American Airlines 2011 Annual Report Download
Download and view the complete annual report
Please find the complete 2011 American Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
1 -
2 -
3 -
4 -
5 -
6 -
7 -
8 -
9 -
10 -
11 -
12 -
13
-
14
-
15
-
16
-
17
-
18
-
19
-
20
-
21
-
22
-
23
-
24
-
25
-
26
-
27
-
28
-
29
-
30
-
31
-
32
-
33
-
34
-
35
-
36
-
37
-
38
-
39
-
40
-
41
-
42
-
43
-
44
-
45
-
46
-
47
-
48
-
49
-
50
-
51
-
52
-
53
-
54
-
55
-
56
-
57
-
58
-
59
-
60
-
61
-
62
-
63
-
64
-
65
-
66
-
67
-
68
-
69
-
70
-
71
-
72
-
73
-
74
-
75
-
76
-
77
-
78
-
79
-
80
-
81
-
82
-
83
-
84
-
85
-
86
-
87
-
88
-
89
-
90
-
91
-
92
-
93
-
94
-
95
-
96
-
97
-
98
-
99
-
100
-
101
-
102
-
103
-
104
-
105
-
106
-
107
-
108
-
109
-
110
-
111
-
112
-
113
-
114
-
115
-
116
-
117
-
118
-
119
-
120
-
121
-
122
-
123
-
124
-
125
-
126
-
127
-
128
-
129
-
130
-
131
-
132
-
133
-
134
-
135
-
136
-
137
-
138
-
139
-
140
-
141
-
142
-
143
-
144
-
145
-
146
-
147
-
148
-
149
-
150
-
151
-
152
-
153
-
154
-
155
-
156
-
157
-
158
-
159
-
160
-
161
-
162
-
163
-
164
-
165
-
166
-
167
-
168
-
169
-
170
-
171
-
172
-
173
-
174
-
175
-
176
-
177
 |
 |
United States
Securities and Exchange Commission
Form 10-K
¨
AMR Corporation
Delaware 75-1825172
4333 Amon Carter Blvd.
Fort Worth, Texas 76155
(817) 963-1234
Common Stock, $1 par value per share N/A
9.00% Debentures due 2016 N/A
7.875% Public Income Notes due 2039 N/A
None
¨
¨
¨
¨
¨
¨ ¨
¨
Table of contents
-
Page 1
... Form 10-K  Annual Report Pursuant to Section 12 or 15(d) of the Securities Exchange Act of 1924 For the fiscal year ended December 21, 2011 ¨ Transition Report Pursuant to Section 12 or 15(d) of the Securities Exchange Act of 1924 Commission File Number: 1-8400 AMR Corporation (Exact name of... -
Page 2
... the end of 2011, American provided scheduled jet service to approximately 160 destinations throughout North America, the Caribbean, Latin America, Europe and Asia. AMR Eagle Holding Corporation (AMR Eagle), a wholly-owned subsidiary of AMR, owns two regional airlines which do business as "American... -
Page 3
... destinations) were approximately 40 percent of the Company's total operating revenues in each of the three years 2011, 2010, and 2009. Additional information about the Company's foreign operations is included in Note 15 to the consolidated financial statements. In providing international air... -
Page 4
... and intense price competition. Fare discounting by competitors has historically had a negative effect on the Company's financial results because the Company is generally required to match competitors' fares, as failing to match would provide even less revenue due to customers' price sensitivity... -
Page 5
... including American and the AMR Eagle carriers. The rule, which is effective January 14, 2014, impacts the required amount and timing of rest periods for pilots between work assignments and modifies duty and rest requirements based on the time of day, number of scheduled segments, flight types, time... -
Page 6
... share of costs at such sites will be immaterial. Labor The airline business is labor intensive. Wages, salaries and benefits represented approximately 28 percent of the Company's consolidated operating expenses for the year ended December 21, 2011. The average full-time equivalent number of people... -
Page 7
... tentative agreements were reached, certain issues remained open as of the Petition Date. AMR Eagle's current collective bargaining agreement with the Air Line Pilots Association (ALPA), became effective in September 1997 and extends by its terms to 2012, with amendment rounds every four years. The... -
Page 8
..., the Company reserves the right to change the AAdvantage program at any time without notice, and may end the program with six months notice. As of December 21, 2011, AAdvantage had approximately 69 million total members, and 591 billion outstanding award miles. During 2011, AAdvantage issued... -
Page 9
...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 The Company makes its annual report... -
Page 10
... 12,000, outsourcing a portion of American's aircraft maintenance work (including seeking the closure of our Fort Worth Alliance Airport maintenance base) and certain airport fleet service clerk work, terminating American's defined benefits pension plans, and discontinuing our subsidized retiree... -
Page 11
... currently plan to drive revenue growth by investing heavily in renewing and optimizing our fleet, building both network scale and our alliances, and investing several hundred million dollars annually in modernizing our brand, products and services. Significant capital resources will be required to... -
Page 12
... unsolicited offers for the Company or our assets. Chapter 11 gives us the exclusive right to file a plan of reorganization during the first 120 days after filing. That period can be extended for cause up to a total of 18 months from the Petition Date with approval of the Bankruptcy Court. While we... -
Page 13
... quantity of assets which could be used as collateral for such financings. A number of other factors, including our Chapter 11 filing, our financial results in recent years, our substantial indebtedness, the competitive revenue environment we face, recent historically high fuel prices, and the... -
Page 14
... impact our liquidity. 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 these agreements, the related credit card processor may hold back a reserve from American's credit card... -
Page 15
... a result of future issuances of our common stock. We may issue common stock to satisfy creditors and any plan of reorganization may include an equity-based incentive compensation plan. The amount and dilutive effect of any such issuance cannot be determined at this time. BUSINESS RISKS The severe... -
Page 16
... travel agents. An adverse outcome in any of these matters could have a material adverse effect on our level of bookings, business and results of operations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-GDS Discussion." Agreements with the GDSs operated... -
Page 17
... have reorganized in recent years under the protection of Chapter 11; other carriers being better hedged against rising fuel costs and able to better absorb high jet fuel prices; and the economy. This pricing environment could persist indefinitely. Our corporate or business strategy may change. In... -
Page 18
... including American and the AMR Eagle carriers. The rule, which is effective January 14, 2014, impacts the required amount and timing of rest periods for pilots between work assignments and modifies duty and rest requirements based on the time of day, number of scheduled segments, flight types, time... -
