UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of earliest event reported: February 14, 2013
AMR CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 1-8400 | 75-1825172 | ||
| (State of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 4333 Amon Carter Blvd. Fort Worth, Texas |
76155 | |||
| (Address of principal executive offices) | (Zip Code) | |||
(817) 963-1234
(Registrant’s telephone number)
(Former name or former address, if changed since last report.)
American Airlines, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 1-2691 | 13-1502798 | ||
| (State of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 4333 Amon Carter Blvd. Fort Worth, Texas |
76155 | |||
| (Address of principal executive offices) | (Zip Code) | |||
(817) 963-1234
(Registrant’s telephone number)
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01. | Regulation FD Disclosure. |
In connection with its consideration of a possible transaction with US Airways Group, Inc. (“US Airways”), AMR Corporation (“AMR”) entered into non-disclosure agreements with certain significant holders of publicly traded bonds and other claims against AMR and other debtor subsidiaries in AMR’s Chapter 11 case for the purpose of facilitating confidential discussions between AMR and those creditors. In the course of those discussions, AMR provided to the creditors certain background information regarding AMR and its views regarding a possible transaction between AMR and US Airways. Pursuant to the relevant non-disclosure agreements, AMR was contractually obligated under certain circumstances to make publicly available the materials it provided to the extent such materials could be deemed to constitute material non-public information. The sole purpose of this form 8-K is to satisfy the contractual obligation of AMR under the relevant non-disclosure agreements.
In furnishing the attached information, AMR notes that the information was prepared significantly prior to its completion of its due diligence review of US Airways. Accordingly, all such materials were preliminary and subject to material revision, and in many instances have been superseded; therefore, the attached information should not be relied upon by investors. Without limiting the generality of the foregoing, AMR specifically notes that all materials that estimate synergies potentially achievable in a merger transaction were preliminary in nature and have been superseded. Investors are urged to review the updated information furnished to the Securities and Exchange Commission (“SEC”) on the date hereof, including the investor presentation attached thereto.
A copy of the materials provided to creditors is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference. The information in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit No. |
Description | |
| 99.1 | Materials provided to certain creditors of AMR. | |
Additional Information and Where To Find It
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. The proposed merger transaction between AMR and US Airways will be submitted to the stockholders of US Airways for their consideration. AMR expects to file with the SEC a registration statement on Form S-4 that will include a prospectus of AMR and a proxy statement of US Airways, and US Airways expects to file with the SEC a definitive proxy statement on Schedule 14A. AMR and US Airways also plan to file other documents with the SEC regarding the proposed transaction. INVESTORS AND SECURITY HOLDERS OF US AIRWAYS ARE URGED TO READ THE PROXY STATEMENT, PROSPECTUS AND OTHER RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of the proxy statement, prospectus and other documents containing important information about AMR and US Airways, once such documents are filed with the SEC, through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by US Airways, when and if available, can be obtained free of charge on US Airways’ website at www.usairways.com or by directing a written request to US Airways Group, Inc., 111 West Rio Salado Parkway, Tempe, Arizona 85281, Attention: Vice President, Legal Affairs. Copies of the documents filed with the SEC by AMR, when and if available, can be obtained free of charge on AMR’s website at www.aa.com or by directing a written request to AMR Corporation, P.O. Box 619616, MD 5675, Dallas/Fort Worth International Airport, Texas 75261-9616, Attention: Investor Relations or by emailing investor.relations@aa.com.
US Airways, AMR and certain of their respective directors, executive officers and certain members of management may be deemed to be participants in the solicitation of proxies from the stockholders of US Airways in connection with the proposed transaction. Information about the directors and executive officers of US Airways is set forth in its proxy statement for its 2012 annual meeting of stockholders, which was filed with the SEC on April 27, 2012. Information about the directors and executive officers of AMR is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which was filed with the SEC on February 15, 2012. These documents can be obtained free of charge from the sources indicated above. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the prospectus and proxy statement and other relevant materials when and if filed with the SEC in connection with the proposed transaction.
Cautionary Statement Regarding Forward-Looking Statements
This document includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “forecast” and other similar words. These forward-looking statements are based on AMR’s and US Airways’ current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the forward-looking statements. The following factors, among others, could cause actual results and financial position and timing of certain events to differ materially from those described in the forward-looking statements: failure of a proposed transaction to be implemented; the challenges and costs of closing, integrating, restructuring and achieving anticipated synergies; the ability to retain key employees; and other economic, business, competitive, and/or regulatory factors affecting the businesses of US Airways and AMR generally, including those set forth in the filings of US Airways and AMR with the SEC, especially in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of their respective annual reports on Form 10-K and quarterly reports on Form 10-Q, their current reports on Form 8-K and other SEC filings, including the registration statement, proxy statement and prospectus. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statements. Neither AMR nor US Airways assumes any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these forward-looking statements except as required by law.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, AMR Corporation has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AMR Corporation | ||||||
| Date: February 14, 2013 | By: | /s/ Kenneth W. Wimberly | ||||
| Kenneth W. Wimberly | ||||||
| Corporate Secretary | ||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, American Airlines, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| American Airlines, Inc. | ||||||
| Date: February 14, 2013 | By: | /s/ Kenneth W. Wimberly | ||||
| Kenneth W. Wimberly | ||||||
| Corporate Secretary | ||||||
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Materials provided to certain creditors of AMR. | |
Exhibit 99.1
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
January 14, 2013
New American Airlines: Preferred carrier for investors and high value customers
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Forward-looking statements
This Presentation contains various forward-looking statements which represent our expectations or beliefs concerning future events. When used in this document, the words “expects,” “estimates,” “plans,” “anticipates,” “indicates,” “believes,” “projects,” “forecast,” “guidance,” “outlook,” “may,” “will,” “should,” “could,” “seeks,” “targets” and similar expressions are intended to identify forward-looking statements. Similarly, statements that describe our strategies, objectives, plans or goals, or actions we may take in the future, are forward-looking statements. Forward-looking statements include, without limitation, statements about:
- the results and benefits of our restructuring
- our business strategies, plans and objectives, including the anticipated impact of such strategies, plans and objectives;
- our future operating and financial performance, including changes in revenues and costs;
- expectations regarding opportunities for growth;
- our aircraft fleet plans and our future financing plans and needs; and
- overall economic and industry conditions.
Other forward-looking statements include statements which do not relate solely to historical facts, such as 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 presentation are based upon information available to us on the date of this Presentation. Neither we nor any of our subsidiaries, officers, directors, employees or retained professionals undertakes any obligation to 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 our actual results to differ materially from our expectations. For information concerning such factors, see our filings with the Securities and Exchange Commission, including but not limited to our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2011, June 30, 2011, and September 30, 2011 and our Annual Reports on Form 10-K ended December 31, 2011
This Presentation indicates how we expect to emerge from the bankruptcy as a “new” airline assuming a completed restructuring. Our restructuring is subject to the completion of many tasks in our Chapter 11 cases, various approvals from the Bankruptcy Court, and a successful confirmation of a plan of reorganization
The information in this Presentation is based on our current reorganization plans and expectations, and is subject to change. This Presentation should not be regarded as a representation or warranty by the Debtors or any other person as to the accuracy of the projected financial or other information or that any projections set forth in the Presentation will be realized.
American Airlines 1
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
American Airlines Overview
Operating Revenues
($ billions)
Cargo $0.7
Other $2.6 Pacific $1.0 Atlantic $2.4 Total $24.7 Domestic $13.6 Latin $4.5
Y/E Nov 2012
Top Ten Airlines (ASMS)
United
Delta
Lufthansa Group
American
Emirates
Air France-KLM
IAG
Southwest
US Airways
China Southern
May 2013
YE 2012 Employees 81,700
YE 2012 Aircraft 599 Mainline, 291 Regional
Hubs Chicago, Dallas, Los Angeles, Miami, New York
Destinations Served 280 (203 Domestic + 77 International)
Alliance oneworld
Source: SEC Filings, internal company analysis, Diio American Airlines 2
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Highly successful restructuring
The majority of our milestones are on track to being achieved
- New labor agreements with all groups - mainline and regional
- Achieved significant savings by freezing the pensions
- Significant vendor savings
- Renegotiated certain aircraft financings and reduced balance sheet debt
- Reduced corporate overhead
End result to be a company that is well-positioned for long term success
- Sustained profitability
- Labor stability with all groups
- Management, labor, and unsecured creditors will all be financially aligned and invested in the company’s success
Although much work remains, with the majority of our major milestones having been achieved, our plan is on track
American Airlines 3
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT
PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
New American: Redesigned for long-term success
Lower cost structure and balance sheet that will generate highly attractive, long term financial results
Expanded global network that, in conjunction with oneworld partners, will be the most attractive network to high value customer segments
Revitalized products and services that will elevate American to an industry leadership position
American Airlines 4
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
New American: Preferred global carrier for Investors
Cost Structure
Among the lowest non-labor costs of any major US carrier
Highly competitive labor costs
Retirement and medical benefits in line with industry leaders
Operational Flexibility
Fleet flexibility to adapt to changing market conditions
Broad portfolio of aircraft choices to address network opportunities
Market-based scope agreements allow expansion of regional operations
