<Page> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 2001.
[ ]Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition Period From to .
Commission file number 1-8400.
AMR Corporation
(Exact name of registrant as specified in its charter)
Delaware 75-1825172
(State or other (I.R.S. Employer
jurisdiction Identification No.)
of incorporation or
organization)
4333 Amon Carter Blvd.
Fort Worth, Texas 76155
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (817) 963-1234
Not Applicable
(Former name, former address and former fiscal year , if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Common Stock, $1 par value - 154,407,819 as of August 1, 2001.
<Page> 2
INDEX
AMR CORPORATION
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations -- Three and six months ended
June 30, 2001 and 2000
Condensed Consolidated Balance Sheets -- June 30, 2001 and December
31, 2000
Condensed Consolidated Statements of Cash Flows -- Six months ended
June 30, 2001 and 2000
Notes to Condensed Consolidated Financial Statements -- June 30, 2001
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
<Page> 3
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In millions, except per share amounts)
<Table>
<Caption>
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
<s> <c> <c> <c> <c>
Revenues
Passenger - American Airlines $3,974 $4,191 $7,909 $7,965
- TWA LLC 671 - 671 -
- American Eagle 409 368 763 706
Cargo 190 180 366 347
Other revenues 339 272 634 570
Total operating revenues 5,583 5,011 10,343 9,588
Expenses
Wages, salaries and benefits 2,126 1,674 3,872 3,291
Aircraft fuel 842 567 1,549 1,120
Depreciation and amortization 352 294 665 582
Maintenance, materials
and repairs 298 272 578 543
Other rentals and landing fees 320 256 577 493
Commissions to agents 260 273 484 530
Food service 218 198 402 383
Aircraft rentals 226 151 374 304
Asset impairment charge 685 - 685 -
Other operating expenses 1,016 809 1,921 1,613
Total operating expenses 6,343 4,494 11,107 8,859
Operating Income (Loss) (760) 517 (764) 729
Other Income (Expense)
Interest income 24 34 64 66
Interest expense (132) (115) (251) (234)
Interest capitalized 38 36 79 74
Miscellaneous - net 37 50 22 44
(33) 5 (86) (50)
Income (Loss) From Continuing
Operations Before Income Taxes (793) 522 (850) 679
Income tax provision (benefit) (286) 201 (300) 269
Income (Loss) From Continuing
Operations (507) 321 (550) 410
Income From Discontinued
Operations, net of applicable
income taxes and minority
interest - - - 43
Net Earnings (Loss) $(507) $ 321 $ (550) $ 453
</Table>
Continued on next page.
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AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(Unaudited) (In millions, except per share amounts)
<Table>
<Caption>
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
<s> <c> <c> <c> <c>
Earnings (Loss) Applicable to
Common Shares $(507) $ 321 $ (550) $ 453
Earnings (Loss) Per Share
Basic
Income (Loss) from
Continuing Operations $(3.29) $ 2.15 $(3.58) $ 2.75
Discontinued Operations - - - 0.29
Net Earnings (Loss) $(3.29) $ 2.15 $(3.58) $ 3.04
Diluted
Income (Loss) from
Continuing Operations $(3.29) $ 1.96 $(3.58) $ 2.58
Discontinued Operations - - - 0.27
Net Earnings (Loss) $(3.29) $ 1.96 $(3.58) $ 2.85
Number of Shares Used in
Computation
Basic 154 150 154 149
Diluted 154 164 154 159
</Table>
The accompanying notes are an integral part of these financial
statements.
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AMR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (In millions)
<Table>
<Caption>
June 30, December 31,
2001 2000
Assets
<s> <c> <c>
Current Assets
Cash $ 265 $ 89
Short-term investments 1,222 2,144
Receivables, net 1,670 1,303
Inventories, net 883 757
Deferred income taxes 695 695
Other current assets 439 191
Total current assets 5,174 5,179
Equipment and Property
Flight equipment, net 14,670 13,721
Other equipment and property, net 1,887 1,671
Purchase deposits for flight equipment 1,599 1,700
18,156 17,092
Equipment and Property Under Capital Leases
Flight equipment, net 1,757 1,448
Other equipment and property, net 95 96
1,852 1,544
Route acquisition costs and airport
operating and gate lease rights, net 1,411 1,143
Other assets, net 2,409 1,255
$ 29,002 $ 26,213
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 1,495 $ 1,267
Accrued liabilities 2,357 2,231
Air traffic liability 3,429 2,696
Current maturities of long-term debt 301 569
Current obligations under capital leases 312 227
Total current liabilities 7,894 6,990
Long-term debt, less current maturities 5,554 4,151
Obligations under capital leases, less
current obligations 1,613 1,323
Deferred income taxes 2,341 2,385
Postretirement benefits 2,399 1,706
Other liabilities, deferred gains and
deferred credits 2,461 2,482
Stockholders' Equity
Common stock 182 182
Additional paid-in capital 2,816 2,911
Treasury stock (1,728) (1,865)
Accumulated other comprehensive income 68 (2)
Retained earnings 5,402 5,950
6,740 7,176
$ 29,002 $26,213
</Table>
The accompanying notes are an integral part of these financial
statements.
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AMR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In millions)
<Table>
<Caption>
Six Months Ended June 30,
2001 2000
<s> <c> <c>
Net Cash Provided by Operating Activities $ 885 $ 1,809
Cash Flow from Investing Activities:
Capital expenditures, including purchase
deposits for flight equipment (2,124) (1,917)
Acquisition of Trans World Airlines, Inc. (742) -
Other investments and miscellaneous (6) (41)
Net decrease (increase) in
short-term investments 922 (563)
Proceeds from:
Sale of equipment and property 206 159
Dividend from Sabre Holdings Corporation - 559
Sale of other investments - 94
Net cash used for investing activities (1,744) (1,709)
Cash Flow from Financing Activities:
Payments on long-term debt and capital
lease obligations (586) (364)
Proceeds from:
Issuance of long-term debt 1,587 286
Exercise of stock options 34 21
Net cash provided by (used for)
financing activities 1,035 (57)
Net increase in cash 176 43
Cash at beginning of period 89 85
Cash at end of period $ 265 $ 128
Activities Not Affecting Cash:
Distribution of Sabre Holdings Corporation $ - $ 581
shares to AMR shareholders
</Table>
The accompanying notes are an integral part of these financial
statements.
