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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of earliest event
reported: October 22, 2003
American Airlines, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-2691 13-1502798
(State of Incorporation) ( Commission File Number) (IRS Employer
Identification No.)
4333 Amon Carter Blvd. Fort Worth, Texas 76155
(Address of principal executive offices) (Zip Code)
(817) 963-1234
(Registrant's telephone number)
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Item 7. Financial Statements and Exhibits
The following exhibits are included herein:
99.1 Press Release
Item 12. Disclosure of Results of Operations and Financial Condition
American Airlines, Inc. (American) is furnishing herewith a press
release issued on October 22, 2003 by its parent company, AMR
Corporation, as Exhibit 99.1 which is included herein. This press
release was issued to report AMR's third quarter 2003 results.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
American Airlines, Inc.
/s/ Charles D. MarLett
Charles D. MarLett
Corporate Secretary
Dated: October 22, 2003
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EXHIBIT INDEX
Exhibit Description
99.1 Press Release
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Exhibit 99.1
CONTACT: Al Becker
Corporate Communications
Fort Worth, Texas
817-967-1577
corp.comm@aa.com
FOR RELEASE: Wednesday, Oct. 22, 2003
Editor's Note: A live Webcast reporting third quarter results will
be broadcast on the Internet on Oct. 22 at 1 p.m. EDT (Windows
Media Player required for viewing.)
AMR CORPORATION REPORTS BREAK-EVEN RESULTS
AMR Posts Third-Quarter Operating Earnings
Of $165 Million And Net Earnings Of $1 Million
Excluding Special Items, AMR Reports Operating Earnings
Of $141 Million And A Modest Net Loss Of $23 Million
Airline Ends Quarter With $3.3 Billion In Total Cash And
Short-Term Investments
AMR's Four-Point Turnaround Plan On Track
In Drive For Sustained Profitability At Acceptable Levels
FORT WORTH, Texas - Continuing to build financial momentum,
AMR Corporation, the parent company of American Airlines, Inc.,
today reported operating earnings of $165 million and net earnings
of $1 million for the third quarter. In last year's third quarter,
AMR reported an operating loss of $1.3 billion and a net loss of
$924 million, or $5.93 per share.
Both this year's quarter and last year's third quarter
included special items - both gains and losses - resulting mostly
from the company's restructuring efforts. In addition, in keeping
with the provisions of SFAS 109, AMR's third quarter 2003 results
do not reflect a provision for federal and state income taxes.
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Conversely, AMR's third quarter 2002 results reflected a tax
benefit. To provide a better comparison between the two periods,
after adjusting for these special items and taxes, the company
recorded a loss of $23 million this quarter, or $0.15 per share,
versus a loss of $741 million, or $4.76 per share, in the third
quarter of last year. (A reconciliation of all non-GAAP measures
included in this earnings release is provided in the attachments).
"We are making good progress under the focus and discipline of
our four-point Turnaround Plan," said Gerard Arpey, AMR's president
and CEO. "Nevertheless, the third quarter is a peak season for the
airline industry, and under normal circumstances, we should be
doing much better at this time of year than simply breaking even.
We have a lot of work to do to achieve sustained profitability at
acceptable levels, but we are clearly on the right track.
"When you look at everything we have had to overcome and
compare our results in the third quarter with the huge losses in
the same period last year," Arpey said, "the progress is very
gratifying. Our third quarter performance is unmistakable evidence
that we are building critical momentum on the cost side of the
business and that those improvements, coupled with other aspects of
the Turnaround Plan, are beginning to produce significant financial
results.
"Most especially, AMR has been aided over the past several
months by the sacrifices and hard work of our employees, who have
rallied behind the Pull Together, Win Together tenet of the
Turnaround Plan to help us overcome our financial crisis and take
good care of our customers under some very challenging
circumstances," Arpey said.
Third quarter highlights included:
o An 8.1 percent increase in American's mainline unit
revenues, reflecting record load factors in July and August.
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o An 8.6 percent decrease in American's mainline unit costs
(excluding special items), despite a 6.3 percent drop in capacity and
higher fuel prices.
o A strong Sept. 30 cash and short-term investment balance of $3.3
billion (including $540 million in restricted cash and short-term
investments), more than double the low of $1.6 billion last April.
o Improved access to the capital markets, underscored by a $300
million convertible debt transaction closed in September.
o Cash contributions of $173 million to the company's pension plans,
bringing the year's total pension contributions to more than $300 million.
