Exhibit 99.3
Unaudited Pro Forma Condensed Combined Financial Statements
In order to simplify American Airlines Group Inc.’s (“AAG”) internal corporate structure and as part of the integration efforts following the business combination of AAG and US Airways Group, Inc. (“US Airways Group”) on December 9, 2013, AAG caused US Airways Group to be merged with and into AAG on December 30, 2015 (the “Effective Date”) with AAG continuing as the surviving corporation (the “US Airways Group Merger”), and immediately following the US Airways Group Merger, US Airways, Inc. (“US Airways”) merged with and into American Airlines, Inc. (“American”), each a direct or indirect wholly-owned subsidiary of AAG, pursuant to the terms of an Agreement and Plan of Merger (the “Merger Agreement”) entered into on December 28, 2015 by and between American and US Airways, with American continuing as the surviving corporation and a wholly-owned subsidiary of AAG (the “US Airways Merger”).
The US Airways Merger described above constitutes 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 on 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 as a result of the contribution of shares.
The Unaudited Pro Forma Condensed Combined Balance Sheet combines the historical consolidated balance sheets of American and US Airways, giving effect to the US Airways Merger as if it had been consummated on September 30, 2015, and the Unaudited Pro Forma Condensed Combined Statements of Operations for the nine months ended September 30, 2015 and the years ended December 31, 2014 and 2013 combines the historical consolidated statements of operations of American and US Airways, giving effect to the US Airways Merger as if it had been consummated on December 9, 2013, the date at which American and US Airways became under common control.
These unaudited pro forma condensed combined financial statements have been developed from and should be read in conjunction with US Airways’ unaudited financial statements as of and for the nine months ended September 30, 2015 and US Airways’ audited financial statements for the year ended December 31, 2014 and for the period from December 9, 2013 through December 31, 2013, which are included in Exhibit 99.2 and 99.1, respectively, of this Current Report on Form 8-K/A. The unaudited pro forma condensed combined financial statements are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or the consolidated financial position of American would have been had the US Airways Merger occurred on the dates assumed, nor are they indicative of future consolidated results of operations or consolidated financial position.
1
Unaudited Pro Forma Condensed Combined Balance Sheet
September 30, 2015
| American | US Airways | Pro Forma Adjustments | Condensed Combined Pro Forma | |||||||||||||
| Note 2 | ||||||||||||||||
| (in millions) | ||||||||||||||||
Assets | ||||||||||||||||
Current assets | ||||||||||||||||
Cash | $ | 806 | $ | 181 | $ | — | $ | 987 | ||||||||
Short-term investments | 5,405 | 2,449 | — | 7,854 | ||||||||||||
Restricted cash and short-term investments | 657 | 53 | — | 710 | ||||||||||||
Accounts receivable, net | 1,490 | 336 | — | 1,826 | ||||||||||||
Receivables from related parties, net | — | 1,024 | (230 | ) (a) | 794 | |||||||||||
Aircraft fuel, spare parts and supplies, net | 632 | 320 | — | 952 | ||||||||||||
Prepaid expenses and other | 795 | 367 | 56 | (b) | 1,218 | |||||||||||
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Total current assets | 9,785 | 4,730 | (174 | ) | 14,341 | |||||||||||
Operating property and equipment | 19,200 | 6,813 | — | 26,013 | ||||||||||||
Other assets | ||||||||||||||||
Goodwill | — | 4,090 | — | 4,090 | ||||||||||||
Intangibles | 871 | 1,390 | — | 2,261 | ||||||||||||
Other assets | 1,826 | 489 | — | 2,315 | ||||||||||||
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Total other assets | 2,697 | 5,969 | — | 8,666 | ||||||||||||
