View:
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: September 22, 2004
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 8.01 Other Events
American Airlines, Inc., a wholly owned subsidiary of AMR
Corporation (AMR), is filing herewith AMR's Eagle Eye
communication to investors. This document includes (a) actual
fuel price, unit cost and capacity and traffic information for
July and August, (b) forecasts of unit cost and revenue
performance, fuel prices, capacity estimates, liquidity
expectations, other income/expense estimates, statements
regarding the company's future financing activities, and
statements regarding the company's liquidity and (c) information
regarding the fully drawn $834 million credit facility of
American Airlines, Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
American Airlines, Inc.
/s/ Charles D. MarLett
Charles D. MarLett
Corporate Secretary
Dated: September 22, 2004
AMR EAGLE EYE
September 22, 2004
Statements in this report contain various forward-looking
statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, which represent the Company's
expectations or beliefs concerning future events. When used in
this document the words "expects", "plans," "anticipates,"
"indicates," "believes," "forecast," "guidance" and similar
expressions are intended to identify forward-looking statements.
Forward-looking statements include, without limitation, the
Company's expectations concerning operations and financial
conditions, including changes in capacity, revenues, and costs,
future financing needs, overall economic conditions, plans and
objectives for future operations, the impact on the Company of
its results of operations for the past three years and the
sufficiency of its financial resources to absorb that impact.
Other forward-looking statements include statements which do not
relate solely to historical facts, such as, without limitation,
statements which discuss the possible future effects of current
known trends or uncertainties, or which indicate that the future
effects of known trends or uncertainties cannot be predicted,
guaranteed or assured. All forward-looking statements in this
report are based on information available to the Company on the
date of this report. The Company undertakes no obligation to
publicly update or revise any forward-looking statement, whether
as a result of new information, future events or otherwise. This
document includes forecasts of unit cost and revenue performance,
fuel prices, capacity estimates, liquidity expectations, other
income/expense estimates, statements regarding the Company's
future financing activities, and statements regarding the
Company's liquidity, each of which is a forward-looking
statement. Forward-looking statements are subject to a number of
factors that could cause the Company's actual results to differ
materially from the Company's expectations. The following
factors, in addition to other possible factors not listed, could
cause the Company's actual results to differ materially from
those expressed in forward-looking statements: changes in
economic, business and financial conditions; the Company's
substantial indebtedness; continued high fuel prices and the
availability of fuel; the residual effects of the war in Iraq;
conflicts in the Middle East or elsewhere; the highly competitive
business environment faced by the Company, with increasing
competition from low cost carriers and historically low fare
levels (which could result in a deterioration of the revenue
environment); the ability of the Company to implement its
restructuring program and the effect of the program on
operational performance and service levels; uncertainties with
respect to the Company's international operations; changes in the
Company's business strategy; actions by U.S. or foreign
government agencies; the possible occurrence of additional
terrorist attacks; another outbreak of a disease (such as SARS)
that affects travel behavior; uncertainties with respect to the
Company's relationships with unionized and other employee work
groups; the ability of the Company to satisfy existing financial
or other covenants in certain of its credit agreements; the
availability of future financing; the ability of the Company to
reach acceptable agreements with third parties; and increased
insurance costs and potential reductions of available insurance
coverage. Additional information concerning these and other
factors is contained in the Company's Securities and Exchange
Commission filings, including but not limited to the Company's
Annual Report on Form 10-K for the year ended December 31, 2003.
We are providing updated guidance due to the further escalation
of fuel prices and a relatively weak revenue environment.
Additionally, as a result of the adverse impact of these factors
on our financial results, we are updating disclosure regarding
the fully drawn $834 million bank credit facility of American
Airlines, Inc. (American).
Performance Update
Costs: Third quarter 2004 fuel price guidance changes from
$1.25/gallon to $1.27/gallon. Full year 2004, fuel price
guidance changes from $1.17/gallon to $1.20/gallon.
Revenue: August 2004 revenue was weaker than expected. A number
of factors are contributing to the weakness in industry revenue,
including: excess industry capacity, more frequent and more
deeply discounted fare sales and the continued aggressive pricing
and growth of Low Cost Carriers. In addition, hurricanes
adversely impacted both revenues and expenses in August and will
impact September to an even greater degree.
