American Airlines 2007 Annual Report Download

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AMR
CORPORATION
2007 Annual Report

Table of contents

  • Page 1
    AMR CORPORATION 2007 Annual Report

  • Page 2
    ..."CORPORATION") ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDING DECEMBER 31, 2007 (THE "10-K"). THE 10-K WAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 20, 2008. ADDITIONAL INFORMATION REGARDING, AMONG OTHER THINGS: (A) THE CORPORATION'S BOARD OF DIRECTORS; (B) THE OFFICERS...

  • Page 3
    ...New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None _____ Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ; Yes Â... No Indicate by check mark if the registrant is not required to file reports...

  • Page 4
    ... American receives all passenger revenue from flights and pays AMR Eagle a fee for each flight. In July 2007, the capacity purchase agreement was amended to reflect what the Company believes are current market rates received by other regional carriers for similar flying. Amounts paid to AMR Eagle...

  • Page 5
    ... asset review, see Item 1A. Risk Factors. On November 28, 2007, the Company announced that it plans to divest AMR Eagle (American Eagle Airlines, Inc., and Executive Airlines, Inc.), its wholly-owned regional carrier. American Eagle Airlines, Inc. feeds American Airlines hubs throughout North...

  • Page 6
    ... Juan, Puerto Rico. United Air Lines (United) also has a hub operation at Chicago O'Hare. The American Eagle® carriers increase the number of markets the Company serves by providing connections at American's hubs and certain other major airports -- Boston, Los Angeles, Raleigh/Durham and New York...

  • Page 7
    ... agreements, diminish the value of route authorities, or otherwise adversely affect the Company's international operations. In addition, at some foreign airports, an air carrier needs slots (landing and take-off authorizations) before the air carrier can introduce new service or increase existing...

  • Page 8
    ... discounts to travel agents, brokers and wholesalers characterize many international markets. Airport Access Historically, the FAA designated JFK, LaGuardia, and Washington Reagan airports as highdensity traffic airports. The high-density rule limits the number of Instrument Flight Rule operations...

  • Page 9
    ...a schedule reduction order at Newark airport, which could include slot controls at that airport. The Company could be adversely affected if such an order is imposed. Although the Company is constrained by slots, it currently has sufficient slot authorizations to operate its existing flights. However...

  • Page 10
    ... and present liabilities at Double Eagle in exchange for a one-time, lump-sum settlement payment. American expects that its payment will be immaterial. American, along with most other tenants at the San Francisco International Airport (SFIA), has been ordered by the California Regional Water Quality...

  • Page 11
    ... contract openers may be exchanged 90 days prior to that date. The other union employees at the American Eagle carriers are covered by separate agreements with the TWU. The agreements between the American Eagle carriers and the TWU were amendable beginning on October 1, 2007. Negotiations commenced...

  • Page 12
    ... by flying on American, American Eagle, and the American Connection carriers or by using services of other participants in the AAdvantage program. Mileage credits can be redeemed for free, discounted or upgraded travel on American, American Eagle or other participating airlines, or for other awards...

  • Page 13
    ... reports are electronically filed with the Securities and Exchange Commission. In addition, the Company's code of ethics, which applies to all employees of the Company, including the Company's Chief Executive Officer (CEO), Chief Financial Officer (CFO) and Controller, is posted under the Investor...

  • Page 14
    ...trends; • changes in the competitive environment due to industry consolidation and other factors; • actual or potential disruptions to the air traffic control system; • increases in costs of safety, security and environmental measures; • outbreaks of diseases that affect travel behavior; and...

  • Page 15
    ...of factors beyond our control. Fuel prices are volatile, increased significantly in 2007, and remain very high by historical standards. Due to the competitive nature of the airline industry, we may not be able to pass on increased fuel prices to customers by increasing fares. In fact, recent history...

  • Page 16
    ...2007. We cannot predict the consequences of such a large portion of the airline industry's capacity being provided by recently reorganized air carriers. Successful reorganizations by other carriers present us with competitors with significantly lower operating costs and a stronger financial position...

  • Page 17
    ...our control, including changes in the competitive landscape we face. Our corporate and business strategies are, therefore, subject to change. In October 2007, we announced that we were conducting a strategic value review involving, among other things, AMR Eagle, our regional airline, American Beacon...

