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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: January 21, 2004
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 January 21, 2004 by its parent company, AMR
Corporation, as Exhibit 99.1 which is included herein. This press
release was issued to report AMR's fourth quarter and full year
2003 results and includes American's fourth quarter and full year
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: January 21, 2004
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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, Jan. 21, 2004
Editor's Note: A live Webcast reporting fourth quarter results
will be broadcast on the Internet on Jan. 21 at 2 p.m. EST (Windows
Media Player required for viewing.)
AMR CORPORATION REPORTS DRAMATICALLY IMPROVED FOURTH
QUARTER FINANCIAL RESULTS ON MOMENTUM OF TURNAROUND PLAN
AMR Reports A Fourth Quarter Net Loss of $111 Million,
A Significant Improvement Over Last Year
Excluding Special Items, AMR Posts Net Loss of $95 Million
And Operating Income of $103 Million, The Second
Consecutive Quarter of Positive Operating Income
AMERICAN AIRLINES BUILDS ON MOMENTUM BY ANNOUNCING
IT WILL RESTRUCTURE ITS MIAMI HUB AND CREATE
A NEW CODESHARING PARTNERSHIP WITH MEXICANA
FORT WORTH, Texas - AMR Corporation, the parent company of
American Airlines, Inc., today reported a net loss of $111 million
for the fourth quarter, or $.70 per share. This compares with last
year's fourth quarter net loss of $529 million, or $3.39 per share.
Building on the added momentum of this financial improvement,
American announced today a major restructuring of its hub
operations at Miami that will make the hub - American's principal
gateway to Latin America - more efficient, increase its on-time
dependability, and give customers added convenience and a wider
choice of flights.
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The airline also announced that it will enter into a robust
new codesharing partnership with Mexicana, the premier airline of
Mexico.
AMR's fourth quarter results include a handful of special
items - both gains and losses - resulting from the company's
continuing restructuring efforts, a federal income tax settlement
during the quarter, and gains on the sale of investments. In
addition, in keeping with the provisions of SFAS 109, AMR's fourth
quarter 2003 results do not reflect a provision for federal and
state income taxes. Conversely, AMR's fourth 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 (pre-tax and excluding special items)
of $95 million this quarter, or $.59 per share, versus a loss (pre-
tax) of $828 million, or $5.31 per share, in the fourth quarter of
last year. For the fourth quarter of 2003, AMR had operating
income of $103 million, excluding special items. In the fourth
quarter of 2002, AMR posted a net operating loss of $679 million.
(A reconciliation of all non-GAAP measures included in this
earnings release is provided in the attachments.)
For the full year 2003, AMR reported a net loss of $1.2
billion, or $7.76 per share, compared to a full year net loss of
$3.5 billion, or $22.57 per share, in 2002. When adjusted for
special items and the year-over-year tax differences mentioned
above, AMR posted a 53 percent improvement in financial results,
registering a full year loss of $1.5 billion in 2003 compared to a
full year loss of $3.2 billion in 2002.
"The improvement in our year-over-year results is a direct
result of our ongoing efforts to restructure our business and the
willingness of every one of us to sacrifice and accept change as an
inevitable fact of life in the airline
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industry," said Gerard Arpey, AMR's president and CEO. "While the
work required to make our company consistently profitable has just
begun, the momentum we have created together is powerful. Perhaps
the best illustration of this is the fact that we have now achieved
an operating profit, excluding special items, two quarters in a
row. And unlike a year ago, when we were burning through millions
of dollars of cash every day, our operation is now generating
positive cash flow."
The Miami hub restructuring and the new relationship with
Mexicana will strengthen American's network and add to the
company's financial progress, Arpey said.
With a combined total of more than 130 years of service
between the U.S. and Mexico, American and Mexicana will forge a
relationship that will give customers enhanced service to the most
important markets in the United States and Mexico, as well as connections
across their global networks. For American, it will mean new flight
availability to 21 additional cities in Mexico and the ability to
offer service in 27 new, nonstop transborder markets. The
relationship also includes a reciprocal frequent-flyer agreement
that will allow passengers to accrue and redeem miles in American's
AAdvantage program or Mexicana's Frecuenta program on more than 500
U.S.-Mexico flights per week.
American and Mexicana will launch the partnership in April,
pending governmental approval.
