American Airlines 2008 Annual Report Download

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AMR
CORPORATION
2008 Annual Report

Table of contents

  • Page 1
    AMR CORPORATION 2008 Annual Report

  • Page 2
    ...REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008 (THE "10-K"). THE 10-K WAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 19, 2009. ADDITIONAL INFORMATION REGARDING, AMONG OTHER THINGS: (A) THE CORPORATION'S BOARD OF DIRECTORS; (B) THE OFFICERS OF THE CORPORATION...

  • Page 3
    ... telephone 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...

  • Page 4
    ...® carriers provide connecting service from ten of American's high-traffic cities to smaller markets throughout the United States, Canada, Mexico and the Caribbean. The AMR Eagle fleet is operated to feed passenger traffic to American pursuant to a capacity purchase agreement between American and...

  • Page 5
    ... the Company's defined benefit pension plans to pilots who retired. Pilot retirements resulted in $917 million in total lump sum payments to pilot retirees. The charge is further described in Note 10 to the consolidated financial statements. In August 2008, AMR retired, by purchasing with cash, $75...

  • Page 6
    ...San 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
    ... 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 8
    ... the open skies agreement, Heathrow is a slot-controlled airport. Only three airlines besides American were previously allowed to provide service to Heathrow. The agreement has resulted in the Company facing increased competition in serving Heathrow, where the Company has lost market share. In...

  • Page 9
    ... significant impact on the Company's flights to or from JFK. In late 2008, the FAA issued new rules for carriers operating at LGA, JFK and Newark that would fundamentally change the manner in which operating authorizations are held and distributed at those airports. Every departure and landing would...

  • Page 10
    ... payments of its share of costs at such sites will be immaterial. Labor The airline business is labor intensive. Wages, salaries and benefits represented approximately 26 percent of the Company's consolidated operating expenses for the year ended December 31, 2008. The average full -time equivalent...

  • Page 11
    ... costs associated with the employees represented by the unions. In conjunction with the Labor Agreements, American also implemented various changes in the pay plans and benefits for non-unionized personnel, including officers and other management (the Management Reductions). The Labor Agreements...

  • Page 12
    ...award travel. Most travel awards are subject to capacity controlled seating. A member's mileage credit does not expire as long as that member has any type of qualifying activity at least once every 18 months. American sells mileage credits and related services to other participants in the AAdvantage...

  • Page 13
    ...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 adversely impacted. Available Information...

  • Page 14
    ... or spikes in jet fuel prices) and to deterioration of the operating environment (such as a deepening of the current global recession or significant increased competition). The severe global economic downturn has resulted in weaker demand for air travel and lower investment asset returns, which may...

  • Page 15
    ...the availability of jet fuel, which are in turn affected by a number of factors beyond our control. Fuel prices have only recently declined from historic high levels. Due to the competitive nature of the airline industry, we may not be able to pass on increased fuel prices to customers by increasing...

  • Page 16
    ...or demographic trends; changes in the competitive environment due to industry consolidation and other factors; actual or potential disruptions to the air traffic control systems; increases in costs of safety, security and environmental measures; outbreaks of diseases that affect travel behavior; and...

  • Page 17
    ... business agreement and related marketing arrangements with British Airways and Iberia, which provide for commercial cooperation on flights between North America and most countries in Europe, pooling and sharing of certain revenues and costs, expanded codesharing, enhanced frequent flyer program...

  • Page 18
    ... rising fuel costs and able to better absorb high jet fuel prices; and fare simplification efforts by certain carriers. We believe that our reduced pricing power could persist indefinitely. Our corporate or business strategy may change. In light of the rapid changes in the airline industry, we...

  • Page 19
    ... slots. For example, the "open skies" air services agreement between the United States and the EU which took effect in March 2008, provides airlines from the United States and EU member states open access to each other's markets, with freedom of pricing and unlimited rights to fly beyond the United...

