SEC Filing | American Airlines

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




	FORM 10-Q



☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2018



☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period From to

Commission file number 1-8400




American Airlines Group Inc. (Exact name of registrant as specified in its charter)



Delaware		75-1825172
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
4333 Amon Carter Blvd., Fort Worth, Texas 76155		(817) 963-1234
(Address of principal executive offices, including zip code)		(Registrant’s telephone number, including area code)

Commission file number 1-2691




American Airlines, Inc. (Exact name of registrant as specified in its charter)



Delaware		13-1502798
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
4333 Amon Carter Blvd., Fort Worth, Texas 76155		(817) 963-1234
(Address of principal executive offices, including zip code)		(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



American Airlines Group Inc.	☒	Yes	☐	No
American Airlines, Inc.	☒	Yes	☐	No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).



American Airlines Group Inc.	☒	Yes	☐	No
American Airlines, Inc.	☒	Yes	☐	No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



American Airlines Group Inc.	☒ Large Accelerated Filer	☐ Accelerated Filer	☐ Non-accelerated Filer	☐ Smaller Reporting Company	☐ Emerging Growth Company
American Airlines, Inc.	☐ Large Accelerated Filer	☐ Accelerated Filer	☒ Non-accelerated Filer	☐ Smaller Reporting Company	☐ Emerging Growth Company

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



American Airlines Group Inc.	☐
American Airlines, Inc.	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



American Airlines Group Inc.	☐	Yes	☒	No
American Airlines, Inc.	☐	Yes	☒	No

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.



American Airlines Group Inc.	☒	Yes	☐	No
American Airlines, Inc.	☒	Yes	☐	No

As of July 20, 2018, there were 460,509,216 shares of American Airlines Group Inc. common stock outstanding.

As of July 20, 2018, there were 1,000 shares of American Airlines, Inc. common stock outstanding, all of which were held by American Airlines Group Inc.

American Airlines Group Inc.

American Airlines, Inc.

Form 10-Q

Quarterly Period Ended June 30, 2018

Table of Contents



		Page
PART I: FINANCIAL INFORMATION
Item 1A.	Condensed Consolidated Financial Statements of American Airlines Group Inc.	4
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Balance Sheets	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to the Condensed Consolidated Financial Statements	8
Item 1B.	Condensed Consolidated Financial Statements of American Airlines, Inc.	23
	Condensed Consolidated Statements of Operations	23
	Condensed Consolidated Statements of Comprehensive Income	24
	Condensed Consolidated Balance Sheets	25
	Condensed Consolidated Statements of Cash Flows	26
	Notes to the Condensed Consolidated Financial Statements	27
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	71
Item 4.	Controls and Procedures	72
PART II: OTHER INFORMATION
Item 1.	Legal Proceedings	73
Item 1A.	Risk Factors	74
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	93
Item 6.	Exhibits	93
SIGNATURES		96

This report is filed by American Airlines Group Inc. (formerly named AMR Corporation) (AAG) and its wholly-owned subsidiary American Airlines, Inc. (American). References in this report to “we,” “us,” “our,” the “Company” and similar terms refer to AAG and its consolidated subsidiaries. “AMR” or “AMR Corporation” refers to the Company during the period of time prior to its emergence from Chapter 11 and its acquisition of US Airways Group, Inc. (US Airways Group) on December 9, 2013. References to “US Airways Group” and “US Airways,” a subsidiary of US Airways Group, represent the entities during the period of time prior to the dissolution of those entities in connection with AAG’s internal corporate restructuring on December 30, 2015. References in this report to “mainline” refer to the operations of American only and exclude regional operations.

Note Concerning Forward-Looking Statements

Certain of the statements contained in this report should be considered forward-looking statements within the meaning of the Securities Act of 1933, as amended (the Securities Act), the Securities Exchange Act of 1934, as amended (the Exchange Act), and 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,” “if current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about our plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that are not historical facts. These forward-looking statements are based on our 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. These risks and uncertainties include, but are not limited to, those described below under Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Part II, Item 1A. Risk Factors and other risks and uncertainties listed from time to time in our filings with the Securities and Exchange Commission (the SEC).

All of the forward-looking statements are qualified in their entirety by reference to the factors discussed in Part II, Item 1A. Risk Factors and elsewhere in this report. There may be other factors of which we are not currently aware that may affect matters discussed in the forward-looking statements and may also cause actual results to differ materially from those discussed. We do not assume any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting such statements other than as required by law. Forward-looking statements speak only as of the date of this report or as of the dates indicated in the statements.

PART I: FINANCIAL INFORMATION

This report on Form 10-Q is filed by both AAG and American and includes the Condensed Consolidated Financial Statements of each company in Item 1A and Item 1B, respectively.

ITEM 1A. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

AMERICAN AIRLINES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except shares and per share amounts)(Unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Operating revenues:
Passenger	$	10,674		$	10,353		$	20,154		$	19,350
Cargo	261			219			488			410
Other	708			655			1,402			1,287
Total operating revenues	11,643			11,227			22,044			21,047
Operating expenses:
Aircraft fuel and related taxes	2,103			1,510			3,866			2,912
Salaries, wages and benefits	3,093			3,037			6,111			5,898
Regional expenses	1,793			1,620			3,490			3,194
Maintenance, materials and repairs	505			495			973			987
Other rent and landing fees	490			452			952			892
Aircraft rent	305			294			609			589
Selling expenses	385			376			742			694
Depreciation and amortization	463			418			908			822
Special items, net	152			202			347			320
Other	1,326			1,224			2,587			2,403
Total operating expenses	10,615			9,628			20,585			18,711
Operating income	1,028			1,599			1,459			2,336
Nonoperating income (expense):
Interest income	30			24			55			45
Interest expense, net	(266		)	(263		)	(530		)	(520		)
Other income (expense), net	(23		)	29			58			63
Total nonoperating expense, net	(259		)	(210		)	(417		)	(412		)
Income before income taxes	769			1,389			1,042			1,924
Income tax provision	203			525			289			720
Net income	$	566		$	864		$	753		$	1,204

Earnings per common share:
Basic	$	1.22		$	1.76		$	1.61		$	2.42
Diluted	$	1.22		$	1.75		$	1.60		$	2.41
Weighted average shares outstanding (in thousands):
Basic	463,533			490,818			467,915			497,360
Diluted	464,618			492,965			469,608			500,381
Cash dividends declared per common share	$	0.10		$	0.10		$	0.20		$	0.20

See accompanying notes to condensed consolidated financial statements.

AMERICAN AIRLINES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)(Unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net income	$	566		$	864		$	753		$	1,204
Other comprehensive loss, net of tax:
Pension, retiree medical and other postretirement benefits	(17		)	(15		)	(33		)	(29		)
Investments	2			—			—			—
Total other comprehensive loss, net of tax	(15		)	(15		)	(33		)	(29		)
Total comprehensive income	$	551		$	849		$	720		$	1,175

See accompanying notes to condensed consolidated financial statements.

AMERICAN AIRLINES GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except shares and par value)



	June 30, 2018			December 31, 2017
	(Unaudited)
ASSETS
Current assets
Cash	$	293		$	295
Short-term investments	4,381			4,771
Restricted cash and short-term investments	183			318
Accounts receivable, net	1,941			1,752
Aircraft fuel, spare parts and supplies, net	1,522			1,359
Prepaid expenses and other	856			651
Total current assets	9,176			9,146
Operating property and equipment
Flight equipment	40,854			40,318
Ground property and equipment	8,903			8,267
Equipment purchase deposits	1,392			1,217
Total property and equipment, at cost	51,149			49,802
Less accumulated depreciation and amortization	(16,725		)	(15,646		)
Total property and equipment, net	34,424			34,156
Other assets
Goodwill	4,091			4,091
Intangibles, net of accumulated amortization of $643 and $622, respectively	2,157			2,203
Deferred tax asset	1,399			1,816
Other assets	1,375			1,373
Total other assets	9,022			9,483
Total assets	$	52,622		$	52,785

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Current maturities of long-term debt and capital leases	$	2,213		$	2,554
Accounts payable	2,053			1,688
Accrued salaries and wages	1,299			1,672
Air traffic liability	5,512			4,042
Loyalty program liability	3,191			3,121
Other accrued liabilities	2,401			2,281
Total current liabilities	16,669			15,358
Noncurrent liabilities
Long-term debt and capital leases, net of current maturities	21,863			22,511
Pension and postretirement benefits	7,118			7,497
Loyalty program liability	5,484			5,701
Other liabilities	2,357			2,498
Total noncurrent liabilities	36,822			38,207
Commitments and contingencies
Stockholders’ equity (deficit)
Common stock, $0.01 par value; 1,750,000,000 shares authorized, 460,502,096 shares issued and outstanding at June 30, 2018; 475,507,887 shares issued and outstanding at December 31, 2017	5			5
Additional paid-in capital	4,923			5,714
Accumulated other comprehensive loss	(5,187		)	(5,154		)
Accumulated deficit	(610		)	(1,345		)
Total stockholders’ deficit	(869		)	(780		)
Total liabilities and stockholders’ equity (deficit)	$	52,622		$	52,785

See accompanying notes to condensed consolidated financial statements.

AMERICAN AIRLINES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)(Unaudited)



	Six Months Ended June 30,
	2018			2017
Net cash provided by operating activities	$	2,883		$	3,938
Cash flows from investing activities:
Capital expenditures and aircraft purchase deposits	(1,731		)	(3,194		)
Proceeds from sale of property and equipment and sale-leaseback transactions	258			313
Purchases of short-term investments	(1,184		)	(3,829		)
Sales of short-term investments	1,579			3,373
Decrease in restricted short-term investments	43			73
Net cash used in investing activities	(1,035		)	(3,264		)
Cash flows from financing activities:
Proceeds from issuance of long-term debt	892			1,625
Payments on long-term debt and capital leases	(1,885		)	(1,101		)
Deferred financing costs	(28		)	(39		)
Treasury stock repurchases	(837		)	(1,013		)
Dividend payments	(94		)	(102		)
Other financing activities	11			9
Net cash used in financing activities	(1,941		)	(621		)
Net increase (decrease) in cash and restricted cash	(93		)	53
Cash and restricted cash at beginning of period	398			436
Cash and restricted cash at end of period ^(a)	$	305		$	489

Supplemental information:
Interest paid, net	542			516
Income taxes paid	13			9

^(a)The following table provides a reconciliation of cash and restricted cash to amounts reported within the condensed consolidated balance sheets:



Cash	$	293	$	386
Restricted cash included in restricted cash and short-term investments	12		103
Total cash and restricted cash	$	305	$	489

See accompanying notes to condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

1. Basis of Presentation and Recent Accounting Pronouncements

(a) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of American Airlines Group Inc. (we, us, our and similar terms, or AAG) should be read in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017. The accompanying unaudited condensed consolidated financial statements include the accounts of AAG and its wholly-owned subsidiaries. AAG’s principal subsidiary is American Airlines, Inc. (American). All significant intercompany transactions have been eliminated.

On December 9, 2013, a subsidiary of AMR Corporation (AMR) merged with and into US Airways Group, Inc. (US Airways Group), a Delaware corporation, which survived as a wholly-owned subsidiary of AAG, and AAG emerged from Chapter 11 (the Merger). Upon closing of the Merger and emergence from Chapter 11, AMR changed its name to American Airlines Group Inc. On December 30, 2015, in order to simplify AAG’s internal corporate structure, US Airways Group merged with and into AAG, with AAG as the surviving corporation. Immediately thereafter, US Airways, Inc. (US Airways), a wholly-owned subsidiary of US Airways Group, merged with and into American, with American as the surviving corporation.

Management believes that all adjustments necessary for the fair presentation of results, consisting of normally recurring items, have been included in the unaudited condensed consolidated financial statements for the interim periods presented. The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The most significant areas of judgment relate to passenger revenue recognition, impairment of goodwill, impairment of long-lived and intangible assets, the loyalty program, valuation allowance for deferred tax assets, as well as pension and retiree medical and other postretirement benefits.

(b) Recent Accounting Pronouncements

Standards Effective for 2018 Reporting Periods

Effective January 1, 2018, we adopted the accounting pronouncements described below.

ASU 2014-09: Revenue from Contracts with Customers (Topic 606) (the New Revenue Standard)

The New Revenue Standard applies to all companies that enter into contracts with customers to transfer goods or services. We adopted the New Revenue Standard using the full retrospective method, which resulted in the recast of prior reporting periods.

The adoption of the New Revenue Standard impacted our accounting for outstanding mileage credits earned through travel by AAdvantage loyalty program members. There was no change in accounting for sales of mileage credits to co-branded card or other partners. Prior to the adoption of the New Revenue Standard, we used the incremental cost method to account for the portion of our loyalty program liability related to mileage credits earned through travel, which were valued based on the estimated incremental cost of carrying one additional passenger. The New Revenue Standard required us to change our policy to the deferred revenue method and apply a relative selling price approach whereby a portion of each passenger ticket sale attributable to mileage credits earned is deferred and recognized in passenger revenue upon future mileage redemption. The value of the earned mileage credits is materially greater under the deferred revenue method than the value attributed to these mileage credits under the incremental cost method.

The New Revenue Standard also required certain reclassifications, principally the reclassification of certain ancillary revenues previously classified and reported as other revenue to passenger revenue and as applicable to cargo revenue. Additionally, the New Revenue Standard required a gross presentation on the face of our condensed consolidated statement of operations for certain revenues and expenses that had previously been presented on a net basis.

See recast condensed consolidated statement of operations data for the three and six months ended June 30, 2017 and recast consolidated balance sheet data as of December 31, 2017 presented below for the effects of adoption.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

ASU 2017-07: Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (the New Retirement Standard)

The New Retirement Standard required all components of our net periodic benefit cost (income), with the exception of service cost, previously reported within operating expenses as salaries, wages and benefits, to be reclassified and reported within nonoperating income (expense). The New Retirement Standard was applied retrospectively, which resulted in the recast of each prior reporting period presented. The adoption of the New Retirement Standard had no impact on pre-tax income or net income reported.

See recast condensed consolidated statement of operations data for the three and six months ended June 30, 2017 presented below for the effects of adoption.

ASU 2016-01: Financial Instruments - Overall (Subtopic 825-10)

This ASU made several modifications to Subtopic 825-10, including the elimination of the available-for-sale classification of equity investments, and it required equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income. This standard was adopted prospectively as of January 1, 2018 and resulted in a $77 million cumulative effect adjustment credit to retained earnings related to our investment in China Southern Airlines Company Limited (China Southern Airlines), which was previously accounted for under the cost method.

ASU 2016-18: Statement of Cash Flows (Topic 230): Restricted Cash

This ASU required that the change in total cash, cash at beginning of period and cash at end of period on the statement of cash flows include restricted cash and restricted cash equivalents and also requires companies who report cash and restricted cash separately on the balance sheet to reconcile those amounts to the statement of cash flows. This standard was applied retrospectively, which resulted in the recast of the prior reporting period in the statement of cash flows. For the six months ended June 30, 2018 and 2017, $12 million and $103 million, respectively, of restricted cash is included in the total of cash and restricted cash balance at the end of period. A reconciliation of cash and restricted cash from our condensed consolidated statement of cash flows to the amounts reported within our condensed consolidated balance sheet is also included in a table below our condensed consolidated statement of cash flows.

Impacts to Prior Period Results

The effects of adoption of the New Revenue Standard and New Retirement Standard to our condensed consolidated statement of operations for the three and six months ended June 30, 2017 were as follows (in millions, except per share amounts):



				New Revenue Standard					New Retirement Standard
Three Months Ended June 30, 2017	As Reported			Deferred Revenue Method		Reclassifications			Reclassifications			As Recast
Operating revenues:
Passenger	$	9,582		$	98	$	673		$	—		$	10,353
Cargo	196			—		23			—			219
Other	1,327			—		(672		)	—			655
Total operating revenues	11,105			98		24			—			11,227
Total operating expenses	9,570			—		24			34			9,628
Operating income	1,535			98		—			(34		)	1,599
Total nonoperating expense, net	(244		)	—		—			34			(210		)
Income before income taxes	1,291			98		—			—			1,389
Income tax provision	488			37		—			—			525
Net income	$	803		$	61	$	—		$	—		$	864
Diluted earnings per common share	$	1.63										$	1.75

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)



				New Revenue Standard					New Retirement Standard
Six Months Ended June 30, 2017	As Reported			Deferred Revenue Method		Reclassifications			Reclassifications			As Recast
Operating revenues:
Passenger	$	17,737		$	268	$	1,345		$	—		$	19,350
Cargo	368			—		42			—			410
Other	2,624			—		(1,337		)	—			1,287
Total operating revenues	20,729			268		50			—			21,047
Total operating expenses	18,593			—		50			68			18,711
Operating income	2,136			268		—			(68		)	2,336
Total nonoperating expense, net	(480		)	—		—			68			(412		)
Income before income taxes	1,656			268		—			—			1,924
Income tax provision	619			101		—			—			720
Net income	$	1,037		$	167	$	—		$	—		$	1,204
Diluted earnings per common share	$	2.07										$	2.41

The effects of adoption of the New Revenue Standard to our December 31, 2017 consolidated balance sheet are as follows (in millions):



	As Reported		New Revenue Standard			As Recast
Deferred tax asset	$	427	$	1,389		$	1,816
Air traffic liability	3,978		64			4,042
Current loyalty program liability	2,791		330			3,121
Noncurrent loyalty program liability	—		5,701			5,701
Total stockholders' equity (deficit)	3,926		(4,706		)	(780		)

Standards Effective for 2019 Reporting Periods

ASU 2016-02: Leases (Topic 842) (the New Lease Standard)

The New Lease Standard requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet and aligns many of the underlying principles of the new lessor model with those in the New Revenue Standard. The New Lease Standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We will adopt the New Lease Standard effective January 1, 2019. We are currently evaluating how the adoption of the New Lease Standard will impact our consolidated financial statements. Interpretations are on-going and could have a material impact on our implementation. Currently, we expect that the adoption of the New Lease Standard will have a material impact on our consolidated balance sheet due to the recognition of right-of-use assets and lease liabilities principally for certain leases currently accounted for as operating leases.

ASU 2018-02: Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

This ASU provides financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings due to the U.S. federal corporate income tax rate change as a result of H.R. 1, the 2017 Tax Cuts and Jobs Act (the 2017 Tax Act). The amount of the reclassification is the difference between the amount initially charged or credited directly to other comprehensive income at the previously enacted U.S. federal corporate income tax rate that remains in accumulated other comprehensive income and the amount that would have been charged or credited directly to other comprehensive income using the newly enacted U.S. federal corporate income tax rate, excluding the effect of any valuation allowance previously charged to income from continuing operations. This standard is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. We expect we will adopt this standard effective January 1, 2019. The adoption of the standard may impact tax amounts stranded in accumulated other comprehensive income related to our pension and retiree medical and other postretirement benefit plans.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

2. Special Items, Net

Special items, net in the condensed consolidated statements of operations consisted of the following expenses (income) (in millions):



	Three Months Ended June 30,					Six Months Ended June 30,
	2018			2017		2018			2017
Fleet restructuring expenses ⁽¹⁾	$	83		$	48	$	166		$	111
Merger integration expenses ⁽²⁾	60			68		120			130
Mark-to-market adjustments on bankruptcy obligations ⁽³⁾	(57		)	38		(56		)	20
Intangible asset impairment ⁽⁴⁾	26			—		26			—
Litigation settlement	5			—		45			—
Labor contract expenses	—			45		13			45
Other operating charges, net	35			3		33			14
Mainline operating special items, net	152			202		347			320

Regional operating special items, net	—			1		—			4

Mark-to-market adjustments on equity investments ⁽⁵⁾	66			—		66			—
Debt refinancing and extinguishment charges	14			2		14			7
Nonoperating special items, net	80			2		80			7

Income tax special items, net ⁽⁶⁾	18			—		40			—


⁽¹⁾	Fleet restructuring expenses principally included the acceleration of depreciation and impairments for aircraft and related equipment grounded or expected to be grounded earlier than planned.


⁽²⁾	Merger integration expenses included costs associated with our remaining integration projects, principally our flight attendant, human resources, payroll and technical operations integrations.


⁽³⁾	Bankruptcy obligations will ultimately be settled in shares of our common stock. Accordingly, fluctuations in our stock price result in mark-to-market adjustments to these obligations.


⁽⁴⁾	Intangible asset impairment includes a non-cash charge to write-off our Brazil route authority as a result of ratification of the U.S.-Brazil open skies agreement.


⁽⁵⁾	Mark-to-market adjustments on equity investments principally relate to unrealized losses on our investment in China Southern Airlines.


⁽⁶⁾	Income tax special items for the three months ended June 30, 2018 included an $18 million charge related to an international income tax matter. Additionally, the six months ended June 30, 2018 included a $22 million charge to income tax expense to establish a required valuation allowance related to our estimated refund for Alternative Minimum Tax (AMT) credits.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

3. Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per common share (EPS) (in millions, except share and per share amounts):



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Basic EPS:
Net income	$	566	$	864	$	753	$	1,204
Weighted average common shares outstanding (in thousands)	463,533		490,818		467,915		497,360
Basic EPS	$	1.22	$	1.76	$	1.61	$	2.42

Diluted EPS:
Net income for purposes of computing diluted EPS	$	566	$	864	$	753	$	1,204
Share computation for diluted EPS (in thousands):
Basic weighted average common shares outstanding	463,533		490,818		467,915		497,360
Dilutive effect of stock awards	1,085		2,147		1,693		3,021
Diluted weighted average common shares outstanding	464,618		492,965		469,608		500,381
Diluted EPS	$	1.22	$	1.75	$	1.60	$	2.41

Restricted stock unit awards excluded from the calculation of diluted EPS because inclusion would be antidilutive (in thousands)	1,690		837		845		616

4. Share Repurchase Programs and Dividends

In April 2018, we announced that our Board of Directors authorized a new $2.0 billion share repurchase program that expires on December 31, 2020. Since July 2014, our Board of Directors has approved seven share repurchase programs aggregating $13.0 billion of authority. As of June 30, 2018, there was $1.7 billion remaining authority to repurchase shares under our new $2.0 billion share repurchase program. Share repurchases under our repurchase programs may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Any such repurchases will be made from time to time subject to market and economic conditions, applicable legal requirements and other relevant factors. We are not obligated to repurchase any specific number of shares and our repurchase of common stock may be limited, suspended or discontinued at any time at our discretion.