and codesharing with domestic partners
Ability to outsource aircraft maintenance and airport operations
Capital Structure
Among the lowest leverage of any major US network carrier
Low leverage should provide liquidity and financial resilience to better
withstand market volatility
Projected best in class EBITDAR margin and significant balance sheet strength
American Airlines 5
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT
PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
New American: Preferred global carrier for High Value Customers
Global Network
Hubs in the U.S. cities with the largest concentration of high value
customers
An expanding international network designed around the places the most
important customers want to fly
Deeper and broader partnerships with the world’s premium airlines
Customer Experience and Brand
Investment in product and service upgrades that high value customers
desire
Outstanding passenger productivity and connectivity through planned
technology investments
A seamless and comfortable total travel experience for high value
customers
Fleet and Facilities
Broad portfolio of aircraft facilitates a convenient schedule pattern
Moving to youngest, most efficient fleet among US peers
Premium terminals in hub cities
Increasing share of the high value customer spend will increase profitability
American Airlines 6
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT
PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
New American: Preferred global carrier for Investors
Cost Structure
Among the lowest non-labor costs of any major US carrier
Highly competitive labor costs
Retirement and medical benefits in line with industry leaders
Fleet flexibility to adapt to changing market conditions
Broad portfolio of aircraft choices to address network opportunities
Operational Flexibility
Market-based scope agreements allow expansion of regional operations
and codesharing with domestic partners
Ability to outsource maintenance and airport operations
Capital Structure
Among the lowest leverage of any major US network carrier
Low leverage should provide liquidity and financial resilience to better
withstand market volatility
Projected best in class EBITDAR margin and significant balance sheet strength
American Airlines 7
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Cost Structure
Non-labor cost savings initiatives nearly complete
Aircraft Ownership
Rejected or renegotiated financing on more than 400 aircraft
Vendors and Facilities
Renegotiated more than 9,000 vendor contracts
Addressed over 500 real estate leases
Debt and Interest Savings
Compromised $2.5 billion of debt, in addition to aircraft debt
Planned refinancing of $1.3 billion of aircraft-backed debt
American Airlines 8
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Cost Structure
Non-labor savings of $4.3 billion over five years
Non-Labor Cash Savings
$910M 2013E $1,440M 2014E $770M 2015E $690M 2016E $560M 2017E
Debt and Interest
Vendors and Facilities
Aircraft
2013-2017 Total
$1.3B
$1.5B
$1.5B
Source: Internal Company projections American Airlines 9
Cost Structure
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Best-in-class non-labor unit costs
US Airways’ costs are lower due to limited international operations and lesser product offering
Mainline Ex-Fuel Non-Labor Unit Costs
Stage-Length Adjusted
6.0¢
5.2¢
5.0¢
4.9¢
5.0¢
United
American
Delta
US Airways
New American
Year Ending 2011
Source: SEC documents and company analysis. 10 Note: New American adjusted for projected non-labor savings, offset by incremental outsourcing costs
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Cost Structure
$1.1 billion in average annual labor savings
Employee Costs
Reduced management headcount by 15% and costs by 17%
Six-year agreements with all organized labor groups
Pensions frozen and competitive defined-contribution plans instituted
Substantial majority of labor savings achieved through long-lasting structural changes
– Additional outsourcing flexibility, productivity increases and competitive retirement and medical benefits
Labor groups’ equity stakes in the New American better align employees’ financial incentives with the Company’s
American Airlines 11
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Cost Structure
$1.1 billion in average annual labor savings
Labor Cash Savings
$1,350M
$1,280M
$1,130M
$1,060M
$780M
2013E
2014E
2015E
2016E
2017E
Average Labor Savings
$1.1B
Agents, Reps, & Planners
Management / Support
Flight Attendants
Pilots
Mechanics, Fleet Service,
and Other Ground
Source: Company analysis 12 Note: Excludes one-time payments related to early-outs and severance; Includes incremental outsourcing costs
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Cost Structure
Results in competitive labor unit costs
Our relative position is expected to continue to improve as other carriers either have open labor contracts or new costlier agreements not reflected here
Mainline Labor Unit Costs
Stage-Length Adjusted
4.4¢
3.7¢
3.4¢
3.4¢
2.9¢
American
United
Delta
US Airways
New American
Year ending 2011
Source: SEC documents and company analysis. 13 Note: New American adjusted for projected labor savings, excluding one-time labor and incremental outsourcing costs
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Cost Structure
Total cost savings average $2.0 billion per year
Total Cash Savings
Labor
Non Labor
$2.7B
$2.1B
$1.7B
$1.7B
$1.7B
2013E
2014E
2015E
2016E
2017E
Source: Company analysis 14 Note: Excludes one-time labor payments related to early-outs and severance; Includes incremental outsourcing costs
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Cost Structure
Highly competitive cost structure
Total Mainline Ex-Fuel Unit Costs
Stage-Length Adjusted
9.7¢
9.7¢
8.4¢
8.4¢
7.9¢
United
American
Delta
US Airways
New American
Year ending 2011
Source: SEC documents and company analysis. 15 Note: New American adjusted for projected non-fuel operating savings, excluding one-time labor payments
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
New American: Preferred global carrier for Investors
Cost Structure
Among the lowest non-labor costs of any major US carrier
Highly competitive labor costs
Retirement and medical benefits in line with industry leaders
Fleet flexibility to adapt to changing market conditions
Broad portfolio of aircraft choices to address network opportunities
Operational Flexibility
Market-based scope agreements allow expansion of regional operations and codesharing with domestic partners
Ability to outsource maintenance and airport operations
Capital Structure
Among the lowest leverage of any major US network carrier
Low leverage should provide liquidity and financial resilience to better withstand market volatility
Projected best in class EBITDAR margin and significant balance sheet strength
American Airlines 16
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Operational Flexibility
While American plans to grow with the industry…
Growth is concentrated in the back half of the forecast period and can be tempered through adjustments to the fleet plan
American Capacity vs. Industry (ASMs)
Indexed to 2011 actual
Industry: 2012-2017 CAGR = 3.2%
American: 2012-2017 CAGR = 3.5%
2011A 2012E 2013E 2014E 2015E 2016E 2017E
Source: Innovata American Airlines 17
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Operational Flexibility
. . . . American has very substantial fleet flexibility
Options, lease expirations, and older unencumbered aircraft provide flexibility to respond to market conditions
Capacity purchase renewals and expirations and unencumbered aircraft provide regional flexibility
Mainline Fleet Flexibility
Maximum Plan Minimum
Max = 693
Plan = 652 185
Min = 508
2015E
Max = 794 237
Plan = 691
Min = 557
2017E
Regional Fleet Flexibility
Plan Minimum
Plan = 332 144
Min = 188
2015E
Plan = 364
Min = 123
2017E
241
American Airlines 18
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Operational Flexibility
The fleet is transformed over the next five years
The fleet plan calls for older, fuel inefficient aircraft such as MD80s and 767s to be replaced with newer, next generation aircraft such as 737s and B787s
Mainline Fleet By Type
YE 2012 YE 2017
190 89 195 446 174 53 49 103
MD80 B737 / A320 Family B757/ B767 B777 / B787
American Airlines 19
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Operational Flexibility
Fleet replacement will improve earnings . . .
Fuel efficiency and lower maintenance costs are expected to more than offset the increased ownership / leasing costs of the new aircraft
Aircraft were evaluated on an absolute and replacement basis to ensure adequate return on the capital investment
Replacement Example: New A319 vs. 20 Year-Old MD-80
Annual economics per aircraft
Earnings Improvement
Current MD80 Net Earnings
Revenue
Fuel
Maintenance
Crew, Landing Fees, Services, and Other
Ownership
New A319 Net Earnings
Assume $3.00 fuel, 513 miles stage length 2,332 annual departures, in-sourced maintenance Airlines
20
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Operational Flexibility
. . . and better matches aircraft to market size
Today Future
UNITED DELTA AA AA
Smallest narrow-body 108 124 140 102
Largest regional jet 76 76 66 76
“Gap” 32 48 74 26
Improved fleet “distribution” will enable American to deploy the right aircraft in the right markets
American Airlines
21
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Operational Flexibility
Impact of gauge improvement on profitability
Revenue impact of gauge and regional flying
2012 to 2017
A. Mainline downgauge
Moving from ~160 to ~153 average seats per departure improves mainline PRASM
B. Regional upgauge
Moving from 51 to 64 average seats per departure decreases regional PRASM
C. Mainline to Regional downgauge
Shift from mainline to higher PRASM regional flying increases consolidated PRASM
D. Total revenue impact D = A – B + C
E. Incremental cost1
Shift to more regional flying increases CASM
F. EBITDAR impact
F = D – E
1 Illustrative analysis of CASM change due to mix of regional and mainline flying. Full impact is implicit in BPM and is influenced by several factors (i.e., efficiency of new fleet, fuel, labor, etc.)
American Airlines
22
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Operational Flexibility
Enhanced scope agreements provide operational flexibility
Increased maximum number of large regional jets from 47 aircraft to 40% of narrowbody fleet size in 2016
Increased codesharing up to 50% of domestic capacity
M&R outsourcing of up to 35% of spend and ability to outsource airport services
Percent of regional ASMs
Domestic codeshare capacity percentage of total
Outsourced M&R Cost / Total M&R Cost
American 2012 8% 9% 10%
+5%pts +41%pts +25%pts
New American 2017E 13% Up to 50% Up to 35%
United 2012 13% 29% 49%
Delta 2012 13% 12% 38%
US Airways 2012 17% 82% 58%
American Airlines
23
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY - SUBJECT TO SUBSTANTIAL REVISION
Operational Flexibility
Improved operational flexibility expected to drive significant portion of revenue improvement
Majority of improvement is “catch up” as we remove constraints that our competitors do not have
Revenue Improvements ($ in millions)
Right Sizing Aircraft
Partnerships
Product Initiatives
Net EBITDAR Benefit
$1,185 $1,127 $972 $639 $760 $614 $549 $456 $377 $234
2013E 2014E 2015E 2016E 2017E
Net EBITDAR benefit of increased costs from change in gauge
Source: Internal Company projections American Airlines 24
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY - SUBJECT TO SUBSTANTIAL REVISION
New American: Preferred global carrier for Investors
Cost Structure
Among the lowest non-labor costs of any major US carrier
Highly competitive labor costs
Retirement and medical benefits in line with industry leaders
Operational Flexibility
Fleet flexibility to adapt to changing market conditions
Broad portfolio of aircraft choices to address network opportunities
Market-based scope agreements allow expansion of regional operations and codesharing with domestic partners
Ability to outsource maintenance and airport operations
Capital Structure
Among the lowest leverage of any major US network carrier
Low leverage should provide liquidity and financial resilience to better withstand market volatility
Projected best in class EBITDAR margin and significant balance sheet strength
American Airlines 25
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY - SUBJECT TO SUBSTANTIAL REVISION
Capital Structure
Significant balance sheet actions...