-4-
<Page> 7
AMR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with accounting
principles generally accepted in the United States for interim
financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, these financial statements contain all
adjustments, consisting of both normal recurring accruals and the
asset impairment charge as discussed in footnote 8, necessary to
present fairly the financial position, results of operations and
cash flows for the periods indicated. The results of operations
and cash flows for Sabre Holdings Corporation (Sabre) have been
reflected as discontinued operations in the consolidated financial
statements for the six months ended June 30, 2000. Results of
operations for the periods presented herein are not necessarily
indicative of results of operations for the entire year. For
further information, refer to the consolidated financial statements
and footnotes thereto included in the AMR Corporation (AMR or the
Company) Annual Report on Form 10-K for the year ended December 31,
2000. Certain amounts have been reclassified to conform with the
2001 presentation.
2.Accumulated depreciation of owned equipment and property at June
30, 2001 and December 31, 2000, was $8.8 billion and $8.3 billion,
respectively. Accumulated amortization of equipment and property
under capital leases at June 30, 2001 and December 31, 2000, was
$1.2 billion.
3.As discussed in the notes to the consolidated financial statements
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2000, the Miami International Airport Authority
is currently investigating and remediating various environmental
conditions at the Miami International Airport (the Airport) and
funding the remediation costs through various cost recovery
methods. American Airlines, Inc. (American) and AMR Eagle have
been named as potentially responsible parties (PRPs) and
contributors to the contamination. During the second quarter of
2001, the Airport filed a lawsuit against 17 defendants, including
American, in an attempt to recover its past and future cleanup
costs (Miami-Dade County, Florida v. Advance Cargo Services, Inc.,
et al. in the Florida Circuit Court). In addition to the 17
defendants named in the lawsuit, 243 other agencies and companies
were also named as PRPs and contributors to the contamination.
American and AMR Eagle's portion of the cleanup costs cannot be
reasonably estimated due to various factors, including the unknown
extent of the remedial actions that may be required, the proportion
of the cost that will ultimately be recovered from the responsible
parties, and uncertainties regarding the environmental agencies
that will ultimately supervise the remedial activities and the
nature of that supervision. In addition, the Company is subject to
environmental issues at various other airport and non-airport
locations. Management believes, after considering a number of factors,
that the ultimate disposition of these environmental issues is not
expected to materially affect the Company's consolidated financial
position, results of operations or cash flows. Amounts recorded for
environmental issues are based on the Company's current assessments
of the ultimate outcome and, accordingly, could increase or decrease
as these assessments change.
4.As of June 30, 2001, the Company had commitments to acquire the
following aircraft: 55 Boeing 737-800s, 19 Boeing 757-200s, 15 Boeing
767-300ERs, 12 Boeing 777-200ERs, 139 Embraer regional jets and 25
Bombardier CRJ-700s. Deliveries of all aircraft continue through
2006. Payments for all aircraft will approximate $1.5 billion during
the remainder of 2001, $2.2 billion in 2002, $1.5 billion in 2003 and
an aggregate of approximately $1.3 billion in 2004 through 2006.
5.During 2001, American and AMR Eagle entered into various debt
agreements which are secured by aircraft. Effective interest rates
on these agreements are fixed or variable (based on LIBOR plus a
spread) and mature over various periods of time, ranging from 2013
to 2021. As of June 30, 2001, the Company had borrowed
approximately $1.6 billion under these agreements.
6.In April 2001, the Board of Directors of American approved the
guarantee by American of AMR's existing debt obligations. As such, as
of June 30, 2001, American will unconditionally guarantee through the
life of the related obligations approximately $700 million of
unsecured debt, approximately $700 million of secured debt and
approximately $1.6 billion of special facility revenue bonds issued by
municipalities.
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AMR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
7.On April 9, 2001, the Company purchased substantially all of the
assets of Trans World Airlines, Inc. (TWA) for approximately $742
million in cash (subject to certain working capital adjustments) and
assumed certain liabilities, including TWA's postretirement benefit
other than pension liability. The $742 million includes the $625
million purchase price paid to TWA and various other acquisition
costs, primarily the purchase of aircraft security deposits and
prepaid rent. TWA was the eighth largest U.S. carrier, with a primary
domestic hub in St. Louis. The Company funded the acquisition of
TWA's assets with its existing cash and short-term investments. The
acquisition of TWA was accounted for under the purchase method of
accounting and, accordingly, the operating results of TWA since the
date of acquisition have been included in the accompanying
consolidated financial statements for the three and six-month periods
ended June 30, 2001.
The accompanying consolidated financial statements reflect the
preliminary allocation of the purchase price, which was based on
estimated fair values of the assets acquired and liabilities
assumed, and is subject to adjustments when additional information
concerning asset and liability valuations are finalized. The
preliminary excess purchase price over the estimated fair values of
the net assets acquired resulted in goodwill in excess of $800
million, which is being amortized on a straight-line basis over 40
years. However, effective January 1, 2002, the Company will
discontinue the amortization of goodwill in accordance with
Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets."
The following table provides unaudited pro forma consolidated
results of operations, assuming the acquisition had occurred as of
January 1, 2000 (in millions, except per share amounts):
<Table>
<Caption>
Six Months Ended
June 30,
2001 2000
<s> <c> <c>
Operating revenues $11,241 $11,416
Income (loss) from continuing operations (531) 459
Net earnings (loss) (531) 502
Earnings (loss) per share - diluted $ (3.45) $ 3.16
</Table>
The unaudited pro forma consolidated results of operations have
been prepared for comparative purposes only. These amounts are not
indicative of the combined results which would have occurred had
the transaction actually been consummated on the date indicated
above and are not indicative of the consolidated results of
operations which may occur in the future.
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<Page> 9
AMR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
8.In conjunction with the acquisition of TWA and the proposed
transactions announced on January 10, 2001, coupled with a revision
to the Company's fleet plan to accelerate the retirement dates of
its Fokker 100, Saab 340 and ATR 42 aircraft, the Company
determined that the estimated future undiscounted cash flows
expected to be generated by its Fokker 100, Saab 340 and ATR 42
aircraft fleets would be less than their carrying amount and
therefore, these aircraft were impaired under Statement of
Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of" (SFAS 121). As a result, during the second quarter of
2001, the Company recorded an asset impairment charge of
approximately $685 million ($430 million after-tax) relating to the
write-down of the carrying value of 71 Fokker 100 aircraft, 74 Saab
340 aircraft and 20 ATR 42 aircraft and related rotables to their
estimated fair market values. Management estimated the
undiscounted future cash flows utilizing models used by the Company
in making fleet and scheduling decisions. In addition, in
determining the fair market value of these aircraft, the Company
considered outside third party appraisals and recent transactions
involving sales of similar aircraft. As a result of the writedown
of these aircraft to fair market value, as well as the acceleration
of their retirement dates and changes in salvage values,
depreciation and amortization expense will decrease by
approximately $18 million on an annualized basis.
