Financial Information for Subsidiary Guarantors and Non-guarantor Subsidiaries | 14. 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 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 condensed consolidating financial information for the periods after Merger close for American Airlines Group (Parent Company Only), American, US Airways Group Parent, US Airways and all other non-guarantor subsidiaries, together with the consolidating adjustments necessary to present the Company’s results on a consolidated basis. AMERICAN AIRLINES GROUP INC. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (In millions)(Unaudited) Three Months Ended June 30, 2015 American Airlines Group (Parent Company Only) American US Airways Group (Parent Company Only) US Airways Non- Subsidiaries Eliminations and Reclassifications American Airlines Group Inc. Consolidated Operating revenues: Mainline passenger $ — $ 4,947 $ — $ 2,708 $ — $ — $ 7,655 Regional passenger — 843 — 916 — — 1,759 Cargo — 161 — 33 — — 194 Other — 868 — 373 761 (783 ) 1,219 Total operating revenues — 6,819 — 4,030 761 (783 ) 10,827 Operating expenses: Aircraft fuel and related taxes — 1,197 — 577 — — 1,774 Salaries, wages and benefits — 1,536 — 825 198 (195 ) 2,364 Regional expenses — 788 — 792 — (23 ) 1,557 Maintenance, materials and repairs — 302 — 200 87 (87 ) 502 Other rent and landing fees — 269 — 182 11 (11 ) 451 Aircraft rent — 226 — 90 37 (37 ) 316 Selling expenses — 198 — 152 — — 350 Depreciation and amortization — 247 — 93 11 (11 ) 340 Special items, net — 74 — 70 — — 144 Other — 776 — 334 418 (420 ) 1,108 Total operating expenses — 5,613 — 3,315 762 (784 ) 8,906 Operating income (loss) — 1,206 — 715 (1 ) 1 1,921 Nonoperating income (expense): Interest income — 10 — 3 3 (6 ) 10 Interest expense, net (17 ) (137 ) (9 ) (63 ) (3 ) 6 (223 ) Equity in earnings of subsidiaries 1,705 — 413 — — (2,118 ) — Other, net 22 (16 ) — 5 — — 11 Total nonoperating income (expense), net 1,710 (143 ) 404 (55 ) — (2,118 ) (202 ) Income (loss) before income taxes 1,710 1,063 404 660 (1 ) (2,117 ) 1,719 Income tax provision — 11 — 247 5 (248 ) 15 Net income (loss) $ 1,710 $ 1,052 $ 404 $ 413 $ (6 ) $ (1,869 ) $ 1,704 AMERICAN AIRLINES GROUP INC. CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) (In millions)(Unaudited) Three Months Ended June 30, 2015 American Airlines Group Only) American US Airways (Parent Only) US Airways Non- Subsidiaries Eliminations Reclassifications American Group Inc. Consolidated Net income (loss) $ 1,710 $ 1,052 $ 404 $ 413 $ (6 ) $ (1,869 ) $ 1,704 Other comprehensive income (loss) before tax: Defined benefit pension plans and retiree medical — (25 ) — (1 ) — — (26 ) Derivative financial instruments: Change in fair value — — — — — — — Reclassification into earnings — (3 ) — — — — (3 ) Unrealized loss on investments: Net change in value — (1 ) — — — — (1 ) Other comprehensive loss before tax — (29 ) — (1 ) — — (30 ) Non-cash tax provision — — — — — — — Comprehensive income (loss) $ 1,710 $ 1,023 $ 404 $ 412 $ (6 ) $ (1,869 ) $ 1,674 AMERICAN AIRLINES GROUP INC. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (In millions)(Unaudited) Six Months Ended June 30, 2015 American Only) American US Only) US Airways Non- Guarantor Subsidiaries Eliminations Reclassifications American Group Inc. Consolidated Operating revenues: Mainline passenger $ — $ 9,638 $ — $ 5,006 $ — $ — $ 14,644 Regional passenger — 1,542 — 1,669 — — 3,211 Cargo — 322 — 66 — — 388 Other — 1,686 — 762 1,486 (1,523 ) 2,411 Total operating revenues — 13,188 — 7,503 1,486 (1,523 ) 20,654 Operating expenses: Aircraft fuel and related taxes — 2,267 — 1,051 — — 3,318 Salaries, wages and benefits — 3,121 — 1,611 391 (386 ) 4,737 Regional expenses — 1,516 — 1,558 — (55 ) 3,019 Maintenance, materials and repairs — 606 — 389 161 (161 ) 995 Other rent and landing fees — 539 — 320 20 (20 ) 859 Aircraft rent — 451 — 182 68 (68 ) 633 Selling expenses — 433 — 253 — — 686 Depreciation and amortization — 483 — 193 22 (22 ) 676 Special items, net — 272 — 175 4 (4 ) 447 Other 2 1,534 — 614 804 (807 ) 2,147 Total operating expenses 2 11,222 — 6,346 1,470 (1,523 ) 17,517 Operating income (loss) (2 ) 1,966 — 1,157 16 — 3,137 Nonoperating income (expense): Interest income 2 16 — 7 3 (9 ) 19 Interest expense, net (30 ) (263 ) (18 ) (127 ) (3 ) 9 (432 ) Equity in earnings of subsidiaries 2,649 — 663 — — (3,312 ) — Other, net 22 (80 ) — (5 ) 1 — (62 ) Total nonoperating income (expense), net 2,643 (327 ) 645 (125 ) 1 (3,312 ) (475 ) Income before income taxes 2,641 1,639 645 1,032 17 (3,312 ) 2,662 Income tax provision — 19 — 378 8 (379 ) 26 Net income $ 2,641 $ 1,620 $ 645 $ 654 $ 9 $ (2,933 ) $ 2,636 AMERICAN AIRLINES GROUP INC. CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (In millions)(Unaudited) Six Months Ended June 30, 2015 American Only) American US Airways (Parent Only) US Airways Non- Guarantor Subsidiaries Eliminations and Reclassifications American Group Inc. Consolidated Net income $ 2,641 $ 1,620 $ 645 $ 654 $ 9 $ (2,933 ) $ 2,636 Other comprehensive income (loss) before tax: Defined benefit pension plans and retiree medical — (51 ) — (1 ) — — (52 ) Derivative financial instruments: Change in fair value — — — — — — — Reclassification into earnings — (9 ) — — — — (9 ) Unrealized gain on investments: Net change in value — — — — — — — Other comprehensive loss before tax — (60 ) — (1 ) — — (61 ) Non-cash tax provision — — — — — — — Comprehensive income $ 2,641 $ 1,560 $ 645 $ 653 $ 9 $ (2,933 ) $ 2,575 AMERICAN AIRLINES GROUP INC. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (In millions)(Unaudited) Three Months Ended June 30, 2014 American Only) American US Airways (Parent Only) US Airways Non- Guarantor Subsidiaries Eliminations and Reclassifications American Group Inc. Consolidated Operating revenues: Mainline passenger $ — $ 5,352 $ — $ 2,861 $ — $ — $ 8,213 Regional passenger — 786 — 921 — — 1,707 Cargo — 178 — 43 — — 221 Other — 837 — 408 744 (775 ) 1,214 Total operating revenues — 7,153 — 4,233 744 (775 ) 11,355 Operating expenses: Aircraft fuel and related taxes — 1,897 — 933 — — 2,830 Salaries, wages and benefits — 1,441 — 720 195 (193 ) 2,163 Regional expenses — 804 — 867 — (14 ) 1,657 Maintenance, materials and repairs — 346 — 168 80 (80 ) 514 Other rent and landing fees — 289 — 152 7 (7 ) 441 Aircraft rent — 214 — 102 22 (26 ) 312 Selling expenses — 282 — 120 — — 402 Depreciation and amortization — 220 — 100 10 (11 ) 319 Special items, net (2 ) 179 — 74 — — 251 Other 2 763 — 319 427 (444 ) 1,067 Total operating expenses — 