One of the biggest challenges facing AMR, Arpey said, is an
uncertain revenue environment. There was an encouraging year-over-
year increase in quarterly yield, the first such increase since the
first quarter of 2001. American's third quarter yield was 11.63
cents, up 2.5 percent from a yield of 11.35 cents in the same
period a year ago. But overall, the revenue environment is
disappointing, Arpey said, and is negating much of the progress
being made in lowering AMR's costs. This, he said, makes all the
more important the cost principles of AMR's Turnaround Plan, aimed
at lowering the company's costs so it can compete effectively in an
industry marked by ever-expanding low-cost competition.
Still, Arpey said, AMR remains confident as it continues to
implement initiatives throughout this year and in 2004 that should
have a positive effect on the company's financial performance. For
example:
o In 2004, American will benefit for the entire year from the revenue
and cost improvements associated with the realignment of its mid-
continent hubs at Chicago, Dallas/Fort Worth and St. Louis.
o American has just begun adding back coach seats on its Boeing
757 and Airbus A300 fleets, both of which will be assigned to
predominantly leisure markets. These steps, and the reconfig-
uration of its Boeing 767-300s and 737-800s, should increase
American's passenger revenue in 2004.
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o The recent launch of American's codeshare service with British
Airways and the addition of SWISS International to the oneworld
alliance will expand American's network and revenue oppor-
tunities in the fourth quarter and beyond.
o American today announced an understanding with Kansas City and
the state of Missouri that retains portions of AA's Kansas City maint-
enance base and completes plans for the more efficient allocation of
work among the airline's three maintenance bases, giving the
company $100 million in incentives from the base communities and
on-going operating efficiencies.
o American's position is enhanced by the focused efforts of its employees
as they pull together and win together, sharing in the value they help
create through the 38 million employee stock options issued earlier
this year.
o Continued implementation of AMR's $2 billion in strategic initiatives.
These include completing the simplification of AMR's fleet from 14 to 6
aircraft types when the last F-100 is retired in September, and rolling
out more self-service alternatives for customers at airports and on-line.
o A recent partnership with American Express to issue a co-branded
American Express Business ExtrAA Corporate Card that offers rebates
and rewards, at the corporate level, for air travel spending on American.
o Continued emphasis on customer service was recognized at the 10th
Annual World Travel Awards, where American was named North
America's Leading Airline for the sixth straight year and also won
for World's Leading Economy Class and World's Leading Airline
Internet Site.
"These and other steps will give us added financial impetus in
2004 that we will use to build on the momentum we are gathering
this year," Arpey said. "We have begun a recovery process that
should be helped substantially in 2004 by many of the initiatives
now underway."
THE TURNAROUND PLAN - A ROAD MAP FOR AMERICAN'S FUTURE
Lower Costs to Compete
Fly Smart - Give Customers What They Value
Pull Together, Win Together
Build a Financial Foundation for Our Future
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Editor's Note: AMR's president and chief executive officer, Gerard
Arpey, and its chief financial officer, Jeff Campbell, will make a
presentation to analysts during a teleconference on Wednesday, Oct.
22, from 1p.m. to 1:45 p.m. EDT. Following the analyst call, they
will hold a question and answer conference call for media from 2
p.m. to 2:45 p.m. EDT. Reporters interested in listening to the
presentation or participating in the media Q&A should call 817-967-
1577 for details.
Statements in this news release contain various forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities and Exchange
Act of 1934, as amended, which represent the Company's expectations
or beliefs concerning future events. When used in this news
release, the words "expects," "plans," "anticipates," "believes,"
and similar expressions are intended to identify forward-looking
statements. Forward-looking statements include, without
limitation, the Company's expectations concerning operations and
financial conditions, including changes in capacity, revenues, and
costs, expectations as to future financing needs, overall economic
conditions and plans and objectives for future operations, the
impact on the Company of the events of September 11, 2001 and of
its results of operations for the past two years and the
sufficiency of its financial resources to absorb that impact.