9.The following table sets forth the computations of basic and
diluted earnings (loss) per share (in millions, except per share
data):
<Table>
<Caption>
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
<s> <c> <c> <c> <c>
Numerator:
Income (loss) from
continuing operations -
numerator for basic and
diluted earnings per share $(507) $ 321 $(550) $ 410
Denominator:
Denominator for basic
earnings (loss) per share
- weighted-average shares 154 150 154 149
Effect of dilutive securities:
Employee options and shares - 32 - 23
Assumed treasury shares
purchased - (18) - (13)
Dilutive potential shares - 14 - 10
Denominator for diluted
earnings (loss) per share -
adjusted weighted-average
shares 154 164 154 159
Basic earnings (loss) per
share from continuing
operations $(3.29) $ 2.15 $(3.58) $ 2.75
Diluted earnings (loss)
per share from
continuing operations $(3.29) $ 1.96 $(3.58) $ 2.58
</Table>
For the three and six months ended June 30, 2001, approximately 14
million dilutive potential shares were not added to the denominator
because inclusion of such shares would be antidilutive.
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<Page> 10
AMR CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
10.During the second quarter of 2001, the Company changed the
manner in which it measured ineffectiveness for its fuel option
contracts. Effective June 1, 2001, the measurement is based on the
change in the total value of the option relative to the change in
the value of the fuel being hedged. In conjunction therewith, the
Company reclassified the ineffective component of its fuel hedge
agreements from other income (expense) to fuel expense on the
accompanying consolidated statements of operations.
For the three and six months ended June 30, 2001, the Company
recognized net gains of approximately $12 million and $37 million,
respectively, as a component of fuel expense on the accompanying
consolidated statements of operations related to its fuel hedging
agreements. This compares to net gains recognized by the Company
of approximately $110 million and $232 million, respectively, for
the three and six months ended June 30, 2000. (The amounts for
2001 and 2000 are not comparable in that the 2001 amounts reflect
the January 1, 2001 adoption of Statement of Financial Accounting
Standards No. 133 (SFAS 133); the 2000 amounts do not.) The fair
value of the Company's fuel hedging agreements at June 30, 2001,
representing the amount the Company would receive to terminate the
agreements, totaled $203 million.
11.The Company includes unrealized gains and losses on available-for-
sale securities, changes in minimum pension liabilities and changes in
the fair value of certain derivative financial instruments which
qualify for hedge accounting in comprehensive income (loss). For the
three and six months ended June 30, 2001, comprehensive loss was $511
million and $480 million, respectively. The difference between net
loss and comprehensive loss for the six months ended June 30, 2001 is
due primarily to the cumulative effect of the adoption of SFAS 133 and
the on-going fair value adjustments of derivative financial
instruments under SFAS 133, net of the reclassification into earnings
of the Company's derivative financial instruments.
As of June 30, 2001, the Company estimates during the next twelve
months it will reclassify from accumulated other comprehensive
income into earnings approximately $60 million (net of tax of $35
million) relating to its derivative financial instruments.
12.During 1999, the Company entered into an agreement with
priceline.com Incorporated (priceline) whereby ticket inventory
provided by the Company may be sold through priceline's e-commerce
system. In conjunction with this agreement, the Company received
warrants to purchase approximately 5.5 million shares of priceline
common stock. In the second quarter of 2000, the Company sold
these warrants for proceeds of approximately $94 million, and
recorded a pre-tax gain of $57 million ($36 million after-tax),
which is included in Miscellaneous - net on the consolidated
statements of operations.
13.Effective after the close of business on March 15, 2000, AMR
distributed 0.722652 shares of Sabre Class A common stock for each
share of AMR stock owned by AMR's shareholders. The record date for
the dividend of Sabre stock was the close of business on March 1,
2000. In addition, on February 18, 2000, Sabre paid a special one-
time cash dividend of $675 million to shareholders of record of Sabre
common stock at the close of business on February 15, 2000. Based
upon its approximate 83 percent interest in Sabre, AMR received
approximately $559 million of this dividend. The dividend of AMR's
entire ownership interest in Sabre's common stock resulted in a
reduction to AMR's retained earnings in March of 2000 equal to the
carrying value of the Company's investment in Sabre on March 15, 2000,
which approximated $581 million.
The results of operations for Sabre have been reflected in the
consolidated statements of operations as discontinued operations.
Other summarized financial information of discontinued operations
for the six months ended June 30, 2000 is as follows (in millions):
Revenues $ 542
Minority interest 10
Income taxes 36
Net income 43
-8-
<Page> 11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
RESULTS OF OPERATIONS
For the Three Months Ended June 30, 2001 and 2000
Summary AMR's net loss for the three months ended 2001 was $507
million, or $3.29 loss per share, as compared to net earnings of $321
million, or $1.96 per share diluted, for the same period in 2000.
AMR's operating loss for the second quarter of 2001 was $760 million,
compared to operating income of $517 million for the second quarter
of 2000. As discussed in footnote 7 to the condensed consolidated
financial statements, on April 9, 2001, the Company purchased
substantially all of the assets and assumed certain liabilities of
Trans World Airlines, Inc. (TWA). Accordingly, the operating results
of TWA since the date of acquisition have been included in the
accompanying consolidated financial statements for the three month
period ended June 30, 2001. In addition, AMR's second quarter 2001
results include: (i) a $430 million after-tax charge, or $2.79 per
share, related to the writedown of the carrying value of its Fokker 100,
Saab 340 and ATR-42 aircraft and related rotables in accordance with
SFAS 121,"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of" (see footnote 8 to the condensed
consolidated financial statements), and (ii) a $29 million after-tax
gain, or $0.19 per share, from the settlement of a legal matter
related to the Company's 1999 labor disruption. AMR's second quarter
2000 results include an approximate $36 million after-tax gain, or
$0.21 per share diluted, related to the sale of the Company's
warrants to purchase 5.5 million shares of priceline.com Incorporated
(priceline) common stock.
The Company's revenues increased $572 million, or 11.4 percent, in
the second quarter of 2001 versus the same period last year.
However, excluding TWA's revenues for the period April 10, 2001
through June 30, 2001, the Company's revenues would have decreased by
approximately $173 million versus the same period last year. During
the second quarter of 2001, the Company's results were impacted by a
slowing U.S. economy, dampening the demand for business travel both
domestically and internationally, and an increase in fare sale
activity compared to the same period in 2000.
American's passenger revenues decreased by 5.2 percent, or $217
million. American's yield (the average amount one passenger pays to
fly one mile) of 13.47 cents decreased by 2.1 percent compared to the
same period in 2000. Domestic yields decreased 2.3 percent from the
second quarter of 2000. International yields decreased 1.4 percent,
primarily due to a decrease of 12.3 percent and 3.3 percent in
Pacific and European yields, respectively, partially offset by an
increase of approximately 3.4 percent in Latin American yields.
