American Airlines 2005 Annual Report Download - page 31

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28
These initiatives have significantly improved the Company’s cost structure and resulted in the Company achieving
what the Company believes to be the lowest unit costs of the traditional carriers in 2004. However, a significant
number of the Company’s competitors have recently reorganized or are reorganizing, including under the
protection of Chapter 11 of the Bankruptcy Code, including Delta, United, US Airways and Northwest. These
competitors are significantly reducing their cost structures through bankruptcy, resulting in the Company’s cost
structure once again becoming less competitive.
The Company’s ability to become profitable and its ability to continue to fund its obligations on an ongoing basis
will depend on a number of factors, many of which are largely beyond the Company’s control. Some of the risk
factors that affect the Company’s business and financial results are discussed 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 ultimate success of these initiatives is not known at this time and
cannot be assured. It will be very difficult, absent continued restructuring of its operations, for the Company to
continue to fund its obligations on an ongoing basis, or to become profitable, if the overall industry revenue
environment does not continue to improve and fuel prices remain at historically high levels for an extended
period.