American Airlines Group, Inc.

AMR Corporation Reports a Fourth Quarter Loss of $604 Million, As Compared to a $387 Million Loss in 2004

January 18, 2006
High Fuel Prices and Competitors With Lower Costs Continued to Impact American's Financial Performance Despite These Headwinds, AMR's Fourth Quarter Results, Excluding Special Items, Improved Year Over Year

Jan 18, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- AMR Corporation (NYSE: AMR), parent company of American Airlines, Inc., today reported a net loss of $604 million in the fourth quarter of 2005, or $3.49 per share, as compared to a net loss of $387 million, or $2.40 per share, in the fourth quarter of 2004. The loss for the fourth quarter of 2005 includes a net $191 million negative impact of special items, including $155 million for aircraft charges, $73 million for facility charges and a $37 million gain related to debt restructuring. Without these special items, AMR would have recorded a net loss of $413 million, or $2.39 per share, in 2005. The net loss in the fourth quarter of 2004 was $473 million, or $2.94 per share, excluding an $86 million net gain due to special items.

For the year 2005, AMR posted a $93 million operating loss and a net loss of $861 million, as compared to 2004's full-year operating loss of $144 million and net loss of $761 million. Special items resulted in a net charge of $180 million in 2005 and a net gain of $135 million in 2004. Excluding these special items, the Company's net loss would have been $681 million in 2005, with operating earnings of $100 million, and $896 million in 2004, with an operating loss of $133 million.

"Our fourth quarter results close the book on another very difficult year," said AMR Chairman and CEO Gerard Arpey. "But while we are dissatisfied with our financial results, we did make progress in a number of important areas during the year, including our first annual operating profit, excluding special items, since the year 2000. As a result, we have -- unlike many of our competitors -- continued to meet our various financial obligations, including funding our defined benefit pension programs. And, by working together with our people and our unions, we have continued to improve the efficiency and productivity of every part of the company. Our collaborative approach enabled us to retain control of our destiny in 2005, despite a challenging revenue environment and higher fuel prices driving a $1.7 billion increase in fuel costs, compared to what we would have paid at 2004 prices."

During the fourth quarter, the Company paid $433 million more for fuel than it would have paid at 2004 prices and, on a year over year basis, American's mainline cost per available seat mile was up by 12.9 percent. Excluding fuel and special items, mainline unit costs increased 2.8 percent versus the fourth quarter of 2004. For the full year, mainline unit costs increased 7.9 percent; however, excluding fuel and special items, these unit costs decreased 2.0 percent.

Arpey congratulated the airline's employees for lowering unit costs, excluding fuel and special items, for the fourth year in a row in 2005. He also pointed out that good customer service, capacity restraint, new products, and numerous fleet and schedule changes enabled American to outperform the industry in generating passenger revenue. Included in the numerous fleet and schedule changes was the year-end decision to permanently ground 27 MD80 aircraft, 24 of which had previously been in temporary storage. The remaining three aircraft were grounded as of Dec. 31, 2005.

For the quarter, American's passenger revenue per available seat mile was up 13.8 percent year over year. American's load factor -- or percentage of seats filled -- for the fourth quarter was 77.9 percent, up 3.6 points over the fourth quarter of 2004, while yield, representing average fares, was up 8.5 percent.

"As our revenue performance indicates, we have been doing a good job of giving customers what they value, and leveraging our global network, strong brand and well-earned reputation for customer service," Arpey said. "We expect these American strengths to continue serving us well in 2006 and beyond, but the fact is we need to do more -- on both the cost and revenue sides of the ledger -- to return our company to sustained profitability."

Arpey noted that the Performance Leadership Initiative (PLI) -- a collaborative effort launched in 2005 -- has the potential to generate substantial improvements, and close gaps between the company's performance, and what would be considered best in class. "PLI is the natural next step in the Turnaround Plan we launched several years ago," Arpey said. "Every work group in the company has participated in identifying the areas where more improvement is needed."

Arpey said one important by-product of the company's collaborative approach has been its ability to meet all of its pension obligations. During the fourth quarter, AMR contributed $22 million to its various defined benefit plans, bringing the 2005 total pension contribution to $310 million.

AMR ended the year with $4.3 billion in cash and short-term investments, including a restricted balance of $510 million.