American's traffic or revenue passenger miles (RPMs) decreased 3.1
percent to 29.5 billion miles for the quarter ended June 30, 2001.
American's capacity or available seat miles (ASMs) of 41.0 billion
miles increased 2.3 percent compared to the second quarter of 2000.
As a result, American's load factor dropped 4 points year-over-year.
American's domestic traffic decreased 4.7 percent on a capacity
increase of 2.1 percent while international traffic increased 0.2
percent on a capacity increase of 2.7 percent. International
activity included a 17.2 percent increase in traffic to the Pacific
on a capacity increase of 18.5 percent, a 1.7 percent decrease in
traffic to Europe on a capacity increase of 5.2 percent, and a 1.7
percent decrease in traffic to Latin America on a capacity decrease
of 2.5 percent. The overall increase in capacity was due primarily
to an increase in the number of aircraft, partially offset by the
Company's More Room Throughout Coach program.
TWA's passenger revenues were $671 million for the period April 10,
2001 through June 31, 2001. TWA's traffic was 5.7 billion RPMs while
capacity was 8.0 billion ASMs.
AMR Eagle's passenger revenues increased 11.1 percent, or $41
million. The increase in passenger revenues resulted from a 3.5
percent increase in passenger yield and a 7.2 percent increase in
traffic, due to the continued addition of regional jets and steps
taken to improve the carrier's network.
Other revenues increased $67 million, or 24.6 percent, due primarily
to the addition of TWA.
-9-
<Page> 12
RESULTS OF OPERATIONS (Continued)
The Company's operating expenses increased 41.1 percent, or
approximately $1.9 billion, and included approximately $757 million
related to TWA's operations for the period April 10, 2001 through
June 30, 2001. American's cost per ASM increased 6.4 percent to
10.98 cents, excluding the impact of the second quarter 2001 asset
impairment charge. The increase in American's cost per ASM was
driven partially by a reduction in ASMs due to the Company's More
Room Throughout Coach program. Adjusted for this program, American's
cost per ASM grew approximately 2.9 percent, excluding the asset
impairment charge. Wages, salaries and benefits increased 27.0
percent, or $452 million, and included approximately $286 million
related to the addition of TWA. The remaining increase of
approximately $166 million related primarily to an increase in the
average number of equivalent employees and contractual wage rate and
seniority increases that are built into the Company's labor
contracts. During the second quarter of 2001, the Company recorded
approximately $170 million in additional wages, salaries and benefits
related to the Company's tentative labor contracts. This was mostly
offset by a $144 million decrease in the provision for profit-sharing
as compared to the corresponding period in the prior year. Aircraft
fuel expense increased 48.5 percent, or $275 million, and included
approximately $121 million related to the addition of TWA. The
increase in aircraft fuel expense was due to a 22.3 percent increase
in the Company's average price per gallon and a 21.2 percent increase
in the Company's fuel consumption, including TWA. Depreciation and
amortization expense increased 19.7 percent, or $58 million, due
primarily to the addition of new aircraft and an increase of
approximately $25 million related to TWA. Other rentals and landing
fees increased $64 million, or 25 percent, primarily due to the
addition of TWA. Commissions to agents decreased 4.8 percent, or $13
million, and included approximately $31 million related to TWA.
Despite an increase of approximately 10.9 percent in combined
passenger revenues - including TWA - the Company continued to benefit
from commission structure changes implemented in 2000 and a decrease
in the percentage of commissionable transactions. Food service
increased 10.1 percent, or $20 million, due primarily to the addition
of TWA. Aircraft rentals increased $75 million, or 49.7 percent, due
to the addition of TWA aircraft. The asset impairment charge of $685
million relates to the writedown of the carrying value of the Company's
Fokker 100, Saab 340 and ATR-42 aircraft and related rotables (see footnote
8 to the condensed consolidated financial statements). Other operating
expense increased 25.6 percent, or $207 million, and included
approximately $131 million related to TWA. The remaining increase is
due primarily to increases in data processing, outsourced services,
travel and incidental, and external contract maintenance costs.
Other income (expense), historically a net expense, increased $38
million due to a decrease in interest income of $10 million, or 29.4
percent, from the Company's lower investment balances, an increase of
$17 million in interest expense resulting from an increase in long-
term debt, and a decrease of $13 million in miscellaneous-net
relating primarily to the $57 million gain on sale of the Company's
warrants to purchase 5.5 million shares of priceline common stock in
the second quarter of 2000 versus a $45 million gain during the
second quarter of 2001 from the settlement of a legal matter related
to the Company's 1999 labor disruption.
-10-
<Page> 13
RESULTS OF OPERATIONS (Continued)
<Table>
<Caption>
OPERATING STATISTICS Three Months Ended June 30,
2001 2000
<s> <c> <c>
American Airlines
Revenue passenger miles (millions) 29,506 30,449
Available seat miles (millions) 41,016 40,095
Cargo ton miles (millions) 574 571
Passenger load factor 71.9% 75.9%
Breakeven load factor (*) 74.2% 65.6%
Passenger revenue yield per passenger
mile (cents) 13.47 13.76
Passenger revenue per available seat
mile (cents) 9.69 10.45
Cargo revenue yield per ton mile (cents) 30.01 31.04
Operating expenses per available seat
mile (cents) (*) 10.98 10.32
Fuel consumption (gallons, in millions) 784 759
Fuel price per gallon (cents) 86.8 71.0
Fuel price per gallon, excluding fuel
taxes (cents) 81.3 65.9
Operating aircraft at period-end 724 712
TWA
Revenue passenger miles (millions) 5,682
Available seat miles (millions) 8,028
Passenger load factor 70.8%
Passenger revenue yield per passenger
mile (cents) 11.81
Passenger revenue per available seat
mile (cents) 8.36
Operating expenses per available seat
mile (cents) 9.43
Operating aircraft at period-end 180
AMR Eagle
Revenue passenger miles (millions) 1,030 961
Available seat miles (millions) 1,680 1,546
Passenger load factor 61.3% 62.2%
Operating aircraft at period-end 271 272
</Table>
Operating aircraft at June 30, 2001, included:
<Table>
<Caption>
<s> <c> <c> <c>
American Airlines Aircraft: TWA Aircraft:
Airbus A300-600R 35 Boeing 717-200 23
Boeing 727-200 55 Boeing 757-200 27
Boeing 737-800 65 Boeing 767-300 Extended Range 9
Boeing 757-200 106 McDonnell Douglas MD-80 103
Boeing 767-200 8 McDonnell Douglas DC-9 18
Boeing 767-200 Extended Total 180
Range 22
Boeing 767-300 Extended
Range 49
Boeing 777-200 Extended
Range 35 AMR Eagle Aircraft:
Fokker 100 74 ATR 42 30
McDonnell Douglas MD-11 5 Embraer 135 40
McDonnell Douglas MD-80 270 Embraer 145 56
724 Super ATR 43
Saab 340 77
Saab 340B Plus 25
Total 271
</Table>
Average aircraft age is 10.9 years for American's aircraft, 9.8 years
for TWA aircraft, and 6.4 years for AMR Eagle aircraft.