  • Page 18
    ... carry about 740 million passengers a year and are forecasted to accommodate a billion passengers annually by 2015. Air-traffic controllers rely on outdated technologies that routinely overwhelm the system and compel airlines to fly inefficient, indirect routes. The Company supports a common-sense...

  • Page 19
    ...the event commercial insurance carriers further reduce the amount of insurance coverage available to us, or significantly increase its cost, we would be adversely affected. We may be unable to retain key management personnel. Since the Terrorist Attacks, a number of our key management employees have...

  • Page 20
    ... these systems could impact our operations and customer service, result in the loss of important data, loss of revenues, and increased costs, and generally harm our business. Moreover, a failure of certain of our vital systems could limit our ability to operate our flights for an extended period of...

  • Page 21
    ... operated by the Company at December 31, 2007 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 Eagle...

  • Page 22
    ... capital and operating leased flight equipment operated by the Company as of December 31, 2007 are: 2013 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...

  • Page 23
    ... payable. 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 O'Hare, Newark, San Juan, and Los Angeles airport authorities to provide funds...

  • Page 24
    ... (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 plaintiffs...

  • Page 25
    ... set prices and surcharges on cargo shipments. These cases, along with other purported class action lawsuits in which the Company was not named, were consolidated in the United States District Court for the Eastern District of New York as In re Air Cargo Shipping Services Antitrust Litigation, 06-MD...

  • Page 26
    ... et al. v. The City of Dallas, Texas et al.) filed on July 17, 2006 in the United States District Court in Dallas. The suit was brought by two lessees of facilities at Dallas Love Field Airport against American, the cities of Fort Worth and Dallas, Southwest Airlines, Inc., and the Dallas/Fort Worth...

  • Page 27
    ... No matters were submitted to a vote of the Company's security holders during the last quarter of its fiscal year ended December 31, 2007. Executive Officers of the Registrant The following information relates to the executive officers of AMR as of the filing of this Form 10-K. Gerard J. Arpey Mr...

  • Page 28
    ... 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 13, 2008 was 16,267. The range of closing market prices for AMR's common stock on the New York Stock Exchange was: 2007 High Quarter Ended...

  • Page 29
    ...Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans". This adoption decreased Stockholders' equity by $1.0 billion and increased the obligation for pension and other postretirement benefits by $880 million. As a result of actuarial changes including the discount rate and...

  • Page 30
    .... The Company's 2007 load factor was 80.9 percent, 1.2 points higher year-over-year and its fifth consecutive year of record load factor. Passenger yield, which is an industry measure of average fares, increased 2.4 percent versus 2006. However, passenger yield remains low by historical standards...

  • Page 31
    ...$2.3 billion to $5.0 billion and the ratio of the fair value of plan assets to the accumulated benefit obligations of the employee pension programs has increased from 75 percent to 96 percent. On November 28, 2007, the Company announced that it plans to divest AMR Eagle (American Eagle Airlines, Inc...

  • 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, revenues that are weak by historical...

  • Page 33
    ... U.S. based employees of American are eligible to participate in the AIP. The AIP is American's annual bonus plan and provides for the payment of awards in the event certain financial and/or customer service metrics are satisfied. Working Capital AMR (principally American) historically operates with...

  • Page 34
    ... primarily to purchase equipment and improve airport facilities that are leased by American and accounted for as operating leases. Approximately $1.7 billion of these bonds (with total future payments of approximately $4.1 billion as of December 31, 2007) are guaranteed by American, AMR, or both...

  • Page 35
    ... based on the current rate at December 31, 2007. Includes noncancelable commitments to purchase goods or services, primarily construction related costs at JFK and information technology related support. The Company has made estimates as to the timing of certain payments primarily for construction...

  • Page 36
    ... - net, a $39 million gain to reflect the positive impact of the change to an 18-month expiration of AAdvantage miles included in Passenger revenue, and a $63 million charge associated with the retirement and planned disposal of 24 MD-80 aircraft and certain other equipment that previously had been...

