American Airlines Group, Inc.

AMR Corporation Reports a Second Quarter Profit of $58 Million Despite High Fuel Costs and Historically Low Ticket Prices

July 20, 2005
Continued Focus on Cost Control and Revenue Performance Produces American's First Quarterly Profit, Without Benefit of Special Items, Since the Fourth Quarter of 2000 American Targeting Continued Progress Toward Required Financial Performance

FORT WORTH, Texas, July 20, 2005 /PRNewswire-FirstCall via COMTEX/ -- AMR Corporation (NYSE: AMR), the parent company of American Airlines, Inc., today reported a net profit of $58 million for the second quarter, or $0.30 per share fully diluted, compared to a net profit of $6 million (which included a $31 million benefit from special items), or $0.03 per share fully diluted, in the second quarter last year. The second quarter was the company's first profitable quarter, without the benefit of special items, since the fourth quarter of 2000.

"The fact that we were able to earn a small profit despite record high fuel prices and a difficult industry environment speaks volumes about our people, who continue to meet our many challenges with determination and ingenuity," said AMR Chairman and CEO Gerard Arpey.

"Working together, we have made significant progress in all aspects of the Turnaround Plan that we launched several years ago," Arpey said. "That progress has become even more crucial, given record high fuel prices that continue to afflict the industry."

During the second quarter, the Company paid $434 million more for fuel than it would have paid with last year's fuel prices.

"The high price of fuel remains one of the biggest clouds hanging over our company and our industry," Arpey said, "and unfortunately, there doesn't seem to be any relief in sight -- oil prices in the second half of the year are currently projected to be higher than during the second quarter. As a result, we have no choice but to redouble our efforts to wring cost and inefficiency out of everything we do."

American's mainline cost per available seat mile in the quarter was up 5.6 percent year over year. However, excluding fuel and last year's special items, the airline's unit cost was down 4.3 percent year over year. "This is a reflection of the many cost-saving initiatives we continue to find," Arpey said. "In addition to the $700 million in annual savings we built into our 2005 budget, our employees have identified -- since the beginning of this year -- another $65 million in expected annual savings on a steady-state basis."

American's revenue performance was buoyed by a combination of capacity restraint, network and aircraft changes, and record high traffic levels. During the second quarter, revenue passenger miles were up 7.4 percent year over year, while available seat miles grew 2.3 percent overall, and decreased 1.6 percent domestically. American's systemwide load factor -- or the percentage of total seats filled -- hit a record of 79.5 percent. Yield, which represents average fares, increased 1.9 percent year over year -- the company's first quarterly yield increase since the fourth quarter of 2003.

"The improvement we have seen on the revenue side of the ledger has only been possible as a result of our people's ability to efficiently and courteously handle an enormous number of customers," Arpey said. "At the same time, we are reaping the benefits of the many changes we have made to our network and product during the past several years. Our load factor is strong, and fares -- while still far too low to provide adequate returns -- have improved somewhat in recent months."

Arpey noted that after 17 quarters of losses, excluding special items, it feels good to report even a modest profit.

"I hope our people take pride in what we have accomplished together," Arpey said. "However, we need to be honest about the fact that -- given the losses of the past four years -- we are digging our way out of a very deep hole. What's more, given the strength of the economy and the public's current appetite for air travel, our second quarter results should be much better."

"High fuel prices are not an excuse," he said, "but they are a constant reminder that our industry is changing and we must change with it to ensure our future. Our competitors continue to lower their costs either in or outside of the bankruptcy court, and the currently improving fare levels are still low by historical standards."

Arpey pointed out that in addition to earning a modest profit, AMR was able to contribute $75 million to its various defined benefit pension plans in the second quarter, bringing its total contributions to the plans this year to $213 million. AMR also was able to grow its cash balance, ending the period with $3.9 billion in cash and short-term investments, including a restricted balance of $492 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; actions by U.S. or foreign government agencies; the possible occurrence of additional terrorist attacks; another outbreak of a disease (such as SARS) 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 2004 Form 10-K.