During the three months ended June 30, 2018, we repurchased 8.2 million shares of AAG common stock for $350 million at a weighted average cost per share of $42.81. During the six months ended June 30, 2018, we repurchased 16.6 million shares of AAG common stock for $800 million at a weighted average cost per share of $48.15. Since the inception of our share repurchase programs in July 2014, we have repurchased 278.9 million shares of AAG common stock for $11.3 billion at a weighted average cost per share of $40.69.

Our Board of Directors declared a cash dividend of $0.10 per share for stockholders of record as of May 8, 2018 and paid on May 22, 2018, totaling $46 million. For the first six months of 2018, we paid total quarterly cash dividends of $94 million.

5. Revenue Recognition

(a) Revenue

Effective January 1, 2018, we adopted the New Revenue Standard using the full retrospective method, which resulted in the recast of prior reporting periods. See Recent Accounting Pronouncements in Note 1(b) above for effects of adoption on our condensed consolidated statement of operations for the three and six months ended June 30, 2017 and on our consolidated balance sheet as of December 31, 2017. Under the New Revenue Standard, revenue is recognized upon transfer of control of promised products or services to our customers in an amount that reflects the consideration we expect to receive in exchange for those products or services.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

The following are the significant categories comprising our reported operating revenues (in millions):



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Passenger revenue:
Passenger travel	$	9,877	$	9,600	$	18,507	$	17,795
Loyalty revenue - travel ⁽¹⁾	797		753		1,647		1,555
Total passenger revenue	10,674		10,353		20,154		19,350
Cargo	261		219		488		410
Other:
Loyalty revenue - marketing services	582		533		1,152		1,047
Other revenue	126		122		250		240
Total other revenue	708		655		1,402		1,287
Total operating revenues	$	11,643	$	11,227	$	22,044	$	21,047


⁽¹⁾	Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions for air travel awards from mileage credits earned through travel and mileage credits sold to co-branded card and other partners. See discussion of Loyalty Revenue below.

The following is our total passenger revenue by geographic region (in millions):



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Domestic	$	7,685	$	7,578	$	14,648	$	14,359
Latin America	1,284		1,209		2,729		2,440
Atlantic	1,298		1,182		1,967		1,806
Pacific	407		384		810		745
Total passenger revenue	$	10,674	$	10,353	$	20,154	$	19,350

We attribute passenger revenue by geographic region based upon the origin and destination of each flight segment.

Passenger Revenue

We recognize all revenues generated from transportation on American and our regional flights operated under the brand name American Eagle, including associated baggage fees, ticketing change fees and other inflight services, as passenger revenue when transportation is provided. Ticket and other related sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on the condensed consolidated balance sheets. The air traffic liability principally represents tickets sold for future travel dates and estimated future refunds and exchanges of tickets sold for past travel dates.

The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. Due to complex pricing structures, refund and exchange policies, and interline agreements with other airlines, certain amounts are recognized in passenger revenue using estimates regarding both the timing of the revenue recognition and the amount of revenue to be recognized. These estimates are generally based on the analysis of our historical data. We have consistently applied this accounting method to estimate revenue from forfeited tickets at the date of travel. Estimated future refunds and exchanges included in the air traffic liability are routinely evaluated based on subsequent activity to validate the accuracy of our estimates. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are included in passenger revenue during the period in which the evaluations are completed.

Various taxes and fees assessed on the sale of tickets to end customers are collected by us as an agent and remitted to taxing authorities. These taxes and fees have been presented on a net basis in the accompanying condensed consolidated statements of operations and recorded as a liability until remitted to the appropriate taxing authority.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

Loyalty Revenue

We currently operate the loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American, any oneworld airline or other partner airlines, or by using the services of other program participants, such as the Citi and Barclays US co-branded cards, hotels and car rental companies. Mileage credits can be redeemed for travel on American and other participating partner airlines as well as other non-air travel awards such as hotels and rental cars. For mileage credits earned by AAdvantage loyalty program members, we apply the deferred revenue method in accordance with the New Revenue Standard.

Mileage credits earned through travel

For mileage credits earned through travel, we apply a relative selling price approach whereby the total amount collected from each passenger ticket sale is allocated between the air transportation and the mileage credits earned. The portion of each passenger ticket sale attributable to mileage credits earned is initially deferred and then recognized in passenger revenue when mileage credits are redeemed and transportation is provided. The estimated selling price of mileage credits is determined using an equivalent ticket value approach which uses historical data, including award redemption patterns by geographic region and class of service as well as similar fares as those used to settle award redemptions. The estimated selling price of miles is adjusted for an estimate of miles that will not be redeemed based on historical redemption patterns.

Mileage credits sold to co-branded cards and other partners

We sell mileage credits to participating airline partners and non-airline business partners including our co-branded card partners, under contracts with terms extending generally for one to nine years. Sales of mileage credits to non-airline business partners are comprised of two components, transportation and marketing. We allocate the consideration received from the sale of mileage credits based on the relative selling price of each product or service delivered.

Our most significant partner agreements are our co-branded card program agreements with Citi and Barclays US that we entered into in 2016. We identified the following revenue elements in these co-branded card agreements: the transportation component; and the use of intellectual property including the American brand and access to loyalty program member lists, which is the predominant element in the agreements, as well as advertising (collectively, the marketing component). Accordingly, we recognize the marketing component in other revenue in the period of the mileage sale following the sales-based royalty method.

The transportation component represents the estimated selling price of future travel awards and is determined using the same equivalent ticket value approach described above. The portion of each mileage credit sold attributable to transportation is initially deferred and then recognized in passenger revenue when mileage credits are redeemed and transportation is provided.

Cargo Revenue

Cargo revenue is recognized when we provide the transportation.

Other Revenue

Other revenue includes revenue associated with our loyalty program, which is comprised principally of the marketing component of mileage sales to co-branded card and other partners and other marketing related payments. For the three and six months ended June 30, 2018, loyalty revenue included in other revenue was $582 million and $1.2 billion, respectively. For the three and six months ended June 30, 2017, loyalty revenue included in other revenue was $533 million and $1.0 billion, respectively. The accounting and recognition for the loyalty program marketing services are discussed above in Loyalty Revenue. The remaining amounts included within other revenue relate to airport clubs, advertising and vacation-related services.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

(b) Contract Balances

Our significant contract liabilities are comprised of (1) outstanding loyalty program mileage credits that may be redeemed for future travel and other non-air travel awards, reported as loyalty program liability on our condensed consolidated balance sheet and (2) ticket sales for transportation that has not yet been provided, reported as air traffic liability on our condensed consolidated balance sheet.



	June 30, 2018		December 31, 2017
	(In millions)
Loyalty program liability	$	8,675	$	8,822
Air traffic liability	5,512		4,042
Total	$	14,187	$	12,864

The balance of the loyalty program liability fluctuates based on seasonal patterns, which impact the volume of mileage credits issued through travel or sold to co-branded card and other partners (deferral of revenue) and mileage credits redeemed (recognition of revenue). Changes in loyalty program liability are as follows (in millions):



Balance at December 31, 2017	$	8,822
Deferral of revenue	1,586
Recognition of revenue ⁽¹⁾	(1,733		)
Balance at June 30, 2018 ⁽²⁾	$	8,675


⁽¹⁾	Principally relates to revenue recognized from the redemption of mileage credits for both air and non-air travel awards. Mileage credits are combined in one homogenous pool and are not separately identifiable. As such, the revenue is comprised of miles that were part of the loyalty program deferred revenue balance at the beginning of the period as well as miles that were issued during the period.

⁽²⁾

Mileage credits can be redeemed at any time and do not expire as long as that AAdvantage member has any type of qualifying activity at least every 18 months. As of June 30, 2018, our current loyalty program liability was $3.2 billion and represents our current estimate of revenue expected to be recognized in the next twelve months based on historical trends, with the balance reflected in long-term loyalty program liability expected to be recognized as revenue in periods thereafter.

The air traffic liability principally represents tickets sold for future travel dates and estimated future refunds and exchanges of tickets sold for past travel dates. The balance in our air traffic liability also fluctuates with seasonal travel patterns. The contract duration of passenger tickets is one year. Accordingly, any revenue associated with tickets sold for future travel dates will be recognized within twelve months. For the six months ended June 30, 2018, $2.9 billion of revenue was recognized in passenger revenue that was included in our air traffic liability at December 31, 2017.

With respect to contract receivables, reflected as accounts receivable, net on the accompanying condensed consolidated balance sheet, these primarily include receivables for tickets sold to individual passengers through the use of major credit cards. These receivables are short-term, mostly settled within seven days after sale. Bad debt losses, which have been minimal in the past, have been considered in establishing allowances for doubtful accounts.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

6. Debt

Long-term debt and capital lease obligations included in the condensed consolidated balance sheets consisted of (in millions):



	June 30, 2018		December 31, 2017
Secured
2013 Credit Facilities, variable interest rate of 3.85%, installments through 2025	$	1,825	$	1,825
2014 Credit Facilities, variable interest rate of 4.05%, installments through 2021	728		728
April 2016 Credit Facilities, variable interest rate of 4.09%, installments through 2023	980		990
December 2016 Credit Facilities, variable interest rate of 4.07%, installments through 2023	1,238		1,238
Aircraft enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.00% to 9.75%, averaging 4.24%, maturing from 2018 to 2029	11,906		11,881
Equipment loans and other notes payable, fixed and variable interest rates ranging from 3.40% to 8.48%, averaging 4.07%, maturing from 2018 to 2029	4,797		5,259
Special facility revenue bonds, fixed interest rates ranging from 5.00% to 8.00%, maturing from 2018 to 2035	857		857
Other secured obligations, fixed interest rates ranging from 3.81% to 12.24%, maturing from 2021 to 2028	728		773
	23,059		23,551
Unsecured
5.50% senior notes, interest only payments until due in 2019	750		750
4.625% senior notes, interest only payments until due in 2020	500		500
6.125% senior notes, interest only payments until due in 2018	—		500
	1,250		1,750
Total long-term debt and capital lease obligations	24,309		25,301
Less: Total unamortized debt discount, premium and issuance costs	233		236
Less: Current maturities	2,213		2,554
Long-term debt and capital lease obligations, net of current maturities	$	21,863	$	22,511

The table below shows the maximum availability under revolving credit facilities, all of which were undrawn, as of June 30, 2018 (in millions):



2013 Revolving Facility	$	1,200
2014 Revolving Facility	1,000
April 2016 Revolving Facility	300
Total	$	2,500

The December 2016 Credit Facilities provide for a revolving credit facility that may be established in the future.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

2018 Aircraft Financing Activities

2017-2 EETCs

As of June 30, 2018, all remaining net proceeds of the Series 2017-2 Class AA, Class A and Class B EETCs (the 2017-2 EETCs), had been used to purchase equipment notes issued by American in connection with the financing of 30 aircraft financed under the 2017-2 EETCs. During the first six months of 2018, $283 million of the $1.0 billion total net proceeds from the issuance of certain enhanced equipment trust certificates in August and October 2017 (the 2017-2 EETCs) were used to purchase equipment notes issued by American in connection with financing 6 of the 30 aircraft financed under the 2017-2 EETCs. Approximately $735 million of proceeds from the 2017-2 EETCs were used in 2017 to purchase equipment notes issued by American in connection with the financing of 24 aircraft. Interest and principal payments on equipment notes issued in connection with the 2017-2 EETCs are payable semi-annually in April and October of each year, with interest payments beginning in April 2018 and principal payments beginning in October 2018. These equipment notes are secured by liens on the aircraft financed with the proceeds of the 2017-2 EETCs.

Certain information regarding the 2017-2 EETC equipment notes as of June 30, 2018 is set forth in the table below.



	2017-2 EETCs
	Series AA	Series A	Series B
Aggregate principal issued	$545 million	$252 million	$221 million
Fixed interest rate per annum	3.35%	3.60%	3.70%
Maturity date	October 2029	October 2029	October 2025

2012-2C(R) EETCs

On May 15, 2018, American created a pass-through trust which issued $100 million aggregate face amount of the Series 2012-2 Class C(R) EETCs (the 2012-2C(R) EETCs). Interest and principal payments on equipment notes issued in connection with the 2012-2C(R) EETCs are payable semiannually in June and December of each year, beginning in December 2018.

American had previously issued $100 million aggregate face amount of Series 2012-2 Class C Certificates on June 6, 2013 (the 2012-2C Certificates) in connection with the financing of 11 aircraft previously delivered to American between May 2013 and October 2013. On June 1, 2018, American redeemed the Series C Equipment Notes relating to such 2012-2C Certificates (the 2012-2C Equipment Notes), which were scheduled to mature on June 3, 2018. The proceeds received from the 2012-2C(R) EETCs were used for the redemption of the 2012-2 Series C Equipment Notes and the repayment of the 2012-2C Certificates.

Certain information regarding the 2012-2 Class C(R) EETC equipment notes as of June 30, 2018 is set forth in the table below.



	2012-2C(R) EETCs
	Series C(R)
Aggregate principal issued	$100 million
Fixed interest rate per annum	4.70%
Maturity date	June 2021

Equipment Loans and Other Notes Payable Issued in 2018

In the first six months of 2018, American entered into agreements under which it borrowed $509 million in connection with the financing of certain aircraft. Debt incurred under these agreements matures in 2023 through 2029.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

Other Financing Activities

2013 Credit Facilities

In May 2018, American and AAG entered into a Fourth Amendment (the Fourth Amendment) to the Amended and Restated Credit and Guaranty Agreement, amending the Amended and Restated Credit and Guaranty Agreement dated as of May 21, 2015, which amended and restated the Credit and Guaranty Agreement dated as of June 27, 2013 (as previously amended, the Credit Agreement, and the term loan and revolving credit facilities established thereunder, the 2013 Credit Facilities), pursuant to which American refinanced $1.8 billion of the existing term loans outstanding under the 2013 Credit Facilities with proceeds of term loans incurred under the Fourth Amendment (the Replacement Term Loans). The interest rate margin on the Replacement Term Loans was reduced from 2.00% to 1.75% for those loans with interest rates based on LIBOR and from 1.00% to 0.75% for those loans with interest rates based on an index. Additionally, the Fourth Amendment extended the maturity date of the Replacement Term Loans to June 2025.

7. Income Taxes

At December 31, 2017, we had approximately $10.0 billion of federal net operating losses (NOLs) carried over from prior taxable years (NOL Carryforwards) to reduce future federal taxable income, substantially all of which we expect to be available for use in 2018. The federal NOL Carryforwards will expire beginning in 2022 if unused. We also had approximately $3.4 billion of NOL Carryforwards to reduce future state taxable income at December 31, 2017, which will expire in years 2018 through 2037 if unused.

At December 31, 2017, we had an AMT credit carryforward of approximately $339 million available for federal income tax purposes, which is expected to be substantially refunded in 2019 and 2020 as a result of the repeal of corporate AMT.

During the three and six months ended June 30, 2018, we recorded an income tax provision of $203 million and $289 million, respectively, which was substantially non-cash as we utilized our NOLs described above. For the three and six months ended June 30, 2018, this provision included an $18 million special income tax charge related to an international income tax matter. Additionally, for the six months ended June 30, 2018, our income tax provision included a $22 million special income tax charge to establish a required valuation allowance related to our estimated refund for AMT credits, which is now subject to a sequestration reduction rate of approximately 6.6%. Substantially all of our income before income taxes is attributable to the United States.

The 2017 Tax Act was enacted on December 22, 2017. The 2017 Tax Act is the most comprehensive tax change in more than 30 years. As of June 30, 2018, we have not completed our evaluation of the 2017 Tax Act; however, to the extent possible, we have made a reasonable estimate of its effects, including the impact of lower corporate income tax rates (21% vs. 35%) on our deferred tax assets and liabilities and the one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred.

The 2017 Tax Act is unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations and implementation regulations by the Treasury and Internal Revenue Service. In addition, it is unclear how these U.S. federal income tax changes will affect state and local taxation, which often uses federal taxable income as a starting point for computing state and local tax liabilities. Accordingly, we have not yet been able to make a reasonable estimate of the impact of certain items and continue to account for those items based on the tax laws in effect prior to the 2017 Tax Act.

As further interpretations, clarifications and amendments to the 2017 Tax Act are made, our future financial statements could be materially impacted.

8. Fair Value Measurements

Assets Measured at Fair Value on a Recurring Basis

We utilize the market approach to measure fair value for our financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. Our short-term investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuation of these securities. No changes in valuation techniques or inputs occurred during the six months ended June 30, 2018.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

Assets measured at fair value on a recurring basis are summarized below (in millions):



	Fair Value Measurements as of June 30, 2018
	Total		Level 1		Level 2		Level 3
Short-term investments ^(1) (2):
Money market funds	$	27	$	27	$	—	$	—
Corporate obligations	1,301		—		1,301		—
Bank notes/certificates of deposit/time deposits	2,803		—		2,803		—
Repurchase agreements	250		—		250		—
	4,381		27		4,354		—
Restricted cash and short-term investments ⁽¹⁾	183		42		141		—
Long-term investments ⁽³⁾	216		216		—		—
Total	$	4,780	$	285	$	4,495	$	—


⁽¹⁾	Unrealized gains or losses on short-term investments are recorded in accumulated other comprehensive loss at each measurement date.


⁽²⁾	All short-term investments are classified as available-for-sale and stated at fair value. Our short-term investments mature in one year or less except for $475 million of bank notes/certificates of deposit/time deposits and $100 million of corporate obligations.


⁽³⁾	Long-term investments primarily include our investment in China Southern Airlines and are classified in other assets on our condensed consolidated balance sheets.

Fair Value of Debt

The fair value of our long-term debt was estimated using quoted market prices or discounted cash flow analyses, based on our current estimated incremental borrowing rates for similar types of borrowing arrangements. If our long-term debt was measured at fair value, it would have been classified as Level 2 in the fair value hierarchy.

The carrying value and estimated fair value of our long-term debt, including current maturities, were as follows (in millions):



	June 30, 2018				December 31, 2017
	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current maturities	$	24,076	$	24,292	$	25,065	$	25,848

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

9. Employee Benefit Plans

The following table provides the components of net periodic benefit cost (income) (in millions):



	Pension Benefits						Retiree Medical and Other Postretirement Benefits
Three Months Ended June 30,	2018			2017			2018			2017
Service cost	$	1		$	1		$	1		$	1
Interest cost	169			180			9			10
Expected return on assets	(226		)	(197		)	(6		)	(5		)
Amortization of:
Prior service cost (benefit)	7			7			(59		)	(59		)
Unrecognized net loss (gain)	36			36			(5		)	(6		)
Net periodic benefit cost (income)	$	(13	)	$	27		$	(60	)	$	(59	)

	Pension Benefits						Retiree Medical and Other Postretirement Benefits
Six Months Ended June 30,	2018			2017			2018			2017
Service cost	$	1		$	1		$	2		$	2
Interest cost	338			361			17			19
Expected return on assets	(452		)	(394		)	(11		)	(10		)
Amortization of:
Prior service cost (benefit)	14			14			(119		)	(119		)
Unrecognized net loss (gain)	72			72			(10		)	(11		)
Net periodic benefit cost (income)	$	(27	)	$	54		$	(121	)	$	(119	)

Effective November 1, 2012, substantially all of our defined benefit pension plans were frozen.

The components of net periodic benefit income other than the service cost component are included in nonoperating other income, net in the condensed consolidated statements of operations.

During the first six months of 2018, we contributed $311 million to our defined benefit pension plans, including supplemental contributions of $272 million in addition to a $39 million minimum required contribution.

10. Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss (AOCI) are as follows (in millions):



	Pension, Retiree Medical and Other Postretirement Benefits			Unrealized Loss on Investments			Income Tax Benefit (Provision) ⁽¹⁾				Total
Balance at December 31, 2017	$	(4,523	)	$	(1	)	$	(630	)		$	(5,154	)
Amounts reclassified from AOCI	(43		)	—			10			(2)	(33		)
Net current-period other comprehensive income (loss)	(43		)	—			10				(33		)
Balance at June 30, 2018	$	(4,566	)	$	(1	)	$	(620	)		$	(5,187	)


⁽¹⁾	Relates principally to pension, retiree medical and other postretirement benefits obligations that will not be recognized in net income until the obligations are fully extinguished.


⁽²⁾	Relates to pension, retiree medical and other postretirement benefits obligations and is recognized within the income tax provision on the condensed consolidated statement of operations.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

Reclassifications out of AOCI are as follows (in millions):



	Amounts reclassified from AOCI												Affected line items on the condensed consolidated statements of operations
AOCI Components	Three Months Ended June 30,						Six Months Ended June 30,
AOCI Components	2018			2017			2018			2017
Amortization of pension, retiree medical and other postretirement benefits:
Prior service benefit	$	(40	)	$	(33	)	$	(80	)	$	(67	)	Nonoperating other income (expense), net
Actuarial loss	23			18			47			38			Nonoperating other income (expense), net
Total reclassifications for the period, net of tax	$	(17	)	$	(15	)	$	(33	)	$	(29	)

11. Regional Expenses

Expenses associated with American Eagle operations are classified as regional expenses on the condensed consolidated statements of operations. Regional expenses consist of the following (in millions):



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Aircraft fuel and related taxes	$	465	$	329	$	863	$	648
Salaries, wages and benefits	389		360		772		705
Capacity purchases from third-party regional carriers	364		413		717		806
Maintenance, materials and repairs	89		65		168		135
Other rent and landing fees	153		156		300		307
Aircraft rent	8		9		17		17
Selling expenses	96		94		181		174
Depreciation and amortization	82		78		165		157
Special items, net	—		1		—		4
Other	147		115		307		241
Total regional expenses	$	1,793	$	1,620	$	3,490	$	3,194

12. Legal Proceedings

Chapter 11 Cases. On November 29, 2011, AMR, American, and certain of AMR’s other direct and indirect domestic subsidiaries (the Debtors) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court). On October 21, 2013, the Bankruptcy Court entered an order approving and confirming the Debtors’ fourth amended joint plan of reorganization (as amended, the Plan). On the Effective Date, December 9, 2013, the Debtors consummated their reorganization pursuant to the Plan and completed the Merger.