Unsecured and Tax-Exempt Debt
Eliminated $2.5 billion of unsecured and tax exempt debt resulting in $1.3 billion in interest and principal savings over the forecast period
Retiree Benefits
Addressed retiree medical benefits for active employees; negotiations regarding retired employees ongoing
Froze pension plans for all employee groups
Aircraft Rent and Debt
Restructured leases to reduce rent payments by over $1.1 billion over the forecast period which lowers capitalized aircraft lease debt
Restructured BNDES debt resulting in $670 million in cash savings, $550 million to be realized in the forecast period
American Airlines 26
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY - SUBJECT TO SUBSTANTIAL REVISION
Capital Structure
Net debt levels will be reduced by over 30%
Adjusted Net Debt
$12.9 -31% $10.1 $9.0
At Filing At Emergence 2015E
Total Cash $5,362 million $7,650 million
Unrestricted Cash $4,775 million $7,163 million
Note: Mainline aircraft leases capitalized at 7x; excludes post-employment liabilities
American Airlines 27
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Capital Structure
Exit financing assumption
The forecast assumes $1 billion in new secured financing is in place at the time of emergence
AMR will review the need for and size of such financing as the reorganization process moves forward
Our cash position at emergence and the necessity, amount, form and timing of any financing will be influenced by a number of factors
Financial performance of the airline
Timing of the emergence and unwinding of restricted cash related to the chapter 11 process
Amount and timing of claims to be satisfied in cash pursuant to a plan of reorganization
Including administrative and priority claims and secured debt obligations
Outcome of assumed debt financing transactions
Market conditions at the time of emergence
American Airlines
28
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT
PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Capital Structure
Plan results in the highest liquidity in the industry while unencumbered assets grow
Liquidity – Unrestricted Cash as % Revenue
New American 19-25%
2013E-2017E range
United 19%
US Airways 18%
American 17%
Delta 14%
Unencumbered Assets
2013 $2.2 B
2014 $2.6 B
2015 $4.3 B
2016 $9.3 B
2017 $11.4 B
Note: Delta and United include undrawn revolvers
American expects to be able to make new investments, support future growth, and maintain flexibility to absorb macro shocks
Source: SEC filings and Company analysis; New American includes adjustments for debt reduction and operating improvement due to restructuring
29
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Capital Structure
Leverage ratio expected to improve to best-in-class
Leverage
Adjusted Net Debt /EBITDAR
3.9x
3.7x
3.3x
2.4x
1.9 – 2.4x
American
US Airways
United
Delta
New American
Year ending September 2012 EBITDAR
2013E-2017E range
(1) Adjusted debt includes on and off balance sheet debt and mainline aircraft leases at 7x, excludes pensions
30
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Cost improvements and revenue enhancements expected to produce industry leading profitability
EBITDAR Margin
8.1%
11.2%
12.8%
13.2%
15.7-17.6%
American
United
US Airways
Delta
New American
2013E-17E Range
Year ending September 2012
Source: SEC documents and Company analysis
American Airlines
30
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
2012 results reflects improved revenue performance
While we have started to see cost savings in 2012, the majority of the EBITDAR improvement in 2012 resulted from improved revenue performance
Labor Savings
Other Savings
Base Revenue Growth & Other
$1,388
$214
$59
$303
$1,963
2011 Adjusted EBITDAR
2012E Adjusted EBITDAR
Note: Periods after 2011 exclude special and one-time costs associated with restructuring; Revenue initiatives are net of associated incremental costs
32
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
2013 improvement reflects the restructuring
The improvement is expected to continue in 2013 as a substantial majority of cost savings begin to be realized in 2013 and revenue initiatives begin to ramp up
Labor Savings
Other Savings
Revenue Initiatives
Base Revenue Growth & Other
$1,963
$1,117
$1,117
$234
$549
$4,132
2012E Adjusted EBITDAR
2013E Adjusted EBITDAR
Note: Periods after 2011 exclude special and one-time costs associated with restructuring; Revenue initiatives are net of associated incremental costs 33
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
...and continue into 2014
The implementation of the cost savings and revenue initiatives are forecast to continue in 2014
Labor Savings
Other Savings
Revenue Initiatives
Base Revenue Growth and Other
$4,132
$253
$89
$222
$146
$4,842
2013E Adjusted EBITDAR
2014E Adjusted EBITDAR
Note: Periods after 2011 exclude special and one-time costs associated with restructuring; Revenue initiatives are net of associated incremental costs
34
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New American: Preferred global carrier for High Value Customers
Global Network
Customer Experience and Brand
Fleet and Facilities
Hubs in the cities with the largest concentration of high value customers
An expanding international network designed around the places the most important customers want to fly
Deeper and broader partnerships with the world’s premium airlines
Leading-edge investment in product and service upgrades that high value customers desire
Outstanding passenger productivity and connectivity through technology
A seamless and comfortable total travel experience for high value customers
Broad portfolio of aircraft facilitates a convenient schedule pattern
Moving to youngest, most efficient fleet among US peers
Premium terminals in hub cities
Increasing share of the high value customer spend will increase profitability
American Airlines
35
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
New American: Preferred global carrier for High Value Customers
Hubs in the cities with the largest concentration of high value customers
Global Network Global Network
An expanding international network designed around the places the most important customers want to fly
Deeper and broader partnerships with the world’s premium airlines
Customer Experience and Brand
Leading-edge investment in product and service upgrades that high value customers desire
Experience and
Outstanding passenger productivity and connectivity through technology
Brand
A seamless and comfortable total travel experience for high value
customers
Fleet and Facilities
Broad portfolio of aircraft facilitates a convenient schedule pattern
Fleet and
Moving to youngest, most efficient fleet among US peers
Facilities
Premium terminals in hub cities
Increasing share of the high value customer spend will increase profitability
American Airlines 36
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Global Network
American’s network is designed to meet high value
customer demands
American has hubs in the four largest metropolitan areas of the United States
139 of Fortune 500 companies are located in our key cities; many of our high value customers are their top travelers
Fortune 500
U.S. Metropolitan Population (millions)
Population Rank
Corporations
New York
18.9
#1
68
Los Angeles
12.8
#2
19
Chicago
9.5
#3
29
Dallas/Fort Worth
6.4
#4
18
Miami
5.6
#8
5
Source: US Census, 2010, Fortune 2012 American Airlines 37
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Global Network
American is building on its enviable position in Latin America
Latin
Atlantic
Pacific
Carrier
Capacity share
Carrier*
Capacity share
Carrier*
Capacity share
#1
AA
American Airlines
28%
UNITED Lufhansa Air CANADA
29%
UNITED ANA
20%
15pts
6pts
6pts
#2
UNITED
13%
DELTA KLM AIRFRANCE ALITALIA
23%
AA
American Airlines JAL QANTAS
14%
#3
LAN
10%
AA
American Airlines BRITISH AIRWAYS IBERIAi
22%
DELTA
10%
*Atlantic and Pacific airlines include joint business agreements represented by U.S. carrier
American Airlines 38
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Global Network Hubs are the foundation for network improvement
The comprehensive hub strategy will strengthen American’s network and better match our customers’ travel demands domestically and internationally
DFW
MIA
ORD
LAX
JFK
Increase Services to
Existing Destinations
ü
ü
ü
ü
ü
Add New Markets/
Destinations Served
ü
ü
ü
ü
ü
Grow Positions of
ü
ü
Strength
Europe Diversification
ü
ü
ü
Grow Asia
ü
ü
Capitalize on Latin
ü
ü
Franchise
American Airlines 39
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Global Network Growth is international - where demand is strongest
Demand Forecast
IATA
(2011-15)
Domestic 3.8%
UK 4.4%
Europe 4.4%
Latin North 6.0%
Latin South 8.0%
Asia 7.5%
Higher growth is projected in all international regions
International Capacity
43%
43%
40%
37%
23%
US Airways
American
Delta
United
2012
American 2017E Plan
Source: FY 2012 DIIO Schedule Data American Airlines 40
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT
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Global Network Growth is focused in the most attractive markets
Demand and Capacity Growth
AA Capacity Growth (2012-17 ASM CAGR) Company Forecast for Industry Demand Growth (2012-17 RPM CAGR)
Focus on higher yielding passengers with smaller aircraft and higher frequency
1.2%
Domestic
Add new destinations for hub feed and network breadth
2.7%
Expand codesharing with domestic partners
Diversify presence in the region
3.1%
Leverage joint business strength to increase key business market penetration
Europe
2.6%
Implement new routes and increase European connectivity and markets served
Build on American’s leading position in the region
Latin
6.0%
Growth with strong business ties to US and Europe
America
Leverage partners’ regional strength to further increase American’s virtual network
6.2%
New service to secondary markets that currently do not have direct service to US
14.4%
Connects US and Latin America with fastest growing economic region
Asia
Higher than industry capacity growth due to low current base in region
4.1%
Capitalize on large local market demand
Leverage joint business agreements with JAL & Qantas
Source: FY 2012 DIIO Schedule Data, Company Analysis American Airlines 41
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY - SUBJECT TO SUBSTANTIAL REVISION
Global Network New routes now in place or announced for this year
American added and announced many exciting new routes in 2012
New routes include Dallas to Incheon, South Korea, Chicago to Dusseldorf, Germany, Los Angeles to Washington, DC, and Miami to Manaus, Brazil
New/Planned Routes (2012-2013)
Increased Frequency (2012-2013)
American Airlines 42
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Global Network Partnerships increase expected share of high value customers
American, with its Joint Business partnerships, is a leader in projected corporate revenue share in the biggest domestic and international markets
Projected Worldwide Corporate Revenue Share
Top 50 Markets by Carrier
37%
27%
22%
11%
4% United
American
Delta
US
Other
Airways
Projected Worldwide Corporate Revenue Share
Top 50 Markets by Joint Business
36%
31%
20%
13%
American
United JB
Delta JB
No JB
JB
YE June 2012 Quality of Service Index (QSI) weighted for YE July 2012 PRISM company travel. All companies in PRISM were used for industry revenue (contracted/non-contracted, domestically/internationally based).
American Airlines
43
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Global Network oneworld, the preferred alliance for High Value Customers, generates disproportionate revenue share
Outsized revenue share validates oneworld’s positioning as the premium global alliance and its resonance with the High Value Customers
Largest Worldwide Premium Markets
International Premium Passengers Per Day Each Way
London 4,200
Tokyo 2,500
New York 2,500
Hong Kong 2,300
Singapore 2,300
Paris 1,700
Seoul 1,400
Frankfurt 1,300
Revenue Premium
versus Seat Share (pts) Top 100 global cities
4.0 1.0 (5.0)
oneworld Star Skyteam
oneworld Data Source: IATA Airport-IS, 12 months ended July 2012, includes members-elect . Top 100 cities from Mastercard study
American Airlines 44
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Global Network
American continues to increase both the breadth and depth of partnerships
No partnership Interline Code share Alliance Joint Business
Through-ticketing and check-in
Place code on flights
Loyalty program alignment
Facility coordination
Network / schedule coordination
Integrated marketing and sales
Coordinated pricing
Revenue and cost sharing
Number of partners (YE 2011) 120 22 11 3
Recent additions
TAM AIRLINES
Air Tahiti Nui
HAINAN AIRLINES
Malaysia AIRLINES
QATAR AIRWAYS
QANTAS
American Airlines
45
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT
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New American: Preferred global carrier for High Value Customers
Global Network
Hubs in the cities with the largest concentration of high value customers
An expanding international network designed around the places the most important customers want to fly
Deeper and broader partnerships with the world’s premium airlines
Customer Experience and Brand
Leading-edge investment in product and service upgrades that high value customers desire
Outstanding passenger productivity and connectivity through technology
A seamless and comfortable total travel experience for high value customers
Broad portfolio of aircraft facilitates a convenient schedule pattern
Fleet and Facilities
Moving to youngest, most efficient fleet among US peers
Premium terminals in hub cities
Increasing share of the high value customer spend will increase profitability
American Airlines
46
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT
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Customer Experience
American is continuing its long history of leading products and services
AAdvantage citi
4147 1101 2345 6789
4147
Valid dates
01/12 12/31/14
L WALKER
VISA
Member since 00
PLATINUM LEVEL
SIGNATURE
Samsung Galaxy Tab in Premium Cabins Introduced 4Q 2011
Citi/ AAdvantage Primary Card Refresh Launched 2Q 2012
Main Cabin Extra/Flight Attendant Tablets Introduced 4Q 2012
777- 300ER 1Q 2013
A319 3Q 2013
A321 Transcon 4Q 2013
Existing Widebody Redesign Early 2014
Note: Club lounge refurbishments ongoing.