Page 19
... in taxes and fees and changes in international government regulation of our operations, including the inability to obtain or retain needed route authorities and/or slots. For example, the open skies air services agreement between the U.S. and the EU which took effect in March 2008 provides airlines... -
Page 20
...Bankruptcy Code, American has begun the process of negotiating with each of its unionized groups for changes to their respective collective bargaining agreements based on proposals which provide the necessary modifications to permit us to reorganize successfully, as contemplated by our business plan... -
Page 21
... in service at one or more of our primary market airports could have an adverse impact on us. Our business is heavily dependent on our operations at our primary market airports in Dallas/Fort Worth, Chicago, Miami, New York City and Los Angeles. Each of these operations includes flights that... -
Page 22
... increasing in number and amount in recent years. Under new Department of Transportation regulations that take effect on January 24, 2012, all government taxes and fees must be included in the fares we quote or advertise to our customers. Due to the competitive revenue environment, many increases... -
Page 23
... Securities and Exchange Commission staff comments at December 21, 2011. ITEM 2. PROPERTIES Flight Equipment - Operating Owned and leased aircraft operated by the Company at December 21, 2011 included: Average Seating Capacity Average Age (Years) Equipment Type American Airlines Aircraft... -
Page 24
... operated by the Company as of December 21, 2011 are: 2017 and Thereafter Equipment Type American Airlines Aircraft Boeing 727-800 Boeing 757-200 Boeing 767-200 Extended Range Boeing 767-200 Extended Range Boeing 777-200 Extended Range 2012 2012 2014 2015 2016 McDonnell Douglas MD-80 AMR... -
Page 25
... values for owned ground properties, lease terms and amortization relating to ground properties under capital leases, and acquisitions of ground properties, see Notes 2 and 6 to the consolidated financial statements. In accordance with the Bankruptcy Code, as of December 21, 2011, the Company... -
Page 26
... continues to operate its business and manage its property as a debtor-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code. As a result of the current Chapter 11 filings, attempts to prosecute, collect, secure or enforce remedies with respect to pre-petition claims against the... -
Page 27
... against American's services in its GDS and to return to the pricing in effect on January 4, 2011. The parties further agreed to enter into good faith negotiations. The Stand-Down Agreement expired on June 1, 2011. On July 8, 2011, the Company filed new breach of contract and Texas antitrust claims... -
Page 28
... American's request to amend its lawsuit by filing additional claims based on the evidence it had uncovered in discovery. American has filed a motion for reconsideration of those portions of the court's November 21 order dismissing certain of American's claims, and the defendants have each filed... -
Page 29
ITEM 4. REMOVED AND RESERVED 28 -
Page 30
... marketplace, operated by OTC Markets Group (www.otcmarkets.com). The approximate number of record holders of the Company's common stock at February 7, 2012 was 14,166. The range of closing market prices for AMR's common stock on the New York Stock Exchange was: 2011 High Quarter Ended March 21... -
Page 31
... discount rate and the impact of legislation changing pilot retirement age to 65, the Company recorded a $1.7 billion reduction in pension and retiree medical and other benefits and a corresponding increase in stockholders' equity in 2007. As a result of a significant decline in 2008 in the market... -
Page 32
...to restructure its business to strengthen its competitive and financial position. However, the Company's substantial cost disadvantage compared to its larger competitors, most of which have reorganized under the protection of Chapter 11 of the Bankruptcy Code, became increasingly untenable given the... -
Page 33
... Bankruptcy Code, holders of equity securities receive little or no recovery of value from their investment. Accordingly, the Debtors urge that caution be exercised with respect to existing and future investments in any of these securities or other Debtor claims. In addition, trading in the Company... -
Page 34
...700, and McDonnell Douglas MD-80 aircraft on the terms provided in the related financing documents. Magnitude of Potential Claims The Debtors will file with the Bankruptcy Court schedules and statements of financial affairs setting forth, among other things, the assets and liabilities of the Debtors... -
Page 35
... of this business plan include targets of an annual $2 billion in cost savings and $1 billion in revenue enhancement. Management expects that the additional cash flow generated from these improvements will enable us to renew American's fleet and to invest several hundred million dollars per year in... -
Page 36
... fuel-efficient fleet among its U.S. airline peers in approximately five years. If assumption of these agreements is requested by the Company and approved by the Bankruptcy Court, these firm aircraft commitments would be scheduled for delivery as follows: 2012 - 40 aircraft, 2014 - 55 aircraft, 2015... -
Page 37
... aircraft scheduled to be delivered in 2011 through 2014, subject to certain terms and conditions. During 2011, American financed 12 Boeing 727-800 aircraft under this and other arrangements, which are accounted for as operating leases. The Company cannot predict the impact, if any, that the Chapter... -
Page 38
... selling American tickets on its website. Prior to that date, approximately 5.4% of American's passenger revenue, on an annualized basis, was booked through Expedia. On April 4, 2011, American and Expedia entered into a new agreement which returned American's fares to Expedia's web site, and... -
Page 39
... could increase or decrease in the near term, based on revisions to those assessments. The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. The Company's 2004 through 2009 tax years are still subject to examination by the Internal Revenue Service... -
Page 40
... increase in total operating revenue was offset by significantly higher year-over-year fuel prices. Fuel prices increased significantly through the second quarter and remained high and extremely volatile through year-end. The Company paid an average of $2.01 per gallon in 2011 compared to an average... -
Page 41