Pursuant to rulings of the Bankruptcy Court, the Plan established the Disputed Claims Reserve to hold shares of AAG common stock reserved for issuance to disputed claimholders at the Effective Date that ultimately become holders of allowed claims. As of June 30, 2018, there were approximately 24.5 million shares of AAG common stock remaining in the Disputed Claims Reserve. As disputed claims are resolved, the claimants will receive distributions of shares from the Disputed Claims Reserve. However, we are not required to distribute additional shares above the limits contemplated by the Plan, even if the shares remaining for distribution are not sufficient to fully pay any additional allowed unsecured claims. To the extent that any of the reserved shares remain undistributed upon resolution of all remaining disputed claims, such shares will not be returned to us but rather will be distributed to former AMR stockholders.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

There is also pending in the Bankruptcy Court an adversary proceeding relating to an action brought by American to seek a determination that certain non-pension, postemployment benefits are not vested benefits and thus may be modified or terminated without liability to American. As of June 30, 2018, we have determined not to pursue this claim and have a motion pending in the Bankruptcy Court to this effect.

DOJ Antitrust Civil Investigative Demand. In June 2015, we received a Civil Investigative Demand (CID) from the United States Department of Justice (DOJ) as part of an investigation into whether there have been illegal agreements or coordination of air passenger capacity. The CID seeks documents and other information from us, and other airlines have announced that they have received similar requests. We are cooperating fully with the DOJ investigation.

Private Party Antitrust Action. Subsequent to announcement of the delivery of CIDs by the DOJ, we, along with Delta Air Lines, Inc., Southwest Airlines Co., United Airlines, Inc. and, in the case of litigation filed in Canada, Air Canada, have been named as defendants in approximately 100 putative class action lawsuits alleging unlawful agreements with respect to air passenger capacity. The U.S. lawsuits have been consolidated in the Federal District Court for the District of Columbia. On June 15, 2018, we reached a preliminary settlement agreement with the plaintiffs in the amount of $45 million that, once approved, will resolve all claims in the U.S. lawsuits. That settlement received preliminary approval from the Court on June 18, 2018. We expect the Court to issue final approval of the settlement later this year.

Private Party Antitrust Action Related to the Merger. On August 6, 2013, a lawsuit captioned Carolyn Fjord, et al., v. AMR Corporation, et al., was filed in the United States Bankruptcy Court for the Southern District of New York. The complaint named as defendants US Airways Group, US Airways, AMR and American, alleged that the effect of the Merger may be to create a monopoly in violation of Section 7 of the Clayton Antitrust Act, and sought injunctive relief and/or divestiture. On November 27, 2013, the Bankruptcy Court denied plaintiffs’ motion to preliminarily enjoin the Merger. On March 26, 2018, the Court held a hearing on motions for summary judgment filed by defendants and plaintiffs. The Court has not yet issued an order. We believe this lawsuit is without merit and intend to vigorously defend against the allegations.

DOJ Investigation Related to the United States Postal Service. In April 2015, the DOJ informed us of an inquiry regarding American’s 2009 and 2011 contracts with the United States Postal Service for the international transportation of mail by air. In October 2015, we received a CID from the DOJ seeking certain information relating to these contracts and the DOJ has also sought information concerning certain of the airlines that transport mail on a codeshare basis. The DOJ has indicated it is investigating potential violations of the False Claims Act or other statutes. We are cooperating fully with the DOJ with regard to its investigation.

General. In addition to the specifically identified legal proceedings, we and our subsidiaries are also engaged in other legal proceedings from time to time. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within our control. Therefore, although we will vigorously defend ourselves in each of the actions described above and such other legal proceedings, their ultimate resolution and potential financial and other impacts on us are uncertain but could be material. See Part II, Item 1A. Risk Factors – “We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity” for additional discussion.

13. Subsequent Events

Dividend Declaration

In July 2018, we announced that our Board of Directors declared a $0.10 per share dividend for stockholders of record as of August 7, 2018, and payable on August 21, 2018. Any future dividends that may be declared and paid from time to time will be subject to market and economic conditions, applicable legal requirements and other relevant factors. We are not obligated to continue a dividend for any fixed period, and the payment of dividends may be suspended at any time at our discretion.

Equipment Loans

In July 2018, American entered into agreements under which it borrowed $312 million in connection with the financing of certain aircraft. Debt incurred under these agreements matures in 2023.

ITEM 1B. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

AMERICAN AIRLINES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions)(Unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Operating revenues:
Passenger	$	10,674		$	10,353		$	20,154		$	19,350
Cargo	261			219			488			410
Other	705			652			1,396			1,280
Total operating revenues	11,640			11,224			22,038			21,040
Operating expenses:
Aircraft fuel and related taxes	2,103			1,510			3,866			2,912
Salaries, wages and benefits	3,090			3,034			6,104			5,891
Regional expenses	1,784			1,629			3,465			3,199
Maintenance, materials and repairs	505			495			973			987
Other rent and landing fees	490			452			952			892
Aircraft rent	305			294			609			589
Selling expenses	385			376			742			694
Depreciation and amortization	463			418			908			822
Special items, net	152			202			347			320
Other	1,326			1,223			2,587			2,404
Total operating expenses	10,603			9,633			20,553			18,710
Operating income	1,037			1,591			1,485			2,330
Nonoperating income (expense):
Interest income	82			53			155			102
Interest expense, net	(257		)	(246		)	(510		)	(488		)
Other income (expense), net	(23		)	29			59			63
Total nonoperating expense, net	(198		)	(164		)	(296		)	(323		)
Income before income taxes	839			1,427			1,189			2,007
Income tax provision	220			539			334			751
Net income	$	619		$	888		$	855		$	1,256

See accompanying notes to condensed consolidated financial statements.

AMERICAN AIRLINES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)(Unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net income	$	619		$	888		$	855		$	1,256
Other comprehensive loss, net of tax:
Pension, retiree medical and other postretirement benefits	(17		)	(15		)	(33		)	(29		)
Investments	2			—			—			—
Total other comprehensive loss, net of tax	(15		)	(15		)	(33		)	(29		)
Total comprehensive income	$	604		$	873		$	822		$	1,227

See accompanying notes to condensed consolidated financial statements.

AMERICAN AIRLINES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except shares and par value)



	June 30, 2018			December 31, 2017
	(Unaudited)
ASSETS
Current assets
Cash	$	282		$	287
Short-term investments	4,370			4,768
Restricted cash and short-term investments	183			318
Accounts receivable, net	1,993			1,755
Receivables from related parties, net	10,403			8,822
Aircraft fuel, spare parts and supplies, net	1,455			1,294
Prepaid expenses and other	853			647
Total current assets	19,539			17,891
Operating property and equipment
Flight equipment	40,535			39,993
Ground property and equipment	8,627			8,006
Equipment purchase deposits	1,392			1,217
Total property and equipment, at cost	50,554			49,216
Less accumulated depreciation and amortization	(16,417		)	(15,354		)
Total property and equipment, net	34,137			33,862
Other assets
Goodwill	4,091			4,091
Intangibles, net of accumulated amortization of $643 and $622, respectively	2,157			2,203
Deferred tax asset	1,556			2,071
Other assets	1,273			1,283
Total other assets	9,077			9,648
Total assets	$	62,753		$	61,401

LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities
Current maturities of long-term debt and capital leases	$	2,216		$	2,058
Accounts payable	1,990			1,625
Accrued salaries and wages	1,241			1,613
Air traffic liability	5,512			4,042
Loyalty program liability	3,191			3,121
Other accrued liabilities	2,319			2,209
Total current liabilities	16,469			14,668
Noncurrent liabilities
Long-term debt and capital leases, net of current maturities	20,585			21,236
Pension and postretirement benefits	7,073			7,452
Loyalty program liability	5,484			5,701
Other liabilities	2,311			2,456
Total noncurrent liabilities	35,453			36,845
Commitments and contingencies
Stockholder’s equity
Common stock, $1.00 par value; 1,000 shares authorized, issued and outstanding	—			—
Additional paid-in capital	16,760			16,716
Accumulated other comprehensive loss	(5,284		)	(5,251		)
Accumulated deficit	(645		)	(1,577		)
Total stockholder’s equity	10,831			9,888
Total liabilities and stockholder’s equity	$	62,753		$	61,401

See accompanying notes to condensed consolidated financial statements.

AMERICAN AIRLINES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)(Unaudited)



	Six Months Ended June 30,
	2018			2017
Net cash provided by operating activities	$	1,415		$	2,787
Cash flows from investing activities:
Capital expenditures and aircraft purchase deposits	(1,703		)	(3,163		)
Proceeds from sale of property and equipment and sale-leaseback transactions	255			312
Purchases of short-term investments	(1,176		)	(3,829		)
Sales of short-term investments	1,579			3,373
Decrease in restricted short-term investments	43			73
Net cash used in investing activities	(1,002		)	(3,234		)
Cash flows from financing activities:
Proceeds from issuance of long-term debt	892			1,625
Payments on long-term debt and capital leases	(1,385		)	(1,101		)
Deferred financing costs	(28		)	(39		)
Other financing activities	12			9
Net cash provided by (used in) financing activities	(509		)	494
Net increase (decrease) in cash and restricted cash	(96		)	47
Cash and restricted cash at beginning of period	390			424
Cash and restricted cash at end of period ^(a)	$	294		$	471

Supplemental information:
Interest paid, net	493			468
Income taxes paid	12			9

^(a)The following table provides a reconciliation of cash and restricted cash to amounts reported within the condensed consolidated balance sheets:



Cash	$	282	$	368
Restricted cash included in restricted cash and short-term investments	12		103
Total cash and restricted cash	$	294	$	471

See accompanying notes to condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

(Unaudited)

1. Basis of Presentation and Recent Accounting Pronouncements

(a) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of American Airlines, Inc. (American) should be read in conjunction with the consolidated financial statements contained in American’s Annual Report on Form 10-K for the year ended December 31, 2017. American is the principal wholly-owned subsidiary of American Airlines Group Inc. (AAG). All significant intercompany transactions have been eliminated.

(b) Recent Accounting Pronouncements

Standards Effective for 2018 Reporting Periods

Effective January 1, 2018, American adopted the accounting pronouncements described below.

ASU 2014-09: Revenue from Contracts with Customers (Topic 606) (the New Revenue Standard)

The New Revenue Standard applies to all companies that enter into contracts with customers to transfer goods or services. American adopted the New Revenue Standard using the full retrospective method, which resulted in the recast of prior reporting periods.

The adoption of the New Revenue Standard impacted American’s accounting for outstanding mileage credits earned through travel by AAdvantage loyalty program members. There was no change in accounting for sales of mileage credits to co-branded card or other partners. Prior to the adoption of the New Revenue Standard, American used the incremental cost method to account for the portion of its loyalty program liability related to mileage credits earned through travel, which were valued based on the estimated incremental cost of carrying one additional passenger. The New Revenue Standard required American to change its policy to the deferred revenue method and apply a relative selling price approach whereby a portion of each passenger ticket sale attributable to mileage credits earned is deferred and recognized in passenger revenue upon future mileage redemption. The value of the earned mileage credits is materially greater under the deferred revenue method than the value attributed to these mileage credits under the incremental cost method.

The New Revenue Standard also required certain reclassifications, principally the reclassification of certain ancillary revenues previously classified and reported as other revenue to passenger revenue and as applicable to cargo revenue. Additionally, the New Revenue Standard required a gross presentation on the face of American’s condensed consolidated statement of operations for certain revenues and expenses that had previously been presented on a net basis.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

(Unaudited)

ASU 2017-07: Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (the New Retirement Standard)

The New Retirement Standard required all components of American’s net periodic benefit cost (income), with the exception of service cost, previously reported within operating expenses as salaries, wages and benefits, to be reclassified and reported within nonoperating income (expense). The New Retirement Standard was applied retrospectively, which resulted in the recast of each prior reporting period presented. The adoption of the New Retirement Standard had no impact on pre-tax income or net income reported.

See recast condensed consolidated statement of operations data for the three and six months ended June 30, 2017 presented below for the effects of adoption.

ASU 2016-01: Financial Instruments - Overall (Subtopic 825-10)

This ASU made several modifications to Subtopic 825-10, including the elimination of the available-for-sale classification of equity investments, and it required equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income. This standard was adopted prospectively as of January 1, 2018 and resulted in a $77 million cumulative effect adjustment credit to retained earnings related to American's investment in China Southern Airlines Company Limited (China Southern Airlines), which was previously accounted for under the cost method.

ASU 2016-18: Statement of Cash Flows (Topic 230): Restricted Cash

This ASU required that the change in total cash, cash at beginning of period and cash at end of period on the statement of cash flows include restricted cash and restricted cash equivalents and also requires companies who report cash and restricted cash separately on the balance sheet to reconcile those amounts to the statement of cash flows. This standard was applied retrospectively, which resulted in the recast of the prior reporting period in the statement of cash flows. For the six months ended June 30, 2018 and 2017, $12 million and $103 million, respectively, of restricted cash is included in the total of cash and restricted cash balance at the end of period. A reconciliation of cash and restricted cash from American's condensed consolidated statement of cash flows to the amounts reported within its condensed consolidated balance sheet is also included in a table below its condensed consolidated statement of cash flows.

Impacts to Prior Period Results

The effects of adoption of the New Revenue Standard and New Retirement Standard to American’s condensed consolidated statement of operations for the three and six months ended June 30, 2017 were as follows (in millions):



				New Revenue Standard					New Retirement Standard
Three Months Ended June 30, 2017	As Reported			Deferred Revenue Method		Reclassifications			Reclassifications			As Recast
Operating revenues:
Passenger	$	9,582		$	98	$	673		$	—		$	10,353
Cargo	196			—		23			—			219
Other	1,324			—		(672		)	—			652
Total operating revenues	11,102			98		24			—			11,224
Total operating expenses	9,575			—		24			34			9,633
Operating income	1,527			98		—			(34		)	1,591
Total nonoperating expense, net	(198		)	—		—			34			(164		)
Income before income taxes	1,329			98		—			—			1,427
Income tax provision	502			37		—			—			539
Net income	$	827		$	61	$	—		$	—		$	888

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

(Unaudited)



				New Revenue Standard					New Retirement Standard
Six Months Ended June 30, 2017	As Reported			Deferred Revenue Method		Reclassifications			Reclassifications			As Recast
Operating revenues:
Passenger	$	17,737		$	268	$	1,345		$	—		$	19,350
Cargo	368			—		42			—			410
Other	2,617			—		(1,337		)	—			1,280
Total operating revenues	20,722			268		50			—			21,040
Total operating expenses	18,592			—		50			68			18,710
Operating income	2,130			268		—			(68		)	2,330
Total nonoperating expense, net	(391		)	—		—			68			(323		)
Income before income taxes	1,739			268		—			—			2,007
Income tax provision	650			101		—			—			751
Net income	$	1,089		$	167	$	—		$	—		$	1,256

The effects of adoption of the New Revenue Standard to American’s December 31, 2017 consolidated balance sheet are as follows (in millions):



	As Reported		New Revenue Standard			As Recast
Deferred tax asset	$	682	$	1,389		$	2,071
Air traffic liability	3,978		64			4,042
Current loyalty program liability	2,791		330			3,121
Noncurrent loyalty program liability	—		5,701			5,701
Total stockholder’s equity (deficit)	14,594		(4,706		)	9,888

Standards Effective for 2019 Reporting Periods

ASU 2016-02: Leases (Topic 842) (the New Lease Standard)

The New Lease Standard requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet and aligns many of the underlying principles of the new lessor model with those in the New Revenue Standard. The New Lease Standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. American will adopt the New Lease Standard effective January 1, 2019. American is currently evaluating how the adoption of the New Lease Standard will impact its consolidated financial statements. Interpretations are on-going and could have a material impact on its implementation. Currently, American expects that the adoption of the New Lease Standard will have a material impact on its consolidated balance sheet due to the recognition of right-of-use assets and lease liabilities principally for certain leases currently accounted for as operating leases.

ASU 2018-02: Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

This ASU provides financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings due to the U.S. federal corporate income tax rate change as a result of H.R. 1, the 2017 Tax Cuts and Jobs Act (the 2017 Tax Act). The amount of the reclassification is the difference between the amount initially charged or credited directly to other comprehensive income at the previously enacted U.S. federal corporate income tax rate that remains in accumulated other comprehensive income and the amount that would have been charged or credited directly to other comprehensive income using the newly enacted U.S. federal corporate income tax rate, excluding the effect of any valuation allowance previously charged to income from continuing operations. This standard is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. American expects it will adopt this standard effective January 1, 2019. The adoption of the standard may impact tax amounts stranded in accumulated other comprehensive income related to American's pension and retiree medical and other postretirement benefit plans.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

(Unaudited)

2. Special Items, Net

Special items, net in the condensed consolidated statements of operations consisted of the following expenses (income) (in millions):



	Three Months Ended June 30,					Six Months Ended June 30,
	2018			2017		2018			2017
Fleet restructuring expenses ⁽¹⁾	$	83		$	48	$	166		$	111
Merger integration expenses ⁽²⁾	60			68		120			130
Mark-to-market adjustments on bankruptcy obligations ⁽³⁾	(57		)	38		(56		)	20
Intangible asset impairment ⁽⁴⁾	26			—		26			—
Litigation settlement	5			—		45			—
Labor contract expenses	—			45		13			45
Other operating charges, net	35			3		33			14
Mainline operating special items, net	152			202		347			320

Regional operating special items, net	—			1		—			4

Mark-to-market adjustments on equity investments ⁽⁵⁾	66			—		66			—
Debt refinancing and extinguishment charges	14			2		14			7
Nonoperating special items, net	80			2		80			7

Income tax special items, net ⁽⁶⁾	18			—		48			—


⁽¹⁾	Fleet restructuring expenses principally included the acceleration of depreciation and impairments for aircraft and related equipment grounded or expected to be grounded earlier than planned.


⁽²⁾	Merger integration expenses included costs associated with American's remaining integration projects, principally its flight attendant, human resources, payroll and technical operations integrations.


⁽³⁾	Bankruptcy obligations will ultimately be settled in shares of AAG common stock. Accordingly, fluctuations in AAG's stock price result in mark-to-market adjustments to these obligations.


⁽⁴⁾	Intangible asset impairment includes a non-cash charge to write-off American's Brazil route authority as a result of ratification of the U.S.-Brazil open skies agreement.


⁽⁵⁾	Mark-to-market adjustments on equity investments principally relate to unrealized losses on American's investment in China Southern Airlines.


⁽⁶⁾	Income tax special items for the three months ended June 30, 2018 included an $18 million charge related to an international income tax matter. Additionally, the six months ended June 30, 2018 included a $30 million charge to income tax expense to establish a required valuation allowance related to American's estimated refund for Alternative Minimum Tax (AMT) credits.

3. Revenue Recognition

(a) Revenue

Effective January 1, 2018, American adopted the New Revenue Standard using the full retrospective method, which resulted in the recast of prior reporting periods. See Recent Accounting Pronouncements in Note 1(b) above for effects of adoption on American's condensed consolidated statement of operations for the three and six months ended June 30, 2017 and on American's consolidated balance sheet as of December 31, 2017. Under the New Revenue Standard, revenue is recognized upon transfer of control of promised products or services to American's customers in an amount that reflects the consideration it expects to receive in exchange for those products or services.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

(Unaudited)

The following are the significant categories comprising American's reported operating revenues (in millions):



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Passenger revenue:
Passenger travel	$	9,877	$	9,600	$	18,507	$	17,795
Loyalty revenue - travel ⁽¹⁾	797		753		1,647		1,555
Total passenger revenue	10,674		10,353		20,154		19,350
Cargo	261		219		488		410
Other:
Loyalty revenue - marketing services	582		533		1,152		1,047
Other revenue	123		119		244		233
Total other revenue	705		652		1,396		1,280
Total operating revenues	$	11,640	$	11,224	$	22,038	$	21,040


⁽¹⁾	Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions for air travel awards from mileage credits earned through travel and mileage credits sold to co-branded card and other partners. See discussion of Loyalty Revenue below.

The following is American's total passenger revenue by geographic region (in millions):



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Domestic	$	7,685	$	7,578	$	14,648	$	14,359
Latin America	1,284		1,209		2,729		2,440
Atlantic	1,298		1,182		1,967		1,806
Pacific	407		384		810		745
Total passenger revenue	$	10,674	$	10,353	$	20,154	$	19,350

American attributes passenger revenue by geographic region based upon the origin and destination of each flight segment.

Passenger Revenue

American recognizes all revenues generated from transportation on American and its regional flights operated under the brand name American Eagle, including associated baggage fees, ticketing change fees and other inflight services, as passenger revenue when transportation is provided. Ticket and other related sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on the condensed consolidated balance sheets. The air traffic liability principally represents tickets sold for future travel dates and estimated future refunds and exchanges of tickets sold for past travel dates.

The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. Due to complex pricing structures, refund and exchange policies, and interline agreements with other airlines, certain amounts are recognized in passenger revenue using estimates regarding both the timing of the revenue recognition and the amount of revenue to be recognized. These estimates are generally based on the analysis of American's historical data. American has consistently applied this accounting method to estimate revenue from forfeited tickets at the date of travel. Estimated future refunds and exchanges included in the air traffic liability are routinely evaluated based on subsequent activity to validate the accuracy of American's estimates. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are included in passenger revenue during the period in which the evaluations are completed.

Various taxes and fees assessed on the sale of tickets to end customers are collected by American as an agent and remitted to taxing authorities. These taxes and fees have been presented on a net basis in the accompanying condensed consolidated statements of operations and recorded as a liability until remitted to the appropriate taxing authority.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

(Unaudited)

Loyalty Revenue

American currently operates the loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American, any oneworld airline or other partner airlines, or by using the services of other program participants, such as the Citi and Barclays US co-branded cards, hotels and car rental companies. Mileage credits can be redeemed for travel on American and other participating partner airlines as well as other non-air travel awards such as hotels and rental cars. For mileage credits earned by AAdvantage loyalty program members, American applies the deferred revenue method in accordance with the New Revenue Standard.

