We have agreements for 5549 spare engines to be delivered in ~~2015~~2016 and beyond.

See Note 15 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 1213 to American’s Consolidated Financial Statements in Part II, Item 8B for additional information on aircraft acquisition commitments, payments and options.

As of December 31, ~~2014,~~2015, aircraft contractually obligated to American ~~and US Airways~~ with third-party regional carriers included:

See Note 15 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 1213 to American’s Consolidated Financial Statements in Part II, Item 8B for additional information on our capacity purchase agreements with third-party regional carriers.

For information concerning the estimated useful lives and residual values for owned aircraft, lease terms for leased aircraft and amortization relating to aircraft under capital leases, see Note 5 and Note 15 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 45 and Note 1213 to American’s Consolidated Financial Statements in Part II, Item 8B.

At each airport where we conduct flight operations, we lease passenger, operations and baggage handling space, generally from the airport operator, but in some cases on a subleased basis from other airlines. Our main operational facilities are associated with our hubs. At those locations and in other cities we serve, we maintain administrative offices, terminal, catering, cargo, training, maintenance and other facilities, in each case as necessary to support our operations in the particular city.

We own our corporate headquarters buildings in Fort Worth, Texas. We lease, or have built as leasehold improvements on leased property, most of our airport and terminal facilities in the U.S. and abroad, ~~US Airways’ corporate office building in Tempe, Arizona,~~ our training facilities in Fort Worth, Texas, our principal overhaul and maintenance base in Tulsa, Oklahoma, our regional reservation offices, and local ticket and administration offices throughout the U.S. and abroad. Our American Airlines Integrated Operations Center is located in Fort Worth, Texas and the US Airways Operations Control Center is located near Pittsburgh, Pennsylvania, in a facility leased from the Allegheny County Airport Authority. In ~~2014,~~September 2015, we ~~began~~completed construction on a new state-of-the-art Integrated Operations Control Center in Fort Worth, Texas, which ~~will serve~~serves as the new operations control facility for the combined ~~airline and is~~airline. In October 2015, we announced plans to build a new headquarters campus in Fort Worth, Texas, with construction presently expected to be completed in ~~the last half of 2015.~~late 2018.

For information concerning the estimated lives and residual values for owned ground properties, lease terms and amortization relating to ground properties under capital leases, and acquisitions of ground properties, see Note 5 and Note 15 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 45 and Note 1213 to American’s Consolidated Financial Statements in Part II, Item 8B.

Chapter 11 Cases. ~~As previously disclosed, on~~On the Petition Date, November 29, 2011, the Debtors filed the Chapter 11 Cases. On October 21, 2013, the Bankruptcy Court entered the Confirmation Order confirming the Plan. On the Effective Date, December 9, 2013, the Debtors consummated their reorganization pursuant to the Plan ~~principally through~~and completed the ~~transactions contemplated by the Merger Agreement pursuant to which Merger Sub merged with and into US Airways Group, with US Airways Group surviving as a wholly-owned subsidiary of AAG.~~Merger. From the Petition Date through the Effective Date, pursuant to automatic stay provisions under the Bankruptcy Code and orders granted by the Bankruptcy Court, actions to enforce or otherwise effect repayment of liabilities preceding the Petition Date as well as all pending litigation against the Debtors generally were stayed. Following the Effective Date, actions to enforce or otherwise effect repayment of liabilities preceding ~~the Petition~~thePetition Date, generally have been permanently enjoined. Any unresolved claims will continue to be subject to the claims reconciliation process under the supervision of the Bankruptcy Court. However, certain pending litigation related to pre-petition liabilities may proceed in courts other than the Bankruptcy Court to determine the amount, if any, of such litigation claims for purposes of treatment under the Plan.

Pursuant to rulings of the Bankruptcy Court, the Plan established the Disputed Claims Reserve to hold shares of AAG Common Stock reserved for issuance to disputed claimholders at the Effective Date that ultimately become holders of allowed Single-Dip Unsecured Claims. The shares provided for under the Plan were determined based upon a Disputed Claims Reserve amount of claims of approximately $755 million, representing the maximum amount of additional distributions to subsequently allowed Single-Dip Unsecured Claims under the Plan. On July 1, 2014 (the date 180 days after the Effective Date), approximately 2.9 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims, and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and shares were withheld or sold on account of related tax obligations. In addition, on July 1, 2014, we repurchased 0.4 million shares of AAG Common Stock for an aggregate of $19 million from the Disputed Claims Reserve at the then prevailing market price in order to fund cash tax obligations resulting from distributions by the Disputed Claims Reserve. On November 4, 2014, approximately 0.7 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims, and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and shares were withheld or sold on account of related tax obligations. In addition, on November 4, 2014, we repurchased less than 0.1 million shares of AAG Common Stock for an aggregate of $2 million from the Disputed Claims Reserve at the then prevailing market price in order to fund cash tax obligations resulting from distributions by the Disputed Claims Reserve. As of December 31, ~~2014,~~2015, there were approximately ~~26.8~~25.3 million shares of AAG Common Stock remaining in the Disputed Claims Reserve. On February 10, 2015, approximately 0.8 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims, and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and shares were withheld or sold on account of related tax obligations. In addition, on February 10, 2015, we repurchased less than 0.1 million shares of AAG Common Stock for an aggregate of $4 million from the Disputed Claims Reserve at the then prevailing market price in order to fund cash tax obligations resulting from distributions by the Disputed Claims Reserve. As disputed claims are resolved, the claimants will receive distributions of shares from the Disputed Claims Reserve on the same basis as if such distributions had been made on or about the Effective Date. However, we are not required to distribute additional shares above the limits contemplated by the Plan, even if the shares remaining for distribution are not sufficient to fully pay any additional allowed unsecured claims. To the extent that any of the reserved shares remain undistributed upon resolution of all remaining disputed claims, such shares will not be returned to us but rather will be distributed to former AMR ~~shareholders~~stockholders as of the Effective Date. However, resolution of disputed claims could have a material effect on recoveries by holders of additional allowed Single-Dip Unsecured Claims under the Plan and the amount of additional share distributions, if any, that are made to former AMR ~~shareholders~~stockholders as the total number of shares of AAG Common Stock that remain available for distribution upon resolution of disputed claims is limited pursuant to the Plan.

There is also pending in the Bankruptcy Court an adversary proceeding relating to an action brought by American to seek a determination that certain non-pension, ~~post-employee~~post-employment benefits (OPEB) are not vested benefits and thus may be modified or terminated without liability to American. On April 18, 2014, the Bankruptcy Court granted American’s motion for summary judgment with respect to certain non-union employees, concluding that their benefits were not vested and could be terminated. The summary judgment motion was denied with respect to all other retirees. The Bankruptcy Court has not yet scheduled a trial on the merits concerning whether those retirees’ benefits are vested, and American cannot predict whether it will receive relief from obligations to provide benefits to any of those retirees. Our financial statements presently reflect these retirement programs without giving effect to any modification or termination of benefits that may ultimately be implemented based upon the outcome of this proceeding. Separately, both the APFA and TWU have filed grievances asserting that American was “successful” in its Chapter 11 with respect to matters related to OPEB and, accordingly, by operation of the underlying collective bargaining agreements, American’s prior contributions to certain OPEB prefunding trusts attributable to active employees should be returned to those active employees. These amounts aggregate approximately $212 million. We have denied both grievances and intend to defend these matters vigorously.

DOJ Antitrust Civil Investigative Demand. In June 2015, we received a Civil Investigative Demand (CID) from the DOJ as part of an investigation into whether there have been illegal agreements or coordination of air passenger capacity. The CID seeks documents and other information from us, and other airlines have announced that they have received similar requests. We are cooperating fully with the DOJ investigation. In addition,

subsequent to announcement of the delivery of CIDs by the DOJ, we, along with Delta Air Lines, Inc., Southwest Airlines Co., United Airlines, Inc. and, in the case of litigation filed in Canada, Air Canada, have been named as defendants in approximately 100 putative class action lawsuits alleging unlawful agreements with respect to air passenger capacity. The U.S. lawsuits were the subject of multiple motions to consolidate them in a single forum, and they have now been consolidated in the Federal District Court for the District of Columbia. Both the DOJ investigation and these lawsuits are in their very early stages and we intend to defend the lawsuits vigorously.

Private Party Antitrust ~~Action.~~Action. On July 2, 2013, a lawsuit captioned Carolyn Fjord, et al., v. US Airways Group, Inc., et al., was filed in the United States District Court for the Northern District of California. The complaint ~~names~~named as defendants US Airways Group and US Airways, and ~~alleges~~alleged that the effect of the Merger may be to substantially lessen competition or tend to create a monopoly in violation of Section 7 of the Clayton Antitrust Act. The relief sought in the complaint ~~includes~~included an injunction against the Merger, or divestiture. On August 6, 2013, the plaintiffs re-filed their complaint in the Bankruptcy Court, adding AMR and American as defendants, and on October 2, 2013, dismissed the initial California action. ~~The~~On November 27, 2013, the Bankruptcy Court denied plaintiffs’ motion to preliminarily enjoin the Merger. On ~~January 10, 2014, the plaintiffs moved~~August 19, 2015, after three previous largely unsuccessful attempts to amend their complaint, to add additional factual allegations, a claim for money damages and a request for preliminary injunctive relief requiring the carriers to hold separate their assets. On March 14, 2014, the Court allowed plaintiffs to add certain allegations but denied plaintiffs’ requests to add a damages claim or seek preliminary injunctive relief requiring the carriers to hold separate their assets. On June 2, 2014, plaintiffs filed ~~an amended~~a fourth motion for leave to file ~~a second~~an amended and supplemental complaint ~~which motion has been fully briefed by~~to add a claim for damages and demand for jury trial, as well as claims similar to those in the putative class action lawsuits regarding air passenger capacity. Thereafter, plaintiffs filed a request with the Judicial Panel on Multidistrict Litigation (JPML) to consolidate the Fjord matter with the putative class action lawsuits. The JPML denied that request on October 15, 2015 and plaintiffs’ request for further relief from the JPML was denied on February 4, 2016. Accordingly, the parties ~~and is pending resolution by~~will continue to litigate the matter in Bankruptcy Court. ~~There is currently no trial date set.~~ We believe this lawsuit is without merit and intend to vigorously defend against the allegations.

~~US Airways Sabre Matter.~~DOJ Civil Investigative Demand Related to the United States Postal Service On. In April ~~21,~~2015, the DOJ informed us of an inquiry regarding American’s 2009 and 2011 ~~US Airways filed an antitrust lawsuit against Sabre Holdings Corporation, Sabre Inc. and Sabre Travel International Limited (collectively, Sabre) in~~contracts with the ~~Federal District Court~~United States Postal Service for the ~~Southern District~~international transportation of ~~New York.~~mail by air. In October 2015, we received a CID from DOJ seeking certain information relating to these contracts. The ~~lawsuit, as amended to date, alleges, among other things, that Sabre~~DOJ has engaged in anticompetitive practices to preserve its market power by restricting our ability to distribute our products to our customers. The lawsuit also alleges that these actions have permitted Sabre to charge supracompetitive booking fees and to use technologies that are not as robust and as efficient as alternatives in a competitive market. The lawsuit seeks money damages. Sabre filed a motion to dismiss the case, which the court denied in part and granted in part in September 2011, allowing twoindicated it is investigating potential violations of the ~~four counts in~~False Claims Act. We are cooperating fully with the complaint to proceed. In January 2015, the court denied in part and granted in part Sabre’s motions for summary judgment. A trial date is expected to be set soon. We intend to pursue our claims against Sabre vigorously, but there can be no assurance of the outcome of this litigation.DOJ investigation.

~~General.~~General We. In addition to the specifically identified legal proceedings, we and our subsidiaries are also engaged in other legal proceedings from time to time. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within our control. Therefore, although we will vigorously defend ourselves in each of the actions described above and such other legal proceedings, their ultimate resolution and potential financial and other impacts on us are ~~uncertain.~~uncertain but could be material. See Part I, Item 1A. Risk Factors – “We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity.”

ITEM 5. MARKET FOR AMERICAN AIRLINES GROUP’S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Pursuant to the Plan and in accordance with the Merger Agreement, effective December 9, 2013, all existing shares of AMR Corporation common stock (OTCQB: AAMRQ) were canceled and ceased trading on the OTCQB market. The newly authorized and issued AAG Common Stock began trading on the NASDAQ Global Select Market (NASDAQ) on December 9, 2013 under the symbol “AAL.” There is no trading market for the common stock of American, which is a wholly-owned subsidiary of AAG.

As of February ~~20, 2015,~~19, 2016, the closing price of AAG Common Stock on NASDAQ was ~~$51.02.~~$39.76. As of February ~~20, 2015,~~19, 2016, there were ~~12,365~~11,546 holders of record of AAG Common Stock.

Information on securities authorized for issuance under our equity compensation plans will be set forth in our Proxy Statement for the ~~2015~~2016 Annual Meeting of Stockholders of American Airlines Group Inc. (the Proxy Statement) under the caption “Equity Compensation Plan Information” and is incorporated by reference into this Annual Report on Form 10-K.

The following table sets forth, for the periods indicated, the high and low sale prices of AAG Common Stock on NASDAQ:

~~On July 23, 2014, as part of our capital deployment program, our~~Our Board of Directors declared ~~a $0.10 per share~~the following cash dividend for shareholders of record as of August 4, 2014, and payable on August 18, 2014. On October 22, 2014, our Board of Directors declared a $0.10 per share dividend for shareholders of record on November 3, 2014, and payable on November 17, 2014. Ondividends:

In January ~~27, 2015,~~2016, we announced that our Board of Directors had declared a $0.10 per share dividend for ~~shareholders~~stockholders of record on February ~~9, 2015,~~10, 2016, and payable on February ~~23, 2015.~~ 24, 2016.

The total cash payment for dividends during the ~~year~~years ended December 31, 2015 and 2014 was $278 million and $144 ~~million. We did not pay any dividends in 2013.~~

million, respectively. Any future dividends that may be declared and paid from time to time under our

capital deployment program will be subject to market and economic conditions, applicable legal requirements and other relevant factors. Our capital deployment program does not obligate us to continue a dividend for any fixed period, and payment of dividends may be suspended at any time at ~~management’s~~our discretion.

~~See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations –~~~~“American Airlines Group – Liquidity and Capital Resources – Commitments – Significant Indebtedness,~~” Note 9 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 6 to American’s Consolidated Financial Statements in Part II, Item 8B for a discussion regarding certain limitations on our ability to pay dividends.

The following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Exchange Act, each as amended, except to the extent that we specifically incorporate it by reference into such filing.

The following stock performance graph compares our cumulative total ~~shareholder~~stockholder return on an annual basis on our common stock with the cumulative total return on the Standard and Poor’s 500 Stock Index and the AMEX Airline Index from December 9, 2013 (the first trading day of AAG Common Stock) through December 31, ~~2014.~~2015. The comparison assumes $100 was invested on December 9, 2013 in AAG Common Stock and in each of the foregoing indices and assumes reinvestment of dividends. The stock performance shown on the graph below represents historical stock performance and is not necessarily indicative of future stock price performance.


	12/9/2013		12/31/2013		12/31/2014		12/31/2015
American Airlines Group Inc.	$	100	$	103	$	219	$	175
Amex Airline Index		100		102		152		127
S&P 500		100		102		114		113

Since July 2014, our Board of Directors has approved several share repurchase programs aggregating $7.0 billion of authority of which, as of December 31, 2015, $2.4 billion remained unused under repurchase programs

which are to be completed no later than December 31, 2016. Share repurchases under the repurchase programs may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Any such repurchases will be made from time to time subject to market and economic conditions, applicable legal requirements and other relevant factors. The programs do not obligate us to repurchase any specific number of shares and may be suspended at any time at our discretion.

During the year ended December 31, 2015, we repurchased 85.1 million shares of AAG Common Stock for $3.6 billion at a weighted average cost per share of $42.09. During the year ended December 31, 2014, we repurchased 23.4 million shares of AAG Common Stock for $1.0 billion at a weighted average cost per share of $42.72. Since the inception of the share repurchase programs in July 2014, we have repurchased 108.5 million shares of AAG Common Stock for $4.6 billion at a weighted average cost per share of $42.23.

Separate from our share repurchase programs, during 2015, we also withheld approximately 7.0 million shares of AAG Common Stock and paid approximately $306 million in satisfaction of certain tax withholding obligations associated with employee equity awards.

The following table displays information with respect to our purchases of shares of AAG Common Stock during the three months ended December 31, ~~2014.~~2015.

AAG’s Certificate of Incorporation and Bylaws provide that, consistent with the requirements of Subtitle VII of Title 49 of the United States Code, as amended, or as the same may be from time to time amended (the Aviation Act), any persons or entities who are not a “citizen of the United States” (as defined under the Aviation Act and administrative interpretations issued by the DOT, its predecessors and successors, from time to time), including any agent, trustee or representative of such persons or entities (a non-citizen), shall not, in the aggregate, own (beneficially or of record) and/or control more than (a) 24.9% of the aggregate votes of all of our outstanding equity securities (as defined, which definition includes our capital stock, securities convertible into or exchangeable for shares of our capital stock, including our outstanding convertible notes, and any options, warrants or other rights to acquire capital stock) (the voting cap amount) or (b) 49.0% of our outstanding equity securities (the absolute cap amount). If non-citizens nonetheless at any time own and/or control more than the voting cap amount, the voting rights of the equity securities in excess of the voting cap amount shall be automatically suspended in accordance with the provisions of our Certificate of Incorporation and Bylaws. Voting rights of equity securities, if any, owned (beneficially or of record) by non-citizens shall be suspended in reverse chronological order based upon the date of registration in the foreign stock record. Further, if at any time a transfer of equity securities to a non-citizen would result in non-citizens owning more than the absolute cap amount, such transfer shall be void and of no effect, in accordance with provisions of AAG’s Certificate of Incorporation and Bylaws. In the event that we determine that the equity securities registered on the foreign stock record or the stock records of the Company exceed the absolute cap amount, sufficient shares shall be removed from the foreign stock record and the stock records of the Company so that the number of shares entered therein does not exceed the absolute cap amount. Shares of equity securities shall be removed from the foreign stock record and the stock records of the Company in reverse chronological order based on the date of registration in the foreign stock record and the stock records of the Company (subject to Article XIII, Section 6 of our Bylaws, which provides special rules applicable to equity securities issued upon effectiveness of the Plan and

consummation of the Merger). Certificates for AAG’s equity securities must bear a legend set forth in our

Certificate of Incorporation stating that such equity securities are subject to the foregoing restrictions. Under our Bylaws, it is the duty of each stockholder who is a non-citizen to register his, her or its equity securities on our foreign stock record. In addition, our Bylaws provide that in the event that non-citizens shall own (beneficially or of record) or have voting control over any equity securities, the voting rights of such persons shall be subject to automatic suspension to the extent required to ensure that we are in compliance with applicable provisions of law and regulations relating to ownership or control of a U.S. air carrier. See AAG’s Certificate of Incorporation and Bylaws, which are filed at Exhibits 3.1 and 3.2 hereto.

In addition, to reduce the risk of a potential adverse effect on our ability to use our NOL Carryforwards and certain other tax attributes for federal income tax purposes, our Certificate of Incorporation contains certain restrictions on the acquisition and disposition of our common stock by substantial stockholders (generally holders of more than 4.75%).

See Part I, Item 1A. Risk Factors –“AAG’s Certificate of Incorporation and Bylaws include provisions that limit voting and acquisition and disposition of our equity interests,”,” and“In order to protect AAG’s NOL Carryforwards and certain other tax attributes, AAG’s Certificate of Incorporation includes certain limitations on acquisitions and dispositions of AAG’s Common Stock, which may limit the liquidity of our common stock.””

The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and “Consolidated Balance Sheet data” for the years ended December 31, 2015, 2014 ~~2013~~ and ~~2012~~2013 and as of December 31, ~~2014~~2015 and ~~2013~~2014 are derived from AAG’s audited consolidated financial statements included elsewhere in this report. The selected consolidated financial data for the years ended December 31, ~~2011~~2012 and ~~2010~~2011 and as of December 31, 2013, 2012 ~~2011~~ and ~~2010~~2011 are derived from AAG’s audited consolidated financial statements not included in this report. The selected consolidated financial data should be read in conjunction with AAG’s consolidated financial statements for the respective periods, the related notes and the related reports of KPMG LLP for 2015 and 2014 and Ernst & Young LLP for ~~2010~~2011 to 2013, both independent registered public accounting firms. On December 9, 2013, a subsidiary of AMR Corporation merged with and into US Airways Group, which survived as a wholly-owned subsidiary of AAG. On December 30, 2015, in order to simplify AAG’s internal corporate structure and as part of the integration efforts following the business combination of AAG and US Airways Group, AAG caused US Airways Group to be merged with and into AAG, with AAG as the surviving corporation, and, immediately thereafter, US Airways, a subsidiary of US Airways Group, merged with and into American, with American as the surviving corporation. AAG’s consolidated financial data provided in the tables below include the results of US Airways Group ~~for the post-Merger period from~~beginning on December 9, 2013, ~~to December 31, 2013 and for~~ the ~~year ended December 31, 2014.~~effective date of the Merger.

Pursuant to the Plan and the Merger Agreement, holders of AMR common stock formerly traded under the symbol “AAMRQ” received shares of AAG Common Stock principally over the 120-day distribution period following the Effective Date. In accordance with ~~GAAP,~~U.S. Generally Accepted Accounting Principles (GAAP), the 2013, 2012 ~~2011,~~ and ~~2010 period~~2011 weighted average shares and earnings (loss) per share calculations have been adjusted to retrospectively reflect these distributions, which were each made at the rate of approximately 0.7441 shares of AAG Common Stock per share of AAMRQ. Former holders of AMR common stock as of the Effective Date may in the future receive additional distributions of AAG Common Stock dependent upon the ultimate distribution of shares of AAG Common Stock to holders of disputed claims. Thus, the shares and related earnings per share calculations prior to the Effective Date may change in the future to reflect additional retrospective adjustments for future AAG Common Stock distributions to former holders of AMR common stock.

A number of factors render AAG’s historical consolidated financial information not directly comparable to its financial information for prior or future periods. See Part I, Item 1A. Risk Factors – “~~The~~ “The historical consolidated financial information contained in this report is not directly comparable to our financial information for prior or future periods,”,” and Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the notes to AAG’s Consolidated Financial Statements in Part II, Item 8A.

We are providing disclosure of the reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis. We believe that the non-GAAP financial measures provide investors the ability to measure financial performance excluding special items, which is more indicative of our ongoing performance and is more comparable to measures reported by other major airlines.

In 2015, special items principally included $1.1 billion of merger integration expenses related to information technology, alignment of labor union contracts, professional fees, severance, share-based compensation, fleet restructuring, re-branding of aircraft and airport facilities, relocation and training.

In 2014, special items principally included $818 million of ~~Merger~~merger integration expenses related to information technology, alignment of labor union contracts, professional fees, severance and retention, share-based compensation, divestiture of London Heathrow ~~Slots,~~slots, fleet restructuring, re-branding of aircraft and airport facilities, relocation and training. In addition, we recorded a net charge of $81 million for bankruptcy related items principally consisting of fair value adjustments for bankruptcy settlement obligations ~~a $24 million charge due to a new pilot labor contract at our Envoy regional subsidiary, $164 million in other special charges, including~~and an $81 million charge to revise prior estimates of certain aircraft residual values and other spare parts asset ~~impairments, as well as $54 million in charges primarily relating to the buyout of certain aircraft leases.~~impairments. These charges were offset in part by a $309 million gain on the sale of ~~Slots~~slots at ~~DCA and an $8 million gain on the sale of certain spare parts.~~DCA.

In 2013, special items included $449 million of ~~primarily Merger~~merger related expenses ~~due~~related to the alignment of labor union contracts, professional fees, severance, share-based compensation and fees for US Airways to exit the Star Alliance and its codeshare agreement with United Airlines. In addition, we recorded a $107 million charge related to American’s pilot long-term disability obligation, a $45 million charge for workers’ compensation claims and a $33 million aircraft impairment charge. These charges were offset in part by a $67 million gain on the sale of slots at LGA and a $31 million special credit related to a change in accounting method resulting from the modification of our AAdvantage miles agreement with Citibank.

recorded a $107 million charge related to American’s pilot long-term disability obligation, a $45 million charge for workers’ compensation claims and a $33 million aircraft impairment charge. These charges were offset in part by a $67 million gain on the sale of Slots at LaGuardia Airport and a $31 million special credit related to a change in accounting method resulting from the modification of our AAdvantage miles agreement with Citibank.

In 2012, special items consisted of $387 million of severance and related charges and write-off of leasehold improvements on aircraft and airport facilities that were rejected in connection with the Chapter 11 Cases.

In 2011, special items consisted primarily of $725 million related to the impairment of certain aircraft and gates, $31 million of non-recurring non-cash charges related to certain ~~sale/leaseback~~sale-leaseback transactions and a $43 million revenue reduction as a result of a decrease in the breakage assumption related to the AAdvantage ~~frequent flyer~~loyalty program liability.

~~In 2010, special items consisted primarily of the impairment of certain route authorities in Latin America and losses on Venezuelan currency remeasurement.~~

In 2015, special items principally included a $592 million charge to write off all of the value of Venezuelan bolivars held by us due to continued lack of repatriations and deterioration of economic conditions in Venezuela.

In 2014, special items consisted principally of $43 million for Venezuelan foreign currency losses, $56 million of early debt extinguishment costs related to the prepayment of 7.50% senior secured notes and other indebtedness and $33 million of non-cash interest accretion on bankruptcy settlement obligations. ~~See Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk for further discussion of our cash held in Venezuelan bolivars.~~

In 2013, special items consisted of interest charges of $138 million primarily to recognize post-petition interest expense on unsecured obligations pursuant to the Plan and penalty interest related to 10.5% secured notes and 7.50% senior secured notes, a $54 million charge related to the premium on tender for existing enhanced equipment trust ~~certificates~~certificate (EETC) financings and the write-off of debt issuance costs and $19 million in charges related to the repayment of existing EETC financings.

In 2012, special items consisted of a $280 million benefit resulting from a settlement of a commercial dispute.

In 2013, special items consisted primarily of a $1.7 billion deemed claim to employees pursuant to the Plan as well as professional fees and estimated allowed claim amounts.

In 2012 and 2011 special items consisted primarily of estimated claims associated with restructuring the financing arrangements for certain debt, aircraft leases, and rejecting certain special facility revenue bonds, as well as professional fees.

In 2015, special items totaled a net credit of $3.0 billion. In connection with the preparation of our financial statements for the fourth quarter of 2015, we determined that it was more likely than not that substantially all of our deferred tax assets, which include our NOLs, would be realized. Accordingly, we reversed $3.0 billion of the valuation allowance as of December 31, 2015, which resulted in a special $3.0 billion non-cash tax benefit recorded in the consolidated statement of operations for 2015.

In 2014, special items consisted of $346 million. During 2014, we sold our portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. In connection with this sale, we recorded a special non-cash tax provision of $330 million in the second quarter of 2014 that reversed the non-cash tax provision which was recorded in other comprehensive income (OCI), a subset of stockholders’ equity, principally in 2009. This provision represents the tax effect associated with gains recorded in OCI principally in 2009 due to a net increase in the fair value of our fuel hedging contracts. In accordance with GAAP, we retained the $330 million tax provision in OCI until the last contract was settled or terminated. ~~In addition, we recorded a special $16 million non-cash deferred income tax provision related to certain indefinite-lived intangible assets.~~

In 2013, special items consisted of a $538 million non-cash income tax benefit resulting from gains recorded in OCI, offset in part by a $214 million non-cash charge due to additional valuation allowance required to reduce deferred tax assets.

In 2012, special items consisted of a $569 million non-cash income tax benefit resulting from gains recorded in OCI.

The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and “Consolidated Balance Sheet data” for the years ended December 31, 2015, 2014 ~~2013~~ and ~~2012~~2013 and as of December 31, ~~2014~~2015 and ~~2013~~2014 are derived from American’s audited consolidated financial statements included elsewhere in this report. The selected consolidated financial data for the years ended December 31, ~~2011~~2012 and ~~2010~~2011 and as of December 31, 2013, 2012 ~~2011~~ and ~~2010~~2011 are derived from American’s audited consolidated financial statements not included in this report. On December 30, 2015, US Airways merged with and into American, with American as the surviving corporation. For financial reporting purposes, this transaction constituted a transfer of assets between entities under common control and is reflected in American’s consolidated financial statements as though the transaction had occurred on December 9, 2013, when a subsidiary of AMR merged with and into US Airways Group, which represents the earliest date that American and US Airways were under common control. Thus, the full years of 2015 and 2014 and the period from December 9, 2013 to December 31, 2013 are comprised of the financial data of American and US Airways. The periods prior to December 9, 2013 are comprised of the financial data of American only. The selected consolidated financial data should be read in conjunction with American’s consolidated financial statements for the respective periods, the related notes and the related reports of KPMG LLP for 2015 and 2014 and Ernst & Young LLP for ~~2010~~2011 to 2013, both independent registered public accounting firms.

In 2015, total special items were a net credit of $1.8 billion and consisted principally of a net special $3.5 billion non-cash tax benefit. In connection with the preparation of American’s financial statements for the fourth quarter of 2015, management determined that it was more likely than not that substantially all of its deferred tax assets, which include its NOLs, would be realized. Accordingly, American reversed $3.5 billion of the valuation allowance as of December 31, 2015, which resulted in a special $3.5 billion non-cash tax benefit recorded in the consolidated statement of operations for 2015. These credits were offset in part by $1.1 billion of merger integration expenses related to information technology, alignment of labor union contracts, professional fees, severance, share-based compensation,

fleet restructuring, re-branding of aircraft and airport facilities, relocation and training. In addition, American recorded a nonoperating charge of $592 million to write off all of the value of Venezuelan bolivars held by American due to continued lack of repatriations and deterioration of economic conditions in Venezuela.

In 2014, total special items were ~~$974 million~~$1.3 billion and consisted principally of ~~$532~~$808 million of merger integration expenses related to information technology, alignment of labor union contracts, professional fees, severance and retention, share-based compensation, divestiture of London Heathrow ~~Slots,~~slots, fleet restructuring, re-branding of aircraft and airport facilities, relocation and training, a $328 million non-cash tax charge relating to the sale of American’s portfolio of fuel hedging contracts, ~~$181 million in other special charges, including~~ an $81 million charge to revise prior estimates of certain aircraft residual values and other spare parts asset impairments and $60 million for bankruptcy related items, $48 million of early debt extinguishment costs, $44 million in charges primarily relating to the buyout of certain aircraft leases, $43 million for Venezuelan foreign currency losses, $29 million of non-cash interest accretion on bankruptcy settlement obligations and a $14 million non-cash deferred income tax provision related to certain indefinite-lived intangible assets.items. These charges were offset in part by a ~~$305~~$309 million gain on the sale of ~~Slots~~slots at DCA.

In 2013, total special items were ~~$48~~$325 million, excluding reorganization items, net and consisted of a $214 million non-cash tax charge due to additional valuation allowance required to reduce deferred tax assets, ~~$166~~$443 million of ~~primarily~~ merger related expenses ~~due~~related to the alignment of labor union contracts, professional fees, severance and share-based compensation, a $107 million charge related to American’s pilot long-term disability obligation, a $54 million charge related to the premium on tender for existing EETC financings and the write-off of debt issuance costs, $48 million of interest charges primarily to recognize post-petition interest expense on unsecured obligations pursuant to the Plan, a $43 million charge for workers’ compensation claims, a $33 million aircraft impairment charge and $19 million in charges related to the repayment of existing EETC financings. These charges were offset in part by a $538 million non-cash income tax benefit resulting from gains recorded in OCI, a $67 million gain on the sale of slots at LGA and a $31 million special credit related to a change in accounting method resulting from the modification of American’s AAdvantage miles agreement with Citibank.

professional fees, severance and share-based compensation, a $107 million charge related to American’s pilot long-term disability obligation, a $54 million charge related to the premium on tender for existing EETC financings and the write-off of debt issuance costs, $48 million of interest charges primarily to recognize post-petition interest expense on unsecured obligations pursuant to the Plan, a $43 million charge for workers’ compensation claims, a $33 million aircraft impairment charge and $19 million in charges related to the repayment of existing EETC financings. These charges were offset in part by a $538 million non-cash income tax benefit resulting from gains recorded in OCI, a $67 million gain on the sale of Slots at LaGuardia Airport and a $31 million special credit related to a change in accounting method resulting from the modification of American’s AAdvantage miles agreement with Citibank.

In 2012, total special items were $463 million, excluding reorganization items, net and consisted primarily of a $569 million non-cash income tax benefit resulting from gains recorded in OCI and a $280 million benefit from a settlement of a commercial dispute, offset in part by $386 million of severance and related charges and write-off of leasehold improvements on aircraft and airport facilities that were rejected in connection with the Chapter 11 Cases.

In 2011, total special items were $799 million, excluding reorganization items, net and consisted primarily of $725 million related to the impairment of certain aircraft and gates, $31 million of non-recurring non-cash charges related to certain ~~sale/leaseback~~sale-leaseback transactions and a $43 million revenue reduction as a result of a decrease in the breakage assumption related to the AAdvantage ~~frequent flyer~~loyalty program liability.

~~In 2010, total special items were $81 million and primarily included the impairment of certain route authorities in Latin America and losses on Venezuelan currency remeasurement.~~

A number of factors render American’s historical consolidated financial information not directly comparable to its financial information for prior or future periods. See Part I, Item 1A. Risk Factors – “~~The~~ “The historical consolidated financial information contained in this report is not directly comparable to our financialinformation for prior or future periods,”,” and Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the notes to American’s Consolidated Financial Statements in Part II, Item 8B.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As previously discussed, the Merger was consummated on December 9, 2013. Accordingly, our consolidated results include US Airways Group for the full year ended December 31, 2014. For 2013, our consolidated results include US Airways Group only for the 23 days ended December 31, 2013.

~~We continue to move toward operating under the single brand name of “American Airlines” through our mainline operating subsidiaries,~~ American Airlines and ~~US Airways. Together with our wholly-owned regional airline subsidiaries and third-party regional carriers operating as~~ American Eagle ~~and US Airways Express, our airlines operate~~offer an average of nearly 6,700 flights per day to ~~339~~nearly 350 destinations in ~~54 countries from our~~more than 50 countries. American has hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. American is a founding member of theoneworld alliance, whose members and members-elect serve nearly 1,000 destinations with 14,250 daily flights to 150 countries. In ~~2014, we had~~2015, approximately ~~197~~201 million passengers ~~boarding~~boarded our mainline and regional flights. As of December 31, ~~2014,~~2015, we operated ~~983~~946 mainline ~~jets~~aircraft and were supported by our regional airline subsidiaries and third-party regional carriers, which operated an additional ~~566~~587 regional aircraft. We

As previously discussed, our Merger was consummated on December 9, 2013. Since the Merger, we have made ~~substantial~~significant progress towards ~~integrating~~completing our integration. During 2015, we achieved the ~~operations of our mainline operating subsidiaries~~following:

Adopted a single reservations system, which when completed, resulted in no operational or customer disruption

Reached ratified contracts with industry-leading pay rates for pilots, flight attendants and ~~towards obtaining~~customer service and reservation agents

Received a single operating certificate ~~which we expect~~from the Federal Aviation Administration, allowing American to ~~obtain in 2015. The following are additional significant integration accomplishments in 2014:~~

~~Completed airport co-locations for 75% of the airports where we have joint operations.~~be regulated as one airline

~~Launched a~~Merged loyalty programs by moving US Airways ~~codeshare with British Airways, Iberia, Air Berlin and Finnair, fully integrating it~~Dividend Miles members into ~~American’s Trans-Atlantic Joint Business Agreement with British Airways, Iberia and Finnair.~~AAdvantage

~~Reached a~~Opened the new ~~five-year joint collective bargaining agreement with the Association of Professional Flight Attendants for the airlines’ combined flight attendants.~~

~~Reached a new five-year collective bargaining agreement with the Allied Pilots Association for the airlines’ combined pilots (ratified in January 2015).~~

~~Broke ground on the~~ state-of-the-art Robert W. Baker Integrated Operations ~~Center.~~Center in Fort Worth

~~See Part I, Item 1. Business –~~ ~~“Chapter 11 Reorganization”~~

Optimized the airline’s flight schedules at Chicago O’Hare International Airport and “~~Merger”~~ ~~for more information related~~Dallas/Fort Worth International Airport

Substantially completed the co-location of our airport operations and consolidated all mainline operations at Dallas/Fort Worth International Airport into three terminals, gaining efficiencies in gate use and line maintenance

Announced plans to masterplan our ~~emergence from Chapter 11~~Fort Worth campus and ~~Merger.~~build a new corporate headquarters building to begin the process of modernizing our facilities and co-locate our headquarters staff with our training functions and integrated operations support teams

Year in Review

The U.S. Airline Industry

In ~~2014,~~2015, the U.S. airline industry ~~continued to experience year-over-year growth~~benefited significantly from lower fuel prices. However, this benefit was offset in ~~passenger~~part by a decline in revenues driven by ~~strong demand~~reduced yields.

Jet fuel prices closely follow the price of Brent crude oil. Oil prices declined significantly throughout 2015, and in December, the price of Brent crude oil fell below $40 a barrel for ~~air travel.~~the first time since 2009. On average, the price of Brent crude oil per barrel was approximately 47% lower in 2015 as compared to 2014. The average daily spot price for Brent crude oil during 2015 was $52 per barrel as compared to an average daily spot price of $99 per barrel during 2014. On a daily basis, Brent crude oil prices fluctuated during 2015 between a high of $66 per barrel to a low of $35 per barrel, and closed the year on December 31, 2015 at $37 per barrel.

InWith respect to revenue, in its most recent data available through the third quarter of 2015, Airlines for America, the trade association for U.S. airlines, reported ~~that annual~~ U.S. industry passenger revenues and yields ~~increased 4.2% and 1.8%, respectively,~~declined as compared to ~~2013. With respect to international versus domestic performance, Airlines for America reported that~~2014. Additionally, domestic markets outperformed international ~~markets. Atlantic~~markets (Atlantic, Pacific and Latin ~~America markets experienced year-over-year growth~~America) in ~~passenger revenues of 2.8%~~both yield and ~~3.4%, respectively, while the Pacific market experienced year-over-year declines in passenger revenues of 1.4%.~~

Jet fuel prices continue to follow the price of Brent crude oil more closely than the price of West Texas Intermediate crude oil. On average, fuel costs were lower in 2014 as compared to 2013, driven by a significant decline in fuel prices in the fourth quarter of 2014. On December 31, 2014, the price of Brent crude oil fell to $55 per barrel, its lowest price since May 2009.overall revenue performance.

While ~~the U.S. airline industry is currently benefiting from a favorable revenue environment and significantly reduced~~jet fuel prices have declined year-over-year as described above, uncertainty exists regarding the economic conditions driving these ~~factors.~~declines. See Part I, Item 1A. Risk Factors – “Downturns in economic conditions adversely affect our business” and“Our business is dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices and significant disruptions in the supply of aircraft fuel could have a significant negative impact on our operating results and liquidity.”

American Airlines Group

~~Our 2014 GAAP results are not comparable~~Driven by substantially lower fuel costs, we realized operating income of $6.2 billion and net income of $7.6 billion in 2015. This compares to ~~the GAAP results for 2013 as~~operating income of $4.2 billion and net income of $2.9 billion in 2014. As a result of not hedging our fuel consumption, we fully benefited from the ~~Merger, which closed on December 9, 2013. Additionally, US Airways Group applied acquisition accounting~~decline in fuel prices.

Excluding the effects of net special charges (credits), we recognized operating income of $7.3 billion and net income of $6.3 billion in 2015 as compared to operating income of ~~December 9, 2013~~$5.1 billion and ~~its financial statements after December 9, 2013 are deemed not comparable to its financial statements for periods prior to the Merger.~~

~~To provide a basis for comparison to prior year results, we have presented~~net income of $4.2 billion in ~~the table below certain “combined” 2013 financial data which includes the financial results~~2014. This represents improvements of ~~AAG~~44% and ~~US Airways Group, each on a standalone basis. While this is a non-GAAP measure, management believes this presentation provides a more meaningful year-over-year comparison.~~50%, respectively, in operating income and net income in 2015.


	Year Ended December 31, 2014		Year Ended December 31, 2013									Percent Change (1)			Year Ended December 31,					Percent Increase (Decrease)
	Year Ended December 31, 2014		AAG			US Airways Group			Combined (3)			Percent Change (1)			2015			2014		Percent Increase (Decrease)
	(In millions)														(In millions, except percentage changes)
Mainline and regional passenger revenues	$	37,124	$	22,521		$	13,021		$	35,542			4.5		$	35,512		$	37,124		(4.3	)
Total operating revenues		42,650		25,812			14,607			40,419			5.5		$	40,990		$	42,650		(3.9	)
Mainline and regional aircraft fuel and related taxes		12,601		8,684			4,533			13,217			(4.7	)	$	7,456		$	12,601		(40.8	)
Total operating expenses		38,401		24,236			13,604			37,840			1.5		$	34,786		$	38,401		(9.4	)
Operating income		4,249		1,576			1,003			2,579			64.8		$	6,204		$	4,249		46.0
Net income (loss)		2,882		(1,638	)		392			(1,233	)		nm
Net income															$	7,610		$	2,882		nm

Special items:(1)
Operating special charges, net		824		259			403			662					$	1,080		$	824
Nonoperating special charges, net		132		211			20			218						594			132
Income tax special charges (credits), net		346		(324	)		(29	)		(353	)					(3,015	)		346
Reorganization items, net		—		2,655			—			2,655

Total net special charges (2)		1,302		2,801			394			3,182
Total net special charges (credits)															$	(1,341	)	$	1,302

(1)	~~Percent change is~~AAG’s 2015 results were impacted by a ~~comparison~~net special credit of $1.3 billion, consisting principally of a $3.0 billion non-cash tax benefit related to the reversal of the ~~combined results.~~

~~(2)~~

~~AAG’s 2014 results were significantly impacted~~Company’s valuation allowance for its deferred tax assets. This credit was offset in part by ~~net~~$1.1 billion of operating special charges, ~~of $1.3 billion. Significant components of net special charges include $818 million~~consisting principally of merger integration expenses and a ~~$330~~$592 million ~~non-cash special income tax~~ charge ~~relating to the sale of our portfolio of fuel hedging contracts, and $132 million of nonoperating special charges primarily~~ related to ~~debt extinguishments, bankruptcy obligations, and Venezuela foreign currency losses.~~a write off of the value of Venezuelan bolivars held. See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “~~AAG’s~~ “AAG’s Results of ~~Operations~~Operations”” of this report for more information on net special items.

~~(3)~~

Combined results exclude $13 million of US Airways Group special nonoperating other, net expense, which was eliminated in consolidation with AAG. This expense represented a non-cash mark-to-market fair value adjustment for US Airways Group’s 7.25% convertible senior notes that were convertible into shares of AAG common stock subsequent to the Merger.

Driven by growth in revenues resulting from strong demand for air travel, we realized operating income of $4.2 billion and net income of $2.9 billion in 2014. This compares to combined operating income of $2.6 billion

and a combined net loss of $1.2 billion for 2013. Our 2014 net income included net operating and total net special charges of $824 million and $1.3 billion, respectively. Excluding the effects of net operating special charges, we recognized operating income of $5.1 billion in 2014, which is a $1.8 billion, or 57%, improvement as compared to combined operating income of $3.2 billion excluding net operating special charges in 2013. Excluding the effects of total net special charges, we recognized net income of $4.2 billion in 2014, which is a $2.2 billion, or 115%, improvement as compared to combined net income of $1.9 billion excluding total net special charges in 2013. See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “~~AAG’s Results of Operations~~~~” of this report for more information on net special charges.~~

Revenue

In ~~2014,~~2015, we reported operating revenues of ~~$42.7~~$41.0 billion. Mainline and regional passenger revenues were ~~$37.1~~$35.5 billion, ~~an increase~~a decrease of $1.6 billion, or ~~4.5%~~4.3%, as compared to ~~the 2013 combined mainline and regional passenger revenues of $35.5 billion.~~2014. The ~~growth~~decline in revenues was driven by a ~~3.3% increase~~6.5% decrease in yield due to competitive growth in certain domestic markets, including Dallas/Fort Worth and ~~1.1% increase~~international weakness resulting from foreign currency devaluation relative to the U.S. dollar, lower fuel surcharges, and continued economic softness in ~~revenue passenger miles as total capacity increased 2.2%, as compared to 2013.~~Latin America, particularly in Brazil and Venezuela. Our ~~combined~~ mainline and regional passenger revenue per available seat mile (PRASM) was 13.21 cents in 2015, a 5.4% decrease, as compared to 13.97 cents in ~~2014, a 2.2% increase, as compared to a combined 13.67 cents in 2013.~~2014.

Fuel

Mainline and regional fuel expense ~~was $12.6~~totaled $7.5 billion in ~~2014,~~2015, which was ~~$616 million,~~$5.1 billion, or ~~4.7%~~40.8%, lower as compared to ~~the combined mainline and regional fuel expense in 2013.~~2014. This decrease was driven by a ~~5.5%~~40.7% decrease in the average price per gallon of fuel to $1.72 in 2015 from $2.91 in ~~2014 from a combined average price per gallon of $3.08 in 2013. This decrease was offset in part by a 0.9% increase in consumption.~~2014.

During the second quarter of 2014, we sold our portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. We have not entered into any transactions to hedge our fuel consumption since December 9, 2013 and, accordingly, asAs of December 31, ~~2014,~~2015, we did not have any fuel hedging contracts ~~outstanding.~~outstanding to hedge our fuel consumption. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully exposed to fluctuations in fuel prices. Our current policy is not to enter into transactions to hedge our fuel consumption, although we review that policy from time to time based on market conditions and other factors.

~~Capacity~~

Total system capacity for the combined company increased 2.2% in 2014 as compared to the combined 2013 period, primarily due to more active aircraft and larger gauge aircraft replacing smaller legacy aircraft.

Cost Control

We remain committed to actively managing ~~and maintaining a low~~our cost structure, which we believe is necessary in an industry whose economic prospects are heavily dependent upon two variables we cannot control: the health of the economy and the price of fuel. Our ~~2014~~2015 mainline cost per available seat mile (CASM) excluding special items and fuel was ~~8.63 cents. When~~8.99 cents, an increase of 4.2% as compared to ~~the 2013 combined results, mainline CASM excluding special items and fuel increased 2.0% in~~ 2014. The increase was primarily due to higher salaries, wages and benefits driven by ~~Merger-related~~new merger related labor contracts ~~and higher maintenance costs driven by an increase in the rate per engine overhaul.~~with industry-leading pay rates. See below for the“Reconciliation of GAAP Financial Information to Non-GAAP Financial Information.”

Customer Service

During 2014, we worked to enhance our customers’ experience by continuing our fleet renewal program, under which we expect to achieve one of the most modern and fuel-efficient fleets in the industry. During 2014,

we took delivery of 82 mainline aircraft and retired 69 older legacy mainline aircraft. Additionally, in the fourth quarter of 2014, we announced $2.0 billion in planned customer improvements, including new seats from nose to tail on several aircraft types and fully lie-flat seats on our long-haul international fleet; satellite-based internet access providing connectivity for international flights; a refreshed and modern design for Admirals Club lounges worldwide; onboard power on new aircraft; and improved and updated kiosks to expedite airport check-in.

~~Most importantly, we~~We are committed to consistently delivering safe, reliable and convenient service to our customers in every aspect of our operation. ~~Our 2014~~The table below summarizes the operating performance was negatively impacted in part by severe weather conditions at our hubs as well as the September 2014 fire at the FAA’s Chicago Air Route Traffic Control Center, which caused significant flight delays and cancellations. Westatistics we reported ~~the following combined operating statistics~~ to the DOT for our mainline operations for the years ended December 31, ~~2014~~2015 and ~~2013:~~2014. We are working to improve these metrics by making investments in our operations, which include the hiring of additional maintenance personnel to reduce the time aircraft are out of service. We are also making capital investments in new baggage handling technology.


	December 31,				Better (Worse)	December 31,				Better (Worse)
	2014		2013 (a)		Better (Worse)	2015		2014		Better (Worse)
On-time performance ~~(b)~~(a)		77.9		79.3	(1.4)pts		80.1		77.9		2.2	pts
Completion factor ~~(c)~~(b)		98.4		98.5	(0.1)pts		98.4		98.4		—	pts
Mishandled baggage ~~(d)~~(c)		3.85		2.80	(37.5)%		3.97		3.77		(5.3	)%
Customer complaints ~~(e)~~(d)		2.12		1.76	(20.5)%		3.22		2.12		(51.9	)%

(a)	~~Represents the combined historical operating statistics for American and US Airways.~~

~~(b)~~

Percentage of reported flight operations arriving ~~on time as defined by~~less than 15 minutes after the ~~DOT.~~scheduled arrival time.

~~(c)~~(b)

Percentage of scheduled flight operations completed.

~~(d)~~(c)

Rate of mishandled baggage reports per 1,000 passengers.

~~(e)~~(d)

Rate of customer complaints filed with the DOT per 100,000 enplanements.

Liquidity Position

As of December 31, ~~2014,~~2015, AAG’s total cash, short-term investments and restricted cash and short-term investments were ~~$8.1~~$6.9 billion, of which ~~$774~~$695 million was restricted. We also had ~~a $1.8~~$2.4 billion of undrawn revolving line of credit ~~facility.~~facilities.


					December 31,
	December 31, 2014		December 31, 2013		2015		2014
	(In millions)				(In millions)
Cash and short-term investments (1)	$	7,303	$	9,251	$	6,254	$	7,303
Restricted cash and short-term investments (2)		774		1,035		695		774

Total cash, short-term investments and restricted cash and short-term investments	$	8,077	$	10,286	$	6,949	$	8,077

(1)

As of December 31, 2014, approximately $656 million of our unrestricted cash and short-term investment balance was held in Venezuelan bolivars. This balance includes approximately $621 million valued at 6.3 bolivars and approximately $35 million valued at 12.0 bolivars, with the rate depending on the date we submitted our repatriation request to the Venezuelan government. These rates are materially more favorable than the exchange rates currently prevailing for other transactions conducted outside of the Venezuelan government’s currency exchange system that we participate in. Our cash balance held in Venezuelan bolivars decreased $54 million from the December 31, 2013 balance of $710 million primarily due to $88 million in cash repatriations and $30 million in foreign currency losses as described below, partially offset by additional cash proceeds from ticket sales in early 2014. In the second and third quarters of 2014, we repatriated $65 million including $31 million valued at 6.3 bolivars to the dollar and $34 million valued at 10.6 bolivars to the dollar. In the fourth quarter of 2014, we incurred an $11 million foreign currency loss related to the receipt of $23 million at a rate of 6.3 bolivars to the dollar for one of our 2012 repatriation requests originally valued at a rate of 4.3 bolivars to the dollar. Accordingly, we revalued our remaining

~~pending 2012 repatriation requests from 4.3 to 6.3 bolivars to the dollar resulting in additional foreign currency losses of $19 million. In total,~~2015, we recognized a ~~$30~~$592 million special charge ~~for these foreign currency losses~~to write off all of the value of Venezuelan bolivars held by us, due to continued lack of repatriations and deterioration of economic conditions in ~~the fourth quarter of 2014.~~Venezuela. During 2014, we significantly reduced capacity in ~~this~~the Venezuelan market and we ~~are~~ no longer ~~accepting~~accept bolivars as payment for airline tickets. We are continuing to work with Venezuelan authorities regarding the timing and exchange rate applicable to the repatriation of funds held in local currency. We are monitoring this situation closely and continue to evaluate our holdings of Venezuelan bolivars for additional foreign currency losses, which could be material, particularly in light of the uncertainty posed by the new foreign exchange regulations announced in mid-February 2015 and the continued deterioration of economic conditions in Venezuela. See Part I, Item 1A. Risk Factors – “We operate a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control~~” for additional discussion of this and other currency risks.~~

(2)	Restricted cash and short-term investments primarily include cash collateral to secure workers’ compensation ~~claims.~~obligations.

In ~~2014,~~2015, we utilized cash generated from operations to ~~pay down certain higher rate debt~~invest in our airline. We continued our fleet renewal program by investing more than $5.3 billion in new aircraft, which has provided us with the youngest and ~~lease obligations, to make supplemental contributions~~most modern fleet of the U.S. network airlines. In 2015, we took delivery of 75 new mainline aircraft while retiring 112 aircraft. We also added 52 regional aircraft to our ~~pension plans~~fleet and ~~to return value~~removed 31 regional aircraft.

In 2015, we returned $3.9 billion to our shareholders ~~by reducing our diluted share count~~ through the payment of $278 million in quarterly dividends and the repurchase ~~program and paying our first cash dividend since 1980. We declared cash dividends~~ of ~~$0.10 per share for shareholders of record on August 4, 2014 and have continued to declare a dividend of $0.10 per share in each quarter thereafter.~~

These cash outflows were offset in part by certain new debt issuances to strengthen our liquidity position. Further information on our significant transactions affecting our liquidity position in 2014 is as follows:

~~Debt Repayments~~

~~We prepaid $1.0~~$3.6 billion of ~~American’s 7.50% senior secured notes.~~

~~We prepaid approximately $1.2 billion of various high cost aircraft debt and lease obligations. Of this amount, $155~~common stock, or 85.1 million ~~was a reduction of debt on our balance sheet. The remaining portion of these obligations was accounted for as an operating lease.~~

We prepaid or repurchased $646 million of obligations associated with special facility revenue bonds issued by municipalities to build or improve certain airport and maintenance facilities. Of this amount, $366 million was a reduction of debt on our balance sheet. The remaining portion of these obligations was accounted for as an operating lease.

~~Reductions~~shares. In addition, in ~~Diluted Share Count~~

In 2014, we repurchased 23.4 million shares of AAG Common Stock for $1.0 billion, completing the $1.0 billion share repurchase program authorized by our Board of Directors on July 23, 2014. In January 2015 we ~~announced that our Board of Directors authorized a new $2.0 billion share repurchase program~~elected to ~~be completed by the end of 2016.~~

~~In 2014, we withheld~~pay approximately ~~9 million shares of AAG Common Stock and paid approximately $325~~$306 million in satisfaction of certain tax withholding obligations associated with ~~distributions under~~equity awards, further reducing the ~~Plan~~share count by 7.0 million.

These cash outflows were offset in part by proceeds from financing transactions, principally aircraft related. We ended the year with $8.7 billion in available liquidity (including available lines of credit). We believe it is important to retain liquidity levels above our network peers as we expect capital expenditures of approximately $4.5 billion in each of 2016 and ~~employee equity awards.~~

~~We redeemed US Airways Group’s 7.25% convertible notes~~2017 as we continue our fleet renewal program. See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “Commitments” for ~~$175 million in cash in lieu~~further discussion of ~~issuing 4 million shares of AAG Common Stock.~~

~~Pension Prefunding~~2015 financing transactions and our contractual commitments.

In 2014, we made $639 million in supplemental contributions to fund our pension plans. These contributions are above and beyond the $171 million aggregate amount of minimum required contributions made in 2014.

~~New Debt Issuances~~

In September 2014, AAG issued $750 million aggregate principal amount of 5.50% senior notes due 2019 (the 5.50% senior notes). Also in September 2014, American issued $957 million in equipment notes related to the 2014-1 Enhanced Equipment Trust Certificates to finance unencumbered aircraft.

In October 2014, American borrowed $750 million under a new term loan facility due in 2021 and arranged a $400 million revolving credit facility due in 2019. American also increased its existing revolving credit facility from $1.0 billion to $1.4 billion and extended its maturity date from 2018 to 2019.

~~2015~~2016 Outlook

We have taken significant actions to restore our competitiveness and to complete our integration. Although it is difficult to predict the price of oil or the strength of the economy, we believe that our ~~2014~~2015 financial results are evidence of the substantial progress we have made and can continue to build on.

Reconciliation of GAAP Financial Information to Non-GAAP Financial Information

We believe that the presentation of mainline CASM excluding fuel is useful to investors as both the cost and availability of fuel are subject to many economic and political factors beyond our control, and the exclusion of special items provides investors the ability to measure financial performance in a way that is more indicative of our ongoing performance and is more comparable to measures reported by other major airlines. Management uses mainline CASM excluding special items and fuel to evaluate our operating performance. Amounts may not recalculate due to rounding.

   Year Ended
December 31, 2014 Year Ended December 31, 2013
   AAG US Airways
Group Combined
   (In millions, except per ASM amounts)
Total operating expenses
   $ 38,401    $ 24,236    $ 13,604    $ 37,840
Less: Regional expenses:

Fuel
   (2,009 ) (1,056 ) (1,052 ) (2,108 )
Other
   (4,507 ) (2,056 ) (2,253 ) (4,309 )


Total mainline operating expenses
   31,885    21,124    10,299    31,423
Less: Special items, net
   (800 ) (282 ) (415 ) (697 )


Mainline operating expenses, excluding special items
   31,085    20,842    9,884    30,726
Less: Aircraft fuel and related taxes
   (10,592 ) (7,628 ) (3,481 ) (11,109 )


Mainline operating expenses, excluding special items and fuel
   $ 20,493    $ 13,214    $ 6,403    $ 19,617


Available Seat Miles (ASM)
   237,522    154,499    77,374    231,873
(In cents)

Mainline operating expenses per ASM
   $ 13.42    $ 13.55
Less: Special items, net per ASM
   (0.34 ) (0.30 )


Mainline operating expenses per ASM, excluding special items
   13.09    13.25
Less: Aircraft fuel and related taxes per ASM
   (4.46 ) (4.79 )


Mainline operating expenses per ASM, excluding special items and fuel
   $ 8.63    $ 8.46


   Year Ended December 31,
           2015                 2014
   (In millions, except per ASM amounts)
Total operating expenses
   $ 34,786    $ 38,401
Less: Regional expenses:

Fuel
   (1,230 ) (2,009 )
Other
   (4,753 ) (4,507 )


Total mainline operating expenses
   28,803    31,885
Less: Special items, net
   (1,051 ) (800 )


Mainline operating expenses, excluding special items
   27,752    31,085
Less: Aircraft fuel and related taxes
   (6,226 ) (10,592 )


Mainline operating expenses, excluding special items and fuel
   $ 21,526    $ 20,493


Available Seat Miles (ASM)
   239,375    237,522
(In cents)

Mainline operating expenses per ASM
   12.03    13.42
Less: Special items, net per ASM
   (0.44 ) (0.34 )


Mainline operating expenses per ASM, excluding special items
   11.59    13.09
Less: Aircraft fuel and related taxes per ASM
   (2.60 ) (4.46 )


Mainline operating expenses per ASM, excluding special items and fuel
   8.99    8.63 ��


AAG’s Results of Operations
In 2015, we realized operating income of $6.2 billion and net income of $7.6 billion. Our 2015 net income included net special operating charges of $1.1 billion and total net special credits of $1.3 billion. Excluding the effects of these special charges and credits, we realized operating income of $7.3 billion and net income of $6.3 billion.
In 2014, we realized operating income of $4.2 billion and net income of $2.9 ~~million.~~billion. Our 2014 net income included net special operating charges of $824 million and total net special charges of $1.3 billion. Excluding the effects of these special charges, we realized operating income of $5.1 billion and net income of $4.2 billion.
We completed the Merger on December 9, 2013. Under GAAP, AAG’s results do not include the financial results of US Airways Group prior to the closing of the Merger. Accordingly, our 2014 period GAAP results are not comparable to the GAAP results for ~~the~~ 2013 ~~or 2012 periods~~ as ~~those periods exclude~~2013 excludes the results of US Airways Group except for the 23 day post-Merger period from December 9, 2013 to December 31, 2013.
~~When compared to the combined separate company results~~In 2013, we realized operating income of ~~AAG~~$1.4 billion and ~~US Airways Group for~~net loss of $1.8 billion. Our 2013 ~~our 2014~~ net income ~~excluding~~included net special operating charges of $536 million and total net special charges ~~improved by $2.2~~of $3.1 billion. ~~In 2013, on a standalone basis, AAG reported a net loss of $1.6 billion and US Airways Group reported net income of $392 million.~~ Excluding the effects of ~~net~~these special charges, ~~AAG~~we realized operating income of $1.9 billion and ~~US Airways Group reported 2013~~ net income of $1.2 ~~billion and $786 million, respectively.~~billion.
~~When compared to the combined separate company results~~
The components of ~~AAG and US Airways Group for 2012, our 2013 combined net income excluding~~total net special charges improved by $1.5 billion. In 2012, on a standalone basis, AAG reported a net loss of $1.9 billion and US Airways Group reported net income of $637 million. Excluding the effects of net special charges, AAG reported a 2012 net loss of $130 million and US Airways Group reported net income of $537 million.
~~The components of net special items~~(credits) in our accompanying consolidated statements of operations are as follows (in millions):

   Year Ended December 31,    Year Ended December 31,
2014    2013 2012 2015 2014    2013
Other revenue special item, net (1)
   $ —       $ (31 ) $ —       $ —    $ —       $ (31 )
Mainline operating special items, net (2)
   800       559    386       1,051    800       559
Regional operating special items, net(3)
   24       8    1       29    24       8
Nonoperating special items, net ~~(3)~~(4)
   132       211    (280 )    594    132       211
Reorganization items, net ~~(4)~~(5)
   —       2,655    2,208       —    —       2,655
Income tax special items, net ~~(5)~~(6)
   346       (324 ) (569 )    (3,015 ) 346       (324 )








Total
   $ 1,302       $ 3,078    $ 1,746       $ (1,341 ) $ 1,302       $ 3,078








(1)
In 2013, other revenue special item, net included a credit to other revenues related to a change in accounting method resulting from the modification of ~~AAG’s~~American’s AAdvantage miles agreement with Citibank.

(2)
In ~~2014,~~2015, mainline operating special items, net principally included ~~$810 million~~$1.0 billion of ~~Merger~~merger integration expenses related to information technology, alignment of labor union contracts, professional fees, severance, ~~and retention,~~ share-based compensation, ~~divestiture of London Heathrow Slots,~~ fleet restructuring, re-branding of aircraft and airport facilities, relocation and training. In addition, we recorded a net charge of $81 million for bankruptcy related items principally consisting of fair value adjustments for bankruptcy settlement obligations, $164 million in other special charges, including an $81 million charge to revise prior estimates of certain aircraft residual values, and other spare parts asset impairments, as well as $54 million in charges primarily relating to the buyout of certain aircraft leases. These charges were offset in part by a $309 million gain on the sale of Slots
In 2014, mainline operating special items, net principally included $810 million of merger integration expenses related to information technology, alignment of labor union contracts, professional fees, severance and retention, share-based compensation, divestiture of London Heathrow slots, fleet restructuring, re-branding of aircraft and airport facilities, relocation and training. In addition, we recorded a net charge of $81 million for bankruptcy related items principally consisting of fair value adjustments for bankruptcy settlement obligations and an $81 million charge to revise prior estimates of certain aircraft residual values and other spare parts asset impairments. These charges were offset in part by a $309 million gain on the sale of slots at DCA.
In 2013, mainline operating special items, net included $443 million of ~~primarily Merger~~merger related expenses ~~due~~related to the alignment of labor union contracts, professional fees, severance, share-based compensation and fees for US Airways to exit the Star Alliance and its codeshare agreement with United Airlines. In addition, we recorded a $107 million charge related to American’s pilot long-term disability obligation, a $43 million
charge for workers’ compensation claims and a $33 million aircraft impairment charge. These charges were offset in part by a $67 million gain on the sale of ~~Slots~~slots at ~~LaGuardia Airport.~~LGA.
~~In 2012, mainline~~
(3)
The 2015 regional operating special items, net principally related to merger integration expenses.
The 2014 regional operating special items, net consisted primarily of ~~$386~~a $24 million charge due to a new pilot labor contract at our Envoy regional subsidiary as well as $7 million of ~~severance and related charges and write-off~~merger integration expenses, offset in part by an $8 million gain on the sale of ~~leasehold improvements on aircraft and airport facilities that were rejected in connection with the Chapter 11 Cases.~~certain spare parts.

~~(3)~~(4)
In ~~2014,~~2015, nonoperating special items, net ~~consisted~~ principally included a $592 million charge to write off all of ~~$43 million for~~the value of Venezuelan ~~foreign currency losses, $56 million~~bolivars held by us due to continued lack of ~~early debt extinguishment costs related to the prepayment~~repatriations and deterioration of our 7.50% senior secured notes and other indebtedness and $33 million of non-cash interest accretion on bankruptcy settlement obligations. See Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk for further discussion of our cash heldeconomic conditions in ~~Venezuelan bolivars.~~Venezuela.
In 2014, nonoperating special items, net principally included a $43 million charge for Venezuelan foreign currency losses, $56 million of early debt extinguishment costs primarily related to the prepayment of 7.50% senior secured notes and other indebtedness and $33 million of non-cash interest accretion on bankruptcy settlement obligations.
In 2013, nonoperating special items, net consisted of interest charges of $138 million primarily to recognize post-petition interest expense on unsecured obligations pursuant to the Plan and penalty interest related to 10.5% secured notes and 7.50% senior secured notes, a $54 million charge related to the premium on tender for existing ~~enhanced equipment trust certificates~~EETC financings and the write-off of debt issuance costs and $19 million in charges related to the repayment of existing EETC financings.
~~In 2012, nonoperating special items, net consisted of a $280 million benefit resulting from a settlement of a commercial dispute.~~
~~(4)~~(5)
In 2013, ~~and 2012,~~ we recognized reorganization expenses as a result of the filing of voluntary petitions for relief under Chapter 11. These amounts consisted primarily of estimated allowed claim amounts and professional fees.

~~(5)~~(6)
In ~~2014,~~2015, income tax special items totaled a net ~~were $346 million. During 2014, we sold our portfolio~~credit of ~~fuel hedging contracts that were scheduled to settle on or after June 30, 2014.~~$3.0 billion. In connection with ~~this sale,~~the preparation of our financial statements for the fourth quarter of 2015, we ~~recorded~~determined that it was more likely than not that substantially all of our deferred tax assets, which include our NOLs, would be realized. Accordingly, we reversed $3.0 billion of the valuation allowance as of December 31, 2015, which resulted in a special $3.0 billion non-cash tax ~~provision of $330 million~~benefit recorded in the ~~second quarter~~consolidated statement of 2014 that reversed the non-cash tax provision which was recorded in other comprehensive income (OCI), a subset of stockholders’ equity, principally in 2009. This provision represents the tax effect associated with gains recorded in OCI principally in 2009 due to a net increase in the fair value of our fuel hedging contracts. In accordance with GAAP, we retained the $330 million tax provision in OCI until the last contract was settled or terminated. In addition, we recorded a special $16 million non-cash deferred income tax provision related to certain indefinite-lived intangible assets.operations for 2015.
In 2014, income tax special items, net were $346 million. During 2014, we sold our portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. In connection with this sale, we recorded a special non-cash tax provision of $330 million in the second quarter of 2014 that reversed the non-cash tax provision which was recorded in other comprehensive income (OCI), a subset of stockholders’ equity, principally in 2009. This provision represents the tax effect associated with gains recorded in OCI principally in 2009 due to a net increase in the fair value of our fuel hedging contracts. In accordance with GAAP, we retained the $330 million tax provision in OCI until the last contract was settled or terminated.
In 2013, ~~and 2012,~~ income tax special items, net included ~~respectively,~~ a $538 ~~million and a $569~~ million non-cash income tax benefit from continuing operations. We are required to consider all items (including items recorded in ~~other comprehensive income)~~OCI) in determining the amount of tax benefit that results from a loss from continuing operations and that should be allocated to continuing operations. As a result, we recorded a tax benefit on the loss from continuing operations for the year, which was exactly offset by income tax expense on ~~other comprehensive income.~~OCI. However, while the income tax benefit from continuing operations is reported on the income statement, the income tax expense on ~~other comprehensive income~~OCI is recorded directly to accumulated other comprehensive income (loss), which is a component of stockholders’ equity. Because the income tax expense on ~~other comprehensive income~~OCI is equal to the income tax benefit from continuing operations, our year-end net deferred tax position is not impacted by this tax allocation. The 2013 tax benefit was offset in part by a $214 million tax charge attributable to additional valuation allowance required to reduce deferred tax assets to the amount we ~~believe is~~believed was more likely than not to be realized.
Income Taxes
At December 31, ~~2014,~~2015, we had approximately ~~$10.1~~$8.0 billion of gross NOL Carryforwards to reduce future federal taxable income, substantially all of which are expected to be available for use in ~~2015.~~2016. The federal NOL Carryforwards will expire beginning in ~~2022~~2023 if unused. These NOL Carryforwards include an unrealized tax benefit of ~~$867 million~~$1.2 billion related to ~~the implementation of~~ share-based compensation ~~accounting guidance~~ that will
be recorded in equity when realized. We also had approximately ~~$4.6~~$4.0 billion of NOL Carryforwards to reduce future state taxable income at December 31, ~~2014,~~2015, which will expire in years ~~2015~~2016 through 2034 if unused. Our ability to deduct our NOL Carryforwards and to utilize certain other available tax attributes can be substantially constrained under the general annual limitation rules of Section 382 where an “ownership change” has occurred. We experienced an ownership change in connection with our emergence from the Chapter 11 Cases, and US Airways Group experienced an ownership change in connection with the Merger. As a result of the Merger, US Airways Group is now included in the AAG consolidated federal and state income tax ~~return.~~returns. The general limitation rules of Section 382 for a debtor in a bankruptcy case are liberalized where the ownership change occurs upon emergence from bankruptcy. We elected to be covered by certain special rules for federal income tax purposes that ~~permit~~permitted approximately $9.0 billion (with $6.6 billion of unlimited NOL remaining at December 31, 2015) of our federal NOL Carryforwards to be utilized without regard to the Section 382 annual limitation ~~rules.~~rules unless a second ownership change occurred on or before December 9, 2015. No second ownership change occurred within that period. Substantially all of our remaining federal NOL Carryforwards (attributable to US Airways Group) are subject to limitation under Section 382; however, our ability to utilize such NOL Carryforwards is not anticipated to be effectively constrained as a result of such limitation. Similar limitations may apply for state income tax purposes. Our ability to utilize any new NOL Carryforwards arising after the ownership changes is not affected by the annual limitation rules imposed by Section 382 unless another ownership change occurs.
At December 31, ~~2014,~~2015, we had an Alternative Minimum Tax (AMT) credit carryforward of approximately $341 million available for federal income tax purposes, which is available for an indefinite period. ~~Our net deferred tax assets, which include~~
In connection with the ~~NOL Carryforwards, are subject to a full valuation allowance. At December 31, 2014,~~preparation of our financial statements for the ~~federal and state valuation allowances were $4.5 billion and $264 million, respectively. In accordance with GAAP, utilization~~fourth quarter of ~~the NOL Carryforwards after December 9, 2013 will result in a corresponding decrease in the valuation allowance and offset our tax provision dollar for dollar.~~
~~We provide a valuation allowance for deferred tax assets when~~2015, we determined that it iswas more likely than not that ~~some portion, or~~substantially all of our deferred tax assets, ~~will not~~which include our NOLs, would be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income (primarily reversals of deferred tax liabilities) during the periods in which those temporary differences will become deductible. In making this determination,Accordingly, we consider all available positive and negative evidence and make certain assumptions. We consider many factors in evaluating the realizability of our deferred tax assets including risks associated with merger integration as well as other factors, which continue to be affected by conditions beyond our control, such as the conditionreversed $3.0 billion of the ~~economy, the level and volatility of fuel prices and travel demand. We have concluded~~valuation allowance as of December 31, ~~2014 that~~2015, which resulted in a special $3.0 billion non-cash tax benefit recorded in the ~~valuation allowance was still needed on our deferred~~consolidated statement of operations for 2015.
Beginning in 2016, we expect to record income tax ~~asset based on~~expense with an effective rate of approximately 38%, which will be substantially non-cash as we utilize the ~~weight of the factors~~NOLs described ~~above.~~above to offset cash income taxes due.
For the year ended December 31, 2014, we recorded a $330 million tax ~~provision. This~~ provision, which included $346 million of special tax charges as described above. In addition, we recorded $8 million of tax expense principally related to certain states and countries where NOL Carryforwards were limited or unavailable to be used. These charges were offset in part by a $24 million federal income tax benefit resulting from our elections under applicable sections of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 and the Housing and Economic Recovery Act of 2008 (as extended by the Tax Increase Prevention Act of 2014), allowing corporations to accelerate utilization of certain research and AMT credit carryforwards in lieu of applicable bonus depreciation on certain qualifying capital investments.
For the year ended December 31, 2013, we recorded a $346 million tax ~~benefit. This~~ benefit, which included $324 million of net special tax benefits as described above. ~~In addition, we recorded a $22 million federal income tax benefit under the Housing and Economic Recovery Act of 2008 as described above.~~
~~For the year ended December 31, 2012, we recorded a $569 million special tax benefit as described above.~~
Operating Statistics
The table below sets forth selected ~~combined~~ mainline and regional operating ~~data:~~data for the years ended December 31, 2015 and 2014. Operating statistics for the year ended December 31, 2013 have not been included because they would not be comparable to the years ended December 31, 2015 or 2014 due to US Airways Group results only being included for 23 days ended December 31, 2013.

Year Ended December 31, Increase
(Decrease)
2014-2013 Increase
(Decrease)
2013-2012

2014 2013 (1) 2012 (1)
Mainline

Revenue passenger miles (millions) (a)
195,651    194,026    188,841    0.8 % 2.7 %
Available seat miles (millions) (b)
�� 237,522    231,873    226,839    2.4 % 2.2 %
Passenger load factor (percent) (c)
82.4    83.7    83.2    (1.3 )pts 0.5 pts
Yield (cents) (d)
15.74    15.08    14.66    4.4 % 2.9 %
Passenger revenue per available seat mile (cents) (e)
12.97    12.62    12.20    2.7 % 3.4 %
Operating cost per available seat mile (cents) (f)
13.42    13.55    13.79    (0.9 )% (1.7 )%
Passenger enplanements (thousands) (g)
145,574    143,747    140,742    1.3 % 2.1 %
Departures (thousands)
1,144    1,140    1,113    0.3 % 2.5 %
Aircraft at end of period
983    970    954    1.3 % 1.7 %
Block hours (thousands) (h)
3,514    3,454    3,350    1.7 % 3.1 %
Average stage length (miles) (i)
1,205    1,190    1,183    1.3 % 0.6 %
Fuel consumption (gallons in millions)
3,644    3,608    3,512    1.0 % 2.8 %
Average aircraft fuel price including related taxes (dollars per gallon)
2.91    3.08    3.19    (5.6 )% (3.4 )%
Full-time equivalent employees at end of period
94,400    91,500    95,800    3.2 % (4.5 )%
Regional (j)

Revenue passenger miles (millions) (a)
22,219    21,515    21,097    3.3 % 2.0 %
Available seat miles (millions) (b)
28,135    28,041    27,809    0.3 % 0.8 %
Passenger load factor (percent) (c)
79.0    76.7    75.9    2.3 pts 0.8 pts
Yield (cents) (d)
28.46    29.17    29.69    (2.4 )% (1.7 )%
Passenger revenue per available seat mile (cents) (e)
22.47    22.38    22.52    0.4 % (0.6 )%
Operating cost per available seat mile (cents) (f)
23.16    22.88    22.81    1.2 % 0.3 %
Passenger enplanements (thousands) (g)
51,766    49,993    49,757    3.5 % 0.5 %
Aircraft at end of period
566    558    536    1.4 % 4.1 %
Fuel consumption (gallons in millions)
688    687    658    0.1 % 4.4 %
Average aircraft fuel price including related taxes (dollars per gallon)
2.92    3.07    3.21    (4.7 )% (4.3 )%
Full-time equivalent employees at end of period (k)
18,900    18,200    18,700    3.8 % (2.7 )%
Total Mainline and Regional

Revenue passenger miles (millions) (a)
217,870    215,541    209,938    1.1 % 2.7 %
Available seat miles (millions) (b)
265,657    259,914    254,648    2.2 % 2.1 %
Cargo ton miles (millions) (l)
2,333    2,198    2,105    6.1 % 4.4 %
Passenger load factor (percent) (c)
82.0    82.9    82.4    (0.9 )pts 0.5 pts
Yield (cents) (d)
17.04    16.49    16.17    3.3 % 2.0 %
Passenger revenue per available seat mile (cents) (e)
13.97    13.67    13.33    2.2 % 2.6 %
Total revenue per available seat mile (cents) (m)
16.05    15.54    15.17    3.3 % 2.5 %
Cargo yield per ton mile (cents) (n)
37.50    37.74    39.38    (0.6 )% (4.2 )%
Passenger enplanements (thousands) (g)
197,340    193,740    190,499    1.9 % 1.7 %
Aircraft at end of period
1,549    1,528    1,490    1.4 % 2.6 %
Fuel consumption (gallons in millions)
4,332    4,295    4,170    0.9 % 3.0 %
Average aircraft fuel price including related taxes (dollars per gallon)
2.91    3.08    3.19    (5.5 )% (3.6 )%
Full-time equivalent employees at end of period
113,300    109,700    114,500    3.3 % (4.2 )%
~~(1)~~
~~Represents the combined historical operating statistics of American and US Airways Group.~~
Year Ended December 31, Increase
(Decrease)
2015-2014

      2015             2014
Mainline

Revenue passenger miles (millions) (a)
199,467    195,651    2.0 %
Available seat miles (millions) (b)
239,375    237,522    0.8 %
Passenger load factor (percent) (c)
83.3    82.4    0.9 pts
Yield (cents) (d)
14.56    15.74    (7.5 )%
Passenger revenue per available seat mile (cents) (e)
12.13    12.97    (6.5 )%
Operating cost per available seat mile (cents) (f)
12.03    13.42    (10.4 )%
Passenger enplanements (thousands) (g)
146,814    145,574    0.9 %
Departures (thousands)
1,114    1,144    (2.6 )%
Aircraft at end of period
946    983    (3.8 )%
Block hours (thousands) (h)
3,494    3,514    (0.6 )%
Average stage length (miles) (i)
1,226    1,205    1.7 %
Fuel consumption (gallons in millions)
3,611    3,644    (0.9 )%
Average aircraft fuel price including related taxes (dollars per gallon)
1.72    2.91    (40.7 )%
Full-time equivalent employees at end of period
98,900    94,400    4.8 %
Regional (j)

Revenue passenger miles (millions) (a)
23,543    22,219    6.0 %
Available seat miles (millions) (b)
29,361    28,135    4.4 %
Passenger load factor (percent) (c)
80.2    79.0    1.2 pts
Yield (cents) (d)
27.50    28.46    (3.3 )%
Passenger revenue per available seat mile (cents) (e)
22.05    22.47    (1.9 )%
Operating cost per available seat mile (cents) (f)
20.38    23.16    (12.0 )%
Passenger enplanements (thousands) (g)
54,435    51,766    5.2 %
Aircraft at end of period
587    566    3.7 %
Fuel consumption (gallons in millions)
712    688    3.6 %
Average aircraft fuel price including related taxes (dollars per gallon)
1.73    2.92    (40.9 )%
Full-time equivalent employees at end of period (k)
19,600    18,900    3.7 %
Total Mainline and Regional

Revenue passenger miles (millions) (a)
223,010    217,870    2.4 %
Available seat miles (millions) (b)
268,736    265,657    1.2 %
Cargo ton miles (millions) (l)
2,314    2,333    (0.8 )%
Passenger load factor (percent) (c)
83.0    82.0    1.0 pts
Yield (cents) (d)
15.92    17.04    (6.5 )%
Passenger revenue per available seat mile (cents) (e)
13.21    13.97    (5.4 )%
Total revenue per available seat mile (cents)
15.25    16.05    (5.0 )%
Cargo yield per ton mile (cents) (m)
32.84    37.50    (12.4 )%
Passenger enplanements (thousands) (g)
201,249    197,340    2.0 %
Aircraft at end of period
1,533    1,549    (1.0 )%
Fuel consumption (gallons in millions)
4,323    4,332    (0.2 )%
Average aircraft fuel price including related taxes (dollars per gallon)
1.72    2.91    (40.7 )%
Full-time equivalent employees at end of period
118,500    113,300    4.6 %

(a)
Revenue passenger mile (RPM) – A basic measure of sales volume. One RPM represents one passenger flown one mile.
(b)
Available seat mile (ASM) – A basic measure of production. One ASM represents one seat flown one mile.

(c)
Passenger load factor – The percentage of available seats that are filled with revenue passengers.

(d)
Yield – A measure of airline revenue derived by dividing passenger revenue by RPMs.

(e)
Passenger revenue per available seat mile (PRASM) – Passenger revenues divided by ASMs.

(f)
Operating cost per available seat mile (CASM) – Operating expenses divided by ASMs.

(g)
Passenger enplanements – The number of passengers on board an aircraft, including local, connecting and through passengers.

(h)
Block hours – The hours measured from the moment an aircraft first moves under its own power, including taxi time, for the purposes of flight until the aircraft is docked at the next point of landing and its power is shut down.

(i)
Average stage length – The average of the distances flown on each segment of every route.

(j)
Regional statistics include our subsidiaries, Envoy Aviation Group Inc. ~~(Envoy, formerly known as AMR Eagle Holding Corporation)~~(Envoy), Piedmont Airlines, Inc. (Piedmont) and PSA Airlines, Inc. (PSA), and operating ~~and financial results~~statistics from our capacity purchase agreements with Air Wisconsin Airlines Corporation, Chautauqua Airlines, Inc., ExpressJet Airlines, Inc., Mesa Airlines, Inc., Republic Airline Inc., SkyWest Airlines, Inc., Compass Airlines, LLC and ~~SkyWest~~Trans States Airlines, Inc.

(k)
Regional full-time equivalent employees only include our ~~wholly owned~~wholly-owned regional airline subsidiaries, Envoy, Piedmont and PSA.

(l)
Cargo ton miles – A basic measure of cargo transportation. One cargo ton mile represents one ton of cargo transported one mile.

(m)
Total revenue per available seat mile (RASM) – Total revenues divided by total mainline and regional ASMs. Total revenues in the 2013 period excludes a $31 million special credit recorded to other revenues related to a change in accounting method resulting from the modification of our AAdvantage miles agreement with Citibank.
~~(n)~~
Cargo yield per ton mile – Cargo revenues divided by total mainline and regional cargo ton miles.
2015 Compared to 2014
Operating Revenues
   Year Ended December 31,    Percent
Increase
(Decrease)
       2015            2014
   (In millions, except percentage changes)
Mainline passenger
   $ 29,037       $ 30,802       (5.7 )
Regional passenger
   6,475       6,322       2.4
Cargo
   760       875       (13.1 )
Other
   4,718       4,651       1.4





Total operating revenues
   $ 40,990       $ 42,650       (3.9 )





Total operating revenues in 2015 decreased $1.7 billion, or 3.9%, from 2014 principally due to competitive growth and weaker international yields primarily due to foreign currency devaluation relative to the U.S. dollar. Significant changes in the components of operating revenues are as follows:
Mainline passenger revenues were $29.0 billion in 2015 as compared to $30.8 billion in 2014. Mainline RPMs increased 2.0% as mainline capacity, as measured by ASMs, increased 0.8%, resulting in a 0.9 point increase in load factor to 83.3%. Mainline passenger yield decreased 7.5% to 14.56 cents in 2015 from 15.74 cents in 2014. Mainline PRASM decreased 6.5% to 12.13 cents in 2015 from 12.97 cents in 2014.
Regional passenger revenues were $6.5 billion in 2015 as compared to $6.3 billion in 2014. Regional RPMs increased 6.0% as regional capacity, as measured by ASMs, increased 4.4%, resulting in a 1.2
point increase in load factor to 80.2%. Regional passenger yield decreased 3.3% to 27.50 cents in 2015 from 28.46 cents in 2014. Regional PRASM decreased 1.9% to 22.05 cents in 2015 from 22.47 cents in 2014.
Cargo revenue decreased $115 million, or 13.1%, in 2015 from 2014 driven primarily by a decrease in international freight yields.
Operating Expenses
   Year Ended December 31,    Percent
Increase
(Decrease)
       2015            2014
   (In millions, except percentage changes)
Aircraft fuel and related taxes
   $ 6,226       $ 10,592       (41.2 )
Salaries, wages and benefits
   9,524       8,508       11.9
Maintenance, materials and repairs
   1,889       2,051       (7.9 )
Other rent and landing fees
   1,731       1,727       0.2
Aircraft rent
   1,250       1,250       —
Selling expenses
   1,394       1,544       (9.8 )
Depreciation and amortization
   1,364       1,295       5.4
Special items, net
   1,051       800       31.3
Other
   4,374       4,118       6.2





Total mainline operating expenses
   28,803       31,885       (9.7 )
Regional expenses:

Fuel
   1,230       2,009       (38.8 )
Other
   4,753       4,507       5.4





Total regional operating expenses
   5,983       6,516       (8.2 )





Total operating expenses
   $ 34,786       $ 38,401       (9.4 )





Total operating expenses were $34.8 billion in 2015, a decrease of $3.6 billion, or 9.4%, from 2014. The decrease in operating expenses was primarily due to substantially lower aircraft fuel costs, offset in part by higher salaries, wages and benefits driven by new merger related labor contracts. See detailed explanations below relating to changes in operating costs per ASM.
Mainline Operating Expenses per ASM
Our mainline CASM decreased 1.39 cents, or 10.4%, from 13.42 cents in 2014 to 12.03 cents in 2015 on 0.8% increase in capacity primarily due to lower fuel prices. Excluding special items and aircraft fuel and related taxes, our mainline CASM increased 0.36 cents, or 4.2%, from 8.63 cents in 2014 to 8.99 cents in 2015, primarily due to higher salaries, wages and benefits due to new merger related labor contracts.
The table below sets forth the major components of our total mainline CASM and our mainline CASM excluding special items and aircraft fuel and related taxes for the year ended December 31, 2015 and 2014:
   Year Ended December 31, Percent
Increase
(Decrease)
       2015         2014
   (In cents, except percentage changes)
Mainline CASM:

Aircraft fuel and related taxes
   2.60    4.46    (41.7 )
Salaries, wages and benefits
   3.98    3.58    11.1
Maintenance, materials and repairs
   0.79    0.86    (8.6 )
Other rent and landing fees
   0.72    0.73    (0.5 )
Aircraft rent
   0.52    0.53    (0.8 )
Selling expenses
   0.58    0.65    (10.5 )
Depreciation and amortization
   0.57    0.55    4.6
Special items, net
   0.44    0.34    30.3
Other
   1.83    1.73    5.4


Total mainline CASM
   12.03    13.42    (10.4 )
Special items, net
   (0.44 ) (0.34 ) 30.3
Aircraft fuel and related taxes
   (2.60 ) (4.46 ) (41.7 )


Mainline operating expenses per ASM, excluding special items and aircraft fuel and related taxes (1)
   8.99    8.63    4.2


(1)
We believe that the presentation of mainline CASM excluding fuel is useful to investors because both the cost and availability of fuel are subject to many economic and political factors beyond our control, and the exclusion of special items provides investors the ability to measure financial performance in a way that is more indicative of our ongoing performance and that is more comparable to measures reported by other major airlines. Management uses mainline CASM excluding special items and fuel to evaluate our operating performance. Amounts may not recalculate due to rounding.
Significant changes in the components of mainline operating expense per ASM are as follows:
Aircraft fuel and related taxes per ASM decreased 41.7% primarily due to a 40.7% decrease in the average price per gallon of fuel to $1.72 in 2015 from an average price per gallon of $2.91 in 2014.
Salaries, wages and benefits per ASM increased 11.1% primarily due to increased costs associated with the new, merger related pilot, flight attendant and customer service and reservation agent joint collective bargaining agreements.
Maintenance, materials and repairs per ASM decreased 8.6% primarily due to fewer engine overhauls in 2015, driven by our fleet renewal program.
Selling expenses per ASM decreased 10.5% primarily due to lower contractually negotiated rates for certain commissions and booking fees as well as lower revenues in 2015.
Other operating expenses per ASM increased 5.4% in 2015 as compared to 2014 primarily due to increases in crew travel and certain information technology projects, as well as enhancements to our aircraft food and catering offerings.
Regional Operating Expenses
Total regional expenses decreased $533 million, or 8.2%, in 2015 to $6.0 billion from $6.5 billion in 2014. The year-over-year decrease was primarily due to a $779 million, or 38.8%, decrease in fuel costs, offset in part by a $246 million, or 5.4%, increase in other regional operating expenses. The average price per gallon of fuel decreased 40.9% to $1.73 in 2015 from $2.92 in 2014. The increase in other regional operating expenses was principally due to increased flying under capacity purchase agreements.
Nonoperating Income (Expense)
   Year Ended December 31, Percent
Increase
(Decrease)
       2015         2014
   (In millions, except percentage changes)
Interest income
   $ 39    $ 31    26.0
Interest expense, net of capitalized interest
   (880 ) (887 ) (0.8 )
Other, net
   (747 ) (181 ) nm


Total nonoperating expense, net
   $ (1,588 ) $ (1,037 ) 53.1


Our short-term investments in each period consisted of highly liquid investments that provided nominal returns.
The following table provides the components of interest expense:
   Year Ended December 31, Increase
(Decrease)
       2015         2014
   (In millions)
Special items, net
   $ —    $ 33    $ (33 )
Amortization of debt issuance costs and debt discounts
   42    39    3
Interest expense on debt and capital lease obligations
   890    876    14


Total interest expense
   932    948    (16 )
Less: capitalized interest
   (52 ) (61 ) 9


Total interest expense, net of capitalized interest
   $ 880    $ 887    $ (7 )


Other nonoperating expense, net in 2015 included a net $594 million in other nonoperating special charges and $159 million of foreign currency losses. The other nonoperating special charges were primarily due to a $592 million write off of all of the value of Venezuelan bolivars held by us due to continued lack of repatriations and deterioration of economic conditions in Venezuela and $41 million in charges principally related to non-cash write offs of unamortized debt discount and debt issuance costs associated with refinancing certain of our secured term loan facilities, prepayments of certain aircraft financings and the purchase and subsequent remarketing of certain special facility revenue bonds. These charges were offset in part by a $22 million gain associated with the sale of an investment and a $17 million early debt extinguishment gain associated with the repayment of American’s AAdvantage loan with Citibank. The foreign currency losses were driven primarily by the strengthening of the U.S. dollar relative to other currencies during 2015, principally in Latin American and European markets, including a 34% decrease in the value of the Argentinian peso, a 30% decrease in the value of the Brazilian real, a 14% decrease in the value of the Mexican peso, a 10% decrease in the value of the Euro and a 5% decrease in the value of the British pound.
Other nonoperating expense, net in 2014 consisted of $114 million of net foreign currency losses, including a $43 million special charge for Venezuelan foreign currency losses, and $56 million in other nonoperating special charges primarily due to early debt extinguishment costs related to the prepayment of our 7.50% senior secured notes and other indebtedness. The foreign currency losses were driven primarily by the strengthening of the U.S. dollar relative to other currencies during 2014, principally in the Latin American market, including a 48% decrease in the value of the Venezuelan bolivar and a 14% decrease in the value of the Brazilian real.
2014 Compared to 2013
Operating Revenues

   Year Ended December 31,    $ Change    $ Change
due to
Merger    Change Excluding
Merger Impact    Year Ended December 31,    $ Change    $ Change
due to
Merger    Change Excluding
Merger Impact
    2014            2013            $            %            2014            2013            $         %
(In millions, except percentage changes)    (In millions, except percentage changes)
Mainline passenger
   $ 30,802       $ 20,218       $ 10,584       $ 9,833       $ 751       3.8       $ 30,802       $ 20,218       $ 10,584       $ 9,833       $ 751    3.8
Regional passenger
   6,322       3,131       3,191       3,207       (16 )    (0.5 )    6,322       3,131       3,191       3,207       (16 ) (0.5 )
Cargo
   875       685       190       149       41       6.1       875       685       190       149       41    6.1
Other
   4,651       2,709       1,942       1,318       624       23.9       4,651       2,709       1,942       1,318       624    23.9




















Total operating revenues
   $ 42,650       $ 26,743       $ 15,907       $ 14,507       $ 1,400       5.4       $ 42,650       $ 26,743       $ 15,907       $ 14,507       $ 1,400    5.4




















The following discussion of operating revenues excludes the results of ~~US Airways Group~~the Merger in order to provide a more meaningful year-over-year comparison.
Total operating revenues in 2014 increased $1.4 billion, or 5.4%, from ~~the~~ 2013, ~~period,~~ which was driven by strong demand for air travel. Significant changes in the components of operating revenues, excluding the results of ~~US Airways Group,~~the Merger, are as follows:

Mainline passenger revenues increased $751 million, or 3.8%, in 2014 from ~~the~~ 2013 ~~period~~ due to higher yields and ASMs, offset in part by slightly lower load factors.

Cargo revenues increased $41 million, or 6.1%, in 2014 from ~~the~~ 2013 ~~period~~ driven primarily by an increase in international freight volumes.

Other revenues increased $624 million, or 23.9%, in 2014 from ~~the~~ 2013 ~~period~~ driven primarily by higher revenues associated with our ~~frequent flyer~~loyalty programs driven by our affinity card agreement with Citibank.
Operating Expenses

   Year Ended December 31,    $ Change    $ Change
due to
Merger Change Excluding
Merger Impact    Year Ended December 31,    $ Change    $ Change
due to
Merger Change Excluding
Merger Impact
    2014            2013            $            %            2014            2013            $         %
(In millions, except percentage changes)    (In millions, except percentage changes)
Aircraft fuel and related taxes
   $ 10,592       $ 7,839       $ 2,753       $ 3,190    $ (437 )    (5.7 )    $ 10,592       $ 7,839       $ 2,753       $ 3,190    $ (437 ) (5.7 )
Salaries, wages and benefits
   8,508       5,460       3,048       2,653    395       7.5       8,508       5,460       3,048       2,653    395    7.5
Maintenance, materials and repairs
   2,051       1,260       791       679    112       9.2       2,051       1,260       791       679    112    9.2
Other rent and landing fees
   1,727       1,152       575       547    28       2.5       1,727       1,152       575       547    28    2.5
Aircraft rent
   1,250       768       482       365    117       15.7       1,250       768       482       365    117    15.7
Selling expenses
   1,544       1,158       386       424    (38 )    (3.3 )    1,544       1,158       386       424    (38 ) (3.3 )
Depreciation and amortization
   1,295       853       442       375    67       7.9       1,295       853       442       375    67    7.9
Special items, net
   800       559       241       (1 ) 242       86.2       800       559       241       (1 ) 242    86.2
Other
   4,118       2,969       1,149       1,079    70       2.4       4,118       2,969       1,149       1,079    70    2.4
















Total mainline operating expenses
   $ 31,885       $ 22,018       $ 9,867       $ 9,311    $ 556       2.6       $ 31,885       $ 22,018       $ 9,867       $ 9,311    $ 556    2.6









Regional expenses:

Fuel
   2,009       1,120       889       947    (58 )    (5.4 )    2,009       1,120       889       947    (58 ) (5.4 )
Other
   4,507       2,206       2,301       2,158    143       7.0       4,507       2,206       2,301       2,158    143    7.0
















Total regional operating expenses
   6,516       3,326       3,190       3,105    85       2.8       6,516       3,326       3,190       3,105    85    2.8
















Total operating expenses
   $ 38,401       $ 25,344       $ 13,057       $ 12,416    $ 641       2.6       $ 38,401       $ 25,344       $ 13,057       $ 12,416    $ 641    2.6
















The following discussion of operating expenses excludes the results of ~~US Airways Group~~the Merger in order to provide a more meaningful year-over-year comparison.
Total operating expenses in 2014 increased $641 million, or 2.6%, from ~~the 2013 period.~~2013. Significant changes in the components of mainline operating expenses, excluding the results of ~~US Airways Group,~~the Merger, are as follows:

Aircraft fuel and related taxes decreased $437 million, or 5.7%, in 2014 from ~~the~~ 2013 ~~period~~ primarily due to a decrease in the average price per gallon of fuel.

Salaries, wages and benefits increased $395 million, or 7.5%, in 2014 from ~~the~~ 2013 ~~period~~ primarily due to increased costs associated with merger related labor contracts.

Maintenance, materials and repairs increased $112 million, or 9.2%, in 2014 from ~~the~~ 2013 ~~period~~ primarily due to an increase in the rate per engine overhaul.

Aircraft rent increased $117 million, or 15.7%, in 2014 from ~~the~~ 2013 ~~period~~ primarily as a result of new leased aircraft deliveries in 2014 as we continued our fleet renewal program.
Depreciation and amortization increased $67 million, or 7.9%, in 2014 from ~~the~~ 2013 ~~period~~ primarily as a result of new purchased aircraft deliveries since the end of 2013 as we continued our fleet renewal program.
Regional Operating Expenses
Total regional expenses, excluding the results of ~~US Airways Group,~~the Merger, increased $85 million, or 2.8%, in 2014 from ~~the 2013 period.~~2013. Other regional operating expenses increased $143 million, or 7.0%, primarily due to higher expenses associated with certain capacity purchase agreements, offset by a $58 million, or 5.4%, decrease in fuel costs as a result of a decrease in the average price per gallon of fuel.
Nonoperating Income (Expense)

   Year Ended December 31, $ Change $ Change
due to
Merger Change Excluding
Merger Impact
       2014         2013         $         %
   (In millions, except percentage changes)
Interest income
   $ 31    $ 20    $ 11    $ 6    $ 5    25.2
Interest expense, net of capitalized interest
   (887 ) (856 ) (31 ) (280 ) 249    (29.8 )
Other, net
   (181 ) (88 ) (93 ) (29 ) (64 ) 73.1


Total nonoperating expense, net
   $ (1,037 ) $ (924 ) $ (113 ) $ (303 ) $ 190    (21.0 )


Interest income was $31 million and $20 million in 2014 and 2013, respectively. Our short-term investments in each period consisted of highly liquid investments, which provided nominal returns.
The following table provides the components of interest ~~expense, including amortization of debt discounts and debt issue costs, capitalized interest and special items:~~expense:

   Year Ended December 31,
Increase
(Decrease)
   Year Ended December 31, Increase
(Decrease)
       2014         2013            2014         2013
   (In millions)    (In millions)
Special items(1)
   $ 33    $ 182    $ (149 )    $ 33    $ 182    $ (149 )
Amortization of debt issuance costs and debt discounts
   38    33    5       38    33    5
Interest expense on debt and capital lease obligations(2)
   568    668    (100 )    568    668    (100 )




Total interest expense
   639    883    (244 )    639    883    (244 )
Less: capitalized interest
   (53 ) (48 ) (5 )    (53 ) (48 ) (5 )




Total interest expense, net of capitalized interest
   586    835    (249 )    586    835    (249 )
US Airways Group total interest expense, net of capitalized interest
   301    21    280       301    21    280




Total AAG interest expense, net of capitalized interest
   $ 887    $ 856    $ 31       $ 887    $ 856    $ 31




The following discussion of nonoperating income and expense excludes the results of ~~US Airways Group~~the Merger in order to provide a more meaningful year-over-year comparison.
Interest expense, net of capitalized interest decreased $249 million ~~or 29.8%,~~ in 2014 from ~~the~~ 2013 ~~period~~ primarily due to a $149 million decrease in special charges recognized ~~period-over-period~~year-over-year as further described below, as well as refinancing activities that resulted in $100 million less interest expense recognized in 2014. In 2014, we recognized $33 million of special charges relating to non-cash interest accretion on bankruptcy settlement obligations. In 2013, we recognized $138 million of special charges relating to post-petition interest expense on unsecured obligations pursuant to the Plan and penalty interest related to American’s 10.5% secured notes and 7.50% senior secured notes. In addition, in 2013 we recorded special charges of $44 million for debt
(1)
In 2014, we recognized $33 million of special charges relating to non-cash interest accretion on bankruptcy settlement obligations. In 2013, we recognized $138 million of special charges relating to post-petition interest expense on unsecured obligations pursuant to the Plan and penalty interest related to American’s 10.5% secured notes and 7.50% senior secured notes. In addition, in 2013 we recorded special charges of $44 million for debt extinguishment costs incurred as a result of the repayment of certain aircraft secured indebtedness, including cash interest charges and non-cash write offs of unamortized debt issuance costs.
extinguishment costs incurred as a result of the repayment of certain aircraft secured indebtedness, including cash interest charges and non-cash write offs of unamortized debt issuance costs. As a result of the 2013 refinancing activities and the early extinguishment of American’s 7.50% senior secured notes in 2014, we recognized $100 million less interest expense in 2014 as compared to the 2013 period.
(2)
As a result of the 2013 refinancing activities and the early extinguishment of American’s 7.50% senior secured notes in 2014, we recognized $100 million less interest expense in 2014 as compared to 2013.
Other nonoperating expense, net in 2014 consisted ~~principally~~of $114 million of net foreign currency losses, ~~of $114~~including a $43 million special charge for Venezuelan foreign currency losses, and $56 million in other nonoperating special charges primarily due to early debt extinguishment ~~charges~~costs related to the prepayment of ~~$56 million.~~ our 7.50% senior secured notes and other indebtedness. The foreign currency losses were driven primarily by the strengthening of the U.S. dollar relative to other currencies during 2014, principally in the Latin American market, including a 48% decrease in the value of the Venezuelan bolivar and a 14% decrease in the value of the Brazilian real.
Other nonoperating expense, net in 2013 consisted principally of net foreign currency losses of $56 million and early debt extinguishment charges of $29 million. Other nonoperating expense, net increased $64 million, or 73.1%, during 2014 primarily due to special charges recognized as a result of early debt extinguishment and an increase in foreign currency losses driven by the strengthening of the U.S. dollar in foreign currency transactions, principally in Latin American markets. We recorded a $43 million special charge for Venezuelan foreign currency losses in 2014. See Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk for further discussion of our cash held in Venezuelan bolivars. In addition, our 2014 nonoperating special items included $56 million primarily related to the early extinguishment of American’s 7.50% senior secured notes and other indebtedness.
Reorganization Items, Net
Reorganization items refer to revenues, expenses (including professional fees), realized gains and losses and provisions for losses that are realized or incurred as a direct result of the Chapter 11 Cases. The following table summarizes the components included in reorganization items, net on AAG’s consolidated statement of operations for the year ended December 31, 2013 (in millions):

   2013
Labor-related deemed claim (1)
   $ 1,733
Aircraft and facility financing renegotiations and rejections (2), (3)
   325
Fair value of conversion discount (4)
   218
Professional fees
   199
Other
   180


Total reorganization items, net
   $ 2,655


(1)
In exchange for employees’ contributions to the successful reorganization, including agreeing to reductions in pay and benefits, we agreed in the Plan to provide each employee group a deemed claim, which was used to provide a distribution of a portion of the equity of the reorganized entity to those employees. Each employee group received a deemed claim amount based upon a portion of the value of cost savings provided by that group through reductions to pay and benefits as well as through certain work rule changes. The total value of this deemed claim was approximately $1.7 billion.

(2)
Amounts include allowed claims (claims approved by the Bankruptcy Court) and estimated allowed claims relating to (i) the rejection or modification of financings related to aircraft and (ii) entry of orders treated as unsecured claims with respect to facility agreements supporting certain issuances of special facility revenue bonds. The Debtors recorded an estimated claim associated with the rejection or modification of a financing or facility agreement when the applicable motion was filed with the Bankruptcy Court to reject or modify such financing or facility agreement and the Debtors believed that it was probable the motion would be approved, and there was sufficient information to estimate the claim. See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information.
~~(3)~~
Pursuant to the Plan, the Debtors agreed to allow certain post-petition unsecured claims on obligations. As a result, during the year ended December 31, 2013, we recorded reorganization charges to adjust estimated allowed claim amounts previously recorded on rejected special facility revenue bonds of $180 million, allowed general unsecured claims related to the 1990 and 1994 series of special facility revenue bonds that financed certain improvements at JFK, and rejected bonds that financed certain improvements at ORD, which are included in the table above.
~~(4)~~
The Plan allowed unsecured creditors receiving AAG Series A Preferred Stock a conversion discount of 3.5%. Accordingly, we recorded the fair value of such discount upon the confirmation of the Plan by the Bankruptcy Court.
~~2013 Compared to 2012~~
~~Operating Revenues~~

   Year Ended December 31,    $ Change    $ Change
due to
Merger    Change Excluding
Merger Impact
       2013            2012                  $            %
   (In millions, except percentage changes)
Mainline passenger
   $ 20,218       $ 18,743       $ 1,475       $ 624       $ 851       4.5
Regional passenger
   3,131       2,914       217       204       13       0.5
Cargo
   685       675       10       9       1       0.1
Other
   2,709       2,523       186       94       92       3.6











Total operating revenues
   $ 26,743       $ 24,855       $ 1,888       $ 931       $ 957       3.8











~~The following discussion of operating revenues excludes the results of US Airways Group in order to provide a more meaningful year-over-year comparison.~~
Total operating revenues in 2013 were $25.8 billion as compared to $24.9 billion in 2012, an increase of $957 million, or 3.8%, which was driven by strong demand for air travel. Significant changes in the components of operating revenues are as follows:
~~Mainline passenger revenues increased 4.5% to $19.6 billion in 2013 as compared to $18.7 billion in 2012 due to an increase in ASMs and yield.~~
~~Regional passenger revenues were $2.9 billion, which was relatively flat as compared to 2012 due to an increase in ASMs, offset by a decrease in yield.~~
Other revenues were $2.6 billion in 2013, an increase of $92 million, or 3.6%, primarily due to increased revenues associated with the sale of AAdvantage frequent flyer mileage credits and a $31 million special credit related to a change in accounting method resulting from the modification of our AAdvantage miles agreement with Citibank.
~~Operating Expenses~~

   Year Ended December 31,    $ Change $ Change
due to
Merger    Change Excluding
Merger Impact
       2013            2012               $         %
   (In millions, except percentage changes)
Aircraft fuel and related taxes
   $ 7,839       $ 7,705       $ 134    $ 211       $ (77 ) (1.0 )
Salaries, wages and benefits
   5,460       6,217       (757 ) 184       (941 ) (15.1 )
Maintenance, materials and repairs
   1,260       1,158       102    38       64    5.5
Other rent and landing fees
   1,152       1,083       69    35       34    3.2
Aircraft rent
   768       553       215    25       190    34.4
Selling expenses
   1,158       1,058       100    31       69    6.5
Depreciation and amortization
   853       845       8    23       (15 ) (1.7 )
Special items, net
   559       386       173    277       (104 ) (26.9 )
Other
   2,969       2,674       295    70       225    8.4








Total mainline operating expenses
   22,018       21,679       339    894       (555 ) (2.6 )
Regional expenses:

Fuel
   1,120       1,012       108    64       44    4.4
Other
   2,206       2,016       190    150       40    2.0








Total regional operating expenses
   3,326       3,028       298    214       84    2.8








Total operating expenses
   $ 25,344       $ 24,707       $ 637    $ 1,108       $ (471 ) (1.9 )








~~The following discussion of operating expenses excludes the results of US Airways Group in order to provide a more meaningful year-over-year comparison.~~
Total operating expenses in 2013 were $24.2 billion as compared to $24.7 billion in 2012, a decrease of $471 million, or 1.9%. Significant changes in the components of operating expenses are as follows:
~~Aircraft fuel and related taxes decreased $77 million, or 1.0%, due to a decrease in the average price per gallon of fuel, offset in part by an increase in gallons consumed.~~
Salaries, wages, and benefits decreased $941 million, or 15.1%, due to the results of voluntary and involuntary terminations in connection with the 2012 restructuring plan as well as effects related to the freezing of American’s pension plans in 2012.
~~Aircraft rent increased $190 million, or 34.4%, as a result of new leased aircraft deliveries in 2013 as we continued our fleet renewal program.~~
~~Selling expenses increased $69 million, or 6.5%, as a result of higher commissions and credit card fees related to the increase in passenger revenues.~~
~~Other operating expenses increased $225 million, or 8.4%, primarily due to higher costs associated with outsourced services and enhanced customer product offerings.~~
~~Regional Operating Expenses~~
Total regional expenses, excluding the results of US Airways Group, increased $84 million, or 2.8%, in 2013 to $3.1 billion from $3.0 billion in 2012. The year-over-year increase was primarily driven by a $44 million, or 4.4%, increase in fuel costs and a $40 million, or 2.0%, increase in other regional operating expenses due to an increase in capacity. The increase in fuel costs was driven by higher fuel consumption due to the transition from turboprop to regional jet aircraft.
~~Nonoperating Income (Expense)~~

   Year Ended December 31, $ Change $ Change
due to
Merger Change Excluding
Merger Impact
       2013         2012         $         %
   (In millions, except percentage changes)
Interest income
   $ 20    $ 26    $ (6 ) $ —    $ (6 ) (21.8 )
Interest expense, net of capitalized interest
   (856 ) (632 ) (224 ) (20 ) (204 ) 32.3
Other, net
   (88 ) 221    (309 ) 1    (310 ) nm


Total nonoperating expense, net
   $ (924 ) $ (385 ) $ (539 ) $ (19 ) $ (520 ) nm


~~The following discussion of nonoperating income and expense excludes the results of US Airways Group in order to provide a more meaningful year-over-year comparison.~~
Interest expense, net of capitalized interest increased $204 million, or 32.3%, to $836 million in 2013 from $632 million in 2012 primarily due to special charges of $138 million to recognize post-petition interest expense on unsecured obligations pursuant to the Plan and penalty interest related to 10.5% secured notes and 7.50% senior secured notes. In addition, in 2013 we recorded special charges of $44 million for debt extinguishment costs incurred as a result of the repayment of certain aircraft secured indebtedness, including cash interest charges and non-cash write offs of unamortized debt issuance costs.
Other nonoperating expense, net of $89 million in 2013 consisted principally of net foreign currency losses of $56 million and early debt extinguishment charges of $29 million. Other nonoperating income in 2012 consisted principally of a $280 million special credit related to the settlement of a commercial dispute partially offset by net foreign currency losses.
~~Reorganization Items, Net~~
Reorganization items refer to revenues, expenses (including professional fees), realized gains and losses and provisions for losses that are realized or incurred as a direct result of the Chapter 11 Cases. The following table summarizes the components included in reorganization items, net on AAG’s consolidated statements of operations for the years ended December 31, 2013 and 2012 (in millions):

   2013    2012
Pension and postretirement benefits
   $ —       $ (66 )
Labor-related deemed claim (1)
   1,733       —
Aircraft and facility financing renegotiations and rejections (2), (3)
   325       1,950
Fair value of conversion discount (4)
   218       —
Professional fees
   199       229
Other
   180       95




Total reorganization items, net
   $ 2,655       $ 2,208




~~(1)~~
In exchange for employees’ contributions to the successful reorganization, including agreeing to reductions in pay and benefits, we agreed in the Plan to provide each employee group a deemed claim, which was used to provide a distribution of a portion of the equity of the reorganized entity to those employees. Each employee group received a deemed claim amount based upon a portion of the value of cost savings provided by that group through reductions to pay and benefits as well as through certain work rule changes. The total value of this deemed claim was approximately $1.7 billion.
~~(2)~~
Amounts include allowed claims (claims approved by the Bankruptcy Court) and estimated allowed claims relating to (i) the rejection or modification of financings related to aircraft and (ii) entry of orders treated as

unsecured claims with respect to facility agreements supporting certain issuances of special facility revenue bonds. The Debtors recorded an estimated claim associated with the rejection or modification of a financing or facility agreement when the applicable motion was filed with the Bankruptcy Court to reject or modify such financing or facility agreement and the Debtors believed that it was probable the motion would be approved, and there was sufficient information to estimate the claim. See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information.

(3)
Pursuant to the Plan, the Debtors agreed to allow certain post-petition unsecured claims on obligations. As a result, during the year ended December 31, 2013, we recorded reorganization charges to adjust estimated allowed claim amounts previously recorded on rejected special facility revenue bonds of $180 million, allowed general unsecured claims related to the 1990 and 1994 series of special facility revenue bonds that financed certain improvements at JFK, and rejected bonds that financed certain improvements at ORD, which are included in the table above.

(4)
The Plan allowed unsecured creditors receiving AAG Series A Preferred Stock a conversion discount of 3.5%. Accordingly, we recorded the fair value of such discount upon the confirmation of the Plan by the Bankruptcy Court.
American’s Results of Operations
On December 30, 2015, in order to simplify AAG’s internal corporate structure and as part of the integration efforts following the business combination of AAG and US Airways Group, US Airways merged with and into American, with American as the surviving corporation. As a result of the merger of US Airways and American, US Airways transferred all of its assets, liabilities and off-balance sheet commitments to American. For financial reporting purposes, this transaction constituted a transfer of assets between entities under common control and was accounted for at historical cost. As a result, American’s consolidated financial statements as well as this management’s discussion and analysis of financial condition and results of operations in this Annual Report on Form 10-K (unless otherwise indicated) are presented as though the transaction had occurred on December 9, 2013, when a subsidiary of AMR merged with and into US Airways Group, which represents the earliest date that American and US Airways were under common control. Thus, the full years of 2015 and 2014 and the period from December 9, 2013 to December 31, 2013 are comprised of the financial data of American and US Airways. The periods prior to December 9, 2013 are comprised of the financial data of American only.
In ~~2014,~~2015, American realized operating income of ~~$2.3~~$6.2 billion and net income of ~~$1.3~~$8.1 billion. American’s ~~2014 period~~2015 net income included net special operating charges of ~~$512~~$1.1 billion and total net special credits of $1.8 billion. Excluding the effects of these special charges and credits, American realized operating income of $7.3 billion and net income of $6.3 billion.
In 2014, American realized operating income of $4.3 billion and net income of $2.9 billion. American’s 2014 net income included net special operating charges of $788 million and total net special charges of ~~$974 million.~~$1.3 billion. Excluding the effects of these special charges, American realized operating income of ~~$2.9~~$5.1 billion and net income of ~~$2.3~~$4.2 billion.
In 2013, American realized operating income of ~~$1.5~~$1.4 billion and a net loss of ~~$1.5~~$1.7 billion. American’s 2013 ~~period~~ net loss included net special operating charges of ~~$251~~$528 million and total net special charges of ~~$2.7~~$3.0 billion. Excluding the effects of these charges, American realized operating income of ~~$1.8~~$1.9 billion and net income of $1.2 billion.
~~In 2012, American realized operating income~~
The components of ~~$82 million and a net loss of $1.9 billion.~~ American’s ~~2012 period net loss included net special operating charges of $386 million and~~ total net special charges ~~of $1.7 billion. Excluding the effects of these charges, American realized operating income of $468 million and a net loss of $210 million.~~
~~The components of American’s net special charges~~(credits) included in ~~the~~American’s accompanying consolidated statements of operations are as follows (in millions):

   Year Ended December 31,    Year Ended December 31,
   2014    2013 2012    2015 2014    2013
Other revenue special item, net (1)
   $ —       $ (31 ) $ —       $ —    $ —       $ (31 )
Mainline operating special items, net (2)
   507       282    386       1,051    783       559
Regional operating special items, net(3)
   5       —    —       18    5       —
Nonoperating special items, net ~~(3)~~(4)
   120       121    (280 )    616    128       121
Reorganization items, net ~~(4)~~(5)
   —       2,640    2,179       —    —       2,640
Income tax special items, net ~~(5)~~(6)
   342       (324 ) (569 )    (3,468 ) 344       (324 )








Total
   $ 974       $ 2,688    $ 1,716       $ (1,783 ) $ 1,260       $ 2,965








(1)
In 2013, other revenue special item, net included a credit to other revenues related to a change in accounting method resulting from the modification of American’s AAdvantage miles agreement with Citibank.

(2)
In ~~2014,~~2015, mainline operating special items, net principally included ~~$527 million~~$1.0 billion of ~~Merger~~merger integration expenses related to information technology, alignment of labor union contracts, professional fees, severance,
~~and retention,~~ share-based compensation, ~~divestiture of London Heathrow Slots,~~ fleet restructuring, re-branding of aircraft and airport facilities, relocation and training. In addition, American recorded a net charge of $60 million for bankruptcy related items principally consisting of fair value adjustments for bankruptcy settlement obligations, as well as $181 million in other special charges, including an $81 million charge to revise prior estimates of certain aircraft residual values, and other spare parts asset impairments, as well as $44 million in charges primarily relating to the buyout of certain aircraft leases. These charges were offset in part by a $305 million gain on the sale of Slots
In 2014, mainline operating special items, net principally included $803 million of merger integration expenses related to information technology, alignment of labor union contracts, professional fees, severance and retention, share-based compensation, divestiture of London Heathrow slots, fleet restructuring, re-branding of aircraft and airport facilities, relocation and training. In addition, American recorded a net charge of $60 million for bankruptcy related items principally consisting of fair value adjustments for bankruptcy settlement obligations and an $81 million charge to revise prior estimates of certain aircraft residual values and other spare parts asset impairments. These charges were offset in part by a $309 million gain on the sale of slots at DCA.
In 2013, mainline operating special items, net principally included ~~$166~~$443 million of ~~primarily Merger~~merger related expenses ~~due~~related to the alignment of labor union contracts, professional fees, severance, share-based compensation and ~~share-based compensation.~~fees for US Airways to exit the Star Alliance and its codeshare agreement with United Airlines. In addition, American recorded a $107 million charge related to ~~the~~American’s pilot long-term disability obligation, a $43 million charge for workers’ compensation claims and a $33 million aircraft impairment charge. These charges were offset in part by a $67 million gain on the sale of ~~Slots~~slots at ~~LaGuardia Airport.~~
In 2012, mainline operating special items, net consisted of $386 million of severance and related charges and write-off of leasehold improvements on aircraft and airport facilities that were rejected in connection with the Chapter 11 Cases.LGA.