6,435 — 3,555 741 (775 ) 9,956 Operating income — 718 — 678 3 — 1,399 Nonoperating income (expense): Interest income 2 6 1 3 — (4 ) 8 Interest expense, net — (139 ) (10 ) (69 ) — 4 (214 ) Equity in earnings of subsidiaries 863 — 595 — — (1,458 ) — Other, net — 16 3 (6 ) 1 (3 ) 11 Total nonoperating income (expense), net 865 (117 ) 589 (72 ) 1 (1,461 ) (195 ) Income before income taxes 865 601 589 606 4 (1,461 ) 1,204 Income tax provision (benefit) (3 ) 336 — 1 6 — 340 Net income (loss) $ 868 $ 265 $ 589 $ 605 $ (2 ) $ (1,461 ) $ 864 AMERICAN AIRLINES GROUP INC. CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) (In millions)(Unaudited) Three Months Ended June 30, 2014 American Only) American US Airways (Parent Only) US Airways Non- Guarantor Subsidiaries Eliminations and Reclassifications American Group Inc. Consolidated Net income (loss) $ 868 $ 265 $ 589 $ 605 $ (2 ) $ (1,461 ) $ 864 Other comprehensive income (loss) before tax: Defined benefit pension plans and retiree medical — (58 ) — (1 ) — — (59 ) Derivative financial instruments: Change in fair value (2 ) 15 — — — — 13 Reclassification into earnings — 5 — — — — 5 Unrealized gain (loss) on investments: Net change in value 2 (2 ) — — — — — Other comprehensive loss before tax — (40 ) — (1 ) — — (41 ) Reversal of non-cash tax provision 2 328 — — — — 330 Comprehensive income (loss) $ 870 $ 553 $ 589 $ 604 $ (2 ) $ (1,461 ) $ 1,153 AMERICAN AIRLINES GROUP INC. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (In millions)(Unaudited) Six Months Ended June 30, 2014 American Only) American US Airways (Parent Only) US Airways Non- Guarantor Subsidiaries Eliminations and Reclassifications American Group Inc. Consolidated Operating revenues: Mainline passenger $ — $ 10,258 $ — $ 5,213 $ — $ — $ 15,471 Regional passenger — 1,455 — 1,659 — — 3,114 Cargo — 346 — 82 — — 428 Other — 1,563 — 826 1,488 (1,539 ) 2,338 Total operating revenues — 13,622 — 7,780 1,488 (1,539 ) 21,351 Operating expenses: Aircraft fuel and related taxes — 3,768 — 1,773 — — 5,541 Salaries, wages and benefits — 2,839 — 1,439 392 (388 ) 4,282 Regional expenses — 1,562 — 1,696 — (7 ) 3,251 Maintenance, materials and repairs — 678 — 321 165 (165 ) 999 Other rent and landing fees — 574 — 292 15 (15 ) 866 Aircraft rent — 430 — 205 43 (47 ) 631 Selling expenses — 566 — 238 — — 804 Depreciation and amortization — 434 — 195 20 (23 ) 626 Special items, net 22 (37 ) — 129 3 (3 ) 114 Other 4 1,512 — 626 857 (891 ) 2,108 Total operating expenses 26 12,326 — 6,914 1,495 (1,539 ) 19,222 Operating income (loss) (26 ) 1,296 — 866 (7 ) — 2,129 Nonoperating income (expense): Interest income 4 13 1 4 1 (8 ) 15 Interest expense, net (4 ) (307 ) (20 ) (134 ) — 8 (457 ) Equity in earnings of subsidiaries 1,314 — 712 — — (2,026 ) — Other, net — 11 (53 ) (3 ) 1 53 9 Total nonoperating income (expense), net 1,314 (283 ) 640 (133 ) 2 (1,973 ) (433 ) Income (loss) before income taxes 1,288 1,013 640 733 (5 ) (1,973 ) 1,696 Income tax provision (benefit) (2 ) 347 — 2 6 — 353 Net income (loss) $ 1,290 $ 666 $ 640 $ 731 $ (11 ) $ (1,973 ) $ 1,343 AMERICAN AIRLINES GROUP INC. CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) (In millions)(Unaudited) Six Months Ended June 30, 2014 American Only) American US Airways (Parent Only) US Airways