Detailed financial information follows:



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

                                    Three Months Ended June 30,      Percent
                                       2005            2004           Change

     Revenues
       Passenger - American Airlines    $4,264          $3,895           9.5
                 - Regional Affiliates     561             505          11.1
       Cargo                               157             155           1.3
       Other revenues                      327             275          18.9
         Total operating revenues        5,309           4,830           9.9

     Expenses
       Wages, salaries and benefits      1,671           1,703          (1.9)
       Aircraft fuel                     1,350             917          47.2
       Other rentals and landing fees      319             301           6.0
       Depreciation and amortization       286             320         (10.6)
       Commissions, booking fees and
        credit card expense                286             287          (0.3)
       Maintenance, materials
        and repairs                        257             245           4.9
       Aircraft rentals                    147             153          (3.9)
       Food service                        127             139          (8.6)
       Other operating expenses            637             600           6.2
       Special charges                     ---             (31)          *
         Total operating expenses        5,080           4,634           9.6

     Operating Income                      229             196          16.8

     Other Income (Expense)
       Interest income                      29              14           *
       Interest expense                   (223)           (217)          2.8
       Interest capitalized                 24              20          20.0
       Miscellaneous - net                  (1)             (7)        (85.7)
                                          (171)           (190)        (10.0)

     Income Before Income Taxes             58               6           *
     Income tax                            ---             ---           ---
     Net Earnings                          $58              $6           *

     Earnings Per Share
     Basic                               $0.35           $0.04
     Diluted                             $0.30           $0.03

     Number of Shares Used in
      Computation
       Basic                               163             160
       Diluted                             216             183

     *  Greater than 100%



                               AMR CORPORATION
                             OPERATING STATISTICS
                                 (Unaudited)

                                         Three Months Ended
                                              June 30,                Percent
                                         2005           2004           Change

     American Airlines, Inc.
      Mainline Jet Operations
       Revenue passenger miles
        (millions)                      35,795          33,323           7.4
       Available seat miles (millions)  45,018          43,997           2.3
       Cargo ton miles (millions)          558             567          (1.6)
       Passenger load factor             79.5%           75.7%        3.8 pts.
       Passenger revenue yield per
        passenger mile (cents)           11.91           11.69           1.9
       Passenger revenue per available
        seat mile (cents)                 9.47            8.85           7.0
       Cargo revenue yield per ton
        mile (cents)                     28.14           27.24           3.3
       Operating expenses per available
        seat mile, excluding Regional
        Affiliates (cents) (A)           10.03            9.50           5.6
       Fuel consumption (gallons,
        in millions)                       749             762          (1.7)
       Fuel price per gallon (cents)     163.4           111.2          46.9

     Regional Affiliates
       Revenue passenger miles
        (millions)                       2,317           1,857          24.8
       Available seat miles (millions)   3,211           2,665          20.5
       Passenger load factor             72.2%           69.7%        2.5 pts.

     AMR Corporation
     Average Equivalent Number
      of Employees
       American Airlines                75,100          79,900
       Other                            13,400          12,600
         Total                          88,500          92,500

     (A)  Excludes $627 million and $517 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 June 30,
     (in millions, except as noted)                 2005           2004

     Total operating expenses                       $5,143         $4,698
     Less: Operating expenses incurred related
      to Regional Affiliates                           627            517
     Operating expenses excluding expenses
      incurred related to Regional Affiliates       $4,516         $4,181
     American mainline jet operations available
      seat miles                                    45,018         43,997

     Operating expenses per available seat mile,
      excluding Regional Affiliates (cents)          10.03           9.50

     Less: Impact of special items (cents)             ---          (0.07)
     Less: Fuel cost per available seat
      mile (cents)                                    2.72           1.93
     Operating expenses per available seat mile,
      excluding impact of special items and the
      cost of fuel (cents)                            7.31           7.64

     Percent change                                   (4.3)%

     AMR Corporation
     Impact of Fuel Price Variance

     Average fuel price per gallon (cents)
       Three months ended June 30, 2005              164.2
       Three months ended June 30, 2004              111.4
     Change in price (cents)                          52.8
     2005 consumption (gallons, in millions)      x  822.3

     Impact of fuel price variance (in millions)    $434.2

     Note: The Company believes that operating expenses per available seat
     mile, excluding special items (which relate to prior periods) 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.