  • Page 20
    ... the airline industry typically is slow and sometimes contentious. The union that represents American's pilots has recently filed a number of grievances, lawsuits and complaints, most of which American believes are part of a corporate campaign related to the union's labor agreement negotiations with...

  • Page 21
    ... 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 time, which would...

  • Page 22
    ... and leased aircraft operated by the Company at December 31, 2008 included: Average Age (Years) 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...

  • Page 23
    ... leased flight equipment operated by the Company as of December 31, 2008 are: 2014 and Thereafter 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 24
    ... Worth, Chicago O'Hare, Newark, San Juan, and Los Angeles airport authorities to provide funds for constructing, improving and modifying facilities and acquiring equipment which are or will be leased to the Company. The Company also uses public airports for its flight operations under lease or use...

  • Page 25
    ...RPA was one of three labor agreements American successfully reached with its unions in order to avoid filing for bankruptcy in 2003. In a related case (Sherry Cooper, et al. v. TWA Airlines, LLC, et al., also in the United States District Court for the Eastern District of New York), the court denied...

  • Page 26
    ... 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 27
    ... The plaintiff alleges that American infringes a number of the plaintiff's patents, each of which relates to automated telephone call processing systems. The plaintiff is seeking past and future royalties, injunctive relief, costs and attorneys' fees. Although the Company believes that the plaintiff...

  • Page 28
    ... 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 51. Mr. Horton was elected Executive Vice President of Finance and Planning and Chief Financial Officer of AMR and American...

  • Page 29
    ... 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 11, 2009 was 15,802. The range of closing market prices for AMR's common stock on the New York...

  • Page 30
    ... primarily related to aircraft and employee charges due to announced capacity reductions (for further discussion of these items, see Note 2 to the consolidated financial statements). Effective December 31, 2006, the Company adopted SFAS 158 "Employers' Accounting for Defined Benefit Pension and...

  • Page 31
    ... changes in capacity, revenues, and costs, future financing plans and needs, overall economic and industry conditions, plans and objectives for future operations, regulatory approvals and actions, including the Company's application for antitrust immunity with other oneworld alliance members...

  • Page 32
    ...billion in 2008. Examples of new revenue sources over this period include checked baggage service charges, flight change service charges, onboard food sales, single day passes for AAdmirals Club admission, reservations ticketing service charges, First Class upgrades on day of departure, and numerous...

  • Page 33
    ... other's flights, enhanced frequent flyer program reciprocity, and cooperation in the areas of planning, marketing and certain operations. These agreements were signed in connection with an application to the U.S. Department of Transportation by the carriers for antitrust immunity to permit global...

  • Page 34
    ... amount of required reserves under credit card processing agreements, and the obligation to post cash collateral to secure loss positions on fuel hedging contracts, also pose challenges to our liquidity. To maintain sufficient liquidity and because the Company has significant debt, lease and other...

  • Page 35
    ...so, the purchase agreement will terminate in its entirety. . The Company's continued aircraft replacement strategy, and its execution of that strategy, will depend on such factors as future economic and industry conditions and the financial condition of the Company. Credit Ratings AMR's and American...

  • Page 36
    ...its operations. Credit Card Processing and Other Reserves American has agreements with a number of credit card companies and processors to accept credit cards for the sale of air travel and other services. Under certain of American's current credit card processing agreements, the related credit card...

  • Page 37
    ... 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 a working capital deficit, as do most other airline companies. In addition...

  • Page 38
    ... payments to redeem or purchase bonds that are not remarketed would generally reduce existing rent leveling accruals or be considered prepaid facility rentals and would reduce future operating lease commitments. In addition, the Company had other operating leases, primarily for aircraft and airport...

  • Page 39
    ... Note 10 to the consolidated financial statements. Pension Obligations The Company is required to make minimum contributions to its defined benefit pension plans under the minimum funding requirements of the Employee Retirement Income Security Act (ERISA), the Pension Funding Equity Act of 2004 and...