In Miami, the airline's principal gateway to Latin America,
American will spread its operations more evenly by increasing the
number of daily flight banks to 13 from seven, effective May 1. In
doing so, the airline will be able to operate
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more flights in and out of Miami using fewer aircraft, thereby
greatly increasing the hub's efficiency and assisting in the
company's overall objective to lower costs.
At the same time, the restructured Miami hub will
significantly enhance customer service, allowing American to offer
passengers more flight choices, giving customers more time to make
their flight connections, and spreading out the flow of
international passengers in ways that will make it easier to clear
customs and immigration processing.
Longer term, the new hub design will give American and
American Eagle room to grow at Miami within the framework of the
new terminal facility that is now under construction. "Miami is
one of the linchpins of our global network," Arpey said. "And this
initiative will enable us to operate more flights in and out of
that hub -- using fewer aircraft -- reduce costs, and relieve some
of the pressure that hub has been under from the ongoing terminal
construction project."
At the heart of AMR's financial progress in 2003, Arpey said,
were the strides it made toward achieving the company's critical
goal of $4 billion in annual capacity-independent cost savings.
These efforts were given a huge boost when employees agreed to a
restructuring that added $1.8 billion a year in labor-cost savings
to savings of $2 billion a year from strategic initiatives and
another $200 million from vendors, suppliers and creditors.
"Lower costs go hand in hand with our ability to protect and
build on our leading share in the marketplace," Arpey said.
"Today, thanks to the sacrifices, hard work and ingenuity of
American's people, our costs - while still not as low as our low-
cost competitors - are continuing to improve to help us compete
vigorously for every customer."
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Although unquestionably pleased by its progress, Arpey said AMR
is not yet satisfied with its financial results and recognizes that
it still has lots of work in front of it.
"We've made great progress," Arpey said, "but we also realize
the many challenges that lie ahead."
Arpey pointed to the following progress in each of the four
tenets of the AMR Turnaround Plan:
- Lower Costs To Compete: This is where AMR has made its most
dramatic progress, underscored by an 11.9 percent decline in unit
costs in the fourth quarter, excluding special items and regional
affiliates. If not for rising fuel prices, AMR's progress would
have been even more dramatic, with a year-over-year drop in unit
costs of 12.8 percent. To further reduce costs, AMR has returned
underused gate space, consolidated terminal space, depeaked its
Chicago and Dallas/Fort Worth hub schedules (now adding Miami to
that list), closed a reservations center, reduced the size of the
St. Louis hub, accelerated the retirement of TWA aircraft, and
improved aircraft utilization across the fleet.
- Fly Smart, Give Customers What They Value: This tenet focuses
on customer service and revenue production, with emphasis on
improving AMR's relative revenue performance. Key moves in this
area are adding seats to American's 757 and A300 fleets and
restructuring the mid-continent hubs at Chicago, DFW and St. Louis
(next up, Miami). Another step is expanding alliances. Progress
here includes a domestic codeshare with Alaska Airlines, approval
of codesharing with British Airways, the addition of SWISS
International to the oneworld alliance, and (as announced today)
the new codeshare linkage with Mexicana.
- Pull Together, Win Together: Fostering greater cooperation
than ever between the company and employees, AMR has adopted an
unprecedented level of openness with employee groups and labor
unions. Arpey holds regular Town Hall-style meetings with
employees, AMR's chief financial officer meets monthly with union
leaders to walk them through the company's financial results in the
same way he briefs AMR's Board, and the Overland Group, a firm
expert in bringing union groups and management together, has
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been engaged to help all parties within AMR move to a philosophy
of active involvement. On Jan. 28 and 29, American will conduct
its first Customer Strategy meeting with frontline employees to
advance this process and improve the customer experience.
- Build A Financial Foundation For The Future: AMR ended the
fourth quarter with $3.1 billion in total cash and short-term
investments (including $527 million in restricted cash and short-
term investments), substantially
greater than the $1.8 billion in cash and short-term investments
at the close of the first quarter. From April 1 to Dec. 31,
AMR's cash flow from operations totaled $1.1 billion, giving AMR
greater access to the capital markets. AMR also has been able
to sell some non-core assets, such as its stakes in Worldspan
and Hotwire. These are the first of many steps AMR will be
taking over time to repair the damage done to its balance sheet
as it works to overcome its financial crisis.
Editor's Note: AMR's president and chief executive officer, Gerard
Arpey, and its chief financial officer, James Beer, will make a
presentation to analysts during a teleconference on Wednesday, Jan.