... million in restricted cash and short-term investments at December 21, 2010. The Company's unrestricted short-term investment portfolio consists of a variety of what the Company believes are highly liquid, lower risk instruments including money market funds, government agency investments, repurchase... -
Page 42
...financial statements for a schedule of the Company's aircraft commitments and payments. Credit Ratings AMR's and American's credit ratings are significantly below investment grade. The outcome of the Chapter 11 proceedings, which cannot be determined at this time, could further increase the Company... -
Page 43
... U.S. based people 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 44
In addition, the Company had other operating leases, primarily for aircraft and airport facilities, with total future lease payments of $6.8 billion as of December 21, 2011. Entering into aircraft leases allows the Company to obtain aircraft without immediate cash outflows. In general, the Debtors ... -
Page 45
... at this time. Payments Due by Year(s) Ended December 21, (in millions) 2012 2015 and and 2012 2014 2016 $ Contractual Obligations Total $ 2017 and Beyond $ Operating lease payments for aircraft and facility obligations 1 Firm aircraft commitments 2 Capacity purchase agreement 2 Long-term debt... -
Page 46
...based on levels of operation) or where short-term cancellation provisions exist. Although the Debtors are not generally permitted to make any payments on pre-petition obligations as a result of the Chapter 11 Cases, the Debtors have made 1110(a) Elections or reached agreements with certain aircraft... -
Page 47
...seat mile (RASM) of 6.2 percent to 11.62 cents. American derived approximately 60 percent of its passenger revenues from domestic operations and approximately 40 percent from international operations (flights serving international destinations). Following is additional information regarding American... -
Page 48
...Year Ended December 21, 2010 Y-O-Y ASMs Change (billions) 9.5% 11.8 8.1 15.9 15.7 Y-O-Y Change 0.2% 2.2 2.7 92.2 60.0 29.4 22.2 7.4 (1.9) 9.8 Regional Affiliates' passenger revenues, which are based on industry standard proration agreements for flights connecting to American flights, increased... -
Page 49
... in operating expense was primarily due to labor related costs, revenue related expenses, such as credit card fees and booking fees and commissions, and increased aircraft rent related to the Company's fleet renewal plan. (in millions) Operating Expenses Year Ended December 21, 2011 $ Change from... -
Page 50
... of fuel hedging). The remaining increase in operating expense was primarily due to revenue related expenses, such as credit card fees and booking fees and commissions, and increased aircraft rent related to the Company's fleet renewal plan. (in millions) Operating Expenses Year ended December... -
Page 51
... included in reorganization items, net on the Consolidated Statements of Operations for the year ended December 21, 2011: (in millions) Aircraft financing renegotiations and rejections Professional fees Other Total reorganization items, net (1) (1) (2) $ 102 14 2 118 $ The Company records an... -
Page 52
... information for American and Regional Affiliates for the years ended December 21, 2011, 2010 and 2009. 2011 American Airlines, Inc. Mainline Jet Operations Revenue passenger miles (millions) Available seat miles (millions) Cargo ton miles (millions) Passenger load factor Passenger revenue... -
Page 53
... following critical accounting policies and estimates used by management in the preparation of the Company's financial statements: long-lived assets, routes, passenger revenue, frequent flyer program, stock compensation, pensions and retiree medical and other benefits, income taxes and derivatives... -
Page 54
... the consolidated financial statements for additional information regarding the valuation of the Company's routes. Passenger2revenue Passenger ticket sales are initially recorded as a component of Air traffic liability. Revenue derived from ticket sales is recognized at the time service is provided... -
Page 55
... marketing services sold, is recognized as related services are provided. The Company's total liability for future AAdvantage award redemptions for free, discounted or upgraded travel on American, American Eagle or participating airlines, as well as unrecognized revenue from selling AAdvantage miles... -
Page 56
... corporate and U.S. government/agency bonds, 28 percent U.S. value stocks, 20 percent developed international stocks, 6 percent emerging markets stocks and bonds and 11 percent alternative (private) investments. The expected return on plan assets component of the Company's net periodic benefit... -
Page 57
...21, 2011 and will be recognized in future periods as contracts settle. New Accounting Pronouncements In November of 2009, the Financial Accounting Standards Board (FASB) issued new guidance that significantly changes the accounting for revenue in arrangements with multiple deliverables by requiring... -
Page 58
Glossary of Defined Terms ASM-Available Seat Mile. A measure of capacity. ASMs equal the total number of seats available for transporting passengers during a reporting period multiplied by the total number of miles flown during that period. CASM-(Operating) Cost per Available Seat Mile. The amount ... -
Page 59
...financial statements for accounting policies and additional information regarding derivatives. Aircraft Fuel The Company's earnings are substantially 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... -
Page 60
... to approximately $205 million and $227 million as of December 21, 2011 and 2010, 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 61
... FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm Consolidated Statements of Operations 61 62 62 64-65 Consolidated Statements of Comprehensive Income Consolidated Balance Sheets Consolidated Statements of Cash Flows 66 67 Consolidated Statements of Stockholders... -
Page 62
... Company) as of December 21, 2011 and 2010, and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity (deficit) and cash flows for each of the three years in the period ended December 21, 2011. Our audits also included the financial statement schedule... -
Page 63
AMR CORPORATION DEBTORS AND DEBTORS-IN-POSSESSION CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share amounts) Year Ended December 21, 2011 2010 2009 Revenues Passenger - American Airlines - Regional Affiliates Cargo Other revenues Total operating revenues Expenses $ 17,947 $ 16... -
Page 64