  • Page 40
    ... write the McDonnell Douglas MD -80 and Embraer RJ-135 fleets and certain related long-lived assets down to their estimated fair values, a $71 million accrual for employee severance cost and a $33 million expense related to the grounding of leased Airbus A300 aircraft prior to lease expiration, all...

  • Page 41
    ...standard proration agreements for flights connecting to American flights, remained flat at $2.5 billion. Regional Affiliates' traffic decreased 10.2 perce nt to 8.8 billion revenue passenger miles (RPMs), while capacity decreased 6.0 percent to 12.6 billion ASMs, resulting in a 3.2 point decrease in...

  • Page 42
    ... 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 reve nue passenger miles (RPMs), while capacity decreased...

  • Page 43
    ... airframe maintenance overhauls, dependability initiatives, repair costs and volume, and contractual engine repair rates, which are driven by aircraft age. (c) Aircraft rental expense decreased principally due to lease expirations of Boeing 757 and McDonnell Douglas MD-80 aircraft. (d) Special...

  • Page 44
    ...heavier workscope of scheduled airframe maintenance overhauls, repair costs and volume, and contractual engine repair rates, which are driven by aircraft age. (c) Special charges increased due to a $63 million charge for the retirement of 24 MD-80 aircraft and certain related equipment. Other Income...

  • Page 45
    ... the reduction in the cost of fuel during the last quarter of 2008, somewhat offset by increased defined benefit pension expenses and retiree medical and other expenses (due to the stock market decline), and by cost pressures associated with the Company's previously announced capacity reductions and...

  • Page 46
    ... critical accounting policies and estimates used by management in the preparation of the Company's financial statements: accounting for fair value, long-lived assets, routes, passenger revenue, frequent flyer program, stock compensation, pensions and retiree medical and other benefits, income taxes...

  • Page 47
    ...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 when AAdvantage members...

  • Page 48
    ... in cash, the fair value is re-measured each reporting period. Pensions and retiree medical and other benefits - The Company accounts for its pension and retiree medical and other benefits under Statement of Financial Accounting Standards 158 "Employers' Accounting for Defined Benefit Pension and...

  • Page 49
    ... long-term rate of return on plan assets by 50 basis points as of December 31, 2008 would increase estimated 2009 pension expense by approximately $32 million. The health care cost trend rate is based upon an evaluation of the Company's historical trends and experience taking into account current...

  • Page 50
    ...the consensus of FASB Staff Position APB 14-1 (FSP APB 14-1), "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)," which applies to all convertible debt instruments that have a ''net settlement feature'', which means that such...

  • Page 51
    ... financial statements for accounting policies and additional information. Aircraft Fuel The Company's earnings are affected by 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...

  • Page 52
    ...$297 million and $326 million as of December 31, 2008 and 2007, respectively. The fair values o f 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. 49

  • Page 53
    ...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 54
    ...basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), AMR Corporation's internal control over financial reporting...

  • Page 55
    ...American Airlines - Regional Affiliates Cargo Other revenues Total operating revenues Expenses Aircraft fuel Wages, salaries and benefits Other rentals and landing fees Depreciation and amortization Maintenance, materials and repairs Commissions, booking fees and credit card expense Aircraft rentals...

  • Page 56
    AMR CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except shares and par value) December 31, 2008 Assets Current Assets Cash Short-term investments Restricted cash and short-term investments Receivables, less allowance for uncollectible accounts (2008 - $49; 2007 - $41) Inventories, less ...

  • Page 57
    ... shares and par value) December 31, 2008 Liabilities and Stockholders' Equity (Deficit) Current Liabilities Accounts payable Accrued salaries and wages Fuel derivative liability Accrued liabilities Air traffic liability Current maturities of long-term debt Current obligations under capital leases...