(3)
The 2015 and 2014 regional operating special items, net principally related to merger integration expenses.
(4)
In ~~2014,~~2015, nonoperating special items, net ~~consisted~~ principally included a $592 million charge to write off all of ~~$43 million for~~the value of Venezuelan ~~foreign currency losses, $48 million~~bolivars held by American due to continued lack of ~~early debt extinguishment costs related to the prepayment~~repatriations and deterioration of 7.50% senior secured notes and other indebtedness and $29 million of non-cash interest accretion on bankruptcy settlement obligations. See Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk for further discussion of our cash heldeconomic conditions in ~~Venezuelan bolivars.~~Venezuela.
In 2014, nonoperating special items, net principally included a $43 million charge for Venezuelan foreign currency losses, $56 million of early debt extinguishment costs primarily related to the prepayment of 7.50% senior secured notes and other indebtedness and $29 million of non-cash interest accretion on bankruptcy settlement obligations.
In 2013, nonoperating special items, net consisted of interest charges of $48 million primarily to recognize post-petition interest expense on unsecured obligations pursuant to the Plan and penalty interest related to 10.5% secured notes and 7.50% senior secured notes, a $54 million charge related to the premium on tender for existing ~~enhanced equipment trust certificates~~EETC financings and the write-off of debt issuance costs and $19 million in charges related to the repayment of existing EETC financings.
~~In 2012, nonoperating special items, net consisted of a $280 million benefit resulting from a settlement of a commercial dispute.~~

~~(4)~~(5)
In 2013, ~~and 2012,~~ American recognized reorganization expenses as a result of the filing of voluntary petitions for relief under Chapter 11. These amounts consisted primarily of estimated allowed claim amounts and professional fees.
~~(5)~~(6)
In ~~2014,~~2015, income tax special items totaled a net ~~were $342 million. During 2014, American sold its portfolio~~credit of ~~fuel hedging contracts that were scheduled to settle on or after June 30, 2014.~~$3.5 billion. In connection with ~~this sale,~~the preparation of American’s financial statements for the fourth quarter of 2015, management determined that it was more likely than not that substantially all of its deferred tax assets, which include its NOLs, would be realized. Accordingly, American ~~recorded~~reversed $3.5 billion of the valuation allowance as of December 31, 2015, which resulted in a special $3.5 billion non-cash tax ~~provision of $328 million~~benefit recorded in the ~~second quarter~~consolidated statement of 2014 that reversed the non-cash tax provision which was recorded in other comprehensive income (OCI), a subset of stockholder’s equity, principally in 2009. This provision represents the tax effect associated with gains recorded in OCI principally in 2009 due to a net increase in the fair value of American’s fuel hedging contracts. In accordance with GAAP, American retained the $328 million tax provision in OCI until the last contract was settled or terminated. In addition, American recorded a special $14 million non-cash deferred income tax provision related to certain indefinite-lived intangible assets.operations for 2015.
In 2014, income tax special items, net were $344 million. During 2014, American sold its portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. In connection with this sale, American recorded a special non-cash tax provision of $328 million in the second quarter of 2014 that reversed the non-cash tax provision which was recorded in OCI, a subset of stockholder’s equity, principally in 2009. This provision represents the tax effect associated with gains recorded in OCI principally in 2009 due to a net increase in the fair value of American’s fuel hedging contracts. In accordance with GAAP, American retained the $328 million tax provision in OCI until the last contract was settled or terminated.
In 2013, ~~and 2012,~~ income tax special items, net included ~~respectively,~~ a $538 ~~million and a $569~~ million non-cash income tax benefit from continuing operations. American is required to consider all items (including items recorded in ~~other comprehensive income)~~OCI) in determining the amount of tax benefit that results from a loss from continuing operations and that should be allocated to continuing operations. As a result, American recorded a tax benefit on the loss from continuing operations for the year, which was exactly offset by income tax expense on ~~other comprehensive income.~~OCI. However, while the income tax benefit from continuing operations is reported on the income statement, the income tax expense on ~~other comprehensive income~~OCI is recorded directly to accumulated other comprehensive income (loss), which is a component of stockholder’s equity. Because the income tax expense on ~~other comprehensive income~~OCI is
equal to the income tax benefit from continuing operations, American’s year-end net deferred tax position is not impacted by this tax allocation. The 2013 tax benefit was offset in part by a $214 million tax charge attributable to additional valuation allowance required to reduce deferred tax assets to the amount American ~~believes is~~believed was more likely than not to be realized.
Income Taxes
At December 31, ~~2014,~~2015, American had approximately ~~$10.3~~$8.8 billion of gross NOL Carryforwards to reduce future federal taxable income, substantially all of which are expected to be available for use in ~~2015.~~2016. American is a member of AAG’s consolidated federal and certain state income tax returns. The amount of federal ~~and state~~ NOL Carryforwards available in those returns is ~~$10.1~~$8.0 billion, ~~and $4.6 billion, respectively,~~ substantially all of which is expected to be available for use in ~~2015.~~2016. The federal NOL Carryforwards will expire beginning in ~~2022~~2023 if unused. These NOL Carryforwards include an unrealized tax benefit of ~~$712 million~~$1.2 billion related to ~~the implementation of~~ share-based compensation ~~accounting guidance~~ that will be recorded in equity when realized. American ~~also~~ had approximately ~~$3.9~~$3.7 billion of NOL Carryforwards to reduce future state taxable income at December 31, ~~2014,~~2015, which will expire in years ~~2015~~2016 through 2034 if unused. American’s ability to deduct its NOL Carryforwards and to utilize certain other available tax attributes can be substantially constrained under the general annual limitation rules of Section 382 where an “ownership change” has occurred. American experienced an ownership change in connection with its emergence from the Chapter 11 ~~Cases.~~Cases, and US Airways Group experienced an ownership change in connection with the Merger. As a result of the Merger, US Airways Group is now included in the AAG consolidated federal and state income tax returns. The general limitation rules of Section 382 for a debtor in a bankruptcy case are liberalized where the ownership change occurs upon emergence from bankruptcy. American elected to be covered by certain special rules for federal income tax purposes that ~~permit~~permitted approximately $9.5 billion (with $7.3 billion of unlimited NOL remaining at December 31, 2015) of its federal NOL Carryforwards to be utilized without regard to the Section 382 annual limitation ~~rules.~~rules unless a second ownership change occurred on or before December 9, 2015. No second ownership change occurred within that period. Substantially all of American’s remaining federal NOL Carryforwards (attributable to US Airways Group) are subject to limitation under Section 382; however, American’s ability to utilize such NOL Carryforwards is not anticipated to be effectively constrained as a result of such limitation. Similar limitations may apply for state income tax purposes. American’s ability to utilize any new NOL Carryforwards arising after the ownership ~~change~~changes is not affected by the annual limitation rules imposed by Section 382 unless another ownership change occurs.
At December 31, ~~2014,~~2015, American had an ~~AMT~~Alternative Minimum Tax (AMT) credit carryforward of approximately ~~$435~~$458 million available for federal income tax purposes, which is available for an indefinite period.
In connection with the preparation of American’s ~~net deferred tax assets, which include~~financial statements for the NOL Carryforwards, are subject to a full valuation allowance. At December 31, 2014, the federal and state valuation allowances were $5.1 billion and $208 million, respectively. In accordance with GAAP, utilizationfourth quarter of ~~the NOL Carryforwards after December 9, 2013 will result in a corresponding decrease in the valuation allowance and offset American’s tax provision dollar for dollar.~~
~~American provides a valuation allowance for deferred tax assets when~~2015, management determined that it iswas more likely than not that ~~some portion, or~~substantially all of its deferred tax assets, ~~will not~~which include its NOLs, would be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income (primarily reversals of deferred tax liabilities) during the periods in which those temporary differences will become deductible. In making this determination,Accordingly, American considers all available positive and negative evidence and makes certain assumptions. American considers many factors in evaluating the realizability of its deferred tax assets including risks associated with merger integration as well as other factors, which continue to be affected by conditions beyond American’s control, such as the conditionreversed $3.5 billion of the ~~economy, the level and volatility of fuel prices and travel demand. American has concluded~~valuation allowance as of December 31, ~~2014 that~~2015, which resulted in a special $3.5 billion non-cash tax benefit recorded in the ~~valuation allowance was still needed on its deferred~~consolidated statement of operations for 2015.
Beginning in 2016, American expects to record income tax ~~asset based on~~expense with an effective rate of approximately 38%, which will be substantially non-cash as American utilizes the ~~weight of the factors~~NOLs described ~~above.~~above to offset cash income taxes due.
For the year ended December 31, 2014, American recorded a ~~$319~~$320 million tax ~~provision. This~~ provision, which included ~~$342~~$344 million of special tax charges as described above. In addition, American recorded $6 million of tax expense principally related to certain states and countries where NOL Carryforwards were limited or unavailable to be used. These charges were offset in part by a $29 million federal income tax benefit resulting from our elections under applicable sections of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 and the Housing and Economic Recovery Act of 2008 (as extended by the Tax Increase Prevention Act of 2014), allowing corporations to accelerate utilization of certain research and AMT credit carryforwards in lieu of applicable bonus depreciation on certain qualifying capital investments.
For the year ended December 31, 2013, American recorded a $354 million tax ~~benefit. This~~ benefit, which included $324 million of net special tax benefits as described above. ~~In addition,~~
2015 Compared to 2014
Operating Revenues
   Year Ended December 31,    Percent
Increase
(Decrease)
       2015            2014
   (In millions, except percentage changes)
Mainline passenger
   $ 29,037       $ 30,802       (5.7 )
Regional passenger
   6,475       6,322       2.4
Cargo
   760       875       (13.1 )
Other
   4,812       4,764       1.0





Total operating revenues
   $ 41,084       $ 42,763       (3.9 )





Total operating revenues in 2015 decreased $1.7 billion, or 3.9%, from 2014 principally due to competitive growth and weaker international yields primarily due to foreign currency devaluation relative to the U.S. dollar. Significant changes in the components of operating revenues are as follows:
Mainline passenger revenues decreased $1.8 billion, or 5.7%, in 2015 from 2014 driven primarily by a decrease in yield.
Regional passenger revenues increased $153 million, or 2.4%, in 2015 from 2014 due primarily to higher ASMs, offset in part by a decrease in yield.
Cargo revenue decreased $115 million, or 13.1%, in 2015 from 2014 driven primarily by a decrease in international freight yields.
Operating Expenses
   Year Ended December 31,    Percent
Increase
(Decrease)
       2015            2014
   (In millions, except percentage changes)
Aircraft fuel and related taxes
   $ 6,226       $ 10,592       (41.2 )
Salaries, wages and benefits
   9,514       8,499       11.9
Maintenance, materials and repairs
   1,889       2,051       (7.9 )
Other rent and landing fees
   1,731       1,727       0.2
Aircraft rent
   1,250       1,250       —
Selling expenses
   1,394       1,544       (9.7 )
Depreciation and amortization
   1,364       1,301       4.8
Special items, net
   1,051       783       34.2
Other
   4,378       4,186       4.6





Total mainline operating expenses
   28,797       31,933       (9.8 )
Regional expenses:

Fuel
   1,230       2,009       (38.8 )
Other
   4,868       4,555       6.9





Total regional operating expenses
   6,098       6,564       (7.1 )





Total operating expenses
   $ 34,895       $ 38,497       (9.4 )





Total operating expenses in 2015 decreased $3.6 billion, or 9.4%, from 2014. Significant changes in the components of mainline operating expenses are as follows:
Aircraft fuel and related taxes decreased $4.4 billion, or 41.2%, in 2015 from 2014 primarily due to a 40.7% decrease in the average price per gallon of fuel to $1.72 in 2015 from an average price per gallon of $2.91 in 2014.
Salaries, wages and benefits increased $1.0 billion, or 11.9%, in 2015 from 2014 primarily due to increased costs associated with the new, merger related pilot, flight attendant and customer service and reservation agent collective bargaining agreements.
Maintenance, materials and repairs decreased $162 million, or 7.9%, in 2015 from 2014 primarily due to fewer engine overhauls in 2015, driven by American’s fleet renewal program.
Selling expenses decreased $150 million, or 9.7%, in 2015 from 2014 primarily due to lower contractually negotiated rates for certain commissions and booking fees as well as lower revenues in 2015.
Regional Operating Expenses
Total regional expenses decreased $466 million, or 7.1%, in 2015 to $6.1 billion from $6.6 billion in 2014. The year-over-year decrease was primarily due to a $779 million, or 38.8%, decrease in fuel costs, offset in part by a $313 million, or 6.9%, increase in other regional operating expenses. The average price per gallon of fuel decreased 40.9% to $1.73 in 2015 from $2.92 in 2014. The increase in other regional operating expenses was principally due to increased flying under capacity purchase agreements.
Nonoperating Income (Expense)
   Year Ended December 31, Percent
Increase
(Decrease)
       2015         2014
   (In millions, except percentage changes)
Interest income
   $ 49    $ 32    53.1
Interest expense, net of capitalized interest
   (796 ) (847 ) (6.0 )
Other, net
   (774 ) (183 ) nm


Total nonoperating expense, net
   $ (1,521 ) $ (998 ) 52.4


American’s short-term investments in each period consisted of highly liquid investments that provided nominal returns.
The following table provides the components of interest expense:
   Year Ended December 31, Increase
(Decrease)
       2015         2014
   (In millions)
Special items, net
   $ —    $ 29    $ (29 )
Amortization of debt issuance costs and debt discounts
   38    37    1
Interest expense on debt and capital lease obligations
   810    842    (32 )


Total interest expense
   848    908    (60 )
Less: capitalized interest
   (52 ) (61 ) 9


Total interest expense, net of capitalized interest
   $ 796    $ 847    $ (51 )


Other nonoperating expense, net in 2015 included a net $616 million in other nonoperating special charges and $159 million of foreign currency losses. The other nonoperating special charges consisted of a $592 million write off of all of the value of Venezuelan bolivars held by American ~~recorded~~due to continued lack of repatriations and deterioration of economic conditions in Venezuela and $41 million in charges principally related to non-cash write offs of unamortized debt discount and debt issuance costs associated with refinancing certain of our secured term loan facilities, prepayments of certain aircraft financings and the purchase and subsequent remarketing of certain special facility revenue bonds. These charges were offset in part by a ~~$30~~$17 million ~~federal income tax benefit under~~early debt extinguishment gain associated with the ~~Housing~~repayment of American’s AAdvantage loan with Citibank. The foreign currency losses were driven primarily by the strengthening of the U.S. dollar relative to other currencies during 2015, principally in Latin American and ~~Economic Recovery Act~~European markets, including a 34% decrease in the value of ~~2008 as described above.~~the Argentinian peso, a 30% decrease in the value of the Brazilian real, a 14% decrease in the value of the Mexican peso, a 10% decrease in the value of the Euro and a 5% decrease in the value of the British pound.
~~For the year ended December 31, 2012, American recorded~~Other nonoperating expense, net in 2014 consisted of $114 million of net foreign currency losses, including a ~~$569~~$43 million special ~~tax benefit as described above.~~charge for Venezuelan foreign currency losses, and $56 million in other nonoperating special charges primarily due to early debt extinguishment costs related to the prepayment of our 7.50% senior secured notes and other indebtedness. The foreign currency losses were driven primarily by the strengthening of the U.S. dollar relative to other currencies during 2014, principally in the Latin American market, including a 48% decrease in the value of the Venezuelan bolivar and a 14% decrease in the value of the Brazilian real.
2014 Compared to 2013
Operating Revenues

   Year Ended December 31,    Percent
Increase
(Decrease)    Year Ended December 31,    $ Change    $ Change
due to
Merger    Change Excluding
Merger Impact
       2014            2013               2014            2013            $         %
   (In millions, except percentage changes)    (In millions, except percentage changes)
Mainline passenger
   $ 20,345       $ 19,594       3.8       $ 30,802       $ 20,218       $ 10,584       $ 9,833       $ 751    3.8
Regional passenger
   2,911       2,927       (0.5 )    6,322       3,131       3,191       3,207       (16 ) (0.5 )
Cargo
   717       676       6.1       875       685       190       149       41    6.1
Other
   3,168       2,563       23.6       4,764       2,667       2,097       1,492       605    23.6














Total operating revenues
   $ 27,141       $ 25,760       5.4       $ 42,763       $ 26,701       $ 16,062       $ 14,681       $ 1,381    5.4














The following discussion of operating revenues excludes the results of US Airways in order to provide a more meaningful year-over-year comparison.
Total operating revenues in 2014 increased $1.4 billion or 5.4%, which was driven by strong demand for air travel. Significant changes in the components of operating revenues, excluding the results of US Airways, are as follows:

Mainline passenger revenues increased $751 million, or 3.8%, in 2014 from ~~the~~ 2013 ~~period~~primarily due to higher yields and ASMs, offset in part by slightly lower load factors.

Cargo revenues increased $41 million, or 6.1%, in 2014 from ~~the~~ 2013 ~~period~~ driven primarily by an increase in international freight volumes.

Other revenues increased $605 million, or 23.6%, in 2014 from ~~the~~ 2013 ~~period~~ driven primarily by higher revenues associated with American’s ~~frequent flyer~~loyalty program driven by American’s affinity card agreement with Citibank.
Operating Expenses

   Year Ended December 31,    Percent
Increase
(Decrease)    Year Ended December 31,    $ Change    $ Change
due to
Merger Change��Excluding
Merger Impact
       2014            2013               2014            2013            $         %
   (In millions, except percentage changes)    (In millions, except percentage changes)
Aircraft fuel and related taxes
   $ 7,190       $ 7,628       (5.7 )    $ 10,592       $ 7,839       $ 2,753       $ 3,190    $ (437 ) (5.7 )
Salaries, wages and benefits
   5,662       5,267       7.5       8,499       5,452       3,047       2,652    395    7.5
Maintenance, materials and repairs
   1,334       1,222       9.2       2,051       1,260       791       679    112    9.2
Other rent and landing fees
   1,145       1,117       2.5       1,727       1,152       575       547    28    2.5
Aircraft rent
   860       743       15.7       1,250       768       482       365    117    15.7
Selling expenses
   1,091       1,128       (3.3 )    1,544       1,158       386       423    (37 ) (3.3 )
Depreciation and amortization
   896       830       7.9       1,301       853       448       382    66    7.9
Special items, net
   507       282       80.0       783       559       224       (1 ) 225    80.0
Other
   3,005       2,935       2.4       4,186       3,007       1,179       1,109    70    2.4












Total mainline operating expenses
   21,690       21,152       2.5       $ 31,933       $ 22,048       $ 9,885       $ 9,346    $ 539    2.5
Regional expenses:

Fuel
   999       1,055       (5.3 )    2,009       1,119       890       947    (57 ) (5.3 )
Other
   2,114       2,019       4.7       4,555       2,174       2,381       2,286    95    4.7












Total regional operating expenses
   3,113       3,074       1.3       6,564       3,293       3,271       3,233    38    1.3












Total operating expenses
   $ 24,803       $ 24,226       2.4       $ 38,497       $ 25,341       $ 13,156       $ 12,579    $ 577    2.4












The following discussion of operating expenses excludes the results of US Airways in order to provide a more meaningful year-over-year comparison.
Total operating expenses in 2014 increased $577 million, or 2.4%, from ~~the 2013 period.~~2013. Significant changes in the components of mainline operating expenses, excluding the results of US Airways, are as follows:

Aircraft fuel and related taxes decreased ~~$438~~$437 million, or 5.7%, in 2014 from ~~the~~ 2013 ~~period~~ primarily due to a decrease in the average price per gallon of fuel.

Salaries, wages and benefits increased $395 million, or 7.5%, in 2014 from ~~the~~ 2013 ~~period~~ primarily due to increased costs associated with merger related labor contracts.

Maintenance, materials and repairs increased $112 million, or 9.2%, in 2014 from ~~the~~ 2013 ~~period~~ primarily due to an increase in the rate per engine overhaul.

Aircraft rent increased $117 million, or 15.7%, in 2014 from ~~the~~ 2013 ~~period~~ primarily as a result of new leased aircraft deliveries in 2014 as American continued its fleet renewal program.

Depreciation and amortization increased $66 million, or 7.9%, in 2014 from ~~the~~ 2013 ~~period~~ primarily as a result of new purchased aircraft deliveries since the end of 2013 as American continues its fleet renewal program.
Regional Operating Expenses
Total regional expenses increased ~~$39~~$38 million, or 1.3%, in 2014 from ~~the 2013 period.~~2013. Other regional operating expenses increased $95 million, or 4.7%, primarily due to higher expenses associated with certain capacity purchase agreements, offset by a ~~$56~~$57 million, or 5.3%, decrease in fuel costs as a result of a decrease in the average price per gallon of fuel.
Nonoperating Income (Expense)

   Year Ended December 31, Percent
Increase
(Decrease)    Year Ended December 31, $ Change $ Change
due to
Merger Change Excluding
Merger Impact
       2014         2013            2014         2013         $         %
   (In millions, excluding percentage changes)    (In millions, except percentage changes)
Interest income
   $ 25    $ 20    27.7       $ 32    $ 20    $ 12    $ 7    $ 5    27.7
Interest expense, net of capitalized interest
   (581 ) (710 ) (18.1 )    (847 ) (727 ) (120 ) (249 ) 129    (18.1 )
Other, net
   (153 ) (84 ) 81.0       (183 ) (84 ) (99 ) (30 ) (69 ) 81.0




Total nonoperating expense, net
   $ (709 ) $ (774 ) (8.4 )    $ (998 ) $ (791 ) $ (207 ) $ (272 ) $ 65    (8.4 )




Interest income was ~~$25~~$32 million and $20 million in 2014 and 2013, respectively. American’s short-term investments in each period consisted of highly liquid investments which provided nominal returns.
The following table provides the components of interest ~~expense, including amortization of debt discounts and debt issue costs, capitalized interest and special items:~~expense:

   Year Ended December 31, Increase
(Decrease)    Year Ended December 31, Increase
(Decrease)
       2014         2013            2014         2013
   (In millions)    (In millions)
Special items(1)
   $ 29    $ 92    $ (63 )    $ 29    $ 92    $ (63 )
Amortization of debt issuance costs and debt discounts
   38    33    5       38    33    5
Interest expense on debt and capital lease obligations(2)
   567    632    (65 )    567    632    (65 )




Total interest expense
   634    757    (123 )    634    757    (123 )
Less: capitalized interest
   (53 ) (47 ) (6 )    (53 ) (47 ) (6 )




Total interest expense, net of capitalized interest
   $ 581    $ 710    $ (129 )    581    710    (129 )
US Airways total interest expense, net of capitalized interest
   266    17    249




Total American interest expense, net of capitalized interest
   $ 847    $ 727    $ 120


The following discussion of nonoperating income and expense excludes the results of US Airways in order to provide a more meaningful year-over-year comparison.
Interest expense, net of capitalized interest decreased $129 million ~~or 18.1%,~~ in 2014 from ~~the~~ 2013 ~~period~~ primarily due to a $63 million decrease in special charges recognized ~~period-over-period~~year-over-year as further described below, as well as refinancing activities that resulted in $65 million less interest expense recognized in 2014. In 2014, American recognized $29 million of special charges relating to non-cash interest accretion on bankruptcy settlement obligations. In 2013, American recognized $48 million of special charges relating to post-petition interest expense on unsecured obligations pursuant to the Plan and penalty interest related to American’s 10.5% secured notes and 7.50% senior secured notes. In addition, in 2013 American recorded special charges of $44 million for debt extinguishment costs incurred as a result of the repayment of certain aircraft secured indebtedness, including cash interest charges and non-cash write offs of unamortized debt issuance costs.
(1)
In 2014, American recognized $29 million of special charges relating to non-cash interest accretion on bankruptcy settlement obligations. In 2013, American recognized $48 million of special charges relating to post-petition interest expense on unsecured obligations pursuant to the Plan and penalty interest related to American’s 10.5% secured notes and 7.50% senior secured notes. In addition, in 2013 American recorded special charges of $44 million for debt extinguishment costs incurred as a result of the repayment of certain aircraft secured indebtedness, including cash interest charges and non-cash write offs of unamortized debt issuance costs.
(2)
As a result of the 2013 refinancing activities and the early extinguishment of American’s 7.50% senior secured notes in 2014, American incurred $65 million less interest expense in 2014 as compared to 2013.
Other nonoperating expense, net in 2014 consisted of $92 million of net foreign currency losses, including a $43 million special charge for Venezuelan foreign currency losses, and $48 million of early debt extinguishment costs related to the prepayment of American’s 7.50% senior secured notes and other indebtedness. The foreign currency losses were driven primarily by the strengthening of the U.S. dollar relative to other currencies during 2014, principally in ~~2014,~~the Latin American ~~recognized $65 million less interest expense~~market, including a 48% decrease in ~~2014 as compared to~~ the ~~2013 period.~~value of the Venezuelan bolivar and a 14% decrease in the value of the Brazilian real.
Other nonoperating expense, net ~~of $153 million in 2014 consisted principally of net foreign currency losses of $92 million and early debt extinguishment charges of $48 million. Other nonoperating expense, net of $84 million~~ in 2013 consisted principally of net foreign currency losses of $55 million and early debt extinguishment charges of $29 million. Other nonoperating expense, net increased $69 million, or 81.0%, during 2014 primarily due to special charges recognized as a result of early debt extinguishment and an increase in foreign currency losses driven by the strengthening of the U.S. dollar in foreign currency transactions, principally in Latin American markets. American recorded a $43 million special charge for Venezuelan foreign currency losses in 2014. See Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk for further discussion of our cash held in Venezuelan bolivars. In addition, American’s nonoperating special items included $48 million in special charges in the 2014 primarily related to the early extinguishment of American’s 7.50% senior secured notes and other indebtedness.
Reorganization Items, Net
Reorganization items refer to revenues, expenses (including professional fees), realized gains and losses and provisions for losses that are realized or incurred as a direct result of the Chapter 11 Cases. The following table summarizes the components included in reorganization items, net on American’s consolidated statement of operations for the year ended December 31, 2013 (in millions):

   2013
Labor-related deemed claim (1)
   $ 1,733
Aircraft and facility financing renegotiations and rejections (2), (3)
   320
Fair value of conversion discount (4)
   218
Professional fees
   199
Other
   170


Total reorganization items, net
   $ 2,640


(1)
In exchange for employees’ contributions to the successful reorganization, including agreeing to reductions in pay and benefits, American agreed in the Plan to provide each employee group a deemed claim, which was used to provide a distribution of a portion of the equity of the reorganized entity to those employees. Each employee group received a deemed claim amount based upon a portion of the value of cost savings provided by that group through reductions to pay and benefits as well as through certain work rule changes. The total value of this deemed claim was approximately $1.7 billion.

(2)
Amounts include allowed claims (claims approved by the Bankruptcy Court) and estimated allowed claims relating to (i) the rejection or modification of financings related to aircraft and (ii) entry of orders treated as unsecured claims with respect to facility agreements supporting certain issuances of special facility revenue bonds. The Debtors recorded an estimated claim associated with the rejection or modification of a financing or facility agreement when the applicable motion was filed with the Bankruptcy Court to reject or modify

such financing or facility agreement and the Debtors believed that it was probable the motion would be approved, and there was sufficient information to estimate the claim. See Note 2 to American’s Consolidated Financial Statements in Part II, Item 8B for further information.
~~(3)~~
Pursuant to the Plan, the Debtors agreed to allow certain post-petition unsecured claims on obligations. As a result, during the year ended December 31, 2013, American recorded reorganization charges to adjust estimated allowed claim amounts previously recorded on rejected special facility revenue bonds of $180 million, allowed general unsecured claims related to the 1990 and 1994 series of special facility revenue bonds that financed certain improvements at JFK, and rejected bonds that financed certain improvements at ORD, which are included in the table above.
~~(4)~~
The Plan allowed unsecured creditors receiving AAG Series A Preferred Stock a conversion discount of 3.5%. Accordingly, American recorded the fair value of such discount upon the confirmation of the Plan by the Bankruptcy Court.
~~2013 Compared to 2012~~
~~Operating Revenues~~

   Year Ended December 31,    Percent
Increase
(Decrease)
       2013            2012
   (In millions, except percentage changes)
Mainline passenger
   $ 19,594       $ 18,743       4.5
Regional passenger
   2,927       2,914       0.5
Cargo
   676       675       —
Other
   2,563       2,493       2.8





Total operating revenues
   $ 25,760       $ 24,825       3.8





Total operating revenues in 2013 were $25.8 billion as compared to $24.8 billion in 2012, an increase of $935 million or 3.8%, which was driven by strong demand for air travel. Significant changes in the components of operating revenues are as follows:
~~Mainline passenger revenues increased 4.5% to $19.6 billion in 2013 as compared to $18.7 billion in 2012 due to an increase in ASMs and yield.~~
~~Regional passenger revenues were $2.9 billion, which was relatively flat as compared to 2012 due to an increase in ASMs, offset by a decrease in yield.~~
Other revenues were $2.6 billion in 2013, an increase of $70 million, or 2.8%, primarily due to increased revenues associated with the sale of AAdvantage frequent flyer mileage credits and a $31 million special credit related to a change in accounting method resulting from the modification of American’s AAdvantage miles agreement with Citibank.
~~Operating Expenses~~

   Year Ended December 31,    Percent
Increase
(Decrease)
       2013            2012
   (In millions, except percentage changes)
Aircraft fuel and related taxes
   $ 7,628       $ 7,705       (1.0 )
Salaries, wages and benefits
   5,267       6,208       (15.2 )
Maintenance, materials and repairs
   1,222       1,158       5.5
Other rent and landing fees
   1,117       1,083       3.2
Aircraft rent
   743       554       34.2
Selling expenses
   1,128       1,059       6.5
Depreciation and amortization
   830       845       (1.7 )
Special items, net
   282       386       (26.9 )
Other
   2,935       2,696       8.9





Total mainline operating expenses
   $ 21,152       $ 21,694       (2.5 )





Regional expenses:

Fuel
   1,055       1,012       4.2
Other
   2,019       2,037       (0.9 )





Total regional expenses
   $ 3,074       $ 3,049       0.8





Total operating expenses
   $ 24,226       $ 24,743       (2.1 )





Total operating expenses in 2013 were $24.2 billion as compared to $24.7 billion in 2012, a decrease of $517 million or 2.1%. Significant changes in the components of operating expenses are as follows:
Salaries, wages and benefits decreased $941 million, or 15.2%, due to the results of voluntary and involuntary terminations in connection with the 2012 restructuring plan, as well as effects related to the freezing of American’s pension plan in 2012.
~~Aircraft rent increased $189 million, or 34.2%, as a result of new aircraft deliveries in 2013 as American continued its fleet renewal program.~~
~~Selling expenses increased $69 million, or 6.5%, as a result of higher commissions and credit card fees related to the increase in passenger revenues.~~
~~Other operating expenses increased $239 million, or 8.9%, due to higher costs associated with outsourced services and enhanced customer product offerings.~~
~~Regional Operating Expenses~~
Total regional expenses increased $25 million, or 0.8%, in 2013 to $3.1 billion from $3.0 billion in 2012. The year-over-year increase was primarily driven by a $43 million, or 4.2%, increase in fuel costs driven by higher fuel consumption due to the transition from turboprop to regional jet aircraft.
~~Nonoperating Income (Expense)~~

   Year Ended December 31, Percent
Increase
(Decrease)
       2013         2012
   (In millions, except percentage changes)
Interest income
   $ 20    $ 25    (21.3 )
Interest expense, net of capitalized interest
   (710 ) (646 ) 9.8
Other, net
   (84 ) 223    nm


Total nonoperating expense, net
   $ (774 ) $ (398 ) (94.2 )


Interest expense, net of capitalized interest increased $64 million, or 9.8%, to $710 million in 2013 from $646 million in 2012 primarily due to special charges of $92 million to recognize post-petition interest expense on unsecured obligations pursuant to the Plan and penalty interest related to 10.5% secured notes and 7.50% senior secured notes.
Other nonoperating expense, net of $84 million in 2013 consists principally of net foreign currency losses of $55 million and early debt extinguishment charges of $48 million. Other nonoperating income in 2012 consisted principally of a $280 million special credit related to the settlement of a commercial dispute partially offset by net foreign currency losses.
~~Reorganization Items, Net~~
Reorganization items refer to revenues, expenses (including professional fees), realized gains and losses and provisions for losses that are realized or incurred as a direct result of the Chapter 11 Cases. The following table summarizes the components included in reorganization items, net on American’s consolidated statements of operations for the years ended December 31, 2013 and 2012 (in millions):

   2013    2012
Pension and postretirement benefits
   $ —       $ (66 )
Labor-related deemed claim (1)
   1,733       —
Aircraft and facility financing renegotiations and rejections (2), (3)
   320       1,951
Fair value of conversion discount (4)
   218       —
Professional fees
   199       227
Other
   170       67




Total reorganization items, net
   $ 2,640       $ 2,179




~~(1)~~
In exchange for employees’ contributions to the successful reorganization, including agreeing to reductions in pay and benefits, American agreed in the Plan to provide each employee group a deemed claim, which was used to provide a distribution of a portion of the equity of the reorganized entity to those employees. Each employee group received a deemed claim amount based upon a portion of the value of cost savings provided by that group through reductions to pay and benefits as well as through certain work rule changes. The total value of this deemed claim was approximately $1.7 billion.
~~(2)~~
Amounts include allowed claims (claims approved by the Bankruptcy Court) and estimated allowed claims relating to (i) the rejection or modification of financings related to aircraft and (ii) entry of orders treated as unsecured claims with respect to facility agreements supporting certain issuances of special facility revenue bonds. The Debtors recorded an estimated claim associated with the rejection or modification of a financing or facility agreement when the applicable motion was filed with the Bankruptcy Court to reject or modify such financing or facility agreement and the Debtors believed that it was probable the motion would be approved, and there was sufficient information to estimate the claim. See Note 2 to American’s Consolidated Financial Statements in Part II, Item 8B for further information.

(3)
Pursuant to the Plan, the Debtors agreed to allow certain post-petition unsecured claims on obligations. As a result, during the year ended December 31, 2013, American recorded reorganization charges to adjust estimated allowed claim amounts previously recorded on rejected special facility revenue bonds of $180 million, allowed general unsecured claims related to the 1990 and 1994 series of special facility revenue bonds that financed certain improvements at JFK, and rejected bonds that financed certain improvements at ORD, which are included in the table above.

(4)
The Plan allowed unsecured creditors receiving AAG Series A Preferred Stock a conversion discount of 3.5%. Accordingly, American recorded the fair value of such discount upon the confirmation of the Plan by the Bankruptcy Court.
Liquidity and Capital Resources
Cash, Short-Term Investments and Restricted Cash
As of December 31, ~~2014,~~2015, AAG’s total cash, short-term investments and restricted cash and short-term investments was ~~$8.1~~$6.9 billion, of which ~~$774~~$695 million was restricted. Additional detail is provided in the table below (in millions):

   AAG    American    AAG    American
   December 31,    December 31,    December 31,    December 31,
   2014    2013    2014    2013    2015    2014    2015    2014
Cash
   $ 994       $ 1,140       $ 785       $ 829       $ 390       $ 994       $ 364       $ 984
Short-term investments
   6,309       8,111       3,290       5,162
Short-term investments.
   5,864       6,309       5,862       6,306
Restricted cash and short-term investments (1)
   774       1,035       650       702       695       774       695       774
















Total cash, short-term investments and restricted cash and short-term investments
   $ 8,077       $ 10,286       $ 4,725       $ 6,693       $ 6,949       $ 8,077       $ 6,921       $ 8,064
















(1)
Our restricted cash and short-term investments related primarily to collateral held to support ~~projected~~ workers’ compensation obligations.
As of December 31, 2015, $150 million of our cash and short-term investment balances were held as foreign currency in foreign bank accounts. In the fourth quarter of 2015, we recognized a $592 million special charge to write off all of the value of Venezuelan bolivars held by us, due to continued lack of repatriations and deterioration of economic conditions in Venezuela. During 2014, we significantly reduced capacity in the Venezuelan market and we no longer accept bolivars as payment for airline tickets.
As of December 31, 2014, $804 million of our cash and short-term ~~investments~~investment balances were held as foreign currency in foreign bank accounts, of which approximately $656 million was held in Venezuelan bolivars. This balance ~~includes~~included approximately $621 million valued at 6.3 bolivars and approximately $35 million valued at 12.0 bolivars, with the rate depending on the date we submitted our repatriation request to the Venezuelan government. These rates are materially more favorable than the exchange rates currently prevailing for other transactions conducted outside of the Venezuelan government’s currency exchange system that we participate in. Our cash balance held in Venezuelan bolivars decreased $54 million from the December 31, 2013 balance of $710 million primarily due to $88 million in cash repatriations and $30 million
Generally, fluctuations in foreign ~~currency losses as described below, partially offset~~currencies, including devaluations, cannot be predicted by ~~additional cash proceeds from ticket sales in early 2014. In~~us and can significantly affect the second and third quarters of 2014, we repatriated $65 million including $31 million valued at 6.3 bolivars to the dollar and $34 million valued at 10.6 bolivars to the dollar. In the fourth quarter of 2014, we incurred an $11 million foreign currency loss related to the receipt of $23 million at a rate of 6.3 bolivars to the dollar for onevalue of our ~~2012~~cash and short-term investments located outside the United States. These conditions, as well as any further delays, devaluations or imposition of more stringent repatriation ~~requests originally valued at a rate~~restrictions, may materially adversely affect our business, results of 4.3 bolivars to the dollar. Accordingly, we revalued our remaining pending 2012 repatriation requests from 4.3 to 6.3 bolivars to the dollar resulting in additional foreign currency losses of $19 million. In total, we recognized a $30 million special charge for these foreign currency losses in the fourth quarter of 2014. During 2014, we significantly reduced capacity in this marketoperations and we are no longer accepting bolivars as payment for airline tickets. We are continuing to work with Venezuelan authorities regarding the timing and exchange rate applicable to the repatriation of funds held in local currency. We are monitoring this situation closely and continue to evaluate our holdings of Venezuelan bolivars for additional foreign currency losses, which could be material, particularly in light of the uncertainty posed by the new foreign exchange regulations announced in mid-February 2015 and the continued deterioration of economic conditions in Venezuela.financial condition. See Part I, Item 1A.
Risk Factors – “We “We operate a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our ~~control~~control”” for additional discussion of this and other currency risks.
~~Share Repurchase Programs~~
In July 2014, as part of a capital deployment program, our Board of Directors authorized a $1.0 billion share repurchase program which was completed in December 2014. During the year ended December 31, 2014, we repurchased 23.4 million shares of AAG Common Stock for $1.0 billion at a weighted average cost per share of $42.72.
On January 27, 2015, we announced that our Board of Directors had authorized a new $2.0 billion share repurchase program to be completed by the end of 2016. Shares repurchased under the program may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Any such repurchases will be made from time to time subject to market and economic conditions, applicable legal requirements and other relevant factors. The program does not obligate us to repurchase any specific number of shares and may be suspended at any time at our discretion.
Separate from our share repurchase programs, during 2014, we also withheld approximately 9 million shares of AAG Common Stock and paid approximately $325 million in satisfaction of certain tax withholding obligations associated with distributions under the Plan and employee equity awards.
~~Cash Dividends Paid~~
In July 2014, as part of our capital deployment program, our Board of Directors declared a $0.10 per share cash dividend for shareholders of record as of August 4, 2014, and payable on August 18, 2014.
~~In October 2014, our Board of Directors declared a $0.10 per share dividend for shareholders of record on November 3, 2014, and payable on November 17, 2014.~~
~~In January 2015, our Board of Directors declared a $0.10 per share dividend for shareholders of record on February 9, 2015, and payable on February 23, 2015.~~
~~The total cash payment for dividends during the year ended December 31, 2014 was $144 million.~~
Any future dividends that may be declared and paid from time to time under our capital deployment program will be subject to market and economic conditions, applicable legal requirements and other relevant factors. Our capital deployment program does not obligate us to continue a dividend for any fixed period, and payment of dividends may be suspended at any time at our discretion.
Sources and Uses of Cash
AAG
2015 Compared to 2014
Operating Activities
Net cash provided by operating activities was $6.2 billion and $3.1 billion in 2015 and 2014, respectively, a year-over-year increase of $3.2 billion. The increase was primarily due to increased profitability driven by substantially lower fuel costs. In addition, a decrease in pension contributions from $810 million in 2014 to $6 million in 2015 contributed to increased operating cash flows. Our 2015 profitability was negatively affected by a $592 million charge to write off all of the value of Venezuelan bolivars held by us due to continued lack of repatriations and deterioration of economic conditions in Venezuela.
Investing Activities
Net cash used in investing activities was $5.6 billion and $2.9 billion in 2015 and 2014, respectively.
Principal investing activities in 2015 included expenditures of $6.2 billion for property and equipment, consisting primarily of the purchase of 114 newly delivered aircraft and eight spare engines, including 31 Airbus A321 family aircraft, 24 Embraer 175 aircraft, 20 Bombardier CRJ900 aircraft, 17 Boeing 737-800 aircraft, 13 Boeing 787 aircraft, seven Airbus A319 aircraft and two Boeing 777 aircraft and the purchase of five Boeing 757 aircraft previously being leased. These cash outflows were offset in part by $391 million in net sales of short-term investments and a $79 million decrease in restricted cash and short-term investments primarily due to lower collateral requirements with respect to workers’ compensation obligations.
Principal investing activities in 2014 included expenditures of $5.3 billion for property and equipment, consisting primarily of the purchase of 70 newly delivered aircraft, including 25 Airbus A320 family aircraft, 20 Boeing 737-800 aircraft, 16 Bombardier CRJ900 aircraft, six Boeing 777 aircraft, and three Airbus A330 family aircraft, the purchase of aircraft previously leased, including nine Airbus A320 family aircraft, three Airbus A330 family aircraft and three Boeing 777 aircraft, as well as pre-delivery deposits for certain aircraft on order. These cash outflows were offset in part by $1.8 billion in net sales of short-term investments, $307 million in proceeds from the sale of DCA slots and a $261 million decrease in restricted cash and short-term investments primarily due to lower collateral requirements with respect to workers’ compensation obligations.
Financing Activities
Net cash used in financing activities was $1.3 billion and $315 million in 2015 and 2014, respectively.
Principal financing activities in 2015 included share repurchases of $3.6 billion, debt repayments of $2.2 billion, including the $400 million repayment of American’s AAdvantage loan with Citibank, and $278 million in dividend payments. These cash outflows were offset in part by proceeds from the issuance of $5.0 billion of debt primarily including $4.2 billion of EETC equipment notes and other aircraft related financings and $500 million principal amount of 4.625% senior notes.
Principal financing activities in 2014 included $1.0 billion in stock repurchases and debt repayments of $3.1 billion, including the $1.0 billion prepayment of American’s 7.50% senior secured notes and the $366 million
prepayment of certain airport facility revenue bonds. These cash outflows were offset in part by proceeds from the issuance of $3.3 billion of debt, primarily including $1.8 billion of proceeds from EETC equipment notes and other aircraft related financings, $1.5 billion of proceeds from the issuance of the 5.50% senior notes and the term loan under the 2014 Credit Facilities, as well as $811 million of proceeds from sale-leaseback transactions related to the financing of 20 Boeing 737-800 aircraft.
2014 Compared to 2013
Operating Activities
Net cash provided by operating activities was $3.1 billion and $675 million in 2014 and 2013, respectively, a ~~period-over-period~~year-over-year increase of $2.4 billion. This ~~period-over-period improvement in cash flow generated from operating activities~~year-over-year increase is principally due to increased profitability and the inclusion of a full year of US Airways Group’s net cash provided by operating activities for the year ended December 31, 2014. These increases were offset in part by higher pension contributions made during 2014. During the ~~year~~years ended December 31, 2014 and 2013, we contributed $810 million and $494 million, respectively, to fund our defined benefit pension plans, representing a $316 million ~~period-over-period~~year-over-year increase in contributions.
Investing Activities
Net cash used in investing activities was $2.9 billion and $3.8 billion in 2014 and 2013, respectively.
Principal investing activities in ~~the~~ 2014 ~~period~~ included expenditures of $5.3 billion for property and equipment, consisting primarily of the purchase of 70 newly delivered aircraft, including 25 Airbus A320 family aircraft, 20 Boeing ~~737 family~~737-800 aircraft, 16 Bombardier CRJ900 aircraft, six Boeing 777 aircraft, 25and three Airbus A330 family aircraft, the purchase of aircraft previously leased, including nine Airbus A320 family aircraft, three Airbus A330 family aircraft and ~~16 Bombardier CRJ900 aircraft, the purchase of aircraft previously leased including three Airbus A330 family~~
~~aircraft,~~ three Boeing 777 ~~aircraft and nine Airbus A320 family~~ aircraft, as well as pre-delivery deposits for certain aircraft on order. These cash outflows were offset in part by $1.8 billion in net sales of short-term investments, $307 million in proceeds from the sale of DCA ~~Slots~~slots and a $261 million decrease in restricted cash and short-term investments primarily due to lower collateral requirements with respect to ~~projected~~ workers’ compensation obligations.
Principal investing activities in 2013 included expenditures of $3.1 billion for property and equipment, consisting primarily of the purchase of 39 newly delivered aircraft, including 31 Boeing ~~737~~737-800 aircraft and eight Boeing 777 aircraft as well as pre-delivery deposits for certain aircraft on order and $1.2 billion in net purchases of short-term investments. These cash outflows were offset in part by ~~proceeds from the sale of certain property and equipment and~~ a $147 million decrease in restricted cash and short-term investments primarily due to lower collateral requirements with respect to ~~projected~~ workers’ compensation ~~obligations.~~obligations and $128 million in proceeds from the sale of certain property and equipment. Additionally, in connection with the Merger, we acquired the $206 million cash balance of US Airways Group.
Financing Activities
Net cash used in financing activities was $315 million in 2014 as compared to net cash provided by financing activities of $3.8 billion in 2013.
Principal financing activities in ~~the~~ 2014 ~~period~~ included $1.0 billion in stock repurchases and debt repayments of $3.1 billion, including the $1.0 billion prepayment of American’s 7.50% senior secured notes ~~the $175 million cash settlement of US Airways Group’s 7.25% convertible notes, the $155 million prepayment of outstanding debt secured by certain aircraft~~ and the $366 million prepayment of certain airport facility revenue bonds. These cash outflows were offset in part by proceeds from the issuance of $3.3 billion of debt, primarily including ~~the $750 million term loan under the 2014 Credit Facilities, the 5.50% senior notes,~~ $1.8 billion of ~~certain~~proceeds from EETC equipment notes and other aircraft related financings, $1.5 billion of proceeds from the issuance of the 5.50% senior notes and the term loan under the 2014 Credit Facilities, as well as $811 million of proceeds from sale-leaseback transactions related to the financing of 20 Boeing ~~737 family~~737-800 aircraft.
Principal financing activities in 2013 included proceeds ~~of $6.8 billion and consisted primarily of~~from the issuance of debt of $5.1 billion, including the $1.9 billion 2013 ~~Citicorp Credit~~Term Loan Facility and several EETC financings, and proceeds from sale-leaseback transactions of $1.7 billion. These cash inflows were offset in part by debt repayments of $2.9 billion.
~~2013~~American
2015 Compared to ~~2012~~2014
Operating Activities
Net cash provided by operating activities was ~~$675 million and $1.3~~flat at $2.6 billion in ~~2013~~each of 2015 and ~~2012, respectively,~~2014. Cash flows were generated from increased profitability, driven by substantially lower fuel costs and a ~~year-over-year~~ decrease in pension contributions, which were offset in part by American’s funding of ~~$610 million. This year-over-year decrease~~share repurchase activities performed at the AAG parent company level. American’s 2015 profitability was ~~primarily~~negatively affected by a $592 million charge to write off all of the value of Venezuelan bolivars held by American due to ~~the inclusion~~continued lack of ~~US Airways Group’s net cash used~~repatriations and deterioration of economic conditions in operating activities of $327 million, for the post-Merger period from December 9, 2013 to December 31, 2013, and our emergence from bankruptcy in 2013 which triggered cash payments for certain liabilities.Venezuela.
Investing Activities
Net cash used in investing activities was ~~$3.8~~$5.6 billion and ~~$1.6~~$2.9 billion in ~~2013~~2015 and ~~2012,~~2014, respectively.
Principal investing activities in ~~2013~~2015 included expenditures of ~~$3.1~~$6.1 billion for property and equipment, ~~and consisted~~consisting primarily of the ~~purchases~~purchase of ~~31 Boeing 737~~114 newly delivered aircraft and eight spare engines, including 31 Airbus A321 family aircraft, 24 Embraer 175 aircraft, 20 Bombardier CRJ900 aircraft, 17 Boeing 737-800 aircraft, 13 Boeing 787 aircraft, seven Airbus A319 aircraft and two Boeing 777 aircraft and ~~pre-delivery deposits for~~the purchase of five Boeing 757 aircraft ~~on order and $1.2 billion in net purchases of short-term investments.~~previously being leased. These cash outflows were offset in part by ~~proceeds from the sale~~$391 million in net sales of ~~certain property and equipment~~short-term investments and a ~~$147~~$79 million decrease in restricted cash and short-term ~~investments. Additionally, in connection~~investments primarily due to lower collateral requirements with ~~the Merger, the Company acquired the $206 million cash balance of US Airways Group.~~respect to workers’ compensation obligations.
Principal investing activities in ~~2012~~2014 included expenditures of ~~$1.9~~$5.3 billion for property and equipment, ~~and consisted~~consisting primarily of the purchase of 2870 newly delivered aircraft, including 25 Airbus A320 family aircraft, 20 Boeing ~~737~~737-800 aircraft, ~~and two~~16 Bombardier CRJ900 aircraft, six Boeing 777 aircraft and three Airbus A330 family aircraft, the purchase of aircraft previously leased, including nine Airbus A320 family aircraft, three Airbus A330 family aircraft and three Boeing 777 aircraft, as well as pre-delivery deposits for certain aircraft on ~~order and $112 million from an increase in restricted cash and short-term investments.~~order. These cash outflows were offset in part by ~~cash proceeds of $306 million from~~$1.8 billion in net sales of short-term investments, ~~and $123~~$307 million in proceeds from the sale of ~~certain property~~DCA slots and ~~equipment.~~a $261 million decrease in restricted cash and short-term investments primarily due to lower collateral requirements with respect to workers’ compensation obligations.
Financing Activities
Net cash provided by financing activities was ~~$3.8~~$2.4 billion and ~~$483~~$143 million in ~~2013~~2015 and ~~2012,~~2014, respectively.
Principal financing activities in ~~2013~~2015 included proceeds ~~of $6.8 billion and consisted primarily of~~from the issuance of $4.5 billion of debt primarily including $4.2 billion of ~~$5.1 billion, including the $1.9 billion Term Loan Facility~~EETC equipment notes and ~~proceeds from sale-leaseback transactions of $1.7 billion.~~other aircraft related financings. These cash inflows were offset in part by debt repayments of ~~$2.9 billion.~~$2.2 billion, including the $400 million repayment of American’s AAdvantage loan with Citibank.
Principal financing activities in ~~2012~~2014 included proceeds from the issuance of $2.6 billion of debt, primarily including $1.8 billion of EETC equipment notes and ~~consisted primarily~~other aircraft related financings and $750 million of ~~$1.5 billion in~~proceeds from issuance of the term loan under the 2014 Credit Facilities, as well as $811 million of proceeds from sale-leaseback ~~transactions.~~transactions related to the financing of 20 Boeing 737-800 aircraft. These ~~proceeds~~cash inflows were offset in part by debt repayments of ~~$1.3 billion.~~$3.0 billion, including the $1.0 billion prepayment of American’s 7.50% senior secured notes and the $366 million prepayment of certain airport facility revenue bonds.
~~American~~
2014 Compared to 2013
Operating Activities
Net cash provided by operating activities was ~~$1.5~~$2.6 billion and ~~$949~~$627 million in 2014 and 2013, respectively, a ~~period-over-period~~year-over-year increase of ~~$528 million.~~$2.0 billion. This ~~period-over-period improvement in cash flow generated from operating activities~~year-over-year increase is principally due to increased profitability and the inclusion of a full year of US Airways’ net cash provided by operating activities for the year ended December 31, 2014. These increases were offset in part by higher pension contributions made during 2014. During the years ended December 31, 2014 and 2013, American contributed $809 million and $494 million, respectively, to fund its defined benefit pension plans, representing a $315 million ~~period-over-period~~year-over-year increase in contributions.
Investing Activities
Net cash used in investing activities was ~~$1.9~~$2.9 billion and ~~$4.5~~$3.8 billion in 2014 and 2013, respectively.
Principal investing activities in ~~the~~ 2014 ~~period~~ included expenditures of ~~$3.9~~$5.3 billion for property and equipment, consisting primarily of the purchase of 70 newly delivered aircraft, including 25 Airbus A320 family aircraft, 20 Boeing ~~737 family~~737-800 aircraft, 16 Bombardier CRJ900 aircraft, six Boeing 777 aircraft ~~seven~~and three Airbus ~~A320~~A330 family ~~aircraft and 16 Bombardier CRJ900~~ aircraft, the purchase of aircraft previously ~~being~~ leased, including ~~three Boeing 777 aircraft and~~ nine Airbus A320 family aircraft, three Airbus A330 family aircraft and three Boeing 777 aircraft, as well as pre-delivery deposits for certain aircraft on ~~order and $198 million of cash transferred to affiliates.~~order. These cash outflows were offset in part by ~~$1.9~~$1.8 billion in net sales of short-term investments, ~~$299~~$307 million in proceeds from the sale of DCA ~~Slots~~slots and a ~~$52~~$261 million decrease in restricted cash and short-term investments primarily due to lower collateral requirements with respect to ~~projected~~ workers’ compensation obligations.
Principal investing activities in 2013 included expenditures of ~~$3.0~~$3.1 billion for property and equipment, consisting primarily of the purchase of 39 newly delivered aircraft, including 31 Boeing ~~737~~737-800 aircraft and eight Boeing 777 aircraft as well as pre-delivery deposits for certain aircraft on order and ~~$1.8~~$1.2 billion in net purchases of short-term investments. These cash outflows were offset in part by a $147 million decrease in restricted cash and short-term investments primarily due to lower collateral requirements with respect to workers’ compensation obligations and $115 million in proceeds from the sale of certain property and ~~equipment and a $148~~equipment. Additionally, in connection with the Merger, American acquired the $200 million ~~decrease in restricted~~ cash ~~and short-term investments.~~balance of US Airways.
Financing Activities
Net cash provided by financing activities was ~~$368~~$143 million ~~in 2014 as compared to net cash provided by financing activities of~~and $3.9 billion in ~~2013.~~2014 and 2013, respectively.
Principal financing activities in ~~the~~ 2014 ~~period~~ included debt repayments of $2.3 billion including the $1.0 billion prepayment of American’s 7.50% senior secured notes, the $293 million prepayment of certain airport facility revenue bonds and the $88 million prepayment of outstanding debt secured by certain aircraft. These cash outflows were offset in part by proceeds from the issuance of ~~$2.0~~$2.6 billion of debt, primarily including ~~the $750 million term loan under the 2014 Credit Facilities, $1.2~~$1.8 billion of ~~certain~~ EETC equipment notes and other aircraft related financings and $750 million of proceeds from issuance of the term loan under the 2014 Credit Facilities, as well as $811 million of proceeds from sale-leaseback transactions related to the financing of 20 Boeing ~~737 family~~737-800 aircraft. These cash inflows were offset in part by debt repayments of $3.0 billion, including the $1.0 billion prepayment of American’s 7.50% senior secured notes and the $366 million prepayment of certain airport facility revenue bonds.
Principal financing activities in 2013 included proceeds ~~of $6.6 billion and consisted primarily of~~from the issuance of debt of ~~$4.8~~$5.1 billion, including the $1.9 billion 2013 Term Loan Facility and several EETC financings, and proceeds from sale-leaseback transactions of $1.7 billion. These cash inflows were offset in part by debt repayments of ~~$2.6~~$2.9 billion.
~~2013 Compared to 2012~~
~~Operating Activities~~
Net cash provided by operating activities was $949 million and $1.2 billion in 2013 and 2012, respectively, a year-over-year decrease of $205 million. This decrease was due principally to emergence from bankruptcy in 2013, which triggered payments for several liabilities.
~~Investing Activities~~
~~Net cash used in investing activities was $4.5 billion and $1.6 billion in 2013 and 2012, respectively.~~
Principal investing activities in 2013 included expenditures of $3.0 billion for property and equipment and consisted primarily of the purchases of 31 Boeing 737 aircraft and eight Boeing 777 aircraft and pre-delivery deposits for aircraft on order and $1.8 billion in net purchases of short-term investments. These cash outflows were offset in part by $115 million in proceeds from the sale of certain property and equipment and a $148 million decrease in restricted cash and short-term investments.
Principal investing activities in 2012 included expenditures of $1.9 billion for property and equipment and consisted primarily of the purchase of 28 Boeing 737 aircraft and 2 Boeing 777 aircraft and pre-delivery deposits for aircraft on order. These cash outflows were offset in part by cash proceeds of $306 million from net sales of marketable securities and $124 million obtained in the sale of certain property and equipment.
~~Financing Activities~~
~~Net cash provided by financing activities was $3.9 billion and $592 million in 2013 and 2012, respectively.~~
Principal financing activities in 2013 included proceeds of $6.6 billion and consisted primarily of the issuance of debt of $4.8 billion, including the $1.9 billion Term Loan and several EETC financings, and proceeds from sale-leaseback transactions of $1.7 billion. These cash inflows were offset in part by debt repayments of $2.6 billion.
Principal financing activities in 2012 included proceeds of $1.8 billion and consisted primarily of $1.5 billion in proceeds from sale-leaseback transactions. These proceeds were offset in part by debt repayments of $1.3 billion.
Commitments
Significant Indebtedness
As of December 31, ~~2014,~~2015, AAG and American had ~~$18.0~~$20.8 billion and ~~$11.3~~$19.1 billion, respectively, in long-term debt and capital leases (including current maturities ~~and before debt discount)~~of $2.2 billion each). See Note 9 and 22 to AAG’s
Consolidated Financial Statements in Part II, Item 8A and Note 67 and 20 to American’s Consolidated Financial Statements in Part II, Item 8B for further information on all indebtedness as of December 31, ~~2014. Our significant indebtedness includes~~2015, as well as the ~~2013 Credit Facilities, the 2013 Citicorp Credit Facility and the 2014 Credit Facilities described below.~~
~~2013 Credit Facilities~~
On June 27, 2013, American and AAG entered into a Credit and Guaranty Agreement (as amended, the 2013 Credit Agreement) with certain lenders. The 2013 Credit Agreement provides for a term loan facility (the 2013 Term Loan Facility) that is scheduled to mature on June 27, 2019, unless otherwise extended by the applicable parties. As of December 31, 2014, $1.9 billion was outstanding under the 2013 Term Loan Facility.
The 2013 Credit Agreement originally provided for a $1.0 billion revolving credit facility (the 2013 Revolving Facility and, together with the 2013 Term Loan Facility, the 2013 Credit Facilities) scheduled to mature on June 27, 2018, unless otherwise extended by the applicable parties. The 2013 Term Loan Facility is repayable in quarterly installments in an amount equal to 0.25% of the original principal amount thereof with any unpaid balance due on the maturity date of the 2013 Term Loan Facility. The 2013 Revolving Facility provided that American may from time to time borrow, repay and reborrow loans thereunder and have letters of credit issued thereunder in an aggregate amount outstanding at any time of up to $1.0 billion. On October 10, 2014, American and AAG amended the 2013 Credit Agreement to extend the maturity date of the 2013 Revolving Facility to October 10, 2019 and increased the commitments thereunder to an aggregate amount of $1.4 billion while reducing the letter of credit commitments thereunder to $300 million. As of December 31, 2014, there were no borrowings or letters of credit outstanding under the 2013 Revolving Facility.
The 2013 Credit Facilities bear interest at an index rate plus an applicable index margin or, at American’s option, LIBOR (subject to a floor of 0.75%, with respect to the 2013 Term Loan Facility) plus an applicable LIBOR margin. The applicable LIBOR margin is 3.00% for borrowings under both the 2013 Term Loan Facility and the 2013 Revolving Facility.
Upon consummation of the Merger, US Airways Group and US Airways joined the 2013 Credit Facilities as guarantors. Following the joinder, certain minimum dollar-thresholds under the negative and financial covenants in the 2013 Credit Facilities were automatically increased.
Subject to certain limitations and exceptions, the 2013 Credit Facilities are secured by certain collateral, including certain route authorities and certain take-off and landing rights and gate leaseholds at certain airports. American is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans under the 2013 Credit Facilities as more fully described below in “~~Collateral Related Covenants.~~”
The 2013 Credit Facilities contain events of default customary for similar financings, including cross default to other material indebtedness. Upon the occurrence of an event of default, the outstanding obligations under the 2013 Credit Facilities may be accelerated and become due and payable immediately. In addition, if a “change of control” (as defined in the 2013 Credit Agreement) occurs, American will (absent an amendment or waiver) be required to repay at par the loans outstanding under the 2013 Credit Facilities and terminate the 2013 Revolving Facility. The 2013 Credit Facilities also include covenants that, among other things, require AAG to maintain a minimum aggregate liquidity (as defined in the 2013 Credit Facilities) of not less than $2.0 billion, and limit the ability of AAG and its restricted subsidiaries to pay dividends and make certain other payments, make certain investments, incur additional indebtedness, incur liens on the collateral, dispose of the collateral, enter into certain affiliate transactions and engage in certain business activities, in each case subject to certain exceptions.
~~2013 Citicorp Credit Facility~~
On May 23, 2013, US Airways entered into a term loan credit facility (the 2013 Citicorp Credit Facility) with Citicorp North America, Inc., as administrative agent, and a syndicate of lenders. US Airways Group and certain other subsidiaries of US Airways Group are guarantors of the 2013 Citicorp Credit Facility agreement. In connection with the closing of the Merger, AAG and American entered into a joinder to the 2013 Citicorp Credit Facility loan agreement pursuant to which AAG and American became guarantors under such agreement.
The 2013 Citicorp Credit Facility consists of tranche B-1 term loans (Tranche B-1) and tranche B-2 term loans (Tranche B-2). As of December 31, 2014, $990 million was outstanding under Tranche B-1 and $594 million was outstanding under Tranche B-2. Voluntary prepayments may be made at any time, with a premium of 1.00% applicable to certain prepayments made prior to the date that is six months following January 16, 2014.
As of December 31, 2014, the 2013 Citicorp Credit Facility bears interest at an index rate plus an applicable index margin or, at US Airways’ option, LIBOR (subject to a floor of 0.75%) plus an applicable LIBOR margin. The applicable LIBOR margin is 2.75% for Tranche B-1 and 2.25% for Tranche B-2.
Tranche B-1 and Tranche B-2 mature on May 23, 2019 and November 23, 2016, respectively (unless otherwise extended by the applicable parties), and each is repayable in annual installments to be paid on each anniversary of the closing date in an amount equal to 1.00% of the initial aggregate principal amount of the loans with any unpaid balance due on the maturity date of the respective tranche.
Subject to certain limitations and exceptions, the obligations of US Airways under the 2013 Citicorp Credit Facility are secured by liens on certain take-off and landing rights at certain airports, and certain other assets of US Airways. US Airways is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans under the 2013 Citicorp Credit Facility as more fully described below in “~~Collateral Related Covenants.~~”
The 2013 Citicorp Credit Facility agreement contains events of default customary for similar financings, including a cross-default provision to certain other material indebtedness of US Airways and certain of its affiliates. Upon the occurrence of an event of default, the outstanding obligations under the 2013 Citicorp Credit Facility may be accelerated and become due and payable immediately. In addition, if a “change of control” (as defined in the 2013 Citicorp Credit Facility agreement) occurs, US Airways will (absent an amendment or waiver) be required to repay the outstanding loans in full together with accrued interest thereon to the date of such prepayment. The 2013 Citicorp Credit Facility agreement includes affirmative, negative and financial covenants that, among other things, (a) require AAG and its restricted subsidiaries to maintain unrestricted liquidity of not less than $2.0 billion, with not less than $750 million held in accounts subject to control agreements, and (b) restrict the ability of US Airways Group, its subsidiaries party to the 2013 Citicorp Credit Facility, AAG and American to make certain investments, pay dividends and make certain other payments, make certain acquisitions, incur liens on the collateral, dispose of collateral, enter into certain affiliate transactions, enter into certain hedging transactions, and engage in certain business activities, in each case subject to certain exceptions.
~~Senior Secured Notes~~
In March 2014, American prepaid $100 million of its 7.50% senior secured notes at a redemption price of 103% of their principal amount plus accrued and unpaid interest. In July 2014, American prepaid the remaining outstanding principal balance of $900 million at a redemption price of 103.75% of outstanding principal amount plus accrued and unpaid interest. In connection with the prepayment of the outstanding 7.50% senior secured notes, American paid $37 million of cash premiums and recorded a $5 million non-cash write off of unamortized deferred issuance costs during the year ended December 31, 2014.
~~7.25% Convertible Notes~~
In March 2014, we notified the holders of US Airways Group’s 7.25% convertible notes that we had elected to settle solely in cash instead of shares of AAG Common Stock all conversions during the period beginning on March 15, 2014 and ending on, and including, the second scheduled trading day immediately preceding the maturity date of May 15, 2014. In May 2014, we settled all outstanding 7.25% convertible notes in cash for approximately $175 million.
~~Other Aircraft Financing Transactions~~
~~In May 2014, we prepaid $113 million principal amount of outstanding debt secured by certain aircraft.~~
~~During 2014, American entered into loan agreements to borrow $286 million in connection with~~2016-1 EETC financing ~~certain aircraft deliveries. The notes mature in 2026 and bear interest at a rate of LIBOR plus an applicable margin.~~
~~2013-1 EETCs~~
During 2014, US Airways issued $559 million of equipment notes in two series under its 2013-1 EETCs completed in April 2013: Series A equipment notes in the amount of $423 million bearing interest at 3.95% per annum and Series B equipment notes in the amount of $136 million bearing interest at 5.375% per annum. As of December 31, 2014, the full $820 million of the escrowed proceeds from US Airways’ 2013-1 EETCs have been used to purchase Series A and Series B equipment notes issued by US Airways. The equipment notes are secured by liens on aircraft.
~~2014-1 EETCs~~
In September 2014, American created two pass-through trusts which issued approximately $957 million aggregate face amount of Series 2014-1 Class A and Class B EETCs in connection with the financing of 17 aircraft recently delivered to, and owned by, American (the 2014 EETC Aircraft).
As of December 31, 2014, the full $957 million of the escrowed proceeds from the 2014-1 EETCs have been used to purchase equipment notes issued by American in two series: Series A equipment notes in the amount of $742 million bearing interest at 3.70% per annum and Series B equipment notes in the amount of $215 million bearing interest at 4.375% per annum. Interest and principal payments on the equipment notes are scheduled to be made in April and October of each year, beginning in April 2015. The final payments on the Series A and Series B equipment notes will be due in October 2026 and October 2022, respectively. The equipment notes are secured by liens on the 2014 EETC Aircraft.
~~Obligations Associated with Special Facility Revenue Bonds~~
In 2014, we prepaid $314 million of obligations, of which $135 million was a reduction of debt on our balance sheet, associated with special facility revenue bonds issued by municipalities to build or improve certain airport and maintenance facilities. The remaining portion of these obligations was accounted for as an operating lease.
In addition, in August 2014, American elected to exercise its option to reset the interest rate on approximately $220 million aggregate principal amount of special facility revenue bonds reflected as debt on its balance sheet, related to the Los Angeles International Airport, resulting in the repurchase of these bonds by American in September 2014. American has the option to remarket these bonds in the future. In connection with the repurchase of these bonds, American paid $2 million in cash premiums and recorded a $5 million non-cash write off of unamortized debt discount and issuance costs.
In December 2014, American purchased approximately $112 million aggregate principal amount of special facility revenue bonds related to the Tulsa International Airport, when such bonds were mandatorily tendered to American. Of this amount, $11 million was a reduction of debt on American’s balance sheet. American has the option to remarket these bonds in the future.
~~5.50% Senior Notes~~
In September 2014, we issued $750 million aggregate principal amount of 5.50% senior notes due 2019 (the 5.50% senior notes). These notes bear interest at a rate of 5.50% per annum, which is payable semi-annually in arrears on each April 1 and October 1, beginning April 1, 2015. The 5.50% senior notes mature on October 1, 2019 and are fully and unconditionally guaranteed by American, US Airways Group and US Airways. The 5.50% senior notes are senior unsecured obligations of AAG. The indenture for the 5.50% senior notes contains covenants and events of default generally customary for similar financings. In addition, if we experience specific kinds of changes of control, we must offer to repurchase the 5.50% senior notes at a price of 101% of the principal amount plus accrued and unpaid interest, if any, to the repurchase date. Upon the occurrence of certain events of default, the 5.50% senior notes may be accelerated and become due and payable.
~~2014 Credit Facilities~~
On October 10, 2014, American, AAG, US Airways Group and US Airways entered into a Credit and Guaranty Agreement (the 2014 Credit Agreement) with certain lenders. The 2014 Credit Agreement provides for a $750 million term loan facility (the 2014 Term Loan Facility) and a $400 million revolving credit facility (the 2014 Revolving Facility and, together with the 2014 Term Loan Facility, the 2014 Credit Facilities). As of December 31, 2014, $750 million was outstanding under the 2014 Term Loan Facility. The 2014 Revolving Facility provides that American may from time to time borrow, repay and reborrow loans thereunder. American may have letters of credit issued under the 2014 Revolving Facility in an aggregate amount outstanding at any time up to $300 million. As of December 31, 2014, there were no borrowings or letters of credit outstanding under the 2014 Revolving Facility.
Subject to certain limitations and exceptions, the 2014 Credit Facilities are secured by certain collateral, including certain route authorities and certain take-off and landing rights and gate leaseholds at certain airports. The obligations of American under the 2014 Credit Facilities are guaranteed by AAG, US Airways Group and US Airways. American is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans under the 2014 Credit Facilities as more fully described below in “~~Collateral Related Covenants.~~”
The 2014 Term Loan Facility and 2014 Revolving Facility mature on October 10, 2021 and October 10, 2019, respectively, unless otherwise extended by the applicable parties. The 2014 Term Loan Facility is repayable in annual installments in an amount equal to 1.00% of the original principal balance with any unpaid balance due on the maturity date of the 2014 Term Loan Facility. Voluntary prepayments may be made by American at any time, with a premium of 1.00% applicable to certain prepayments made prior to the date that is six months following October 10, 2014.
The 2014 Credit Facilities bear interest at an index rate plus an applicable index margin or, at American’s option, LIBOR (subject to a floor of 0.75% in the case of the 2014 Term Loan Facility) plus an applicable LIBOR margin. The applicable LIBOR margins are 3.50% and 3.00% for borrowings under the 2014 Term Loan Facility and the 2014 Revolving Facility, respectively. If American has a corporate credit rating of Ba3 or higher from Moody’s and BB- or higher from S&P, the applicable LIBOR margin is 3.25% under the 2014 Term Loan Facility.
The 2014 Credit Facilities contain events of default customary for similar financings, including cross default to other material indebtedness. Upon the occurrence of an event of default, the outstanding obligations under the
2014 Credit Facilities may be accelerated and become due and payable immediately. In addition, if a “change of control” (as defined in the 2014 Credit Agreement) occurs with respect to AAG, American will (absent an amendment or waiver) be required to repay at par the loans outstanding under the 2014 Credit Facilities and terminate the 2014 Revolving Facility. The 2014 Credit Facilities also include covenants that, among other things, require AAG to maintain a minimum aggregate liquidity (as defined in the 2014 Credit Facilities) of not less than $2.0 billion, and limit the ability of AAG and its restricted subsidiaries to pay dividends and make certain other payments, make certain investments, incur liens on the collateral, dispose of the collateral, enter into certain affiliate transactions and engage in certain business activities, in each case subject to certain exceptions.
~~AAdvantage Loan~~
American had the right to repay in cash, without premium or penalty, any or all of the amounts owed to Citibank under the AAdvantage Loan. Effective January 2, 2015, American exercised its loan repayment right with respect to the full value of the outstanding balance to Citibank for $400 million. In connection with the repayment, in the first quarter of 2015, American will recognize an early debt extinguishment gain of approximately $17 million. The entire outstanding balance of the obligation is reflected in current maturities of long-term debt on the accompanying consolidated balance sheet as of December 31, 2014.
~~Guarantees~~
In March 2014, AAG, US Airways Group and US Airways entered into amended and restated guarantees of the payment obligations of US Airways under the equipment notes relating to each of its Series 2010-1, 2011-1, 2012-1, 2012-2 and 2013-1 Pass Through Certificates, the result of which was to add AAGdisclosed as a ~~guarantor of such equipment notes on a joint and several basis with US Airways Group.~~
~~Collateral Related Covenants~~
Certain of our debt financing agreements contain loan to value ratio covenants and require us to periodically appraise the related collateral. Pursuant to such agreements, if the loan to value ratio exceeds a specified threshold, we are required, as applicable, to pledge additional qualifying collateral (which in some cases may include cash collateral), or pay down such financing, in whole or in part, as described below.
~~Specifically, we are required to meet certain collateral coverage tests on a periodic basis on three Credit Facilities, as described below:~~


2014 Credit Facilities

2013 Credit Facilities

2013 Citicorp Credit Facility
Frequency of Appraisals of Appraised Collateral
   Annual    Semi-Annual    Once per Fiscal Year (1)
LTV Requirement
   1.6x Collateral valuation to amount of debt outstanding (62.5% LTV)    1.6x Collateral valuation to amount of debt outstanding (62.5% LTV)    1.5x Collateral valuation to amount of debt outstanding (66.7% LTV)
LTV as of Last Measurement
Date
   21.9%    33.7%    61.8%
Collateral Description
   Generally, certain route authorities, take-off and landing slots, and rights to airport facilities used by American to operate certain services between the U.S. and London Heathrow, Tokyo Narita, and China    Generally, certain route authorities, take-off and landing slots, and rights to airport facilities used by American to operate all services between the U.S. and South America    Generally, certain Slots (e.g., DCA and LaGuardia), accounts receivable, certain engines, certain spare parts and ground service equipment, certain simulators, certain leasehold real estate assets and cash
~~(1)~~
~~With respect to spare parts, one physical appraisal and one desktop appraisal are required in each fiscal year.~~
~~At December 31, 2014, we were in compliance with the applicable collateral coverage tests as of the most recent measurement dates.~~subsequent event.
Credit Ratings
The following table details our credit ratings as of December 31, ~~2014:~~2015:

   S&P
Local Issuer
Credit Rating Fitch
Issuer Default
Credit Rating Moody’s
Corporate
Family Rating
American Airlines Group
   B+ BB-    B+ B1BB- Ba3
American Airlines, Inc.
   B+ BB-    B+ BB- *

*
The credit agency does not rate this category for this entity.
A decrease in our credit ratings could cause our borrowing costs to increase, which would increase our interest expense and could affect our net income, and our credit ratings could adversely affect our ability to obtain additional financing. If our financial performance or industry conditions worsen, we may face future downgrades, which could negatively impact our borrowing costs and the prices of our equity or debt securities. In addition, any downgrade of our credit ratings may indicate a decline in our business and in our ability to satisfy our obligations under our indebtedness.
Aircraft and Engine Purchase Commitments
As of December 31, ~~2014,~~2015, we had definitive purchase agreements with Airbus, Boeing and other manufacturers for the acquisition of the following mainline and regional aircraft:

   2015    2016    2017    2018    2019    2020 and
Thereafter    Total    2016    2017    2018    2019    2020    2021 and
Thereafter    Total
Airbus

A320 Family
   42       25       20       —       —       —       87       25       20       —       —       —       —       45
A320neo
   —       —       10       25       25       40       100
A320neo Family
   —       —       —       25       25       50       100
A350 XWB
   —       —       6       10       6       —       22       —       4       10       6       2       —       22
Boeing

737 Family
   18       20       20       —       —       —       58
737 MAX
   —       —       3       17       20       60       100
737-800
   20       20       —       —       —       —       40
737 MAX Family
   —       3       17       20       20       40       100
777-300 ER
   2       2       —       —       —       —       4       2       —       —       —       —       —       2
787 Family
   12       13       10       7       —       —       42       8       13       8       —       —       —       29
Bombardier

CRJ900 (1)
   18       20       —       —       —       —       38       18       —       —       —       —       —       18
Embraer

ERJ175 (1)
   24       24       12       —       —       —       60       24       12       —       —       —       —       36




























Total
   116       104       81       59       51       100       511       97       72       35       51       47       90       392

(1)
These aircraft may be operated by wholly-owned subsidiaries or leased to third-party regional carriers which would operate the aircraft under capacity purchase arrangements.
We also ~~had~~have agreements for 5549 spare engines to be delivered in ~~2015~~2016 and beyond. Under all of our aircraft and engine purchase agreements, our total future commitments as of December 31, ~~2014~~2015 are expected to be as follows ~~(approximately, in~~(in millions):

   2015    2016    2017    2018    2019    2020 and
Thereafter    Total
Payments for American aircraft commitments and certain engines (1)
   $ 4,586       $ 4,856       $ 4,165       $ 3,241       $ 2,654       $ 5,651       $ 25,153
Payments for US Airways aircraft commitments and certain engines (1)
   $ 524       $ 122       $ 772       $ 1,050       $ 588       $ —       $ 3,056
   2016    2017    2018    2019    2020    2021 and
Thereafter    Total
Payments for the above aircraft commitments and certain engines (1)
   $ 4,505       $ 4,591       $ 2,916       $ 3,156       $ 2,793       $ 4,537       $ 22,498

(1)
These amounts are net of purchase deposits currently held by the manufacturers and include all commitments for regional aircraft. American has granted Boeing a security interest in its purchase deposits with Boeing. Our purchase deposits held by all manufacturers totaled ~~$1.2~~$1.1 billion as of December 31, ~~2014.~~2015.
In April ~~2014,~~2015, we ~~exercised~~amended our ~~option~~delivery agreement with Boeing to ~~purchase,~~defer four 787 aircraft from 2016 to 2017 and ~~terminated~~one 787 aircraft from 2017 to 2018. In June 2015, we amended our ~~existing lease financing arrangements~~delivery agreement with ~~respect~~Airbus to ~~62 Airbus A320~~defer delivery of 10 A320neo family aircraft ~~scheduled~~in 2017 and 25 A320neo family aircraft in 2018 to be delivered between the first quarter of 2015 and the third quarter of 2017. In connection with our exercise of such option, we also exercised our right to convert firm orders for 30 Airbus A320neo aircraft, scheduled to be delivered inyears 2021 ~~and 2022, to options to acquire such aircraft. The table above reflects these changes.~~
through 2023. In December ~~2014,~~2015, we ~~exercised~~amended our ~~right under our purchase~~delivery agreement with ~~Bombardier~~Airbus to ~~convert 24 of our 40 option order CRJ900 aircraft~~defer two A350 XWB from 2017 to ~~firm orders to acquire such aircraft.~~2020. These deferrals are reflected in the table above.
As of December 31, ~~2014,~~2015, we did not have financing commitments for the following aircraft currently on order and scheduled to be delivered through 2017: 8325 Airbus A320 family aircraft 10in 2016 and 20 Airbus ~~A320neo aircraft, six Airbus A350 XWB aircraft, 13 Boeing 737~~A320 family aircraft ~~three 737 MAX aircraft, four Boeing 777-300 ER aircraft, and 35~~in 2017, 8 Boeing 787 family ~~aircraft.~~aircraft in 2016 and 13 Boeing 787 family aircraft in 2017, 15 Boeing 737-800 aircraft in 2016, three Boeing 737 MAX family aircraft in 2017 and two Boeing 777-300ER aircraft in 2016. In addition, we ~~did~~do not have financing commitments in place for substantially all aircraft currently on order and scheduled to be delivered in 2018 and beyond. See Part I, Item 1A. Risk Factors – “We “We will need to obtain sufficient financing or other capital to operate ~~successfully~~successfully.”.”
Credit Card Processing Agreements
We have agreements with companies that process customer credit card transactions for the sale of air travel and other services. Credit card processors have financial risk associated with tickets purchased for travel because, although the processor generally forwards the cash related to the purchase to us soon after the purchase is completed, the air travel generally occurs after that time, and the processor may have liability if we do not ultimately provide the air ~~travel.~~travel or services according to our fare rules. Our agreements allow these processing companies, under certain conditions, to hold an amount of our cash (referred to as a “holdback”) equal to a portion of advance ticket sales that have been processed by that company, but for which we have not yet provided the air transportation. We are not currently required to maintain any holdbacks pursuant to these requirements. Certain of our agreements provide that these holdback requirements can be modified at the discretion of the processing companies, up to the estimated liability for future air travel purchased with the respective credit cards, upon the occurrence of specified events, including material adverse changes in our financial condition. The amount that the processing companies may withhold also varies as a result of changes in financial risk due to seasonal fluctuations in ticket volume. Additional holdback requirements will reduce our liquidity in the form of unrestricted cash by the amount of the holdbacks.
Pension Funding Obligation
We are required to make minimum contributions to our defined benefit pension plans under the minimum funding requirements of Employee Retirement Income Security Act of 1974 ~~(ERISA), the Pension Funding Equity Act of 2004, the Pension Protection Act of 2006, the Pension Relief Act of 2010~~ and the Moving Ahead for Progress in the 21st Century Act of 2012. In 2014, we made our aggregate minimum required contributions for 2014 of $171 million, and made $639 million in supplemental contributions to our pension plans, above and beyond the $171 million of minimum required contributions.various other laws.
Based on our current funding assumptions, we have no minimum required contributions until ~~2019.~~2018. Currently, our minimum funding obligation for our pension plans is subject to temporary favorable rules that are scheduled to expire at the end of 2017. ~~Upon expiration of these rules, our~~Our pension funding obligations are likely to increase ~~materially.~~materially following expiration of the temporary funding rules, when we will be required to make contributions relating to the 2018
fiscal year. The amount of these obligations will depend on the performance of our investments held in trust by the pension plans, interest rates for determining liabilities and our actuarial experience. See Note 13 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 11 to American’s Consolidated Financial Statements in Part II, Item 8B for further information on retirement benefits as of December 31, 2015.
Labor Agreements
In ~~June~~ 2014 and 2015, we reached ~~three~~ agreements with IAM covering 11,000 US Airways mechanics, fleet service agents and maintenance training specialists. In July 2014, these three-year agreements that amend pre-merger contracts were ratified by IAM and will remain in effect until a joint collective bargaining agreement can be reached with their colleagues at the TWU to cover more than 30,000 employees at the new American Airlines.
several labor unions. On December 18, 2014, we reached a JCBA with the APFA. ~~On December 23, 2014, the APFA JCBA pay rates were increased by 4% due to a corporate wide initiative announced on that day.~~ The new agreement did not require ratification and was effective immediately with the wage increases under the JCBA becoming effective January 1, 2015. ~~We estimate that our total flight attendant costs in 2015 will be approximately $200 million higher as a result of this new agreement.~~
On January 3, 2015, we reached a tentative agreement with the APA on a five-year JCBA, which was ratified on January 30, 2015. The new, higher pay rates were implemented retroactive to December 2, 2014. ~~We estimate that the ratified contract will increase our 2015 cost of pilot compensation and benefits by approximately $650 million.~~
In ~~2014, Envoy pilots ratified~~September 2015, we reached an agreement with the CWA-IBT for a new ~~10 year collective bargaining agreement, Piedmont pilots~~JCBA applicable to passenger service employees, which was ratified ~~a new 10 year collective bargaining agreement~~in November 2015 and ~~Piedmont flight attendants ratified a new five-year collective bargaining agreement.~~provided significant pay increases for combined passenger service employees, effective immediately.
Off-Balance Sheet Arrangements
An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity under which a company has (1) made guarantees, (2) a retained or a contingent interest in transferred assets, (3) an obligation under derivative instruments classified as equity or (4) any obligation arising out of a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or that engages in leasing, hedging or research and development arrangements with us.
We have no off-balance sheet arrangements of the types described in the first three categories above that we believe may have a material current or future effect on financial condition, liquidity or results of operations. Certain guarantees that we do not expect to have a material current or future effect on our financial condition, liquidity or results of operations are disclosed in Note 15 to AAG’s Consolidated Financial Statements included in Part II, Item 8A and Note 1213 to American’s Consolidated Financial Statements in Part II, Item 8B.
Special Facility Revenue Bonds
We guarantee the payment of principal and interest of certain special facility revenue bonds issued by municipalities primarily to build or improve airport facilities and purchase equipment which is leased to us. Under such leases, we are required to make rental payments through 2035, sufficient to pay maturing principal and interest payments on the related bonds. As of December 31, ~~2014,~~2015, the remaining lease payments guaranteeing the principal and interest on these bonds are ~~$449~~$617 million, which are accounted for as operating leases.
Pass-Through Trusts
We have financed certain aircraft and engines with pass-through trust certificates, or EETCs, issued by pass-through trusts. These trusts are off-balance sheet entities, the primary purpose of which is to finance our acquisition of flight equipment. Rather than finance each aircraft separately when such aircraft is purchased, delivered or refinanced, these trusts allow American ~~and US Airways~~ to raise the financing for several aircraft at one time and, if applicable, place such funds in escrow pending ~~the~~a future purchase, delivery or refinancing of the relevant aircraft. The trusts were also structured to provide for certain credit enhancements, such as liquidity facilities to cover certain interest payments, that reduce the risks to the purchasers of the trust certificates and, as a result, reduce the cost of aircraft financing to ~~American and US Airways.~~American.
Each trust covered a set amount of aircraft scheduled to be delivered or refinanced upon the issuance of the EETC or within a specific period of ~~time.~~time thereafter. At the time of each covered aircraft financing, the relevant trust used the ~~funds~~proceeds of the issuance of the EETC (which may have been available at the time of issuance thereof or held in escrow until the date of delivery of the applicable aircraft) to purchase equipment notes relating to the financed aircraft. The equipment notes were issued, at American or, in the case of equipment notes issued by US Airways prior to its merger with and into American, at US Airways’ election, in connection with a mortgage financing of the aircraft or, in certain cases, by a separate owner trust in connection with a leveraged lease financing of the aircraft. In the case of a leveraged lease financing, the owner trust then leased the aircraft to American or US Airways. In both cases, the equipment notes are secured by a security interest in the aircraft. On December 30, 2015, American assumed all of US Airways’ obligations under all outstanding equipment notes previously issued by US Airways. The pass-through trust certificates are not direct obligations of, nor are they guaranteed by, AAG ~~American, US Airways Group~~ or ~~US Airways.~~American. However, in the case of mortgage financings, the equipment notes issued to the trusts are direct obligations of American ~~or US Airways~~ and, in certain instances, are guaranteed by ~~AAG or US Airways Group as applicable.~~AAG. As of December 31, ~~2014, $7.0~~2015, $8.7 billion associated with these mortgage financings is reflected as debt in the accompanying consolidated balance sheet.
With respect to leveraged leases, American ~~or US Airways~~ evaluated whether the leases had characteristics of a variable interest entity. American ~~or US Airways~~ concluded the leasing entities met the criteria for variable interest entities. American ~~and US Airways~~ generally ~~are~~is not the primary beneficiary of the leasing entities if the
lease terms are consistent with market terms at the inception of the lease and do not include a residual value guarantee, fixed-price purchase option or similar feature that obligates American ~~or US Airways~~ to absorb decreases in value or entitles American ~~or US Airways~~ to participate in increases in the value of the aircraft. American ~~and US Airways do~~does not provide residual value guarantees to the bondholders or equity participants in the trusts. ~~American’s existing lease arrangements do not contain fixed-price purchase options or similar features. Certain US Airways’~~Some leases have a fair market value or a fixed price purchase option that allows itAmerican to purchase the aircraft at or near the end of the lease term. However, the option price approximates an estimate of the aircraft’s fair value at the option date. Under this feature, ~~US Airways~~American does not participate in any increases in the value of the aircraft. American ~~and US Airways~~ concluded ~~they were~~it is not the primary beneficiary under these arrangements. Therefore, American ~~and US Airways account~~accounts for ~~their~~its EETC leveraged lease financings as operating leases. ~~American and US Airways’~~American’s total future obligations under these leveraged lease financings are ~~$2.1~~$1.8 billion as of December 31, ~~2014.~~2015.
AAG Contractual Obligations
The following table provides details of our future cash contractual obligations as of December 31, ~~2014.~~2015. The table does not include commitments that are contingent on events or other factors that are uncertain or unknown at this time.

Payments Due by Period Payments Due by Period
2015 2016 2017 2018 2019 2020 and
Thereafter Total 2016 2017 2018 2019 2020 2021 and
Thereafter Total
American

Debt and capital lease obligations (1), (3)
$ 1,230    $ 698    $ 942    $ 844    $ 2,744    $ 4,791    $ 11,249    $ 2,266    $ 1,598    $ 1,634    $ 2,628    $ 3,081    $ 7,820    $ 19,027
Interest obligations (2), (3)
525    478    486    497    374    1,094    3,454    796    742    698    601    472    1,314    4,623
Commitments for aircraft and engine purchases (4)
4,586    4,856    4,165    3,241    2,654    5,651    25,153    4,505    4,591    2,916    3,156    2,793    4,537    22,498
Operating lease commitments (5)
1,391    1,293    1,240    1,141    1,069    4,939    11,073    2,187    2,069    1,824    1,642    1,493    4,704    13,919
Regional capacity purchase agreements (6)
502    592    463    446    430    2,242    4,675    1,672    1,553    1,249    1,075    881    2,393    8,823
Minimum pension obligations (7)
—    —    —    —    853    3,606    4,459    —    —    164    1,205    902    4,199    6,470
Retiree medical and other purchase obligations
461    260    215    192    166    374    1,668
Retiree medical and other purchase obligations (7)
435    241    206    178    90    355    1,505

Total American Contractual Obligations
$ 8,695    $ 8,177    $ 7,511    $ 6,361    $ 8,290    $ 22,697    $ 61,731    $ 11,861    $ 10,794    $ 8,691    $ 10,485    $ 9,712    $ 25,322    $ 76,865
AAG Parent, US Airways Group and Other AAG Subsidiaries

Debt and capital lease obligations (1), (3)
$ 478    $ 964    $ 396    $ 1,035    $ 2,156    $ 1,685    $ 6,714
Interest obligations (2), (3)
321    303    275    239    168    270    1,576
Commitments for aircraft and engine purchases (4)
524    122    772    1,050    588    —    3,056
Operating lease commitments (5)
719    624    569    417    330    782    3,441
Regional capacity purchase agreements (6)
1,082    1,024    1,016    751    636    860    5,369
Retiree medical and other purchase obligations
9    9    9    9    7    35    78
AAG Parent and Other AAG Subsidiaries

Debt and capital lease obligations (1)
$ —    $ —    $ 500    $ 750    $ 506    $ 24    $ 1,780
Interest obligations (2)
97    97    82    67    14    9    366
Operating lease commitments
11    9    5    1    —    —    26

Total AAG Contractual Obligations
$ 11,828    $ 11,223    $ 10,548    $ 9,862    $ 12,175    $ 26,329    $ 81,965    $ 11,969    $ 10,900    $ 9,278    $ 11,303    $ 10,232    $ 25,355    $ 79,037

(1)
Amounts represent contractual amounts due. For American, excludes ~~$42~~$228 million and for ~~US Airways Group,~~AAG Parent and other AAG subsidiaries, excludes ~~$17~~$18 million of unamortized debt discount and debt issuance costs as of December 31, ~~2014.~~2015.

(2)
For variable-rate debt, future interest obligations are estimated using the current forward rates at December 31, ~~2014.~~2015.

(3)
~~For American, includes $4.3~~Includes $8.7 billion of future principal payments and ~~$1.1~~$2.3 billion ~~of future interest payments, respectively, and for US Airways Group, includes $2.7 billion of future principal payments and~~
~~$867 million~~ of future interest payments, respectively, as of December 31, ~~2014,~~2015, related to EETCs associated with mortgage financings for the purchase of certain aircraft.

(4)
See Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations –~~“Liquidity~~ “Liquidity and Capital Resources” for additional information about ~~the obligations of American and US Airways Group.~~these obligations.

(5)
~~For American, includes $269 million and for US Airways Group, includes~~Includes $1.8 billion of future minimum lease payments related to EETC leverage leased financings of certain aircraft as of December 31, ~~2014.~~2015.

(6)
Represents minimum payments under capacity purchase agreements with third-party regional carriers. These commitments are estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and our actual payments could differ materially.

(7)
Includes minimum pension contributions based on actuarially determined estimates and other postretirement benefit payments based on estimated payments through ~~2024.~~2025. See Note 1011 to American’s Consolidated Financial Statements in Part II, Item 8B.
Capital Raising Activity and Other Possible Actions
In light of our significant financial commitments related to, among other things, new aircraft and the servicing and amortization of existing debt and equipment leasing arrangements, we and our subsidiaries will regularly
consider, and enter into negotiations related to, capital raising activity, which may include the entry into leasing transactions and future issuances of secured or unsecured debt obligations or additional equity securities in public or private offerings or otherwise. The cash available from operations and these sources, however, may not be sufficient to cover cash contractual obligations because economic factors may reduce the amount of cash generated by operations or increase costs. For instance, an economic downturn or general global instability caused by military actions, terrorism, disease outbreaks or natural disasters could reduce the demand for air travel, which would reduce the amount of cash generated by operations. An increase in costs, either due to an increase in borrowing costs caused by a reduction in credit ratings or a general increase in interest rates, or due to an increase in the cost of fuel, maintenance, or aircraft, aircraft engines or parts, could decrease the amount of cash available to cover cash contractual obligations. Moreover, the 2013 Credit Facilities, the 2014 Credit Facilities, the 2013 Citicorp Credit Facility and certain of our other financing arrangements contain significant minimum cash balance requirements. As a result, we cannot use all of our available cash to fund operations, capital expenditures and cash obligations without violating these requirements.
In the past, we have from time to time refinanced, redeemed or repurchased our debt and taken other steps to reduce or otherwise manage the aggregate amount and cost of our debt or lease obligations or otherwise improve our balance sheet. Going forward, depending on market conditions, our cash position and other considerations, we may continue to take such actions.
OTHER INFORMATION
Basis of Presentation
See Note 5 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 45 to American’s Consolidated Financial Statements in Part II, Item 8B for information regarding the basis of presentation.
Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. We believe our estimates and assumptions are reasonable; however, actual results
could differ from those estimates. Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and potentially result in materially different results under different assumptions and conditions. We have identified the following critical accounting policies that impact the preparation of our Consolidated Financial Statements. See the summary of significant accounting policies included in Note 5 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 45 to American’s Consolidated Financial Statements in Part II, Item 8B for additional discussion of the application of these estimates and other accounting policies.
Passenger ~~revenue~~Revenue
Passenger revenue is recognized when transportation is provided. Ticket sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on the consolidated balance sheets. The air traffic liability represents tickets sold for future travel dates and estimated future refunds and exchanges of tickets sold for past travel dates. The balance in the air traffic liability fluctuates throughout the year based on seasonal travel patterns and fare sale activity. ~~AAG’s~~Our air traffic liability was ~~$4.3~~$3.7 billion and ~~$4.4~~$4.3 billion as of December 31, ~~2014~~2015 and ~~2013, respectively, and American’s air traffic liability was $3.0 billion and $3.1 billion as of December 31,~~ 2014, ~~and 2013,~~ respectively.
The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. Due to complex pricing structures, refund and exchange policies, and interline agreements with other airlines, certain amounts are recognized in revenue using estimates regarding both the timing of the
revenue recognition and the amount of revenue to be recognized. These estimates are generally based on the analysis of our historical data. We and ~~members of the~~other airline industry participants have consistently applied this accounting method to estimate revenue from forfeited tickets at the date ~~travel was to be provided.~~of travel. Estimated future refunds and exchanges included in the air traffic liability are routinely evaluated based on subsequent activity to validate the accuracy of our estimates. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are included in results of operations during the period in which the evaluations are completed.
Long-lived Assets
Long-lived assets consist of flight equipment along with other fixed assets and amortizing intangible assets such as certain ~~domestic take-off and landing rights,~~slots, customer relationships, marketing agreements and tradenames. In addition to the original cost, the recorded value of our fixed assets is impacted by a number of estimates made, including estimated useful lives, salvage values and our determination as to whether aircraft are temporarily or permanently grounded. Amortizing intangible assets are originally recorded at their acquired fair values and are subsequently amortized over their estimated useful lives. See Note 5 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 45 to American’s Consolidated Financial Statements in Part II, Item 8B for further information.
We record impairment charges on long-lived assets used in operations when events and circumstances indicate that the assets may be impaired. An asset or group of assets is considered impaired when the undiscounted cash flows estimated to be generated by ~~those~~the assets are less than the carrying amount of ~~those~~the assets and the net book value of the assets exceeds their estimated fair value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Cash flow estimates are based on historical results adjusted to reflect management’s best estimate of future market and operating conditions, including our current fleet plan and considerations of any modifications thereto. Estimates of fair value represent management’s best estimate based on appraisals, industry trends and reference to market rates and transactions.
The majority of American’s ~~and US Airways’~~ fleet types are depreciated over 25-30 years. It is possible that the ultimate lives of our aircraft will be significantly different than the current estimate due to unforeseen events in the future that impact our fleet plan, including positive or negative developments in the areas described above. For example, operating the aircraft for a longer period will result in higher maintenance, fuel and other operating costs than if we replaced the aircraft.
Goodwill and ~~indefinite-lived assets~~Indefinite-lived Assets
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired and liabilities assumed. Goodwill is not amortized but tested for impairment annually on October 1^st or more frequently if events or circumstances ~~indicate.~~indicate that goodwill may be impaired. We have one consolidated reporting unit.
Our indefinite-lived intangible assets other than goodwill include certain international slots and route authorities and domestic ~~take-off and landing rights.~~airport slots. Indefinite-lived intangible assets are not amortized but tested for impairment annually on October 1^st or more frequently if events or circumstances ~~indicate.~~indicate that the asset may be impaired.
Goodwill and indefinite-lived intangible assets are measured for impairment by initially performing a qualitative screen. Under the qualitative approach, we analyze the following factors to determine if events and circumstances have affected the fair value of goodwill and indefinite-lived intangible assets: (1) negative trends in our market capitalization, (2) an increase in fuel prices, (3) declining per mile passenger ~~mile~~ yields, (4) lower passenger demand as a result of a weakened U.S. and global economy and (5) changes to the regulatory environment.
If we determine that it is more likely than not that the asset value may be impaired, we use the quantitative approach to assess the asset’s fair value and the amount of the impairment. Under the quantitative approach, we
calculate the fair value of the asset using the following assumptions: (1) our projected revenues, expenses and cash flows, (2) an estimated weighted average cost of capital, (3) assumed discount rates depending on the asset (4) a tax rate and (5) market prices for comparable assets. These assumptions are consistent with those which hypothetical market participants would use. If the asset’s carrying value exceeds its fair value calculated using the quantitative approach, we will record an impairment charge for the difference in fair value and carrying value.
Based upon our annual testing, there were no impairments of our goodwill and indefinite-lived assets in ~~2014.~~2015.
Business Combination Measurements
In accordance with applicable accounting standards, we estimated the fair value of US Airways’ assets and liabilities as of the closing date of the Merger, December 9, 2013. These fair value adjustments did not result in gains or losses, but were instead an input to the calculation of goodwill related to the excess of the purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed by us in the Merger.
The fair values of the assets acquired and liabilities assumed were determined using the market, income and cost approaches. The fair value measurements were primarily based on significant inputs that are not observable in the market, other than certain long-term debt assumed in the Merger. The market approach, which indicates value for a subject asset based on available market pricing for comparable assets, was utilized to estimate the fair value of US Airways’ aircraft and operating leases. The market approach used ~~includes~~included prices and other relevant information generated by market transactions involving comparable assets, as well as pricing guides and other sources. We considered the current market for the aircraft, the maintenance condition of the aircraft and the expected proceeds from the sale of the assets, among other factors. We also utilized the market approach to value certain intangible assets such as airport ~~take-off~~take off and landing slots when sufficient market information was available. The income approach was primarily used to value intangible assets, including customer relationships, marketing agreements, certain international route authorities, and the US Airways tradename. The income approach indicates value for a subject asset based on the present value of cash flows projected to be generated by the asset. Projected cash flows are discounted at a required market rate of return that reflects the relative risk of achieving the cash flows and the time value of money. The cost approach, which estimates value by determining the current cost of replacing an asset with another of equivalent economic utility, was used, as appropriate, for certain assets for which the market and income approaches could not be applied due to the nature of the asset. The cost to replace a given asset reflects the estimated reproduction or replacement cost for the asset, less an allowance for loss in value due to depreciation. The fair value of the US Airways Dividend Miles ~~frequent flyer~~loyalty program liability was determined based on the weighted average equivalent ticket value of outstanding miles which were expected to be redeemed for future travel at December 9, 2013. The weighted average equivalent ticket value contemplates differing classes of service, domestic and international itineraries and the carrier providing the award travel.
~~Frequent flyer programs~~Loyalty Program
~~AAG~~We currently ~~operates two frequent traveler programs, American’s AAdvantage and US Airways’ Dividend Miles. These programs award~~operate the loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American ~~US Airways~~ andoneworld carriers, as well as certain other partner airlines that participate in the ~~programs.~~program. Mileage credits can also be earned through purchases from other non-airline partners that participate in our ~~respective~~ loyalty ~~programs.~~program. Mileage credits can be redeemed for travel on American ~~US Airways~~ or other participating partner airlines, in which case we pay a fee.
We use the incremental cost method to account for the portion of our ~~frequent flyer~~loyalty program liability incurred when AAdvantage ~~and Dividend Miles~~ members earn mileage credits by flying on American ~~US Airways~~ or our regional affiliates. We have an obligation to provide future travel when these mileage credits are redeemed and therefore have recorded a liability for mileage credits outstanding.
The incremental cost liability includes all mileage credits that are expected to be redeemed, including mileage credits earned by members whose mileage account balances have not yet reached the minimum mileage credit level required to redeem an award. Additionally, outstanding mileage credits are subject to expiration if unused. In calculating the liability, we estimate how many mileage credits will never be redeemed for travel and exclude those mileage credits from the estimate of the liability. Estimates are also made for the number of miles that will be used per award redemption and the number of travel awards that will be redeemed on partner airlines. These estimates are based on historical program experience as well as consideration of enacted program changes, as applicable. Changes in the liability resulting from members earning additional mileage credits or changes in estimates are recorded in the ~~statement~~consolidated statements of operations as a part of passenger revenue.
The liability for outstanding mileage credits is valued based on the estimated incremental cost of carrying one additional passenger. Incremental cost primarily includes unit costs incurred for fuel, food, and insurance as well as fees incurred when travel awards are redeemed on partner airlines. No profit or overhead margin is included in the accrual of incremental cost. These estimates are generally updated based upon our 12-month historical average of such costs.
WeAs of December 31, 2015 and 2014, the liability for outstanding mileage credits for the AAdvantage program accounted for under the incremental cost method was $657 million and $674 million, respectively, and is included on the consolidated balance sheets within loyalty program liability.
In addition, we applied the acquisition method of accounting in connection with the Merger and therefore recorded the liability for outstanding US ~~Airways~~Airways’ mileage credits at fair value, an amount significantly in excess of incremental cost. As of December 31, 2015 and 2014, the liability for these outstanding mileage credits expected to be redeemed for future travel awards ~~for US Airways under the Dividend Miles program~~ was ~~$638~~$296 million and $611 million, respectively, and is included on the consolidated balance sheets within ~~frequent flyer~~loyalty program liability. This liability ~~will~~is amortized into passenger revenue on a straight-line basis over the period in which the mileage credits are expected to be ~~reduced as miles are~~ redeemed ~~and~~for travel. All new miles earned will be recorded as a liability based on the incremental cost method discussed above.
~~As of December 31, 2014, the liability for outstanding mileage credits for the AAdvantage program was $647 million and is included on the consolidated balance sheets within frequent flyer liability.~~
American ~~and US Airways~~ also ~~sell frequent flyer~~sells loyalty program mileage credits to participating airline partners and non-airline business partners. Sales of mileage credits to non-airline business partners is comprised of two components, transportation and marketing. Historically, we have used the residual method of accounting to determine the values of each component as there had not been a material modification to any significant agreements since ~~our~~the adoption of Accounting Standards Update (ASU) No. 2009-13, “Revenue Recognition (Topic 605) – Multiple-Deliverable Revenue Arrangements” on January 1, 2011.
~~During the fourth quarter of~~In 2013, American and Citibank amended their ~~current~~AAdvantage co-branded credit card agreement, which resulted in a material modification of the terms of the arrangement. Also, in connection with ~~our~~the acquisition of US Airways on December 9, 2013, a material modification occurred on all of US Airways’ agreements in connection with the Merger. Therefore, subsequent to the amendments of these arrangements, we ~~will apply~~have applied the relative selling price method to determine the values of each deliverable. Under the relative selling price approach, we identified five revenue elements for the co-branded credit card agreements with Citibank and Barclays: the transportation component; use of the
American ~~and US Airways’~~ brand including access to ~~frequent flyer~~loyalty program member lists; advertising; lounge access; and baggage services (together excluding ~~“the~~the transportation component,” the ~~“marketing component”)~~marketing component).
The transportation component represents the estimated selling price of future travel awards and is determined using historical transaction information, including information related to customer redemption patterns. The transportation component is deferred based on its relative selling price and is amortized into passenger revenue on a straight-line basis over the period in which the mileage credits are expected to be redeemed for travel.
The marketing component represents services provided to our business partners and relates primarily to the use of ~~American’s and US Airways’ logo and tradenames along with~~the American brand including access to ~~customers lists of AAdvantage and Dividend Miles members.~~loyalty program member lists. The marketing services are provided
periodically, but no less than monthly. Accordingly, the marketing component is considered earned and recognized in other revenues in the period of the mileage sale.
Upon application of the relative selling price method in 2013 for American’s Citibank modification, we reduced our travel component liability and recorded other revenue of approximately $31 million. As a result of the change in the marketing component value when the relative selling price method is applied, ~~American and US Airways~~we now defer less revenue per mile sold.
~~For American’s agreements where there has not been a material modification, we continue to apply the residual method.~~
As of December 31, 2015 and 2014, ~~and 2013, AAG~~American had $1.5 billion in deferred revenue from the sale of mileage credits (recorded ~~as frequent flyer~~within loyalty program liability on the consolidated balance sheets). For the years ended December 31, 2015, 2014 and 2013, ~~and 2012, AAG’s~~the marketing component of mileage sales recognized at the time of sale in other revenues was approximately $1.5 billion, $1.4 billion ~~$834 million~~ and ~~$725 million, respectively.~~
As of December 31, 2014 and 2013, American had $1.2 billion, in deferred revenue from the sale of mileage credits (recorded as frequent flyer liability on the consolidated balance sheets). For the years ended December 31, 2014, 2013 and 2012, American’s marketing component of mileage sales recognized at the time of sale in other revenues was approximately $1.1 billion, $816 million and $725$834 million, respectively.
A change to certain estimates used in the calculation of incremental cost could have a material impact on the liability. A 1%one percentage point increase or decrease in the percentage of travel awards redeemed on partner airlines would have ~~a $31~~an approximate $35 million impact on the liability as of December 31, ~~2014.~~2015. A 10% increase or decrease in the assumed price per gallon of fuel would have ~~a $23~~an approximate $12 million impact on the liability as of December 31, ~~2014.~~2015.
A change to the estimated fair value of the transportation component could have a significant impact on revenue. A 10% increase or decrease in the estimated fair value of the transportation component would have an approximately ~~$91~~$75 million impact on revenue recognized in ~~2014.~~2015.
The number of one way travel award redemptions during the year ended December 31, ~~2014,~~2015, was ~~approximately 7.9~~8.3 million representing ~~approximately 5.5%~~6.5% of our total mainline and regional RPMs during that period. We believe displacement of revenue passengers is minimal given our load factors and our ability to manage ~~frequent flyer~~loyalty program seat inventory.
Pensions and ~~retiree medical~~Retiree Medical and ~~other benefits~~Other Postretirement Benefits
We recognize the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of our pension and other postretirement plans in the consolidated balance sheet with a corresponding adjustment to accumulated other comprehensive income (loss).
Our pension and other postretirement benefit costs and liabilities are calculated using various actuarial assumptions and methodologies. We use certain assumptions including, but not limited to, the selection of the: (i) discount rate; (ii) expected return on plan assets; (iii) expected health care cost trend rate and (iv) the estimated age of pilot retirement (as discussed below). These assumptions as of December 31 were:

   2014 2013    2015 2014
Pension discount rate (1)
   4.30 % 5.10 %    4.70 % 4.30 %
OPEB discount rate (1)
   4.00 % 4.71 %
Other postretirement benefits discount rate (1)
   4.42 % 4.00 %
Expected return on plan assets (2)
   8.00 % 8.00 %    8.00 % 8.00 %
Expected health care cost trend rate (3):

Pre-65 individuals

Initial
   5.25 % 6.50 %    5.21 % 5.25 %
Ultimate (2023)
   4.55 % 4.50 %
Ultimate (2024)
   4.56 % 4.55 %
Post-65 individuals

Initial
   5.25 % 6.50 %    5.21 % 5.25 %
Ultimate (2023)
   4.55 % 4.50 %
Ultimate (2024)
   4.56 % 4.55 %
Pilot Retirement Age
   62    63       62    62

(1)
When establishing our discount rate to measure our obligations, we match high quality corporate bonds available in the marketplace whose cash flows approximate our projected benefit disbursements. Lowering
the discount rate by 50 basis points as of December 31, ~~2014~~2015 would increase our pension and other postretirement benefits obligations by approximately ~~$1.4~~$1.2 billion and ~~$58~~$52 million, respectively, and increase estimated ~~2015~~2016 pension expense by $7 million and decrease estimated ~~2015~~2016 other postretirement benefit expense by $2less than $1 million.

(2)
The expected return on plan assets is based upon an evaluation of our historical trends and experience taking into account current and expected market conditions and our target asset allocation of ~~32%~~31% longer duration corporate and U.S. government/agency bonds, ~~33%~~32% U.S. value stocks, ~~18%~~19% developed international stocks, 9%10% emerging markets stocks and bonds and 8% alternative (private) investments. The expected return on plan assets component of our net periodic benefit cost is calculated based on the fair value of plan assets and our target asset allocation. We monitor our actual asset allocation and believe that our long-term asset allocation will continue to approximate our target allocation. Our historical annualized ten-year rate of return on plan assets, calculated using a geometric compounding of monthly returns, is approximately 8% as of December 31, 2014. Lowering the expected long-term rate of return on plan assets by 50 basis points as of December 31, ~~2014~~2015 would increase estimated ~~2015~~2016 pension expense and other postretirement benefit expense by approximately ~~$53~~$47 million and $1 million, respectively.