21, from 2 p.m. to 2:45 p.m. EST. Following the analyst call, they
will hold a question and answer conference call for media from 3
p.m. to 3:45 p.m. EST. 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
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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,
June 30, 2003 and Sept. 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 December 31, Percent
2003 2002 Change
Revenues
Passenger - American Airlines $3,589 $ 3,455 3.9
- Regional Affiliates ** 407 367 10.9
Cargo 149 146 2.1
Other revenues 246 257 (4.3)
Total operating revenues 4,391 4,225 3.9
Expenses
Wages, salaries and benefits 1,604 2,065 (22.3)
Aircraft fuel 695 682 1.9
Depreciation and amortization 350 347 0.9
Other rentals and landing fees 282 290 (2.8)
Commissions, booking fees and
credit card expense 267 251 6.4
Maintenance, materials and repairs 219 268 (18.3)
Aircraft rentals 155 190 (18.4)
Food service 151 159 (5.0)
Other operating expenses 565 652 (13.3)
Special charges 330 - *
Total operating expenses 4,618 4,904 (5.8)
Operating Loss (227) (679) (66.6)
Other Income (Expense)
Interest income 14 17 (17.6)
Interest expense (123) (184) (33.2)
Interest capitalized 17 19 (10.5)
Miscellaneous - net 128 (1) *
36 (149) *
Loss Before Income Taxes (191) (828) (76.9)
Income tax benefit *** (80) (299) (73.2)
Net Loss $ (111) $ (529) (79.0)
Continued on next page
* Greater than 100%
** Regional Affiliates includes capacity purchase
agreements with American Eagle Airlines, Inc. (American
Eagle), Executive Airlines, Inc. (Executive), Trans
States Airlines, Inc. (Trans States) and Chautauqua
Airlines, Inc. (Chautauqua).
*** As a result of the Company's deferred tax asset
valuation allowance position, the Company did not record
a tax benefit associated with its 2003 losses. However,
in the fourth quarter of 2003, the Company reached an
agreement with the IRS covering tax years 1990 through
1995. As a result of this agreement, the Company
recorded an $80 million tax benefit to reduce previously
accrued income tax liabilities.
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 December 31,
2003 2002
Basic and Diluted Loss Per Share $ (0.70) $ (3.39)
Number of Shares Used in Computation
Basic and Diluted 160 156
Impact of Special Items and Three Months Ended December 31,
Income Taxes (in millions, 2003 2002
except per share amounts) Amount EPS Amount EPS
Net loss as reported $ (111) $(0.70) $ (529) $(3.39)
Income tax benefit * (80) (299)
Loss before income taxes (191) (828)
Special items:
Aircraft charges 302 -
Facility costs 12 -
Employee charges 16 -
Interest on previously accrued
income tax liabilities (84) -
Gain on sale of investments (150) -
Loss before income taxes
and special items $ (95) $(0.59) $ (828) $(5.31)
* As a result of the Company's deferred tax asset
valuation allowance position, the Company did not record a
tax benefit associated with its 2003 losses. However, in the
fourth quarter of 2003, the Company reached an agreement with
the IRS covering tax years 1990 through 1995. As a result of
this agreement, the Company recorded an $80 million tax
benefit to reduce previously accrued income tax liabilities.
Impact of Special Items (in millions) Three Months Ended
December 31,
2003 2002
Operating loss as reported $ (227) $ (679)
Special items:
Aircraft charges 302 -
Facility costs 12 -
Employee charges 16 -
Operating income (loss) before special items $ 103 $ (679)
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AMR CORPORATION
OPERATING STATISTICS
(Unaudited)
Three Months Ended
December 31, Percent
2003 2002 Change
American Airlines, Inc. Mainline Jet Operations
Revenue passenger miles (millions) 29,592 29,471 0.4
Available seat miles (millions) 41,348 42,232 (2.1)
Cargo ton miles (millions) 532 528 0.8
Passenger load factor 71.6% 69.8% 1.8 pts.
Passenger revenue yield per
passenger mile (cents) 12.13 11.72 3.5
Passenger revenue per available
seat mile (cents) 8.68 8.18 6.1
Cargo revenue yield per ton
mile (cents) 27.91 27.49 1.5
Operating expenses per available seat
mile, excluding Regional
Affiliates (cents) (1) 10.25 10.73 (4.5)
Operating expenses per available seat
mile, excluding Special charges and
Regional Affiliates (cents) (1) (2) 9.45 10.73 (11.9)
Fuel consumption (gallons,in millions) 732 771 (5.1)
Fuel price per gallon (cents) 88.1 82.7 6.5
Regional Affiliates
Revenue passenger miles (millions) 1,499 1,201 24.8
Available seat miles (millions) 2,311 1,947 18.7
Passenger load factor 64.9% 61.7% 3.2 pts.
