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United States
Securities and Exchange Commission
Washington, D.C. 20549
_____________________________________
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2012
¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number: 1-2691
American Airlines, Inc
(Exact name of registrant as specified in its charter)
Delaware 13-1502798
(State or other jurisdiction of
incorporation or organization)
(IRS Employer
Identification Number)
4333 Amon Carter Blvd.
Fort Worth, Texas 76155
(Address of principal executive offices, including zip code)
(817) 963-1234
(Registrant’s telephone number, including area code)
_____________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Exchange on Which Registered
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
None
_______________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
¨ Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
¨ Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
Yes ¨ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best
of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ¨ Accelerated Filer ¨
Non-accelerated Filer Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ¨ Yes No
American Airlines, Inc. is a wholly-owned subsidiary of AMR Corporation, and there is no market for the registrant’s common stock. As of February 13,
2012, 1,000 shares of the registrant’s common stock were outstanding.

Table of contents

  • Page 1
    ... company ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ¨ Yes  No American Airlines, Inc. is a wholly-owned subsidiary of AMR Corporation, and there is no market for the registrant's common stock. As of February 13, 2012, 1,000 shares...

  • Page 2
    ... limitation, the Company's expectations concerning AMR's anticipated merger with US Airways Group, Inc., the Chapter 11 Cases and the Company's business plan; the Company's operations and financial conditions, including changes in capacity, revenues, and costs; future financing plans and needs...

  • Page 3
    prior to May 1, 2014), (ii) W. Douglas Parker, US Airways' current chief executive officer, who will serve as chief executive officer of New American and will serve as chairman of New American following the end of Mr. Horton's term, (iii) two independent directors designated by AMR, (iv) three ...

  • Page 4
    ... was filed with the SEC on April 27, 2012. Information about the directors and executive officers of AMR is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which was filed with the SEC on February 15, 2012. These documents can be obtained free of charge from...

  • Page 5
    ...daily flights. The combined network fleet numbers approximately 900 aircraft. American Airlines is also a founding member of oneworld® alliance, which enables member airlines to offer their customers more services and benefits than any member airline can provide individually. These services include...

  • Page 6
    ... American increase the number of markets the Company serves by providing connections at American's primary markets. American's competitors also own or have marketing agreements with regional carriers which provide similar services at their major hubs and other locations. On most of its domestic non...

  • Page 7
    ...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. There are a number of low-cost carriers (LCCs) in the domestic market...

  • Page 8
    ... Act is based on an agreement by the cities of Dallas and Fort Worth, Texas, DFW International Airport, Southwest, and the Company to modify the Wright Amendment, which authorizes certain flight operations at Dallas Love Field within defined geographic areas. Among other things, in October 2014 the...

  • Page 9
    ... Year 2011 2012 2,481 2,445 2,410 Total Cost (in millions) 5,731 7,434 8,717 (in dollars) 2.310 3.009 3.198 26.1 29.6 35.2 In order to provide a measure of control over price and supply, the Company trades and ships fuel and maintains fuel storage facilities to support its flight operations...

  • Page 10
    ... for an award, the member may book 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...

  • Page 11
    ... 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 12
    ... confirming our plan of reorganization is in effect, that the plan of reorganization conform with the requirements of the Merger Agreement, that secured indebtedness of the Debtors and certain other claims against the Debtors not exceed specified levels and other customary conditions. US Airways...

  • Page 13
    ...• our operations will be restricted by the terms of the Merger Agreement, which may cause us to forego otherwise attractive business opportunities; AMR will be required to pay certain costs relating to the Merger, whether or not it is consummated, such as legal, accounting, financial advisor and...

  • Page 14
    ... customer service and running an efficient operation; and potential unknown liabilities, liabilities that are significantly larger than we currently anticipate and unforeseen increased expenses or delays associated with the Merger, including one-time cash costs to integrate the two businesses...

  • Page 15
    ... and maintain normal credit terms with vendors, strategic partners and service providers; we may not be able to continue to invest in our products and services, which could hurt our competitiveness; our access to capital to fund ongoing business operations or emergence costs may be limited; we...

  • Page 16
    ... effect on our business, financial condition and results of operations particularly if our Chapter 11 Cases are protracted. Our businesses could suffer from a protracted restructuring. Our future results are dependent upon the timely and successful filing, confirmation and implementation of a plan...