(3)
The health care cost trend rate is based upon an evaluation of our historical trends and experience taking into account current and expected market conditions. Increasing the assumed health care cost trend rate by 100 basis points would increase estimated ~~2015~~2016 other postretirement benefits expense by $3 million.
During ~~2014,~~2015, we revised our mortality assumptions to incorporate the new ~~set of~~ mortality ~~tables~~improvement scale issued by the Society of ~~Actuaries, adjusted to reflect our experience and future expectations.~~Actuaries. This resulted in ~~an increase~~a decrease in the projected benefit ~~obligation~~obligations of our pension and retiree medical programs of ~~$682~~$161 million and ~~$47~~$9 million, respectively. We also reviewed and revised certain other economic and demographic assumptions including the pension and retiree medical discount rates and health care cost and trend rates. The net effect of changing these assumptions for the pension and retiree medical plans resulted in ~~an increase of $1.8 billion and~~ a decrease of ~~$64~~$940 million and $119 million, respectively, in the projected benefit obligation at December 31, ~~2014~~2015 primarily due to the ~~decrease~~increase in the pension discount rate.
See Note 13 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 1011 to American’s Consolidated Financial Statements in Part II, Item 8B for additional information regarding our retirement benefits.
Income ~~taxes~~Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. A valuation allowance is established, if necessary, for the amount of any tax benefits that, based on available evidence, are not expected to be realized.
~~New~~Recent Accounting Pronouncements
~~In May 2014, the~~See Note 5 to AAG’s Consolidated Financial ~~Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 completes the joint effort by the FASB~~Statements in Part II, Item 8A and ~~International Accounting Standards Board (IASB)~~Note 5 to ~~improve financial reporting by creating common revenue recognition guidance~~American’s Consolidated Financial Statements in Part II, Item 8B for U.S. GAAP and International Financial Reporting Standards (IFRS). ASU 2014-09 applies to all companies that enter into contracts with customers to transfer goods or services. ASU 2014-09 is effective for public entities for interim and annual reporting periods beginning after December 15, 2016. Early application is not permitted and entities have the choice to apply ASU 2014-09 either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying ASU 2014-09 at the date of initial application and not adjusting comparative information. We are currently evaluating the requirements of ASU 2014-09 and have not yet determined its impactfurther information on ~~our consolidated financial statements.~~recent accounting pronouncements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
AAG’s Market Risk Sensitive Instruments and Positions
The risk inherent in our market risk sensitive instruments and positions is the potential loss arising from adverse changes in the price of fuel, foreign currency exchange rates and interest rates as discussed below. The sensitivity analyses presented do not consider the effects that such adverse changes may have on overall economic activity, nor do they consider additional actions management may take to mitigate our exposure to such changes. Therefore, actual results may differ. See Note 11 to AAG’s Consolidated Financial Statements in Part II, Item 8A for ~~accounting policies and~~ additional ~~information~~discussion regarding ~~derivatives.~~risk management matters.
Aircraft Fuel
Our operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of the largest single cost items in our business. Because of the amount of fuel needed to operate our airlines, even a relatively small increase or decrease in the price of fuel can have a material ~~adverse aggregate~~ effect on our costs and liquidity. Jet fuel market prices have fluctuated substantially over the past several years with market spot prices ranging from a low of approximately ~~$1.55~~$1.00 per gallon to a high of approximately ~~$3.37~~$3.34 per gallon during the period from January 1, ~~2011~~2012 to December 31, ~~2014. In order to provide a measure of control over price and supply, we trade and ship fuel and maintain fuel storage facilities to support our flight operations.~~2015.
During the second quarter of 2014, we sold our portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. We have not entered into any transactions to hedge our fuel consumption since December 9, 2013 and, accordingly, asAs of December 31, ~~2014,~~2015, we did not have any fuel hedging contracts ~~outstanding.~~outstanding to hedge our fuel consumption. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully exposed to fluctuations in fuel prices. Our current policy is not to enter into transactions to hedge our fuel consumption, although we review that policy from time to time based on market conditions and other factors. Our ~~2015~~2016 forecasted mainline and regional fuel consumption is presently approximately ~~4.3~~4.4 billion gallons, and based on this forecast, a one cent per gallon increase in aviation fuel price would result in a ~~$43~~$44 million increase in annual expense.
Foreign Currency
We are exposed to the effect of foreign exchange rate fluctuations on the U.S. dollar value of foreign currency-denominated operating revenues and expenses. Our largest exposure comes from the British pound, Euro, Canadian dollar ~~Japanese yen~~ and various Latin American currencies, ~~particularly~~primarily the ~~Venezuelan bolivar,~~ Brazilian ~~real and Argentine peso.~~real. We do not currently have a foreign currency hedge ~~program related to our foreign currency-denominated ticket sales. Due to our foreign-denominated revenues exceeding our foreign-denominated expenses, a~~program. A uniform 10% relative strengthening in the value of the U.S. dollar from ~~December 31, 2014 and 2013~~2015 levels relative to each of the currencies in which we have foreign currency exposure would have resulted in an increase in our total nonoperating expense, net of approximately ~~$235 million and $199~~$220 million for the ~~years ending~~year ended December 31, ~~2014 and 2013, respectively,~~2015, and does not address any exposure to foreign currency held on our consolidated balance sheet.
~~Venezuela Cash~~Generally, fluctuations in foreign currencies, including devaluations, cannot be predicted by us and ~~Short-term Investments~~
~~As of December 31, 2014, $804 million~~can significantly affect the value of our ~~cash~~assets located outside the United States. These conditions, as well as any further delays, devaluations or imposition of more stringent repatriation restrictions, may materially adversely affect our business, results of operations and short-term investments balances were held in foreign bank accounts, of which approximately $656 million was held in Venezuelan bolivars. This balance includes approximately $621 million valued at 6.3 bolivars and approximately $35 million valued at 12.0 bolivars, with the rate depending on the date we submitted our repatriation request to the Venezuelan government. These rates are materially more favorable than the exchange rates currently prevailing for other transactions conducted outside of the Venezuelan government’s currency exchange system that we participate in. Our cash balance held
in Venezuelan bolivars decreased $54 million from the December 31, 2013 balance of $710 million primarily due to $88 million in cash repatriations and $30 million in foreign currency losses as described below, partially offset by additional cash proceeds from ticket sales in early 2014. In the second and third quarters of 2014, we repatriated $65 million including $31 million valued at 6.3 bolivars to the dollar and $34 million valued at 10.6 bolivars to the dollar. In the fourth quarter of 2014, we incurred an $11 million foreign currency loss related to the receipt of $23 million at a rate of 6.3 bolivars to the dollar for one of our 2012 repatriation requests originally valued at a rate of 4.3 bolivars to the dollar. Accordingly, we revalued our remaining pending 2012 repatriation requests from 4.3 to 6.3 bolivars to the dollar resulting in additional foreign currency losses of $19 million. In total, we recognized a $30 million special charge for these foreign currency losses in the fourth quarter of 2014. During 2014, we significantly reduced capacity in this market and we are no longer accepting bolivars as payment for airline tickets. We are continuing to work with Venezuelan authorities regarding the timing and exchange rate applicable to the repatriation of funds held in local currency. We are monitoring this situation closely and continue to evaluate our holdings of Venezuelan bolivars for additional foreign currency losses, which could be material, particularly in light of the uncertainty posed by the new foreign exchange regulations announced in mid-February 2015 and the continued deterioration of economic conditions in Venezuela.financial condition. See Part I, Item 1A. Risk Factors –~~“We~~ “We operate a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control” for additional discussion of this and other currency risks.
Interest
Our earnings are also affected by changes in interest rates due to the impact those changes have on our interest income from short-term investments, and our interest expense from variable-rate debt instruments. Our largest exposure with respect to variable rate debt comes from changes in the London Interbank Offered Rate (LIBOR). We had variable rate debt instruments representing approximately ~~36%~~38% of our total long-term debt at
December 31, ~~2014.~~2015. We currently do not have an interest rate hedge program. If our interest rates increased 10% in ~~2014,~~2015, our interest expense would have increased by approximately ~~$21 million and interest income from short-term investments would have increased by approximately $2~~$23 million.
Additional information regarding our debt obligations as of December 31, ~~2014~~2015 is as follows (in millions):

   Expected Maturity Date    Expected Maturity Date
   2015 2016 2017 2018 2019 Thereafter Total    2016 2017 2018 2019 2020 2021 and
Thereafter Total
Fixed-rate debt
   $ 1,281    $ 745    $ 1,005    $ 1,539    $ 1,838    $ 5,100    $ 11,508       $ 1,200    $ 1,121    $ 1,651    $ 1,946    $ 1,360    $ 5,698    $ 12,976
Weighted avg. interest rate
   5.6 % 5.6 % 5.6 % 5.6 % 5.6 % 6.0 %    5.0 % 5.1 % 5.0 % 4.9 % 4.9 % 5.7 %
Variable-rate debt
   $ 427    $ 917    $ 333    $ 340    $ 3,062    $ 1,376    $ 6,455       $ 1,066    $ 477    $ 483    $ 1,432    $ 2,227    $ 2,146    $ 7,831
Weighted avg. interest rate
   3.3 % 3.3 % 3.4 % 3.4 % 3.4 % 3.2 %    3.0 % 3.0 % 3.0 % 2.9 % 2.8 % 1.0 %
American’s Market Risk Sensitive Instruments and Positions
The risk inherent in American’s market risk sensitive instruments and positions is the potential loss arising from adverse changes in the price of fuel, foreign currency exchange rates and interest rates as discussed below. The sensitivity analyses presented do not consider the effects that such adverse changes may have on overall economic activity, nor do they consider additional actions management may take to mitigate American’s exposure to such changes. Therefore, actual results may differ. See Note 89 to American’s Consolidated Financial Statements in Part II, Item 8B for ~~accounting policies and~~ additional ~~information~~discussion regarding ~~derivatives.~~risk management matters.
Aircraft Fuel
American’s operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of the largest single cost items in American’s business. Because of the amount
of fuel needed to operate American, even a relatively small increase or decrease in the price of fuel can have a material ~~adverse aggregate~~ effect on American’s costs and liquidity. Jet fuel market prices have fluctuated substantially over the past several years with market spot prices ranging from a low of approximately ~~$1.55~~$1.00 per gallon to a high of approximately ~~$3.37~~$3.34 per gallon during the period from January 1, ~~2011~~2012 to December 31, ~~2014. In order to provide a measure of control over price and supply, American trades and ships fuel and maintains fuel storage facilities to support its flight operations.~~2015.
During the second quarter of 2014, American sold its portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. American has not entered into any transactions to hedge its fuel consumption since December 9, 2013 and, accordingly, asAs of December 31, ~~2014,~~2015, American did not have any fuel hedging contracts ~~outstanding.~~outstanding to hedge its fuel consumption. As such, and assuming American does not enter into any future transactions to hedge its fuel consumption, American will continue to be fully exposed to fluctuations in fuel prices. American’s current policy is not to enter into transactions to hedge its fuel consumption, although American reviews that policy from time to time based on market conditions and other factors. American’s ~~2015~~2016 forecasted mainline and regional fuel consumption is presently approximately ~~2.8~~4.4 billion gallons, and based on this forecast, a one cent per gallon increase in aviation fuel price would result in a ~~$28~~$44 million increase in annual expense.
Foreign Currency
American is exposed to the effect of foreign exchange rate fluctuations on the U.S. dollar value of foreign currency-denominated operating revenues and expenses. American’s largest exposure comes from the British pound, Euro, Canadian dollar ~~Japanese yen~~ and various Latin American currencies, ~~particularly~~primarily the ~~Venezuelan bolivar,~~ Brazilian ~~real and Argentine peso.~~real. American does not currently have a foreign currency ~~hedge program related to its foreign currency-denominated ticket sales. Due to American’s foreign-denominated revenues exceeding its foreign-denominated expenses, a~~hedge. A uniform 10% strengthening in the value of the U.S. dollar from ~~December 31, 2014 and 2013~~2015 levels relative to each of the currencies in which American has foreign currency exposure would have resulted in an increase in its nonoperating expense, net of approximately ~~$195 million and $199~~$220 million for the ~~years ending~~year ended December 31, ~~2014 and 2013, respectively,~~2015, and does not address any exposure to foreign currency held on its consolidated balance sheet.
~~Venezuela Cash~~Generally, fluctuations in foreign currencies, including devaluations, cannot be predicted by American and ~~Short-term Investments~~
~~As of December 31, 2014, $745 million~~can significantly affect the value of American’s cash and short-term investments balances were held in foreign bank accounts, of which approximately $656 million was held in Venezuelan bolivars. This balance includes approximately $621 million valued at 6.3 bolivars and approximately $35 million valued at 12.0 bolivars, withassets located outside the ~~rate depending on the date American submitted its repatriation request to the Venezuelan government.~~United States. These rates are materially more favorable than the exchange rates currently prevailing for other transactions conducted outside of the Venezuelan government’s currency exchange system that American participates in. American’s cash balance held in Venezuelan bolivars decreased $54 million from the December 31, 2013 balance of $710 million primarily due to $88 million in cash repatriations and $30 million in foreign currency lossesconditions, as described below, partially offset by additional cash proceeds from ticket sales in early 2014. In the second and third quarters of 2014, American repatriated $65 million including $31 million valued at 6.3 bolivars to the dollar and $34 million valued at 10.6 bolivars to the dollar. In the fourth quarter of 2014, American incurred an $11 million foreign currency loss related to the receipt of $23 million at a rate of 6.3 bolivars to the dollar for one of its 2012 repatriation requests originally valued at a rate of 4.3 bolivars to the dollar. Accordingly, American revalued its remaining pending 2012 repatriation requests from 4.3 to 6.3 bolivars to the dollar resulting in additional foreign currency losses of $19 million. In total, American recognized a $30 million special charge for these foreign currency losses in the fourth quarter of 2014. During 2014, American significantly reduced capacity in this market and is no longer accepting bolivarswell as payment for airline tickets. American is continuing to work with Venezuelan authorities regarding the timing and exchange rate applicable to the repatriation of funds held in local currency. American is monitoring this situation closely and continues to evaluate its holdings of Venezuelan bolivars for additional foreign currency losses, which could be material,
~~particularly in light~~any further delays, devaluations or imposition of ~~the uncertainty posed by the new foreign exchange regulations announced in mid-February 2015~~more stringent repatriation restrictions, may materially adversely affect American’s business, results of operations and ~~the continued deterioration of economic conditions in Venezuela.~~financial condition. See Part I, Item 1A. Risk Factors – “We “We operate a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our ~~control~~control”” for additional discussion of this and other currency risks.
Interest
American’s earnings are also affected by changes in interest rates due to the impact those changes have on its interest income from short-term investments, and its interest expense from variable-rate debt instruments. American’s largest exposure with respect to variable rate debt comes from changes in the ~~London Interbank Offered Rate (LIBOR).~~LIBOR. American had variable rate debt instruments representing approximately ~~35%~~41% of its total long-term debt at December 31, ~~2014.~~2015. American currently does not have an interest rate hedge program. If American’s interest rates increased 10% in ~~2014,~~2015, American’s interest expense would have increased by approximately ~~$14 million and interest income from short-term investments would have increased by approximately $2~~$23 million.
Additional information regarding American’s debt obligations as of December 31, ~~2014~~2015 is as follows (in millions):

   Expected Maturity Date    Expected Maturity Date
   2015 2016 2017 2018 2019 Thereafter Total    2016 2017 2018 2019 2020 2021 and
Thereafter Total
Fixed-rate debt
   $ 968    $ 505    $ 745    $ 658    $ 766    $ 3,673    $ 7,315       $ 1,200    $ 1,121    $ 1,151    $ 1,196    $ 854    $ 5,674    $ 11,196
Weighted avg. interest rate
   5.4 % 5.4 % 5.4 % 5.5 % 5.6 % 6.2 %    5.0 % 5.0 % 5.0 % 4.9 % 4.9 % 5.6 %
Variable-rate debt
   $ 262    $ 193    $ 197    $ 186    $ 1,978    $ 1,118    $ 3,934       $ 1,066    $ 477    $ 483    $ 1,432    $ 2,227    $ 2,146    $ 7,831
Weighted avg. interest rate
   3.6 % 3.6 % 3.6 % 3.6 % 3.6 % 3.3 %    3.0 % 3.0 % 3.0 % 2.9 % 2.8 % 1.0 %
ITEM 8A. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA OF AMERICAN AIRLINES GROUP INC.
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
American Airlines Group Inc.:
We have audited the accompanying consolidated balance ~~sheet~~sheets of American Airlines Group Inc. and subsidiaries (the Company) as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income (loss), cash flows, and stockholders’ equity (deficit)~~, and cash flows~~ for the ~~year~~years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our ~~audit.~~audits.
We conducted our ~~audit~~audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our ~~audit provides~~audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of American Airlines Group Inc. and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for the ~~year~~years then ended, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), ~~American Airlines Group Inc.’s~~the Company’s internal control over financial reporting as of December 31, ~~2014,~~2015, based on criteria established inInternal Control – Integrated Framework ~~(1992)~~(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February ~~25, 2015~~24, 2016 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
/s/    KPMG LLP
Dallas, Texas
February ~~25, 2015~~24, 2016
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
American Airlines Group Inc.
We have audited the accompanying consolidated ~~balance sheet of American Airlines Group Inc. (the Company) (formerly AMR Corporation) as of December 31, 2013, and the related consolidated~~ statements of operations, comprehensive income (loss), stockholders’ equity (deficit) and cash flows of American Airlines Group Inc. (the Company) (formerly AMR Corporation) for ~~each of~~ the ~~two years in the period~~year ended December 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our ~~audits.~~audit. We did not audit the financial statements of US Airways Group, Inc., a wholly-owned subsidiary of the Company, which statements reflect ~~consolidated total assets constituting 39% as of December 31, 2013, and total~~ operating revenues constituting 3% of consolidated operating revenues for the year ended December 31, ~~2013, of the related consolidated totals.~~2013. Those financial statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to data included for such wholly-owned subsidiary, is based solely on the report of other auditors.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated ~~financial position~~results of American Airlines Group Inc. ~~at December 31, 2013 and the consolidated results of its~~’s operations and its cash flows for ~~each of~~ the ~~two years in the period~~year ended December 31, 2013 in conformity with U.S. generally accepted accounting principles.
/s/    Ernst & Young LLP
Dallas, Texas
February 27, 2014 except for Note 7
as to which the date is February 25, 2015
AMERICAN AIRLINES GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except shares and per share amounts)

   Year Ended December 31,    Year Ended December 31,
   2014 2013 2012    2015 2014 2013
Operating revenues:

Mainline passenger
   $ 30,802    $ 20,218    $ 18,743       $ 29,037    $ 30,802    $ 20,218
Regional passenger
   6,322    3,131    2,914       6,475    6,322    3,131
Cargo
   875    685    675       760    875    685
Other
   4,651    2,709    2,523       4,718    4,651    2,709




Total operating revenues
   42,650    26,743    24,855       40,990    42,650    26,743
Operating expenses:

Aircraft fuel and related taxes
   10,592    7,839    7,705       6,226    10,592    7,839
Salaries, wages and benefits
   8,508    5,460    6,217       9,524    8,508    5,460
Regional expenses
   6,516    3,326    3,028       5,983    6,516    3,326
Maintenance, materials and repairs
   2,051    1,260    1,158       1,889    2,051    1,260
Other rent and landing fees
   1,727    1,152    1,083       1,731    1,727    1,152
Aircraft rent
   1,250    768    553       1,250    1,250    768
Selling expenses
   1,544    1,158    1,058       1,394    1,544    1,158
Depreciation and amortization
   1,295    853    845       1,364    1,295    853
Special items, net
   800    559    386       1,051    800    559
Other
   4,118    2,969    2,674       4,374    4,118    2,969




Total operating expenses
   38,401    25,344    24,707       34,786    38,401    25,344




Operating income
   4,249    1,399    148       6,204    4,249    1,399
Nonoperating income (expense):

Interest income
   31    20    26       39    31    20
Interest expense, net of capitalized interest
   (887 ) (856 ) (632 )    (880 ) (887 ) (856 )
Other, net
   (181 ) (88 ) 221       (747 ) (181 ) (88 )




Total nonoperating expense, net
   (1,037 ) (924 ) (385 )    (1,588 ) (1,037 ) (924 )




Income (loss) before reorganization items, net
   3,212    475    (237 )
Income before reorganization items, net
   4,616    3,212    475
Reorganization items, net
   —    (2,655 ) (2,208 )    —    —    (2,655 )




Income (loss) before income taxes
   3,212    (2,180 ) (2,445 )    4,616    3,212    (2,180 )
Income tax provision (benefit)
   330    (346 ) (569 )    (2,994 ) 330    (346 )




Net income (loss)
   $ 2,882    $ (1,834 ) $ (1,876 )    $ 7,610    $ 2,882    $ (1,834 )




Earnings (loss) per share:

Basic
   $ 4.02    $ (6.54 ) $ (7.52 )    $ 11.39    $ 4.02    $ (6.54 )
Diluted
   $ 3.93    $ (6.54 ) $ (7.52 )    $ 11.07    $ 3.93    $ (6.54 )
Weighted average shares outstanding (in thousands):

Basic
   717,456    280,213    249,490       668,393    717,456    280,213
Diluted
   734,016    280,213    249,490       687,355    734,016    280,213
Cash dividends declared per common share
   $ 0.20    $ —    $ —       $ 0.40    $ 0.20    $ —
See accompanying notes to consolidated financial statements.
AMERICAN AIRLINES GROUP INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)

   Year Ended December 31,    Year Ended December 31,
   2014 2013 2012    2015 2014 2013
Net income (loss)
   $ 2,882    $ (1,834 ) $ (1,876 )    $ 7,610    $ 2,882    $ (1,834 )


Other comprehensive income (loss), before tax:

Other comprehensive income (loss):

Defined benefit pension plans and retiree medical:

Amortization of actuarial gain (loss) and prior service cost
   (163 ) (142 ) 130
Amortization of actuarial loss and prior service cost
   (108 ) (163 ) (142 )
Current year change
   (2,633 ) 1,577    (1,910 )    (51 ) (2,633 ) 1,577
Benefit plan modifications
   —    —    3,345
Derivative financial instruments:

Change in fair value
   (54 ) 18    (12 )    —    (54 ) 18
Reclassification into earnings
   (4 ) 34    (3 )    (9 ) (4 ) 34
Unrealized gain (loss) on investments:

Unrealized loss on investments:

Net change in value
   (3 ) (1 ) 3       (5 ) (3 ) (1 )
Reversal of non-cash tax provision (benefit)
   —    330    (538 )




Other comprehensive income (loss) before tax
   (2,857 ) 1,486    1,553
Non-cash tax provision (benefit)
   (330 ) 538    569
Total other comprehensive income (loss)
   (173 ) (2,527 ) 948




Comprehensive income (loss)
   $ 355    $ (886 ) $ (892 )
Total comprehensive income (loss)
   $ 7,437    $ 355    $ (886 )




See accompanying notes to consolidated financial statements.
AMERICAN AIRLINES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except shares and par value)

December 31,    December 31,
2014 2013    2015 2014
ASSETS

Current assets

Cash
$ 994    $ 1,140       $ 390    $ 994
Short-term investments
6,309    8,111       5,864    6,309
Restricted cash and short-term investments
774    1,035       695    774
Accounts receivable, net
1,771    1,560       1,425    1,771
Aircraft fuel, spare parts and supplies, net
1,004    1,012       863    1,004
Prepaid expenses and other
1,260    1,465       748    898



Total current assets
12,112    14,323       9,985    11,750
Operating property and equipment

Flight equipment
28,213    23,730       33,185    28,213
Ground property and equipment
5,900    5,585       6,402    5,900
Equipment purchase deposits
1,230    1,077       1,067    1,230



Total property and equipment, at cost
35,343    30,392       40,654    35,343
Less accumulated depreciation and amortization
(12,259 ) (11,133 )    (13,144 ) (12,259 )



Total property and equipment, net
23,084    19,259       27,510    23,084
Other assets

Goodwill
4,091    4,086       4,091    4,091
Intangibles, net of accumulated amortization of $447 and $373, respectively
2,240    2,311
Intangibles, net of accumulated amortization of $502 and $447, respectively
   2,249    2,240
Deferred tax asset
   2,477    —
Other assets
2,244    2,299       2,103    2,060



Total other assets
8,575    8,696       10,920    8,391



Total assets
$ 43,771    $ 42,278       $ 48,415    $ 43,225



LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Current maturities of long-term debt and capital leases
$ 1,708    $ 1,446       $ 2,231    $ 1,677
Accounts payable
1,377    1,368       1,563    1,377
Accrued salaries and wages
1,194    1,143       1,205    1,194
Air traffic liability
4,252    4,380       3,747    4,252
Frequent flyer liability
2,807    3,005
Loyalty program liability
   2,525    2,807
Other accrued liabilities
2,097    2,464       2,334    2,097



Total current liabilities
13,435    13,806       13,605    13,404
Noncurrent liabilities

Long-term debt and capital leases, net of current maturities
16,196    15,353       18,330    16,043
Pension and postretirement benefits
7,562    5,828       7,450    7,562
Deferred gains and credits, net
829    935       667    829
Mandatorily convertible preferred stock and other bankruptcy settlement obligations
325    5,928
Bankruptcy settlement obligations
   193    325
Other liabilities
3,403    3,159       2,535    3,041



Total noncurrent liabilities
28,315    31,203       29,175    27,800
Commitments and contingencies (Note 15)

Stockholders’ equity (deficit)

Common stock, $0.01 par value; 1,750,000,000 shares authorized, 697,474,535 shares issued and outstanding at December 31, 2014; 526,805,522 shares issued and outstanding at December 31, 2013
7    5
Stockholders’ equity

Common stock, $0.01 par value; 1,750,000,000 shares authorized 624,622,381 shares issued and outstanding at December 31, 2015; 697,474,535 shares issued and outstanding at December 31, 2014
   6    7
Additional paid-in capital
15,135    10,592       11,591    15,135
Accumulated other comprehensive loss
(4,559 ) (2,032 )    (4,732 ) (4,559 )
Accumulated deficit
(8,562 ) (11,296 )    (1,230 ) (8,562 )



Total stockholders’ equity (deficit)
2,021    (2,731 )
Total stockholders’ equity
   5,635    2,021



Total liabilities and stockholders’ equity (deficit)
$ 43,771    $ 42,278
Total liabilities and stockholders’ equity
   $ 48,415    $ 43,225



See accompanying notes to consolidated financial statements.
AMERICAN AIRLINES GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)

December 31,    December 31,
2014 2013 2012    2015 2014 2013
Cash flows from operating activities:

Net income (loss)
$ 2,882    $ (1,834 ) $ (1,876 )    $ 7,610    $ 2,882    $ (1,834 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization
1,513    1,020    1,015       1,609    1,513    1,020
Debt discount and lease amortization
(171 ) —    (14 )    (122 ) (171 ) —
Special items, non-cash
52    95    �� 215       273    52    95
Pension and postretirement
(163 ) (154 ) 287       (193 ) (163 ) (154 )
Deferred income taxes
346    (324 ) (569 )    (3,014 ) 346    (324 )
Share based compensation
304    39    29
Share-based compensation
   284    304    39
Reorganization items, non-cash
—    2,112    2,066       —    —    2,112
Interest expense, non-cash
—    181    —       —    —    181
Other, net
3    (76 ) 22       (12 ) 3    (76 )
Changes in operating assets and liabilities:

Increase in accounts receivable
(160 ) (93 ) (222 )
Decrease (increase) in accounts receivable
   352    (160 ) (93 )
Increase in other current assets
(45 ) (29 ) (133 )    (90 ) (45 ) (29 )
Decrease (increase) in derivative collateral
—    1    (1 )
Decrease in derivative collateral
   —    —    1
Increase in accounts payable and accrued liabilities
110    71    449       173    110    71
Increase (decrease) in air traffic liability
(97 ) 150    161       (505 ) (97 ) 150
Increase (decrease) in frequent flyer liability
(229 ) 38    140
Increase (decrease) in loyalty program liability
   (295 ) (229 ) 38
Contributions to pension plans
(810 ) (494 ) (277 )    (6 ) (810 ) (494 )
Decrease in other assets and liabilities
(455 ) (28 ) (7 )
Increase (decrease) in other assets and liabilities
   185    (455 ) (28 )



Net cash provided by operating activities
3,080    675    1,285       6,249    3,080    675
Cash flows from investing activities:

Capital expenditures and aircraft purchase deposits
(5,311 ) (3,114 ) (1,888 )    (6,151 ) (5,311 ) (3,114 )
Acquisition of US Airways Group
—    206    —       —    —    206
Purchases of short-term investments
(5,380 ) (3,342 ) (1,078 )    (8,126 ) (5,380 ) (3,342 )
Sales of short-term investments
7,179    2,161    1,384       8,517    7,179    2,161
Decrease (increase) in restricted cash and short-term investments
261    147    (112 )
Decrease in restricted cash and short-term investments
   79    261    147
Net proceeds from slot transaction
307    —    —       —    307    —
Proceeds from sale of an investment
   52    —    —
Proceeds from sale of property and equipment
33    128    123       35    33    128



Net cash used in investing activities
(2,911 ) (3,814 ) (1,571 )    (5,594 ) (2,911 ) (3,814 )
Cash flows from financing activities:

Payments on long-term debt and capital leases
(3,132 ) (2,926 ) (1,288 )    (2,153 ) (3,132 ) (2,926 )
Proceeds from issuance of long-term debt
3,302    5,134    268       5,009    3,302    5,134
Deferred financing costs
(106 ) (120 ) (6 )    (87 ) (106 ) (120 )
Sale-leaseback transactions
811    1,700    1,509       43    811    1,700
Exercise of stock options
10    —    —       —    10    —
Treasury stock repurchases
(1,062 ) —    —       (3,846 ) (1,062 ) —
Dividend payment
(144 ) —    —
Dividend payments
   (278 ) (144 ) —
Other financing activities
6    11    —       53    6    11



Net cash provided by (used in) financing activities
(315 ) 3,799    483       (1,259 ) (315 ) 3,799



Net increase (decrease) in cash
(146 ) 660    197       (604 ) (146 ) 660
Cash at beginning of year
1,140    480    283       994    1,140    480



Cash at end of year
$ 994    $ 1,140    $ 480       $ 390    $ 994    $ 1,140



See accompanying notes to consolidated financial statements.
AMERICAN AIRLINES GROUP INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(In millions, except share amounts)

Common
Stock Additional
Paid-in
Capital Treasury
Stock Accumulated
Other
Comprehensive
Income (Loss) Accumulated
Deficit Total
Balance at December 31, 2011
$ 254    $ 4,552    $ (367 ) $ (3,964 ) $ (7,586 ) $ (7,111 )
Net loss
—    —    —    —    (1,876 ) (1,876 )
Change in unrealized gain on investments
—    —    —    3    —    3
Changes in pension, retiree medical and other liability
—    —    —    1,565    —    1,565
Net changes in fair value of derivative financial instruments
—    —    —    (15 ) —    (15 )
Non-cash tax provision
—    —    —    (569 ) —    (569 )
Share-based compensation expense
—    16    —    —    —    16

Common
Stock Additional
Paid-in
Capital Treasury
Stock Accumulated
Other
Comprehensive
Income (Loss) Accumulated
Deficit Total
Balance at December 31, 2012
254    4,568    (367 ) (2,980 ) (9,462 ) (7,987 ) 254    4,568    (367 ) (2,980 ) (9,462 ) (7,987 )
Net loss
—    —    —    —    (1,834 ) (1,834 ) —    —    —    —    (1,834 ) (1,834 )
Change in unrealized loss on investments
—    —    —    (1 ) —    (1 )
Changes in pension, retiree medical and other liability
—    —    —    1,435    —    1,435    —    —    —    1,435    —    1,435
Net changes in fair value of derivative financial instruments
—    —    —    52    —    52    —    —    —    52    —    52
Non-cash tax provision
—    —    —    (538 ) —    (538 )
Reversal of non-cash tax benefit
—    —    —    (538 ) —    (538 )
Issuance of 6,249,185 shares to employees pursuant to stock option and deferred stock incentive plans
6    2    —    —    —    8    6    2    —    —    —    8
Issuance of 37,208,354 shares in exchange for redemption of AMR Corporation debt
37    484    —    —    —    521    37    484    —    —    —    521
Cancellation of pre-reorganization common stock
(297 ) (70 ) 367    —    —    —    (297 ) (70 ) 367    —    —    —
Issuance of 319,412,943 shares of post-reorganization common stock
3    592    —    —    —    595    3    592    —    —    —    595
Issuance of 197,363,088 shares in exchange for US Airways Group common stock
2    4,590    —    —    —    4,592    2    4,590    —    —    —    4,592
Equity component of US Airways Group convertible debt assumed in Merger
—    88    —    —    —    88    —    88    —    —    —    88
Issuance of 9,993,882 shares for Optional Conversion of Preferred Shares
—    269    —    —    —    269    —    269    —    —    —    269
Share-based compensation expense
—    69    —    —    —    69    —    69    —    —    —    69
Issuance of 35,609 shares to employees pursuant to stock option and deferred stock incentive plans
—    —    —    —    —    —    —    —    —    —    —    —
Change in unrealized loss on investments
—    —    —    (1 ) —    (1 )

Balance at December 31, 2013
5    10,592    —    (2,032 ) (11,296 ) (2,731 ) 5    10,592    —    (2,032 ) (11,296 ) (2,731 )
Net income
—    —    —    —    2,882    2,882    —    —    —    —    2,882    2,882
Change in unrealized loss on investments
—    —    —    (3 ) —    (3 )
Changes in pension, retiree medical and other liability
—    —    —    (2,796 ) —    (2,796 ) —    —    —    (2,796 ) —    (2,796 )
Net changes in fair value of derivative financial instruments
—    —    —    (58 ) —    (58 ) —    —    —    (58 ) —    (58 )
Non-cash tax benefit
—    —    —    330    —    330
Reversal of non-cash tax benefit
—    —    —    330    —    330
Cash tax withholding on shares issued
—    (110 ) —    —    —    (110 ) —    (110 ) —    —    —    (110 )
Purchase and retirement of 23,406,472 of AAG Common Stock
—    (1,000 ) —    —    —    (1,000 ) —    (1,000 ) —    —    —    (1,000 )
Dividends declared on common stock ($0.20 per share)
—    —    —    —    (148 ) (148 ) —    —    —    —    (148 ) (148 )
US Airways Group convertible debt settled with cash
—    (154 ) —    —    —    (154 ) —    (154 ) —    —    —    (154 )
Issuance of 5,701,776 shares of common stock pursuant to employee stock plans
—    10    —    —    —    10    —    10    —    —    —    10
Issuance of 57,393,096 shares of post-reorganization common stock
1    1,604    —    —    —    1,605    1    1,604    —    —    —    1,605
Issuance of 130,980,613 shares for Optional Conversion of Preferred Shares
1    3,889    —    —    —    3,890    1    3,889    —    —    —    3,890
Share-based compensation expense
—    304    —    —    —    304    —    304    —    —    —    304
Change in unrealized loss on investments
—    —    —    (3 ) —    (3 )

Balance at December 31, 2014
$ 7    $ 15,135    $ —    $ (4,559 ) $ (8,562 ) $ 2,021    7    15,135    —    (4,559 ) (8,562 ) 2,021
Net income
—    —    —    —    7,610    7,610
Changes in pension, retiree medical and other liability
—    —    —    (159 ) —    (159 )
Net changes in fair value of derivative financial instruments
—    —    —    (9 ) —    (9 )
Cash tax withholding on shares issued
—    (306 ) —    —    —    (306 )
Purchase and retirement of 85,141,691 shares of AAG Common Stock
(1 ) (3,585 ) —    —    —    (3,586 )
Dividends declared on common stock ($0.40 per share)
—    —    —    —    (278 ) (278 )
Issuance of 12,289,537 shares of common stock pursuant to employee stock plans
—    —    —    —    —    —
Settlement of Single-dip unsecured claims held in distributed claims reserve
—    63    —    —    —    63
Share-based compensation expense
—    284    —    —    —    284
Change in unrealized loss on investments
—    —    —    (5 ) —    (5 )

Balance at December 31, 2015
$ 6    $ 11,591    $ —    $ (4,732 ) $ (1,230 ) $ 5,635

See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
1.  Nature of Operations and Operating Environment
American Airlines Group Inc. (AAG or the Company), a Delaware corporation, is a holding company whose primary business activity is the operation of ~~two~~a major network air ~~carriers~~carrier through its subsidiaries, American Airlines, Inc. (American), US Airways Group, Inc. (US Airways Group) and Envoy Aviation Group Inc. (Envoy, formerly known as AMR Eagle Holding Corporation). US Airways Group’s principal subsidiary is US Airways, Inc. (US Airways) and its wholly-owned regional subsidiaries, ~~include~~Envoy Aviation Group Inc. (Envoy), Piedmont Airlines, Inc. (Piedmont), and PSA Airlines, Inc. (PSA). that operate under capacity purchase agreements as American Eagle.
~~The Company operates the largest airline in the world as measured by revenue passenger miles (RPMs) and available seat miles (ASMs).~~ The Company has hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York City, Philadelphia, Phoenix and Washington, D.C. Together with American Eagle, ~~and US Airways Express,~~ the Company operates an average of nearly 6,700 flights per day to ~~339~~nearly 350 destinations in 54more than 50 countries. In ~~2014,~~2015, the Company had approximately ~~146 million and 52~~201 million passengers boarding its mainline and regional ~~flights, respectively.~~flights. As of December 31, ~~2014,~~2015, the Company operated ~~983~~946 mainline ~~jets~~aircraft and is supported by its regional airline subsidiaries and third-party regional carriers operating as American Eagle ~~and US Airways Express~~ under capacity purchase agreements, which operated ~~566~~an additional 587 regional aircraft.
On December 30, 2015, in order to simplify AAG’s internal corporate structure and as part of the integration efforts following the business combination of AAG and US Airways Group, Inc. (US Airways Group), AAG caused US Airways Group to be merged with and into AAG, with AAG as the surviving corporation, and, immediately thereafter, US Airways, Inc. (US Airways), a Delaware corporation and wholly-owned subsidiary of US Airways Group, merged with and into American, with American as the surviving corporation. As a result of the merger of US Airways and American, US Airways transferred all of its assets, liabilities and off-balance sheet commitments to American. For financial reporting purposes, this transaction constituted a transfer of assets between entities under common control and was accounted for at historical cost. As part of the transfer of assets and liabilities to American, all of US Airways’ obligations with respect to certain pass through trusts and the leases of related aircraft and engines were transferred to American.
As of December 31, ~~2014,~~2015, the Company employed approximately ~~113,300~~118,500 active full-time equivalent employees, of which ~~18,900~~19,600 were employed by its regional operations. Approximately 82% of employees are covered by collective bargaining agreements ~~(CBAs)~~ with various labor unions.
2.  Emergence from Chapter 11
Overview
On November 29, 2011 (the Petition Date), AMR Corporation (AMR, renamed American Airlines Group Inc., upon the closing of the Merger), its principal subsidiary, American, and certain of ~~the Company’s~~AMR’s other direct and indirect domestic subsidiaries (collectively, the Debtors), filed voluntary petitions for relief (the Chapter 11 Cases) under Chapter 11 of the United States Bankruptcy Code (the Bankruptcy Code) in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court). On October 21, 2013, the Bankruptcy Court entered an order (the Confirmation Order) approving and confirming the Debtors’ fourth amended joint plan of reorganization (as amended, the Plan).
On December 9, 2013 (the Effective Date), the Debtors consummated their reorganization pursuant to the Plan, principally through the transactions contemplated by ~~that certain~~an Agreement and Plan of Merger (as amended, the Merger Agreement), dated as of February 13, 2013, by and among AMR, AMR Merger Sub, Inc. (Merger Sub) and US Airways Group, pursuant to which Merger Sub merged with and into US Airways Group (the Merger), with US Airways Group surviving as a wholly-owned subsidiary of the Company following the Merger. Pursuant to the Merger Agreement, each share of common stock, par value $0.01 per share, of US Airways Group was converted into the right to receive one share of AAG common stock, par value $0.01 per share (AAG Common Stock).
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
From the Petition Date through the Effective Date, pursuant to automatic stay provisions under the Bankruptcy Code and orders granted by the Bankruptcy Court, all actions to enforce or otherwise effect repayment of liabilities preceding the Petition Date as well as all pending litigation against the Debtors generally were stayed. Following the Effective Date, actions to enforce or otherwise effect repayment of liabilities preceding the Petition Date generally have been permanently enjoined. Any unresolved claims will continue to be subject to the claims reconciliation process under the supervision of the U.S. Bankruptcy Court. However, certain pending litigation related to pre-petition liabilities may proceed in courts other than the U.S. Bankruptcy Court to the extent the parties to such litigation have obtained relief from the permanent injunction.
Plan of Reorganization
The Plan implements the Merger and incorporates a compromise and settlement of certain intercreditor and intercompany claim issues.
Pursuant to the Plan, all shares of AMR common stock outstanding prior to the Effective Date were canceled. AAG’s Certificate of Incorporation, which was approved in connection with the Plan, authorizes the issuance of 1.75 billion new shares of AAG Common Stock and 200 million shares of AAG Series A Preferred Stock, par value $0.01 per share (AAG Series A Preferred Stock). Of the authorized AAG Series A Preferred Stock, approximately 168 million shares were designated “Series A Convertible Preferred Stock,” with a stated value of $25.00 per share, and issued in accordance with the Plan. AAG Common Stock is listed on the NASDAQ Global Select Market under the symbol “AAL” and began trading on December 9, 2013. AAG Series A Preferred Stock was listed on the NASDAQ Global Select Market under the symbol “AALCP” from December 9, 2013 until its final mandatory conversion on April 8, 2014. In addition, the 2013 Incentive Award Plan (the 2013 Plan) authorizes the grant of awards for the issuance of 40 million shares of AAG Common Stock plus any shares underlying awards granted under the 2013 Plan, or any pre-existing US Airways Group plan, that are forfeited, terminate or are cash settled (in whole or in part) without a payment being made in the form of shares. In addition, any shares that were available for issuance under the US Airways Group 2011 Incentive Award Plan (the 2011 Plan) as of the effective date of the Merger may be used for awards under the 2013 Plan; provided, that awards using such available shares shall not be made after the date awards or grants could have been made under 2011 Plan and shall only be made to individuals who were not providing services to AMR prior to the Merger.
The Plan contains the following provisions relating to the treatment of pre-petition claims against the Debtors and other holders of allowed interests in the Debtors:
all secured claims against the Debtors have been reinstated;
allowed administrative claims, priority claims and convenience claims have been or will be paid in full in cash;
other holders of allowed pre-petition unsecured claims, holders of allowed interests and certain employees of AMR received or will receive 72% of AAG Common Stock (on a fully converted basis) authorized to be issued pursuant to the Plan and in connection with the Merger under the following provisions:
all creditors holding general unsecured claims against American that are guaranteed by AAG and general unsecured claims against AAG that are guaranteed by American (Double-Dip Unsecured Claims) were treated the same under the Plan. Holders of Double-Dip Unsecured Claims received, at the Effective Date, their recovery in shares of AAG Series A Preferred Stock with a stated amount equal to the allowed amount of their claims, including post-petition interest at the non-default rate;
all creditors holding Single-Dip Unsecured Claims were treated the same regardless of whether the claim was asserted against the AAG Debtors, the American Debtors, or other Debtors. As used herein, “Single-Dip Unsecured Claims” means the general unsecured claims against the Debtors that were not
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
guaranteed by any other Debtor, other than the claims of the Debtors’ labor unions representing mainline workers. Holders of Single-Dip Unsecured Claims received a portion of their recovery in shares of AAG Series A Preferred Stock at the Effective Date and their remaining recovery in shares of AAG Common Stock during the 120-day period after the Effective Date;
holders of certain labor-related deemed claims and certain non-management, non-union employees as specified in the Plan received, at the Effective Date, the right to receive an allocation of shares of AAG Common Stock representing 23.6% of the total number of shares of AAG Common Stock ultimately distributed to holders of pre-petition general unsecured creditors against the Debtors. On the Effective Date, pursuant to the Plan, an initial allocation of approximately 39 million shares of AAG Common Stock was made related to these labor and employee groups, of which approximately 27 million shares were distributed on the Effective Date and approximately 13 million shares of which were withheld in connection with the Company making a cash payment of approximately $300 million for certain required withholding taxes;
holders of allowed interests in AMR (primarily holders of AMR common stock existing immediately prior to the Effective Date) received, at the Effective Date, a distribution of approximately 26 million shares of AAG Common Stock representing 3.5% of the total number of shares of AAG Common Stock contemplated for issuance pursuant to the Plan and received an additional 267 million shares of AAG Common Stock during the 120-day period after the Effective Date; and
holders of disputed claims at the Effective Date, to the extent such disputed claims become allowed Single-Dip Unsecured Claims after the Effective Date, are eligible to receive shares of AAG Common Stock held in reserve (the Disputed Claims Reserve), beginning 180 days after the Effective Date. Disputed claimholders that subsequently become holders of Single-Dip Unsecured Claims will receive, subject to the availability of sufficient shares in the Disputed Claims Reserve, the number of shares of AAG Common Stock that the disputed claimholder would have received had such claimholder been a holder of Single-Dip Unsecured Claims as of the Effective Date.
The Plan contemplated the distribution of up to 756 million shares of AAG Common Stock, however this amount was reduced by approximately 20 million shares because certain tax withholdings for employees were paid in cash as permitted under the Plan. In accordance with the Plan, the Company issued the remaining shares of AAG Common Stock over the 120-day distribution period, except for shares held in the Disputed Claims Reserve. In addition, pursuant to the Plan, approximately 197 million shares of AAG Common Stock were distributed to holders of outstanding shares of US Airways Group common stock.
The AAG Series A Preferred Stock, while outstanding, voted and participated in accordance with the terms of the underlying Certificate of Designation. One quarter of the shares of AAG Series A Preferred Stock initially issued was mandatorily convertible on each of the 30th, 60th, 90th and 120th days after the Effective Date, subject to additional voluntary conversions. The initial stated value of each share of AAG Series A Preferred Stock was $25.00 and accrued dividends at 6.25% per annum, calculated daily, while outstanding. Additionally, AAG Series A Preferred Stock converted to AAG Common Stock based upon the volume weighted average price of the shares of AAG Common Stock on the five trading days immediately preceding the conversion date, at a 3.5% fixed discount, subject to a conversion price floor of $10.875 per share and a conversion price cap of $33.8080 per share, below or above which the conversion rate remains fixed. As of April 8, 2014, all shares of AAG Series A Preferred Stock had been converted into AAG Common Stock.
Pursuant to rulings of the Bankruptcy Court, the Plan established the Disputed Claims Reserve that was initially issued 30.4 million shares of AAG Common Stock reserved for issuance to disputed claimholders at the Effective Date that ultimately become holders of allowed Single-Dip Unsecured Claims (Single-Dip Equity Obligations) as well as to certain AMR labor groups and employees who received a deemed claim amount based upon a fixed percentage of the distributions to be made to general unsecured claimholders. As of December 31,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
2014, the Disputed Claims Reserve held 26.8 million shares of AAG Common Stock pending distribution of those shares in accordance with the Plan. On February 10, 2015, approximately 0.8 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims, and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and the Company repurchased less than 0.1 million shares of AAG Common Stock for an aggregate of $4 million from the Disputed Claims Reserve at the then-prevailing market price in order to fund cash tax obligations resulting from this distribution. On July 14, 2015, approximately 0.6 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims, and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and the Company repurchased less than 0.1 million shares of AAG Common Stock for an aggregate of $2 million from the Disputed Claims Reserve at the then-prevailing market price in order to fund cash tax obligations resulting from this distribution. As of December 31, 2015, there were approximately 25.3 million shares of AAG Common Stock remaining in the Disputed Claims Reserve. As disputed claims are resolved, the claimants will receive distributions of shares from the Disputed Claims Reserve on the same basis as if such distributions had been made on or about the Effective Date. To the extent that any of the reserved shares remain undistributed upon resolution of all remaining disputed claims, such shares will not be returned to the Company but rather will be distributed to former AMR stockholders as of the Effective Date. The Company is not required to distribute additional shares above the limits contemplated by the Plan described above.
In addition, from the Effective Date through December 31, 2015, the Company has made the following cash disbursements under the Plan:
$385 million in cash to the pension plans in connection with missed contributions to the pension plans during the Chapter 11 Cases and interest and penalty interest thereon;
$108 million in cash to holders in partial or full satisfaction of their claims, including to holders of administrative claims, and state and local priority tax claims;
$196 million in cure payments to holders of secured debt; and
Approximately $570 million for payroll and other taxes associated with equity distributions to employees and distributions from the Disputed Claims Reserve.
Several parties have filed appeals seeking reconsideration of the Confirmation Order. See Note 15 for more information.
The reconciliation process with respect to the remaining claims will take considerable time post-emergence. The Company’s estimate of the amounts of disputed claims that will ultimately become allowed Single-Dip Unsecured Claims are included in bankruptcy settlement obligations on the Company’s consolidated balance sheet as of December 31, 2015. As these claims are resolved, or where better information becomes available and is evaluated, the Company will make adjustments to the liabilities recorded on the Company’s consolidated financial statements as appropriate. Any such adjustments could be material to the Company’s financial position or results of operations in any given period.
Availability and Utilization of Net Operating Losses
Upon emergence from bankruptcy, the Debtors experienced an “ownership change” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (Section 382), which could potentially limit the ability to utilize certain tax attributes including the Debtors’ substantial net operating losses (NOLs). The general limitation rules for a debtor in a bankruptcy case are liberalized where the ownership change occurs upon emergence from bankruptcy. The Debtors elected to be covered by certain special rules for federal income tax
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
purposes that permitted approximately $9.0 billion (with $6.6 billion of unlimited NOL still remaining at December 31, 2015) of the federal NOLs carried over from prior taxable years (NOL Carryforwards) to be utilized without regard to the annual limitation generally imposed by Section 382. See Note 10 for additional information related to tax matters.
Moreover, an ownership change subsequent to the Debtors’ emergence from bankruptcy may further limit or effectively eliminate the ability to utilize the Debtors’ NOL Carryforwards and other tax attributes. To reduce the risk of a potential adverse effect on the Debtors’ ability to utilize the NOL Carryforwards, AAG’s Restated Certificate of Incorporation (the Certificate of Incorporation) contains transfer restrictions applicable to certain substantial stockholders. Although the purpose of these transfer restrictions is to prevent an ownership change from occurring, there can be no assurance that an ownership change will not occur even with these transfer restrictions. A copy of the Certificate of Incorporation was attached as Exhibit 3.1 to a Current Report on Form 8-K filed by the Company with the SEC on December 9, 2013.
Reorganization Items, Net
Reorganization items refer to revenues, expenses (including professional fees), realized gains and losses and provisions for losses that are realized or incurred in the Chapter 11 Cases. The following table summarizes the components included in reorganization items, net on the consolidated statement of operations for the year ended December 31, 2013 (in millions):
   December 31,
2013
Labor-related deemed claim (1)
   $ 1,733
Aircraft and facility financing renegotiations and rejections (2),(3)
   325
Fair value of conversion discount (4)
   218
Professional fees
   199
Other
   180


Total reorganization items, net
   $ 2,655


(1)
In exchange for employees’ contributions to the successful reorganization, including agreeing to reductions in pay and benefits, the Company agreed in the Plan to provide each employee group a deemed claim, which was used to provide a distribution of a portion of the equity of the reorganized entity to those employees. Each employee group received a deemed claim amount based upon a portion of the value of cost savings provided by that group through reductions to pay and benefits as well as through certain work rule changes. The total value of this deemed claim was approximately $1.7 billion.
(2)
Amounts include allowed claims (claims approved by the Bankruptcy Court) and estimated allowed claims relating to (i) the rejection or modification of financings related to aircraft and (ii) entry of orders treated as unsecured claims with respect to facility agreements supporting certain issuances of special facility revenue bonds. The Debtors recorded an estimated claim associated with the rejection or modification of a financing or facility agreement when the applicable motion was filed with the Bankruptcy Court to reject or modify such financing or facility agreement and the Debtors believed that it was probable the motion would be approved, and there was sufficient information to estimate the claim.
(3)
Pursuant to the Plan, the Debtors agreed to allow certain post-petition unsecured claims on obligations. As a result, during the year ended December 31, 2013, the Company recorded reorganization charges to adjust estimated allowed claim amounts previously recorded on rejected special facility revenue bonds of $180 million, allowed general unsecured claims related to the 1990 and 1994 series of special facility revenue bonds that financed certain improvements at John F. Kennedy International Airport (JFK), and rejected bonds that financed certain improvements at Chicago O’Hare International Airport (ORD), which are included in the table above.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(4)
The Plan allowed unsecured creditors receiving AAG Series A Preferred Stock a conversion discount of 3.5%. Accordingly, the Company recorded the fair value of such discount upon the confirmation of the Plan by the Bankruptcy Court.
3.  Bankruptcy Settlement Obligations
As of December 31, 2015 and 2014, the components of bankruptcy settlement obligations on the consolidated balance sheets are as follows (in millions):
   December 31,
   2015    2014
Single-Dip Equity Obligations
   $ 147       $ 248
Labor-related deemed claim
   46       77




Total
   $ 193       $ 325




The Single-Dip Equity Obligations, while outstanding, do not vote or participate in accordance with the terms of the Plan. These equity obligations, representing the amount of total Single-Dip Unsecured Claims not satisfied through the issuance of AAG Series A Preferred Stock at the Effective Date, represented an unconditional obligation to transfer a variable number of shares of AAG Common Stock based predominantly on a fixed monetary amount known at inception, and, as such, were not treated as equity, but rather as liabilities, until the 120th day after emergence, which was April 8, 2014. As of April 8, 2014, the Company has issued shares of AAG Common Stock to satisfy the obligation amount at emergence, plus accrued dividends of 12% per annum, calculated daily, through such date, based on the volume weighted average price of the shares of AAG Common Stock, at a 3.5% discount, as specified in the Plan. The amount of the remaining Single-Dip Equity Obligations at December 31, 2015 is the Company’s estimate of its obligation for disputed claims of $147 million and is calculated based on the fair value of the shares expected to be issued, measured as if the obligations were settled using the closing price of AAG Common Stock at December 31, 2015. Additional allowed claims will receive 30.7553 shares, subject to reduction for expenses of the Disputed Claims Reserve, including tax liabilities, for each $1,000 of allowed claims. For accounting purposes, the value of the shares expected to be issued is marked-to-market each period until issued. Accordingly, changes in the value of AAG Common Stock could result in future increases and decreases in this obligation.
In exchange for employees’ contributions to the successful reorganization of the Company, including agreeing to reductions in pay and benefits, the Company agreed in the Plan to provide each employee group a deemed claim which was used to provide a distribution of a portion of the equity of the reorganized entity to those employees. Each employee group received a deemed claim amount based upon a fixed percentage of the distributions to be made to general unsecured claimholders. The fair value based on the expected number of shares to be distributed to satisfy this deemed claim, as adjusted, was approximately $1.5 billion. From the Effective Date through December 31, 2015, the Company has made distributions of $1.0 billion in AAG Common Stock and paid approximately $555 million in cash to cover payroll and other taxes related to the equity distributions. As of December 31, 2015, the liability to certain AMR labor groups and employees of $46 million represents the estimated fair value of the remaining shares expected to be issued in satisfaction of such obligation, measured as if the obligation were settled using the closing price of AAG Common Stock at December 31, 2015. For accounting purposes, the value of the remaining shares expected to be issued to satisfy the labor claim is marked-to-market each period until issued. Accordingly, changes in the value of AAG Common Stock could result in future increases and decreases in this obligation.
On February 10, 2015 and July 14, 2015, approximately 0.8 million and 0.6 million shares, respectively, of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
Unsecured Claims, to holders of certain labor-related deemed claims and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and 0.1 million shares in the aggregate were withheld to fund cash tax obligations resulting from these distributions.
4.  Merger and Related Matters
Description of Transaction
As previously discussed in Note 2, on the Effective Date, the Debtors consummated their reorganization and the Merger pursuant to the Plan. The Merger has been accounted for as a business acquisition using the acquisition method of accounting in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805, “Business Combinations” (ASC 805), with AAG considered the acquirer of US Airways Group. The acquisition method of accounting requires, among other things, that assets acquired and liabilities assumed be recognized on the balance sheet at their fair values as of the acquisition date. The acquisition values have also been reflected in US Airways Group’s separate-entity financial statements as of December 9, 2013. The excess of the purchase price over the net fair value of assets and liabilities acquired was recorded as goodwill. Goodwill is not amortized, but is tested for impairment at least annually.
Slot Divestitures
As a stipulation for the Merger to be approved by the Department of Justice (DOJ), the Company was required to divest certain airport take off and landing rights (slots) at LaGuardia Airport (LGA) and Ronald Reagan Washington National Airport (DCA). In 2014, the Company divested the required DCA slots and received $307 million in cash as well as 24 slots at JFK. The Company recognized a net gain of $309 million related to these divestitures, which has been included in special items, net in the consolidated statement of operations. In 2013, the Company recognized a gain of $67 million related to the sale of the LGA slots, which has been included in special items, net in the consolidated statement of operations.
In 2013, the European Commission cleared under the EU Merger Regulation the proposed merger between US Airways and American. As a consequence of the merger clearance process in the EU, the Company was required to make available one pair of London Heathrow slots for use by another carrier between London and Philadelphia, which the acquiring carrier can deploy on another London Heathrow city pair after operating the slots on London-Philadelphia for a period of not less than three consecutive years. In addition, along with the Company’s joint business agreement partners, the Company was required to make available for an initial period of up to seven years one pair of Heathrow slots for service between London and Miami that may be operated via an intermediate point. In connection with these requirements and upon making these slots available, in 2014, the Company recorded a $43 million non-cash charge, which has been included in special items, net in the consolidated statement of operations.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
Fair Value of Consideration Transferred
The fair value of the consideration transferred, or the purchase price, was derived as described below based on the outstanding shares of US Airways Group common stock at December 9, 2013, the exchange ratio of one share of AAG Common Stock for each share of US Airways Group common stock, and a price per share of AAG Common Stock of $22.55, which represented the closing price of US Airways Group common stock on December 6, 2013, the last day such shares traded on the New York Stock Exchange. US Airways Group equity awards outstanding at the close of the Merger converted into equity awards with respect to AAG Common Stock. Vested equity awards held by employees of US Airways Group are considered part of the purchase price.
   (In millions except per share data)
Outstanding shares of US Airways Group Common Stock at December 9, 2013 exchanged
   197.4
Exchange ratio
   1.0


Assumed shares of AAG Common Stock
   197.4
Price per share
   $ 22.55


Fair value of AAG Common Stock issued
   $ 4,451
Fair value of AAG equity awards issued in exchange for outstanding US Airways Group equity awards
   $ 141


Total purchase price
   $ 4,592
Allocation of Consideration Transferred
The Merger has been accounted for using the acquisition method of accounting in accordance with ASC 805, with AAG treated as the acquirer of US Airways Group for accounting purposes. The acquisition method of accounting requires, among other things, that assets acquired and liabilities assumed be recognized on the balance sheet at their fair values as of the acquisition date. The excess of the purchase price over the net fair value of assets acquired and liabilities assumed was recorded as goodwill. Goodwill is not amortized, but is tested for impairment at least annually.
   (In millions)
Cash
   $ 206
Short-term investments
   3,517
Other current assets
   1,459
Operating property and equipment
   5,536
Goodwill
   4,091
Identifiable intangibles
   1,501
Other noncurrent assets
   123
Long-term debt and capital leases, including current portion
   (6,026 )
Air traffic liability
   (1,417 )
Loyalty program liability
   (1,256 )
Other liabilities assumed
   (3,142 )


Total purchase price
   $ 4,592
The fair values of the assets acquired and liabilities assumed were determined using the market, income and cost approaches. The fair value measurements were primarily based on significant inputs that are not observable in the market, other than certain long-term debt assumed in the Merger. The market approach, which indicates value for a subject asset based on available market pricing for comparable assets, was utilized to estimate the fair value of US Airways’ aircraft and operating leases. The market approach included prices and other relevant
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
information generated by market transactions involving comparable assets, as well as pricing guides and other sources. The current market for the aircraft, the maintenance condition of the aircraft and the expected proceeds from the sale of the assets, among other factors, were considered. The market approach was utilized to value certain intangible assets such as airport take off and landing slots when sufficient market information was available. The income approach was primarily used to value intangible assets, including customer relationships, marketing agreements, certain international route authorities, and the US Airways tradename. The income approach indicates value for a subject asset based on the present value of cash flows projected to be generated by the asset. Projected cash flows are discounted at a required market rate of return that reflects the relative risk of achieving the cash flows and the time value of money. The cost approach, which estimates value by determining the current cost of replacing an asset with another of equivalent economic utility, was used, as appropriate, for certain assets for which the market and income approaches could not be applied due to the nature of the asset. The cost to replace a given asset reflects the estimated reproduction or replacement cost for the asset, less an allowance for loss in value due to depreciation. The fair value of US Airways’ Dividend Miles loyalty program liability was determined based on the weighted average equivalent ticket value of outstanding miles which were expected to be redeemed for future travel at December 9, 2013. The weighted average equivalent ticket value contemplates differing classes of service, domestic and international itineraries and the carrier providing the award travel.
Pro-forma Impact of the Merger
The Company’s unaudited pro-forma results presented below include the effects of the Merger as if it had been consummated as of January 1, 2012. The pro-forma results include the depreciation and amortization associated with the acquired tangible and intangible assets, lease and debt fair value adjustments, the elimination of any deferred gains or losses, adjustments relating to reflecting the fair value of the loyalty program liability and the impact of income changes on profit sharing expense, among others. In addition, the pro-forma results below reflect the impact of higher wage rates related to memorandums of understanding with US Airways’ pilots that became effective upon closing of the Merger, as well as the elimination of the Company’s reorganization items, net and Merger transition costs. However, the pro-forma results do not include any anticipated synergies or other expected benefits of the Merger. Accordingly, the unaudited pro-forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been consummated as of January 1, 2012.
   December 31,
2013
   (In millions)
Revenue
   $ 40,678
Net Income
   2,526
5.  Basis of Presentation and Summary of Significant Accounting Policies
(a) Basis of Presentation
The consolidated financial statements for the full years of 2015 and 2014 and the period from December 9, 2013 to December 31, 2013 include the accounts of the Company and its wholly-owned subsidiaries. For the periods prior to December 9, 2013, the consolidated financial statements do not include the accounts of US Airways Group. All significant intercompany transactions have been eliminated.
The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The most significant areas
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
of judgment relate to passenger revenue recognition, impairment of goodwill, impairment of long-lived and intangible assets, business combination measurements, the loyalty program, pensions and retiree medical and other postretirement benefits and the deferred tax asset valuation allowance.
(b) Chapter 11 Matters
In accordance with GAAP, the Debtors (as defined in Note 2 above) applied ASC 852 “Reorganizations” (ASC 852) in preparing the consolidated financial statements for periods subsequent to the Chapter 11 Cases (as defined in Note 2 above). ASC 852 requires that the financial statements distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain revenues, expenses (including professional fees), realized gains and losses and provisions for losses that are realized or incurred in the Chapter 11 Cases for 2013 are presented in reorganization items, net on the accompanying consolidated statement of operations.
(c) Restricted Cash and Short-term Investments
The Company has restricted cash and short-term investments related primarily to collateral held to support workers’ compensation obligations.
(d) Aircraft Fuel, Spare Parts, and Supplies, Net
Aircraft fuel, spare parts, and supplies, net are recorded at net realizable value based on average costs. These items are expensed when used. An allowance for obsolescence is provided for aircraft spare parts and supplies.
(e) Operating Property and Equipment
Operating property and equipment are recorded at cost. Interest expense related to the acquisition of certain property and equipment, including aircraft purchase deposits, is capitalized as an additional cost of the asset. Interest capitalized for the years ended December 31, 2015, 2014 and 2013 was $52 million, $61 million and $47 million, respectively. Property and equipment is depreciated and amortized to residual values over the estimated useful lives or the lease term, whichever is less, using the straight-line method. Costs of major improvements that enhance the usefulness of the asset are capitalized and depreciated over the estimated useful life of the asset or the modifications, whichever is less. The depreciable lives used for the principal depreciable asset classifications are:
Principal Depreciable Asset Classification
Depreciable Life
Jet aircraft and engines
16 - 30 years
Other regional aircraft and engines
25 years
Major rotable parts, avionics and assemblies
Fleet end date
Improvements to leased flight equipment
Lesser of asset/leasehold improvement or lease end date
Buildings and improvements
Lesser of 5 - 30 years or lease term
Furniture, fixtures and other equipment
3 - 10 years: ranges from computer hardware to furniture
Capitalized software
Lesser of 5 years or lease term
Residual values for aircraft, engines, major rotable parts, avionics and assemblies are generally 5% to 10%.
Equipment and property under capital leases are amortized over the term of the leases or, in the case of certain aircraft, over their expected useful lives. Lease terms vary but are generally 12 to 30 years for aircraft and three to 30 years for other leased equipment and property.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
The Company records impairment charges on long-lived assets used in operations when events and circumstances indicate that the assets may be impaired. An asset or group of assets is considered impaired when the undiscounted cash flows estimated to be generated by the assets are less than the carrying amount of the assets and the net book value of the assets exceeds their estimated fair value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell.
(f) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. A valuation allowance is established, if necessary, for the amount of any tax benefits that, based on available evidence, are not expected to be realized.
(g) Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired and liabilities assumed. Goodwill is not amortized but tested for impairment annually on October 1^st or more frequently if events or circumstances indicate that goodwill may be impaired. The Company has one consolidated reporting unit.
Goodwill is measured for impairment by initially performing a qualitative screen and, if necessary, then comparing the fair value of the reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit is less than the carrying value, a second step is performed to determine the implied fair value of goodwill. If the implied fair value of goodwill is lower than its carrying value, an impairment charge equal to the difference is recorded. Based upon the Company’s annual measurement, there was no goodwill impairment in 2015.
(h) Other Intangibles, Net
Intangible assets consist primarily of airport slots, customer relationships, marketing agreements, international slots and route authorities, gate leasehold rights and tradenames. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
The following table provides information relating to the Company’s amortizable intangible assets as of December 31, 2015 and 2014 (in millions):
   December 31,
   2015 2014
Domestic airport slots
   $ 365    $ 365
Customer relationships
   300    300
Marketing agreements
   105    105
Tradenames
   35    35
Airport gate leasehold rights
   137    138
Accumulated amortization
   (502 ) (447 )


Total
   $ 440    $ 496


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
Domestic airport slots and airport gate leasehold rights are amortized on a straight-line basis over 25 years. The customer relationships, marketing agreements and tradenames were identified as intangible assets subject to amortization and are amortized on a straight-line basis over approximately nine years, 30 years and 15 months, respectively.
The Company recorded amortization expense related to these intangible assets of approximately $55 million, $81 million and $20 million for the years ended December 31, 2015, 2014 and 2013, respectively. The Company expects to record annual amortization expense for the aforementioned definite-life intangible assets as follows (in millions):
2016
   $ 50
2017
   46
2018
   42
2019
   42
2020
   42
2021 and thereafter
   218


Total
   $ 440


The Company’s indefinite-lived assets include certain international slots and route authorities and domestic airport slots. Indefinite-lived assets are not amortized but instead are reviewed for impairment annually on October 1^st or more frequently if events or circumstances indicate that the asset may be impaired. As of December 31, 2015 and 2014, the Company had $1.8 billion and $1.7 billion, respectively, of indefinite-lived intangible assets on its consolidated balance sheets.
The Company’s indefinite-lived intangible assets are reviewed for impairment by initially performing a qualitative screen to determine whether the Company believes it is more likely than not that an asset has been impaired. If the Company believes an impairment has occurred, the Company then evaluates for impairment by comparing the estimated fair value of assets to the carrying value. An impairment charge is recognized if the asset’s estimated fair value is less than its carrying value. Based upon the Company’s annual review, there was no indefinite-lived intangible asset impairment in 2015.
(i) Loyalty Program
The Company currently operates the loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American andoneworld carriers, as well as certain other partner airlines that participate in the program. Mileage credits can also be earned through purchases from other non-airline partners that participate in the Company’s loyalty program. Mileage credits can be redeemed for travel on American or other participating partner airlines, in which case the Company pays a fee.
The Company uses the incremental cost method to account for the portion of its loyalty program liability incurred when AAdvantage members earn mileage credits by flying on American or its regional affiliates. The Company has an obligation to provide future travel when these mileage credits are redeemed and therefore has recorded a liability for mileage credits outstanding.
The incremental cost liability includes all mileage credits that are expected to be redeemed, including mileage credits earned by members whose mileage account balances have not yet reached the minimum mileage credit level required to redeem an award. Additionally, outstanding mileage credits are subject to expiration if unused. In calculating the liability, the Company estimates how many mileage credits will never be redeemed for travel and excludes those mileage credits from the estimate of the liability. Estimates are also made for the number of miles that will be used per award redemption and the number of travel awards that will be redeemed on partner
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
airlines. These estimates are based on historical program experience as well as consideration of enacted program changes, as applicable. Changes in the liability resulting from members earning additional mileage credits or changes in estimates are recorded in the consolidated statements of operations as a part of passenger revenue.
The liability for outstanding mileage credits is valued based on the estimated incremental cost of carrying one additional passenger. Incremental cost primarily includes unit costs incurred for fuel, food, and insurance as well as fees incurred when travel awards are redeemed on partner airlines. No profit or overhead margin is included in the accrual of incremental cost. These estimates are generally updated based upon the Company’s 12-month historical average of such costs.
As of December 31, 2015 and 2014, the liability for outstanding mileage credits for the AAdvantage program accounted for under the incremental cost method was $657 million and $674 million, respectively, and is included on the consolidated balance sheets within loyalty program liability.
In addition, the Company applied the acquisition method of accounting in connection with the Merger and therefore recorded the liability for outstanding US Airways’ mileage credits at fair value, an amount significantly in excess of incremental cost. As of December 31, 2015 and 2014, the liability for these outstanding mileage credits expected to be redeemed for future travel awards was $296 million and $611 million, respectively, and is included on the consolidated balance sheets within loyalty program liability. This liability is amortized into passenger revenue on a straight-line basis over the period in which the mileage credits are expected to be redeemed for travel. All new miles earned will be recorded as a liability based on the incremental cost method discussed above.
American also sells loyalty program mileage credits to participating airline partners and non-airline business partners. Sales of mileage credits to non-airline business partners is comprised of two components, transportation and marketing. Historically, the Company has used the residual method of accounting to determine the values of each component as there had not been a material modification to any significant agreements since the adoption of Accounting Standards Update (ASU) No. 2009-13, “Revenue Recognition (Topic 605) – Multiple-Deliverable Revenue Arrangements” on January 1, 2011.
In 2013, American and Citibank amended their AAdvantage co-branded credit card agreement, which resulted in a material modification of the terms of the arrangement. Also, in connection with the acquisition of US Airways on December 9, 2013, a material modification occurred on all of US Airways’ agreements in connection with the Merger. Therefore, subsequent to the amendments of these arrangements, the Company applied the relative selling price method to determine the values of each deliverable. Under the relative selling price approach, the Company identified five revenue elements for the co-branded credit card agreements with Citibank and Barclays: the transportation component; use of the American brand including access to loyalty program member lists; advertising; lounge access; and baggage services (together excluding the transportation component, the marketing component).
The transportation component represents the estimated selling price of future travel awards and is determined using historical transaction information, including information related to customer redemption patterns. The transportation component is deferred based on its relative selling price and is amortized into passenger revenue on a straight-line basis over the period in which the mileage credits are expected to be redeemed for travel.
The marketing component represents services provided to the Company’s business partners and relates primarily to the use of the American brand including access to loyalty program member lists. The marketing services are provided periodically, but no less than monthly. Accordingly, the marketing component is considered earned and recognized in other revenues in the period of the mileage sale.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
Upon application of the relative selling price method in 2013 for American’s Citibank modification, the Company reduced its travel component liability and recorded other revenue of approximately $31 million. As a result of the change in the marketing component value when the relative selling price method is applied, the Company now defers less revenue per mile sold.
As of December 31, 2015 and 2014, the Company had $1.5 billion in deferred revenue from the sale of mileage credits (recorded within loyalty program liability on the consolidated balance sheets). For the years ended December 31, 2015, 2014 and 2013, the marketing component of mileage sales recognized at the time of sale in other revenues was approximately $1.5 billion, $1.4 billion and $834 million, respectively.
(j) Passenger Revenue
Passenger revenue is recognized when transportation is provided. Ticket sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on the consolidated balance sheets. The air traffic liability represents tickets sold for future travel dates and estimated future refunds and exchanges of tickets sold for past travel dates. The balance in the air traffic liability fluctuates throughout the year based on seasonal travel patterns and fare sale activity. The Company’s air traffic liability was $3.7 billion and $4.3 billion as of December 31, 2015 and 2014, respectively.
The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. Due to complex pricing structures, refund and exchange policies, and interline agreements with other airlines, certain amounts are recognized in revenue using estimates regarding both the timing of the revenue recognition and the amount of revenue to be recognized. These estimates are generally based on the analysis of the Company’s historical data. The Company and other airline industry participants have consistently applied this accounting method to estimate revenue from forfeited tickets at the date of travel. Estimated future refunds and exchanges included in the air traffic liability are routinely evaluated based on subsequent activity to validate the accuracy of the Company’s estimates. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are included in results of operations during the period in which the evaluations are completed.
The Company purchases capacity, or ASMs, generated by its wholly-owned regional air carriers and the capacity of third-party carriers including Air Wisconsin Airlines Corporation (Air Wisconsin), Republic Airline Inc. (Republic), Mesa Airlines, Inc. (Mesa), SkyWest Airlines, Inc. (SkyWest), ExpressJet Airlines, Inc. (ExpressJet), Compass Airlines, LLC (Compass) and Trans States Airlines, Inc. (Trans States) in certain markets. The Company’s wholly-owned regional air carriers and third-party carriers operate regional aircraft as part of American Eagle carriers. The Company classifies revenues generated from transportation on these carriers as regional passenger revenues. Liabilities related to tickets sold by the Company for travel on these air carriers are also included in the Company’s air traffic liability and are subsequently recognized as revenue in the same manner as described above.
Various taxes and fees assessed on the sale of tickets to end customers are collected by the Company as an agent and remitted to taxing authorities. These taxes and fees have been presented on a net basis in the accompanying consolidated statements of operations and recorded as a liability until remitted to the appropriate taxing authority.
(k) Maintenance, Materials and Repairs
Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred, except costs incurred for maintenance and repair under flight hour maintenance contract agreements, which are accrued based on contractual terms when an obligation exists.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(l) Selling Expenses
Selling expenses include commissions, credit card fees, computerized reservations systems fees and advertising. Advertising expenses are expensed as incurred. Advertising expense was $110 million, $92 million and $166 million for the years ended December 31, 2015, 2014 and 2013, respectively.
(m) Share-based Compensation
The Company accounts for its share-based compensation expense based on the fair value of the stock award at the time of grant, which is recognized ratably over the vesting period of the stock award. The fair value of stock options and stock appreciation rights is estimated using a Black-Scholes option pricing model. The fair value of restricted stock units is based on the market price of the underlying shares of common stock on the date of grant. See Note 18 for further discussion of share-based compensation.
(n) Deferred Gains and Credits, Net
Included within deferred gains and credits, net are amounts deferred and amortized into future periods associated with the adjustment of leases to fair value in connection with the application of acquisition accounting, deferred gains on the sale-leaseback of aircraft and certain vendor incentives. The Company periodically receives vendor incentives in connection with acquisition of aircraft and engines. These credits are deferred until aircraft and engines are delivered and then applied as a reduction to the cost of the related equipment.
(o) Foreign Currency Gains and Losses
Foreign currency gains and losses are recorded as part of other nonoperating expense, net in the consolidated statements of operations. Foreign currency losses for 2015, 2014 and 2013 were $751 million, $114 million and $56 million, respectively. The 2015 period included a $592 million special charge to write off all of the value of Venezuelan bolivars held by the Company due to continued lack of repatriations and deterioration of economic conditions in Venezuela.
(p) Other Operating Expenses
Other operating expenses includes expenses associated with ground and cargo handling, crew travel, aircraft food and catering, passenger accommodation, airport security, international navigation fees and certain general and administrative expenses.
(q) Regional Expenses
Expenses associated with the Company’s wholly-owned regional airlines and third-party regional carriers operating under the brand name American Eagle are classified as regional expenses on the consolidated statements of operations. Regional expenses consist of the following (in millions):
   Year Ended December 31,
   2015    2014    2013
Aircraft fuel and related taxes
   $ 1,230       $ 2,009       $ 1,120
Salaries, wages and benefits
   1,187       1,140       692
Capacity purchases from third-party regional carriers (1)
   1,591       1,475       269
Maintenance, materials and repairs
   305       367       284
Other rent and landing fees
   476       419       236
Aircraft rent
   7       35       4
Selling expenses
   333       307       154
Depreciation and amortization
   243       217       168
Special items, net
   29       24       8
Other
   582       523       391






Total regional expenses
   $ 5,983       $ 6,516       $ 3,326






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(1)
For the years ended December 31, 2015 and 2014, the component of capacity purchase expenses related to aircraft deemed to be leased was approximately $492 million and $447 million, respectively.
(r) Recent Accounting Pronouncements
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 completes the joint effort by the FASB and International Accounting Standards Board (IASB) to improve financial reporting by creating common revenue recognition guidance for GAAP and International Financial Reporting Standards (IFRS). ASU 2014-09 applies to all companies that enter into contracts with customers to transfer goods or services. ASU 2014-09 is effective for public entities for interim and annual reporting periods beginning after December 15, 2017. Early application is permitted, but not before interim and annual reporting periods beginning after December 15, 2016. Entities have the choice to apply ASU 2014-09 either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying ASU 2014-09 at the date of initial application and not adjusting comparative information. The Company is currently evaluating the requirements of ASU 2014-09 and has not yet determined its impact on the Company’s consolidated financial statements.
On February 18, 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810).” ASU 2015-02 amends both the variable interest entity and voting interest entity consolidation models. The standard is effective for public reporting entities in fiscal periods beginning after December 15, 2015, and early adoption is permitted. This standard is not expected to have a material impact on the Company’s consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The update requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. ASU 2015-03 requires retrospective application, represents a change in accounting principle and is effective for fiscal years beginning after December 15, 2015. The Company early adopted this standard during the fourth quarter 2015, utilizing retrospective application as permitted. As such, certain prior period amounts have been reclassified to conform to the current presentation. As a result, the Company reclassified $184 million of debt issuance costs within other assets to reduce current maturities of long-term debt and capital leases by $31 million and to reduce long-term debt and capital leases by $153 million on the consolidated balance sheet as of December 31, 2014.
In May 2015, the FASB issued ASU 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share (or Its Equivalent).” Under ASU 2015-07, investments for which fair value is measured at net asset value per share (or its equivalent) using the practical expedient should not be categorized in the fair value hierarchy. ASU 2015-07 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. ASU 2015-07 is not expected to have a material impact on the Company’s consolidated financial statements.
In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes,” which changes how deferred taxes are classified on the balance sheet. ASU 2015-17 eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent on the balance sheet. Deferred tax liabilities and assets are now required to be classified as noncurrent on the balance sheet. Entities have the choice to apply ASU 2015-17 either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The update is effective for annual and interim periods in fiscal years beginning after December 15, 2016. The Company early adopted this standard during the fourth quarter 2015, utilizing retrospective application as permitted. As such, certain prior period amounts have been reclassified to conform to the current presentation. As a result, the Company reclassified $361 million of current deferred income tax assets within prepaid expenses and other to reduce deferred income taxes within other liabilities on the consolidated balance sheet as of December 31, 2014.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
In January 2016, the FASB issued ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10).” ASU 2016-01 makes several modifications to Subtopic 825-10 including the elimination of the available-for-sale classification of equity investments, and requires equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income. ASU 2016-01 is effective for interim and annual periods beginning after December 15, 2017 and is not expected to have a material impact on the Company’s consolidated financial statements.
6.  Special Items, Net
The Company’s special items, net on the consolidated statements of operations are as follows (in millions):
   Year Ended December 31,
     2015        2014        2013
Mainline operating special items, net (1)
   $ 1,051       $ 800       $ 559
(1)
The 2015 mainline operating special items totaled a net charge of $1.1 billion, which principally included $1.0 billion of merger integration expenses related to information technology, alignment of labor union contracts, professional fees, severance, share-based compensation, fleet restructuring, re-branding of aircraft and airport facilities, relocation and training.
The 2014 mainline operating special items totaled a net charge of $800 million, which principally included $810 million of merger integration expenses related to information technology, alignment of labor union contracts, professional fees, severance and retention, share-based compensation, divestiture of London Heathrow slots, fleet restructuring, re-branding of aircraft and airport facilities, relocation and training. In addition, the Company recorded a net charge of $81 million for bankruptcy related items principally consisting of fair value adjustments for bankruptcy settlement obligations and an $81 million charge to revise prior estimates of certain aircraft residual values and other spare parts asset impairments. These charges were offset in part by a $309 million gain on the sale of slots at DCA.
The 2013 mainline operating special items, net principally included $443 million of merger related expenses related to the alignment of labor union contracts, professional fees, severance, share-based compensation and fees for US Airways to exit the Star Alliance and its codeshare agreement with United Airlines. In addition, the Company recorded a $107 million charge related to American’s pilot long-term disability obligation, a $43 million charge for workers’ compensation claims and a $33 million aircraft impairment charge. These charges were offset in part by a $67 million gain on the sale of slots at LGA.
The following additional amounts are also included in the consolidated statements of operations as follows (in millions):
   Year Ended December 31,
   2015 2014    2013
Other revenue special item, net (1)
   $ —    $ —       $ (31 )
Regional operating special items, net (2)
   29    24       8
Nonoperating special items, net (3)
   594    132       211
Reorganization items, net (4)
   —    —       2,655
Income tax special items, net (5)
   (3,015 ) 346       (324 )
(1)
The 2013 other revenue special item, net included a credit to other revenues related to a change in accounting method resulting from the modification of American’s AAdvantage miles agreement with Citibank.
(2)
The 2015 regional operating special items, net principally related to merger integration expenses.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
The 2014 regional operating special items, net consisted primarily of a $24 million charge due to a new pilot labor contract at the Company’s Envoy regional subsidiary, as well as $7 million of merger integration expenses, offset in part by an $8 million gain on the sale of certain spare parts.
(3)
The 2015 nonoperating special items totaled a net charge of $594 million, which principally included a $592 million charge to write off all of the value of Venezuelan bolivars held by the Company due to continued lack of repatriations and deterioration of economic conditions in Venezuela.
The 2014 nonoperating special items totaled a net charge of $132 million, which principally included a $43 million charge for Venezuelan foreign currency losses, $56 million of early debt extinguishment costs primarily related to the prepayment of 7.50% senior secured notes and other indebtedness and $33 million of non-cash interest accretion on bankruptcy settlement obligations.
The 2013 nonoperating special items, net consisted of interest charges of $138 million primarily to recognize post-petition interest expense on unsecured obligations pursuant to the Plan and penalty interest related to 10.5% secured notes and 7.50% senior secured notes, a $54 million charge related to the premium on tender for existing enhanced equipment trust certificates (EETC) financings and the write-off of debt issuance costs and $19 million in charges related to the repayment of existing EETC financings.
(4)
In 2013, the Company recognized reorganization expenses as a result of the filing of voluntary petitions for relief under Chapter 11. These amounts consisted primarily of estimated allowed claim amounts and professional fees.
(5)
In 2015, income tax special items totaled a net credit of $3.0 billion. In connection with the preparation of the Company’s financial statements for the fourth quarter of 2015, management determined that it was more likely than not that substantially all of its deferred tax assets, which include its NOLs, would be realized. Accordingly, the Company reversed $3.0 billion of the valuation allowance as of December 31, 2015, which resulted in a special $3.0 billion non-cash tax benefit recorded in the consolidated statement of operations for 2015.
In 2014, income tax special items, net were $346 million. During 2014, the Company sold its portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. In connection with this sale, the Company recorded a special non-cash tax provision of $330 million in the second quarter of 2014 that reversed the non-cash tax provision which was recorded in other comprehensive income (OCI), a subset of stockholders’ equity, principally in 2009. This provision represents the tax effect associated with gains recorded in OCI principally in 2009 due to a net increase in the fair value of the Company’s fuel hedging contracts. In accordance with GAAP, the Company retained the $330 million tax provision in OCI until the last contract was settled or terminated.
In 2013, income tax special items, net included a $538 million non-cash income tax benefit from continuing operations. The Company is required to consider all items (including items recorded in OCI) in determining the amount of tax benefit that results from a loss from continuing operations and that should be allocated to continuing operations. As a result, the Company recorded a tax benefit on the loss from continuing operations for the year, which was exactly offset by income tax expense on OCI. However, while the income tax benefit from continuing operations is reported on the income statement, the income tax expense on OCI is recorded directly to accumulated other comprehensive income (loss), which is a component of stockholders’ equity. Because the income tax expense on OCI is equal to the income tax benefit from continuing operations, the Company’s year-end net deferred tax position is not impacted by this tax allocation. The 2013 tax benefit was offset in part by a $214 million tax charge attributable to additional valuation allowance required to reduce deferred tax assets to the amount the Company believed was more likely than not to be realized.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
7.  Earnings (Loss) Per Share
Pursuant to the Plan and the Merger Agreement, holders of AMR common stock formerly traded under the symbol “AAMRQ” received shares of AAG Common Stock principally over the 120-day distribution period following the Effective Date. In accordance with GAAP, the 2013 weighted average shares and earnings (loss) per share calculations have been adjusted to retrospectively reflect these distributions which were each made at the rate of approximately 0.7441 shares of AAG Common Stock per share of AMR common stock. Former holders of AMR common stock as of the Effective Date may in the future receive additional distributions of AAG Common Stock dependent upon the ultimate distribution of shares of AAG Common Stock to holders of disputed claims. Thus, the shares and related earnings per share calculations prior to the Effective Date may change in the future to reflect additional retrospective adjustments for future AAG Common Stock distributions to former holders of AMR common stock.
As of December 31, 2015, all shares pursuant to the Plan have been issued and are outstanding for purposes of the Company’s basic and diluted earnings per share calculation in connection with the conversion of AAG Series A Preferred Stock and satisfaction of other bankruptcy settlement obligations related to allowed unsecured claims, including disputed claims, labor-related deemed claims and former holders of AMR common stock.
The following table sets forth the computation of basic and diluted earnings (loss) per share (in millions, except share and per share amounts in thousands):
Year Ended December 31,
2015 2014 2013
Basic Earnings (Loss) Per Share:

Net income (loss)
$ 7,610    $ 2,882    $ (1,834 )
Weighted-average shares outstanding (in thousands)
668,393    717,456    280,213

Basic earnings (loss) per share
$ 11.39    $ 4.02    $ (6.54 )

Diluted Earnings (Loss) Per Share:

Net income (loss)
$ 7,610    $ 2,882    $ (1,834 )
Change in fair value of conversion feature on 7.25% convertible senior notes (a)
—    3    —

Net income (loss) for purposes of computing diluted earnings (loss) per share
$ 7,610    $ 2,885    $ (1,834 )
Share computation for diluted earnings (loss) per share (in thousands):

Weighted-average shares outstanding
668,393    717,456    280,213
Dilutive effect of stock awards
18,962    15,603    —
Assumed conversion of convertible senior notes
—    957    —

Weighted average common shares outstanding – as adjusted
687,355    734,016    280,213

Diluted earnings (loss) per share
$ 11.07    $ 3.93    $ (6.54 )

The following were excluded from the calculation of diluted earnings (loss) per share (in thousands):

Stock options, SARs and RSUs because inclusion would be antidilutive
764    226    7,674
(a)
In March 2014, the Company notified the holders of US Airways Group’s 7.25% convertible senior notes that it had elected to settle all future conversions solely in cash instead of shares of AAG Common Stock in accordance with the related indenture. Thus, the diluted shares include the weighted average impact of the 7.25% convertible senior notes only for the period from January 1, 2014 to March 12, 2014. In addition, under GAAP, the Company must adjust the numerator for purposes of calculating diluted earnings per share by the change in fair value of the conversion feature from March 12, 2014 to May 15, 2014, which increased GAAP net income for purposes of computing diluted earnings per share by $3 million for the year ended December 31, 2014.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
8.  Share Repurchase Programs and Dividends
Since July 2014, the Company’s Board of Directors have approved several share repurchase programs aggregating $7.0 billion of authority of which, as of December 31, 2015, $2.4 billion of authority remained unused under repurchase programs which are to be completed no later than December 31, 2016. Share repurchases under the repurchase programs may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Any such repurchases will be made from time to time subject to market and economic conditions, applicable legal requirements and other relevant factors. The programs do not obligate the Company to repurchase any specific number of shares and may be suspended at any time at the Company’s discretion.
During the year ended December 31, 2015, the Company repurchased 85.1 million shares of AAG Common Stock for $3.6 billion at a weighted average cost per share of $42.09. During the year ended December 31, 2014, the Company repurchased 23.4 million shares of AAG Common Stock for $1.0 billion at a weighted average cost per share of $42.72. Since the inception of the share repurchase programs in July 2014, the Company has repurchased 108.5 million shares of AAG Common Stock for $4.6 billion at a weighted average cost per share of $42.23.
The Company’s Board of Directors declared the following cash dividends:
Year Ended
December 31

Period
   Per share
For stockholders
of record as of

Payable on
2015
   Fourth Quarter    $ 0.10       November 5, 2015    November 19, 2015
   Third Quarter    0.10       August 10, 2015    August 24, 2015
   Second Quarter    0.10       May 4, 2015    May 18, 2015
   First Quarter    0.10       February 9, 2015    February 23, 2015
2014
   Fourth Quarter    $ 0.10       November 3, 2014    November 17, 2014
   Third Quarter    0.10       August 4, 2014    August 18, 2014
The total cash payment for dividends during the years ended December 31, 2015 and 2014 was $278 million and $144 million, respectively. Any future dividends that may be declared and paid from time to time under the Company’s capital deployment program will be subject to market and economic conditions, applicable legal requirements and other relevant factors. The Company’s capital deployment program does not obligate it to continue a dividend for any fixed period, and payment of dividends may be suspended at any time at the Company’s discretion.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
9.  Debt
Long-term debt and capital lease obligations included in the consolidated balance sheets consisted of (in millions):
   December 31,
   2015    2014
Secured

2013 Credit Facilities, variable interest rate of 3.25%, installments through 2020 (a)
   $ 1,867       $ 1,872
2014 Credit Facilities, variable interest rate of 3.50%, installments through 2021 (b)
   743       750
2013 Citicorp Credit Facility tranche B-1, variable interest rate of 3.50%, installments through 2019 (c)
   980       990
2013 Citicorp Credit Facility tranche B-2, variable interest rate of 3.00%, installments through 2016 (c)
   588       594
Aircraft enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.38% to 9.75%, maturing from 2017 to 2027 (d)
   8,693       7,028
Equipment loans and other notes payable, fixed and variable interest rates ranging from 1.63% to 8.48%, maturing from 2016 to 2027 (e)
   4,183       2,952
Special facility revenue bonds, fixed interest rates ranging from 2.00% to 8.00%, maturing from 2016 to 2035 (f)
   1,080       1,100
AAdvantage Loan (g)
   —       433
Other secured obligations, fixed interest rates ranging from 3.60% to 12.24%, maturing from 2016 to 2028 (e)
   923       994




   19,057       16,713




Unsecured

5.50% senior notes, interest only payments until due in 2019 (h)
   750       750
6.125% senior notes, interest only payments until due in 2018 (i)
   500       500
4.625% senior notes, interest only payments until due in 2020 (j)
   500       —




   1,750       1,250




Total long-term debt and capital lease obligations
   20,807       17,963
Less: Total unamortized debt discount and debt issuance costs
   246       243
Less: Current maturities
   2,231       1,677




Long-term debt and capital lease obligations, net of current maturities
   $ 18,330       $ 16,043




The table below shows availability under revolving credit facilities, all of which were undrawn, as of December 31, 2015 (in millions):
2013 Revolving Facility
   $ 1,400
2014 Revolving Facility
   1,025


Total
   $ 2,425


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
Secured financings are collateralized by assets, primarily aircraft, engines, simulators, rotable aircraft parts, airport leasehold rights, route authorities and airport slots. At December 31, 2015, the Company was operating 35 aircraft under capital leases. Leases can generally be renewed at rates based on fair market value at the end of the lease term for a number of additional years. At December 31, 2015, the maturities of long-term debt and capital lease obligations are as follows (in millions):
2016
   $ 2,266
2017
   1,598
2018
   2,134
2019
   3,378
2020
   3,587
2021 and thereafter
   7,844


Total
   $ 20,807


(a) 2013 Credit Facilities
On June 27, 2013, American and AAG entered into a Credit and Guaranty Agreement (as amended, restated, amended and restated or otherwise modified, the 2013 Credit Agreement) with Deutsche Bank AG New York Branch, as administrative agent, and certain lenders that originally provided for a $1.9 billion term loan facility scheduled to mature on June 27, 2019 (the 2013 Term Loan Facility) and a $1.0 billion revolving credit facility scheduled to mature on June 27, 2018 (the 2013 Revolving Facility). The maturity of the term loan facility was subsequently extended to June 2020 and the revolving credit facility commitments were subsequently increased to $1.4 billion with an extended maturity date of October 10, 2020, all of which is further described below.
On May 21, 2015, American amended and restated the 2013 Credit Agreement pursuant to which it refinanced the 2013 Term Loan Facility (the $1.9 billion 2015 Term Loan Facility and, together with the 2013 Revolving Facility, the 2013 Credit Facilities) to extend the maturity date to June 2020 and reduce the LIBOR margin from 3.00% to 2.75%. In addition, American entered into certain amendments to reflect the ability for American to make future modifications to the collateral pledged, subject to certain restrictions. The $1.9 billion 2015 Term Loan Facility is repayable in annual installments, with the first installment in an amount equal to 1.25% of the principal amount commencing on June 27, 2016 and installments thereafter, in an amount equal to 1.0% of the principal amount, with any unpaid balance due on the maturity date. As of December 31, 2015, $1.9 billion of principal was outstanding under the $1.9 billion 2015 Term Loan Facility. Voluntary prepayments may be made by American at any time.
On October 10, 2014, American and AAG amended the 2013 Credit Agreement to extend the maturity date of the 2013 Revolving Facility to October 10, 2019 and increased the commitments thereunder to an aggregate principal amount of $1.4 billion while reducing the letter of credit commitments thereunder to $300 million. On October 26, 2015, American, AAG, US Airways Group and US Airways amended the 2013 Credit Agreement to extend the maturity date of the 2013 Revolving Facility to October 10, 2020. The 2013 Revolving Facility provides that American may from time to time borrow, repay and reborrow loans thereunder and have letters of credit issued thereunder. As of December 31, 2015, there were no borrowings or letters of credit outstanding under the 2013 Revolving Facility.
The 2013 Credit Facilities bear interest at an index rate plus an applicable index margin or, at American’s option, LIBOR (subject to a floor of 0.75%, with respect to the $1.9 billion 2015 Term Loan Facility) plus a LIBOR margin of 3.00% with respect to the 2013 Revolving Facility and 2.75% with respect to the $1.9 billion 2015 Term Loan Facility; provided that American’s corporate credit rating is Ba3 or higher from Moody’s and BB- or higher from S&P, the applicable LIBOR margin would be 2.50% for the $1.9 billion 2015 Term Loan
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
Facility. As of December 31, 2015, American satisfied this ratings test and accordingly, the LIBOR margin for the $1.9 billion 2015 Term Loan Facility was 2.50%. The 2013 Revolving Credit Facility is subject to an undrawn fee of 0.75%.
Upon consummation of the Merger, US Airways Group and US Airways joined the 2013 Credit Facilities as guarantors. Following the joinder, certain minimum dollar-thresholds under the negative and financial covenants in the 2013 Credit Facilities were automatically increased.
Subject to certain limitations and exceptions, the 2013 Credit Facilities are secured by certain collateral, including certain slots, route authorities and airport gate leasehold rights. The obligations of American under the 2013 Credit Facilities are guaranteed by AAG. American is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans under the 2013 Credit Facilities as further described below in“Collateral Related Covenants.”
The 2013 Credit Facilities contain events of default customary for similar financings, including cross default to other material indebtedness. Upon the occurrence of an event of default, the outstanding obligations under the 2013 Credit Facilities may be accelerated and become due and payable immediately. In addition, if a “change of control” (as defined in the 2013 Credit Agreement) occurs, American will (absent an amendment or waiver) be required to repay at par the loans outstanding under the 2013 Credit Facilities and terminate the 2013 Revolving Facility. The 2013 Credit Facilities also include covenants that, among other things, require AAG to maintain a minimum aggregate liquidity (as defined in the 2013 Credit Facilities) of not less than $2.0 billion, and limit the ability of AAG and its restricted subsidiaries to pay dividends and make certain other payments, make certain investments, incur additional indebtedness, incur liens on the collateral, dispose of the collateral, enter into certain affiliate transactions and engage in certain business activities, in each case subject to certain exceptions.
(b) 2014 Credit Facilities
On October 10, 2014, American, AAG, US Airways Group and US Airways entered into a Credit and Guaranty Agreement (as amended, restated, amended and restated or otherwise modified, the 2014 Credit Agreement) with Citibank, N.A., as administrative agent, and certain lenders that originally provided for a $750 million term loan facility scheduled to mature on October 10, 2021 (the 2014 Term Loan Facility) and a $400 million revolving credit facility scheduled to mature on October 10, 2019 (the 2014 Revolving Facility). The revolving credit facility commitments were subsequently increased to $1.025 billion with an extended maturity date of October 10, 2020 as further described below.
On April 20, 2015, American amended and restated the 2014 Credit Agreement pursuant to which it refinanced the 2014 Term Loan Facility (the $750 million 2015 Term Loan Facility and, together with the 2014 Revolving Facility, the 2014 Credit Facilities) to reduce the LIBOR margin from 3.50% to 3.00% and entered into certain amendments to reflect the release of certain existing collateral and the addition of certain new collateral, as well as the ability for American to make future modifications to the collateral pledged, subject to certain restrictions. The $750 million 2015 Term Loan Facility is repayable in annual installments in an amount equal to 1.00% of the original principal balance with any unpaid balance due on the maturity date. As of December 31, 2015, $743 million of principal was outstanding under the $750 million 2015 Term Loan Facility. Voluntary prepayments may be made by American at any time.
On October 26, 2015, American, AAG, US Airways Group and US Airways amended the 2014 Credit Agreement to increase the commitments under the 2014 Revolving Facility to an aggregate principal amount of $1.025 billion and extend the maturity date to October 10, 2020. The 2014 Revolving Facility provides that American may from time to time borrow, repay and reborrow loans thereunder. American may have letters of credit issued under the 2014 Revolving Facility in an aggregate amount outstanding at any time up to $300 million. As of December 31, 2015, there were no borrowings or letters of credit outstanding under the 2014 Revolving Facility.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
The 2014 Credit Facilities bear interest at an index rate plus an applicable index margin or, at American’s option, LIBOR (subject to a floor of 0.75% in the case of the $750 million 2015 Term Loan Facility) plus a LIBOR margin of 3.00% with respect to the 2014 Revolving Facility and 3.00% with respect to the 2015 Term Loan Facility; provided that, American’s corporate credit rating is Ba3 or higher from Moody’s and BB- or higher from S&P, the applicable LIBOR margin would be 2.75% for the $750 million 2015 Term Loan Facility. As of December 31, 2015, American satisfied this ratings test and accordingly, the LIBOR margin for the $750 million 2015 Term Loan Facility was 2.75%. The 2014 Revolving Facility is subject to an undrawn fee of 0.75%.
Subject to certain limitations and exceptions, the 2014 Credit Facilities are secured by certain collateral, including certain slots, route authorities and airport gate leasehold rights. The obligations of American under the 2014 Credit Facilities are guaranteed by AAG. American is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans under the 2014 Credit Facilities as further described below in“Collateral Related Covenants.”
The 2014 Credit Facilities contain events of default customary for similar financings, including cross default to other material indebtedness. Upon the occurrence of an event of default, the outstanding obligations under the 2014 Credit Facilities may be accelerated and become due and payable immediately. In addition, if a “change of control” (as defined in the 2014 Credit Agreement) occurs with respect to AAG, American will (absent an amendment or waiver) be required to repay at par the loans outstanding under the 2014 Credit Facilities and terminate the 2014 Revolving Facility. The 2014 Credit Facilities also include covenants that, among other things, require AAG to maintain a minimum aggregate liquidity (as defined in the 2014 Credit Facilities) of not less than $2.0 billion, and limit the ability of AAG and its restricted subsidiaries to pay dividends and make certain other payments, make certain investments, incur liens on the collateral, dispose of the collateral, enter into certain affiliate transactions and engage in certain business activities, in each case subject to certain exceptions.
(c) 2013 Citicorp Credit Facility
On May 23, 2013, US Airways entered into a term loan credit facility (as amended, the 2013 Citicorp Credit Facility) with Citicorp North America, Inc., as administrative agent, and certain lenders. US Airways Group guaranteed the obligations of US Airways under the 2013 Citicorp Credit Facility, and AAG and certain other subsidiaries of AAG are guarantors of those obligations. On December 30, 2015, in connection with the merger of US Airways Group with and into AAG and the merger of US Airways with and into American, AAG and American entered into an assumption agreement pursuant to which they assumed the obligations of US Airways Group and US Airways, respectively, in connection with the 2013 Citicorp Credit Facility.
The 2013 Citicorp Credit Facility consists of tranche B-1 term loans (Tranche B-1) and tranche B-2 term loans (Tranche B-2). As of December 31, 2015, $980 million of principal was outstanding under Tranche B-1 and $588 million of principal was outstanding under Tranche B-2. Voluntary prepayments may be made by American at any time.
The 2013 Citicorp Credit Facility bears interest at an index rate plus an applicable index margin or, at American’s option, LIBOR (subject to a floor of 0.75%) plus an applicable LIBOR margin. As of December 31, 2015, the applicable LIBOR margin was 2.75% for Tranche B-1 and 2.25% for Tranche B-2.
Tranche B-1 and Tranche B-2 mature on May 23, 2019 and November 23, 2016, respectively (unless otherwise extended by the applicable parties), and each is repayable in annual installments to be paid on each anniversary of the closing date in an amount equal to 1.00% of the initial aggregate principal amount of the loans with any unpaid balance due on the maturity date of the respective tranche.
Subject to certain limitations and exceptions, the obligations under the 2013 Citicorp Credit Facility are secured by liens on certain take off and landing slots at LGA, spare parts and certain other assets. The obligations
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
of American under the 2013 Citicorp Credit Facility are guaranteed by AAG. American is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans under the 2013 Citicorp Credit Facility as further described below in“Collateral Related Covenants.”
The 2013 Citicorp Credit Facility agreement contains events of default customary for similar financings, including a cross-default provision to certain other material indebtedness of American and certain of its affiliates. Upon the occurrence of an event of default, the outstanding obligations under the 2013 Citicorp Credit Facility may be accelerated and become due and payable immediately. In addition, if a “change of control” (as defined in the 2013 Citicorp Credit Facility agreement) occurs, American will (absent an amendment or waiver) be required to repay the outstanding loans in full together with accrued interest thereon to the date of such prepayment. The 2013 Citicorp Credit Facility agreement includes affirmative, negative and financial covenants that, among other things, (a) require AAG and its restricted subsidiaries to maintain unrestricted liquidity of not less than $2.0 billion, with not less than $750 million held in accounts subject to control agreements, and (b) restrict the ability of AAG and its subsidiaries party to the 2013 Citicorp Credit Facility to make certain investments, pay dividends and make certain other payments, make certain acquisitions, incur liens on the collateral, dispose of collateral, enter into certain affiliate transactions, enter into certain hedging transactions, and engage in certain business activities, in each case subject to certain exceptions.
(d) Aircraft Enhanced Equipment Trust Certificates (EETCs)
2015-1 EETCs
In March 2015, American created two pass-through trusts which issued approximately $1.2 billion aggregate face amount of Series 2015-1 Class A and Class B EETCs (the 2015-1 EETCs) in connection with the financing of 28 aircraft owned by American (the 2015-1 EETC Aircraft).
As of December 31, 2015, the entire $1.2 billion of the proceeds from the sale of the 2015-1 EETCs had been used to purchase equipment notes issued by American in two series: Series A equipment notes in the amount of $948 million bearing interest at 3.375% per annum and Series B equipment notes in the amount of $266 million bearing interest at 3.70% per annum. Interest and principal payments on the equipment notes are payable semi-annually in May and November of each year, which began in November 2015. The final payments on the Series A and Series B equipment notes are due in May 2027 and May 2023, respectively. These equipment notes are secured by liens on the 2015-1 EETC Aircraft.
2015-2 EETCs
In September 2015, American created three pass-through trusts which issued approximately $1.1 billion aggregate face amount of Series 2015-2 Class AA, Class A and Class B EETCs (the 2015-2 EETCs) in connection with the financing of 21 aircraft owned by American (the 2015-2 EETC Aircraft).
As of December 31, 2015, the entire $1.1 billion of the proceeds from the sale of the 2015-2 EETCs had been used to purchase equipment notes issued by American in three series: Series AA equipment notes in the amount of $583 million bearing interest at 3.60% per annum, Series A equipment notes in the amount of $239 million bearing interest at 4.00% per annum and Series B equipment notes in the amount of $239 million bearing interest at 4.40% per annum. Interest and principal payments on the equipment notes are payable semi-annually in March and September of each year, with interest payments beginning in March 2016 and principal payments beginning in September 2016. The final payments on the Series AA and Series A equipment notes are due in September 2027 and the final payment on the Series B equipment notes is due in September 2023. These equipment notes are secured by liens on the 2015-2 EETC Aircraft.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(e) Other Aircraft Financing Transactions
In 2015, the Company prepaid $72 million principal amount of outstanding debt secured by certain aircraft.
In 2015, the Company entered into loan agreements to borrow $1.9 billion in connection with the financing of certain aircraft. The notes mature in 2022 through 2027 and bear interest at a rate of LIBOR plus an applicable margin averaging 1.82%.
(f) Obligations Associated with Special Facility Revenue Bonds
In December 2014, American acquired approximately $112 million aggregate principal amount of special facility revenue bonds related to the Tulsa International Airport, when such bonds were mandatorily tendered to American. The acquisition of these bonds resulted in an $11 million reduction of a capital lease obligation and a $50 million reduction of a long-term operating lease obligation included in other long-term liabilities on American’s consolidated balance sheet as of December 31, 2014. American exercised its option to remarket approximately $104 million of these bonds in May 2015. The remarketed bonds bear interest at 5.0% per annum from the date of initial issuance and delivery of the bonds on May 27, 2015, until the day preceding June 1, 2025, on which date the bonds will be subject to mandatory tender for purchase by American. In connection with the remarketing of these special facility revenue bonds, American received cash proceeds of $112 million. As of December 31, 2015, $11 million is reflected as a capital lease and $52 million is reflected in other long-term liabilities on American’s consolidated balance sheet.
In June 2015, American exercised its right to adjust the interest rate on approximately $365 million aggregate principal amount of special facility revenue bonds related to the John F. Kennedy International Airport, which were bearing interest at 8.50% per annum. In August 2015, these bonds were purchased by American and subsequently remarketed. The remarketed bonds bear interest at 2.00% per annum from the date of initial issuance and delivery of the bonds in August 2015, until August 2016, when the bonds will be subject to mandatory tender for purchase by American. The $365 million obligation is reflected in current maturities of long-term debt and capital leases on American’s consolidated balance sheet as of December 31, 2015.
(g) AAdvantage Loan
Effective January 2, 2015, American exercised its loan repayment right with respect to the full value of the outstanding balance of the AAdvantage Loan with Citibank for $400 million.
(h) 5.50% Senior Notes
In September 2014, the Company issued $750 million aggregate principal amount of 5.50% senior notes due 2019 (the 5.50% senior notes). These notes bear interest at a rate of 5.50% per annum, which is payable semi-annually in arrears on each April 1 and October 1, and began on April 1, 2015. The 5.50% senior notes mature on October 1, 2019 and are fully and unconditionally guaranteed by American. The 5.50% senior notes are senior unsecured obligations of the Company. The indenture for the 5.50% senior notes contains covenants and events of default generally customary for similar financings. In addition, if the Company experiences specific kinds of changes of control, the Company must offer to repurchase the 5.50% senior notes at a price of 101% of the principal amount plus accrued and unpaid interest, if any, to (but not including) the repurchase date. Upon the occurrence of certain events of default, the 5.50% senior notes may be accelerated and become due and payable. When issued, the 5.50% senior notes were fully and unconditionally guaranteed by US Airways Group and US Airways. On December 30, 2015, AAG, American and the trustee entered into a first supplemental indenture agreement to the 5.50% senior notes, in which AAG assumed the obligations of US Airways Group as guarantor and American assumed the obligations of US Airways as guarantor, in each case, under the 5.50% senior notes.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(i) 6.125% Senior Notes
In May 2013, US Airways Group issued its 6.125% Senior Notes due 2018 (the 6.125% senior notes). The 6.125% senior notes bear interest at a rate of 6.125% per annum, which is payable semi-annually in arrears on each June 1 and December 1 and began on December 1, 2013. The 6.125% senior notes mature on June 1, 2018 and, prior to the execution of the third supplemental indenture agreement (as described below), were fully and unconditionally guaranteed by US Airways when issued. In connection with the closing of the Merger, AAG and American each also provided a full and unconditional guarantee of the payment obligations of US Airways Group under the 6.125% senior notes. The indenture for the 6.125% senior notes contains covenants and events of default generally customary for similar financings. In addition, if the Company experiences specific kinds of changes of control, the Company must offer to repurchase the 6.125% senior notes at a price of 101% of the principal amount plus accrued and unpaid interest, if any, to (but not including) the repurchase date. Upon the occurrence of certain events of default, the 6.125% senior notes may be accelerated and become due and payable. The 6.125% senior notes are general unsecured senior obligations of the Company. On December 30, 2015, AAG, American and the trustee entered into a third supplemental indenture agreement to the 6.125% senior notes, in which AAG assumed the obligations of US Airways Group as issuer and American assumed the obligations of US Airways as guarantor, in each case, under the 6.125% senior notes.
(j) 4.625% Senior Notes
In March 2015, the Company issued $500 million aggregate principal amount of 4.625% senior notes due 2020 (the 4.625% senior notes). These notes bear interest at a rate of 4.625% per annum, which is payable semi-annually in arrears on each March 1 and September 1, which began on September 1, 2015. The 4.625% senior notes mature on March 1, 2020 and are fully and unconditionally guaranteed by American. The 4.625% senior notes are senior unsecured obligations of the Company. The indenture for the 4.625% senior notes contains covenants and events of default generally customary for similar financings. In addition, if the Company experiences specific kinds of changes of control, the Company must offer to repurchase the 4.625% senior notes in whole or in part at a repurchase price of 101% of the aggregate principal amount plus accrued and unpaid interest, if any, to (but not including) the repurchase date. Upon the occurrence of certain events of default, the 4.625% senior notes may be accelerated and become due and payable. When issued, the 4.625% senior notes were fully and unconditionally guaranteed by US Airways Group and US Airways. On December 30, 2015, AAG, American and the trustee entered into a first supplemental indenture agreement to the 4.625% senior notes, in which AAG assumed the obligations of US Airways Group as guarantor and American assumed the obligations of US Airways as guarantor, in each case, under the 4.625% senior notes.
Guarantees
As of December 31, 2015, AAG had issued guarantees covering approximately $1.1 billion of American’s special facility revenue bonds (and interest thereon) and $8.6 billion of American’s secured debt (and interest thereon), including the 2013 Credit Facilities, the 2014 Credit Facilities, the 2013 Citicorp Credit Facility and certain EETC financings.
Collateral Related Covenants
Certain of the Company’s debt financing agreements contain loan to value ratio covenants and require it to annually appraise the related collateral. Pursuant to such agreements, if the loan to value (LTV) ratio exceeds a specified threshold, the Company is required, as applicable, to pledge additional qualifying collateral (which in some cases may include cash collateral), or pay down such financing, in whole or in part.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
Specifically, the Company is required to meet certain collateral coverage tests on an annual basis for three credit facilities, as described below:

2014 Credit Facilities

2013 Credit Facilities

2013 Citicorp Credit Facility
Frequency of Appraisals of Appraised Collateral    Annual    Annual    Annual (1)
LTV Requirement
1.6x Collateral valuation to
amount of debt outstanding
(62.5% LTV)

1.6x Collateral valuation to
amount of debt outstanding
(62.5% LTV)

1.5x Collateral valuation to
amount of debt outstanding
(66.7% LTV)
LTV as of Last Measurement Date    24.1%    33.6%    57.8%
Collateral Description
Generally, certain slots, route
authorities and airport gate
leasehold rights used by
American to operate certain
services between the U.S. and
London Heathrow

Generally, certain slots, route
authorities, and airport gate
leasehold rights used by
American to operate all
services between the U.S. and
South America

Generally, certain LGA slots,
certain spare parts, certain
simulators, certain leasehold
real estate assets and cash
(1)
With respect to spare parts, one physical appraisal and one desktop appraisal are required in each fiscal year.
At December 31, 2015, the Company was in compliance with the applicable collateral coverage tests as of the most recent measurement dates.
10.  Income Taxes
The significant components of the income tax provision (benefit) were (in millions):
   Year Ended December 31,
   2015 2014 2013
Current
   $ 20    $ (16 ) $ (22 )
Deferred
   (3,014 ) 346    (324 )


Income tax provision (benefit)
   $ (2,994 ) $ 330    $ (346 )


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
The income tax provision (benefit) differed from amounts computed at the statutory federal income tax rate as follows (in millions):
   Year Ended December 31,
   2015 2014 2013
Statutory income tax provision (benefit)
   $ 1,616    $ 1,123    $ (763 )
State income tax provision (benefit), net of federal tax effect
   72    75    (8 )
Book expenses (benefits) not deductible for tax purposes
   57    (1 ) 27
Bankruptcy administration expenses
   3    95    83
Interest cutback to net operating loss (NOL)
   —    —    141
Alternative minimum tax credit refund
   —    (24 ) (22 )
Change in valuation allowance
   (4,742 ) (1,323 ) 717
Tax provision (benefit) resulting from OCI allocation
   —    330    (538 )
Other, net
   —    55    17


Income tax provision (benefit)
   $ (2,994 ) $ 330    $ (346 )


The Company provides a valuation allowance for its deferred tax assets, which includes the NOLs, when it is more likely than not that some portion, or all, of its deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. The Company considers all available positive and negative evidence and makes certain assumptions in evaluating the realizability of its deferred tax assets. As of December 31, 2015, after considering all positive and negative evidence, including the completion of certain critical merger integration milestones as well as the Company’s financial performance, the Company concluded that substantially all of its deferred income tax assets were more likely than not to be realized. Accordingly, the Company reversed the valuation allowance, which resulted in a special $3.0 billion non-cash tax benefit recorded in the consolidated statement of operations for 2015.
For the year ended December 31, 2014, the Company recorded a $330 million tax provision. During 2014, the Company sold its portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. In connection with this sale, the Company recorded a special non-cash tax provision of $330 million in the second quarter of 2014 that reversed the non-cash tax provision which was recorded in OCI, a subset of stockholders’ equity, principally in 2009. This provision represents the tax effect associated with gains recorded in OCI principally in 2009 due to a net increase in the fair value of the Company’s fuel hedging contracts. In accordance with GAAP, the Company retained the $330 million tax provision in OCI until the last contract was settled or terminated.
For the year ended December 31, 2013, the Company recorded a $346 million tax benefit. This benefit included a $538 million special non-cash income tax benefit from continuing operations. The Company is required to consider all items (including items recorded in OCI) in determining the amount of tax benefit that results from a loss from continuing operations and that should be allocated to continuing operations. As a result, the Company recorded a tax benefit on the loss from continuing operations for the year, which was exactly offset by income tax expense on OCI. However, while the income tax benefit from continuing operations is reported on the income statement, the income tax expense on OCI is recorded directly to accumulated OCI, which is a component of stockholders’ equity. Because the income tax expense on OCI is equal to the income tax benefit from continuing operations, the Company’s net deferred tax position is not impacted by this tax allocation. The 2013 tax benefit was offset in part by a $214 million special tax provision attributable to additional valuation allowance required to reduce deferred tax assets to the amount the Company believed was more likely than not to be realized.
In addition to the changes in the valuation allowance from operations described in the table above, the valuation allowance was also impacted by the changes in the components of accumulated other comprehensive income (loss), described in Note 14. The total decrease in the valuation allowance was $4.8 billion and $197 million in 2015 and 2014, respectively. The total increase in the valuation allowance was $602 million in 2013.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
The components of the Company’s deferred tax assets and liabilities were (in millions):
   December 31,
   2015 2014
Deferred tax assets:

Postretirement benefits other than pensions
   $ 340    $ 386
Rent expense
   134    180
Alternative minimum tax credit carryforwards
   346    346
Operating loss carryforwards
   2,558    3,461
Pensions
   2,436    2,403
Loyalty program obligation
   590    948
Gains from lease transactions
   262    207
Reorganization items
   57    64
Other
   1,200    1,210


Total deferred tax assets
   7,923    9,205
Valuation allowance
   (22 ) (4,816 )


Net deferred tax assets
   7,901    4,389


Deferred tax liabilities:

Accelerated depreciation and amortization
   (5,158 ) (4,829 )
Other
   (266 ) (98 )


Total deferred tax liabilities
   (5,424 ) (4,927 )


Net deferred tax asset (liability)
   $ 2,477    $ (538 )


At December 31, 2015, the Company had approximately $8.0 billion of gross NOL Carryforwards to reduce future federal taxable income, substantially all of which are expected to be available for use in 2016. The federal NOL Carryforwards will expire beginning in 2023 if unused. These NOL Carryforwards include an unrealized tax benefit of $1.2 billion related to share-based compensation that will be recorded in equity when realized. The Company also had approximately $4.0 billion of NOL Carryforwards to reduce future state taxable income at December 31, 2015, which will expire in years 2016 through 2034 if unused. As of December 31, 2015, the amount of NOL Carryforwards for state income tax purposes that will expire, if unused, in 2016 is $136 million. The Company’s ability to deduct its NOL Carryforwards and to utilize certain other available tax attributes can be substantially constrained under the general annual limitation rules of Section 382 where an “ownership change” has occurred. The Company experienced an ownership change in connection with its emergence from the Chapter 11 Cases, and US Airways Group experienced an ownership change in connection with the Merger. As a result of the Merger, US Airways Group is now included in the AAG consolidated federal and state income tax returns. The general limitation rules of Section 382 for a debtor in a bankruptcy case are liberalized where the ownership change occurs upon emergence from bankruptcy. The Company elected to be covered by certain special rules for federal income tax purposes that permitted approximately $9.0 billion (with $6.6 billion of unlimited NOL still remaining at December 31, 2015) of its federal NOL Carryforwards to be utilized without regard to the Section 382 annual limitation rules unless a second ownership change occurred on or before December 9, 2015. No second ownership change occurred within that period. Substantially all of the Company’s remaining federal NOL Carryforwards (attributable to US Airways Group) are subject to limitation under Section 382; however, the Company’s ability to utilize such NOL Carryforwards is not anticipated to be effectively constrained as a result of such limitation. Similar limitations may apply for state income tax purposes. The Company’s ability to utilize any new NOL Carryforwards arising after the ownership changes is not affected by the annual limitation rules imposed by Section 382 unless another ownership change occurs. Under the Section 382 limitation, cumulative stock ownership changes among material stockholders exceeding 50% during a rolling three-year period can potentially limit a company’s future use of NOLs and tax credits. See Part I,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
Item 1A. Risk Factors– “Our ability to utilize our NOL Carryforwards may be limited” for unaudited additional discussion of this risk.
At December 31, 2015, the Company had an Alternative Minimum Tax credit carryforward of approximately $341 million available for federal income tax purposes, which is available for an indefinite period.
The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. The Company’s 2012 through 2014 tax years are still subject to examination by the Internal Revenue Service. Various state and foreign jurisdiction tax years remain open to examination and the Company is under examination, in administrative appeals, or engaged in tax litigation in certain jurisdictions. The Company believes that the effect of any assessments will be immaterial to its consolidated financial statements.
In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes,” which changes how deferred taxes are classified on the balance sheet. The update eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent on the balance sheet. Deferred tax liabilities and assets are now required to be classified as noncurrent on the balance sheet. Entities have the choice to apply ASU 2015-17 either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The update is effective for annual and interim periods in fiscal years beginning after December 15, 2016. The Company early adopted this standard during the fourth quarter 2015, utilizing retrospective application as permitted. As such, certain prior period amounts have been reclassified to conform to the current presentation. As a result, the Company reclassified $361 million of current deferred income tax assets within prepaid expenses and other to reduce deferred income taxes within other liabilities on the consolidated balance sheet as of December 31, 2014.
11.  Risk Management
The Company’s economic prospects are heavily dependent upon two variables it cannot control: the health of the economy and the price of fuel.
Due to the discretionary nature of business and leisure travel spending, airline industry revenues are heavily influenced by the condition of the U.S. economy and economies in other regions of the world. Unfavorable conditions in these broader economies have resulted, and may result in the future, in decreased passenger demand for air travel and changes in booking practices, both of which in turn have had, and may have in the future, a strong negative effect on the Company’s revenues. In addition, during challenging economic times, actions by its competitors to increase their revenues can have an adverse impact on the Company’s revenues.
The Company’s operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of the largest single cost items in the Company’s business. Jet fuel market prices have fluctuated substantially over the past several years and prices continue to be highly volatile. Because of the amount of fuel needed to operate the Company’s business, even a relatively small increase or decrease in the price of fuel can have a material effect on the Company’s operating results and liquidity.
These additional factors could impact the Company’s results of operations, financial performance and liquidity.
(a) Credit Risk
Most of the Company’s receivables relate to tickets sold to individual passengers through the use of major credit cards or to tickets sold by other airlines and used by passengers on American. These receivables are short-term, mostly being settled within seven days after sale. Bad debt losses, which have been minimal in the past, have been considered in establishing allowances for doubtful accounts. The Company does not believe it is subject to any significant concentration of credit risk.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(b) Interest Rate Risk
The Company has exposure to market risk associated with changes in interest rates related primarily to its variable rate debt obligations. Interest rates on $7.8 billion principal amount of long-term debt as of December 31, 2015 are subject to adjustment to reflect changes in floating interest rates. The weighted average effective interest rate on the Company’s variable rate debt was 2.93% at December 31, 2015. The Company does not currently have an interest rate hedge program.
(c) Foreign Currency Risk
The Company is exposed to the effect of foreign exchange rate fluctuations on the U.S. dollar value of foreign currency-denominated operating revenues and expenses. The Company’s largest exposure comes from the British pound, Euro, Canadian dollar and various Latin American currencies, primarily the Brazilian real. The Company does not currently have a foreign currency hedge program. See Part I, Item 1A. Risk Factors – “We operate a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control” for unaudited additional discussion.
12.  Investments and Fair Value Measurements
Assets Measured at Fair Value on a Recurring Basis
The Company utilizes the market approach to measure fair value for its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. The Company’s short-term investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuation of these securities. No changes in valuation techniques or inputs occurred during the year ended December 31, 2015.
Assets measured at fair value on a recurring basis are summarized below (in millions):
   Fair Value Measurements as of December 31, 2015
       Total            Level 1            Level 2            Level 3
Short-term investments (1), (2):

Money market funds
   $ 1,010       $ 1,010       $ —       $ —
Government agency investments
   1       —       1       —
Corporate obligations
   2,191       —       2,191       —
Bank notes/certificates of deposit/time deposits
   2,662       —       2,662       —








   5,864       1,010       4,854       —
Restricted cash and short-term investments (1)
   695       695       —       —








Total
   $ 6,559       $ 1,705       $ 4,854       $ —








(1)
Unrealized gains or losses on short-term investments and restricted cash and short-term investments are recorded in accumulated other comprehensive loss at each measurement date.
(2)
All short-term investments are classified as available-for-sale and stated at fair value. The Company’s short-term investments mature in one year or less except for $734 million of corporate obligations and $1.2 billion of bank notes/certificates of deposit/time deposits.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
   Fair Value Measurements as of December 31, 2014
       Total            Level 1            Level 2            Level 3
Short-term investments (1), (2):

Money market funds
   $ 954       $ 954       $ —       $ —
Government agency investments
   101       —       101       —
Repurchase agreements
   46       —       46       —
Corporate obligations
   3,927       —       3,927       —
Bank notes/certificates of deposit/time deposits
   1,281       —       1,281       —








   6,309       954       5,355       —
Restricted cash and short-term investments (1)
   774       774       —       —








Total
   $ 7,083       $ 1,728       $ 5,355       $ —








(1)
Unrealized gains or losses on short-term investments and restricted cash and short-term investments are recorded in accumulated other comprehensive loss at each measurement date.
(2)
All short-term investments are classified as available-for-sale and stated at fair value. The Company’s short-term investments mature in one year or less except for $1.1 billion of corporate obligations and $575 million of bank notes/certificates of deposit/time deposits.
There were no Level 1 to Level 2 transfers during the years ended December 31, 2015 or 2014.
Fair Value of Debt
The fair value of the Company’s long-term debt was estimated using quoted market prices or discounted cash flow analyses, based on the Company’s current estimated incremental borrowing rates for similar types of borrowing arrangements. If the Company’s long-term debt was measured at fair value, it would have been classified as Level 2 in the fair value hierarchy.
The carrying value and estimated fair value of the Company’s long-term debt, including current maturities, were as follows (in millions):
   December 31, 2015    December 31, 2014
   Carrying
Value    Fair
Value    Carrying
Value    Fair
Value
Long-term debt, including current maturities
   $ 20,561       $ 21,111       $ 17,720       $ 18,542








Cash and Short-term Investments
Generally, fluctuations in foreign currencies, including devaluations, cannot be predicted by the Company and can significantly affect the value of the Company’s cash and short-term investments located outside the United States. These conditions, as well as any further delays, devaluations or imposition of more stringent repatriation restrictions, may materially adversely affect the Company’s business, results of operations and financial condition. See Part I, Item 1A. Risk Factors – “We operate a global business with international operations thatare subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control” for unaudited additional discussion of this and other currency risks.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
13.  Retirement Benefits
The Company sponsors defined benefit and defined contribution pension plans for eligible employees. The defined benefit plans provide benefits for participating employees based on years of service and average compensation for a specified period of time before retirement. Effective November 1, 2012, substantially all of the Company’s defined benefit pension plans were frozen and the Company began providing enhanced benefits under its defined contribution plans for certain groups. The Company uses a December 31 measurement date for all of its defined benefit plans. The Company also provides certain retiree medical and other postretirement benefits, including health care and life insurance benefits, to retired employees. Effective November 1, 2012, the Company modified its retiree medical and life coverage to eliminate the company subsidy for employees who retire on or after November 1, 2012. As a result of modifications to its retiree medical plans in 2012, the Company recognized a negative plan amendment of $1.9 billion, which is included as a component of actuarial gain in OCI and will be amortized over the future service life of the active plan participants for whom the benefit was eliminated, or approximately eight years. As of December 31, 2015, $1.1 billion of actuarial gain remains to be amortized.
Year End Information
The following table provides a reconciliation of the changes in the pension and retiree medical and other postretirement benefit obligations and fair value of assets for the years ended December 31, 2015 and 2014, and a statement of funded status as of December 31, 2015 and 2014 (in millions):
   Pension Benefits Retiree Medical and Other
Postretirement Benefits
   2015 2014     2015         2014
Reconciliation of benefit obligation:

Obligation at January 1
   $ 17,594    $ 14,899    $ 1,325    $ 1,385
Service cost
   2    3    3    1
Interest cost
   737    746    50    61
Actuarial (gain) loss
   (1,159 ) 2,573    (177 ) (39 )
Plan amendments
   —    —    —    33
Settlements
   (3 ) (20 ) —    —
Benefit payments
   (776 ) (607 ) (94 ) (112 )
Other
   —    —    24    (4 )


Obligation at December 31
   $ 16,395    $ 17,594    $ 1,131    $ 1,325


Reconciliation of fair value of plan assets:

Fair value of plan assets at January 1
   $ 10,986    $ 10,057    $ 244    $ 239
Actual return on plan assets
   (506 ) 746    (10 ) 11
Employer contributions
   6    810    89    106
Settlements
   (3 ) (20 ) —    —
Benefit payments
   (776 ) (607 ) (94 ) (112 )
Other (1)
   —    —    24    —


Fair value of plan assets at December 31
   9,707    10,986    253    244


Funded status at December 31
   $ (6,688 ) $ (6,608 ) $ (878 ) $ (1,081 )