American Airlines
47
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Customer Experience
...exemplified by fleet and product introductions that further enhance our position
First and only U.S. airline to take delivery of Boeing 777-300ER
Redesigned industry leading Flagship suite
New fully flat, 100% aisle access Business Class
Walk-up snack bar, a first for a North American Airline
New international wi-fi connectivity and premium service enhancements
A321 Transcontinental
Soon to be only airline to offer three classes of service
Exclusive First Class and fully flat Business Class
Best product for cross-country travel between JFK and LAX/SFO
All new mainline aircraft delivered late 2013 and beyond will have seat back In-Flight Entertainment
New Airbus and Boeing aircraft will offer advanced In-Flight Entertainment
48
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
New American: Preferred global carrier for High Value Customers
Hubs in the cities with the largest concentration of high value customers
Global
An expanding international network designed around the places the most
Network
important customers want to fly
Deeper and broader partnerships with the world’s premium airlines
Leading-edge investment in product and service upgrades that high value
Customer
customers desire
Experience and Outstanding passenger productivity and connectivity through technology
Brand A seamless and comfortable total travel experience for high value customers Broad portfolio of aircraft facilitates a convenient schedule pattern
Fleet and Moving to youngest, most efficient fleet among US peers
Facilities
Premium terminals in hub cities
Increasing share of the high value customer spend will increase profitability
American Airlines 49
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Fleet and Facilities
American will have the youngest fleet in the industry
Average Mainline Fleet Age (years)
16.4
14.9
13.2
12.9
-4.3
10.6
Delta
American
United
US Airways
New American
2017
Source: ACAS November 2012, Company Analysis American Airlines 50
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Fleet and Facilities
Regional flying will increase to improve connectivity
Increasing regional capacity will allow American to increase frequency, with lower total capacity, at comparable costs
– Regional flying grows to level proven successful and sustainable by United and Delta
8am
9am
10am 11am
1pm
4pm
6pm
Competitor
Current
AA
- GAP -
- GAP -
- GAP -
Future
AA
Mainline (120-140 Seats)
Regional (66-76 Seats)
Source: Innovata American Airlines 51
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Fleet and Facilities
American’s premium facilities further elevate the total travel experience
American works with airport partners to provide passengers with the world-class amenities and services they value
New terminals at DFW, JFK and Miami
37 Admirals Club and 4 Flagship lounges feature offer a professional environment, personalized service and exceptional amenities to make the travel experience more relaxing and productive
American Airlines
52
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The strategy is working in each of our hubs…
Unit revenue growth has been strong across all five hubs, and growth is expected to continue
Domestic unit revenue grew 5.8% in the first eleven months of 2012
Hub Unit Revenue Growth
First eleven months of 2012
ORD
PRASM
Strategy
Large RJs offer
competitive cabin
9%
product and
increased
frequencies
LAX
PRASM
Strategy
Expand into Asian
oneworld hubs
4%
Premium transcon service
DFW
PRASM
Strategy
Increase
penetration in
7%
Mexico and Latin
America
Increase scale
NYC
PRASM
Strategy
Primary trans-Atlantic
gateway
4%
Use code-share to
feed connections
Premium transcon
MIA
PRASM
Strategy
Enhance Latin
gateway
5%
Use large RJs to
improve domestic
depth
Source: Internal company report (Consolidated YTD November 2012 vs. YTD November 2011)
53
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
...and in each international region
Unit revenue growth is robust in all four entities and reflects American’s strengthening position in Asia and Latin America
Unit revenue increased 6.2% in the first eleven months of 2012
Unit Revenue Growth
First eleven months of 2012
Domestic
PRASM
Strategy
Focus on HVCs
New destinations for
6%
hub feed
Expand codesharing
Latin America
PRASM
Strategy
Strengthen American’s
leadership position in
region
5%
Increase virtual
network through
partners
New routes
EMEA
PRASM
Strategy
Leverage JBAs’
strength to increase
HVC market
6%
penetration
New routes
Asia
PRASM
Strategy
Diversify
geographies served
Connect US and Latin
11%
America with region
Leverage JBAs
Source: Internal company report (Mainline YTD November 2012 vs. YTD November 2011)
54
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Conclusion
New American: Preferred airline for investors
- Best in class profitability
- Strong capital structure
- Operational flexibility to adapt as needed
New American: Preferred airline for high value customers
- Hubs in the right places and premier partners
- Renewing and re-gauging our fleet
- Leading products and services
Our existing strategic assets combined with our restructured balance sheet and cost profile creates a long-term competitive advantage
American Airlines 55
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Financial Summary
56
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT
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Summary Financial Projections
($ in millions)
2012E(1) 2013E(2) 2014E 2015E 2016E 2017E CAGR ‘12E - ‘17E
Revenues $24,798 $26,348 $27,559 $29,963 $31,807 $32,346 5.5%
Adjusted EBITDAR(3) 1,963 4,132 4,842 5,128 5,105 5,142 21.2%
% Margin 7.9% 15.7% 17.6% 17.1% 16.1% 15.9%
Adjusted Net Income(4) (228) 1,630 2,263 2,213 1,984 1,788 n.m.
% Margin (0.9%) 6.2% 8.2% 7.4% 6.2% 5.5%
Consolidated Operating Statistics:
Available Seat Miles (bn) 166.0 168.2 172.8 185.3 194.7 197.2 3.5%
Pax Rev per Available Seat Mile (¢) 13.01 13.53 13.80 14.01 14.15 14.21 1.8%
CASM Ex-Fuel and Special Items (¢) 9.43 8.96 9.20 9.53 10.01 10.35 1.9%
Fuel Price Per Gallon $3.20 $3.17 $3.14 $3.14 $3.13 $3.11
Cash Flow from Operations $1,375 $2,204 $3,357 $3,666 $3,167 $2,967 16.6%
Net Capex(5) (492) (1,353) (1,834) (2,643) (2,657) (2,372)
Balance Sheet Summary
Unrestricted Cash $3,884 $5,559 $6,791 $7,163 $6,060 $6,066
% of Revenue 15.7% 21.1% 24.6% 23.9% 19.1% 18.8%
Total Debt(6) $8,530 $9,075 $8,784 $8,167 $6,575 $6,011
Off Balance Sheet Debt(6) 210 425 313 313 313 313
Capitalized Aircraft Rent(7) 3,805 5,432 7,027 8,767 10,276 11,943
Adjusted Net Debt $8,662 $9,374 $9,332 $10,085 $11,103 $12,200
Adj. Net Debt / Adj. EBITDAR 4.4x 2.3x 1.9x 2.0x 2.2x 2.4x
Notes
1. Based on actuals from January – November and December forecast
2. Projected emergence date of April 30, 2013
3. Adjusted to exclude bankruptcy and special items of ($149m) in 2012 and $103m in 2013
4. Adjusted to exclude bankruptcy and special items of ($134m) in 2012 and $163m in 2013
5. Capex less sale leaseback proceeds
6. 2012 values net of $1.9B and $1.3B, respectively, in liabilities subject to compromise
7. Represents LTM mainline aircraft rent capitalized at 7x
American Airlines
57
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Projected Consolidated Statements of Operations (1)
Years ending December 31,
($ in millions)
2012E(2) 2013E(3) 2014E 2015E 2016E 2017E
Operating Revenue:
Passenger Revenue $21,601 $22,754 $23,840 $25,974 $27,557 $28,038
Other Revenue 3,196 3,594 3,720 3,989 4,250 4,308
Total Operating Revenue $24,798 $26,348 $27,559 $29,963 $31,807 $32,346
Operating Expenses
Aircraft Fuel & Taxes $8,739 $8,871 $8,816 $9,446 $9,807 $9,715
Salaries and Benefits 6,882 5,619 5,763 6,418 7,139 7,355
Maintenance, Materials & Repairs 1,401 1,628 1,613 1,753 1,863 1,790
Food and Service 532 567 598 659 704 727
Other Rentals and Landing Fees 1,321 1,356 1,466 1,650 1,807 1,906
Depreciation and Amortization 1,023 959 986 1,027 1,120 1,222
Aircraft Rentals 550 844 1,190 1,625 1,998 2,320
Special Charges (149) 103 – – – –
Other operating expenses 3,951 4,108 4,276 4,537 4,853 5,097
Total Operating Expenses $24,251 $24,053 $24,707 $27,114 $29,290 $30,132
Operating Earnings $547 $2,295 $2,852 $2,848 $2,517 $2,214
Other Income / (Expense)
Net Interest Expense ($641) ($713) ($564) ($541) ($459) ($346)
Other 6 (114) (25) (94) (74) (79)
Total Other Income / (Expense) ($635) ($828) ($589) ($636) ($534) ($425)
Pretax Income ($89) $1,467 $2,263 $2,213 $1,984 $1,788
Income Taxes (5) – – – – –
Net Income ($93) $1,467 $2,263 $2,213 $1,984 $1,788
Notes
1. Exclude bankruptcy and special items and does not reflect fresh start accounting
2. Based on actuals from January - November and December forecast
3. Projected emergence date of April 30, 2013
American Airlines
58
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Projected Consolidated Balance Sheets (1)
Years ending December 31,
($ in millions)
2012E(2) 2013E(3) 2014E 2015E 2016E 2017E
Current Assets
Cash and ST Investments
$4,733 $6,097 $7,279 $7,650 $6,548 $6,554
Other current assets
2,130 2,276 2,370 2,507 2,562 2,595
Total Current Assets
$6,863 $8,372 $9,648 $10,158 $9,110 $9,149
Flight and Other Equipment, Net
$13,622 $14,005 $14,868 $16,487 $18,014 $19,166
Intangibles, Routes, Slots and Gates
871 871 871 871 871 871
Other Non-Current Assets
2,053 2,053 2,053 2,053 2,053 2,053
Total Assets
$23,409 $25,302 $27,441 $29,569 $30,048 $31,240
Current Liabilities
Accounts Payable
$1,183 $1,315 $1,334 $1,500 $1,599 $1,641
Accrued Liabilities
2,178 2,243 2,346 2,668 2,794 2,890
Air Traffic Liability
4,236 4,315 4,598 4,787 4,836 4,836
Total Current Liabilities
$7,597 $7,873 $8,279 $8,955 $9,229 $9,366
Debt and Capital Leases(4)
$8,530 $9,075 $8,784 $8,167 $6,575 $6,011
Pension and Post-Retirement Benefits(5)
$6,781 $6,242 $6,022 $5,804 $5,572 $5,317
Other Liabilities, Deferred Gains & Credits
1,580 1,715 1,832 1,940 2,017 2,123
Total Liabilities
$24,489 $24,906 $24,917 $24,866 $23,393 $22,816
Shareholders’ Equity(6)
(1,080)
396 2,524 4,703 6,655 8,423
Total Liabilities and Shareholders’ Equity
$23,409 $25,302 $27,441 $29,569 $30,048 $31,240
Notes
1. Exclude bankruptcy and special items and does not reflect fresh start accounting
2. Based on actuals from January - November and December forecast
3. Projected emergence date of April 30, 2013
4. 2012 net of $1.9B in liabilities subject to compromise
5. Assumes termination of post retirement benefits
6. For purposes of the Consolidated Financial Projections, no value has been ascribed to the common equity of the Reorganized Debtors
American Airlines 59
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Projected Consolidated Statements of Cash Flows (1)
Years ending December 31,
($ in millions) 2012E(2) 2013E(3) 2014E 2015E 2016E 2017E
Cash Flows From Operating Activities:
Net Income (Loss) ($93) $1,467 $2,263 $2,213 $1,984 $1,788
Depreciation 1,023 959 986 1,027 1,120 1,222
Special Charges (100) 100 - - - -
Pension Expense (Addback)(4) 663 (85) (134) (151) (171) (187)
Pension Funding(4) (271) (433) (88) (68) (63) (68)
Working Capital 339 (90) 312 538 220 103
Other, Net (185) 287 18 107 77 108
Net Cash Provided by Operating Activities $1,375 $2,204 $3,357 $3,666 $3,167 $2,967
Cash Flows From Investing Activities:
Capital Expenditures, Net of Sale-Leaseback Proceeds ($492) ($1,353) ($1,834) ($2,643) ($2,657) ($2,372)
Other (47) (7) (48) (32) (16) (23)
Net Cash Provided by Investing Activities ($538) ($1,360) ($1,881) ($2,674) ($2,673) ($2,394)
Cash Flows From Financing Activities:
Payments on Long-Term Debt and Capital Leases ($1,259) ($2,636) ($938) ($834) ($1,811) ($567)
Issuance of Long-Term Debt 268 3,155 644 215 215 -
Other 148 - - - - -
Net Cash Provided by Financing Activities ($843) $520 ($294) ($619) ($1,597) ($567)
Net Increase (Decrease) in Cash ($7) $1,364 $1,182 $372 ($1,103) $6
Beginning Cash Balance $4,739 $4,733 $6,097 $7,279 $7,650 $6,548