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Total assets | $ | 31,682 | $ | 17,512 | $ | (174 | ) | $ | 49,020 | |||||||
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Liabilities and stockholder’s equity (deficit) | ||||||||||||||||
Current liabilities | ||||||||||||||||
Current maturities of long-term debt and capital leases | $ | 1,212 | $ | 500 | $ | — | $ | 1,712 | ||||||||
Accounts payable | 1,269 | 213 | — | 1,482 | ||||||||||||
Payables to related parties, net | 565 | — | (230 | ) (a) | 335 | |||||||||||
Air traffic liability | 4,373 | 438 | — | 4,811 | ||||||||||||
Frequent flyer liability | 2,649 | — | — | 2,649 | ||||||||||||
Other accrued liabilities | 2,043 | 1,114 | — | 3,157 | ||||||||||||
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Total current liabilities | 12,111 | 2,265 | (230 | ) | 14,146 | |||||||||||
Noncurrent liabilities | ||||||||||||||||
Long-term debt and capital leases, net of current maturities | 12,040 | 5,062 | — | 17,102 | ||||||||||||
Pension and postretirement benefits | 7,270 | 123 | — | 7,393 | ||||||||||||
Bankruptcy settlement obligations | 177 | — | — | 177 | ||||||||||||
Other liabilities | 2,927 | 2,057 | (741 | ) (b) | 4,243 | |||||||||||
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| 22,414 | 7,242 | (741 | ) | 28,915 | ||||||||||||
Stockholder’s equity (deficit) | ||||||||||||||||
Common stock | — | — | — | — | ||||||||||||
Additional paid-in capital | 10,833 | 5,618 | — | 16,451 | ||||||||||||
Accumulated other comprehensive loss | (4,734 | ) | (12 | ) | (3 | ) (b) | (4,749 | ) | ||||||||
Retained earnings (deficit) | (8,942 | ) | 2,399 | 800 | (b) | (5,743 | ) | |||||||||
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Total stockholder’s equity (deficit) | (2,843 | ) | 8,005 | 797 | 5,959 | |||||||||||
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Total liabilities and stockholder’s equity(deficit) | $ | 31,682 | $ | 17,512 | $ | (174 | ) | $ | 49,020 | |||||||
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2
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Nine Months Ended September 30, 2015
| American | US Airways | Pro Forma Adjustments | Condensed Combined Pro Forma | |||||||||||||
| Note 2 | ||||||||||||||||
| (in millions) | ||||||||||||||||
Operating revenues | ||||||||||||||||
Mainline | $ | 14,565 | $ | 7,733 | $ | — | $ | 22,298 | ||||||||
Regional | 2,399 | 2,511 | — | 4,910 | ||||||||||||
Cargo | 472 | 96 | — | 568 | ||||||||||||
Other | 2,533 | 1,114 | — | 3,647 | ||||||||||||
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Total operating revenues | 19,969 | 11,454 | — | 31,423 | ||||||||||||
Operating expenses | ||||||||||||||||
Aircraft fuel and related taxes | 3,332 | 1,580 | — | 4,912 | ||||||||||||
Salaries, wages and benefits | 4,684 | 2,450 | — | 7,134 | ||||||||||||
Regional expenses | 2,318 | 2,296 | — | 4,614 | ||||||||||||
Maintenance, materials and repairs | 868 | 584 | — | 1,452 | ||||||||||||
Other rent and landing fees | 825 | 465 | — | 1,290 | ||||||||||||
Aircraft rent | 676 | 265 | — | 941 | ||||||||||||
Selling expenses | 688 | 363 | — | 1,051 | ||||||||||||
Depreciation and amortization | 728 | 285 | — | 1,013 | ||||||||||||
Special items, net | 350 | 260 | — | 610 | ||||||||||||
Other | 2,323 | 958 | — | 3,281 | ||||||||||||
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Total operating expenses | 16,792 | 9,506 | — | 26,298 | ||||||||||||
Operating income | 3,177 | 1,948 | — | 5,125 | ||||||||||||
Nonoperating income (expense) | ||||||||||||||||
Interest income | 26 | 10 | — | 36 | ||||||||||||
Interest expense, net | (396 | ) | (191 | ) | — | (587 | ) | |||||||||
Other, net | (162 | ) | (4 | ) | — | (166 | ) | |||||||||
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Total nonoperating expense, net | (532 | ) | (185 | ) | — | (717 | ) | |||||||||