Amounts recognized in the consolidated balance sheets:

Current liability
   $ 7    $ 10    $ 109    $ 117
Noncurrent liability (2)
   6,681    6,598    769    964


   $ 6,688    $ 6,608    $ 878    $ 1,081


Amounts recognized in other comprehensive income:

Net actuarial loss (gain)
   $ 5,047    $ 4,961    $ (339 ) $ (199 )
Prior service cost (benefit) (2)
   216    245    (1,084 ) (1,326 )


   $ 5,263    $ 5,206    $ (1,423 ) $ (1,525 )


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
Pension Benefits Retiree Medical and
Other Postretirement Benefits
        2015                 2014                 2015                 2014
For plans with accumulated benefit obligations exceeding the fair value of plan assets:

Projected benefit obligation (PBO)
$ 16,369    $ 17,560    $ —    $ —
Accumulated benefit obligation (ABO)
16,357    17,548    —    —
Accumulated postretirement benefit obligation (APBO)
—    —    1,129    1,324
Fair value of plan assets
9,677    10,950    253    244
ABO less fair value of plan assets
6,680    6,598    —    —
(1)
At December 31, 2015, certain trust assets totaling approximately $24 million, were added to the retiree medical plan asset values that were previously offset against the benefit obligation.
(2)
The 2015 noncurrent liability does not include $17 million of other postretirement benefits or $1 million of prior service costs. The 2014 noncurrent liability does not include $18 million of other postretirement benefits or $2 million of prior service costs.
The following tables provide the components of net periodic benefit cost (income) for the years ended December 31, 2015, 2014 and 2013 (in millions):
   Pension Benefits Retiree Medical and
Other Postretirement Benefits
       2015         2014         2013         2015         2014         2013

Defined benefit plans:

Service cost
   $ 2    $ 3    $ 3    $ 3    $ 1    $ —
Interest cost
   737    746    654    50    61    50
Expected return on assets
   (851 ) (786 ) (720 ) (19 ) (19 ) (16 )
Curtailments
   —    —    2    —    —    —
Settlements
   1    4    (1 ) —    —    —
Amortization of:

Prior service cost (benefit) (1)
   28    28    28    (243 ) (244 ) (251 )
Unrecognized net loss (gain)
   112    43    90    (9 ) (8 ) (9 )


Net periodic benefit cost (income) for defined benefit plans
   29    38    56    (218 ) (209 ) (226 )
Defined contribution plans
   662    546    328    N/A    N/A    N/A


   $ 691    $ 584    $ 384    $ (218 ) $ (209 ) $ (226 )


(1)
The 2015 prior service cost does not include amortization of $3 million related to other postretirement benefits. The 2014 prior service cost does not include amortization of $14 million related to other postretirement benefits.
The estimated amount of unrecognized net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is $126 million.
The estimated amount of unrecognized net gain for the retiree medical and other postretirement plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is $16 million.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
   Pension Benefits Retiree Medical and
Other Postretirement Benefits
       2015         2014         2015         2014
Weighted-average assumptions used to determine benefit obligations as of December 31:

Discount rate
   4.70 % 4.30 % 4.42 % 4.00 %
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:

Discount rate 1/1 – 12/31
   4.30 % 5.10 % 4.00 % 4.74 %
Expected return on plan assets
   8.00 % 8.00 % 8.00 % 8.00 %
As of December 31, 2015, the Company’s estimate of the long-term rate of return on plan assets was 8% based on the target asset allocation. Expected returns on longer duration bonds are based on yields to maturity of the bonds held at year-end. Expected returns on other assets are based on a combination of long-term historical returns, actual returns on plan assets achieved over the last ten years, current and expected market conditions, and expected value to be generated through active management, currency overlay and securities lending programs.
The objectives of the Company’s investment policies are to: maintain sufficient income and liquidity to pay retirement benefits; produce a long-term rate of return that meets or exceeds the assumed rate of return for plan assets; limit the volatility of asset performance and funded status; and diversify assets among asset classes and investment managers.
Based on these investment objectives, a long-term strategic asset allocation has been established. This strategic allocation seeks to balance the potential benefit of improving funded position with the potential risk that the funded position would decline. The current strategic target asset allocation is as follows:
Asset Class/Sub-Class
Allowed Range
Equity
62% - 72%
Public:
U.S. Value
20% - 35%
International Value
14% - 24%
Emerging Markets
5% - 11%
Alternative Investments
0% - 18%
Fixed Income
28% - 38%
U.S. Long Duration
26% - 36%
Emerging Markets
0% -  4%
Other
0% -  5%
Cash Equivalents
0% -  5%
Public equity and emerging market fixed income securities are used to provide diversification and are expected to generate higher returns over the long-term than longer duration U.S. bonds. Public stocks are managed using a value investment approach in order to participate in the returns generated by stocks in the long-term, while reducing year-over-year volatility. Longer duration U.S. bonds are used to partially hedge the assets from declines in interest rates. Alternative (private) investments are used to provide expected returns in excess of the public markets over the long-term. Additionally, the pension plan’s master trust engages currency overlay managers in an attempt to increase returns by protecting non-U.S. dollar denominated assets from a rise in the relative value of the U.S. dollar. The pension plan’s master trust also participates in securities lending programs to generate additional income by loaning plan assets to borrowers on a fully collateralized basis. These programs are subject to market risk.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
Investments in securities traded on recognized securities exchanges are valued at the last reported sales price on the last business day of the year. Securities traded in the over-the-counter market are valued at the last bid price. The money market fund is valued at fair value which represents the net asset value of the shares of such fund as of the close of business at the end of the period. Investments in limited partnerships are carried at estimated net asset value as determined by and reported by the general partners of the partnerships and represent the proportionate share of the estimated fair value of the underlying assets of the limited partnerships. Common/collective trusts are valued at net asset value based on the fair values of the underlying investments of the trusts as determined by the sponsor of the trusts. The pension plan’s master trust also invests in a 103-12 investment entity (the 103-12 Investment Trust) which is designed to invest plan assets of more than one unrelated employer. The 103-12 Investment Trust is valued at net asset value which is determined by the issuer at the end of each month and is based on the aggregate fair value of trust assets less liabilities, divided by the number of units outstanding. No changes in valuation techniques or inputs occurred during the year.
The fair value of the Company’s pension plan assets at December 31, 2015 and 2014, by asset category, are as follows (in millions):
Fair Value Measurements as of December 31, 2015
Asset Category
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1) Significant
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Total
Cash and cash equivalents
$ 287    $ —    $ —    $ 287
Equity securities:

International markets (a), (b)
2,873    —    —    2,873
Large-cap companies (b)
1,999    —    —    1,999
Mid-cap companies (b)
361    —    —    361
Small-cap companies (b)
18    —    —    18
Mutual funds (c)
47    —    —    47
Fixed income:

Corporate bonds (d)
—    2,204    —    2,204
Government Securities (e)
—    917    —    917
U.S. municipal securities
—    48    —    48
Alternative instruments:

Private equity partnerships (f)
—    —    722    722
Common/collective trusts and 103-12 Investment Trust (g)
—    219    —    219
Insurance group annuity contracts
—    —    2    2
Dividend and interest receivable
50    —    —    50
Due to/from brokers for sale of securities – net
23    —    —    23
Other assets – net
8    —    —    8
Other liabilities – net
(71 ) —    —    (71 )

Total
$ 5,595    $ 3,388    $ 724    $ 9,707

a)
Holdings are diversified as follows: 16% United Kingdom, 12% Japan, 10% France, 7% Switzerland, 7% Netherlands, 6% Republic of Korea, 11% of other emerging markets and the remaining 31% with no concentration greater than 5% in any one country.
b)
There are no significant concentrations of holdings by company or industry.
c)
Investment includes mutual funds invested 40% in equity securities of large-cap, mid-cap and small-cap U.S. companies, 35% in U.S. treasuries and corporate bonds and 25% in equity securities of international companies.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
d)
Includes approximately 74% investments in corporate debt with a Standard and Poor’s (S&P) rating lower than A and 26% investments in corporate debt with an S&P rating A or higher. Holdings include 82% U.S. companies, 16% international companies and 2% emerging market companies.
e)
Includes approximately 75% investments in U.S. domestic government securities and 25% in emerging market government securities. There are no significant foreign currency risks within this classification.
f)
Includes limited partnerships that invest primarily in U.S. (89%) and European (11%) buyout opportunities of a range of privately held companies. The pension plan’s master trust does not have the right to redeem its limited partnership investment at its net asset value, but rather receives distributions as the underlying assets are liquidated. It is estimated that the underlying assets of these funds will be gradually liquidated over the next one to ten years. Additionally, the pension plan’s master trust has future funding commitments of approximately $428 million over the next ten years.
g)
Investment includes 73% in an emerging market 103-12 Investment Trust with investments in emerging country equity securities, 14% in Canadian segregated balanced value, income growth and diversified pooled funds and 13% in a common/collective trust investing in securities of smaller companies located outside the U.S., including developing markets. Requests for withdrawals must meet specific requirements with advance notice of redemption preferred.
   Fair Value Measurements as of December 31, 2014
Asset Category
   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)    Significant
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Total
Cash and cash equivalents
   $ 332       $ —       $ —       $ 332
Equity securities:

International markets (a), (b)
   2,943       —       —       2,943
Large-cap companies (b)
   2,488       —       —       2,488
Mid-cap companies (b)
   362       —       —       362
Small-cap companies (b)
   21       —       —       21
Mutual funds (c)
   51       —       —       51
Fixed income:

Corporate bonds (d)
   —       2,384       —       2,384
Government Securities (e)
   —       1,184       —       1,184
U.S. municipal securities
   —       65       —       65
Alternative instruments:

Private equity partnerships (f)
   —       —       818       818
Common/collective trusts and 103-12 Investment Trust (g)
   —       240       —       240
Insurance group annuity contracts
   —       —       2       2
Dividend and interest receivable
   52       —       —       52
Due to/from brokers for sale of securities – net
   39       —       —       39
Other assets – net
   5       —       —       5








Total
   $ 6,293       $ 3,873       $ 820       $ 10,986








a)
Holdings are diversified as follows: 18% United Kingdom, 11% Japan, 10% France, 7% Switzerland, 7% Netherlands, 6% Republic of Korea, 13% of other emerging markets and the remaining 28% with no concentration greater than 5% in any one country.
b)
There are no significant concentrations of holdings by company or industry.
c)
Investment includes mutual funds invested 46% in equity securities of large-cap, mid-cap and small-cap U.S. companies, 35% in U.S. treasuries and corporate bonds and 18% in equity securities of international companies.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
d)
Includes approximately 74% investments in corporate debt with an S&P rating lower than A and 26% investments in corporate debt with an S&P rating A or higher. Holdings include 81% U.S. companies, 16% international companies and 3% emerging market companies.
e)
Includes approximately 73% investments in U.S. domestic government securities and 27% in emerging market government securities. There are no significant foreign currency risks within this classification.
f)
Includes limited partnerships that invest primarily in U.S. (91%) and European (9%) buyout opportunities of a range of privately held companies. The pension plan’s master trust does not have the right to redeem its limited partnership investment at its net asset value, but rather receives distributions as the underlying assets are liquidated. It is estimated that the underlying assets of these funds will be gradually liquidated over the next one to ten years. Additionally, the pension plan’s master trust has future funding commitments of approximately $403 million over the next ten years.
g)
Investment includes 74% in an emerging market 103-12 Investment Trust with investments in emerging country equity securities, 14% in Canadian segregated balanced value, income growth and diversified pooled funds and 12% in a common/collective trust investing in securities of smaller companies located outside the U.S., including developing markets. Requests for withdrawals must meet specific requirements with advance notice of redemption preferred.
Changes in fair value measurements of Level 3 investments during the year ended December 31, 2015, were as follows (in millions):
   Private Equity
Partnerships Insurance Group
Annuity Contracts
Beginning balance at December 31, 2014
   $ 818    $ 2
Actual return on plan assets:

Relating to assets still held at the reporting date
   (105 ) —
Relating to assets sold during the period
   115    —
Purchases
   145    —
Sales
   (251 ) —


Ending balance at December 31, 2015
   $ 722    $ 2


Changes in fair value measurements of Level 3 investments during the year ended December 31, 2014, were as follows (in millions):
   Private Equity
Partnerships Insurance Group
Annuity Contracts
Beginning balance at December 31, 2013
   $ 848    $ 2
Actual return on plan assets:

Relating to assets still held at the reporting date
   (38 ) —
Relating to assets sold during the period
   158    —
Purchases
   148    —
Sales
   (298 ) —


Ending balance at December 31, 2014
   $ 818    $ 2


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
The fair value of the Company’s other postretirement benefit plan assets at December 31, 2015 by asset category, were as follows (in millions):
   Fair Value Measurements as of December 31, 2015
Asset Category
   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)    Significant
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Total
Money market fund
   $ 4       $ —       $ —       $ 4
Mutual funds – Institutional Class
   19       —       $ —       $ 19
Mutual funds – AMR Class
   —       230       —       230








Total
   $ 23       $ 230       $ —       $ 253








The fair value of the Company’s other postretirement benefit plan assets at December 31, 2014 by asset category, were as follows (in millions):
   Fair Value Measurements as of December 31, 2014
Asset Category
   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)    Significant
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Total
Money market fund
   $ 2       $ —       $ —       $ 2
Mutual funds – AMR Class
   —       242       —       242








Total
   $ 2       $ 242       $ —       $ 244








Investments in the other postretirement benefit plan’s mutual funds are valued by quoted prices on the active market, which is fair value and represents the net asset value of the shares of such funds as of the close of business at the end of the period. AMR Class shares are offered without a sales charge to participants. Purchases are restricted to certain retirement benefit plans, including the Company’s other postretirement benefit plan, resulting in a fair value classification of Level 2. Investments include approximately 27% and 28% of investments in non-U.S. common stocks in 2015 and 2014, respectively. Net asset value is based on the fair market value of the funds’ underlying assets and liabilities at the date of determination.
           2015                 2014
Assumed health care trend rates at December 31

Health care cost trend rate assumed for next year
   5.21 % 5.25 %
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
   4.56 % 4.55 %
Year that the rate reaches the ultimate trend rate
   2024    2023
A one percentage point change in the assumed health care cost trend rates would have the following effects (in millions):
   1% Increase    1% Decrease
Impact on 2015 service and interest cost
   $ 3       $ (3 )
Impact on other postretirement benefits obligation as of December 31, 2015
   61       (60 )
The Company is required to make minimum contributions to its defined benefit pension plans under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 and various other laws. Based on current funding assumptions, the Company has no minimum required contributions until 2018. Currently, the Company’s minimum funding obligation for its pension plans is subject to temporary favorable rules that are scheduled to expire at the end of 2017. The Company’s pension funding obligations are likely to increase materially following expiration of the temporary funding rules, when the Company will be required to
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
make contributions relating to the 2018 fiscal year. The amount of these obligations will depend on the performance of the Company’s investments held in trust by the pension plans, interest rates for determining liabilities and the Company’s actuarial experience.
The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (in millions):
   2016    2017    2018    2019    2020    2021-2025
Pension
   $ 662       $ 690       $ 725       $ 764       $ 805       $ 4,642
Retiree medical and other postretirement benefits
   109       104       99       90       84       353
14.  Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive income (loss) are as follows (in millions):
   Pension and
Retiree Medical
Liability Derivative
Financial
Instruments Unrealized
Gain/(Loss) on
Investments Income
Tax
Benefit
(Provision) Total
Balance at December 31, 2013
   $ (887 ) $ 67    $ (2 ) $ (1,210 ) $ (2,032 )
Other comprehensive loss before reclassifications
   (2,633 ) (54 ) —    —    (2,687 )
Amounts reclassified from accumulated other comprehensive income (loss)
   (163 ) (4 ) (3 ) 330    160


Net current-period other comprehensive income (loss)
   (2,796 ) (58 ) (3 ) 330    (2,527 )


Balance at December 31, 2014
   (3,683 ) 9    (5 ) (880 ) (4,559 )
Other comprehensive loss before reclassifications
   (51 ) —    (6 ) —    (57 )
Amounts reclassified from accumulated other comprehensive income (loss)
   (108 ) (9 ) 1    —    (116 )


Net current-period other comprehensive loss
   (159 ) (9 ) (5 ) —    (173 )


Balance at December 31, 2015
   $ (3,842 ) $ —    $ (10 ) $ (880 ) $ (4,732 )


Reclassifications out of accumulated other comprehensive income (loss) for the years ended December 31, 2015 and 2014 are as follows (in millions):
Details about accumulated other comprehensive
income (loss) components
   Amount reclassified from accumulated
other comprehensive income (loss)
Affected line item in the
statement where net income
(loss) is presented
   Year Ended December 31,
   2015 2014
Amortization of pension and retiree medical liability:

Prior service cost
   $ (212 ) $ (202 ) Salaries, wages and benefits
Actuarial loss
   104    39    Salaries, wages and benefits
Derivative financial instruments:

Cash flow hedges
   (9 ) (4 ) Aircraft fuel and related taxes
Net unrealized change on investments:

Net change in value
   1    (3 ) Other nonoperating, net
Income tax benefit (provision):

Reversal of non-cash tax provision
   —    330    Income tax provision (benefit)


Total reclassifications for the period
   $ (116 ) $ 160


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
During 2014, the Company sold its portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. In connection with this sale, the Company recorded a special non-cash tax provision of $330 million in the statement of operations for the second quarter of 2014 that reversed the non-cash tax provision which was recorded in OCI, a subset of stockholders’ equity, principally in 2009. This provision represented the tax effect associated with gains recorded in OCI principally in 2009 due to a net increase in the fair value of the Company’s fuel hedging contracts. In accordance with GAAP, the Company retained the $330 million tax provision in OCI until the last contract was settled or terminated.
Amounts allocated to OCI for income taxes as further described in Note 10 will remain in accumulated other comprehensive income (loss) until the Company ceases all related activities, such as termination of the pension plan.
15.  Commitments, Contingencies and Guarantees
(a) Aircraft and Engine Purchase Commitments
Under all of the Company’s aircraft and engine purchase agreements, its total future commitments as of December 31, 2015 are expected to be as follows (approximately, in millions):
   2016    2017    2018    2019    2020    2021 and
Thereafter    Total
Payments for aircraft commitments and certain engines (1)
   $ 4,505       $ 4,591       $ 2,916       $ 3,156       $ 2,793       $ 4,537       $ 22,498
(1)
These amounts are net of purchase deposits currently held by the manufacturers and include all commitments for wholly-owned regional aircraft. American has granted Boeing a security interest in its purchase deposits with Boeing. The Company’s purchase deposits totaled $1.1 billion as of December 31, 2015.
As of December 31, 2015, the Company did not have financing commitments for the following aircraft currently on order and scheduled to be delivered through 2017: 25 Airbus A320 family aircraft in 2016 and 20 Airbus A320 family aircraft in 2017, 8 Boeing 787 family aircraft in 2016 and 13 Boeing 787 family aircraft in 2017, 15 Boeing 737-800 aircraft in 2016, three Boeing 737 MAX family aircraft in 2017 and two Boeing777-300ER aircraft in 2016. In addition, the Company did not have financing commitments in place for substantially all aircraft currently on order and scheduled to be delivered in 2018 and beyond. See Part I, Item 1A. Risk Factors – “We will need to obtain sufficient financing or other capital to operate successfully” for unaudited additional discussion.
(b) Facility and support commitments
The Company has contracts related to facility construction or improvement projects, primarily at airport locations, as well as information technology support. The contractual obligations related to these contracts are presented in the table below (in millions):
   2016    2017    2018    2019    2020    2021 and
Thereafter    Total
Facility construction or improvement contracts
   $ 211       $ 2       $ —       $ —       $ —       $ —       $ 213
Information technology contracts
   160       136       107       88       6       —       497
(c) Capacity Purchase Agreements with Third-Party Regional Carriers
As of December 31, 2015, the Company’s capacity purchase agreements with third-party regional carriers had expiration dates ranging from 2017 to 2027, with rights of American to extend the respective terms of each agreement. See Part I, Item 2. Properties for unaudited information on the aircraft contractually obligated to the Company under such capacity purchase agreements with third-party regional carriers.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
The Company has entered into agreements with the third-party regional carriers that operate certain of their aircraft using American’s flight designator codes. American controls the scheduling, pricing, reservations, ticketing and seat inventories of those aircraft and retains all revenues associated with flights by those aircraft. American pays the third-party regional carriers an amount, as defined in the applicable agreement, based on the airlines’ costs of operating those flights. In addition, these agreements provide that certain variable costs, such as airport landing fees, fuel and passenger liability insurance, will be 100% paid for or reimbursed by the Company. As of December 31, 2015, the Company’s minimum fixed obligations under its capacity purchase agreements with third-party regional carriers were as follows (approximately, in millions):
   2016    2017    2018    2019    2020    2021 and
Thereafter    Total
Minimum fixed obligations under its capacity purchase agreements with third-party regional carriers (1)
   $ 1,672       $ 1,553       $ 1,249       $ 1,075       $ 881       $ 2,393       $ 8,823
(1)
Represents minimum payments under capacity purchase agreements with third-party regional carriers. These commitments are estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and the Company’s actual payments could differ materially. These obligations also include the portion of the Company’s future obligations related to aircraft deemed to be leased in the amount of approximately $469 million in 2016, $414 million in 2017, $334 million in 2018, $292 million in 2019, $235 million in 2020 and $704 million in 2021 and thereafter.
(d) Operating Leases
The Company leases certain aircraft, engines and ground equipment, in addition to the majority of its ground facilities and terminal space. As of December 31, 2015, the Company had 438 aircraft under operating leases, with remaining terms ranging from one month to approximately 12 years. Airports are utilized for flight operations under lease arrangements with the municipalities or agencies owning or controlling such airports. Substantially all leases provide that the lessee must pay taxes, maintenance, insurance and certain other operating expenses applicable to the leased property. Some leases also include renewal and purchase options.
As of December 31, 2015, obligations under noncancellable operating leases for future minimum lease payments were as follows (in millions):
   2016    2017    2018    2019    2020    2021 and
Thereafter    Total
Future minimum lease payments (1)
   $ 2,198       $ 2,078       $ 1,829       $ 1,643       $ 1,493       $ 4,704       $ 13,945
(1)
As of December 31, 2015, $294 million is included on the accompanying consolidated balance sheet in accrued liabilities and deferred gains and credits, net relating to rent expense being recorded in advance of future operating lease payments.
Mainline and regional rent expense, excluding landing fees, was $2.8 billion, $2.8 billion and $1.7 billion in 2015, 2014 and 2013, respectively.
(e) Off-Balance Sheet Arrangements
Aircraft
The Company currently operates 263 owned aircraft and 138 leased aircraft which were financed with enhanced equipment trust certificates, or EETCs, issued by pass-through trusts. These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of flight equipment. Rather than finance each aircraft separately when such aircraft was purchased, delivered or refinanced, these trusts allowed American to
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
raise the financing for several aircraft at one time and place such funds in escrow pending the purchase, delivery or refinancing of the relevant aircraft. The trusts were also structured to provide for certain credit enhancements, such as liquidity facilities to cover certain interest payments, that reduce the risks to the purchasers of the trust certificates and, as a result, reduce the cost of aircraft financing to American.
Each trust covered a set amount of aircraft scheduled to be delivered or refinanced within a specific period of time. At the time of each covered aircraft financing, the relevant trust uses the funds in escrow to purchase equipment notes relating to the financed aircraft. The equipment notes are issued, at American’s election, in connection with a mortgage financing of the aircraft or, in certain cases, by a separate owner trust in connection with a leveraged lease financing of the aircraft. In the case of a leveraged lease financing, the owner trust then leases the aircraft to American. In both cases, the equipment notes are secured by a security interest in the aircraft. The EETCs are not direct obligations of, nor are they guaranteed by, AAG or American. However, in the case of mortgage financings, the equipment notes issued to the trusts are direct obligations of American and, in certain instances, are guaranteed by AAG. As of December 31, 2015, $8.7 billion associated with these mortgage financings is reflected as debt in the accompanying consolidated balance sheet.
With respect to leveraged leases, American evaluated whether the leases had characteristics of a variable interest entity. American concluded the leasing entities met the criteria for variable interest entities. American generally is not the primary beneficiary of the leasing entities if the lease terms are consistent with market terms at the inception of the lease and do not include a residual value guarantee, fixed-price purchase option or similar feature that obligates American to absorb decreases in value or entitles American to participate in increases in the value of the aircraft. American does not provide residual value guarantees to the bondholders or equity participants in the trusts. Some leases have a fair market value or a fixed price purchase option that allows American to purchase the aircraft at or near the end of the lease term. However, the option price approximates an estimate of the aircraft’s fair value at the option date. Under this feature, American does not participate in any increases in the value of the aircraft. American concluded it was not the primary beneficiary under these arrangements. Therefore, American accounts for its EETC leveraged lease financings as operating leases. American’s total future obligations under these leveraged lease financings are $1.8 billion as of December 31, 2015, which are included in the future minimum lease payments table above.
Special Facility Revenue Bonds
AAG guarantees the payment of principal and interest of certain special facility revenue bonds issued by municipalities primarily to build or improve airport facilities and purchase equipment which is leased to American. Under such leases, American is required to make rental payments through 2035, sufficient to pay maturing principal and interest payments on the related bonds. As of December 31, 2015, the remaining lease payments guaranteeing the principal and interest on these bonds are $617 million, which are accounted for as operating leases.
(f) Legal Proceedings
Chapter 11 Cases. On the Petition Date, November 29, 2011, the Debtors filed the Chapter 11 Cases. On October 21, 2013, the Bankruptcy Court entered the Confirmation Order confirming the Plan. On the Effective Date, December 9, 2013, the Debtors consummated their reorganization pursuant to the Plan and completed the Merger. From the Petition Date through the Effective Date, pursuant to automatic stay provisions under the Bankruptcy Code and orders granted by the Bankruptcy Court, actions to enforce or otherwise effect repayment of liabilities preceding the Petition Date as well as all pending litigation against the Debtors generally were stayed. Following the Effective Date, actions to enforce or otherwise effect repayment of liabilities preceding the Petition Date, generally have been permanently enjoined. Any unresolved claims will continue to be subject to the claims reconciliation process under the supervision of the Bankruptcy Court. However, certain pending litigation related to pre-petition liabilities may proceed in courts other than the Bankruptcy Court to determine the amount, if any, of such litigation claims for purposes of treatment under the Plan.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
Pursuant to rulings of the Bankruptcy Court, the Plan established the Disputed Claims Reserve to hold shares of AAG Common Stock reserved for issuance to disputed claimholders at the Effective Date that ultimately become holders of allowed Single-Dip Unsecured Claims. The shares provided for under the Plan were determined based upon a Disputed Claims Reserve amount of claims of approximately $755 million, representing the maximum amount of additional distributions to subsequently allowed Single-Dip Unsecured Claims under the Plan. As of December 31, 2015, there were approximately 25.3 million shares of AAG Common Stock remaining in the Disputed Claims Reserve. As disputed claims are resolved, the claimants will receive distributions of shares from the Disputed Claims Reserve on the same basis as if such distributions had been made on or about the Effective Date. However, the Company is not required to distribute additional shares above the limits contemplated by the Plan, even if the shares remaining for distribution are not sufficient to fully pay any additional allowed unsecured claims. To the extent that any of the reserved shares remain undistributed upon resolution of all remaining disputed claims, such shares will not be returned to the Company but rather will be distributed to former AMR stockholders as of the Effective Date. However, resolution of disputed claims could have a material effect on recoveries by holders of additional allowed Single-Dip Unsecured Claims under the Plan and the amount of additional share distributions, if any, that are made to former AMR stockholders as the total number of shares of AAG Common Stock that remain available for distribution upon resolution of disputed claims is limited pursuant to the Plan.
There is also pending in the Bankruptcy Court an adversary proceeding relating to an action brought by American to seek a determination that certain non-pension, post-employment benefits (OPEB) are not vested benefits and thus may be modified or terminated without liability to American. On April 18, 2014, the Bankruptcy Court granted American’s motion for summary judgment with respect to certain non-union employees, concluding that their benefits were not vested and could be terminated. The summary judgment motion was denied with respect to all other retirees. The Bankruptcy Court has not yet scheduled a trial on the merits concerning whether those retirees’ benefits are vested, and American cannot predict whether it will receive relief from obligations to provide benefits to any of those retirees. The Company’s financial statements presently reflect these retirement programs without giving effect to any modification or termination of benefits that may ultimately be implemented based upon the outcome of this proceeding. Separately, both the APFA and TWU have filed grievances asserting that American was “successful” in its Chapter 11 with respect to matters related to OPEB and, accordingly, by operation of the underlying collective bargaining agreements, American’s prior contributions to certain OPEB prefunding trusts attributable to active employees should be returned to those active employees. These amounts aggregate approximately $212 million. The Company has denied both grievances and intends to defend these matters vigorously.
DOJ Antitrust Civil Investigative Demand. In June 2015, the Company received a Civil Investigative Demand (CID) from the DOJ as part of an investigation into whether there have been illegal agreements or coordination of air passenger capacity. The CID seeks documents and other information from the Company, and other airlines have announced that they have received similar requests. The Company is cooperating fully with the DOJ investigation. In addition, subsequent to announcement of the delivery of CIDs by the DOJ, the Company, along with Delta Air Lines, Inc., Southwest Airlines Co., United Airlines, Inc. and, in the case of litigation filed in Canada, Air Canada, have been named as defendants in approximately 100 putative class action lawsuits alleging unlawful agreements with respect to air passenger capacity. The U.S. lawsuits were the subject of multiple motions to consolidate them in a single forum, and they have now been consolidated in the Federal District Court for the District of Columbia. Both the DOJ investigation and these lawsuits are in their very early stages and the Company intends to defend the lawsuits vigorously.
Private Party Antitrust Action. On July 2, 2013, a lawsuit captioned Carolyn Fjord, et al., v. US Airways Group, Inc., et al., was filed in the United States District Court for the Northern District of California. The complaint named as defendants US Airways Group and US Airways, and alleged that the effect of the Merger may be to substantially lessen competition or tend to create a monopoly in violation of Section 7 of the Clayton
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
Antitrust Act. The relief sought in the complaint included an injunction against the Merger, or divestiture. On August 6, 2013, the plaintiffs re-filed their complaint in the Bankruptcy Court, adding AMR and American as defendants, and on October 2, 2013, dismissed the initial California action. On November 27, 2013, the Bankruptcy Court denied plaintiffs’ motion to preliminarily enjoin the Merger. On August 19, 2015, after three previous largely unsuccessful attempts to amend their complaint, plaintiffs filed a fourth motion for leave to file an amended and supplemental complaint to add a claim for damages and demand for jury trial, as well as claims similar to those in the putative class action lawsuits regarding air passenger capacity. Thereafter, plaintiffs filed a request with the Judicial Panel on Multidistrict Litigation (JPML) to consolidate the Fjord matter with the putative class action lawsuits. The JPML denied that request on October 15, 2015 and plaintiffs’ request for further relief from the JPML was denied on February 4, 2016. Accordingly, the parties will continue to litigate the matter in Bankruptcy Court. The Company believes this lawsuit is without merit and intends to vigorously defend against the allegations.
DOJ Civil Investigative Demand Related to the United States Postal Service. In April 2015, the DOJ informed the Company of an inquiry regarding American’s 2009 and 2011 contracts with the United States Postal Service for the international transportation of mail by air. In October 2015, the Company received a CID from DOJ seeking certain information relating to these contracts. The DOJ has indicated it is investigating potential violations of the False Claims Act. The Company is cooperating fully with the DOJ investigation.
General. In addition to the specifically identified legal proceedings, the Company and its subsidiaries are also engaged in other legal proceedings from time to time. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within the Company’s control. Therefore, although the Company will vigorously defend itself in each of the actions described above and such other legal proceedings, their ultimate resolution and potential financial and other impacts on the Company are uncertain but could be material. See Part I, Item 1A. Risk Factors – “We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity” for unaudited additional discussion.
(g) Guarantees and Indemnifications
The Company is a party to many routine contracts in which it provides general indemnities in the normal course of business to third parties for various risks. The Company is not able to estimate the potential amount of any liability resulting from the indemnities. These indemnities are discussed in the following paragraphs.
In its aircraft financing agreements, the Company generally indemnifies the financing parties, trustees acting on their behalf and other relevant parties against liabilities (including certain taxes) resulting from the financing, manufacture, design, ownership, operation and maintenance of the aircraft regardless of whether these liabilities (or taxes) relate to the negligence of the indemnified parties.
The Company’s loan agreements and other LIBOR-based financing transactions (including certain leveraged aircraft leases) generally obligate the Company to reimburse the applicable lender for incremental costs due to a change in law that imposes (i) any reserve or special deposit requirement against assets of, deposits with or credit extended by such lender related to the loan, (ii) any tax, duty or other charge with respect to the loan (except standard income tax) or (iii) capital adequacy requirements. In addition, the Company’s loan agreements and other financing arrangements typically contain a withholding tax provision that requires the Company to pay additional amounts to the applicable lender or other financing party, generally if withholding taxes are imposed on such lender or other financing party as a result of a change in the applicable tax law.
These increased cost and withholding tax provisions continue for the entire term of the applicable transaction, and there is no limitation on the maximum additional amounts the Company could be obligated to pay under such
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
provisions. Any failure to pay amounts due under such provisions generally would trigger an event of default and, in a secured financing transaction, would entitle the lender to foreclose on the collateral to realize the amount due.
In certain transactions, including certain aircraft financing leases and loans, the lessors, lenders and/or other parties have rights to terminate the transaction based on changes in foreign tax law, illegality or certain other events or circumstances. In such a case, the Company may be required to make a lump sum payment to terminate the relevant transaction.
The Company has general indemnity clauses in many of its airport and other real estate leases where the Company as lessee indemnifies the lessor (and related parties) against liabilities related to the Company’s use of the leased property. Generally, these indemnifications cover liabilities resulting from the negligence of the indemnified parties, but not liabilities resulting from the gross negligence or willful misconduct of the indemnified parties. In addition, the Company provides environmental indemnities in many of these leases for contamination related to the Company’s use of the leased property.
Under certain contracts with third parties, the Company indemnifies the third-party against legal liability arising out of an action by the third-party, or certain other parties. The terms of these contracts vary and the potential exposure under these indemnities cannot be determined. The Company has liability insurance protecting the Company for some of the obligations it has undertaken under these indemnities.
The Company is involved in certain claims and litigation related to its operations. The Company is also subject to regulatory assessments in the ordinary course of business. The Company establishes reserves for litigation and regulatory matters when those matters present loss contingencies that are both probable and can be reasonably estimated. In the opinion of management, liabilities, if any, arising from these regulatory matters, claims and litigation will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows, after consideration of available insurance.
As of December 31, 2015, AAG had issued guarantees covering approximately $1.1 billion of American’s special facility revenue bonds (and interest thereon) and $8.6 billion of American’s secured debt (and interest thereon), including the 2013 Credit Facilities, the 2014 Credit Facilities, the 2013 Citicorp Credit Facility and certain EETC financings.
(h) Other
As a result of the terrorist attacks of September 11, 2001 (the Terrorist Attacks) and the subsequent liability protections provided for by the Air Transportation Safety and System Stabilization Act (the Stabilization Act), the Company recorded a liability for the Terrorist Attacks claims equal to the related insurance receivable due to American. The Stabilization Act provides that, notwithstanding any other provision of law, liability for all claims, whether compensatory or punitive, arising from the Terrorist Attacks, against any air carrier shall not exceed the liability coverage maintained by the air carrier. As of December 31, 2015, the remaining liability and the amount of the offsetting receivable were each $974 million.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
16.  Supplemental Cash Flow Information
Supplemental disclosure of cash flow information and non-cash investing and financing activities are as follows (in millions):
   Year Ended December 31,
   2015    2014    2013
Non-cash investing and financing activities:

Settlement of bankruptcy obligations
   $ 63       $ 5,495       $ 864
Acquisition of US Airways Group, net
   —       —       4,386
Capital lease obligations
   5       747       —
Supplemental information:

Interest paid, net of amounts capitalized
   873       814       713
Income taxes paid
   20       7       12
17.  Operating Segments and Related Disclosures
The Company is managed as a single business unit that provides air transportation for passengers and cargo. This allows it to benefit from an integrated revenue pricing and route network that includes American and AAG’s wholly-owned and third-party regional carriers that fly under capacity purchase agreements operating as American Eagle. The flight equipment of all these carriers is combined to form one fleet that is deployed through a single route scheduling system. When making resource allocation decisions, the chief operating decision maker evaluates flight profitability data, which considers aircraft type and route economics, but gives no weight to the financial impact of the resource allocation decision on an individual carrier basis. The objective in making resource allocation decisions is to maximize consolidated financial results, not the individual results of American or American Eagle.
The Company’s operating revenues by geographic region as defined by the U.S. Department of Transportation (DOT) are summarized below (in millions):
   Year Ended December 31,
   2015    2014    2013
DOT Domestic
   $ 28,761       $ 28,568       $ 15,376
DOT Latin America
   5,539       6,964       6,288
DOT Atlantic
   5,146       5,652       3,756
DOT Pacific
   1,544       1,466       1,323






Total consolidated revenues
   $ 40,990       $ 42,650       $ 26,743






The Company attributes operating revenues by geographic region based upon the origin and destination of each flight segment. The Company’s tangible assets consist primarily of flight equipment, which are mobile across geographic markets and, therefore, have not been allocated.
18.   Share-based Compensation
In December 2013, the Board of Directors of AAG approved the 2013 AAG Incentive Award Plan (the 2013 Plan). Awards may be in the form of an option, restricted stock award, restricted stock unit award, performance award, dividend equivalent award, deferred stock award, deferred stock unit award, stock payment award or stock appreciation right. The 2013 Plan authorizes the grant of awards for the issuance of 40 million shares plus any shares underlying awards granted under the 2013 Plan, or any pre-existing US Airways Group plan, that are forfeited, terminate or are cash settled (in whole or in part) without a payment being made in the form of shares. In addition, any shares that were available for issuance under the US Airways Group 2011 Incentive Award Plan (the
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
2011 Plan) as of the effective date of the Merger may be used for awards under the 2013 Plan; provided, that awards using such available shares under the 2011 Plan shall not be made after the date awards or grants could have been made under the 2011 Plan and shall only be made to individuals who were not providing services to AAG prior to the Merger. Awards granted under the 2013 Plan upon the assumption of, or in substitution for, outstanding awards in connection with a corporate transaction, such as a merger, will not reduce the shares authorized for issuance under the 2013 Plan.
In addition, pursuant to the Plan, and as approved by the Bankruptcy Court, certain officers, directors and employees received share-based incentive awards related to the Merger and future service. Awards issued in conjunction with the Plan are discussed in more detail below.
All outstanding US Airways Group equity awards were converted into equity awards with respect to AAG Common Stock using an exchange ratio of 1 to 1 and had a fair value of approximately $141 million at the Merger, which was included in the purchase price. These awards have the same terms and conditions as were applicable to such equity awards immediately prior to the Merger closing date.
The Company’s net income for the years ended December 31, 2015, 2014 and 2013 included $274 million, $381 million and $92 million, respectively, of share-based compensation costs. Of the 2015, 2014 and 2013 amounts, $198 million, $224 million and $42 million, respectively, were related to the Merger and recorded in special items, net on the accompanying consolidated statements of operations.
During 2015, the Company withheld approximately 7.0 million shares of AAG common stock and paid approximately $306 million in satisfaction of certain tax withholding obligations associated with employee equity awards.
(a) Restricted Stock Unit Awards (RSUs)
The Company has granted RSUs with service conditions (time vested) and performance conditions. The grant-date fair value of RSUs is equal to the market price of the underlying shares of common stock on the date of grant. For time vested awards, the expense is recognized on a straight-line basis over the vesting period for the entire award. For awards with performance conditions, the expense is recognized based on the expected achievement at each reporting period. Stock-settled RSUs are classified as equity awards as the vesting results in the issuance of shares of AAG Common Stock. Cash-settled restricted stock unit awards (CRSUs) are classified as liability awards as the vesting results in payment of cash by the Company. The Company granted certain RSU awards in connection with the Merger as follows:
Alignment Awards
On December 9, 2013, alignment awards were granted in the form of RSUs. The awards were provided to legacy AMR employees in order to align interests and create parity with peers at US Airways Group, and one-third of the awards vested on the Company’s emergence from bankruptcy. The remaining awards vested equally on the one and two year anniversary of emergence. The awards of employees terminated in connection with the Merger became fully vested on the date of termination. Compensation expenses for these awards were recorded in special items, net on the consolidated statements of operations.
Merger Equity Grant
The Merger Equity Grant was granted on the Effective Date to certain officers and directors and employees in the form of RSUs and settled in equity for domestic employees and in cash for international employees. Subject to the executive’s continued employment, each RSU vested on December 16, 2015 with respect to (i) 50% of the
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
RSUs which were time vested; (ii) 25% of the RSUs as the Company was issued a Single Operating Certificate in April 2015; and (iii) 25% of the RSUs as the compensation committee of the Board of Directors determined that the Company had achieved at least $1.0 billion in net synergies with respect to fiscal year 2015. Compensation expenses for these awards were recorded in special items, net on the consolidated statements of operations.
Stock-settled RSU award activity for all plans for the years ended December 31, 2015, 2014 and 2013 is as follows (shares in thousands):
   Number of
Shares Weighted Average
Grant Date Fair
Value
   (In thousands)
Outstanding at January 1, 2013
   —    $ —
Granted
   22,101    24.60
Assumed US Airways Group awards
   3,164    22.55
Vested and released
   (1,386 ) 24.58
Forfeited
   —    —


Outstanding at December 31, 2013
   23,879    $ 24.33
Granted
   3,467    37.07
Vested and released
   (4,193 ) 23.84
Forfeited
   (1,811 ) 25.10


Outstanding at December 31, 2014
   21,342    $ 26.43
Granted
   2,213    46.62
Vested and released
   (17,163 ) 25.20
Forfeited
   (785 ) 27.12


Outstanding at December 31, 2015
   5,607    $ 38.08


As of December 31, 2015, there was $117 million of unrecognized compensation cost related to stock-settled RSUs. These costs are expected to be recognized over a weighted average period of one year. The total fair value of stock-settled RSUs vested during the years ended December 31, 2015, 2014 and 2013 was $750 million, $154 million and $31 million, respectively.
As of December 31, 2015, the Company had a nominal amount of CRSUs outstanding. The total cash paid for CRSUs vested during the years ended December 31, 2015, 2014 and 2013 was $10 million, $12 million and less than $1 million, respectively.
(b) Stock Options and Stock Appreciation Rights
No stock options or stock appreciation rights have been granted subsequent to the Merger closing date. The Company assumed US Airways Group’s outstanding stock options and stock appreciation rights in connection with the Merger. These stock options and stock appreciation rights were granted with an exercise price equal to the underlying common stock’s fair value at the date of each grant, have service conditions, become exercisable over a three-year vesting period and expire if unexercised at the end of their term, which ranges from seven to ten years. Stock options and stock-settled stock appreciation rights (SARs) are classified as equity awards as the exercise results in the issuance of shares of AAG Common Stock. Cash-settled stock appreciation rights (CSARs) are classified as liability awards as the exercise results in payment of cash by the Company. Stock appreciation rights are expensed on a straight-line basis over the vesting period for the entire award. There are no unrecognized compensation costs for stock options.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
Stock option and SAR award activity for all plans for the years ended December 31, 2015, 2014 and 2013 is as follows (stock options and SARs in thousands):
   Stock Options
and SARS Weighted
Average
Exercise
Price    Weighted Average
Remaining
Contractual Term    Aggregate
Intrinsic Value
   (In thousands)    (In years)    (In millions)
Assumed US Airways Group awards at December 9, 2013
   11,200    $ 12.84
Granted
   —    —
Exercised
   (42 ) 14.42
Forfeited
   —    —
Expired
   —    —



Balance at December 31, 2013
   11,158    $ 12.84
Granted
   —    —
Exercised
   (4,109 ) 10.74
Forfeited
   —    —
Expired
   (42 ) 41.73



Balance at December 31, 2014
   7,007    $ 13.90
Granted
   —    —
Exercised
   (2,985 ) 12.09
Forfeited
   —    —
Expired
   (9 ) 45.75



Balance at December 31, 2015
   4,013    $ 15.17       1.9       $ 111
Vested or expected to vest at December 31, 2015
   4,013    $ 15.17       1.9       $ 111
Exercisable at December 31, 2015
   3,996    $ 15.17       1.9       $ 110
CSAR award activity for all plans for the years ended December 31, 2015, 2014 and 2013 is as follows (CSARs in thousands):
   CSARs Weighted
Average
Exercise
Price    Weighted Average
Remaining
Contractual Term    Aggregate
Intrinsic Value
   (In thousands)    (In years)    (In millions)
Assumed US Airways Group awards at December 9, 2013
   2,888    $ 6.25
Granted
   —    —
Exercised
   (23 ) 5.10
Forfeited
   —    —
Expired
   —    —



Balance at December 31, 2013
   2,865    $ 6.26
Granted
   —    —
Exercised
   (1,254 ) 6.18
Forfeited
   —    —
Expired
   —    —



Balance at December 31, 2014
   1,611    $ 6.33
Granted
   —    —
Exercised
   (760 ) 6.31
Forfeited
   —    —
Expired
   —    —



Balance at December 31, 2015
   851    $ 6.35       1.4       $ 31
Vested or expected to vest at December 31, 2015
   851    $ 6.35       1.4       $ 31
Exercisable at December 31, 2015
   851    $ 6.35       1.4       $ 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
As of December 31, 2015, there were less than a million of total unrecognized compensation costs related to SARs which are expected to be recognized in 2016. The total intrinsic value of stock options and SARs exercised during the years ended December 31, 2015, 2014 and the 23 day period ended December 31, 2013 was $102 million, $105 million and less than $1 million, respectively.
As of December 31, 2015, the weighted average fair value of outstanding CSARs was $35.76 per share and the related liability was $31 million. These CSARs are fully vested and will continue to be remeasured at fair value at each reporting date until all awards are settled. Total cash paid for CSARs exercised during the years ended December 31, 2015, 2014 and the 23 day period ended December 31, 2013 was $31 million, $42 million and less than $1 million, respectively.
19.  Valuation and Qualifying Accounts (in millions)
Balance at
Beginning
of Year Changes Charged to
Statement of
Operations
Accounts Payments Write-offs
(Net of
Recoveries) Sales,
Retirements
and
Transfers Balance at
End
of Year
Allowance for obsolescence of inventories

Year ended December 31, 2015
$ 673    $ 50    $ —    $ (4 ) $ 9    $ 728
Year ended December 31, 2014
547    142    —    (4 ) (12 ) 673
Year ended December 31, 2013
546    24    —    (23 ) —    547
Allowance for uncollectible accounts

Year ended December 31, 2015
$ 17    $ 46    $ —    $ (22 ) $ —    $ 41
Year ended December 31, 2014
41    6    —    (30 ) —    17
Year ended December 31, 2013
44    3    —    (6 ) —    41
Reserves for environmental remediation costs

Year ended December 31, 2015
$ 10    $ —    $ (1 ) $ —    $ —    $ 9
Year ended December 31, 2014
11    —    (1 ) —    —    10
Year ended December 31, 2013
13    2    (1 ) (3 ) —    11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
20.  Quarterly Financial Data (Unaudited)
Unaudited summarized financial data by quarter for 2015 and 2014 (in millions, except share and per share amounts):
   First Quarter    Second Quarter    Third Quarter    Fourth Quarter
2015

Operating revenues
   $ 9,827       $ 10,827       $ 10,706       $ 9,630
Operating expenses
   8,611       8,906       8,707       8,562
Operating income
   1,216       1,921       1,999       1,068
Net income
   932       1,704       1,693       3,281
Earnings per share:

Basic
   $ 1.34       $ 2.47       $ 2.56       $ 5.24
Diluted
   $ 1.30       $ 2.41       $ 2.49       $ 5.09
Shares used for computation (in thousands):

Basic
   696,415       688,727       661,869       626,559
Diluted
   716,930       707,611       680,739       644,140
2014

Operating revenues
   $ 9,995       $ 11,355       $ 11,139       $ 10,160
Operating expenses
   9,265       9,956       9,879       9,300
Operating income
   730       1,399       1,260       860
Net income
   480       864       942       597
Earnings per share:

Basic
   $ 0.66       $ 1.20       $ 1.31       $ 0.84
Diluted
   $ 0.65       $ 1.17       $ 1.28       $ 0.82
Shares used for computation (in thousands):

Basic
   723,971       720,600       719,067       706,185
Diluted
   741,335       734,767       735,196       724,767
The Company’s fourth quarter 2015 results include $2.0 billion of total net special credits consisting principally of a $3.0 billion non-cash tax benefit recorded in connection with the reversal of the Company’s tax valuation allowance, offset in part by a nonoperating net special charge of $592 million to write off all of the value of Venezuelan bolivars held by the Company due to continued lack of repatriations and deterioration of economic conditions in Venezuela and $450 million in total operating special charges primarily consisting of merger integration expenses.
The Company’s fourth quarter 2014 results include $507 million of total net special charges consisting principally of $280 million of merger integration expenses, a net $116 million charge for bankruptcy related items principally consisting of fair value adjustments for bankruptcy settlement obligations and a $70 million charge related primarily to certain spare parts asset impairments.
21.  Financial Information for Subsidiary Guarantors and Non-guarantor Subsidiaries
There are various cross-guarantees among the Company and American with respect to publicly held debt securities. In accordance with Rule 3-10 of Regulation S-X, the Company is providing the following consolidating financial information as of and for the years ended December 31, 2015 and 2014 for American Airlines Group (Parent), American and all other non-guarantor subsidiaries, together with the consolidating adjustments necessary to present the Company’s results on a consolidated basis.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
AMERICAN AIRLINES GROUP INC.
CONSOLIDATING STATEMENT OF OPERATIONS
(In millions)
Year Ended December 31, 2015
American
Airlines Group
(Parent
Company
Only) American Non-
Guarantor
Subsidiaries Eliminations
and
Reclassifications American
Airlines
Group Inc.
Consolidated
Operating revenues:

Mainline passenger
$ —    $ 29,037    $ —    $ —    $ 29,037
Regional passenger
—    6,475    —    —    6,475
Cargo
—    760    —    —    760
Other
—    4,812    2,742    (2,836 ) 4,718

Total operating revenues
—    41,084    2,742    (2,836 ) 40,990
Operating expenses:

Aircraft fuel and related taxes
—    6,226    —    —    6,226
Salaries, wages and benefits
—    9,514    783    (773 ) 9,524
Regional expenses
—    6,098    —    (115 ) 5,983
Maintenance, materials and repairs
—    1,889    304    (304 ) 1,889
Other rent and landing fees
—    1,731    44    (44 ) 1,731
Aircraft rent
—    1,250    151    (151 ) 1,250
Selling expenses
—    1,394    —    —    1,394
Depreciation and amortization
—    1,364    44    (44 ) 1,364
Special items, net
—    1,051    7    (7 ) 1,051
Other
4    4,378    1,390    (1,398 ) 4,374

Total operating expenses
4    34,895    2,723    (2,836 ) 34,786

Operating income (loss)
(4 ) 6,189    19    —    6,204
Nonoperating income (expense):

Interest income
6    49    9    (25 ) 39
Interest expense, net
(99 ) (796 ) (10 ) 25    (880 )
Equity in earnings of subsidiaries
7,624    —    —    (7,624 ) —
Other, net
22    (774 ) 1    4    (747 )

Total nonoperating income (expense), net
7,553    (1,521 ) —    (7,620 ) (1,588 )

Income before income taxes
7,549    4,668    19    (7,620 ) 4,616
Income tax benefit
(61 ) (3,452 ) (23 ) 542    (2,994 )

Net income
$ 7,610    $ 8,120    $ 42    $ (8,162 ) $ 7,610

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
AMERICAN AIRLINES GROUP INC.
CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
(In millions)
   Year Ended December 31, 2015
   American
Airlines
Group
(Parent
Company
Only)    American Non-
Guarantor
Subsidiaries    Eliminations
and
Reclassifications American
Airlines
Group Inc.
Consolidated
Net income
   $ 7,610       $ 8,120    $ 42       $ (8,162 ) $ 7,610
Other comprehensive income (loss):

Defined benefit pension plans and retiree medical:

Amortization of actuarial loss and prior service cost
   —       (109 ) —       1    (108 )
Current year change
   —       (51 ) 1       (1 ) (51 )
Derivative financial instruments:

Reclassification into earnings
   —       (9 ) —       —    (9 )
Unrealized loss on investments:

Net change in value
   —       (6 ) —       1    (5 )






Total other comprehensive income (loss)
   —       (175 ) 1       1    (173 )






Total comprehensive income
   $ 7,610       $ 7,945    $ 43       $ (8,161 ) $ 7,437






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
AMERICAN AIRLINES GROUP INC.
CONSOLIDATING STATEMENT OF OPERATIONS
(In millions)
   Year Ended December 31, 2014
   American
Airlines Group
(Parent
Company
Only) American Non-
Guarantor
Subsidiaries Eliminations
and
Reclassifications American
Airlines
Group Inc.
Consolidated
Operating revenues:

Mainline passenger
   $ —    $ 30,802    $ —    $ —    $ 30,802
Regional passenger
   —    6,322    —    —    6,322
Cargo
   —    875    —    —    875
Other
   —    4,764    3,278    (3,391 ) 4,651


Total operating revenues
   —    42,763    3,278    (3,391 ) 42,650
Operating expenses:

Aircraft fuel and related taxes
   —    10,592    —    —    10,592
Salaries, wages and benefits
   —    8,499    782    (773 ) 8,508
Regional expenses
   —    6,564    —    (48 ) 6,516
Maintenance, materials and repairs
   —    2,051    352    (352 ) 2,051
Other rent and landing fees
   —    1,727    32    (32 ) 1,727
Aircraft rent
   —    1,250    94    (94 ) 1,250
Selling expenses
   —    1,544    —    —    1,544
Depreciation and amortization
   —    1,301    40    (46 ) 1,295
Special items, net
   18    783    18    (19 ) 800
Other
   6    4,186    1,951    (2,025 ) 4,118


Total operating expenses
   24    38,497    3,269    (3,389 ) 38,401


Operating income (loss)
   (24 ) 4,266    9    (2 ) 4,249
Nonoperating income (expense):

Interest income
   9    32    2    (12 ) 31
Interest expense, net
   (51 ) (847 ) (1 ) 12    (887 )
Equity in earnings of subsidiaries
   3,008    —    —    (3,008 ) —
Other, net
   (53 ) (183 ) 2    53    (181 )


Total nonoperating income (expense), net
   2,913    (998 ) 3    (2,955 ) (1,037 )


Income before income taxes
   2,889    3,268    12    (2,957 ) 3,212
Income tax provision
   7    320    16    (13 ) 330


Net income (loss)
   $ 2,882    $ 2,948    $ (4 ) $ (2,944 ) $ 2,882


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
AMERICAN AIRLINES GROUP INC.
CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(In millions)
   Year Ended December 31, 2014
   American
Airlines
Group (Parent
Company
Only) American Non-
Guarantor
Subsidiaries Eliminations
and
Reclassifications American
Airlines
Group Inc.
Consolidated
Net income (loss)
   $ 2,882    $ 2,948    $ (4 ) $ (2,944 ) $ 2,882
Other comprehensive income (loss):

Defined benefit pension plans and retiree medical:

Amortization of actuarial loss and prior service cost
   — �� (163 ) —    —    (163 )
Current year change
   —    (2,621 ) (12 ) —    (2,633 )
Derivative financial instruments:

Change in fair value
   (2 ) (52 ) —    —    (54 )
Reclassification into earnings
   —    (4 ) —    —    (4 )
Unrealized gain (loss) on investments:

Net change in value
   1    (4 ) —    —    (3 )
Reversal of non-cash tax provision
   2    328    —    —    330


Total other comprehensive income (loss)
   1    (2,516 ) (12 ) —    (2,527 )


Total comprehensive income (loss)
   $ 2,883    $ 432    $ (16 ) $ (2,944 ) $ 355


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
AMERICAN AIRLINES GROUP INC.
CONDENSED CONSOLIDATING BALANCE SHEET
(In millions)
December 31, 2015
American
Airlines Group
(Parent
Company
Only) American Non-
Guarantor
Subsidiaries Eliminations and
Reclassifications American
Airlines
Group Inc.
Consolidated
ASSETS

Current assets

Cash
$ 19    $ 364    $ 7    $ —    $ 390
Short-term investments
—    5,862    2    —    5,864
Restricted cash and short-term investments
—    695    —    —    695
Accounts receivable, net
1    1,420    18    (14 ) 1,425
Receivables from related parties, net
—    1,981    66    (2,047 ) —
Aircraft fuel, spare parts and supplies, net
—    796    67    —    863
Prepaid expenses and other
—    740    8    —    748

Total current assets
20    11,858    168    (2,061 ) 9,985
Operating property and equipment
—    27,236    274    —    27,510
Other assets

Investments in subsidiaries
9,433    —    —    (9,433 ) —
Goodwill
—    4,091    —    —    4,091
Intangibles, net of accumulated amortization
—    2,249    —    —    2,249
Deferred tax asset
40    2,932    62    (557 ) 2,477
Other assets
13    2,073    36    (19 ) 2,103

Total other assets
9,486    11,345    98    (10,009 ) 10,920

Total assets
$ 9,506    $ 50,439    $ 540    $ (12,070 ) $ 48,415

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Current maturities of long-term debt and capital leases
$ —    $ 2,234    $ —    $ (3 ) $ 2,231
Accounts payable
—    1,517    62    (16 ) 1,563
Payables to related parties, net
2,031    —    —    (2,031 ) —
Air traffic liability
—    3,747    —    —    3,747
Loyalty program liability
—    2,525    —    —    2,525
Other accrued liabilities
69    3,354    115    1    3,539

Total current liabilities
2,100    13,377    177    (2,049 ) 13,605
Noncurrent liabilities

Long-term debt and capital leases, net of current maturities
1,771    16,592    —    (33 ) 18,330
Pension and postretirement benefits
—    7,410    40    —    7,450
Bankruptcy settlement obligations
—    193    —    —    193
Other liabilities
—    3,169    53    (20 ) 3,202

Total noncurrent liabilities
1,771    27,364    93    (53 ) 29,175
Stockholders’ equity

Common stock
6    —    —    —    6
Additional paid-in capital
11,591    16,521    198    (16,719 ) 11,591
Accumulated other comprehensive loss
(4,732 ) (4,831 ) (11 ) 4,842    (4,732 )
Retained earnings (deficit)
(1,230 ) (1,992 ) 83    1,909    (1,230 )

Total stockholders’ equity
5,635    9,698    270    (9,968 ) 5,635

Total liabilities and stockholders’ equity
$ 9,506    $ 50,439    $ 540    $ (12,070 ) $ 48,415

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
AMERICAN AIRLINES GROUP INC.
CONDENSED CONSOLIDATING BALANCE SHEET
(In millions)
December 31, 2014
American
Airlines Group
(Parent
Company
Only) American Non-
Guarantor
Subsidiaries Eliminations and
Reclassifications American
Airlines
Group Inc.
Consolidated
ASSETS

Current assets

Cash
$ 3    $ 984    $ 7    $ —    $ 994
Short-term investments
—    6,306    3    —    6,309
Restricted cash and short-term investments
—    774    —    —    774
Accounts receivable, net
—    1,769    15    (13 ) 1,771
Receivables from related parties, net
2,050    —    526    (2,576 ) —
Aircraft fuel, spare parts and supplies, net
—    919    85    —    1,004
Prepaid expenses and other
154    885    15    (156 ) 898

Total current assets
2,207    11,637    651    (2,745 ) 11,750
Operating property and equipment
—    22,805    279    —    23,084
Other assets

Investments in subsidiaries
1,849    —    —    (1,849 ) —
Goodwill
—    4,091    —    —    4,091
Intangibles, net of accumulated amortization
—    2,240    —    —    2,240
Other assets
53    2,014    38    (45 ) 2,060

Total other assets
1,902    8,345    38    (1,894 ) 8,391

Total assets
$ 4,109    $ 42,787    $ 968    $ (4,639 ) $ 43,225

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Current maturities of long-term debt and capital leases
$ —    $ 1,678    $ —    $ (1 ) $ 1,677
Accounts payable
—    1,316    61    —    1,377
Payables to related parties, net
634    1,703    239    (2,576 ) —
Air traffic liability
—    4,252    —    —    4,252
Loyalty program liability
—    2,807    —    —    2,807
Other accrued liabilities
17    3,139    138    (3 ) 3,291

Total current liabilities
651    14,895    438    (2,580 ) 13,404
Noncurrent liabilities

Long-term debt and capital leases, net of current maturities
1,282    14,804    1    (44 ) 16,043
Pension and postretirement benefits
—    7,522    40    —    7,562
Bankruptcy settlement obligations
—    325    —    —    325
Other liabilities
155    3,835    291    (411 ) 3,870

Total noncurrent liabilities
1,437    26,486    332    (455 ) 27,800
Stockholders’ equity

Common stock
7    —    —    —    7
Additional paid-in capital
15,135    16,174    199    (16,373 ) 15,135
Accumulated other comprehensive loss
(4,559 ) (4,656 ) (12 ) 4,668    (4,559 )
Retained earnings (deficit)
(8,562 ) (10,112 ) 11    10,101    (8,562 )

Total stockholders’ equity
2,021    1,406    198    (1,604 ) 2,021

Total liabilities and stockholders’ equity
$ 4,109    $ 42,787    $ 968    $ (4,639 ) $ 43,225

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
AMERICAN AIRLINES GROUP INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(In millions)
Year Ended December 31, 2015
American
Airlines Group
(Parent
Company
Only) American Non-
Guarantor
Subsidiaries Eliminations
and
Reclassifications American
Airlines
Group Inc.
Consolidated
Net cash provided by operating activities
$ 3,595    $ 2,587    $ 67    $ —    $ 6,249
Cash flows from investing activities:

Capital expenditures and aircraft purchase deposits
—    (6,075 ) (76 ) —    (6,151 )
Purchases of short-term investments
—    (8,126 ) —    —    (8,126 )
Sales of short-term investments
—    8,517    —    —    8,517
Decrease in restricted cash and short-term investments
—    79    —    —    79
Proceeds from sale of an investment
52    —    —    —    52
Proceeds from sale of property and equipment
—    26    9    —    35

Net cash provided by (used in) investing activities
52    (5,579 ) (67 ) —    (5,594 )
Cash flows from financing activities:

Payments on long-term debt and capital leases
—    (2,153 ) —    —    (2,153 )
Proceeds from issuance of long-term debt
500    4,509    —    —    5,009
Deferred financing costs
(7 ) (80 ) —    —    (87 )
Sale-leaseback transactions
—    43    —    —    43
Treasury stock repurchases
(3,846 ) —    —    —    (3,846 )
Dividend payments
(278 ) —    —    —    (278 )
Other financing activities
—    53    —    �� —    53

Net cash provided by (used in) financing activities
(3,631 ) 2,372    —    —    (1,259 )

Net increase (decrease) in cash
16    (620 ) —    —    (604 )
Cash at beginning of year
3    984    7    —    994

Cash at end of year
$ 19    $ 364    $ 7    $ —    $ 390

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
AMERICAN AIRLINES GROUP INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(In millions)
Year Ended December 31, 2014
American
Airlines Group
(Parent
Company
Only) American Non-
Guarantor
Subsidiaries Eliminations
and
Reclassifications American
Airlines
Group Inc.
Consolidated
Net cash provided by operating activities
$ 458    $ 2,578    $ 44    $ —    $ 3,080
Cash flows from investing activities:

Capital expenditures and aircraft purchase deposits
—    (5,256 ) (55 ) —    (5,311 )
Purchases of short-term investments
—    (5,380 ) —    —    (5,380 )
Sales of short-term investments
—    7,179    —    —    7,179
Decrease in restricted cash and short-term investments
—    261    —    —    261
Net proceeds from slot transaction
—    307    —    —    307
Proceeds from sale of property and equipment
—    20    13    —    33

Net cash used in investing activities
—    (2,869 ) (42 ) —    (2,911 )
Cash flows from financing activities:

Payments on long-term debt and capital leases
—    (2,955 ) (1 ) (176 ) (3,132 )
Proceeds from issuance of long-term debt
750    2,552    —    —    3,302
Deferred financing costs
(11 ) (95 ) —    —    (106 )
Sale-leaseback transactions
—    811    —    —    811
Exercise of stock options
10    —    —    —    10
Treasury stock repurchases
(1,062 ) —    —    —    (1,062 )
Dividend payments
(144 ) —    —    —    (144 )
Funds transferred to affiliates, net
—    (176 ) 176    —
Other financing activities
—    6    —    —    6

Net cash provided by (used in) financing activities
(457 ) 143    (1 ) —    (315 )

Net increase (decrease) in cash
1    (148 ) 1    —    (146 )
Cash at beginning of year
2    1,132    6    —    1,140

Cash at end of year
$ 3    $ 984    $ 7    $ —    $ 994

22.  Subsequent Events
Dividend Declaration
In January 2016, the Company announced that its Board of Directors had declared a $0.10 per share dividend for stockholders of record on February 10, 2016, and payable on February 24, 2016. Any future dividends that may be declared and paid from time to time under the Company’s capital deployment program will be subject to market and economic conditions, applicable legal requirements and other relevant factors. The Company’s capital deployment program does not obligate it to continue a dividend for any fixed period, and payment of dividends may be suspended at any time at the Company’s discretion.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
2016-1 EETCs
In January 2016, American created three pass-through trusts which issued approximately $1.1 billion aggregate face amount of Series 2016-1 Class AA, Class A and Class B EETCs in connection with the financing of 22 aircraft owned by American (the 2016-1 EETC Aircraft).
All of the proceeds received from the sale of the 2016-1 EETCs have been used to purchase equipment notes issued by American in three series: Series AA equipment notes in the amount of $584 million bearing interest at 3.575% per annum, Series A equipment notes in the amount of $262 million bearing interest at 4.10% per annum and Series B equipment notes in the amount of $228 million bearing interest at 5.25% per annum. Interest and principal payments on the equipment notes are payable semi-annually in January and July of each year, beginning in July 2016. The final payments on the Series AA and Series A equipment notes are due in January 2028 and the final payment on the Series B equipment notes is due in January 2024. These equipment notes are secured by liens on the 2016-1 EETC Aircraft.
ITEM 8B. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA OF AMERICAN AIRLINES, INC.
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
American Airlines, Inc.:
We have audited the accompanying consolidated balance sheets of American Airlines, Inc. and subsidiaries (American) as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income (loss), cash flows, and stockholder’s equity (deficit) for the years then ended. These consolidated financial statements are the responsibility of the American’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of American Airlines, Inc. and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), American’s internal control over financial reporting as of December 31, 2015, based on criteria established inInternal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 24, 2016 expressed an unqualified opinion on the effectiveness of American’s internal control over financial reporting.
/s/    KPMG LLP
Dallas, Texas
February 24, 2016
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
American Airlines, Inc.
We have audited the accompanying consolidated statements of operations, comprehensive income (loss), stockholders’ equity (deficit) and cash flows of American Airlines, Inc. (the Company) for the year ended December 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the financial statements of US Airways, Inc. (US Airways), a wholly-owned subsidiary of the Company, which statements reflect operating revenues constituting 4% of consolidated operating revenues for the year ended December 31, 2013. Those financial statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to data included for such wholly-owned subsidiary, is based solely on the report of other auditors.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated results of American Airlines, Inc.’s operations and its cash flows for the year ended December 31, 2013 in conformity with U.S. generally accepted accounting principles.
As discussed in Note 5 to the consolidated financial statements, US Airways merged with and into American Airlines, Inc. on December 30, 2015; therefore, the 2013 financial statements are presented as though the transaction occurred on December 9, 2013, which represents the earliest date that the Company and US Airways were under common control.
/s/    Ernst & Young LLP
Dallas, Texas
February 27, 2014 except for Note 5
as to which the date is February 23, 2016
AMERICAN AIRLINES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions)
   Year Ended December 31,
   2015 2014 2013
Operating revenues:

Mainline passenger
   $ 29,037    $ 30,802    $ 20,218
Regional passenger
   6,475    6,322    3,131
Cargo
   760    875    685
Other
   4,812    4,764    2,667


Total operating revenues
   41,084    42,763    26,701
Operating expenses:

Aircraft fuel and related taxes
   6,226    10,592    7,839
Salaries, wages and benefits
   9,514    8,499    5,452
Regional expenses
   6,098    6,564    3,293
Maintenance, materials and repairs
   1,889    2,051    1,260
Other rent and landing fees
   1,731    1,727    1,152
Aircraft rent
   1,250    1,250    768
Selling expenses
   1,394    1,544    1,158
Depreciation and amortization
   1,364    1,301    853
Special items, net
   1,051    783    559
Other
   4,378    4,186    3,007


Total operating expenses
   34,895    38,497    25,341


Operating income
   6,189    4,266    1,360
Nonoperating income (expense):

Interest income
   49    32    20
Interest expense, net of capitalized interest
   (796 ) (847 ) (727 )
Other, net
   (774 ) (183 ) (84 )


Total nonoperating expense, net
   (1,521 ) (998 ) (791 )


Income before reorganization items, net
   4,668    3,268    569
Reorganization items, net
   —    —    (2,640 )


Income (loss) before income taxes
   4,668    3,268    (2,071 )
Income tax provision (benefit)
   (3,452 ) 320    (354 )


Net income (loss)
   $ 8,120    $ 2,948    $ (1,717 )


See accompanying notes to consolidated financial statements.
AMERICAN AIRLINES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)
   Year Ended December 31,
   2015 2014 2013
Net income (loss)
   $ 8,120    $ 2,948    $ (1,717 )
Other comprehensive income (loss):

Defined benefit pension plans and retiree medical:

Amortization of actuarial loss and prior service cost
   (109 ) (163 ) (142 )
Current year change
   (51 ) (2,621 ) 1,577
Derivative financial instruments:

Change in fair value
   —    (52 ) 18
Reclassification into earnings
   (9 ) (4 ) 34
Unrealized loss on investments:

Net change in value
   (6 ) (4 ) (1 )
Reversal of non-cash tax provision (benefit)
   —    328    (538 )


Total other comprehensive income (loss)
   (175 ) (2,516 ) 948


Total comprehensive income (loss)
   $ 7,945    $ 432    $ (769 )


See accompanying notes to consolidated financial statements.
AMERICAN AIRLINES, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except shares and par value)
   December 31,
   2015 2014
ASSETS

Current assets

Cash
   $ 364    $ 984
Short-term investments
   5,862    6,306
Restricted cash and short-term investments
   695    774
Accounts receivable, net
   1,420    1,769
Receivables from related parties, net
   1,981    —
Aircraft fuel, spare parts and supplies, net
   796    919
Prepaid expenses and other
   740    885


Total current assets
   11,858    11,637
Operating property and equipment

Flight equipment
   32,838    27,852
Ground property and equipment
   6,224    5,762
Equipment purchase deposits
   1,067    1,230


Total property and equipment, at cost
   40,129    34,844
Less accumulated depreciation and amortization
   (12,893 ) (12,039 )


Total property and equipment, net
   27,236    22,805
Other assets

Goodwill
   4,091    4,091
Intangibles, net of accumulated amortization of $502 and $447, respectively
   2,249    2,240
Deferred tax asset
   2,932    —
Other assets
   2,073    2,014


Total other assets
   11,345    8,345


Total assets
   $ 50,439    $ 42,787


LIABILITIES AND STOCKHOLDER’S EQUITY

Current liabilities

Current maturities of long-term debt and capital leases
   $ 2,234    $ 1,678
Accounts payable
   1,517    1,316
Accrued salaries and wages
   1,156    1,126
Air traffic liability
   3,747    4,252
Loyalty program liability
   2,525    2,807
Payables to related parties, net
   —    1,703
Other accrued liabilities
   2,198    2,013


Total current liabilities
   13,377    14,895
Noncurrent liabilities

Long-term debt and capital leases, net of current maturities
   16,592    14,804
Pension and postretirement benefits
   7,410    7,522
Deferred gains and credits, net
   667    829
Bankruptcy settlement obligations
   193    325
Other liabilities
   2,502    3,006


Total noncurrent liabilities
   27,364    26,486
Commitments and contingencies (Note 13)

Stockholder’s equity

Common stock, $1.00 par value; 1,000 shares authorized, issued and outstanding
   —    —
Additional paid-in capital
   16,521    16,174
Accumulated other comprehensive loss
   (4,831 ) (4,656 )
Accumulated deficit
   (1,992 ) (10,112 )


Total stockholder’s equity
   9,698    1,406


Total liabilities and stockholder’s equity
   $ 50,439    $ 42,787


See accompanying notes to consolidated financial statements.
AMERICAN AIRLINES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
   December 31,
   2015 2014 2013
Cash flows from operating activities:

Net income (loss)
   $ 8,120    $ 2,948    $ (1,717 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization
   1,560    1,469    1,003
Debt discount and lease amortization
   (126 ) (171 ) —
Special items, non-cash
   295    91    82
Pension and postretirement
   (194 ) (163 ) (154 )
Deferred income taxes
   (3,467 ) 344    (324 )
Share-based compensation
   284    300    34
Reorganization items, non-cash
   —    —    2,098
Interest expense, non-cash
   —    —    45
Other, net
   (21 ) 7    (77 )
Changes in operating assets and liabilities:

Decrease (increase) in accounts receivable
   354    (176 ) (94 )
Decrease (increase) in other current assets
   (105 ) (73 ) 1
Decrease in derivative collateral
   —    —    1
Increase in accounts payable and accrued liabilities
   214    74    83
Increase (decrease) in air traffic liability
   (505 ) (97 ) 150
Decrease in payables to related parties, net
   (3,695 ) (527 ) (51 )
Increase (decrease) in loyalty program liability
   (295 ) (229 ) 38
Contributions to pension plans
   (6 ) (809 ) (494 )
Increase (decrease) in other assets and liabilities
   174    (410 ) 3


Net cash provided by operating activities
   2,587    2,578    627
Cash flows from investing activities:

Capital expenditures and aircraft purchase deposits
   (6,075 ) (5,256 ) (3,099 )
Acquisition of US Airways
   —    —    200
Purchases of short-term investments
   (8,126 ) (5,380 ) (3,342 )
Sales of short-term investments
   8,517    7,179    2,159
Decrease in restricted cash and short-term investments
   79    261    147
Net proceeds from slot transaction
   —    307    —
Proceeds from sale of property and equipment
   26    20    115


Net cash used in investing activities
   (5,579 ) (2,869 ) (3,820 )
Cash flows from financing activities:

Payments on long-term debt and capital leases
   (2,153 ) (2,955 ) (2,925 )
Proceeds from issuance of long-term debt
   4,509    2,552    5,134
Deferred financing costs
   (80 ) (95 ) (120 )
Sale-leaseback transactions
   43    811    1,700
Funds transferred from (to) affiliates, net
   —    (176 ) 53
Other financing activities
   53    6    9


Net cash provided by financing activities
   2,372    143    3,851


Net increase (decrease) in cash
   (620 ) (148 ) 658
Cash at beginning of year
   984    1,132    474


Cash at end of year
   $ 364    $ 984    $ 1,132


See accompanying notes to consolidated financial statements.
AMERICAN AIRLINES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY (DEFICIT)
(In millions)
Common
Stock Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Income (Loss) Accumulated
Deficit Total
Balance at December 31, 2012
—    4,469    (3,088 ) (11,343 ) (9,962 )
Merger impact:

Issuance of new stock by AAG pursuant to Merger
—    5,431    —    —    5,431
Net loss
—    —    —    (1,717 ) (1,717 )
Changes in pension, retiree medical and other liability
—    —    1,435    —    1,435
Net changes in fair value of derivative financial instruments
—    —    52    —    52
Reversal of non-cash tax benefit
—    —    (538 ) —    (538 )
Share-based compensation expense
—    78    —    —    78
Intercompany equity transfer
—    824    —    —    824
Change in unrealized loss on investments
—    —    (1 ) —    (1 )

Balance at December 31, 2013
—    10,802    (2,140 ) (13,060 ) (4,398 )
Net income
—    —    —    2,948    2,948
Changes in pension, retiree medical and other liability
—    —    (2,784 ) —    (2,784 )
Net changes in fair value of derivative financial instruments
—    —    (56 ) —    (56 )
Reversal of non-cash tax provision
—    —    328    —    328
Share-based compensation expense
—    300    —    —    300
Intercompany equity transfer
—    5,072    —    —    5,072
Change in unrealized loss on investments
—    —    (4 ) —    (4 )

Balance at December 31, 2014
$ —    $ 16,174    $ (4,656 ) $ (10,112 ) $ 1,406
Net income
—    —    —    8,120    8,120
Changes in pension, retiree medical and other liability
—    —    (160 ) —    (160 )
Net changes in fair value of derivative financial instruments
—    —    (9 ) —    (9 )
Share-based compensation expense
—    284    —    —    284
Intercompany equity transfer
—    63    —    —    63
Change in unrealized loss on investments
—    —    (6 ) —    (6 )

Balance at December 31, 2015
$ —    $ 16,521    $ (4,831 ) $ (1,992 ) $ 9,698

See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
1.  Nature of Operations and Operating Environment
American Airlines, Inc. (American) is a Delaware corporation whose primary business activity is the operation of a major network air carrier. American is a wholly-owned subsidiary of American Airlines Group Inc. (AAG; formerly AMR Corporation), which owns all of American’s outstanding common stock, par value $1.00 per share.
American has hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York City, Philadelphia, Phoenix and Washington, D.C.
On December 30, 2015, in order to simplify AAG’s internal corporate structure and as part of the integration efforts following the business combination of AAG and US Airways Group, Inc. (US Airways Group), AAG caused US Airways Group to be merged with and into AAG, with AAG as the surviving corporation, and, immediately thereafter, US Airways, Inc. (US Airways), a Delaware corporation and wholly-owned subsidiary of US Airways Group, merged with and into American, with American as the surviving corporation. As a result of the merger of US Airways and American, US Airways transferred all of its assets, liabilities and off-balance sheet commitments to American. For financial reporting purposes, this transaction constituted a transfer of assets between entities under common control and was accounted for at historical cost. As part of the transfer of assets and liabilities to American, all of US Airways’ obligations with respect to certain pass through trusts and the leases of related aircraft and engines were transferred to American. See Note 5(a) for further information.
As of December 31, 2015, American employed approximately 98,900 active full-time equivalent employees, of which approximately 85% are covered by collective bargaining agreements with various labor unions.
2.  Emergence from Chapter 11
Overview
On November 29, 2011 (the Petition Date), AMR Corporation (AMR, renamed American Airlines Group Inc., upon the closing of the Merger), its principal subsidiary, American, and certain of AMR’s other direct and indirect domestic subsidiaries (collectively, the Debtors), filed voluntary petitions for relief (the Chapter 11 Cases) under Chapter 11 of the United States Bankruptcy Code (the Bankruptcy Code) in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court). On October 21, 2013, the Bankruptcy Court entered an order (the Confirmation Order) approving and confirming the Debtors’ fourth amended joint plan of reorganization (as amended, the Plan).
On December 9, 2013 (the Effective Date), the Debtors consummated their reorganization pursuant to the Plan, principally through the transactions contemplated by an Agreement and Plan of Merger (as amended, the Merger Agreement), dated as of February 13, 2013, by and among AMR, AMR Merger Sub, Inc. (Merger Sub) and US Airways Group, pursuant to which Merger Sub merged with and into US Airways Group (the Merger), with US Airways Group surviving as a wholly-owned subsidiary of AAG following the Merger. Pursuant to the Merger Agreement, each share of common stock, par value $0.01 per share, of US Airways Group was converted into the right to receive one share of AAG common stock, par value $0.01 per share (AAG Common Stock).
From the Petition Date through the Effective Date, pursuant to automatic stay provisions under the Bankruptcy Code and orders granted by the Bankruptcy Court, all actions to enforce or otherwise effect repayment of liabilities preceding the Petition Date as well as all pending litigation against the Debtors generally were stayed. Following the Effective Date, actions to enforce or otherwise effect repayment of liabilities preceding the Petition Date generally have been permanently enjoined. Any unresolved claims will continue to be subject to the claims reconciliation process under the supervision of the U.S. Bankruptcy Court. However, certain pending litigation related to pre-petition liabilities may proceed in courts other than the U.S. Bankruptcy Court to the extent the parties to such litigation have obtained relief from the permanent injunction.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, ~~GROUP~~ INC.

Plan of Reorganization
The Plan implements the Merger and incorporates a compromise and settlement of certain intercreditor and intercompany claim issues.
Pursuant to the Plan, all shares of AMR common stock outstanding prior to the Effective Date were canceled. AAG’s Certificate of Incorporation, which was approved in connection with the Plan, authorizes the issuance of 1.75 billion new shares of AAG Common Stock and 200 million shares of AAG Series A Preferred Stock, par value $0.01 per share (AAG Series A Preferred Stock). Of the authorized AAG Series A Preferred Stock, approximately 168 million shares were designated “Series A Convertible Preferred Stock,” with a stated value of $25.00 per share, and issued in accordance with the Plan. AAG Common Stock is listed on the NASDAQ Global Select Market under the symbol “AAL” and began trading on December 9, 2013. AAG Series A Preferred Stock was listed on the NASDAQ Global Select Market under the symbol “AALCP” from December 9, 2013 until its final mandatory conversion on April 8, 2014. In addition, the 2013 Incentive Award Plan (the 2013 Plan) authorizes the grant of awards for the issuance of 40 million shares of AAG Common Stock plus any shares underlying awards granted under the 2013 Plan, or any pre-existing US Airways Group plan, that are forfeited, terminate or are cash settled (in whole or in part) without a payment being made in the form of shares. In addition, any shares that were available for issuance under the US Airways Group 2011 Incentive Award Plan (the 2011 Plan) as of the effective date of the Merger may be used for awards under the 2013 Plan; provided, that awards using such available shares shall not be made after the date awards or grants could have been made under 2011 Plan and shall only be made to individuals who were not providing services to AMR prior to the Merger.
The Plan contains the following provisions relating to the treatment of pre-petition claims against the Debtors and other holders of allowed interests in the Debtors:

all secured claims against the Debtors have been reinstated;

allowed administrative claims, priority claims and convenience claims have been or will be paid in full in cash;

other holders of allowed pre-petition unsecured claims, holders of allowed interests and certain employees of AMR received or will receive 72% of AAG Common Stock (on a fully converted basis) authorized to be issued pursuant to the Plan and in connection with the Merger under the following provisions:

all creditors holding general unsecured claims against American that are guaranteed by AAG and general unsecured claims against AAG that are guaranteed by American (Double-Dip Unsecured Claims) were treated the same under the Plan. Holders of Double-Dip Unsecured Claims received, at the Effective Date, their recovery in shares of AAG Series A Preferred Stock with a stated amount equal to the allowed amount of their claims, including post-petition interest at the non-default rate;

all creditors holding Single-Dip Unsecured Claims were treated the same regardless of whether the claim was asserted against the AAG Debtors, the American Debtors, or other Debtors. As used herein, “Single-Dip Unsecured Claims” means the general unsecured claims against the Debtors that were not guaranteed by any other Debtor, other than the claims of the Debtors’ labor unions representing mainline workers. Holders of Single-Dip Unsecured Claims received a portion of their recovery in shares of AAG Series A Preferred Stock at the Effective Date and their remaining recovery in shares of AAG Common Stock during the 120-day period after the Effective Date;

holders of certain labor-related deemed claims and certain non-management, non-union employees as specified in the Plan received, at the Effective Date, the right to receive an allocation of shares of AAG Common Stock representing 23.6% of the total number of shares of AAG Common Stock ultimately distributed to holders of pre-petition general unsecured creditors against the Debtors. On ~~the Effective Date, pursuant to the Plan, an initial allocation of approximately 39 million shares of~~
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, ~~GROUP~~ INC.

the Effective Date, pursuant to the Plan, an initial allocation of approximately 39 million shares of AAG Common Stock was made related to these labor and employee groups, of which approximately 27 million shares were distributed on the Effective Date and approximately 13 million shares of which were withheld in connection with ~~the Company~~American making a cash payment of approximately $300 million for certain required withholding taxes;

holders of allowed interests in AMR (primarily holders of AMR common stock existing immediately prior to the Effective Date) received, at the Effective Date, a distribution of approximately 26 million shares of AAG Common Stock representing 3.5% of the total number of shares of AAG Common Stock contemplated for issuance pursuant to the Plan and received an additional 267 million shares of AAG Common Stock during the 120-day period after the Effective Date; and

holders of disputed claims at the Effective Date, to the extent such disputed claims become allowed Single-Dip Unsecured Claims after the Effective Date, are eligible to receive shares of AAG Common Stock held in reserve (the Disputed Claims Reserve), beginning 180 days after the Effective Date. Disputed claimholders that subsequently become holders of Single-Dip Unsecured Claims will receive, subject to the availability of sufficient shares in the Disputed Claims Reserve, the number of shares of AAG Common Stock that the disputed claimholder would have received had such claimholder been a holder of Single-Dip Unsecured Claims as of the Effective Date.
The Plan contemplated the distribution of up to 756 million shares of AAG Common Stock, however this amount ~~has been~~was reduced by approximately 20 million shares because certain tax withholdings for employees were paid in cash as permitted under the Plan. In accordance with the Plan, ~~the Company~~AAG issued the remaining shares of AAG Common Stock over the 120-day distribution period, except for shares held in the Disputed Claims Reserve. In addition, pursuant to the Plan, approximately 197 million shares of AAG Common Stock were distributed to holders of outstanding shares of US Airways Group common stock.
Pursuant to rulings of the Bankruptcy Court, the Plan established the Disputed Claims Reserve that was initially issued 30.4 million shares of AAG Common Stock reserved for issuance to disputed claimholders at the Effective Date that ultimately become holders of allowed Single-Dip Unsecured Claims (Single-Dip Equity Obligations) as well as to certain AMR labor groups and employees who received a deemed claim amount based upon a fixed percentage of the distributions to be made to general unsecured claimholders. On July 1, 2014 (the date 180 days after the Effective Date), approximately 2.9 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims, and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and shares were withheld or sold on account of related tax obligations. In addition, on July 1, 2014, the Company repurchased 0.4 million shares of AAG Common Stock for an aggregate of $19 million from the Disputed Claims Reserve at the then prevailing market price in order to fund cash tax obligations resulting from distributions by the Disputed Claims Reserve. On November 4, 2014, approximately 0.7 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims, and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and shares were withheld or sold on account of related tax obligations. In addition, on November 4, 2014, the Company repurchased less than 0.1 million shares of AAG Common Stock for an aggregate of $2 million from the Disputed Claims Reserve at the then prevailing market price in order to fund cash tax obligations resulting from distributions by the Disputed Claims Reserve. As of December 31, 2014, there were approximately 26.8 million shares of AAG Common Stock remaining in the Disputed Claims Reserve. As disputed claims are resolved, the claimants will receive distributions of shares from the Disputed Claims Reserve on the same basis as if such distributions had been made on or about the Effective Date. To the extent that any of the reserved shares remain undistributed upon resolution of all remaining disputed claims, such shares will not be returned to the Company but rather will be distributed to former AMR shareholders as of the Effective Date. The Company is not required to distribute additional shares above the limits contemplated by the Plan described above.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~In addition, from the Effective Date through December 31, 2014, the Company has made the following cash disbursements under the Plan:~~
~~$385 million in cash to the pension plans in connection with missed contributions to the pension plans during the Chapter 11 Cases and interest and penalty interest thereon;~~
~~$108 million in cash to holders in partial or full satisfaction of their claims, including to holders of administrative claims, and state and local priority tax claims;~~
~~$196 million in cure payments to holders of secured debt; and~~
~~Approximately $563 million for payroll and other taxes associated with equity distributions to employees and distributions from the Disputed Claims Reserve.~~
~~Several parties have filed appeals seeking reconsideration of the Confirmation Order. See Note 15 for more information.~~
The reconciliation process with respect to the remaining claims will take considerable time post-emergence. The Company’s estimate of the amounts of disputed claims that will ultimately become allowed Single-Dip Unsecured Claims are included in mandatorily convertible preferred stock and other bankruptcy settlement obligations on the Company’s consolidated balance sheet as of December 31, 2014. As these claims are resolved, or where better information becomes available and is evaluated, the Company will make adjustments to the liabilities recorded on the Company’s consolidated financial statements as appropriate. Any such adjustments could be material to the Company’s financial position or results of operations in any given period.
~~Availability and Utilization of Net Operating Losses~~
Upon emergence from bankruptcy, the Debtors experienced an “ownership change” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (Section 382), which could potentially limit the ability to utilize certain tax attributes including the Debtors’ substantial net operating losses (NOLs). The general limitation rules for a debtor in a bankruptcy case are liberalized where the ownership change occurs upon emergence from bankruptcy. The Debtors elected to be covered by certain special rules for federal income tax purposes that permit approximately $9.0 billion of the federal NOL Carryforwards to be utilized without regard to the annual limitation generally imposed by Section 382. See Note 10 for additional information related to tax matters.
Moreover, an ownership change subsequent to the Debtors’ emergence from bankruptcy may further limit or effectively eliminate the ability to utilize the Debtors’ NOL Carryforwards and other tax attributes. To reduce the risk of a potential adverse effect on the Debtors’ ability to utilize the NOL Carryforwards, AAG’s Certificate of Incorporation contains transfer restrictions applicable to certain substantial shareholders. Although the purpose of these transfer restrictions is to prevent an ownership change from occurring, there can be no assurance that an ownership change will not occur even with these transfer restrictions. A copy of AAG’s Certificate of Incorporation was attached as Exhibit 3.1 to a Current Report on Form 8-K filed by the Company with the SEC on December 9, 2013.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~Reorganization Items, Net~~
Reorganization items refer to revenues, expenses (including professional fees), realized gains and losses and provisions for losses that are realized or incurred in the Chapter 11 Cases. The following table summarizes the components included in reorganization items, net on the consolidated statements of operations for the years ended December 31, 2013 and 2012 (in millions):

   December 31,
   2013    2012
Pension and postretirement benefits
   $ —       $ (66 )
Labor-related deemed claim (1)
   1,733       —
Aircraft and facility financing renegotiations and rejections (2),(3)
   325       1,950
Fair value of conversion discount (4)
   218       —
Professional fees
   199       229
Other
   180       95




Total reorganization items, net
   $ 2,655       $ 2,208




~~(1)~~
In exchange for employees’ contributions to the successful reorganization, including agreeing to reductions in pay and benefits, The Company agreed in the Plan to provide each employee group a deemed claim, which was used to provide a distribution of a portion of the equity of the reorganized entity to those employees. Each employee group received a deemed claim amount based upon a portion of the value of cost savings provided by that group through reductions to pay and benefits as well as through certain work rule changes. The total value of this deemed claim was approximately $1.7 billion.
~~(2)~~
Amounts include allowed claims (claims approved by the Bankruptcy Court) and estimated allowed claims relating to (i) the rejection or modification of financings related to aircraft and (ii) entry of orders treated as unsecured claims with respect to facility agreements supporting certain issuances of special facility revenue bonds. The Debtors recorded an estimated claim associated with the rejection or modification of a financing or facility agreement when the applicable motion was filed with the Bankruptcy Court to reject or modify such financing or facility agreement and the Debtors believed that it was probable the motion would be approved, and there was sufficient information to estimate the claim.
~~(3)~~
Pursuant to the Plan, the Debtors agreed to allow certain post-petition unsecured claims on obligations. As a result, during the year ended December 31, 2013, the Company recorded reorganization charges to adjust estimated allowed claim amounts previously recorded on rejected special facility revenue bonds of $180 million, allowed general unsecured claims related to the 1990 and 1994 series of special facility revenue bonds that financed certain improvements at John F. Kennedy International Airport (JFK), and rejected bonds that financed certain improvements at Chicago O’Hare International Airport (ORD), which are included in the table above.
~~(4)~~
The Plan allowed unsecured creditors receiving AAG Series A Preferred Stock a conversion discount of 3.5%. Accordingly, the Company recorded the fair value of such discount upon the confirmation of the Plan by the Bankruptcy Court.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~3.  Mandatorily Convertible Preferred Stock and Other Bankruptcy Settlement Obligations~~
As of December 31, 2014 and 2013, the components of mandatorily convertible preferred stock and other bankruptcy settlement obligations on the consolidated balance sheets are as follows (in millions):

   December 31,
   2014    2013
AAG Series A Preferred Stock
   $ —       $ 3,833
Single-Dip Equity Obligations
   248       1,246
Labor-related deemed claim
   77       849




Total
   $ 325       $ 5,928




The AAG Series A Preferred Stock, while outstanding, voted and participated in accordance with the terms of the underlying Certificate of Designation. One quarter of the shares of AAG Series A Preferred Stock initially issued was mandatorily convertible on each of the 30th, 60th, 90th and 120th days after the Effective Date, subject to additional voluntary conversions. The initial stated value of each share of AAG Series A Preferred Stock was $25.00 and accrued dividends at 6.25% per annum, calculated daily, while outstanding. Additionally, AAG Series A Preferred Stock converted to AAG Common Stock based upon the volume weighted average price of the shares of AAG Common Stock on the five trading days immediately preceding the conversion date, at a 3.5% fixed discount, subject to a conversion price floor of $10.875 per share and a conversion price cap of $33.8080 per share, below or above which the conversion rate remains fixed. As of April 8, 2014, all shares of AAG Series A Preferred Stock had been converted into AAG Common Stock.
The Single-Dip Equity Obligations, while outstanding, do not vote or participate in accordance with the terms of the Plan. These equity obligations, representing the amount of total Single-Dip Unsecured Claims not satisfied through the issuance of AAG Series A Preferred Stock at the Effective Date, represented an unconditional obligation to transfer a variable number of shares of AAG Common Stock based predominantly on a fixed monetary amount known at inception, and, as such, were not treated as equity, but rather as liabilities, until the 120th day after emergence, which was April 8, 2014. As of April 8, 2014, the Company has issued shares of AAG Common Stock to satisfy the obligation amount at emergence, plus accrued dividends of 12% per annum, calculated daily, through such date, based on the volume weighted average price of the shares of AAG Common Stock, at a 3.5% discount, as specified in the Plan. The amount of the remaining Single-Dip Equity Obligations at December 31, 2014 is the Company’s estimate of its obligation for disputed claims of $248 million and is calculated based on the fair value of the shares expected to be issued, measured as if the obligations were settled using the closing price of AAG Common Stock at December 31, 2014. Additional allowed claims will receive 30.7553 shares, subject to reduction for expenses of the Disputed Claims Reserve, including tax liabilities, for each $1,000 of allowed claims. For accounting purposes, the value of the shares expected to be issued is marked-to-market each period until issued. Accordingly, changes in the value of AAG Common Stock could result in future increases and decreases in this obligation.
In exchange for employees’ contributions to the successful reorganization of the Company, including agreeing to reductions in pay and benefits, the Company agreed in the Plan to provide each employee group a deemed claim which was used to provide a distribution of a portion of the equity of the reorganized entity to those employees. Each employee group received a deemed claim amount based upon a fixed percentage of the distributions to be made to general unsecured claimholders. The fair value based on the expected number of shares to be distributed to satisfy this deemed claim, as adjusted, was approximately $1.5 billion. From the Effective Date through December 31, 2014, the Company has made distributions of $988 million in AAG Common Stock and paid approximately $553 million in cash to cover payroll and other taxes related to the equity distributions. As of December 31, 2014, the liability to certain AMR labor groups and employees of $77 million represents the estimated fair value of the remaining shares expected to be issued in satisfaction of such
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
obligation, measured as if the obligation were settled using the closing price of AAG Common Stock at December 31, 2014. For accounting purposes, the value of the remaining shares expected to be issued to satisfy the labor claim is marked-to-market each period until issued. Accordingly, changes in the value of AAG Common Stock could result in future increases and decreases in this obligation.
On July 1, 2014, approximately 2.9 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and shares were withheld or sold on account of related tax obligations. In addition, on November 4, 2014, approximately 0.7 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and shares were withheld or sold on account of related tax obligations.
On February 10, 2015, approximately 0.8 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and shares were withheld or sold on account of related tax obligations.
~~4.  Merger and Related Matters~~
~~Description of Transaction~~
As previously discussed in Note 2, on the Effective Date, the Debtors consummated their reorganization and the Merger pursuant to the Plan. The Merger has been accounted for as a business acquisition using the acquisition method of accounting in accordance with ASC 805, “Business Combinations,” with AAG considered the acquirer of US Airways Group. The acquisition method of accounting requires, among other things, that assets acquired and liabilities assumed be recognized on the balance sheet at their fair values as of the acquisition date. The acquisition values have also been reflected in US Airways Group’s separate-entity financial statements as of December 9, 2013. The excess of the purchase price over the net fair value of assets and liabilities acquired was recorded as goodwill. Goodwill is not amortized, but is tested for impairment at least annually.
~~Slot Divestitures~~
As a stipulation for the Merger to be approved by the Department of Justice (DOJ), the Company was required to divest certain airport take-off and landing rights (Slots) at LaGuardia Airport and Ronald Reagan Washington National Airport (DCA). As of December 31, 2013, the DCA Slots to be divested were recorded as assets held for sale and were included in prepaid expenses and other on the consolidated balance sheet. In 2014, the Company divested the required DCA Slots and received $307 million in cash as well as 24 Slots at JFK. The Company recognized a net gain of $309 million related to these divestitures, which has been included in special items, net in the consolidated statement of operations. In 2013, the Company recognized a gain of $67 million related to the sale of the LaGuardia Airport Slots, which has been included in special items, net in the consolidated statement of operations.
In 2013, the European Commission cleared under the EU Merger Regulation the proposed merger between US Airways and American. As a consequence of the merger clearance process in the EU, the Company was required to make available one pair of London Heathrow Slots for use by another carrier between London and Philadelphia, which the acquiring carrier can deploy on another Heathrow city pair after operating the Slots on London-Philadelphia for a period of not less than three consecutive years. In addition, along with the Company’s joint business agreement (JBA) partners, the Company was required to make available for an initial period of up
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
to seven years one pair of Heathrow Slots for service between London and Miami that may be operated via an intermediate point. In connection with these requirements and upon making these slots available, in 2014, the Company recorded a $43 million non-cash charge, which has been included in special items, net in the consolidated statement of operations.
~~Fair Value of Consideration Transferred~~
The fair value of the consideration transferred, or the purchase price, was derived as described below based on the outstanding shares of US Airways Group common stock at December 9, 2013, the exchange ratio of one share of AAG Common Stock for each share of US Airways Group common stock, and a price per share of AAG Common Stock of $22.55, which represented the closing price of US Airways Group common stock on December 6, 2013, the last day such shares traded on the New York Stock Exchange. US Airways Group equity awards outstanding at the close of the Merger converted into equity awards with respect to AAG Common Stock. Vested equity awards held by employees of US Airways Group are considered part of the purchase price.

   (In millions except per share data)
Outstanding shares of US Airways Group Common Stock at December 9, 2013 exchanged
   197.4
Exchange ratio
   1.0


Assumed shares of AAG Common Stock
   197.4
Price per share
   $ 22.55


Fair value of AAG Common Stock issued
   $ 4,451
Fair value of AAG equity awards issued in exchange for outstanding US Airways Group equity awards
   $ 141


Total purchase price
   $ 4,592
~~Allocation of Consideration Transferred~~
The Merger has been accounted for using the acquisition method of accounting in accordance with ASC 805, “Business Combinations” (ASC 805), with AAG treated as the acquirer of US Airways Group for accounting purposes. The acquisition method of accounting requires, among other things, that assets acquired and liabilities assumed be recognized on the balance sheet at their fair values as of the acquisition date. The excess of the purchase price over the net fair value of assets acquired and liabilities assumed was recorded as goodwill. Goodwill is not amortized, but is tested for impairment at least annually.

   (In millions)
Cash
   $ 206
Short-term investments
   3,517
Other current assets
   1,459
Operating property and equipment
   5,536
Goodwill
   4,091
Identifiable intangibles
   1,501
Other noncurrent assets
   123
Long-term debt and capital leases, including current portion
   (6,026 )
Air traffic liability
   (1,417 )
Frequent flyer liability
   (1,256 )
Other liabilities assumed
   (3,142 )


Total purchase price
   $ 4,592
The fair values of the assets acquired and liabilities assumed were determined using the market, income and cost approaches. The fair value measurements were primarily based on significant inputs that are not observable
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
in the market, other than certain long-term debt assumed in the Merger. The market approach, which indicates value for a subject asset based on available market pricing for comparable assets, was utilized to estimate the fair value of US Airways’ aircraft and operating leases. The market approach included prices and other relevant information generated by market transactions involving comparable assets, as well as pricing guides and other sources. The Company considered the current market for the aircraft, the maintenance condition of the aircraft and the expected proceeds from the sale of the assets, among other factors. The Company also utilized the market approach to value certain intangible assets such as airport take-off and landing slots when sufficient market information was available. The income approach was primarily used to value intangible assets, including customer relationships, marketing agreements, certain international route authorities, and the US Airways logo and tradenames. The income approach indicates value for a subject asset based on the present value of cash flows projected to be generated by the asset. Projected cash flows are discounted at a required market rate of return that reflects the relative risk of achieving the cash flows and the time value of money. The cost approach, which estimates value by determining the current cost of replacing an asset with another of equivalent economic utility, was used, as appropriate, for certain assets for which the market and income approaches could not be applied due to the nature of the asset. The cost to replace a given asset reflects the estimated reproduction or replacement cost for the asset, less an allowance for loss in value due to depreciation. The fair value of US Airways’ Dividend Miles frequent flyer program liability was determined based on the equivalent ticket value of outstanding miles which were expected to be redeemed at December 9, 2013. The equivalent ticket value contemplates purchased tickets that have similar restrictions as frequent traveler awards.
~~Pro-forma Impact of the Merger~~
The Company’s unaudited pro-forma results presented below include the effects of the Merger with US Airways Group as if it had been consummated as of January 1, 2012. The pro-forma results include the depreciation and amortization associated with the acquired tangible and intangible assets, lease and debt fair value adjustments, the elimination of any deferred gains or losses, adjustments relating to reflecting the fair value of the frequent flyer liability and the impact of income changes on profit sharing expense, among others. In addition, the pro-forma results below reflect the impact of higher wage rates related to memorandums of understanding with US Airways’ pilots and all labor groups of the Company that became effective upon closing of the Merger as well as the elimination of the Company’s reorganization items, net and Merger transition costs. However, the pro-forma results do not include any anticipated synergies or other expected benefits of the Merger. Accordingly, the unaudited pro-forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been consummated as of January 1, 2012.