Statements in this release contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events. When used in this release, the words "expects," "plans," "anticipates," "indicates," "believes," "forecast," "guidance," "outlook" and similar expressions are intended to identify forward-looking statements. Forward- looking statements include, without limitation, the Company's expectations concerning operations and financial conditions, including changes in capacity, revenues and costs, future financing plans and needs, overall economic conditions, plans and objectives for future operations, and the impact on the Company of its results of operations in recent years and the sufficiency of its financial resources to absorb that impact. Other forward-looking statements include statements which do not relate solely to historical facts, such as, without limitation, statements which discuss the possible future effects of current known trends or uncertainties or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company undertakes no obligation to publicly update or revise any forward- looking statement, whether as a result of new information, future events, or otherwise.

Forward-looking statements are subject to a number of factors that could cause the Company's actual results to differ materially from the Company's expectations. The following factors, in addition to other possible factors not listed, could cause the Company's actual results to differ materially from those expressed in forward-looking statements: changes in economic, business and financial conditions; the Company's substantial indebtedness; continued high fuel prices and the availability of fuel; further increases in the price of fuel; the impact of events in Iraq; conflicts in the Middle East or elsewhere; the highly competitive business environment faced by the Company, characterized by increasing pricing transparency and competition from low cost carriers and financially distressed carriers; historically low fare levels and fare simplification initiatives (both of which could result in a further deterioration of the revenue environment); the ability of the Company to reduce its costs further without adversely affecting operational performance and service levels; uncertainties with respect to the Company's international operations; changes in the Company's business strategy; changes in the price of the Company's stock; actions by U.S. or foreign government agencies; the possible occurrence of additional terrorist attacks; another outbreak of a disease (such as SARS or Avian Flu) that affects travel behavior; uncertainties with respect to the Company's relationships with unionized and other employee work groups; the inability of the Company to satisfy existing financial or other covenants in certain of its credit agreements; the availability and terms of future financing; the ability of the Company to reach acceptable agreements with third parties; and increased insurance costs and potential reductions of available insurance coverage. Additional information concerning these and other factors is contained in the Company's Securities and Exchange Commission filings, including but not limited to the Company's 2004 Form 10-K.

Detailed financial information follows:



                               AMR CORPORATION
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                   (in millions, except per share amounts)
                                 (Unaudited)

                                      Three Months Ended December 31,  Percent
                                           2005          2004          Change
     Revenues
       Passenger - American Airlines      $4,080        $3,610          13.0
                 - Regional Affiliates       566           463          22.2
       Cargo                                 162           173          (6.4)
       Other revenues                        360           295          22.0
         Total operating revenues          5,168         4,541          13.8

     Expenses
       Wages, salaries and benefits        1,776         1,680           5.7
       Aircraft fuel                       1,585         1,188          33.4
       Other rentals and landing fees        306           286           7.0
       Depreciation and amortization         296           329         (10.0)
       Commissions, booking fees and
        credit card expense                  264           244           8.2
       Maintenance, materials and repairs    228           230          (0.9)
       Aircraft rentals                      148           151          (2.0)
       Food service                          119           137         (13.1)
       Other operating expenses              830           651          27.5
         Total operating expenses          5,552         4,896          13.4

     Operating Loss                         (384)         (355)          8.2

     Other Income (Expense)
       Interest income                        45            19             *
       Interest expense                     (260)         (223)         16.6
       Interest capitalized                    6            20         (70.0)
       Miscellaneous - net                   (11)          152             *
                                            (220)          (32)            *

     Loss Before Income Taxes               (604)         (387)         56.1
     Income tax                              ---           ---             *
     Net Loss                              $(604)        $(387)         56.1

     Basic and Diluted Loss Per Share     $(3.49)       $(2.40)

     Number of Shares Used in Computation
       Basic and Diluted                     173           161

     *  Greater than 100%



                               AMR CORPORATION
                             OPERATING STATISTICS
                                 (Unaudited)

                                           Three Months Ended
                                               December 31,        Percent
                                            2005         2004      Change

     American Airlines, Inc.
      Mainline Jet Operations
       Revenue passenger miles (millions)  33,226       31,893       4.2
       Available seat miles (millions)     42,627       42,906      (0.7)
       Cargo ton miles (millions)             573          586      (2.2)
       Passenger load factor                77.9%        74.3%       3.6 pts.
       Passenger revenue yield per
        passenger mile (cents)              12.28        11.32       8.5
       Passenger revenue per available
        seat mile (cents)                    9.57         8.41      13.8
       Cargo revenue yield per ton mile
        (cents)                             28.35        29.56      (4.1)
       Operating expenses per available
        seat mile, excluding Regional
        Affiliates (cents) (A)              11.57        10.25      12.9
       Fuel consumption (gallons,
        in millions)                          706          738      (4.3)
       Fuel price per gallon (cents)        202.1        147.4      37.1

     Regional Affiliates
       Revenue passenger miles (millions)   2,359        1,928      22.4
       Available seat miles (millions)      3,262        2,877      13.4
       Passenger load factor                72.3%        67.0%       5.3 pts.