As a result, third quarter 2004 mainline unit revenue is expected
to decline between 2.5 and 3.5 percent year over year. On a
consolidated basis, AMR passenger unit revenue for the third
quarter is expected to be lower than last year by 1.7 - 2.7
points year over year.
Credit Facility
American has a fully drawn $834 million bank credit facility
secured by aircraft that expires December 31, 2005. The facility
contains a liquidity covenant and an EBITDAR (generally, earnings
before interest, taxes, depreciation, amortization and rentals,
adjusted for certain non-cash items) to fixed charges (generally,
interest and total rentals) ratio covenant (the EBITDAR
Covenant). The liquidity covenant requires American to maintain
a minimum level of $1.0 billion of unrestricted cash and short-
term investments (the Liquidity Covenant). Prior to the
amendment of the bank credit facility referred to below, the
required EBITDAR to fixed charges ratio was 1.3 to 1.0 for the
nine-month period ending September 30, 2004, 1.4 to 1.0 for the
twelve-month period ending December 31, 2004, and 1.5 to 1.0 for
each of the four consecutive calendar quarters ending after
December 31, 2004.
While American fully expects to comply with the Liquidity
Covenant, American recently determined that, because of
continuing record high fuel prices and weakness in the revenue
environment, it might not be able to comply with the EBITDAR
Covenant as of September 30, 2004 and it was unlikely to be
able to comply with the EBITDAR Covenant as of December 31, 2004.
To address this situation, on September 22, 2004, American
obtained an amendment to the bank credit facility to lower the
required EBITDAR to fixed charges ratio to 1.0 to 1.0 for the
nine-month period ending September 30, 2004 and 0.9 to 1.0 for
the twelve month period ending December 31, 2004. The required
ratio remains 1.5 to 1.0 for each of the four consecutive
calendar quarters ending after December 31, 2004. To address
this, American is in active discussions to refinance its bank
credit facility with one or more credit facilities or term loans
(collectively, the Replacement Facility) in the fourth quarter of
2004. American has engaged Citigroup Global Markets Inc. and
JPMorgan Chase to act as arrangers in connection with the
Replacement Facility. While American believes that it will be
able to obtain the Replacement Facility on acceptable terms,
there can be no assurance that American will be able to do so.
A number of banks, financial institutions and other institutional
lenders are parties to the bank credit facility. From time to
time, several of the banks or their affiliates perform investment
banking and advisory services for, and provide general financing
and banking services to, American and its affiliates.
Liquidity
We expect to end the third quarter with a total cash and short-
term investment balance of about $3.6 billion, including
approximately $480 million in restricted cash and short-term
investments.
Kathy Bonanno
Director Investor Relations
AMR EAGLE EYE
Fuel Forecast
Fuel Hedge Position:
3Q04: Hedged on 9% of consumption at $32/bbl WTI Crude
AMR Fuel Price (Including Hedges and Taxes) and Consumption
Actual Forecast
Jul Aug Sep 3Q04 2004
Fuel Price (dollars/gal) 1.18 1.28 1.35 1.27 1.20
Fuel Consumption (MM gals) 293.2 292.6 258.8 844.7 3,274.0
Unit Cost Forecast
AMR Consolidated Cost per ASM
Actual Forecast
Jul Aug Sep 3Q04 2004*
AMR Cost per ASM (cents) 9.83 10.08 10.75 10.20 10.15
American Mainline Operations Cost per ASM
Actual Forecast
Jul Aug Sep 3Q04 2004*
AA Cost per ASM (cents) 9.42 9.64 10.30 9.77 9.71
Capacity and Traffic Forecast
AA Mainline Operations
Actual Forecast
Jul Aug Sep 3Q04 2004
ASMs (millions) 15,544 15,536 13,504 44,584 174,224
Domestic 10,265 10,304 9,023 29,592 117,775
International 5,279 5,232 4,481 14,992 56,449
Traffic 12,605 12,192 9,775 34,572 129,380
Regional Affiliate Operations
Actual Forecast
Jul Aug Sep 3Q04 2004
ASMs (millions) 951 968 941 2,860 10,863
Traffic 694 660 570 1,924 7,195
Below the Line Income/Expenses
Total Other Income/(Expense) is estimated at ($190) million
during each of the third and fourth quarters of 2004.
* 1Q04 and 2Q04 as reported