(*) Excludes the second quarter 2001 asset impairment charge.
-11-
<Page> 14
RESULTS OF OPERATIONS (Continued)
For the Six Months Ended June 30, 2001 and 2000
Summary AMR's net loss for the six months ended June 30, 2001 was
$550 million, or $3.58 loss per share. This compares with income
from continuing operations of $410 million, or $2.58 per share
diluted, for the same period in 2000. AMR's operating loss for the
six months ended June 30, 2001 was $764 million, compared to
operating income of $729 million for the same period in 2000. On
April 9, 2001, the Company purchased substantially all of the assets
and assumed certain liabilities of TWA. Accordingly, the operating
results of TWA since the date of acquisition have been included in
the accompanying consolidated financial statements for the six month
period ended June 30, 2001. In addition, AMR's 2001 results include:
(i) a $430 million after-tax charge, or $2.79 per share, related to
the writedown of the carrying value of its Fokker 100, Saab 340 and
ATR-42 aircraft and related rotables, and (ii) a $29 million after-tax
gain, or $0.19 per share, from the settlement of a legal matter related
to the Company's 1999 labor disruption. AMR's 2000 results include an
approximate $36 million after-tax gain, or $0.21 per share diluted,
related to the sale of the Company's warrants to purchase 5.5 million
shares of priceline common stock.
The Company's revenues increased approximately $755 million, or 7.9
percent, during the first six months of 2001 versus the same period
last year. However, excluding TWA's revenues for the period April
10, 2001 through June 30, 2001, the Company's revenues would have
remained flat versus the same period last year. The Company's 2001
results were impacted by a slowing U.S. economy, dampening the demand
for business travel both domestically and internationally.
American's passenger revenues decreased by 0.7 percent, or $56
million. American's yield of 14.13 cents increased by 1.9 percent
compared to the same period in 2000. Domestic yields increased 2.0
percent from the first six months of 2000. International yields
increased 2.5 percent, reflecting an increase of 5.3 percent and 1.4
percent in Latin American and European yields, respectively,
partially offset by a decrease of 7.3 percent in Pacific yields.
Yields were up year-over-year largely due to fare increases enacted
over the course of 2000, which more than offset the increase in fare
sale activity during the second quarter of 2001.
American's traffic or RPMs decreased 2.6 percent to 56.0 billion
miles for the six months ended June 30, 2001. American's capacity or
ASMs decreased 0.2 percent to 80.0 billion miles for the first six
months of 2001. American's domestic traffic decreased 4.2 percent on
a capacity decrease of 0.3 percent while international traffic
increased 0.8 percent on capacity increases of 0.2 percent.
International activity included a 12.4 percent increase in traffic to
the Pacific on a capacity increase of 7.5 percent, a 0.7 percent
decrease in traffic to Europe on a capacity increase of 2.8 percent,
and a 0.4 percent decrease in traffic to Latin America on a capacity
decrease of 3.3 percent. The slight decrease in overall capacity
year-over-year was due primarily to the Company's More Room
Throughout Coach program, which offset the addition of new aircraft.
AMR Eagle's passenger revenues increased 8.1 percent, or $57 million.
The increase in passenger revenues resulted from a 4.2 percent
increase in passenger yield and a 3.7 percent increase in traffic,
due to the continued addition of regional jets and steps taken to
improve the carrier's network.
Other revenues increased $64 million, or 11.2 percent, due primarily
to the addition of TWA.
-12-
<Page> 15
RESULTS OF OPERATIONS (Continued)
The Company's operating expenses increased 25.4 percent, or
approximately $2.2 billion, and included approximately $757 million
related to TWA's operations for the period April 10, 2001 through
June 30, 2001. American's cost per ASM increased by 9.2 percent to
11.12 cents, excluding the impact of the second quarter 2001 asset
impairment charge. The increase in American's cost per ASM was
driven partially by a reduction in ASMs due to the Company's More
Room Throughout Coach program. Adjusted for this program, American's
cost per ASM grew approximately 4.5 percent, excluding the asset
impairment charge. Wages, salaries and benefits increased 17.7
percent, or $581 million, and included approximately $286 million
related to the addition of TWA. The remaining increase of
approximately $295 million related primarily to an increase in the
average number of equivalent employees and contractual wage rate and
seniority increases that are built into the Company's labor
contracts. During the six months ended June 30, 2001, the Company
recorded approximately $200 million in additional wages, salaries and
benefits related to the Company's tentative labor contracts. This
was mostly offset by a $172 million decrease in the provision for
profit-sharing as compared to the corresponding period in the prior
year. Aircraft fuel expense increased 38.3 percent, or $429 million,
and included approximately $121 million related to the addition of
TWA. The increase in aircraft fuel expense was due to a 23.6 percent
increase in the Company's average price per gallon and an 11.9
percent increase in the Company's fuel consumption, including TWA.
Depreciation and amortization expense increased 14.3 percent, or $83
million, due primarily to the addition of new aircraft and an
increase of approximately $25 million related to TWA. Other rentals
and landing fees increased $84 million, or 17 percent, primarily due
to the addition of TWA. Commissions to agents decreased 8.7 percent,
or $46 million, and included approximately $31 million related to
TWA. Despite an increase of approximately 7.8 percent in combined
passenger revenues - including TWA - the Company continued to benefit
from commission structure changes implemented in 2000 and a decrease
in the percentage of commissionable transactions. Aircraft rentals
increased $70 million, or 23 percent, due to the addition of TWA
aircraft. The asset impairment charge of $685 million relates to the
writedown of the carrying value of the Company's Fokker 100, Saab 340 and
ATR-42 aircraft and related rotables (see footnote 8 to the condensed
consolidated financial statements). Other operating expense increased
19.1 percent, or $308 million, and included approximately $131 million
related to TWA. The remaining increase is due primarily to increases
in data processing, outsourced services, travel and incidental, and
external contract maintenance costs.