Change in Cash (7) 1,364 1,182 372 (1,103) 6
Ending Cash Balance $4,733 $6,097 $7,279 $7,650 $6,548 $6,554
Notes
1. Exclude bankruptcy and special items and does not reflect fresh start accounting
2. Based on actuals from January - November and December forecast
3. Projected emergence date of April 30, 2013
4. Assumes termination of medical benefits for retirees
American Airlines 60
HIGHLY CONFIDENTIAL - RESTRICTED DISSEMINATION ONLY
Relative 2012 Performance adjusted for expected 2013
improvements
January through September 2012 performance
AA
With 2013 Cost
Actual With 2013 and Revenue US
Results Cost Benefits Benefits Airways United Delta
EBITDAR 1,612 2,753 2,947 1,424 3,272 3,498
Margin 8.5% 14.6% 15.3% 13.5% 11.5% 12.5%
Operating Income 432 1,581 1,774 759 1,388 2,124
Margin 2.3% 8.4% 9.2% 7.2% 4.9% 7.6%
Pre-Tax Income (39) 1,078 1,272 492 792 1,326
Margin -0.2% 5.7% 6.6% 4.7% 2.8% 4.7%
American Airlines
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT
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January 8, 2013
Discussion materials: synergies
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT
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Forward-looking statements
This Presentation contains various forward-looking statements which represent our expectations or beliefs concerning future events. When used in this document, the words “expects,” “estimates,” “plans,” “anticipates,” “indicates,” “believes,” “projects,” “forecast,” “guidance,” “outlook,” “may,” “will,” “should,” “could,” “seeks,” “targets” and similar expressions are intended to identify forward- looking statements. Similarly, statements that describe our strategies, objectives, plans or goals, or actions we may take in the future, are forward-looking statements. Forward-looking statements include, without limitation, statements about:
– the results and benefits of our restructuring
– our business strategies, plans and objectives, including the anticipated impact of such strategies, plans and objectives;
– our future operating and financial performance, including changes in revenues and costs;
– expectations regarding opportunities for growth;
– our aircraft fleet plans and our future financing plans and needs; and
– overall economic and industry conditions.
Other forward-looking statements include statements which do not relate solely to historical facts, such as 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 presentation are based upon information available to us on the date of this Presentation. Neither we nor any of our subsidiaries, officers, directors, employees or retained professionals undertakes any obligation to 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 our actual results to differ materially from our expectations. For information concerning such factors, see our filings with the Securities and Exchange Commission, including but not limited to our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2011, June 30, 2011, and September 30, 2011 and our Annual Reports on Form 10-K ended December 31, 2011
This Presentation indicates how we expect to emerge from the bankruptcy as a “new” airline assuming a completed restructuring. Our restructuring is subject to the completion of many tasks in our Chapter 11 cases, various approvals from the Bankruptcy Court, and a successful confirmation of a plan of reorganization
The information in this Presentation is based on our current reorganization plans and expectations, and is subject to change. This Presentation should not be regarded as a representation or warranty by the Debtors or any other person as to the accuracy of the projected financial or other information or that any projections set forth in the Presentation will be realized.
American Airlines
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Revenue synergies
Revenue synergies include:
– Network scale: enhanced spoke presence, passenger mix, and alliance partner benefits
– Network optimization: flight frequency, flight timing, connectivity, gauge and reallocation of flights
– Corporate travel: enhanced share of corporate travel that exceeds the base network scale share
– Frequent flier: revenue driven by enhanced program penetration
Revenue synergies phase in over 3 years and reach approximately $800 million in
year 3
($ in millions) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Thereafter
Net revenue synergies $320 $710 $780 $750 $720 $720 $720
Source: AMR mgmt synergy estimates as of 1/8/13
American Airlines
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Cost synergies and labor dis-synergies
Year 3 cost synergies of approximately $500 million
– Management: Benefits from rationalization of overlapping management positions
– Information Technology: Consolidating and reducing IT projects and services
– Facilities: Rationalize headquarters and optimize footprint at common stations and associated utilities savings
– Other: Scale benefit in purchasing materials and airport services, advertising
($ in millions) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Thereafter
Cost synergies $200 $400 $490 $560 $590 $590 $590
The cost synergies will be offset by increased labor costs as a result of harmonizing American and US Air workforces
Source: AMR mgmt synergy estimates as of 1/8/13
American Airlines
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One time costs
Total one time costs of $1.3 billion
– Integration to be completed in 3-4 years with majority of integration costs in years 1 and 2
– Costs driven primarily by aircraft and facility standardization but also include integration of IT systems, training and relocation of employees
($ in billions) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Thereafter
Total one-time costs(1) $1.3
One-time cost timing 0.6 0.5 0.2 0.1 – – –
Source: AMR mgmt synergy estimates as of 1/8/13
Note
(1) Total one-time costs do not equal sum of annual one-time cost amounts due to rounding
American Airlines
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Synergy summary
($ in billions) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Thereafter
Net revenue synergies $0.3 $0.7 $0.8 $0.8 $0.7 $0.7 $0.7
Cost synergies 0.2 0.4 0.5 0.6 0.6 0.6 0.6
Labor dis- synergies (6 years) (1) (0.5) (0.5) (0.5) (0.9) (1.0) (1.0) –
Total net synergies 0.1 0.7 0.8 0.4 0.3 0.3 $1.3
Total one-time costs (2) $1.3
One-time cost timing 0.6 0.5 0.2 0.1 – – –
Source: AMR mgmt synergy estimates as of 1/8/13
Notes
(1) Labor dis-synergies net of profit sharing
(2) Total one-time costs do not equal sum of annual one-time cost amounts due to rounding
American Airlines
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January 8, 2013
Discussion materials: Claims
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Forward-looking statements
• This Presentation contains various forward-looking statements which represent our expectations or beliefs concerning future events.
When used in this document, the words “expects,” “estimates,” “plans,” “anticipates,” “indicates,” “believes,” “projects,” “forecast,” “guidance,” “outlook,” “may,” “will,” “should,” “could,” “seeks,” “targets” and similar expressions are intended to identify forward-looking statements. Similarly, statements that describe our strategies, objectives, plans or goals, or actions we may take in the future, are forward-looking statements. Forward-looking statements include, without limitation, statements about:
- the results and benefits of our restructuring
- our business strategies, plans and objectives, including the anticipated impact of such strategies, plans and objectives;
- our future operating and financial performance, including changes in revenues and costs;
- expectations regarding opportunities for growth;
- our aircraft fleet plans and our future financing plans and needs; and
- overall economic and industry conditions.
• Other forward-looking statements include statements which do not relate solely to historical facts, such as 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 presentation are based upon information available to us on the date of this Presentation. Neither we nor any of our subsidiaries, officers, directors, employees or retained professionals undertakes any obligation to 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 our actual results to differ materially from our expectations. For information concerning such factors, see our filings with the Securities and Exchange Commission, including but not limited to our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2011, June 30, 2011, and September 30, 2011 and our Annual Reports on Form 10-K ended December 31, 2011
• This Presentation indicates how we expect to emerge from the bankruptcy as a “new” airline assuming a completed restructuring.
Our restructuring is subject to the completion of many tasks in our Chapter 11 cases, various approvals from the Bankruptcy Court, and a successful confirmation of a plan of reorganization
• The information in this Presentation is based on our current reorganization plans and expectations, and is subject to change. This Presentation should not be regarded as a representation or warranty by the Debtors or any other person as to the accuracy of the projected financial or other information or that any projections set forth in the Presentation will be realized .
American Airlines
1
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AMR et al. Preliminary Estimate of Claims by Corporate Group 1
In millions
Administrative claims
Class AMR AA Eagle Total
Professional fees and expenses 2 $35 $35 $35 $105
503(b)(9) claims $0 $30 $3 $33
Post-Petition Pension Payment $0 $45 $0 $45
Cure claims (assumed executory contracts) $0 $90 $13 $104
Tax claims $0 $0 $0 $0
Priority claims
Non-tax claims (incl. pension payment) $0 $227 $0 $227
Secured claims
Non-tax exempt debt $0 $7,516 $0 $7,516
Tax exempt $0 $1,743 $0 $1,743
Funded debt (incl. unsecured tax exempt) $851 $1,656 $0 $2,507
Aircraft lease rejection/restructured claims (1110) (incl. BNDES) $0 $2,421 $0 $2,421
Pre-petition accounts payable $0 $85 $15 $100
1113 claim (American Eagle Unions) $0 $32 $0 $32
1114 claim (OPEB), if any TBD TBD TBD TBD
Unsecured claims 3
Executory contracts (non-aircraft rejection claims) $0 $26 $0 $26
Guarantees of funded debt (incl. BNDES) $2,033 $851 $0 $2,884
Intercompany claims (payable to AMR) $0 $2,438 $0 $2,438
Intercompany claims (payable to AA) $60 $0 $21 $81
Intercompany claims (payable to Eagle) $0 $320 $0 $320
Other $0 $80 $3 $83
1 Claims to be addressed under Plan of Reorganization; Debtor legal entities roll up to one of three Corporate Groups; Assumes emergence date of April 30, 2013
2 Allocation of fees and expenses among Corporate Groups is preliminary and subject to material change
3 Figures do not take into account equity of reorganized entity to be distributed to AA unions pursuant to court-approved settlements
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January 15, 2013
American’s International Strategy:
Network and Partnerships
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Forward Looking Statements
This Presentation contains various forward-looking statements which represent our expectations or beliefs concerning future events. When used in this document, the words “expects,” “estimates,” “plans,” “anticipates,” “indicates,” “believes,” “projects,” “forecast,” “guidance,” “outlook,” “may,” “will,” “should,” “could,” “seeks,” “targets” and similar expressions are intended to identify forward-looking statements. Similarly, statements that describe our strategies, objectives, plans or goals, or actions we may take in the future, are forward-looking statements. Forward-looking statements include, without limitation, statements about our business strategies, plans and objectives, including the anticipated impact of such strategies, plans and objectives.