  • Page 17
    ... Cases. The Bankruptcy Code provides that the confirmation of a plan of reorganization discharges a debtor from substantially all debts arising prior to confirmation. As of February 13, 2013 , approximately 13,366 claims totaling about $290.0 billion have been filed with the Bankruptcy Court against...

  • Page 18
    ... book values of our long-lived assets and the related depreciation and amortization schedules, among other things, are expected to change. Any "ownership change" due to our Chapter 11 Cases could limit our ability to utilize our net operating loss carryforwards. Under the Internal Revenue Code of...

  • Page 19
    ... scheduled for 2013, and we cannot assure investors of the availability or the cost of that financing. If we are not able to arrange financing for such aircraft at customary advance rates and on terms and conditions acceptable to us, we may need to use cash from operations to purchase such aircraft...

  • Page 20
    ...supply of fuel. Aircraft fuel has been our largest single operating expense in recent years, and our results are very significantly affected by the cost, price volatility and the availability of jet fuel, which are in turn affected by a number of factors beyond our control. Although fuel prices have...

  • Page 21
    ... fleet renewal plans, and are dependent on Boeing and Airbus to deliver aircraft on schedule. If we experience delays in delivery of, or are unable to obtain, more fuel efficient aircraft, we will be adversely affected. Our aviation fuel purchase contracts generally do not provide meaningful price...

  • Page 22
    ... member). Competition with foreign air carriers and with such marketing/operational alliances has been increasing in recent years in part due to the adoption of liberalized open skies aviation agreements between the United States and an increasing number of countries around the world. Our business...

  • Page 23
    ... based on the time of day, number of scheduled segments, flight types, time zones and other factors. These regulations could have a material adverse impact on us and the industry upon implementation. Recent DOT consumer rules require new procedures for customer handling during long onboard delays...

  • Page 24
    ... DOT rules apply to post-ticket purchase price increases and an expansion of tarmac delay regulations to international carriers. The TSA mandates the federalization of certain airport security procedures and imposes additional security requirements on airports and airlines, most of which are funded...

  • Page 25
    ... purchase emission offsets or credits, increased aircraft and equipment costs, and restrictions on the growth of airline operations. We continue to evaluate ongoing climate change developments at the international, federal and state levels and assess the potential associated impacts on our business...

  • Page 26
    ... our system and, at some airports, adequate slots. In order to operate our existing flight schedule and, where appropriate, add service along new or existing routes, we must be able to obtain adequate gates, ticketing facilities, operations areas, slots (where applicable) and office space. Also, as...

  • Page 27
    ... customer service. These technologies and systems include our computerized airline reservation system, flight operations system, financial planning, management and accounting systems, telecommunications systems, website, maintenance systems and check-in kiosks. In order for our operations to work...

  • Page 28
    ... an adverse impact on our business, financial condition and results of operations. Our business is heavily dependent on our operations at our primary market airports in DFW, Chicago, Miami, New York City and Los Angeles. Each of these operations includes flights that gather and distribute traffic...

  • Page 29
    of us could be materially adversely affected. Significant problems, disruptions or interruptions could materially adversely affect our business, financial condition and results of operations. 29

  • Page 30
    ... 31, 2012 included: Average Seating Equipment Type American Airlines Aircraft Boeing 737-800 Boeing 757-200 Boeing 767-200 ER Boeing 767-300 ER Boeing 777-200 ER Boeing 777-300 ER McDonnell Douglas MD-80 Total Capacity Owned Capital Leased Operating Leased Average Age Total (Years) 153...

  • Page 31
    ... was on operational reserve as of December 31, 2012 . See Note 5 and Note 17 to the consolidated financial statements for additional information on the Company's capacity purchase agreements with third party regional airlines. Flight Equipment - Other Information All aircraft, excluding the...

  • Page 32
    ... Company. These special facility revenue bonds are non-recourse to the issuer. In accordance with various orders of the Bankruptcy Court, special facility revenue bond claims in connection with the Alliance Airport, Dallas-Fort Worth International Airport and Luis Munoz Marin International Airport...