   December 31,
   2013    2012
   (In millions)
Revenue
   $ 40,678       $ 38,897
Net Income
   2,526       520
~~5.  Basis of Presentation and Summary of Significant Accounting Policies~~
~~(a) Basis of Presentation~~
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. As a result of the Merger, the consolidated financial statements presented include the results of AMR and its wholly-owned subsidiaries, American and Envoy, for periods ended prior to December 9, 2013 and consolidated results of AAG, which includes American, Envoy and US Airways Group, for periods ending on or after December 9, 2013. Accordingly, the consolidated financial statement for the year ended December 31, 2013 includes the accounts of US Airways Group for the 23 days ended December 31, 2013. All significant intercompany transactions have been eliminated.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The most significant areas of judgment relate to passenger revenue recognition, impairment of goodwill, impairment of long-lived and intangible assets, the frequent traveler programs, pensions and retiree medical and other benefits and the deferred tax asset valuation allowance.
~~(b) Chapter 11 Matters~~
In accordance with GAAP, the Debtors (as defined in Note 2 above) applied ASC 852 “Reorganizations” (ASC 852) in preparing the consolidated financial statements for periods subsequent to the Chapter 11 Cases (as defined in Note 2 above). ASC 852 requires that the financial statements distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain revenues, expenses (including professional fees), realized gains and losses and provisions for losses that are realized or incurred in the Chapter 11 Cases for the 2013 and 2012 period are presented in reorganization items, net on the accompanying consolidated statements of operations.
~~(c) Restricted Cash and Short-term Investments~~
~~The Company has restricted cash and short-term investments related primarily to collateral held to support projected workers’ compensation obligations and funds held for certain tax obligations.~~
~~(d) Aircraft Fuel, Spare Parts, and Supplies, Net~~
Aircraft fuel, spare parts, and supplies, net are recorded at net realizable value based on average costs. These items are expensed when used. An allowance for obsolescence is provided for aircraft spare parts and supplies.
~~(e) Operating Property and Equipment~~
Operating property and equipment are recorded at cost. Interest expense related to the acquisition of certain property and equipment, including aircraft purchase deposits, is capitalized as an additional cost of the asset. Interest capitalized for the years ended December 31, 2014, 2013 and 2012 was $61 million, $47 million and $50 million, respectively. Property and equipment is depreciated and amortized to residual values over the estimated useful lives or the lease term, whichever is less, using the straight-line method. Costs of major improvements that enhance the usefulness of the asset are capitalized and depreciated over the estimated useful life of the asset or the modifications, whichever is less. The depreciable lives used for the principal depreciable asset classifications are:
~~Principal Depreciable Asset Classification~~
~~Depreciable Life~~
~~Jet aircraft and engines~~
~~16 - 30 years~~
~~Other regional aircraft and engines~~
~~25 years~~
~~Major rotable parts, avionics and assemblies~~
~~Fleet end date~~
~~Improvements to leased flight equipment~~
~~Lesser of asset/leasehold improvement or lease end date~~
~~Buildings and improvements~~
~~Lesser of 5 - 30 years or lease term~~
~~Furniture, fixtures and other equipment~~
~~3 - 10 years: ranges from computer hardware to furniture~~
~~Capitalized software~~
~~Lesser of 5 years or lease term~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~Residual values for aircraft, engines, major rotable parts, avionics and assemblies are generally 5% to 10%.~~
Equipment and property under capital leases are amortized over the term of the leases or, in the case of certain aircraft, over their expected useful lives. Lease terms vary but are generally 16 to 30 years for aircraft and three to 30 years for other leased equipment and property.
The Company records impairment charges on long-lived assets used in operations when events and circumstances indicate that the assets may be impaired. An asset or group of assets is considered impaired when the undiscounted cash flows estimated to be generated by the asset are less than the carrying amount of the asset and the net book value of the asset exceeds its estimated fair value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell.
~~(f) Income Taxes~~
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. A valuation allowance is established, if necessary, for the amount of any tax benefits that, based on available evidence, are not expected to be realized.
~~(g) Goodwill~~
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired and liabilities assumed. Goodwill is not amortized but tested for impairment annually or more frequently if events or circumstances indicate. The Company has one consolidated reporting unit.
Goodwill is measured for impairment by initially performing a qualitative screen and, if necessary, then comparing the fair value of the reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit is less than the carrying value, a second step is performed to determine the implied fair value of goodwill. If the implied fair value of goodwill is lower than its carrying value, an impairment charge equal to the difference is recorded. Based upon the Company’s annual testing, there was no goodwill impairment in 2014.
~~(h) Other Intangibles, Net~~
Intangible assets consist primarily of airport take-off and landing rights (Slots), customer relationships, marketing agreements, international Slots and route authorities, gate leasehold rights and tradenames. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values and reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~The following table provides information relating to the Company’s amortizable intangible assets as of December 31, 2014 and 2013 (in millions):~~

   December 31,
   2014 2013
Airport Slots
   $ 365    $ 332
Customer relationships
   300    300
Marketing agreements
   105    105
Tradenames
   35    35
Airport gate leasehold rights
   138    155
Accumulated amortization
   (447 ) (373 )


Total
   $ 496    $ 554


Airport operating and gate lease rights are being amortized on a straight-line basis over 25 years to a zero residual value. The customer relationships, marketing agreements and tradenames were identified as intangible assets subject to amortization and are amortized on a straight-line basis over approximately nine years, 30 years and 15 months, respectively.
The Company recorded amortization expense related to these intangible assets of approximately $81 million, $20 million and $25 million for the years ended December 31, 2014, 2013 and 2012, respectively. The Company expects to record annual amortization expense for the aforementioned definite-life intangible assets as follows (in millions):

2015
   $ 56
2016
   50
2017
   46
2018
   42
2019
   42
2020 and thereafter
   260


Total
   $ 496


The Company’s indefinite-lived assets include certain international Slots and route authorities and domestic airport take-off and landing slots. Indefinite-lived assets are not amortized but instead are reviewed for impairment annually and more frequently if events or circumstances indicate that the asset may be impaired. As of December 31, 2014 and 2013, the Company had $1.7 billion and $1.8 billion, respectively, of indefinite-lived intangible assets on its consolidated balance sheets.
The Company’s indefinite-lived intangible assets are reviewed for impairment by initially performing a qualitative screen to determine whether the Company believes it is more likely than not that an asset has been impaired. If the Company believes an impairment has occurred, the Company then evaluates for impairment by comparing the estimated fair value of assets to the carrying value. An impairment charge is recognized if the asset’s estimated fair value is less than its carrying value. Based upon the Company’s annual testing, there was no indefinite-lived intangible asset impairment in 2014.
~~(i) Frequent Flyer Programs~~
~~AAG currently operates two frequent traveler programs, American’s AAdvantage and US Airways’ Dividend Miles. These programs award mileage credits to passengers who fly on American, US Airways and~~~~one~~~~world carriers, as well as certain other partner airlines that participate in the programs. Mileage credits can also be~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
earned through purchases from other non-airline partners that participate in the Company’s respective loyalty programs. Mileage credits can be redeemed for travel on American, US Airways or other participating partner airlines, in which case the Company pays a fee.
The Company uses the incremental cost method to account for the portion of the Company’s frequent flyer liability incurred when AAdvantage and Dividend Miles members earn mileage credits by flying on American, US Airways or its regional affiliates. The Company has an obligation to provide future travel when these mileage credits are redeemed and therefore has recorded a liability for mileage credits outstanding.
The incremental cost liability includes all mileage credits that are expected to be redeemed, including mileage credits earned by members whose mileage account balances have not yet reached the minimum mileage credit level required to redeem an award. Additionally, outstanding mileage credits are subject to expiration if unused. In calculating the liability, the Company estimates how many mileage credits will never be redeemed for travel and excludes those mileage credits from the estimate of the liability. Estimates are also made for the number of miles that will be used per award redemption and the number of travel awards that will be redeemed on partner airlines. These estimates are based on historical program experience as well as consideration of enacted program changes, as applicable. Changes in the liability resulting from members earning additional mileage credits or changes in estimates are recorded in the statement of operations as a part of passenger revenue.
The liability for outstanding mileage credits is valued based on the estimated incremental cost of carrying one additional passenger. Incremental cost primarily includes unit costs incurred for fuel, food, and insurance as well as fees incurred when travel awards are redeemed on partner airlines. No profit or overhead margin is included in the accrual of incremental cost. These estimates are generally updated based upon the Company’s 12-month historical average of such costs.
The Company applied the acquisition method of accounting in connection with the Merger and therefore recorded the liability for outstanding US Airways mileage credits at fair value. As of December 31, 2014 and 2013, the liability for outstanding mileage credits expected to be redeemed for future travel awards for US Airways under the Dividend Miles program was $638 million and $932 million and is included on the consolidated balance sheets within frequent flyer liability. This liability will be reduced as miles are redeemed and new miles earned will be recorded as a liability based on the incremental cost method discussed above.
As of December 31, 2014 and 2013 the liability for outstanding mileage credits for the AAdvantage program was $647 million and $580 million, respectively, and is included on the consolidated balance sheets within frequent flyer liability.
American and US Airways also sell frequent flyer program mileage credits to participating airline partners and non-airline business partners. Sales of mileage credits to business partners is comprised of two components, transportation and marketing. Historically, American and US Airways have used the residual method of accounting to determine the values of each component as there had not been a material modification to any significant agreements since the adoption of Accounting Standards Update (ASU) No. 2009-13, “Revenue Recognition (Topic 605) – Multiple-Deliverable Revenue Arrangements” on January 1, 2011.
In 2013, American and Citibank amended their AAdvantage co-branded credit card agreement, which resulted in a material modification of the terms of the arrangement. Also, in connection with the acquisition of US Airways on December 9, 2013, a material modification occurred on all of US Airways’ agreements in connection with the Merger. Therefore, subsequent to the amendments of these arrangements, AAG applied the relative selling price method to determine the values of each deliverable. Under the relative selling price approach, American and US Airways identified five revenue elements for the co-branded credit card agreement with Citibank and Dividend Miles co-branded credit card agreement with Barclays: the transportation component; use
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
of the American and US Airways’ brand including access to frequent flyer member lists; advertising; lounge access; and baggage services (together excluding “the transportation component,” the “marketing component”).
The transportation component represents the estimated selling price of future travel awards and is determined using historical transaction information, including information related to customer redemption patterns. The transportation component is deferred based on its relative selling price and amortized into passenger revenue on a straight-line basis over the period in which the mileage credits are expected to be redeemed for travel.
The marketing component represents services provided to the Company’s business partners and relates primarily to the use of American’s and US Airways’ logo and tradenames along with access to customers lists of AAdvantage and Dividend Miles members. The marketing services are provided periodically, but no less than monthly. Accordingly, the marketing component is considered earned and recognized in other revenues in the period of the mileage sale.
Upon application of the relative selling price method in 2013 for American’s Citibank modification, American reduced its travel component liability and recorded other revenue of approximately $31 million. As a result of the change in the marketing component value when the relative selling price method is applied, American and US Airways now defer less revenue per mile sold. For American’s agreements where there has not been a material modification, it continues to apply the residual method.
As of December 31, 2014 and 2013, the Company had $1.5 billion in deferred revenue from the sale of mileage credits (recorded as frequent flyer liability on the consolidated balance sheets). For the years ended December 31, 2014, 2013 and 2012, the marketing component of mileage sales recognized at the time of sale in other revenues was approximately $1.4 billion, $834 million and $725 million, respectively.
~~(j) Passenger Revenue~~
Passenger ticket sales are initially recorded as a component of air traffic liability. Revenue derived from ticket sales is recognized at the time service is provided. However, due to various factors, including the complex pricing structure and interline agreements throughout the industry, certain amounts are recognized in revenue using estimates regarding both the timing of the revenue recognition and the amount of revenue to be recognized, including breakage. These estimates are generally based upon the evaluation of historical trends, including the use of regression analysis and other methods to model the outcome of future events based on the Company’s historical experience, and are recorded at the scheduled time of departure.
The Company purchases capacity, or ASMs, generated by the Company’s wholly-owned regional air carriers and the capacity of Air Wisconsin Airlines Corporation (Air Wisconsin), Republic Airways Holdings’ subsidiaries Republic Airlines (Republic) and Chautauqua Airlines (Chautauqua), Mesa Airlines, Inc. (Mesa), and SkyWest Airlines, Inc.’s subsidiaries Sky West Airlines (SkyWest) and ExpressJet Airlines (ExpressJet) in certain markets. The Company’s wholly-owned regional air carriers and Air Wisconsin, Chautauqua, ExpressJet, Republic, Mesa, and SkyWest operate regional aircraft in these markets as part of either American Eagle carriers or US Airways Express. The Company classifies revenues generated from transportation on these carriers as regional passenger revenues. Liabilities related to tickets sold by the Company for travel on these air carriers are also included in the Company’s air traffic liability and are subsequently relieved in the same manner as described above.
Various taxes and fees assessed on the sale of tickets to end customers are collected by the Company as an agent and remitted to taxing authorities. These taxes and fees have been presented on a net basis in the accompanying consolidated statements of operations and recorded as a liability until remitted to the appropriate taxing authority.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~(k) Maintenance, Materials and Repairs~~
Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred, except costs incurred for maintenance and repair under flight hour maintenance contract agreements, which are accrued based on contractual terms when an obligation exists.
~~(l) Selling Expenses~~
Selling expenses include commissions, credit card fees, computerized reservations systems fees and advertising. Advertising expenses are expensed as incurred. Advertising expense was $100 million, $166 million and $153 million for the years ended December 31, 2014, 2013 and 2012, respectively.
~~(m) Share-based Compensation~~
The Company accounts for its share-based compensation expense based on the fair value of the stock award at the time of grant, which is recognized ratably over the vesting period of the stock award. The fair value of stock options and stock appreciation rights is estimated using a Black-Scholes option pricing model. The fair value of restricted stock units is based on the market price of the underlying shares of common stock on the date of grant. See Note 18 for further discussion of share-based compensation.
~~(n) Deferred Gains and Credits, Net~~
Included within deferred gains and credits, net are amounts deferred and amortized into future periods associated with the adjustment of leases to fair value in connection with the application of acquisition accounting, deferred gains on the sale leaseback of aircraft and certain vendor incentives.
~~(o) Foreign Currency Gains and Losses~~
Foreign currency gains and losses are recorded as part of other nonoperating expense, net in the consolidated statements of operations. Foreign currency losses for 2014, 2013 and 2012 were $114 million, $56 million and $41 million, respectively.
~~(p) Regional Expenses~~
Expenses associated with the Company’s wholly-owned regional airlines and third-party regional carriers operating under the brand names American Eagle and US Airways Express are classified as regional expenses on the consolidated statements of operations. Regional expenses consist of the following (in millions):

   Year Ended December 31,
   2014    2013    2012
Aircraft fuel and related taxes
   $ 2,009       $ 1,120       $ 1,012
Salaries, wages and benefits
   1,078       692       681
Capacity purchases from third-party regional carriers (1)
   1,475       269       129
Maintenance, materials and repairs
   367       284       285
Other rent and landing fees
   419       236       222
Aircraft rent
   35       4       6
Selling expenses
   307       154       152
Depreciation and amortization
   217       168       170
Special items, net
   24       8       1
Other
   585       391       370






Total regional expenses
   $ 6,516       $ 3,326       $ 3,028






~~(1)~~
~~For the year ended December 31, 2014, the component of capacity purchase expenses related to aircraft deemed to be leased was approximately $447 million.~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~(q) Recent Accounting Pronouncements~~
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 completes the joint effort by the FASB and International Accounting Standards Board (IASB) to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and International Financial Reporting Standards (IFRS). ASU 2014-09 applies to all companies that enter into contracts with customers to transfer goods or services. ASU 2014-09 is effective for public entities for interim and annual reporting periods beginning after December 15, 2016. Early application is not permitted and entities have the choice to apply ASU 2014-09 either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying ASU 2014-09 at the date of initial application and not adjusting comparative information. The Company is currently evaluating the requirements of ASU 2014-09 and has not yet determined its impact on the Company’s consolidated financial statements.
~~6.  Special Items, Net~~
~~The Company’s special items, net on the consolidated statements of operations are as follows (in millions):~~

   Year Ended December 31,
     2014        2013        2012
Mainline operating special items, net (1)
   $ 800       $ 559       $ 386
~~(1)~~
The 2014 mainline operating special items totaled a net charge of $800 million, which principally included $810 million of Merger integration expenses related to information technology, alignment of labor union contracts, professional fees, severance and retention, share-based compensation, divestiture of London Heathrow Slots, fleet restructuring, re-branding of aircraft and airport facilities, relocation and training. In addition, the Company recorded a net charge of $81 million for bankruptcy related items principally consisting of fair value adjustments for bankruptcy settlement obligations, $164 million in other special charges, including an $81 million charge to revise prior estimates of certain aircraft residual values, and other spare parts asset impairments, as well as $54 million in charges primarily relating to the buyout of certain aircraft leases. These charges were offset in part by a $309 million gain on the sale of Slots at DCA.
The 2013 mainline operating special items, net included $443 million of primarily Merger related expenses due to the alignment of labor union contracts, professional fees, severance, share-based compensation and fees for US Airways to exit the Star Alliance and its codeshare agreement with United Airlines. In addition, the Company recorded a $107 million charge related to American’s pilot long-term disability obligation, a $43 million charge for workers’ compensation claims and a $33 million aircraft impairment charge. These charges were offset in part by a $67 million gain on the sale of Slots at LaGuardia Airport.
The 2012 mainline operating special items, net consisted of $386 million of severance and related charges and write-off of leasehold improvements on aircraft and airport facilities that were rejected in connection with the Chapter 11 Cases.
~~See Note 4 for more information on the Merger Agreement.~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~The following additional amounts are also included in the consolidated statements of operations as follows (in millions):~~

   Year Ended December 31,
   2014    2013 2012
Other revenue special item, net (1)
   $ —       $ (31 ) $ —
Regional operating special items, net
   24       8    1
Nonoperating special items, net (2)
   132       211    (280 )
Reorganization items, net (3)
   —       2,655    2,208
Income tax special items, net (4)
   346       (324 ) (569 )
~~(1)~~
The 2013 other revenue special item, net included a credit to other revenues related to a change in accounting method resulting from the modification of AAG’s AAdvantage miles agreement with Citibank.
~~(2)~~
The 2014 nonoperating special items totaled a net charge of $132 million, which principally included a $43 million charge for Venezuelan foreign currency losses, $56 million of early debt extinguishment costs related to the prepayment of 7.50% senior secured notes and other indebtedness and $33 million of non-cash interest accretion on bankruptcy settlement obligations. See Note 12 for further discussion on Venezuela cash and short-term investments.
The 2013 nonoperating special items, net consisted of interest charges of $138 million to recognize post-petition interest expense on unsecured obligations pursuant to the Plan and penalty interest related to 10.5% secured notes and 7.50% senior secured notes, a $54 million charge related to the premium on tender for existing enhanced equipment trust certificates financings and the write-off of debt issuance costs, and $19 million in charges related to the repayment of existing EETC financings.
~~The 2012 nonoperating special items, net consisted of a $280 million benefit resulting from a settlement of a commercial dispute.~~
~~(3)~~
In 2013 and 2012, the Company recognized reorganization expenses as a result of the filing of voluntary petitions for relief under Chapter 11. These amounts consisted primarily of estimated allowed claim amounts and professional fees.
~~(4)~~
In 2014, income tax special items, net were $346 million. During 2014, the Company sold its portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. In connection with this sale, the Company recorded a special non-cash tax provision of $330 million in the second quarter of 2014 that reversed the non-cash tax provision which was recorded in other comprehensive income (OCI), a subset of stockholders’ equity, principally in 2009. This provision represents the tax effect associated with gains recorded in OCI principally in 2009 due to a net increase in the fair value of the Company’s fuel hedging contracts. In accordance with GAAP, the Company retained the $330 million tax provision in OCI until the last contract was settled or terminated. In addition, the 2014 period included a special $16 million non-cash deferred income tax provision related to certain indefinite-lived intangible assets.
In 2013 and 2012, income tax special items, net included, respectively, a $538 million and a $569 million non-cash income tax benefit from continuing operations. The Company is required to consider all items (including items recorded in other comprehensive income) in determining the amount of tax benefit that results from a loss from continuing operations and that should be allocated to continuing operations. As a result, the Company recorded a tax benefit on the loss from continuing operations for the year, which was exactly offset by income tax expense on other comprehensive income. However, while the income tax benefit from continuing operations is reported on the income statement, the income tax expense on other comprehensive income is recorded directly to accumulated other comprehensive income (loss), which is a component of stockholders’ equity. Because the income tax expense on other comprehensive income is equal to the income tax benefit from continuing operations, the Company’s year-end net deferred tax
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
position is not impacted by this tax allocation. The 2013 tax benefit was offset in part by a $214 million tax charge attributable to additional valuation allowance required to reduce deferred tax assets to the amount the Company believes is more likely than not to be realized.
~~7.  Earnings (Loss) Per Share~~
Pursuant to the Plan and the Merger Agreement, holders of AMR common stock formerly traded under the symbol “AAMRQ” received shares of AAG Common Stock principally over the 120-day distribution period following the Effective Date. In accordance with GAAP, the 2013 and 2012 weighted average shares and earnings (loss) per share calculations have been adjusted to retrospectively reflect these distributions which were each made at the rate of approximately 0.7441 shares of AAG Common Stock per share of AMR common stock. Former holders of AMR common stock as of the Effective Date may in the future receive additional distributions of AAG Common Stock dependent upon the ultimate distribution of shares of AAG Common Stock to holders of disputed claims. Thus, the shares and related earnings per share calculations prior to the Effective Date may change in the future to reflect additional retrospective adjustments for future AAG Common Stock distributions to former holders of AMR common stock.
As of December 31, 2014, all shares pursuant to the Plan have been issued and are outstanding for purposes of the Company’s basic and diluted earnings per share calculation in connection with the conversion of AAG Series A Preferred Stock and satisfaction of other bankruptcy settlement obligations related to allowed unsecured claims, including disputed claims, labor-related deemed claims and former holders of AMR common stock.
~~The following table sets forth the computation of basic and diluted earnings (loss) per share (in millions, except share and per share amounts in thousands):~~

   Year Ended December 31,
   2014    2013 2012
Basic Earnings (Loss) Per Share:

Net income (loss)
   $ 2,882       $ (1,834 ) $ (1,876 )
Weighted-average shares outstanding (in thousands)
   717,456       280,213    249,490




Basic earnings (loss) per share
   $ 4.02       $ (6.54 ) $ (7.52 )




Diluted Earnings (Loss) Per Share:

Net income (loss)
   $ 2,882       $ (1,834 ) $ (1,876 )
Change in fair value of conversion feature on 7.25% convertible senior notes (a)
   3       —    —




Net income (loss) for purposes of computing diluted earnings (loss) per share
   $ 2,885       $ (1,834 ) (1,876 )
Share computation for diluted earnings (loss) per share (in thousands):

Weighted-average shares outstanding
   717,456       280,213    249,490
Dilutive effect of stock awards
   15,603       —    —
Assumed conversion of convertible senior notes
   957       —    —




Weighted average common shares outstanding – as adjusted
   734,016       280,213    249,490




Diluted earnings (loss) per share
   $ 3.93       $ (6.54 ) $ (7.52 )




The following were excluded from the calculation of diluted earnings (loss) per share (in thousands):

Stock options, SARs and RSUs because inclusion would be antidilutive
   226       7,674    17,656
~~(a)~~
In March 2014, the Company notified the holders of US Airways Group’s 7.25% convertible senior notes that it had elected to settle all future conversions solely in cash instead of shares of AAG Common Stock in accordance with the related indenture. Thus, the diluted shares include the weighted average impact of the
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
7.25% convertible senior notes only for the period from January 1, 2014 to March 12, 2014. In addition, under GAAP, the Company must adjust the numerator for purposes of calculating diluted earnings per share by the change in fair value of the conversion feature from March 12, 2014 to May 15, 2014, which increased GAAP net income for purposes of computing diluted earnings per share by $3 million for the year ended December 31, 2014.
~~8.  Share Repurchase Program and Dividends~~
On July 23, 2014, as part of a capital deployment program, the Company’s Board of Directors authorized a $1.0 billion share repurchase program to be completed no later than December 31, 2015. During the year ended December 31, 2014, the Company completed this $1.0 billion share repurchase program by repurchasing 23.4 million shares of AAG Common Stock for $1.0 billion at a weighted average cost per share of $42.72. On January 27, 2015, the Company announced that its Board of Directors had authorized a new $2.0 billion share repurchase program to be completed by the end of 2016. Shares repurchased under the program may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Any such repurchases will be made from time to time subject to market and economic conditions, applicable legal requirements and other relevant factors. The program does not obligate the Company to repurchase any specific number of shares and may be suspended at any time at its discretion.
Also on July 23, 2014, as part of the Company’s capital deployment program, the Company’s Board of Directors declared a $0.10 per share cash dividend for shareholders of record as of August 4, 2014, and payable on August 18, 2014.
~~On October 22, 2014, the Company’s Board of Directors declared a $0.10 per share dividend for stockholders of record on November 3, 2014, and payable on November 17, 2014.~~
The total cash payment for dividends during the year ended December 31, 2014 was $144 million. Any future dividends that may be declared and paid from time to time under the Company’s capital deployment program will be subject to market and economic conditions, applicable legal requirements and other relevant factors. The Company’s capital deployment program does not obligate the Company to continue a dividend for any fixed period, and payment of dividends may be suspended at any time at management’s discretion.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~9.  Debt~~
~~Long-term debt and capital lease obligations included in the consolidated balance sheets consisted of (in millions):~~

   December 31,
   2014    2013
Secured

2013 Credit Facilities, variable interest rate of 3.75%, installments through 2019 (a)
   $ 1,872       $ 1,891
2014 Credit Facilities, variable interest rate of 4.25%, installments through 2021 (b)
   750       —
2013 Citicorp Credit Facility tranche B-1, variable interest rate of 3.50%, installments through 2019 (c)
   990       1,000
2013 Citicorp Credit Facility tranche B-2, variable interest rate of 3.00%, installments through 2016 (c)
   594       600
Aircraft enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.70% to 11.00%, maturing from 2015 to 2026 (d)
   7,028       6,031
Equipment loans and other notes payable, fixed and variable interest rates ranging from 1.43% to 8.48%, maturing from 2015 to 2026 (e)
   2,952       3,441
Special facility revenue bonds, fixed interest rates ranging from 5.50% to 8.50%, maturing from 2016 to 2035 (f)
   1,100       1,466
7.50% senior secured notes (g)
   —       1,000
AAdvantage Loan, effective rate of 8.30% (h)
   433       611
Other secured obligations, fixed interest rates ranging from 4.19% to 12.24%, maturing from 2015 to 2028 (e)
   994       303




   16,713       16,343




Unsecured

5.50% senior notes, interest only payments until due in 2019 (i)
   750       —
6.125% senior notes, interest only payments until due in 2018 (j)
   500       500
7.25% convertible senior notes (k)
   —       22
Industrial development bonds
   —       29




   1,250       551




Total long-term debt and capital lease obligations
   17,963       16,894
Less: Total unamortized debt discount
   59       95
Less: Current maturities
   1,708       1,446




Long-term debt and capital lease obligations, net of current maturities
   $ 16,196       $ 15,353




Secured financings are collateralized by assets, primarily aircraft, engines, simulators, rotable aircraft parts, hangar and maintenance facilities, route authorities and airport Slots. At December 31, 2014, the Company was operating 37 jet aircraft under capital leases. Leases can generally be renewed at rates based on fair market value at the end of the lease term for a number of additional years. At December 31, 2014, the maturities of long-term debt and capital leases are as follows (in millions):

2015
   $ 1,708
2016
   1,662
2017
   1,338
2018
   1,879
2019
   4,900
2020 and thereafter
   6,476


Total
   $ 17,963


~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~(a) 2013 Credit Facilities~~
On June 27, 2013, American and AAG entered into a Credit and Guaranty Agreement (as amended, the 2013 Credit Agreement) with certain lenders. The 2013 Credit Agreement provides for a term loan facility (the 2013 Term Loan Facility) that is scheduled to mature on June 27, 2019, unless otherwise extended by the applicable parties. As of December 31, 2014, $1.9 billion was outstanding under the 2013 Term Loan Facility.
The 2013 Credit Agreement originally provided for a $1.0 billion revolving credit facility (the 2013 Revolving Facility and, together with the 2013 Term Loan Facility, the 2013 Credit Facilities) scheduled to mature on June 27, 2018, unless otherwise extended by the applicable parties. The 2013 Term Loan Facility is repayable in quarterly installments in an amount equal to 0.25% of the original principal amount thereof with any unpaid balance due on the maturity date of the 2013 Term Loan Facility. The 2013 Revolving Facility provided that American may from time to time borrow, repay and reborrow loans thereunder and have letters of credit issued thereunder in an aggregate amount outstanding at any time of up to $1.0 billion. On October 10, 2014, American and AAG amended the 2013 Credit Agreement to extend the maturity date of the 2013 Revolving Facility to October 10, 2019 and increased the commitments thereunder to an aggregate amount of $1.4 billion while reducing the letter of credit commitments thereunder to $300 million. As of December 31, 2014, there were no borrowings or letters of credit outstanding under the 2013 Revolving Facility.
The 2013 Credit Facilities bear interest at an index rate plus an applicable index margin or, at American’s option, LIBOR (subject to a floor of 0.75%, with respect to the 2013 Term Loan Facility) plus an applicable LIBOR margin. The applicable LIBOR margin is 3.00% for borrowings under both the 2013 Term Loan Facility and the 2013 Revolving Facility.
Upon consummation of the Merger, US Airways Group and US Airways joined the 2013 Credit Facilities as guarantors. Following the joinder, certain minimum dollar-thresholds under the negative and financial covenants in the 2013 Credit Facilities were automatically increased.
Subject to certain limitations and exceptions, the 2013 Credit Facilities are secured by certain collateral, including certain route authorities and certain take-off and landing rights and gate leaseholds at certain airports. American is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans under the 2013 Credit Facilities as more fully described below in “~~Collateral Related Covenants~~.”
The 2013 Credit Facilities contain events of default customary for similar financings, including cross default to other material indebtedness. Upon the occurrence of an event of default, the outstanding obligations under the 2013 Credit Facilities may be accelerated and become due and payable immediately. In addition, if a “change of control” (as defined in the 2013 Credit Agreement) occurs, American will (absent an amendment or waiver) be required to repay at par the loans outstanding under the 2013 Credit Facilities and terminate the 2013 Revolving Facility. The 2013 Credit Facilities also include covenants that, among other things, require AAG to maintain a minimum aggregate liquidity (as defined in the 2013 Credit Facilities) of not less than $2.0 billion, and limit the ability of AAG and its restricted subsidiaries to pay dividends and make certain other payments, make certain investments, incur additional indebtedness, incur liens on the collateral, dispose of the collateral, enter into certain affiliate transactions and engage in certain business activities, in each case subject to certain exceptions.
~~(b) 2014 Credit Facilities~~
On October 10, 2014, American, AAG, US Airways Group and US Airways entered into a Credit and Guaranty Agreement (the 2014 Credit Agreement) with certain lenders. The 2014 Credit Agreement provides for a $750 million term loan facility (the 2014 Term Loan Facility) and a $400 million revolving credit facility (the 2014 Revolving Facility and, together with the 2014 Term Loan Facility, the 2014 Credit Facilities). As of December 31, 2014, $750 million was outstanding under the 2014 Term Loan Facility. The 2014 Revolving
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
Facility provides that American may from time to time borrow, repay and reborrow loans thereunder. American may have letters of credit issued under the 2014 Revolving Facility in an aggregate amount outstanding at any time up to $300 million. As of December 31, 2014 there were no borrowings or letters of credit outstanding under the 2014 Revolving Facility.
Subject to certain limitations and exceptions, the 2014 Credit Facilities are secured by certain collateral, including certain route authorities and certain take-off and landing rights and gate leaseholds at certain airports. The obligations of American under the 2014 Credit Facilities are guaranteed by AAG, US Airways Group and US Airways. American is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans under the 2014 Credit Facilities as more fully described below in “~~Collateral Related Covenants~~.”
The 2014 Term Loan Facility and 2014 Revolving Facility mature on October 10, 2021 and October 10, 2019, respectively, unless otherwise extended by the applicable parties. The 2014 Term Loan Facility is repayable in annual installments in an amount equal to 1.00% of the original principal balance with any unpaid balance due on the maturity date of the 2014 Term Loan Facility. Voluntary prepayments may be made by American at any time, with a premium of 1.00% applicable to certain prepayments made prior to the date that is six months following October 10, 2014.
The 2014 Credit Facilities bear interest at an index rate plus an applicable index margin or, at American’s option, LIBOR (subject to a floor of 0.75% in the case of the 2014 Term Loan Facility) plus an applicable LIBOR margin. The applicable LIBOR margins are 3.50% and 3.00% for borrowings under the 2014 Term Loan Facility and the 2014 Revolving Facility, respectively. If American has a corporate credit rating of Ba3 or higher from Moody’s and BB- or higher from S&P, the applicable LIBOR margin is 3.25% under the 2014 Term Loan Facility.
The 2014 Credit Facilities contain events of default customary for similar financings, including cross default to other material indebtedness. Upon the occurrence of an event of default, the outstanding obligations under the 2014 Credit Facilities may be accelerated and become due and payable immediately. In addition, if a “change of control” (as defined in the 2014 Credit Agreement) occurs with respect to AAG, American will (absent an amendment or waiver) be required to repay at par the loans outstanding under the 2014 Credit Facilities and terminate the 2014 Revolving Facility. The 2014 Credit Facilities also include covenants that, among other things, require AAG to maintain a minimum aggregate liquidity (as defined in the 2014 Credit Facilities) of not less than $2.0 billion, and limit the ability of AAG and its restricted subsidiaries to pay dividends and make certain other payments, make certain investments, incur liens on the collateral, dispose of the collateral, enter into certain affiliate transactions and engage in certain business activities, in each case subject to certain exceptions.
~~(c) 2013 Citicorp Credit Facility~~
US Airways Group and certain other subsidiaries of US Airways Group are guarantors of the 2013 Citicorp Credit Facility agreement dated as of May 23, 2013. In connection with the closing of the Merger, AAG and American entered into a joinder to the 2013 Citicorp Credit Facility loan agreement pursuant to which AAG and American became guarantors under such agreement.
The 2013 Citicorp Credit Facility consists of tranche B-1 term loans (Tranche B-1) and tranche B-2 term loans (Tranche B-2). As of December 31, 2014, $990 million was outstanding under Tranche B-1 and $594 million was outstanding under Tranche B-2. Voluntary prepayments may be made at any time, with a premium of 1.00% applicable to certain prepayments made prior to the date that is six months following January 16, 2014.
As of December 31, 2014, the 2013 Citicorp Credit Facility bears interest at an index rate plus an applicable index margin or, at US Airways’ option, LIBOR (subject to a floor of 0.75%) plus an applicable LIBOR margin. The applicable LIBOR margin is 2.75% for Tranche B-1 and 2.25% for Tranche B-2.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
Tranche B-1 and Tranche B-2 mature on May 23, 2019 and November 23, 2016, respectively (unless otherwise extended by the applicable parties), and each is repayable in annual installments to be paid on each anniversary of the closing date in an amount equal to 1.00% of the initial aggregate principal amount of the loans with any unpaid balance due on the maturity date of the respective tranche.
Subject to certain limitations and exceptions, the obligations of US Airways under the 2013 Citicorp Credit Facility are secured by liens on certain take-off and landing rights at certain airports and certain other assets of US Airways. US Airways is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans under the 2013 Citicorp Credit Facility agreement as more fully described below in “~~Collateral Related Covenants~~”.
The 2013 Citicorp Credit Facility agreement contains events of default customary for similar financings, including a cross default provision to certain other material indebtedness of US Airways and certain of its affiliates. Upon the occurrence of an event of default, the outstanding obligations under the 2013 Citicorp Credit Facility may be accelerated and become due and payable immediately. In addition, if a “change of control” (as defined in the 2013 Citicorp Credit Facility agreement) occurs, US Airways will (absent an amendment or waiver) be required to repay the outstanding loans in full together with accrued interest thereon to the date of such prepayment. The 2013 Citicorp Credit Facility agreement includes affirmative, negative and financial covenants that, among other things, (a) require AAG and its restricted subsidiaries to maintain unrestricted liquidity of not less than $2.0 billion, with not less than $750 million held in accounts subject to control agreements, and (b) restrict the ability of US Airways Group, its subsidiaries party to the 2013 Citicorp Credit Facility, AAG and American to make certain investments, pay dividends and make certain other payments, make certain acquisitions, incur liens on the collateral, dispose of collateral, enter into certain affiliate transactions, enter into certain hedging transactions, and engage in certain business activities, in each case subject to certain exceptions.
~~(d) Aircraft Enhanced Equipment Trust Certificates (EETCs)~~
~~2014-1 EETCs~~
In September 2014, American created two pass-through trusts which issued approximately $957 million aggregate face amount of Series 2014-1 Class A and Class B EETCs in connection with the financing of 17 aircraft recently delivered to, and owned by, American (the 2014 EETC Aircraft).
As of December 31, 2014, the full $957 million of the escrowed proceeds from the 2014-1 EETCs have been used to purchase equipment notes issued by American in two series: Series A equipment notes in the amount of $742 million bearing interest at 3.70% per annum and Series B equipment notes in the amount of $215 million bearing interest at 4.375% per annum. Interest and principal payments on the equipment notes are scheduled to be made in April and October of each year, beginning in April 2015. The final payments on the Series A and Series B equipment notes will be due in October 2026 and October 2022, respectively. The equipment notes are secured by liens on the 2014 EETC Aircraft.
~~2013-1 EETCs~~
During 2014, US Airways issued $559 million of equipment notes in two series under its 2013-1 EETCs completed in April 2013: Series A equipment notes in the amount of $423 million bearing interest at 3.95% per annum and Series B equipment notes in the amount of $136 million bearing interest at 5.375% per annum. As of December 31, 2014, the full $820 million of the escrowed proceeds from US Airways’ 2013-1 EETCs have been used to purchase Series A and Series B equipment notes issued by US Airways. The equipment notes are secured by liens on aircraft.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~(e) Other Aircraft Financing Transactions~~
~~In May 2014, the Company prepaid $113 million principal amount of outstanding debt secured by certain aircraft.~~
During 2014, American entered into loan agreements to borrow $286 million in connection with financing certain aircraft deliveries. The notes mature in 2026 and bear interest at a rate of LIBOR plus an applicable margin.
During 2014, American financed 20 Boeing 737-800 aircraft under sale-leaseback arrangements and recorded proceeds from the sale of $811 million. Of the 20 Boeing 737-800 aircraft, 19 aircraft were accounted for as a capital lease and $747 million was reflected as debt on the consolidated balance sheet, included within other secured obligations in the table above. Gains associated with these sale-leaseback transactions are amortized over the respective remaining lease terms and are included in the consolidated balance sheet as deferred gains.
~~(f) Obligations Associated with Special Facility Revenue Bonds~~
In 2014, the Company prepaid $314 million of obligations, of which $135 million was a reduction of debt on the Company’s balance sheet, associated with special facility revenue bonds issued by municipalities to build or improve certain airport and maintenance facilities. The remaining portion of these obligations was accounted for as an operating lease.
In addition, in August 2014, American elected to exercise its option to reset the interest rate on approximately $220 million aggregate principal amount of special facility revenue bonds reflected as debt on its balance sheet, related to the Los Angeles International Airport, resulting in the repurchase of these bonds by American in September 2014. American has the option to remarket these bonds in the future. In connection with the repurchase of these bonds, American paid $2 million in cash premiums and recorded a $5 million non-cash write off of unamortized debt discount and issuance costs.
In December 2014, American purchased approximately $112 million aggregate principal amount of special facility revenue bonds related to the Tulsa International Airport, when such bonds were mandatorily tendered to American. Of this amount, $11 million was a reduction of debt on American’s balance sheet. American has the option to remarket these bonds in the future.
~~(g) Senior Secured Notes~~
In March 2014, American prepaid $100 million of its 7.50% senior secured notes at a redemption price of 103% of their principal amount plus accrued and unpaid interest. In July 2014, American prepaid the remaining outstanding principal balance of $900 million at a redemption price of 103.75% of outstanding principal amount plus accrued and unpaid interest. In connection with the prepayment of the outstanding 7.50% senior secured notes, American paid $37 million of cash premiums and recorded a $5 million non-cash write off of unamortized deferred issuance costs during the year ended December 31, 2014.
~~(h) AAdvantage Loan~~
In 2009, American entered into an arrangement under which Citibank loaned American $1.0 billion that could be repaid either in AAdvantage miles under American’s AAdvantage program or in cash (the AAdvantage Loan). Approximately $890 million of the AAdvantage Loan proceeds was accounted for as a loan from Citibank with the remaining $110 million recorded as deferred revenue in other liabilities and deferred credits.
To effect the AAdvantage Loan, American and Citibank entered into an Amended and Restated AAdvantage Participation Agreement (as so amended and restated, the Amended Participation Agreement). Under the
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
Amended Participation Agreement, American agreed that it would apply in equal monthly installments over a five year period beginning on January 1, 2012, a credit for miles awarded to Citibank cardholders’ AAdvantage accounts.
American had the right to repay in cash, without premium or penalty, any or all of the amounts owed to Citibank under the AAdvantage Loan. Effective January 2, 2015, American exercised its loan repayment right with respect to the full value of the outstanding balance to Citibank for $400 million. In connection with the repayment, in the first quarter of 2015, American will recognize an early debt extinguishment gain of approximately $17 million. The entire outstanding balance of the obligation is reflected in current maturities of long-term debt on the accompanying consolidated balance sheet as of December 31, 2014.
~~(i) 5.50% Senior Notes~~
In September 2014, the Company issued $750 million aggregate principal amount of 5.50% senior notes due 2019 (the 5.50% senior notes). These notes bear interest at a rate of 5.50% per annum, which is payable semi-annually in arrears on each April 1 and October 1, beginning April 1, 2015. The 5.50% senior notes mature on October 1, 2019 and are fully and unconditionally guaranteed by American, US Airways Group and US Airways. The 5.50% senior notes are senior unsecured obligations of the Company. The indenture for the 5.50% senior notes contains covenants and events of default generally customary for similar financings. In addition, if the Company experiences specific kinds of changes of control, the Company must offer to repurchase the 5.50% senior notes at a price of 101% of the principal amount plus accrued and unpaid interest, if any, to the repurchase date. Upon the occurrence of certain events of default, the 5.50% senior notes may be accelerated and become due and payable.
~~(j) 6.125% Senior Notes~~
In May 2013, US Airways Group issued its 6.125% Senior Notes due 2018 (the 6.125% senior notes). The 6.125% senior notes bear interest at a rate of 6.125% per annum, which is payable semi-annually on each June 1 and December 1 and began December 1, 2013. The 6.125% senior notes mature on June 1, 2018 and are fully and unconditionally guaranteed by US Airways. In connection with the closing of the Merger, AAG and American provided a full and unconditional guarantee of the payment obligations of US Airways Group under the 6.125% senior notes. The 6.125% senior notes are general unsecured senior obligations of the Company.
~~(k) 7.25% Convertible Notes~~
In March 2014, the Company notified the holders of US Airways Group’s 7.25% convertible notes that it had elected to settle solely in cash instead of shares of AAG Common Stock all conversions during the period beginning on March 15, 2014 and ending on, and including, the second scheduled trading day immediately preceding the maturity date of May 15, 2014. In May 2014, the Company settled all outstanding 7.25% convertible notes in cash for approximately $175 million.
~~Guarantees~~
As of December 31, 2014, AAG had issued guarantees covering approximately $1.1 billion of American’s tax-exempt bond debt (and interest thereon) and $4.4 billion of American’s secured debt (and interest thereon).
In connection with the Merger and pursuant to the Plan on December 9, 2013, the Company and American entered into a joinder to the loan agreement and became co-obligors of US Airways Group’s $1.6 billion 2013 Citicorp Credit Facility and the Company and American entered into a second supplemental indenture that guarantees the payment obligations associated with the 6.125% senior notes. In March 2014, AAG, US Airways Group and US Airways entered into amended and restated guarantees of the payment obligations of US Airways
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
under the equipment notes relating to each of its Series 2010-1, 2011-1, 2012-1, 2012-2 and 2013-1 Pass Through Certificates, the result of which was to add AAG as a guarantor of such equipment notes on a joint and several basis with US Airways Group. Refer to Note 21 for further information.
~~Collateral Related Covenants~~
Certain of the Company’s debt financing agreements contain loan to value ratio covenants and require it to periodically appraise the related collateral. Pursuant to such agreements, if the loan to value ratio exceeds a specified threshold, the Company is required, as applicable, to pledge additional qualifying collateral (which in some cases may include cash collateral), or pay down such financing, in whole or in part, as described below.
~~Specifically, the Company is required to meet certain collateral coverage tests on a periodic basis on three Credit Facilities, as described below:~~


2014 Credit Facilities

2013 Credit Facilities

2013 Citicorp Credit Facility
Frequency of Appraisals of Appraised Collateral    Annual    Semi-Annual    Once per Fiscal Year (1)
LTV Requirement    1.6x Collateral valuation to amount of debt outstanding (62.5% LTV)    1.6x Collateral valuation to amount of debt outstanding (62.5% LTV)    1.5x Collateral valuation to amount of debt outstanding (66.7% LTV)
LTV as of Last Measurement Date    21.9%    33.7%    61.8%
Collateral
Description
   Generally, certain route authorities, take-off and landing slots, and rights to airport facilities used by American to operate certain services between the U.S. and London Heathrow, Tokyo Narita, and China    Generally, certain route authorities, take-off and landing slots, and rights to airport facilities used by American to operate all services between the U.S. and South America    Generally, certain Slots (e.g., DCA and LaGuardia), accounts receivable, certain engines, certain spare parts and ground service equipment, certain simulators, certain leasehold real estate assets and cash
~~(1)~~
~~With respect to spare parts, one physical appraisal and one desktop appraisal are required in each fiscal year.~~
~~At December 31, 2014, American and US Airways were in compliance with the applicable collateral coverage tests as of the most recent measurement dates.~~
~~10.  Income Taxes~~
~~The significant components of the income tax expense (benefit) were (in millions):~~

   Year Ended December 31,
     2014   2013 2012
Current
   $ (16 ) $ (22 ) $ —
Deferred
   346    (324 ) (569 )


Income tax expense (benefit)
   $ 330    $ (346 ) $ (569 )


~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~The income tax expense (benefit) differed from amounts computed at the statutory federal income tax rate as follows (in millions):~~

   Year Ended December 31,
   2014 2013 2012
Statutory income tax provision (benefit)
   $ 1,123    $ (763 ) $ (857 )
State income tax expense (benefit), net of federal tax effect
   75    (8 ) (32 )
Book expenses (benefits) not deductible for tax purposes
   (1 ) 27    19
Bankruptcy administration expenses
   95    83    26
Interest cutback to net operating loss (NOL)
   —    141    —
Alternative minimum tax credit refund
   (24 ) (22 ) —
Change in valuation allowance
   (1,323 ) 717    839
Tax expense (benefit) resulting from OCI allocation
   330    (538 ) (569 )
Other, net
   55    17    5


Income tax expense (benefit)
   $ 330    $ (346 ) $ (569 )


~~As a result of the Merger, US Airways Group and its subsidiaries are included in the AAG consolidated federal and state income tax returns for the period ended December 31, 2014.~~
For the year ended December 31, 2014, the Company recorded a $330 million tax provision. This provision included $346 million of special tax charges. During 2014, the Company sold its portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. In connection with this sale, the Company recorded a special non-cash tax provision of $330 million in the second quarter of 2014 that reversed the non-cash tax provision which was recorded in other comprehensive income (OCI), a subset of stockholders’ equity, principally in 2009. This provision represents the tax effect associated with gains recorded in OCI principally in 2009 due to a net increase in the fair value of our fuel hedging contracts. In accordance with GAAP, the Company retained the $330 million tax provision in OCI until the last contract was settled or terminated. The Company also recorded a special $16 million non-cash deferred income tax provision related to certain indefinite-lived intangible assets. In addition, the Company recorded $8 million of tax expense principally related to certain states and countries where NOL Carryforwards were limited or unavailable to be used. These charges were offset in part by a $24 million federal income tax benefit resulting from the Company’s elections under applicable sections of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 and the Housing and Economic Recovery Act of 2008 (as extended by the Tax Increase Prevention Act of 2014), allowing corporations to accelerate utilization of certain research and AMT credit carryforwards in lieu of applicable bonus depreciation on certain qualifying capital investments.
For the year ended December 31, 2013, the Company recorded a $346 million tax benefit. This benefit included a $538 million special non-cash income tax benefit from continuing operations. The Company is required to consider all items (including items recorded in OCI) in determining the amount of tax benefit that results from a loss from continuing operations and that should be allocated to continuing operations. As a result, the Company recorded a tax benefit on the loss from continuing operations for the year, which was exactly offset by income tax expense on OCI. However, while the income tax benefit from continuing operations is reported on the income statement, the income tax expense on other comprehensive income is recorded directly to accumulated other comprehensive income (loss), which is a component of stockholders’ equity. Because the income tax expense on other comprehensive income is equal to the income tax benefit from continuing operations, the Company’s year-end net deferred tax position is not impacted by this tax allocation. The 2013 tax benefit was offset in part by a $214 million tax charge attributable to additional valuation allowance required to reduce deferred tax assets to the amount the Company believes is more likely than not to be realized. In addition, the Company recorded a $22 million federal income tax benefit under the Housing and Economic Recovery Act of 2008 as described above.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
For the year ended December 31, 2012, the Company recorded a net income tax benefit of $569 million, which represents the non-cash income tax benefit resulting from gains recorded in OCI as discussed above.
The Company provides a valuation allowance for deferred tax assets when it is more likely than not that some portion, or all of its deferred tax assets, will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income (primarily reversals of deferred tax liabilities) during the periods in which those temporary differences will become deductible. In making this determination, the Company considers all available positive and negative evidence and makes certain assumptions. The Company considers many factors in evaluating the realizability of its deferred tax assets including risks associated with merger integration as well as other factors, which continue to be affected by conditions beyond the Company’s control, such as the condition of the economy, the level and volatility of fuel prices and travel demand. The Company has concluded as of December 31, 2014 that the valuation allowance was still needed on its deferred tax asset based on the weight of the factors described above.
A portion of the change in the valuation allowance reflects the income tax benefit of approximately $24 million and $22 million, respectively, recorded in 2014 and 2013 resulting from the Company’s elections under applicable sections of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 and the Housing and Economic Recovery Act of 2008 (as extended by the Tax Increase Prevention Act of 2014 and the American Taxpayer Relief Act of 2012), allowing corporations to accelerate utilization of certain research and alternative minimum tax (AMT) credit carryforwards in lieu of applicable bonus depreciation on certain qualifying capital investments.
In addition to the changes in the valuation allowance from operations described in the table above, the valuation allowance was also impacted by the changes in the components of accumulated other comprehensive income (loss), described in Note 14 to AAG’s consolidated financial statements. The total decrease in the valuation allowance was $197 million in 2014 and the total increase in the valuation allowance was $602 million and $263 million in 2013 and 2012, respectively.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~The components of AAG’s deferred tax assets and liabilities were (in millions):~~

   December 31,
   2014 2013
Deferred tax assets:

Postretirement benefits other than pensions
   $ 386    $ 643
Rent expense
   180    355
Alternative minimum tax credit carryforwards
   346    370
Operating loss carryforwards
   3,461    3,655
Pensions
   2,403    1,765
Frequent flyer obligation
   948    1,075
Gains from lease transactions
   207    56
Reorganization items
   64    682
Other
   1,210    871


Total deferred tax assets
   9,205    9,472
Valuation allowance
   (4,816 ) (5,013 )


Net deferred tax assets
   4,389    4,459


Deferred tax liabilities:

Accelerated depreciation and amortization
   (4,829 ) (4,460 )
Other
   (98 ) (519 )


Total deferred tax liabilities
   (4,927 ) (4,979 )


Net deferred tax liability
   $ (538 ) $ (520 )


At December 31, 2014, the Company had approximately $10.1 billion of gross NOL Carryforwards to reduce future federal taxable income, substantially all of which are expected to be available for use in 2015. The federal NOL Carryforwards will expire beginning in 2022 if unused. These NOL Carryforwards include an unrealized tax benefit of $867 million related to the implementation of share-based compensation accounting guidance that will be recorded in equity when realized. The Company also had approximately $4.6 billion of NOL Carryforwards to reduce future state taxable income at December 31, 2014, which will expire in years 2015 through 2034 if unused. The Company’s ability to deduct its NOL Carryforwards and to utilize certain other available tax attributes can be substantially constrained under the general annual limitation rules of Section 382 where an “ownership change” has occurred. The Company experienced an ownership change in connection with its emergence from the Chapter 11 Cases, and US Airways Group experienced an ownership change in connection with the Merger. As a result of the Merger, US Airways Group is now included in the AAG consolidated federal and state income tax return. The general limitation rules of Section 382 for a debtor in a bankruptcy case are liberalized where the ownership change occurs upon emergence from bankruptcy. The Company elected to be covered by certain special rules for federal income tax purposes that permit approximately $9.0 billion of its federal NOL Carryforwards to be utilized without regard to the Section 382 annual limitation rules. Substantially all of the Company’s remaining federal NOL Carryforwards (attributable to US Airways Group) are subject to limitation under Section 382; however, the Company’s ability to utilize such NOL Carryforwards is not anticipated to be effectively constrained as a result of such limitation. Similar limitations may apply for state income tax purposes. The Company’s ability to utilize any new NOL Carryforwards arising after the ownership changes is not affected by the annual limitation rules imposed by Section 382 unless another ownership change occurs. Under the Section 382 Limitation cumulative stock ownership changes among material shareholders exceeding 50% during a rolling 3-year period can potentially limit a company’s future use of net operating losses and tax credits. See Part I, Item 1A. Risk Factors~~– “Our ability to utilize our NOL Carryforwards may be limited”for additional unaudited discussion of this risk.~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
At December 31, 2014, the Company had an AMT credit carryforward of approximately $341 million available for federal income tax purposes, which is available for an indefinite period. The Company’s net deferred tax assets, which include the NOL Carryforwards, are subject to a full valuation allowance. At December 31, 2014, the federal and state valuation allowances were $4.5 billion and $264 million, respectively. In accordance with GAAP, utilization of the NOL Carryforwards after December 9, 2013 will result in a corresponding decrease in the valuation allowance and offset our tax provision dollar for dollar.
The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. The Company’s 2004 through 2013 tax years are still subject to examination by the Internal Revenue Service. Various state and foreign jurisdiction tax years remain open to examination and the Company is under examination, in administrative appeals, or engaged in tax litigation in certain jurisdictions. The Company believes that the effect of any assessments will be immaterial to its consolidated financial statements.
The Company had an unrecognized tax benefit of approximately $6 million, which did not change during the twelve months ended December 31, 2014. Changes in the unrecognized tax benefit have no impact on the effective tax rate due to the existence of the valuation allowance. Accrued interest on tax positions is recorded as a component of interest expense but was not significant at December 31, 2014.
~~The reconciliation of the beginning and ending amounts of unrecognized tax benefit are (in millions):~~

   2014    2013
Unrecognized tax benefit at January 1
   $ 6       $ 6
No activity
   —       —




Unrecognized tax benefit at December 31
   $ 6       $ 6




~~The Company estimates that the unrecognized tax benefit will be realized within the next twelve months.~~
~~11.  Risk Management and Financial Instruments~~
~~The Company’s economic prospects are heavily dependent upon two variables it cannot control: the health of the economy and the price of fuel.~~
Due to the discretionary nature of business and leisure travel spending, airline industry revenues are heavily influenced by the condition of the U.S. economy and economies in other regions of the world. Unfavorable conditions in these broader economies have resulted, and may result in the future, in decreased passenger demand for air travel and changes in booking practices, both of which in turn have had, and may have in the future, a strong negative effect on the Company’s revenues. In addition, during challenging economic times, actions by our competitors to increase their revenues can have an adverse impact on the Company’s revenues.
The Company’s operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of the largest single cost items in the Company’s business. Because of the amount of fuel needed to operate the Company’s business, even a relatively small increase in the price of fuel can have a material adverse aggregate effect on the Company’s operating results and liquidity. Jet fuel market prices have fluctuated substantially over the past several years and prices continued to be volatile in 2014.
~~These factors could impact the Company’s results of operations, financial performance and liquidity.~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~(a) Fuel Price Risk Management~~
During the second quarter of 2014, the Company sold its portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. The Company has not entered into any transactions to hedge its fuel consumption since December 9, 2013 and, accordingly, as of December 31, 2014, the Company did not have any fuel hedging contracts outstanding. As such, and assuming the Company does not enter into any future transactions to hedge its fuel consumption, the Company will continue to be fully exposed to fluctuations in fuel prices. The Company’s current policy is not to enter into transactions to hedge its fuel consumption, although the Company reviews that policy from time to time based on market conditions and other factors.
The cash proceeds on these sales totaled $71 million which exceeded the current value of the portfolio. Approximately $25 million of the resulting gain was recorded to OCI and will be recognized as a decrease to fuel expense in the period the hedged fuel is scheduled to be consumed (through the second quarter of 2015). As of December 31, 2014, the Company expects to recognize the remaining $9 million of these gains into earnings in 2015. For the years ended December 31, 2014, 2013 and 2012, the Company recognized net gains of approximately $16 million, net losses of approximately $12 million and net gains of approximately $4 million, respectively, as a component of aircraft fuel expense on the accompanying consolidated statements of operations related to its fuel hedging agreements, including the ineffective portion of the hedges.
~~The impact of aircraft fuel derivative instruments (all cash flow hedges) on the Company’s consolidated statements of operations is depicted below (in millions):~~

   Location    Year Ended December 31,
      2014    2013 2012
Amount of gain (loss) reclassified from AOCI into income (1)
   Aircraft fuel and
related taxes    $ 4       $ (34 ) $ 3
Amount of gain (loss) recognized in income on derivative (2)
   Aircraft fuel and
related taxes    12       22    1




Amount of gain (loss) recognized in consolidated statements of operations (3)
      $ 16       $ (12 ) $ 4




~~(1)~~
~~Includes the effective portion of hedge gain (loss)~~
~~(2)~~
~~Includes the ineffective portion of hedge gain (loss)~~
~~(3)~~
~~Includes the effective and ineffective portion of hedge gain (loss)~~
~~The impact of aircraft fuel derivative instruments (all cash flow hedges) on the Company’s consolidated statements of comprehensive income is depicted below (in millions):~~

   Location    Year Ended December 31,
      2014 2013 2012
Amount of (gain) loss reclassified from AOCI into income (1)
   Reclassification
into earnings
   $ (4 ) $ 34    $ (3 )
Amount of gain (loss) recognized in OCI on derivative (1)
   Change in fair
value
   (34 ) (2 ) (12 )


Amount of gain (loss) recognized in consolidated statements of comprehensive income
      $ (38 ) $ 32    $ (15 )


~~(1)~~
~~Includes the effective portion of hedge gain (loss)~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
While certain of the Company’s fuel derivatives were subject to enforceable master netting agreements with its counterparties, the Company did not offset its fuel derivative assets and liabilities in its consolidated balance sheets. The Company had a gross asset of $109 million as of December 31, 2013 for its aircraft fuel derivative instruments, which was reflected in prepaid expenses and other on the accompanying consolidated balance sheet. The Company had no cash collateral posted or received as of December 31, 2013.
~~(b) Credit Risk~~
Most of the Company’s receivables relate to tickets sold to individual passengers through the use of major credit cards or to tickets sold by other airlines and used by passengers on American, US Airways or the Company’s regional carriers. These receivables are short-term, mostly being settled within seven days after sale. Bad debt losses, which have been minimal in the past, have been considered in establishing allowances for doubtful accounts. The Company does not believe it is subject to any significant concentration of credit risk.
~~(c) Interest Rate Risk~~
The Company has exposure to market risk associated with changes in interest rates related primarily to its variable rate debt obligations. Interest rates on $6.5 billion principal amount of long-term debt as of December 31, 2014 are subject to adjustment to reflect changes in floating interest rates. The weighted average effective interest rate on the Company’s variable rate debt was 3.3% at December 31, 2014.
~~12.  Investments and Fair Value Measurements~~
~~Short-term investments consisted of (in millions):~~

   December 31,
   2014    2013
Overnight Investments, Time Deposits and Repurchase Agreements
   $ 60       $ 177
Corporate and Bank Notes
   5,194       3,350
U.S. Government Agency and Treasury Obligations
   101       1,513
Commingled Funds
   952       3,069
Other
   2       2




Total
   $ 6,309       $ 8,111




~~Short-term investments at December 31, 2014, by contractual maturity included (in millions):~~

Due in one year or less
   $ 4,625
Due between one year and three years
   1,684
Due after three years
   —


Total
   $ 6,309


~~All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are reflected as a component of accumulated other comprehensive income (loss).~~
~~Assets and Liabilities Measured at Fair Value on a Recurring Basis~~
The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The Company’s short-term investments classified as Level 2 primarily utilize
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
broker quotes in a non-active market for valuation of these securities. The Company’s fuel derivative contracts, which consisted primarily of call options, collars (consisting of a purchased call option and a sold put option) and call spreads (consisting of a purchased call option and a sold call option), are valued using energy and commodity market data which is derived by combining raw inputs with quantitative models and processes to generate forward curves and volatilities. Heating oil, jet fuel and crude oil were the primary underlying commodities in the hedge portfolio. No changes in valuation techniques or inputs occurred during the year ended December 31, 2014.
~~Assets and liabilities measured at fair value on a recurring basis are summarized below (in millions):~~

   Fair Value Measurements as of December 31, 2014
       Total            Level 1            Level 2            Level 3
Short-term investments (1), (2):

Money market funds
   $ 954       $ 954       $ —       $ —
Government agency investments
   101       —       101       —
Repurchase agreements
   46       —       46       —
Corporate obligations
   3,927       —       3,927       —
Bank notes / Certificates of deposit / Time deposits
   1,281       —       1,281       —








   6,309       954       5,355       —
Restricted cash and short term investments (1)
   774       774       —       —








Total
   $ 7,083       $ 1,728       $ 5,355       $ —








~~(1)~~
~~Unrealized gains or losses on short-term investments and restricted cash and short-term investments are recorded in accumulated other comprehensive loss at each measurement date.~~
~~(2)~~
~~The Company’s short-term investments mature in one year or less except for $1.1 billion of corporate obligations and $575 million of bank notes/certificates of deposit/time deposits.~~
~~There were no Level 1 to Level 2 transfers during the year ended December 31, 2014.~~

   Fair Value Measurements as of December 31, 2013
       Total            Level 1            Level 2            Level 3
Short-term investments (1), (2):

Money market funds
   $ 3,071       $ 3,071       $ —       $ —
Government agency investments
   1,512       —       1,512       —
Repurchase agreements
   170       —       170       —
Corporate obligations
   2,750       —       2,750       —
Bank notes / Certificates of deposit / Time deposits
   608       —       608       —








   8,111       3,071       5,040       —
Restricted cash and short term investments (1)
   1,035       979       56       —
Fuel derivative contracts, net (1)
   109       —       109       —








Total
   $ 9,255       $ 4,050       $ 5,205       $ —








~~(1)~~
Unrealized gains or losses on short-term investments, restricted cash and short-term investments and derivatives qualifying for hedge accounting are recorded in accumulated other comprehensive income (loss) at each measurement date.
~~(2)~~
The Company’s short-term investments mature in one year or less except for $250 million of bank notes/certificates of deposit/time deposits, $511 million of U.S. Government agency investments and $2.1 billion of corporate obligations.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
A $56 million Level 1 restricted money market security was liquidated in August 2013. The cash proceeds were subsequently reinvested in a Level 2 U.S. Treasury Obligation. American’s policy regarding the recording of transfers between levels is to reflect any such transfers at the end of the reporting period.
~~Venezuela Cash and Short-term Investments~~
As of December 31, 2014, $804 million of the Company’s cash and short-term investments balances were held in foreign bank accounts, of which approximately $656 million was held in Venezuelan bolivars. This balance includes approximately $621 million valued at 6.3 bolivars and approximately $35 million valued at 12.0 bolivars, with the rate depending on the date the Company submitted its repatriation request to the Venezuelan government. These rates are materially more favorable than the exchange rates currently prevailing for other transactions conducted outside of the Venezuelan government’s currency exchange system that the Company participates in. The Company’s cash balance held in Venezuelan bolivars decreased $54 million from the December 31, 2013 balance of $710 million primarily due to $88 million in cash repatriations and $30 million in foreign currency losses as described below, partially offset by additional cash proceeds from ticket sales in early 2014. In the second and third quarters of 2014, the Company repatriated $65 million including $31 million valued at 6.3 bolivars to the dollar and $34 million valued at 10.6 bolivars to the dollar. In the fourth quarter of 2014, the Company incurred an $11 million foreign currency loss related to the receipt of $23 million at a rate of 6.3 bolivars to the dollar for one of its 2012 repatriation requests originally valued at a rate of 4.3 bolivars to the dollar. Accordingly, the Company revalued its remaining pending 2012 repatriation requests from 4.3 to 6.3 bolivars to the dollar resulting in additional foreign currency losses of $19 million. In total, the Company recognized a $30 million special charge for these foreign currency losses in the fourth quarter of 2014. During 2014, the Company significantly reduced capacity in this market and is no longer accepting bolivars as payment for airline tickets. The Company is continuing to work with Venezuelan authorities regarding the timing and exchange rate applicable to the repatriation of funds held in local currency. The Company is monitoring this situation closely and continues to evaluate its holdings of Venezuelan bolivars for additional foreign currency losses, which could be material, particularly in light of the uncertainty posed by the new foreign exchange regulations announced in mid-February 2015 and the continued deterioration of economic conditions in Venezuela. See Part I, Item 1A. Risk Factors – “We operate a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control~~” for unaudited additional discussion of this and other currency risks.~~
~~Fair Value of Debt~~
The fair value of the Company’s long-term debt was estimated using quoted market prices or discounted cash flow analyses, based on the Company’s current estimated incremental borrowing rates for similar types of borrowing arrangements. If the Company’s long-term debt was measured at fair value, it would have been classified as Level 2 in the fair value hierarchy.
~~The carrying value and estimated fair value of the Company’s long-term debt, including current maturities, were as follows (in millions):~~

   December 31, 2014    December 31, 2013
   Carrying
Value    Fair
Value    Carrying
Value    Fair
Value
Long-term debt, including current maturities
   $ 17,904       $ 18,542       $ 16,799       $ 17,035








~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~13.  Retirement Benefits~~
The Company sponsors defined benefit and defined contribution pension plans for eligible employees. The defined benefit plans provide benefits for participating employees based on years of service and average compensation for a specified period of time before retirement. The Company uses a December 31 measurement date for all of its defined benefit plans. In addition, the Company provides certain postemployment benefits to its employees. These benefits include disability-related and workers’ compensation benefits for certain employees. The Company accrues for the cost of such benefit expenses once an appropriate triggering event has occurred.
~~Year End Information~~
The following table provides a reconciliation of the changes in the pension and retiree medical and other benefit obligations and fair value of assets for the years ended December 31, 2014 and 2013, and a statement of funded status as of December 31, 2014 and 2013 (in millions):

Pension Benefits Retiree Medical and Other
Benefits
        2014                 2013                 2014                 2013
Reconciliation of benefit obligation:

Obligation at January 1
$ 14,899    $ 15,895    $ 1,385    $ 1,412
Service cost
3    3    1    —
Interest cost
746    654    61    50
Actuarial (gain) loss
2,573    (1,152 ) (39 ) (82 )
Plan amendments
—    —    33    —
Curtailments
—    2    —    —
Settlements
(20 ) (1 ) —    —
Benefit payments
(607 ) (575 ) (112 ) (116 )
US Airways plan liability (Assumed)
—    73    (4 ) 121

Obligation at December 31
$ 17,594    $ 14,899    $ 1,325    $ 1,385

Reconciliation of fair value of plan assets:

Fair value of plan assets at January 1
$ 10,057    $ 9,065    $ 239    $ 211
Actual return on plan assets
746    1,026    11    41
Employer contributions
810    494    106    103
Settlements
(20 ) (1 ) —    —
Benefit payments
(607 ) (575 ) (112 ) (116 )
US Airways plan assets (Assumed)
—    48    —    —

Fair value of plan assets at December 31
10,986    10,057    244    239

Funded status at December 31
$ (6,608 ) $ (4,842 ) $ (1,081 ) $ (1,146 )

Amounts recognized in the consolidated balance sheets:

Current liability
$ 10    $ 31    $ 117    $ 129
Noncurrent liability (1)
6,598    4,811    964    1,017

$ 6,608    $ 4,842    $ 1,081    $ 1,146

Amounts recognized in other comprehensive income:

Net actuarial loss (gain)
$ 4,961    $ 2,395    $ (199 ) $ (176 )
Prior service cost (credit) (1)
245    273    (1,326 ) (1,592 )

$ 5,206    $ 2,668    $ (1,525 ) $ (1,768 )

US Airways plan other comprehensive loss
—    —    —    (12 )

$ 5,206    $ 2,668    $ (1,525 ) $ (1,780 )

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~

Pension Benefits Retiree Medical and Other
Benefits
        2014                 2013                 2014                 2013
For plans with accumulated benefit obligations exceeding the fair value of plan assets:

Projected benefit obligation (PBO)
$ 17,560    $ 14,869    $ —    $ —
Accumulated benefit obligation (ABO)
17,548    14,858    —    —
Accumulated postretirement benefit obligation (APBO)
—    —    1,324    1,385
Fair value of plan assets
10,950    10,024    244    239
ABO less fair value of plan assets
6,598    4,834    —    —
~~(1)~~
~~The 2014 noncurrent liability does not include $18 million of other post-employment benefits or $2 million of prior service costs.~~
~~The following tables provide the components of net periodic benefit cost for the years ended December 31, 2014, 2013 and 2012 (in millions):~~

   Pension Benefits Retiree Medical and Other Benefits
       2014         2013         2012         2014         2013         2012
Components of net periodic benefit cost:

Defined benefit plans:

Service cost
   $ 3    $ 3    $ 341    $ 1    $ —    $ 46
Interest cost
   746    654    729    61    50    128
Expected return on assets
   (786 ) (720 ) (676 ) (19 ) (16 ) (17 )
Curtailments
   —    2    58    —    —    (124 )
Settlements
   4    (1 ) —    —    —    —
Amortization of:

Prior service cost (1)
   28    28    10    (244 ) (251 ) (82 )
Unrecognized net loss (gain)
   43    90    211    (8 ) (9 ) (9 )


Net periodic benefit cost for defined benefit plans
   38    56    673    (209 ) (226 ) (58 )
Defined contribution plans
   546    328    218    N/A    N/A    N/A


   $ 584    $ 384    $ 891    $ (209 ) $ (226 ) $ (58 )


~~(1)~~
~~The 2014 prior service cost does not include amortization of $14 million related to other post-employment benefits.~~
The estimated amount of unrecognized net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is $111 million.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
The estimated amount of unrecognized net gain for the retiree medical and other postretirement plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is $7 million.

   Pension Benefits Retiree Medical and Other
Benefits
           2014                 2013                 2014                 2013
Weighted-average assumptions used to determine benefit obligations as of December 31:

Discount rate
   4.30 % 5.10 % 4.00 % 4.71 %
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:

Discount rate 1/1 – 12/31
   5.10 % 4.20 % 4.74 % 3.80 %
Expected return on plan assets
   8.00 % 8.00 % 8.00 % 8.00 %
As of December 31, 2014, the Company’s estimate of the long-term rate of return on plan assets was 8.00% based on the target asset allocation. Expected returns on longer duration bonds are based on yields to maturity of the bonds held at year-end. Expected returns on other assets are based on a combination of long-term historical returns, actual returns on plan assets achieved over the last ten years, current and expected market conditions, and expected value to be generated through active management, currency overlay and securities lending programs. The Company’s annualized ten-year rate of return on plan assets as of December 31, 2014, was approximately 8%.
The objectives of the Company’s investment policies are to: maintain sufficient income and liquidity to pay retirement benefits; produce a long-term rate of return that meets or exceeds the assumed rate of return for plan assets; limit the volatility of asset performance and funded status; and diversify assets among asset classes and investment managers.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
Based on these investment objectives, a long-term strategic asset allocation has been established. This strategic allocation seeks to balance the potential benefit of improving funded position with the potential risk that the funded position would decline. The current strategic target asset allocation is as follows:
~~Asset Class/Sub-Class~~
~~Allowed Range~~
~~Equity~~
~~62% - 72%~~
~~Public:~~
~~U.S. Value~~
~~20% - 35%~~
~~International Value~~
~~14% - 24%~~
~~Emerging Markets~~
~~5% - 11%~~
~~Alternative Investments~~
~~0% - 18%~~
~~Fixed Income~~
~~28% - 38%~~
~~U.S. Long Duration~~
~~26% - 36%~~
~~Emerging Markets~~
~~0% -   4%~~
~~Other~~
~~0% -   5%~~
~~Cash Equivalents~~
~~0% -   5%~~
Each asset class is actively managed and, historically, the plans’ assets have produced returns, net of management fees, in excess of the expected rate of return over the last ten years. Public equity and emerging market fixed income securities are used to provide diversification and are expected to generate higher returns over the long-term than longer duration U.S. bonds. Public stocks are managed using a value investment approach in order to participate in the returns generated by stocks in the long-term, while reducing year-over-year volatility. Longer duration U.S. bonds are used to partially hedge the assets from declines in interest rates. Alternative (private) investments are used to provide expected returns in excess of the public markets over the long-term. Additionally, the Company engages currency overlay managers in an attempt to increase returns by protecting non-U.S. dollar denominated assets from a rise in the relative value of the U.S. dollar. The Company also participates in securities lending programs to generate additional income by loaning plan assets to borrowers on a fully collateralized basis. These programs are subject to market risk.
Investments in securities traded on recognized securities exchanges are valued at the last reported sales price on the last business day of the year. Securities traded in the over-the-counter market are valued at the last bid price. The money market fund is valued at fair value which represents the net asset value of the shares of such fund as of the close of business at the end of the period. Investments in limited partnerships are carried at estimated net asset value as determined by and reported by the general partners of the partnerships and represent the proportionate share of the estimated fair value of the underlying assets of the limited partnerships. Common/collective trusts are valued at net asset value based on the fair values of the underlying investments of the trusts as determined by the sponsor of the trusts. The 103-12 investment trust is valued at net asset value which is determined by the issuer at the end of each month and is based on the aggregate fair value of trust assets less liabilities, divided by the number of units outstanding. No changes in valuation techniques or inputs occurred during the year.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~The fair value of the Company’s pension plan assets at December 31, 2014 and 2013, by asset category, are as follows (in millions):~~

   Fair Value Measurements as of December 31, 2014
Asset Category
   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)    Significant
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Total
Cash and cash equivalents
   $ 332       $ —       $ —       $ 332
Equity securities:

International markets (a) (b)
   2,943       —       —       2,943
Large-cap companies (b)
   2,488       —       —       2,488
Mid-cap companies (b)
   362       —       —       362
Small-cap companies (b)
   21       —       —       21
Mutual funds – US Airways plan (g)
   51       —       —       51
Fixed Income:

Corporate bonds (c)
   —       2,384       —       2,384
Government Securities (d)
   —       1,184       —       1,184
U.S. municipal securities
   —       65       —       65
Alternative instruments:

Private equity partnerships (e)
   —       —       818       818
Common/collective and 103-12 investment trusts (f)
   —       240       —       240
Insurance group annuity contracts
   —       —       2       2
Dividend and interest receivable
   52       —       —       52
Due to/from brokers for sale of securities – net
   39       —       —       39
Other assets – net
   5       —       —       5








Total
   $ 6,293       $ 3,873       $ 820       $ 10,986








a)
Holdings are diversified as follows: 18% United Kingdom, 11% Japan, 10% France, 7% Switzerland, 7% Netherlands, 6% Republic of Korea, 13% emerging markets and the remaining 28% with no concentration greater than 5% in any one country.
b)
~~There are no significant concentrations of holdings by company or industry.~~
c)
Includes approximately 74% investments in corporate debt with a Standard and Poor’s (S&P) rating lower than A and 26% investments in corporate debt with an S&P rating A or higher. Holdings include 81% U.S. companies, 16% international companies and 3% emerging market companies.
d)
Includes approximately 73% investments in U.S. domestic government securities and 27% in emerging market government securities. There are no significant foreign currency risks within this classification.
e)
Includes limited partnerships that invest primarily in U.S. (91%) and European (9%) buyout opportunities of a range of privately held companies. The Master Trust does not have the right to redeem its limited partnership investment at its net asset value. Instead, the Master Trust receives distributions as the underlying assets are liquidated. It is estimated that the underlying assets of these funds will be gradually liquidated over the next one to ten years. Additionally, the Master Trust has future funding commitments of approximately $403 million over the next ten years.
f)
Investment includes 74% in an emerging market 103-12 investment trust with investments in emerging country equity securities, 14% in Canadian segregated balanced value, income growth and diversified pooled funds and 12% in a common/collective trust investing in securities of smaller companies located outside the U.S., including developing markets. Requests for withdrawals must meet specific requirements with advance notice of redemption preferred.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
g)
Investment includes mutual funds invested 46% in equity securities of large-cap, mid-cap and small-cap US companies, 35% in US treasuries and corporate bonds and 18% in equity securities of international companies.

   Fair Value Measurements as of December 31, 2013
Asset Category
   Quoted Prices in
Active Markets for
Identical Assets
(Level 1) Significant
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Total
Cash and cash equivalents
   $ 360    $ —       $ —       $ 360
Equity securities:

International markets (a) (b)
   2,908    —       —       2,908
Large-cap companies (b)
   2,196    —       —       2,196
Mid-cap companies (b)
   227    —       —       227
Small-cap companies (b)
   18    —       —       18
Mutual funds – US Airways plan (g)
   48    —       —       48
Fixed Income:

Corporate bonds (c)
   —    2,067       —       2,067
Government Securities (d)
   —    1,035       —       1,035
U.S. municipal securities
   —    55       —       55
Alternative instruments:

Private equity partnerships (e)
   —    —       848       848
Common/collective and 103-12 investment trusts (f)
   —    245       —       245
Insurance group annuity contracts
   —    —       2       2
Dividend and interest receivable
   51    —       —       51
Due to/from brokers for sale of securities – net
   (10 ) —       —       (10 )
Other assets – net
   7    —       —       7






Total
   $ 5,805    $ 3,402       $ 850       $ 10,057






a)
Holdings are diversified as follows: 19% United Kingdom, 10% Japan, 11% France, 7% Switzerland, 6% Germany, 5% Netherlands, 6% Republic of Korea, 15% emerging markets and the remaining 21% with no concentration greater than 5% in any one country.
b)
~~There are no significant concentrations of holdings by company or industry.~~
c)
Includes approximately 76% investments in corporate debt with a Standard and Poor’s (S&P) rating lower than A and 24% investments in corporate debt with an S&P rating A or higher. Holdings include 80% U.S. companies, 17% international companies and 3% emerging market companies.
d)
Includes approximately 72% investments in U.S. domestic government securities and 28% in emerging market government securities. There are no significant foreign currency risks within this classification.
e)
Includes limited partnerships that invest primarily in U.S. (92%) and European (8%) buyout opportunities of a range of privately held companies. The Master Trust does not have the right to redeem its limited partnership investment at its net asset value. Instead, the Master Trust receives distributions as the underlying assets are liquidated. It is estimated that the underlying assets of these funds will be gradually liquidated over the next one to ten years. Additionally, the Master Trust has future funding commitments of approximately $376 million over the next ten years.
f)
~~Investment includes 74% in an emerging market 103-12 investment trust with investments in emerging country equity securities, 14% in Canadian segregated balanced value, income growth and diversified~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
pooled funds and 12% in a common/collective trust investing in securities of smaller companies located outside the U.S., including developing markets. Requests for withdrawals must meet specific requirements with advance notice of redemption preferred.
g)
Investment includes mutual funds invested 49% in equity securities of large-cap, mid-cap and small-cap US companies, 30% in US treasuries and corporate bonds and 21% in equity securities of international companies.
~~Changes in fair value measurements of Level 3 investments during the year ended December 31, 2014, were as follows (in millions):~~

   Private Equity
Partnerships Insurance Group
Annuity Contracts
Beginning balance at December 31, 2013
   $ 848    $ 2
Actual return on plan assets:

Relating to assets still held at the reporting date
   (38 ) —
Relating to assets sold during the period
   158    —
Purchases
   148    —
Sales
   (298 ) —


Ending balance at December 31, 2014
   $ 818    $ 2


~~Changes in fair value measurements of Level 3 investments during the year ended December 31, 2013, were as follows (in millions):~~

   Private Equity
Partnerships Insurance Group
Annuity Contracts
Beginning balance at December 31, 2012
   $ 914    $ 2
Actual return on plan assets:

Relating to assets still held at the reporting date
   (21 ) —
Relating to assets sold during the period
   99    —
Purchases
   85    —
Sales
   (229 ) —


Ending balance at December 31, 2013
   $ 848    $ 2


~~The fair value of the Company’s other postretirement benefit plan assets at December 31, 2014 by asset category, were as follows (in millions):~~

   Fair Value Measurements as of December 31, 2014
Asset Category
   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)    Significant
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Total
Money market fund
   $ 2       $ —       $ —       $ 2
Mutual funds – AMR Class
   —       242       —       242








Total
   $ 2       $ 242       $ —       $ 244








~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~The fair value of the Company’s other postretirement benefit plan assets at December 31, 2013 by asset category, were as follows (in millions):~~

   Fair Value Measurements as of December 31, 2013
Asset Category
   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)    Significant
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Total
Money market fund
   $ 4       $ —       $ —       $ 4
Mutual funds – AMR Class
   —       235       —       235








Total
   $ 4       $ 235       $ —       $ 239








Investments in the AMR Class shares of the mutual funds managed by American Beacon Advisors, Inc (ABA) are valued by quoted prices on the active market, which is fair value and represents the net asset value of the shares of such funds as of the close of business at the end of the period. AMR Class shares are offered without a sales charge to participants and have the lowest expense ratio among the Beacon Funds. Purchases are restricted to retirement benefit plans of ABA and AMR and its affiliates, resulting in a fair value classification of Level 2. Investments include approximately 28% of investments in non-U.S. common stocks in 2014 and 27% of investments in non-U.S. common stocks in 2013. Net asset value is based on the fair market value of the funds’ underlying assets and liabilities at the date of determination.

         2014             2013
Assumed health care trend rates at December 31

Health care cost trend rate assumed for next year
   5.25 % 6.50 %
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
   4.55 % 4.50 %
Year that the rate reaches the ultimate trend rate
   2023    2018
~~A one percentage point change in the assumed health care cost trend rates would have the following effects (in millions):~~

   1% Increase    1% Decrease
Impact on 2014 service and interest cost
   $ 3       $ (3 )
Impact on postretirement benefit obligation as of December 31, 2014
   65       (65 )
The Company is required to make minimum contributions to its defined benefit pension plans under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (ERISA), the Pension Funding Equity Act of 2004, the Pension Protection Act of 2006, the Pension Relief Act of 2010 and the Moving Ahead for Progress in the 21^st Century Act of 2012. In 2014, the Company has made its aggregate minimum required contributions for 2014 of $171 million, and has made $639 million in supplemental contributions to its pension plans, above and beyond the $171 million of minimum required contributions.
Based on current funding assumptions, the Company has no minimum required contributions until 2019. Currently, American’s minimum funding obligation for its pension plans is subject to temporary favorable rules that are scheduled to expire at the end of 2017. Upon expiration of these rules, American’s funding obligations are likely to increase materially.
~~The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (in millions):~~

   2015    2016    2017    2018    2019    2020-2024
Pension
   $ 645       $ 667       $ 699       $ 735       $ 776       $ 4,535
Retiree medical and other
   117       111       106       100       95       414
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~Modifications to Retirement and Life Insurance Benefits~~
Effective November 1, 2012, the Company’s defined benefit pension plans were frozen and the Company began providing enhanced benefits under the $uper $aver 401(k) Plan for certain groups. Effective November 1, 2012, the Company matches all non-flight crew employee contributions up to 5.5% of eligible earnings. Effective November 1, 2012 through December 31, 2013, pilots received employer contributions of 14% of eligible earnings and flight attendants received matching contributions of up to 5.5% of eligible earnings. With the ratification of a new CBA by pilots on December 9, 2013, effective January 1, 2014, pilots receive employer contributions of 16% of eligible earnings. With the 2013 Conditional Labor Agreement, effective January 1, 2014, flight attendants on the American seniority list as of April 12, 2012 receive age-based employer contributions (under age 40 – 5.5% of eligible earnings; age 40 to 49 – 6.75% of eligible earnings; and age 50 and above – 9.9% of eligible earnings) and flight attendants hired after April 12, 2012, receive employer contributions of 3% of eligible earnings plus company matching contributions of up to 2.5% of eligible earnings.
In December 2012, the Pilot A Plan, a defined benefit plan, was amended to remove the lump-sum option and the installment option forms of benefit effective December 31, 2012. A small group of American pilots is appealing the Bankruptcy Court’s decision authorizing American to eliminate the lump sum option and installment option forms of benefit. This is the same group of pilots that are appealing the Bankruptcy Court’s decisions authorizing American to reject the pilot CBA and approve the new pilot CBA. The U.S. District Court for the Southern District of New York upheld the Bankruptcy Court decision. The appeals currently are pending in the U.S. Court of Appeals for the Second Circuit.
The Pilot B Plan, a defined contribution plan, was terminated on November 30, 2012. With the exception of a small residual balance to cover final plan expenses, the Company has distributed all of the funds in the plan.
On July 6, 2012, the Company commenced an adversary proceeding in the Bankruptcy Court seeking a determination on the issue of vesting for former employees who retired before November 1, 2012 and were eligible for certain retiree medical coverage. The Bankruptcy Court granted in part and denied in part the Company’s motion for summary judgment concerning vesting.
As a result of the modifications to the retirement benefits as discussed above, a portion of the pension and postretirement benefits liability, primarily relating to retiree medical and other benefits, was classified as liabilities subject to compromise as of December 31, 2012. This amount was reinstated upon emergence since there was no resolution in the Chapter 11 Cases.
~~Curtailment and Plan Amendment in the Third Quarter of 2012~~
In accordance with ASC 715 “Retirement Benefits” (ASC 715), in the third quarter of 2012, the Company remeasured its defined benefit pension and retiree medical plans as a result of modifications to its retirement plans and reductions in certain work groups (see above and Note 2 to AAG’s consolidated financial statements). The Company updated its significant actuarial assumptions used for the remeasurements including the discount rate, which was lowered to 4.10% and 3.80% for the defined benefit pension plans and retiree medical plans, respectively.
The remeasurement of the defined benefit plans resulted in an actuarial loss of $1.9 billion offset by a curtailment gain of $1.8 billion. In addition, a loss of $58 million, representing unamortized prior service cost as of the remeasurement date of the frozen defined benefit plans, is included as a component of reorganization items, net.
Further, as a result of modifications to its retiree medical plans, the Company recognized a negative plan amendment of $1.9 billion, which is included as a component of actuarial gain arising in current year in other
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
comprehensive income and will be amortized over the future service life of the active plan participants for whom the benefit was eliminated, or approximately eight years. In addition, a net credit of $124 million, representing unamortized prior service credits of $157 million offset by a curtailment loss of $33 million, is included as a component of reorganization items, net.
~~14.  Accumulated Other Comprehensive Income (Loss)~~
~~The components of accumulated other comprehensive income (loss) are as follows (in millions):~~

   Pension and
Retiree Medical
Liability Unrealized
Gain/(Loss)
on
Investments Derivative
Financial
Instruments Income
Tax
Benefit
(Expense) Total
Balance at December 31, 2012
   $ (2,322 ) $ (1 ) $ 15    $ (672 ) $ (2,980 )
Other comprehensive income (loss) before reclassifications
   1,577    —    18    (538 ) 1,057
Amounts reclassified from accumulated other comprehensive income (loss)
   (142 ) (1 ) 34    —    (109 )


Net current-period other comprehensive income (loss)
   1,435    (1 ) 52    (538 ) 948


Balance at December 31, 2013
   (887 ) (2 ) 67    (1,210 ) (2,032 )
Other comprehensive income (loss) before reclassifications
   (2,633 ) —    (54 ) —    (2,687 )
Amounts reclassified from accumulated other comprehensive income (loss)
   (163 ) (3 ) (4 ) 330    160


Net current-period other comprehensive income (loss)
   (2,796 ) (3 ) (58 ) 330    (2,527 )


Balance at December 31, 2014
   $ (3,683 ) $ (5 ) $ 9    $ (880 ) $ (4,559 )


~~Reclassifications out of accumulated other comprehensive income (loss) for the years ended December 31, 2014 and 2013 are as follows (in millions):~~

Details about accumulated other comprehensive
income (loss) components
   Amount reclassified from accumulated
other comprehensive income (loss)
Affected line item in the
statement where net income
(loss) is presented
   Year Ended December 31,
   2014 2013
Amortization of pension and retiree medical liability:

Prior service cost
   $ (202 ) $ (223 ) Wages, salaries and benefits
Actuarial loss
   39    81    Wages, salaries and benefits
Derivative financial instruments:

Cash flow hedges
   (4 ) 34    Aircraft fuel and related taxes
Net unrealized change on investments:

Net change in value
   (3 ) —    Other, net
Income tax benefit (expense):

Reversal of non-cash tax provision
   330    —    Income tax provision (benefit)


Total reclassifications for the period
   $ 160    $ (108 )


~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
During 2014, the Company sold its portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. In connection with this sale, the Company recorded a special non-cash tax provision of $330 million in the statement of operations for the second quarter of 2014 that reverses the non-cash tax provision which was recorded in OCI, a subset of stockholders’ equity, principally in 2009. This provision represents the tax effect associated with gains recorded in OCI principally in 2009 due to a net increase in the fair value of the Company’s fuel hedging contracts. In accordance with GAAP, the Company retained the $330 million tax provision in OCI until the last contract was settled or terminated.
The Company recognized a $538 million non-cash income tax benefit, offset by a $538 million charge to other comprehensive income, during the fourth quarter of 2013 related to gains in other comprehensive income. See Note 10 for further information.
Amounts allocated to other comprehensive income for income taxes as further described in Note 10 will remain in accumulated other comprehensive income (loss) until the Company ceases all related activities, such as termination of the pension plan.
~~15.  Commitments, Contingencies and Guarantees~~
~~(a) Aircraft Acquisition Commitments~~
~~AAG had total aircraft acquisition commitments as of December 31, 2014 as follows:~~

   2015    2016    2017    2018    2019    2020 and
Thereafter    Total
Airbus

A320 Family
   42       25       20       —       —       —       87
A320neo
   —       —       10       25       25       40       100
A350 XWB
   —       —       6       10       6       —       22
Boeing

737 Family
   18       20       20       —       —       —       58
737 MAX
   —       —       3       17       20       60       100
777-300 ER
   2       2       —       —       —       —       4
787 Family
   12       13       10       7       —       —       42
Bombardier

CRJ900
   18       20       —       —       —       —       38
Embraer

ERJ175
   24       24       12       —       —       —       60














Total
   116       104       81       59       51       100       511
~~As of December 31, 2014, payments for the above aircraft commitments and certain engines are presented in the table below (in millions):~~

   2015    2016    2017    2018    2019    2020 and
Thereafter    Total
Payments for above aircraft commitments and certain engines (1)
   $ 5,110       $ 4,978       $ 4,937       $ 4,291       $ 3,242       $ 5,651       $ 28,209
~~(1)~~
These amounts are net of purchase deposits currently held by the manufacturers and include all commitments for regional aircraft. American has granted Boeing a security interest in its purchase deposits with Boeing. The Company’s purchase deposits totaled $1.2 billion as of December 31, 2014.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
In April 2014, the Company exercised its option to purchase and terminated its existing lease financing arrangements with respect to 62 Airbus A320 family aircraft scheduled to be delivered between the first quarter of 2015 and the third quarter of 2017. In connection with the Company’s exercise of such option, the Company also exercised its right to convert firm orders for 30 Airbus A320neo aircraft, scheduled to be delivered in 2021 and 2022, to options to acquire such aircraft. The table above reflects these changes.
~~In December 2014, the Company exercised its right under its purchase agreement with Bombardier to convert 24 of the Company’s 40 option order CRJ900 aircraft to firm orders to acquire such aircraft.~~
~~(b) Facility and support commitments~~
The Company has contracts related to facility construction or improvement projects, primarily at airport locations as well as information technology support. The contractual obligations related to these contracts are presented in the table below (in millions):

   2015    2016    2017    2018    2019    2020 and
Thereafter    Total
Facility construction or improvement contracts
   $ 166       $ 6       $ —       $ —       $ —       $ —       $ 172
Information technology contracts
   183       143       115       96       79       1       617
~~(c) Capacity Purchase Agreements with Third-Party Regional Carriers~~
As of December 31, 2014, the Company’s capacity purchase agreements with third-party regional carriers had expiration dates ranging from 2015 to 2027, with rights of American or US Airways, respectively, to extend the respective terms of each agreement. See Part I, Item 2. Properties for unaudited information on the aircraft contractually obligated to the Company under such capacity purchase agreements with third-party regional carriers.
The Company has entered into agreements with the third-party regional carriers that operate certain of their aircraft using American’s or US Airways’ flight designator codes. American or US Airways, respectively, controls the scheduling, pricing, reservations, ticketing and seat inventories of those aircraft and retains all revenues associated with revenue flights by those aircraft. American or US Airways pays the third-party regional carriers an amount, as defined in the applicable agreement, based on the airlines’ costs of operating those flights and other factors intended to approximate market rates for those services. As of December 31, 2014, the Company’s minimum fixed obligations under its capacity purchase agreements with third-party regional airlines were as follows (approximately, in millions):

   2015    2016    2017    2018    2019    2020 and
Thereafter    Total
Minimum fixed obligations under its capacity purchase agreements with third-party regional carriers (1)
   $ 1,584       $ 1,616       $ 1,479       $ 1,197       $ 1,066       $ 3,102       $ 10,044
~~(1)~~
Represents minimum payments under capacity purchase agreements with third-party regional carriers. These commitments are estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and the Company’s actual payments could differ materially. These obligations also include the portion of the Company’s future obligations related to aircraft deemed to be leased in the amount of approximately $492 million in 2015, $446 million in 2016, $382 million in 2017, $316 million in 2018, $283 million in 2019 and $883 million in 2020 and thereafter.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~(d) Operating Leases~~
The Company leases certain aircraft, engines and ground equipment, in addition to the majority of its ground facilities and terminal space. As of December 31, 2014, the Company had 477 aircraft under operating leases, with remaining terms ranging from one month to approximately 13 years. Airports are utilized for flight operations under lease arrangements with the municipalities or agencies owning or controlling such airports. Substantially all leases provide that the lessee must pay taxes, maintenance, insurance and certain other operating expenses applicable to the leased property. Some leases also include renewal and purchase options.
~~As of December 31, 2014, obligations under noncancellable operating leases for future minimum lease payments were as follows (in millions):~~

   2015    2016    2017    2018    2019    2020 and
Thereafter    Total
Future minimum lease payments (1)
   $ 2,110       $ 1,917       $ 1,809       $ 1,558       $ 1,399       $ 5,721       $ 14,514
~~(1)~~
As of December 31, 2014, $267 million is included on the accompanying balance sheet in accrued liabilities and deferred gains and credits, net relating to rent expense being recorded in advance of future operating lease payments.
~~Rent expense, excluding landing fees, was $2.8 billion, $1.7 billion and $1.4 billion in 2014, 2013 and 2012, respectively.~~
~~(e) Off-Balance Sheet Arrangements~~
~~Aircraft~~
AAG has 214 owned aircraft and 138 leased aircraft which were financed with pass through trust certificates, or EETCs, issued by pass through trusts. These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of flight equipment. Rather than finance each aircraft separately when such aircraft was purchased, delivered or refinanced, these trusts allowed AAG to raise the financing for several aircraft at one time and place such funds in escrow pending the purchase, delivery or refinancing of the relevant aircraft. The trusts were also structured to provide for certain credit enhancements, such as liquidity facilities to cover certain interest payments, that reduce the risks to the purchasers of the trust certificates and, as a result, reduce the cost of aircraft financing to AAG.
Each trust covered a set amount of aircraft scheduled to be delivered or refinanced within a specific period of time. At the time of each covered aircraft financing, the relevant trust used the funds in escrow to purchase equipment notes relating to the financed aircraft. The equipment notes were issued, at AAG’s election, in connection with a mortgage financing of the aircraft or, in certain cases, by a separate owner trust in connection with a leveraged lease financing of the aircraft. In the case of a leveraged lease financing, the owner trust then leased the aircraft to American or US Airways, as applicable. In both cases, the equipment notes are secured by a security interest in the aircraft. The pass through trust certificates are not direct obligations of, nor are they guaranteed by AAG, American, US Airways Group or US Airways. However, in the case of mortgage financings, the equipment notes issued to the trusts are direct obligations of American or US Airways and in certain instances are guaranteed by AAG or US Airways Group, as applicable. As of December 31, 2014, $7.0 billion associated with these mortgage financings is reflected as debt in the accompanying consolidated balance sheet.
With respect to leveraged leases, AAG evaluated whether the leases had characteristics of a variable interest entity and concluded the leasing entities met the criteria for variable interest entities. AAG generally is not the primary beneficiary of the leasing entities if the lease terms are consistent with market terms at the inception of
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
the lease and do not include a residual value guarantee, fixed-price purchase option or similar feature that obligates AAG to absorb decreases in value or entitles AAG to participate in increases in the value of the aircraft. AAG does not provide residual value guarantees to the bondholders or equity participants in the trusts. Some leases have a fair market value or a fixed price purchase option that allows AAG to purchase the aircraft at or near the end of the lease term. However, the option price approximates an estimate of the aircraft’s fair value at the option date. Under this feature, AAG does not participate in any increases in the value of the aircraft. AAG concluded it was not the primary beneficiary under these arrangements. Therefore, AAG accounts for its EETC leveraged lease financings as operating leases. AAG’s total future obligations under these leveraged lease financings are $2.1 billion as of December 31, 2014, which are included in the future minimum lease payments table above.
~~Special Facility Revenue Bonds~~
AAG guarantees the payment of principal and interest of certain special facility revenue bonds issued by municipalities primarily to build or improve airport facilities and purchase equipment which is leased to AAG. Under such leases, AAG is required to make rental payments through 2035, sufficient to pay maturing principal and interest payments on the related bonds. As of December 31, 2014, the remaining lease payments guaranteeing the principal and interest on these bonds are $449 million, which are accounted for as operating leases.
~~(f) Legal Proceedings~~
~~Chapter 11 Cases.~~As previously disclosed, on the Petition Date, November 29, 2011, the Debtors filed the Chapter 11 Cases. On October 21, 2013, the Bankruptcy Court entered the Confirmation Order confirming the Plan. On the Effective Date, December 9, 2013, the Debtors consummated their reorganization pursuant to the Plan, principally through the transactions contemplated by the Merger Agreement pursuant to which Merger Sub merged with and into US Airways Group, with US Airways Group surviving as a wholly-owned subsidiary of AAG. From the Petition Date through the Effective Date, pursuant to automatic stay provisions under the Bankruptcy Code and orders granted by the Bankruptcy Court, actions to enforce or otherwise effect repayment of liabilities preceding the Petition Date as well as all pending litigation against the Debtors generally were stayed. Following the Effective Date, actions to enforce or otherwise effect repayment of liabilities preceding the Petition Date, generally have been permanently enjoined. Any unresolved claims will continue to be subject to the claims reconciliation process under the supervision of the Bankruptcy Court. However, certain pending litigation related to pre-petition liabilities may proceed in courts other than the Bankruptcy Court to determine the amount, if any, of such litigation claims for purposes of treatment under the Plan.
Pursuant to rulings of the Bankruptcy Court, the Plan established the Disputed Claims Reserve to hold shares of AAG Common Stock reserved for issuance to disputed claimholders at the Effective Date that ultimately become holders of allowed Single-Dip Unsecured Claims. The shares provided for under the Plan were determined based upon a Disputed Claims Reserve amount of claims of approximately $755 million, representing the maximum amount of additional distributions to subsequently allowed Single-Dip Unsecured Claims under the Plan. On July 1, 2014 (the date 180 days after the Effective Date), approximately 2.9 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims, and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and shares were withheld or sold on account of related tax obligations. In addition, on July 1, 2014, the Company repurchased 0.4 million shares of AAG Common Stock for an aggregate of $19 million from the Disputed Claims Reserve at the then prevailing market price in order to fund cash tax obligations resulting from distributions by the Disputed Claims Reserve. On November 4, 2014, approximately 0.7 million shares of AAG Common Stock held in the Disputed Claims
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims, and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and shares were withheld or sold on account of related tax obligations. In addition, on November 4, 2014, the Company repurchased less than 0.1 million shares of AAG Common Stock for an aggregate of $2 million from the Disputed Claims Reserve at the then prevailing market price in order to fund cash tax obligations resulting from distributions by the Disputed Claims Reserve. As of December 31, 2014, there were approximately 26.8 million shares of AAG Common Stock remaining in the Disputed Claims Reserve. On February 10, 2015, approximately 0.8 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims, and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and shares were withheld or sold on account of related tax obligations. In addition, on February 10, 2015, the Company repurchased less than 0.1 million shares of AAG Common Stock for an aggregate of $4 million from the Disputed Claims Reserve at the then prevailing market price in order to fund cash tax obligations resulting from distributions by the Disputed Claims Reserve. As disputed claims are resolved, the claimants will receive distributions of shares from the Disputed Claims Reserve on the same basis as if such distributions had been made on or about the Effective Date. However, the Company is not required to distribute additional shares above the limits contemplated by the Plan, even if the shares remaining for distribution are not sufficient to fully pay any additional allowed unsecured claims. To the extent that any of the reserved shares remain undistributed upon resolution of all remaining disputed claims, such shares will not be returned to the Company but rather will be distributed to former AMR shareholders as of the Effective Date. However, resolution of disputed claims could have a material effect on recoveries by holders of additional allowed Single-Dip Unsecured Claims under the Plan and the amount of additional share distributions, if any, that are made to former AMR shareholders as the total number of shares of AAG Common Stock that remain available for distribution upon resolution of disputed claims is limited pursuant to the Plan.
There is also pending in the Bankruptcy Court an adversary proceeding relating to an action brought by American to seek a determination that certain non-pension, post-employee benefits (OPEB) are not vested benefits and thus may be modified or terminated without liability to American. On April 18, 2014, the Bankruptcy Court granted American’s motion for summary judgment with respect to certain non-union employees, concluding that their benefits were not vested and could be terminated. The summary judgment motion was denied with respect to all other retirees. The Bankruptcy Court has not yet scheduled a trial on the merits concerning whether those retirees’ benefits are vested, and American cannot predict whether it will receive relief from obligations to provide benefits to any of those retirees. The Company’s financial statements presently reflect these retirement programs without giving effect to any modification or termination of benefits that may ultimately be implemented based upon the outcome of this proceeding. Separately, both the Association of Professional Flight Attendants and Transport Workers Union have filed grievances asserting that American was “successful” in its Chapter 11 with respect to matters related to OPEB and, accordingly, by operation of the underlying collective bargaining agreements, American’s prior contributions to certain OPEB prefunding trusts attributable to active employees should be returned to those active employees. These amounts aggregate approximately $212 million. The Company has denied both grievances and intends to defend these matters vigorously.
~~Private Party Antitrust Action.~~On July 2, 2013, a lawsuit captioned Carolyn Fjord, et al., v. US Airways Group, Inc., et al., was filed in the United States District Court for the Northern District of California. The complaint names as defendants US Airways Group and US Airways, and alleges that the effect of the Merger may be to substantially lessen competition or tend to create a monopoly in violation of Section 7 of the Clayton Antitrust Act. The relief sought in the complaint includes an injunction against the Merger, or divestiture. On August 6, 2013, the plaintiffs re-filed their complaint in the Bankruptcy Court, adding AMR and American as defendants, and on October 2, 2013, dismissed the initial California action. The Bankruptcy Court denied plaintiffs’ motion to preliminarily enjoin the Merger. On January 10, 2014, the plaintiffs moved to amend their
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
complaint to add additional factual allegations, a claim for money damages and a request for preliminary injunctive relief requiring the carriers to hold separate their assets. On March 14, 2014, the Court allowed plaintiffs to add certain allegations but denied plaintiffs’ requests to add a damages claim or seek preliminary injunctive relief requiring the carriers to hold separate their assets. On June 2, 2014, plaintiffs filed an amended motion for leave to file a second amended and supplemental complaint, which motion has been fully briefed by the parties and is pending resolution by the Court. There is currently no trial date set. The Company believes this lawsuit is without merit and intends to vigorously defend against the allegations.
~~US Airways Sabre Matter~~. On April 21, 2011, US Airways filed an antitrust lawsuit against Sabre Holdings Corporation, Sabre Inc. and Sabre Travel International Limited (collectively, Sabre) in the Federal District Court for the Southern District of New York. The lawsuit, as amended to date, alleges, among other things, that Sabre has engaged in anticompetitive practices to preserve its market power by restricting the Company’s ability to distribute its products to its customers. The lawsuit also alleges that these actions have permitted Sabre to charge supracompetitive booking fees and to use technologies that are not as robust and as efficient as alternatives in a competitive market. The lawsuit seeks money damages. Sabre filed a motion to dismiss the case, which the court denied in part and granted in part in September 2011, allowing two of the four counts in the complaint to proceed. In January 2015, the court denied in part and granted in part Sabre’s motions for summary judgment. A trial date is expected to be set soon. The Company intends to pursue its claims against Sabre vigorously, but there can be no assurance of the outcome of this litigation.
~~General~~. The Company and its subsidiaries are also engaged in other legal proceedings from time to time. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within the control of the Company. Therefore, although the Company will vigorously defend itself in each of the actions described above and such other legal proceedings, their ultimate resolution and potential financial and other impacts on the Company are uncertain.
~~(g) Guarantees and Indemnifications~~
US Airways assigned to Delta a lease agreement with the Port Authority of New York and New Jersey (the Port Authority) related to the East End Terminal at LaGuardia airport. A portion of the rental payments under the lease are used to repay special facility revenue bonds issued by the Port Authority. The special facility revenue bonds have a final scheduled maturity in 2015 and had an outstanding principal amount of approximately $22 million at December 31, 2014. Pursuant to the terms of the lease assignment, US Airways is contingently liable for Delta’s obligations, as assignee, under the lease agreement in the event Delta fails to perform such obligations including, without limitation, the payment of all rentals and other amounts due under the lease agreement. US Airways has the right to cure any failure by Delta to perform its obligations under the lease agreement and, in addition, US Airways has the right to reoccupy the terminal if it so chooses to cure any such default.
The Company is a party to many routine contracts in which it provides general indemnities in the normal course of business to third parties for various risks. The Company is not able to estimate the potential amount of any liability resulting from the indemnities. These indemnities are discussed in the following paragraphs.
In its aircraft financing agreements, the Company generally indemnifies the financing parties, trustees acting on their behalf and other relevant parties against liabilities (including certain taxes) resulting from the financing, manufacture, design, ownership, operation and maintenance of the aircraft regardless of whether these liabilities (or taxes) relate to the negligence of the indemnified parties.
The Company’s loan agreements and other London Interbank Offered Rate (LIBOR)-based financing transactions (including certain leveraged aircraft leases) generally obligate the Company to reimburse the applicable lender for incremental costs due to a change in law that imposes (i) any reserve or special deposit
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
requirement against assets of, deposits with or credit extended by such lender related to the loan, (ii) any tax, duty or other charge with respect to the loan (except standard income tax) or (iii) capital adequacy requirements. In addition, the Company’s loan agreements, derivative contracts and other financing arrangements typically contain a withholding tax provision that requires the Company to pay additional amounts to the applicable lender or other financing party, generally if withholding taxes are imposed on such lender or other financing party as a result of a change in the applicable tax law.
These increased cost and withholding tax provisions continue for the entire term of the applicable transaction, and there is no limitation on the maximum additional amounts the Company could be obligated to pay under such provisions. Any failure to pay amounts due under such provisions generally would trigger an event of default and, in a secured financing transaction, would entitle the lender to foreclose on the collateral to realize the amount due.
In certain transactions, including certain aircraft financing leases and loans, the lessors, lenders and/or other parties have rights to terminate the transaction based on changes in foreign tax law, illegality or certain other events or circumstances. In such a case, the Company may be required to make a lump sum payment to terminate the relevant transaction.
The Company has general indemnity clauses in many of its airport and other real estate leases where the Company as lessee indemnifies the lessor (and related parties) against liabilities related to the Company’s use of the leased property. Generally, these indemnifications cover liabilities resulting from the negligence of the indemnified parties, but not liabilities resulting from the gross negligence or willful misconduct of the indemnified parties. In addition, the Company provides environmental indemnities in many of these leases for contamination related to the Company’s use of the leased property.
Under certain contracts with third parties, the Company indemnifies the third-party against legal liability arising out of an action by the third-party, or certain other parties. The terms of these contracts vary and the potential exposure under these indemnities cannot be determined. The Company has liability insurance protecting the Company for some of the obligations it has undertaken under these indemnities.
The Company is involved in certain claims and litigation related to its operations. The Company is also subject to regulatory assessments in the ordinary course of business. The Company establishes reserves for litigation and regulatory matters when those matters present loss contingencies that are both probable and can be reasonably estimated. In the opinion of management, liabilities, if any, arising from these regulatory matters, claims and litigation will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows, after consideration of available insurance.
~~(h) Other~~
In 2010, American and Japan Airlines entered into a JBA under which, amongst other things, American provided Japan Airlines a guarantee of certain minimum incremental revenue resulting from the successful operation of the joint business for the first three years following its implementation, subject to certain terms and conditions. The amount required to be paid by the Company under the guarantee in any one of such years may not exceed $100 million, and is reduced if capacity for one of such years is less than a defined base year period capacity. As of December 31, 2013, American reached an agreement with Japan Airlines to settle the liability for $90 million. The liability is expected to be settled in 2015.
In the fourth quarter of 2012, the Company entered into a settlement agreement resolving a commercial dispute. The settlement agreement includes two elements which were valued at relative fair value and will be recognized when earned. The Company determined that the settlement includes a litigation gain of $280 million, which was valued using future cash flows and recognized in the fourth quarter of 2012. The settlement also
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
includes an incentive which is contingent upon signing a future contract and will be recognized over the term of the future contract. The contract was signed in January 2014. In connection with the new contract, the Company recorded an additional $70 million receivable with an offset to other liabilities to be recognized over the course of the remaining contract term.
As a result of the terrorist attacks of September 11, 2001 (the Terrorist Attacks) and the subsequent liability protections provided for by the Air Transportation Safety and System Stabilization Act (the Stabilization Act), the Company recorded a liability for the Terrorist Attacks claims equal to the related insurance receivable due to American. The Stabilization Act provides that, notwithstanding any other provision of law, liability for all claims, whether compensatory or punitive, arising from the Terrorist Attacks, against any air carrier shall not exceed the liability coverage maintained by the air carrier. As of December 31, 2014, the remaining liability and the amount of the offsetting receivable were each $974 million.
~~16.  Supplemental Cash Flow Information~~
~~Supplemental disclosure of cash flow information and non-cash investing and financing activities are as follows (in millions):~~

   Year Ended December 31,
   2014    2013    2012
Non-cash investing and financing activities:

Settlement of bankruptcy obligations
   $ 5,495       $ 864       $ —
Acquisition of US Airways, net
   —       4,386       —
Capital lease obligations
   747       —       —
Supplemental information:

Interest paid, net of amounts capitalized
   814       713       485
Income taxes paid
   7       12       6
~~17.  Operating Segments and Related Disclosures~~
The Company is managed as a single business unit that provides air transportation for passengers and cargo. This allows it to benefit from an integrated revenue pricing and route network that includes American, US Airways, Envoy, Piedmont, PSA and third-party carriers that fly under capacity purchase or prorate agreements as part of the Company’s regional operations. The flight equipment of all these carriers is combined to form one fleet that is deployed through a single route scheduling system. When making resource allocation decisions, the chief operating decision maker evaluates flight profitability data, which considers aircraft type and route economics, but gives no weight to the financial impact of the resource allocation decision on an individual carrier basis. The objective in making resource allocation decisions is to maximize consolidated financial results, not the individual results of American, US Airways, Envoy, Piedmont and PSA.
~~The Company’s operating revenues by geographic region as defined by the U.S. Department of Transportation (DOT) are summarized below (in millions):~~

   Year Ended December 31,
   2014    2013    2012
DOT Domestic
   $ 28,568       $ 15,376       $ 14,287
DOT Latin America
   6,964       6,288       5,813
DOT Atlantic
   5,652       3,756       3,411
DOT Pacific
   1,466       1,323       1,344






Total consolidated revenues
   $ 42,650       $ 26,743       $ 24,855






~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
The Company attributes operating revenues by geographic region based upon the origin and destination of each flight segment. The Company’s tangible assets consist primarily of flight equipment, which are mobile across geographic markets and, therefore, have not been allocated.
~~18.  Share-based Compensation~~
In December 2013, the Board of Directors of AAG approved the 2013 AAG Incentive Award Plan (the 2013 Plan). Awards may be in the form of an option, restricted stock award, restricted stock unit award, performance award, dividend equivalent award, deferred stock award, deferred stock unit award, stock payment award or stock appreciation right. The 2013 Plan authorizes the grant of awards for the issuance of 40 million shares plus any shares underlying awards granted under the 2013 Plan, or any pre-existing US Airways Group plan, that are forfeited, terminate or are cash settled (in whole or in part) without a payment being made in the form of shares. In addition, any shares that are available for issuance under the US Airways Group 2011 Incentive Award Plan (the 2011 Plan) as of the effective date of the Merger may be used for awards under the 2013 Plan; provided, that awards using such available shares under the 2011 Plan shall not be made after the date awards or grants could have been made under the 2011 Plan and shall only be made to individuals who were not providing services to AAG prior to the Merger. Awards granted under the 2013 Plan upon the assumption of, or in substitution for, outstanding awards in connection with a corporate transaction, such as a merger, will not reduce the shares authorized for issuance under the 2013 Plan.
In addition, pursuant to the Plan, and as approved by the Bankruptcy Court, certain officers, directors and employees received share-based incentive awards related to the Merger and future service. Awards issued in conjunction with the Plan are discussed in more detail below.
All outstanding US Airways Group equity awards were converted into equity awards with respect to AAG Common Stock using an exchange ratio of 1 to 1 and had a fair value of approximately $141 million at the Merger, which was included in the purchase price. These awards have the same terms and conditions as were applicable to such equity awards immediately prior to the Merger closing date.
The Company’s net income for the years ended December 31, 2014, 2013 and 2012 included $381 million, $92 million and $29 million respectively, of share-based compensation costs. Of the 2014 and 2013 amounts, $224 million and $42 million, respectively, were related to the Merger and recorded in special items, net on the accompanying consolidated statements of operations.
~~(a) Restricted Stock Unit (RSU) Awards~~
As of December 31, 2014, the Company has outstanding restricted stock unit awards with service conditions (time vested) and performance conditions. The grant-date fair value of restricted stock unit awards is equal to the market price of the underlying shares of common stock on the date of grant. For time vested awards, the expense is recognized on a straight-line basis over the vesting period for the entire award. For awards with performance conditions, the expense is recognized based on the expected achievement at each reporting period. Stock-settled restricted stock unit awards (RSUs) are classified as equity awards as the vesting results in the issuance of shares of AAG Common Stock. Cash-settled restricted stock unit awards (CRSUs) are classified as liability awards as the vesting results in payment of cash by the Company. The Company granted certain RSU awards in connection with the Merger as follows:
~~Alignment Awards~~
On December 9, 2013, alignment awards were granted in the form of RSUs. The awards were provided to legacy AMR employees in order to align interests and create parity with peers at US Airways Group, and one-third of the awards vested on the Company’s emergence from bankruptcy. The remaining awards vest equally on
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
the one and two year anniversary of emergence. Employees terminated in connection with the Merger fully vest in their awards on the termination date. Compensation expenses for these awards are recorded in special items, net on the consolidated statements of operations.
~~Merger Equity Grant~~
The Merger Equity Grant was granted on the Effective Date to certain officers and directors and employees in the form of RSUs and will be settled in equity for domestic employees and in cash for international employees. Each restricted stock unit award granted will vest, subject to the executive’s continued employment, with respect to (i) 50% of the restricted stock units on December 16, 2015; (ii) 25% of the restricted stock units on the earlier to occur of (a) December 16, 2015, if the Company is issued a Single Operating Certificate prior to or on that date or (b) the date on which the Company is issued a Single Operating Certificate, provided that such date is prior to or on December 9, 2016; and (iii) 25% of the restricted stock units on the date the Board of Directors or compensation committee of the Board of Directors determines that the Company has achieved at least $1.0 billion in net synergies with respect to fiscal year 2015 or 2016. Compensation expenses for these awards are recorded in special items, net on the consolidated statements of operations.
~~RSU award activity for all plans for the years ended December 31, 2014 and 2013 is as follows (shares in thousands):~~

   Number of
Shares Weighted Average
Grant Date Fair
Value
   (In thousands)
Outstanding at January 1, 2013
   —    $ —
Granted
   22,101    24.60
Assumed US Airways awards
   3,164    22.55
Vested and released
   (1,386 ) 24.58
Forfeited
   —    —


Outstanding at December 31, 2013
   23,879    $ 24.33
Granted
   3,467    37.07
Vested and released
   (4,193 ) 23.84
Forfeited
   (1,811 ) 25.10


Outstanding at December 31, 2014
   21,342    $ 26.43


As of December 31, 2014, there was $308 million of total unrecognized compensation cost related to RSUs. These costs are expected to be recognized over a weighted average period of one year. The total fair value of RSUs vested during the years ended December 31, 2014 and 2013 was $154 million and $31 million, respectively.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~Cash-settled restricted stock~~
~~CRSU award activity for all plans for the years ended December 31, 2014 and 2013 is as follows (shares in thousands):~~

   Number of
Shares Weighted Average
Fair Value
   (In thousands)
Outstanding at January 1, 2013
   —    $ —
Granted
   309    24.60
Assumed US Airways awards
   320    22.55
Vested and released
   (3 ) 25.25
Forfeited
   —    —


Outstanding at December 31, 2013
   626    $ 25.25
Granted
   50    40.93
Vested and released
   (341 ) 34.54
Forfeited
   (74 ) 34.75


Outstanding at December 31, 2014
   261    $ 53.63


As of December 31, 2014, the liability related to CRSUs was $6 million, which will continue to be remeasured at fair value at each reporting date until all awards are vested. As of December 31, 2014, the total unrecognized compensation expense for CRSUs was $8 million and is expected to be recognized over a weighted average period of one year. The total cash paid for CRSUs vested during the years ended December 31, 2014 and 2013 was $12 million and less than $1 million, respectively.
~~(b) Stock Options and Stock Appreciation Rights~~
Stock options and stock appreciation rights are granted with an exercise price equal to the underlying common stock’s fair value at the date of each grant. Stock options and stock appreciation rights have service conditions, become exercisable over a three-year vesting period and expire if unexercised at the end of their term, which ranges from seven to ten years. Stock options and stock-settled stock appreciation rights (SARs) are classified as equity awards as the exercise results in the issuance of shares of AAG Common Stock. Cash-settled stock appreciation rights (CSARs) are classified as liability awards as the exercise results in payment of cash by the Company.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~Stock option and SAR award activity for all plans for the years ended December 31, 2014 and 2013 is as follows (stock options and SARs in thousands):~~

   Stock Options
and SARS Weighted
Average
Exercise
Price    Weighted Average
Remaining
Contractual Term    Aggregate
Intrinsic Value
   (In thousands)    (In years)    (In millions)
Assumed US Airways awards at December 9, 2013
   11,200    $ 12.84
Granted
   —    —
Exercised
   (42 ) 14.42
Forfeited
   —    —
Expired
   —    —



Balance at December 31, 2013
   11,158    $ 12.84
Granted
   —    —
Exercised
   (4,109 ) 10.74
Forfeited
   —    —
Expired
   (42 ) 41.73



Balance at December 31, 2014
   7,007    $ 13.90       2.6       $ 278
Vested or expected to vest at December 31, 2014
   7,006    $ 13.90       2.6       $ 278
Exercisable at December 31, 2014
   6,052    $ 14.83       2.4       $ 235
~~CSAR award activity for all plans for the years ended December 31, 2014 and 2013 is as follows (CSARs in thousands):~~

   CSARs Weighted
Average
Exercise
Price    Weighted Average
Remaining
Contractual Term    Aggregate
Intrinsic Value
   (In thousands)    (In years)    (In millions)
Assumed US Airways awards at December 9, 2013
   2,888    $ 6.25
Granted
   —    —
Exercised
   (23 ) 5.10
Forfeited
   —    —
Expired
   —    —



Balance at December 31, 2013
   2,865    $ 6.26
Granted
   —    —
Exercised
   (1,254 ) 6.18
Forfeited
   —    —
Expired
   —    —



Balance at December 31, 2014
   1,611    $ 6.33       2.2       $ 76
Vested or expected to vest at December 31, 2014
   1,611    $ 6.33       2.2       $ 76
Exercisable at December 31, 2014
   1,610    $ 6.33       2.2       $ 76
There were no stock options or stock appreciation rights granted subsequent to the Merger closing date. Stock options and stock appreciation rights are expensed on a straight-line basis over the vesting period for the entire award.
As of December 31, 2014, there were $4 million of total unrecognized compensation costs related to SARs. These costs are expected to be recognized over a weighted average period of 0.3 years. The total intrinsic value of stock options and SARs exercised during the year ended December 31, 2014 and the 23 day period ended December 31, 2013 was $105 million and less than $1 million, respectively.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
As of December 31, 2014, the weighted average fair value of outstanding CSARs was $47.29 per share and the related liability was $76 million. These CSARs will continue to be remeasured at fair value at each reporting date until all awards are settled. As of December 31, 2014, the total unrecognized compensation expense for CSARs was less than a million and is expected to be recognized over a weighted average period of 0.3 years. Total cash paid for CSARs exercised during the year ended December 31, 2014 and the 23 day period ended December 31, 2013 was $42 million and less than $1 million, respectively.
~~19.  Valuation and Qualifying Accounts (in millions)~~

Balance at
beginning
of year Changes charged to
statement of
operations
accounts Payments Write-offs
(net of
recoveries) Sales,
retirements
and
transfers Balance at
end of
year
Allowance for obsolescence of inventories

Year ended December 31, 2014
$ 547    $ 142    $ —    $ (4 ) $ (12 ) $ 673
Year ended December 31, 2013
546    24    —    (23 ) —    547
Year ended December 31, 2012
575    20    —    (49 ) —    546
Allowance for uncollectible accounts

Year ended December 31, 2014
$ 41    $ 6    $ —    $ (30 ) $ —    $ 17
Year ended December 31, 2013
44    �� 3    —    (6 ) —    41
Year ended December 31, 2012
52    3    —    (11 ) —    44
Reserves for environmental remediation costs

Year ended December 31, 2014
$ 11    $ —    $ (1 ) $ —    $ —    $ 10
Year ended December 31, 2013
13    2    (1 ) (3 ) —    11
Year ended December 31, 2012
14    (1 ) —    —    —    13
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~20.  Quarterly Financial Data (Unaudited)~~
~~Unaudited summarized financial data by quarter for 2014 and 2013 (in millions, except share and per share amounts):~~

   First Quarter Second Quarter    Third Quarter    Fourth Quarter
2014

Operating revenues
   $ 9,995    $ 11,355       $ 11,139       $ 10,160
Operating expenses
   9,265    9,956       9,879       9,300
Operating income
   730    1,399       1,260       860
Net income
   480    864       942       597
Earnings per share:

Basic
   $ 0.66    $ 1.20       $ 1.31       $ 0.84
Diluted
   $ 0.65    $ 1.17       $ 1.28       $ 0.82
Shares used for computation (in thousands):

Basic
   723,971    720,600       719,067       706,185
Diluted
   741,335    734,767       735,196       724,767
2013

Operating revenues
   $ 6,098    $ 6,449       $ 6,828       $ 7,367
Operating expenses
   6,027    5,937       6,127       7,252
Operating income
   71    512       701       115
Net income (loss)
   (341 ) 220       289       (2,000 )
Earnings (loss) per share (1):

Basic
   $ (1.37 ) $ 0.88       $ 1.16       $ (5.38 )
Diluted
   $ (1.37 ) $ 0.79       $ 1.02       $ (5.38 )
Shares used for computation (in thousands) (1):

Basic
   249,491    249,588       249,719       372,055
Diluted
   249,491    288,511       289,036       372,055
~~(1)~~
The Company’s weighted average diluted shares outstanding for the 2013 quarters presented include the weighted effect of shares outstanding for both the pre and post-merger periods. The shares outstanding for the pre-merger periods (January 1, 2013 through December 8, 2013) consist only of the AMR common stock formerly traded under the symbol: “AAMRQ”. In accordance with GAAP, these former AAMRQ shares have been adjusted for all periods presented to retrospectively reflect the distributions made to date pursuant to the Company’s Plan, whereby holders of AAMRQ have received 0.7441 shares of AAG Common Stock per share of AAMRQ. The shares outstanding for the 23 day post-merger period (December 9, 2013 through December 31, 2013) include the full amount of shares to be issued pursuant to the Plan over the 120 day distribution period adjusted for approximately 13 million shares withheld by the Company in satisfaction of employee tax obligations.
Former holders of AAMRQ shares as of the Effective Date may in the future receive additional distributions of AAG Common Stock dependent upon the ultimate distribution of shares of AAG Common Stock to holders of disputed claims. Thus, the shares and related earnings per share calculation prior to the Effective Date may change in the future to reflect additional retrospective adjustments for future AAG Common Stock distributions to former holders of AAMRQ shares.
The Company’s fourth quarter 2014 results reflect $507 million of net special items consisting of $280 million of merger integration expenses related to information technology, alignment of labor union contracts, professional fees, severance and retention, share-based compensation, divestiture of London Heathrow Slots, fleet restructuring, re-branding of aircraft and airport facilities, relocation and training. In addition, the Company recorded a net $116 million charge for bankruptcy related items principally consisting of fair value adjustments
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
for bankruptcy settlement obligations, a $70 million charge related primarily to certain spare parts asset impairments as well as a $24 million charge due to a new pilot labor contract at the Company’s Envoy regional subsidiary. The Company also recorded a $31 million nonoperating special charge principally for Venezuelan foreign currency losses. These charges were offset in part by an $8 million gain on the sale of certain spare parts as well as a $6 million non-cash deferred income tax benefit related to certain indefinite-lived intangible assets.
The Company’s fourth quarter 2013 results reflect $2.4 billion of net special items consisting of $2.2 billion of reorganization items principally due to a $1.7 billion deemed claim to employees pursuant to the Plan as well as professional fees and estimated allowed claim amounts, $393 million of Merger related expenses due to the alignment of labor union contracts, professional fees, severance, share-based compensation and fees for US Airways to exit the Star Alliance and its codeshare agreement with United Airlines, a $214 million tax charge attributable to additional valuation allowance required to reduce deferred tax assets to the amount more likely than not to be realized, a $107 million charge related to American’s pilot long-term disability obligation, a $33 million aircraft impairment charge and $20 million of interest charges to recognize post-petition interest expense on unsecured obligations pursuant to the Plan. These charges were offset in part by a $538 million non-cash income tax benefit resulting from gains recorded in OCI, a $67 million gain on the sale of Slots at LaGuardia Airport and a $31 million credit to other revenue related to a change in accounting method resulting from the modification of the Company’s AAdvantage miles agreement with Citibank.
~~21.  Financial Information for Subsidiary Guarantors and Non-guarantor Subsidiaries~~
There are various cross-guarantees among the Company, American, US Airways Group and US Airways with respect to publicly held debt securities. In connection with the Merger, the Company and American entered into a second supplemental indenture under which they jointly and severally guaranteed the payment obligations of US Airways Group under the 6.125% senior notes. In addition, on March 31, 2014, the Company, US Airways Group and US Airways entered into amended and restated guarantees of the payment obligations of US Airways under the equipment notes relating to each of its Series 2010-1, 2011-1, 2012-1, 2012-2 and 2013-1 Pass Through Certificates, the result of which was to add AAG as a guarantor of such equipment notes on a joint and several basis with US Airways Group. In September 2014, the Company issued $750 million aggregate principal amount of the 5.50% senior notes, which are fully and unconditionally guaranteed by American, US Airways Group and US Airways.
In connection with the issuance of these guarantees, in accordance with Rule 3-10 of Regulation S-X and Rule 12h-5 under the Securities Exchange Act of 1934, as amended, US Airways Group and US Airways discontinued filing separate periodic and current reports with the SEC. As a result, in accordance with Rule 3-10, the Company is providing the following consolidating financial information for American Airlines Group (Parent Company Only), American, US Airways Group (Parent Company Only), US Airways and all other non-guarantor subsidiaries, together with the consolidating adjustments necessary to present the Company’s results on a consolidated basis. For the financial statements of US Airways Group and US Airways for the fiscal year ended December 31, 2013, please refer to the Annual Report on Form 10-K of each such company filed with the SEC on February 28, 2014.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~AMERICAN AIRLINES GROUP INC.~~
~~CONSOLIDATING STATEMENT OF OPERATIONS~~
~~(In millions)~~

Year Ended December 31, 2014
American
Airlines Group
(Parent
Company
Only) American US
Airways
Group
(Parent
Company
Only) US Airways Non-
Guarantor
Subsidiaries Eliminations
and
Reclassifications American
Airlines
Group Inc.
Consolidated
Operating revenues:

Mainline passenger
$ —    $ 20,345    $ —    $ 10,457    $ —    $ —    $ 30,802
Regional passenger
—    2,911    —    3,411    —    —    6,322
Cargo
—    717    —    158    —    —    875
Other
—    3,168    —    1,600    3,278    (3,395 ) 4,651

Total operating revenues
—    27,141    —    15,626    3,278    (3,395 ) 42,650
Operating expenses:

Aircraft fuel and related taxes
—    7,190    —    3,401    1    —    10,592
Salaries, wages and benefits
—    5,662    —    2,837    782    (773 ) 8,508
Regional expenses
—    3,113    —    3,452    —    (49 ) 6,516
Maintenance, materials and repairs
—    1,334    —    717    352    (352 ) 2,051
Other rent and landing fees
—    1,145    —    582    32    (32 ) 1,727
Aircraft rent
—    860    —    394    94    (98 ) 1,250
Selling expenses
—    1,091    —    453    —    —    1,544
Depreciation and amortization
—    896    —    405    40    (46 ) 1,295
Special items, net
18    507    —    276    18    (19 ) 800
Other
5    3,005    1    1,181    1,951    (2,025 ) 4,118

Total operating expenses
23    24,803    1    13,698    3,270    (3,394 ) 38,401

Operating income (loss)
(23 ) 2,338    (1 ) 1,928    8    (1 ) 4,249
Nonoperating income (expense):

Interest income
9    25    —    7    2    (12 ) 31
Interest expense, net
(15 ) (581 ) (36 ) (266 ) (1 ) 12    (887 )
Equity in earnings of subsidiaries
2,919    —    1,480    —    —    (4,399 ) —
Other, net
—    (153 ) (53 ) (30 ) 2    53    (181 )

Total nonoperating income (expense), net
2,913    (709 ) 1,391    (289 ) 3    (4,346 ) (1,037 )

Income before income taxes
2,890    1,629    1,390    1,639    11    (4,347 ) 3,212
Income tax provision (benefit)
8    319    (1 ) 157    16    (169 ) 330

Net income (loss)
$ 2,882    $ 1,310    $ 1,391    $ 1,482    $ (5 ) $ (4,178 ) $ 2,882

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~AMERICAN AIRLINES GROUP INC.~~
~~CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)~~
~~(In millions)~~

Year Ended December 31, 2014
American
Airlines
Group
(Parent
Company
Only) American US
Airways
Group
(Parent
Company
Only) US Airways Non-
Guarantor
Subsidiaries Eliminations
and
Reclassifications American
Airlines
Group Inc.
Consolidated
Net income (loss)
$ 2,882    $ 1,310    $ 1,391    $ 1,482    $ (5 ) $ (4,178 ) $ 2,882

Other comprehensive income (loss), before tax:

Defined benefit pension plans and retiree medical:

Amortization of actuarial loss and prior service cost
—    (159 ) —    (4 ) —    —    (163 )
Current year change
—    (2,602 ) —    (19 ) (12 ) —    (2,633 )
Derivative financial instruments:

Change in fair value
(2 ) (52 ) —    —    —    —    (54 )
Reclassification into earnings
—    (4 ) —    —    —    —    (4 )
Unrealized gain (loss) on investments:

Net change in value
1    (4 ) —    —    —    —    (3 )

Other comprehensive income (loss) before tax
(1 ) (2,821 ) —    (23 ) (12 ) —    (2,857 )
Non-cash tax benefit
(2 ) (328 ) —    —    —    —    (330 )

Comprehensive income (loss)
$ 2,883    $ (1,183 ) $ 1,391    $ 1,459    $ (17 ) $ (4,178 ) $ 355

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~AMERICAN AIRLINES GROUP INC.~~
~~CONDENSED CONSOLIDATING BALANCE SHEET~~
~~(In millions)~~

December 31, 2014
American
Airlines Group
(Parent
Company
Only) American US
Airways
Group
(Parent
Company
Only) US Airways Non-
Guarantor
Subsidiaries Eliminations
and
Reclassifications American
Airlines
Group Inc.
Consolidated
ASSETS

Current assets

Cash
$ 1    $ 785    $ 2    $ 199    $ 7    $ —    $ 994
Short-term investments
—    3,290    —    3,016    3    —    6,309
Restricted cash and short-term investments
—    650    —    124    —    —    774
Accounts receivable, net
—    1,445    —    324    15    (13 ) 1,771
Receivables from related parties, net
1,893    —    157    933    526    (3,509 ) —
Aircraft fuel, spare parts and supplies, net
—    625    —    294    85    —    1,004
Prepaid expenses and other
—    462    —    912    41    (155 ) 1,260

Total current assets
1,894    7,257    159    5,802    677    (3,677 ) 12,112
Operating property and equipment
—    16,299    —    6,506    279    —    23,084
Other assets

Investments in subsidiaries
847    —    6,870    —    —    (7,717 ) —
Goodwill
—    —    —    4,090    —    1    4,091
Intangibles, net of accumulated amortization
—    815    —    1,425    —    —    2,240
Other assets
53    1,921    —    267    38    (35 ) 2,244

Total other assets
900    2,736    6,870    5,782    38    (7,751 ) 8,575

Total assets
$ 2,794    $ 26,292    $ 7,029    $ 18,090    $ 994    $ (11,428 ) $ 43,771

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities

Current maturities of long-term debt and capital leases
$ —    $ 1,230    $ —    $ 477    $ 1    $ —    $ 1,708
Accounts payable
—    1,029    —    287    61    —    1,377
Payables to related parties, net
—    2,563    634    73    239    (3,509 ) —
Air traffic liability
—    2,989    —    1,263    —    —    4,252
Frequent flyer liability
—    1,823    —    984    —    —    2,807
Other accrued liabilities
14    1,886    3    1,253    138    (3 ) 3,291

Total current liabilities
14    11,520    637    4,337    439    (3,512 ) 13,435
Noncurrent liabilities