All forward-looking statements in this presentation are based upon information available to us on the date of this Presentation. Neither we nor any of our subsidiaries, officers, directors, employees or retained professionals undertakes any obligation to 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 our actual results to differ materially from our expectations. For information concerning such factors, see our filings with the Securities and Exchange Commission, including but not limited to our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2011, June 30, 2011, and September 30, 2011 and our Annual Reports on Form 10-K ended December 31, 2011.
The information in this Presentation is based on our current plans and expectations, and is subject to change. This Presentation should not be regarded as a representation or warranty by the Debtors or any other person as to the accuracy of any projected information or that any projections set forth in the Presentation will be realized.
American Airlines
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American will build an even stronger international network
A critical element of the strategy is to continue to further strengthen our international operations by . . .
– . . . Growing the size of our international operations
– . . . Growing the number and depth of our partnerships
American has a strong foundation and is well-positioned to take advantage of International growth
Planned Capacity Growth
Domestic
International
2011 2012 2013 2014 2015 2016 2017
American Airlines
3
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American has always recognized the importance of a global network
American Airlines International Launch/Expansion
1942 1970 1982 1987 1990s 2000s
MEXICO
American operates 390 flights per week to 18 cities in Mexico
CARIBBEAN
American has more departures than any other U.S. carrier in the Caribbean with 450 flights per week to 29 cities
LONDON
American has the largest Heathrow operation of any non-U.K. carrier
JAPAN
American now serves Tokyo from 4 of its 5 hubs and has service to Narita and Haneda
LATIN
American offers more flights to more destinations in Latin America than any airline with 450 flights per week to 33 cities
American is the #1 airline by revenue from 35 Latin American countries to the U.S.
CHINA
American serves Beijing and Shanghai daily
TODAY
Sources: American’s operational stats: American network plan (average weekly departures planned for 2013); Diio; DB1B
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Contents
American has a comprehensive international operation
American is well-positioned to take advantage of the increasing demand for international travel
Industry-leading partnerships are the hallmark of American’s international growth plan
A highly experienced and multinational organization continues to lead this very complex aspect of American’s business
American Airlines
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American has 2,000 weekly departures to 100 international cities
Europe
12 Destinations 220+ Departures per Week
London-Heathrow Paris-De Gaulle
Madrid Manchester
Barcelona Rome-Da Vinci
Dublin Milan-Malpensa
Frankfurt Zurich
Duesseldorf Helsinki
Canada
6 Destinations 350+ Departures per Week
Toronto Montreal-PET
Ottawa Calgary
Vancouver Kitchener
Asia
5 Destinations 60 Departures per Week
Tokyo-Narita Shanghai
Tokyo-Haneda Beijing
Seoul Central America
10 Destinations 170+ Departures per Week
San Jose
Guatemala City Panama City
Belize City Managua
San Pedro Sula San Salvador
Liberia Tegucigalpa
Roatan South America
20 Destinations 290+ Departures per Week
Sao Paulo-Guarulhos
Caracas Buenos Aires
Rio De Janeiro Lima
Bogota Santiago
Quito Guayaquil
Maracaibo Cali
Montevideo La Paz
Manaus Medellin
Brasilia Belo Horizonte
Recife Salvador
Asuncion Caribbean
29 Destinations 540+ Departures per Week
Nassau Santo Domingo
Port Au Prince Punta Cana
Montego Bay Tortola
Freeport Barbados
Grand Cayman Island Kingston
St. Maarten Antigua
St. Kitts Santiago
Providenciales Bermuda
Curacao Aruba
Port Of Spain George Town
Pointe A Pitre Fort De France
Marsh Harbour North Eleuthera
Dominica St. Lucia-Vieux Fort
Puerto Plata La Romana
Grenada Mexico
18 Destinations 380+ Departures per Week
Cancun Mexico City
San Jose Cabo Monterrey
Guadalajara Leon/Guanajuato
San Luis Potosi Queretaro
Aguascalientes Chihuahua
Torreon Puerto Vallarta
Cozumel Morelia
Puebla Veracruz
Mazatlan Ixtapa/Zihuatanejo
Source: Innovata schedule data for 2013 as of January 14, 2013
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American’s drives significant revenue from international
International business has always been at the core of American’s business, and provides a substantial percentage of revenue today
American’s Mainline Passenger Revenue Distribution by Entity
Domestic, 57%
Latin, 25%
International 43%
Atlantic, 13%
Pacific, 5%
Source: Company Analysis
American Airlines
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It takes significant resources to manage the international network…
Asia / Pacific
80 Management 150+ Total
Canada
25+ Management 350+ Total
UK / Europe
275+ Management 1,250+ Total
Mexico / Caribbean
200+ Management 2,200+ Total
Latin America
325+ Management 2,300+ Total
American Airlines
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…as well as significant investment in facilities
American Airlines serves over 100 international airports, has 11 international Admirals Clubs and nearly 100 international ticket sales offices
Asia / Pacific
4 Airports
3 Sales & Ticket Offices
1 Admirals Club
21 Partner Clubs
Canada
6 Airports
1 Admirals Club
Mexico / Caribbean
49 Airports
25 Sales & Ticket Offices
2 Admirals Clubs
Latin
30 Airports
64 Sales & Ticket Offices
5 Admirals Clubs
UK / Europe
12 Airports
7 Sales & Ticket Offices
2 Admirals Clubs
2 Partner Clubs
American Airlines
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Contents
American has a comprehensive international operation
American is well-positioned to take advantage of the increasing demand for international travel
Industry-leading partnerships are the hallmark of American’s international growth plan
A highly experienced and multinational organization continues to lead this very complex aspect of American’s business
American Airlines
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Industry increasingly shifting focus to higher yield international business
Legacy airlines grew their international revenues by more than 35% between 2006 and 2011
International yields for major carriers outperformed domestic yields in the same period
2006 2011
Network Airlines
Operating Revenue
2%
$67B $68B
Domestic
37%
$30B
$42B
International
Network Airlines Stage-length Adjusted Yields
19%
16.6¢
19.9¢
Domestic
24%
26.4¢
32.8¢
International
Source: Form 41
American Airlines
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American’s fleet investment enables international growth
American’s dedicated international fleet will grow 23% by YE 2017
Planned International Aircraft
2012 2013 2014 2015 2016 2017
Boeing 757 International 20 20 20 20 20 20
Boeing 767-300s 58 58 58 58 43 33
Boeing 777s 49 57 63 65 62 62
Boeing 787s 0 0 2 13 26 41
Total 127 135 143 156 151 156
American Airlines
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American will capitalize on high growth international markets
Demand Forecast
IATA (2011-15)
Domestic 3.8%
UK 4.4%
Europe 4.4%
Latin North 6.0%
Latin South 8.0%
Asia 7.5%
Higher growth is projected in all international regions
2012 International Capacity
Percent of Mainline ASMs
43%
United
40%
Delta
37%
American
23%
US Airways
43%
American 2017 plan
Source: FY 2012 Diio Schedule Data
American Airlines
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American has either started or announced many new routes this year
In 2012, American added and announced a number of new routes, including Dallas to Seoul, South Korea, Chicago to Dusseldorf, Germany and Miami to Manaus, Brazil
New/Planned Routes (2012-2013) Increased Frequency (2012-2013)
American Airlines
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Contents
American has a comprehensive international operation
American is well-positioned to take advantage of the increasing demand for international travel
Industry-leading partnerships are the hallmark of American’s international growth plan
A highly experienced and multinational organization continues to lead this very complex aspect of American’s business
American Airlines
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Our partners provide our high value customers a more expansive global network
CURRENT & ANNOUNCED PARTNERS
HAINAN AIRLINES
JAPAN AIRLINES
CATHY PACIFIC
malaysia AIRLINES
Jet
QANTAS
HAWAIIN AIRLINES
Air Tahiti Nui
AIR PACIFIC FLN’S INTERNATIONAL AIRLINE
WESTJET
AlaskaAirlines
Cape Air
AmericanAirlines
TAM
LAN
BRITISH AIRWAYS
Airberlin
IBERIA
FINNAIR
S7 AIRLINES
EL AL
ROYAL JORDANIAN
Gulf Air
QATAR AIRWAYS
JET AIRWAYS
SriLankan
Airlines
Over 280 codeshare cities and over 520 routes
1,800+ departures per day
American Airlines
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Partnerships enable international growth for airlines
n Partnerships solve a number of constraints that limit organic international expansion
Fleet
• Increase the number of long-haul aircraft available
Facilities/Slots
• Provide access to lucrative facility or slot constrained markets
Market Knowledge
• Share local market knowledge and relationships
Cost Efficiencies
• Allow efficient expansion with limited investment in facilities and staff
Capacity Discipline
• Provide incremental capacity while maintaining supply/demand balance
American Airlines
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Partnerships come in various forms
Interline Codeshare Alliance Joint Business
Through-ticketing and check-in
Place code on flights
Loyalty program alignment
Facility coordination
Network / schedule
coordination
Integrated marketing and sales
Coordinated pricing
Revenue and cost sharing
Number of partners (YE 2011) 120 22 11 4
INCREASE IN VALUE
INCREASE IN COMPLEXITY
American Airlines
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Codeshare
While codesharing provides valuable benefits for customers…
Codeshare Benefits