Other forward-looking statements include statements which do not
relate solely to historical facts, such as, without limitation,
statements which discuss the possible future effects of current
known trends or uncertainties, or which indicate that the future
effects of known trends or uncertainties cannot be predicted,
guaranteed or assured. All forward-looking statements in this
release are based upon information available to the Company on the
date of this release. The Company undertakes no obligation to
publicly update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise. Forward-
looking statements are subject to a number of risk factors that
could cause actual results to differ materially from our
expectations. The following factors, in addition to other possible
factors not listed, could cause the Company's actual results to
differ materially from those expressed in forward-looking
statements: the uncertain financial and business environment the
Company faces; the struggling economy; high fuel prices and the
availability of fuel; the residual effects of the war in Iraq;
conflicts in the Middle East; historically low fare levels and the
general competitive environment; the ability of the Company to
implement its restructuring program and the effect of the program
on operational performance and service levels; uncertainties with
respect to the Company's international operations; changes in its
business strategy; actions by U.S. or foreign government agencies;
the possible occurrence of additional terrorist attacks; another
outbreak of SARS; the inability of the Company to satisfy existing
liquidity requirements or other covenants in certain of its credit
agreements; and the availability of future financing. Additional
information concerning these and other factors is contained in the
Company's Securities and Exchange Commission filings, including but
not limited to the Form 10-K for the year ended Dec. 31, 2002, and
the Form 10-Q for the quarters ended March 31, 2003 and
June 30, 2003.
Detailed financial information follows:
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AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Three Months Ended September 30, Percent
2003 2002 Change
Revenues
Passenger - American Airlines $3,805 $ 3,754 1.4
- Regional Affiliates ** 399 366 9.0
Cargo 135 139 (2.9)
Other revenues 266 265 0.4
Total operating revenues 4,605 4,524 1.8
Expenses
Wages, salaries and benefits 1,693 2,121 (20.2)
Aircraft fuel 701 697 0.6
Depreciation and amortization 345 340 1.5
Other rentals and landing fees 302 313 (3.5)
Commissions, booking fees and
credit card expense 281 268 4.9
Maintenance, materials and repairs 223 289 (22.8)
Aircraft rentals 165 210 (21.4)
Food service 160 189 (15.3)
Other operating expenses 594 710 (16.3)
Special charges (credits) (24) 718 *
U.S. government grant - (10) *
Total operating expenses 4,440 5,845 (24.0)
Operating Income (Loss) 165 (1,321) *
Other Income (Expense)
Interest income 20 18 11.1
Interest expense (198) (171) 15.8
Interest capitalized 17 23 (26.1)
Miscellaneous - net (3) 2 *
(164) (128) 28.1
Income (Loss) Before Income Taxes 1 (1,449) *
Income tax benefit - (525) *
Net Earnings (Loss) $ 1 $ (924) *
Continued on next page
* Greater than 100%
** Regional Affiliates includes capacity purchase agreements with
American Eagle Airlines, Inc., Executive Airlines, Inc., Trans
States Airlines, Inc. and Chautauqua Airlines, Inc.
Note: Certain amounts have been reclassified to conform with the 2003
presentation.
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AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(in millions, except per share amounts)
(Unaudited)
Three Months Ended September 30,
2003 2002
Basic and Diluted Earnings (Loss) Per Share $ 0.00 $ (5.93)
Number of Shares Used in Computation
Basic 159 156
Diluted 181 156
Impact of Special Items and Three Months Ended September 30,
Income Taxes (in millions, 2003 2002
except per share amounts) Amount EPS Amount EPS
Net earnings (loss) as reported $ 1 $ 0.00 $ (924) $(5.93)
Income tax benefit - (525)
Income (loss) before income taxes 1 (1,449)
Special charges (credits):
Employee charges 4 57
Aircraft and facility costs 40 661
Gain on restructuring (68) -
U.S. government grant - (10)
Loss before income taxes and
special items $ (23) $ (0.15) $ (741) $(4.76)
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AMR CORPORATION
OPERATING STATISTICS
(Unaudited)
Three Months Ended
September 30, Percent
2003 2002 Change
American Airlines, Inc. Mainline Jet Operations
Revenue passenger miles (millions) 32,718 33,080 (1.1)
Available seat miles (millions) 43,021 45,920 (6.3)
Cargo ton miles (millions) 485 498 (2.6)
Passenger load factor 76.0% 72.0% 4.0 pts.