Long-term debt and capital leases, net of current maturities
758    10,004    524    4,945    —    (35 ) 16,196
Pension and postretirement benefits
—    7,400    —    122    40    —    7,562
Mandatorily convertible preferred stock and other bankruptcy settlement obligations
—    325    —    —    —    —    325
Other liabilities
1    2,615    —    1,861    317    (562 ) 4,232

Total noncurrent liabilities
759    20,344    524    6,928    357    (597 ) 28,315
Stockholders’ equity (deficit)

Common stock
7    —    —    —    —    —    7
Additional paid-in capital
15,135    10,632    4,703    5,542    199    (21,076 ) 15,135
Accumulated other comprehensive loss
(4,559 ) (4,645 ) (16 ) (8 ) (12 ) 4,681    (4,559 )
Retained earnings (deficit)
(8,562 ) (11,559 ) 1,181    1,291    11    9,076    (8,562 )

Total stockholders’ equity (deficit)
2,021    (5,572 ) 5,868    6,825    198    (7,319 ) 2,021

Total liabilities and stockholders’ equity (deficit)
$ 2,794    $ 26,292    $ 7,029    $ 18,090    $ 994    $ (11,428 ) $ 43,771

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~AMERICAN AIRLINES GROUP INC.~~
~~CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS~~
~~(In millions)~~

Year Ended December 31, 2014
American
Airlines Group
(Parent
Company
Only) American US
Airways
Group
(Parent
Company
Only) US Airways Non-
Guarantor
Subsidiaries Eliminations
and
Reclassifications American
Airlines
Group Inc.
Consolidated
Net cash provided by operating activities
$ 457    $ 1,477    $ 1    $ 1,101    $ 44    $ —    $ 3,080
Cash flows from investing activities:

Capital expenditures and aircraft purchase deposits
—    (3,913 ) —    (1,145 ) (55 ) (198 ) (5,311 )
Purchases of short-term investments
—    (3,270 ) —    (2,110 ) —    —    (5,380 )
Sales of short-term investments
—    5,139    —    2,040    —    —    7,179
Decrease in restricted cash and short-term investments
—    52    —    209    —    —    261
Net proceeds from slot transaction
—    299    —    8    —    —    307
Funds transferred to affiliates, net
—    (198 ) —    —    —    198    —
Proceeds from sale of property and equipment
—    2    —    18    13    —    33

Net cash used in investing activities
—    (1,889 ) —    (980 ) (42 ) —    (2,911 )
Cash flows from financing activities:

Payments on long-term debt and capital leases
—    (2,343 ) —    (612 ) (1 ) (176 ) (3,132 )
Proceeds from issuance of long-term debt
750    1,993    —    559    —    —    3,302
Deferred financing costs
(11 ) (93 ) —    (2 ) —    —    (106 )
Sale-leaseback transactions
—    811    —    —    —    —    811
Exercise of stock options
10    —    —    —    —    —    10
Treasury stock repurchases
(1,062 ) —    —    —    —    —    (1,062 )
Dividend payment
(144 ) —    —    —    —    —    (144 )
Funds transferred to affiliates, net
—    —    —    (176 ) 176    —
Other financing activities
—    —    —    6    —    —    6

Net cash provided by (used in) financing activities
(457 ) 368    —    (225 ) (1 ) —    (315 )

Net increase (decrease) in cash
—    (44 ) 1    (104 ) 1    —    (146 )
Cash at beginning of year
1    829    1    303    6    —    1,140

Cash at end of year
$ 1    $ 785    $ 2    $ 199    $ 7    $ —    $ 994

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.~~
~~22.  Subsequent Events~~
~~AAdvantage Loan~~
American had the right to repay in cash, without premium or penalty, any or all of the amounts owed to Citibank under the AAdvantage Loan. Effective January 2, 2015, American exercised its loan repayment right with respect to the full value of the outstanding balance to Citibank for $400 million. In connection with the repayment, in the first quarter of 2015, American will recognize an early debt extinguishment gain of approximately $17 million. The entire outstanding balance of the obligation is reflected in current maturities of long-term debt on the accompanying consolidated balance sheet as of December 31, 2014.
~~Share Repurchase Program and Dividend Declaration~~
On January 27, 2015, the Company announced that its Board of Directors had authorized a $2.0 billion share repurchase program to be completed by the end of 2016. Shares repurchased under the program may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Any such repurchases will be made from time to time subject to market and economic conditions, applicable legal requirements and other relevant factors. The share repurchase program does not obligate the Company to repurchase any specific number of shares and may be suspended at any time at management’s discretion.
Also on January 27, 2015, the Company announced that its Board of Directors had declared a $0.10 per share dividend for shareholders of record on February 9, 2015, and payable on February 23, 2015. Any future dividends that may be declared and paid from time to time under the Company’s capital deployment program will be subject to market and economic conditions, applicable legal requirements and other relevant factors. The Company’s capital deployment program does not obligate it to continue a dividend for any fixed period, and payment of dividends may be suspended at any time at management’s discretion.
~~Distribution of AAG Common Stock~~
On February 10, 2015, approximately 0.8 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and shares were withheld or sold on account of related tax obligations.
~~ITEM 8B. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA OF AMERICAN AIRLINES, INC.~~
~~Report of Independent Registered Public Accounting Firm~~
~~The Board of Directors and Stockholders~~
~~American Airlines, Inc.:~~
We have audited the accompanying consolidated balance sheet of American Airlines, Inc. and subsidiaries (American) as of December 31, 2014, and the related consolidated statements of operations, comprehensive income (loss), stockholder’s equity (deficit), and cash flows for the year then ended. These consolidated financial statements are the responsibility of American’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of American Airlines, Inc. and subsidiaries as of December 31, 2014, and the results of their operations and their cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), American Airlines, Inc.’s internal control over financial reporting as of December 31, 2014, based on criteria established in~~Internal Control – Integrated Framework (1992)~~ issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 25, 2015 expressed an unqualified opinion on the effectiveness of American’s internal control over financial reporting.
~~/s/    KPMG LLP~~
~~Dallas, Texas~~
~~February 25, 2015~~
~~Report of Independent Registered Public Accounting Firm~~
~~The Board of Directors and Stockholder~~
~~American Airlines, Inc.~~
We have audited the accompanying consolidated balance sheet of American Airlines, Inc. (American) as of December 31, 2013, and the related consolidated statements of operations, comprehensive income (loss), stockholder’s equity (deficit) and cash flows for each of the two years in the period ended December 31, 2013. These consolidated financial statements and schedule are the responsibility of American’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of American Airlines, Inc. at December 31, 2013 and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.
~~/s/    Ernst & Young LLP~~
~~Dallas, Texas~~
~~February 27, 2014~~
~~AMERICAN AIRLINES, INC.~~
~~CONSOLIDATED STATEMENTS OF OPERATIONS~~
~~(In millions)~~

   Year Ended December 31,
   2014 2013 2012
Operating revenues:

Mainline passenger
   $ 20,345    $ 19,594    $ 18,743
Regional passenger
   2,911    2,927    2,914
Cargo
   717    676    675
Other
   3,168    2,563    2,493


Total operating revenues
   27,141    25,760    24,825
Operating expenses:

Aircraft fuel and related taxes
   7,190    7,628    7,705
Salaries, wages and benefits
   5,662    5,267    6,208
Regional expenses
   3,113    3,074    3,049
Maintenance, materials and repairs
   1,334    1,222    1,158
Other rent and landing fees
   1,145    1,117    1,083
Aircraft rent
   860    743    554
Selling expenses
   1,091    1,128    1,059
Depreciation and amortization
   896    830    845
Special items, net
   507    282    386
Other
   3,005    2,935    2,696


Total operating expenses
   24,803    24,226    24,743


Operating income
   2,338    1,534    82
Nonoperating income (expense):

Interest income
   25    20    25
Interest expense, net of capitalized interest
   (581 ) (710 ) (646 )
Other, net
   (153 ) (84 ) 223


Total nonoperating expense, net
   (709 ) (774 ) (398 )


Income (loss) before reorganization items, net
   1,629    760    (316 )
Reorganization items, net
   —    (2,640 ) (2,179 )


Income (loss) before income taxes
   1,629    (1,880 ) (2,495 )
Income tax provision (benefit)
   319    (354 ) (569 )


Net income (loss)
   $ 1,310    $ (1,526 ) $ (1,926 )


~~See accompanying notes to consolidated financial statements.~~
~~AMERICAN AIRLINES, INC.~~
~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS~~
~~(In millions)~~

   Year Ended December 31,
   2014 2013 2012
Net income (loss)
   $ 1,310    $ (1,526 ) $ (1,926 )


Other comprehensive income (loss), before tax:

Defined benefit pension plans and retiree medical:

Amortization of actuarial gain (loss) and prior service cost
   (159 ) (142 ) 130
Current year change
   (2,602 ) 1,565    (1,910 )
Benefit plan modifications
   —    —    3,345
Derivative financial instruments:

Change in fair value
   (52 ) 18    (12 )
Reclassification into earnings
   (4 ) 34    (3 )
Unrealized gain (loss) on investments:

Net change in value
   (4 ) (1 ) 6


Other comprehensive income (loss) before tax
   (2,821 ) 1,474    1,556
Non-cash tax provision (benefit)
   (328 ) 538    569


Comprehensive loss
   $ (1,183 ) $ (590 ) $ (939 )


~~See accompanying notes to consolidated financial statements.~~
~~AMERICAN AIRLINES, INC.~~
~~CONSOLIDATED BALANCE SHEETS~~
~~(In millions, except shares and par value)~~

   December 31,
   2014 2013
ASSETS

Current assets

Cash
   $ 785    $ 829
Short-term investments
   3,290    5,162
Restricted cash and short-term investments
   650    702
Accounts receivable, net
   1,445    1,186
Aircraft fuel, spare parts and supplies, net
   625    620
Prepaid expenses and other
   462    702


Total current assets
   7,257    9,201
Operating property and equipment

Flight equipment
   21,646    18,534
Ground property and equipment
   5,217    5,002
Equipment purchase deposits
   1,128    847


Total property and equipment, at cost
   27,991    24,383
Less accumulated depreciation and amortization
   (11,692 ) (10,914 )


Total property and equipment, net
   16,299    13,469
Other assets

Intangibles, net of accumulated amortization of $376 and $375, respectively
   815    812
Other assets
   1,921    2,130


Total other assets
   2,736    2,942


Total assets
   $ 26,292    $ 25,612


LIABILITIES AND STOCKHOLDER’S DEFICIT

Current liabilities

Current maturities of long-term debt and capital leases
   $ 1,230    $ 957
Accounts payable
   1,029    1,013
Accrued salaries and wages
   650    659
Air traffic liability
   2,989    3,145
Frequent flyer liability
   1,823    1,760
Payable to affiliates
   2,563    2,807
Other accrued liabilities
   1,236    1,578


Total current liabilities
   11,520    11,919
Noncurrent liabilities

Long-term debt and capital leases, net of current maturities
   10,004    9,852
Pension and postretirement benefits
   7,400    5,693
Deferred gains and credits, net
   271    278
Bankruptcy settlement obligations
   325    5,424
Other liabilities
   2,344    2,106


Total noncurrent liabilities
   20,344    23,353
Commitments and contingencies (Note 12)

Stockholder’s deficit

Common stock, $1.00 par value; 1,000 shares authorized, issued and outstanding
   —    —
Additional paid-in capital
   10,632    5,361
Accumulated other comprehensive loss
   (4,645 ) (2,152 )
Accumulated deficit
   (11,559 ) (12,869 )


Total stockholder’s deficit
   (5,572 ) (9,660 )


Total liabilities and stockholder’s deficit
   $ 26,292    $ 25,612


~~See accompanying notes to consolidated financial statements.~~
~~AMERICAN AIRLINES, INC.~~
~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~
~~(In millions)~~

   December 31,
   2014 2013 2012
Cash flows from operating activities:

Net income (loss)
   $ 1,310    $ (1,526 ) $ (1,926 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization
   1,051    979    999
Debt discount and lease amortization
   (5 ) 4    (14 )
Special items, non-cash
   89    82    214
Pension and postretirement
   (159 ) (154 ) 287
Deferred income taxes
   342    (324 ) (569 )
Share based compensation
   199    24    26
Reorganization items, non-cash
   —    2,098    2,037
Interest expense, non-cash
   —    45    —
Other, net
   3    (77 ) 13
Changes in operating assets and liabilities:

Increase in accounts receivable
   (209 ) (81 ) (222 )
Decrease (increase) in other current assets
   8    (3 ) (133 )
Decrease (increase) in derivative collateral
   —    1    (1 )
Increase in accounts payable and accrued liabilities
   99    46    423
Increase (decrease) in air traffic liability
   (124 ) 332    161
Increase in frequent flyer liability
   31    49    140
Contributions to pension plans
   (809 ) (494 ) (277 )
Decrease in other assets and liabilities
   (349 ) (52 ) (4 )


Net cash provided by operating activities
   1,477    949    1,154
Cash flows from investing activities:

Capital expenditures and aircraft purchase deposits
   (3,913 ) (2,968 ) (1,870 )
Purchases of short-term investments
   (3,270 ) (3,342 ) (1,067 )
Sales of short-term investments
   5,139    1,588    1,373
Decrease (increase) in restricted cash and short-term investments
   52    148    (112 )
Net proceeds from slot transaction
   299    —    —
Funds transferred to affiliates, net
   (198 ) —    —
Proceeds from sale of property and equipment
   2    115    124


Net cash used in investing activities
   (1,889 ) (4,459 ) (1,552 )
Cash flows from financing activities:

Payments on long-term debt and capital leases
   (2,343 ) (2,628 ) (1,288 )
Proceeds from issuance of long-term debt
   1,993    4,850    268
Deferred financing costs
   (93 ) (115 ) (6 )
Sale-leaseback transactions
   811    1,700    1,509
Funds transferred to affiliates, net
   —    53    109
Other financing activities
   —    5    —


Net cash provided by financing activities
   368    3,865    592


Net increase (decrease) in cash
   (44 ) 355    194
Cash at beginning of year
   829    474    280


Cash at end of year
   $ 785    $ 829    $ 474


~~See accompanying notes to consolidated financial statements.~~
~~AMERICAN AIRLINES, INC.~~
~~CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY (DEFICIT)~~
~~(In millions)~~

Common
Stock Additional
Paid-in
Capital Treasury
Stock Accumulated
Other
Comprehensive
Income (Loss) Accumulated
Deficit Total
Balance at December 31, 2011
$ —    $ 4,455    $ —    $ (4,075 ) $ (9,417 ) $ (9,037 )
Net loss
—    —    —    —    (1,926 ) (1,926 )
Change in unrealized gain on investments
—    —    —    6    —    6
Changes in pension, retiree medical and other liability
—    —    —    1,565    —    1,565
Net changes in fair value of derivative financial instruments
—    —    —    (15 ) —    (15 )
Non-cash tax provision
—    —    —    (569 ) —    (569 )
Share-based compensation expense
—    14    —    —    14

Balance at December 31, 2012
—    4,469    —    (3,088 ) (11,343 ) (9,962 )
Net loss
—    —    —    —    (1,526 ) (1,526 )
Change in unrealized loss on investments
—    —    —    (1 ) —    (1 )
Changes in pension, retiree medical and other liability
—    —    —    1,423    —    1,423
Net changes in fair value of derivative financial instruments
—    —    —    52    —    52
Non-cash tax provision
—    —    —    (538 ) —    (538 )
Share-based compensation expense
—    68    —    —    68
Intercompany equity transfer
—    824    —    —    824

Balance at December 31, 2013
—    5,361    —    (2,152 ) (12,869 ) (9,660 )
Net income
—    —    —    —    1,310    1,310
Change in unrealized loss on investments
—    —    —    (4 ) —    (4 )
Changes in pension, retiree medical and other liability
—    —    —    (2,761 ) —    (2,761 )
Net changes in fair value of derivative financial instruments
—    —    —    (56 ) —    (56 )
Non-cash tax benefit
—    —    —    328    —    328
Share-based compensation expense
—    199    —    —    —    199
Intercompany equity transfer
—    5,072    —    —    —    5,072

Balance at December 31, 2014
$ —    $ 10,632    $ —    $ (4,645 ) $ (11,559 ) $ (5,572 )

~~See accompanying notes to consolidated financial statements.~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
~~1.  Nature of Operations and Operating Environment~~
American Airlines, Inc. (American) is a Delaware corporation whose primary business activity is the operation of a major network air carrier. American is a wholly-owned subsidiary of American Airlines Group Inc. (AAG; formerly AMR Corporation), which owns all of American’s outstanding common stock, par value $1.00 per share.
Prior to the Merger, as discussed below, American operated the third largest airline in the U.S. as measured by revenue passenger miles (RPMs) and available seat miles (ASMs). American operates in five primary domestic markets: Chicago, Dallas/Fort Worth, Los Angeles, Miami, and New York City.
As of December 31, 2014, American employed approximately 61,600 active full-time equivalent employees, of which approximately 86% are covered by collective bargaining agreements (CBAs) with various labor unions.
~~2.  Emergence from Chapter 11~~
~~Overview~~
On November 29, 2011 (the Petition Date), AMR Corporation (AMR, renamed American Airlines Group Inc., upon the closing of the Merger), its principal subsidiary, American, and certain of AMR’s other direct and indirect domestic subsidiaries (collectively, the Debtors), filed voluntary petitions for relief (the Chapter 11 Cases) under Chapter 11 of the United States Bankruptcy Code (the Bankruptcy Code) in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court). On October 21, 2013, the Bankruptcy Court entered an order (the Confirmation Order) approving and confirming the Debtors’ fourth amended joint plan of reorganization (as amended, the Plan).
On December 9, 2013 (the Effective Date), the Debtors consummated their reorganization pursuant to the Plan, principally through the transactions contemplated by that certain Agreement and Plan of Merger (as amended, the Merger Agreement), dated as of February 13, 2013, by and among AMR, AMR Merger Sub, Inc. (Merger Sub) and US Airways Group, Inc. (US Airways Group), pursuant to which Merger Sub merged with and into US Airways Group (the Merger), with US Airways Group surviving as a wholly-owned subsidiary of AAG following the Merger. Pursuant to the Merger Agreement, each share of common stock, par value $0.01 per share, of US Airways Group was converted into the right to receive one share of AAG common stock, par value $0.01 per share (AAG Common Stock).
From the Petition Date through the Effective Date, pursuant to automatic stay provisions under the Bankruptcy Code and orders granted by the Bankruptcy Court, all actions to enforce or otherwise effect repayment of liabilities preceding the Petition Date as well as all pending litigation against the Debtors generally were stayed. Following the Effective Date, actions to enforce or otherwise effect repayment of liabilities preceding the Petition Date generally have been permanently enjoined. Any unresolved claims will continue to be subject to the claims reconciliation process under the supervision of the U.S. Bankruptcy Court. However, certain pending litigation related to pre-petition liabilities may proceed in courts other than the U.S. Bankruptcy Court to the extent the parties to such litigation have obtained relief from the permanent injunction.
~~Plan of Reorganization~~
~~The Plan implements the Merger and incorporates a compromise and settlement of certain intercreditor and intercompany claim issues.~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
Pursuant to the Plan, all shares of AMR common stock outstanding prior to the Effective Date were canceled. AAG’s Certificate of Incorporation, which was approved in connection with the Plan, authorizes the issuance of 1.75 billion new shares of AAG Common Stock and 200 million shares of AAG Series A Preferred Stock, par value $0.01 per share (AAG Series A Preferred Stock). Of the authorized AAG Series A Preferred Stock, approximately 168 million were designated “Series A Convertible Preferred Stock,” with a stated value of $25.00 per share, and issued in accordance with the Plan. AAG Common Stock is listed on the NASDAQ Global Select Market under the symbol “AAL” and began trading on December 9, 2013. AAG Series A Preferred Stock was listed on the NASDAQ Global Select Market under the symbol “AALCP” from December 9, 2013 until its final mandatory conversion on April 8, 2014. In addition, the 2013 Incentive Award Plan (the 2013 Plan) authorizes the grant of awards for the issuance of 40 million shares of AAG Common Stock plus any shares underlying awards granted under the 2013 Plan, or any pre-existing US Airways Group plan, that are forfeited, terminate or are cash settled (in whole or in part) without a payment being made in the form of shares. In addition, any shares that were available for issuance under the US Airways Group 2011 Incentive Award Plan (the 2011 Plan) as of the effective date of the Merger may be used for awards under the 2013 Plan; provided, that awards using such available shares shall not be made after the date awards or grants could have been made under 2011 Plan and shall only be made to individuals who were not providing services to AMR prior to the Merger.
~~The Plan contains the following provisions relating to the treatment of pre-petition claims against the Debtors and other holders of allowed interests in the Debtors:~~
~~all secured claims against the Debtors have been reinstated;~~
~~allowed administrative claims, priority claims and convenience claims have been or will be paid in full in cash;~~
other holders of allowed pre-petition unsecured claims, holders of allowed interests and certain employees of AMR received or will receive 72% of AAG Common Stock (on a fully converted basis) authorized to be issued pursuant to the Plan and in connection with the Merger under the following provisions:
all creditors holding general unsecured claims against American that are guaranteed by AAG and general unsecured claims against AAG that are guaranteed by American (Double-Dip Unsecured Claims) were treated the same under the Plan. Holders of Double-Dip Unsecured Claims received, at the Effective Date, their recovery in shares of AAG Series A Preferred Stock with a stated amount equal to the allowed amount of their claims, including post-petition interest at the non-default rate;
all creditors holding Single-Dip Unsecured Claims were treated the same regardless of whether the claim was asserted against the AAG Debtors, the American Debtors, or other Debtors. As used herein, “Single-Dip Unsecured Claims” means the general unsecured claims against the Debtors that were not guaranteed by any other Debtor, other than the claims of the Debtors’ labor unions representing mainline workers. Holders of Single-Dip Unsecured Claims received a portion of their recovery in shares of AAG Series A Preferred Stock at the Effective Date and their remaining recovery in shares of AAG Common Stock during the 120-day period after the Effective Date;
holders of certain labor-related deemed claims and certain non-management, non-union employees as specified in the Plan received, at the Effective Date, the right to receive an allocation of shares of AAG Common Stock representing 23.6% of the total number of shares of AAG Common Stock ultimately distributed to holders of pre-petition general unsecured creditors against the Debtors. On the Effective Date, pursuant to the Plan, an initial allocation of approximately 39 million shares of AAG Common Stock was made related to these labor and employee groups, of which approximately 27 million shares were distributed on the Effective Date and approximately 13 million shares of which were withheld in connection with American making a cash payment of approximately $300 million for certain required withholding taxes;
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
holders of allowed interests in AMR (primarily holders of AMR common stock existing immediately prior to the Effective Date) received, at the Effective Date, a distribution of approximately 26 million shares of AAG Common Stock representing 3.5% of the total number of shares of AAG Common Stock contemplated for issuance pursuant to the Plan and received an additional 267 million shares of AAG Common Stock during the 120-day period after the Effective Date; and
holders of disputed claims at the Effective Date, to the extent such disputed claims become allowed Single-Dip Unsecured Claims after the Effective Date, are eligible to receive shares of AAG Common Stock held in reserve (the Disputed Claims Reserve), beginning 180 days after the Effective Date. Disputed claimholders that subsequently become holders of Single-Dip Unsecured Claims will receive, subject to the availability of sufficient shares in the Disputed Claims Reserve, the number of shares of AAG Common Stock that the disputed claimholder would have received had such claimholder been a holder of Single-Dip Unsecured Claims as of the Effective Date.
The Plan contemplated the distribution of up to 756 million shares of AAG Common Stock, however this amount has been reduced by approximately 20 million shares because certain tax withholdings for employees were paid in cash as permitted under the Plan. In accordance with the Plan, AAG issued the remaining shares of AAG Common Stock over the 120-day distribution period, except for shares held in the Disputed Claims Reserve. In addition, pursuant to the Plan, approximately 197 million shares of AAG Common Stock were distributed to holders of outstanding shares of US Airways Group common stock.
Pursuant to rulings of the Bankruptcy Court, the Plan established the Disputed Claims Reserve that was initially issued 30.4 million shares of AAG Common Stock reserved for issuance to disputed claimholders at the Effective Date that ultimately become holders of allowed Single-Dip Unsecured Claims (Single-Dip Equity Obligations) as well as to certain AMR labor groups and employees who received a deemed claim amount based upon a fixed percentage of the distributions to be made to general unsecured claimholders. As of December 31, 2014, the Disputed Claims Reserve held 26.8 million shares of AAG Common Stock pending distribution of those shares in accordance with the Plan. On ~~July 1, 2014 (the date 180 days after the Effective Date),~~February 10, 2015, approximately ~~2.9~~0.8 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims, and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and ~~shares were withheld or sold on account of related tax obligations. In addition, on July 1, 2014,~~ American repurchased ~~0.4~~less than 0.1 million shares of AAG Common Stock for an aggregate of ~~$19~~$4 million from the Disputed Claims Reserve at the ~~then prevailing~~then-prevailing market price in order to fund cash tax obligations resulting from ~~distributions by the Disputed Claims Reserve.~~this distribution. On ~~November 4, 2014,~~July 14, 2015, approximately ~~0.7~~0.6 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims, and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and ~~shares were withheld or sold on account of related tax obligations. In addition, on November 4, 2014,~~ American repurchased less than 0.1 million shares of AAG Common Stock for an aggregate of $2 million from the Disputed Claims Reserve at the ~~then prevailing~~then-prevailing market price in order to fund cash tax obligations resulting from ~~distributions by the Disputed Claims Reserve.~~this distribution. As of December 31, ~~2014,~~2015, there were approximately ~~26.8~~25.3 million shares of AAG Common Stock remaining in the Disputed Claims Reserve. As disputed claims are resolved, the claimants will receive distributions of shares from the Disputed Claims Reserve on the same basis as if such distributions had been made on or about the Effective Date. To the extent that any of the reserved shares remain undistributed upon resolution of all remaining disputed claims, such shares will not be returned to AAG but rather will be distributed to former AMR ~~shareholders~~stockholders as of the Effective Date. AAG is not required to distribute additional shares above the limits contemplated by the Plan described above.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
In addition, from the Effective Date through December 31, ~~2014,~~2015, American has made the following cash disbursements under the Plan:

$385 million in cash to the pension plans in connection with missed contributions to the pension plans during the Chapter 11 Cases and interest and penalty interest thereon;

$108 million in cash to holders in partial or full satisfaction of their claims, including to holders of administrative claims, and state and local priority tax claims;

$196 million in cure payments to holders of secured debt; and

Approximately ~~$563~~$570 million for payroll and other taxes associated with equity distributions to employees and distributions from the Disputed Claims Reserve.
Several parties have filed appeals seeking reconsideration of the Confirmation Order. See Note 1213 for more information.
The reconciliation process with respect to the remaining claims will take considerable time post-emergence. American’s estimate of the amounts of disputed claims that will ultimately become allowed Single-Dip Unsecured Claims are included in bankruptcy settlement obligations on American’s consolidated balance sheet as of December 31, ~~2014.~~2015. As these claims are resolved, or where better information becomes available and is evaluated, American will make adjustments to the liabilities recorded inon American’s consolidated financial statements as appropriate. Any such adjustments could be material to American’s financial position or results of operations in any given period.
Availability and Utilization of Net Operating Losses
Upon emergence from bankruptcy, American experienced an “ownership change” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (Section 382), which could potentially limit the ability to utilize certain tax attributes including American’s substantial net operating losses (NOLs). The general limitation rules for a debtor in a bankruptcy case are liberalized where the ownership change occurs upon emergence from bankruptcy. American elected to be covered by certain special rules for federal income tax purposes that ~~permit~~permitted approximately $9.5 billion (with $7.3 billion of unlimited NOL still remaining at December 31, 2015) of the federal ~~NOL Carryforwards~~NOLs carried over from prior taxable years (NOL Carryforwards) to be utilized without regard to the annual limitation generally imposed by Section 382. See Note 78 for additional information related to tax matters.
Moreover, an ownership change subsequent to American’s emergence from bankruptcy may further limit or effectively eliminate the ability to utilize American’s NOL Carryforwards and other tax attributes. To reduce the risk of a potential adverse effect on American’s ability to utilize the NOL Carryforwards, AAG’s Restated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
Certificate of Incorporation (the Certificate of Incorporation) contains transfer restrictions applicable to certain substantial ~~shareholders.~~stockholders. Although the purpose of these transfer restrictions is to prevent an ownership change from occurring, there can be no assurance that an ownership change will not occur even with these transfer restrictions. A copy of ~~AAG’s~~the Certificate of Incorporation was attached as Exhibit 3.1 to a Current Report on Form 8-K filed by AAG with the SEC on December 9, 2013.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
Reorganization Items, Net
Reorganization items refer to revenues, expenses (including professional fees), realized gains and losses and provisions for losses that are realized or incurred in the Chapter 11 Cases. The following table summarizes the components included in reorganization items, net on the consolidated ~~statements~~statement of operations for the ~~years~~year ended December 31, 2013 ~~and 2012~~ (in millions):

   December 31,    December 31,
2013
   2013    2012
Pension and postretirement benefits
   $ —       $ (66 )
Labor-related deemed claim (1)
   1,733       —       $ 1,733
Aircraft and facility financing renegotiations and rejections (2),(3)
   320       1,951       320
Fair value of conversion discount (4)
   218       —       218
Professional fees
   199       227       199
Other
   170       67       170






Total reorganization items, net
   $ 2,640       $ 2,179       $ 2,640






(1)
In exchange for employees’ contributions to the successful reorganization, including agreeing to reductions in pay and benefits, American agreed in the Plan to provide each employee group a deemed claim, which was used to provide a distribution of a portion of the equity of the reorganized entity to those employees. Each employee group received a deemed claim amount based upon a portion of the value of cost savings provided by that group through reductions to pay and benefits as well as through certain work rule changes. The total value of this deemed claim was approximately $1.7 billion.

(2)
Amounts include allowed claims (claims approved by the Bankruptcy Court) and estimated allowed claims relating to (i) the rejection or modification of financings related to aircraft and (ii) entry of orders treated as unsecured claims with respect to facility agreements supporting certain issuances of special facility revenue bonds. The Debtors recorded an estimated claim associated with the rejection or modification of a financing or facility agreement when the applicable motion was filed with the Bankruptcy Court to reject or modify such financing or facility agreement and the Debtors believed that it was probable the motion would be approved, and there was sufficient information to estimate the claim.

(3)
Pursuant to the Plan, the Debtors agreed to allow certain post-petition unsecured claims on obligations. As a result, during the year ended December 31, 2013, American recorded reorganization charges to adjust estimated allowed claim amounts previously recorded on rejected special facility revenue bonds of $180 million, allowed general unsecured claims related to the 1990 and 1994 series of special facility revenue bonds that financed certain improvements at John F. Kennedy International Airport (JFK), and rejected bonds that financed certain improvements at Chicago O’Hare International Airport (ORD), which are included in the table above.

(4)
The Plan allowed unsecured creditors receiving AAG Series A Preferred Stock a conversion discount of 3.5%. Accordingly, American recorded the fair value of such discount upon the confirmation of the Plan by the Bankruptcy Court.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

3.  Bankruptcy Settlement Obligations
As of December 31, ~~2014~~2015 and ~~2013,~~2014, the components of bankruptcy settlement obligations on American’s consolidated balance sheets are as follows (in millions):

   December 31,
   2014    2013
Single-Dip and Double-Dip Equity Obligations
   $ 248       $ 4,575
Labor-related deemed claim
   77       849




Total
   $ 325       $ 5,424




The AAG Series A Preferred Stock, while outstanding, voted and participated in accordance with the terms of the underlying Certificate of Designation. One quarter of the shares of AAG Series A Preferred Stock initially issued was mandatorily convertible on each of the 30th, 60th, 90th and 120th days after the Effective Date, subject to additional voluntary conversions. The initial stated value of each share of AAG Series A Preferred Stock was $25.00 and accrued dividends at 6.25% per annum, calculated daily, while outstanding. Additionally, AAG Series A Preferred Stock converted to AAG Common Stock based upon the volume weighted average price of the shares of AAG Common Stock on the five trading days immediately preceding the conversion date, at a 3.5% fixed discount, subject to a conversion price floor of $10.875 per share and a conversion price cap of $33.8080 per share, below or above which the conversion rate remains fixed. As of April 8, 2014, all shares of AAG Series A Preferred Stock had been converted into AAG Common Stock.
   December 31,
   2015    2014
Single-Dip Equity Obligations
   $ 147       $ 248
Labor-related deemed claim
   46       77




Total
   $ 193       $ 325




The Single-Dip Equity Obligations, while outstanding, do not vote or participate in accordance with the terms of the Plan. These equity obligations, representing the amount of total Single-Dip Unsecured Claims not satisfied through the issuance of AAG Series A Preferred Stock at the Effective Date, represented an unconditional obligation to transfer a variable number of shares of AAG Common Stock based predominantly on a fixed monetary amount known at inception, and, as such, were not treated as equity, but rather as liabilities, until the 120th day after emergence, which was April 8, 2014. As of April 8, 2014, AAG has issued shares of AAG Common Stock to satisfy the obligation amount at emergence, plus accrued dividends of 12% per annum, calculated daily, through such date, based on the volume weighted average price of the shares of AAG Common Stock, at a 3.5% discount, as specified in the Plan. The amount of the remaining Single-Dip Equity Obligations at December 31, ~~2014~~2015 is American’s estimate of its obligation for disputed claims of ~~$248~~$147 million and is calculated based on the fair value of the shares expected to be issued, measured as if the obligations were settled using the closing price of AAG Common Stock at December 31, ~~2014.~~2015. Additional allowed claims will receive 30.7553 shares, subject to reduction for expenses of the Disputed Claims Reserve, including tax liabilities, for each $1,000 of allowed claims. For accounting purposes, the value of the shares expected to be issued is marked-to-market each period until issued. Accordingly, changes in the value of AAG Common Stock could result in future increases and decreases in this obligation.
In exchange for employees’ contributions to the successful reorganization of AAG, including agreeing to reductions in pay and benefits, AAG and American agreed in the Plan to provide each employee group a deemed claim which was used to provide a distribution of a portion of the equity of the reorganized entity to those employees. Each employee group received a deemed claim amount based upon a fixed percentage of the distributions to be made to general unsecured claimholders. The fair value based on the expected number of shares to be distributed to satisfy this deemed claim, as adjusted, was approximately $1.5 billion. From the Effective Date through December 31, ~~2014,~~2015, AAG has made distributions of ~~$988 million~~$1.0 billion in AAG Common Stock and paid approximately ~~$553~~$555 million in cash to cover payroll and other taxes related to the equity distributions. As of December 31, ~~2014,~~2015, the liability to certain AMR labor groups and employees of ~~$77~~$46 million represents the estimated fair value of the remaining shares expected to be issued in satisfaction of such obligation, measured as if the obligation were settled using the closing price of AAG Common Stock at
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
December 31, ~~2014.~~2015. For accounting purposes, the value of the remaining shares expected to be issued to satisfy the labor claim is marked-to-market each period until issued. Accordingly, changes in the value of AAG Common Stock could result in future increases and decreases in this obligation.
On February 10, 2015 and July ~~1, 2014,~~14, 2015, approximately ~~2.9~~0.8 million and 0.6 million shares, respectively, of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and 0.1 million shares in the aggregate were withheld ~~or sold~~to fund cash tax obligations resulting from these distributions.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
4.  Merger and Related Matters
Description of Transaction
As previously discussed in Note 2, on ~~account~~the Effective Date, the Debtors consummated their reorganization and the Merger pursuant to the Plan. The Merger has been accounted for as a business acquisition using the acquisition method of accounting in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805, “Business Combinations” (ASC 805), with AAG considered the acquirer of US Airways Group. The acquisition method of accounting requires, among other things, that assets acquired and liabilities assumed be recognized on the balance sheet at their fair values as of the acquisition date. The excess of the purchase price over the net fair value of assets and liabilities acquired was recorded as goodwill. Goodwill is not amortized, but is tested for impairment at least annually. As a result of US Airways Group becoming a wholly-owned subsidiary of AAG, US Airways Group applied push down accounting to US Airways.
Slot Divestitures
As a stipulation for the Merger to be approved by the Department of Justice (DOJ), American was required to divest certain airport take off and landing rights (slots) at LaGuardia Airport (LGA) and Ronald Reagan Washington National Airport (DCA). In 2014, American divested the required DCA slots and received $307 million in cash as well as 24 slots at JFK. American recognized a net gain of $309 million related ~~tax obligations.~~to these divestitures, which has been included in special items, net in the consolidated statement of operations. In 2013, American recognized a gain of $67 million related to the sale of the LGA slots, which has been included in special items, net in the consolidated statement of operations.
In 2013, the European Commission cleared under the EU Merger Regulation the proposed merger between US Airways and American. As a consequence of the merger clearance process in the EU, American was required to make available one pair of London Heathrow slots for use by another carrier between London and Philadelphia, which the acquiring carrier can deploy on another London Heathrow city pair after operating the slots on London-Philadelphia for a period of not less than three consecutive years. In addition, along with American’s joint business agreement partners, American was required to make available for an initial period of up to seven years one pair of Heathrow slots for service between London and Miami that may be operated via an intermediate point. In connection with these requirements and upon making these slots available, in 2014, American recorded a $43 million non-cash charge, which has been included in special items, net in the consolidated statement of operations.
Fair Value of Consideration Transferred
The fair value of the consideration transferred, or the purchase price, was derived as described below based on ~~November 4, 2014, approximately 0.7 million~~the outstanding shares of US Airways Group common stock at December 9, 2013, the exchange ratio of one share of AAG Common Stock ~~held in the Disputed Claims Reserve were distributed to holders~~for each share of ~~allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims~~US Airways Group common stock, and ~~to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and shares were withheld or sold on account of related tax obligations.~~
~~On February 10, 2015, approximately 0.8 million shares~~a price per share of AAG Common Stock of $22.55, which represented the closing price of US Airways Group common stock on December 6, 2013, the last day such shares traded on the New York Stock Exchange. US Airways Group equity awards outstanding at the close of the Merger converted into equity awards with respect to AAG Common Stock. Vested equity awards held by employees of US Airways Group are considered part of the purchase price.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
   (In millions except per share data)
Outstanding shares of US Airways Group Common Stock at December 9, 2013 exchanged
   197.4
Exchange ratio
   1.0


Assumed shares of AAG Common Stock
   197.4
Price per share
   $ 22.55


Fair value of AAG Common Stock issued
   $ 4,451
Fair value of AAG equity awards issued in exchange for outstanding US Airways Group equity awards
   $ 141


Total purchase price
   $ 4,592
Allocation of Consideration Transferred
The Merger has been accounted for using the acquisition method of accounting in accordance with ASC 805, with AAG treated as the acquirer of US Airways Group for accounting purposes. The acquisition method of accounting requires, among other things, that assets acquired and liabilities assumed be recognized on the balance sheet at their fair values as of the acquisition date. The acquisition values have been pushed down to US Airways as of December 9, 2013. The amount of acquisition pushed down to US Airways was $5.4 billion, the remainder of the purchase price being pushed down to US Airways Group and its other subsidiaries based on the fair value of their net assets. The excess of the pushed down acquisition value over the net fair value of assets acquired and liabilities assumed was recorded as goodwill. Goodwill is not amortized, but is tested for impairment at least annually.
   (In millions)
Cash
   $ 200
Short-term investments
   3,517
Other current assets
   1,417
Operating property and equipment
   5,383
Goodwill
   4,091
Identifiable intangibles
   1,501
Other noncurrent assets
   125
Long-term debt and capital leases, including current portion
   (5,481 )
Air traffic liability
   (1,417 )
Loyalty program liability
   (1,256 )
Other liabilities assumed
   (2,649 )


Total purchase price
   $ 5,431
The fair values of the assets acquired and liabilities assumed were determined using the market, income and cost approaches. The fair value measurements were primarily based on significant inputs that are not observable in the ~~Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of~~market, other than certain ~~labor-related deemed claims and to holders of certain non-management, non-union employee deemed claims as specified~~long-term debt assumed in the ~~Plan,~~Merger. The market approach, which indicates value for a subject asset based on available market pricing for comparable assets, was utilized to estimate the fair value of US Airways’ aircraft and ~~shares~~operating leases. The market approach included prices and other relevant information generated by market transactions involving comparable assets, as well as pricing guides and other sources. The current market for the aircraft, the maintenance condition of the aircraft and the expected proceeds from the sale of the assets, among other factors, were ~~withheld~~considered. The market approach was utilized to value certain intangible assets such as airport take off and landing slots when sufficient market information was available. The income approach was primarily used to value intangible assets, including customer relationships, marketing agreements, certain international route authorities, and the US Airways tradename. The income approach indicates value for a subject asset based on the present value of cash flows projected to be generated by
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
the asset. Projected cash flows are discounted at a required market rate of return that reflects the relative risk of achieving the cash flows and the time value of money. The cost approach, which estimates value by determining the current cost of replacing an asset with another of equivalent economic utility, was used, as appropriate, for certain assets for which the market and income approaches could not be applied due to the nature of the asset. The cost to replace a given asset reflects the estimated reproduction or ~~sold~~replacement cost for the asset, less an allowance for loss in value due to depreciation. The fair value of US Airways’ Dividend Miles loyalty program liability was determined based on ~~account~~the weighted average equivalent ticket value of ~~related tax obligations.~~outstanding miles which were expected to be redeemed for future travel at December 9, 2013. The weighted average equivalent ticket value contemplates differing classes of service, domestic and international itineraries and the carrier providing the award travel.
4.Pro-forma Impact of the Merger
American’s unaudited pro-forma results presented below include the effects of the Merger as if it had been consummated as of January 1, 2012. The pro-forma results include the depreciation and amortization associated with the acquired tangible and intangible assets, lease and debt fair value adjustments, the elimination of any deferred gains or losses, adjustments relating to reflecting the fair value of the loyalty program liability and the impact of income changes on profit sharing expense, among others. In addition, the pro-forma results below reflect the impact of higher wage rates related to memorandums of understanding with US Airways’ pilots that became effective upon closing of the Merger, as well as the elimination of American’s reorganization items, net and Merger transition costs. However, the pro-forma results do not include any anticipated synergies or other expected benefits of the Merger. Accordingly, the unaudited pro-forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been consummated as of January 1, 2012.
   December 31,
2013
   (In millions)
Revenue
   $ 40,782
Net Income
   2,707
5.  Basis of Presentation and Summary of Significant Accounting Policies
(a) Basis of Presentation
~~The~~On December 30, 2015, US Airways merged with and into American, which is reflected in American’s consolidated financial statements as though the transaction had occurred on December 9, 2013, when a subsidiary of AMR merged with and ~~for~~into US Airways Group. Thus, the full years ~~ended~~of 2015 and 2014 and the period from December 9, 2013 to December 31, ~~2014,~~ 2013 ~~and 2012 include~~are comprised of the ~~accounts of American. American is a wholly-owned subsidiary~~consolidated financial data of American ~~Airlines Group Inc. (AAG). All significant intercompany transactions have been eliminated.~~and US Airways. For the periods prior to December 9, 2013, the financial data reflects the results of American only. For financial reporting purposes, the transaction constituted a transfer of assets between entities under common control and was accounted for in a manner similar to the pooling of interests method of accounting. Under this method, the carrying amount of net assets recognized in the balance sheets of each combining entity are carried forward to the balance sheet of the combined entity and no other assets or liabilities are recognized.
The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The most significant areas of judgment relate to passenger revenue recognition, impairment of goodwill, impairment of long-lived and
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
intangible assets, business combination measurements, the ~~frequent traveler~~loyalty program, pensions and retiree medical and other postretirement benefits and the deferred tax asset valuation allowance. All significant intercompany transactions have been eliminated.
(b) Chapter 11 Matters
In accordance with GAAP, the Debtors (as defined in Note 2 above) applied ASC 852 “Reorganizations” (ASC 852) in preparing the consolidated financial statements for periods subsequent to the Chapter 11 Cases (as defined in Note 2 above). ASC 852 requires that the financial statements distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain revenues, expenses (including professional fees), realized gains and losses and provisions for losses that are realized or incurred in the Chapter 11 Cases for ~~the~~ 2013 ~~and 2012 period~~ are presented in reorganization items, net on the accompanying consolidated ~~statements~~statement of operations.
(c) Restricted Cash and Short-term Investments
American has restricted cash and short-term investments related primarily to collateral held to support ~~projected~~ workers’ compensation ~~obligations and funds held for certain tax~~ obligations.
(d) Aircraft Fuel, Spare Parts, and Supplies, Net
Aircraft fuel, spare parts, and supplies, net are recorded at net realizable value based on average costs. These items are expensed when used. An allowance for obsolescence is provided for aircraft spare parts and supplies.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
(e) Operating Property and Equipment
Operating property and equipment are recorded at cost. Interest expense related to the acquisition of certain property and equipment, including aircraft purchase deposits, is capitalized as an additional cost of the asset. Interest capitalized for the years ended December 31, 2015, 2014 and 2013 ~~and 2012~~ was ~~$53~~$52 million, ~~$47~~$61 million and ~~$50~~$47 million, respectively. Property and equipment is depreciated and amortized to residual values over the estimated useful lives or the lease term, whichever is less, using the straight-line method. Costs of major improvements that enhance the usefulness of the asset are capitalized and depreciated over the estimated useful life of the asset or the modifications, whichever is less. The depreciable lives used for the principal depreciable asset classifications are:

Principal Depreciable Asset Classification

Depreciable Life
Jet aircraft and engines
   ~~16—~~16 - 30 years
Other regional aircraft and engines
   25 years
Major rotable parts, avionics and assemblies
   Fleet end date
Improvements to leased flight equipment
   Lesser of asset/leasehold improvement or lease end date
Buildings and improvements
   Lesser of 5—5 - 30 years or lease term
Furniture, fixtures and other equipment
   3—3 - 10 years: ranges from computer hardware to furniture
Capitalized software
   Lesser of 5 years or lease term
Residual values for aircraft, engines, major rotable parts, avionics and assemblies are generally 5% to 10%.
Equipment and property under capital leases are amortized over the term of the leases or, in the case of certain aircraft, over their expected useful lives. Lease terms vary but are generally 1612 to 30 years for aircraft and three to 30 years for other leased equipment and property.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
American records impairment charges on long-lived assets used in operations when events and circumstances indicate that the assets may be impaired. An asset or group of assets is considered impaired when the undiscounted cash flows estimated to be generated by the ~~asset~~assets are less than the carrying amount of the ~~asset~~assets and the net book value of the ~~asset~~assets exceeds ~~its~~their estimated fair value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell.
(f) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. A valuation allowance is established, if necessary, for the amount of any tax benefits that, based on available evidence, are not expected to be realized.
(g) Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired and liabilities assumed. Goodwill is not amortized but tested for impairment annually on October 1^st or more frequently if events or circumstances indicate that goodwill may be impaired. American has one consolidated reporting unit.
Goodwill is measured for impairment by initially performing a qualitative screen and, if necessary, then comparing the fair value of the reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit is less than the carrying value, a second step is performed to determine the implied fair value of goodwill. If the implied fair value of goodwill is lower than its carrying value, an impairment charge equal to the difference is recorded. Based upon American’s annual measurement, there was no goodwill impairment in 2015.
(h) Other Intangibles, Net
Intangible assets consist primarily of airport ~~take-off and landing rights (Slots),~~slots, customer relationships, marketing agreements, international ~~Slots~~slots and route authorities, ~~and~~ gate leasehold ~~rights.~~rights and tradenames. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives ~~to their estimated residual values~~ and reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
The following table provides information relating to American’s amortizable intangible assets as of December 31, ~~2014~~2015 and ~~2013~~2014 (in millions):

   December 31,    December 31,
   2014 2013    2015 2014
Airport Slots
   $ 310    $ 277
Domestic airport slots
   $ 365    $ 365
Customer relationships
   300    300
Marketing agreements
   105    105
Tradenames
   35    35
Airport gate leasehold rights
   138    155       137    138
Accumulated amortization
   (376 ) (375 )    (502 ) (447 )




Total
   $ 72    $ 57       $ 440    $ 496




~~Airport operating~~
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
Domestic airport slots and airport gate ~~lease~~leasehold rights are amortized on a straight-line basis over 25 years. The customer relationships, marketing agreements and tradenames were identified as intangible assets subject to amortization and are amortized on a straight-line basis over approximately nine years, ~~to a zero residual value.~~30 years and 15 months, respectively.
American recorded amortization expense related to these intangible assets of approximately ~~$14~~$55 million, ~~$18~~$81 million and ~~$25~~$20 million for the years ended December 31, 2015, 2014 ~~2013~~ and ~~2012,~~2013, respectively. American expects to record annual amortization expense for the aforementioned definite-life intangible assets as follows (in millions):

2015
   $ 12
2016
   11       $ 50
2017
   7       46
2018
   3       42
2019
   3       42
2020 and thereafter
   36
2020
   42
2021 and thereafter
   218




Total
   $ 72       $ 440




American’s indefinite-lived assets include certain international slots and route authorities and domestic airport ~~take-off and landing~~ slots. Indefinite-lived assets are not amortized but instead are reviewed for impairment annually ~~and~~on October 1^st or more frequently if events or circumstances indicate that the asset may be impaired. As of December 31, ~~2014~~2015 and ~~2013,~~2014, American had ~~$743 million~~$1.8 billion and ~~$755 million,~~$1.7 billion, respectively, of indefinite-lived intangible assets on its consolidated balance sheets.
American’s indefinite-lived intangible assets are reviewed for impairment by initially performing a qualitative screen to determine whether American believes it is more likely than not that an asset has been impaired. If American believes an impairment has occurred, American then evaluates for impairment by comparing the estimated fair value of assets to the carrying value. An impairment charge is recognized if the asset’s estimated fair value is less than its carrying value. Based upon American’s annual ~~testing,~~review, there was no indefinite-lived intangible asset impairment in ~~2014.~~
~~Slot Divestitures~~
As a stipulation for the Merger to be approved by the Department of Justice (DOJ), American was required to divest certain Slots at LaGuardia Airport and Ronald Reagan Washington National Airport (DCA). As of December 31, 2013, the DCA Slots to be divested were recorded as assets held for sale and were included in prepaid expenses and other on the consolidated balance sheet. In 2014, American divested the required DCA Slots and received $299 million in cash as well as 24 Slots at JFK. American recognized a gain of $305 million related to these divestitures, which has been included in special items, net in the consolidated statement of operations. In 2013, American recognized a gain of $67 million related to the sale of the LaGuardia Airport Slots, which has been included in special items, net in the consolidated statement of operations.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
In 2013, the European Commission cleared under the EU Merger Regulation the proposed merger between US Airways and American. As a consequence of the merger clearance process in the EU, American was required to make available one pair of London Heathrow Slots for use by another carrier between London and Philadelphia, which the acquiring carrier can deploy on another Heathrow city pair after operating the Slots on London-Philadelphia for a period of not less than three consecutive years. In addition, along with American’s joint business agreement (JBA) partners, American was required to make available for an initial period of up to seven years one pair of Heathrow Slots for service between London and Miami that may be operated via an intermediate point. In connection with these requirements and upon making these slots available, in 2014, American recorded a $43 million non-cash charge, which has been included in special items, net in the consolidated statement of operations.2015.
~~(h) Frequent Flyer~~(i) Loyalty Program
American currently operates the ~~AAdvantage frequent flyer program.~~loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American andoneworld carriers, as well as certain other partner airlines that participate in the ~~programs.~~program. Mileage credits can also be earned through purchases from other non-airline partners that participate in American’s loyalty program. Mileage credits can be redeemed for travel on American ~~US Airways~~ or other participating partner airlines, in which case American pays a fee.
American uses the incremental cost method to account for the portion of ~~American’s frequent flyer~~its loyalty program liability incurred when AAdvantage members earn mileage credits by flying on American ~~US Airways~~ or its regional affiliates. American has an obligation to provide future travel when these mileage credits are redeemed and therefore has recorded a liability for mileage credits outstanding.
The incremental cost liability includes all mileage credits that are expected to be redeemed, including mileage credits earned by members whose mileage account balances have not yet reached the minimum mileage credit level required to redeem an award. Additionally, outstanding mileage credits are subject to expiration if unused. In calculating the liability, American estimates how many mileage credits will never be redeemed for travel and excludes those mileage credits from the estimate of the liability. Estimates are also made for the number of miles that will be used per award redemption and the number of travel awards that will be redeemed on partner airlines. These estimates are based on historical program experience as well as consideration of enacted program changes,
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
as applicable. Changes in the liability resulting from members earning additional mileage credits or changes in estimates are recorded in the ~~statement~~consolidated statements of operations as a part of passenger revenue.
The liability for outstanding mileage credits is valued based on the estimated incremental cost of carrying one additional passenger. Incremental cost primarily includes unit costs incurred for fuel, food, and insurance as well as fees incurred when travel awards are redeemed on partner airlines. No profit or overhead margin is included in the accrual of incremental cost. These estimates are generally updated based upon American’s 12-month historical average of such costs.
As of December 31, ~~2014~~2015 and ~~2013~~2014, the liability for outstanding mileage credits for the AAdvantage program accounted for under the incremental cost method was ~~$647~~$657 million and ~~$580~~$674 million, respectively, and is included on the consolidated balance sheets within ~~frequent flyer~~loyalty program liability.
In addition, American applied the acquisition method of accounting in connection with the Merger and therefore recorded the liability for outstanding US Airways’ mileage credits at fair value, an amount significantly in excess of incremental cost. As of December 31, 2015 and 2014, the liability for these outstanding mileage credits expected to be redeemed for future travel awards was $296 million and $611 million, respectively, and is included on the consolidated balance sheets within loyalty program liability. This liability is amortized into passenger revenue on a straight-line basis over the period in which the mileage credits are expected to be redeemed for travel. All new miles earned will be recorded as a liability based on the incremental cost method discussed above.
American also sells ~~frequent flyer~~loyalty program mileage credits to participating airline partners and non-airline business partners. Sales of mileage credits to non-airline business partners is comprised of two components, transportation and marketing. Historically, American has used the residual method of accounting to determine the values of each component as there had not been a material modification to any significant agreements since the adoption of Accounting Standards Update (ASU) No. 2009-13, “Revenue Recognition (Topic 605) – Multiple-Deliverable Revenue Arrangements” on January 1, 2011.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
In 2013, American and Citibank amended their ~~current~~ AAdvantage co-branded credit card agreement which resulted in a material modification of the terms of the arrangement. Also, in connection with the acquisition of US Airways on December 9, 2013, a material modification occurred on all of US Airways’ agreements in connection with the Merger. Therefore, subsequent to the ~~amendment~~amendments of ~~the arrangement,~~these arrangements, American applied the relative selling price method to determine the values of each deliverable. Under the relative selling price approach, American identified five revenue elements for the co-branded credit card agreements with ~~Citibank:~~Citibank and Barclays: the transportation component; use of ~~American’s~~the American brand including access to ~~frequent flyer~~loyalty program member lists; advertising; lounge access; and baggage services (together excluding ~~“the~~the transportation component,” the ~~“marketing component”)~~marketing component).
The transportation component represents the estimated selling price of future travel awards and is determined using historical transaction information, including information related to customer redemption patterns. The transportation component is deferred based on its relative selling price and is amortized into passenger revenue on a straight-line basis over the period in which the mileage credits are expected to be redeemed for travel.
The marketing component represents services provided to American’s business partners and relates primarily to the use of ~~American’s logo and tradename along with~~the American brand including access to ~~customers lists of AAdvantage members.~~loyalty program member lists. The marketing services are provided periodically, but no less than monthly. Accordingly, the marketing component is considered earned and recognized in other revenues in the period of the mileage sale.
Upon application of the relative selling price method in 2013 for American’s Citibank modification, American reduced its travel component liability and recorded other revenue of approximately $31 million. As a result of the change in the marketing component value when the relative selling price method is applied, American now defers less revenue per mile sold. ~~For American’s agreements where there has not been a material modification, it continues to apply the residual method.~~
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
As of December 31, ~~2014~~2015 and ~~2013,~~2014, American had ~~$1.2~~$1.5 billion in deferred revenue from the sale of mileage credits (recorded ~~as frequent flyer~~within loyalty program liability on the consolidated balance sheets). For the years ended December 31, 2015, 2014 ~~2013~~ and ~~2012,~~2013, the marketing component of mileage sales recognized at the time of sale in other revenues was approximately ~~$1.1~~$1.5 billion, ~~$816 million~~$1.4 billion and ~~$725~~$834 million, respectively.
~~(i)~~(j) Passenger Revenue
Passenger ~~ticket~~revenue is recognized when transportation is provided. Ticket sales for transportation that has not yet been provided are initially deferred and recorded as ~~a component of~~ air traffic ~~liability. Revenue derived from ticket sales is recognized at~~liability on the ~~time service is provided. However, due~~consolidated balance sheets. The air traffic liability represents tickets sold for future travel dates and estimated future refunds and exchanges of tickets sold for past travel dates. The balance in the air traffic liability fluctuates throughout the year based on seasonal travel patterns and fare sale activity. American’s air traffic liability was $3.7 billion and $4.3 billion as of December 31, 2015 and 2014, respectively.
The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. Due to ~~various factors, including the~~ complex pricing ~~structure~~structures, refund and exchange policies, and interline agreements ~~throughout the industry,~~with other airlines, certain amounts are recognized in revenue using estimates regarding both the timing of the revenue recognition and the amount of revenue to be ~~recognized, including breakage.~~recognized. These estimates are generally based ~~upon~~on the ~~evaluation~~analysis of American’s historical ~~trends, including the use of regression analysis~~data. American and other ~~methods~~airline industry participants have consistently applied this accounting method to ~~model~~estimate revenue from forfeited tickets at the ~~outcome~~date of travel. Estimated future ~~events~~refunds and exchanges included in the air traffic liability are routinely evaluated based on subsequent activity to validate the accuracy of American’s ~~historical experience, and~~estimates. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are ~~recorded at~~included in results of operations during the ~~scheduled time of departure.~~period in which the evaluations are completed.
American purchases capacity, or ASMs, generated by AAG’s wholly-owned regional air ~~carrier~~carriers and the capacity of third-party carriers including Air Wisconsin Airlines Corporation (Air Wisconsin), Republic ~~Airways Holdings’ subsidiaries Republic~~Airline Inc. (Republic), Mesa Airlines, ~~(Republic) and Chautauqua Airlines (Chautauqua)~~Inc. (Mesa), ~~and~~ SkyWest Airlines, Inc.~~‘s subsidiaries Sky West Airlines~~ (SkyWest) ~~and~~, ExpressJet Airlines, Inc. (ExpressJet), Compass Airlines, LLC (Compass) and Trans States Airlines, Inc. (Trans States) in certain markets. AAG’s wholly-owned regional air ~~carrier~~carriers and ~~Chautauqua, ExpressJet, Republic, and SkyWest~~third-party carriers operate regional aircraft ~~in these markets~~ as part of American Eagle carriers. American classifies revenues generated from transportation on these carriers as regional passenger revenues. Liabilities related to tickets sold by American for travel on these air carriers are also included in American’s air traffic liability and are subsequently ~~relieved~~recognized as revenue in the same manner as described above.
Various taxes and fees assessed on the sale of tickets to end customers are collected by American as an agent and remitted to taxing authorities. These taxes and fees have been presented on a net basis in the accompanying consolidated statements of operations and recorded as a liability until remitted to the appropriate taxing authority.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
~~(j)~~(k) Maintenance, Materials and Repairs
Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred, except costs incurred for maintenance and repair under flight hour maintenance contract agreements, which are accrued based on contractual terms when an obligation exists.
~~(k)~~(l) Selling Expenses
Selling expenses include commissions, credit card fees, computerized reservations systems fees and advertising. Advertising expenses are expensed as incurred. Advertising expense was ~~$86~~$110 million, ~~$166~~$92 million and ~~$153~~$166 million for the years ended December 31, 2015, 2014 and 2013, ~~and 2012,~~ respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
~~(l)~~(m) Share-based Compensation
American accounts for its share-based compensation expense based on the fair value of the stock award at the time of grant, which is recognized ratably over the vesting period of the stock award. The fair value of stock options and stock appreciation rights is estimated using a Black-Scholes option pricing model. The fair value of restricted stock units is based on the market price of the underlying shares of common stock on the date of grant. See Note 1516 for further discussion of share-based compensation.
~~(m)~~(n) Deferred Gains and Credits, Net
Included within deferred gains and credits, net are amounts deferred and amortized into future periods associated with the adjustment of leases to fair value in connection with the application of acquisition accounting, deferred gains on the ~~sale leaseback~~sale-leaseback of aircraft and certain vendor incentives. American periodically receives vendor incentives in connection with acquisition of aircraft and engines. These credits are deferred until aircraft and engines are delivered and then applied as a reduction to the cost of the related equipment.
~~(n)~~(o) Foreign Currency Gains and Losses
Foreign currency gains and losses are recorded as part of other nonoperating expense, net in American’s consolidated statements of operations. Foreign currency losses for 2015, 2014 and 2013 ~~and 2012~~ were ~~$92~~$751 million, ~~$55~~$114 million and ~~$41~~$56 million, respectively. The 2015 period included a $592 million special charge to write off all of the value of Venezuelan bolivars held by American due to continued lack of repatriations and deterioration of economic conditions in Venezuela.
~~(o)~~(p) Other Operating Expenses
Other operating expenses includes expenses associated with ground and cargo handling, crew travel, aircraft food and catering, passenger accommodation, airport security, international navigation fees and certain general and administrative expenses.
(q) Regional Expenses
Expenses associated with American’s third-party regional carriers operating under the brand name American Eagle are classified as ~~Regional~~regional expenses on the consolidated statements of operations. Regional expenses consist of the following (in millions):

   Year Ended December 31,    Year Ended December 31,
   2014    2013    2012    2015    2014    2013
Aircraft fuel and related taxes
   $ 999       $ 1,055       $ 1,012       $ 1,230       $ 2,009       $ 1,119
Salaries, wages and benefits
   35       20       33       276       228       29
Capacity purchases from third-party regional carriers (1)
   1,253       1,242       1,282       3,246       3,187       1,359
Maintenance, materials and repairs
   1       6       —
Other rent and landing fees
   242       207       203       436       386       217
Selling expenses
   151       142       152       333       307       153
Depreciation and amortization
   155       149       154       197       168       150
Special items, net
   5       —       —       18       5       —
Other
   273       259       213       361       268       266












Total regional expenses
   $ 3,113       $ 3,074       $ 3,049       $ 6,098       $ 6,564       $ 3,293












(1)
For the ~~year~~years ended December 31, 2015 and 2014, the component of capacity purchase expenses related to aircraft deemed to be leased was approximately ~~$133 million.~~$492 million and $447 million, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

~~(p)~~(r) Recent Accounting Pronouncements
In May 2014, the ~~Financial Accounting Standards Board (FASB)~~FASB issued ~~Accounting Standards Update (ASU)~~ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 completes the joint effort by the FASB and International Accounting Standards Board (IASB) to improve financial reporting by creating common revenue recognition guidance for ~~U.S.~~ GAAP and International Financial Reporting Standards (IFRS). ASU 2014-09 applies to all companies that enter into contracts with customers to transfer goods or services. ASU 2014-09 is effective for public entities for interim and annual reporting periods beginning after December 15, ~~2016.~~2017. Early application is permitted, but not ~~permitted~~before interim and ~~entities~~annual reporting periods beginning after December 15, 2016. Entities have the choice to apply ASU 2014-09 either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying ASU 2014-09 at the date of initial application and not adjusting comparative information. American is currently evaluating the requirements of ASU 2014-09 and has not yet determined its impact on American’s consolidated financial statements.
On February 18, 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810).” ASU 2015-02 amends both the variable interest entity and voting interest entity consolidation models. The standard is effective for public reporting entities in fiscal periods beginning after December 15, 2015, and early adoption is permitted. This standard is not expected to have a material impact on American’s consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03, “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The update requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. ASU 2015-03 requires retrospective application, represents a change in accounting principle and is effective for fiscal years beginning after December 15, 2015. American early adopted this standard during the fourth quarter 2015, utilizing retrospective application as permitted. As such, certain prior period amounts have been reclassified to conform to the current presentation. As a result, American reclassified $174 million of debt issuance costs within other assets to reduce current maturities of long-term debt and capital leases by $29 million and to reduce long-term debt and capital leases by $145 million on the consolidated balance sheet as of December 31, 2014.
In May 2015, the FASB issued ASU 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share (or Its Equivalent).” Under ASU 2015-07, investments for which fair value is measured at net asset value per share (or its equivalent) using the practical expedient should not be categorized in the fair value hierarchy. ASU 2015-07 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. ASU 2015-07 is not expected to have a material impact on American’s consolidated financial statements.
In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes,” which changes how deferred taxes are classified on the balance sheet. ASU 2015-17 eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent on the balance sheet. Deferred tax liabilities and assets are now required to be classified as noncurrent on the balance sheet. Entities have the choice to apply ASU 2015-17 either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The update is effective for annual and interim periods in fiscal years beginning after December 15, 2016. American early adopted this standard during the fourth quarter 2015, utilizing retrospective application as permitted. As such, certain prior period amounts have been reclassified to conform to the current presentation. As a result, American reclassified $314 million of current deferred income tax assets within prepaid expenses and other to reduce deferred income taxes within other liabilities on the consolidated balance sheet as of December 31, 2014.
In January 2016, the FASB issued ASU 2016-01, “Financial Instruments—Overall (Subtopic 825-10).” ASU 2016-01 makes several modifications to Subtopic 825-10 including the elimination of the available-for-sale
5.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
classification of equity investments, and requires equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income. ASU 2016-01 is effective for interim and annual periods beginning after December 15, 2017 and is not expected to have a material impact on American’s consolidated financial statements.
6.  Special Items, Net
American’s special items, net on the consolidated statements of operations are as follows (in millions):

   Year Ended December 31,
       2014            2013            2012
Mainline operating special items, net (1)
   $ 507       $ 282       $ 386
   Year Ended December 31,
     2015        2014        2013
Mainline operating special items, net (1)
   $ 1,051       $ 783       $ 559

(1)
The ~~2014~~2015 mainline operating special items totaled a net charge of ~~$507 million,~~$1.1 billion, which principally included ~~$527 million~~$1.0 billion of ~~Merger~~merger integration expenses related to information technology, alignment of labor union contracts, professional fees, severance, ~~and retention,~~ share-based compensation, ~~divestiture of London Heathrow Slots,~~ fleet restructuring, re-branding of aircraft and airport facilities, relocation and training. In addition, American recorded a net charge of $60 million for bankruptcy related items principally consisting of fair value adjustments for bankruptcy settlement obligations, $181 million in other special charges, including an $81 million charge to revise prior estimates of certain aircraft residual values, and other spare parts asset impairments, as well as $44 million in charges primarily relating to the buyout of certain aircraft leases. These charges were offset in part by a $305 million gain on the sale of Slots
The 2014 mainline operating special items totaled a net charge of $783 million, which principally included $807 million of merger integration expenses related to information technology, alignment of labor union contracts, professional fees, severance and retention, share-based compensation, divestiture of London Heathrow slots, fleet restructuring, re-branding of aircraft and airport facilities, relocation and training. In addition, American recorded a net charge of $60 million for bankruptcy related items principally consisting of fair value adjustments for bankruptcy settlement obligations and an $81 million charge to revise prior estimates of certain aircraft residual values and other spare parts asset impairments. These charges were offset in part by a $309 million gain on the sale of slots at DCA.
The 2013 mainline operating special items, net principally included ~~$166~~$443 million of ~~primarily Merger~~merger related expenses ~~due~~related to the alignment of labor union contracts, professional fees, severance, ~~and~~ share-based compensation and fees for US Airways to exit the Star Alliance and its codeshare agreement with United Airlines. In addition, American recorded a $107 million charge related to American’s pilot long-term disability obligation, a $43 million charge for workers’ compensation claims and a $33 million aircraft impairment charge. These charges were offset in part by a $67 million gain on the sale of ~~Slots~~slots at ~~LaGuardia Airport.~~
The 2012 mainline operating special items, net consisted of $386 million of severance and related charges and write-off of leasehold improvements on aircraft and airport facilities that were rejected in connection with the Chapter 11 Cases.
~~See Note 4 to AAG’s Consolidated Financial Statements in Part II, Item 8A for information on the Merger Agreement.~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
LGA.
The following additional amounts are also included in the consolidated statements of operations as follows (in millions):

   Year Ended December 31,    Year Ended December 31,
   2014    2013 2012    2015 2014    2013
Other revenue special item, net (1)
   $ —       $ (31 ) $ —       $ —    $ —       $ (31 )
Regional operating special items, net(2)
   5       —    —       18    5       —
Nonoperating special items, net ~~(2)~~(3)
   120       121    (280 )    616    128       121
Reorganization items, net ~~(3)~~(4)
   —       2,640    2,179       —    —       2,640
Income tax special items, net ~~(4)~~(5)
   342       (324 ) (569 )    (3,468 ) 344       (324 )

(1)
The 2013 other revenue special item, net included a credit to other revenues related to a change in accounting method resulting from the modification of American’s AAdvantage miles agreement with Citibank.

(2)
The 2015 and 2014 regional operating special items, net principally related to merger integration expenses.
(3)
The 2015 nonoperating special items totaled a net charge of ~~$120~~$616 million, which principally included a ~~$43~~$592 million charge ~~for~~to write off all of the value of Venezuelan ~~foreign currency losses, $48 million~~bolivars held by American due to continued lack of ~~early debt extinguishment costs related to the prepayment~~repatriations and deterioration of 7.50% senior secured notes and other indebtedness and $29 million of non-cash interest accretion on bankruptcy settlement obligations. See Note 9 for further discussion on Venezuela cash and short-term investments.economic conditions in Venezuela.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
The 2014 nonoperating special items totaled a net charge of $128 million, which principally included a $43 million charge for Venezuelan foreign currency losses, $56 million of early debt extinguishment costs primarily related to the prepayment of 7.50% senior secured notes and other indebtedness and $29 million of non-cash interest accretion on bankruptcy settlement obligations.
The 2013 nonoperating special items, net consisted of interest charges of $48 million primarily to recognize post-petition interest expense on unsecured obligations pursuant to the Plan and penalty interest related to 10.5% secured notes and 7.50% senior secured notes, a $54 million charge related to the premium on tender for existing enhanced equipment trust certificates (EETC) financings and the write-off of debt issuance costs and $19 million in charges related to the repayment of existing EETC financings.
~~The 2012 nonoperating special items, net totaled a net benefit of $280 million resulting from a settlement of a commercial dispute.~~

~~(3)~~(4)
In 2013, ~~and 2012,~~ American recognized reorganization expenses as a result of the filing of voluntary petitions for relief under Chapter 11. These amounts consisted primarily of estimated allowed claim amounts and professional fees.

~~(4)~~(5)
In ~~2014,~~2015, income tax special items totaled a net ~~were $342 million. During 2014, American sold its portfolio~~credit of ~~fuel hedging contracts that were scheduled to settle on or after June 30, 2014.~~$3.5 billion. In connection with ~~this sale,~~the preparation of American’s financial statements for the fourth quarter of 2015, management determined that it was more likely than not that substantially all of its deferred tax assets, which include its NOLs, would be realized. Accordingly, American ~~recorded~~reversed $3.5 billion of the valuation allowance as of December 31, 2015, which resulted in a special $3.5 billion non-cash tax ~~provision of $328 million~~benefit recorded in the ~~second quarter~~consolidated statement of 2014 that reversed the non-cash tax provision which was recorded in other comprehensive income (OCI), a subset of stockholder’s equity, principally in 2009. This provision represents the tax effect associated with gains recorded in OCI principally in 2009 due to a net increase in the fair value of American’s fuel hedging contracts. In accordance with GAAP, American retained the $328 million tax provision in OCI until the last contract was settled or terminated. In addition, the 2014 period included a special $14 million non-cash deferred income tax provision related to certain indefinite-lived intangible assets.operations for 2015.
In 2014, income tax special items, net were $344 million. During 2014, American sold its portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. In connection with this sale, American recorded a special non-cash tax provision of $328 million in the second quarter of 2014 that reversed the non-cash tax provision which was recorded in other comprehensive income (OCI), a subset of stockholder’s equity, principally in 2009. This provision represents the tax effect associated with gains recorded in OCI principally in 2009 due to a net increase in the fair value of American’s fuel hedging contracts. In accordance with GAAP, American retained the $328 million tax provision in OCI until the last contract was settled or terminated.
In 2013, ~~and 2012,~~ income tax special items, net included ~~respectively,~~ a $538 ~~million and a $569~~ million non-cash income tax benefit from continuing operations. American is required to consider all items (including items recorded in ~~other comprehensive income)~~OCI) in determining the amount of tax benefit that results from a loss from continuing operations and that should be allocated to continuing operations. As a result, American recorded a tax benefit on the loss from continuing operations for the year, which was exactly offset by income tax expense on ~~other comprehensive income.~~OCI. However, while the income tax benefit from continuing operations is reported on the income statement, the income tax expense on ~~other comprehensive income~~OCI is recorded directly to accumulated other comprehensive income (loss), which is a component of stockholder’s equity. Because the income tax expense on ~~other comprehensive income~~OCI is
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
equal to the income tax benefit from continuing operations, American’s year-end net deferred tax position is not impacted by this tax allocation. The 2013 tax benefit was offset in part by a $214 million tax charge attributable to additional valuation allowance required to reduce deferred tax assets to the amount American ~~believes is~~believed was more likely than not to be realized.
6.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
7.  Debt
Long-term debt and capital lease obligations included in the consolidated balance sheets consisted of (in millions):

   December 31,
   2014    2013
Secured

2013 Credit Facilities, variable interest rate of 3.75%, installments through 2019 (a)
   $ 1,872       $ 1,891
2014 Credit Facilities, variable interest rate of 4.25%, installments through 2021 (b)
   750       —
Aircraft enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.70% to 7.00%, maturing from 2017 to 2026 (c)
   4,271       3,516
Equipment loans and other notes payable, fixed and variable interest rates ranging from 1.43% to 8.10%, maturing from 2015 to 2026 (d)
   1,860       2,140
Special facility revenue bonds, fixed interest rates ranging from 5.50% to 8.50%, maturing from 2016 to 2035 (e)
   1,071       1,393
7.50% senior secured notes (f)
   —       1,000
AAdvantage Loan, effective rate of 8.30%, (g)
   433       611
Other secured obligations, fixed interest rates ranging from 4.19% to 12.24%, maturing from 2015 to 2028 (d)
   992       300




   11,249       10,851




Unsecured

Affiliate unsecured obligations
   27       27




   27       27




Total long-term debt and capital lease obligations
   11,276       10,878
Less: Total unamortized debt discount
   42       69
Less: Current maturities
   1,230       957




Long-term debt and capital lease obligations, net of current maturities
   $ 10,004       $ 9,852




   December 31,
   2015    2014
Secured

2013 Credit Facilities, variable interest rate of 3.25%, installments through 2020 (a)
   $ 1,867       $ 1,872
2014 Credit Facilities, variable interest rate of 3.50%, installments through 2021 (b)
   743       750
2013 Citicorp Credit Facility tranche B-1, variable interest rate of 3.50%, installments through 2019 (c)
   980       990
2013 Citicorp Credit Facility tranche B-2, variable interest rate of 3.00%, installments through 2016 (c)
   588       594
Aircraft enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.38% to 9.75%, maturing from 2017 to 2027 (d)
   8,693       7,028
Equipment loans and other notes payable, fixed and variable interest rates ranging from 1.63% to 8.48%, maturing from 2016 to 2027 (e)
   4,183       2,952
Special facility revenue bonds, fixed interest rates ranging from 2.00% to 8.00%, maturing from 2016 to 2035 (f)
   1,051       1,071
AAdvantage Loan (g)
   —       433
Other secured obligations, fixed interest rates ranging from 3.60% to 12.24%, maturing from 2016 to 2028 (e)
   922       993




   19,027       16,683




Unsecured

Affiliate unsecured obligations
   27       27




   27       27




Total long-term debt and capital lease obligations
   19,054       16,710
Less: Total unamortized debt discount and debt issuance costs
   228       228
Less: Current maturities
   2,234       1,678




Long-term debt and capital lease obligations, net of current maturities
   $ 16,592       $ 14,804




The table below shows availability under revolving credit facilities, all of which were undrawn, as of December 31, 2015 (in millions):
2013 Revolving Facility
   $ 1,400
2014 Revolving Facility
   1,025


Total
   $ 2,425


Secured financings are collateralized by assets, primarily aircraft, engines, simulators, rotable aircraft parts, ~~hangar and maintenance facilities,~~airport leasehold rights, route authorities and airport ~~Slots.~~slots. At December 31, ~~2014,~~2015, American was operating ~~37 jet~~35 aircraft under capital leases. Leases can generally be renewed at rates based on fair market value at the end of the lease term for a number of additional years. At December 31, ~~2014,~~2015, the maturities of long-term debt and capital ~~leases~~lease obligations are as follows (in millions):

2015
   $ 1,230
2016
   698       $ 2,266
2017
   942       1,598
2018
   844       1,634
2019
   2,744       2,628
2020 and thereafter
   4,791
2020
   3,081
2021 and thereafter
   7,820




Total
   $ 11,249       $ 19,027




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

(a) 2013 Credit Facilities
On June 27, 2013, American and AAG entered into a Credit and Guaranty Agreement (as amended, restated, amended and restated or otherwise modified, the 2013 Credit Agreement) with Deutsche Bank AG New York Branch, as administrative agent, and certain ~~lenders. The 2013 Credit Agreement provides~~lenders that originally provided for a $1.9 billion term loan facility ~~(the 2013 Term Loan Facility) that is~~ scheduled to mature on June 27, 2019 ~~unless otherwise extended by the applicable parties. As of December 31, 2014, $1.9 billion was outstanding under the~~(the 2013 Term Loan ~~Facility.~~
~~The 2013 Credit Agreement originally provided for~~Facility) and a $1.0 billion revolving credit facility ~~(the 2013 Revolving Facility and, together with the 2013 Term Loan Facility, the 2013 Credit Facilities)~~ scheduled to mature on June 27, 2018 ~~unless otherwise~~(the 2013 Revolving Facility). The maturity of the term loan facility was subsequently extended byto June 2020 and the ~~applicable parties.~~revolving credit facility commitments were subsequently increased to $1.4 billion with an extended maturity date of October 10, 2020, all of which is further described below.
On May 21, 2015, American amended and restated the 2013 Credit Agreement pursuant to which it refinanced the 2013 Term Loan Facility (the $1.9 billion 2015 Term Loan Facility and, together with the 2013 Revolving Facility, the 2013 Credit Facilities) to extend the maturity date to June 2020 and reduce the LIBOR margin from 3.00% to 2.75%. In addition, American entered into certain amendments to reflect the ability for American to make future modifications to the collateral pledged, subject to certain restrictions. The ~~2013~~$1.9 billion 2015 Term Loan Facility is repayable in ~~quarterly~~annual installments, with the first installment in an amount equal to ~~0.25%~~1.25% of the ~~original~~ principal amount ~~thereof~~commencing on June 27, 2016 and installments thereafter, in an amount equal to 1.0% of the principal amount, with any unpaid balance due on the maturity ~~date~~date. As of December 31, 2015, $1.9 billion of principal was outstanding under the ~~2013~~$1.9 billion 2015 Term Loan Facility. ~~The 2013 Revolving Facility provided that~~Voluntary prepayments may be made by American ~~may from time to time borrow, repay and reborrow loans thereunder and have letters of credit issued thereunder in an aggregate amount outstanding~~ at any ~~time of up to $1.0 billion.~~ time.
On October 10, 2014, American and AAG amended the 2013 Credit Agreement to extend the maturity date of the 2013 Revolving Facility to October 10, 2019 and increased the commitments thereunder to an aggregate principal amount of $1.4 billion while reducing the letter of credit commitments thereunder to $300 million. On October 26, 2015, American, AAG, US Airways Group and US Airways amended the 2013 Credit Agreement to extend the maturity date of the 2013 Revolving Facility to October 10, 2020. The 2013 Revolving Facility provides that American may from time to time borrow, repay and reborrow loans thereunder and have letters of credit issued thereunder. As of December 31, ~~2014,~~2015, there were no borrowings or letters of credit outstanding under the 2013 Revolving Facility.
The 2013 Credit Facilities bear interest at an index rate plus an applicable index margin or, at American’s option, LIBOR (subject to a floor of 0.75%, with respect to the ~~2013~~$1.9 billion 2015 Term Loan Facility) plus ~~an applicable~~a LIBOR ~~margin. The~~margin of 3.00% with respect to the 2013 Revolving Facility and 2.75% with respect to the $1.9 billion 2015 Term Loan Facility; provided that American’s corporate credit rating is Ba3 or higher from Moody’s and BB- or higher from S&P, the applicable LIBOR margin ~~is 3.00%~~would be 2.50% for ~~borrowings under both~~ the ~~2013~~$1.9 billion 2015 Term Loan Facility. As of December 31, 2015, American satisfied this ratings test and accordingly, the LIBOR margin for the $1.9 billion 2015 Term Loan Facility ~~and the~~was 2.50%. The 2013 Revolving ~~Facility.~~Credit Facility is subject to an undrawn fee of 0.75%.
Upon consummation of the Merger, US Airways Group and US Airways joined the 2013 Credit Facilities as guarantors. Following the joinder, certain minimum dollar-thresholds under the negative and financial covenants in the 2013 Credit Facilities were automatically increased.
Subject to certain limitations and exceptions, the 2013 Credit Facilities are secured by certain collateral, including certain slots, route authorities and ~~certain take-off and landing rights and~~airport gate ~~leaseholds at certain airports.~~leasehold rights. The obligations of American under the 2013 Credit Facilities are guaranteed by AAG. American is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans under the 2013 Credit Facilities as ~~more fully~~further described below in“Collateral Related ~~Covenants~~Covenants.”.”
The 2013 Credit Facilities contain events of default customary for similar financings, including cross default to other material indebtedness. Upon the occurrence of an event of default, the outstanding obligations under the
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
2013 Credit Facilities may be accelerated and become due and payable immediately. In addition, if a “change of control” (as defined in the 2013 Credit Agreement) occurs, American will (absent an amendment or waiver) be required to repay at par the loans outstanding under the 2013 Credit Facilities and terminate the 2013 Revolving Facility. The 2013 Credit Facilities also include covenants that, among other things, require AAG to maintain a minimum aggregate liquidity (as defined in the 2013 Credit Facilities) of not less than $2.0 billion, and limit the ability of AAG and its restricted subsidiaries to pay dividends and make certain other payments, make certain investments, incur additional indebtedness, incur liens on the collateral, dispose of the collateral, enter into certain affiliate transactions and engage in certain business activities, in each case subject to certain exceptions.
(b) 2014 Credit Facilities
On October 10, 2014, American, AAG, US Airways Group and US Airways entered into a Credit and Guaranty Agreement ~~(the~~(as amended, restated, amended and restated or otherwise modified, the 2014 Credit Agreement) with Citibank, N.A., as administrative agent, and certain ~~lenders. The 2014 Credit Agreement provides~~lenders that originally provided for a $750 million term loan facility scheduled to mature on October 10, 2021 (the 2014 Term Loan Facility) and a $400 million revolving credit facility scheduled to mature on October 10, 2019 (the 2014 Revolving Facility). The revolving credit facility commitments were subsequently increased to $1.025 billion with an extended maturity date of October 10, 2020 as further described below.
On April 20, 2015, American amended and restated the 2014 Credit Agreement pursuant to which it refinanced the 2014 Term Loan Facility (the $750 million 2015 Term Loan Facility and, together with the 2014 ~~Term Loan~~Revolving Facility, the 2014 Credit Facilities). to reduce the LIBOR margin from 3.50% to 3.00% and entered into certain amendments to reflect the release of certain existing collateral and the addition of certain new collateral, as well as the ability for American to make future modifications to the collateral pledged, subject to certain restrictions. The $750 million 2015 Term Loan Facility is repayable in annual installments in an amount equal to 1.00% of the original principal balance with any unpaid balance due on the maturity date. As of December 31, ~~2014, $750~~2015, $743 million of principal was outstanding under the ~~2014~~$750 million 2015 Term Loan Facility. Voluntary prepayments may be made by American at any time.
On October 26, 2015, American, AAG, US Airways Group and US Airways amended the 2014 Credit Agreement to increase the commitments under the 2014 Revolving Facility to an aggregate principal amount of $1.025 billion and extend the maturity date to October 10, 2020. The 2014 Revolving
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
Facility provides that American may from time to time borrow, repay and reborrow loans thereunder. American may have letters of credit issued under the 2014 Revolving Facility in an aggregate amount outstanding at any time up to $300 million. As of December 31, ~~2014~~2015, there were no borrowings or letters of credit outstanding under the 2014 Revolving Facility.
Subject to certain limitations and exceptions, the 2014 Credit Facilities are secured by certain collateral, including certain route authorities and certain take-off and landing rights and gate leaseholds at certain airports. The obligations of American under the 2014 Credit Facilities are guaranteed by AAG, US Airways Group and US Airways. American is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans under the 2014 Credit Facilities as more fully described below in “~~Collateral Related Covenants~~.”
The 2014 Term Loan Facility and 2014 Revolving Facility mature on October 10, 2021 and October 10, 2019, respectively, unless otherwise extended by the applicable parties. The 2014 Term Loan Facility is repayable in annual installments in an amount equal to 1.00% of the original principal balance with any unpaid balance due on the maturity date of the 2014 Term Loan Facility. Voluntary prepayments may be made by American at any time, with a premium of 1.00% applicable to certain prepayments made prior to the date that is six months following October 10, 2014.
The 2014 Credit Facilities bear interest at an index rate plus an applicable index margin or, at American’s option, LIBOR (subject to a floor of 0.75% in the case of the ~~2014~~$750 million 2015 Term Loan Facility) plus ~~an applicable~~a LIBOR ~~margin. The applicable LIBOR margins are 3.50% and~~margin of 3.00% ~~for borrowings under the 2014 Term Loan Facility and~~with respect to the 2014 Revolving Facility ~~respectively. If American has a~~and 3.00% with respect to the 2015 Term Loan Facility; provided that, American’s corporate credit rating ofis Ba3 or higher from Moody’s and BB- or higher from S&P, the applicable LIBOR margin would be 2.75% for the $750 million 2015 Term Loan Facility. As of December 31, 2015, American satisfied this ratings test and accordingly, the LIBOR margin for the $750 million 2015 Term Loan Facility was 2.75%. The 2014 Revolving Facility is ~~3.25%~~subject to an undrawn fee of 0.75%.
Subject to certain limitations and exceptions, the 2014 Credit Facilities are secured by certain collateral, including certain slots, route authorities and airport gate leasehold rights. The obligations of American under the 2014 ~~Term Loan Facility.~~Credit Facilities are guaranteed by AAG. American is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans under the 2014 Credit Facilities as further described below in“Collateral Related Covenants.”
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
The 2014 Credit Facilities contain events of default customary for similar financings, including cross default to other material indebtedness. Upon the occurrence of an event of default, the outstanding obligations under the 2014 Credit Facilities may be accelerated and become due and payable immediately. In addition, if a “change of control” (as defined in the 2014 Credit Agreement) occurs with respect to AAG, American will (absent an amendment or waiver) be required to repay at par the loans outstanding under the 2014 Credit Facilities and terminate the 2014 Revolving Facility. The 2014 Credit Facilities also include covenants that, among other things, require AAG to maintain a minimum aggregate liquidity (as defined in the 2014 Credit Facilities) of not less than $2.0 billion, and limit the ability of AAG and its restricted subsidiaries to pay dividends and make certain other payments, make certain investments, incur liens on the collateral, dispose of the collateral, enter into certain affiliate transactions and engage in certain business activities, in each case subject to certain exceptions.
(c) 2013 Citicorp Credit Facility
On May 23, 2013, US Airways entered into a term loan credit facility (as amended, the 2013 Citicorp Credit Facility) with Citicorp North America, Inc., as administrative agent, and certain lenders. US Airways Group guaranteed the obligations of US Airways under the 2013 Citicorp Credit Facility, and AAG and certain other subsidiaries of AAG are guarantors of those obligations. On December 30, 2015, in connection with the merger of US Airways Group with and into AAG and the merger of US Airways with and into American, AAG and American entered into an assumption agreement pursuant to which they assumed the obligations of US Airways Group and US Airways, respectively, in connection with the 2013 Citicorp Credit Facility.
The 2013 Citicorp Credit Facility consists of tranche B-1 term loans (Tranche B-1) and tranche B-2 term loans (Tranche B-2). As of December 31, 2015, $980 million of principal was outstanding under Tranche B-1 and $588 million of principal was outstanding under Tranche B-2. Voluntary prepayments may be made by American at any time.
The 2013 Citicorp Credit Facility bears interest at an index rate plus an applicable index margin or, at American’s option, LIBOR (subject to a floor of 0.75%) plus an applicable LIBOR margin. As of December 31, 2015, the applicable LIBOR margin was 2.75% for Tranche B-1 and 2.25% for Tranche B-2.
Tranche B-1 and Tranche B-2 mature on May 23, 2019 and November 23, 2016, respectively (unless otherwise extended by the applicable parties), and each is repayable in annual installments to be paid on each anniversary of the closing date in an amount equal to 1.00% of the initial aggregate principal amount of the loans with any unpaid balance due on the maturity date of the respective tranche.
Subject to certain limitations and exceptions, the obligations under the 2013 Citicorp Credit Facility are secured by liens on certain take off and landing slots at LGA, spare parts and certain other assets. The obligations of American under the 2013 Citicorp Credit Facility are guaranteed by AAG. American is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans under the 2013 Citicorp Credit Facility as further described below in“Collateral Related Covenants.”
The 2013 Citicorp Credit Facility agreement contains events of default customary for similar financings, including a cross-default provision to certain other material indebtedness of American and certain of its affiliates. Upon the occurrence of an event of default, the outstanding obligations under the 2013 Citicorp Credit Facility may be accelerated and become due and payable immediately. In addition, if a “change of control” (as defined in the 2013 Citicorp Credit Facility agreement) occurs, American will (absent an amendment or waiver) be required to repay the outstanding loans in full together with accrued interest thereon to the date of such prepayment. The 2013 Citicorp Credit Facility agreement includes affirmative, negative and financial covenants that, among other things, (a) require AAG and its restricted subsidiaries to maintain unrestricted liquidity of not less than $2.0 billion, with not less than $750 million held in accounts subject to control agreements, and (b) restrict the ability
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
of AAG and its subsidiaries party to the 2013 Citicorp Credit Facility to make certain investments, pay dividends and make certain other payments, make certain acquisitions, incur liens on the collateral, dispose of collateral, enter into certain affiliate transactions, enter into certain hedging transactions, and engage in certain business activities, in each case subject to certain exceptions.
(d) Aircraft Enhanced Equipment Trust Certificates (EETCs)
~~2014-1~~2015-1 EETCs
In ~~September 2014,~~March 2015, American created two pass-through trusts which issued approximately ~~$957 million~~$1.2 billion aggregate face amount of Series ~~2014-1~~2015-1 Class A and Class B EETCs (the 2015-1 EETCs) in connection with the financing of 1728 aircraft ~~recently delivered to, and~~ owned by American (the ~~2014~~2015-1 EETC Aircraft).
As of December 31, ~~2014,~~2015, the ~~full $957 million~~entire $1.2 billion of the ~~escrowed~~ proceeds from the ~~2014-1~~sale of the 2015-1 EETCs ~~have~~had been used to purchase equipment notes issued by American in two series: Series A equipment notes in the amount of ~~$742~~$948 million bearing interest at ~~3.70%~~3.375% per annum and Series B equipment notes in the amount of ~~$215~~$266 million bearing interest at ~~4.375%~~3.70% per annum. Interest and principal payments on the equipment notes are ~~scheduled to be made~~payable semi-annually in ~~April~~May and ~~October~~November of each year, ~~beginning~~which began in ~~April~~November 2015. The final payments on the Series A and Series B equipment notes ~~will be~~are due in ~~October 2026~~May 2027 and ~~October 2022,~~May 2023, respectively. ~~The~~These equipment notes are secured by liens on the ~~2014~~2015-1 EETC Aircraft.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~2015-2 EETCs
In September 2015, American created three pass-through trusts which issued approximately $1.1 billion aggregate face amount of Series 2015-2 Class AA, Class A and Class B EETCs (the 2015-2 EETCs) in connection with the financing of 21 aircraft owned by American (the 2015-2 EETC Aircraft).
As of December 31, 2015, the entire $1.1 billion of the proceeds from the sale of the 2015-2 EETCs had been used to purchase equipment notes issued by American in three series: Series AA equipment notes in the amount of $583 million bearing interest at 3.60% per annum, Series A equipment notes in the amount of $239 million bearing interest at 4.00% per annum and Series B equipment notes in the amount of $239 million bearing interest at 4.40% per annum. Interest and principal payments on the equipment notes are payable semi-annually in March and September of each year, with interest payments beginning in March 2016 and principal payments beginning in September 2016. The final payments on the Series AA and Series A equipment notes are due in September 2027 and the final payment on the Series B equipment notes is due in September 2023. These equipment notes are secured by liens on the 2015-2 EETC Aircraft.
~~(d)~~(e) Other Aircraft Financing Transactions
In ~~May 2014,~~2015, American prepaid ~~$61~~$72 million principal amount of outstanding debt secured by certain aircraft.
~~During 2014,~~In 2015, American entered into loan agreements to borrow ~~$286 million~~$1.9 billion in connection with the financing of certain ~~aircraft deliveries.~~aircraft. The notes mature in ~~2026~~2022 through 2027 and bear interest at a rate of LIBOR plus an applicable ~~margin.~~
During 2014, American financed 20 Boeing 737-800 aircraft under sale-leaseback arrangements and recorded proceeds from the sale of $811 million. Of the 20 Boeing 737-800 aircraft, 19 aircraft were accounted for as a capital lease and $747 million was reflected as debt on the consolidated balance sheet, included within other secured obligations in the table above. Gains associated with these sale-leaseback transactions are amortized over the respective remaining lease terms and are included in the consolidated balance sheet as deferred gains.margin averaging 1.82%.
~~(e)~~(f) Obligations Associated with Special Facility Revenue Bonds
In 2014, American prepaid $98 million of obligations, of which $62 million was a reduction of debt on its balance sheet, associated with special facility revenue bonds issued by municipalities to build or improve certain airport and maintenance facilities. The remaining portion of these obligations was accounted for as an operating lease.
In addition, in August 2014, American elected to exercise its option to reset the interest rate on approximately $220 million aggregate principal amount of special facility revenue bonds reflected as debt on its balance sheet, related to the Los Angeles International Airport, resulting in the repurchase of these bonds by American in September 2014. American has the option to remarket these bonds in the future. In connection with the repurchase of these bonds, American paid $2 million in cash premiums and recorded a $5 million non-cash write off of unamortized debt discount and issuance costs.
In December 2014, American ~~purchased~~acquired approximately $112 million aggregate principal amount of special facility revenue bonds related to the Tulsa International Airport, when such bonds were mandatorily tendered to American. ~~Of this amount,~~The acquisition of these bonds resulted in an $11 million ~~was a~~ reduction of ~~debt on American’s balance sheet. American has the option to remarket these bonds in the future.~~
~~(f) Senior Secured Notes~~
~~In March 2014, American prepaid $100 million of its 7.50% senior secured notes at~~ a ~~redemption price of 103% of their principal amount plus accrued~~capital lease obligation and ~~unpaid interest. In July 2014, American prepaid the remaining outstanding principal balance of $900 million at~~ a redemption price of 103.75% of outstanding principal amount plus accrued and unpaid interest. In connection with the prepayment of the outstanding 7.50% senior secured notes, American paid $37 million of cash premiums and recorded a $5 million non-cash write off of unamortized deferred issuance costs during the year ended December 31, 2014.
~~(g) AAdvantage Loan~~
In 2009, American entered into an arrangement under which Citibank loaned American $1.0 billion that could be repaid either in AAdvantage miles under American’s AAdvantage program or in cash (the AAdvantage Loan). Approximately $890 million of the AAdvantage Loan proceeds was accounted for as a loan from Citibank with the remaining $110 million recorded as deferred revenue in other liabilities and deferred credits.
To effect the AAdvantage Loan, American and Citibank entered into an Amended and Restated AAdvantage Participation Agreement (as so amended and restated, the Amended Participation Agreement). Under the
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

~~Amended Participation Agreement,~~$50 million reduction of a long-term operating lease obligation included in other long-term liabilities on American’s consolidated balance sheet as of December 31, 2014. American ~~agreed that it would apply~~exercised its option to remarket approximately $104 million of these bonds in ~~equal monthly installments over~~May 2015. The remarketed bonds bear interest at 5.0% per annum from the date of initial issuance and delivery of the bonds on May 27, 2015, until the day preceding June 1, 2025, on which date the bonds will be subject to mandatory tender for purchase by American. In connection with the remarketing of these special facility revenue bonds, American received cash proceeds of $112 million. As of December 31, 2015, $11 million is reflected as a ~~five year period beginning~~capital lease and $52 million is reflected in other long-term liabilities on ~~January 1, 2012, a credit for miles awarded to Citibank cardholders’ AAdvantage accounts.~~American’s consolidated balance sheet.
In June 2015, American ~~had the~~exercised its right to ~~repay in cash, without premium or penalty, any or all~~adjust the interest rate on approximately $365 million aggregate principal amount of special facility revenue bonds related to the John F. Kennedy International Airport, which were bearing interest at 8.50% per annum. In August 2015, these bonds were purchased by American and subsequently remarketed. The remarketed bonds bear interest at 2.00% per annum from the date of initial issuance and delivery of the ~~amounts owed~~bonds in August 2015, until August 2016, when the bonds will be subject to ~~Citibank under the~~mandatory tender for purchase by American. The $365 million obligation is reflected in current maturities of long-term debt and capital leases on American’s consolidated balance sheet as of December 31, 2015.
(g) AAdvantage ~~Loan.~~ Loan
Effective January 2, 2015, American exercised its loan repayment right with respect to the full value of the outstanding balance toof the AAdvantage Loan with Citibank for $400 million. In connection with the repayment, in the first quarter of 2015, American will recognize an early debt extinguishment gain of approximately $17 million. The entire outstanding balance of the obligation is reflected in current maturities of long-term debt on the accompanying consolidated balance sheet as
Guarantees
As of December 31, ~~2014.~~2015, American had issued guarantees covering AAG’s $750 million aggregate principal amount of 5.50% senior notes due 2019, $500 million aggregate principal amount of 6.125% senior notes due 2018 and $500 million aggregate principal amount of 4.625% senior notes due 2020.
Collateral Related Covenants
Certain of American’s debt financing agreements contain loan to value ratio covenants and require American to ~~periodically~~annually appraise the related collateral. Pursuant to such agreements, if the loan to value (LTV) ratio exceeds a specified threshold, American is required, as applicable, to pledge additional qualifying collateral (which in some cases may include cash collateral), or pay down such financing, in whole or in ~~part, as described below.~~part.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
Specifically, American is required to meet certain collateral coverage tests on ~~a periodic~~an annual basis ~~on two Credit Facilities,~~for three credit facilities, as described below:


2014 Credit Facilities

2013 Credit Facilities
Frequency of
Appraisals of
Appraised
Collateral
   Annual    Semi-Annual
LTV
Requirement

1.6x Collateral valuation to
amount of debt outstanding
(62.5% LTV)

1.6x Collateral valuation to
amount of debt outstanding
(62.5% LTV)
LTV as of
Last
Measurement
Date
   21.9%    33.7%
Collateral Description

Generally, certain route
authorities, take-off and landing
slots, and rights to airport facilities
used by American to operate certain
services between the U.S. and
London Heathrow, Tokyo
Narita, and China

Generally, certain route
authorities, take-off and landing
slots, and rights to airport facilities
used by American to operate all
services between the U.S. and
South America

2014 Credit Facilities

2013 Credit Facilities

2013 Citicorp Credit Facility
Frequency of Appraisals of Appraised Collateral    Annual    Annual    Annual (1)
LTV Requirement    1.6x Collateral valuation to amount of debt outstanding (62.5% LTV)    1.6x Collateral valuation to amount of debt outstanding (62.5% LTV)    1.5x Collateral valuation to amount of debt outstanding (66.7% LTV)
LTV as of Last Measurement Date    24.1%    33.6%    57.8%
Collateral Description    Generally, certain slots, route authorities and airport gate leasehold rights used by American to operate certain services between the U.S. and London Heathrow    Generally, certain slots, route authorities and airport gate leasehold rights used by American to operate all services between the U.S. and South America    Generally, certain LGA slots, certain spare parts, certain simulators, certain leasehold real estate assets and cash
(1)
With respect to spare parts, one physical appraisal and one desktop appraisal are required in each fiscal year.
At December 31, ~~2014,~~2015, American was in compliance with the applicable collateral coverage tests as of the most recent measurement dates.
8.  Income Taxes
The significant components of the income tax provision (benefit) were (in millions):
   Year Ended December 31,
   2015 2014 2013
Current
   $ 15    $ (24 ) $ (30 )
Deferred
   (3,467 ) 344    (324 )


Income tax provision (benefit)
   $ (3,452 ) $ 320    $ (354 )


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

~~7. Income Taxes~~
~~The significant components of the income tax expense (benefit) were (in millions):~~

   Year Ended December 31,
   2014 2013 2012
Current
   $ (23 ) $ (30 ) $ —
Deferred
   342    (324 ) (569 )


Income tax expense (benefit)
   $ 319    $ (354 ) $ (569 )


The income tax ~~expense~~provision (benefit) differed from amounts computed at the statutory federal income tax rate as follows (in millions):

   Year Ended December 31,    Year Ended December 31,
   2014 2013 2012    2015 2014 2013
Statutory income tax provision (benefit)
   $ 570    $ (658 ) $ (873 )    $ 1,635    $ 1,144    $ (725 )
State income tax expense (benefit), net of federal tax effect
   43    (14 ) (35 )
Book expenses (benefits) not deductible for tax purposes
   (20 ) 20    20
State income tax provision (benefit), net of federal tax effect
   71    81    (18 )
Book expenses not deductible for tax purposes
   55    4    25
Bankruptcy administration expenses
   86    82    26       3    86    82
Interest cutback to net operating loss (NOL)
   —    53    —       —    —    53
Alternative minimum tax credit refund
   (28 ) (30 ) —       —    (29 ) (30 )
Change in valuation allowance
   (660 ) 714    858       (5,216 ) (1,285 ) 780
Tax expense (benefit) resulting from OCI allocation
   328    (538 ) (569 )
Tax provision (benefit) resulting from OCI allocation
   —    328    (538 )
Other, net
   —    17    4       —    (9 ) 17




Income tax expense (benefit)
   $ 319    $ (354 ) $ (569 )
Income tax provision (benefit)
   $ (3,452 ) $ 320    $ (354 )




American provides a valuation allowance for its deferred tax assets, which includes the NOLs, when it is more likely than not that some portion, or all, of its deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. American considers all available positive and negative evidence and makes certain assumptions in evaluating the realizability of its deferred tax assets. As of December 31, 2015, after considering all positive and negative evidence, including the completion of certain critical merger integration milestones as well as American’s financial performance, American concluded that substantially all of its deferred income tax assets were more likely than not to be realized. Accordingly, American reversed the valuation allowance, which resulted in a special $3.5 billion non-cash tax benefit recorded in the consolidated statement of operations for 2015.
For the year ended December 31, 2014, American recorded a ~~$319~~$320 million tax provision. ~~This provision included $342 million of special tax charges.~~ During 2014, American sold its portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. In connection with this sale, American recorded a special non-cash tax provision of $328 million in the second quarter of 2014 that reversed the non-cash tax provision which was recorded in ~~other comprehensive income (OCI),~~OCI, a subset of ~~stockholders’~~stockholder’s equity, principally in 2009. This provision represents the tax effect associated with gains recorded in OCI principally in 2009 due to a net increase in the fair value of ~~our~~American’s fuel hedging contracts. In accordance with GAAP, American retained the $328 million tax provision in OCI until the last contract was settled or terminated. American also recorded a special $14 million non-cash deferred income tax provision related to certain indefinite-lived intangible assets. In addition, American recorded $6 million of tax expense principally related to certain states and countries where NOL Carryforwards were limited or unavailable to be used. These charges were offset in part by a $29 million federal income tax benefit resulting from American’s elections under applicable sections of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 and the Housing and Economic Recovery Act of 2008 (as extended by the Tax Increase Prevention Act of 2014), allowing corporations to accelerate utilization of certain research and AMT credit carryforwards in lieu of applicable bonus depreciation on certain qualifying capital investments.
For the year ended December 31, 2013, American recorded a $354 million tax benefit. This benefit included a $538 million special non-cash income tax benefit from continuing operations. American is required to consider all items (including items recorded in OCI) in determining the amount of tax benefit that results from a loss from continuing operations and that should be allocated to continuing operations. As a result, American recorded a tax benefit on the loss from continuing operations for the year, which was exactly offset by income tax expense on OCI. However, while the income tax benefit from continuing operations is reported on the income statement, the
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
income tax expense on ~~other comprehensive income~~OCI is recorded directly to accumulated ~~other comprehensive income (loss),~~OCI, which is a component of stockholder’s equity. Because the income tax expense on ~~other comprehensive income~~OCI is equal to the income tax benefit from continuing operations, American’s ~~year-end~~ net deferred tax position is not impacted by this tax allocation. The 2013 tax benefit was offset in part by a $214 million special tax ~~charge~~provision attributable to additional valuation allowance required to reduce deferred tax assets to the amount American ~~believes is~~believed was more likely than not to be realized. ~~In addition, American recorded a $30 million federal income tax benefit under the Housing and Economic Recovery Act of 2008 as described above.~~
For the year ended December 31, 2012, American recorded a net income tax benefit of $569 million, which represents the non-cash income tax benefit resulting from gains recorded in OCI as discussed above.
American provides a valuation allowance for deferred tax assets when it is more likely than not that some portion, or all of its deferred tax assets, will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income (primarily reversals of deferred tax liabilities) during the periods in which those temporary differences will become deductible. In making this determination, American considers all available positive and negative evidence and makes certain assumptions. American considers many factors in evaluating the realizability of its deferred tax assets including risks associated with merger integration as well as other factors, which continue to be affected by conditions beyond American’s control, such as the condition of the economy, the level and volatility of fuel prices and travel demand. American has concluded as of December 31, 2014 that the valuation allowance was still needed on its deferred tax asset based on the weight of the factors described above.
A portion of the change in the valuation allowance reflects the income tax benefit of approximately $29 million and $30 million, respectively, recorded in 2014 and 2013 resulting from American’s elections under applicable sections of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 and the Housing and Economic Recovery Act of 2008 (as extended by the Tax Increase Prevention Act of 2014 and the American Taxpayer Relief Act of 2012), allowing corporations to accelerate utilization of certain research and alternative minimum tax (AMT) credit carryforwards in lieu of applicable bonus depreciation on certain qualifying capital investments.
In addition to the changes in the valuation allowance from operations described in the table above, the valuation allowance was also impacted by the changes in the components of accumulated other comprehensive income (loss), described in Note 11 to American’s consolidated financial statements. The total increase in the valuation allowance was $69 million, $155 million and $282 million in 2014, 2013 and 2012, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

income (loss), described in Note 12. The total decrease in the valuation allowance was $5.2 billion and $525 million in 2015 and 2014, respectively. The total increase in the valuation allowance was $221 million in 2013.
The components of American’s deferred tax assets and liabilities were (in millions):

   December 31,    December 31,
   2014 2013    2015 2014
Deferred tax assets:

Postretirement benefits other than pensions
   $ 322    $ 342       $ 340    $ 379
Rent expense
   86    55       134    121
Alternative minimum tax credit carryforwards
   438    467       458    458
Operating loss carryforwards
   3,536    3,302       2,818    3,737
Pensions
   2,385    1,747       2,420    2,394
Frequent flyer obligation
   589    620
Loyalty program obligation
   590    948
Gains from lease transactions
   22    24       261    208
Reorganization items
   64    675       57    64
Other
   829    975       1,123    1,172




Total deferred tax assets
   8,271    8,207       8,201    9,481
Valuation allowance
   (5,308 ) (5,239 )    (14 ) (5,196 )




Net deferred tax assets
   2,963    2,968       8,187    4,285




Deferred tax liabilities:

Accelerated depreciation and amortization
   (2,953 ) (2,932 )    (5,011 ) (4,579 )
Other
   (238 ) (250 )    (244 ) (242 )




Total deferred tax liabilities
   (3,191 ) (3,182 )    (5,255 ) (4,821 )




Net deferred tax liability
   $ (228 ) $ (214 )
Net deferred tax asset (liability)
   $ 2,932    $ (536 )




At December 31, ~~2014,~~2015, American had approximately ~~$10.3~~$8.8 billion of gross NOL Carryforwards to reduce future federal taxable income, substantially all of which are expected to be available for use in ~~2015.~~2016. American is a member of AAG’s consolidated federal and certain state income tax returns. The amount of federal ~~and state~~ NOL Carryforwards available in those returns is ~~$10.1~~$8.0 billion, ~~and $4.6 billion, respectively,~~ substantially all of which is expected to be available for use in ~~2015.~~2016. The federal NOL Carryforwards will expire beginning in ~~2022~~2023 if unused. These NOL Carryforwards include an unrealized tax benefit of ~~$712 million~~$1.2 billion related to ~~the implementation of~~ share-based compensation ~~accounting guidance~~ that will be recorded in equity when realized. American also had approximately ~~$3.9~~$3.7 billion of NOL Carryforwards to reduce future state taxable income at December 31, ~~2014,~~2015, which will expire in years ~~2015~~2016 through 2034 if unused. As of December 31, 2015, the amount of NOL Carryforwards for state income tax purposes that will expire, if unused, in 2016 is $106 million. American’s ability to deduct its NOL Carryforwards and to utilize certain other available tax attributes can be substantially constrained under the general annual limitation rules of Section 382 where an “ownership change” has occurred. American experienced an ownership change in connection with its emergence from the Chapter 11 ~~Cases.~~Cases, and US Airways Group experienced an ownership change in connection with the Merger. As a result of the Merger, US Airways Group is now included in the AAG consolidated federal and state income tax returns. The general limitation rules of Section 382 for a debtor in a bankruptcy case are liberalized where the ownership change occurs upon emergence from bankruptcy. American elected to be covered by certain special rules for federal income tax purposes that ~~permit~~permitted approximately $9.5 billion (with $7.3 billion of unlimited NOL still remaining at December 31, 2015) of its federal NOL Carryforwards to be utilized without regard to the Section 382 annual limitation ~~rules.~~rules unless a second ownership change occurred on or before December 9, 2015. No second ownership change occurred within that period. Substantially all of American’s remaining federal NOL Carryforwards (attributable to US Airways Group) are subject to limitation under Section 382; however, American’s ability to utilize such NOL Carryforwards is not anticipated to be effectively
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
constrained as a result of such limitation. Similar limitations may apply for state income tax purposes. American’s ability to utilize any new NOL Carryforwards arising after the ownership ~~change~~changes is not affected by the annual limitation rules imposed by Section 382 unless another ownership change occurs. Under the Section 382 limitation, cumulative stock ownership changes among material stockholders exceeding 50% during a rolling three-year period can potentially limit a company’s future use of NOLs and tax credits. See Part I, Item 1A. Risk Factors – “Our ability to utilize our NOL Carryforwards may be limited” for unaudited additional discussion of this risk.
At December 31, ~~2014,~~2015, American had an ~~AMT~~Alternative Minimum Tax credit carryforward of approximately ~~$435~~$458 million available for federal income tax purposes, which is available for an indefinite period. American’s net deferred tax assets, which include the NOL Carryforwards, are subject to a full valuation allowance. At December 31, 2014, the federal and state valuation allowances were $5.1 billion and $208 million, respectively. In accordance with GAAP, utilization of the NOL Carryforwards after December 9, 2013 will result in a corresponding decrease in the valuation allowance and offset American’s tax provision dollar for dollar.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
American files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. American’s ~~2004~~2012 through ~~2013~~2014 tax years are still subject to examination by the Internal Revenue Service. Various state and foreign jurisdiction tax years remain open to examination and American is under examination, in administrative appeals, or engaged in tax litigation in certain jurisdictions. American believes that the effect of ~~additional~~any assessments will be immaterial to its consolidated financial statements.
In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes,” which changes how deferred taxes are classified on the balance sheet. The update eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent on the balance sheet. Deferred tax liabilities and assets are now required to be classified as noncurrent on the balance sheet. Entities have the choice to apply ASU 2015-17 either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The update is effective for annual and interim periods in fiscal years beginning after December 15, 2016. American ~~has an unrecognized tax benefit of approximately $5 million, which did not change~~early adopted this standard during the ~~twelve months ended December 31, 2014. Changes in~~fourth quarter 2015, utilizing retrospective application as permitted. As such, certain prior period amounts have been reclassified to conform to the ~~unrecognized~~current presentation. As a result, American reclassified $314 million of current deferred income tax ~~benefit have no impact~~assets within prepaid expenses and other to reduce deferred income taxes within other liabilities on the ~~effective tax rate due to the existence~~consolidated balance sheet as of ~~the valuation allowance. Accrued interest on tax positions is recorded as a component of interest expense but was not significant at~~ December 31, 2014.
~~The reconciliation of the beginning and ending amounts of unrecognized tax benefit are (in millions):~~

   2014    2013
Unrecognized tax benefit at January 1
   $ 5       $ 5
No activity
   —       —




Unrecognized tax benefit at December 31
   $ 5       $ 5




~~American estimates that the unrecognized tax benefit will be realized within the next twelve months.~~
8.9.  Risk Management ~~and Financial Instruments~~
American’s economic prospects are heavily dependent upon two variables it cannot control: the health of the economy and the price of fuel.
Due to the discretionary nature of business and leisure travel spending, airline industry revenues are heavily influenced by the condition of the U.S. economy and economies in other regions of the world. Unfavorable conditions in these broader economies have resulted, and may result in the future, in decreased passenger demand for air travel and changes in booking practices, both of which in turn have had, and may have in the future, a strong negative effect on American’s revenues. In addition, during challenging economic times, actions by ~~our~~its competitors to increase their revenues can have an adverse impact on American’s revenues.
American’s operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of the largest single cost items in American’s business. Jet fuel market prices have fluctuated substantially over the past several years and prices continue to be highly volatile. Because of the amount of fuel needed to operate American’s business, even a relatively small increase or decrease in the price of fuel can have a material ~~adverse aggregate~~ effect on American’s operating results and liquidity. ~~Jet fuel market prices have fluctuated substantially over the past several years and prices continued to be volatile in 2014.~~
These additional factors could impact American’s results of operations, financial performance and liquidity.
~~(a) Fuel Price Risk Management~~
During the second quarter of 2014, American sold its portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. American has not entered into any transactions to hedge its fuel consumption since December 9, 2013 and, accordingly, as of December 31, 2014, American did not have any fuel hedging contracts outstanding. As such, and assuming American does not enter into any future transactions to hedge its fuel consumption, American will continue to be fully exposed to fluctuations in fuel prices. American’s current policy is not to enter into transactions to hedge its fuel consumption, although American reviews that policy from time to time based on market conditions and other factors.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

The cash proceeds on these sales totaled $71 million which exceeded the current value of the portfolio. Approximately $25 million of the resulting gain was recorded to OCI and will be recognized as a decrease to fuel expense in the period the hedged fuel is scheduled to be consumed (through the second quarter of 2015). As of December 31, 2014, American expects to recognize the remaining $9 million of these gains into earnings in 2015. For the years ended December 31, 2014, 2013 and 2012, American recognized net gains of approximately $16 million, net losses of approximately $12 million and net gains of approximately $4 million, respectively, as a component of aircraft fuel expense on the accompanying consolidated statements of operations related to its fuel hedging agreements, including the ineffective portion of the hedges.
~~The impact of aircraft fuel derivative instruments (all cash flow hedges) on American’s consolidated statements of operations is depicted below (in millions):~~

   Location    Year Ended December 31,
              2014                    2013                 2012
Amount of gain (loss) reclassified from AOCI into income (1)
   Aircraft fuel and
related taxes    $ 4       $ (34 ) $ 3
Amount of gain (loss) recognized in income on derivative (2)
   Aircraft fuel and
related taxes    12       22    1




Amount of gain (loss) recognized in consolidated statements of operations (3)
      $ 16       $ (12 ) $ 4




~~(1)~~
~~Includes the effective portion of hedge gain (loss)~~
~~(2)~~
~~Includes the ineffective portion of hedge gain (loss)~~
~~(3)~~
~~Includes the effective and ineffective portion of hedge gain (loss)~~
~~The impact of aircraft fuel derivative instruments (all cash flow hedges) on American’s consolidated statements of comprehensive income is depicted below (in millions):~~

   Location    Year Ended December 31,
              2014                 2013                 2012
Amount of (gain) loss reclassified from AOCI into income (1)
   Reclassification
into earnings    $ (4 ) $ 34    $ (3 )
Amount of gain (loss) recognized in OCI on derivative (1)
   Change in fair value    (34 ) (2 ) (12 )


Amount of gain (loss) recognized in consolidated statements of comprehensive income
      $ (38 ) $ 32    $ (15 )


~~(1)~~
~~Includes the effective portion of hedge gain (loss)~~
While certain of American’s fuel derivatives were subject to enforceable master netting agreements with its counterparties, American did not offset its fuel derivative assets and liabilities in its consolidated balance sheets. American had a gross asset of $109 million as of December 31, 2013 for its aircraft fuel derivative instruments, which was reflected in prepaid expenses and other on the accompanying consolidated balance sheet. American had no cash collateral posted or received as of December 31, 2013.
~~(b)~~(a) Credit Risk
Most of American’s receivables relate to tickets sold to individual passengers through the use of major credit cards or to tickets sold by other airlines and used by passengers on ~~American or its regional carriers.~~American. These
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
receivables are short-term, mostly being settled within seven days after sale. Bad debt losses, which have been minimal in the past, have been considered in establishing allowances for doubtful accounts. American does not believe it is subject to any significant concentration of credit risk.
~~(c)~~(b) Interest Rate Risk
American has exposure to market risk associated with changes in interest rates related primarily to its variable rate debt obligations. Interest rates on ~~$3.9~~$7.8 billion principal amount of long-term debt as of December 31, ~~2014~~2015 are subject to adjustment to reflect changes in floating interest rates. The weighted average effective interest rate on American’s variable rate debt was ~~3.6%~~2.93% at December 31, ~~2014.~~
~~9. Investments and Fair Value Measurements~~
~~Short-term investments consisted of (in millions):~~

   December 31,
   2014    2013
Overnight Investments, Time Deposits and Repurchase Agreements
   $ 60       $ 177
Corporate and Bank Notes
   2,441       3,350
U.S. Government Agency and Treasury Obligations
   —       1,312
Commingled Funds
   789       323




Total
   $ 3,290       $ 5,162




~~Short-term investments at December 31, 2014, by contractual maturity included (in millions):~~

Due in one year or less
   $ 2,532
Due between one year and three years
   758
Due after three years
   —


Total
   $ 3,290


~~All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are reflected as a component of accumulated other comprehensive income (loss).~~2015. American does not currently have an interest rate hedge program.
~~Assets and Liabilities Measured at Fair Value on a Recurring Basis~~(c) Foreign Currency Risk
American ~~utilizes~~is exposed to the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. American’s short-term investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuationeffect of these securities. American’s fuel derivative contracts, which consisted primarily of call options, collars (consisting of a purchased call option and a sold put option) and call spreads (consisting of a purchased call option and a sold call option), are valued using energy and commodity market data which is derived by combining raw inputs with quantitative models and processes to generate forward curves and volatilities. Heating oil, jet fuel and crude oil were the primary underlying commodities in the hedge portfolio. No changes in valuation techniques or inputs occurred during the year ended December 31, 2014.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
~~Assets and liabilities measured at fair value on a recurring basis are summarized below (in millions):~~

   Fair Value Measurements as of December 31, 2014
       Total            Level 1            Level 2            Level 3
Short-term investments (1), (2):

Money market funds
   $ 789       $ 789       $ —       $ —
Repurchase agreements
   46       —       46       —
Corporate obligations
   1,775       —       1,775       —
Bank notes / Certificates of deposit / Time deposits
   680       —       680       —








   3,290       789       2,501       —
Restricted cash and short term investments (1)
   650       650       —       —








Total
   $ 3,940       $ 1,439       $ 2,501       $ —








~~(1)~~
~~Unrealized gains or losses on short-term investments and restricted cash and short-term investments are recorded in accumulated other comprehensive loss at each measurement date.~~
~~(2)~~
~~American’s short-term investments mature in one year or less except for $558 million of corporate obligations and $200 million of bank notes/certificates of deposit/time deposits.~~
~~There were no Level 1 to Level 2 transfers during the year ended December 31, 2014.~~

   Fair Value Measurements as of December 31, 2013
       Total            Level 1            Level 2            Level 3
Short-term investments (1), (2):

Money market funds
   $ 323       $ 323       $ —       $ —
Government agency investments
   1,312       —       1,312       —
Repurchase agreements
   170       —       170       —
Corporate obligations
   2,750       —       2,750       —
Bank notes / Certificates of deposit / Time deposits
   607       —       607       —








   5,162       323       4,839       —
Restricted cash and short term investments (1)
   702       646       56       —
Fuel derivative contracts, net (1)
   109       —       109       —








Total
   $ 5,973       $ 969       $ 5,004       $ —








~~(1)~~
Unrealized gains or losses on short-term investments, restricted cash and short-term investments and derivatives qualifying for hedge accounting are recorded in accumulated other comprehensive income (loss) at each measurement date.
~~(2)~~
American’s short-term investments mature in one year or less except for $250 million of bank notes/certificates of deposit/time deposits, $511 million of U.S. Government agency investments and $2.1 billion of corporate obligations.
A $56 million Level 1 restricted money market security was liquidated in August 2013. The cash proceeds were subsequently reinvested in a Level 2 U.S. Treasury Obligation. American’s policy regarding the recording of transfers between levels is to reflect any such transfers at the end of the reporting period.
~~Venezuela Cash and Short-term Investments~~
~~As of December 31, 2014, $745 million of American’s cash and short-term investments balances were held in~~ foreign ~~bank accounts, of which approximately $656 million was held in Venezuelan bolivars. This balance includes approximately $621 million valued at 6.3 bolivars and approximately $35 million valued at 12.0~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
~~bolivars, with the~~exchange rate ~~depending~~fluctuations on the date American submitted its repatriation request to the Venezuelan government. These rates are materially more favorable than the exchange rates currently prevailing for other transactions conducted outsideU.S. dollar value of ~~the Venezuelan government’s currency exchange system that American participates in.~~foreign currency-denominated operating revenues and expenses. American’s ~~cash balance held in Venezuelan bolivars decreased $54 million~~largest exposure comes from the ~~December 31, 2013 balance of $710 million~~British pound, Euro, Canadian dollar and various Latin American currencies, primarily ~~due to $88 million in cash repatriations and $30 million in~~the Brazilian real. American does not currently have a foreign currency losses as described below, partially offset by additional cash proceeds from ticket sales in early 2014. In the second and third quarters of 2014, American repatriated $65 million including $31 million valued at 6.3 bolivars to the dollar and $34 million valued at 10.6 bolivars to the dollar. In the fourth quarter of 2014, American incurred an $11 million foreign currency loss related to the receipt of $23 million at a rate of 6.3 bolivars to the dollar for one of its 2012 repatriation requests originally valued at a rate of 4.3 bolivars to the dollar. Accordingly, American revalued its remaining pending 2012 repatriation requests from 4.3 to 6.3 bolivars to the dollar resulting in additional foreign currency losses of $19 million. In total, American recognized a $30 million special charge for these foreign currency losses in the fourth quarter of 2014. During 2014, American significantly reduced capacity in this market and is no longer accepting bolivars as payment for airline tickets. American is continuing to work with Venezuelan authorities regarding the timing and exchange rate applicable to the repatriation of funds held in local currency. American is monitoring this situation closely and continues to evaluate its holdings of Venezuelan bolivars for additional foreign currency losses, which could be material, particularly in light of the uncertainty posed by the new foreign exchange regulations announced in mid-February 2015 and the continued deterioration of economic conditions in Venezuela.hedge program. See Part I, Item 1A. Risk Factors –“–We “We operate a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our ~~control~~control”” for unaudited additional ~~discussion of this~~discussion.
10.  Investments and Fair Value Measurements
Assets Measured at Fair Value on a Recurring Basis
American utilizes the market approach to measure fair value for its financial assets. The market approach uses prices and other ~~currency risks.~~relevant information generated by market transactions involving identical or comparable assets. American’s short-term investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuation of these securities. No changes in valuation techniques or inputs occurred during the year ended December 31, 2015.
Assets measured at fair value on a recurring basis are summarized below (in millions):
   Fair Value Measurements as of December 31, 2015
       Total            Level 1            Level 2            Level 3
Short-term investments (1), (2):

Money market funds
   $ 1,008       $ 1,008       $ —       $ —
Government agency investments
   1       —       1       —
Corporate obligations
   2,191       —       2,191       —
Bank notes/certificates of deposit/time deposits
   2,662       —       2,662       —








   5,862       1,008       4,854       —
Restricted cash and short-term investments (1)
   695       695       —       —








Total
   $ 6,557       $ 1,703       $ 4,854       $ —








(1)
Unrealized gains or losses on short-term investments and restricted cash and short-term investments are recorded in accumulated other comprehensive loss at each measurement date.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
(2)
All short-term investments are classified as available-for-sale and stated at fair value. American’s short-term investments mature in one year or less except for $734 million of corporate obligations and $1.2 billion of bank notes/certificates of deposit/time deposits.
   Fair Value Measurements as of December 31, 2014
       Total            Level 1            Level 2            Level 3
Short-term investments (1), (2):

Money market funds
   $ 951       $ 951       $ —       $ —
Government agency investments
   101       —       101       —
Repurchase agreements
   46       —       46       —
Corporate obligations
   3,927       —       3,927       —
Bank notes/certificates of deposit/time deposits
   1,281       —       1,281       —








   6,306       951       5,355       —
Restricted cash and short-term investments (1)
   774       774       —       —








Total
   $ 7,080       $ 1,725       $ 5,355       $ —








(1)
Unrealized gains or losses on short-term investments and restricted cash and short-term investments are recorded in accumulated other comprehensive loss at each measurement date.
(2)
All short-term investments are classified as available-for-sale and stated at fair value. American’s short-term investments mature in one year or less except for $1.1 billion of corporate obligations and $575 million of bank notes/certificates of deposit/time deposits.
There were no Level 1 to Level 2 transfers during the years ended December 31, 2015 or 2014.
Fair Value of Debt
The fair value of American’s long-term debt was estimated using quoted market prices or discounted cash flow analyses, based on American’s current estimated incremental borrowing rates for similar types of borrowing arrangements. If American’s long-term debt was measured at fair value, it would have been classified as Level 2 in the fair value hierarchy.
The carrying value and estimated fair value of American’s long-term debt, including current maturities, were as follows (in millions):

   December 31, 2014    December 31, 2013
   Carrying
Value    Fair
Value    Carrying
Value    Fair
Value
Long-term debt, including current maturities
   $ 11,234       $ 11,618       $ 10,809       $ 11,045








   December 31, 2015    December 31, 2014
   Carrying
Value    Fair
Value    Carrying
Value    Fair
Value
Long-term debt, including current maturities
   $ 18,826       $ 19,378       $ 16,482       $ 17,245








~~10.~~Cash and Short-term Investments
Generally, fluctuations in foreign currencies, including devaluations, cannot be predicted by American and can significantly affect the value of American’s cash and short-term investments located outside the United States. These conditions, as well as any further delays, devaluations or imposition of more stringent repatriation restrictions, may materially adversely affect American’s business, results of operations and financial condition. See Part I, Item 1A. Risk Factors – “We operate a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected bynumerous events, circumstances or government actions beyond our control” for unaudited additional discussion of this and other currency risks.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
11. Retirement Benefits
American sponsors defined benefit and defined contribution pension plans for eligible employees. The defined benefit plans provide benefits for participating employees based on years of service and average compensation for a specified period of time before retirement. Effective November 1, 2012, substantially all of American’s defined benefit pension plans were frozen and American began providing enhanced benefits under its defined contribution plans for certain groups. American uses a December 31 measurement date for all of its defined benefit plans. ~~In addition,~~ American also provides certain ~~postemployment~~retiree medical and other postretirement benefits, including health care and life insurance benefits, to retired employees. Effective November 1, 2012, American modified its ~~employees. These benefits include disability-related~~retiree medical and ~~workers’ compensation benefits~~life coverage to eliminate the company subsidy for ~~certain employees.~~employees who retire on or after November 1, 2012. As a result of modifications to its retiree medical plans in 2012, American ~~accrues~~recognized a negative plan amendment of $1.9 billion, which is included as a component of actuarial gain in OCI and will be amortized over the future service life of the active plan participants for whom the ~~cost~~benefit was eliminated, or approximately eight years. As of ~~such benefit expenses once an appropriate triggering event has occurred.~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
December 31, 2015, $1.1 billion of actuarial gain remains to be amortized.
Year End Information
The following table provides a reconciliation of the changes in the pension and retiree medical and other postretirement benefit obligations and fair value of assets for the years ended December 31, ~~2014~~2015 and ~~2013,~~2014, and a statement of funded status as of December 31, ~~2014~~2015 and ~~2013~~2014 (in millions):

   Pension Benefits Retiree Medical and Other
Benefits
   2014 2013 2014    2013
Reconciliation of benefit obligation:

Obligation at January 1
   $ 14,826    $ 15,895    $ 1,264       $ 1,412
Service cost
�� 2    3    —       —
Interest cost
   742    654    55       50
Actuarial (gain) loss
   2,559    (1,152 ) (57 )    (82 )
Plan amendments
   —    —    33       —
Curtailments
   —    2    —       —
Settlements
   (20 ) (1 ) —       —
Benefit payments
   (605 ) (575 ) (102 )    (116 )




Obligation at December 31
   $ 17,504    $ 14,826    $ 1,193       $ 1,264




Reconciliation of fair value of plan assets:

Fair value of plan assets at January 1
   $ 10,009    $ 9,065    $ 239       $ 211
Actual return on plan assets
   742    1,026    11       41
Employer contributions
   809    494    96       103
Settlements
   (20 ) (1 ) —       —
Benefit payments
   (605 ) (575 ) (102 )    (116 )




Fair value of plan assets at December 31
   10,935    10,009    244       239




Funded status at December 31
   $ (6,569 ) $ (4,817 ) $ (949 )    $ (1,025 )




Amounts recognized in the consolidated balance sheets:

Current liability
   $ 10    $ 31    $ 108       $ 118
Noncurrent liability (1)
   6,559    4,786    841       907




   $ 6,569    $ 4,817    $ 949       $ 1,025




Amounts recognized in other comprehensive income:

Net actuarial loss (gain)
   $ 4,949    $ 2,395    $ (217 )    $ (176 )
Prior service cost (credit) (1)
   245    273    (1,319 )    (1,592 )




   $ 5,194    $ 2,668    $ (1,536 )    $ (1,768 )




For plans with accumulated benefit obligations exceeding the fair value of plan assets:

Projected benefit obligation (PBO)
   $ 17,471    $ 14,796    $ —       $ —
Accumulated benefit obligation (ABO)
   17,461    14,788    —       —
Accumulated postretirement benefit obligation (APBO)
   —    —    1,193       1,264
Fair value of plan assets
   10,899    9,976    244       239
ABO less fair value of plan assets
   6,562    4,812    —       —
~~(1) The 2014 noncurrent liability does not include $18 million of other post-employment benefits or $2 million of prior service costs.~~
Pension Benefits Retiree Medical and Other
Postretirement Benefits
        2015                 2014                 2015                 2014
Reconciliation of benefit obligation:

Obligation at January 1
$ 17,504    $ 14,826    $ 1,324    $ 1,383
Service cost
2    2    3    1
Interest cost
733    742    50    61
Actuarial (gain) loss
(1,153 ) 2,559    (178 ) (39 )
Plan amendments
—    —    —    33
Settlements
(3 ) (20 ) —    —
Benefit payments
(773 ) (605 ) (94 ) (111 )
Other
—    —    24    (4 )

Obligation at December 31
$ 16,310    $ 17,504    $ 1,129    $ 1,324

Reconciliation of fair value of plan assets:

Fair value of plan assets at January 1
$ 10,935    $ 10,009    $ 244    $ 239
Actual return on plan assets
(505 ) 742    (10 ) 11
Employer contributions
6    809    89    105
Settlements
(3 ) (20 ) —    —
Benefit payments
(773 ) (605 ) (94 ) (111 )
Other (1)
—    —    24    —

Fair value of plan assets at December 31
9,660    10,935    253    244

Funded status at December 31
$ (6,650 ) $ (6,569 ) $ (876 ) $ (1,080 )

Amounts recognized in the consolidated balance sheets:

Current liability
$ 7    $ 10    $ 109    $ 117
Noncurrent liability (2)
6,643    6,559    767    963

$ 6,650    $ 6,569    $ 876    $ 1,080

Amounts recognized in other comprehensive income:

Net actuarial loss (gain)
$ 5,036    $ 4,949    $ (339 ) $ (199 )
Prior service cost (benefit) (2)
216    245    (1,084 ) (1,326 )

$ 5,252    $ 5,194    $ (1,423 ) $ (1,525 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

Pension Benefits Retiree Medical and Other
Postretirement Benefits
        2015                 2014             ��   2015                 2014
For plans with accumulated benefit obligations exceeding the fair value of plan assets:

Projected benefit obligation (PBO)
$ 16,283    $ 17,471    $ —    $ —
Accumulated benefit obligation (ABO)
16,272    17,461    —    —
Accumulated postretirement benefit obligation (APBO)
—    —    1,129    1,324
Fair value of plan assets
9,630    10,899    253    244
ABO less fair value of plan assets
6,642    6,562    —    —
(1)
At December 31, 2015, certain trust assets totaling approximately $24 million, were added to the retiree medical plan asset values that were previously offset against the benefit obligation.
(2)
The 2015 noncurrent liability does not include $17 million of other postretirement benefits or $1 million of prior service costs. The 2014 noncurrent liability does not include $18 million of other postretirement benefits or $2 million of prior service costs.
The following tables provide the components of net periodic benefit cost (income) for the years ended December 31, 2015, 2014 ~~2013~~ and ~~2012~~2013 (in millions):

   Pension Benefits Retiree Medical and Other
Benefits Pension Benefits Retiree Medical and Other
Postretirement Benefits
   2014 2013 2012 2014 2013 2012     2015         2014         2013         2015         2014         2013
Components of net periodic benefit cost:

Defined benefit plans:

Service cost
   $ 2    $ 3    $ 341    $ —    $ —    $ 46    $ 1    $ 2    $ 3    $ 3    $ 1    $ —
Interest cost
   742    654    729    55    50    128    733    742    654    50    61    50
Expected return on assets
   (783 ) (720 ) (676 ) (19 ) (16 ) (17 ) (848 ) (783 ) (720 ) (19 ) (19 ) (16 )
Curtailments
   —    2    58    —    —    (124 ) —    —    2    —    —    —
Settlements
   4    (1 ) —    —    —    —    1    4    (1 ) —    —    —
Amortization of:

Prior service cost (1)
   28    28    10    (240 ) (251 ) (82 )
Prior service cost (benefit) (1)
28    28    28    (243 ) (244 ) (251 )
Unrecognized net loss (gain)
   43    90    211    (8 ) (9 ) (9 ) 111    43    90    (9 ) (8 ) (9 )


Net periodic benefit cost for defined benefit plans
   36    56    673    (212 ) (226 ) (58 )
Net periodic benefit cost (income) for defined benefit plans
26    36    56    (218 ) (209 ) (226 )
Defined contribution plans
   385    303    202    N/A    N/A    N/A    657    527    311    N/A    N/A    N/A


   $ 421    $ 359    $ 875    $ (212 ) $ (226 ) $ (58 ) $ 683    $ 563    $ 367    $ (218 ) $ (209 ) $ (226 )


(1)
The 2015 prior service cost does not include amortization of $3 million related to other postretirement benefits. The 2014 prior service cost does not include amortization of $14 million related to other ~~post-employment~~postretirement benefits.
The estimated amount of unrecognized net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is ~~$111~~$125 million.
The estimated amount of unrecognized net gain for the retiree medical and other postretirement plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is $7$16 million.

