American Airlines 2012 Annual Report Download - page 33

ITEM 3. LEGAL PROCEEDINGS
As previously discussed, on November 29, 2011 the debtors filed voluntary petitions for relief under the Bankruptcy Code. Each of the Debtors 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 Debtors are subject to the automatic
stay provisions of section 362(a) of the Bankruptcy Code, including, except in such cases where the Bankruptcy Court has entered an order modifying or
lifting the automatic stay, the litigation described below. Notwithstanding the general application of the automatic stay described above, governmental
authorities, both domestic and foreign, may determine to continue actions brought under their regulatory powers. Therefore, the automatic stay may have no
effect on certain matters described below.
On February 22, 2006, the Company received a letter from the Swiss Competition Commission informing the Company that it is investigating whether the
Company and certain other cargo carriers entered into agreements relating to fuel surcharges, security surcharges, war-risk surcharges, and customs clearance
surcharges. On March 11, 2008, the Company received a request for information from the Swiss Competition Commission concerning, among other things,
the scope and organization of the Company's activities in Switzerland. On November 8, 2012, the Swiss Competition Commission issued a preliminary order
finding that the Company participated in an illegal conspiracy to set cargo fuel, security, and war risk surcharges, and recommending that the Company
should be fined 2,225,310 Swiss Francs. The Company disputes the allegation in the Swiss order and intends to vigorously defend itself under Swiss law.
On January 23, 2007, the Brazilian competition authorities, as part of an ongoing investigation, conducted an unannounced search of the Company's cargo
facilities in Sao Paulo, Brazil. On April 24, 2008, the Brazilian competition authorities charged the Company with violating Brazilian competition laws. On
December 31, 2009, the Brazilian competition authorities made a non-binding recommendation to the Brazilian competition tribunal that it find the Company
in violation of competition laws and levy a fine in an unspecified amount. The authorities are investigating whether the Company and certain other foreign and
domestic air carriers violated Brazilian competition laws by illegally conspiring to set fuel surcharges on cargo shipments. The Company is vigorously
contesting the allegations and the preliminary findings of the Brazilian competition authorities. The Company intends to cooperate fully with all pending
investigations.
In addition, the Company has received inquiries from a number of other jurisdictions, including Australia and Korea, regarding the Company's practices
relating to setting fuel charges. The Company has timely responded to all such inquiries.
On January 10, 2011, the Company filed a lawsuit in Tarrant County, Texas State Court against Sabre alleging, among other claims, that Sabre's actions of
introducing bias against the display 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 in this action. On June 8, 2011 and October 7, 2011, Sabre filed counterclaims against the Company alleging that
American has breached its agreement and that American violated antitrust laws. On October 30, 2012, Sabre and American settled their disputes. Under the
terms of the settlement, (i) the parties renewed their current distribution agreement for multiple years, (ii) American agreed to negotiate with Sabre for additional
technology services in the future, (iii) Sabre agreed to provide a monetary payment to American, and (iv) American may continue to pursue its direct connect
initiative. The terms were approved by the bankruptcy court on December 5, 2012.
On April 12, 2011, the Company filed an antitrust lawsuit against Travelport and Orbitz in Federal District Court for the Northern District of Texas. On
June 1, 2011, Sabre filed a request to intervene in this action and stated that it intended to file its own claims against American alleging that American violated
the antitrust laws by withholding certain content from the Sabre GDS. On June 1, 2011, the Company amended its lawsuit to add Sabre as a defendant. On
October 20, 2011, American sought leave to file new antitrust claims against the defendants based on facts learned through discovery. The lawsuit, as
amended, alleges, among other things, that the defendants (1) engaged in anticompetitive practices to preserve their monopoly power over American's ability to
distribute its products through their subscribers; (2) conspired with each other, as well as other third parties, to preserve existing the GDS business model;
(3) undertook actions against American, such as biasing and increasing prices, to punish American for supporting a competitive alternative, and
(4) organized, supported, and monitored a boycott of American services among travel agencies. The lawsuit further alleges that these actions have prevented
American from employing new competing technologies and have allowed the defendants to continue to charge American supracompetitive fees. The lawsuit
seeks both injunctive relief and unspecified money damages. All defendants filed motions requesting that the court dismiss American's claims. On
November 21, 2011, the court granted those motions as to certain claims, but denied them as to others. The court further granted American's request to amend
its lawsuit by filing additional claims based on the evidence it had uncovered in discovery. American filed a motion for reconsideration of those portions of the
court's November 21 order dismissing certain of American's claims, and the defendants each filed new motions to dismiss certain claims asserted in
American's amended complaint. On February 28, 2012, the court partially granted and partially denied American's motion for reconsideration. On August 7,
2012, the court denied the defendants' motions to dismiss American's amended claims,
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