... (in millions) Year Ended December 21, 2011 2010 2009 Net Earnings (Loss) $ (1,979) $ (471) $ (1,468) Other Comprehensive Income (Loss), Before Tax: Defined benefit pension plans and retiree medical: Amortization of actuarial loss and prior service cost Current year change Derivative financial... -
Page 65
AMR CORPORATION DEBTORS AND DEBTORS-IN-POSSESSION CONSOLIDATED BALANCE SHEETS (in millions, except shares and par value) December 21, 2011 2010 Assets Current Assets Cash Short-term investments Restricted cash and short-term investments Receivables, less allowance for uncollectible accounts (2011... -
Page 66
... millions, except shares and par value) December 21, 2011 2010 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 obligations under capital leases Total... -
Page 67
...) Year Ended December 21, 2011 2010 2009 Cash Flow from Operating Activities: Net earnings (loss) Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation Amortization Equity based stock compensation Special charges Reorganization items Pension... -
Page 68
...stock compensation plans Issuance of 52,269,849 shares Issuance of 1,299,822 shares to employees pursuant to stock option and deferred stock incentive plans Balance at December 21, 2009 Net loss Changes in pension, retiree medical and other liability Net changes in fair value of derivative financial... -
Page 69
... Bankruptcy Code, holders of equity securities receive little or no recovery of value from their investment. Accordingly, the Debtors urge that caution be exercised with respect to existing and future investments in any of these securities or other Debtor claims. In addition, trading in the Company... -
Page 70
...of the Bankruptcy Code, beginning 60 days after filing a petition under Chapter 11, certain secured parties, lessors and conditional sales vendors may have a right to take possession of certain qualifying Aircraft Property that is leased or subject to a security interest or conditional sale contract... -
Page 71
...700, and McDonnell Douglas MD-80 aircraft on the terms provided in the related financing documents. Magnitude of Potential Claims The Debtors will file with the Bankruptcy Court schedules and statements of financial affairs setting forth, among other things, the assets and liabilities of the Debtors... -
Page 72
... Chapter 11 proceedings. The following table summarizes the components included in reorganization items, net on the Consolidated Statements of Operations for the year ended December 21, 2011: (in millions) Aircraft financing renegotiations and rejections Professional fees Other Total reorganization... -
Page 73
... subsidiary, AMR Eagle Holding Corporation and its primary subsidiaries, American Eagle Airlines, Inc. and Executive Airlines, Inc. (collectively, AMR Eagle). The consolidated financial statements as of and for the years ended December 21, 2011, 2010 and 2009 include the accounts of the Company and... -
Page 74
... all periods presented in the financial statements. Early adoption is permitted, and as such the Company elected to early adopt this guidance for the fiscal year ended December 21, 2011. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make... -
Page 75
... analysis and other methods to model the outcome of future events based on the Company's historical experience, and are recorded at the scheduled time of departure. Various taxes and fees assessed on the sale of tickets to end customers are collected by the Company as an agent and remitted to taxing... -
Page 76
... the asset recoverability, management estimated the undiscounted future cash flows utilizing models used by the Company in making fleet and scheduling decisions. In determining fair market value, the Company utilized recent external appraisals of its fleets and two published aircraft pricing surveys... -
Page 77
... considering the liability protections provided for by the Stabilization Act. In the second quarter of 2011, the Company received $576 million in insurance proceeds as partial settlement of claims related to the Terrorist Attacks. The Company used these funds to pay a portion of its share of the... -
Page 78
...millions) Description Short-term investments 1, 2 Money market funds Government agency investments Repurchase agreements Corporate obligations Bank notes / Certificates of deposit / Time deposits Restricted cash and short-term investments Fuel derivative contracts, net 1 Total 1 Total $ Fair Value... -
Page 79
... rights on June 20, 2011. Twenty of the firm NG Aircraft are scheduled to be delivered in each of the years 2012-2017. Under the Boeing Agreements, American also expects to acquire 100 Boeing 727 Next Generation "re-engined" aircraft (the Boeing 727 MAX Aircraft), to be equipped with new, more fuel... -
Page 80
...million in 2012, $895 million in 2012, $1.0 billion in 2014, $1.2 billion in 2015, $1.4 billion in 2016 and $12.1 billion in 2017 and beyond. In 2008, American entered into a purchase agreement with Boeing (subject to certain reconfirmation rights) to acquire 42 Boeing 787-9 aircraft, with the right... -
Page 81
... the Company has an information technology support related contract that requires minimum annual payments of $90 million in 2012 and declining to $70 million in 2014 through 2019. American has a capacity purchase agreement with Chautauqua Airlines, Inc. to provide Embraer -140 regional jet services... -
Page 82
... of management, liabilities, if any, arising from these claims and litigation will not have a material adverse effect on the Company's consolidated financial position, results of operations, or cash flows, after consideration of available insurance. As a result of the current Chapter 11 filings... -
Page 83
... lease terms in excess of one year as of December 21, 2011, were (in millions): Capital Leases Not Subject to Compromise Subject to Compromise $ 167 Total Year Ending December 21, 2012 2012 2014 2015 2016 2017 and thereafter Less amount representing interest Present value of net minimum... -
Page 84
...and operating lease payments have changed as its ordered aircraft are delivered and such deliveries have been financed. As of December 21, 2011, maturities of long-term debt (including sinking fund requirements) for the next five years are: Years Ending December 21 (in millions) 2012 2012 2014 2015... -
Page 85
... with a leasing company to finance 25 Boeing 727-800 aircraft scheduled to be delivered in 2011 through 2014, subject to certain terms and conditions. During 2011, American financed 12 Boeing 727-800 aircraft under this and other arrangements, which are accounted for as operating leases. 84 -
Page 86
