American Airlines 2012 Annual Report Download - page 15

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•our creditors or other third parties may take actions or make decisions that are inconsistent with and detrimental to the plans we believe to be in the
best interests of the Company;
•we may be unable to obtain Bankruptcy Court approval with respect to certain matters in our Chapter 11 Cases from time to time;
•the Bankruptcy Court may not agree with our objections to positions taken by other parties;
•we may not be able to successfully develop, prosecute, confirm and consummate a Chapter 11 plan of reorganization or may be delayed in doing so;
•we may not be able to obtain 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 may not be able to enter into or maintain contracts that are critical to our operations at competitive rates and terms, if at all, including hedging
strategies to assist in controlling our fuel costs;
•we may be exposed to risks associated with third parties seeking and obtaining Bankruptcy Court approval to (i) terminate or shorten our exclusivity
period to propose and confirm a plan of reorganization, (ii) appoint a Chapter 11 trustee or (iii) convert our Chapter 11 Cases to Chapter 7
liquidation cases; and
•our customers may choose to travel on other air carriers.
These risks and uncertainties could affect our business and operations in various ways. For example, negative events, the positions we take in court, or
publicity associated with our Chapter 11 Cases could adversely affect our sales of tickets and our relationship with our customers, as well as with vendors
and our employees, which in turn could adversely affect our business, financial condition and results of operations, particularly if our Chapter 11 Cases are
protracted. Because of the risks and uncertainties associated with our Chapter 11 Cases, the ultimate impact on our business, financial condition and results
of operations of events that occur during these proceedings cannot be accurately predicted or quantified. If any one or more of these risks materializes,
particularly if our Chapter 11 Cases are protracted, it could affect our ability to continue as a going concern.
We may not be able to implement our business plan.
On February 1, 2012, AMR announced the principal terms of a business plan (the business plan) that is designed to restore AMR and its subsidiaries,
including the Company, to industry leadership, profitability and growth as an independent company; that is, assuming that AMR would not engage in a
transaction such as the Merger or another consolidation transaction. While the business plan has evolved during the course of our Chapter 11 Cases, the chief
components of the business plan continue to include targets of an annual $2 billion in cost savings and $1 billion in revenue enhancement. We expect to
pursue many of the initiatives contemplated by the business plan, whether or not the Merger is consummated.
As part of the business plan, we are implementing increased outsourcing. Although we believe that outsourcing will result in lower costs and increased
efficiencies, third parties may not be as responsive to our needs as we might be ourselves, which may adversely affect our business, financial condition and
results of operations.
The business plan originally contemplated the termination of all of American's defined benefit pension plans. Due to the subsequent decision to freeze (rather
than to terminate) its defined benefit pension plans, American expects to retain greater pension funding obligations than it previously anticipated. To offset
these greater obligations, we anticipate that we may raise additional capital at or after our exit from our Chapter 11 Cases whether or not the Merger is
consummated. There can be no assurance that we would be able to raise such additional capital or that any capital raised would be sufficient to offset these
greater pension funding obligations.
We continue efforts to renegotiate a number of agreements and take other steps to achieve the cost savings we are seeking in our restructuring. In addition, we
continue efforts to reduce our healthcare costs for current retirees. We may not be able to realize all of the cost savings we are seeking. Also, as part of the
process of renegotiating agreements, we may reject certain of those agreements in our Chapter 11 Cases. We cannot predict whether we would be able to enter
into new agreements to replace any rejected agreements (some of which may be material) on acceptable terms, or at all.
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