Broader network Codeshares provide customers more destinations around the world
Codeshare provide customers with a seamless travel experience
throughout the customer journey
Customer experience
n Reserve and ticket an itinerary all in one place
n Check baggage and obtain a boarding pass to final destination
n Easier flight connections due to better coordination of schedule
Frequent flyer benefits
Frequent flyer benefits are extended to customers traveling on
partner airlines, with more ways to earn and redeem miles
Departure Flight Depart Arrive
AMERICAN AIRLINES Chicago (ORD) Hong Kong (HKG)
October 7, 2011 03:25 PM October 8, 2011 08:00 PM
AA 6093
Operated by Cathy Pacific Travel Time 15h 35m Booking Code: L
Cabin Class: Economy Plane Type: 773
Seat: unassigned
American Airlines
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oneworld
…Alliances offer even more customer value
Incremental Alliance Benefits
Codeshare Benefits
oneworld Benefits Broader network Customer experience Frequent flyer benefits Global coverage
Broader product offering
More FFP rewards & recognition
More lounges and smoother transfers
Greater support
Alliances allow each carrier to offer services beyond what any individual carrier can provide by itself
• Access to more destinations across a significant number of airlines
• Innovative, flexible and attractively priced alliance fares and sales products
• Top tier frequent flyers enjoy all of the privileges to which their status entitles them across all airlines
• Members of an alliance airline’s frequent flyer program can earn and redeem miles on eligible flights
• Access to a network of airport lounges
American Airlines
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oneworld
American: A founding member of oneworld Alliance
• As one of the founding members in 1999, American has been instrumental in the direction of oneworld
– AMR’s CEO and Chairman, Tom Horton, is also the Chairman of oneworld
oneworld
• 11 Member Airlines with
4 Member-Elect Airlines
• 850 Airports
• Nearly 160 Countries
• 9,300 Daily Departures
• 340M Passengers/Year
• 2,600 Aircraft
S7
JAL
AA
American Airlines
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oneworld
American is oneworld’s largest member
Carrier Size and Rank by ASM
#1 #2 #3 #4 #5
Oneworld AmericanAirlines* BRITISH AIRWAYS
IBERIA CATHY PACIFIC QANTAS JAI
JAPAN AIRLINES
28% 23% 12% 10% 8%
STAR ALLIANCE UNITED Lufthansa U.S AIRWAYS SINGAPORE AIRLINES AIR CHINA
21% 14% 8% 7% 6%
SKYTEAM DELTA AIRFRANCE
KLM CHINA SOUTHERN CHINA EASTERN KOREAN AIR
28% 20% 10% 9% 7%
Source: Rankings based on YE 3Q 2013 Scheduled ASMs, Diio
American Airlines
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oneworld
oneworld: preferred alliance for High Value Customers
• Outsized revenue share demonstrates oneworld’s positioning as the premium global alliance and its resonance with High Value Customers
Largest Worldwide Premium Markets
International Premium Passengers Per Day Each Way
London 4,200
Tokyo 2,500
New York 2,500
Hong Kong 2,300
Singapore 2,300
Paris 1,700
Seoul 1,400
Frankfurt 1,300
Revenue Premium
versus Seat Share (pts) Top 100 global cities
4.0
oneworld
1.0
Star
(5.0)
Skyteam
oneworld Data Source: IATA Airport-IS, 12 months ended July 2012, includes members-elect . Top 100 cities from Mastercard study
American Airlines
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Joint Business
Agreements
Joint Businesses provide the most customer benefits
Codeshare Benefits
oneworld Benefits
Broader network
Global coverage
Broader product offering
Customer experience
More lounges and smoother transfers
Frequent flyer benefits
More rewards & recognition
Greater customer support
In addition to codeshare and oneworld member benefits, joint business agreements provide customers the following incremental benefits
Coordinated schedules
Greater convenience
Joint sales agreements
Corporate customers benefit across larger network
Superior product standards
Commitment to high standards of quality, service
and safety
Seamless customer experience
Superior customer service integration
Frequent flyer program consistency
Consistent frequent flyer benefits and recognition
American Airlines
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Joint Business
Agreements
American’s international network is bolstered by its three strategic global joint business agreements
• A joint business is a cooperative arrangement that allows for balanced growth across the carriers and mutually shared revenues, risk and reward
• Each carrier retains its separate brand, corporate identity and individual operations
• American established joint business agreements with:
• British Airways and Iberia in 2010
• Japan Airlines in 2011
• Qantas in 2012
AA
JAL
AA
AA
American Airlines
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Contents
• American has a comprehensive international operation
• American is well-positioned to take advantage of the increasing demand for international travel
• Industry-leading partnerships are the hallmark of American’s international growth plan
• A highly experienced and multinational organization continues to lead this very complex aspect of American’s business
American Airlines
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American has built many partnerships over the past several years
JET AIRWAYS
Codeshare with Jet Airways
BRITISH AIRWAYS
IBERIA
Joint Business Launched
GOL
Codeshare with GOL
WESTJET
Codeshare with WestJet
AIR PACIFIC
FLN’S INTERNATIONAL AIRLINE
Codeshare with Air Pacific
QANTAS
Joint Business Launched
oneworld
airberlin
Air Berlin Joins oneworld
TAM
Codeshare with TAM
Pre-2007 2007 2008 2009 2010 2011 2012 2013
oneworld Partners
oneworld
Codeshare with EL AL
EL AL
IT’S NOT JUST AN AIRLINE ITS ISRAEL
Codeshare with Etihad Airways
ETIHAD AIRWAYS
S7 Airlines Joins oneworld
S7 Airlines
oneworld
Codeshare with Air Berlin
airberlin
Codeshare Agreement with Hainan
HAINAN AIRLINES
Codeshare with Open Skies
Open Skies
BRITISH AIRWAYS
Joint Business Launched
JAPAN AIRLINES
Codeshare with LAN Ecuador
LAN
Codeshare with Air Tahiti Nui
Air Tahiti Nui
Codeshare with Qatar Airways
QATAR AIRWAYS
BRITISH AIRWAYS
CATHAY PACIFIC
FINNAIR
IBERIA
LAN
QANTAS
ROYAL JORDANIAN
JAPAN AIRLINES
American Airlines
27
Codesharing
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
While implementing a codeshare requires coordination in various areas…
Define terms of agreement, including exclusivity, commission,
Scope
routes, prorate, etc.
Regulatory
Coordinate various government approvals
System Testing
Determine technical requirements and test system processes
Sell
Place code on flights and coordinate marketing efforts
American Airlines
28
Joint Business
Agreements
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
. . . Implementing a Joint Business is more complex
• Unlike a codeshare, defining a fair financial settlement in a joint business that rewards airlines for jointly growing the joint business is more difficult yet critical
Metal neutrality
Proportionality
Incentive alignment
Anti-Trust Immunity
Alignment of Product
Fairness
• Promote neutrality regarding sales and pricing decisions
• Balanced growth for all parties
• Creates a framework for cooperation & optimal joint decisions
• Incentives for alignment of product/service
• Increased scrutiny from government officials
• Aligned pricing, sales and network strategy
• Co-location at airports and sales offices
• Share the risk and reward of beneficial decisions
• Dis-incentive for damaging unilateral actions
American Airlines
29
Joint Business
Agreements
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Managing a Joint Business also continues to be more resource-intensive after implementation
• For a joint business to be successful, carriers must be aligned on objectives and develop a financial mechanism that drives incentives to grow the joint business successfully
Alignment of Strategic Direction
• Maintain a single view of key functions, including sales, marketing, schedules and pricing
• Allow for balanced growth
• Develop a complex financial structure to incentivize appropriate behavior to benefit all carriers jointly
Alignment of Management Teams
• Expedite critical decision-making
• Align motives and incentive programs
American Airlines
30
Joint Business
Agreements
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
We have put together a governance structure to ensure success
nDeveloping a joint business governance structure helps expedite proper implementation
Commercial Board
Cargo
Marketing & Comm
Sales
Revenue Management
Network Planning
Commercial
Steering
Committee
Management
Committee
Customer
Board
Lounges
Onboard Product
Web & Call Centre
Airport
FFP
Customer
General Mgmt Team
People & Culture
Legal
Finance
IT
Enablers
Procurement
Policies
Data & Metrics
Disruption Management
Special Projects
American Airlines
31
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
Maintaining a partnership’s value is an iterative process
• Significant effort is put into implementing a partnership. To ensure long term success and durability, partnerships are contemplated in everyday decisions
• Beyond processes, it is essential to maintain and develop new personal and business relationships with our partners
Seamless Customer Experience
Performance Analysis
Optimize Schedule
Optimize Revenue
Marketing
Customer Service
American Airlines
32
Joint Business
Agreements
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
When implemented successfully, the benefits from a joint business are rewarding
n Two years after implementation, the Atlantic Joint Business is showing strong results
Revenue +23% Unit Revenue +10%
Capacity +11%
Premium Load Factor
+4 points to 77.1%
Non-Premium Market
Share +1.0 points
Premium Market Share
+1.6 points
American Airlines
33
STRICTLY PRIVATE AND HIGHLY CONFIDENTIAL WORKING DRAFT PRELIMINARY – SUBJECT TO SUBSTANTIAL REVISION
American’s global network, coupled with the best partners, is positioned to capitalize on international growth
• American has a strong foundation and is well-positioned to take advantage of international growth
– Significant revenue from international
– A Latin America franchise unmatched by any carrier
– A founding member of the most premium alliance