...convert prior to maturity, the Company will retire the debt in cash. These notes are guaranteed by American. In the case of the Senior Secured Notes, an additional alternative is to pay a higher rate of interest on such notes until such time, if any, as the loan to value ratio is below the specified... -
Page 87
....1% 142 aircraft consisting of: Type # of Aircraft MD-80 74 B757-200 41 B767-200ER 2 B767-200ER 25 TOTAL 142 65.5% 21.8% Collateral Description Generally, certain route authorities, take-off and landing slots, and rights to airport facilities used by American to operate certain services between... -
Page 88
... comprehensive loss into earnings approximately $11 million in net gains (based on prices as of December 21, 2011) related to its fuel derivative hedges. The impact of cash flow hedges on the Company's consolidated financial statements for the years ending December 21, 2011 and 2010, respectively... -
Page 89
... 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 its... -
Page 90
... income tax rate as follows (in millions): Year Ended December 21, 2011 2010 2009 $ (691) $ (177) $ (612) (27) ( 1) (41) 8 705 7 7 Statutory income tax provision expense/(benefit) State income tax expense/(benefit), net of federal tax effect Meal expense Change in valuation allowance Tax benefit... -
Page 91
... benefit of approximately $666 million related to the implementation of share-based compensation accounting guidance that will be recorded in equity when realized. The Company had available for state income tax purposes net operating losses of $2.8 billion, which expire, if unused, in years 2012... -
Page 92
...the option by issuing the net number of shares equal to the in-the-money value of the option. This amendment is estimated to make available enough shares to permit the Company to settle all outstanding performance and deferred share awards under the 1998 Plan in stock rather than cash. Options/SARs... -
Page 93
.... The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The dividend yield is assumed to be zero based on the Company's history and expectation of not paying dividends. Expected volatility Expected term (in years) Risk-free rate Annual forfeiture rate 2011 72... -
Page 94
... deferred share awards granted under the LTIP Plans is based solely on a requisite service period (generally 26 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 95
... 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 a December 21 measurement date for all of its defined benefit plans. American's pilots... -
Page 96
... the changes in the pension and retiree medical and other benefit obligations and fair value of assets for the years ended December 21, 2011 and 2010, and a statement of funded status as of December 21, 2011 and 2010 (in millions): Pension Benefits 2011 2010 Retiree Medical and Other Benefits 2011... -
Page 97
...5.80% 2.78 4.89% - 5.69% - Pension Benefits 2011 2010 Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 21 Discount rate Salary scale (ultimate) Expected return on plan assets Retiree Medical and Other Benefits 2011 2010 5.80% 2.78 6.10% 2.78... -
Page 98
... on the last business day of the year. Securities traded in the over-the-counter market are valued at the last bid price. The money market fund is valued at fair value which represents the net asset value of the shares of such fund as of the close of business at the end of the period. Investments in... -
Page 99
...1) (Level 2) Asset Category Total $ 160 Cash and cash equivalents Equity securities International markets (a)(b) Large-cap companies (b) Mid-cap companies (b) Small-cap companies(b) Fixed Income Corporate bonds (c) Government securities (d) U.S. municipal securities Alternative investments Private... -
Page 100
... on loaned securities which effectively net to zero. Changes in fair value measurements of Level 2 investments during the year ended December 21, 2011, were as follows: Private Equity Partnerships Beginning balance at December 21, 2010 Actual return on plan assets: Relating to assets still held... -
Page 101
.... Investments in the money market fund are valued at fair value which represents the net assets value of the shares of such fund as of the close of business at the end of the period. 2011 Assumed health care trend rates at December 21 Health care cost trend rate assumed for next year Rate to... -
Page 102
...the required contribution, the Pension Benefit Guaranty Corporation filed a lien against certain assets of the Company. The Company's 2012 contribution to its defined benefit pension plans is subject to the Chapter 11 proceedings. The following benefit payments, which reflect expected future service... -
Page 103
... changes to the Company's network or capacity, or the implementation of open skies agreements in countries where the Company operates flights. As there is minimal market activity for the valuation of routes and international slots and landing rights, the Company measures fair value with inputs using... -
Page 104
...on Investments Income Derivative Financial Instruments 152 - Tax Benefit/ (Expense) $ Total $ (2,755) Balance at December 21, 2010 Current year change Amortization of actuarial loss and prior service cost Reclassification of derivative financial instruments into earnings Change in fair value of... -
Page 105
... Year Ended December 21, 2011 2010 2009 Numerator: Net earnings (loss) - numerator for basic earnings (loss) per share Denominator: Denominator for basic earnings (loss) per share - weighted average shares $ (1,979) $ (471) 222 $ (1,468) 225 294 - Effect of dilutive securities: Employee options... -
Page 106
... of American and AMR Eagle. American, AMR Eagle and the AmericanConnection ® airline serve more than 250 cities in approximately 50 countries with, on average, 2,400 daily flights. The combined network fleet numbers approximately 900 aircraft. American is also one of the largest scheduled air... -
Page 107
.... Quarterly Financial Data (Unaudited) Unaudited summarized financial data by quarter for 2011 and 2010 (in millions, except per share amounts): First Quarter 2011 Second Quarter $ Third Quarter $ 6,276 29 Fourth Quarter $ Operating revenues Operating income (loss) Net earnings (loss) Earnings... -
Page 108
... terms and conditions, including customary events of default and certain cross-default provisions. As of the end of 2011, the net book value of such transferred Jet Aircraft was $2.2 billion, and the aggregate outstanding indebtedness (net of discount) associated with such transferred Jet Aircraft... -
Page 109
... new business plan. The chief components of this business plan include targets of an annual $2 billion in cost savings and $1 billion in revenue enhancement. The business plan contemplates, among other things, reducing headcount by approximately 12,000, terminating American's defined benefit pension... -