  • Page 37
    ... are based on industry standard proration agreements for flights connecting to American flights, decreased $32 million, or 1.3 percent, to $2.5 billion as a result of decreased capacity and load factors. Regional Affiliates' traffic decreased 1.2 percent to 9.8 billion revenue passenger miles (RPMs...

  • Page 38
    ... based on industry standard proration agreements for flights connecting to American flights, increased $354 million, or 16.5 percent, to $2.5 billion as a result of increased capacity and load factors. Regional Affiliates' traffic increased 11.5 percent to 10.0 billion revenue passenger miles (RPMs...

  • Page 39
    ... taken in 2007. Included in 2007 expenses was a $63 million charge for the retirement of 24 MD-80 aircraft and certain related equipment. In addition, Other operating expenses increased due to technology investments and development, and other costs associated with improving the customer experience...

  • Page 40
    ...due primarily to a 16.5 percent increase in American's price per gallon of fuel (net of the impact of a fuel tax credit and fuel hedging) in 2006 relative to 2005. (in millions) Operating Expenses Wages, salaries and benefits Aircraft fuel Other rentals and landing fees Depreciation and amortization...

  • Page 41
    ... to $279 million. Interest expense increased $73 million, or 7.6 percent, to $1.0 billion primarily as a result of increases in interest rates. Miscellaneous - net includes a charge of $102 million for changes in market value of hedges that did not qualify for hedge accounting during certain periods...

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

  • Page 43
    ... how the recent open skies agreement will ultimately affect the Company's operations at Heathrow, the actual results could differ from those estimates. See Note 4 to the consolidated financial statements for additional information. Passenger revenue - Passenger ticket sales are initially recorded...

  • Page 44
    ...for free, discounted or upgraded travel on American, American Eagle or participating airlines as well as unrecognized revenue from selling AAdvantage miles to other companies was approximately $1.6 billion at both December 21, 2007 and 2006 (and is recorded as a component of Air traffic liability in...

  • Page 45
    ... return on plan assets by 50 basis points as of December 31, 2007 would increase estimated 2008 pension expense by approximately $45 million. 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...

  • Page 46
    ... tax balances of the financial statements. Recognized and unrecognized tax positions are reviewed and adjusted as events occur that affect the Company's judgment about the recognizability of income tax benefits, such as lapsing of applicable statutes of limitations, conclusion of tax audits, release...

  • Page 47
    ... changes in the price and availability of aircraft fuel. In order to provide a measure of control over price and supply, 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...

  • Page 48
    ... to approximately $326 million and $315 million as of December 31, 2007 and 2006, 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...

  • Page 49
    ...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 Statements...

  • Page 50
    ... balance sheets of AMR Corporation as of December 31, 2007 and 2006 and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for each of the three years in the period ended December 31, 2007. Our audits also included the financial statement schedule...

  • Page 51
    ... CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share amounts) Year Ended December 31, 2006 2007 Revenues Passenger - American Airlines - Regional Affiliates Cargo Other revenues Total operating revenues Expenses Wages, salaries and benefits Aircraft fuel Other rentals...

  • Page 52
    AMR CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except shares and par value) December 31, 2007 Assets Current Assets Cash Short-term investments Restricted cash and short-term investments Receivables, less allowance for uncollectible accounts (2007 - $41; 2006- $45) Inventories, less ...

  • Page 53
    ... CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except shares and par value) December 31, 2007 Liabilities and Stockholders' Equity (Deficit) Current Liabilities Accounts payable Accrued salaries and wages Accrued liabilities Air traffic liability Current maturities of long-term debt Current...

  • Page 54
    ...) to net cash provided (used) by operating activities: Depreciation Amortization Equity based stock compensation Provisions for asset impairments and restructuring charges Gain on sale of investments Redemption payments under operating leases for special facility revenue bonds Change in assets and...

  • Page 55
    AMR CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (in millions, except share amounts) Accumulated Additional Common Stock Balance at January 1, 2005 Net loss Minimum pension liability Changes in fair value of derivative financial instruments Unrealized gain on investments ...

  • Page 56
    ... with Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS 142). Airport operating and gate lease rights are being amortized on a straight-line basis over 25 years to a zero residual value. Statements of Cash Flows Short-term investments, without...