  • Page 33
    ...of American's services in its global distribution system (GDS) and substantially increasing the rates that it would charge the Company for bookings made through the Sabre GDS breached its agreement with the Company. On July 8, 2011, the Company filed new breach of contract and Texas antitrust claims...

  • Page 34
    ..., denying a travel agency access to American's fare information, or taking any other punitive action against a travel agency because it chooses to use Travelport instead of American's direct connect; (4) an award of three times Travelport's actual damages; and (5) an award of all costs in the action...

  • Page 35
    ITEM 4. Not Applicable. MINE SAFETY DISCLOSURES 35

  • Page 36
    ... is no market for the Registrant's Common Stock ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA (in millions, except per share amounts) Total operating revenues $ 2012 1,4 24,825 41 $ Operating income (loss) Reorganization items, net 2 Net income (loss) Total assets Long-term debt, less current...

  • Page 37
    ... in the discount rate, the Company recorded a $1.3 billion increase in pension and retiree medical and other benefits obligations and a corresponding decrease in stockholders' equity in 2011. No cash dividends were declared on AMR's common shares during any of the periods above. Information on the...

  • Page 38
    ... First and Business Class seats on transcontinental flights. In November 2012, the Company also announced new travel options and a new booking path on AA.com. Strengthening the network - The Company continued to build network scale and alliances by expanding service from its hubs to the domestic and...

  • Page 39
    ... cost savings of approximately $2 billion each year and its targeted annual revenue enhancements of $1 billion by 2017, although there can be no assurance that it would be able to do so. See Note 1 of the consolidated financial statements for additional details on the Chapter 11 Reorganization...

  • Page 40
    ..., 2013, AMR entered into a Merger Agreement with US Airways. See Note 17 to the consolidated financial statements for further information, including a description of the Merger Agreement and Plan of Merger. Other On December 7, 2011, the Communications Workers of America (CWA) filed an application...

  • Page 41
    ... assurance that American, Travelport, and Orbitz will enter into acceptable long term agreements. On February 5, 2013, Travelport filed a motion for reconsideration of the court's August 16, 2012 order granting American's motion to dismiss and to amend its counterclaims to assert a new claim against...

  • Page 42
    42

  • Page 43
    ...certain work groups. In late September and early October 2012, the Company experienced a labor related operational disruption resulting in the cancellation or delay of a substantial number of flights and which affected bookings for fourth quarter travel. This negatively impacted 2012 revenue and net...

  • Page 44
    ... the Chapter 11 Cases, see Note 1 to the consolidated financial statements. Cash, Short-Term Investments and Restricted Assets At December 31, 2012 , the Company had $3.9 billion in unrestricted cash and short-term investments and $850 million in restricted cash and short-term investments, both...

  • Page 45
    ..., the PBGC filed a lien against certain assets of the Company. The Company's 2013 contribution to its defined benefit pension plans is subject to the Chapter 11 proceedings. Cash Flow Activity At December 31, 2012 , the Company had $3.9 billion in unrestricted cash and short-term investments, which...

  • Page 46
    ...and accounted for as operating leases. In accordance with various orders of the Bankruptcy Court, special facility revenue bond claims (totaling approximately $1.1 billion ) in connection with the Alliance Airport, Dallas-Fort Worth International Airport and Luis Munoz Marin International Airport in...

  • Page 47
    ... time. Payments Due by Year(s) Ended December 31, (in millions) 2014 Contractual Obligations Operating lease payments for aircraft and facility obligations 1 $ Firm aircraft commitments 2 Capacity purchase agreements 3 Long-term debt, not including liabilities subject to compromise 4 Total 2013...

  • Page 48
    ... benefit payments based on estimated payments through 2022. These payments are subject to the Chapter 11 proceedings. See Note 11 to the consolidated financial statements. Total contractual obligations do not include long-term contracts that represent a variable expense (based on levels of operation...

  • Page 49
    ...of its passenger revenues from domestic operations and approximately 40 percent from international operations (flights serving international destinations). Following is additional information regarding American's domestic and international RASM and capacity: Year Ended December 31, 2011 RASM (cents...

