ (1,293) 337 Unrealized Gain/(Loss) on Investments $ 4 (3) Income Tax Benefit $ 145 - Total $ (1,076) 334 - - (146) - (146) (956) 129...

  • Page 81
    .... Based on the way the Company treats the network and the manner in which resource allocation decisions are made, the Company has only one operating segment for financial reporting purposes consisting of the operations of American and AMR Eagle. American is the largest scheduled passenger airline in...

  • Page 82
    ... information of the Company's one reportable segment and the financial information included in the accompanying consolidated statements of operations and balance sheets as a result of these entities is not material. The Company's operating revenues by geographic region (as defined by the Department...

  • Page 83
    ...is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, or the Exchange Act. This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act...

  • Page 84
    ... with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of AMR Corporation as of December 31, 2005 and 2004 and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for each of the three...

  • Page 85
    ... granted under the 2003 Employee Stock Incentive Plan (the ESIP). The Pilot Stock Option Plan and the ESIP were implemented in accordance with the rules of the New York Stock Exchange. ** Includes 4,917,119 shares available for future grant under the 1998 Long Term Incentive Plan, as amended, and...

  • Page 86
    ...required information is included in the consolidated financial statements or notes thereto. (3) Exhibits required to be filed by Item 601 of Regulation S-K. (Where the amount of securities authorized to be issued under any of AMR's long-term debt agreements does not exceed 10 percent of AMR's assets...

  • Page 87
    ... of informal arrangement relating to deferral of payment of directors' fees, incorporated by reference to Exhibit 10(c)(11) to American's Registration Statement No. 2-76709. AMR Corporation 2004 Directors Unit Incentive Plan, as amended, incorporated by reference to Exhibit 10.5 to AMR's report on...

  • Page 88
    ... 31, 2000. Deferred Compensation Agreement, dated as of December 18, 2001 between AMR and Armando M. Codina, incorporated by reference to Exhibit 10.6 to AMR's report on Form 10-Q for the quarterly period ended June 30, 2002, as filed on July 19, 2002. Deferred Compensation Agreement, dated as of...

  • Page 89
    ... to Exhibit 10.34 to AMR's report on Form 10K for the year ended December 31, 2004. Deferred Compensation Agreement, dated as of November 29, 2005 between AMR and Michael A. Miles. Deferred Compensation Agreement, dated as of January 19, 2001, between AMR and Philip J. Purcell, incorporated by...

  • Page 90
    ... for the quarterly period ended June 30, 2002, as filed on July 19, 2002. Deferred Compensation Agreement, dated as of November 22, 2002 between AMR and Joe M. Rodgers, incorporated by reference to Exhibit 10.25 to AMR's report on Form 10K for the year ended December 31, 2002. Deferred Compensation...

  • Page 91
    ... ended December 31, 2004. Deferred Compensation Agreement, dated as of November 29, 2005 between AMR and Roger T. Staubach. American Airlines, Inc. 2004 Employee Profit Sharing Plan, incorporated by reference to Exhibit 10.1 to AMR's report on Form 10-Q for the quarterly period ended March 31, 2004...

  • Page 92
    ... Program Deferred Stock Award Agreement for Senior Officers under the AMR 1998 Long-Term Incentive Plan, incorporated by reference to Exhibit 10.42(a) to AMR's report on Form 10-K for the year ended December 31, 1998. Current form of Career Equity Program Deferred Stock Award Agreement for Employees...

  • Page 93
    ... Officers and Key Employees under the 1998 Long-Term Incentive Plan, as amended, incorporated by reference to Exhibit 10.10 to AMR's report on Form 10-Q for the quarterly period ended June 30, 2002, as filed on July 19, 2002. AMR Corporation 2002 - 2004 Performance Share Program Deferred Stock Award...

  • Page 94
    ...-K for the year ended December 31, 2002. Amended and Restated Executive Termination Benefits Agreement between AMR, American Airlines and Gary F. Kennedy dated February 3, 2003, incorporated by reference to Exhibit 10.55 to AMR's report on Form 10-K for the year ended December 31, 2002. Amended and...

  • Page 95
    ...Program for Officers of American Airlines, Inc Participating in the $uper $aver Plus Plan, incorporated by reference to Exhibit 10 to AMR's report on Form 10-Q for the quarterly period ended September 30, 2005. Aircraft Purchase Agreement by and between American Airlines, Inc. and The Boeing Company...

  • Page 96
    32 Certification pursuant to Rule 13a-14(b) and section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code). 93

  • Page 97
    ... thereunto duly authorized. AMR CORPORATION By: /s/ Gerard J. Arpey Gerard J. Arpey Chairman, President and Chief Executive Officer (Principal Executive Officer) Date: February 24, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the...

  • Page 98
    ...an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. /s/ Ernst & Young LLP Dallas...

  • Page 99
    AMR CORPORATION Schedule II - Valuation and Qualifying Accounts and Reserves (in millions) Changes charged to statement of operation s accounts Balance at beginning of year Payments Write-offs (net of recoveries) Sales, retirements and transfers Balance at end of year Year ended December 31, ...

  • Page 100
    ... effect of accounting change Add: Total fixed charges (per below) Less: Interest capitalized Total earnings (loss) Fixed charges: Interest Portion of rental expense representative of the interest factor Amortization of debt expense Total fixed charges Coverage deficiency 2004 2003 2002 2001 $ (861...

  • Page 101
    ...Airlines Marketing Services LLC American Airlines Realty (NYC) Holdings, Inc. American Aviation Supply LLC oneworld Alliance, LLC (31.2%) oneworld Management Company Ltd. (31.2%) Texas Aero Engine Services, L.L.C, dba TAESL (50/50 AA/RollsRoyce) American Beacon Advisors, Inc. American Private Equity...

  • Page 102
    ... management's assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of AMR Corporation, included in this Annual Report (Form 10-K) for the year ended December 31, 2005. /s/ ERNST & YOUNG LLP Dallas...

  • Page 103
    ... condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules...

  • Page 104
    ... condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules...

  • Page 105
    ... of the Securities Exchange Act of 1934 and information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: February 24, 2006 /s/ Gerard J. Arpey Gerard J. Arpey Chairman, President and Chief Executive Officer...

  • Page 106
    ... J. Arpey Chairman, President and Chief Executive Officer AMR Corporation / American Airlines, Inc. (Air Transportation) Fort Worth, Texas Elected in 2003 John W. Bachmann Senior Partner Edward Jones (Financial Services) St. Louis, Missouri Elected in 2001 David L. Boren President The University of...

  • Page 107
    ... - Dallas/Fort Worth Walter J. Aue Vice President - Capacity Planning David R. Brooks President - American Airlines Cargo Mark L. Burdette Vice President - Employee Relations David L. Campbell Vice President - Alliance and Kansas City Base Maintenance John A. Carpenter Vice President - Corporate...

  • Page 108
    ... Street New York, NY 10286 CORPORATE SECRETARY AMR Corporation Mail Drop 5675 HDQ P.O. Box 619616 Dallas/Fort Worth Airport, TX 75261-9616 9%, 9 3/4%, 9.8% AND 10% DEBENTURES, 7.875% PUBLIC INCOME NOTES, 4.25% AND 4.5% SENIOR CONVERTIBLE NOTES Trustee Wilmington Trust Company 1100 North Market...