Non- Guarantor Subsidiaries Eliminations and Reclassifications American Group Inc. Consolidated Net income (loss) $ 1,290 $ 666 $ 640 $ 731 $ (11 ) $ (1,973 ) $ 1,343 Other comprehensive income (loss) before tax: Defined benefit pension plans and retiree medical — (102 ) — (2 ) — — (104 ) Derivative financial instruments: Change in fair value (2 ) (52 ) — — — — (54 ) Reclassification into earnings — 12 — — — — 12 Unrealized gain on investments: Net change in value 2 — — — — — 2 Other comprehensive loss before tax — (142 ) — (2 ) — — (144 ) Reversal of non-cash tax provision 2 328 — — — — 330 Comprehensive income (loss) $ 1,292 $ 852 $ 640 $ 729 $ (11 ) $ (1,973 ) $ 1,529 AMERICAN AIRLINES GROUP INC. CONDENSED CONSOLIDATING BALANCE SHEET (In millions)(Unaudited) June 30, 2015 American Only) American US Airways (Parent Only) US Airways Non- Guarantor Subsidiaries Eliminations and Reclassifications American Group Inc. Consolidated ASSETS Current assets Cash $ 1 $ 789 $ 12 $ 144 $ 6 $ — $ 952 Short-term investments — 5,192 — 2,772 3 — 7,967 Restricted cash and short-term investments — 641 — 106 — — 747 Accounts receivable, net — 1,535 — 352 18 (13 ) 1,892 Receivables from related parties, net 1,623 — — 742 138 (2,503 ) — Aircraft fuel, spare parts and supplies, net — 665 — 330 74 — 1,069 Prepaid expenses and other 100 717 — 621 44 — 1,482 Total current assets 1,724 9,539 12 5,067 283 (2,516 ) 14,109 Operating property and equipment — 18,165 — 6,848 275 — 25,288 Other assets Investments in subsidiaries 3,363 — 7,590 — — (10,953 ) — Goodwill — — — 4,091 — — 4,091 Intangibles, net of accumulated amortization — 874 — 1,400 — — 2,274 Other assets 28 1,822 — 251 40 (35 ) 2,106 Total other assets 3,391 2,696 7,590 5,742 40 (10,988 ) 8,471 Total assets $ 5,115 $ 30,400 $ 7,602 $ 17,657 $ 598 $ (13,504 ) $ 47,868 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities Current maturities of long-term debt and capital leases $ — $ 1,172 $ — $ 470 $ — $ — $ 1,642 Accounts payable — 1,292 — 325 74 (8 ) 1,683 Payables to related parties, net — 1,868 504 — 131 (2,503 ) — Air traffic liability — 4,160 — 1,504 — — 5,664 Frequent flyer liability — 2,745 — — — — 2,745 Other accrued liabilities 92 2,018 3 1,096 97 5 3,311 Total current liabilities 92 13,255 507 3,395 302 (2,506 ) 15,045 Noncurrent liabilities Long-term debt and capital leases, net of current maturities 1,257 10,595 525 4,810 — (35 ) 17,152 Pension and postretirement benefits — 7,313 — 124 40 — 7,477 Bankruptcy settlement obligations — 208 — — — — 208 Other liabilities 130 2,912 — 1,802 49 (543 ) 4,350 Total noncurrent liabilities 1,387 21,028 525 6,736 89 (578 ) 29,187 Stockholders’ equity (deficit) Common stock 7 — — — — — 7 Additional paid-in capital 14,319 10,761 4,752 5,591 199 (21,303 ) 14,319 Accumulated other comprehensive loss (4,620 ) (4,705 ) (17 ) (9 ) (12 ) 4,743 (4,620 ) Retained earnings (deficit) (6,070 ) (9,939 ) 1,835 1,944 20 6,140 (6,070 ) Total stockholders’ equity (deficit) 3,636 (3,883 ) 6,570 7,526 207 (10,420 ) 3,636 Total liabilities and stockholders’ equity (deficit) $ 5,115 $ 30,400 $ 7,602 $ 17,657 $ 598 $ (13,504 ) $ 47,868 AMERICAN AIRLINES GROUP INC. CONDENSED CONSOLIDATING BALANCE SHEET (In millions)(Unaudited) December 31, 2014 American Only) American US Airways (Parent Only) US Airways Non- Subsidiaries Eliminations Reclassifications American 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 AMERICAN AIRLINES GROUP INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (In millions)(Unaudited) Six Months Ended June 30, 2015 American Only) American US Airways (Parent Only) US Airways Non- Guarantor Subsidiaries Eliminations and Reclassifications American Group Inc. Consolidated Net cash provided by operating activities $ 526 $ 3,935 $ 10 $ 340 $ 30 $ — $ 4,841 Cash flows from investing activities: Capital expenditures and aircraft purchase deposits — (2,563 ) — (541 ) (35 ) — (3,139 ) Purchases of short-term investments — (3,080 ) — (2,013 ) — — (5,093 ) Sales of short-term investments — 1,178 — 2,258 — — 3,436 Decrease in restricted cash and short-term investments — 9 — 18 — — 27 Proceeds from sale of an investment 52 — — — — — 52 Proceeds from sale of property and equipment — 18 — — 4 — 22 Net cash provided by (used in) investing activities 52 (4,438 ) — (278 ) (31 ) — (4,695 ) Cash flows from financing activities: Payments on long-term debt and capital leases — (881 ) — (226 ) — — (1,107 ) Proceeds from issuance of long-term debt 500 1,420 — 76 — — 1,996 Deferred financing costs (7 ) (32 ) — (1 ) — — (40 ) Treasury stock repurchases (931 ) — — — — — (931 ) Dividend payment (140 ) — — — — — (140 ) Other financing activities — — — 34 — — 34 Net cash provided by (used in) financing activities (578 ) 507 — (117 ) — — (188 ) Net increase (decrease) in cash — 4 10 (55 ) (1 ) — (42 ) Cash at beginning of period 1 785 2 199 7 — 994 Cash at end of period $ 1 $ 789 $ 12 $ 144 $ 6 $ — $ 952 AMERICAN AIRLINES GROUP INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (In millions)(Unaudited) Six Months Ended June 30, 2014 American Only) American US Airways (Parent Only) US Airways Non- Guarantor Subsidiaries Eliminations and Reclassifications American Group Inc. Consolidated Net cash provided by operating activities $ — $ 1,683 $ — $ 931 $ 23 $ — $ 2,637 Cash flows from investing activities: Capital expenditures and aircraft purchase deposits — (1,828 ) — (626 ) (26 ) (198 ) (2,678 ) Purchases of short-term investments — (1,183 ) — (678 ) — — (1,861 ) Sales of short-term investments — 1,523 — 200 — — 1,723 Decrease in restricted cash and short-term investments — 52 — 101 — — 153 Net proceeds from slot transaction — 299 — 8 — — 307 Funds transferred to affiliates — (198 ) — — — 198 — Proceeds from sale of property and equipment — 7 — — 2 — 9 Net cash used in investing activities — (1,328 ) — (995 ) (24 ) — (2,347 ) Cash flows from financing activities: Payments on long-term debt and capital leases — (655 ) — (314 ) — (176 ) (1,145 ) Proceeds from issuance of long-term debt — 53 — 481 — — 534 Deferred financing costs — (5 ) — (2 ) — — (7 ) Sale-leaseback transactions — 411 — — — — 411 Exercise of stock options — — — 9 — — 9 Treasury stock repurchases — (7 ) — (21 ) — — (28 ) Funds transferred to affiliates, net — — — (176 ) — 176 — Other financing activities — — — 6 — — 6 Net cash used in financing activities — (203 ) — (17 ) — — (220 ) Net increase (decrease) in cash — 152 — (81 ) (1 ) — 70 Cash at beginning of period 1 829 1 303 6 — 1,140 Cash at end of period $ 1 $ 981 $ 1 $ 222 $ 5 $ — $ 1,210 |