Page 110
... over Financial Reporting Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule 12a-15(f) under the Securities Exchange Act of 1924. The Company's internal control over financial reporting is designed to... -
Page 111
... Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of December 21, 2011 and 2010, and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity (deficit) and cash flows for each of the three years... -
Page 112
... as a director and member of board committees of these and other companies provides important insights into corporate governance and board functions. He is a resident of St. Louis, Missouri, one of our important markets. His background and experience make him an effective member of the Board and its... -
Page 113
... a director and member of board committees of these and other companies provides important insights into corporate governance and board functions. He also resides in the Chicago area, one our largest and most important markets. His background and experience make him an effective member of the Board... -
Page 114
... as a director and member of board committees of these and other companies provides important insights into corporate governance and board functions. She is a resident of New York City, one of our most important markets. Her background and experience make her an effective member of the Board and its... -
Page 115
... statements were required, we believe that our directors and executive officers complied with all these requirements during 2011. Based upon our review of their filings on Schedule 12G, we believe that the beneficial owners of more than 10 percent of our common stock are not required to file reports... -
Page 116
...and the airline industry in general, none of the named executive officers received base salary increases in 2011, other than Ms. Goren. The values of our annual long-term incentive awards in 2011 were approximately the same as the values targeted in 2010. Because we did not meet the pre-tax earnings... -
Page 117
... an average of 70% of the total potential pay we awarded our named executive officers in 2011 was in the form of long-term stock-based compensation. As a result of our Chapter 11 filing and delisting of our shares, we anticipate that the future value of the long-term stock-based compensation awarded... -
Page 118
... Group analysis focused on both annual total compensation and each pay element - base, short-term incentive and long-term incentive pay. For each of our named executive officers, the Compensation Committee generally targeted the median total compensation for similar positions at companies in... -
Page 119
...our named executive officers, are awarded cash payments under our Annual Incentive Plan if we achieve our target customer satisfaction metrics. Stock Price Growth -We granted stock appreciation rights that vested over a five-year period to provide our named executive officers a stake in our company... -
Page 120
... customer service targets. Our people (including the named executive officers) can also earn awards annually under the financial component of the Annual Incentive Plan. Under this component, awards are paid as a percentage of base salary if American Airlines has at least a 5% pre-tax earnings margin... -
Page 121
... Chapter 11 filings, the Company does not plan to continue to distribute shares to recipients under any outstanding equity-based awards. Performance Shares Performance shares are contractual rights to receive shares of our common stock at the end of a three-year measurement period. The Compensation... -
Page 122
... the Retirement Benefit Plan of American Airlines, Inc. for Agents, Management, Specialists, Support Personnel and Officers (the Retirement Benefit Plan). This is a defined benefit plan that provides compensation to all of our eligible people during their retirement. Our named executive officers are... -
Page 123
... his direct reports if we restate our financial statements due to that officer's intentional misconduct. The recoupment policy applies to annual incentive or equity compensation awards to the extent the awards were paid due to metrics impacted by the misstated financial information. Stock Ownership... -
Page 124
... most highly compensated executive officers during 2011. The table does not take into account the impact of the Chapter 11 filings in November 2011. Also, the table does not reflect compensation for Ms. Goren in 2009 since she was not a named executive officer in that year. Change in Pension Value... -
Page 125
... or no value, and the Company does not plan to continue to distribute shares to recipients under any outstanding equity-based awards. The amounts shown are payments earned under the customer service component of the Annual Incentive Plan. We made no payments in 2009, 2010 or 2011 under the financial... -
Page 126
... take into account the Chapter 11 filings in November 2011. Estimated Future Payouts Under Non-Equity Incentive Plan Awards Estimated Future Payouts Under Equity Incentive Plan Awards4 All Other Stock Awards: Number of Shares of Stock Grant Name Horton Date2 Threshold ($) 462,6011 Target ($) 741... -
Page 127
... Compensation Table and Fiscal Year 2011 Grants of Plan-Based Awards Table As stated above, on November 29, 2011, AMR and certain of its domestic direct and indirect subsidiaries, including American, filed for reorganization under Chapter 11 of the United States Bankruptcy Code, and our securities... -
Page 128
... pre-tax earnings targets, so no amounts were paid to him under the plan in 2011. Equity Incentive Plan Awards During its annual compensation review in May 2011, the Compensation Committee awarded performance shares, deferred shares and stock appreciation rights to our named executive officers as... -
Page 129
... times his base salary and target annual bonus under the Annual Incentive Plan and COBRA coverage for 18 months. 2011 Outstanding Equity Awards At Fiscal Year-End Table The following table lists all of the outstanding stock and stock option/stock appreciation right awards held on December 21, 2011... -
Page 130
...26/2014 07/25/2015 07/24/2016 07/22/2017 05/20/2018 07/20/2019 05/19/2020 07/26/2020 05/18/2021 Number of Shares or Units of Stock That Have Not Vested Market Value of Shares or Units of Stock That Have Not Vested Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That... -
Page 131