  • Page 50
    ... affect the Company's financial condition and results of operations. The Company also incurred charges of $360 million for severance related costs associated with planned reductions in certain work groups. Year Ended December 31, 2012 (in millions) Operating Expenses Aircraft fuel Change from 2011...

  • Page 51
    ... reorganization items, net on the Consolidated Statements of Operations for the years ended December 31, 2012 and 2011: (in millions) 2012 Pension and postretirement benefits Aircraft and facility financing renegotiations and rejections Professional fees Other Total reorganization items, net 2011...

  • Page 52
    ... provides statistical information for American and Regional Affiliates for the years ended December 31, 2012 , 2011 and 2010. Year Ended December 31, 2012 2011 2010 American Airlines, Inc. Mainline Jet Operations Revenue passenger miles (millions) Available seat miles (millions) Cargo ton miles...

  • Page 53
    ... statements: claims resolution process, long-lived assets, international slots and route authorities, passenger revenue, frequent flyer program, stock compensation, pensions and retiree medical and other benefits, income taxes and derivatives accounting. Claims Resolution Process Bankruptcy Rule...

  • Page 54
    ... 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 55
    ... 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 to other companies, was approximately $1.7 billion and $1.6 billion at December 31, 2012 and 2011, respectively...

  • Page 56
    ... expected long-term rate of return on plan assets by 50 basis points as of December 31, 2012 would increase estimated 2013 pension expense by approximately $44 million . The health care cost trend rate is based upon an evaluation of the Company's historical trends and experience taking into account...

  • Page 57
    ... financial statements for information regarding new accounting pronouncements. 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...

  • Page 58
    ... 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 storage facilities to support its flight operations. The Company also manages the price risk of fuel costs through the use...

  • Page 59
    ... $281 million as of December 31, 2012 and 2011, 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 arrangements. In accordance with...

  • Page 60
    ...CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm 61 62 63 64 66 67 68 Consolidated Statements of Operations Consolidated Statements of Comprehensive Income Consolidated Balance Sheets Consolidated Statements of Cash Flows Consolidated Statements of...

  • Page 61
    ... 31, 2012 and 2011 and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2012 , in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered...

  • Page 62
    ... fuel Wages, salaries and benefits Regional payments to AMR Eagle Other rentals and landing fees Maintenance, materials and repairs Commissions, booking fees and credit card expense Depreciation and amortization Aircraft rentals Food service Special charges Other operating expenses Total operating...

  • Page 63
    ...Year Ended December 31, 2012 2011 (1,926) $ (1,965) $ 2010 Net Earnings (Loss) Other Comprehensive Income (Loss), Before Tax: Defined benefit pension plans and retiree medical: Amortization of actuarial loss and prior service cost Current year change Benefit plan modifications Derivative financial...

  • Page 64
    ...AIRLINES, INC. DEBTORS AND DEBTORS IN POSSESSION CONSOLIDATED BALANCE SHEETS (in millions, except shares and par value) December 31, 2012 2011 Assets Current Assets Cash Short-term investments Restricted cash and short-term investments Receivables, less allowance for uncollectible accounts (2012...

  • Page 65
    ...) Common stock - $1 par value; 1,000 shares authorized, issued and outstanding Additional paid-in capital Accumulated other comprehensive loss Accumulated deficit Total Liabilities and Stockholder's Equity (Deficit) The accompanying notes are an integral part of these financial statements. 6,780...

  • Page 66
    ... from: Reimbursement from construction reserve account Issuance of long-term debt Sale leaseback transactions Funds transferred from affiliates, net Net cash provided by (used in) financing activities Net increase (decrease) in cash Cash at beginning of year Cash at end of year 608 (288) (4) (1,116...

  • Page 67
    ...other liability Net changes in fair value of derivative financial instruments Non-cash tax provision Total comprehensive loss Reclassification and amortization of stock compensation plans Balance at December 31, 2012 Stock $ Additional Paid-in Capital Accumulated Deficit Total - - - - $ 3,938...

  • Page 68
    ... course of business. Appointment of Creditors' Committee. On December 5, 2011, the U.S. Trustee appointed the Creditors' Committee (Creditors' Committee) for the Chapter 11 Cases. Retirement and Life Insurance Benefits. See Note 11 to the consolidated financial statements for information regarding...