  • Page 58
    ...-term debt and capital lease obligations Proceeds from: Issuance of common stock, net of issuance costs Reimbursement from construction reserve account Exercise of stock options Issuance of long-term debt Sale leaseback transactions Net cash provided by (used in) financing activities Net increase...

  • Page 59
    ... Issuance of 13,000,000 shares Issuance of 14,173,610 shares to employees pursuant to stock option and deferred stock incentive plans Balance at December 31, 2007 Net loss Pension, retiree medical and other liability Net changes in fair value of derivative financial instruments Unrealized loss on...

  • Page 60
    ...service. Allowances are also provided for spare parts currently identified as excess and obsolete. These allowances are based on management estimates, which are subject to change. Maintenance and Repair Costs Maintenance and repair costs for owned and leased flight equipment are charged to operating...

  • Page 61
    ... 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 62
    ...travel on participating airlines based on historical usage patterns and contractual rates. American sells mileage credits and related services to companies participating in its frequent flyer program. The portion of the revenue related to the sale of mileage credits, representing the revenue for air...

  • Page 63
    ... undiscounted cash flows or these fleet types had fair values at levels above current carrying value. Included in the charge for the Embraer RJ-135 fleet were write downs on 29 aircraft, of which 19 were considered held for sale as of December 31, 2008. The McDonnell Douglas MD-80 aircraft are...

  • Page 64
    ... the Company's special charges, the remaining accruals for these charges and the capacity reduction related charges (in millions) as of December 31, 2008: Aircraft Charges Remaining accrual at January 1, 2006 Adjustments Payments Remaining accrual at December 31, 2006 Restructuring charges Non-cash...

  • Page 65
    ... the full term of the assets or liabilities. The Company's short -term investments primarily utilize broker quotes in a non-active market for valuation of these securities. The Company's fuel derivative contracts, which primarily consist of commodity options and collars, are valued using energy and...

  • Page 66
    ...is included in Miscellaneous-net in the accompanying consolidated statement of operations. 4. Commitments, Contingencies and Guarantees During 2008, the Company continued its fleet renewal strategy as it entered into amendments to its purchase agreement with the Boeing Company. Giving effect to the...

  • Page 67
    ... London Interbank Offered Rate (LIBOR)-based financing transactions (including certain leveraged aircraft leases) generally obligate the Company to reimburse the applicable lender for incremental costs due to a change in law that imposes (i) any reserve or special deposit requirement against assets...

  • Page 68
    .... Some aircraft leases have purchase options at or near the end of the lease 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. During 2008, the Company raised $354 million through sale leasebacks...

  • Page 69
    ...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 of December 31, 2008...

  • Page 70
    ...Notes, the Company had the option to pay the purchase price with cash, stock, or a combination of cash and stock, and the Company elected to pay for the 4.50 Notes solely with cash. The $318 million principal amount of the 4.50 Notes is recorded as Current maturities of long-term debt as of December...

  • Page 71
    ...the terms of the 4.25 Notes, the Company had the option to pay the purchase price with cash, stock, or a combination of cash and stock, and the Company elected to pay for the 4.25 Notes solely with cash. Certain debt is secured by aircraft, engines, equipment and other assets having a net book value...

  • Page 72
    ...unwound trades. The impact of cash flow hedges on the Company's consolidated financial statements for the years ending December 31, 2008 and 2007, respectively, is depicted below (in millions): Fair Value of Aircraft Fuel Derivative Instruments (all cash flow hedges under SFAS 133) Asset Derivatives...

  • Page 73
    .... The credit exposure related to these financial instruments is represented by the fair value of contracts 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...

  • Page 74
    ...'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 arrangements. The carrying...

  • Page 75
    ... 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 Total deferred tax assets Valuation allowance Net deferred tax assets Deferred tax...

  • Page 76
    ... Long Term 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, 2008, the Company had stock option/settled stock appreciation right (SSAR) awards, performance share awards, deferred share...