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

                                     Six Months Ended June 30,        Percent
                                        2005            2004           Change
     Revenues
       Passenger - American Airlines    $8,106          $7,573           7.0
                 - Regional Affiliates   1,012             925           9.4
       Cargo                               308             303           1.7
       Other revenues                      633             541          17.0
         Total operating revenues       10,059           9,342           7.7

     Expenses
       Wages, salaries and benefits      3,315           3,343          (0.8)
       Aircraft fuel                     2,448           1,725          41.9
       Other rentals and landing fees      619             606           2.1
       Depreciation and amortization       576             646         (10.8)
       Commissions, booking fees and
        credit card expense                557             575          (3.1)
       Maintenance, materials and
        repairs                            492             476           3.4
       Aircraft rentals                    295             306          (3.6)
       Food service                        252             276          (8.7)
       Other operating expenses          1,253           1,182           6.0
       Special charges                     ---             (31)          *
         Total operating expenses        9,807           9,104           7.7

     Operating Income                      252             238           5.9

     Other Income (Expense)
       Interest income                      64              28           *
       Interest expense                   (457)           (429)          6.5
       Interest capitalized                 47              38          23.7
       Miscellaneous - net                 (10)            (35)        (71.4)
                                          (356)           (398)        (10.6)

     Loss Before Income Taxes             (104)           (160)         35.0
     Income tax                            ---             ---           *
     Net Loss                            $(104)          $(160)         35.0

     Basic and Diluted Loss Per Share   $(0.64)         $(1.00)

     Number of Shares Used in
      Computation
       Basic and Diluted                   162             160

     *  Greater than 100%



                               AMR CORPORATION
                             OPERATING STATISTICS
                                 (Unaudited)

                                          Six Months Ended
                                              June 30,                Percent
                                        2005            2004           Change
     American Airlines, Inc.
      Mainline Jet Operations
       Revenue passenger miles
        (millions)                      68,123          63,613           7.1
       Available seat miles (millions)  87,872          86,594           1.5
       Cargo ton miles (millions)        1,098           1,088           0.9
       Passenger load factor             77.5%           73.5%        4.0 pts.
       Passenger revenue yield per
        passenger mile (cents)           11.90           11.90           ---
       Passenger revenue per available
        seat mile (cents)                 9.22            8.75           5.4
       Cargo revenue yield per ton
        mile (cents)                     28.08           27.83           0.9
       Operating expenses per
        available seat mile, excluding
        Regional Affiliates (cents) (A)   9.92            9.49           4.5
       Fuel consumption (gallons,
        in millions)                     1,478           1,503          (1.7)
       Fuel price per gallon (cents)     150.2           106.2          41.4

     Regional Affiliates
       Revenue passenger miles
        (millions)                       4,202           3,396          23.7
       Available seat miles (millions)   6,126           5,118          19.7
       Passenger load factor             68.6%           66.3%        2.3 pts.

     (A)  Excludes $1.2 billion and $1.0 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                           Six Months Ended June 30,
     (in millions, except as noted)               2005           2004

     Total operating expenses                     $9,924         $9,226
     Less: Operating expenses incurred related
      to Regional Affiliates                       1,210          1,004
     Operating expenses excluding expenses
      incurred related to Regional Affiliates     $8,714         $8,222
     American mainline jet operations
      available seat miles                        87,872         86,594
     Operating expenses per available seat
      mile, excluding expenses incurred
      related to Regional Affiliates (cents)        9.92           9.49


      Current AMR Corp. news releases can be accessed via 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