   Pension Benefits Retiree Medical and Other
Benefits
   2014 2013 2014 2013
Weighted-average assumptions used to determine benefit obligations as of December 31:

Discount rate
   4.30 % 5.10 % 4.00 % 4.71 %
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:

Discount rate 1/1 – 12/31
   5.10 % 4.20 % 4.71 % 3.80 %
Expected return on plan assets
   8.00 % 8.00 % 8.00 % 8.00 %
   Pension Benefits Retiree Medical and Other
Postretirement Benefits
           2015                 2014                 2015                 2014
Weighted-average assumptions used to determine benefit obligations as of December 31:

Discount rate
   4.70 % 4.30 % 4.42 % 4.00 %
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
   Pension Benefits Retiree Medical and Other
Postretirement Benefits
           2015                 2014                 2015                 2014
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:

Discount rate 1/1 – 12/31
   4.30 % 5.10 % 4.00 % 4.74 %
Expected return on plan assets
   8.00 % 8.00 % 8.00 % 8.00 %
As of December 31, ~~2014,~~2015, American’s estimate of the long-term rate of return on plan assets was ~~8.00%~~8% based on the target asset allocation. Expected returns on longer duration bonds are based on yields to maturity of the bonds held at year-end. Expected returns on other assets are based on a combination of long-term historical returns, actual returns on plan assets achieved over the last ten years, current and expected market conditions, and expected value to be generated through active management, currency overlay and securities lending programs. ~~American’s annualized ten-year rate of return on plan assets as of December 31, 2014, was approximately 8%.~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
The objectives of American’s investment policies are to: maintain sufficient income and liquidity to pay retirement benefits; produce a long-term rate of return that meets or exceeds the assumed rate of return for plan assets; limit the volatility of asset performance and funded status; and diversify assets among asset classes and investment managers.
Based on these investment objectives, a long-term strategic asset allocation has been established. This strategic allocation seeks to balance the potential benefit of improving funded position with the potential risk that the funded position would decline. The current strategic target asset allocation is as follows:

Asset Class/Sub-Class
   Allowed Range
Equity
   62% - 7272% %
Public:

U.S. Value
   20% - 3535% %
International Value
   14% - 2424% %
Emerging Markets
   5% - 1111% %
Alternative Investments
   0% - 1818% %
Fixed Income
   28% - 3838% %
U.S. Long Duration
   26% - 3636% %
Emerging Markets
   0% -   44% %
Other
   0% -   55% %
Cash Equivalents
   0% -   55% %
~~Each asset class is actively managed and, historically, the plans’ assets have produced returns, net of management fees, in excess of the expected rate of return over the last ten years.~~ Public equity and emerging market fixed income securities are used to provide diversification and are expected to generate higher returns over the long-term than longer duration U.S. bonds. Public stocks are managed using a value investment approach in order to participate in the returns generated by stocks in the long-term, while reducing year-over-year volatility. Longer duration U.S. bonds are used to partially hedge the assets from declines in interest rates. Alternative (private) investments are used to provide expected returns in excess of the public markets over the long-term. Additionally, ~~American~~the pension plan’s master trust engages currency overlay managers in an attempt to increase returns by protecting non-U.S. dollar denominated assets from a rise in the relative value of the U.S. dollar. ~~American~~The pension plan’s master trust also participates in securities lending programs to generate additional income by loaning plan assets to borrowers on a fully collateralized basis. These programs are subject to market risk.
Investments in securities traded on recognized securities exchanges are valued at the last reported sales price on the last business day of the year. Securities traded in the over-the-counter market are valued at the last bid
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
price. The money market fund is valued at fair value which represents the net asset value of the shares of such fund as of the close of business at the end of the period. Investments in limited partnerships are carried at estimated net asset value as determined by and reported by the general partners of the partnerships and represent the proportionate share of the estimated fair value of the underlying assets of the limited partnerships. Common/collective trusts are valued at net asset value based on the fair values of the underlying investments of the trusts as determined by the sponsor of the trusts. The pension plan’s master trust also invests in a 103-12 investment ~~trust~~entity (the 103-12 Investment Trust) which is designed to invest plan assets of more than one unrelated employer. The 103-12 Investment Trust is valued at net asset value which is determined by the issuer at the end of each month and is based on the aggregate fair value of trust assets less liabilities, divided by the number of units outstanding. No changes in valuation techniques or inputs occurred during the year.
The fair value of American’s pension plan assets at December 31, 2015 and 2014, by asset category are as follows (in millions):
   Fair Value Measurements as of December 31, 2015
Asset Category
   Quoted Prices in
Active Markets for
Identical Assets
(Level 1) Significant
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Total
Cash and cash equivalents
   $ 287    $ —       $ —       $ 287
Equity securities:

International markets (a), (b)
   2,873    —       —       2,873
Large-cap companies (b)
   1,999    —       —       1,999
Mid-cap companies (b)
   361    —       —       361
Small-cap companies (b)
   18    —       —       18
Fixed income:

Corporate bonds (c)
   —    2,204       —       2,204
Government Securities (d)
   —    917       —       917
U.S. municipal securities
   —    48       —       48
Alternative instruments:

Private equity partnerships (e)
   —    —       722       722
Common/collective trusts and 103-12 Investment Trust (f)
   —    219       —       219
Insurance group annuity contracts
   —    —       2       2
Dividend and interest receivable
   50    —       —       50
Due to/from brokers for sale of securities – net
   23    —       —       23
Other assets – net
   8    —       —       8
Other liabilities – net
   (71 ) —       —       (71 )






Total
   $ 5,548    $ 3,388       $ 724       $ 9,660






a)
Holdings are diversified as follows: 16% United Kingdom, 12% Japan, 10% France, 7% Switzerland, 7% Netherlands, 6% Republic of Korea, 11% of other emerging markets and the remaining 31% with no concentration greater than 5% in any one country.
b)
There are no significant concentrations of holdings by company or industry.
c)
Includes approximately 74% investments in corporate debt with a Standard and Poor’s (S&P) rating lower than A and 26% investments in corporate debt with an S&P rating A or higher. Holdings include 82% U.S. companies, 16% international companies and 2% emerging market companies.
d)
Includes approximately 75% investments in U.S. domestic government securities and 25% in emerging market government securities. There are no significant foreign currency risks within this classification.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

~~The fair value of American’s pension plan assets at December 31, 2014 and 2013, by asset category are as follows (in millions):~~
e)
Includes limited partnerships that invest primarily in U.S. (89%) and European (11%) buyout opportunities of a range of privately held companies. The pension plan’s master trust does not have the right to redeem its limited partnership investment at its net asset value, but rather receives distributions as the underlying assets are liquidated. It is estimated that the underlying assets of these funds will be gradually liquidated over the next one to ten years. Additionally, the pension plan’s master trust has future funding commitments of approximately $428 million over the next ten years.

Fair Value Measurements as of December 31, 2014
Asset Category
Quoted Prices in
Active Markets for
Identical Assets
(Level 1) Significant
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Total
Cash and cash equivalents
$ 332    $ —    $ —    $ 332
Equity securities:

International markets (a)(b)
2,943    —    —    2,943
Large-cap companies (b)
2,488    —    —    2,488
Mid-cap companies (b)
362    —    —    362
Small-cap companies (b)
21    —    —    21
Fixed Income:

Corporate bonds (c)
—    2,384    2,384
Government Securities (d)
—    1,184    1,184
U.S. municipal securities
—    65    65
Alternative instruments:

Private equity partnerships (e)
—    —    818    818
Common/collective and 103-12 investment trusts (f)
—    240    —    240
Insurance group annuity contracts
—    —    2    2
Dividend and interest receivable
52    —    —    52
Due to/from brokers for sale of securities – net
39    —    —    39
Other assets – net
5    —    —    5

Total
$ 6,242    $ 3,873    $ 820    $ 10,935

f)
Investment includes 73% in an emerging market 103-12 Investment Trust with investments in emerging country equity securities, 14% in Canadian segregated balanced value, income growth and diversified pooled funds and 13% in a common/collective trust investing in securities of smaller companies located outside the U.S., including developing markets. Requests for withdrawals must meet specific requirements with advance notice of redemption preferred.
   Fair Value Measurements as of December 31, 2014
Asset Category
   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)    Significant
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Total
Cash and cash equivalents
   $ 332       $ —       $ —       $ 332
Equity securities:

International markets (a), (b)
   2,943       —       —       2,943
Large-cap companies (b)
   2,488       —       —       2,488
Mid-cap companies (b)
   362       —       —       362
Small-cap companies (b)
   21       —       —       21
Fixed income:

Corporate bonds (c)
   —       2,384       —       2,384
Government Securities (d)
   —       1,184       —       1,184
U.S. municipal securities
   —       65       —       65
Alternative instruments:

Private equity partnerships (e)
   —       —       818       818
Common/collective trusts and 103-12 Investment Trust (f)
   —       240       —       240
Insurance group annuity contracts
   —       —       2       2
Dividend and interest receivable
   52       —       —       52
Due to/from brokers for sale of securities – net
   39       —       —       39
Other assets – net
   5       —       —       5








Total
   $ 6,242       $ 3,873       $ 820       $ 10,935








a)
Holdings are diversified as follows: 18% United Kingdom, 11% Japan, 10% France, 7% Switzerland, 7% Netherlands, 6% Republic of Korea, 13% of other emerging markets and the remaining 28% with no concentration greater than 5% in any one country.

b)
There are no significant concentrations of holdings by company or industry.

c)
Includes approximately 74% investments in corporate debt with ~~a Standard and Poor’s (S&P)~~an S&P rating lower than A and 26% investments in corporate debt with an S&P rating A or higher. Holdings include 81% U.S. companies, 16% international companies and 3% emerging market companies.

d)
Includes approximately 73% investments in U.S. domestic government securities and 27% in emerging market government securities. There are no significant foreign currency risks within this classification.

e)
Includes limited partnerships that invest primarily in U.S. (91%) and European (9%) buyout opportunities of a range of privately held companies. The ~~Master Trust~~pension plan’s master trust does not have the right to redeem its
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
limited partnership investment at its net asset ~~value. Instead, the Master Trust~~value, but rather receives distributions as the underlying assets are liquidated. It is estimated that the underlying assets of these funds will be gradually liquidated over the next one to ten years. Additionally, the ~~Master Trust~~pension plan’s master trust has future funding commitments of approximately $403 million over the next ten years.

f)
Investment includes 74% in an emerging market 103-12 ~~investment trust~~Investment Trust with investments in emerging country equity securities, 14% in Canadian segregated balanced value, income growth and diversified pooled funds and 12% in a common/collective trust investing in securities of smaller companies located outside the U.S., including developing markets. Requests for withdrawals must meet specific requirements with advance notice of redemption preferred.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~Changes in fair value measurements of Level 3 investments during the year ended December 31, 2015, were as follows (in millions):

Fair Value Measurements as of December 31, 2013
Asset Category
Quoted Prices in
Active Markets for
Identical Assets
(Level 1) Significant
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Total
Cash and cash equivalents
$ 360    $ —    $ —    $ 360
Equity securities:

International markets (a)(b)
2,908    —    —    2,908
Large-cap companies (b)
2,196    —    —    2,196
Mid-cap companies (b)
227    —    —    227
Small-cap companies (b)
18    —    —    18
Fixed Income:

Corporate bonds (c)
—    2,067    —    2,067
Government Securities (d)
—    1,035    —    1,035
U.S. municipal securities
—    55    —    55
Alternative instruments:

Private equity partnerships (e)
—    —    848    848
Common/collective and 103-12 investment trusts (f)
—    245    —    245
Insurance group annuity contracts
—    —    2    2
Dividend and interest receivable
51    —    —    51
Due to/from brokers for sale of securities – net
(10 ) —    —    (10 )
Other assets – net
7    —    —    7

Total
$ 5,757    $ 3,402    $ 850    $ 10,009

a)
Holdings are diversified as follows: 19% United Kingdom, 10% Japan, 11% France, 7% Switzerland, 6% Germany, 5% Netherlands, 6% Republic of Korea, 15% emerging markets and the remaining 21% with no concentration greater than 5% in any one country.
b)
~~There are no significant concentrations of holdings by company or industry.~~
c)
Includes approximately 76% investments in corporate debt with a Standard and Poor’s (S&P) rating lower than A and 24% investments in corporate debt with an S&P rating A or higher. Holdings include 80% U.S. companies, 17% international companies and 3% emerging market companies.
d)
Includes approximately 72% investments in U.S. domestic government securities and 28% in emerging market government securities. There are no significant foreign currency risks within this classification.
e)
Includes limited partnerships that invest primarily in U.S. (92%) and European (8%) buyout opportunities of a range of privately held companies. The Master Trust does not have the right to redeem its limited partnership investment at its net asset value. Instead, the Master Trust receives distributions as the underlying assets are liquidated. It is estimated that the underlying assets of these funds will be gradually liquidated over the next one to ten years. Additionally, the Master Trust has future funding commitments of approximately $376 million over the next ten years.
f)
Investment includes 74% in an emerging market 103-12 investment trust with investments in emerging country equity securities, 14% in Canadian segregated balanced value, income growth and diversified pooled funds and 12% in a common/collective trust investing in securities of smaller companies located outside the U.S., including developing markets. Requests for withdrawals must meet specific requirements with advance notice of redemption preferred.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
   Private Equity
Partnerships Insurance Group
Annuity
Contracts
Beginning balance at December 31, 2014
   $ 818    $ 2
Actual return on plan assets:

Relating to assets still held at the reporting date
   (105 ) —
Relating to assets sold during the period
   115    —
Purchases
   145    —
Sales
   (251 ) —


Ending balance at December 31, 2015
   $ 722    $ 2


Changes in fair value measurements of Level 3 investments during the year ended December 31, 2014, were as follows (in millions):

   Private Equity
Partnerships Insurance Group
Annuity Contracts    Private Equity
Partnerships Insurance Group
Annuity Contracts
Beginning balance at December 31, 2013
   $ 848    $ 2       $ 848    $ 2
Actual return on plan assets:

Relating to assets still held at the reporting date
   (38 ) —       (38 ) —
Relating to assets sold during the period
   158    —       158    —
Purchases
   148    —       148    —
Sales
   (298 ) —       (298 ) —




Ending balance at December 31, 2014
   $ 818    $ 2       $ 818    $ 2




~~Changes in~~The fair value ~~measurements~~ of ~~Level 3 investments during the year ended~~American’s other postretirement benefit plan assets at December 31, ~~2013,~~2015 by asset category, were as follows (in millions):

   Private Equity
Partnerships Insurance Group
Annuity Contracts
Beginning balance at December 31, 2012
   $ 914    $ 2
Actual return on plan assets:

Relating to assets still held at the reporting date
   (21 ) —
Relating to assets sold during the period
   99    —
Purchases
   85    —
Sales
   (229 ) —


Ending balance at December 31, 2013
   $ 848    $ 2


   Fair Value Measurements as of December 31, 2015
Asset Category
   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)    Significant
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Total
Money market fund
   $ 4       $ —       $ —       $ 4
Mutual funds – Institutional Class
   19       —       —       19
Mutual funds – AMR Class
   —       230       —       230








Total
   $ 23       $ 230       $ —       $ 253








NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
The fair value of American’s other postretirement benefit plan assets at December 31, 2014 by asset category, were as follows (in millions):

   Fair Value Measurements as of December 31, 2014
Asset Category
   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)    Significant
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Total
Money market fund
   $ 2       $ —       $ —       $ 2
Mutual funds – AMR Class
   —       242       —       242








Total
   $ 2       $ 242       $ —       $ 244








~~The fair value of American’s~~Investments in the other postretirement benefit ~~plan assets at December 31, 2013 by asset category, were as follows (in millions):~~

   Fair Value Measurements as of December 31, 2013
Asset Category
   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)    Significant
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Total
Money market fund
   $ 4       $ —       $ —       $ 4
Mutual funds – AMR Class
   —       235       —       235








Total
   $ 4       $ 235       $ —       $ 239








~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
~~Investments in the AMR Class shares of the~~plan’s mutual funds ~~managed by American Beacon Advisors, Inc (ABA)~~ are valued by quoted prices on the active market, which is fair value and represents the net asset value of the shares of such funds as of the close of business at the end of the period. AMR Class shares are offered without a sales charge to ~~participants and have the lowest expense ratio among the Beacon Funds.~~participants. Purchases are restricted to certain retirement benefit plans, ~~of ABA and AMR and its affiliates,~~including American’s other postretirement benefit plan, resulting in a fair value classification of Level 2. Investments include approximately 27% and 28% of investments in non-U.S. common stocks in 2015 and 2014, ~~and 27% of investments in non-U.S. common stocks in 2013.~~respectively. Net asset value is based on the fair market value of the funds’ underlying assets and liabilities at the date of determination.

   2014 2013
Assumed health care trend rates at December 31
      2015 2014
Health care cost trend rate assumed for next year
   5.0 % 6.5 %    5.21 % 5.25 %
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
   4.5 % 4.5 %    4.56 % 4.55 %
Year that the rate reaches the ultimate trend rate
   2023    2018       2024    2023
A one percentage point change in the assumed health care cost trend rates would have the following effects (in millions):

   1% Increase    1% Decrease
Impact on 2014 service and interest cost
   $ 2       $ (2 )
Impact on postretirement benefit obligation as of December 31, 2014
   48       (51 )
   1% Increase    1% Decrease
Impact on 2015 service and interest cost
   $ 3       $ (3 )
Impact on other postretirement benefits obligation as of December 31, 2015
   61       (60 )
American is required to make minimum contributions to its defined benefit pension plans under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 ~~(ERISA), the Pension Funding Equity Act of 2004, the Pension Protection Act of 2006, the Pension Relief Act of 2010~~ and the Moving Ahead for Progress in the 21st Century Act of 2012. In 2014, American has made its aggregate minimum required contributions for 2014 of $170 million, and has made $639 million in supplemental contributions to its pension plans, above and beyond the $170 million of minimum required contributions.
various other laws. Based on current funding assumptions, American has no minimum required contributions until ~~2019.~~2018. Currently, American’s minimum funding obligation for its pension plans is subject to temporary favorable rules that are scheduled to expire at the end of 2017. ~~Upon expiration of these rules,~~ American’s pension funding obligations are likely to increase ~~materially.~~materially following expiration of the temporary funding rules, when American will be required to make contributions relating to the 2018 fiscal year. The amount of these obligations will depend on the performance of American’s investments held in trust by the pension plans, interest rates for determining liabilities and American’s actuarial experience.
The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (in millions):

   2015    2016    2017    2018    2019    2020-2024
Pension
   $ 643       $ 664       $ 696       $ 732       $ 773       $ 4,515
Retiree medical and other
   108       102       97       91       87       374
~~Modifications to Retirement and Life Insurance Benefits~~
Effective November 1, 2012, American’s defined benefit pension plans were frozen and American began providing enhanced benefits under the $uper $aver 401(k) Plan for certain groups. Effective November 1, 2012, American matches all non-flight crew employee contributions up to 5.5% of eligible earnings. Effective November 1, 2012 through December 31, 2013, pilots received employer contributions of 14% of eligible earnings and flight attendants received matching contributions of up to 5.5% of eligible earnings. With the ratification of a new CBA by pilots on December 9, 2013, effective January 1, 2014, pilots receive employer contributions of 16% of eligible earnings. With the 2013 Conditional Labor Agreement, effective January 1,
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
2014, flight attendants on the American seniority list as of April 12, 2012 receive age-based employer contributions (under age 40 – 5.5% of eligible earnings; age 40 to 49 – 6.75% of eligible earnings; and age 50 and above – 9.9% of eligible earnings) and flight attendants hired after April 12, 2012, receive employer contributions of 3% of eligible earnings plus company matching contributions of up to 2.5% of eligible earnings.
In December 2012, the Pilot A Plan, a defined benefit plan, was amended to remove the lump-sum option and the installment option forms of benefit effective December 31, 2012. A small group of American pilots is appealing the Bankruptcy Court’s decision authorizing American to eliminate the lump sum option and installment option forms of benefit. This is the same group of pilots that are appealing the Bankruptcy Court’s decisions authorizing American to reject the pilot CBA and approve the new pilot CBA. The U.S. District Court for the Southern District of New York upheld the Bankruptcy Court decision. The appeals currently are pending in the U.S. Court of Appeals for the Second Circuit.
The Pilot B Plan, a defined contribution plan, was terminated on November 30, 2012. With the exception of a small residual balance to cover final plan expenses, American has distributed all of the funds in the plan.
On July 6, 2012, American commenced an adversary proceeding in the Bankruptcy Court seeking a determination on the issue of vesting for former employees who retired before November 1, 2012 and were eligible for certain retiree medical coverage. The Bankruptcy Court granted in part and denied in part American’s motion for summary judgment concerning vesting.
As a result of the modifications to the retirement benefits as discussed above, a portion of the pension and postretirement benefits liability, primarily relating to retiree medical and other benefits, was classified as liabilities subject to compromise as of December 31, 2012. This amount was reinstated upon emergence since there was no resolution in the Chapter 11 Cases.
~~Curtailment and Plan Amendment in the Third Quarter of 2012~~
In accordance with ASC 715 “Retirement Benefits” (ASC 715), in the third quarter of 2012, American remeasured its defined benefit pension and retiree medical plans as a result of modifications to its retirement plans and reductions in certain work groups (see above and Note 2 to American’s consolidated financial statements). American updated its significant actuarial assumptions used for the remeasurements including the discount rate, which was lowered to 4.10% and 3.80% for the defined benefit pension plans and retiree medical plans, respectively.
The remeasurement of the defined benefit plans resulted in an actuarial loss of $1.9 billion offset by a curtailment gain of $1.8 billion. In addition, a loss of $58 million, representing unamortized prior service cost as of the remeasurement date of the frozen defined benefit plans, is included as a component of reorganization items, net.
Further, as a result of modifications to its retiree medical plans, American recognized a negative plan amendment of $1.9 billion, which is included as a component of actuarial gain arising in current year in other comprehensive income and will be amortized over the future service life of the active plan participants for whom the benefit was eliminated, or approximately eight years. In addition, a net credit of $124 million, representing unamortized prior service credits of $157 million offset by a curtailment loss of $33 million, is included as a component of reorganization items, net.
   2016    2017    2018    2019    2020    2021-2025
Pension
   $ 660       $ 687       $ 722       $ 761       $ 802       $ 4,621
Retiree medical and other postretirement benefits
   109       104       98       90       84       353
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

~~11.~~12. Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive income (loss) are as follows (in millions):

   Pension and
Retiree Medical
Liability Unrealized
Gain/(Loss)
on
Investments Derivative
Financial
Instruments Income
Tax
Benefit
(Expense) Total    Pension and
Retiree Medical
Liability Derivative
Financial
Instruments Unrealized
Gain/(Loss)
on
Investments Income
Tax
Benefit
(Provision) Total
Balance at December 31, 2012
   $ (2,322 ) $ 2    $ 13    $ (781 ) $ (3,088 )
Other comprehensive income (loss) before reclassifications
   1,565    —    18    (538 ) 1,045
Amounts reclassified from accumulated other comprehensive income (loss)
   (142 ) (1 ) 34    —    (109 )


Net current-period other comprehensive income (loss)
   1,423    (1 ) 52    (538 ) 936


Balance at December 31, 2013
   (899 ) 1    65    (1,319 ) (2,152 )    $ (887 ) $ 65    $ 1    $ (1,319 ) $ (2,140 )
Other comprehensive income (loss) before reclassifications
   (2,602 ) —    (52 ) —    (2,654 )
Other comprehensive loss before reclassifications
   (2,621 ) (52 ) —    —    (2,673 )
Amounts reclassified from accumulated other comprehensive income (loss)
   (159 ) (4 ) (4 ) 328    161       (163 ) (4 ) (4 ) 328    157




Net current-period other comprehensive income (loss)
   (2,761 ) (4 ) (56 ) 328    (2,493 )    (2,784 ) (56 ) (4 ) 328    (2,516 )




Balance at December 31, 2014
   $ (3,660 ) $ (3 ) $ 9    $ (991 ) $ (4,645 )    (3,671 ) 9    (3 ) (991 ) (4,656 )
Other comprehensive loss before reclassifications
   (51 ) —    (7 ) —    (58 )
Amounts reclassified from accumulated other comprehensive income (loss)
   (109 ) (9 ) 1    —    (117 )




Net current-period other comprehensive loss
   (160 ) (9 ) (6 ) —    (175 )


Balance at December 31, 2015
   $ (3,831 ) $ —    $ (9 ) $ (991 ) $ (4,831 )


Reclassifications out of accumulated other comprehensive income (loss) for the years ended December 31, ~~2014~~2015 and ~~2013~~2014 are as follows (in millions):

Details about accumulated other comprehensive
income (loss) components
Amount reclassified from accumulated
other comprehensive income (loss) Affected line item in the statement
where net income (loss) is presented    Amount reclassified from accumulated
other comprehensive income (loss)
Affected line item in the statement
where net income (loss) is presented
Year Ended December 31, Year Ended December 31,
2014 2013 2015 2014
Amortization of pension and retiree medical liability:

Prior service cost
$ (198 ) $ (223 ) Wages, salaries and benefits    $ (212 ) $ (202 ) Salaries, wages and benefits
Actuarial loss
39    81    Wages, salaries and benefits    103    39    Salaries, wages and benefits
Derivative financial instruments:

Cash flow hedges
(4 ) 34    Aircraft fuel and related taxes    (9 ) (4 ) Aircraft fuel and related taxes
Net unrealized change on investments:

Net change in value
(4 ) —    Other, net    1    (4 ) Other nonoperating, net
Income tax benefit (expense):

Income tax benefit (provision):

Reversal of non-cash tax provision
328    —    Income tax provision (benefit)    —    328    Income tax provision (benefit)



Total reclassifications for the period
$ 161    $ (108 )    $ (117 ) $ 157



During 2014, American sold its portfolio of fuel hedging contracts that were scheduled to settle on or after June 30, 2014. In connection with this sale, American recorded a special non-cash tax provision of $328 million in the statement of operations for the second quarter of 2014 that ~~reverses~~reversed the non-cash tax provision which was recorded in OCI, a subset of stockholder’s equity, principally in 2009. This provision ~~represents~~represented the tax effect associated with gains recorded in OCI principally in 2009 due to a net increase in the fair value of American’s fuel hedging contracts. In accordance with GAAP, American retained the $328 million tax provision in OCI until the last contract was settled or terminated.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

American recognized a $538 million non-cash income tax benefit, offset by a $538 million charge to other comprehensive income, during the fourth quarter of 2013 related to gains in other comprehensive income. See Note 7 for further information.
Amounts allocated to ~~other comprehensive income~~OCI for income taxes as further described in Note 78 will remain in accumulated other comprehensive income (loss) until American ceases all related activities, such as termination of the pension plan.
~~12.~~13.  Commitments, Contingencies and Guarantees
(a) Aircraft ~~Acquisition~~and Engine Purchase Commitments
~~American had~~Under all of American’s aircraft and engine purchase agreements, its total ~~aircraft acquisition~~future commitments as of December 31, ~~2014~~2015 are expected to be as ~~follows:~~

   2015    2016    2017    2018    2019    2020 and
Thereafter    Total
Airbus

A320 Family
   30       25       20       —       —       —       75
A320neo
   —       —       10       25       25       40       100
Boeing

737 Family
   18       20       20       —       —       —       58
737 MAX
   —       —       3       17       20       60       100
777-300 ER
   2       2       —       —       —       —       4
787 Family
   12       13       10       7       —       —       42
Bombardier

CRJ900
   18       20       —       —       —       —       38
Embraer

ERJ175
   24       24       12       —       —       —       60














Total
   104       104       75       49       45       100       477
~~As of December 31, 2014, payments for the above aircraft commitments and certain engines are presented~~follows (approximately, in ~~the table below (in~~ millions):

   2015    2016    2017    2018    2019    2020 and
Thereafter    Total
Payments for above aircraft commitments and certain engines (1)
   $ 4,586       $ 4,856       $ 4,165       $ 3,241       $ 2,654       $ 5,651       $ 25,153
   2016    2017    2018    2019    2020    2021 and
Thereafter    Total
Payments for aircraft commitments and certain engines (1)
   $ 4,505       $ 4,591       $ 2,916       $ 3,156       $ 2,793       $ 4,537       $ 22,498

(1)
These amounts are net of purchase deposits currently held by the manufacturers and include all commitments for wholly-owned regional aircraft. American has granted Boeing a security interest in its purchase deposits with Boeing. American’s purchase deposits totaled $1.1 billion as of December 31, ~~2014.~~2015.
~~In April 2014,~~As of December 31, 2015, American ~~exercised its option~~did not have financing commitments for the following aircraft currently on order and scheduled to ~~purchase and terminated its existing lease financing arrangements with respect to 62~~be delivered through 2017: 25 Airbus A320 family aircraft ~~scheduled to be delivered between the first quarter of 2015~~in 2016 and ~~the third quarter of 2017.~~20 Airbus A320 family aircraft in 2017, 8 Boeing 787 family aircraft in 2016 and 13 Boeing 787 family aircraft in 2017, 15 Boeing 737-800 aircraft in 2016, three Boeing 737 MAX family aircraft in 2017 and two Boeing 777-300ER aircraft in 2016. In ~~connection with American’s exercise of such option,~~addition, American ~~also exercised its right to convert firm orders~~did not have financing commitments in place for ~~30 Airbus A320neo~~substantially all aircraft currently on order and scheduled to be delivered in ~~2021~~2018 and ~~2022,~~beyond. See Part I, Item 1A. Risk Factors – “We will need to ~~options~~obtain sufficient financing or other capital to ~~acquire such aircraft. The table above reflects these changes.~~
~~In December 2014, American exercised its right under its purchase agreement with Bombardier to convert 24 of American’s 40 option order CRJ900 aircraft to firm orders to acquire such aircraft.~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~operate successfully” for unaudited additional discussion.
(b) Facility and support commitments
American has contracts related to facility construction or improvement projects, primarily at airport locations, as well as information technology support. The contractual obligations related to these contracts are presented in the table below (in millions):

   2015    2016    2017    2018    2019    2020 and
Thereafter    Total    2016    2017    2018    2019    2020    2021 and
Thereafter    Total
Facility construction or improvement contracts
   $ 166       $ 6       $ —       $ —       $ —       $ —       $ 172       $ 211       $ 2       $ —       $ —       $ —       $ —       $ 213
Information technology contracts
   179       139       112       96       79       1       606       160       136       107       88       6       —       497
(c) Capacity Purchase Agreements with Third-Party Regional Carriers
As of December 31, ~~2014,~~2015, American’s capacity purchase agreements with third-party regional carriers had expiration dates ranging from ~~2016~~2017 to 2027, with rights of American to extend the respective terms of each agreement. See Part I, Item 2. Properties for unaudited information on the aircraft contractually obligated to American under such capacity purchase agreements with third-party regional carriers.
American has entered into agreements with the third-party regional carriers that operate certain of their aircraft using American’s flight designator codes. American controls the scheduling, pricing, reservations, ticketing and seat inventories of those aircraft and retains all revenues associated with ~~revenue~~ flights by those aircraft. American pays the third-party regional carriers an amount, as defined in the applicable agreement, based on the airlines’ costs of operating those ~~flights~~flights. In addition, these agreements provide that certain variable costs, such as airport landing
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
fees, fuel and ~~other factors intended to approximate market rates~~passenger liability insurance, will be 100% paid for ~~those services.~~or reimbursed by American. As of December 31, ~~2014,~~2015, American’s minimum fixed obligations under its capacity purchase agreements with third-party regional carriers were as follows (approximately, in millions):

   2015    2016    2017    2018    2019    2020 and
Thereafter    Total
Minimum fixed obligations under its capacity purchase agreements with third-party regional carriers (1)
   $ 502       $ 592       $ 463       $ 446       $ 430       $ 2,242       $ 4,675
   2016    2017    2018    2019    2020    2021 and
Thereafter    Total
Minimum fixed obligations under its capacity purchase agreements with third-party regional carriers (1)
   $ 1,672       $ 1,553       $ 1,249       $ 1,075       $ 881       $ 2,393       $ 8,823

(1)
Represents minimum payments under capacity purchase agreements with third-party regional carriers. These commitments are estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and American’s actual payments could differ materially. These obligations also include the portion of American’s future obligations related to aircraft deemed to be leased in the amount of approximately ~~$173 million in 2015, $171~~$469 million in 2016, ~~$111~~$414 million in 2017, ~~$107~~$334 million in 2018, ~~$107~~$292 million in 2019, ~~and $665~~$235 million in 2020 and $704 million in 2021 and thereafter.
(d) Operating Leases
American leases certain aircraft, engines and ground equipment, in addition to the majority of its ground facilities and terminal space. As of December 31, ~~2014,~~2015, American had ~~245~~427 aircraft under operating leases, with remaining terms ranging from one month to approximately 1312 years. Airports are utilized for flight operations under lease arrangements with the municipalities or agencies owning or controlling such airports. Substantially all leases provide that the lessee must pay taxes, maintenance, insurance and certain other operating expenses applicable to the leased property. Some leases also include renewal and purchase options.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
As of December 31, ~~2014,~~2015, obligations under noncancellable operating leases for future minimum lease payments were as follows (in millions):

   2015    2016    2017    2018    2019    2020 and
Thereafter    Total
Future minimum lease payments (1)
   $ 1,391       $ 1,293       $ 1,240       $ 1,141       $ 1,069       $ 4,939       $ 11,073
   2016    2017    2018    2019    2020    2021 and
Thereafter    Total
Future minimum lease payments (1)
   $ 2,187       $ 2,069       $ 1,824       $ 1,642       $ 1,493       $ 4,704       $ 13,919

(1)
As of December 31, ~~2014, $231~~2015, $294 million is included on the accompanying consolidated balance sheet in accrued liabilities and deferred gains and credits, net relating to rent expense being recorded in advance of future operating lease payments.
~~Rent~~Mainline and regional rent expense, excluding landing fees, was ~~$1.8~~$2.7 billion, ~~$1.6~~$2.8 billion and ~~$1.4~~$1.7 billion in 2015, 2014 ~~2013~~ and ~~2012~~2013, respectively.
(e) Off-Balance Sheet Arrangements
Aircraft
American ~~has 135~~currently operates 263 owned aircraft and 32138 leased aircraft which were financed with ~~pass through~~enhanced equipment trust certificates, or EETCs, issued by ~~pass through~~pass-through trusts. These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of flight equipment. Rather than finance each aircraft separately when such aircraft was purchased, delivered or refinanced, these trusts allowed American to raise the financing for several aircraft at one time and place such funds in escrow pending the purchase, delivery or refinancing of the relevant aircraft. The trusts were also structured to provide for certain credit enhancements, such as liquidity facilities to cover certain interest payments, that reduce the risks to the purchasers of the trust certificates and, as a result, reduce the cost of aircraft financing to American.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
Each trust covered a set amount of aircraft scheduled to be delivered or refinanced within a specific period of time. At the time of each covered aircraft financing, the relevant trust ~~used~~uses the funds in escrow to purchase equipment notes relating to the financed aircraft. The equipment notes ~~were~~are issued, at American’s election, in connection with a mortgage financing of the aircraft or, in certain cases, by a separate owner trust in connection with a leveraged lease financing of the aircraft. In the case of a leveraged lease financing, the owner trust then ~~leased~~leases the aircraft to American. In both cases, the equipment notes are secured by a security interest in the aircraft. The ~~pass through trust certificates~~EETCs are not direct obligations of, nor are they guaranteed by, AAG or American. However, in the case of mortgage financings, the equipment notes issued to the trusts are direct obligations of American and, in certain instances, are guaranteed by AAG. As of December 31, ~~2014, $4.3~~2015, $8.7 billion associated with these mortgage financings is reflected as debt in the accompanying consolidated balance sheet.
With respect to leveraged leases, American evaluated whether the leases had characteristics of a variable interest ~~entity and~~entity. American concluded the leasing entities met the criteria for variable interest entities. American generally is not the primary beneficiary of the leasing entities if the lease terms are consistent with market terms at the inception of the lease and do not include a residual value guarantee, fixed-price purchase option or similar feature that obligates American to absorb decreases in value or entitles American to participate in increases in the value of the aircraft. American does not provide residual value guarantees to the bondholders or equity participants in the ~~trusts and American’s existing leasing arrangements do~~trusts. Some leases have a fair market value or a fixed price purchase option that allows American to purchase the aircraft at or near the end of the lease term. However, the option price approximates an estimate of the aircraft’s fair value at the option date. Under this feature, American does not ~~contain fixed-price purchase options or similar features.~~participate in any increases in the value of the aircraft. American concluded it was not the primary beneficiary under these arrangements. Therefore, American accounts for its EETC leveraged lease financings as operating leases. American’s total future obligations under these leveraged lease financings are ~~$269 million~~$1.8 billion as of December 31, ~~2014,~~2015, which are included in the future minimum lease payments table above.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
Special Facility Revenue Bonds
American guarantees the payment of principal and interest of certain special facility revenue bonds issued by municipalities primarily to build or improve airport facilities and purchase equipment which is leased to American. Under such leases, American is required to make rental payments through 2035, sufficient to pay maturing principal and interest payments on the related bonds. As of December 31, ~~2014,~~2015, the remaining lease payments guaranteeing the principal and interest on these bonds are ~~$449~~$617 million, which are accounted for as operating leases.
(f) Legal Proceedings
Chapter 11 Cases. ~~As previously disclosed, on~~On the Petition Date, November 29, 2011, the Debtors filed the Chapter 11 Cases. On October 21, 2013, the Bankruptcy Court entered the Confirmation Order confirming the Plan. On the Effective Date, December 9, 2013, the Debtors consummated their reorganization pursuant to the Plan ~~principally through~~and completed the ~~transactions contemplated by the Merger Agreement pursuant to which Merger Sub merged with and into US Airways Group, with US Airways Group surviving as a wholly-owned subsidiary of AAG.~~Merger. From the Petition Date through the Effective Date, pursuant to automatic stay provisions under the Bankruptcy Code and orders granted by the Bankruptcy Court, actions to enforce or otherwise effect repayment of liabilities preceding the Petition Date as well as all pending litigation against the Debtors generally were stayed. Following the Effective Date, actions to enforce or otherwise effect repayment of liabilities preceding the Petition Date, generally have been permanently enjoined. Any unresolved claims will continue to be subject to the claims reconciliation process under the supervision of the Bankruptcy Court. However, certain pending litigation related to pre-petition liabilities may proceed in courts other than the Bankruptcy Court to determine the amount, if any, of such litigation claims for purposes of treatment under the Plan.
Pursuant to rulings of the Bankruptcy Court, the Plan established the Disputed Claims Reserve to hold shares of AAG Common Stock reserved for issuance to disputed claimholders at the Effective Date that ultimately
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
become holders of allowed Single-Dip Unsecured Claims. The shares provided for under the Plan were determined based upon a Disputed Claims Reserve amount of claims of approximately $755 million, representing the maximum amount of additional distributions to subsequently allowed Single-Dip Unsecured Claims under the Plan. On July 1, 2014 (the date 180 days after the Effective Date), approximately 2.9 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims, and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and shares were withheld or sold on account of related tax obligations. In addition, on July 1, 2014, American repurchased 0.4 million shares of AAG Common Stock for an aggregate of $19 million from the Disputed Claims Reserve at the then prevailing market price in order to fund cash tax obligations resulting from distributions by the Disputed Claims Reserve. On November 4, 2014, approximately 0.7 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims, and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and shares were withheld or sold on account of related tax obligations. In addition, on November 4, 2014, American repurchased less than 0.1 million shares of AAG Common Stock for an aggregate of $2 million from the Disputed Claims Reserve at the then prevailing market price in order to fund cash tax obligations resulting from distributions by the Disputed Claims Reserve. As of December 31, ~~2014,~~2015, there were approximately ~~26.8~~25.3 million shares of AAG Common Stock remaining in the Disputed Claims Reserve. On February 10, 2015, approximately 0.8 million shares of AAG Common Stock held in the Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims, and to holders of certain non-management, non-union employee deemed claims as specified in the Plan, and shares were withheld or sold on account of related tax obligations. In addition, on February 10, 2015, American repurchased less than 0.1 million shares of AAG Common Stock for an aggregate of $4 million
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
~~from the Disputed Claims Reserve at the then prevailing market price in order to fund cash tax obligations resulting from distributions by~~ the Disputed Claims Reserve. As disputed claims are resolved, the claimants will receive distributions of shares from the Disputed Claims Reserve on the same basis as if such distributions had been made on or about the Effective Date. However, American is not required to distribute additional shares above the limits contemplated by the Plan, even if the shares remaining for distribution are not sufficient to fully pay any additional allowed unsecured claims. To the extent that any of the reserved shares remain undistributed upon resolution of all remaining disputed claims, such shares will not be returned to AAG but rather will be distributed to former AMR ~~shareholders~~stockholders as of the Effective Date. However, resolution of disputed claims could have a material effect on recoveries by holders of additional allowed Single-Dip Unsecured Claims under the Plan and the amount of additional share distributions, if any, that are made to former AMR ~~shareholders~~stockholders as the total number of shares of AAG Common Stock that remain available for distribution upon resolution of disputed claims is limited pursuant to the Plan.
There is also pending in the Bankruptcy Court an adversary proceeding relating to an action brought by American to seek a determination that certain non-pension, ~~post-employee~~post-employment benefits (OPEB) are not vested benefits and thus may be modified or terminated without liability to American. On April 18, 2014, the Bankruptcy Court granted American’s motion for summary judgment with respect to certain non-union employees, concluding that their benefits were not vested and could be terminated. The summary judgment motion was denied with respect to all other retirees. The Bankruptcy Court has not yet scheduled a trial on the merits concerning whether those retirees’ benefits are vested, and American cannot predict whether it will receive relief from obligations to provide benefits to any of those retirees. American’s financial statements presently reflect these retirement programs without giving effect to any modification or termination of benefits that may ultimately be implemented based upon the outcome of this proceeding. Separately, both the ~~Association of Professional Flight Attendants~~APFA and ~~Transport Workers Union~~TWU have filed grievances asserting that American was “successful” in its Chapter 11 with respect to matters related to OPEB and, accordingly, by operation of the underlying collective bargaining agreements, American’s prior contributions to certain OPEB prefunding trusts attributable to active employees should be returned to those active employees. These amounts aggregate approximately $212 million. American has denied both grievances and intends to defend these matters vigorously.
DOJ Antitrust Civil Investigative Demand. In June 2015, American received a Civil Investigative Demand (CID) from the DOJ as part of an investigation into whether there have been illegal agreements or coordination of air passenger capacity. The CID seeks documents and other information from American, and other airlines have announced that they have received similar requests. American is cooperating fully with the DOJ investigation. In addition, subsequent to announcement of the delivery of CIDs by the DOJ, American, along with Delta Air Lines, Inc., Southwest Airlines Co., United Airlines, Inc. and, in the case of litigation filed in Canada, Air Canada, have been named as defendants in approximately 100 putative class action lawsuits alleging unlawful agreements with respect to air passenger capacity. The U.S. lawsuits were the subject of multiple motions to consolidate them in a single forum, and they have now been consolidated in the Federal District Court for the District of Columbia. Both the DOJ investigation and these lawsuits are in their very early stages and American intends to defend the lawsuits vigorously.
Private Party Antitrust Action. On July 2, 2013, a lawsuit captioned Carolyn Fjord, et al., v. US Airways Group, Inc., et al., was filed in the United States District Court for the Northern District of California. The complaint ~~names~~named as defendants US Airways Group and US Airways, and ~~alleges~~alleged that the effect of the Merger may be to substantially lessen competition or tend to create a monopoly in violation of Section 7 of the Clayton Antitrust Act. The relief sought in the complaint ~~includes~~included an injunction against the Merger, or divestiture. On August 6, 2013, the plaintiffs re-filed their complaint in the Bankruptcy Court, adding AMR and American as
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
defendants, and on October 2, 2013, dismissed the initial California action. ~~The~~On November 27, 2013, the Bankruptcy Court denied plaintiffs’ motion to preliminarily enjoin the Merger. On ~~January 10, 2014, the plaintiffs moved~~August 19, 2015, after three previous largely unsuccessful attempts to amend their complaint, to add additional factual allegations, a claim for money damages and a request for preliminary injunctive relief requiring the carriers to hold separate their assets. On March 14, 2014, the Court allowed plaintiffs to add certain allegations but denied plaintiffs’ requests to add a damages claim or seek preliminary injunctive relief requiring the carriers to hold separate their assets. On June 2, 2014, plaintiffs filed ~~an amended~~a fourth motion for leave to file ~~a second~~an amended and supplemental complaint ~~which motion has been fully briefed by~~to add a claim for damages and demand for jury trial, as well as claims similar to those in the putative class action lawsuits regarding air passenger capacity. Thereafter, plaintiffs filed a request with the Judicial Panel on Multidistrict Litigation (JPML) to consolidate the Fjord matter with the putative class action lawsuits. The JPML denied that request on October 15, 2015 and plaintiffs’ request for further relief from the JPML was denied on February 4, 2016. Accordingly, the parties ~~and is pending resolution by~~will continue to litigate the matter in Bankruptcy Court. ~~There is currently no trial date set.~~ American believes this lawsuit is without merit and intends to vigorously defend against the allegations.
DOJ Civil Investigative Demand Related to the United States Postal Service. In April 2015, the DOJ informed American of an inquiry regarding American’s 2009 and 2011 contracts with the United States Postal Service for the international transportation of mail by air. In October 2015, American received a CID from DOJ seeking certain information relating to these contracts. The DOJ has indicated it is investigating potential violations of the False Claims Act. American is cooperating fully with the DOJ investigation.
General. In addition to the specifically identified legal proceedings, American isand its subsidiaries are also engaged in other legal proceedings from time to time. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within ~~the control of American.~~American’s control. Therefore, although American will vigorously defend itself in each of the actions described above and such other legal proceedings, their ultimate resolution and potential financial and other impacts on American are ~~uncertain.~~uncertain but could be material. See Part I, Item 1A. Risk Factors – “We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity” for unaudited additional discussion.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
(g) Guarantees and Indemnifications
American is a party to many routine contracts in which it provides general indemnities in the normal course of business to third parties for various risks. American is not able to estimate the potential amount of any liability resulting from the indemnities. These indemnities are discussed in the following paragraphs.
In its aircraft financing agreements, American generally indemnifies the financing parties, trustees acting on their behalf and other relevant parties against liabilities (including certain taxes) resulting from the financing, manufacture, design, ownership, operation and maintenance of the aircraft regardless of whether these liabilities (or taxes) relate to the negligence of the indemnified parties.
American’s loan agreements and other ~~London Interbank Offered Rate (LIBOR)-based~~LIBOR-based financing transactions (including certain leveraged aircraft leases) generally obligate American to reimburse the applicable lender for incremental costs due to a change in law that imposes (i) any reserve or special deposit requirement against assets of, deposits with or credit extended by such lender related to the loan, (ii) any tax, duty or other charge with respect to the loan (except standard income tax) or (iii) capital adequacy requirements. In addition, American’s loan agreements ~~derivative contracts~~ and other financing arrangements typically contain a withholding tax provision that requires American to pay additional amounts to the applicable lender or other financing party, generally if withholding taxes are imposed on such lender or other financing party as a result of a change in the applicable tax law.
These increased cost and withholding tax provisions continue for the entire term of the applicable transaction, and there is no limitation on the maximum additional amounts American could be obligated to pay under such provisions. Any failure to pay amounts due under such provisions generally would trigger an event of default and, in a secured financing transaction, would entitle the lender to foreclose on the collateral to realize the amount due.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
In certain transactions, including certain aircraft financing leases and loans, the lessors, lenders and/or other parties have rights to terminate the transaction based on changes in foreign tax law, illegality or certain other events or circumstances. In such a case, American may be required to make a lump sum payment to terminate the relevant transaction.
American has general indemnity clauses in many of its airport and other real estate leases where American as lessee indemnifies the lessor (and related parties) against liabilities related to American’s use of the leased property. Generally, these indemnifications cover liabilities resulting from the negligence of the indemnified parties, but not liabilities resulting from the gross negligence or willful misconduct of the indemnified parties. In addition, American provides environmental indemnities in many of these leases for contamination related to American’s use of the leased property.
Under certain contracts with third parties, American indemnifies the third-party against legal liability arising out of an action by the third-party, or certain other parties. The terms of these contracts vary and the potential exposure under these indemnities cannot be determined. American has liability insurance protecting American for some of the obligations it has undertaken under these indemnities.
American is involved in certain claims and litigation related to its operations. American is also subject to regulatory assessments in the ordinary course of business. American establishes reserves for litigation and regulatory matters when those matters present loss contingencies that are both probable and can be reasonably estimated. In the opinion of management, liabilities, if any, arising from these regulatory matters, claims and litigation will not have a material adverse effect on American’s consolidated financial position, results of operations, or cash flows, after consideration of available insurance.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
~~In connection with the Merger and pursuant to the Plan on~~As of December ~~9, 2013, AAG and~~31, 2015, American ~~entered into a joinder to the loan agreement and became co-obligors~~had issued guarantees covering AAG’s $750 million aggregate principal amount of ~~US Airways Group’s $1.6 billion 2013 Citicorp Credit Facility and AAG and American entered into a second supplemental indenture that guarantees the payment obligations associated with the~~5.50% senior notes due 2019, $500 million aggregate principal amount of 6.125% senior ~~notes.~~notes due 2018 and $500 million aggregate principal amount of 4.625% senior notes due 2020.
(h) Other
In 2010, American and Japan Airlines entered into a JBA under which, amongst other things, American provided Japan Airlines a guarantee of certain minimum incremental revenue resulting from the successful operation of the joint business for the first three years following its implementation, subject to certain terms and conditions. The amount required to be paid by American under the guarantee in any one of such years may not exceed $100 million, and is reduced if capacity for one of such years is less than a defined base year period capacity. As of December 31, 2013, American reached an agreement with Japan Airlines to settle the liability for $90 million. The liability is expected to be settled in 2015.
In the fourth quarter of 2012, American entered into a settlement agreement resolving a commercial dispute. The settlement agreement includes two elements which were valued at relative fair value and will be recognized when earned. American determined that the settlement includes a litigation gain of $280 million, which was valued using future cash flows and recognized in the fourth quarter of 2012. The settlement also includes an incentive which is contingent upon signing a future contract and will be recognized over the term of the future contract. The contract was signed in January 2014. In connection with the new contract, American recorded an additional $70 million receivable with an offset to other liabilities to be recognized over the course of the remaining contract term.
As a result of the terrorist attacks of September 11, 2001 (the Terrorist Attacks) and the subsequent liability protections provided for by the Air Transportation Safety and System Stabilization Act (the Stabilization Act), American recorded a liability for the Terrorist Attacks claims equal to the related insurance receivable due to American. The Stabilization Act provides that, notwithstanding any other provision of law, liability for all claims, whether compensatory or punitive, arising from the Terrorist Attacks, against any air carrier shall not exceed the liability coverage maintained by the air carrier. As of December 31, ~~2014,~~2015, the remaining liability and the amount of the offsetting receivable were each $974 million.
~~13.~~14.  Supplemental Cash Flow Information
Supplemental disclosure of cash flow information and non-cash investing and financing activities are as follows (in millions):

   Year Ended December 31,    Year Ended December 31,
       2014            2013            2012        2015    2014    2013
Non-cash investing and financing activities:

Settlement of bankruptcy obligations
   $ 5,131       $ 833       $ —       $ 63       $ 5,131       $ 833
Acquisition of US Airways, net
   —       —       5,231
Capital lease obligations
   747       —       —       5       747       —
Supplemental information:

Interest paid, net of amounts capitalized
   525       706       498       787       780       712
Income taxes paid
   2       7       5       19       4       7
~~14.~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
15.  Operating Segments and Related Disclosures
American is managed as a single business unit that provides air transportation for passengers and cargo. This allows it to benefit from an integrated revenue pricing and route network that includes American ~~Envoy~~and AAG’s wholly-owned and third-party regional carriers that fly under capacity purchase ~~or prorate~~ agreements operating as ~~part of American’s regional~~
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
~~operations.~~American Eagle. The flight equipment of all these carriers is combined to form one fleet that is deployed through a single route scheduling system. When making resource allocation decisions, the chief operating decision maker evaluates flight profitability data, which considers aircraft type and route economics, but gives no weight to the financial impact of the resource allocation decision on an individual carrier basis. The objective in making resource allocation decisions is to maximize consolidated financial results, not the individual results of American ~~and Envoy.~~or American Eagle.
American’s operating revenues by geographic region as defined by the U.S. Department of Transportation (DOT) are summarized below (in millions):

   Year Ended December 31,    Year Ended December 31,
   2014    2013    2012    2015    2014    2013
DOT Domestic
   $ 15,873       $ 14,603       $ 14,257       $ 28,855       $ 28,671       $ 15,392
DOT Latin America
   6,034       6,197       5,813       5,539       6,974       6,267
DOT Atlantic
   3,768       3,638       3,411       5,146       5,652       3,720
DOT Pacific
   1,466       1,322       1,344       1,544       1,466       1,322












Total consolidated revenues
   $ 27,141       $ 25,760       $ 24,825       $ 41,084       $ 42,763       $ 26,701












American attributes operating revenues by geographic region based upon the origin and destination of each flight segment. American’s tangible assets consist primarily of flight equipment, which are mobile across geographic markets and, therefore, have not been allocated.
~~15.~~16.  Share-based Compensation
In December 2013, the Board of Directors of AAG approved the 2013 AAG Incentive Award Plan (the 2013 Plan). Awards may be in the form of an option, restricted stock award, restricted stock unit award, performance award, dividend equivalent award, deferred stock award, deferred stock unit award, stock payment award or stock appreciation right. The 2013 Plan authorizes the grant of awards for the issuance of 40 million shares plus any shares underlying awards granted under the 2013 Plan, or any pre-existing US Airways Group plan, that are forfeited, terminate or are cash settled (in whole or in part) without a payment being made in the form of shares. In addition, any shares that ~~are~~were available for issuance under the US Airways Group 2011 Incentive Award Plan (the 2011 Plan) as of the effective date of the Merger may be used for awards under the 2013 Plan; provided, that awards using such available shares under the 2011 Plan shall not be made after the date awards or grants could have been made under the 2011 Plan and shall only be made to individuals who were not providing services to AAG prior to the Merger. Awards granted under the 2013 Plan upon the assumption of, or in substitution for, outstanding awards in connection with a corporate transaction, such as a merger, will not reduce the shares authorized for issuance under the 2013 Plan.
In addition, pursuant to the Plan, and as approved by the Bankruptcy Court, certain officers, directors and employees received share-based incentive awards related to the Merger and future service. Awards issued in conjunction with the Plan are discussed in more detail below.
All outstanding US Airways Group equity awards were converted into equity awards with respect to AAG Common Stock using an exchange ratio of 1 to 1 and had a fair value of approximately $141 million at the Merger, which was included in the purchase price. These awards have the same terms and conditions as were applicable to such equity awards immediately prior to the Merger closing date.
AAG’s net income for the years ended December 31, 2014 and 2013 included $381 million and $92 million, respectively, of share-based compensation costs. Of the $381 million recorded by AAG in 2014, $250 million
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

~~was allocated to~~American’s net income for the ~~financials~~years ended December 31, 2015, 2014 and 2013 included $274 million, $381 million and $84 million, respectively, of ~~American.~~share-based compensation costs. Of the ~~$92 million recorded by AAG in 2013, $65 million was recorded by American. The~~2015, 2014 and 2013 amounts, ~~recorded by AAG included~~$198 million, $224 million and ~~$42~~$44 million, respectively, were related to the Merger and recorded in special items, net on the accompanying consolidated statements of operations. ~~Of the $224~~
During 2015, AAG withheld approximately 7.0 million ~~recorded by~~shares of AAG common stock and paid approximately $306 million in ~~2014, $155 million was allocated to the financials~~satisfaction of American. Of the $42 million recorded by AAG in 2013, $37 million was recorded by American. In 2012, American recorded $26 million of share-based compensation costs, included in salaries, wages, and benefits expense.certain tax withholding obligations associated with employee equity awards.
(a) Restricted Stock Unit ~~(RSU)~~ Awards (RSUs)
~~As of December 31, 2014,~~ AAG has ~~outstanding restricted stock unit awards~~granted RSUs with service conditions (time vested) and performance conditions. The grant-date fair value of ~~restricted stock unit awards~~RSUs is equal to the market price of the underlying shares of common stock on the date of grant. For time vested awards, the expense is recognized on a straight-line basis over the vesting period for the entire award. For awards with performance conditions, the expense is recognized based on the expected achievement at each reporting period. Stock-settled ~~restricted stock unit awards (RSUs)~~RSUs are classified as equity awards as the vesting results in the issuance of shares of AAG Common Stock. Cash-settled restricted stock unit awards (CRSUs) are classified as liability awards as the vesting results in payment of cash by AAG. AAG granted certain RSU awards in connection with the Merger as follows:
Alignment Awards
On December 9, 2013, alignment awards were granted in the form of RSUs. The awards were provided to legacy AMR employees in order to align interests and create parity with peers at US Airways Group, and one-third of the awards vested on AAG’s emergence from bankruptcy. The remaining awards ~~vest~~vested equally on the one and two year anniversary of emergence. ~~Employees~~The awards of employees terminated in connection with the Merger became fully ~~vest in their awards~~vested on the ~~termination date.~~date of termination. Compensation expenses for these awards ~~are~~were recorded in special items, net on the consolidated statements of operations.
Merger Equity Grant
The Merger Equity Grant was granted on the Effective Date to certain officers and directors and employees in the form of RSUs and ~~will be~~ settled in equity for domestic employees and in cash for international employees. ~~Each restricted stock unit award granted will vest, subject~~Subject to the executive’s continued employment, each RSU vested on December 16, 2015 with respect to (i) 50% of the ~~restricted stock units on December 16, 2015;~~RSUs which were time vested; (ii) 25% of the ~~restricted stock units on the earlier to occur of (a) December 16, 2015, if~~RSUs as AAG iswas issued a Single Operating Certificate ~~prior to or on that date or (b) the date on which AAG is issued a Single Operating Certificate, provided that such date is prior to or on December 9, 2016;~~in April 2015; and (iii) 25% of the ~~restricted stock units on~~RSUs as the ~~date the Board of Directors or~~ compensation committee of the Board of Directors ~~determines~~determined that AAG ~~has~~had achieved at least $1.0 billion in net synergies with respect to fiscal year ~~2015 or 2016.~~2015. Compensation expenses for these awards ~~are~~were recorded in special items, net on the consolidated statements of operations.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

Stock-settled RSU award activity for all plans for the years ended December 31, 2015, 2014 and 2013 is as follows (shares in thousands):

   Number of Shares Weighted Average
Grant Date Fair
Value    Number of
Shares Weighted Average
Grant Date Fair
Value
   (In thousands)    (In thousands)
Outstanding at January 1, 2013
   —    $ —       —    $ —
Granted
   22,101    24.60       22,101    24.60
Assumed US Airways awards
   3,164    22.55
Assumed US Airways Group awards
   3,164    22.55
Vested and released
   (1,386 ) 24.58       (1,386 ) 24.58
Forfeited
   —    —       —    —




Outstanding at December 31, 2013
   23,879    $ 24.33       23,879    $ 24.33
Granted
   3,467    37.07       3,467    37.07
Vested and released
   (4,193 ) 23.84       (4,193 ) 23.84
Forfeited
   (1,811 ) 25.10       (1,811 ) 25.10




Outstanding at December 31, 2014
   21,342    $ 26.43       21,342    $ 26.43
Granted
   2,213    46.62
Vested and released
   (17,163 ) 25.20
Forfeited
   (785 ) 27.12




Outstanding at December 31, 2015
   5,607    $ 38.08


As of December 31, ~~2014,~~2015, there was ~~$308~~$117 million of ~~total~~ unrecognized compensation cost related to ~~RSUs, which will be allocated to American and US Airways Group.~~stock-settled RSUs. These costs are expected to be recognized over a weighted average period of one year. The total fair value of stock-settled RSUs vested during the years ended December 31, 2015, 2014 and 2013 was $750 million, $154 million and $31 million, respectively.
~~Cash-settled restricted stock~~
~~CRSU award activity for all plans for the years ended December 31, 2014 and 2013 is as follows (shares in thousands):~~

   Number of Shares Weighted Average
Fair Value
   (In thousands)
Outstanding at January 1, 2013
   —    $ —
Granted
   309    24.60
Assumed US Airways awards
   320    22.55
Vested and released
   (3 ) 25.25
Forfeited
   —    —


Outstanding at December 31, 2013
   626    $ 25.25
Granted
   50    40.93
Vested and released
   (341 ) 34.54
Forfeited
   (74 ) 33.52


Outstanding at December 31, 2014
   261    $ 53.63


As of December 31, ~~2014, the liability related to~~2015, AAG had a nominal amount of CRSUs was $6 million, which was allocated to American and US Airways Group, and will continue to be remeasured at fair value at each reporting date until all awards are vested. As of December 31, 2014, the total unrecognized compensation expense for CRSUs was $8 million, which will be allocated to American and US Airways Group, and is expected to be recognized over a weighted average period of one year.outstanding. The total cash paid for CRSUs vested during the years ended December 31, 2015, 2014 and 2013 was $10 million, $12 million and less than $1 million, respectively.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
(b) Stock Options and Stock Appreciation Rights
~~Stock~~No stock options or stock appreciation rights have been granted subsequent to the Merger closing date. AAG assumed US Airways Group’s outstanding stock options and stock appreciation rights ~~are~~in connection with the Merger. These stock options and stock appreciation rights were granted with an exercise price equal to the underlying common stock’s fair value at the date of each ~~grant. Stock options and stock appreciation rights~~grant, have service conditions, become exercisable over a three-year vesting period and expire if unexercised at the end of their term, which ranges from seven to ten years. Stock options and stock-settled stock appreciation rights (SARs) are classified as equity awards as the exercise results in the issuance of shares of AAG Common Stock. Cash-settled stock appreciation rights (CSARs) are classified as liability awards as the exercise results in payment of cash by AAG. Stock appreciation rights are expensed on a straight-line basis over the vesting period for the entire award. There are no unrecognized compensation costs for stock options.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
Stock option and SAR award activity for all plans for the years ended December 31, 2015, 2014 and 2013 is as follows (stock options and SARs in thousands):

Stock Options and SARS Weighted
Average
Exercise Price Weighted Average
Remaining
Contractual Term Aggregate
Intrinsic Value Stock Options
and SARS Weighted
Average
Exercise
Price Weighted Average
Remaining
Contractual Term Aggregate
Intrinsic Value
(In thousands) (In years) (In millions) (In thousands) (In years) (In millions)
Assumed US Airways awards at December 9, 2013
11,200    $ 12.84
Assumed US Airways Group awards at December 9, 2013
11,200    $ 12.84
Granted
—    —    —    —
Exercised
(42 ) 14.42    (42 ) 14.42
Forfeited
—    —    —    —
Expired
—    —    —    —

Balance at December 31, 2013
11,158    $ 12.84    11,158    $ 12.84
Granted
—    —    —    —
Exercised
(4,109 ) 10.74    (4,109 ) 10.74
Forfeited
—    —    —    —
Expired
(42 ) 41.73    (42 ) 41.73

Balance at December 31, 2014
7,007    $ 13.90    2.6    $ 278    7,007    $ 13.90
Vested or expected to vest at December 31, 2014
7,006    $ 13.90    2.6    $ 278
Exercisable at December 31, 2014
6,052    $ 14.83    2.4    $ 235
Granted
—    —
Exercised
(2,985 ) 12.09
Forfeited
—    —
Expired
(9 ) 45.75

Balance at December 31, 2015
4,013    $ 15.17    1.9    $ 111
Vested or expected to vest at December 31, 2015
4,013    $ 15.17    1.9    $ 111
Exercisable at December 31, 2015
3,996    $ 15.17    1.9    $ 110
CSAR award activity for all plans for the years ended December 31, 2015, 2014 and 2013 is as follows (CSARs in thousands):

CSARs Weighted
Average
Exercise Price Weighted Average
Remaining
Contractual Term Aggregate
Intrinsic Value CSARs Weighted
Average
Exercise Price Weighted Average
Remaining
Contractual Term Aggregate
Intrinsic Value
(In thousands) (In years) (In millions) (In thousands) (In years) (In millions)
Assumed US Airways awards at December 9, 2013
2,888    $ 6.25
Assumed US Airways Group awards at December 9, 2013
2,888    $ 6.25
Granted
—    —    —    —
Exercised
(23 ) 5.10    (23 ) 5.10
Forfeited
—    —    —    —
Expired
—    —    —    —

Balance at December 31, 2013
2,865    $ 6.26    2,865    $ 6.26
Granted
—    —    —    —
Exercised
(1,254 ) 6.18    (1,254 ) 6.18
Forfeited
—    —    —    —
Expired
—    —    —    —

Balance at December 31, 2014
1,611    $ 6.33    2.2    $ 76    1,611    $ 6.33
Vested or expected to vest at December 31, 2014
1,611    $ 6.33    2.2    $ 76
Exercisable at December 31, 2014
1,610    $ 6.33    2.2    $ 76
Granted
—    —
Exercised
(760 ) 6.31
Forfeited
—    —
Expired
—    —

Balance at December 31, 2015
851    $ 6.35    1.4    $ 31
Vested or expected to vest at December 31, 2015
851    $ 6.35    1.4    $ 31
Exercisable at December 31, 2015
851    $ 6.35    1.4    $ 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

There were no stock options or stock appreciation rights granted subsequent to the Merger closing date. Stock options and stock appreciation rights are expensed on a straight-line basis over the vesting period for the entire award.
As of December 31, ~~2014,~~2015, there were $4less than a million of total unrecognized compensation costs related to SARs which ~~will be allocated to American and US Airways Group. These costs~~ are expected to be recognized ~~over a weighted average period of 0.3 years.~~in 2016. The total intrinsic value of stock options and SARs exercised during the ~~year~~years ended December 31, 2015 and 2014 and the 23 day period ended December 31, 2013 was $102 million, $105 million and less than $1 million, respectively.
As of December 31, ~~2014,~~2015, the weighted average fair value of outstanding CSARs was ~~$47.29~~$35.76 per share and the related liability was ~~$76 million, which was allocated to American and US Airways Group.~~$31 million. These CSARs are fully vested and will continue to be remeasured at fair value at each reporting date until all awards are settled. As of December 31, 2014, the total unrecognized compensation expense for CSARs was less than a million, which will be allocated to American and US Airways Group, and is expected to be recognized over a weighted average period of 0.3 years. Total cash paid for CSARs exercised during the ~~year~~years ended December 31, 2015 and 2014 and the 23 day period ended December 31, 2013 was $31 million, $42 million and less than $1 million, respectively.
~~16.~~17.  Valuation and Qualifying Accounts (in millions)

Balance at
beginning
of year Changes charged to
statement of
operations
accounts Payments Write-off
(net of
recoveries) Sales,
retirements
and transfers Balance at
end of year Balance at
Beginning
of Year Changes Charged to
Statement of
Operations
Accounts Payments Write-offs
(Net of
Recoveries) Sales,
Retirements
and Transfers Balance at
End of Year
Allowance for obsolescence of inventories

Year ended December 31, 2015
$ 638    $ 42    $ —    $ —    $ 9    $ 689
Year ended December 31, 2014
$ 502    $ 108    $ —    $ —    $ 1    $ 611    504    135    —    (2 ) 1    638
Year ended December 31, 2013
503    20    —    (21 ) —    502    607    22    —    (125 ) —    504
Year ended December 31, 2012
530    18    —    (45 ) —    503
Allowance for uncollectible accounts

Year ended December 31, 2015
$ 14    $ 45    $ —    $ (22 ) $ —    $ 37
Year ended December 31, 2014
$ 40    $ —    $ —    $ (29 ) $ —    $ 11    40    3    —    (29 ) —    14
Year ended December 31, 2013
43    2    —    (5 ) —    40    49    2    —    (11 ) —    40
Year ended December 31, 2012
51    3    —    (11 ) —    43
Reserves for environmental remediation costs

Year ended December 31, 2015
$ 10    $ —    $ (1 ) $ —    $ —    $ 9
Year ended December 31, 2014
$ 11    $ —    $ (1 ) $ —    $ —    $ 10    11    —    (1 ) —    —    10
Year ended December 31, 2013
13    2    (1 ) (3 ) —    11    13    2    (1 ) (3 ) —    11
Year ended December 31, 2012
14    (1 ) —    —    —    13
18.  Quarterly Financial Data (Unaudited)
Unaudited summarized financial data by quarter for 2015 and 2014 (in millions):
   First Quarter    Second Quarter    Third Quarter    Fourth Quarter
2015

Operating revenues
   $ 9,842       $ 10,849       $ 10,733       $ 9,660
Operating expenses
   8,641       8,928       8,730       8,596
Operating income
   1,201       1,921       2,003       1,064
Net income
   808       1,465       1,450       4,397
2014

Operating revenues
   $ 10,015       $ 11,382       $ 11,169       $ 10,197
Operating expenses
   9,249       9,986       9,905       9,357
Operating income
   766       1,396       1,264       840
Net income
   527       870       954       597
American’s fourth quarter 2015 results include $2.5 billion of total net special credits consisting principally of a $3.5 billion non-cash tax benefit recorded in connection with the reversal of American’s tax valuation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

~~17.  Quarterly Financial Data (Unaudited)~~
~~Unaudited summarized financial data~~allowance, offset in part by ~~quarter for 2014~~a nonoperating net special charge of $592 million to write off all of the value of Venezuelan bolivars held by American due to continued lack of repatriations and ~~2013 (in millions):~~deterioration of economic conditions in Venezuela and $447 million in total operating special charges primarily consisting of merger integration expenses.

   First Quarter Second Quarter    Third Quarter    Fourth Quarter
2014

Operating revenues
   $ 6,469    $ 7,153       $ 7,055       $ 6,464
Operating expenses
   5,891    6,435       6,357       6,120
Operating income
   578    718       698       344
Net income
   401    265       465       179
2013

Operating revenues
   $ 6,085    $ 6,437       $ 6,816       $ 6,422
Operating expenses
   6,019    5,936       6,130       6,141
Operating income
   66    501       686       281
Net income (loss)
   (253 ) 228       290       (1,791 )
American’s fourth quarter 2014 results ~~reflect $406~~include $495 million of total net special ~~items~~charges consisting principally of ~~$195~~$284 million of merger integration expenses, related to information technology, alignment of labor union contracts, professional fees, severance and retention, share-based compensation, divestiture of London Heathrow Slots, fleet restructuring, re-branding of aircraft and airport facilities, relocation and training. In addition, American recorded a net $116 million charge for bankruptcy related items principally consisting of fair value adjustments for bankruptcy settlement obligations and a $70 million charge related primarily to certain spare parts asset impairments. American also recorded a $31 million nonoperating special charge principally for Venezuelan foreign currency losses. These charges were offset in part by a $6 million non-cash deferred income tax benefit related to certain indefinite-lived intangible assets.
American’s fourth quarter 2013 results reflect $2.1 billion of net special items consisting of $2.2 billion of reorganization items principally due to a $1.7 billion deemed claim to employees pursuant to the Plan as well as professional fees and estimated allowed claim amounts, a $214 million tax charge attributable to additional valuation allowance required to reduce deferred tax assets to the amount more likely than not to be realized, $110 million of Merger related expenses due professional fees, severance and share-based compensation, a $107 million charge related to American’s pilot long-term disability obligation, a $33 million aircraft impairment charge and $20 million of interest charges to recognize post-petition interest expense on unsecured obligations pursuant to the Plan. These charges were offset in part by a $538 million non-cash income tax benefit resulting from gains recorded in OCI, a $67 million gain on the sale of Slots at LaGuardia Airport and a $31 million credit to other revenue related to a change in accounting method resulting from the modification of American’s AAdvantage miles agreement with Citibank.
~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.~~
~~18.~~19.  Transactions with Related Parties
The following represents the net ~~payables~~receivables (payables) to related parties (in millions):

   December 31,    December 31,
   2014    2013    2015 2014
American Airlines Group Parent(1)
   $ 1,893       $ 2,455       $ 4,489    $ 653
US Airways Group, Inc.
   320       —
Envoy Aviation Group (1) and other subsidiaries
   350       352
American Airlines Group’s wholly-owned subsidiaries (2)
   (2,508 ) (2,356 )






Total
   $ 2,563       $ 2,807       $ 1,981    $ (1,703 )






(1)
~~Formerly known as AMR Eagle Holding Corporation (Envoy),~~The increase in net related party receivables between American and American Airlines Group Parent is primarily due to American providing the funding for share repurchases performed by the AAG parent company.
(2)
The net payable to AAG’s wholly-owned subsidiaries consists primarily of amounts due under regional ~~airline~~capacity purchase agreements with AAG’s wholly-owned regional airlines operating under the brand name of American ~~Eagle consists principally of amounts due under regional capacity purchase agreements.~~Eagle.
Pursuant to a capacity purchase agreement between American and ~~Envoy,~~AAG’s wholly-owned regional airlines operating as American Eagle, American purchases all of the capacity from these carriers and recognizes passenger revenue from flights operated by ~~Envoy~~American Eagle. In 2015, 2014 and American purchases all of the capacity from Envoy. The capacity purchase agreement reflects what American believes are current market rates received by third-party regional carriers for similar flying. In 2014, 2013, ~~and 2012,~~ American recognized expense of approximately ~~$894 million, $1.0~~$1.2 billion, $1.2 billion and ~~$1.1~~$1.0 billion, respectively, related to ~~the Envoy~~wholly-owned regional airline capacity purchase ~~agreement.~~agreements.
~~19.~~20.  Subsequent Events
~~AAdvantage Loan~~2016-1 EETCs
In January 2016, American ~~had the right to repay~~created three pass-through trusts which issued approximately $1.1 billion aggregate face amount of Series 2016-1 Class AA, Class A and Class B EETCs in cash, without premium or penalty, any or all of the amounts owed to Citibank under the AAdvantage Loan. Effective January 2, 2015, American exercised its loan repayment right with respect to the full value of the outstanding balance to Citibank for $400 million. In connection with the ~~repayment,~~financing of 22 aircraft owned by American (the 2016-1 EETC Aircraft).
All of the proceeds received from the sale of the 2016-1 EETCs have been used to purchase equipment notes issued by American in three series: Series AA equipment notes in the ~~first quarter~~amount of ~~2015, American will recognize an early debt extinguishment gain~~$584 million bearing interest at 3.575% per annum, Series A equipment notes in the amount of ~~approximately $17 million. The entire outstanding balance~~$262 million bearing interest at 4.10% per annum and Series B equipment notes in the amount of ~~the obligation is reflected in current maturities of long-term debt~~$228 million bearing interest at 5.25% per annum. Interest and principal payments on the ~~accompanying consolidated balance sheet as~~equipment notes are payable semi-annually in January and July of ~~December 31, 2014.~~
~~Distribution of AAG Common Stock~~
~~On February 10, 2015, approximately 0.8 million shares of AAG Common Stock held~~each year, beginning in July 2016. The final payments on the ~~Disputed Claims Reserve were distributed to holders of allowed Single-Dip Unsecured Claims, to holders of certain labor-related deemed claims~~Series AA and ~~to holders of certain non-management, non-union employee deemed claims as specified~~Series A equipment notes are due in January 2028 and the ~~Plan, and shares were withheld or sold~~final payment on ~~account of related tax obligations.~~the Series B equipment notes is due in January 2024. These equipment notes are secured by liens on the 2016-1 EETC Aircraft.
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.  CONTROLS AND PROCEDURES
Management’s Evaluation of Disclosure Controls and Procedures
The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC. An evaluation of the effectiveness of AAG’s and American’s disclosure controls and procedures as of December 31, ~~2014~~2015 was performed under the supervision and with the participation of AAG’s and American’s management, including AAG’s and American’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO). Based on that evaluation, AAG’s and American’s management, including AAG’s and American’s CEO and CFO, concluded that AAG’s and American’s disclosure controls and procedures were effective as of December 31, ~~2014.~~2015.
Changes in Internal Control over Financial Reporting
On December 9, 2013, AAG acquired US Airways Group and its subsidiaries. We are in the process of integrating policies, processes, people, technology and operations for the post-Merger combined company, and we will continue to evaluate the impact of any related changes to our internal control over financial reporting. Except for any changes in internal controls related to the integration of US Airways Group and its subsidiaries into the post-Merger combined company, including the related adoption of common financial reporting and internal control practices for the combined company and associated updates and improvements to the combined control environment, during the year ended December 31, ~~2014,~~2015, there has been no change in AAG’s or American’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, AAG’s and American’s internal control over financial reporting.
Limitation on the Effectiveness of Controls
We believe that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, and the CEO and CFO of AAG and American believe that our disclosure controls and procedures were effective at the “reasonable assurance” level as of December 31, ~~2014.~~2015.
Management’s Annual Report on Internal Control over Financial Reporting
Management of AAG and American is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. AAG’s and American’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. AAG’s and American’s internal control over financial reporting includes policies and procedures that:

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of AAG or American, respectively;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of AAG or American are being made only in accordance with authorizations of management and directors of AAG or American, respectively; and

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of AAG’s or American’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of AAG’s and American’s internal control over financial reporting as of December 31, ~~2014.~~2015. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in its Internal Control — Integrated Framework ~~(1992~~(2013 Framework).
Based on our assessment and those criteria, AAG’s and American’s management concludes that AAG and American, respectively, maintained effective internal control over financial reporting as of December 31, ~~2014.~~2015.
AAG’s and American’s independent registered public accounting firm has issued an attestation report on the effectiveness of AAG’s and American’s internal control over financial reporting. That report has been included herein.
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
American Airlines Group Inc.:
We have audited American Airlines Group Inc.’s (the Company) internal control over financial reporting as of December 31, ~~2014,~~2015, based on criteria established inInternal Control – Integrated Framework ~~(1992)~~(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). ~~American Airlines Group Inc.’s~~The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, American Airlines Group Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2014,~~2015, based on criteria established inInternal Control – Integrated Framework ~~(1992)~~(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance ~~sheet~~sheets of ~~American Airlines Group Inc. and subsidiaries~~the Company as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income (loss), cash flows, and stockholders’ equity (deficit)~~, and cash flows~~ for the ~~year~~years then ended, and our report dated February ~~25, 2015~~24, 2016 expressed an unqualified opinion on those consolidated financial statements.
/s/    KPMG LLP
Dallas, Texas
February ~~25, 2015~~24, 2016
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
American Airlines, Inc.:
We have audited American Airlines, Inc.’s (American) internal control over financial reporting as of December 31, ~~2014,~~2015, based on criteria established inInternal Control – Integrated Framework ~~(1992)~~(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). ~~American Airlines, Inc.’s~~American’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on American’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, American Airlines, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2014,~~2015, based on criteria established inInternal Control – Integrated Framework ~~(1992)~~(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance ~~sheet~~sheets of American ~~Airlines, Inc. and subsidiaries~~ as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income (loss), cash flows, and stockholder’s equity (deficit)~~, and cash flows~~ for the ~~year~~years then ended, and our report dated February ~~25, 2015~~24, 2016 expressed an unqualified opinion on those consolidated financial statements.
~~/s/~~    KPMG LLP
Dallas, Texas
February ~~25, 2015~~24, 2016
PART III
~~ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE~~
ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Except as stated below, the information required by this Item will be set forth under the captions “Proposal 1 – Election of Directors,” “Executive Officers,” “Section 16(a) Beneficial Ownership Reporting Compliance” and “Information About Our Board of Directors and Corporate Governance” in the Proxy Statement and is incorporated by reference into this Annual Report on Form 10-K.
American Airlines Group and American have adopted Standards of Business Conduct (the Ethics Standards) within the meaning of Item 406(b) of Regulation S-K. The Ethics Standards apply to all officers and employees of American Airlines Group Inc. and its subsidiaries, including American except for the employees, officers and members of the Board of Directors of US Airways Group and its wholly-owned subsidiaries, who are governed by the US Airways Group Code of Business Conduct and Ethics (the US Airways Group Code).American. The Ethics Standards are available on our website at www.aa.com. If we make substantive amendments to the Ethics Standards ~~or the US Airways Group Code~~ or grant any waiver, including any implicit waiver, to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, we will disclose the nature of such amendment or waiver on our website or in a Current Report on Form 8-K in accordance with applicable rules and regulations.
ITEM 11.  EXECUTIVE COMPENSATION
Except as stated below, the information required by this Item will be set forth in the Proxy Statement under the captions “Information About the Board of Directors and Corporate Governance,” “Director Compensation,” “Compensation Discussion and Analysis,” “Executive Compensation” and “Compensation Committee Report” and is incorporated by reference into this Annual Report on Form 10-K.
During ~~2014,~~2015, the executive officers of AAG and American were the same persons, and the information regarding such persons called for by Item 11 with respect to American will be set forth in the Proxy Statement.
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Except as stated below, the information required by this Item will be set forth in the Proxy Statement under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” and is incorporated by reference into this Annual Report on Form 10-K.
All of the outstanding shares of common stock of American, consisting of 1,000 shares, par value $1.00 per share, are owned beneficially and of record by AAG.
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item will be set forth in the Proxy Statement under the captions “Certain Relationships and Related Party Transactions” and “Information About the Board of Directors and Corporate Governance” and is incorporated by reference into this Annual Report on Form 10-K.
ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item will be set forth in the Proxy Statement under the caption “Proposal 2 – Ratification of Appointment of Independent Registered Public Accounting Firm” and is incorporated by reference into this Annual Report on Form 10-K.
PART IV
~~ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES~~
ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Consolidated Financial Statements
The following consolidated financial statements of American Airlines Group Inc. and Independent Auditors’ ~~Report~~Reports are filed as part of this report:

   Page
Reports of Independent Registered Public Accounting Firms
   ~~119~~103
Consolidated Statements of Operations for the Years Ended December 31, 2015, 2014 ~~2013~~ and ~~2012~~2013
   ~~121~~105
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2015, 2014 ~~2013~~ and ~~2012~~2013
   ~~122~~106
Consolidated Balance Sheets at December 31, ~~2014~~2015 and ~~2013~~2014
   ~~123~~107
Consolidated Statements of Cash Flows for the Years Ended December ~~31,~~2015, 2014 ~~2013~~ and ~~2012~~2013
   ~~124~~108
Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2015, 2014 ~~2013~~ and ~~2012~~2013
   ~~125~~109
Notes to Consolidated Financial Statements
   ~~126~~110
The following consolidated financial statements of American Airlines, Inc. and Independent Auditors’ ~~Report~~Reports are filed as part of this report:

   Page
Reports of Independent Registered Public Accounting Firm
   ~~190~~172
Consolidated Statements of Operations for the Years Ended December 31, 2015, 2014 ~~2013~~ and ~~2012~~2013
   ~~192~~174
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2015, 2014 ~~2013~~ and ~~2012~~2013
   ~~193~~175
Consolidated Balance Sheets at December 31, ~~2014~~2015 and ~~2013~~2014
   ~~194~~176
Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014 ~~2013~~ and ~~2012~~2013
   ~~195~~177
Consolidated Statements of Stockholder’s Equity (Deficit) for the Years Ended December 31, 2015, 2014 ~~2013~~ and ~~2012~~2013
   ~~196~~178
Notes to Consolidated Financial Statements
   ~~197~~179
Schedules not included have been omitted because they are not applicable or because the required information is included in the Consolidated Financial Statements or notes thereto.
Exhibits
The exhibits listed in the Exhibit Index following the signature pages to this report are filed as part of, or incorporated by reference into, this report.
Exhibits required to be filed by Item 601 of Regulation S-K: Where the amount of securities authorized to be issued under any of our long-term debt agreements does not exceed 10 percent of our assets, pursuant to paragraph (b)(4) of Item 601 of Regulation S-K, in lieu of filing such as an exhibit, we hereby agree to furnish to the Commission upon request a copy of any agreement with respect to such long-term debt.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

American Airlines Group Inc.
Date: February ~~25, 2015~~24, 2016
By:

/s/    W. Douglas Parker
W. Douglas Parker
Chairman and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

American Airlines, Inc.
Date: February ~~25, 2015~~24, 2016
By:

/s/    W. Douglas Parker
W. Douglas Parker
Chairman and Chief Executive Officer
(Principal Executive Officer)
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints W. Douglas Parker and Derek J. Kerr and each or any of them, his or her true and lawful attorneys and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to the Registrants’ Annual Report on Form 10-K for the fiscal year ended December 31, ~~2014,~~2015, and to file the same with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys and agents, and each or any of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys and agents, and each of them, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of American Airlines Group Inc. and in the capacities and on the dates noted:

Date: February ~~25, 2015~~24, 2016

/s/    W. Douglas Parker
   W. Douglas Parker
   Chairman and Chief Executive Officer
   (Principal Executive Officer)
Date: February ~~25, 2015~~24, 2016

/s/    Derek J. Kerr
   Derek J. Kerr
   Executive Vice President and Chief Financial Officer
   (Principal Financial and Accounting Officer)
Date: February ~~25, 2015~~24, 2016

/s/    James F. Albaugh
   James F. Albaugh, Director
Date: February ~~25, 2015~~24, 2016

/s/    Jeffrey D. Benjamin
   Jeffrey D. Benjamin, Director
Date: February ~~25, 2015~~24, 2016

/s/    John T. Cahill
   John T. Cahill, Director
Date: February ~~25, 2015~~24, 2016

/s/    Michael J. Embler
   Michael J. Embler, Director
Date: February ~~25, 2015~~24, 2016

/s/    Matthew J. Hart
   Matthew J. Hart, Director
Date: February ~~25, 2015~~24, 2016

/s/    Alberto Ibargüen
   Alberto Ibargüen, Director
Date: February ~~25, 2015~~24, 2016

/s/    Richard C. Kraemer
   Richard C. Kraemer, Director
Date: February ~~25, 2015~~24, 2016
/s/    Susan D. Kronick
Susan D. Kronick, Director
Date: February 24, 2016
/s/    Martin H. Nesbitt
Martin H. Nesbitt, Director
Date: February 24, 2016

/s/    Denise M. O’Leary
   Denise M. O’Leary, Director
Date: February ~~25, 2015~~24, 2016

/s/    Ray M. Robinson
   Ray M. Robinson, Director
Date: February ~~25, 2015~~24, 2016

/s/    Richard P. Schifter
   Richard P. Schifter, Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of American Airlines, Inc. and in the capacities and on the dates noted:

Date: February ~~25, 2015~~24, 2016

/s/    W. Douglas Parker
   W. Douglas Parker
   Chairman and Chief Executive Officer
   (Principal Executive Officer)
Date: February ~~25, 2015~~24, 2016

/s/    Derek J. Kerr
   Derek J. Kerr
   Executive Vice President and Chief Financial Officer
   (Principal Financial and Accounting Officer)
Date: February ~~25, 2015~~24, 2016

/s/    Stephen L. Johnson
   Stephen L. Johnson, Director
Date: February ~~25, 2015~~24, 2016

/s/    J. Scott Kirby
   J. Scott Kirby, Director
EXHIBIT INDEX

Exhibit
Number

Description
  2.1    Confirmation Order and Plan (incorporated by reference to Exhibit 2.1 to AMR’s Current Report on Form 8-K filed on October 23, 2013 (Commission File No. 1-8400)).
  2.2    Agreement and Plan of Merger, dated as of February 13, 2013, among AMR Corporation, AMR Merger Sub, Inc. and US Airways Group, Inc. (incorporated by reference to Exhibit 2.1 to US Airways Group’s Current Report on Form 8-K/A filed on February 14, 2013 (Commission File No. 1-8444)).#
  2.3    Amendment to Agreement and Plan of Merger, dated as of May 15, 2013, by and among AMR Corporation, AMR Merger Sub, Inc. and US Airways Group, Inc. (incorporated by reference to Exhibit 2.1 to US Airways Group’s Current Report on Form 8-K filed on May 16, 2013 (Commission File No. 1-8444)).
  2.4    Second Amendment to Agreement and Plan of Merger, dated as of June 7, 2013, by and among AMR Corporation, AMR Merger Sub, Inc. and US Airways Group, Inc. (incorporated by reference to Exhibit 2.1 to US Airways Group’s Current Report on Form 8-K filed on June 12, 2013 (Commission File No. 1-8444)).
  2.5    Third Amendment to Agreement and Plan of Merger, dated as of September 20, 2013, by and among AMR Corporation, AMR Merger Sub, Inc. and US Airways Group, Inc. (incorporated by reference to Exhibit 2.1 to US Airways Group’s Current Report on Form 8-K filed on September 23, 2013 (Commission File No. 1-8444)).
  2.6    ~~Amended~~Agreement and ~~Restated Mutual Asset Purchase and Sale Agreement,~~Plan of Merger, dated as of ~~May 20, 2011,~~December 28, 2015, by and ~~among~~between American Airlines, Inc. and US Airways, ~~Inc., US Airways Group, Inc. and Delta Air Lines,~~ Inc. (incorporated by reference to Exhibit 2.1 to ~~US Airways Group’s Quarterly~~AAG’s Current Report on Form ~~10-Q for the quarter ended June 30, 2011~~8-K filed on December 31, 2015 (Commission File No. ~~1-8444)~~1-8400)).#*.
  3.1    Restated Certificate of Incorporation of American Airlines Group Inc., including the Certificate of Designations, Powers, Preferences and Rights of the American Airlines Group Inc. Series A Convertible Preferred Stock attached as Annex I thereto (incorporated by reference to Exhibit 3.1 to AAG’s Current Report on Form 8-K filed on December 9, 2013 (Commission File No. 1-8400)).
  3.2    Amended and Restated Bylaws of American Airlines Group Inc. (incorporated by reference to Exhibit 3.2 to AAG’s Current Report on Form 8-K filed on December 9, 2013 (Commission File No. 1-8400)).
  3.3    Amended and Restated Certificate of Incorporation of American Airlines, Inc. (incorporated by reference to Exhibit 3.3 to AAG’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2013 (Commission File No. 1-8400)).
  3.4    Amended and Restated Bylaws of American Airlines, Inc. (incorporated by reference to Exhibit 3.4 to AAG’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2013 (Commission File No. 1-8400)).
  4.1 Indenture, dated as of May 13, 2009, between US Airways Group, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to US Airways Group’s Current Report on Form 8-K filed May 14, 2009 (Commission File No. 1-8444)).
  ~~4.2~~ First Supplemental Indenture, dated as of May 13, 2009, between US Airways Group, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee., including a form of 7.25% Convertible Senior Note due 2014 (incorporated by reference to Exhibit 4.2 to US Airways Group’s Current Report on Form 8-K filed May 14, 2009 (Commission File No. 1-8444)).
~~Exhibit~~
~~Number~~
~~Description~~
  ~~4.3~~ Second Supplemental Indenture with The Bank of New York Mellon Trust Company, N.A., as trustee, to the indenture governing US Airways Inc.’s 7.25% Senior Convertible Notes due 2014 (incorporated by reference to Exhibit 4.2 to AAG’s Current Report on Form 8-K filed on December 9, 2013 (Commission File No. 1-8400)).
  ~~4.4~~    Pass Through Trust Agreement, dated as of March 12, 2013, between American Airlines, Inc. and Wilmington Trust Company (incorporated by reference to Exhibit 4.1 to AMR’s Current Report on Form 8-K filed on March 12, 2013 (Commission File No. 1-8400)).
  ~~4.5~~4.2    Trust Supplement No. 2013-2B, dated as of November 27, 2013, among American Airlines, Inc. and Wilmington Trust Company, as Class B Trustee, to the Pass Through Trust Agreement, dated as of March 12, 2013 (incorporated by reference to Exhibit 4.2 to AMR’s Current Report on Form 8-K filed on November 27, 2013 (Commission File No. 1-8400)).
Exhibit
Number
Description
  ~~4.6~~4.3    Form of Pass Through Trust Certificate, Series 2013-2B (included in Exhibit A to Exhibit 4.2) (incorporated by reference to Exhibit 4.3 to AMR’s Current Report on Form 8-K filed on November 27, 2013 (Commission File No. 1-8400)).
  ~~4.7~~ Amendment No. 1 to Intercreditor Agreement (2013-2), dated as of November 27, 2013, among Wilmington Trust Company, as Trustee of American Airlines Pass Through Trust 2013-2A and American Airlines Pass Through Trust 2013-2B, Morgan Stanley Bank, N.A., as Class A Liquidity Provider and as Class B Liquidity Provider, and Wilmington Trust Company, as Subordination Agent (incorporated by reference to Exhibit 4.4 ~~to AMR’s Current Report on Form 8-K filed on November 27, 2013 (Commission File No. 1-8400)).~~
  ~~4.8~~    Revolving Credit Agreement (2013-2B), dated as of November 27, 2013, between Wilmington Trust Company, as Subordination Agent, as agent and trustee for Trustee of American Airlines Pass Through Trust 2013-2B and as Borrower, and Morgan Stanley Bank, N.A., as Class B Liquidity Provider (incorporated by reference to Exhibit 4.5 to AMR’s Current Report on Form 8-K filed on November 27, 2013 (Commission File No. 1-8400)).
  ~~4.9~~ Trust Supplement No. 2013-2C, dated as of December 20, 2013, among American Airlines, Inc. and Wilmington Trust Company, as Class C Trustee, to the Pass Through Trust Agreement, dated as of March 12, 2013 (incorporated by reference to Exhibit 4.2 to AMR’s Current Report on Form 8-K filed on December 20, 2013 (Commission File No. 1-8400)).
  ~~4.10~~ Form of Pass Through Trust Certificate, Series 2013-2C (included in Exhibit A to Exhibit 4.11) (incorporated by reference to Exhibit 4.3 to AMR’s Current Report on Form 8-K filed on December 20, 2013 (Commission File No. 1-8400)).
  ~~4.11~~ Amended and Restated Intercreditor Agreement (2013-2), dated as of December 20, 2013, among Wilmington Trust Company, as Trustee of American Airlines Pass Through Trust 2013-2A, American Airlines Pass Through Trust 2013-2B and American Airlines Pass Through Trust 2013-2C, Morgan Stanley Bank, N.A., as Class A Liquidity Provider and as Class B Liquidity Provider, and Wilmington Trust Company, as Subordination Agent (incorporated by reference to Exhibit 4.4 to AMR’s Current Report on Form 8-K filed on December 20, 2013 (Commission File No. 1-8400)).
  ~~4.12~~4.5    Participation Agreement (N907AN), dated as of September 9, 2013, among American Airlines, Inc., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements in effect as of the date thereof, Wilmington Trust Company, as Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein (incorporated by reference to Exhibit 4.6 to AMR’s Current Report on Form 8-K filed on November 27, 2013 (Commission File No. 1-8400)).
~~Exhibit~~
~~Number~~
  4.6
~~Description~~Indenture and Security Agreement (N907AN), dated as of September 9, 2013, between American Airlines, Inc. and Wilmington Trust Company, as Loan Trustee (incorporated by reference to Exhibit 4.7 to AMR’s Current Report on Form 8-K filed on November 27, 2013 (Commission File No.1-8400)).
  ~~4.13~~4.7    First Amendment to Participation Agreement (N907AN), dated as of November 27, 2013, among American Airlines, Inc., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein (incorporated by reference to Exhibit 4.8 to AMR’s Current Report on Form 8-K filed on November 27, 2013 (Commission File No. 1-8400)).
  ~~4.14~~ Second Amendment to Participation Agreement (N907AN), dated as of December 20, 2013, among American Airlines, Inc., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein (incorporated by reference to Exhibit 4.9 to AMR’s Current Report on Form 8-K filed on December 20, 2013 (Commission File No. 1-8400)).
  ~~4.15~~ Indenture and Security Agreement (N907AN), dated as of September 9, 2013, between American Airlines, Inc. and Wilmington Trust Company, as Loan Trustee (incorporated by reference to Exhibit 4.7 to AMR’s Current Report on Form 8-K filed on November 27, 2013 (Commission File No. 1-8400)).
  ~~4.16~~4.8    First Amendment to Indenture and Security Agreement (N907AN), dated as of November 27, 2013, between American Airlines, Inc. and Wilmington Trust Company, as Loan Trustee (incorporated by reference to Exhibit 4.9 to AMR’s Current Report on Form 8-K filed on November 27, 2013 (Commission File No. 1-8400)).
  ~~4.17~~ Second Amendment to Indenture and Security Agreement (N907AN), dated as of December 20, 2013, between American Airlines, Inc. and Wilmington Trust Company, as Loan Trustee (incorporated by reference to Exhibit 4.10 to AMR’s Current Report on Form 8-K filed on December 20, 2013 (Commission File No. 1-8400)).
  ~~4.18~~4.9    Series 2013-2A N907AN Equipment Note No. 1, dated as of September 9, 2013 (incorporated by reference to Exhibit 4.10 to AMR’s Current Report on Form 8-K filed on November 27, 2013 (Commission File No. 1-8400)).
  ~~4.19~~4.10    Series 2013-2B N907AN Equipment Note No. 1, dated as of November 27, 2013 (incorporated by reference to Exhibit 4.11 to AMR’s Current Report on Form 8-K filed on November 27, 2013 (Commission File No. 1-8400)).
  ~~4.20~~ ~~Series 2013-2C N907AN Equipment Note No. 1, dated as of December 20, 2013 (incorporated by reference to Exhibit~~ 4.11 ~~to AMR’s Current Report on Form 8-K filed on December 20, 2013 (Commission File No. 1-8400)).~~
  ~~4.21~~    Registration Rights Agreement, dated as of November 27, 2013, among American Airlines, Inc., Wilmington Trust Company, as Trustee under Trust Supplement No. 2013-2B, dated as of November 27, 2013, and Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, in their capacity as representatives of the Initial Purchasers (incorporated by reference to Exhibit 4.12 to AMR’s Current Report on Form 8-K filed on November 27, 2013 (Commission File No. 1-8400)).
  ~~4.22~~ Registration Rights Agreement, dated as of December 20, 2013, among American Airlines, Inc., Wilmington Trust Company, as Trustee under Trust Supplement No. 2013-2C, dated as of December 20, 2013, and Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, in their capacity as representatives of the Initial Purchasers (incorporated by reference to Exhibit 4.12 ~~to AMR’s Current Report on Form 8-K filed on December 20, 2013 (Commission File No. 1-8400)).~~
~~Exhibit~~
~~Number~~
~~Description~~
  ~~4.23~~    Schedule I (Pursuant to Instruction 2 to Item 6.01 of Regulation S-K, this Schedule I contains a list of documents applicable to the financing of the Aircraft in connection with the offering of the Class B Certificates, which documents are substantially identical to those filed herewith as Exhibits 4.12, 4.13, 4.15, 4.16, 4.18 and 4.19. Schedule I sets forth the details by which such documents differ from the corresponding Exhibits) (incorporated by reference to Exhibit 99.2 to AMR’s Current Report on Form 8-K filed on November 27, 2013 (Commission File No. 1-8400)).
Exhibit
Number
Description
  ~~4.24~~4.13 Trust Supplement No. 2013-2C, dated as of December 20, 2013, among American Airlines, Inc. and Wilmington Trust Company, as Class C Trustee, to the Pass Through Trust Agreement, dated as of March 12, 2013 (incorporated by reference to Exhibit 4.2 to AMR’s Current Report on Form 8-K filed on December 20, 2013 (Commission File No. 1-8400)).
  4.14 Form of Pass Through Trust Certificate, Series 2013-2C (included in Exhibit A to Exhibit 4.14) (incorporated by reference to Exhibit 4.3 to AMR’s Current Report on Form 8-K filed on December 20, 2013 (Commission File No. 1-8400)).
  4.15 Amended and Restated Intercreditor Agreement (2013-2), dated as of December 20, 2013, among Wilmington Trust Company, as Trustee of American Airlines Pass Through Trust 2013-2A, American Airlines Pass Through Trust 2013-2B and American Airlines Pass Through Trust 2013-2C, Morgan Stanley Bank, N.A., as Class A Liquidity Provider and as Class B Liquidity Provider, and Wilmington Trust Company, as Subordination Agent (incorporated by reference to Exhibit 4.4 to AMR’s Current Report on Form 8-K filed on December 20, 2013 (Commission File No. 1-8400)).
  4.16 Second Amendment to Participation Agreement (N907AN), dated as of December 20, 2013, among American Airlines, Inc., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein (incorporated by reference to Exhibit 4.9 to AMR’s Current Report on Form 8-K filed on December 20, 2013 (Commission File No. 1-8400)).
  4.17 Second Amendment to Indenture and Security Agreement (N907AN), dated as of December 20, 2013, between American Airlines, Inc. and Wilmington Trust Company, as Loan Trustee (incorporated by reference to Exhibit 4.10 to AMR’s Current Report on Form 8-K filed on December 20, 2013 (Commission File No. 1-8400)).
  4.18 Series 2013-2C N907AN Equipment Note No. 1, dated as of December 20, 2013 (incorporated by reference to Exhibit 4.11 to AMR’s Current Report on Form 8-K filed on December 20, 2013 (Commission File No. 1-8400)).
  4.19 Registration Rights Agreement, dated as of December 20, 2013, among American Airlines, Inc., Wilmington Trust Company, as Trustee under Trust Supplement No. 2013-2C, dated as of December 20, 2013, and Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, in their capacity as representatives of the Initial Purchasers (incorporated by reference to Exhibit 4.12 to AMR’s Current Report on Form 8-K filed on December 20, 2013 (Commission File No. 1-8400)).
  4.20    Schedule I (Pursuant to Instruction 2 to Item 6.01 of Regulation S-K, this Schedule I contains a list of documents applicable to the financing of the Aircraft in connection with the offering of the Class C Certificates, which documents are substantially identical to those filed herewith as Exhibits 4.14, 4.17 and 4.20. Schedule I sets forth the details by which such documents differ from the corresponding Exhibits) (incorporated by reference to Exhibit 99.2 to AMR’s Current Report on Form 8-K filed on December 20, 2013 (Commission File No. 1-8400)).
  ~~4.25~~ Indenture, dated as of March 15, 2011, among American Airlines, Inc., AMR Corporation, U.S. Bank National Association, as trustee, and Wilmington Trust Company, as collateral trustee (incorporated by reference to Exhibit 4.1 to AMR’s Current Report on Form 8-K filed on March 15, 2011 (Commission File No. 1-8400)).
  ~~4.26~~ Form of 7.50% Senior Secured Note due 2016 (included in Exhibit 4.1, as Exhibit A to Indenture, dated as of March 15, 2011, among American Airlines, Inc., AMR Corporation, U.S. Bank National Association, as trustee, and Wilmington Trust Company, as collateral trustee) (incorporated by reference to Exhibit 4.2 to AMR’s Current Report on Form 8-K filed on March 15, 2011 (Commission File No. 1-8400)).
  ~~4.27~~ First Supplemental Indenture, dated as of December 9, 2013, by US Airways Group, Inc. in favor of U.S. Bank National Association, as trustee, guaranteeing the obligations of American Airlines Group Inc. and American Airlines, Inc. under the Indenture, dated as of March 15, 2011, by and among American Airlines Group Inc. (f/k/a AMR Corporation), American Airlines, Inc., U.S. Bank National Association, as trustee and Wilmington Trust Company, as collateral trustee (incorporated by reference to Exhibit 4.3 to AAG’s Current Report on Form 8-K filed on December 9, 2013 (Commission File No. 1-8400)).
  ~~4.28~~4.21    Indenture, dated as of May 24, 2013, between US Airways Group, Inc. and Wilmington Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to US Airways Group’s Current Report on Form 8-K filed on May 24, 2013 (Commission File No. 1-8444)).
  ~~4.29~~4.22    First Supplemental Indenture, dated as of May 24, 2013, among US Airways Group, Inc., US Airways, Inc. and Wilmington Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.2 to US Airways Group’s Current Report on Form 8-K filed on May 24, 2013 (Commission File No. 1-8444)).
Exhibit
Number
Description
  ~~4.30~~4.23    Form of 6.125% Senior Notes due 2018 (incorporated by reference to Exhibit 4.3 to US Airways Group’s Current Report on Form 8-K filed on May 24, 2013 (Commission File No. 1-8444)).
  ~~4.31~~4.24    Second Supplemental Indenture dated as of December 9, 2013, by and among US Airways Group, Inc., AMR Corporation Airlines Group Inc. and Wilmington Trust, National Association, as trustee, ~~with respect~~ to the Indenture, dated as of May 24, 2013 between US Airways Group, Inc. and Wilmington Trust, National Association, as trustee, as supplemented by the First Supplemental Indenture, dated as of May 24, 2013, among US Airways Group Inc., US Airways, Inc. and Wilmington Trust, National Association (incorporated by reference to Exhibit 4.1 to AAG’s Current Report on Form 8-K filed on December 9, 2013 (Commission File No. 1-8000)).
~~Exhibit~~
~~Number~~
  4.25
~~Description~~
Third Supplemental Indenture, dated as of December 30, 2015, by and among American Airlines Group Inc., American Airlines, Inc. and Wilmington Trust, National Association, as trustee, to the Indenture dated as of May 24, 2013 (incorporated by reference to Exhibit 4.1 to AAG’s Current Report on Form 8-K filed on December 31, 2015 (Commission File No. 1-8400)).
  ~~4.32~~4.26    Pass Through Trust Agreement, dated as of September 16, 2014, between American Airlines, Inc. and Wilmington Trust Company, as Trustee (incorporated by reference to Exhibit 4.1 to ~~AAG’s~~American’s Current Report on Form 8-K filed on September 17, 2014 (Commission File No. ~~1-8400)~~1-2691)).
  ~~4.33~~4.27    Trust Supplement No. 2014-1A, dated as of September 16, 2014, between American Airlines, Inc. and Wilmington Trust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.2 to ~~AAG’s~~American’s Current Report on Form 8-K filed on September 17, 2014 (Commission File No. ~~1-8400)~~1-2691)).
  ~~4.34~~4.28    Trust Supplement No. 2014-1B, dated as of September 16, 2014, between American Airlines, Inc. and Wilmington Trust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.3 to ~~AAG’s~~American’s Current Report on Form 8-K filed on September 17, 2014 (Commission File No. ~~1-8400)~~1-2691)).
  ~~4.35~~4.29    Intercreditor Agreement (2014-1), dated as of September 16, 2014, among Wilmington Trust Company, as Trustee of the American Airlines Pass Through Trust 2014-1A and as Trustee of the American Airlines Pass Through Trust 2014-1B, Crédit Agricole Corporate and Investment Bank, acting through its New York Branch, as Class A Liquidity Provider and Class B Liquidity Provider, and Wilmington Trust Company, as Subordination Agent (incorporated by reference to Exhibit 4.4 to ~~AAG’s~~American’s Current Report on Form 8-K filed on September 17, 2014 (Commission FileNo. 1-2691)).
  4.30 Amendment No. 1 to Intercreditor Agreement (2014-1), dated as of June 24, 2015, by and among American Airlines, Inc., Crédit Agricole Corporate and Investment Bank, as Class A and Class B liquidity provider and Wilmington Trust Company, as subordination agent and trustee (incorporated by reference to Exhibit 10.6 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (Commission File No. 1-8400)).
  ~~4.36~~4.31    Note Purchase Agreement, dated as of September 16, 2014, among American Airlines, Inc., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent, Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent (incorporated by reference to Exhibit 4.9 to ~~AAG’s~~American’s Current Report on Form 8-K filed on September 17, 2014 (Commission File No. ~~1-8400)~~1-2691)).
  ~~4.37~~4.32    Form of Participation Agreement (Participation Agreement among American Airlines, Inc., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein) (Exhibit B to Note Purchase Agreement) (incorporated by reference to Exhibit 4.10 to ~~AAG’s~~American’s Current Report on Form 8-K filed on September 17, 2014 (Commission File No. ~~1-8400)~~1-2691)).
Exhibit
Number
Description
  ~~4.38~~4.33    Form of Indenture and Security Agreement (Indenture and Security Agreement between American Airlines, Inc., and Wilmington Trust Company, as Loan Trustee) (Exhibit C to Note Purchase Agreement) (incorporated by reference to Exhibit 4.11 to ~~AAG’s~~American’s Current Report on Form 8-K filed on September 17, 2014 (Commission File No. ~~1-8400)~~1-2691)).
  ~~4.39~~4.34    Revolving Credit Agreement (2014-1A), dated as of September 16, 2014, between Wilmington Trust Company, as Subordination Agent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2014-1A, as Borrower, and Crédit Agricole Corporate and Investment Bank, acting through its New York Branch, as Liquidity Provider (incorporated by reference to Exhibit 4.14 to ~~AAG’s~~American’s Current Report on Form 8-K filed on September 17, 2014 (Commission FileNo. ~~1-8400)~~1-2691)).
  ~~4.40~~4.35    Revolving Credit Agreement (2014-1B), dated as of September 16, 2014, between Wilmington Trust Company, as Subordination Agent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2014-1B, as Borrower, and Crédit Agricole Corporate and Investment Bank, acting through its New York Branch, as Liquidity Provider (incorporated by reference to Exhibit 4.15 to ~~AAG’s~~American’s Current Report on Form 8-K filed on September 17, 2014 (Commission FileNo. ~~1-8400)~~1-2691)).
  ~~4.41~~4.36    Indenture, dated as of September 25, 2014, by and among American Airlines Group Inc., the Guarantors (as defined therein) and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 to AAG’s Current Report on Form 8-K filed on September 26, 2014 (Commission File No. 1-8400)).
  ~~4.42~~4.37    Form of 5.50% Senior Notes due 2019 (incorporated by reference to Exhibit 4.2 to AAG’s Current Report on Form 8-K filed on September 26, 2014 (Commission File No. 1-8400)).
  4.38 First Supplemental Indenture, dated as of December 30, 2015, by and among American Airlines Group Inc., American Airlines, Inc. and Wilmington Trust, National Association, as trustee, to the Indenture dated as of September 25, 2014 (incorporated by reference to Exhibit 4.2 to AAG’s Current Report on Form 8-K filed on December 31, 2015 (Commission File No. 1-8400)).
  4.39 Indenture, dated as of March 5, 2015, by and among American Airlines Group Inc., the Guarantors (as defined therein) and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 to AAG’s Current Report on Form 8-K filed on March 12, 2015 (Commission File No. 1-8400)).
  4.40 Form of 4.625% Senior Notes due 2020 (incorporated by reference to Exhibit 4.2 to AAG’s Current Report on Form 8-K filed on March 12, 2015 (Commission File No. 1-8400)).
  4.41 First Supplemental Indenture, dated as of December 30, 2015, by and among American Airlines Group Inc., American Airlines, Inc. and Wilmington Trust, National Association, as trustee, to the Indenture dated as of March 5, 2015 (incorporated by reference to Exhibit 4.3 to AAG’s Current Report on Form 8-K filed on December 31, 2015 (Commission File No. 1-8400)).
  4.42 Trust Supplement No. 2015-1A, dated as of March 16, 2015, between American Airlines, Inc. and Wilmington Trust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.2 to American’s Current Report on Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)).
  4.43 Trust Supplement No. 2015-1B, dated as of March 16, 2015, between American Airlines, Inc. and Wilmington Trust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.3 to American’s Current Report on Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)).
Exhibit
Number

