American Airlines 2006 Annual Report Download - page 19

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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 Aviation and Transportation Security Act, which became law
in 2001, mandated the federalization of certain airport security procedures and resulted in the imposition of
additional security requirements on airlines. In addition, many aspects of our operations are subject to
increasingly stringent environmental regulations, and concerns about climate change, in particular, may result in
the imposition of additional regulation. For example, the European Commission is currently seeking to impose
emissions controls on all flights coming into Europe. Laws or regulations similar to those described above or
other U.S. or foreign governmental actions in the future may adversely affect our business and financial results.
The results of our operations, demand for air travel, and the manner in which we conduct our business each may
be affected by changes in law and future actions taken by governmental agencies, including:
• changes in law which affect the services that can be offered by airlines in particular markets and at
particular airports;
• the granting and timing of certain governmental approvals (including foreign government approvals)
needed for codesharing alliances and other arrangements with other airlines;
• restrictions on competitive practices (for example court orders, or agency regulations or orders, that
would curtail an airline’s ability to respond to a competitor);
• the adoption of regulations that impact customer service standards (for example new passenger security
standards); or
• the adoption of more restrictive locally-imposed noise restrictions.
In November 2005, the United States and the European Union reached a tentative air services agreement that
would provide airlines from the United States and E.U. member states open access to each other’s markets, with
freedom of pricing and unlimited rights to fly beyond the United States and both within and beyond the E.U. The
tentative agreement is subject to approval by the E.U. Transport Council of Ministers. Under the agreement,
every U.S. and E.U. airline would be authorized 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 competition in serving Heathrow if additional carriers are able to obtain necessary slots and
terminal facilities.
We could be adversely affected by conflicts overseas or terrorist attacks.
Actual or threatened U.S. military involvement in overseas operations has, on occasion, had an adverse impact
on our business, financial position (including access to capital markets) and results of operations, and on the
airline industry in general. The continuing conflict in Iraq, or other conflicts or events in the Middle East or
elsewhere, may result in similar adverse impacts.
The Terrorist Attacks had a material adverse impact on us. The occurrence of another terrorist attack (whether
domestic or international and whether against us or another entity) could again have a material adverse impact
on us.
Our international operations could be adversely affected by numerous events, circumstances or
government actions beyond our control.
Our current international activities and prospects could be adversely affected by factors such as reversals or
delays in the opening of foreign markets, exchange controls, currency and political risks, taxation and changes in
international government regulation of our operations, including the inability to obtain or retain needed route
authorities and/or slots.