  • Page 77
    ....0% A summary of stock option/SSARs activity under the LTIP Plans and the 2003 Plan as of December 31, 2008, and changes during the year then ended is presented below: LTIP Plans Weighted Average Exercise Price The 2003 Plan Weighted Average Exercise Price Options/SSARs Options Outstanding at...

  • Page 78
    ... 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 79
    ...All employees of the Company may participate in pension plans if they meet the plans' eligibility requirements. The defined benefit plans provide benefits for participating employees based on years of service and average compensation for a specified period of time before retirement. The Company uses...

  • Page 80
    ... million at December 31, 2007. The following table provides a reconciliation of the changes in the pension and retiree medical and other benefit obligations and fair value of assets for the years ended December 31, 2008 and 2007, and a statement of funded status as of December 31, 2008 and 2007 (in...

  • Page 81
    ... funds. The following tables provide the components of net periodic benefit cost for the years ended December 31, 2008, 2007 and 2006 (in millions): Pension Benefits 2008 2007 2006 Components of net periodic benefit cost Defined benefit plans: Service cost Interest cost Expected return on assets...

  • Page 82
    10. Retirement Benefits (Continued) Pension Benefits 2008 Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31 Discount rate Salary scale (ultimate) Expected return on plan assets 2007 Retiree Medical and Other Benefits 2008 2007 6.50% 3.78 8.75...

  • Page 83
    ... the Company's defined benefit pension plans to pilots who retired. Statement of Financial Accounting Standard s No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits" ("SFAS 88"), requires the use of settlement accounting if...

  • Page 84
    ... an "open skies" air services agreement that provides airlines from the United States and EU member states open access to each other's marke ts, with freedom of pricing and unlimited rights to fly beyond the United States and any airport in the EU including London's Heathrow Airport. The provisions...

  • Page 85
    ... prior service cost Reclassification of derivative financial instruments into earnings Change in fair value of derivative financial instruments Balance at December 31, 2008 $ (1,206) 748 Unrealized Gain/(Loss) on Investments $ 3 - Derivative Financial Instruments $ 79 - Income Tax Benefit $ 145...

  • Page 86
    ...® airlines serve 250 cities in 40 countries with, on average, more than 3,400 daily flights. The combined network fleet numbers approximately 900 aircraft. American is also one of the largest scheduled air freight carriers in the world, providing a wide range of freight and mail services to...

  • Page 87
    ... of revenues from American Beacon Advisors, Inc. (divested in 2008) 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...

  • Page 88
    ... fair values, and a $55 million accrual for employee severance costs. The Company's third quarter 2008 results include the sale of American Beacon for total proceeds of $442 mil lion with a net gain of $432 million and $27 million of special charges due to continued capacity reduction effects...

  • Page 89
    ... and procedures" 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...

  • Page 90
    ... of operations, stockholders' equity (deficit) and cash flows for each of the three years in the period ended December 31, 2008 of AMR Corporation and related financial statement schedule and our report dated February 18, 2009 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP Dallas...

  • Page 91
    ... 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 92
    ... Consolidated Statements of Stockholders' Equity (Deficit) for the Years Ended December 31, 2008, 2007 and 2006 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...

  • Page 93
    ... Employee Retirement Program for Officers of American Airlines Inc., as amended and restated as of January 1, 2005 (filed as Exhibit 10.128), First Amendment to AMR Corporation 2004 Directors Unit Incentive Plan, dated as of January 1, 2005 (filed as Exhibit 10.4, AMR Corporation 2003 Employee Stock...

  • Page 94
    ... as of December 18, 2001 between AMR and John W. Bachmann, incorporated by reference to Exhibit 10.5 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 November 16, 2002 between AMR and John W. Bachmann...

  • Page 95
    ... 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 December 13, 2002 between AMR and Armando M. Codina...

  • Page 96
    ... as of December 18, 2001 between AMR and Philip J. Purcell, incorporated by reference to Exhibit 10.7 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 November 15, 2002 between AMR and Philip J. Purcell...