Description
  4.44 Intercreditor Agreement (2015-1), dated as of March 16, 2015, among Wilmington Trust Company, as Trustee of the American Airlines Pass Through Trust 2015-1A and as Trustee of the American Airlines Pass Through Trust 2015-1B, Crédit Agricole Corporate and Investment Bank, acting through its New York Branch, as Class A Liquidity Provider and Class B Liquidity Provider, and Wilmington Trust Company, as Subordination Agent (incorporated by reference to Exhibit 4.4 to American’s Current Report on Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)).
  4.45 Note Purchase Agreement, dated as of March 16, 2015, among American Airlines, Inc., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent, Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent (incorporated by reference to Exhibit 4.9 to American’s Current Report on Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)).
  4.46 Form of Participation Agreement (Participation Agreement among American Airlines, Inc., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein) (incorporated by reference to Exhibit 4.10 to American’s Current Report on Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)).
  4.47 Form of Indenture and Security Agreement (Indenture and Security Agreement between American Airlines, Inc., and Wilmington Trust Company, as Loan Trustee) (incorporated by reference to Exhibit 4.11 to American’s Current Report on Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)).
  4.48 Form of Pass Through Trust Certificate, Series 2015-1A (incorporated by reference to Exhibit 4.12 to American’s Current Report on Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)).
  4.49 Form of Pass Through Trust Certificate, Series 2015-1B (incorporated by reference to Exhibit 4.13 to American’s Current Report on Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)).
  4.50 Revolving Credit Agreement (2015-1A), dated as of March 16, 2015, between Wilmington Trust Company, as Subordination Agent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2015-1A, as Borrower, and Crédit Agricole Corporate and Investment Bank, acting through its New York Branch, as Liquidity Provider (incorporated by reference to Exhibit 4.14 to American’s Current Report on Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)).
  4.51 Revolving Credit Agreement (2015-1B), dated as of March 16, 2015, between Wilmington Trust Company, as Subordination Agent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2015-lB, as Borrower, and Crédit Agricole Corporate and Investment Bank, acting through its New York Branch, as Liquidity Provider (incorporated by reference to Exhibit 4.15 to American’s Current Report on Form 8-K filed on March 16, 2015 (Commission File No. 1-2691)).
  4.52 Trust Supplement No. 2015-2AA, dated as of September 24, 2015, between American Airlines, Inc. and Wilmington Trust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.2 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)).
  4.53 Trust Supplement No. 2015-2A, dated as of September 24, 2015, between American Airlines, Inc. and Wilmington Trust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.3 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)).
Exhibit
Number
Description
  4.54 Trust Supplement No. 2015-2B, dated as of September 24, 2015, between American Airlines, Inc. and Wilmington Trust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.4 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)).
  4.55 Intercreditor Agreement (2015-2), dated as of September 24, 2015, among Wilmington Trust Company, as Trustee of the American Airlines Pass Through Trust 2015-2AA, as Trustee of the American Airlines Pass Through Trust 2015-2A and as Trustee of the American Airlines Pass Through Trust 2015-2B, Commonwealth Bank of Australia, New York Branch, as Class AA Liquidity Provider, Crédit Agricole Corporate and Investment Bank, acting through its New York Branch, as Class A Liquidity Provider and Class B Liquidity Provider, and Wilmington Trust Company, as Subordination Agent (incorporated by reference to Exhibit 4.5 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)).
  4.56 Note Purchase Agreement, dated as of September 24, 2015, among American Airlines, Inc., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements and Wilmington Trust Company, as Subordination Agent (incorporated by reference to Exhibit 4.6 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)).
  4.57 Form of Participation Agreement (Participation Agreement among American Airlines, Inc., Wilmington Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements, Wilmington Trust Company, as Subordination Agent, Wilmington Trust Company, as Loan Trustee, and Wilmington Trust Company, in its individual capacity as set forth therein) (incorporated by reference to Exhibit 4.7 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)).
  4.58 Form of Indenture and Security Agreement (Indenture and Security Agreement between American Airlines, Inc., and Wilmington Trust Company, as Loan Trustee) (incorporated by reference to Exhibit 4.8 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)).
  4.59 Form of Pass Through Trust Certificate, Series 2015-2AA (incorporated by reference to Exhibit 4.9 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission FileNo. 1-2691)).
  4.60 Form of Pass Through Trust Certificate, Series 2015-2A (incorporated by reference to Exhibit 4.10 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No.1-2691)).
  4.61 Form of Pass Through Trust Certificate, Series 2015-2B (incorporated by reference to Exhibit 4.11 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission FileNo. 1-2691)).
  4.62 Revolving Credit Agreement (2015-2AA), dated as of September 24, 2015, between Wilmington Trust Company, as Subordination Agent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2015-2AA, as Borrower, and Commonwealth Bank of Australia, New York Branch, as Liquidity Provider (incorporated by reference to Exhibit 4.12 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)).
  4.63 Revolving Credit Agreement (2015-2A), dated as of September 24, 2015, between Wilmington Trust Company, as Subordination Agent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2015-2A, as Borrower, and Crédit Agricole Corporate and Investment Bank, acting through its New York Branch, as Liquidity Provider (incorporated by reference to Exhibit 4.13 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)).
Exhibit
Number
Description
  4.64 Revolving Credit Agreement (2015-2B), dated as of September 24, 2015, between Wilmington Trust Company, as Subordination Agent, as agent and trustee for the trustee of the American Airlines Pass Through Trust 2015-2B, as Borrower, and Crédit Agricole Corporate and Investment Bank, acting through its New York Branch, as Liquidity Provider (incorporated by reference to Exhibit 4.14 to American’s Current Report on Form 8-K filed on September 24, 2015 (Commission File No. 1-2691)).
  4.65 Note Purchase Agreement, dated as of April 24, 2013, among US Airways, Inc., Wilmington Trust Company, as Pass Through Trustee, Wilmington Trust Company, as Subordination Agent, Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent (incorporated by reference to Exhibit 4.12 to US Airways Group’s Current Report on Form 8-K filed on April 25, 2013 (Commission File No. 1-8444)).
  4.66 Assumption Agreement, dated as of December 30, 2015, by American Airlines, Inc. for the benefit of Wilmington Trust Company, as pass through trustee, subordination agent, and paying agent, and Wilmington Trust, National Association, as escrow agent, in each case, under the Note Purchase Agreement, dated as of April 24, 2013, among US Airways, Inc., Wilmington Trust Company, Wilmington Trust, National Association and Wilmington Trust Company (incorporated by reference to Exhibit 10.2 to AAG’s Current Report on Form 8-K filed on December 31, 2015 (Commission File No. 1-8400)).
  4.67 Form of Participation Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee, Subordination Agent and Pass Through Trustee (incorporated by reference to Exhibit 4.13 to US Airways Group’s Current Report on Form 8-K filed on April 25, 2013 (Commission File No. 1-8444)).
  4.68 Form of Trust Indenture and Security Agreement among US Airways, Inc., as Owner, Wilmington Trust, National Association, as Securities Intermediary, and Wilmington Trust Company, as Indenture Trustee (incorporated by reference to Exhibit 4.14 to US Airways Group’s Current Report on Form 8-K filed on April 25, 2013 (Commission File No. 1-8444)).
  4.69 Form of Amendment No. 1 to Participation Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee, Subordination Agent and Pass Through Trustee (Exhibit A to Note Purchase Agreement) (incorporated by reference to Exhibit 4.8 to US Airways Group’s Current Report on Form 8-K filed on June 6, 2013 (Commission File No. 1-8444)).
  4.70 Form of Amendment No. 1 to Trust Indenture and Security Agreement among US Airways, Inc., as Owner, Wilmington Trust, National Association, as Securities Intermediary, and Wilmington Trust Company, as Indenture Trustee) (Exhibit B to Note Purchase Agreement) (incorporated by reference to Exhibit 4.9 to US Airways Group’s Current Report on Form 8-K filed on June 6, 2013 (Commission File No. 1-8444)).
  4.71 Amended and Restated Guarantee, dated as of March 31, 2014, from US Airways Group, Inc. and American Airlines Group Inc., relating to obligations of US Airways under the equipment notes relating to its Series 2013-1 Pass Through Certificates (incorporated by reference to Exhibit 10.5 to AAG’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 (Commission File No. 1-8400)).
  4.72 Form of Participation Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee, Subordination Agent and Pass Through Trustee (Schedule I to Amendment No. 1 to Note Purchase Agreement (2012-2)) (incorporated by reference to Exhibit 4.10 to US Airways Group’s Current Report on Form 8-K filed on June 6, 2013 (Commission File No. 1-8444)).
Exhibit
Number
Description
  4.73 Form of Trust Indenture and Security Agreement among US Airways, Inc., as Owner, Wilmington Trust, National Association, as Securities Intermediary, and Wilmington Trust Company, as Indenture Trustee) (Schedule II to Amendment No. 1 to Note Purchase Agreement (2012-2)) (incorporated by reference to Exhibit 4.11 to US Airways Group’s Current Report on Form 8-K filed on June 6, 2013 (Commission File No. 1-8444)).
  4.74 Form of Participation Agreement (Participation Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee and Subordination Agent) (incorporated by reference to Exhibit 4.14 to US Airways Group’s Current Report on Form 8-K filed on December 23, 2010 (Commission File No. 1-8444)).
  4.75 Form of Indenture (Trust Indenture and Security Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee) (incorporated by reference to Exhibit 4.15 to US Airways Group’s Current Report on Form 8-K filed on December 23, 2010 (Commission File No. 1-8444)).
  4.76 Amended and Restated Guarantee, dated as of March 31, 2014, from US Airways Group, Inc. and American Airlines Group Inc., relating to obligations of US Airways under the equipment notes relating to its Series 2010-1 Pass Through Certificates (incorporated by reference to Exhibit 10.1 to AAG’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 (Commission File No. 1-8400)).
  4.77 Form of Participation Agreement (Participation Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee and Subordination Agent) (incorporated by reference to Exhibit 4.18 to US Airways Group’s Current Report on Form 8-K filed on July 1, 2011 (Commission File No. 1-08444)).
  4.78 Form of Indenture (Trust Indenture and Security Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee) (incorporated by reference to Exhibit 4.19 to US Airways Group’s Current Report on Form 8-K filed on July 1, 2011 (Commission FileNo. 1-08444)).
  4.79 Guarantee, dated as of June 28, 2011, from US Airways Group, Inc. (incorporated by reference to Exhibit 4.23 to US Airways Group’s Current Report on Form 8-K filed on July 1, 2011 (Commission File No. 1-08444)).
  4.80 Amended and Restated Guarantee, dated as of March 31, 2014, from US Airways Group, Inc. and American Airlines Group Inc., relating to obligations of US Airways under the equipment notes relating to its Series 2011-1 Pass Through Certificates (incorporated by reference to Exhibit 10.2 to AAG’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 (Commission File No. 1-8400)).
  4.81 Form of Participation Agreement (Participation Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee and Subordination Agent) (incorporated by reference to Exhibit 4.18 to US Airways Group’s Current Report on Form 8-K filed on May 16, 2012 (Commission File No. 1-08444)).
  4.82 Form of Indenture (Trust Indenture and Security Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee) (incorporated by reference to Exhibit 4.19 to US Airways Group’s Current Report on Form 8-K filed on May 16, 2012 (Commission FileNo. 1-08444)).
  4.83 Amended and Restated Guarantee, dated as of March 31, 2014, from US Airways Group, Inc. and American Airlines Group Inc., relating to obligations of US Airways under the equipment notes relating to its Series 2012-1 Pass Through Certificates (incorporated by reference to Exhibit 10.3 to AAG’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 (Commission File No. 1-8400)).
Exhibit
Number
Description
  4.84 Form of Participation Agreement (Participation Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee and Subordination Agent) (incorporated by reference to Exhibit B to Exhibit 4.12 to US Airways Group’s Current Report on Form 8-K filed on December 13, 2012 (Commission File No. 1-08444)).
  4.85 Form of Indenture (Trust Indenture and Security Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee) (incorporated by reference to Exhibit C to Exhibit 4.12 to US Airways Group’s Current Report on Form 8-K filed on December 13, 2012 (Commission File No. 1-08444)).
  4.86 Amended and Restated Guarantee, dated as of March 31, 2014, from US Airways Group, Inc. and American Airlines Group Inc., relating to obligations of US Airways under the equipment notes relating to its Series 2012-2 Pass Through Certificates (incorporated by reference to Exhibit 10.4 to AAG’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 (Commission File No. 1-8400)).
  4.87 Form of Assumption Agreement, dated as of December 30, 2015, by American Airlines, Inc. for the benefit of Wilmington Trust Company, as Indenture Trustee, to (i) each Participation Agreement between, among others, US Airways, Inc. and Wilmington Trust Company, as Indenture Trustee, entered into pursuant to the 2010-1, 2011-1, 2012-1, 2012-2 and 2013-1 EETC note purchase agreements and (ii) each Trust Indenture and Security Agreement, between, among others, US Airways, Inc., and Wilmington Trust Company, as Indenture Trustee entered into pursuant to the 2010-1, 2011-1, 2012-1, 2012-2 and 2013-1 EETC note purchase agreements (incorporated by reference to Exhibit 10.3 to AAG’s Current Report on Form 8-K filed on December 31, 2015 (Commission File No. 1-8400)).
10.1    ~~Aircraft Purchase~~$1,600,000 Loan Agreement, ~~No. 1980,~~ dated as of ~~October 31, 1997, between The Boeing Company~~May 23, 2013, among US Airways, Inc., as Borrower, certain affiliates of US Airways, Inc. party to the agreement from time to time, Citicorp North America, Inc., as Administrative Agent, the lenders party to the agreement from time to time and certain other parties thereto (incorporated by reference to Exhibit 10.1 to US Airways Group’s Current Report on Form 8-K filed on May 30, 2013 (Commission File No. 1-8444)).
10.2 Joinder to Loan Agreement, dated as of December 9, 2013, by American Airlines Group Inc. and American Airlines, Inc.~~, Relating~~ to the ~~Boeing Model 777-223IGW Aircraft~~$1,600,000,000 Loan Agreement, dated as of May 23, 2013, among US Airways, Inc., US Airways Group, Inc. and certain affiliates of US Airways, Inc. party thereto from time to time, the lenders party thereto and Citicorp North America, Inc., as administrative agent for the lenders (incorporated by reference to Exhibit 10.1 to AAG’s Current Report on Form 8-K filed on December 9, 2013 (Commission File No. 1-8400)).
10.3 Amendment No. 1, dated as of January 16, 2014, to the $1,600,000,000 Loan Agreement, dated as of May 23, 2013, among US Airways, Inc., as Borrower, certain affiliates of US Airways, Inc. party to the agreement from time to time, Citicorp North America, Inc., as Administrative Agent, the lenders party to the agreement from time to time and and certain other parties thereto (incorporated by reference to Exhibit 10.48 to ~~AMR’s~~US Airways Group’s Annual Report on Form 10-K for the year ended December 31, ~~1997~~2013 (Commission File No. ~~1-8400)~~1-8444)).*
~~10.2~~ Aircraft Purchase Agreement No. 1977, dated as of October 31, 1997, between The Boeing Company and American Airlines, Inc., Relating to the Boeing Model 737-823 Aircraft (incorporated by reference to Exhibit 10.48 to AMR’s Annual Report on Form 10-K for the year ended December 31, 1997 (Commission File No. 1-8400)).*
~~10.3~~ Letter Agreement, dated as of November 17, 2004, Purchase Agreement No. 1977 Supplement No. 19 and Purchase Agreement No. 1980 Supplement No. 17, dated as of January 11, 2005, between The Boeing Company and American Airlines, Inc. (incorporated by reference to Exhibit 10.99 to AMR’s Annual Report on Form 10-K for the year ended December 31, 2004 (Commission File No.1-8400)).*
10.4 Assumption Agreement, dated as of December 30, 2015, by and among American Airlines Group Inc., American Airlines, Inc. and Citicorp North America, Inc., as administrative agent, to the Loan Agreement, as amended, dated May 23, 2013 between, among others, US Airways, Inc., certain affiliates of US Airways, Inc. and certain lenders (incorporated by reference to Exhibit 10.1 to AAG’s Current Report on Form 8-K filed on December 31, 2015 (Commission File No. 1-8400)).
Exhibit
Number
Description
10.5 First Amendment and Restatement Agreement, dated April 20, 2015, in relation to the Credit and Guaranty Agreement, dated as of October 10, 2014 (as amended), among American Airlines, Inc., American Airlines Group Inc. (formerly known as AMR Corporation), US Airways Group, Inc., US Airways, Inc., the Revolving Lenders (as defined therein) party thereto, the 2015 Term Loan Lenders (as defined therein) party thereto and Citibank N.A., as administrative agent and collateral agent (incorporated by reference to Exhibit 10.4 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (Commission File No. 1-8400)).
10.6 First Amendment to Amended and Restated Credit and Guaranty Agreement, dated as of October 26, 2015, amending the Amended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, among American Airlines, Inc., American Airlines Group Inc., US Airways Group, Inc. and US Airways, Inc., the lenders from time to time party thereto, Deutsche Bank AG New York Branch, as administrative agent, and certain other parties thereto.
10.7 First Amendment and Restatement Agreement, dated May 21, 2015, in relation to the Credit and Guaranty Agreement, dated as of June 27, 2013 (as amended), among American Airlines, Inc., American Airlines Group Inc. (formerly known as AMR Corporation), US Airways Group, Inc., US Airways, Inc., the Revolving Lenders (as defined therein) party thereto, the 2015 Term Loan Lenders (as defined therein) party thereto and Deutsche Bank AG New York Branch, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.5 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (Commission File No. 1-8400)).
10.8 First Amendment to Amended and Restated Credit and Guaranty Agreement, dated as of October 26, 2015, amending the Amended and Restated Credit and Guaranty Agreement, dated as of May 21, 2015, among American Airlines, Inc., American Airlines Group Inc., US Airways Group, Inc. and US Airways, Inc., the lenders from time to time party thereto, Citibank N.A., as administrative agent, and certain other parties thereto.
10.9    Letter Agreement, dated as of May 5, 2005, between The Boeing Company and American Airlines, Inc. (incorporated by reference to Exhibit 10.7 to AMR’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 (Commission File No. 1-8400)).*
~~10.5~~10.10    Purchase Agreement No. 3219, dated as of October 15, 2008, between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.29 to American Airlines, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 (Commission FileNo. 1-8400)).*
~~10.6~~10.11    Supplemental Agreement No. 2, dated as of July 21, 2010, to Purchase Agreement No. 3219 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.2 to AMR’s report on Form 10-QA for the quarter ended June 30, 2010 (CommissionFile No. 1-8400)).*
~~10.7~~10.12    Supplemental Agreement No. 3, dated as of February 1, 2013, to Purchase Agreement No. 3219 by and between American Airlines, Inc., and The Boeing Company (incorporated by reference to Exhibit 10.2 to AMR’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (Commission File No. 1-8400)).*
~~10.8~~10.13    Supplemental Agreement No. 4, dated as of June 9, 2014, to Purchase Agreement No. 3219 by and between The Boeing Company and American Airlines, Inc. dated as of October 15, 2008, Relating to Boeing Model 787 Aircraft, as amended, restated, amended and restated, supplemented or otherwise modified (incorporated by reference to Exhibit 10.6 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (Commission File No. 1-8400)).*
Exhibit
Number
Description
~~10.9~~10.14 Supplemental Agreement No. 5, dated as of January 20, 2015, to Purchase Agreement No. 3219 by and between The Boeing Company and American Airlines, Inc., dated as of October 15, 2008, Relating to Boeing Model 787 Aircraft, as amended, restated, amended and restated, supplemented or otherwise modified (incorporated by reference to Exhibit 10.2 to AAG’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 (Commission File No. 1-8400)).*
10.15 Supplemental Agreement No. 6, dated as of April 21, 2015, to Purchase Agreement No. 3219 by and between American Airlines, Inc. and The Boeing Company, dated October 15, 2008, as amended, restated, amended and restated, supplemented or otherwise modified (incorporated by reference to Exhibit 10.2 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (Commission File No. 1-8400)).*
10.16 Aircraft Purchase Agreement No. 1977, dated as of October 31, 1997, between The Boeing Company and American Airlines, Inc., Relating to the Boeing Model 737-823 Aircraft (incorporated by reference to Exhibit 10.48 to AMR’s Annual Report on Form 10-K for the year ended December 31, 1997 (Commission File No. 1-8400)).*
10.17 Letter Agreement, dated as of November 17, 2004, Purchase Agreement No. 1977 Supplement No. 19 and Purchase Agreement No. 1980 Supplement No. 17, dated as of January 11, 2005, between The Boeing Company and American Airlines, Inc. (incorporated by reference to Exhibit 10.99 to AMR’s Annual Report on Form 10-K for the year ended December 31, 2004 (Commission File No. 1-8400)).*
10.18    Supplemental Agreement No. 20, dated as of August 17, 2007, to Purchase Agreement No. 1977 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.133 to AMR’s Annual Report on Form 10-K for the year ended December 31, 2007 (Commission File No. 1-8400)).*
~~10.10~~10.19    Supplemental Agreement No. 21, dated as of November 20, 2007, to Purchase Agreement No. 1977 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.134 to AMR’s Annual Report on Form 10-K for the year ended December 31, 2007 (Commission File No. 1-8400)).*
~~10.11~~10.20    Supplemental Agreement No. 22, dated as of December 10, 2007, to Purchase Agreement No. 1977 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.135 to AMR’s Annual Report on Form 10-K for the year ended December 31, 2007 (Commission File No. 1-8400)).*
~~Exhibit~~
~~Number~~
~~Description~~
~~10.12~~10.21    Supplemental Agreement No. 23, dated as of January 30, 2008, to Purchase Agreement No. 1977 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.136 to AMR’s Annual Report on Form 10-K for the year ended December 31, 2007 (Commission File No. 1-8400)).*
~~10.13~~10.22    Supplemental Agreement No. 24, dated as of February 11, 2008, to Purchase Agreement No. 1977 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.137 to AMR’s Annual Report on Form 10-K for the year ended December 31, 2007 (Commission File No. 1-8400)).*
~~10.14~~10.23    Supplemental Agreement No. 25, dated as of March 12, 2008, to Purchase Agreement No. 1977 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 13.1 to AMR’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (Commission File No. 1-8400)).*
~~10.15~~10.24    Supplemental Agreement No. 26, dated as of April 11, 2008, to Purchase Agreement No. 1977 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 13.2 to AMR’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (Commission File No. 1-8400)).*
Exhibit
Number
Description
~~10.16~~10.25    Supplemental Agreement No. 27, dated as of May 14, 2008, to Purchase Agreement No. 1977 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.2 to AMR’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 (Commission File No. 1-8400)).*
~~10.17~~10.26    Supplemental Agreement No. 28, dated as of June 30, 2008, to Purchase Agreement No. 1977 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to 10.3 to AMR’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 (Commission File No. 1-8400)).*
~~10.18~~10.27    Supplemental Agreement No. 29, dated as of July 29, 2008, to Purchase Agreement No. 1977 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to 10.1 to AMR’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 (Commission File No. 1-8400)).*
~~10.19~~10.28    Supplemental Agreement No. 30, dated as of August 8, 2008, to Purchase Agreement No. 1977 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to 10.2 to AMR’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 (Commission File No. 1-8400)).*
~~10.20~~10.29    Supplemental Agreement No. 31, dated as of September 15, 2008, to Purchase Agreement No. 1977 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to 10.3 to AMR’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 (Commission File No. 1-8400)).*
~~10.21~~10.30    Supplemental Agreement No. 32, dated as of June 9, 2009, to Purchase Agreement No. 1977 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.5 to AMR’s report on Form 10-QA for the quarter ended June 30, 2009 (Commission FileNo. 1-8400)).*
~~10.22~~10.31    Supplemental Agreement No. 34, dated as of July 21, 2010, to Purchase Agreement No. 1977 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AMR’s report on Form 10-QA for the quarter ended June 30, 2010 (Commission FileNo. 1-8400)).*
~~Exhibit~~
~~Number~~
~~Description~~
~~10.23~~10.32    Supplemental Agreement No. 35, dated as of August 19, 2011, to Purchase Agreement No. 1977 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.3 to AMR’s report on Form 10-Q for the quarter ended September 30, 2011 (Commission File No. 1-8400)).*
~~10.24~~10.33    Supplemental Agreement No. 36, dated as of February 1, 2013, to Purchase Agreement No. 1977 by and between American Airlines, Inc., and The Boeing Company (incorporated by reference to Exhibit 10.3 to AMR’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (Commission File No. 1-8400)).*
~~10.25~~10.34    Supplemental Agreement No. 37, dated as of April 25, 2014, to Purchase Agreement No. 1977, between The Boeing Company and American Airlines, Inc. dated as of October 31, 1997, Relating to Boeing Model 737-800 Aircraft, as amended, restated, amended and restated, supplemented or otherwise modified (incorporated by reference to Exhibit 10.4 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (Commission File No. 1-8400)).*
~~10.26~~10.35    Supplemental Agreement No. 38, dated as of Sept. 26, 2014, to Purchase Agreement No. 1977 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AAG’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 (Commission File No. 1-8400)).*
Exhibit
Number
Description
~~10.27~~10.36 Letter Agreement, dated as of October 29, 2015, to Purchase Agreement No. 1977 by and between American Airlines, Inc. and The Boeing Company.**
10.37 Aircraft Purchase Agreement No. 1980, dated as of October 31, 1997, between The Boeing Company and American Airlines, Inc., Relating to the Boeing Model 777-223IGW Aircraft (incorporated by reference to Exhibit 10.48 to AMR’s Annual Report on Form 10-K for the year ended December 31, 1997 (Commission File No. 1-8400)).*
10.38    Purchase Agreement Supplement No. 19, dated as of December 18, 2009, to Purchase Agreement No. 1980 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.151 to AMR’s Annual Report on Form 10-K for the year ended December 31, 2009 (Commission File No. 1-8400)).*
~~10.28~~10.39    Purchase Agreement Supplement No. 20, dated as of January 14, 2011, to Purchase Agreement No. 1980 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.159 to AMR’s Annual Report on Form 10-K for the year ended December 31, 2010 (Commission File No. 1-8400)).*
~~10.29~~10.40    Supplemental Agreement No. 21, dated as of March 14, 2011, to Purchase Agreement No. 1980 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AMR’s report on Form 10-Q for the quarter ended March 31, 2011 (Commission File No. 1-8400)).*
~~10.30~~10.41    Supplemental Agreement No. 22, dated as of March 31, 2011, to Purchase Agreement No. 1980 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.2 to AMR’s report on Form 10-Q for the quarter ended March 31, 2011 (Commission File No. 1-8400)).*
~~10.31~~10.42    Supplemental Agreement No. 23, dated as of April 29, 2011, to Purchase Agreement No. 1980 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AMR’s report on Form 10-Q for the quarter ended June 30, 2011 (Commission File No. 1-8400)).*
~~10.32~~10.43    Supplemental Agreement No. 24, dated as of May 25, 2011, to Purchase Agreement No. 1980 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.2 to AMR’s report on Form 10-Q for the quarter ended June 30, 2011 (Commission File No. 1-8400)).*
~~10.33~~10.44    Supplemental Agreement No. 25, dated as of July 19, 2011, to Purchase Agreement No. 1980 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AMR’s report on Form 10-Q for the quarter ended September 30, 2011 (Commission File No. 1-8400)).*
~~Exhibit~~
~~Number~~
~~Description~~
~~10.34~~10.45    Supplemental Agreement No. 26, dated as of July 26, 2011, to Purchase Agreement No. 1980 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.2 to AMR’s report on Form 10-Q for the quarter ended September 30, 2011 (Commission File No. 1-8400)).*
~~10.35~~10.46    Supplemental Agreement No. 27, dated as of October 10, 2011, to Purchase Agreement No. 1980 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.155 to AMR’s Annual Report on Form 10-K for the year ended December 31, 2011 (Commission File No. 1-8400)).*
~~10.36~~10.47    Supplemental Agreement No. 28, dated as of June 1, 2012, to Purchase Agreement No. 1980 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AMR’s report on Form 10-Q for the quarter ended June 30, 2012 (Commission File No. 1-8400)). *
Exhibit
Number
Description
~~10.37~~10.48    Supplemental Agreement No. 29, dated as of March 12, 2012, to Purchase Agreement No. 1980 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AMR’s report on Form 10-Q for the quarter ended March 31, 2012 (Commission File No. 1-8400)).*
~~10.38~~10.49    Supplemental Agreement No. 30, dated as of June 29, 2012, to Purchase Agreement No. 1980 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.2 to AMR’s report on Form 10-Q for the quarter ended June 30, 2012 (Commission File No. 1-8400)).*
~~10.39~~10.50    Supplemental Agreement No. 32, dated as of September 30, 2012, to Purchase Agreement No. 1980 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AMR’s report on Form 10-Q for the quarter ended September 30, 2012 (Commission File No. 1-8400)).*
~~10.40~~10.51    Supplemental Agreement No. 33, dated as of February 1, 2013, to Purchase Agreement No. 1980 by and between American Airlines, Inc., and The Boeing Company (incorporated by reference to Exhibit 10.4 to AMR’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (Commission File No. 1-8400)).*
~~10.41~~10.52    Supplemental Agreement No. 34, dated as of February 1, 2013, to Purchase Agreement No. 1980 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.5 to AMR’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (Commission File No. 1-8400)).*
~~10.42~~10.53    Supplemental Agreement No. 35, dated as of February 13, 2013, to Purchase Agreement No. 1980 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.6 to AMR’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (Commission File No. 1-8400)).*
~~10.43~~10.54    Supplemental Agreement No. 36, dated as of April 30, 2014, to Purchase Agreement No. 1980, between The Boeing Company and American Airlines, Inc. dated as of October 31, 1997, Relating to Boeing Model 777 Aircraft, as amended, restated, amended and restated, supplemented or otherwise modified (incorporated by reference to Exhibit 10.5 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (Commission File No. 1-8400)).*
~~10.44~~10.55 Supplemental Agreement No. 37, dated as of July 31, 2015, to Purchase Agreement No. 1980 dated as of October 31, 1997, between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.2 to AAG’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 (Commission File No. 1-8400)).*
10.56    A320 Family Aircraft Purchase Agreement, dated as of July 20, 2011, by and between American Airlines, Inc. and Airbus S.A.S. (incorporated by reference to Exhibit 10.4 to AMR’s report on Form 10-Q for the quarter ended September 30, 2011 (Commission File No. 1-8400)).*
~~Exhibit~~
~~Number~~
~~Description~~
~~10.45~~10.57    Amendment No. 1, dated as of January 11, 2013, to A320 Family Aircraft Purchase Agreement by and between American Airlines, Inc. and Airbus S.A.S., dated as of July 20, 2011 (incorporated by reference to Exhibit 10.8 to AMR’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (Commission File No. 1-8400)).*
~~10.46~~10.58    Amendment No. 2, dated as of May 30, 2013, to A320 Family Aircraft Purchase Agreement by and between American Airlines, Inc. and Airbus S.A.S, dated as of July 20, 2011 (incorporated by reference to Exhibit 10.2 to AMR’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 (Commission File No. 1-8400)).*
Exhibit
Number
Description
~~10.47~~10.59    Amendment No. 3, dated as of November 20, 2013, to A320 Family Aircraft Purchase Agreement by and between American Airlines, Inc. and Airbus S.A.S., dated as of July 20, 2011 (incorporated by reference to Exhibit 10.27 to AAG’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2013 (Commission File No. 1-8400)).*
~~10.48~~10.60    Amendment No. 4, dated as of June 18, 2014, to the A320 Family Aircraft Purchase Agreement between Airbus S.A.S., as seller, and American Airlines, Inc., as buyer, dated as of July 20, 2011, as amended, restated, amended and restated, supplemented or otherwise modified (incorporated by reference to Exhibit 10.1 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (Commission File No. 1-8400)).*
~~10.49~~10.61    Amendment No. 5, dated as of June 24, 2014, to the A320 Family Aircraft Purchase Agreement between Airbus S.A.S., as seller, and American Airlines, Inc., as buyer, dated as of July 20, 2011, as amended, restated, amended and restated, supplemented or otherwise modified (incorporated by reference to Exhibit 10.2 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (Commission File No. 1-8400)).*
~~10.50~~10.62    Amendment No. 6, dated as of July 1, 2014, to the A320 Family Aircraft Purchase Agreement between Airbus S.A.S., as seller, and American Airlines, Inc., as buyer, dated as of July 20, 2011, as amended, restated, amended and restated, supplemented or otherwise modified (incorporated by reference to Exhibit 10.3 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (Commission File No. 1-8400)).*
~~10.51~~10.63    Amendment No. 7, dated as of November 25, 2014, to the A320 Family Aircraft Purchase Agreement between Airbus S.A.S., as seller, and American Airlines, Inc., as buyer, dated as of July 20, 2011, as amended, restated, amended and restated, supplemented or otherwise.*otherwise (incorporated by reference to Exhibit 10.51 to AAG’s Annual Report on Form 10-K for the year ended December 31, 2014 (Commission File No. 1-8400)).*
~~10.52~~10.64 Amendment No. 8, dated as of June 11, 2015, to the A320 Family Aircraft Purchase Agreement between American Airlines, Inc. and Airbus S.A.S., dated July 20, 2011, as amended, restated, amended and restated, supplemented or otherwise modified (incorporated by reference to Exhibit 10.1 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (Commission File No. 1-8400)).*
10.65 Amendment No. 9, dated as of September 23, 2015, to the A320 Family Aircraft Purchase Agreement, dated as of July 20, 2011, between American Airlines, Inc. and Airbus S.A.S. (incorporated by reference to Exhibit 10.6 to AAG’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 (Commission File No. 1-8400)).*
10.66    2012 Omnibus Restructure Agreement, dated as of January 11, 2013, by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AMR’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (Commission FileNo.1-8400)).*
~~10.53~~10.67    2012 Omnibus Restructure Agreement, dated as of January 11, 2013, by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to Amendment No. 1 to AMR’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (Commission File No. 1-8400)).*
~~10.54~~10.68    Purchase Agreement No. 03735, dated as of February 1, 2013, by and between American Airlines, Inc., and The Boeing Company (incorporated by reference to Exhibit 10.7 to AMR’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (Commission File No. 1-8400)).*
Exhibit
Number
Description
~~10.55~~10.69    Supplemental Agreement No. 1, dated as of April 15, 2013, to Purchase Agreement No. 03735 by and between American Airlines, Inc. and The Boeing Company (incorporated by reference to Exhibit 10.1 to AMR’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 (Commission File No. 1-8400)).*
~~Exhibit~~
~~Number~~
~~Description~~
~~10.56~~10.70    ~~Aircraft Purchase~~Supplemental Agreement No. 2, dated as of ~~January 31, 1998,~~March 6, 2015, to Purchase Agreement No. 03735 by and between ~~AMR Eagle Holding Corporation~~American Airlines, Inc. and ~~Bombardier Inc.~~The Boeing Company, dated February 1, 2013 Relating to Boeing Model 737 MAX Aircraft, as amended, restated, amended and restated, supplemented or otherwise modified (incorporated by reference to Exhibit ~~10.49~~10.1 to ~~AMR’s Annual~~AAG’s Quarterly Report on Form ~~10-K~~10-Q for the ~~year~~quarter ended ~~December~~March 31, ~~1997~~2015 (Commission File No. 1-8400)).*
~~10.57~~10.71 Supplemental Agreement No. 3, dated as of May 22, 2015, to Purchase Agreement No. 03735 by and between American Airlines, Inc. and The Boeing Company, dated February 1, 2013 Relating to Boeing Model 737 MAX Aircraft, as amended, restated, amended and restated, supplemented or otherwise modified (incorporated by reference to Exhibit 10.3 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (Commission File No. 1-8400)).*
10.72    Purchase Agreement Supplement, dated as of December 2, 2009, by and between AMR Eagle Holding Corporation and Bombardier Inc. (incorporated by reference to Exhibit 10.150 to AMR’s Annual Report on Form 10-K for the year ended December 31, 2009 (Commission FileNo. 1-8400)).*
~~10.58~~ Credit and Guaranty Agreement, dated as of June 27, 2013, among American Airlines, Inc., as the borrower, AMR, as parent and guarantor, the subsidiaries of AMR from time to time party thereto, as guarantors, the lenders party thereto from time to time, Deutsche Bank AG New York Branch, as administrative agent, collateral agent, issuing lender and Citigroup Global Markets Inc., as left lead arranger for the Revolving Facility (as defined in the Credit and Guaranty Agreement) and syndication agent, Barclays Bank PLC, Goldman Sachs Bank USA, J.P. Morgan Securities LLC and Morgan Stanley Senior Funding, Inc., as documentation agents, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Barclays Bank PLC, Goldman Sachs Bank USA, J.P. Morgan Securities LLC and Morgan Stanley Senior Funding, Inc., as joint lead arrangers and joint bookrunners, and Credit Suisse Securities (USA) LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint bookrunners (incorporated by reference to Exhibit 10.3 to AMR’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 (Commission File No. 1-8400)).
~~10.59~~ First Amendment to Credit and Guaranty Agreement, dated as of August 5, 2013, among American Airlines, Inc., as borrower, AMR, as parent, the lenders committing to provide and providing new loans thereunder, and Deutsche Bank AG New York Branch, as administrative agent (incorporated by reference to Exhibit 10.1 to AMR’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 (Commission File No. 1-8400)).
~~10.60~~ Instrument of Assumption of Joinder, dated as of December 9, 2013, by US Airways Group, Inc. and US Airways, Inc. in favor of Deutsche Bank AG New York Branch, as administrative agent for the Lenders, guaranteeing the obligations of American Airlines, Inc. under the Credit and Guaranty Agreement, dated as of June 27, 2013, by and among American Airlines, Inc., AMR Corporation, the direct and indirect Domestic Subsidiaries of AMR Corporation from time to time party thereto other than American Airlines, Inc., each of the several banks and other financial institutions or entities from time to time party hereto as a lender and Deutsche Bank AG New York Branch, as administrative agent for the Lenders (incorporated by reference to Exhibit 10.2 to AAG’s Current Report on Form 8-K filed on December 9, 2013 (Commission File No. 1-8444)).
~~10.61~~ Second Amendment to Credit and Guaranty Agreement, dated as of December 27, 2013, among American Airlines, Inc., American Airlines Group Inc., the Consenting Lenders (as defined therein), the New Lenders (as defined therein) and Deutsche Bank AG New York Branch, as administrative agent and, by Instrument of Assumption and Joinder, dated as of December 9, 2013, US Airways Group, Inc. and US Airways, Inc. (incorporated by reference to Exhibit 10.45 to AAG’s Annual Report on Form 10-K for the year ended December 31, 2014 (Commission File No. 1-8400)).
~~10.62~~ Third Amendment to Credit and Guaranty Agreement, dated as of October 10, 2014, among American Airlines, Inc., American Airlines Group Inc. (formerly known as AMR Corporation), US Airways Group, Inc., US Airways, Inc., the Existing Revolving Lenders (as defined therein) party thereto, BNP Paribas, Credit Agricole Corporate and Investment Bank and Deutsche Bank AG New York Branch, as administrative agent and as an issuing lender (incorporated by reference to Exhibit 10.2 to AAG’s Current Report on Form 8-K filed on October 14, 2014 (Commission File No. 1-8444)).
~~Exhibit~~
~~Number~~
~~Description~~
~~10.63~~ Credit and Guaranty Agreement, dated as of October 10, 2014, by and among American Airlines, Inc., as the Borrower, American Airlines Group Inc., as Parent and a Guarantor, US Airways Group, Inc. and US Airways, Inc., as Guarantors, the lenders party thereto, Citibank N.A., as Administrative Agent and Collateral Agent, Citigroup Global Markets Inc., as Left Lead Arranger for the Term Loan Facility and Revolving Facility, Citigroup Global Markets Inc., Bank of America, N.A., Barclays Bank PLC, BNP Paribas Securities Corp., Credit Agricole Corporate and Investment Bank, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs Bank USA, J.P. Morgan Securities LLC and Morgan Stanley Senior Funding, Inc., as Joint Lead Arrangers and Bookrunners, Citigroup Global Markets Inc., Bank of America, N.A., Barclays Bank PLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs Bank USA, J.P. Morgan Securities LLC and Morgan Stanley Senior Funding, Inc., as Syndication Agents and Credit Agricole Corporate and Investment Bank and BNP Paribas Securities Corp., as Documentation Agents (incorporated by reference to Exhibit 10.1 to AAG’s Current Report on Form 8-K filed on October 14, 2014 (Commission File No. 1-8444)).
~~10.64~~ Note Purchase Agreement, dated as of April 24, 2013, among US Airways, Inc., Wilmington Trust Company, as Pass Through Trustee, Wilmington Trust Company, as Subordination Agent, Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent (incorporated by reference to Exhibit 4.12 to US Airways Group’s Current Report on Form 8-K filed on April 25, 2013 (Commission File No. 1-8444)).
~~10.65~~ Form of Participation Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee, Subordination Agent and Pass Through Trustee (incorporated by reference to Exhibit 4.13 to US Airways Group’s Current Report on Form 8-K filed on April 25, 2013 (Commission File No. 1-8444)).
~~10.66~~ Form of Trust Indenture and Security Agreement among US Airways, Inc., as Owner, Wilmington Trust, National Association, as Securities Intermediary, and Wilmington Trust Company, as Indenture Trustee (incorporated by reference to Exhibit 4.14 to US Airways Group’s Current Report on Form 8-K filed on April 25, 2013 (Commission File No. 1-8444)).
~~10.67~~ Form of Amendment No. 1 to Participation Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee, Subordination Agent and Pass Through Trustee (Exhibit A to Note Purchase Agreement) (incorporated by reference to Exhibit 4.8 to US Airways Group’s Current Report on Form 8-K filed on June 6, 2013 (Commission File No. 1-8444)).
~~10.68~~ Form of Amendment No. 1 to Trust Indenture and Security Agreement among US Airways, Inc., as Owner, Wilmington Trust, National Association, as Securities Intermediary, and Wilmington Trust Company, as Indenture Trustee) (Exhibit B to Note Purchase Agreement) (incorporated by reference to Exhibit 4.9 to US Airways Group’s Current Report on Form 8-K filed on June 6, 2013 (Commission File No. 1-8444)).
~~10.69~~ Guarantee, dated as of April 24, 2013, from US Airways Group, Inc. in respect of Fourteen (14) Airbus A321-231 and Four (4) Airbus A330-243 Aircraft (incorporated by reference to Exhibit 4.17 to US Airways Group’s Current Report on Form 8-K filed on April 25, 2013 (Commission File No. 1-8444)).
~~10.70~~ Form of Participation Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee, Subordination Agent and Pass Through Trustee (Schedule I to Amendment No. 1 to Note Purchase Agreement (2012-2)) (incorporated by reference to Exhibit 4.10 to US Airways Group’s Current Report on Form 8-K filed on June 6, 2013 (Commission File~~No. 1-8444)).~~
~~Exhibit~~
~~Number~~
~~Description~~
~~10.71~~ Form of Trust Indenture and Security Agreement among US Airways, Inc., as Owner, Wilmington Trust, National Association, as Securities Intermediary, and Wilmington Trust Company, as Indenture Trustee) (Schedule II to Amendment No. 1 to Note Purchase Agreement (2012-2)) (incorporated by reference to Exhibit 4.11 to US Airways Group’s Current Report on Form 8-K filed on June 6, 2013 (Commission File No. 1-8444)).
~~10.72~~ Guarantee Confirmation, dated as of June 6, 2013, from US Airways Group, Inc. in respect of seven (7) Airbus A321-200 and four (4) Airbus A330-200 Aircraft (incorporated by reference to Exhibit 4.13 to US Airways Group’s Current Report on Form 8-K filed on June 6, 2013 (Commission File No. 1-8444)).
10.73    Amended and Restated Airbus A320 Agreement, dated as of October 2, 2007, between US Airways, Inc. and Airbus S.A.S. (incorporated by reference to Exhibit 10.3 to US Airways Group’s Annual Report on Form 10-K for the year ended December 31, 2007 (Commission File No. 1-8444)).*
10.74    Amendment No. 1, dated as of January 11, 2008, to the Amended and Restated Airbus A320 Family Aircraft Purchase Agreement dated as of October 2, 2007 between US Airways, Inc. and Airbus S.A.S. (incorporated by reference to Exhibit 10.1 to US Airways Group’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (Commission File No. 1-8444)).*
10.75    Amendment No. 2, dated as of October 20, 2008, to the Amended and Restated Airbus A320 Family Aircraft Purchase Agreement dated as of October 2, 2007 between US Airways, Inc. and Airbus S.A.S., including Amended and Restated Letter Agreement No. 3, Amended and Restated Letter Agreement No. 5, and Amended and Restated Letter Agreement No. 9 to the Purchase Agreement (incorporated by reference to Exhibit 10.5 to US Airways Group’s Annual Report on Form 10-K for the year ended December 31, 2008 (Commission File No. 1-8444)).*
10.76    Amendment No. 3, dated as of January 16, 2009, to the Amended and Restated Airbus A320 Family Aircraft Purchase Agreement dated as of October 2, 2007 between US Airways, Inc. and Airbus S.A.S. (incorporated by reference to Exhibit 10.1 to US Airways Group’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 (Commission File No. 1-8444)).*
10.77    Amendment No. 4, dated as of August 11, 2009, to the Amended and Restated Airbus A320 Family Aircraft Purchase Agreement dated as of October 2, 2007 between Airbus S.A.S. and US Airways, Inc. (incorporated by reference to Exhibit 10.1 to US Airways Group’s Quarterly Report onForm 10-Q for the quarter ended September 30, 2009 (Commission File No. 1-8444)).*
10.78    Amendment No. 5, dated as of October 2, 2009, to the Amended and Restated Airbus A320 Family Aircraft Purchase Agreement dated as of October 2, 2007 between Airbus S.A.S. and US Airways, Inc. (incorporated by reference to Exhibit 10.93 to US Airways Group’s Annual Report onForm 10-K for the year ended December 31, 2009 (Commission File No. 1-8444)).*
Exhibit
Number
Description
10.79    Amendment No. 6, dated as of November 20, 2009, to the Amended and Restated Airbus A320 Family Aircraft Purchase Agreement dated as of October 2, 2007 between Airbus S.A.S. and US Airways, Inc. (incorporated by reference to Exhibit 10.94 to US Airways Group’s Annual Report on Form 10-K for the year ended December 31, 2009 (Commission File No. 1-8444)).*
10.80 �� Amendment No. 7, dated as of April 1, 2010, to the Amended and Restated Airbus A320 Family Aircraft Purchase Agreement, dated as of October 2, 2007, between Airbus S.A.S. and US Airways, Inc. (incorporated by reference to Exhibit 10.1 to US Airways Group’s Quarterly Report onForm 10-Q for the quarter ended June 30, 2010 (Commission File No. 1-8444)).*
10.81    Amendment No. 8, dated as of February 13, 2011, to the Amended and Restated Airbus A320 Family Aircraft Purchase Agreement, dated as of October 2, 2007, between Airbus S.A.S. and US Airways, Inc. (incorporated by reference to Exhibit 10.22 to US Airways Group’s Annual Report onForm 10-K for the year ended December 31, 2013 (Commission File No. 1-8444)).*
~~Exhibit~~
~~Number~~
~~Description~~
10.82    Amendment No. 9, dated as of March 31, 2011, to the Amended and Restated Airbus A320 Family Aircraft Purchase Agreement, dated as of October 2, 2007, between Airbus S.A.S. and US Airways, Inc. (incorporated by reference to Exhibit 10.23 to US Airways Group’s Annual Report onForm 10-K for the year ended December 31, 2013 (Commission File No. 1-8444)).*
10.83    Amendment No. 10, dated as of October 17, 2011, to the Amended and Restated Airbus A320 Family Aircraft Purchase Agreement, dated as of October 2, 2007, between Airbus S.A.S. and US Airways, Inc. (incorporated by reference to Exhibit 10.24 to US Airways Group’s Annual Report on Form 10-K for the year ended December 31, 2013 (Commission File No. 1-8444)).*
10.84    Amendment No. 11, dated as of December 15, 2011, to the Amended and Restated Airbus A320 Family Aircraft Purchase Agreement, dated as of October 2, 2007, between Airbus S.A.S. and US Airways, Inc. (incorporated by reference to Exhibit 10.25 to US Airways Group’s Annual Report on Form 10-K for the year ended December 31, 2013 (Commission File No. 1-8444)).*
10.85    Amendment No. 12, dated as of October 19, 2012, to the Amended and Restated Airbus A320 Family Aircraft Purchase Agreement, dated as of October 2, 2007, between Airbus S.A.S. and US Airways, Inc. (incorporated by reference to Exhibit 10.26 to US Airways Group’s Annual Report on Form 10-K for the year ended December 31, 2013 (Commission File No. 1-8444)).*
10.86    Amendment No. 13, dated as of July 3, 2013, to the Amended and Restated Airbus A320 Family Aircraft Purchase Agreement, dated as of October 2, 2007, between Airbus S.A.S. and US Airways, Inc. (incorporated by reference to Exhibit 10.27 to US Airways Group’s Annual Report onForm 10-K for the year ended December 31, 2013 (Commission File No. 1-8444)).*
10.87    Amendment No. 14, dated as of September 30, 2013, to the Amended and Restated Airbus A320 Family Aircraft Purchase Agreement, dated as of October 2, 2007, between Airbus S.A.S. and US Airways, Inc. (incorporated by reference to Exhibit 10.28 to US Airways Group’s Annual Report on Form 10-K for the year ended December 31, 2013 (Commission File No. 1-8444)).*
10.88    Amendment No. 15, dated as of December 20, 2013, to the Amended and Restated Airbus A320 Family Aircraft Purchase Agreement, dated as of October 2, 2007, between Airbus S.A.S. and US Airways, Inc. (incorporated by reference to Exhibit 10.29 to US Airways Group’s Annual Report on Form 10-K for the year ended December 31, 2013 (Commission File No. 1-8444)).*
10.89    Amendment No. 16, dated as of July 1, 2014, to the Amended and Restated Airbus A320 Family Aircraft Purchase Agreement, dated as of October 2, 2007, between Airbus S.A.S. and US Airways, Inc. as amended, restated, amended and restated, supplemented or otherwise modified (incorporated by reference to Exhibit 10.7 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (Commission File No. 1-8400)). *
Exhibit
Number
Description
10.90    Amended and Restated Airbus A350 XWB Purchase Agreement, dated as of October 2, 2007, among AVSA, S.A.R.L. and US Airways, Inc., AWA and US Airways Group (incorporated by reference to Exhibit 10.19 to US Airways Group’s Annual Report on Form 10-K for the year ended December 31, 2007 (Commission File No. 1-8444)).*
10.91    Amendment No. 1, dated as of October 20, 2008, to the Amended and Restated Airbus A350 XWB Purchase Agreement, dated as of October 2, 2007, between US Airways, Inc. and Airbus S.A.S., including Amended and Restated Letter Agreement No. 3, Amended and Restated Letter Agreement No. 5, and Amended and Restated Letter Agreement No. 9 to the Purchase Agreement (incorporated by reference to Exhibit 10.23 to US Airways Group’s Annual Report on Form 10-K for the year ended December 31, 2008 (Commission File No. 1-8444)).*
~~Exhibit~~
~~Number~~
~~Description~~
10.92    Amendment No. 2, dated as of January 16, 2009, to the Amended and Restated Airbus A350 XWB Purchase Agreement, dated as of October 2, 2007, among AVSA, S.A.R.L. and US Airways, Inc., AWA and US Airways Group (incorporated by reference to Exhibit 10.3 to US Airways Group’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 (Commission FileNo. 1-8444)).*
10.93    Amendment No. 3, dated as of July 23, 2009, to the Amended and Restated Airbus A350 XWB Purchase Agreement dated as of October 2, 2007 between Airbus S.A.S. and US Airways, Inc. (incorporated by reference to Exhibit 10.3 to US Airways Group’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 (Commission File No. 1-8444)).*
10.94    Amendment No. 4, dated as of November 20, 2009, to the Amended and Restated Airbus A350 XWB Purchase Agreement dated as of October 2, 2007 between Airbus S.A.S. and US Airways, Inc. (incorporated by reference to Exhibit 10.96 to US Airways Group’s Annual Report on Form 10-K for the year ended December 31, 2009 (Commission File No. 1-8444)).*
10.95    Amendment No. 5, dated as of December 20, 2013, to the Amended and Restated Airbus A350 XWB Purchase Agreement dated as of October 2, 2007 between Airbus S.A.S. and US Airways, Inc., including Amended and Restated Letter Agreement No. 2, Amended and Restated Letter Agreement No. 4, Third Amended and Restated Letter Agreement No. 5, Amended and Restated Letter Agreement No. 6, Amended and Restated Letter Agreement No. 7, Amended and Restated Letter Agreement No. 8-2, Second Amended and Restated Letter Agreement No. 9, Amended and Restated Letter Agreement No. 12, Amended and Restated Letter Agreement No. 13 and Amended and Restated Letter Agreement No. 14 to the Amended and Restated Airbus A350 XWB Purchase Agreement dated as of October 2, 2007 between Airbus S.A.S. and US Airways, Inc. (incorporated by reference to Exhibit 10.43 to US Airways Group’s Annual Report on Form 10-K for the year ended December 31, 2013 (Commission File No. 1-8444)).*
10.96    ~~Loan~~Second Amended and Restated Letter Agreement No. 6, dated as of July 7, 2015 to the Amended and Restated Airbus A350 XWB Purchase Agreement, dated as of May 23, 2013, among US Airways, Inc., as Borrower, certain affiliates of US Airways, Inc. party to the agreement from time to time, Citicorp North America, Inc., as Administrative Agent, the lenders party to the agreement from time to time, Citigroup Global Markets Inc., as Joint Lead Arranger and Joint Bookrunner, Barclays Bank PLC, as Joint Lead Arranger, Joint Bookrunner and Syndication Agent, Morgan Stanley Senior Funding, Inc., as Joint Bookrunner and Documentation Agent and Goldman Sachs Bank USA, as Joint Bookrunner and Documentation Agent (incorporated by reference to Exhibit 10.1 to US Airways Group’s Current Report on Form 8-K filed on May 30, 2013 (Commission File No. 1-8444)).
~~10.97~~ Amendment No. 1, dated as of January 16, 2014, to Loan Agreement, dated as of May 23, 2013, among US Airways, Inc., as Borrower, certain affiliates of US Airways, Inc. party to the agreement from time to time, Citicorp North America, Inc., as Administrative Agent, the lenders party to the agreement from time to time, Citigroup Global Markets Inc., as Joint Lead Arranger and Joint Bookrunner, Barclays Bank PLC, as Joint Lead Arranger, Joint Bookrunner and Syndication Agent, Morgan Stanley Senior Funding, Inc., as Joint Bookrunner and Documentation Agent and Goldman Sachs Bank USA, as Joint Bookrunner and Documentation Agent (incorporated by reference to Exhibit 10.48 to US Airways Group’s Annual Report on Form 10-K for the year ended December 31, 2013 (Commission File No. 1-8444)).
~~10.98~~ Joinder to Loan Agreement, dated as of December 9, 2013, by American Airlines Group Inc. and American Airlines, Inc. to the $1,600,000,000 Loan Agreement, dated as of May 23, 2013, among US Airways, Inc., US Airways Group, Inc. and certain affiliates of US Airways, Inc. party thereto from time to time, the lenders party thereto and Citicorp North America, Inc., as administrative agent for the lenders (incorporated by reference to Exhibit 10.1 to AAG’s Current Report on Form 8-K filed on December 9, 2013 (Commission File No. 1-8400)).
~~Exhibit~~
~~Number~~
~~Description~~
~~10.99~~ ~~Form of Participation Agreement (Participation Agreement~~October 2, 2007, between US Airways, Inc.~~, as Owner,~~ and Wilmington Trust Company, as Indenture Trustee and Subordination Agent) (incorporated by reference to Exhibit 4.14 to US Airways Group’s Current Report on Form 8-K filed on December 23, 2010 (Commission File No. 1-8444)).
~~10.100~~ Form of Indenture (Trust Indenture and Security Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee) (incorporated by reference to Exhibit 4.15 to US Airways Group’s Current Report on Form 8-K filed on December 23, 2010 (Commission File No. 1-8444)).
~~10.101~~ Guarantee, dated as of December 21, 2010, from US Airways Group, Inc. (incorporated by reference to Exhibit 4.18 to US Airways Group’s Current Report on Form 8-K filed on December 23, 2010 (Commission File No. 1-8444)).
~~10.102~~ Form of Participation Agreement (Participation Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee and Subordination Agent) (incorporated by reference to Exhibit 4.18 to US Airways Group’s Current Report on Form 8-K filed on July 1, 2011 (Commission File No. 001-08444)).
~~10.103~~ Form of Indenture (Trust Indenture and Security Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee) (incorporated by reference to Exhibit 4.19 to US Airways Group’s Current Report on Form 8-K filed on July 1, 2011 (Commission File~~No. 001-08444)).~~
~~10.104~~ Guarantee, dated as of June 28, 2011, from US Airways Group, Inc. (incorporated by reference to Exhibit 4.23 to US Airways Group’s Current Report on Form 8-K filed on July 1, 2011 (Commission File No. 001-08444)).
~~10.105~~ Form of Participation Agreement (Participation Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee and Subordination Agent) (incorporated by reference to Exhibit 4.18 to US Airways Group’s Current Report on Form 8-K filed on May 16, 2012 (Commission File No. 001-08444)).
~~10.106~~ Form of Indenture (Trust Indenture and Security Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee) (incorporated by reference to Exhibit 4.19 to US Airways Group’s Current Report on Form 8-K filed on May 16, 2012 (Commission File~~No. 001-08444)).~~
~~10.107~~ Guarantee, dated as of May 14, 2012, from US Airways Group, Inc. (incorporated by reference to Exhibit 4.23 to US Airways Group’s Current Report on Form 8-K filed on May 16, 2012 (Commission File No. 001-08444)).
~~10.108~~ Form of Participation Agreement (Participation Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee and Subordination Agent) (incorporated by reference to Exhibit B to Exhibit 4.12 to US Airways Group’s Current Report on Form 8-K filed on December 13, 2012 (Commission File No. 001-08444)).
~~10.109~~ Form of Indenture (Trust Indenture and Security Agreement between US Airways, Inc., as Owner, and Wilmington Trust Company, as Indenture Trustee) (incorporated by reference to Exhibit C to Exhibit 4.12 to US Airways Group’s Current Report on Form 8-K filed on December 13, 2012 (Commission File No. 001-08444)).
~~10.110~~ Guarantee, dated as of December 13, 2012, from US Airways Group, Inc. (incorporated by reference to Exhibit 4.17 to US Airways Group’s Current Report on Form 8-K filed on December 13, 2012 (Commission File No. 001-08444)).
~~Exhibit~~
~~Number~~
~~Description~~
~~10.111~~ Amended and Restated Guarantee, dated as of March 31, 2014, from US Airways Group, Inc. and American Airlines Group Inc., relating to obligations of US Airways under the equipment notes relating to its Series 2010-1 Pass Through CertificatesAirbus S.A.S. (incorporated by reference to Exhibit 10.1 to AAG’s Quarterly Report on Form 10-Q for the quarter ended ~~March 31, 2014~~September 30, 2015 (Commission File No. 1-8400)).*
~~10.112~~10.97    Amendment No. 6, dated as of December 15, 2015, to the Amended and Restated ~~Guarantee,~~Airbus A350 XWB Purchase Agreement dated as of ~~March 31, 2014, from~~October 2, 2007 between Airbus S.A.S. and US Airways, ~~Group,~~ Inc. and American Airlines Group Inc., relating to obligations of US Airways under the equipment notes relating to its Series 2011-1 Pass Through Certificates (incorporated by reference to Exhibit 10.2 to AAG’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 (Commission File No. 1-8400)).**
~~10.113~~10.98    ~~Amended and Restated Guarantee,~~Consent Agreement, dated as of ~~March 31, 2014, from~~October 5, 2015, by and between US Airways, ~~Group,~~Inc., American Airlines, Inc. and American Airlines Group Inc., relating to obligations of US Airways under the equipment notes relating to its Series 2012-1 Pass Through Certificates (incorporated by reference to Exhibit 10.3 to AAG’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 (Commission File No. 1-8400)).Airbus S.A.S.**
~~10.114~~ Amended and Restated Guarantee, dated as of March 31, 2014, from US Airways Group, Inc. and American Airlines Group Inc., relating to obligations of US Airways under the equipment notes relating to its Series 2012-2 Pass Through Certificates (incorporated by reference to Exhibit 10.4 to AAG’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 (Commission File No. 1-8400)).
~~10.115~~ Amended and Restated Guarantee, dated as of March 31, 2014, from US Airways Group, Inc. and American Airlines Group Inc., relating to obligations of US Airways under the equipment notes relating to its Series 2013-1 Pass Through Certificates (incorporated by reference to Exhibit 10.5 to AAG’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 (Commission File No. 1-8400)).
~~10.116~~10.99    AMR Corporation Amended and Restated Directors Pension Benefits Plan, effective as of January 1, 2005 (incorporated by reference to Exhibit 10.149 to AMR’s Annual Report on Form 10-K for the year ended December 31, 2008 (Commission File No. 1-8400)).†
Exhibit
Number
Description
~~10.117~~10.100    Supplemental Executive Retirement Program for Officers of American Airlines, Inc., as amended and restated as of January 1, 2005 (incorporated by reference to Exhibit 10.127 to AMR’s Annual Report on Form 10-K for the year ended December 31, 2008 (Commission File No. 1-8400)).†
~~10.118~~10.101    Trust Agreement Under Supplemental Retirement Program for Officers of American Airlines, Inc., as amended and restated as of June 1, 2007 (incorporated by reference to Exhibit 10.128 to AMR’s Annual Report on Form 10-K for the year ended December 31, 2008 (Commission FileNo. 1-8400)).†
~~10.119~~10.102    Trust Agreement Under Supplemental Executive Retirement Program for Officers of American Airlines, Inc. Participating in the Super Saver Plus Plan, as amended and restated as of June 1, 2007 (incorporated by reference to Exhibit 10.129 to AMR’s Annual Report on Form 10-K for the year ended December 31, 2008 (Commission File No. 1-8400)).
~~10.120~~10.103    Form of American Severance Agreement (incorporated by reference to Exhibit 10.4 to AAG’s Current Report on Form 8-K filed on December 9, 2013 (Commission File No. 1-8400)).†
~~10.121~~10.104    Form of letter agreement regarding equity awards by and between US Airways Group, Inc. and each executive officer of US Airways Group, Inc. (incorporated by reference to Exhibit 10.1 to US Airways Group’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (Commission File No. 1-8444)).†
~~Exhibit~~
~~Number~~
~~Description~~
~~10.122~~10.105    American Airlines Group Inc. 2013 Incentive Award Plan (incorporated by reference to Exhibit 4.1 of American Airlines Group Inc.’s (f/k/a AMR Corporation) Form S-8 Registration Statement, filed on December 4, 2013).†
~~10.123~~10.106    Form of American Airlines Group Inc. 2013 Incentive Award Plan Restricted Stock Unit (Cash-Settled) Award Grant Notice and Award Agreement (incorporated by reference to Exhibit 10.125 to AAG’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2013 (Commission File No. 1-8400)).†
~~10.124~~10.107    Form of American Airlines Group Inc. 2013 Incentive Award Plan Restricted Stock Unit (Cash-Settled) Award Grant Notice and Award Agreement for Merger Equity Grants (incorporated by reference to Exhibit 10.126 to AAG’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2013 (Commission File No. 1-8400)).†
~~10.125~~10.108    Form of American Airlines Group Inc. 2013 Incentive Award Plan Restricted Stock Unit (Stock-Settled) Award Grant Notice and Award Agreement (incorporated by reference to Exhibit 10.127 to AAG’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2013 (Commission File No. 1-8400)).†
~~10.126~~10.109    Form of American Airlines Group Inc. 2013 Incentive Award Plan Restricted Stock Unit (Stock-Settled) Award Grant Notice and Award Agreement for Merger Equity Grants (incorporated by reference to Exhibit 10.128 to AAG’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2013 (Commission File No. 1-8400)).†
~~10.127~~10.110    Form of American Airlines Group Inc. 2013 Incentive Award Plan Restricted Stock Unit (Stock-Settled) Award Grant Notice and Award Agreement for Director Grants (incorporated by reference to Exhibit 10.129 to AAG’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2013 (Commission File No. 1-8400)).†
~~10.128~~10.111    Form of Indemnification Agreement (incorporated by reference to Exhibit 10.9 to AAG’s Current Report on Form 8-K filed on December 9, 2013 (Commission File No. 1-8400)).†
~~10.129~~
Exhibit
Number
   America West Holdings 2002 Incentive Equity Plan as amended through May 23, 2002 (incorporated by reference to Exhibit 10.1 to US Airways Group’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 (Commission File No. 1-8444)).†
Description
~~10.130~~10.112    US Airways Group 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to US Airways Group’s Current Report on Form 8-K filed on October 3, 2005 (Commission FileNo. 1-8444)).†
~~10.131~~10.113    Stock Unit Award Agreement, dated as of September 27, 2005, between US Airways Group and W. Douglas Parker (incorporated by reference to Exhibit 10.6 to US Airways Group’s Current Report on Form 8-K filed on October 3, 2005 (Commission File No. 1-8444)).†
~~10.132~~10.114    Form of Stock Unit Agreement under US Airways Group’s 2005 Equity Incentive Plan (incorporated by reference to Exhibit ~~10.2~~10.1 to US Airways Group’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 (Commission File No. 1-8444)).†
~~10.133~~10.115    Form of Stock Appreciation Rights Award Agreement under US Airways Group’s 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.75 to US Airways Group’s Annual Report on Form 10-K for the year ended December 31, 2005 (Commission File No. 1-8444)).†
~~10.134~~10.116    Form of Nonstatutory Stock Option Award Agreement under US Airways Group’s 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to US Airways Group’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 (Commission File No. 1-8444)).†
~~Exhibit~~
~~Number~~
~~Description~~
~~10.135~~10.117    Form of Stock Bonus Award Agreement for Non-Employee Directors under US Airways Group’s 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.96 to US Airways Group’s Annual Report on Form 10-K for the year ended December 31, 2007 (Commission FileNo. 1-8444)).†
~~10.136~~10.118    US Airways Group, Inc. 2008 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 to US Airways Group’s Registration Statement on Form S-8 filed on June 30, 2008 (RegistrationNo. 333-152033)).†
~~10.137~~10.119    Form of Restricted Stock Unit Award Agreement under the US Airways Group, Inc. 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to US Airways Group’s Current Report on Form 8-K filed August 7, 2008 (Commission File No. 1-8444)).†
~~10.138~~10.120    Form of Stock Appreciation Right Award Agreement under the US Airways Group, Inc. 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to US Airways Group’s Current Report on Form 8-K filed August 7, 2008 (Commission File No. 1-8444)).†
~~10.139~~10.121    Form of Stock Appreciation Right (Cash-Settled) Award Agreement under the US Airways Group, Inc. 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.8 to US Airways Group’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 (Commission FileNo. 1-8444)).†
~~10.140~~10.122    Form of Stock Appreciation Right (Stock-Settled) Award Agreement under the US Airways Group, Inc. 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.9 to US Airways Group’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 (Commission FileNo. 1-8444)).†
~~10.141~~10.123    Form of Director Vested Share Award Agreement under the US Airways Group 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.78 to US Airways Group’s Annual Report on Form 10-K for the year ended December 31, 2008 (Commission File No. 1-8444)).†
~~10.142~~ 2011 Long Term Incentive Performance Program Under 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to US Airways Group’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 (Commission File No. 1-8444)).†
~~10.143~~10.124    US Airways Group, Inc. 2011 Incentive Award Plan (incorporated by reference to Exhibit 4.1 to US Airways Group’s Registration Statement on Form S-8 filed on July 1, 2011 (RegistrationNo. 333-175323)).†
Exhibit
Number
Description
~~10.144~~10.125    Form of Annual Grant Agreement under the US Airways Group, Inc. 2011 Incentive Award Plan (incorporated by reference to Exhibit 4.2 to US Airways Group’s Registration Statement onForm S-8 filed on July 1, 2011 (Registration No. 333-175323)).†
~~10.145~~10.126    Form of Stock Appreciation Right (Cash-Settled) Award Grant Notice and Stock Appreciation Right (Cash-Settled) Award Agreement under the US Airways Group, Inc. 2011 Incentive Award Plan (incorporated by reference to Exhibit 4.3 to US Airways Group’s Registration Statement onForm S-8 filed on July 1, 2011 (Registration No. 333-175323)).†
~~10.146~~10.127    Form of Stock Appreciation Right (Stock-Settled) Award Grant Notice and Stock Appreciation Right Award Agreement under the US Airways Group, Inc. 2011 Incentive Award Plan (incorporated by reference to Exhibit 4.4 to US Airways Group’s Registration Statement on Form S-8 filed on July 1, 2011 (Registration No. 333-175323)).†
~~Exhibit~~
~~Number~~
~~Description~~
~~10.147~~10.128    Form of Restricted Stock Unit (Cash-Settled) Award Grant Notice and Restricted Stock Unit (Cash-Settled) Award Agreement under the US Airways Group, Inc. 2011 Incentive Award Plan (incorporated by reference to Exhibit 4.5 to US Airways Group’s Registration Statement onForm S-8 filed on July 1, 2011 (Registration No. 333-175323)).†
~~10.148~~10.129    Form of Restricted Stock Unit (Stock-Settled) Award Grant Notice and Restricted Stock Unit Award Agreement under the US Airways Group, Inc. 2011 Incentive Award Plan (incorporated by reference to Exhibit 4.6 to US Airways Group’s Registration Statement on Form S-8 filed on July 1, 2011 (Registration No. 333-175323)).†
~~10.149~~10.130    2012 Long Term Incentive Performance Program Under 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.151 to AAG’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2013 (Commission File No. 1-8400)).†
~~10.150~~10.131    2013 Long Term Incentive Performance Program Under 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.152 to AAG’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2013 (Commission File No. 1-8400)).†
~~10.151~~10.132    2014 Short Term-Incentive Program Under 2013 Incentive Award Plan (incorporated by reference to Exhibit 10.8 to AAG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (Commission File No. 1-8400)).†
~~10.152~~10.133    Form of Executive Change in Control Agreement for Presidents (incorporated by reference to Exhibit 10.2 to US Airways Group’s Current Report on Form 8-K filed on November 29, 2007 (Commission File No. 1-8444)).†
~~10.153~~10.134    Form of Executive Change in Control Agreement for Executive Vice Presidents (incorporated by reference to Exhibit 10.3 to US Airways Group’s Current Report on Form 8-K filed on November 29, 2007 (Commission File No. 1-8444)).†
~~10.154~~10.135    Form of Executive Change in Control Agreement for Senior Vice Presidents (incorporated by reference to Exhibit 10.4 to US Airways Group’s Current Report on Form 8-K filed on November 29, 2007 (Commission File No. 1-8444)).†
~~10.155~~10.136    Form of Letter Agreement for Directors Travel Program (incorporated by reference to Exhibit 10.106 to US Airways Group’s Annual Report on Form 10-K for the year ended December 31, 2007 (Commission File No. 1-8444)).†
~~10.156~~10.137    Amended and Restated Employment Agreement, dated as of November 28, 2007, by and among US Airways Group, US Airways, Inc. and W. Douglas Parker (incorporated by reference to Exhibit 10.1 to US Airways Group’s Current Report on Form 8-K filed on November 29, 2007 (Commission File No. 1-8444)).†
~~10.157~~
Exhibit
Number
   ~~Form of Indemnity Agreement (incorporated by reference to Exhibit 10.1 to US Airways Group’s Current Report on Form 8-K filed on October 6, 2005 (Commission File No. 1-8444)).†~~
Description
~~10.158~~10.138    Support and Settlement Agreement, dated as of February 13, 2013, by and among AMR Corporation, certain direct and indirect subsidiaries of AMR Corporation, and the Initial Consenting Creditors (as defined therein) (incorporated by reference to Exhibit 10.1 to AMR’s Current Report on Form 8-K filed on February 14, 2013 (Commission File No. 1-8400)).
~~10.159~~10.139    Proposed Final Judgment (incorporated by reference to Exhibit 10.1 to AMR’s Current Report on Form 8-K filed on November 13, 2013 (Commission File No. 1-8400)).
~~10.160~~10.140    Asset Preservation Order (incorporated by reference to Exhibit 10.2 to AMR’s Current Report on Form 8-K filed on November 13, 2013 (Commission File No. 1-8400)).
~~Exhibit~~
~~Number~~
~~Description~~
~~10.161~~10.141    Supplemental Stipulated Order (incorporated by reference to Exhibit 10.3 to AMR’s Current Report on Form 8-K filed on November 13, 2013 (Commission File No. 1-8400)).
~~10.162~~10.142    Joint Stipulation (incorporated by reference to Exhibit 10.4 to AMR’s Current Report on Form 8-K filed on November 13, 2013 (Commission File No. 1-8400)).
~~10.163~~10.143    DOT Agreement (incorporated by reference to Exhibit 10.5 to AMR’s Current Report on Form 8-K filed on November 13, 2013 (Commission File No. 1-8400)).
12.1    Computation of ratio of earnings to combined fixed charges and preferred dividends of American Airlines Group Inc. for 2015, 2014, 2013, 2012 ~~2011~~ and ~~2010.~~2011.
12.2    Computation of ratio of earnings to fixed charges of American Airlines, Inc. for 2015, 2014, 2013, 2012 ~~2011~~ and ~~2010.~~2011.
14.1    Code of Ethics (incorporated by reference to Exhibit 14.1 to AAG’s Current Report on Form 8-K filed on December 9, 2013 (Commission File No. 1-8400)).
~~14.2~~ US Airways Group, Inc. Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to US Airways Group’s Current Report on Form 8-K filed on December 9, 2013 (Commission File No. 1-8444)).
21    Significant subsidiaries of AAG and American as of December 31, ~~2014.~~2015.
23.1    Consent of Independent Registered Public Accounting Firm – KPMG LLP.
23.2    Consent of Independent Registered Public Accounting Firm – Ernst & Young LLP.
24    Powers of Attorney (included in signature page of this Annual Report on Form 10-K).
31.1    Certification of AAG Chief Executive Officer pursuant to Rule 13a-14(a).
31.2    Certification of AAG Chief Financial Officer pursuant to Rule 13a-14(a).
31.3    Certification of American Chief Executive Officer pursuant to Rule 13a-14(a).
31.4    Certification of American Chief Financial Officer pursuant to Rule 13a-14(a).
32.1    Certification pursuant to Rule 13a-14(b) and section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code).
32.2    Certification pursuant to Rule 13a-14(b) and section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code).
101    Interactive data files pursuant to Rule 405 of Regulation S-T.

  #
Pursuant to Item 601(b)(2) of Regulation S-K promulgated by the Securities and Exchange Commission, certain exhibits and schedules to this agreement have been omitted. Such exhibits and schedules are described in the referenced agreement. AAG and American hereby agree to furnish to the Securities and Exchange Commission, upon its request, any or all of such omitted exhibits or schedules.

  *
Confidential treatment has been granted with respect to certain portions of this agreement.

  **
Confidential treatment has been requested with respect to certain portions of this agreement.

  †
Management contract or compensatory plan or arrangement.

~~276~~260


Delaware		75-1825172
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
4333 Amon Carter Blvd., Fort Worth, Texas 76155		(817) 963-1234
(Address of principal executive offices, including zip code)		Registrant’s telephone number, including area code


Delaware		13-1502798
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
4333 Amon Carter Blvd., Fort Worth, Texas 76155		(817) 963-1234
(Address of principal executive offices, including zip code)		Registrant’s telephone number, including area code


American Airlines Group Inc.	Yesþ	No¨
American Airlines, Inc.	Yesþ	No¨


American Airlines Group Inc.	Yes¨	Noþ
American Airlines, Inc.	Yes¨	Noþ


American Airlines Group Inc.	Yesþ	No¨
American Airlines, Inc.	Yesþ	No¨


		Name of Exchange on Which Registered
Common Stock, $0.01 par value per share		NASDAQ


American Airlines Group Inc.	þ Large Accelerated Filer	~~Large~~¨ Accelerated Filer¨	~~Accelerated Filer~~ ¨ Non-accelerated Filer	~~Non-accelerated Filer~~¨ Smaller Reporting Company
American Airlines, Inc.	~~Smaller Reporting Company~~
~~American Airlines, Inc.~~¨ Large Accelerated Filer	~~Large~~¨ Accelerated Filer¨	~~Accelerated Filer~~ þ Non-accelerated Filer	~~Non-accelerated Filer~~¨	Smaller Reporting Company


		Page
PART I
Item 1.	Business		5
Item 1A.	Risk Factors		3022
Item 1B.	Unresolved Staff Comments		5244
Item 2.	Properties		5345
Item 3.	Legal Proceedings		5648
Item 4.	Mine Safety Disclosures		5749

PART II
Item 5.	Market for American Airlines Group’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities		5850
Item 6.	Selected Consolidated Financial Data		6254
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		6759
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		~~115~~100
Item 8A.	Consolidated Financial Statements and Supplementary Data of American Airlines Group Inc.		~~119~~103
Item 8B.	Consolidated Financial Statements and Supplementary Data of American Airlines, Inc.		~~190~~172
Item 9.	Changes inIn and Disagreements with Accountants on Accounting and Financial Disclosure		~~247~~229
Item 9A.	Controls and Procedures		~~247~~229

PART III
Item 10.	Directors, Executive Officers and Corporate Governance		~~251~~233
Item 11.	Executive Compensation		~~251~~233
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		~~251~~233
Item 13.	Certain Relationships and Related Transactions, and Director Independence		~~251~~233
Item 14.	Principal Accountant Fees and Services		~~251~~233

PART IV
Item 15.	Exhibits and Financial Statement Schedules		~~252~~234
SIGNATURES			~~253~~235


	American		US Airways		Wholly-owned Regional Carriers		Total
Pilots		8,600		4,400		3,200		16,200
Flight attendants		15,900		7,700		1,800		25,400
Maintenance personnel		10,800		3,600		1,700		16,100
Fleet service personnel		8,600		6,200		2,500		17,300
Passenger service personnel		9,100		6,100		7,300		22,500
Administrative and other		8,600		4,800		2,400		15,800

Total		61,600		32,800		18,900		113,300


	Mainline Operations		Wholly-owned Regional Carriers		Total
Pilots and Flight Crew Training Instructors		13,100		3,200		16,300
Flight Attendants		24,100		1,900		26,000
Maintenance personnel		14,400		1,800		16,200
Fleet Service personnel		16,100		3,200		19,300
Passenger Service personnel		16,500		7,100		23,600
Administrative and other		14,700		2,400		17,100

Total		98,900		19,600		118,500


Year	Gallons		Average Price per Gallon		Aircraft Fuel Expense		Percent of Total Mainline Operating Expenses
2014		3,644	$	2.91	$	10,592		33.2	%
2013 (a)		3,608		3.08		11,109		35.4
2012 (a)		3,512		3.19		11,194		35.8


	Average Seating Capacity				Operating Aircraft																		Non- Operating Aircraft (2)			Average Seating Capacity		Operating Aircraft										Non- Operating Aircraft (2)
				Owned				Capital Leased			Operating Leased			Total			Average Age (Years)			In Temporary Storage (1)					Owned (1)				Capital Leased		Operating Leased		Total		Average Age (Years)			Non- Operating Aircraft (2)
Airbus A319	Average Seating Capacity		125				12			—			106			118			11			—	Non- Operating Aircraft (2)		—	Average Seating Capacity		125		19		—		106		125		12		—
Airbus A320		150				13			—			51			64			15			—			1			150		10		—		45		55		15		4
Airbus A321		176				97			—			42			139			5			—			—			177		128		—		46		174		5		—
Airbus A330-200		258				15			—			—			15			3			—			—			258		15		—		—		15		4		—
Airbus A330-300		291				4			—			5			9			14			—			—			291		4		—		5		9		15		—
Boeing 737-800		150				86			19			141			246			7			—			—			159		103		19		142		264		7		—
Boeing 757-200		182				65			2			39			106			20			8			19			181		46		—		18		64		19		43
Boeing 767-200 ER		204				—			—			6			6			25			—			3
Boeing 767-300 ER		218				45			—			13			58			21			—			—
Boeing 777-200 ER		247				44			3			—			47			14			—			—
Boeing 777-300 ER		310				14			—			2			16			1			—			—
Boeing 767-300ER																											213		39		—		6		45		21		10
Boeing 777-200ER																											249		44		3		—		47		15		—
Boeing 777-300ER																											310		16		—		2		18		2		—
Boeing 787-800																											226		13		—		—		13		1		—
Embraer 190		99				20			—			—			20			7			—			—			99		20		—		—		20		8		—
McDonnell DouglasMD-80		140				95			13			31			139			23			2			22			140		59		11		27		97		23		53

Total						510			37			436			983			12			10			45					516		33		397		946		11		110


	Average Seating Capacity				Operating Aircraft																		Non- Operating Aircraft (1)			Average Seating Capacity		Operating Aircraft										Non- Operating Aircraft (3)
				Owned				Capital Leased			Operating Leased			Total			Average Age (Years)			In Temporary Storage					Owned (1)				Operating Leased		Total		Average Age (Years)		In Temporary Storage (2)			Non- Operating Aircraft (3)
Bombardier CRJ 200	Average Seating Capacity		50				12			—			23			35			12			—	Non- Operating Aircraft (1)		—	Average Seating Capacity		50		12		23		35		12		—		—
Bombardier CRJ 700		65				54			—			7			61			9			—			—			65		54		7		61		10		—		—
Bombardier CRJ 900		78				16			—			—			16			9			—			—			76		36		—		36		1		—		—
De Havilland Dash 8-100		37				27			—			—			27			25			—			5			37		26		—		26		26		—		1
De Havilland Dash 8-300		50				—			—			11			11			23			—			—			50		—		11		11		24		—		—
Embraer ERJ 175																											76		24		—		24		1		—		—
Embraer ERJ 140		44				34			—			—			34			12			—			25			44		14		—		14		13		45		—
Embraer ERJ 145		50				118			—			—			118			13			—			—			50		118		—		118		14		—		—
Saab 340B		34				—			—			—			—			—			—			41			34		—		—		—		—		—		29

Total						261			—			41			302			12			—			71					284		41		325		12		45		30


	2015		2016		2017		2018		2019		2020 and Thereafter
Firm orders (1):
American		104		104		75		49		45		100
US Airways		12		—		6		10		6		—

Total		116		104		81		59		51		100
Scheduled mainline lease expirations:
American		19		10		15		8		3		227
US Airways		31		5		26		15		28		86

Total		50		15		41		23		31		313
Scheduled wholly-owned regional subsidiaries lease expirations		—		—		3		3		10		25


	Number of Aircraft				Type of Aircraft
Carrier	American		US Airways		Type of Aircraft
Air Wisconsin		—		70		Regional jets
ExpressJet		11		—		Regional jets
Mesa		—		57		Regional jets
Republic		42		58		Regional jets
SkyWest		12		14		Regional jets

		65		199


Carrier	Number of Aircraft
Air Wisconsin Airlines Corporation		70	Regional jets
ExpressJet Airlines, Inc.		11	Regional jets
Mesa Airlines, Inc.		64	Regional jets
Republic Airline Inc.		105	Regional jets
SkyWest Airlines, Inc.		12	Regional jets

		262


Year Ended December 31	Period	High		Low		Period	High		Low
2015						Fourth Quarter	$	47.09	$	37.42
						Third Quarter		44.59		34.10
						Second Quarter		53.47		38.45
						First Quarter		56.20		45.95
2014	Fourth Quarter	$	53.63	$	28.58	Fourth Quarter	$	54.64	$	28.10
	Third Quarter		43.86		35.03	Third Quarter		44.00		34.34
	Second Quarter		44.55		33.37	Second Quarter		44.88		31.86
	First Quarter		39.02		25.36	First Quarter		39.88		25.06
2013	December 9-31	$	26.61	$	24.60


Year Ended December 31	Period	Per share		For stockholders of record as of	Payable on
2015	Fourth Quarter	$	0.10	November 5, 2015	November 19, 2015
	Third Quarter		0.10	August 10, 2015	August 24, 2015
	Second Quarter		0.10	May 4, 2015	May 18, 2015
	First Quarter		0.10	February 9, 2015	February 23, 2015
2014	Fourth Quarter	$	0.10	November 3, 2014	November 17, 2014
	Third Quarter		0.10	August 4, 2014	August 18, 2014


Period	Total number of shares purchased			Average price paid per share		Total number of shares purchased as part of publicly announced plan or program (a)		Maximum dollar value of shares that may be purchased under the plan or program (in millions)
October 2014		3,896,793		$	40.41		3,896,793	$	729
November 2014		16,314,374	(b)	$	43.75		16,261,766	$	18
December 2014		367,732		$	48.07		367,732	$	—


	Year Ended December 31,														Year Ended December 31,
	2014		2013			2012			2011			2010			2015		2014		2013			2012			2011
	(In millions, except share and per share data)														(In millions, except share and per share data)
Consolidated Statements of Operations data:
Total operating revenues	$	42,650	$	26,743		$	24,855		$	23,979		$	22,170		$	40,990	$	42,650	$	26,743		$	24,855		$	23,979
Total operating expenses		38,401		25,344			24,707			25,016			21,808			34,786		38,401		25,344			24,707			25,016

Operating income (loss)	$	4,249	$	1,399		$	148		$	(1,037	)	$	362		$	6,204	$	4,249	$	1,399		$	148		$	(1,037	)
Reorganization items, net (1)	$	—	$	(2,655	)	$	(2,208	)	$	(118	)	$	—		$	—	$	—	$	(2,655	)	$	(2,208	)	$	(118	)
Net income (loss)	$	2,882	$	(1,834	)	$	(1,876	)	$	(1,979	)	$	(471	)	$	7,610	$	2,882	$	(1,834	)	$	(1,876	)	$	(1,979	)
Earnings (loss) per common share:
Basic	$	4.02	$	(6.54	)	$	(7.52	)	$	(7.95	)	$	(1.90	)	$	11.39	$	4.02	$	(6.54	)	$	(7.52	)	$	(7.95	)
Diluted	$	3.93	$	(6.54	)	$	(7.52	)	$	(7.95	)	$	(1.90	)	$	11.07	$	3.93	$	(6.54	)	$	(7.52	)	$	(7.95	)
Shares used for computation (in thousands):
Basic		717,456		280,213			249,490			249,000			247,825			668,393		717,456		280,213			249,490			249,000
Diluted		734,016		280,213			249,490			249,000			247,825			687,355		734,016		280,213			249,490			249,000
Cash dividends declared per common share	$	0.20	$	—		$	—		$	—		$	—		$	0.40	$	0.20	$	—		$	—		$	—
Consolidated Balance Sheet data (at end of period):
Total assets	$	43,771	$	42,278		$	23,510		$	23,848		$	25,088		$	48,415	$	43,225	$	41,741		$	23,396		$	23,719
Long-term debt and capital leases, net of current maturities		16,196		15,353			7,116			6,702			9,253			18,330		16,043		15,212			7,019			6,592
Pension and postretirement benefits (2)		7,562		5,828			6,780			9,204			7,877			7,450		7,562		5,828			6,780			9,204
Mandatorily convertible preferred stock and other bankruptcy settlement obligations		325		5,928			—			—			—			193		325		5,928			—			—
Liabilities subject to compromise		—		—			6,606			4,843			—			—		—		—			6,606			4,843
Stockholders’ equity (deficit)		2,021		(2,731	)		(7,987	)		(7,111	)		(3,945	)		5,635		2,021		(2,731	)		(7,987	)		(7,111	)
Consolidated Statements of Operations data excluding special items (3) (Unaudited):
Operating income (loss) excluding special items	$	5,073	$	1,935		$	535		$	(238	)	$	444		$	7,284	$	5,073	$	1,935		$	535		$	(238	)
Net income (loss) excluding special items		4,184		1,244			(130	)		(1,062	)		(389	)		6,269		4,184		1,244			(130	)		(1,062	)


	Year Ended December 31, 2014			Year Ended December 31, 2013
	Year Ended December 31, 2014			AAG			US Airways Group			Combined
	(In millions, except per ASM amounts)
Total operating expenses	$	38,401		$	24,236		$	13,604		$	37,840
Less: Regional expenses:
Fuel		(2,009	)		(1,056	)		(1,052	)		(2,108	)
Other		(4,507	)		(2,056	)		(2,253	)		(4,309	)

Total mainline operating expenses		31,885			21,124			10,299			31,423
Less: Special items, net		(800	)		(282	)		(415	)		(697	)

Mainline operating expenses, excluding special items		31,085			20,842			9,884			30,726
Less: Aircraft fuel and related taxes		(10,592	)		(7,628	)		(3,481	)		(11,109	)

Mainline operating expenses, excluding special items and fuel	$	20,493		$	13,214		$	6,403		$	19,617

Available Seat Miles (ASM)		237,522			154,499			77,374			231,873

(In cents)
Mainline operating expenses per ASM	$	13.42								$	13.55
Less: Special items, net per ASM		(0.34	)								(0.30	)

Mainline operating expenses per ASM, excluding special items		13.09									13.25
Less: Aircraft fuel and related taxes per ASM		(4.46	)								(4.79	)

Mainline operating expenses per ASM, excluding special items and fuel	$	8.63								$	8.46


	Year Ended December 31,						Increase (Decrease) 2014-2013			Increase (Decrease) 2013-2012
	Year Ended December 31,
	2014		2013 (1)		2012 (1)
Mainline
Revenue passenger miles (millions) (a)		195,651		194,026		188,841		0.8	%		2.7	%
Available seat miles (millions) (b)	��	237,522		231,873		226,839		2.4	%		2.2	%
Passenger load factor (percent) (c)		82.4		83.7		83.2		(1.3	)pts		0.5	pts
Yield (cents) (d)		15.74		15.08		14.66		4.4	%		2.9	%
Passenger revenue per available seat mile (cents) (e)		12.97		12.62		12.20		2.7	%		3.4	%
Operating cost per available seat mile (cents) (f)		13.42		13.55		13.79		(0.9	)%		(1.7	)%
Passenger enplanements (thousands) (g)		145,574		143,747		140,742		1.3	%		2.1	%
Departures (thousands)		1,144		1,140		1,113		0.3	%		2.5	%
Aircraft at end of period		983		970		954		1.3	%		1.7	%
Block hours (thousands) (h)		3,514		3,454		3,350		1.7	%		3.1	%
Average stage length (miles) (i)		1,205		1,190		1,183		1.3	%		0.6	%
Fuel consumption (gallons in millions)		3,644		3,608		3,512		1.0	%		2.8	%
Average aircraft fuel price including related taxes (dollars per gallon)		2.91		3.08		3.19		(5.6	)%		(3.4	)%
Full-time equivalent employees at end of period		94,400		91,500		95,800		3.2	%		(4.5	)%
Regional (j)
Revenue passenger miles (millions) (a)		22,219		21,515		21,097		3.3	%		2.0	%
Available seat miles (millions) (b)		28,135		28,041		27,809		0.3	%		0.8	%
Passenger load factor (percent) (c)		79.0		76.7		75.9		2.3	pts		0.8	pts
Yield (cents) (d)		28.46		29.17		29.69		(2.4	)%		(1.7	)%
Passenger revenue per available seat mile (cents) (e)		22.47		22.38		22.52		0.4	%		(0.6	)%
Operating cost per available seat mile (cents) (f)		23.16		22.88		22.81		1.2	%		0.3	%
Passenger enplanements (thousands) (g)		51,766		49,993		49,757		3.5	%		0.5	%
Aircraft at end of period		566		558		536		1.4	%		4.1	%
Fuel consumption (gallons in millions)		688		687		658		0.1	%		4.4	%
Average aircraft fuel price including related taxes (dollars per gallon)		2.92		3.07		3.21		(4.7	)%		(4.3	)%
Full-time equivalent employees at end of period (k)		18,900		18,200		18,700		3.8	%		(2.7	)%
Total Mainline and Regional
Revenue passenger miles (millions) (a)		217,870		215,541		209,938		1.1	%		2.7	%
Available seat miles (millions) (b)		265,657		259,914		254,648		2.2	%		2.1	%
Cargo ton miles (millions) (l)		2,333		2,198		2,105		6.1	%		4.4	%
Passenger load factor (percent) (c)		82.0		82.9		82.4		(0.9	)pts		0.5	pts
Yield (cents) (d)		17.04		16.49		16.17		3.3	%		2.0	%
Passenger revenue per available seat mile (cents) (e)		13.97		13.67		13.33		2.2	%		2.6	%
Total revenue per available seat mile (cents) (m)		16.05		15.54		15.17		3.3	%		2.5	%
Cargo yield per ton mile (cents) (n)		37.50		37.74		39.38		(0.6	)%		(4.2	)%
Passenger enplanements (thousands) (g)		197,340		193,740		190,499		1.9	%		1.7	%
Aircraft at end of period		1,549		1,528		1,490		1.4	%		2.6	%
Fuel consumption (gallons in millions)		4,332		4,295		4,170		0.9	%		3.0	%
Average aircraft fuel price including related taxes (dollars per gallon)		2.91		3.08		3.19		(5.5	)%		(3.6	)%
Full-time equivalent employees at end of period		113,300		109,700		114,500		3.3	%		(4.2	)%


	Year Ended December 31,				Increase (Decrease) 2015-2014
	Year Ended December 31,
	2015		2014
Mainline
Revenue passenger miles (millions) (a)		199,467		195,651		2.0	%
Available seat miles (millions) (b)		239,375		237,522		0.8	%
Passenger load factor (percent) (c)		83.3		82.4		0.9	pts
Yield (cents) (d)		14.56		15.74		(7.5	)%
Passenger revenue per available seat mile (cents) (e)		12.13		12.97		(6.5	)%
Operating cost per available seat mile (cents) (f)		12.03		13.42		(10.4	)%
Passenger enplanements (thousands) (g)		146,814		145,574		0.9	%
Departures (thousands)		1,114		1,144		(2.6	)%
Aircraft at end of period		946		983		(3.8	)%
Block hours (thousands) (h)		3,494		3,514		(0.6	)%
Average stage length (miles) (i)		1,226		1,205		1.7	%
Fuel consumption (gallons in millions)		3,611		3,644		(0.9	)%
Average aircraft fuel price including related taxes (dollars per gallon)		1.72		2.91		(40.7	)%
Full-time equivalent employees at end of period		98,900		94,400		4.8	%
Regional (j)
Revenue passenger miles (millions) (a)		23,543		22,219		6.0	%
Available seat miles (millions) (b)		29,361		28,135		4.4	%
Passenger load factor (percent) (c)		80.2		79.0		1.2	pts
Yield (cents) (d)		27.50		28.46		(3.3	)%
Passenger revenue per available seat mile (cents) (e)		22.05		22.47		(1.9	)%
Operating cost per available seat mile (cents) (f)		20.38		23.16		(12.0	)%
Passenger enplanements (thousands) (g)		54,435		51,766		5.2	%
Aircraft at end of period		587		566		3.7	%
Fuel consumption (gallons in millions)		712		688		3.6	%
Average aircraft fuel price including related taxes (dollars per gallon)		1.73		2.92		(40.9	)%
Full-time equivalent employees at end of period (k)		19,600		18,900		3.7	%
Total Mainline and Regional
Revenue passenger miles (millions) (a)		223,010		217,870		2.4	%
Available seat miles (millions) (b)		268,736		265,657		1.2	%
Cargo ton miles (millions) (l)		2,314		2,333		(0.8	)%
Passenger load factor (percent) (c)		83.0		82.0		1.0	pts
Yield (cents) (d)		15.92		17.04		(6.5	)%
Passenger revenue per available seat mile (cents) (e)		13.21		13.97		(5.4	)%
Total revenue per available seat mile (cents)		15.25		16.05		(5.0	)%
Cargo yield per ton mile (cents) (m)		32.84		37.50		(12.4	)%
Passenger enplanements (thousands) (g)		201,249		197,340		2.0	%
Aircraft at end of period		1,533		1,549		(1.0	)%
Fuel consumption (gallons in millions)		4,323		4,332		(0.2	)%
Average aircraft fuel price including related taxes (dollars per gallon)		1.72		2.91		(40.7	)%
Full-time equivalent employees at end of period		118,500		113,300		4.6	%


	Year Ended December 31,						Increase (Decrease)
	2015			2014			Increase (Decrease)
	(In millions)
Special items, net	$	—		$	33		$	(33	)
Amortization of debt issuance costs and debt discounts		42			39			3
Interest expense on debt and capital lease obligations		890			876			14

Total interest expense		932			948			(16	)
Less: capitalized interest		(52	)		(61	)		9

Total interest expense, net of capitalized interest	$	880		$	887		$	(7	)


	Year Ended December 31,				$ Change				$ Change due to Merger			Change Excluding Merger Impact							Year Ended December 31,						$ Change		$ Change due to Merger				Change Excluding Merger Impact
	2014		2013					$					%				2014			2013				$						%
	(In millions, except percentage changes)																		(In millions, except percentage changes)
Mainline passenger	$	30,802	$	20,218	$ Change		$	10,584	$ Change due to Merger		$	9,833			$	751			3.8		$	30,802		$	$ Change	20,218	$ Change due to Merger	$	10,584			$	9,833	$	751	3.8
Regional passenger		6,322		3,131		3,191				3,207			(16	)			(0.5	)		6,322			3,131			3,191		3,207				(16	)	(0.5	)
Cargo		875		685		190				149			41				6.1			875			685			190		149				41		6.1
Other		4,651		2,709		1,942				1,318			624				23.9			4,651			2,709			1,942		1,318				624		23.9

Total operating revenues	$	42,650	$	26,743	$	15,907			$	14,507		$	1,400				5.4		$	42,650		$	26,743		$	15,907	$	14,507			$	1,400		5.4


	2013
Labor-related deemed claim (1)	$	1,733
Aircraft and facility financing renegotiations and rejections (2), (3)		325
Fair value of conversion discount (4)		218
Professional fees		199
Other		180

Total reorganization items, net	$	2,655


	2013		2012
Pension and postretirement benefits	$	—	$	(66	)
Labor-related deemed claim (1)		1,733		—
Aircraft and facility financing renegotiations and rejections (2), (3)		325		1,950
Fair value of conversion discount (4)		218		—
Professional fees		199		229
Other		180		95

Total reorganization items, net	$	2,655	$	2,208


	2014 Credit Facilities	2013 Credit Facilities	2013 Citicorp Credit Facility

Frequency of Appraisals of Appraised Collateral	Annual	Semi-Annual	Once per Fiscal Year (1)

LTV Requirement	1.6x Collateral valuation to amount of debt outstanding (62.5% LTV)	1.6x Collateral valuation to amount of debt outstanding (62.5% LTV)	1.5x Collateral valuation to amount of debt outstanding (66.7% LTV)

LTV as of Last Measurement Date	21.9%	33.7%	61.8%

Collateral Description	Generally, certain route authorities, take-off and landing slots, and rights to airport facilities used by American to operate certain services between the U.S. and London Heathrow, Tokyo Narita, and China	Generally, certain route authorities, take-off and landing slots, and rights to airport facilities used by American to operate all services between the U.S. and South America	Generally, certain Slots (e.g., DCA and LaGuardia), accounts receivable, certain engines, certain spare parts and ground service equipment, certain simulators, certain leasehold real estate assets and cash


	Payments Due by Period														Payments Due by Period
	2015		2016		2017		2018		2019		2020 and Thereafter		Total		2016		2017		2018		2019		2020		2021 and Thereafter		Total
American
Debt and capital lease obligations (1), (3)	$	1,230	$	698	$	942	$	844	$	2,744	$	4,791	$	11,249	$	2,266	$	1,598	$	1,634	$	2,628	$	3,081	$	7,820	$	19,027
Interest obligations (2), (3)		525		478		486		497		374		1,094		3,454		796		742		698		601		472		1,314		4,623
Commitments for aircraft and engine purchases (4)		4,586		4,856		4,165		3,241		2,654		5,651		25,153		4,505		4,591		2,916		3,156		2,793		4,537		22,498
Operating lease commitments (5)		1,391		1,293		1,240		1,141		1,069		4,939		11,073		2,187		2,069		1,824		1,642		1,493		4,704		13,919
Regional capacity purchase agreements (6)		502		592		463		446		430		2,242		4,675		1,672		1,553		1,249		1,075		881		2,393		8,823
Minimum pension obligations (7)		—		—		—		—		853		3,606		4,459		—		—		164		1,205		902		4,199		6,470
Retiree medical and other purchase obligations		461		260		215		192		166		374		1,668
Retiree medical and other purchase obligations (7)																435		241		206		178		90		355		1,505

Total American Contractual Obligations	$	8,695	$	8,177	$	7,511	$	6,361	$	8,290	$	22,697	$	61,731	$	11,861	$	10,794	$	8,691	$	10,485	$	9,712	$	25,322	$	76,865

AAG Parent, US Airways Group and Other AAG Subsidiaries
Debt and capital lease obligations (1), (3)	$	478	$	964	$	396	$	1,035	$	2,156	$	1,685	$	6,714
Interest obligations (2), (3)		321		303		275		239		168		270		1,576
Commitments for aircraft and engine purchases (4)		524		122		772		1,050		588		—		3,056
Operating lease commitments (5)		719		624		569		417		330		782		3,441
Regional capacity purchase agreements (6)		1,082		1,024		1,016		751		636		860		5,369
Retiree medical and other purchase obligations		9		9		9		9		7		35		78
AAG Parent and Other AAG Subsidiaries
Debt and capital lease obligations (1)															$	—	$	—	$	500	$	750	$	506	$	24	$	1,780
Interest obligations (2)																97		97		82		67		14		9		366
Operating lease commitments																11		9		5		1		—		—		26

Total AAG Contractual Obligations	$	11,828	$	11,223	$	10,548	$	9,862	$	12,175	$	26,329	$	81,965	$	11,969	$	10,900	$	9,278	$	11,303	$	10,232	$	25,355	$	79,037


	Expected Maturity Date																				Expected Maturity Date
	2015			2016			2017			2018			2019			Thereafter			Total		2016			2017			2018			2019			2020			2021 and Thereafter			Total
Fixed-rate debt	$	1,281		$	745		$	1,005		$	1,539		$	1,838		$	5,100		$	11,508	$	1,200		$	1,121		$	1,651		$	1,946		$	1,360		$	5,698		$	12,976
Weighted avg. interest rate		5.6	%		5.6	%		5.6	%		5.6	%		5.6	%		6.0	%				5.0	%		5.1	%		5.0	%		4.9	%		4.9	%		5.7	%
Variable-rate debt	$	427		$	917		$	333		$	340		$	3,062		$	1,376		$	6,455	$	1,066		$	477		$	483		$	1,432		$	2,227		$	2,146		$	7,831
Weighted avg. interest rate		3.3	%		3.3	%		3.4	%		3.4	%		3.4	%		3.2	%				3.0	%		3.0	%		3.0	%		2.9	%		2.8	%		1.0	%


	Common Stock			Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total
Balance at December 31, 2011	$	254		$	4,552		$	(367	)	$	(3,964	)	$	(7,586	)	$	(7,111	)
Net loss		—			—			—			—			(1,876	)		(1,876	)
Change in unrealized gain on investments		—			—			—			3			—			3
Changes in pension, retiree medical and other liability		—			—			—			1,565			—			1,565
Net changes in fair value of derivative financial instruments		—			—			—			(15	)		—			(15	)
Non-cash tax provision		—			—			—			(569	)		—			(569	)
Share-based compensation expense		—			16			—			—			—			16
																			Common Stock			Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total
Balance at December 31, 2012		254			4,568			(367	)		(2,980	)		(9,462	)		(7,987	)		254			4,568			(367	)		(2,980	)		(9,462	)		(7,987	)
Net loss		—			—			—			—			(1,834	)		(1,834	)		—			—			—			—			(1,834	)		(1,834	)
Change in unrealized loss on investments		—			—			—			(1	)		—			(1	)
Changes in pension, retiree medical and other liability		—			—			—			1,435			—			1,435			—			—			—			1,435			—			1,435
Net changes in fair value of derivative financial instruments		—			—			—			52			—			52			—			—			—			52			—			52
Non-cash tax provision		—			—			—			(538	)		—			(538	)
Reversal of non-cash tax benefit																				—			—			—			(538	)		—			(538	)
Issuance of 6,249,185 shares to employees pursuant to stock option and deferred stock incentive plans		6			2			—			—			—			8			6			2			—			—			—			8
Issuance of 37,208,354 shares in exchange for redemption of AMR Corporation debt		37			484			—			—			—			521			37			484			—			—			—			521
Cancellation of pre-reorganization common stock		(297	)		(70	)		367			—			—			—			(297	)		(70	)		367			—			—			—
Issuance of 319,412,943 shares of post-reorganization common stock		3			592			—			—			—			595			3			592			—			—			—			595
Issuance of 197,363,088 shares in exchange for US Airways Group common stock		2			4,590			—			—			—			4,592			2			4,590			—			—			—			4,592
Equity component of US Airways Group convertible debt assumed in Merger		—			88			—			—			—			88			—			88			—			—			—			88
Issuance of 9,993,882 shares for Optional Conversion of Preferred Shares		—			269			—			—			—			269			—			269			—			—			—			269
Share-based compensation expense		—			69			—			—			—			69			—			69			—			—			—			69
Issuance of 35,609 shares to employees pursuant to stock option and deferred stock incentive plans		—			—			—			—			—			—			—			—			—			—			—			—
Change in unrealized loss on investments																				—			—			—			(1	)		—			(1	)

Balance at December 31, 2013		5			10,592			—			(2,032	)		(11,296	)		(2,731	)		5			10,592			—			(2,032	)		(11,296	)		(2,731	)
Net income		—			—			—			—			2,882			2,882			—			—			—			—			2,882			2,882
Change in unrealized loss on investments		—			—			—			(3	)		—			(3	)
Changes in pension, retiree medical and other liability		—			—			—			(2,796	)		—			(2,796	)		—			—			—			(2,796	)		—			(2,796	)
Net changes in fair value of derivative financial instruments		—			—			—			(58	)		—			(58	)		—			—			—			(58	)		—			(58	)
Non-cash tax benefit		—			—			—			330			—			330
Reversal of non-cash tax benefit																				—			—			—			330			—			330
Cash tax withholding on shares issued		—			(110	)		—			—			—			(110	)		—			(110	)		—			—			—			(110	)
Purchase and retirement of 23,406,472 of AAG Common Stock		—			(1,000	)		—			—			—			(1,000	)		—			(1,000	)		—			—			—			(1,000	)
Dividends declared on common stock ($0.20 per share)		—			—			—			—			(148	)		(148	)		—			—			—			—			(148	)		(148	)
US Airways Group convertible debt settled with cash		—			(154	)		—			—			—			(154	)		—			(154	)		—			—			—			(154	)
Issuance of 5,701,776 shares of common stock pursuant to employee stock plans		—			10			—			—			—			10			—			10			—			—			—			10
Issuance of 57,393,096 shares of post-reorganization common stock		1			1,604			—			—			—			1,605			1			1,604			—			—			—			1,605
Issuance of 130,980,613 shares for Optional Conversion of Preferred Shares		1			3,889			—			—			—			3,890			1			3,889			—			—			—			3,890
Share-based compensation expense		—			304			—			—			—			304			—			304			—			—			—			304
Change in unrealized loss on investments																				—			—			—			(3	)		—			(3	)

Balance at December 31, 2014	$	7		$	15,135		$	—		$	(4,559	)	$	(8,562	)	$	2,021			7			15,135			—			(4,559	)		(8,562	)		2,021
Net income																				—			—			—			—			7,610			7,610
Changes in pension, retiree medical and other liability																				—			—			—			(159	)		—			(159	)
Net changes in fair value of derivative financial instruments																				—			—			—			(9	)		—			(9	)
Cash tax withholding on shares issued																				—			(306	)		—			—			—			(306	)
Purchase and retirement of 85,141,691 shares of AAG Common Stock																				(1	)		(3,585	)		—			—			—			(3,586	)
Dividends declared on common stock ($0.40 per share)																				—			—			—			—			(278	)		(278	)
Issuance of 12,289,537 shares of common stock pursuant to employee stock plans																				—			—			—			—			—			—
Settlement of Single-dip unsecured claims held in distributed claims reserve																				—			63			—			—			—			63
Share-based compensation expense																				—			284			—			—			—			284
Change in unrealized loss on investments																				—			—			—			(5	)		—			(5	)

Balance at December 31, 2015																			$	6		$	11,591		$	—		$	(4,732	)	$	(1,230	)	$	5,635


	(In millions except per share data)
Outstanding shares of US Airways Group Common Stock at December 9, 2013 exchanged		197.4
Exchange ratio		1.0

Assumed shares of AAG Common Stock		197.4
Price per share	$	22.55

Fair value of AAG Common Stock issued	$	4,451
Fair value of AAG equity awards issued in exchange for outstanding US Airways Group equity awards	$	141

Total purchase price	$	4,592


	(In millions)
Cash	$	206
Short-term investments		3,517
Other current assets		1,459
Operating property and equipment		5,536
Goodwill		4,091
Identifiable intangibles		1,501
Other noncurrent assets		123
Long-term debt and capital leases, including current portion		(6,026	)
Air traffic liability		(1,417	)
Loyalty program liability		(1,256	)
Other liabilities assumed		(3,142	)

Total purchase price	$	4,592


Principal Depreciable Asset Classification		Depreciable Life
Jet aircraft and engines		16 - 30 years
Other regional aircraft and engines		25 years
Major rotable parts, avionics and assemblies		Fleet end date
Improvements to leased flight equipment		Lesser of asset/leasehold improvement or lease end date
Buildings and improvements		Lesser of 5 - 30 years or lease term
Furniture, fixtures and other equipment		3 - 10 years: ranges from computer hardware to furniture
Capitalized software		Lesser of 5 years or lease term


2013 Revolving Facility	$	1,400
2014 Revolving Facility		1,025

Total	$	2,425