Passenger revenue yield per passenger
mile (cents) 11.63 11.35 2.5
Passenger revenue per available seat
mile (cents) 8.84 8.18 8.1
Cargo revenue yield per ton mile (cents) 27.86 27.58 1.0
Operating expenses per available seat mile,
excluding Regional Affiliates (cents)(1) 9.43 11.70 (19.4)
Operating expenses per available seat
mile, excluding Special charges (credits),
U.S. government grant and Regional
Affiliates (cents) (1) (2) 9.49 10.38 (8.6)
Fuel consumption (gallons, in millions) 772 839 (8.0)
Fuel price per gallon (cents) 85.0 78.0 9.0
Operating aircraft at period-end 799 826 (3.3)
Regional Affiliates
Revenue passenger miles (millions) 1,463 1,176 24.4
Available seat miles (millions) 2,190 1,817 20.5
Passenger load factor 66.8% 64.7% 2.1 pts.
AMR Corporation
Average Equivalent Number of Employees
American Airlines 81,300 99,700
Other 11,500 12,000
Total 92,800 111,700
(1) The Company believes that excluding costs related to Regional
Affiliates provides a measure which is more comparable to
American's historical operating expenses per ASM. Following is a
reconciliation of total operating expenses to operating expenses
excluding Regional Affiliates.
(2) The Company believes that excluding Special charges (credits)
and U.S. government grant receipts provides a measure that is more
representative of ongoing costs and therefore more comparable to
American's historical operating expenses per ASM. Following is a
reconciliation of total operating expenses to operating expenses
excluding Special charges (credits), U.S. government grant and
Regional Affiliates.
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AMR CORPORATION
OPERATING STATISTICS (CONTINUED)
(Unaudited)
American Airlines, Inc. Mainline Jet Operations Three Months Ended September 30,
(in millions, except as noted) 2003 2002
Total operating expenses (GAAP) $ 4,500 $ 5,409
Less: Operating expenses incurred related
to Regional Affiliates 441 33
Operating expenses excluding expenses
incurred related to Regional Affiliates $ 4,059 $ 5,376
American mainline jet operations
available seat miles 43,021 45,920
Operating expenses per available seat
mile, excluding Regional Affiliates (cents) 9.43 11.70
Operating expenses excluding expenses
incurred related to Regional Affiliates $ 4,059 $ 5,376
Less: Special charges (credits) and U.S.
government grant (24) 615
Operating expenses, excluding Special
charges (credits), U.S. government
grant and expenses incurred related to
Regional Affiliates $ 4,083 $ 4,761
American mainline jet operations
available seat miles 43,021 45,920
Operating expenses per available seat
mile, excluding Special charges
(credits), U.S. government grant and
Regional Affiliates (cents) 9.49 10.38
Note: Certain amounts have been reclassified to conform with the 2003
presentation. American Airlines, Inc. 2003 operating expenses include
expenses incurred related to capacity purchase agreements with
Regional Affiliates - American Eagle Airlines Inc., Executive
Airlines, Inc., Trans States Airlines, Inc. and Chautauqua Airlines,
Inc. whereas 2002 operating expenses include expenses incurred related
to a capacity purchase agreement with Regional Affiliate - Chautauqua
Airlines, Inc.
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AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Nine Months Ended September 30, Percent
2003 2002 Change
Revenues
Passenger - American Airlines $10,743 $10,985 (2.2)
- Regional Affiliates ** 1,112 1,064 4.5
Cargo 409 415 (1.4)
Other revenues 785 731 7.4
Total operating revenues 13,049 13,195 (1.1)
Expenses
Wages, salaries and benefits 5,660 6,327 (10.5)
Aircraft fuel 2,077 1,880 10.5
Depreciation and amortization 1,027 1,019 0.8
Other rentals and landing fees 891 908 (1.9)
Commissions, booking fees and
credit card expense 796 912 (12.7)
Maintenance, materials and repairs 641 840 (23.7)
Aircraft rentals 532 650 (18.2)
Food service 460 539 (14.7)
Other operating expenses 1,863 2,063 (9.7)
Special charges 77 718 (89.3)
U.S. government grant (358) (10) *
Total operating expenses 13,666 15,846 (13.8)
Operating Loss (617) (2,651) (76.7)
Other Income (Expense)
Interest income 41 54 (24.1)
Interest expense (580) (501) 15.8
Interest capitalized 54 67 (19.4)
Miscellaneous - net (15) (1) *
(500) (381) 31.2
Loss Before Income Taxes and
Cumulative Effect of
Accounting Change (1,117) (3,032) (63.2)
Income tax benefit - (1,038) *
Loss Before Cumulative Effect
of Accounting Change (1,117) (1,994) (44.0)
Cumulative Effect of Accounting
Change, Net of Tax Benefit - (988) *
Net Loss $(1,117) $(2,982) (62.5)
Continued on next page
* Greater than 100%
** Regional Affiliates includes the capacity purchase agreements
with American Eagle Airlines, Inc., Executive Airlines, Inc.,
Trans States Airlines, Inc. and Chautauqua Airlines, Inc.