     AMR Corporation
     Average Equivalent Number of Employees
       American Airlines                   74,000       77,500
       Other                               13,200       13,200
         Total                             87,200       90,700

     (A)  Excludes $655 million and $561 million of expense incurred related
          to Regional Affiliates in 2005 and 2004, respectively.



                               AMR CORPORATION
                      NON-GAAP AND OTHER RECONCILIATIONS
                                 (Unaudited)

     American Airlines, Inc.
      Mainline Jet Operations               Three Months Ended December 31,
      (in millions, except as noted)              2005           2004

     Total operating expenses                    $5,588         $4,957
     Less: Operating expenses incurred
      related to Regional Affiliates                655            561
     Operating expenses excluding expenses
      incurred related to Regional Affiliates    $4,933         $4,396
     American mainline jet operations
      available seat miles                       42,627         42,906

     Operating expenses per available seat mile,
      excluding Regional Affiliates (cents)       11.57          10.25

     Impact of special items (cents)              (0.44)         (0.14)
     Fuel cost per available seat mile (cents)    (3.35)         (2.54)
     Operating expenses per available seat mile,
      excluding impact of special items and
      the cost of fuel (cents)                     7.78           7.57

     Percent change                                2.8%



     AMR Corporation
     Impact of Fuel Price Variance

     Average fuel price per gallon (cents)
       Three months ended December 31, 2005       203.3
       Three months ended December 31, 2004       147.7
     Change in price (cents)                       55.6
     2005 consumption (gallons, in millions)    x 779.4
     Impact of fuel price variance
      (in millions)                              $433.3

     Note: The Company believes that operating expenses per available seat
     mile, excluding special items and the cost of fuel, as well as the impact
     of fuel price increases, assist investors in understanding the impact of
     fuel prices on the Company's operations, without regard to special items.



                               AMR CORPORATION
                      NON-GAAP AND OTHER RECONCILIATIONS
                                 (Unaudited)

     AMR Corporation
     Impact of Special Items
     (in millions, except per share amounts)
                                                 Three Months Ended
                                                  December 31, 2005
                                                 Amount          EPS

     Net loss                                    $(604)        $(3.49)
     Less: Impact of special items                 191           1.10
     Net loss excluding special items            $(413)        $(2.39)



     AMR Corporation
     Impact of Special Items
     (in millions, except per share amounts)
                                                 Three Months Ended
                                                  December 31, 2004
                                                 Amount          EPS

     Net loss                                    $(387)        $(2.40)
     Add: Impact of special items                  (86)         (0.54)
     Net loss excluding special items            $(473)        $(2.94)

     Note: The Company believes the loss excluding special items assists
     investors in understanding the impact of the special items on the
     Company's financial results.



                               AMR CORPORATION
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                   (in millions, except per share amounts)
                                 (Unaudited)

                                     Twelve Months Ended December 31,  Percent
                                           2005          2004          Change
     Revenues
       Passenger - American Airlines     $16,614       $15,021          10.6
                 - Regional Affiliates     2,148         1,876          14.5
       Cargo                                 622           625          (0.5)
       Other revenues                      1,328         1,123          18.3
         Total operating revenues         20,712        18,645          11.1

     Expenses
       Wages, salaries and benefits        6,755         6,719           0.5
       Aircraft fuel                       5,615         3,969          41.5
       Other rentals and landing fees      1,262         1,187           6.3
       Depreciation and amortization       1,164         1,292          (9.9)
       Commissions, booking fees and
        credit card expense                1,113         1,107           0.5
       Maintenance, materials and repairs    989           971           1.9
       Aircraft rentals                      591           609          (3.0)
       Food service                          507           558          (9.1)
       Other operating expenses            2,809         2,377          18.2
         Total operating expenses         20,805        18,789          10.7

     Operating Loss                          (93)         (144)        (35.4)

     Other Income (Expense)
       Interest income                       149            66             *
       Interest expense                     (957)         (871)          9.9
       Interest capitalized                   65            80         (18.8)
       Miscellaneous - net                   (25)          108             *
                                            (768)         (617)         24.5

     Loss Before Income Taxes               (861)         (761)         13.1
       Income tax                            ---           ---             *
     Net Loss                              $(861)        $(761)         13.1

     Basic and Diluted Loss Per Share     $(5.21)       $(4.74)

     Number of Shares Used in Computation
       Basic and Diluted                     165           161

     *  Greater than 100%



                               AMR CORPORATION
                             OPERATING STATISTICS
                                 (Unaudited)

