American Airlines 2009 Annual Report Download - page 41

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38
Operating Expenses
2009 Compared to 2008 The Company’s total operating expenses decreased 18.5 percent, or $4.7 billion, to
$20.9 billion in 2009 compared to 2008. American’s mainline operating expenses per ASM in 2009 decreased
11.9 percent compared to 2008 to 12.22 cents. The decrease in operating expense was largely due to a year-
over-year decrease in AMR’s fuel prices from $3.03 per gallon in 2008 to $2.01 per gallon in 2009, including the
impact of fuel hedging. Although fuel prices have abated considerably from the record high prices recorded in
July 2008, they have steadily increased since the first quarter of 2009 and remain high and extremely volatile by
historical standards. A return to the recent historically high fuel prices and/or disruptions in the supply of fuel
would further materially adversely affect the Company’s financial condition and results of operations. The
Company’s unit costs excluding fuel and special charges were greater for the year ended December 31, 2009
than the year ended December 31, 2008. Factors driving the increase include increased defined benefit pension
expenses (due to the stock market decline in 2008), higher airport rent and landing fees and cost pressures
associated with the Company’s capacity reductions announced in 2008 and 2009 and dependability initiatives.
(in millions)
Operating Expenses
Year ended
December 31,
2009
Change
from 2008
Percentage
Change
Wages, salaries and benefits
$ 6,807
$ 152
2.3%
Aircraft fuel
5,553
(3,461)
(38.4)
(a)
Other rentals and landing fees
1,353
55
4.2
Depreciation and amortization
1,104
(103)
(8.5)
Maintenance, materials and repairs
1,280
43
3.5
Commissions, booking fees and credit
card expense
853
(144)
(14.4)
(b)
Aircraft rentals
505
13
2.6
Food service
487
(31)
(6.0)
Special charges
171
(1,042)
(85.9)
(c)
Other operating expenses
2,808
(216)
(7.1)
(d)
Total operating expenses
$ 20,921
$ (4,734)
(18.5)%
(a) Aircraft fuel expense decreased primarily due to a 33.7 percent decrease in the Company’s price per
gallon of fuel (net of the impact of fuel hedging) and a 7.0 percent decrease in the Company’s fuel
consumption. The Company recorded $651 million in net losses and $380 million in net gains on its
fuel hedging contracts for the years ended December 31, 2009 and 2008, respectively.
(b) Commissions, booking fees and credit card expense decreased in conjunction with the 16.2 percent
decrease in the Company’s revenues.
(c) Special charges in 2008 are related to an impairment charge of $1.1 billion to write down the
Company’s McDonnell Douglas MD-80 and Embraer RJ-135 fleets and certain related long-lived
assets to their estimated fair values. Special charges in 2009 relate to announced capacity
reductions, the grounding of the Airbus A300 fleet and the write down of certain Embraer RJ-135
aircraft to their estimated fair values.
(d) Other operating expenses in 2009 include $184 million for the impairment of certain route and slot
authorities, primarily in Latin America, and losses on certain sale leaseback transactions.