• American will continue to build complex partnerships that return the most value to stakeholders
• American’s experienced multinational organization is ideally positioned to capitalize on international demand growth
American Airlines
34
| ($ in millions) |
Actual 2011 |
Actual 4Q11 |
Actual YTD Sep-12 |
YE Sep 2012 |
YTD Sep 2012 |
4Q12 Proj- ected |
2012E | ($ in millions) |
2013E | 2014E | 2015E | 2016E | 2017E | |||||||||||||||||||||||||||||||||||||||
| Operating Earnings | ($ | 1,054 | ) | ($ | 784 | ) | $ | 104 | ($ | 681 | ) | $ | 104 | $ | 114 | $ | 218 | Operating Earnings |
$ | 2,295 | $ | 2,852 | $ | 2,848 | $ | 2,517 | $ | 2,214 | ||||||||||||||||||||||||
| Plus: Depreciation |
$ | 1,086 | $ | 271 | $ | 777 | $ | 1,047 | $ | 777 | $ | 246 | $ | 1,023 | Depreciation | $ | 959 | $ | 986 | $ | 1,027 | $ | 1,120 | $ | 1,222 | |||||||||||||||||||||||||||
| Plus: Mainline Aircraft Rent |
$ | 631 | $ | 172 | $ | 404 | $ | 575 | $ | 404 | $ | 139 | $ | 542 | Mainline Aircraft Rent |
$ | 776 | $ | 1,004 | $ | 1,252 | $ | 1,468 | $ | 1,706 | |||||||||||||||||||||||||||
| Plus: Special Items |
$ | 725 | $ | 725 | $ | 329 | $ | 1,054 | $ | 329 | ($ | 149 | ) | $ | 179 | Special Items | $ | 103 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||||||||||
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| Adjusted EBITDAR |
1,388 | 383 | 1,612 | 1,995 | 1,612 | 350 | 1,963 | Adjusted EBITDAR |
4,132 | 4,842 | 5,128 | 5,105 | 5,142 | |||||||||||||||||||||||||||||||||||||||
| Revenue | 24,022 | 5,956 | 18,918 | 24,874 | 18,918 | 5,879 | 24,798 | Revenue | 26,348 | 27,559 | 29,963 | 31,807 | 32,346 | |||||||||||||||||||||||||||||||||||||||
| EBITDAR Margin |
5.8 | % | 6.4 | % | 8.5 | % | 8.1 | % | 8.5 | % | 5.9 | % | 7.9 | % | EBITDAR Margin |
15.7 | % | 17.6 | % | 17.1 | % | 16.1 | % | 15.9 | % | |||||||||||||||||||||||||||
| Net Income | ($ | 1,979 | ) | ($ | 1,095 | ) | ($ | 2,139 | ) | ($ | 3,234 | ) | ($ | 2,139 | ) | ($ | 50 | ) | ($ | 2,189 | ) | Net Income | $ | 1,467 | $ | 2,263 | $ | 2,213 | $ | 1,984 | $ | 1,788 | ||||||||||||||||||||
| Plus: Reorganization Items |
$ | 118 | $ | 118 | $ | 1,767 | $ | 1,885 | $ | 1,767 | $ | 15 | $ | 1,782 | Reorganization Items |
$ | 60 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||||||||||||||
| Plus: Special Items |
$ | 725 | $ | 725 | $ | 329 | $ | 1,054 | $ | 329 | ($ | 149 | ) | $ | 179 | Special Items | $ | 103 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||||||||||
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| Adjusted Net Income |
($ | 1,136 | ) | ($ | 252 | ) | ($ | 43 | ) | ($ | 295 | ) | ($ | 43 | ) | ($ | 185 | ) | ($ | 228 | ) | Adjusted Net Income |
1,630 | 2,263 | 2,213 | 1,984 | 1,788 | |||||||||||||||||||||||||
| Adj Net Income Margin |
(4.7 | %) | (4.2 | %) | (0.2 | %) | (1.2 | %) | (0.2 | %) | (3.1 | %) | (0.9 | %) | Adj Net Income Margin |
6.2 | % | 8.2 | % | 7.4 | % | 6.2 | % | 5.5 | % | |||||||||||||||||||||||||||
| Consolidated Operating Statistics: |
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| Available Seat Miles (bn) |
166 | 168.2 | 172.8 | 185.3 | 194.7 | 197.2 | ||||||||||||||||||||||||||||||||||||||||||||||
| Pax Rev per Available Seat Mile (¢) |
13.01 | 13.53 | 13.8 | 14.01 | 14.15 | 14.21 | ||||||||||||||||||||||||||||||||||||||||||||||
| CASM Ex-Fuel and Special Items (¢) |
9.43 | 8.96 | 9.2 | 9.53 | 10.01 | 10.35 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fuel Price Per Gallon |
$ | 3.20 | $ | 3.17 | $ | 3.14 | $ | 3.14 | $ | 3.13 | $ | 3.11 | ||||||||||||||||||||||||||||||||||||||||
| Cash Flow from Operations |
$ | 1,375 | $ | 2,204 | $ | 3,357 | $ | 3,666 | $ | 3,167 | $ | 2,967 | ||||||||||||||||||||||||||||||||||||||||
| Net Capex(5) | -492 | -1,353 | -1,834 | -2,643 | -2,657 | -2,372 | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance Sheet Summary |
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| Unrestricted Cash |
$ | 3,884 | $ | 5,559 | $ | 6,791 | $ | 7,163 | $ | 6,060 | $ | 6,066 | ||||||||||||||||||||||||||||||||||||||||
| % of Revenue | 15.70 | % | 21.10 | % | 24.60 | % | 23.90 | % | 19.10 | % | 18.80 | % | ||||||||||||||||||||||||||||||||||||||||
| Total Debt(6) | $ | 8,530 | $ | 9,075 | $ | 8,784 | $ | 8,167 | $ | 6,575 | $ | 6,011 | ||||||||||||||||||||||||||||||||||||||||
| Off Balance Sheet Debt(6) |
210 | 425 | 313 | 313 | 313 | 313 | ||||||||||||||||||||||||||||||||||||||||||||||
| Capitalized Aircraft Rent(7) |
3,805 | 5,432 | 7,027 | 8,767 | 10,276 | 11,943 | ||||||||||||||||||||||||||||||||||||||||||||||
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| Adjusted Net Debt |
$ | 8,662 | $ | 9,374 | $ | 9,332 | $ | 10,085 | $ | 11,103 | $ | 12,200 | ||||||||||||||||||||||||||||||||||||||||
| Adj. Net Debt / Adj. EBITDAR |
4.4x | 2.3x | 1.9x | 2.0x | 2.2x | 2.4x | ||||||||||||||||||||||||||||||||||||||||||||||
| From BPM | |
Op Earnings |
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546496.071 | 2294974.27 | 2852236.57 | 2848434.84 | 2517261.9 | 2213725.65 | |||||||||||||||||||||||||||||||||||||||||||
| Dep | 1022742.25 | 958583.704 | 986154.306 | 1027025.59 | 1120237.95 | 1222031.08 | ||||||||||||||||||||||||||||||||||||||||||||||
| Rent | 550159.795 | 843593.376 | 1189670.44 | 1624869.75 | 1998136.36 | 2319743.42 | ||||||||||||||||||||||||||||||||||||||||||||||
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Special Items |
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-149396.75 | 102540.316 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||
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Reg Rent |
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6575.23587 | 67564.1208 | 185879.411 | 372428.213 | 530178.693 | 613581.9 | ||||||||||||||||||||||||||||||||||||||||||||
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ML Rent |
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543584.56 | 776029.255 | 1003791.03 | 1252441.53 | 1467957.67 | 1706161.52 | ||||||||||||||||||||||||||||||||||||||||||||
| Revenue | 24797509.1 | 26347598.9 | 27559208.7 | 29962816.2 | 31807180 | 32345708.8 | ||||||||||||||||||||||||||||||||||||||||||||||
| Net Income | 1467248.16 | 2263462.89 | 2212814.66 | 1983680.91 | 1788404.54 | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted Net Debt | 7,832 | $8,662 | Adjusted Net Debt |
$ | 9,374 | $ | 9,332 | $ | 10,085 | $ | 11,103 | 12200 | ||||||||||||||||||||||||||||||||||||||||
| Adj Net Debt / EBITDAR | 3.9 | 4.4 | Adj Net Debt / EBITDAR |
2.3 | 1.9 | 2.0 | 2.2 | 2.4 | ||||||||||||||||||||||||||||||||||||||||||||
YE September 2012 Financials
| ($ Millions) |
YE September 12 | |||
| Long-Term Debt and Capital Leases |
$ | 8,033 | ||
| Present Value of Operating Leases |
4,026 | |||
| Less: Unrestricted Cash and Short-Term Investments |
$ | (4,227 | ) | |
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| Adjusted Net Debt |
$ | 7,832 | ||
| ($ in millions) |
Actual 4Q11 |
Actual YTD Sep-12 |
YE Sep 2012 |
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| Operating Earnings |
$ | (784 | ) | $ | 104 | $ | (681 | ) | ||||
| Plus: Depreciation |
$ | 271 | $ | 777 | $ | 1,047 | ||||||
| Plus: Mainline Aircraft Rent |
$ | 172 | $ | 404 | $ | 575 | ||||||
| Plus: Special Items |
$ | 725 | $ | 329 | $ | 1,054 | ||||||
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| Adjusted EBITDAR |
$ | 383 | $ | 1,612 | $ | 1,995 | ||||||
| Revenue |
$ | 5,956 | $ | 18,918 | $ | 24,874 | ||||||
| EBITDAR Margin |
6.4 | % | 8.5 | % | 8.1 | % | ||||||
| Unrestricted Cash and Short-Term Investments at 9/30/12 |
$ | 4,227 | ||||||||||
| Unrestricted Cash as % of Revenue |
17 | % | ||||||||||
| Adjusted Net Debt / Adjusted EBITDAR |
3.9 | |||||||||||
Adjusted Net Debt - 2012-17
| ($ Millions) |
At Filing (11/29/11) | At Emergence (4/30/13) | 2012E | 2013E | 2014E | 2015E | 2016E | 2017E | ||||||||||||||||||||||||
| Long-Term Debt and Capital Leases |
$ | 11,316 | $ | 9,149 | $ | 10,472 | $ | 9,075 | $ | 8,784 | $ | 8,167 | $ | 6,575 | $ | 6,011 | ||||||||||||||||
| Liabilities Subject to Compromise |
$ | — | $ | — | $ | (3,278 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
| Present Value of Operating Leases and Off-Balance Sheet Obligations |
$ | 5,943 | $ | 4,579 | $ | 5,352 | $ | 5,857 | $ | 7,340 | $ | 9,080 | $ | 10,589 | $ | 12,256 | ||||||||||||||||
| Less: Unrestricted Cash and Short-Term Investments |
$ | (4,350 | ) | $ | (4,775 | ) | $ | (3,884 | ) | $ | (5,559 | ) | $ | (6,791 | ) | $ | (7,163 | ) | $ | (6,060 | ) | $ | (6,066 | ) | ||||||||
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| Adjusted Net Debt |
$ | 12,908 | $ | 8,953 | $ | 8,662 | $ | 9,374 | $ | 9,332 | $ | 10,085 | $ | 11,103 | $ | 12,200 | ||||||||||||||||
| ($ in millions) |
2011 | 2012E | 2013E | 2014E | 2015E | 2016E | 2017E | |||||||||||||||||||||||||
| Operating Earnings |
$ | (1,054 | ) | $ | 218 | $ | 2,295 | $ | 2,852 | $ | 2,848 | $ | 2,517 | $ | 2,214 | |||||||||||||||||
| Depreciation |
$ | 1,086 | $ | 1,023 | $ | 959 | $ | 986 | $ | 1,027 | $ | 1,120 | $ | 1,222 | ||||||||||||||||||
| Mainline Aircraft Rent |
$ | 631 | $ | 542 | $ | 776 | $ | 1,004 | $ | 1,252 | $ | 1,468 | $ | 1,706 | ||||||||||||||||||
| Special Items |
$ | 725 | $ | 179 | $ | 103 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
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| Adjusted EBITDAR |
$ | 1,388 | $ | 1,963 | $ | 4,132 | $ | 4,842 | $ | 5,128 | $ | 5,105 | $ | 5,142 | ||||||||||||||||||
| Revenue |
$ | 24,022 | $ | 24,798 | $ | 26,348 | $ | 27,559 | $ | 29,963 | $ | 31,807 | $ | 32,346 | ||||||||||||||||||
| EBITDAR Margin |
5.8 | % | 7.9 | % | 15.7 | % | 17.6 | % | 17.1 | % | 16.1 | % | 15.9 | % | ||||||||||||||||||
| Net Income |
$ | (1,979 | ) | $ | (2,189 | ) | $ | 1,467 | $ | 2,263 | $ | 2,213 | $ | 1,984 | $ | 1,788 | ||||||||||||||||
| Reorganization Items |
$ | 118 | $ | 1,782 | $ | 60 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
| Special Items |
$ | 725 | $ | 179 | $ | 103 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
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| Adjusted Net Income |
$ | (1,136 | ) | $ | (228 | ) | $ | 1,630 | $ | 2,263 | $ | 2,213 | $ | 1,984 | $ | 1,788 | ||||||||||||||||
| Adj Net Income Margin |
-4.7 | % | -0.9 | % | 6.2 | % | 8.2 | % | 7.4 | % | 6.2 | % | 5.5 | % | ||||||||||||||||||