  • Page 69
    ... unexpired leases of non-residential real property. As of December 31, 2012 , the Company had also entered into stipulations or agreed orders providing that the claims with respect to special facility revenue bonds at Dallas/Fort Worth International Airport, Fort Worth Alliance Airport and Luis Mu...

  • Page 70
    ...aircraft. The debt encumbering 50 Embraer 145 aircraft will not be reduced. The Company's entry into these transactions was approved by the Bankruptcy Court on November 8, 2012. Magnitude of Potential Claims. On February 27, 2012, the Debtors filed with the Bankruptcy Court schedules and statements...

  • Page 71
    .... The Merger Agreement provides that the procedures of the order, as in effect or as amended with the reasonable approval of US Airways, will be used to obtain ownership information from Substantial Claimholders. See discussion in Item 1A, "Risk Factors - Chapter 11 Reorganization Risks" regarding...

  • Page 72
    ... reorganization items, net on the Consolidated Statements of Operations for the years ended December 31, 2012 and 2011: (in millions) 2012 Pension and postretirement benefits Aircraft and facility financing renegotiations and rejections Professional fees Other Total reorganization items, net 2011...

  • Page 73
    ... of business. Moreover, the ultimate plan of reorganization for the Debtors could materially change the amounts and classifications in the historical consolidated financial statements. New Accounting Pronouncements In December 2011, the FASB issued ASU 2011-11, "Disclosures About Offsetting Assets...

  • Page 74
    ... changes to the Company's network or capacity, or the implementation of open skies agreements in countries where the Company operates flights. 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...

  • Page 75
    ... upon sale as a component of Other revenues, as the related services have been 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...

  • Page 76
    ...certain work groups. The severance charges will be paid through the end of 2013. Aircraft Charges In connection with the Boeing and Airbus aircraft agreements entered into by American in the second quarter of 2011, and the Company's anticipated acceleration of its fleet renewal and replacement plan...

  • Page 77
    ...value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The Company's short-term investments classified as Level 2 primarily utilize broker quotes in a non...

  • Page 78
    ...in January 2013. See Note 17 to the consolidated financial statements for further information regarding these agreements, including the changes to the Company's aircraft acquisition commitments, payments and options. In 2010, American and Japan Airlines (JAL) entered into a Joint Business Agreement...

  • Page 79
    ...controls the scheduling, pricing, reservations, ticketing and seat inventories of those aircraft and retains all revenues associated with revenue flights by those aircraft. American pays the third party regional airlines an amount, as defined in the applicable agreement, based on the airlines' costs...

  • Page 80
    ... 365 of the Bankruptcy Code, including negotiating revised economic terms for its mainline aircraft in the Company's fleet. The Company's liabilities pertaining to leases may still change significantly in the future as differences between amounts scheduled by the Debtors and claims by creditors are...

  • Page 81
    ... under operating leases and 33 jet aircraft under capital leases. Leases can generally be renewed at rates based on fair market value at the end of the lease term for a number of additional years. Special facility revenue bonds have been issued by certain municipalities primarily to improve airport...

  • Page 82
    ... financial statements. The Company's future long-term debt and operating lease payments have changed as its ordered aircraft are delivered and such deliveries have been financed. As of December 31, 2012 , maturities of long-term debt (including sinking fund requirements) for the next five years...

  • Page 83
    ... March 2011, American issued $1.0 billion aggregate principal amount of senior secured notes due 2016 (the Senior Secured Notes) guaranteed by the Company. The Senior Secured Notes bear interest at a rate of 7.50% per annum, payable semi-annually on March 15 and September 15 of each year, beginning...

  • Page 84
    ... for interest, net of capitalized interest, were $498 million , $628 million and $627 million for 2012, 2011 and 2010, respectively. Almost all of the Company's aircraft assets (including aircraft and aircraft-related assets eligible for the benefits of section 1110 of the Bankruptcy Code) are...

  • Page 85
    ... net gains (based on prices as of December 31, 2012 ) related to its fuel derivative hedges. The impact of cash flow hedges on the Company's consolidated financial statements for the years ending December 31, 2012 and 2011, respectively, is depicted below (in millions): Fair Value of Aircraft Fuel...