Mileage credits earned through travel

For mileage credits earned through travel, American applies a relative selling price approach whereby the total amount collected from each passenger ticket sale is allocated between the air transportation and the mileage credits earned. The portion of each passenger ticket sale attributable to mileage credits earned is initially deferred and then recognized in passenger revenue when mileage credits are redeemed and transportation is provided. The estimated selling price of mileage credits is determined using an equivalent ticket value approach which uses historical data, including award redemption patterns by geographic region and class of service as well as similar fares as those used to settle award redemptions. The estimated selling price of miles is adjusted for an estimate of miles that will not be redeemed based on historical redemption patterns.

Mileage credits sold to co-branded cards and other partners

American sells mileage credits to participating airline partners and non-airline business partners including American's co-branded card partners, under contracts with terms extending generally for one to nine years. Sales of mileage credits to non-airline business partners are comprised of two components, transportation and marketing. American allocates the consideration received from the sale of mileage credits based on the relative selling price of each product or service delivered.

American's most significant partner agreements are its co-branded card program agreements with Citi and Barclays US that American entered into in 2016. American identified the following revenue elements in these co-branded card agreements: the transportation component; and the use of intellectual property including the American brand and access to loyalty program member lists, which is the predominant element in the agreements, as well as advertising (collectively, the marketing component). Accordingly, American recognizes the marketing component in other revenue in the period of the mileage sale following the sales-based royalty method.

For the portion of American's outstanding mileage credits that it estimates will not be redeemed, American recognizes the associated value proportionally as the remaining mileage credits are redeemed. American's estimates are based on analysis of historical redemptions.

Cargo Revenue

Cargo revenue is recognized when American provides the transportation.

Other Revenue

Other revenue includes revenue associated with American's loyalty program, which is comprised principally of the marketing component of mileage sales to co-branded card and other partners and other marketing related payments. For the three and six months ended June 30, 2018, loyalty revenue included in other revenue was $582 million and $1.2 billion, respectively. For the three and six months ended June 30, 2017, loyalty revenue included in other revenue was $533 million and $1.0 billion, respectively. The accounting and recognition for the loyalty program marketing services are discussed above in Loyalty Revenue. The remaining amounts included within other revenue relate to airport clubs, advertising and vacation-related services.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

(Unaudited)

(b) Contract Balances

American's significant contract liabilities are comprised of (1) outstanding loyalty program mileage credits that may be redeemed for future travel and other non-air travel awards, reported as loyalty program liability on American's condensed consolidated balance sheet and (2) ticket sales for transportation that has not yet been provided, reported as air traffic liability on American's condensed consolidated balance sheet.



	June 30, 2018		December 31, 2017
	(In millions)
Loyalty program liability	$	8,675	$	8,822
Air traffic liability	5,512		4,042
Total	$	14,187	$	12,864



Balance at December 31, 2017	$	8,822
Deferral of revenue	1,586
Recognition of revenue ⁽¹⁾	(1,733		)
Balance at June 30, 2018 ⁽²⁾	$	8,675


⁽¹⁾	Principally relates to revenue recognized from the redemption of mileage credits for both air and non-air travel awards. Mileage credits are combined in one homogenous pool and are not separately identifiable. As such, the revenue is comprised of miles that were part of the loyalty program deferred revenue balance at the beginning of the period as well as miles that were issued during the period.

⁽²⁾

Mileage credits can be redeemed at any time and do not expire as long as that AAdvantage member has any type of qualifying activity at least every 18 months. As of June 30, 2018, American's current loyalty program liability was $3.2 billion and represents American's current estimate of revenue expected to be recognized in the next twelve months based on historical trends, with the balance reflected in long-term loyalty program liability expected to be recognized as revenue in periods thereafter.

The air traffic liability principally represents tickets sold for future travel dates and estimated future refunds and exchanges of tickets sold for past travel dates. The balance in American's air traffic liability also fluctuates with seasonal travel patterns. The contract duration of passenger tickets is one year. Accordingly, any revenue associated with tickets sold for future travel dates will be recognized within twelve months. For the six months ended June 30, 2018, $2.9 billion of revenue was recognized in passenger revenue that was included in American's air traffic liability at December 31, 2017.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

(Unaudited)

4. Debt

Long-term debt and capital lease obligations included in the condensed consolidated balance sheets consisted of (in millions):



	June 30, 2018		December 31, 2017
Secured
2013 Credit Facilities, variable interest rate of 3.85%, installments through 2025	$	1,825	$	1,825
2014 Credit Facilities, variable interest rate of 4.05%, installments through 2021	728		728
April 2016 Credit Facilities, variable interest rate of 4.09%, installments through 2023	980		990
December 2016 Credit Facilities, variable interest rate of 4.07%, installments through 2023	1,238		1,238
Aircraft enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.00% to 9.75%, averaging 4.24%, maturing from 2018 to 2029	11,906		11,881
Equipment loans and other notes payable, fixed and variable interest rates ranging from 3.40% to 8.48%, averaging 4.07%, maturing from 2018 to 2029	4,797		5,259
Special facility revenue bonds, fixed interest rates ranging from 5.00% to 5.50%, maturing from 2018 to 2035	828		828
Other secured obligations, fixed interest rates ranging from 3.81% to 12.24%, maturing from 2021 to 2028	728		772
Total long-term debt and capital lease obligations	23,030		23,521
Less: Total unamortized debt discount, premium and issuance costs	229		227
Less: Current maturities	2,216		2,058
Long-term debt and capital lease obligations, net of current maturities	$	20,585	$	21,236

The table below shows the maximum availability under revolving credit facilities, all of which were undrawn, as of June 30, 2018 (in millions):



2013 Revolving Facility	$	1,200
2014 Revolving Facility	1,000
April 2016 Revolving Facility	300
Total	$	2,500

The December 2016 Credit Facilities provide for a revolving credit facility that may be established in the future.

2018 Aircraft Financing Activities

2017-2 EETCs

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

(Unaudited)

Certain information regarding the 2017-2 EETC equipment notes as of June 30, 2018 is set forth in the table below.



	2017-2 EETCs
	Series AA	Series A	Series B
Aggregate principal issued	$545 million	$252 million	$221 million
Fixed interest rate per annum	3.35%	3.60%	3.70%
Maturity date	October 2029	October 2029	October 2025

2012-2C(R) EETCs

Certain information regarding the 2012-2 Class C(R) EETC equipment notes as of June 30, 2018 is set forth in the table below.



	2012-2C(R) EETCs
	Series C(R)
Aggregate principal issued	$100 million
Fixed interest rate per annum	4.70%
Maturity date	June 2021

Equipment Loans and Other Notes Payable Issued in 2018

Other Financing Activities

2013 Credit Facilities

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

(Unaudited)

5. Income Taxes

At December 31, 2017, American had approximately $10.6 billion of federal net operating losses (NOLs) carried over from prior taxable years (NOL Carryforwards) to reduce future federal taxable income, substantially all of which, American expects to be available for use in 2018. American is a member of AAG’s consolidated federal and certain state income tax returns. The amount of federal NOL Carryforwards available in those returns is $10.0 billion, substantially all of which is expected to be available for use in 2018. The federal NOL Carryforwards will expire beginning in 2022 if unused. American also had approximately $3.2 billion of NOL Carryforwards to reduce future state taxable income at December 31, 2017, which will expire in years 2018 through 2037 if unused.

At December 31, 2017, American had an AMT credit carryforward of approximately $452 million available for federal income tax purposes.

During the three and six months ended June 30, 2018, American recorded an income tax provision of $220 million and $334 million, respectively, which was substantially non-cash as American utilized the NOLs described above. For the three and six months ended June 30, 2018, this provision included an $18 million special income tax charge related to an international income tax matter. Additionally, for the six months ended June 30, 2018, American's income tax provision included a $30 million special income tax charge to establish a required valuation allowance related to American's estimated refund for AMT credits, which is now subject to a sequestration reduction rate of approximately 6.6%. Substantially all of American’s income before income taxes is attributable to the United States.

The 2017 Tax Act was enacted on December 22, 2017. The 2017 Tax Act is the most comprehensive tax change in more than 30 years. As of June 30, 2018, American has not completed its evaluation of the 2017 Tax Act; however, to the extent possible, American has made a reasonable estimate of its effects, including the impact of lower corporate income tax rates (21% vs. 35%) on its deferred tax assets and liabilities and the one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred.

The 2017 Tax Act is unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations and implementation regulations by the Treasury and Internal Revenue Service. In addition, it is unclear how these U.S. federal income tax changes will affect state and local taxation, which often uses federal taxable income as a starting point for computing state and local tax liabilities. Accordingly, American has not yet been able to make a reasonable estimate of the impact of certain items and continues to account for those items based on the tax laws in effect prior to the 2017 Tax Act.

As further interpretations, clarifications and amendments to the 2017 Tax Act are made, American's future financial statements could be materially impacted.

6. Fair Value Measurements

Assets Measured at Fair Value on a Recurring Basis

American utilizes the market approach to measure fair value for its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. American’s short-term investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuation of these securities. No changes in valuation techniques or inputs occurred during the six months ended June 30, 2018.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

(Unaudited)

Assets measured at fair value on a recurring basis are summarized below (in millions):



	Fair Value Measurements as of June 30, 2018
	Total		Level 1		Level 2		Level 3
Short-term investments ^(1) (2):
Money market funds	$	17	$	17	$	—	$	—
Corporate obligations	1,301		—		1,301		—
Bank notes/certificates of deposit/time deposits	2,802		—		2,802		—
Repurchase agreements	250		—		250		—
	4,370		17		4,353		—
Restricted cash and short-term investments ⁽¹⁾	183		42		141		—
Long-term investments ⁽³⁾	216		216		—		—
Total	$	4,769	$	275	$	4,494	$	—


⁽¹⁾	Unrealized gains or losses on short-term investments are recorded in accumulated other comprehensive loss at each measurement date.


⁽²⁾	All short-term investments are classified as available-for-sale and stated at fair value. American’s short-term investments mature in one year or less except for $475 million of bank notes/certificates of deposit/time deposits and $100 million of corporate obligations.


⁽³⁾	Long-term investments primarily include American's investment in China Southern Airlines and are classified in other assets on its condensed consolidated balance sheets.

Fair Value of Debt

The fair value of American’s long-term debt was estimated using quoted market prices or discounted cash flow analyses, based on American’s current estimated incremental borrowing rates for similar types of borrowing arrangements. If American’s long-term debt was measured at fair value, it would have been classified as Level 2 in the fair value hierarchy.

The carrying value and estimated fair value of American’s long-term debt, including current maturities, were as follows (in millions):



	June 30, 2018				December 31, 2017
	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current maturities	$	22,801	$	22,999	$	23,294	$	24,029

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

(Unaudited)

7. Employee Benefit Plans

The following table provides the components of net periodic benefit cost (income) (in millions):



	Pension Benefits						Retiree Medical and Other Postretirement Benefits
Three Months Ended June 30,	2018			2017			2018			2017
Service cost	$	1		$	—		$	1		$	1
Interest cost	168			180			9			10
Expected return on assets	(225		)	(196		)	(6		)	(5		)
Amortization of:
Prior service cost (benefit)	7			7			(59		)	(59		)
Unrecognized net loss (gain)	36			36			(5		)	(6		)
Net periodic benefit cost (income)	$	(13	)	$	27		$	(60	)	$	(59	)

	Pension Benefits						Retiree Medical and Other Postretirement Benefits
Six Months Ended June 30,	2018			2017			2018			2017
Service cost	$	1		$	1		$	2		$	2
Interest cost	336			359			17			19
Expected return on assets	(450		)	(393		)	(11		)	(10		)
Amortization of:
Prior service cost (benefit)	14			14			(119		)	(119		)
Unrecognized net loss (gain)	72			72			(10		)	(11		)
Net periodic benefit cost (income)	$	(27	)	$	53		$	(121	)	$	(119	)

Effective November 1, 2012, substantially all of American’s defined benefit pension plans were frozen.

The components of net periodic benefit income other than the service cost component are included in nonoperating other income, net in the condensed consolidated statements of operations.

During the first six months of 2018, American contributed $311 million to its defined benefit pension plans, including supplemental contributions of $272 million in addition to a $39 million minimum required contribution.

8. Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss (AOCI) are as follows (in millions):



	Pension, Retiree Medical and Other Postretirement Benefits			Unrealized Loss on Investments			Income Tax Benefit (Provision) ⁽¹⁾				Total
Balance at December 31, 2017	$	(4,508	)	$	(1	)	$	(742	)		$	(5,251	)
Amounts reclassified from AOCI	(43		)	—			10			(2)	(33		)
Net current-period other comprehensive income (loss)	(43		)	—			10				(33		)
Balance at June 30, 2018	$	(4,551	)	$	(1	)	$	(732	)		$	(5,284	)


⁽¹⁾	Relates principally to pension, retiree medical and other postretirement benefits obligations that will not be recognized in net income until the obligations are fully extinguished.


⁽²⁾	Relates to pension, retiree medical and other postretirement benefits obligations and is recognized within the income tax provision on the condensed consolidated statement of operations.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

(Unaudited)

Reclassifications out of AOCI are as follows (in millions):



	Amounts reclassified from AOCI												Affected line items on the condensed consolidated statements of operations
AOCI Components	Three Months Ended June 30,						Six Months Ended June 30,
AOCI Components	2018			2017			2018			2017
Amortization of pension, retiree medical and other postretirement benefits:
Prior service benefit	$	(40	)	$	(33	)	$	(80	)	$	(67	)	Nonoperating other income (expense), net
Actuarial loss	23			18			47			38			Nonoperating other income (expense), net
Total reclassifications for the period, net of tax	$	(17	)	$	(15	)	$	(33	)	$	(29	)

9. Regional Expenses



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Aircraft fuel and related taxes	$	465	$	329	$	863	$	648
Salaries, wages and benefits	87		86		169		161
Capacity purchases from third-party regional carriers	825		827		1,622		1,628
Maintenance, materials and repairs	3		2		5		3
Other rent and landing fees	147		150		288		296
Aircraft rent	7		7		14		14
Selling expenses	96		94		181		174
Depreciation and amortization	67		65		135		128
Special items, net	—		1		—		4
Other	87		68		188		143
Total regional expenses	$	1,784	$	1,629	$	3,465	$	3,199

10. Transactions with Related Parties

The following represents the net receivables (payables) to related parties (in millions):



	June 30, 2018			December 31, 2017
AAG ⁽¹⁾	$	12,529		$	10,968
AAG’s wholly-owned subsidiaries ⁽²⁾	(2,126		)	(2,146		)
Total	$	10,403		$	8,822


⁽¹⁾	The increase in American’s net related party receivable from AAG is primarily due to American providing the cash funding for AAG’s dividend and share repurchase programs as well as the repayment of AAG's 6.125% senior notes.


⁽²⁾	The net payable to AAG’s wholly-owned subsidiaries consists primarily of amounts due under regional capacity purchase agreements with AAG’s wholly-owned regional airlines operating under the brand name of American Eagle.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

(Unaudited)

11. Legal Proceedings

Pursuant to rulings of the Bankruptcy Court, the Plan established the Disputed Claims Reserve to hold shares of AAG common stock reserved for issuance to disputed claimholders at the Effective Date that ultimately become holders of allowed claims. As of June 30, 2018, there were approximately 24.5 million shares of AAG common stock remaining in the Disputed Claims Reserve. As disputed claims are resolved, the claimants will receive distributions of shares from the Disputed Claims Reserve. However, American is not required to distribute additional shares above the limits contemplated by the Plan, even if the shares remaining for distribution are not sufficient to fully pay any additional allowed unsecured claims. To the extent that any of the reserved shares remain undistributed upon resolution of all remaining disputed claims, such shares will not be returned to American but rather will be distributed to former AMR stockholders.

There is also pending in the Bankruptcy Court an adversary proceeding relating to an action brought by American to seek a determination that certain non-pension, postemployment benefits are not vested benefits and thus may be modified or terminated without liability to American. As of June 30, 2018, American has determined not to pursue this claim and have a motion pending in the Bankruptcy Court to this effect.

DOJ Antitrust Civil Investigative Demand. In June 2015, American received a Civil Investigative Demand (CID) from the United States Department of Justice (DOJ) as part of an investigation into whether there have been illegal agreements or coordination of air passenger capacity. The CID seeks documents and other information from American, and other airlines have announced that they have received similar requests. American is cooperating fully with the DOJ investigation.

Private Party Antitrust Action. Subsequent to announcement of the delivery of CIDs by the DOJ, American, along with Delta Air Lines, Inc., Southwest Airlines Co., United Airlines, Inc. and, in the case of litigation filed in Canada, Air Canada, have been named as defendants in approximately 100 putative class action lawsuits alleging unlawful agreements with respect to air passenger capacity. The U.S. lawsuits have been consolidated in the Federal District Court for the District of Columbia. On June 15, 2018, American reached a preliminary settlement agreement with the plaintiffs in the amount of $45 million that, once approved, will resolve all claims in the U.S. lawsuits. That settlement received preliminary approval from the Court on June 18, 2018. American expects the Court to issue final approval of the settlement later this year.

Private Party Antitrust Action Related to the Merger. On August 6, 2013, a lawsuit captioned Carolyn Fjord, et al., v. AMR Corporation, et al., was filed in the United States Bankruptcy Court for the Southern District of New York. The complaint named as defendants US Airways Group, US Airways, AMR and American, alleged that the effect of the Merger may be to create a monopoly in violation of Section 7 of the Clayton Antitrust Act, and sought injunctive relief and/or divestiture. On November 27, 2013, the Bankruptcy Court denied plaintiffs’ motion to preliminarily enjoin the Merger. On March 26, 2018, the Court held a hearing on motions for summary judgment filed by defendants and plaintiffs. The Court has not yet issued an order. American believes this lawsuit is without merit and intends to vigorously defend against the allegations.

DOJ Investigation Related to the United States Postal Service. In April 2015, the DOJ informed American of an inquiry regarding American’s 2009 and 2011 contracts with the United States Postal Service for the international transportation of mail by air. In October 2015, American received a CID from the DOJ seeking certain information relating to these contracts and the DOJ has also sought information concerning certain of the airlines that transport mail on a codeshare basis. The DOJ has indicated it is investigating potential violations of the False Claims Act or other statutes. American is cooperating fully with the DOJ with regard to its investigation.

General. In addition to the specifically identified legal proceedings, American and its subsidiaries are also engaged in other legal proceedings from time to time. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within American’s control. Therefore, although American will vigorously defend itself in each of the actions described above and such other legal proceedings, their ultimate resolution and potential financial and other impacts on American are uncertain but could be material. See Part II, Item 1A. Risk Factors – “We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity” for additional discussion.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

(Unaudited)

12. Subsequent Event

Equipment Loans

In July 2018, American entered into agreements under which it borrowed $312 million in connection with the financing of certain aircraft. Debt incurred under these agreements matures in 2023.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Part I, Item 2 of this report should be read in conjunction with Part II, Item 7 of AAG’s and American’s Annual Report on Form 10-K for the year ended December 31, 2017 (the 2017 Form 10-K). The information contained herein is not a comprehensive discussion and analysis of the financial condition and results of operations of AAG and American, but rather updates disclosures made in the 2017 Form 10-K.

Background

Together with our wholly-owned regional airline subsidiaries and third-party regional carriers operating as American Eagle, we operate an average of nearly 6,700 flights per day to nearly 350 destinations in more than 50 countries. We have hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. In the second quarter of 2018, approximately 53 million passengers boarded our flights.

Financial Overview

The U.S. Airline Industry

While the second quarter of 2018 marked another profitable quarter for the U.S. airline industry, higher fuel costs significantly impacted industry results. The price of Brent crude oil per barrel, which jet fuel prices tend to follow, was on average approximately 50% higher in the second quarter of 2018 as compared to the 2017 period. The average daily spot price for Brent crude oil during the second quarter of 2018 was $75 per barrel as compared to an average daily spot price of $50 per barrel during the second quarter of 2017. On a daily basis, Brent crude oil prices fluctuated during the second quarter between a high of $80 per barrel to a low of $67 per barrel, and closed on June 30, 2018 at $79 per barrel. Brent crude oil prices were higher in the 2018 period due principally to reductions of global inventories driven by strong demand and continued production restraint. With respect to revenue, the legacy U.S. airlines reported positive unit revenue growth. In international markets, particularly in the Atlantic market, unit revenue growth outpaced the growth of domestic markets.

See Part II, Item 1A. Risk Factors –“Downturns in economic conditions could adversely affect our business,” “Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on our operating results and liquidity” and "Our business has been and will continue to be affected by many changing economic and other conditions beyond our control, including global events that affect travel behavior, and our results of operations could be volatile and fluctuate due to seasonality."

AAG’s Second Quarter 2018 Results

The selected financial data presented below is derived from AAG’s unaudited condensed consolidated financial statements included in Part I, Item 1A of this report and should be read in conjunction with those financial statements and the related notes thereto.



	Three Months Ended June 30,				Increase (Decrease)			Percent Increase (Decrease)
	2018		2017		Increase (Decrease)			Percent Increase (Decrease)
	(In millions, except percentage changes)
Passenger revenue	$	10,674	$	10,353	$	321		3.1
Cargo revenue	261		219		42			19.4
Other operating revenue	708		655		53			8.1
Total operating revenues	11,643		11,227		416			3.7
Mainline and regional aircraft fuel and related taxes	2,568		1,839		729			39.6
Salaries, wages and benefits	3,093		3,037		56			1.8
Total operating expenses	10,615		9,628		987			10.3
Operating income	1,028		1,599		(571		)	(35.7	)
Pre-tax income	769		1,389		(620		)	(44.7	)
Income tax provision	203		525		(322		)	(61.4	)
Net income	566		864		(298		)	(34.5	)

Pre-tax income	$	769	$	1,389	$	(620	)	(44.7	)
Adjusted for: Total pre-tax net special items ⁽¹⁾	232		205		27			12.9
Pre-tax income excluding special items	$	1,001	$	1,594	$	(593	)	(37.2	)


⁽¹⁾	See below “Reconciliation of GAAP to Non-GAAP Financial Measures” and Note 2 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for details on the components of special items.