Other income (expense), historically a net expense, increased $36
million due primarily to an increase of $17 million in interest
expense resulting from an increase in long-term debt, and a decrease
of $22 million in miscellaneous-net. The latter reflects the $57
million gain on sale of the Company's warrants to purchase 5.5
million shares of priceline common stock in the second quarter of
2000 versus a $45 million gain during the second quarter of 2001 from
the settlement of a legal matter related to the Company's 1999 labor
disruption and the write-down of certain investments held by the
Company during 2001.
-13-
<Page> 16
RESULTS OF OPERATIONS (Continued)
<Table>
<Caption>
OPERATING STATISTICS Six Months Ended June 30,
2001 2000
<s> <c> <c>
American Airlines
Revenue passenger miles (millions) 55,958 57,471
Available seat miles (millions) 79,993 80,115
Cargo ton miles (millions) 1,123 1,117
Passenger load factor 70.0% 71.7%
Breakeven load factor (*) 71.2% 64.6%
Passenger revenue yield per passenger
mile (cents) 14.13 13.86
Passenger revenue per available seat
mile (cents) 9.89 9.94
Cargo revenue yield per ton mile (cents) 30.83 30.69
Operating expenses per available seat
mile (cents) (*) 11.12 10.18
Fuel consumption (gallons, in millions) 1,527 1,489
Fuel price per gallon (cents) 88.5 71.6
Fuel price per gallon, excluding fuel
taxes (cents) 83.0 66.3
Operating aircraft at period-end 724 712
AMR Eagle
Revenue passenger miles (millions) 1,890 1,822
Available seat miles (millions) 3,268 3,060
Passenger load factor 57.8% 59.6%
Operating aircraft at period-end 271 272
</Table>
(*) Excludes the second quarter 2001 asset impairment charge.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities in the six month period
ended June 30, 2001 was $885 million, a decrease of approximately
$924 million over the same period in 2000, due primarily to a
decrease in income from continuing operations and a decrease in the
change in the air traffic liability from the corresponding period in
the prior year. Capital expenditures for the first six months of
2001 were $2.1 billion, and included the acquisition of 14 Boeing 737-
800s, eight Boeing 777-200ERs, four Boeing 757-200s, seven Embraer
135 aircraft, six Embraer 145 aircraft, and the purchase of 18
McDonnell Douglas MD-80 aircraft previously leased by TWA. These
capital expenditures were financed primarily through secured mortgage
and debt agreements. On April 9, 2001, the Company purchased
substantially all of the assets and assumed certain liabilities of
TWA for approximately $742 million, which was funded from the
Company's existing cash and short-term investments. The $742 million
includes the $625 million purchase price paid to TWA and various
other acquisition costs, primarily the purchase of aircraft security
deposits and prepaid rent. Proceeds from the sale of equipment and
property of $206 million included the proceeds received upon the
delivery of three McDonnell Douglas MD-11 aircraft to Federal
Express.
As of June 30, 2001, the Company had commitments to acquire the
following aircraft: 55 Boeing 737-800s, 19 Boeing 757-200s, 15 Boeing
767-300ERs, 12 Boeing 777-200ERs, 139 Embraer regional jets and 25
Bombardier CRJ-700s. Deliveries of all aircraft continue through
2006. Payments for all aircraft will approximate $1.5 billion during
the remainder of 2001, $2.2 billion in 2002, $1.5 billion in 2003 and
an aggregate of approximately $1.3 billion in 2004 through 2006. The
Company expects to fund its remaining 2001 capital expenditures from
the Company's existing cash and short-term investments, internally
generated cash and new financing depending upon market conditions and
the Company's evolving view of its long-term needs.
The Company announced in January 2001 that it had agreed to acquire
or lease from United Airlines, Inc. (United) certain key strategic
assets (slots, gates and aircraft) of US Airways Group, Inc. (US
Airways) and to jointly operate the northeast Shuttle (New
York/Washington/Boston) with United upon the consummation of the
previously announced merger between United and US Airways. In
addition, American announced that it had agreed to acquire a 49
percent stake in, and to enter into an exclusive marketing agreement
with, D.C. Air, LLC (D.C. Air).
-14-
<Page> 17
On July 27, 2001, United and US Airways announced that they had
agreed to terminate the merger agreement between them. Upon
termination of that merger agreement, the agreement between American
and United automatically terminated. In addition, as the transactions
between American and D.C. Air were contingent upon the closing of the
United-US Airways merger, the transactions between American and D.C.
Air discussed above will not be consummated.
NEW ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141, "Business
Combinations" (SFAS 141) and No. 142, "Goodwill and Other Intangible
Assets" (SFAS 142). SFAS 141 prohibits the use of the pooling-of-
interests method for business combinations initiated after June 30,
2001 and includes criteria for the recognition of intangible assets
separately from goodwill. SFAS 142 includes the requirement to test
goodwill and indefinite lived intangible assets for impairment rather
than amortize them. The Company will adopt SFAS 142 in the first
quarter of 2002, and currently estimates discontinuing the
amortization of approximately $62 million on an annualized basis. The
Company is currently evaluating what additional impact these new
accounting standards may have on the Company's financial position or
results of operations.
OUTLOOK FOR 2001
The Company expects the soft revenue environment experienced during
the first half of the year to continue throughout the remainder of
2001. In addition, the Company expects to see significantly higher
labor costs, given recent industry trends and American's recently
negotiated tentative agreements with its flight attendants and
mechanics. In response to the resulting earnings pressure, coupled
with the continued uncertainty surrounding fuel costs, the Company has
announced that it has or will (i) retire 27 aircraft earlier than
planned, including the retirement of its entire fleet of McDonnell
Douglas DC-9 aircraft by the first quarter of 2002, (ii) adjust
capacity in certain markets by either reducing the size of the
aircraft flown or reducing the number of frequencies operated, (iii)
opt to not exercise certain aircraft purchase rights, (iv) implement a
management and support staff hiring freeze, (v) reduce discretionary
operating expenses where possible, and (vi) reduce or delay long-term
capital spending projects and freeze all discretionary capital
spending. Notwithstanding these actions, if current economic
conditions persist, the Company expects to incur a loss for the third
quarter and full year 2001.
FORWARD-LOOKING INFORMATION
Statements in this report contain various forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which represent the Company's expectations or beliefs
concerning future events. When used in this report, the words
"expects," "plans," "anticipates," and similar expressions are
intended to identify forward-looking statements. All forward-looking
statements in this report are based upon information available to the
Company on the date of this report. The Company undertakes no
obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise. Forward-looking statements are subject to a number of
factors that could cause actual results to differ materially from our
expectations. Additional information concerning these and other
factors is contained in the Company's Securities and Exchange
Commission filings, included but not limited to the Form 10-K for the
year ended December 31, 2000.