  • Page 97
    ..., dated as of December 4, 2007 between AMR and Philip J. Purcell, incorporated by reference to Exhibit 10.54 to AMR's report on Form 10 -K for the year ended December 31, 2007. Deferred Compensation Agreement, dated as of December 4, 2008 between AMR and Philip J. Purcell. Deferred Compensation...

  • Page 98
    ...of December 18, 2001 between AMR and Judith Rodin, incorporated by reference to Exhibit 10.4 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 November 20, 2002 between AMR and Judith Rodin, incorporated...

  • Page 99
    ...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 Long-Term Incentive Plan, as amended...

  • Page 100
    ... 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 101
    ... Right Agreement under the 1998 Long Term Incentive Plan, as Amended (with awards to executive officers noted), incorporated by reference to Exhibit 99.1 to AMR's report on Form 8-K for on May 22, 2008. Amended and Restated Executive Termination Benefits Agreement between AMR, American Airlines...

  • Page 102
    ...Executive Retirement Program for Officers of American Airlines, Inc. Participating in the $uper $aver Plus Plan, as amended and restated as of June 1, 2007. Aircraft Purchase Agreement by and between American Airlines, Inc. and The Boeing Company, dated October 31, 1997, incorporated by reference to...

  • Page 103
    ... Share Plan for Officers and Key Employees, incorporated by reference to Exhibit 99.3 to AMR's current report on Form 8 -K dated May 22, 2008. AMR Corporation 1998 Long-Term Incentive Plan, as Amended and Restated as of January 1, 2005. Amendment of Stock Option Agreements Under the 1998 Long-Term...

  • Page 104
    ... request under Rule 24b-2 of the Securities and Exchange Act of 1934, as amended, incorporated by reference to Exhibit 10.136 to AMR's report on Form 10-K for the year ended December 31, 2007. Purchase Agreement Supplement by and between American Airlines, Inc. and The Boeing Company, dated February...

  • Page 105
    ..., President and Chief Executive Officer (Principal Executive Officer) Date: February 18, 2009 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates noted...

  • Page 106
    AMR CORPORATION Schedule II - Valuation and Qualifying Accounts and Reserves (in millions) Changes charged to Balance statement at of beginning operations of year accounts Payments Write-offs (net of recoveries) Sales, retirements and transfers Balance at end of year Year ended December 31, ...

  • Page 107
    ... 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 expense representative of the interest factor Amortization of debt expense Total fixed charges Ratio of earnings to fixed...

  • Page 108
    ... over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating...

  • Page 109
    ... over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating...

  • Page 110
    ... 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, 2008 (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 111
    ... (International Public Policy Research) Santa Monica, California Elected in 1990 Michael A. Miles Special Limited Partner Forstmann Little & Co. (Investment Banking) New York, New York Elected in 2000 Philip J. Purcell President Continental Investors, LLC (Private Equity Investing) Chicago, Illinois...

  • Page 112
    ... J. Ahern Vice President - Airport Services Walter J. Aue Vice President - Capacity Planning David R. Brooks President - American Airlines Cargo Mark L. Burdette Vice President - Employee Relations William M. Cavitt Vice President - Engineering, Planning and Quality Assurance Fred E. Cleveland Vice...

  • Page 113
    ... stockholder return is an indicator of corporate performance, it is subject to the vagaries of the market. CUMULATIVE TOTAL RETURNS* ON $100 INVESTMENT ON DECEMBER 31, 2003 $280 $230 $180 AMR S & P 500 AMEX Airline Index $130 $80 $30 2003 2004 2005 2006 2007 2008 * Defined as stock price...

  • Page 114
    ...ended December 31, 2008, is available on our web site at www.aa.com/investorrelations. In addition, financial reports, filings with the U.S. Securities and Exchange Commission (SEC), news releases and other information are available on our Investor Relations website. We filed with the New York Stock...