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Income before income taxes | 2,645 | 1,763 | — | 4,408 | ||||||||||||
Income tax provision | 28 | 656 | (644 | ) (b) | 40 | |||||||||||
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Net income | $ | 2,617 | $ | 1,107 | $ | 644 | $ | 4,368 | ||||||||
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3
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2014
| American | US Airways | Pro Forma Adjustments | Condensed Combined Pro Forma | |||||||||||||
| Note 2 | ||||||||||||||||
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Operating revenues | ||||||||||||||||
Mainline | $ | 20,345 | $ | 10,457 | $ | — | $ | 30,802 | ||||||||
Regional | 2,911 | 3,411 | — | 6,322 | ||||||||||||
Cargo | 717 | 158 | — | 875 | ||||||||||||
Other | 3,168 | 1,600 | (4 | ) (c) | 4,764 | |||||||||||
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Total operating revenues | 27,141 | 15,626 | (4 | ) | 42,763 | |||||||||||
Operating expenses | ||||||||||||||||
Aircraft fuel and related taxes | 7,190 | 3,401 | — | 10,591 | ||||||||||||
Salaries, wages and benefits | 5,662 | 2,837 | — | 8,499 | ||||||||||||
Regional expenses | 3,113 | 3,452 | — | 6,565 | ||||||||||||
Maintenance, materials and repairs | 1,334 | 717 | — | 2,051 | ||||||||||||
Other rent and landing fees | 1,145 | 582 | — | 1,727 | ||||||||||||
Aircraft rent | 860 | 394 | (4 | ) (c) | 1,250 | |||||||||||
Selling expenses | 1,091 | 453 | — | 1,544 | ||||||||||||
Depreciation and amortization | 896 | 405 | — | 1,301 | ||||||||||||
Special items, net | 507 | 276 | — | 783 | ||||||||||||
Other | 3,005 | 1,181 | — | 4,186 | ||||||||||||
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Total operating expenses | 24,803 | 13,698 | (4 | ) | 38,497 | |||||||||||
Operating income | 2,338 | 1,928 | — | 4,266 | ||||||||||||
Nonoperating income (expense) | ||||||||||||||||
Interest income | 25 | 7 | — | 32 | ||||||||||||
Interest expense, net | (581 | ) | (266 | ) | — | (847 | ) | |||||||||
Other, net | (153 | ) | (30 | ) | — | (183 | ) | |||||||||
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Total nonoperating expense, net | (709 | ) | (289 | ) | — | (998 | ) | |||||||||
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Income before income taxes | 1,629 | 1,639 | — | 3,268 | ||||||||||||
Income tax provision | 319 | 157 | (156 | ) (b) | 320 | |||||||||||
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Net income | $ | 1,310 | $ | 1,482 | $ | 156 | $ | 2,948 | ||||||||
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4
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2013
| American | US Airways | Pro Forma Adjustments | Condensed Combined Pro Forma | |||||||||||||
| Note 1 | Note 2 | |||||||||||||||
| (in millions) | ||||||||||||||||
Operating revenues | ||||||||||||||||
Mainline | $ | 19,594 | $ | 625 | $ | — | $ | 20,219 | ||||||||
Regional | 2,927 | 203 | — | 3,130 | ||||||||||||
Cargo | 676 | 9 | — | 685 | ||||||||||||
Other | 2,563 | 104 | — | 2,667 | ||||||||||||
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Total operating revenues | 25,760 | 941 | — | 26,701 | ||||||||||||
Operating expenses | ||||||||||||||||
Aircraft fuel and related taxes | 7,628 | 211 | — | 7,839 | ||||||||||||
Salaries, wages and benefits | 5,267 | 185 | — | 5,452 | ||||||||||||
Regional expenses | 3,074 | 219 | — | 3,293 | ||||||||||||
Maintenance, materials and repairs | 1,222 | 38 | — | 1,260 | ||||||||||||
Other rent and landing fees | 1,117 | 35 | — | 1,152 | ||||||||||||
Aircraft rent | 743 | 25 | — | 768 | ||||||||||||
Selling expenses | 1,128 | 30 | — | 1,158 | ||||||||||||
Depreciation and amortization | 830 | 23 | — | 853 | ||||||||||||
Special items, net | 282 | 277 | — | 559 | ||||||||||||
Other | 2,935 | 72 | — | 3,007 | ||||||||||||
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Total operating expenses | 24,226 | 1,115 | — | 25,341 | ||||||||||||