...26/2014 07/25/2015 07/24/2016 07/22/2017 09/19/2017 05/20/2018 07/20/2019 05/19/2020 05/18/2021 Number of Shares or Units of Stock That Have Not Vested Market Value of Shares or Units of Stock That Have Not Vested Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That... -
Page 132
... rules, the number of performance shares shown assumes that target levels of performance (100%) will be achieved. (16) Mr. Arpey resigned effective November 28, 2011. Pursuant to the terms of our long-term incentive plans, all of his outstanding stock awards were forfeited. 2011 Option Exercises and... -
Page 133
... Name Horton Goren Garton Kennedy Former Officers Arpey Reding Tax Liability ($) 60,992 42,580 47,289 22,012 79,228 91,409 Net Amount ($) 106,229 71,498 80,962 55,952 128,207 157,874 (2) As of December 21, 2011, Mr. Horton had 21.655 years of credited service under the Retirement Benefit Plan... -
Page 134
... have similar defined benefit plans for other American Airlines employees, including those covered by bargained labor agreements. Our Retirement Benefit Plan is only available to employees hired prior to January 1, 2002 who had also completed 1,000 hours of eligible service in one year prior to that... -
Page 135
... career equity shares. They were calculated using: (w) the number of shares granted; (x) the grant price; (y) individual performance; and (z) a rolling three-year return on investment. Income received from long-term incentive compensation payments (such as stock option/stock appreciation right... -
Page 136
... resigned effective November 28, 2011, he forfeited all outstanding stock awards under the terms of our long-term incentive plans. Upon retirement, we will also continue to provide to each named executive officer, his or her spouse or companion and any dependent children the air travel perquisite... -
Page 137
... a named executive officer, all of his or her outstanding performance shares and deferred shares would vest on a pro-rata basis. Their stock options and stock appreciation rights would continue to be exercisable. All outstanding career equity awards would vest at a rate of 20% per year for each year... -
Page 138
... their air travel for the number of years of the named executive officer's projected life expectancy (according to the mortality tables we used to determine the present value of his or her retirement benefits in the "2011 Pension Benefits Table"). We have not entered into any agreements with... -
Page 139
... agreements, following a change in control all outstanding stock options and stock appreciation rights become immediately exercisable, all outstanding career equity and deferred shares vest, and all performance shares vest and will be paid at target levels (or 100%) of the original award. Each named... -
Page 140
... assumptions and mortality tables used to determine the present value of retirement benefits shown in the "2011 Pension Benefits Table." These figures assume all payments are made at the time provided under Section 409A of the Internal Revenue Code. For the air travel perquisite, since Mr. Horton... -
Page 141
... to provide the complimentary air travel for the number of years the director served on the Board. Stock Ownership Guidelines Effective March 2011, the Board adopted stock ownership guidelines for our directors. Due to our Chapter 11 filing in November 2011, the Board has suspended compliance with... -
Page 142
... fair value of these awards. As a result of the Chapter 11 filings and delisting of our shares, we anticipate that these awards will have minimal or no value. The chart below reflects the aggregate number of outstanding stock-based compensation awards each director held as of December 21, 2011. As... -
Page 143
... to receive a pension benefit of $20,000 per year from the date of retirement until the later of the death of the director or his or her spouse. The present value of their accumulated retirement benefits increased from December 21, 2010 to December 21, 2011 because the discount rate decreased from... -
Page 144
... AND MANAGEMENT Equity Compensation Plan Information Number of securities to be issued upon exercise of outstanding options, warrants and rights Equity compensation plans approved by security holders Equity compensation plans not approved by security holders Total Weighted-average exercise price... -
Page 145
... result of the Chapter 11 filings in November 2011, we anticipate these shares will have minimal or no value. See "Item 11. Executive Compensation - 2011 Outstanding Equity Awards At Fiscal Year-End Table" for other outstanding equity awards held by our named executive officers that are not included... -
Page 146
...Fees Tax Fees All Other Fees Total Fees "Audit Fees" are fees for (a) the audit of our consolidated financial statements; (b) the audit of internal control over financial reporting; (c) the review of the interim condensed consolidated financial statements included in quarterly reports; (d) services... -
Page 147
... Stockholders' Equity (Deficit) for the Years Ended December 21, 2011, 2010 and 2009 Notes to Consolidated Financial Statements 67 68-108 (2) The following financial statement schedule is filed as part of this report: Page Schedule II Valuation and Qualifying Accounts and Reserves 161 Schedules... -
Page 148
...the year ended December 21, 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 21, 1999. First Amendment to AMR Corporation 2004 Directors Unit Incentive Plan, dated... -
Page 149
...Armando M. Codina, incorporated by reference to Exhibit 10.6 to AMR's report on Form 10-Q for the quarterly period ended June 20, 2002, as filed on July 19, 2002. Deferred Compensation Agreement, dated as of December 12, 2002 between AMR and Armando M. Codina, incorporated by reference to Exhibit 10... -
Page 150
... 10-K for the year ended December 21, 2008. Deferred Compensation Agreement, dated as of April 20, 2002 between AMR and Michael A. Miles, incorporated by reference to Exhibit 10.4 to AMR's report on Form 10-Q for the quarterly period ended March 21, 2002. Deferred Compensation Agreement, dated as of... -
Page 151
...Philip J. Purcell, incorporated by reference to Exhibit 10.7 to AMR's report on Form 10-Q for the quarterly period ended June 20, 2002, as filed on July 19, 2002. Deferred Compensation Agreement, dated as of November 15, 2002 between AMR and Philip J. Purcell, incorporated by reference to Exhibit 10... -
Page 152
... 10.25 to AMR's report on Form 10-K for the year ended December 21, 2000. Deferred Compensation Agreement, dated as 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 20, 2002, as filed on July... -
Page 153