Pre-Tax Income and Net Income

Pre-tax income and net income were $769 million and $566 million in the second quarter of 2018, respectively. This compares to second quarter 2017 pre-tax income and net income of $1.4 billion and $864 million, respectively. Excluding the effects of pre-tax net special items, we recognized pre-tax income of $1.0 billion in the second quarter of 2018 as compared to $1.6 billion in the second quarter of 2017. The quarter-over-quarter declines in our pre-tax income on both a GAAP basis and excluding pre-tax net special items were principally driven by a 37.5% increase in the average price per gallon of fuel. This increase was offset in part by higher revenues.

Additionally, on June 14, 2018, PSA Airlines, Inc. one of our wholly-owned regional carriers, experienced a technology system issue that impacted its operations and resulted in the cancellation of approximately 3,000 flights over the week that followed. We estimate that this event negatively impacted our pre-tax income by approximately $35 million.

Revenue

In the second quarter of 2018, we reported total operating revenues of $11.6 billion, an increase of $416 million, or 3.7%, as compared to the 2017 period. Passenger revenue was $10.7 billion in the second quarter of 2018, an increase of $321 million, or 3.1%, as compared to the 2017 period. The increase in passenger revenue in the second quarter of 2018 was due to a 2.0% increase in revenue passenger miles (RPMs) and a 1.0% increase in yields driven by continued strong demand. International yields increased 6.1%, led by improved yields in the Atlantic market, which more than offset a 0.9% decrease in domestic yields.

Additionally, cargo revenue increased $42 million, or 19.4%, primarily due to increases in freight volume and domestic and international freight yields. Other revenue, driven by higher loyalty revenue, increased $53 million, or 8.1%, as compared to the second quarter of 2017.

Our total revenue per available seat mile (TRASM) was 15.97 cents in the second quarter of 2018, a 2.1% increase as compared to 15.65 cents in the second quarter of 2017. This marks our seventh consecutive quarter of positive TRASM growth.

Fuel

Our mainline and regional fuel expense totaled $2.6 billion in the second quarter of 2018, which was $729 million, or 39.6%, higher as compared to the 2017 period. This increase was driven by a 37.5% increase in the average price per gallon of fuel to $2.24 in the second quarter of 2018 from $1.63 in the 2017 period.

As of June 30, 2018, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully exposed to fluctuations in fuel prices. Our current policy is not to enter into transactions to hedge our fuel consumption, although we review that policy from time to time based on market conditions and other factors.

Other Costs

We remain committed to actively managing our cost structure, which we believe is necessary in an industry whose economic prospects are heavily dependent upon two variables we cannot control: the health of the economy and the price of fuel.

Our 2018 second quarter total cost per available seat mile (CASM) was 14.56 cents, an increase of 8.5%, from 13.42 cents in 2017. The increase was primarily driven by an increase in fuel costs as described above.

Our 2018 second quarter CASM excluding special items and fuel was 10.83 cents, an increase of 2.4%, as compared to the 2017 period. The increase was primarily driven by higher depreciation due to the delivery of new aircraft as a result of our fleet renewal program and merger integration projects as well as higher other operating expenses associated with improving our product offerings, customer experience and operational reliability.

For a reconciliation of total CASM excluding special items and fuel, see below “Reconciliation of GAAP to Non-GAAP Financial Measures.”

Liquidity

As of June 30, 2018, we had approximately $7.2 billion in total available liquidity, consisting of $4.7 billion in unrestricted cash and short-term investments and $2.5 billion in undrawn revolving credit facilities. We also had restricted cash and short-term investments of $183 million.

During the second quarter of 2018, we completed the following financing transactions:


•	Refinanced a $1.8 billion term loan at a lower interest rate and extended the maturity date from 2020 to 2025


•	Raised $583 million in proceeds from aircraft debt financing, approximately $440 million of which was used to repay existing indebtedness


•	Raised $229 million in proceeds from aircraft sale-leaseback transactions

See Note 6 to AAG's Condensed Consolidated Financial Statements in Part I, Item 1A for additional information on our debt obligations.

Additionally, we returned $396 million to our stockholders, including quarterly dividend payments of $46 million and the repurchase of $350 million of common stock, or 8.2 million shares, during the second quarter of 2018. Since our capital return program commenced in mid-2014, we have returned $12.3 billion to stockholders, including $929 million in quarterly dividend payments and $11.3 billion in share repurchases, or 278.9 million shares. In July 2018, we announced that our Board of Directors declared a $0.10 per share dividend for stockholders of record as of August 7, 2018, and payable on August 21, 2018.

Reconciliation of GAAP to Non-GAAP Financial Measures

We sometimes use financial measures that are derived from the condensed consolidated financial statements but that are not presented in accordance with GAAP to understand and evaluate our current operating performance and to allow for period-to-period comparisons. We believe these non-GAAP financial measures may also provide useful information to investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and should be considered in addition to and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with GAAP. We are providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis.

The following table presents the reconciliation of pre-tax income (GAAP measure) to pre-tax income excluding special items (non-GAAP measure). Management uses this non-GAAP financial measure to evaluate our current operating performance and to allow for period-to-period comparisons. As special items may vary from period-to-period in nature and amount, the adjustment to exclude special items allows management an additional tool to better understand our core operating performance.



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
	(In millions)
Reconciliation of Pre-Tax Income Excluding Special Items:
Pre-tax income - GAAP	$	769	$	1,389	$	1,042	$	1,924
Pre-tax special items ⁽¹⁾:
Operating special items, net	152		203		347		324
Nonoperating special items, net	80		2		80		7
Total pre-tax special items, net	232		205		427		331
Pre-tax income excluding special items	$	1,001	$	1,594	$	1,469	$	2,255

Additionally, the table below presents the reconciliation of total operating costs (GAAP measure) to total operating costs excluding special items and fuel (non-GAAP measure). Management uses total operating costs excluding special items and fuel to evaluate our current operating performance and for period-to-period comparisons. The price of fuel, over which we have no control, impacts the comparability of period-to-period financial performance. The adjustment to exclude aircraft fuel and special items allows management an additional tool to better understand and analyze our non-fuel costs and core operating performance. Amounts may not recalculate due to rounding.



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Reconciliation of Total Operating Costs per Available Seat Mile (CASM) Excluding Special Items and Fuel:
(In millions)
Total operating expenses - GAAP	$	10,615		$	9,628		$	20,585		$	18,711
Special items ⁽¹⁾:
Special items, net	(152		)	(202		)	(347		)	(320		)
Regional operating special items, net	—			(1		)	—			(4		)
Fuel:
Aircraft fuel and related taxes - mainline	(2,103		)	(1,510		)	(3,866		)	(2,912		)
Aircraft fuel and related taxes - regional	(465		)	(329		)	(863		)	(648		)
Total operating expenses, excluding special items and fuel	$	7,895		$	7,586		$	15,509		$	14,827
(In millions)
Total Available Seat Miles (ASM)	72,893			71,743			138,717			136,083
(In cents)
Total operating CASM	14.56			13.42			14.84			13.75
Special items per ASM:
Special items, net ⁽¹⁾	(0.21		)	(0.28		)	(0.25		)	(0.24		)
Fuel per ASM:
Aircraft fuel and related taxes - mainline	(2.89		)	(2.10		)	(2.79		)	(2.14		)
Aircraft fuel and related taxes - regional	(0.64		)	(0.46		)	(0.62		)	(0.48		)
Total CASM, excluding special items and fuel	10.83			10.57			11.18			10.90


⁽¹⁾	See Note 2 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for further information on special items.

AAG’s Results of Operations

Operating Statistics

The table below sets forth selected operating data for the three and six months ended June 30, 2018 and 2017.



	Three Months Ended June 30,		Increase (Decrease)		Six Months Ended June 30,		Increase (Decrease)
	2018	2017	Increase (Decrease)		2018	2017	Increase (Decrease)
Revenue passenger miles (millions) ^(a)	60,779	59,564	2.0	%	113,725	110,548	2.9	%
Available seat miles (millions) ^(b)	72,893	71,743	1.6	%	138,717	136,083	1.9	%
Passenger load factor (percent) ^(c)	83.4	83.0	0.4	pts	82.0	81.2	0.8	pts
Yield (cents) ^(d)	17.56	17.38	1.0	%	17.72	17.50	1.2	%
Passenger revenue per available seat mile (cents) ^(e)	14.64	14.43	1.5	%	14.53	14.22	2.2	%
Total revenue per available seat mile (cents) ^(f)	15.97	15.65	2.1	%	15.89	15.47	2.8	%
Aircraft at end of period	1,559	1,583	(1.5	)%	1,559	1,583	(1.5	)%
Fuel consumption (gallons in millions)	1,147	1,129	1.6	%	2,177	2,143	1.6	%
Average aircraft fuel price including related taxes (dollars per gallon)	2.24	1.63	37.5	%	2.17	1.66	30.8	%
Full-time equivalent employees at end of period	131,600	128,300	2.6	%	131,600	128,300	2.6	%
Operating cost per available seat mile (cents) ^(g)	14.56	13.42	8.5	%	14.84	13.75	7.9	%


^(a)	Revenue passenger mile (RPM) – A basic measure of sales volume. One RPM represents one passenger flown one mile.


^(b)	Available seat mile (ASM) – A basic measure of production. One ASM represents one seat flown one mile.


^(c)	Passenger load factor – The percentage of available seats that are filled with revenue passengers.


^(d)	Yield – A measure of airline revenue derived by dividing passenger revenue by RPMs.


^(e)	Passenger revenue per available seat mile (PRASM) – Passenger revenue divided by ASMs.


^(f)	Total revenue per available seat mile (TRASM) – Total revenues divided by total ASMs.


^(g)	Operating cost per available seat mile (CASM) – Operating expenses divided by ASMs.

Three Months Ended June 30, 2018 Compared to Three Months Ended June 30, 2017

Pre-tax income and net income were $769 million and $566 million in the second quarter of 2018, respectively. This compares to the second quarter 2017 pre-tax income and net income of $1.4 billion and $864 million, respectively. Excluding the effects of pre-tax net special items, pre-tax income was $1.0 billion and $1.6 billion in the second quarters of 2018 and 2017, respectively.

The quarter-over-quarter declines in our pre-tax income on both a GAAP basis and excluding pre-tax net special items were principally driven by an increase in fuel costs, which was offset in part by higher revenues.

Operating Revenues



	Three Months Ended June 30,				Increase (Decrease)		Percent Increase (Decrease)
	2018		2017		Increase (Decrease)		Percent Increase (Decrease)
	(In millions, except percentage changes)
Passenger	$	10,674	$	10,353	$	321	3.1
Cargo	261		219		42		19.4
Other	708		655		53		8.1
Total operating revenues	$	11,643	$	11,227	$	416	3.7

This table presents our passenger revenue and the quarter-over-quarter change in certain operating statistics:



			Increase (Decrease) vs. Three Months Ended June 30, 2017
	Three Months Ended June 30, 2018		RPMs	ASMs	Load Factor		Passenger Yield		PRASM
	(In millions)
Passenger revenue	$	10,674	2.0%	1.6%	0.4	pts	1.0	%	1.5	%

Passenger revenue increased $321 million, or 3.1%, in the second quarter of 2018 from the 2017 period due to a 2.0% quarter-over-quarter increase in RPMs and a 1.0% increase in yields driven by continued strong demand. International yields increased 6.1%, led by improved yields in the Atlantic market, which more than offset a 0.9% decrease in domestic yields.

Cargo revenue increased $42 million, or 19.4%, in the second quarter of 2018 from the 2017 period primarily driven by increases in freight volume and domestic and international freight yields.

Other revenue includes revenue associated with our loyalty program, airport clubs, advertising and vacation-related services. Other revenue increased $53 million, or 8.1%, in the second quarter of 2018 from the 2017 period due to higher revenue associated with our loyalty program. For the three months ended June 30, 2018 and 2017, loyalty revenue included in other revenue was $582 million and $533 million, respectively.

Total operating revenues in the second quarter of 2018 increased $416 million, or 3.7%, from the 2017 period driven principally by a 3.1% increase in passenger revenue as described above. Our TRASM was 15.97 cents in the second quarter of 2018, a 2.1% increase as compared to 15.65 cents in the 2017 period.

Operating Expenses



	Three Months Ended June 30,				Increase (Decrease)			Percent Increase (Decrease)
	2018		2017		Increase (Decrease)			Percent Increase (Decrease)
	(In millions, except percentage changes)
Aircraft fuel and related taxes	$	2,103	$	1,510	$	593		39.3
Salaries, wages and benefits	3,093		3,037		56			1.8
Maintenance, materials and repairs	505		495		10			2.0
Other rent and landing fees	490		452		38			8.3
Aircraft rent	305		294		11			3.6
Selling expenses	385		376		9			2.6
Depreciation and amortization	463		418		45			10.9
Special items, net	152		202		(50		)	(24.5	)
Other	1,326		1,224		102			8.4
Regional expenses:
Aircraft fuel and related taxes	465		329		136			41.1
Other	1,328		1,291		37			2.8
Total operating expenses	$	10,615	$	9,628	$	987		10.3

Total operating expenses increased $987 million, or 10.3%, in the second quarter of 2018 from the 2017 period. The increase in operating expenses was principally driven by an increase in fuel costs. See detailed explanations below relating to changes in total CASM.

Total CASM

We sometimes use financial measures that are derived from the condensed consolidated financial statements but that are not presented in accordance with GAAP to understand and evaluate our current operating performance to allow for period-to-period comparisons. We believe these non-GAAP financial measures may also provide useful information to investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with GAAP. We are providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis.

The table below presents the reconciliation of total operating expenses (GAAP measure) to total operating costs excluding special items and fuel (non-GAAP measure). Management uses total operating costs excluding special items and fuel to evaluate our current operating performance and for period-to-period comparisons. The price of fuel, over which we have no control, impacts the comparability of period-to-period financial performance. The adjustment to exclude aircraft fuel and special items allows management an additional tool to better understand and analyze our non-fuel costs and core operating performance.

The major components of our total CASM and our total CASM excluding special items and fuel for the three months ended June 30, 2018 and 2017 are as follows (amounts may not recalculate due to rounding):



	Three Months Ended June 30,				Percent Increase (Decrease)
	2018		2017		Percent Increase (Decrease)
	(In cents, except percentage changes)
Total CASM:
Aircraft fuel and related taxes	2.89		2.10		37.1
Salaries, wages and benefits	4.24		4.23		0.2
Maintenance, materials and repairs	0.69		0.69		0.4
Other rent and landing fees	0.67		0.63		6.6
Aircraft rent	0.42		0.41		2.0
Selling expenses	0.53		0.52		1.0
Depreciation and amortization	0.63		0.58		9.1
Special items, net	0.21		0.28		(25.7	)
Other	1.82		1.71		6.7
Regional expenses:
Aircraft fuel and related taxes	0.64		0.46		38.9
Other	1.82		1.80		1.2
Total CASM	14.56		13.42		8.5
Special items, net:
Special items, net	(0.21	)	(0.28	)	(25.7	)
Aircraft fuel and related taxes:
Aircraft fuel and related taxes - mainline	(2.89	)	(2.10	)	37.1
Aircraft fuel and related taxes - regional	(0.64	)	(0.46	)	38.9
Total CASM, excluding special items and fuel	10.83		10.57		2.4

Significant changes in the components of total CASM are as follows:


•	Aircraft fuel and related taxes per ASM increased 37.1% primarily due to a 37.8% increase in the average price per gallon of fuel to $2.23 in the second quarter of 2018 from $1.62 in the 2017 period.


•	Other rent and landing fees per ASM increased 6.6% and was primarily driven by rate increases at certain hub airports in the second quarter of 2018 as compared to the 2017 period.


•	Depreciation and amortization per ASM increased 9.1% due in part to our fleet renewal program as subsequent to the second quarter of 2017 we took delivery of 18 newly owned mainline aircraft. Information technology and software development projects associated with our merger integration also contributed to the increase.


•	Other operating expenses per ASM increased 6.7% primarily due to expenses associated with improving our product offerings, customer experience and operational reliability.


•	Regional aircraft fuel and related taxes per ASM increased 38.9% primarily due to a 35.7% increase in the average price per gallon of fuel to $2.29 in the second quarter of 2018 from $1.69 in the 2017 period as well as a 4.0% increase in gallons of fuel consumed.

Operating Special Items, Net



	Three Months Ended June 30,
	2018			2017
	(In millions)
Fleet restructuring expenses ⁽¹⁾	$	83		$	48
Merger integration expenses ⁽²⁾	60			68
Mark-to-market adjustments on bankruptcy obligations ⁽³⁾	(57		)	38
Intangible asset impairment ⁽⁴⁾	26			—
Litigation settlement	5			—
Labor contract expenses	—			45
Other operating charges, net	35			3
Total mainline operating special items, net	152			202
Regional operating special items, net	—			1
Total operating special items, net	$	152		$	203


⁽¹⁾	Fleet restructuring expenses principally included the acceleration of depreciation and impairments for aircraft and related equipment grounded or expected to be grounded earlier than planned.


⁽²⁾	Merger integration expenses included costs associated with our remaining integration projects, principally our flight attendant, human resources, payroll and technical operations integrations.


⁽³⁾	Bankruptcy obligations will ultimately be settled in shares of our common stock. Accordingly, fluctuations in our stock price result in mark-to-market adjustments to these obligations.


⁽⁴⁾	Intangible asset impairment includes a non-cash charge to write-off our Brazil route authority as a result of ratification of the U.S.-Brazil open skies agreement.

Nonoperating Results



	Three Months Ended June 30,						Increase (Decrease)			Percent Increase (Decrease)
	2018			2017			Increase (Decrease)			Percent Increase (Decrease)
	(In millions, except percentage changes)
Interest income	$	30		$	24		$	6		29.3
Interest expense, net	(266		)	(263		)	(3		)	1.0
Other income (expense), net	(23		)	29			(52		)	nm⁽¹⁾
Total nonoperating expense, net	$	(259	)	$	(210	)	$	(49	)	23.1

⁽¹⁾ Not meaningful.

In the 2018 period, other nonoperating expense, net principally included a $66 million net special charge for mark-to-market unrealized losses primarily on our equity investment in China Southern Airlines Company Limited (China Southern Airlines), $29 million of net foreign currency losses, principally associated with losses from Latin American currencies, and $14 million of net special charges associated with debt refinancings and extinguishments. These charges were offset in part by $75 million of non-service related pension and other postretirement benefit plan income.

In the 2017 period, other nonoperating income, net principally included $33 million of non-service related pension and other postretirement benefit plan income, offset in part by $7 million of net foreign currency losses.

Income Taxes

In the second quarter of 2018, we recorded an income tax provision of $203 million, which was substantially non-cash due to utilization of our net operating losses (NOLs). This provision included an $18 million special income tax charge related to an international income tax matter. Substantially all of our income before income taxes is attributable to the United States. At December 31, 2017, we had approximately $10.0 billion of federal NOLs and $3.4 billion of state NOLs, substantially all of which are expected to be available in 2018 to reduce federal and state taxable income.

See Note 7 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for additional information on income taxes.

Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2017

Pre-tax income and net income were $1.0 billion and $753 million in the first six months of 2018, respectively. This compares to the first six months of 2017 pre-tax income and net income of $1.9 billion and $1.2 billion, respectively. Excluding the effects of pre-tax net special items, pre-tax income was $1.5 billion and $2.3 billion in the first six months of 2018 and 2017, respectively.

The period-over-period declines in our pre-tax income on both a GAAP basis and excluding pre-tax net special items were principally driven by an increase in fuel costs and higher wage rates, which were offset in part by higher revenues.

Operating Revenues



	Six Months Ended June 30,				Increase (Decrease)		Percent Increase (Decrease)
	2018		2017		Increase (Decrease)		Percent Increase (Decrease)
	(In millions, except percentage changes)
Passenger	$	20,154	$	19,350	$	804	4.2
Cargo	488		410		78		19.1
Other	1,402		1,287		115		9.0
Total operating revenues	$	22,044	$	21,047	$	997	4.7

This table presents our passenger revenue and the period-over-period change in certain operating statistics:



			Increase (Decrease) vs. Six Months Ended June 30, 2017
	Six Months Ended June 30, 2018		RPMs	ASMs	Load Factor		Passenger Yield	PRASM
	(In millions)
Passenger revenue	$	20,154	2.9%	1.9%	0.8	pts	1.2%	2.2	%

Passenger revenue increased $804 million, or 4.2%, in the first six months of 2018 from the 2017 period primarily driven by a 2.9% period-over-period increase in RPMs and 1.2% increase in yields driven by continued strong demand. International yields increased 6.4%, led by improved yields in the Atlantic market, which more than offset a 0.5% decrease in domestic yields.

Cargo revenue increased $78 million, or 19.1%, in the first six months of 2018 from the 2017 period primarily driven by increases in freight volume and domestic and international freight yields.

Other revenue includes revenue associated with our loyalty program, airport clubs, advertising and vacation-related services. Other revenue increased $115 million, or 9.0%, in the first six months of 2018 from the 2017 period due to higher revenue associated with our loyalty program. In the first six months of 2018 and 2017, loyalty revenue included in other revenue was $1.2 billion and $1.0 billion, respectively.

Total operating revenues in the first six months of 2018 increased $997 million, or 4.7%, from the 2017 period driven principally by a 4.2% increase in passenger revenue as described above. Our TRASM was 15.89 cents in the first six months of 2018, a 2.8% increase as compared to 15.47 cents in the 2017 period.

Operating Expenses



	Six Months Ended June 30,				Increase (Decrease)			Percent Increase (Decrease)
	2018		2017		Increase (Decrease)			Percent Increase (Decrease)
	(In millions, except percentage changes)
Aircraft fuel and related taxes	$	3,866	$	2,912	$	954		32.8
Salaries, wages and benefits	6,111		5,898		213			3.6
Maintenance, materials and repairs	973		987		(14		)	(1.4	)
Other rent and landing fees	952		892		60			6.6
Aircraft rent	609		589		20			3.4
Selling expenses	742		694		48			6.9
Depreciation and amortization	908		822		86			10.5
Special items, net	347		320		27			8.5
Other	2,587		2,403		184			7.6
Regional expenses:
Aircraft fuel and related taxes	863		648		215			33.2
Other	2,627		2,546		81			3.2
Total operating expenses	$	20,585	$	18,711	$	1,874		10.0

Total operating expenses increased $1.9 billion, or 10.0%, in the first six months of 2018 from the 2017 period. The increase in operating expenses was primarily driven by an increase in fuel costs and higher wage rates. See detailed explanations below relating to changes in total CASM.