  • Page 86
    ...in other assets. Fair Values of Financial Instruments The fair values of the Company's long-term debt classified as Level 2 were estimated using quoted market prices or discounted cash flow analyses, based on the Company's current estimated incremental borrowing rates for similar types of borrowing...

  • Page 87
    ... tax rate as follows (in millions): Year Ended December 31, 2012 Statutory income tax provision expense/(benefit) State income tax expense/(benefit), net of federal tax effect Meal expense 2011 (873) (35) 2010 $ $ Bankruptcy administration expenses Change in valuation allowance Tax benefit...

  • Page 88
    ...these rules on the company's utilization of its net operating losses. The Company has an unrecognized tax benefit of approximately $5 million, which did not change during the twelve months ended December 31, 2012 . Changes in the unrecognized tax benefit have no impact on the effective tax rate due...

  • Page 89
    ...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 90
    ...Vested Forfeited Outstanding at December 31 7,468,019 $ - (2,022,036 ) (787,577) 4,658,406 $ 3.59 - 3.89 3.54 3.47 As of December 31, 2012 , there was $6 million of total unrecognized compensation cost related to non-vested stock options/SARs granted under the LTIP Plans and the 2003 Plan that is...

  • Page 91
    ...based on years of service and average compensation for a specified period of time before retirement. The Company uses a December 31 measurement date for all of its defined benefit plans. Modifications to Retirement and Life Insurance Benefits On March 7, 2012, the Company announced that, in working...

  • Page 92
    ...for work performed beginning on November 1, 2012. Effective November 8, 2012, the U.S. Treasury Department and the Internal Revenue Service published a Final Regulation establishing the process by which the Company could seek to amend certain structural aspects of the Pilot A Plan, a defined benefit...

  • Page 93
    ... a component of reorganization items, net. Year End Information 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, 2012 and 2011, and a statement of funded status as...

  • Page 94
    ...funds. The following tables provide the components of net periodic benefit cost for the years ended December 31, 2012 , 2011 and 2010 (in millions): Pension Benefits 2012 Components of net periodic benefit cost 2011 2010 Defined benefit plans: Service cost Interest cost Expected return on assets...

  • Page 95
    ... actively managed and, historically, the plans' assets have produced returns, net of management fees, in excess of the expected rate of return over the last ten years. Stocks and emerging market bonds are used to provide diversification and are expected to generate higher returns over the long-term...

  • Page 96
    ... 31, 2012 (in millions) Quoted Prices in Active Markets for Identical Assets (Level 1) Asset Category Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Cash and cash equivalents Equity securities International markets (a)(b) Large-cap companies (b) Mid...

  • Page 97
    ... futures contracts which net to approximately $2 million and collateral held on loaned securities and the obligation to return collateral on loaned securities which effectively net to zero. Changes in fair value measurements of Level 3 investments during the year ended December 31, 2012 , were as...

  • Page 98
    ... Actual return on plan assets: Relating to assets still held at the reporting date Relating to assets sold during the period Purchases Sales Ending balance at December 31, 2012 96 (224) $ 914 $ 2 Changes in fair value measurements of Level 3 investments during the year ended December 31, 2011...

  • Page 99
    ...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 100
    ... Tax Benefit/ (Expense) Total Balance at December 31, 2011 $ Current year change Amortization of actuarial loss and prior service cost Benefit plan modifications Reclassification of derivative financial instruments into earnings Change in fair value of derivative financial instruments Non-cash...

  • Page 101
    ... billion , respectively, related to the capacity purchase agreement. In addition, American incurred costs associated with generating Regional Affiliates revenue for flights on AMR Eagle of $128 million and $132 million in 2012 and 2011, respectively, recorded in Commissions, booking fees and credit...

  • Page 102
    ... Agreement with Airbus, dated July 20, 2011 (the Airbus Amendment) specifying the scheduled delivery months of certain aircraft and revising the date by which American must notify Airbus of the engine selection of certain aircraft types. The Airbus Amendment became effective on January 23, 2013...

  • Page 103
    ...in American's purchase deposits with Boeing. New Capacity Purchase Agreement On January 23, 2013, American entered into a 12 year capacity purchase agreement with Republic Airline Inc. (Republic), a subsidiary of Republic Airways Holdings, to provide large regional jet flying. Through the agreement...