Note: Certain amounts have been reclassified to conform with the 2003
presentation.
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AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(in millions, except per share amounts)
(Unaudited)
Nine Months Ended September 30,
2003 2002
Basic and Diluted Loss Per Share
Before Cumulative Effect of Accounting Change $ (7.08) $(12.83)
Cumulative Effect of Accounting Change - (6.36)
Net Loss $ (7.08) $(19.19)
Number of Shares Used in Computation
Basic and Diluted 158 155
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AMR CORPORATION
OPERATING STATISTICS
(Unaudited)
Nine Months Ended
September 30, Percent
2003 2002 Change
American Airlines, Inc. Mainline Jet Operations
Revenue passenger miles (millions) 90,736 92,276 (1.7)
Available seat miles (millions) 123,861 129,968 (4.7)
Cargo ton miles (millions) 1,468 1,478 (0.7)
Passenger load factor 73.3% 71.0% 2.3 pts.
Passenger revenue yield per passenger
mile (cents) 11.84 11.90 (0.5)
Passenger revenue per available seat
mile (cents) 8.67 8.45 2.6
Cargo revenue yield per ton mile (cents) 27.86 27.82 0.1
Operating expenses per available seat mile,
excluding Regional Affiliates (cents) (1) 10.12 11.27 (10.2)
Operating expenses per available seat mile,
excluding Special charges, U.S. government
grant and Regional Affiliates (cents)(1)(2) 10.31 10.80 (4.5)
Fuel consumption (gallons, in millions) 2,224 2,392 (7.0)
Fuel price per gallon (cents) 87.3 73.8 18.3
Regional Affiliates
Revenue passenger miles (millions) 4,017 3,375 19.0
Available seat miles (millions) 6,286 5,301 18.6
Passenger load factor 63.9% 63.7% 0.2 pts.
(1) The Company believes that excluding costs related to Regional
Affiliates provides a measure which is more comparable to
American's historical operating expenses per ASM. Following is a
reconciliation of total operating expenses to operating expenses
excluding Regional Affiliates.
(2) The Company believes that excluding Special charges and U.S.
government grant receipts provides a measure that is more
representative of ongoing costs and therefore more comparable to
American's historical operating expenses per ASM. Following is a
reconciliation of total operating expenses to operating expenses
excluding Special charges, U.S. government grant and Regional Affiliates.
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AMR CORPORATION
OPERATING STATISTICS (CONTINUED)
(Unaudited)
American Airlines, Inc. Mainline Jet Operations Nine Months Ended September 30,
(in millions, except as noted) 2003 2002
Total operating expenses (GAAP) $ 13,843 $ 14,736
Less: Operating expenses incurred related
to Regional Affiliates 1,306 92
Operating expenses excluding expenses
incurred related to Regional Affiliates $ 12,537 $ 14,644
American mainline jet operations available seat miles 123,861 129,968
Operating expenses per available seat
mile, excluding Regional Affiliates (cents) 10.12 11.27
Operating expenses excluding expenses
incurred related to Regional Affiliates $12,537 $ 14,644
Less: Special charges and U.S. government grant (238) 615
Operating expenses, excluding Special
charges, U.S. government grant and
expenses incurred related to Regional Affiliates $12,775 $ 14,029
American mainline jet operations available seat miles 123,861 129,968
Operating expenses per available seat
mile, excluding Special charges, U.S.
government grant and Regional Affiliates (cents) 10.31 10.80
Note: Certain amounts have been reclassified to conform with the 2003
presentation. American Airlines, Inc. 2003 operating expenses include
expenses incurred related to capacity purchase agreements with
Regional Affiliates - American Eagle Airlines Inc., Executive
Airlines, Inc., Trans States Airlines, Inc. and Chautauqua Airlines,
Inc. whereas 2002 operating expenses include expenses incurred
related to a capacity purchase agreement with Regional Affiliate
- Chautauqua Airlines, Inc.