AMR Corporation
Average Equivalent Number of Employees
American Airlines 78,900 93,500
Other 11,700 12,000
Total 90,600 105,500
(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 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 and Regional
Affiliates.
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AMR CORPORATION
OPERATING STATISTICS (CONTINUED)
(Unaudited)
American Airlines, Inc. Mainline Jet Operations Three Months Ended December 31,
(in millions, except as noted) 2003 2002
Total operating expenses as reported $4,689 $ 4,569
Less: Operating expenses incurred
related to Regional Affiliates 451 37
Operating expenses excluding expenses
incurred related to Regional Affiliates $4,238 $ 4,532
American mainline jet operations
available seat miles 41,348 42,232
Operating expenses per available seat
mile, excluding Regional Affiliates (cents) 10.25 10.73
Operating expenses excluding expenses
incurred related to Regional Affiliates $4,238 $ 4,532
Less: Special charges 330 -
Operating expenses, excluding Special
charges and expenses incurred related
to Regional Affiliates $3,908 $ 4,532
American mainline jet operations
available seat miles 41,348 42,232
Operating expenses per available seat
mile, excluding Special charges and
Regional Affiliates (cents) 9.45 10.73
Operating expenses, excluding Special
charges and expenses incurred related
to Regional Affiliates $3,908 $ 4,532
Less: Aircraft fuel price variance * 40 -
Operating expenses, excluding Special
charges, aircraft fuel price variance
and expenses incurred related to
Regional Affiliates $3,868 $ 4,532
American mainline jet operations
available seat miles 41,348 42,232
Operating expenses per available seat
mile, excluding Special charges,
aircraft fuel price variance and
Regional Affiliates (cents) 9.36 10.73
Percent change 12.8
* Change in price x consumption (5.4 cents x 732 million gallons)
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, Executive, Trans
States and Chautauqua, whereas 2002 operating expenses
include expenses incurred related to capacity purchase
agreements with Regional Affiliates - Trans States
(beginning in November 2002) and Chautauqua.
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AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Twelve Months Ended December 31, Percent
2003 2002 Change
Revenues
Passenger - American Airlines $14,332 $ 14,440 (0.7)
- Regional Affiliates ** 1,519 1,431 6.1
Cargo 558 561 (0.5)
Other revenues 1,031 988 4.4
Total operating revenues 17,440 17,420 0.1
Expenses
Wages, salaries and benefits 7,264 8,392 (13.4)
Aircraft fuel 2,772 2,562 8.2
Depreciation and amortization 1,377 1,366 0.8
Other rentals and landing fees 1,173 1,198 (2.1)
Commissions, booking fees and
credit card expense 1,063 1,163 (8.6)
Maintenance, materials and repairs 860 1,108 (22.4)
Aircraft rentals 687 840 (18.2)
Food service 611 698 (12.5)
Other operating expenses 2,428 2,715 (10.6)
Special charges 407 718 (43.3)
U.S. government grant (358) (10) *
Total operating expenses 18,284 20,750 (11.9)
Operating Loss (844) (3,330) (74.7)
Other Income (Expense)
Interest income 55 71 (22.5)
Interest expense (703) (685) 2.6
Interest capitalized 71 86 (17.4)
Miscellaneous - net 113 (2) *
(464) (530) (12.5)
Loss Before Income Taxes and
Cumulative Effect of Accounting
Change (1,308) (3,860) (66.1)
Income tax benefit *** (80) (1,337) (94.0)
Loss Before Cumulative Effect of
Accounting Change (1,228) (2,523) (51.3)
Cumulative Effect of Accounting
Change, Net of Tax Benefit - (988) *
Net Loss $(1,228) $(3,511) (65.0)
Continued on next page
* Greater than 100%
** Regional Affiliates includes the capacity purchase agreements
with American Eagle, Executive, Trans States and Chautauqua.
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AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(in millions, except per share amounts)
(Unaudited)
*** As a result of the Company's deferred tax asset
valuation allowance position, the Company did not record
a tax benefit associated with its 2003 losses. However,
in the fourth quarter of 2003, the Company reached an
agreement with the IRS covering tax years 1990 through
1995. As a result of this agreement, the Company
recorded an $80 million tax benefit to reduce previously
accrued income tax liabilities.