  • Page 57
    ... other leased equipment and property. Regional Affiliates Revenue from ticket sales is generally recognized when service is provided. Regional Affiliates revenues for flights connecting to American flights are based on industry standard proration agreements. Passenger Revenue Passenger ticket sales...

  • Page 58
    ...for free, discounted or upgraded travel on American, American Eagle or participating airlines as well as unrecognized revenue from selling AAdvantage miles was approximately $1.6 billion (and is recorded as a component of Air traffic liability on the accompanying consolidated balance sheets) at both...

  • Page 59
    ...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 Remaining accrual at January 1, 2005 Restructuring charges Adjustments Non-cash charges Payments Remaining accrual at...

  • Page 60
    ... price escalation, will approximate $269 million in 2008, $432 million in 2009, no payments in 2010, $106 million in 2011, $336 million in 2012, and $1.6 billion for 2013 and beyond. This amount is net of purchase deposits currently held by the manufacturer. American has granted Boeing a security...

  • Page 61
    ... arrangements, the Company pays the American Connection carriers a fee per block hour to operate the aircraft. The block 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...

  • Page 62
    ... of operations, or cash flows, after consideration of available insurance. 5. Leases AMR's subsidiaries lease various types of equipment and property, primarily aircraft and airport facilities. The future minimum lease payments required under capital leases, together with the present value of...

  • Page 63
    .... However, American does not guarantee the residual value of the aircraft. As of December 31, 2007, future lease payments required under these leases totaled $2.0 billion. 6. Indebtedness Long-term debt consisted of (in millions): December 31, 2007 Secured variable and fixed rate indebtedness due...

  • Page 64
    ... associated with the transaction. As such, American is required to consolidate the VIE in its financial statements. At December 31, 2007, the book value of the engines was $87 million and was included in Flight equipment on the consolidated balance sheet. The engines serve as collateral for the VIE...

  • Page 65
    ... Airport to provide reimbursement to American for certain facility construction and other related costs. The Company recorded the issuance of $775 million (net of $25 million discount) as long-term debt on the consolidated balance sheet as of December 31, 2005. The bonds bear interest at fixed rates...

  • Page 66
    ... with 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...

  • Page 67
    ..., including current maturities, were (in millions): December 31, 2007 2006 Carrying Fair Carrying Fair Value Value Value Value Secured variable and fixed rate indebtedness Enhanced equipment trust certificates 6.0% - 8.5% special facility revenue bonds Credit facility agreement 4.25% - 4.50 % senior...

  • Page 68
    ...'s deferred tax assets and liabilities were (in millions): December 31, 2007 Deferred tax assets: Postretirement benefits other than pensions Rent expense Alternative minimum tax credit carryforwards Operating loss carryforwards Pensions Frequent flyer obligation Gains from lease transactions Other...

  • Page 69
    ... Incentive Plan, as amended, officers and key employees of AMR and its subsidiaries may be granted certain types of stock or performance based awards. At December 31, 2007, the Company had stock option/ settled stock appreciation right (SSAR) awards, performance share awards, deferred share awards...

  • Page 70
    ... the Company to settle all outstanding performance and deferred share awards in stock rather than cash. Options/SSARs granted under the LTIP Plans and the 2003 Plan are awarded with an exercise price equal to the fair market value of the stock on date of grant, become exercisable in equal annual...

  • Page 71
    9. Share Based Compensation (Continued) A summary of stock option/SSARs activity under the LTIP Plans, the 2003 Plan and the Pilot Plan as of December 31, 2007, and changes during the year then ended is presented below: LTIP Plans Weighted Average Exercise Price The Pilot Plan and the 2003 Plan ...

  • Page 72
    ... deferred share awards granted under the LTIP Plans is based solely on a requisite service period (generally 36 months). Career equity awards granted to certain employees of the Company vest upon the retirement of those individuals. The fair value of each deferred award is based on AMR's stock price...

  • Page 73
    ... Other Awards As of December 31, 2007, certain performance share agreements and deferred share award agreements were accounted for as a liability, or as equity, as appropriate, in the consolidated balance sheet as the plans only permit settlement in cash or the awards required that the employee meet...