Total CASM

We sometimes use financial measures that are derived from the condensed consolidated financial statements but that are not presented in accordance with GAAP to understand and evaluate our current operating performance to allow for period-to-period comparisons. We believe these non-GAAP financial measures may also provide useful information to investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and should be considered in addition to and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with GAAP. We are providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis.

The major components of our total CASM and our total CASM excluding special items and fuel for the six months ended June 30, 2018 and 2017 are as follows (amounts may not recalculate due to rounding):



	Six Months Ended June 30,				Percent Increase (Decrease)
	2018		2017		Percent Increase (Decrease)
	(In cents, except percentage changes)
Total CASM:
Aircraft fuel and related taxes	2.79		2.14		30.3
Salaries, wages and benefits	4.41		4.33		1.6
Maintenance, materials and repairs	0.70		0.73		(3.3	)
Other rent and landing fees	0.69		0.66		4.6
Aircraft rent	0.44		0.43		1.5
Selling expenses	0.53		0.51		4.9
Depreciation and amortization	0.65		0.60		8.4
Special items, net	0.25		0.24		6.5
Other	1.86		1.77		5.6
Regional expenses:
Aircraft fuel and related taxes	0.62		0.48		30.7
Other	1.89		1.87		1.2
Total CASM	14.84		13.75		7.9
Special items, net:
Special items, net	(0.25	)	(0.24	)	6.5
Aircraft fuel and related taxes:
Aircraft fuel and related taxes - mainline	(2.79	)	(2.14	)	30.3
Aircraft fuel and related taxes - regional	(0.62	)	(0.48	)	30.7
Total CASM, excluding special items and fuel	11.18		10.90		2.6

Significant changes in the components of total CASM are as follows:


•	Aircraft fuel and related taxes per ASM increased 30.3% primarily due to a 31.1% increase in the average price per gallon of fuel to $2.16 in the first six months of 2018 from $1.65 in the 2017 period.


•	Salaries, wages and benefits per ASM increased 1.6% primarily due to mid-contract pay rate increases for pilots and flight attendants effective in the second quarter of 2017.


•	Depreciation and amortization per ASM increased 8.4% due in part to our fleet renewal program as subsequent to the second quarter of 2017 we took delivery of 18 newly owned mainline aircraft. Information technology and software development projects associated with our merger integration also contributed to the increase.


•	Other operating expenses per ASM increased 5.6% primarily due to expenses associated with improving our product offerings, customer experience and operational reliability.


•	Regional aircraft fuel and related taxes per ASM increased 30.7% primarily due to a 29.4% increase in the average price per gallon of fuel to $2.22 in the first six months of 2018 from $1.72 in the 2017 period.

Operating Special Items, Net



	Six Months Ended June 30,
	2018			2017
	(In millions)
Fleet restructuring expenses ⁽¹⁾	$	166		$	111
Merger integration expenses ⁽²⁾	120			130
Mark-to-market adjustments on bankruptcy obligations ⁽³⁾	(56		)	20
Intangible asset impairment ⁽⁴⁾	26			—
Litigation settlement	45			—
Labor contract expenses	13			45
Other operating charges, net	33			14
Total mainline operating special items, net	347			320
Regional operating special items, net	—			4
Total operating special items, net	$	347		$	324


⁽¹⁾	Fleet restructuring expenses principally included the acceleration of depreciation and impairments for aircraft and related equipment grounded or expected to be grounded earlier than planned.


⁽²⁾	Merger integration expenses included costs associated with our remaining integration projects, principally our flight attendant, human resources, payroll and technical operations integrations.


⁽³⁾	Bankruptcy obligations will ultimately be settled in shares of our common stock. Accordingly, fluctuations in our stock price result in mark-to-market adjustments to these obligations.


⁽⁴⁾	Intangible asset impairment includes a non-cash charge to write-off our Brazil route authority as a result of ratification of the U.S.-Brazil open skies agreement.

Nonoperating Results



	Six Months Ended June 30,						Increase (Decrease)			Percent Increase (Decrease)
	2018			2017			Increase (Decrease)			Percent Increase (Decrease)
	(In millions, except percentage changes)
Interest income	$	55		$	45		$	10		22.7
Interest expense, net	(530		)	(520		)	(10		)	2.0
Other income, net	58			63			(5		)	(7.6	)
Total nonoperating expense, net	$	(417	)	$	(412	)	$	(5	)	1.2

In the 2018 period, other nonoperating income, net principally included $151 million of non-service related pension and other postretirement benefit plan income. This income was offset in part by a $66 million net special charge for mark-to-market unrealized losses primarily on our equity investment in China Southern Airlines, $23 million of net foreign currency losses, principally associated with losses from Latin American currencies, and $14 million of net special charges associated with debt refinancings and extinguishments.

In the 2017 period, other nonoperating income, net principally included $68 million of non-service related pension and other postretirement benefit plan income, offset in part by $4 million of net foreign currency losses.

Income Taxes

In the first six months of 2018, we recorded an income tax provision of $289 million, which was substantially non-cash due to utilization of our NOLs. This provision included a $22 million special income tax charge to establish a required valuation allowance related to our estimated refund for Alternative Minimum Tax (AMT) credits and an $18 million special income tax charge related to an international income tax matter. Substantially all of our income before income taxes is attributable to the United States.

See Note 7 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for additional information on income taxes.

American’s Results of Operations

Three Months Ended June 30, 2018 Compared to Three Months Ended June 30, 2017

American realized pre-tax income of $839 million and net income of $619 million in the second quarter of 2018. This compares to the second quarter 2017 pre-tax income of $1.4 billion and net income of $888 million.

The quarter-over-quarter declines in American's pre-tax income were principally driven by an increase in fuel costs, which was offset in part by higher revenues.

Operating Revenues



	Three Months Ended June 30,				Increase (Decrease)		Percent Increase (Decrease)
	2018		2017		Increase (Decrease)		Percent Increase (Decrease)
	(In millions, except percentage changes)
Passenger	$	10,674	$	10,353	$	321	3.1
Cargo	261		219		42		19.4
Other	705		652		53		8.1
Total operating revenues	$	11,640	$	11,224	$	416	3.7

Passenger revenue increased $321 million, or 3.1%, in the second quarter of 2018 from the 2017 period due to a quarter-over-quarter increase in RPMs and yields driven by continued strong demand. International yields increased, led by improved yields in the Atlantic market, which more than offset the decrease in domestic yields.

Cargo revenue increased $42 million, or 19.4%, in the second quarter of 2018 from the 2017 period primarily driven by increases in freight volume and domestic and international freight yields.

Other revenue includes revenue associated with American's loyalty program, airport clubs, advertising and vacation-related services. Other revenue increased $53 million, or 8.1%, in the second quarter of 2018 from the 2017 period due to higher revenue associated with American's loyalty program. For the three months ended June 30, 2018 and 2017, loyalty revenue included in other revenue was $582 million and $533 million, respectively.

Total operating revenues in the second quarter of 2018 increased $416 million, or 3.7%, from the 2017 period driven principally by a 3.1% increase in passenger revenue as described above.

Operating Expenses



	Three Months Ended June 30,				Increase (Decrease)			Percent Increase (Decrease)
	2018		2017		Increase (Decrease)			Percent Increase (Decrease)
	(In millions, except percentage changes)
Aircraft fuel and related taxes	$	2,103	$	1,510	$	593		39.3
Salaries, wages and benefits	3,090		3,034		56			1.9
Maintenance, materials and repairs	505		495		10			2.0
Other rent and landing fees	490		452		38			8.3
Aircraft rent	305		294		11			3.6
Selling expenses	385		376		9			2.6
Depreciation and amortization	463		418		45			10.9
Special items, net	152		202		(50		)	(24.5	)
Other	1,326		1,223		103			8.4
Regional expenses:
Aircraft fuel and related taxes	465		329		136			41.1
Other	1,319		1,300		19			1.5
Total operating expenses	$	10,603	$	9,633	$	970		10.1

Total operating expenses increased $970 million, or 10.1%, in the second quarter of 2018 from the 2017 period. The increase in operating expenses was principally driven by an increase in fuel costs.

Significant changes in the components of American's total operating expenses are as follows:


•	Aircraft fuel and related taxes increased 39.3% primarily due to a 37.8% increase in the average price per gallon of fuel to $2.23 in the second quarter of 2018 from $1.62 in the 2017 period.


•	Other rent and landing fees increased 8.3% and was primarily driven by rate increases at certain hub airports in the second quarter of 2018 as compared to the 2017 period.


•	Depreciation and amortization increased 10.9% due in part to American's fleet renewal program as subsequent to the second quarter of 2017 American took delivery of 18 newly owned mainline aircraft. Information technology and software development projects associated with American's merger integration also contributed to the increase.


•	Other operating expenses increased 8.4% primarily due to expenses associated with improving American's product offerings, customer experience and operational reliability.


•	Regional aircraft fuel and related taxes increased 41.1% primarily due to a 35.7% increase in the average price per gallon of fuel to $2.29 in the second quarter of 2018 from $1.69 in the 2017 period as well as a 4.0% increase in gallons of fuel consumed.

Operating Special Items, Net



	Three Months Ended June 30,
	2018			2017
	(In millions)
Fleet restructuring expenses ⁽¹⁾	$	83		$	48
Merger integration expenses ⁽²⁾	60			68
Mark-to-market adjustments on bankruptcy obligations ⁽³⁾	(57		)	38
Intangible asset impairment ⁽⁴⁾	26			—
Litigation settlement	5			—
Labor contract expenses	—			45
Other operating charges, net	35			3
Total mainline operating special items, net	152			202
Regional operating special items, net	—			1
Total operating special items, net	$	152		$	203


⁽¹⁾	Fleet restructuring expenses principally included the acceleration of depreciation and impairments for aircraft and related equipment grounded or expected to be grounded earlier than planned.


⁽²⁾	Merger integration expenses included costs associated with American's remaining integration projects, principally its flight attendant, human resources, payroll and technical operations integrations.


⁽³⁾	Bankruptcy obligations will ultimately be settled in shares of AAG common stock. Accordingly, fluctuations in AAG's stock price result in mark-to-market adjustments to these obligations.


⁽⁴⁾	Intangible asset impairment includes a non-cash charge to write-off American's Brazil route authority as a result of ratification of the U.S.-Brazil open skies agreement.

Nonoperating Results



	Three Months Ended June 30,						Increase (Decrease)			Percent Increase (Decrease)
	2018			2017			Increase (Decrease)			Percent Increase (Decrease)
	(In millions, except percentage changes)
Interest income	$	82		$	53		$	29		54.0
Interest expense, net	(257		)	(246		)	(11		)	4.0
Other income (expense), net	(23		)	29			(52		)	nm⁽¹⁾
Total nonoperating expense, net	$	(198	)	$	(164	)	$	(34	)	20.8

⁽¹⁾ Not meaningful.

Interest income increased $29 million due to higher interest-bearing related party receivables from American's parent company, AAG.

In the 2018 period, other nonoperating expense, net principally included a $66 million net special charge for mark-to-market unrealized losses primarily on American's equity investment in China Southern Airlines, $29 million of net foreign currency losses, principally associated with losses from Latin American currencies, and $14 million of net special charges associated with debt refinancings and extinguishments. These charges were offset in part by $75 million of non-service related pension and other postretirement benefit plan income.

In the 2017 period, other nonoperating income, net principally included $34 million of non-service related pension and other postretirement benefit plan income, offset in part by $7 million of net foreign currency losses.

Income Taxes

American is part of the AAG consolidated income tax return.

In the second quarter of 2018, American recorded an income tax provision of $220 million, which was substantially non-cash due to utilization of its NOLs. This provision included an $18 million special income tax charge related to an international income tax matter. Substantially all of American’s income before income taxes is attributable to the United States. At December 31, 2017, American had approximately $10.6 billion of federal NOLs and $3.2 billion of state NOLs, substantially all of which are expected to be available in 2018 to reduce federal and state taxable income.

See Note 5 to American’s Condensed Consolidated Financial Statements in Part I, Item 1B for additional information on income taxes.

Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2017

American realized pre-tax income of $1.2 billion and net income of $855 million in the first six months of 2018. This compares to the first six months of 2017 pre-tax income of $2.0 billion and net income of $1.3 billion.

The period-over-period declines in American's pre-tax income were principally driven by an increase in fuel costs and higher wage rates, which were offset in part by higher revenues.

Operating Revenues



	Six Months Ended June 30,				Increase (Decrease)		Percent Increase (Decrease)
	2018		2017		Increase (Decrease)		Percent Increase (Decrease)
	(In millions, except percentage changes)
Passenger	$	20,154	$	19,350	$	804	4.2
Cargo	488		410		78		19.1
Other	1,396		1,280		116		9.1
Total operating revenues	$	22,038	$	21,040	$	998	4.7

Passenger revenue increased $804 million, or 4.2%, in the first six months of 2018 from the 2017 period primarily driven by a period-over-period increase in RPMs and yields driven by continued strong demand. International yields increased, led by improved yields in the Atlantic market, which more than offset the decrease in domestic yields.

Cargo revenue increased $78 million, or 19.1%, in the first six months of 2018 from the 2017 period primarily driven by increases in freight volume and domestic and international freight yields.

Other revenue includes revenue associated with American’s loyalty program, airport clubs, advertising and vacation-related services. Other revenue increased $116 million, or 9.1%, in the first six months of 2018 from the 2017 period due to higher revenue associated with American's loyalty program. In the first six months of 2018 and 2017, loyalty revenue included in other revenue was $1.2 billion and $1.0 billion, respectively.

Total operating revenues in the first six months of 2018 increased $998 million, or 4.7%, from the 2017 period driven principally by a 4.2% increase in passenger revenue as described above.

Operating Expenses



	Six Months Ended June 30,				Increase (Decrease)			Percent Increase (Decrease)
	2018		2017		Increase (Decrease)			Percent Increase (Decrease)
	(In millions, except percentage changes)
Aircraft fuel and related taxes	$	3,866	$	2,912	$	954		32.8
Salaries, wages and benefits	6,104		5,891		213			3.6
Maintenance, materials and repairs	973		987		(14		)	(1.4	)
Other rent and landing fees	952		892		60			6.6
Aircraft rent	609		589		20			3.4
Selling expenses	742		694		48			6.9
Depreciation and amortization	908		822		86			10.5
Special items, net	347		320		27			8.5
Other	2,587		2,404		183			7.6
Regional expenses:
Aircraft fuel and related taxes	863		648		215			33.2
Other	2,602		2,551		51			2.0
Total operating expenses	$	20,553	$	18,710	$	1,843		9.9

Total operating expenses increased $1.8 billion, or 9.9%, in the first six months of 2018 from the 2017 period. The increase in operating expenses was primarily driven by an increase in fuel costs and higher wage rates.

Significant changes in the components of American’s total operating expenses are as follows:


•	Aircraft fuel and related taxes increased 32.8% primarily due to a 31.1% increase in the average price per gallon of fuel to $2.16 in the first six months of 2018 from $1.65 in the 2017 period.


•	Salaries, wages and benefits increased 3.6% primarily due to mid-contract pay rate increases for pilots and flight attendants effective in the second quarter of 2017.


•	Depreciation and amortization increased 10.5% due in part to American's fleet renewal program as subsequent to the second quarter of 2017 American took delivery of 18 newly owned mainline aircraft. Information technology and software development projects associated with American's merger integration also contributed to the increase.


•	Other operating expenses increased 7.6% primarily due to expenses associated with improving American's product offerings, customer experience and operational reliability.


•	Regional aircraft fuel and related taxes increased 33.2% primarily due to a 29.4% increase in the average price per gallon of fuel to $2.22 in the first six months of 2018 from $1.72 in the 2017 period.

Operating Special Items, Net



	Six Months Ended June 30,
	2018			2017
	(In millions)
Fleet restructuring expenses ⁽¹⁾	$	166		$	111
Merger integration expenses ⁽²⁾	120			130
Mark-to-market adjustments on bankruptcy obligations ⁽³⁾	(56		)	20
Intangible asset impairment ⁽⁴⁾	26			—
Litigation settlement	45			—
Labor contract expenses	13			45
Other operating charges, net	33			14
Total mainline operating special items, net	347			320
Regional operating special items, net	—			4
Total operating special items, net	$	347		$	324


⁽¹⁾	Fleet restructuring expenses principally included the acceleration of depreciation and impairments for aircraft and related equipment grounded or expected to be grounded earlier than planned.


⁽²⁾	Merger integration expenses included costs associated with American's remaining integration projects, principally its flight attendant, human resources, payroll and technical operations integrations.


⁽³⁾	Bankruptcy obligations will ultimately be settled in shares of AAG common stock. Accordingly, fluctuations in AAG's stock price result in mark-to-market adjustments to these obligations.


⁽⁴⁾	Intangible asset impairment includes a non-cash charge to write-off American's Brazil route authority as a result of ratification of the U.S.-Brazil open skies agreement.

Nonoperating Results



	Six Months Ended June 30,						Increase (Decrease)			Percent Increase (Decrease)
	2018			2017			Increase (Decrease)			Percent Increase (Decrease)
	(In millions, except percentage changes)
Interest income	$	155		$	102		$	53		52.1
Interest expense, net	(510		)	(488		)	(22		)	4.5
Other income, net	59			63			(4		)	(7.1	)
Total nonoperating expense, net	$	(296	)	$	(323	)	$	27		(8.2	)

Interest income increased $53 million due to higher interest-bearing related party receivables from American's parent company, AAG.

In the 2018 period, other nonoperating income, net principally included $151 million of non-service related pension and other postretirement benefit plan income. This income was offset in part by a $66 million net special charge for mark-to-market unrealized losses primarily on American's equity investment in China Southern Airlines, $23 million of net foreign currency losses, principally associated with losses from Latin American currencies, and $14 million of net special charges associated with debt refinancings and extinguishments.

Income Taxes

American is part of the AAG consolidated income tax return.

In the first six months of 2018, American recorded an income tax provision of $334 million, which was substantially non-cash due to utilization of its NOLs. This provision included a $30 million special income tax charge to establish a required valuation allowance related to American's estimated refund for AMT credits and an $18 million special income tax charge related to an international income tax matter. Substantially all of American’s income before income taxes is attributable to the United States.

See Note 5 to American’s Condensed Consolidated Financial Statements in Part I, Item 1B for additional information on income taxes.

Liquidity and Capital Resources

Liquidity

As of June 30, 2018, AAG had approximately $7.2 billion in total available liquidity and $183 million in restricted cash and short-term investments. Additional detail of our available liquidity is provided in the table below (in millions):



	AAG				American
	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
Cash	$	293	$	295	$	282	$	287
Short-term investments	4,381		4,771		4,370		4,768
Undrawn revolving credit facilities	2,500		2,500		2,500		2,500
Total available liquidity	$	7,174	$	7,566	$	7,152	$	7,555

Share Repurchase Programs

Cash Dividends

In July 2018, we announced that our Board of Directors declared a $0.10 per share dividend for stockholders of record as of August 7, 2018, and payable on August 21, 2018.

Any future dividends that may be declared and paid from time to time will be subject to market and economic conditions, applicable legal requirements and other relevant factors. We are not obligated to continue a dividend for any fixed period, and the payment of dividends may be suspended at any time at our discretion.

Collateral-Related Covenants

Certain of our debt financing agreements contain loan to value ratio covenants and require us to appraise the related collateral annually. Pursuant to such agreements, if the loan to value ratio exceeds a specified threshold, we are required, as applicable, to pledge additional qualifying collateral (which in some cases may include cash collateral), or pay down such financing, in whole or in part. As of June 30, 2018, we were in compliance with the collateral coverage tests for the 2013 Credit Facilities, the 2014 Credit Facilities, the April 2016 Credit Facilities and the December 2016 Credit Facilities as of the most recent measurement dates.

Credit Ratings

The following table details AAG and American’s credit ratings as of June 30, 2018:



	Current Rating
S&P Local Issuer Credit Rating	BB-
Fitch Issuer Default Credit Rating	BB-
Moody’s Corporate Family Rating ⁽¹⁾	Ba3


⁽¹⁾	This rating is for AAG only. The credit agency does not rate this category for American.

A decrease in our credit ratings could cause our borrowing costs to increase, which would increase our interest expense and could affect our net income, and our credit ratings could adversely affect our ability to obtain additional financing. If our financial performance or industry conditions worsen, we may face future downgrades, which could negatively impact our borrowing costs and the prices of our equity or debt securities. In addition, any downgrade of our credit ratings may indicate a decline in our business and in our ability to satisfy our obligations under our indebtedness.

Sources and Uses of Cash

AAG

Operating Activities

Our net cash provided by operating activities was $2.9 billion and $3.9 billion for the first six months of 2018 and 2017, respectively, a period-over-period decrease of $1.0 billion. This decrease in operating cash flows from the 2017 to the 2018 period was primarily due to lower profitability in the first six months of 2018 driven by an increase in fuel costs and higher wage rates due to mid-contract pay rate increases for pilots and flight attendants effective in the second quarter of 2017, which were offset in part by higher revenues.

Investing Activities

Our net cash used in investing activities was $1.0 billion and $3.3 billion for the first six months of 2018 and 2017, respectively.

Our principal investing activities in the 2018 period included expenditures of $1.7 billion for property and equipment, including seven Boeing 737-8 MAX aircraft and two Boeing 787 Family aircraft. These cash outflows were offset in part by $395 million in net sales of short-term investments and $258 million of proceeds primarily from aircraft sale-leaseback transactions.

Our principal investing activities in the 2017 period included expenditures of $3.2 billion for property and equipment, including 15 Airbus A321 aircraft, 10 Boeing 737-800 aircraft, nine Embraer 175 aircraft, and eight Boeing 787 Family aircraft. We also had $456 million in net purchases of short-term investments. These cash outflows were offset in part by $313 million of proceeds primarily from aircraft sale-leaseback transactions.

Financing Activities

Our net cash used in financing activities was $1.9 billion and $621 million for the first six months of 2018 and 2017, respectively.