Note: Certain amounts have been reclassified to conform with
the 2003 presentation.
Twelve Months Ended
December 31,
2003 2002
Basic and Diluted Loss Per Share
Before Cumulative Effect of
Accounting Change $ (7.76) $(16.22)
Cumulative Effect of Accounting Change - (6.35)
Net Loss $ (7.76) $(22.57)
Number of Shares Used in Computation
Basic and Diluted 158 156
Impact of Special Items and Twelve Months Ended
Income Taxes (in millions) December 31,
2003 2002
Net loss as reported $(1,228) $(3,511)
Cumulative effect of accounting change - 988
Income tax benefit * (80) (1,337)
Loss before income taxes and cumulative
effect of accounting change (1,308) (3,860)
Special items:
Aircraft and facility costs 383 661
Employee charges 92 57
Gain on restructuring (68) -
Interest on previously accrued income tax
liabilities (84) -
Gain on sale of investments (150) -
U.S. government grant (358) (10)
Loss before income taxes and special items $(1,493) $(3,152)
* As a result of the Company's deferred tax asset valuation
allowance position, the Company did not record a tax benefit
associated with its 2003 losses. However, in the fourth
quarter of 2003, the Company reached an agreement with the
IRS covering tax years 1990 through 1995. As a result of this
agreement, the Company recorded an $80 million tax benefit to
reduce previously accrued income tax liabilities.
18
AMR CORPORATION
OPERATING STATISTICS
(Unaudited)
Twelve Months Ended
December 31, Percent
2003 2002 Change
American Airlines, Inc. Mainline Jet Operation
Revenue passenger miles (millions) 120,328 121,747 (1.2)
Available seat miles (millions) 165,209 172,200 (4.1)
Cargo ton miles (millions) 2,000 2,007 (0.3)
Passenger load factor 72.8% 70.7% 2.1 pts.
Passenger revenue yield per passenger
mile (cents) 11.91 11.86 0.4
Passenger revenue per available seat
mile (cents) 8.67 8.39 3.3
Cargo revenue yield per ton mile (cents) 27.87 27.73 0.5
Operating expenses per available seat
mile, excluding Regional
Affiliates (cents) (1) 10.15 11.14 (8.9)
Operating expenses per available seat
mile, excluding Special charges, U.S.
government grant and Regional
Affiliates (cents) (1) (2) 10.10 10.78 (6.3)
Fuel consumption (gallons, in millions) 2,956 3,163 (6.5)
Fuel price per gallon (cents) 87.5 76.0 15.1
Regional Affiliates
Revenue passenger miles (millions) 5,516 4,576 20.5
Available seat miles (millions) 8,597 7,248 18.6
Passenger load factor 64.2% 63.2% 1.0 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.
19
AMR CORPORATION
OPERATING STATISTICS (CONTINUED)
(Unaudited)
American Airlines, Inc. Mainline Jet Operations Twelve Months Ended
(in millions, except as noted) December 31,
2003 2002
Total operating expenses as reported $18,532 $ 19,305
Less: Operating expenses incurred related
to Regional Affiliates 1,757 129
Operating expenses excluding expenses
incurred related to Regional Affiliates $16,775 $ 19,176
American mainline jet operations
available seat miles 165,209 172,200
Operating expenses per available seat
mile, excluding Regional Affiliates (cents) 10.15 11.14
Operating expenses excluding expenses
incurred related to Regional Affiliates $16,775 $ 19,176
Less: Special charges and U.S. government grant 92 615
Operating expenses, excluding Special
charges, U.S. government grant and
expenses incurred related to Regional Affiliates $16,683 $ 18,561
American mainline jet operations
available seat miles 165,209 172,200
Operating expenses per available seat
mile, excluding Special charges, U.S.
government grant and Regional Affiliates (cents) 10.10 10.78
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, Executive, Trans
States and Chautauqua, whereas 2002 operating expenses
include expenses incurred related to capacity purchase
agreements with Regional Affiliates - Trans States
(beginning in November 2002) and Chautauqua.