Operating income (loss) | 1,534 | (174 | ) | — | 1,360 | |||||||||||
Nonoperating income (expense) | ||||||||||||||||
Interest income | 20 | — | — | 20 | ||||||||||||
Interest expense, net | (710 | ) | (17 | ) | — | (727 | ) | |||||||||
Other, net | (84 | ) | — | — | (84 | ) | ||||||||||
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Total nonoperating expense, net | (774 | ) | (17 | ) | — | (791 | ) | |||||||||
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Income (loss) before reorganization items, net | 760 | (191 | ) | — | 569 | |||||||||||
Reorganization items, net | (2,640 | ) | — | — | (2,640 | ) | ||||||||||
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Loss before income taxes | (1,880 | ) | (191 | ) | — | (2,071 | ) | |||||||||
Income tax benefit | (354 | ) | — | — | (354 | ) | ||||||||||
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Net loss | $ | (1,526 | ) | $ | (191 | ) | $ | — | $ | (1,717 | ) | |||||
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5
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
Note 1. Basis of Presentation
The US Airways Merger constitutes a transfer of assets between entities under common control and will be accounted for in a manner similar to the pooling of interests method of accounting. Under this method, the carrying amount of net assets recognized on 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 as a result of the contribution of shares.
The accompanying unaudited pro forma condensed combined financial statements present the pro forma consolidated financial position and results of operations of American based upon the historical financial statements of American and US Airways, after giving effect to the US Airways Merger, and adjustments described in these notes, and are intended to reflect the impact of the US Airways Merger on American’s historical consolidated financial statements.
The Unaudited Pro Forma Condensed Combined Balance Sheet gives effect to the US Airways Merger as if it had been consummated on September 30, 2015. The Unaudited Pro Forma Condensed Combined Statements of Operations give effect to the US Airways Merger as if it had been consummated on December 9, 2013, the date at which American and US Airways became under common control. Therefore, the 2013 Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2013 includes the amounts for US Airways only for the 23 days ended December 31, 2013.
Note 2. Pro Forma Adjustments
The unaudited pro forma condensed combined financial statements reflect the following:
| (a) | Intercompany receivables and payables. The elimination of $230 million of receivables and payables between American and US Airways associated with allocations of revenue in connection with redemptions by AAdvantage members on US Airways operated flights as well as certain marketing services and allocations of expenses for certain services shared with US Airways, including selling expenses, airport operating expenses, information technology expenses and corporate management and support functions. |
| (b) | Income taxes. On a combined basis American is in a net deferred tax asset position. This adjustment reverses US Airways’ non-cash provision for income taxes for the nine months ended September 30, 2015 and year ended December 31, 2014 in order to reflect the utilization of net operating losses. As a result, it reduces the combined net deferred tax asset and in turn results in the release of a portion of the valuation allowance, which offsets the tax provision dollar for dollar. The adjustment also reflects the appropriate classification of the current deferred tax assets and noncurrent deferred tax liabilities on a combined basis. |
| (c) | Intercompany revenue and expense. The elimination of $4 million of revenue and expense between American and US Airways associated with the rental of aircraft for the year ended December 31, 2014. |
6