                                          Twelve Months Ended
                                              December 31,           Percent
                                          2005          2004         Change

     American Airlines, Inc.
      Mainline Jet Operations
       Revenue passenger miles
        (millions)                       138,374       130,164        6.3
       Available seat miles (millions)   176,112       174,015        1.2
       Cargo ton miles (millions)          2,209         2,203        0.3
       Passenger load factor               78.6%         74.8%        3.8 pts.
       Passenger revenue yield per
        passenger mile (cents)             12.01         11.54        4.1
       Passenger revenue per available
        seat mile (cents)                   9.43          8.63        9.3
       Cargo revenue yield per ton mile
        (cents)                            28.21         28.36       (0.5)
       Operating expenses per available
        seat mile, excluding Regional
        Affiliates (cents) (A)             10.50          9.73        7.9
       Fuel consumption (gallons,
        in millions)                       2,948         3,014       (2.2)
       Fuel price per gallon (cents)       172.3         121.2       42.2

     Regional Affiliates
       Revenue passenger miles (millions)  8,946         7,283       22.8
       Available seat miles (millions)    12,714        10,835       17.3
       Passenger load factor               70.4%         67.2%        3.2 pts.

     (A)  Excludes $2.5 billion and $2.1 billion of expense incurred related
          to Regional Affiliates in 2005 and 2004, respectively.



                               AMR CORPORATION
                      NON-GAAP AND OTHER RECONCILIATIONS
                                 (Unaudited)

     American Airlines, Inc.
      Mainline Jet Operations                 Twelve Months Ended December 30,
     (in millions, except as noted)                 2005          2004

     Total operating expenses                      $21,008       $19,029
     Less: Operating expenses incurred
      related to Regional Affiliates                 2,515         2,104
     Operating expenses excluding expenses
      incurred related to Regional Affiliates      $18,493       $16,925
     American mainline jet operations
      available seat miles                         176,112       174,015
     Operating expenses per available seat mile,
      excluding expenses incurred related to
     Regional Affiliates (cents)                     10.50          9.73

     Impact of special items (cents)                 (0.11)        (0.01)
     Fuel cost per available seat mile (cents)       (2.91)        (2.09)
     Operating expenses per available seat mile,
      excluding impact of special items and
      the cost of fuel (cents)                        7.48          7.63

     Percent change                                   (2.0%)



     AMR Corporation
     Impact of Fuel Price Variance

      Average fuel price per gallon (cents)
        Twelve months ended December 31, 2005        173.5
        Twelve months ended December 31, 2004        121.6
      Change in price (cents)                         51.9
      2005 consumption (gallons, in millions)    x 3,237.0
      Impact of fuel price variance
       (in millions)                              $1,680.0

     Note: The Company believes that operating expenses per available seat
     mile, excluding special items and the cost of fuel, as well as the
     impact of fuel price increases, assist investors in understanding the
     impact of fuel prices on the Company's operations, without regard to
     special items.



                               AMR CORPORATION
                      NON-GAAP AND OTHER RECONCILIATIONS
                                 (Unaudited)

     AMR Corporation
     Impact of Special Items
     (in millions, except per share amounts)
                                                 Twelve Months Ended
                                                  December 31, 2005
                                                 Amount         EPS

     Net loss                                    $(861)       $(5.21)
     Less: Impact of special items                 180          1.09
     Net loss excluding special items            $(681)       $(4.12)



     AMR Corporation
     Impact of Special Items
     (in millions, except per share amounts)
                                                 Twelve Months Ended
                                                  December 31, 2004
                                                 Amount         EPS

     Net loss                                    $(761)       $(4.74)
     Add: Impact of special items                 (135)        (0.84)
     Net loss excluding special items            $(896)       $(5.58)



     AMR Corporation
     Impact of Special Items on Operating Earnings
     (in millions, except per share amounts)
                                                 Twelve Months Ended
                                                     December 31
                                                  2005          2004

     Operating income (loss)                      $(93)        $(144)
     Less: Impact of special items (A)             193            11
     Operating income (loss) excluding
      special items                               $100         $(133)

     (A)  Certain special items in 2005 and 2004 did not impact operating
          earnings.

     Note: The Company believes the operating income/(loss) and net loss
     excluding special items assists investors in understanding the impact of
     the special items on the Company's financial results.

       Current AMR Corp. news releases can be accessed on the Internet.
                      The address is:  http://www.aa.com

SOURCE AMR Corporation

Al Becker, Corporate Communications of AMR Corporation, +1-817-967-1577, or
corp.comm@aa.com
http://www.prnewswire.com