Our principal financing activities in the 2018 period included $1.9 billion in debt repayments, consisting of $1.4 billion in scheduled debt repayments, including the repayment of our $500 million 6.125% senior notes, and the prepayment of $454 million of secured loans. We also had $837 million in share repurchases and $94 million in dividend payments. These cash outflows were offset in part by net proceeds of $892 million from the issuance of debt, primarily including the issuance of equipment notes related to EETCs.

Our principal financing activities in the 2017 period included $1.1 billion in scheduled debt repayments, $1.0 billion in share repurchases and $102 million in dividend payments. These cash outflows were offset in part by net proceeds of $1.6 billion from the issuance of debt, primarily the issuance of $1.1 billion of EETCs and $533 million borrowed in connection with the financing of certain aircraft.

American

Operating Activities

American’s net cash provided by operating activities was $1.4 billion and $2.8 billion for the first six months of 2018 and 2017, respectively, a period-over-period decrease of $1.4 billion. This decrease in operating cash flows from the 2017 to the 2018 period was primarily due to lower profitability in the first six months of 2018 driven by an increase in fuel costs and higher wage rates due to mid-contract pay rate increases for pilots and flight attendants effective in the second quarter of 2017, which were offset in part by higher revenues.

Investing Activities

American’s net cash used in investing activities was $1.0 billion and $3.2 billion for the first six months of 2018 and 2017, respectively.

American’s principal investing activities in the 2018 period included expenditures of $1.7 billion for property and equipment, including seven Boeing 737-8 MAX aircraft and two Boeing 787 Family aircraft. These cash outflows were offset in part by $403 million in net sales of short-term investments and $255 million of proceeds primarily from aircraft sale-leaseback transactions.

American’s principal investing activities in the 2017 period included expenditures of $3.2 billion for property and equipment, including 15 Airbus A321 aircraft, 10 Boeing 737-800 aircraft, nine Embraer 175 aircraft, and eight Boeing 787 Family aircraft. American also had $456 million in net purchases of short-term investments. These cash outflows were offset in part by $312 million of proceeds primarily from aircraft sale-leaseback transactions.

Financing Activities

American’s net cash used in financing activities was $509 million for the first six months of 2018, and American's net cash provided by financing activities was $494 million for the first six months of 2017.

American’s principal financing activities in the 2018 period included $1.4 billion in debt repayments, consisting of $929 million in scheduled debt repayments and the prepayment of $454 million of secured loans. These cash outflows were offset in part by net proceeds of $892 million from the issuance of debt, primarily including the issuance of equipment notes related to EETCs.

American’s principal financing activities in the 2017 period included $1.1 billion in scheduled debt repayments. These cash outflows were offset by net proceeds of $1.6 billion from the issuance of debt, primarily including the issuance of $1.1 billion of EETCs and $533 million borrowed in connection with the financing of certain aircraft.

Commitments

Significant Indebtedness

As of June 30, 2018, AAG and American had $24.3 billion and $23.0 billion, respectively, including current maturities of $2.2 billion, in long-term debt and capital leases. During the six months ended June 30, 2018, there have been no material changes in our significant indebtedness as discussed in our 2017 Form 10-K, except as discussed in Note 6 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A and Note 4 to American’s Condensed Consolidated Financial Statements in Part I, Item 1B.

Aircraft and Engine Purchase Commitments

As of June 30, 2018, we had definitive purchase agreements with Airbus, Boeing, Embraer and Bombardier for the acquisition of the following mainline and regional aircraft:



	Remainder of 2018	2019	2020	2021	2022	2023 and Thereafter	Total
Airbus ⁽¹⁾
A320neo Family	—	17	15	18	20	30	100
Boeing ⁽²⁾
737 MAX Family	9	20	10	10	—	40	89
787 Family	4	2	12	10	—	25	53
Embraer ⁽³⁾
E175	5	20	—	—	—	—	25
Bombardier ⁽³⁾
CRJ900	—	14	1	—	—	—	15
Total	18	73	38	38	20	95	282

⁽¹⁾

In April 2018, American and Airbus agreed to terminate the parties’ A350 XWB purchase agreement and cancel the parties’ obligations thereunder. American was scheduled to acquire 22 Airbus A350 aircraft with deliveries commencing in 2020 and continuing through 2024. The table above reflects the termination of this agreement. In addition, the termination of this agreement is reflected below in the Contractual Obligations table.

In July 2018, American and Airbus entered into an agreement to defer the delivery of 22 Airbus A321neo aircraft currently scheduled for delivery in 2019, 2020 and 2021. These aircraft are now scheduled to be delivered in 2024. The table above reflects this revised delivery schedule. In addition, the future payments in the Contractual Obligations table below reflect these transactions.

⁽²⁾

In April 2018, American agreed with Boeing to acquire an additional 47 Boeing 787 aircraft, consisting of 22 787-8 aircraft and 25 787-9 aircraft with deliveries scheduled to commence in 2020 and continue through 2026. Additionally, American agreed with Boeing to defer the delivery of 40 737 MAX aircraft currently scheduled for delivery in 2020, 2021 and 2022. These aircraft are now scheduled to be delivered in 2025 and 2026. The table above reflects the additional 47 Boeing 787 aircraft deliveries as well as the revised delivery schedule for the 40 737 MAX aircraft. In addition, the future payments in the Contractual Obligations table below reflect these transactions.

⁽³⁾

These aircraft may be operated by wholly-owned regional subsidiaries which would operate the aircraft under capacity purchase arrangements. In May 2018, American agreed to purchase 15 additional E175 regional aircraft from Embraer S.A. and 15 additional CRJ900 aircraft from Bombardier Inc. scheduled for delivery in 2019 and 2020. Additionally, American obtained options to purchase an additional 15 E175 aircraft and 15 CRJ900 aircraft from Embraer S.A. and Bombardier Inc., respectively.

We also have agreements for 41 spare engines to be delivered in 2018 and beyond.

As of June 30, 2018, we had financing commitments for all of the aircraft currently on order and scheduled to be delivered through December 2018. We do not have financing commitments for the following aircraft currently on order and scheduled to be delivered through the end of 2019: 17 Airbus A320neo Family aircraft, 20 Boeing 737 MAX Family aircraft, 15 Embraer E175 aircraft, 14 Bombardier CRJ-900 aircraft and two Boeing 787 Family aircraft. In addition, with the exception of the 47 recently ordered 787 Family aircraft, we do not have financing commitments in place for the remaining aircraft currently on order and scheduled to be delivered in 2020 and beyond. See Part II, Item 1A. Risk Factors – “We will need to obtain sufficient financing or other capital to operate successfully” for additional discussion.

Off-Balance Sheet Arrangements

An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity under which a company has (1) made guarantees, (2) a retained or a contingent interest in transferred assets, (3) an obligation under derivative instruments classified as equity or (4) any obligation arising out of a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or that engages in leasing, hedging or research and development arrangements with us.

There have been no material changes in our off-balance sheet arrangements as discussed in our 2017 Form 10-K.

Contractual Obligations

The following table provides details of our future cash contractual obligations as of June 30, 2018 (in millions):



	Payments Due by Period
	Remainder of 2018		2019		2020		2021		2022		2023 and Thereafter		Total
American
Debt and capital lease obligations ^(a) (c)	$	1,040	$	2,113	$	1,755	$	2,938	$	1,365	$	13,819	$	23,030
Interest obligations ^(b) (c)	491		932		859		763		654		1,696		5,395
Aircraft and engine purchase commitments^(d)	996		2,891		1,228		967		1,363		7,489		14,934
Operating lease commitments^(e)	1,194		2,180		1,993		1,673		1,500		6,127		14,667
Regional capacity purchase agreements ^(f)	725		1,377		1,172		979		801		2,003		7,057
Minimum pension obligations ^(g)	153		890		484		495		581		1,476		4,079
Retiree medical and other postretirement benefits	48		92		80		75		70		314		679
Other purchase obligations ^(h)	1,046		2,046		1,149		1,120		55		12		5,428
Total American Contractual Obligations	$	5,693	$	12,521	$	8,720	$	9,010	$	6,389	$	32,936	$	75,269

AAG and Other AAG Subsidiaries
Debt and capital lease obligations ^(a)	$	—	$	750	$	505	$	2	$	2	$	20	$	1,279
Interest obligations ^(b)	32		67		14		2		2		6		123
Minimum pension obligations ^(g)	3		7		3		3		4		19		39
Operating lease commitments	9		8		9		6		5		14		51
Total AAG Contractual Obligations	$	5,737	$	13,353	$	9,251	$	9,023	$	6,402	$	32,995	$	76,761


^(a)	Amounts represent contractual amounts due. Excludes $229 million and $233 million of unamortized debt discount, premium and issuance costs as of June 30, 2018 for American and AAG, respectively. For additional information, see Note 6 and Note 4 to AAG’s and American’s Condensed Consolidated Financial Statements in Part I, Items 1A and 1B.


^(b)	For variable-rate debt, future interest obligations are estimated using the current forward rates at June 30, 2018.


^(c)	Includes $11.9 billion of future principal payments and $2.6 billion of future interest payments, as of June 30, 2018, related to EETC debt financings of certain aircraft.

^(d)

See Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – “Liquidity and Capital Resources” for additional information about these obligations. Boeing has committed to provide sale-leaseback financing (in the form of operating leases) for the 22 787-8 aircraft to be delivered in 2020 and 2021. This financing is reflected in the operating lease commitments line above.


^(e)	Includes $401 million of future minimum lease payments related to EETC leveraged lease financings of certain aircraft as of June 30, 2018.


^(f)	Represents minimum payments under capacity purchase agreements with third-party regional carriers. These commitments are estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and our actual payments could differ materially.


^(g)	Includes minimum pension contributions based on actuarially determined estimates and is based on estimated payments through 2027. The total expected pension contribution of $156 million for the remainder of 2018 assumes a supplemental contribution of $153 million in addition to the $3 million minimum required contribution.


^(h)	Includes purchase commitments for jet fuel, facility construction projects and information technology support.

Capital Raising Activity and Other Possible Actions

In light of our significant financial commitments related to, among other things, new aircraft, the servicing and amortization of existing debt and equipment leasing arrangements, and future pension funding obligations, we and our subsidiaries will regularly consider, and enter into negotiations related to, capital raising activity, which may include the entry into leasing transactions and future issuances of secured or unsecured debt obligations or additional equity securities in public or private offerings or otherwise. The cash available from operations and these sources, however, may not be sufficient to cover cash contractual obligations because economic factors may reduce the amount of cash generated by operations or increase costs. For instance, an economic downturn or general global instability caused by military actions, terrorism, disease outbreaks or natural disasters could reduce the demand for air travel, which would reduce the amount of cash generated by operations. An increase in costs, either due to an increase in borrowing costs caused by a reduction in credit ratings or a general increase in interest rates, or due to an increase in the cost of fuel, maintenance, or aircraft, aircraft engines or parts, could decrease the amount of cash available to cover cash contractual obligations. Moreover, certain of our financing arrangements contain significant minimum cash balance requirements. As a result, we cannot use all of our available cash to fund operations, capital expenditures and cash obligations without violating these requirements.

In the past, we have from time to time refinanced, redeemed or repurchased our debt and taken other steps to reduce or otherwise manage the aggregate amount and cost of our debt or lease obligations or otherwise improve our balance sheet. Going forward, depending on market conditions, our cash position and other considerations, we may continue to take such actions.

Our Board of Directors has from time to time authorized programs to repurchase shares of our common stock, one of which is currently in effect and may authorize additional share repurchase programs in the future.

Critical Accounting Policies and Estimates

In the second quarter of 2018, there were no changes to our critical accounting policies and estimates from those disclosed in the Consolidated Financial Statements and accompanying notes contained in our 2017 Form 10-K, except as discussed below relating to the New Revenue Standard.

Effective January 1, 2018, we adopted the New Revenue Standard using the full retrospective method, which resulted in the recast of the prior reporting periods. See Recent Accounting Pronouncements below for effects of adoption on our condensed consolidated statement of operations for the three and six months ended June 30, 2017 and on our consolidated balance sheet as of December 31, 2017. Under the New Revenue Standard, revenue is recognized upon transfer of control of promised products or services to our customers in an amount that reflects the consideration we expect to receive in exchange for those products or services.

Passenger Revenue

Loyalty Revenue

Mileage credits earned through travel

Mileage credits sold to co-branded cards and other partners

For the portion of our outstanding mileage credits that we estimate will not be redeemed, we recognize the associated value proportionally as the remaining mileage credits are redeemed. Our estimates are based on analysis of historical redemption patterns. For the year ended December 31, 2017, a hypothetical 10% increase in our estimate of miles not expected to be redeemed would have increased revenues by approximately $100 million.

Cargo Revenue

Cargo revenue is recognized when we provide the transportation.

Other Revenue

Other revenue includes revenue associated with our loyalty program, which is comprised principally of the marketing component of mileage sales to co-branded card and other partners and other marketing related payments. The accounting and recognition for the loyalty program marketing services are discussed above in Loyalty Revenue. The remaining amounts included within other revenue relate to airport clubs, advertising and vacation-related services.

Recent Accounting Pronouncements

Standards Effective for 2018 Reporting Periods

Effective January 1, 2018, we adopted the accounting pronouncements described below.

ASU 2014-09: Revenue from Contracts with Customers (Topic 606) (the New Revenue Standard)

ASU 2017-07: Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (the New Retirement Standard)

See recast condensed consolidated statement of operations data for the three and six months ended June 30, 2017 presented below for the effects of adoption.

Impacts to Prior Period Results



				New Revenue Standard					New Retirement Standard
Three Months Ended June 30, 2017	As Reported			Deferred Revenue Method		Reclassifications			Reclassifications			As Recast
Operating revenues:
Passenger	$	9,582		$	98	$	673		$	—		$	10,353
Cargo	196			—		23			—			219
Other	1,327			—		(672		)	—			655
Total operating revenues	11,105			98		24			—			11,227
Total operating expenses	9,570			—		24			34			9,628
Operating income	1,535			98		—			(34		)	1,599
Total nonoperating expense, net	(244		)	—		—			34			(210		)
Income before income taxes	1,291			98		—			—			1,389
Income tax provision	488			37		—			—			525
Net income	$	803		$	61	$	—		$	—		$	864
Diluted earnings per common share	$	1.63										$	1.75



				New Revenue Standard					New Retirement Standard
Six Months Ended June 30, 2017	As Reported			Deferred Revenue Method		Reclassifications			Reclassifications			As Recast
Operating revenues:
Passenger	$	17,737		$	268	$	1,345		$	—		$	19,350
Cargo	368			—		42			—			410
Other	2,624			—		(1,337		)	—			1,287
Total operating revenues	20,729			268		50			—			21,047
Total operating expenses	18,593			—		50			68			18,711
Operating income	2,136			268		—			(68		)	2,336
Total nonoperating expense, net	(480		)	—		—			68			(412		)
Income before income taxes	1,656			268		—			—			1,924
Income tax provision	619			101		—			—			720
Net income	$	1,037		$	167	$	—		$	—		$	1,204
Diluted earnings per common share	$	2.07										$	2.41

The effects of adoption of the New Revenue Standard to our December 31, 2017 consolidated balance sheet are as follows (in millions):



	As Reported		New Revenue Standard			As Recast
Deferred tax asset	$	427	$	1,389		$	1,816
Air traffic liability	3,978		64			4,042
Current loyalty program liability	2,791		330			3,121
Noncurrent loyalty program liability	—		5,701			5,701
Total stockholders' equity (deficit)	3,926		(4,706		)	(780		)

See Note 1 to AAG's Condensed Consolidated Financial Statements in Part 1, Item 1A and Note 1 to American's Condensed Consolidated Financial Statements in Part 1, Item 1B for further information on recent accounting pronouncements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

AAG and American’s Market Risk Sensitive Instruments and Positions

Our primary market risk exposures include the price of aircraft fuel, foreign currency exchange rates and interest rate risk. Our exposure to these market risks has not changed materially from our exposure discussed in our 2017 Form 10-K except as updated below.

Aircraft Fuel

Foreign Currency

We are exposed to the effect of foreign exchange rate fluctuations on the U.S. dollar value of foreign currency-denominated operating revenues and expenses. Our largest exposure comes from the British pound, Euro, Canadian dollar and various Latin American currencies, primarily the Brazilian real. We do not currently have a foreign currency hedge program.

Generally, fluctuations in foreign currencies, including devaluations, cannot be predicted by us and can significantly affect the value of our assets located outside the United States. These conditions, as well as any further delays, devaluations or imposition of more stringent repatriation restrictions, may materially adversely affect our business, results of operations and financial condition. See Part II, Item 1A. Risk Factors – “We operate a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control” for additional discussion of this and other currency risks.

Interest

Our earnings and cash flow are affected by changes in interest rates due to the impact those changes have on our interest expense from variable rate debt instruments and our interest income from short-term, interest bearing investments. If annual interest rates increase 100 basis points, based on our June 30, 2018 variable-rate debt and short term investments balances, annual interest expense on variable rate debt would increase by approximately $91 million and annual interest income on short-term investments would increase by approximately $47 million.

ITEM 4. CONTROLS AND PROCEDURES

Management’s Evaluation of Disclosure Controls and Procedures

The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act). This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC. An evaluation of the effectiveness of AAG’s and American’s disclosure controls and procedures as of June 30, 2018 was performed under the supervision and with the participation of AAG’s and American’s management, including AAG’s and American’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO). Based on that evaluation, AAG’s and American’s management, including AAG’s and American’s CEO and CFO, concluded that AAG’s and American’s disclosure controls and procedures were effective as of June 30, 2018.

Changes in Internal Control over Financial Reporting

On December 9, 2013, AAG acquired US Airways Group and its subsidiaries. We are still in the process of integrating certain processes, technology and operations for the post-Merger combined company, and we will continue to evaluate the impact of any related changes to our internal control over financial reporting. In connection with the adoption of the New Revenue Standard on January 1, 2018, we materially modified certain processes related to our loyalty program. The operating effectiveness of these changes will be evaluated as part of our annual assessment of internal control over financial reporting. For the quarter ended June 30, 2018, there have been no changes in AAG’s or American’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, AAG’s and American’s internal control over financial reporting.

Limitation on the Effectiveness of Controls

We believe that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, and the CEO and CFO of AAG and American believe that our disclosure controls and procedures were effective at the “reasonable assurance” level as of June 30, 2018.

PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 1A. RISK FACTORS

Below are certain risk factors that may affect our business, results of operations and financial condition, or the trading price of our common stock or other securities. We caution the reader that these risk factors may not be exhaustive. We operate in a continually changing business environment, and new risks and uncertainties emerge from time to time. Management cannot predict such new risks and uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or any combination thereof, may impact our business.

Downturns in economic conditions could adversely affect our business.

Due to the discretionary nature of business and leisure travel spending and the highly competitive nature of the airline industry, our revenues are heavily influenced by the condition of the U.S. economy and economies in other regions of the world. Unfavorable conditions in these broader economies have resulted, and may result in the future, in decreased passenger demand for air travel, changes in booking practices and related reactions by our competitors, all of which in turn have had, and may have in the future, a strong negative effect on our business. See also “The airline industry is intensely competitive and dynamic” below.

Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on our operating results and liquidity.

Our operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of the largest single cost items in our business. Jet fuel market prices have fluctuated substantially over the past several years and prices continue to be highly volatile.

Because of the amount of fuel needed to operate our business, even a relatively small increase or decrease in the price of fuel can have a material effect on our operating results and liquidity. Due to the competitive nature of the airline industry and unpredictability of the market for air travel, we can offer no assurance that we may be able to increase our fares, impose fuel surcharges or otherwise increase revenues or decrease other operating costs sufficiently to offset fuel price increases. Similarly, we cannot predict actions that may be taken by our competitors in response to changes in fuel prices.

Although we are currently able to obtain adequate supplies of aircraft fuel, we cannot predict the future availability, price volatility or cost of aircraft fuel. Natural disasters (including hurricanes or similar events in the U.S. Southeast and on the Gulf Coast where a significant portion of domestic refining capacity is located), political disruptions or wars involving oil-producing countries, changes in fuel-related governmental policy, the strength of the U.S. dollar against foreign currencies, changes in access to petroleum product pipelines and terminals, speculation in the energy futures markets, changes in aircraft fuel production capacity, environmental concerns and other unpredictable events may result in fuel supply shortages, distribution challenges, additional fuel price volatility and cost increases in the future. Any of these factors or events could cause a disruption in oil production, refinery operations or pipeline capacity and possibly result in significant increases in the price of aircraft fuel and diminished availability of aircraft fuel supply.

Our aviation fuel purchase contracts generally do not provide meaningful price protection against increases in fuel costs. Our current policy is not to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and other factors. Accordingly, as of June 30, 2018, we did not have any fuel hedging contracts outstanding. As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully exposed to fluctuations in fuel prices. See also the discussion in Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk – “Aircraft Fuel.”

The airline industry is intensely competitive and dynamic.

Our competitors include other major domestic airlines and foreign, regional and new entrant airlines, as well as joint ventures formed by some of these airlines, many of which have more financial or other resources and/or lower cost structures than ours, as well as other forms of transportation, including rail and private automobiles. In many of our markets we compete with at least one low-cost air carrier. Our revenues are sensitive to the actions of other carriers in many areas including pricing, scheduling, capacity, amenities, loyalty benefits and promotions, which can have a substantial adverse impact not only on our revenues, but on overall industry revenues. These factors may become even more significant in periods when the industry experiences large losses, as airlines under financial stress, or in bankruptcy, may institute pricing structures intended to achieve near-term survival rather than long-term viability.

Low-cost carriers, including so-called ultra-low-cost carriers, have a profound impact on industry revenues. Using the advantage of low unit costs, these carriers offer lower fares in order to shift demand from larger, more established airlines, and represent significant competitors, particularly for customers who fly infrequently and are price sensitive and tend not to be loyal to any one particular carrier. While historically these carriers have provided competition in domestic markets, we have recently experienced new competition from low-cost carriers on international routes. A number of these low-cost carriers have announced growth strategies including commitments to acquire significant numbers of new aircraft for delivery in the next few years. These low-cost carriers are attempting to continue to increase their market share through growth and, potentially, consolidation, and could continue to have an impact on our revenues and overall performance. In addition, we and several other large network carriers have announced “basic economy” fares designed to compete against low-cost carriers and we cannot predict whether these initiatives will be successful or the competitive reaction of the low-cost carriers. Additionally, competition is also increasing from low cost airlines executing international long-haul expansion strategies, including, for example, Icelandair, Norwegian Air Shuttle and Wow Air. The actions of the low-cost carriers, including those described above, could have a material adverse effect on our operations and financial performance.

