American Airlines 2012 Annual Report Download - page 16

Operating under Chapter 11 may restrict our ability to pursue our business strategies.
Under Chapter 11, transactions outside the ordinary course of business are subject to the prior approval of the Bankruptcy Court, which may limit our
ability to respond in a timely manner to certain events or take advantage of certain opportunities. We must obtain Bankruptcy Court approval to, among other
things:
•engage in certain transactions with our suppliers and vendors;
•buy or sell assets outside the ordinary course of business;
•consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and
•borrow for our operations, investments or other capital needs or to engage in other business activities that would be in our interest.
In particular, AMR will need Bankruptcy Court approval to enter into the Merger Agreement.
Our employees face considerable uncertainty due to our Chapter 11 Cases.
As a result of our Chapter 11 Cases, our employees are facing considerable uncertainty. A material erosion of our employees' commitment could have a
material adverse 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 of reorganization. The Merger Agreement
requires that AMR's plan of reorganization include approval of the Merger. If the Merger is terminated for any reason, AMR would anticipate filing an
alternative plan of reorganization that would include all of its debtor subsidiaries. In any event, if our restructuring is protracted, whether because approval by
the Bankruptcy Court of AMR's entry into the Merger Agreement is delayed or because the Merger Agreement is terminated, it could adversely affect our
business, financial condition and results of operations, including our relationships with our people, vendors, strategic partners, service providers and
customers. If we experience a protracted reorganization, there is a significant risk that the value of our enterprise would be substantially eroded to the detriment
of all of our stakeholders.
Whether or not the Merger is consummated, our ability to emerge from our Chapter 11 Cases and thereafter operate profitably will depend on
increasing our revenue, lowering our costs, reducing our liabilities and obtaining sufficient financing or other capital to operate successfully.
AMR has not yet prepared or filed with the Bankruptcy Court the ultimate plan of reorganization covering AMR and its debtor subsidiaries. Under the terms
of the Merger Agreement, AMR's plan of reorganization will, among other things, provide for approval of the Merger and distribution to our claimholders of
shares in the surviving company. However, if the Merger is not consummated for any reason, it will be necessary for AMR to prepare and file an alternative
plan of reorganization, which could include other strategic alternatives or could contemplate that AMR would emerge as an independent company. For an
independent plan of reorganization to be effective, we will need to increase our revenue, lower our costs, reduce our liabilities, and obtain and/or demonstrate
the sufficiency of financing and/or other capital to operate after emergence.
If AMR were to emerge as an independent company, we currently plan to drive revenue growth by investing heavily in renewing and optimizing our fleet,
strengthening 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 achieve these goals, and as a result we estimate AMR's planned capital expenditures on a consolidated basis for
calendar years 2013-2017 as an independent company would be in excess of $13 billion. After the conclusion of our Chapter 11 Cases, we will need
substantial financing or other capital resources, some of which are expected to be subject to Bankruptcy Court approval, whether or not the Merger is
consummated. Depending on numerous factors, many of which are out of our control, such as the state of the domestic and global economy, the credit
market's view of our prospects and the airline industry in general, and the general availability of debt and equity capital at the time we emerge from our
Chapter 11 Cases, whether or not the Merger is consummated, the financing and other capital that we will need may not be available to us, or may only be
available on onerous terms and conditions. Whether or not the Merger is consummated, there is no assurance that we will be successful in obtaining financing
or other needed sources of capital to successfully emerge from Chapter 11 and operate our Company. Inability to obtain sufficient financing or other capital
may further delay the emergence of our Company from bankruptcy and/or limit our alternatives, which could result in our inability to continue as a going
concern. Even if such financing or other capital is available, there is no guarantee that we will achieve the desired revenue growth to successfully operate.
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