  • Page 74
    ...'s accounting policy. The incremental effects of adopting the provisions of SFAS 158 on the Company's consolidated balance sheet at December 31, 2006 are presented in the following table. The adoption of SFAS 158 had no effect on the Company's consolidated statement of operations for the year ended...

  • Page 75
    ... of the changes in the pension and retiree medical and other benefit obligations and fair value of assets for the years ended December 31, 2007 and 2006, and a statement of funded status as of December 31, 2007 and 2006 (in millions): Pension Benefits 2007 Reconciliation of benefit obligation...

  • Page 76
    ... (Continued) At December 31, 2007 and 2006, pension benefit plan assets of $127 million and $149 million, respectively, and retiree medical and other benefit plan assets of $220 million and $200 million, respectively, were invested in shares of mutual funds managed by a subsidiary of AMR. The...

  • Page 77
    ... 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 assets...

  • Page 78
    ... percentage point change in the assumed health care cost trend rates would have the following effects (in millions): One Percent Increase Impact on 2007 service and interest cost Impact on postretirement benefit obligation as of December 31, 2007 25 192 One Percent Decrease (24) (188) The Company...

  • Page 79
    ... to operate between airports in the United States and Heathrow. Notwithstanding the open skies agreement, Heathrow is a slot-controlled airport. Only three airlines besides American were previously allowed to provide that Heathrow service. The Company has recorded route acquisition costs (including...

  • Page 80
    ... year change Amortization of actuarial loss and prior service cost Reclassification of derivative financial instruments into earnings Change in fair value of derivative financial instruments Balance at December 31, 2007 $ (827) (379) Unrealized Gain/(Loss) on Investments $ (3) 6 Income Tax Benefit...

  • Page 81
    ... Company has only one operating segment for financial reporting purposes consisting of the operations of American and AMR Eagle. American is largest scheduled passenger airline in the world in terms of available seat miles and revenue passenger miles. At the end of 2007, American provided scheduled...

  • Page 82
    ... of revenues from American Beacon Advisors, Inc. and Americas Ground Services, Inc. The difference between the financial 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...

  • Page 83
    ... Income, Miscellaneous - net, a $39 million gain to reflect the positive impact of the change to an 18-month expiration of AAdvantage miles included in Passenger revenue, and a $63 million charge associated with the retirement of 24 MD-80 aircraft and certain other equipment that previously had been...

  • Page 84
    ...systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2007 using the criteria set forth in Internal...

  • Page 85
    ..., stockholders' equity (deficit) and cash flows for each of the three years in the period ended December 31, 2007 of AMR Corporation and related financial statement schedule and our report dated February 20, 2008 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP Dallas, Texas February...

  • Page 86
    ... with the rules of the New York Stock Exchange. Additional shares may become available for future use as certain employee stock options are settled as SSARs. See Note 9 to the consolidated financial statements for additional information regarding the equity compensation plans included above...

  • Page 87
    ...Consolidated Statements of Stockholders' Equity (Deficit) for the Years Ended December 31, 2007, 2006 and 2005 Notes to Consolidated Financial Statements (2) The following financial statement schedule is filed as part of this report: Page Schedule II Valuation and Qualifying Accounts and Reserves 96...

  • Page 88
    ... on Form 10K for the year ended December 31, 1996, and the AMR Corporation 1999 Directors' Stock Appreciation Rights Plan, incorporated by reference to Exhibit 10.1 to AMR's report on Form 10-Q for the quarterly period ended March 31, 1999. Deferred Compensation Agreement, dated as of December 18...

  • Page 89
    ... 30, 2002, as filed on July 19, 2002. Deferred Compensation Agreement, dated as of December 13, 2002 between AMR and Armando M. Codina, incorporated by reference to Exhibit 10.28 to AMR's report on Form 10-K for the year ended December 31, 2002. Deferred Compensation Agreement, dated as of January...

  • Page 90
    ... to Exhibit 10.26 to AMR's report on Form 10K for the year ended December 31, 2003. Deferred Compensation Agreement, dated as of December 8, 2004 between AMR and Michael A. Miles, incorporated by reference to Exhibit 10.34 to AMR's report on Form 10K for the year ended December 31, 2004. 10.39 10...