-15-
<Page> 18
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes in market risk from the
information provided in Item 7A. Quantitative and Qualitative
Disclosures About Market Risk of the Company's Annual Report on Form
10-K for the year ended December 31, 2000, except as discussed below.
Based on projected fuel usage for the next twelve months, including
the Company's estimated fuel consumption for TWA, a hypothetical 10
percent increase in the June 30, 2001 cost per gallon of fuel would
result in an increase in the Company's aircraft fuel expense of
approximately $210 million for the next twelve months, net of fuel
hedge instruments outstanding at June 30, 2001. The change in market
risk from December 31, 2000 is due primarily to the additional fuel
consumption of TWA, partially offset by a decrease in fuel prices.
As of June 30, 2001, the Company, including the estimated fuel
consumption of TWA, has hedged approximately 43 percent of its
remaining 2001 fuel requirements, 28 percent of its 2002 fuel
requirements, and 16 percent of its 2003 fuel requirements.
-16-
<Page> 19
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
On July 26, 1999, a class action lawsuit was filed, and in November
1999 an amended complaint was filed, against AMR Corporation, American
Airlines, Inc., AMR Eagle Holding Corporation, Airlines Reporting
Corporation, and the Sabre Group Holdings, Inc. in the United States
District Court for the Central District of California, Western
Division (Westways World Travel, Inc. v. AMR Corp., et al.). The
lawsuit alleges that requiring travel agencies to pay debit memos to
American for violations of American's fare rules (by customers of the
agencies) (1) breaches the Agent Reporting Agreement between American
and American Eagle and plaintiffs, (2) constitutes unjust enrichment,
and (3) violates the Racketeer Influenced and Corrupt Organizations
Act of 1970 (RICO). The as yet uncertified class includes all travel
agencies who have been or will be required to pay monies to American
for debit memos for fare rules violations from July 26, 1995 to the
present. Plaintiffs seek to enjoin American from enforcing the
pricing rules in question and to recover the amounts paid for debit
memos, plus treble damages, attorneys' fees, and costs. Defendants'
motion to dismiss all claims is pending. American intends to
vigorously defend the lawsuit. Although the Company believes that the
litigation is without merit, adverse court decisions could impose
restrictions on American's ability to respond to competitors, and
American's business may be adversely impacted.
On May 13, 1999, the United States (through the Antitrust Division
of the Department of Justice) sued AMR Corporation, American
Airlines, Inc., and AMR Eagle Holding Corporation in federal court in
Wichita, Kansas. The lawsuit alleges that American unlawfully
monopolized or attempted to monopolize airline passenger service to
and from Dallas/Fort Worth International Airport (DFW) by increasing
service when new competitors began flying to DFW, and by matching
these new competitors' fares. The Department of Justice seeks to
enjoin American from engaging in the alleged improper conduct and to
impose restraints on American to remedy the alleged effects of its
past conduct. On April 27, 2001, the U.S. District Court for the
District of Kansas granted American's motion for summary judgment.
On June 26, 2001, the U.S. Department of Justice appealed the
granting of American's motion for summary judgment. The government
has requested that the 10th Circuit Court of Appeals set the
following briefing schedule: the government's brief to be filed on
September 28, 2001; American's response to be filed November 20,
2001; and the government's reply to be filed on December 11, 2001.
American did not oppose the government's request. No date has been
set for oral argument. American intends to defend the lawsuit
vigorously.
Between May 14, 1999 and June 7, 1999, seven class action lawsuits
were filed against AMR Corporation, American Airlines, Inc., and AMR
Eagle Holding Corporation in the United States District Court in
Wichita, Kansas seeking treble damages under federal and state
antitrust laws, as well as injunctive relief and attorneys' fees
(King v. AMR Corp., et al.; Smith v. AMR Corp., et al.; Team Electric
v. AMR Corp., et al.; Warren v. AMR Corp., et al.; Whittier v. AMR
Corp., et al.; Wright v. AMR Corp., et al.; and Youngdahl v. AMR
Corp., et al.). Collectively, these lawsuits allege that American
unlawfully monopolized or attempted to monopolize airline passenger
service to and from DFW by increasing service when new competitors
began flying to DFW, and by matching these new competitors' fares.
Two of the suits (Smith and Wright) also allege that American
unlawfully monopolized or attempted to monopolize airline passenger
service to and from DFW by offering discounted fares to corporate
purchasers, by offering a frequent flyer program, by imposing certain
conditions on the use and availability of certain fares, and by
offering override commissions to travel agents. The suits propose to
certify several classes of consumers, the broadest of which is all
persons who purchased tickets for air travel on American into or out
of DFW since 1995 to the present. On November 10, 1999, the District
Court stayed all of these actions pending developments in the case
brought by the Department of Justice. As a result, to date no class
has been certified. American intends to defend these lawsuits
vigorously.
-17-
<Page> 20
Item 1. Legal Proceedings (Continued)
In June 2001, the named plaintiff in a class action lawsuit, Hall
v. United Airlines, et al., No. 7:00 CV 123-BR(1), sought leave to
file an amended complaint that would substantially increase the size
and scope of the pending litigation. The Hall case was originally
filed in the United States District Court for the Eastern District of
North Carolina against American and other airlines, and alleged that
during 1999, American and the other defendant airlines conspired to
reduce commissions paid to U.S.-based travel agents in violation of
Section 1 of the Sherman Act. The proposed amended complaint seeks
to add additional named plaintiffs and defendants, and to add
allegations that American and other airlines also conspired to reduce
commission rates from 10 percent to 8 percent in September 1997 and
to cap commissions for international travel at $50 each way in
October 1998. Plaintiff's motion for leave to amend is pending, and
no class has yet been certified. American is vigorously defending
the lawsuit.
The Miami International Airport Authority is currently
investigating and remediating various environmental conditions at the
Miami International Airport (the Airport) and funding the remediation
costs through various cost recovery methods. American Airlines, Inc.
and AMR Eagle have been named as potentially responsible parties
(PRPs) and contributors to the contamination. During the second
quarter of 2001, the Airport filed a lawsuit against 17 defendants,
including American Airlines, Inc., in an attempt to recover its past
and future cleanup costs (Miami-Dade County, Florida v. Advance Cargo
Services, Inc., et al. in the Florida Circuit Court). In addition to
the 17 defendants named in the lawsuit, 243 other agencies and
companies were also named as PRPs and contributors to the
contamination. American and AMR Eagle's portion of the cleanup costs
cannot be reasonably estimated due to various factors, including the
unknown extent of the remedial actions that may be required, the
proportion of the cost that will ultimately be recovered from the
responsible parties, and uncertainties regarding the environmental
agencies that will ultimately supervise the remedial activities and
the nature of that supervision. American is vigorously defending the
lawsuit.