  • Page 104
    ... are scheduled to mature in May 2013 and July 2013. American expects the New EETC structure to be substantially similar to other American EETCs, other than the economic terms (such as the interest rate) and certain terms and conditions to be in effect during its current Chapter 11 bankruptcy case...

  • Page 105
    ...of US Airways' common stock for the thirty trading days ending on the last trading day immediately prior to the date of termination is less than $10.40. Termination of the Support Agreement would give the Consenting Creditors the right to withdraw their support of the Plan. As described in the Term...

  • Page 106
    ...price of the shares of the New American Common Stock on the five trading days immediately preceding each conversion date, at a 3.5% discount, subject to a cap and a floor price. The New American Preferred Stock allocable to the Double-Dip Unsecured Claims will have a face amount equal to the allowed...

  • Page 107
    ...provide only reasonable assurance with respect to financial statement preparation and presentation. Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2012 using the criteria set forth in Internal Control - Integrated Framework issued...

  • Page 108
    ...; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may...

  • Page 109
    ... and Related Transactions, and Director Independence, is incorporated herein by reference to an amendment to this Form 10-K to be filed by the Company not later than 120 days after the end of the fiscal year covered by this report. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information...

  • Page 110
    ... STATEMENT SCHEDULES (a) (1) The following financial statements and Independent Auditors' Report are filed as part of this report: Page Report of Independent Registered Public Accounting Firm 61 62 63 64 66 Consolidated Statements of Operations for the Years Ended December 31, 2012, 2011...

  • Page 111
    ...-K for the year ended December 31, 2008. 2012 Annual Incentive Plan for American, incorporated by reference to Exhibit 99.1 to American's current report on Form 8-K dated January 23, 2012. 10.12 10.13 Aircraft Purchase Agreement by and between American Airlines, Inc. and The Boeing Company, dated...

  • Page 112
    ....151 to AMR's report on Form 10-K for the year ended December 31, 2009. 10.23 10.24 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...

  • Page 113
    ... to Exhibit 10.3 to American's report on Form 10-Q for the quarter ended September 30, 2011. 10.34 A320 Family Aircraft Purchase Agreement by and between American Airlines, Inc. and Airbus S.A.S. dated as of July 20, 2011. Portions of this Exhibit have been omitted and filed separately with the...

  • Page 114
    ....2 to American's report on Form 8-K/A dated February 14, 2013. Computation of ratio of earnings to fixed charges for the years ended December 31, 2012, 2011, 2010, 2009 and 2008. Consent of Independent Registered Public Accounting Firm. 12 23 31.1 31.2 32 Certification of Chief Executive Officer...

  • Page 115
    ...Extensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Statements of Shareholders' Equity (Deficit) and (v) Notes to Consolidated Financial Statements, tagged...

  • Page 116
    ..., thereunto duly authorized. American Airlines, Inc. By: /s/ Thomas W. Horton Thomas W. Horton Chairman and Chief Executive Officer (Principal Executive Officer) Date: February 20, 2013 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the...

  • Page 117
    ...Qualifying Accounts and Reserves (in millions) Changes Balance at beginning Sales, retire- charged to of year Year ended December 31, 2012 Allowance for obsolescence of inventories Allowance for uncollectible accounts Reserves for environmental remediation costs statement of operations accounts...

  • Page 118
    Exhibit 12 AMERICAN AIRLINES, INC. Computation of Ratio of Earnings to Fixed Charges (in millions) 2012 2011 2010 2002 2008 Loss: Loss before inoome taxes and oumulative effeot of aooounting ohange Add: Total fixed oharges (per below) Less: Interest oapitalized Total earnings (loss) before ...

  • Page 119
    ... PUBLIC ACCOUNTING ...financial statements and schedule of American Airlines and the effectiveness of internal control over financial reporting of American Airlines, included in this Annual Report (Form 10-K) for the year ended December 31, 2012. /s/ ERNST & YOUNG LLP Dallas, Texas February 20, 2013

  • Page 120
    ... the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal...

  • Page 121
    ... the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal...

  • Page 122
    ... of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of American Airlines, Inc., 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, 2012 (the Form 10...

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