...Roger T. Staubach, incorporated by reference to Exhibit 10.1 to AMR's report on Form 10-Q for the quarterly period ended June 20, 2002, as filed on July 19, 2002. Deferred Compensation Agreement, dated as of November 18, 2002 between AMR and Roger T. Staubach, incorporated by reference to Exhibit 10... -
Page 154
...to AMR's report on Form 10-Q for the quarterly period ended June 20, 2005. Current form of Amendment of Stock Option Agreements under the 1998 Long Term Incentive Plan to Add Stock Appreciation Rights, incorporated by reference to Exhibit 10.1 AMR's report on Form 10-Q for the quarterly period ended... -
Page 155
... 8-K dated May 20, 2011. Current form of 2006 Stock Appreciation Right Agreement under the 1998 Long Term Incentive Plan, as Amended (with awards to executive officers noted), incorporated by reference to Exhibit 10.1 to AMR's report on Form 10-Q for the quarterly period ended June 20, 2006. Current... -
Page 156
... Appreciation Right Agreement under the 2009 Long Term Incentive Plan, as Amended (with awards to executive officers noted), incorporated by reference to AMR's current report on Form 8-K dated May 20, 2011. Amended and Restated Executive Termination Benefits Agreement between AMR, American Airlines... -
Page 157
...99.1 to AMR's current report on Form 8-K dated January 21, 2011. 2012 Annual Incentive Plan for American, incorporated by reference to Exhibit 99.1 to AMR's current report on Form 8-K dated January 22, 2012. Purchase Agreement No. 2219 between American Airlines, Inc. and The Boeing Company, dated as... -
Page 158
... 10.151 to AMR's report on Form 10-K for the year ended December 21, 2009. Purchase Agreement Supplement by and between American Airlines, Inc. and The Boeing Company, dated January 14, 2011. Portions of this Exhibit have been omitted and filed separately with the Securities and Exchange Commission... -
Page 159
...of the Securities and Exchange Act of 1924, as amended, incorporated by reference to Exhibit 10.1 to AMR's report on Form 10-Q for the quarter ended September 21, 2011. Supplemental Agreement No. 26 to Purchase Agreement No. 1980 by and between American Airlines, Inc. and The Boeing Company dated as... -
Page 160
...24b-2 of the Securities and Exchange Act of 1924, as amended. AMR Corporation Amended and Restated Directors Pension Benefits Plan, effective as of January 1, 2005, incorporated by reference to Exhibit 10.149 to AMR's report on Form 10-K for the year ended December 21, 2008. Amended and Restated Air... -
Page 161
... undersigned, thereunto duly authorized. AMR CORPORATION By: /s/ Thomas W. Horton Thomas W. Horton Chairman and Chief Executive Officer (Principal Executive Officer) Date: February 15, 2012 Pursuant to the requirements of the Securities Exchange Act of 1924, this report has been signed below by... -
Page 162
AMR CORPORATION Schedule II - Valuation and Qualifying Accounts and Reserves (in millions) Changes charged to statement of operations accounts Balance at beginning of year Payments Write-offs (net of recoveries) Sales, retirements and transfers Balance at end of year Year ended December 31, ... -
Page 163
...The Boeing Company and AMERICAN AIRLINES, INC Relating to Boeing Model 777 Aircraft THIS SUPPLEMENTAL AGREEMENT, entered into as of OCT. 10, 2011, ( SA-27) by and between THE BOEING COMPANY, a Delaware corporation with offices in Seattle, Washington, (Boeing) and American Airlines, Inc. ( Customer... -
Page 164
... exhibits to this Supplemental Agreement, the terms of the exhibits will control. EyECUTED IN DUPLICATE as of the day and year first above written. THE BOEING COMPANY AMERICAN AIRLINES, INC. By: Name: Christopher L. Odegard Name: BEVERLY K. GOULET VP CORPORATE DEVELOPMENT AND TREASURER Its... -
Page 165
... TREATMENT] Airframe Base Year Jul. [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] Engine Base Year SA NUMBER Original Purchase Agreement, SA-3, SA-17, SA-18 & SA-26 1-1. 777-200IGW Aircraft Information Table: [CONFIDENTIAL... -
Page 166
... AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] Airframe Base Year Jul. [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] Engine Base Year 1-5. 777-223IGW Aircraft Information Table... -
Page 167
...WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] Airframe Base Year Jul. [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] Engine Base Year 777-223IGW Aircraft Information Table: [CONFIDENTIAL PORTION OMITTED... -
Page 168
... - 777-323ER Aircraft Delivery Requirements and Responsibilities SA-20 SA-20 SA-20 Defined Terms SUPPLEMENTAL EyHIBITS SA NUMBER SA-20 AE1. BFE1. BFE1-2. Escalation Adjustment Airframe and Optional Features - 777-323ER BFE Variables BFE Variables - 777-323ER Customer Support Variables SA-25... -
Page 169
... Delivery Schedule Confidentiality Multiple Operating Weight Program Model 777-200IGW Aircraft [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] Open Configuration Matters -777-323ER Performance Guarantees for Rights Aircraft... -
Page 170
Attachment C to Letter Agreement 6-1162-AKP-110R3 (Model 777) Information Regarding QADP Rights [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] PA No. 1980 SA No. 27 Page 1 of 1 -
Page 171
Exhibit 12 AMR CORPORATION Computation of Ratio of Earnings to Fixed Charges (in millions) 2011 Earnings: Income (loss) before income taxes and cumulative effect of accounting change Add: Total fixed charges (per below) Less: Interest capitalized Total earnings (loss) 2010 2009 2008 2007 $(1,... -
Page 172
... WR.D.), S.A. WDSA) International Ground Services, S.A. de C.V. AMR Eagle Holding Corporation American Eagle Airlines, Inc. Eagle Aviation Services, Inc. Executive Airlines, Inc. Executive Ground Services, Inc. Avion Assurance Ltd. PMA Investment Subsidiars, Inc. SC Investment, Inc. *Entits with... -
Page 173
...15, 2012, with respect to the consolidated financial statements and schedule of AMR Corporation and the effectiveness of internal control over financial reporting of AMR Corporation, included in this Annual Report (Form 10-K) for the year ended December 31, 2011. /s/ ERNST & YOUNG LLP Dallas, Texas... -
Page 174
... 31.1 I, Thomas W. Horton, certify that: 1. 2. 3. I have reviewed this annual report on Form 10-K of AMR Corporation; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the... -
Page 175
... 31.2 I, Isabella D. Goren, certify that: 1. 2. 3. I have reviewed this annual report on Form 10-K of AMR Corporation; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the... -
Page 176
... (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of AMR Corporation, a Delaware 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, 2011 (the Form 10-K) of... -
Page 177