Item 4. Submission of Matters to a Vote of Security Holders
The owners of 131,649,384 shares of common stock, or 86 percent of
shares outstanding, were represented at the annual meeting of
stockholders on May 16, 2001 at the American Airlines Training &
Conference Center, Flagship Auditorium, 4501 Highway 360 South, Fort
Worth, Texas.
Elected as directors of the Corporation, each receiving a minimum of
127,712,378 votes were:
David L. Boren Ann McLaughlin Korologos
Edward A. Brennan Michael A. Miles
Donald J. Carty Philip J. Purcell
Armando M. Codina Joe M. Rodgers
Earl G. Graves Judith Rodin
Stockholders ratified the appointment of Ernst & Young LLP as
independent auditors for the Corporation for 2001. The vote was
129,228,640 in favor; 830,851 against; and 1,589,893 abstaining.
A stockholder proposal relating to the future location of the annual
meetings of stockholders - submitted by Mrs. Evelyn Y. Davis - was
defeated. The vote was 2,575,753 in favor; 110,967,362 against;
2,105,203 abstaining; and 16,004,066 non-voting.
A stockholder proposal relating to increasing the Board of Directors
independence by adopting the Council of Institutional Investors
standard of independence in the Company's by-laws - submitted by Mr.
John Chevedden - was defeated. The vote was 14,674,879 in favor;
97,954,054 against; 3,018,385 abstaining; and 16,002,066 non-voting.
-18-
<Page> 21
Item 6. Exhibits and Reports on Form 8-K
The following exhibits are included herein:
12 Computation of ratio of earnings to fixed charges for the three
and six months ended June 30, 2001 and 2000.
Form 8-Ks filed under Item 5 - Other Events
On April 11, 2001, AMR filed a report on Form 8-K relative to a
press release issued to announce the completion of American Airlines,
Inc. acquisition of Trans World Airways, Inc.
On April 12, 2001, AMR filed a report on Form 8-K relative to a
press release issued to report all debt obligations of AMR and
American Airlines, Inc. remain investment grade.
On April 19, 2001, AMR filed a report on Form 8-K relative to a
press release issued to report the Company's first quarter 2001
earnings.
On April 24, 2001, AMR filed a report on Form 8-K to report that
based upon preliminary information received from Trans World Airways,
Inc., the Company does not believe the acquisition of Trans World
Airways, Inc. represents a significant acquisition as defined in
Regulation S-X.
On April 30, 2001, AMR filed a report on Form 8-K relative to two
press releases issued to announce: (i) American Airlines, Inc. was
granted its motion for summary judgment in the U.S. Government's 1999
civil lawsuit alleging predatory pricing by American Airlines, Inc.,
and (ii) American Airlines, Inc. has reached an agreement with the
Allied Pilots Association (APA) on a settlement to the outstanding
$45.5 million contempt damage award levied against the APA.
On May 10, 2001, AMR filed a report on Form 8-K relative to a press
release issued to report that American Airlines, Inc. has placed an
order for 15 new GE-powered Boeing 767-300ER widebody aircraft.
On May 11, 2001, AMR filed a report on Form 8-K to provide
information discussed at the May 10, 2001 security analyst meeting
hosted by AMR to discuss the expected impact to AMR of the acquisition
of Trans World Airlines, Inc.
On May 24, 2001, AMR filed a report on Form 8-K relative to a press
release issued to announce that American Airlines, Inc. would accept
binding arbitration proffered by the National Medication Board to
settle contract negotiations with the Association of Professional
Flight Attendants.
On May 31, 2001, AMR filed a report on Form 8-K relative to a press
release issued in response to the Association of Professional Flight
Attendants' (APFA) rejection of the National Mediation Board's proffer
of binding arbitration to resolve the remaining contract issues of the
APFA.
On June 18, 2001, AMR filed a report on Form 8-K relative to a
press release issued to announce: (i) a reduction in American
Airlines, Inc. capacity resulting from a sluggish U.S. economy, (ii)
AMR expects its second quarter loss to exceed $100 million, and (iii)
AMR will take an after-tax charge of approximately $425 million in the
second quarter 2001 to write down certain aircraft.
On June 26, 2001, AMR filed a report on Form 8-K relative to a
press release issued in response to the White House announcement of
the appointment of a Presidential Emergency Board to intervene in
American's negotiations with the Association of Professional Flight
Attendants if a negotiated settlement has not been reached by
12:01a.m. EDT on July 1, 2001.
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<Page> 22
Item 6. Exhibits and Reports on Form 8-K (Continued)
Form 8-Ks furnished under Item 9 - Regulation FD Disclosure
On April 12, 2001, AMR filed a report on Form 8-K to announce
information relating to AMR's intent to host a conference call on
April 19, 2001 with the financial community relating to its first
quarter 2001 earnings.
On May 4, 2001, AMR filed a report on Form 8-K to announce it will
host a security analyst meeting on May 10, 2001 to discuss the Trans
World Airlines, Inc. acquisition and provide updated information on
how the Trans World Airlines, Inc. transaction is expected to impact
AMR.
On May 23, 2001, AMR filed a report on Form 8-K relative to
certain data regarding its unit costs, capacity, traffic and fuel,
and a monthly update.
On May 31, 2001, AMR filed a report on Form 8-K to announce that
AMR's Chairman and CEO Don Carty will be speaking at Merrill Lynch's
Eighth Annual Global Transportation Leaders Conference on June 4,
2001.
On June 18, 2001, AMR filed a report on Form 8-K relative to
certain data regarding its unit costs, capacity, traffic and fuel,
and a monthly update.
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<Page> 23
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amended report to be signed on
its behalf by the undersigned thereunto duly authorized.
AMR CORPORATION
Date: August 13, 2001 BY: /s/ Thomas W. Horton
Thomas W. Horton
Senior Vice President and Chief
Financial Officer
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<Page> 24
Exhibit 12
AMR CORPORATION
Computation of Ratio of Earnings to Fixed Charges
(in millions)
<Table>
<Caption>
Three Months Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
<s> <c> <c> <c> <c>
Earnings:
Earnings (loss) from continuing
operations before income taxes $(793) $ 522 $(850) $679
Add: Total fixed charges
(per below) 423 332 754 660
Less: Interest capitalized 38 36 79 74
Total earnings (loss) $(408) $ 818 $(175) $1,265
Fixed charges:
Interest, including interest
capitalized $126 $ 111 $240 $ 226
Portion of rental expense
representative of the
interest factor 290 216 502 425
Amortization of debt expense 7 5 12 9
Total fixed charges $423 $332 $754 $660
Ratio of earnings to fixed charges - 2.46 - 1.92
Coverage deficiency $831 - $929 -
</Table>
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