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AMERICAN AIRLINES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Three Months Ended December 31, Percent
2003 2002 Change
Revenues
Passenger - American Airlines $ 3,589 $ 3,454 3.9
- Regional Affiliates ** 407 26 *
Cargo 149 146 2.1
Other revenues 238 235 1.3
Total operating revenues 4,383 3,861 13.5
Expenses
Wages, salaries and benefits 1,496 1,953 (23.4)
Aircraft fuel 645 640 0.8
Regional carrier payments 401 32 *
Depreciation and amortization 309 307 0.7
Other rentals and landing fees 262 267 (1.9)
Commissions, booking fees and
credit card expense 268 237 13.1
Maintenance, materials and repairs 179 233 (23.2)
Aircraft rentals 151 185 (18.4)
Food service 150 157 (4.5)
Other operating expenses 498 558 (10.8)
Special charges 330 - *
Total operating expenses 4,689 4,569 2.6
Operating Loss (306) (708) (56.8)
Other Income (Expense)
Interest income 14 16 (12.5)
Interest expense (74) (141) (47.5)
Interest capitalized 16 18 (11.1)
Related party interest - net - 4 *
Miscellaneous - net 130 (2) *
86 (105) *
Loss Before Income Taxes (220) (813) (72.9)
Income tax benefit *** (80) (86) (7.0)
Net Loss $ (140) $ (727) (80.7)
Continued on next page
* Greater than 100%
** Regional Affiliates includes capacity purchase
agreements with American Eagle Airlines, Inc. (American
Eagle), Executive Airlines, Inc. (Executive), Trans
States Airlines, Inc. (Trans States) and Chautauqua
Airlines, Inc. (Chautauqua).
21
AMERICAN AIRLINES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(in millions, except per share amounts)
(Unaudited)
*** As a result of the Company's deferred tax asset
valuation allowance position, the Company did not record
a tax benefit associated with its 2003 losses. However,
in the fourth quarter of 2003, the Company reached an
agreement with the IRS covering tax years 1990 through
1995. As a result of this agreement, the Company
recorded an $80 million tax benefit to reduce previously
accrued income tax liabilities.
Note: Certain amounts have been reclassified to conform with the 2003
presentation.
22
AMERICAN AIRLINES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Twelve Months Ended December 31, Percent
2003 2002 Change
Revenues
Passenger - American Airlines $14,332 $14,439 (0.7)
- Regional Affiliates ** 1,519 99 *
Cargo 558 557 0.2
Other revenues 994 897 10.8
Total operating revenues 17,403 15,992 8.8
Expenses
Wages, salaries and benefits 6,831 7,954 (14.1)
Aircraft fuel 2,586 2,415 7.1
Regional payments 1,550 106 *
Depreciation and amortization 1,213 1,209 0.3
Other rentals and landing fees 1,084 1,110 (2.3)
Commissions, booking fees
and credit card expense 1,064 1,087 (2.1)
Maintenance, materials and repairs 714 962 (25.8)
Aircraft rentals 666 815 (18.3)
Food service 606 693 (12.6)
Other operating expenses 2,126 2,339 (9.1)
Special charges 407 625 (34.9)
U.S. government grant (315) (10) *
Total operating expenses 18,532 19,305 (4.0)
Operating Loss (1,129) (3,313) (65.9)
Other Income (Expense)
Interest income 54 70 (22.9)
Interest expense (524) (521) 0.6
Interest capitalized 66 80 (17.5)
Related party interest - net 7 18 (61.1)
Miscellaneous - net 117 (3) *
(280) (356) (21.3)
Loss Before Income Taxes and
Cumulative Effect of
Accounting Change (1,409) (3,669) (61.6)
Income tax benefit *** (80) (1,063) (92.5)
Loss Before Cumulative Effect
of Accounting Change (1,329) (2,606) (49.0)
Cumulative Effect of
Accounting Change, Net of
Tax Benefit - (889) *
Net Loss $ (1,329) $(3,495) (62.0)
Continued on next page
* Greater than 100%
23
AMERICAN AIRLINES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(in millions, except per share amounts)
(Unaudited)
** Regional Affiliates includes the capacity purchase
agreements with American Eagle, Executive, Trans States
and Chautauqua.
*** As a result of the Company's deferred tax asset
valuation allowance position, the Company did not record
a tax benefit associated with its 2003 losses. However,
in the fourth quarter of 2003, the Company reached an
agreement with the IRS covering tax years 1990 through
1995. As a result of this agreement, the Company
recorded an $80 million tax benefit to reduce previously
accrued income tax liabilities.
Note: Certain amounts have been reclassified to conform with the 2003
presentation
###
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