  • Page 91
    ... 2006 between AMR and Michael A. Miles, incorporated by reference to Exhibit 10.49 to AMR's report on Form 10K for the year ended December 31, 2006. Deferred Compensation Agreement, dated as of December 4, 2007 between AMR and Michael A. Miles. Deferred Compensation Agreement, dated as of January 19...

  • Page 92
    ... June 30, 2002, as filed on July 19, 2002. Deferred Compensation Agreement, dated as of November 20, 2002 between AMR and Judith Rodin, incorporated by reference to Exhibit 10.26 to AMR's report on Form 10-K for the year ended December 31, 2002. Deferred Compensation Agreement, dated as of January...

  • Page 93
    ... 10-K for the year ended December 31, 2004. Current form of Stock Option Agreement under the 2003 Employee Stock Incentive Plan, incorporated by reference to Exhibit 10.49 to AMR's report on Form 10-K for the year ended December 31, 2003. Current form of 2003 Stock Option Agreement under the 1998...

  • Page 94
    ... 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 under...

  • Page 95
    ...Exhibit 10.61 to AMR's report on Form 10-K for the year ended December 31, 2002. Trust Agreement Under Supplemental Executive Retirement 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...

  • Page 96
    ... Stock Appreciation Rights, incorporated by reference to Exhibit 10.132 to AMR's report on Form 10-K for the year ended December 31, 2006. American Airlines 2008 Employee Profit Sharing Plan. Stock Purchase Agreement dated as of July 3, 2007, between American Airlines, Inc., Radio Acquisition Corp...

  • Page 97
    ... under Rule 24b-2 of the Securities and Exchange Act of 1934, as amended. Purchase Agreement Supplement by and between American Airlines, Inc. and The Boeing Company, dated November 20, 2007. Portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission...

  • Page 98
    ... duly authorized. AMR CORPORATION By: /s/ Gerard J. Arpey Gerard J. Arpey Chairman, President and Chief Executive Officer (Principal Executive Officer) Date: February 20, 2008 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following...

  • Page 99
    AMR CORPORATION Schedule II - Valuation and Qualifying Accounts and Reserves (in millions) Changes charged to statement of operations accounts Balance at beginning of year Year ended December 31, 2007 Allowance for obsolescence of inventories $ Allowance for uncollectible accounts Reserves for ...

  • Page 100
    ... AMR CORPORATION Computation of Ratio of Earnings to Fixed Charges (in millions) 2007 Earnings: Income (loss) before income taxes and cumulative effect of accounting change Add: Total fixed charges (per below) Less: Interest capitalized Total earnings (loss) Fixed charges: Interest Portion of rental...

  • Page 101
    ... design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have...

  • Page 102
    ... design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have...

  • Page 103
    ... corporation (the Company), does hereby certify, to such officer's knowledge, that: The Annual Report on Form 10-K for the year ended December 31, 2007 (the Form 10-K) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information...

  • Page 104
    ... of AMR Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and shall not be deemed to be "soliciting material" or to be "filed" with the Securities and Exchange Commission. Such information shall not be deemed to be incorporated by reference into any filing under...

  • Page 105
    ...- Line Maintenance Oliver S. Martins Vice President - Engineering, Planning and Quality Assurance Brian J. McMenamy Vice President and Controller Scott D. Nason Vice President - Revenue Management Arthur W. Pappas Vice President - Chicago Airport Services Kurt Stache Vice President and General Sales...

  • Page 106
    ... airline index published by the American Stock Exchange, in each case over the preceding five-year period. AMR Corporation believes that while total stockholder return is an indicator of corporate performance, it is subject to the vagaries of the market. CUMULATIVE TOTAL RETURNS* ON $100 INVESTMENT...

  • Page 107
    ... 5675 HDQ P.O. Box 619616 Dallas/Fort Worth Airport, Texas 75261-9616 COMMON STOCK Transfer Agent & Registrar American Stock Transfer & Trust Company 59 Maiden Lane, Plaza Level New York, New York 10038 Shareholder Services: Toll-free telephone number: 1-877-390-3077 Website: www.amstock.com E-mail...