Our presence in international markets, such as Asia, is not as extensive as that of some of our competitors. In providing international air transportation, we compete to provide scheduled passenger and cargo service between the U.S. and various overseas locations with U.S. airlines, foreign investor-owned airlines and foreign state-owned or state-affiliated airlines. Competition is increasing from foreign state-owned and state-affiliated airlines in the Gulf region, including Emirates, Etihad Airways and Qatar Airways. These carriers have large numbers of international widebody aircraft in service and on order and are increasing service to the U.S. from locations both in and outside the Middle East. We believe these carriers benefit from significant government subsidies, which has allowed them to grow quickly, reinvest in their product and expand their global presence. Our international service exposes us to foreign economies and the potential for reduced demand, such as we have recently experienced in Venezuela, when any foreign country we serve suffers adverse local economic conditions. In addition, open skies agreements with an increasing number of countries around the world provide international airlines with open access to U.S. markets. See also “Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages.”

Certain airline alliances, joint ventures and joint businesses have been, or may in the future be, granted immunity from antitrust regulations by governmental authorities for specific areas of cooperation, such as joint pricing decisions. To the extent alliances formed by our competitors can undertake activities that are not available to us, our ability to effectively compete may be hindered. Our ability to attract and retain customers is dependent upon, among other things, our ability to offer our customers convenient access to desired markets. Our business could be adversely affected if we are unable to maintain or obtain alliance and marketing relationships with other air carriers in desired markets.

We have established antitrust-immunized joint business agreements (JBAs) with British Airways, Iberia and Finnair, and separately with Japan Airlines. In October 2017, American and its transatlantic partners executed an amended and restated JBA which, among other things, extends the term of the agreement. Also, we had previously signed a revised JBA with Qantas Airways and applied for antitrust immunity with the U.S. Department of Transportation (DOT) for the revised relationship, but we withdrew that application in November 2016 after it was tentatively denied by the DOT. In February 2018, we filed a new application for antitrust immunity with the DOT, which, if granted, would allow us to further expand our relationship with Qantas Airways. In addition, we have signed JBAs with certain air carriers of the LATAM Airlines Group and have applied for antitrust immunity in the relevant jurisdictions affected by such agreements, which applications have been approved in some jurisdictions, but are still pending in other jurisdictions, including the United States and Chile. The foregoing arrangements are important aspects of our international network and we are dependent on the performance of the other airlines party to those agreements. No assurances can be given as to any benefits that we may derive from such arrangements or any other arrangements that may ultimately be implemented.

Additional mergers and other forms of industry consolidation, including antitrust immunity grants, may take place and may not involve us as a participant. Depending on which carriers combine and which assets, if any, are sold or otherwise transferred to other carriers in connection with any such combinations, our competitive position relative to the post-combination carriers or other carriers that acquire such assets could be harmed. In addition, as carriers combine through traditional mergers or antitrust immunity grants, their route networks will grow, and that growth will result in greater overlap with our network, which in turn could result in lower overall market share and revenues for us. Such consolidation is not limited to the U.S., but could include further consolidation among international carriers in Europe and elsewhere.

Additionally, our AAdvantage loyalty program, which is an important element of our sales and marketing programs, faces significant and increasing competition from the loyalty programs offered by other travel companies, as well as from similar loyalty benefits offered by banks and other financial services companies. Competition among loyalty programs is intense regarding the rewards, fees, required usage, and other terms and conditions of these programs. These competitive factors affect our ability to attract and retain customers, increase usage of our loyalty program and maximize the revenue generated by our loyalty program.

Evolving data security and privacy requirements could increase our costs, and any significant data security incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of operations and financial condition.

Our business requires the secure processing and storage of sensitive information relating to our customers, employees, business partners and others. However, like any global enterprise operating in today’s digital business environment, we are subject to threats to the security of our networks and data, including threats potentially involving criminal hackers, hacktivists, state-sponsored actors, corporate espionage, employee malfeasance, and human or technological error. These threats continue to increase as the frequency, intensity and sophistication of attempted attacks and intrusions increase around the world. We have been the target of cybersecurity attacks in the past and expect that we will continue to be in the future.

Furthermore, in response to these threats there has been heightened legislative and regulatory focus on data privacy and security in the U.S., the European Union (EU) and elsewhere, particularly with respect to critical infrastructure providers, including those in the transportation sector. As a result, we must comply with a growing and fast-evolving set of legal requirements in this area, including substantive cybersecurity standards as well as requirements for notifying regulators and affected individuals in the event of a data security incident. This regulatory environment is increasingly challenging and may present material obligations and risks to our business, including significantly expanded compliance burdens, costs and enforcement risks. For example, in May 2018, the EU’s new General Data Protection Regulation, commonly referred to as GDPR, came into effect, which imposes a host of new data privacy and security requirements, imposing significant costs on us and carrying substantial penalties for non-compliance.

In addition, many of our commercial partners, including credit card companies, have imposed data security standards that we must meet. In particular, we are required by the Payment Card Industry Security Standards Council, founded by the credit card companies, to comply with their highest level of data security standards. While we continue our efforts to meet these standards, new and revised standards may be imposed that may be difficult for us to meet and could increase our costs.

A significant cybersecurity incident could result in a range of potentially material negative consequences for us, including unauthorized access to, disclosure, modification, misuse, loss or destruction of company systems or data; theft of sensitive, regulated or confidential data, such as personal identifying information or our intellectual property; the loss of functionality of critical systems through ransomware, denial of service or other attacks; and business delays, service or system disruptions, damage to equipment and injury to persons or property. The costs and operational consequences of responding to and remediating an incident may be substantial. Further, we could be exposed to litigation, regulatory enforcement or other legal action as a result of an incident, carrying the potential for damages, fines, sanctions or other penalties, as well injunctive relief requiring costly compliance measures. A cybersecurity incident could also impact our brand, harm our reputation and adversely impact our relationship with our customers, employees and stockholders. Failure to appropriately address these issues could also give rise to potentially material legal risks and liabilities.

Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional financing, may limit our flexibility in responding to competitive developments and cause our business to be vulnerable to adverse economic and industry conditions.

We have significant amounts of indebtedness and other obligations, including pension obligations, obligations to make future payments on flight equipment and property leases, and substantial non-cancelable obligations under aircraft and related spare engine purchase agreements. Moreover, currently a substantial portion of our assets are pledged to secure our indebtedness. Our substantial indebtedness and other obligations could have important consequences. For example, they:


•	may make it more difficult for us to satisfy our obligations under our indebtedness;


•	may limit our ability to obtain additional funding for working capital, capital expenditures, acquisitions, investments, integration costs, and general corporate purposes, and adversely affect the terms on which such funding can be obtained;


•	require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness and other obligations, thereby reducing the funds available for other purposes;


•	make us more vulnerable to economic downturns, industry conditions and catastrophic external events, particularly relative to competitors with lower relative levels of financial leverage;


•	contain covenants requiring us to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities;


•	contain restrictive covenants that could:


•	limit our ability to merge, consolidate, sell assets, incur additional indebtedness, issue preferred stock, make investments and pay dividends;


•	significantly constrain our ability to respond, or respond quickly, to unexpected disruptions in our own operations, the U.S. or global economies, or the businesses in which we operate, or to take advantage of opportunities that would improve our business, operations, or competitive position versus other airlines;


•	limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing business and economic conditions; and


•	result in an event of default under our indebtedness.

Further, a substantial portion of our long-term indebtedness bears interest at fluctuating interest rates, primarily based on the London interbank offered rate for deposits of U.S. dollars (LIBOR). LIBOR tends to fluctuate based on general interest rates, rates set by the Federal Reserve and other central banks, the supply of and demand for credit in the London interbank market and general economic conditions. We have not hedged our interest rate exposure with respect to our floating rate debt. Accordingly, our interest expense for any particular period will fluctuate based on LIBOR and other variable interest rates. On July 27, 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, is considering replacing U.S. dollar LIBOR with a newly created index, calculated based on repurchase agreements backed by treasury securities. It is not possible to predict the effect of these changes, other reforms or the establishment of alternative reference rates in the United Kingdom, the United States or elsewhere. To the extent these interest rates increase, our interest expense will increase, in which event we may have difficulties making interest payments and funding our other fixed costs, and our available cash flow for general corporate requirements may be adversely affected. See also the discussion of interest rate risk in Part I, Item 3. Quantitative and Qualitative Disclosures About Market Risk –“Interest.”

These obligations also impact our ability to obtain additional financing, if needed, and our flexibility in the conduct of our business, and could materially adversely affect our liquidity, results of operations and financial condition.

We will need to obtain sufficient financing or other capital to operate successfully.

Our business plan contemplates continued significant investments related to modernizing our fleet, improving the experience of our customers and updating our facilities. Significant capital resources will be required to execute this plan. We estimate that, based on our commitments as of June 30, 2018, our planned aggregate expenditures for aircraft purchase commitments and certain engines on a consolidated basis for calendar years 2018-2022 would be approximately $8.4 billion. Accordingly, we will need substantial financing or other capital resources to finance such aircraft and engines. If we are unable to arrange financing for such aircraft at customary advance rates and on terms and conditions acceptable to us, we may need to use cash from operations or cash on hand to purchase such aircraft or may seek to negotiate deferrals for such aircraft with the aircraft manufacturers. Depending on numerous factors, many of which are out of our control, such as the state of the domestic and global economies, the capital and credit markets’ view of our prospects and the airline industry in general, and the general availability of debt and equity capital at the time we seek capital, the financing or other capital resources that we will need may not be available to us, or may be available only on onerous terms and conditions. There can be no assurance that we will be successful in obtaining financing or other needed sources of capital to operate successfully. An inability to obtain necessary financing on acceptable terms would have a material adverse impact on our business, results of operations and financial condition.

We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, results of operations and financial condition.

Our pension funding obligations are significant. The amount of these obligations will depend on the performance of investments held in trust by the pension plans, interest rates for determining liabilities and actuarial experience. The minimum funding obligation applicable to our pension plans was subject to favorable temporary funding rules that expired at the end of 2017. Our minimum pension funding obligations are likely to increase materially beginning in 2019, when we will be required to make cash contributions corresponding to determinations made regarding the 2018 fiscal year. In addition, we may have significant obligations for other postretirement benefits, retiree medical and other postretirement benefits.

If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely affect our liquidity.

We have agreements with companies that process customer credit card transactions for the sale of air travel and other services. These agreements allow these processing companies, under certain conditions (including, with respect to certain agreements, the failure of American to maintain certain levels of liquidity), to hold an amount of our cash (a holdback) equal to some or all of the advance ticket sales that have been processed by that credit card processor, but for which we have not yet provided the air transportation. We are not currently required to maintain any holdbacks pursuant to these requirements. These holdback requirements can be modified at the discretion of the credit card processing companies upon the occurrence of specific events, including material adverse changes in our financial condition. An increase in the current holdbacks, up to and including 100% of relevant advanced ticket sales, could materially reduce our liquidity. Likewise, other of our commercial agreements contain provisions that allow other entities to impose less-favorable terms, including the acceleration of amounts due, in the event of material adverse changes in our financial condition.

Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations.

Relations between air carriers and labor unions in the U.S. are governed by the Railway Labor Act (RLA). Under the RLA, collective bargaining agreements (CBAs) generally contain “amendable dates” rather than expiration dates, and the RLA requires that a carrier maintain the existing terms and conditions of employment following the amendable date through a multi-stage and usually lengthy series of bargaining processes overseen by the National Mediation Board (NMB). For the dates that the CBAs with our major work groups become amendable under the RLA, see Part I, Item 1. Business – “Employees and Labor Relations” in our 2017 Form 10-K.

In the case of a CBA that is amendable under the RLA, if no agreement is reached during direct negotiations between the parties, either party may request that the NMB appoint a federal mediator. The RLA prescribes no timetable for the direct negotiation and mediation processes, and it is not unusual for those processes to last for many months or even several years. If no agreement is reached in mediation, the NMB in its discretion may declare that an impasse exists and proffer binding arbitration to the parties. Either party may decline to submit to arbitration, and if arbitration is rejected by either party, a 30-day “cooling off” period commences. During or after that period, a Presidential Emergency Board (PEB) may be established, which examines the parties’ positions and recommends a solution. The PEB process lasts for 30 days and is followed by another 30-day “cooling off” period. At the end of a “cooling off” period, unless an agreement is reached or action is taken by Congress, the labor organization may exercise “self-help,” such as a strike, which could materially adversely affect our business, results of operations and financial condition.

None of the unions representing our employees presently may lawfully engage in concerted refusals to work, such as strikes, slow-downs, sick-outs or other similar activity, against us. Nonetheless, there is a risk that disgruntled employees, either with or without union involvement, could engage in one or more concerted refusals to work that could individually or collectively harm the operation of our airline and impair our financial performance. See also Part I, Item 1. Business – “Employees and Labor Relations” in our 2017 Form 10-K.

The inability to maintain labor costs at competitive levels would harm our financial performance.

Currently, we believe our labor costs are competitive relative to the other large network carriers. However, we cannot provide assurance that labor costs going forward will remain competitive because we are in negotiations for some new agreements now and other agreements may become amendable, competitors may significantly reduce their labor costs or we may agree to higher-cost provisions unilaterally or in connection with our current or future labor negotiations, such as the employee profit sharing program we instituted effective January 1, 2016, the mid-contract adjustment we provided to our flight attendants and pilots in 2017 and the $1,000 per employee one-time bonus we announced on January 2, 2018. As of December 31, 2017, approximately 85% of our employees were represented for collective bargaining purposes by labor unions. Some of our unions have brought and may continue to bring grievances to binding arbitration, including those related to wages. Unions may also bring court actions and may seek to compel us to engage in bargaining processes where we believe we have no such obligation. If successful, there is a risk these judicial or arbitral avenues could create material additional costs that we did not anticipate.

Interruptions or disruptions in service at one of our key facilities could have a material adverse impact on our operations.

We operate principally through hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. Substantially all of our flights either originate in or fly into one of these locations. A significant interruption or disruption in service at one of our hubs or other airports where we have a significant presence, such as London Heathrow, resulting from air traffic control (ATC) delays, weather conditions, natural disasters, growth constraints, relations with third-party service providers (such as electric utility or telecommunications providers), failure of computer systems, disruptions at airport facilities or other key facilities used by us to manage our operations, labor relations, power supplies, fuel supplies, terrorist activities, or otherwise could result in the cancellation or delay of a significant portion of our flights and, as a result, could have a severe impact on our business, results of operations and financial condition. We have minimal control over the operation, quality or maintenance of these services or whether vendors will improve or continue to provide services that are essential to our business.

If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may have a material adverse impact on our operations.

In order to operate our existing and proposed flight schedule and, where desirable, add service along new or existing routes, we must be able to maintain and/or obtain adequate gates, check-in counters, operations areas, operations control facilities and administrative support space. As airports around the world become more congested, we are not always able to ensure that our plans for new service can be implemented in a commercially viable manner, given operating constraints at airports throughout our network, including due to inadequate facilities at desirable airports. Further, our operating costs at airports at which we operate, including our hubs, may increase significantly because of capital improvements at such airports that we may be required to fund, directly or indirectly. Additionally, there is presently a significant amount of capital spending underway at major airports in the United States that we serve, and that spending is expected to result in increased costs to airlines and the traveling public that use those facilities as the airports seek to recover these investments through increased rental, landing and other facility costs. In some circumstances, such costs could be imposed by the relevant airport authority without our approval.

In addition, operations at three major domestic airports, certain smaller domestic airports and many foreign airports served by us are regulated by governmental entities through the use of slots or similar regulatory mechanisms that limit the rights of carriers to conduct operations at those airports. Each slot represents the authorization to land at or take off from the particular airport during a specified time period and may have other operational restrictions as well. In the U.S., the DOT and the Federal Aviation Administration (FAA) currently regulate the allocation of slots or slot exemptions at Ronald Reagan Washington National Airport (DCA) and two New York City airports: John F. Kennedy International Airport (JFK) and La Guardia Airport (LGA). In addition to slot restrictions, operations at LGA and DCA are also limited based on the stage length of the flight. Our operations at these airports generally require the allocation of slots or similar regulatory authority. Similarly, our operations at international airports in Beijing, Frankfurt, London Heathrow (LHR), Paris, Tokyo and other airports outside the U.S. are regulated by local slot authorities pursuant to the International Airline Trade Association (IATA) Worldwide Scheduling Guidelines and/or applicable local law. Termination of slot controls at some or all of the foregoing airports could affect our operational performance and competitive position. We currently have sufficient slots or analogous authorizations to operate our existing flights and we have generally, but not always, been able to obtain the rights to expand our operations and to change our schedules. However, there is no assurance that we will be able to obtain sufficient slots or analogous authorizations in the future or as to the cost of acquiring such rights because, among other reasons, such allocations are often sought after by other airlines and are subject to changes in governmental policies. We cannot provide any assurance that regulatory changes regarding the allocation of slots or similar regulatory authority will not have a material adverse impact on our operations.

Our ability to provide service can also be impaired at airports, such as Chicago O'Hare International Airport (ORD) and Los Angeles International Airport, where the airport gate and other facilities are inadequate to accommodate all of the service that we would like to provide, or airports such as Dallas Love Field Airport where we have no access to gates at all.

Any limitation on our ability to acquire or maintain adequate gates, ticketing facilities, operations areas, operations control facilities, slots (where applicable), or office space could have a material adverse effect on our business, results of operations and financial condition.

If we encounter problems with any of our third-party regional operators or third-party service providers, our operations could be adversely affected by a resulting decline in revenue or negative public perception about our services.

A significant portion of our regional operations are conducted by third-party operators on our behalf, primarily under capacity purchase agreements. Due to our reliance on third parties to provide these essential services, we are subject to the risk of disruptions to their operations, which may result from many of the same risk factors disclosed in this report, such as the impact of adverse economic conditions, the inability of third parties to hire or retain necessary personnel, including in particular pilots, and other risk factors, such as an out-of-court or bankruptcy restructuring of any of our regional operators. Many of these third-party regional operators provide significant regional capacity that we would be unable to replace in a short period of time should that operator fail to perform its obligations to us. Volatility in fuel prices, disruptions to capital markets and adverse economic conditions in general have subjected certain of these third-party regional operators to significant financial pressures, which have in the past and may in the future lead to bankruptcies among these operators. We may also experience disruption to our regional operations if we terminate the capacity purchase agreement with one or more of our current operators and transition the services to another provider. Any significant disruption to our regional operations would have a material adverse effect on our business, results of operations and financial condition.

In addition, our reliance upon others to provide essential services on behalf of our operations may result in our relative inability to control the efficiency and timeliness of contract services. We have entered into agreements with contractors to provide various facilities and services required for our operations, including distribution and sale of airline seat inventory, provision of information technology and services, regional operations, aircraft maintenance, ground services and facilities, reservations and baggage handling. Similar agreements may be entered into in any new markets we decide to serve. These agreements are generally subject to termination after notice by the third-party service provider. We are also at risk should one of these service providers cease operations, and there is no guarantee that we could replace these providers on a timely basis with comparably priced providers, or at all. Any material problems with the efficiency and timeliness of contract services, resulting from financial hardships or otherwise, could have a material adverse effect on our business, results of operations and financial condition.

The commercial relationships that we have with airlines, including any related equity investment, may not produce the returns or results we expect.

An important part of our strategy to expand our network has been to expand our commercial relationships with other airlines, such as global alliance, joint business and code share relationships, and, in one recent instance, make a significant equity investment in another airline in connection with initiating such a commercial relationship. We may explore similar non-controlling investments in, and joint ventures and strategic alliances with, other carriers as part of our global business strategy. We face competition in forming these commercial relationships since there are a limited number of potential arrangements and other airlines are looking to enter into similar relationships. Any such existing or future investment could involve significant challenges and risks, including that we may not realize a satisfactory return on our investment or that they may not generate the expected revenue synergies. These events could have a material adverse effect on our business, results of operations and financial condition.

We rely on third-party distribution channels and must manage effectively the costs, rights and functionality of these channels.

We rely on third-party distribution channels, including those provided by or through global distribution systems (GDSs) (e.g., Amadeus, Sabre and Travelport), conventional travel agents and online travel agents (OTAs) (e.g., Expedia, including its booking sites Orbitz and Travelocity, and The Priceline Group), to distribute a significant portion of our airline tickets, and we expect in the future to continue to rely on these channels and hope to expand their ability to distribute and collect revenues for ancillary products (e.g., fees for selective seating). These distribution channels are more expensive and at present have less functionality in respect of ancillary product offerings than those we operate ourselves, such as our website at www.aa.com. Certain of these distribution channels also effectively restrict the manner in which we distribute our products generally. To remain competitive, we will need to manage successfully our distribution costs and rights, increase our distribution flexibility and improve the functionality of our distribution channels, while maintaining an industry-competitive cost structure. These imperatives may affect our relationships with GDSs and OTAs, including as consolidation of OTAs continues or is proposed to continue. Further, as distribution technology changes we will need to continue to update our technology either by acquiring new technology from third parties, building the functionality ourselves, or a combination, which in any event will likely entail significant technological and commercial risk and involve potentially material investments. Any inability to manage our third-party distribution costs, rights and functionality at a competitive level or any material diminishment or disruption in the distribution of our tickets could have a material adverse effect on our business, results of operations and financial condition.

Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages.

Airlines are subject to extensive domestic and international regulatory requirements. In the last several years, Congress has passed laws, and the DOT, the FAA, the Transportation Security Administration (TSA) and the Department of Homeland Security have issued a number of directives and other regulations, that affect the airline industry. These requirements impose substantial costs on us and restrict the ways we may conduct our business.

For example, the FAA from time to time issues directives and other regulations relating to the maintenance and operation of aircraft that require significant expenditures or operational restrictions. These requirements can be issued with little or no notice, or can otherwise impact our ability to efficiently or fully utilize our aircraft. The FAA also exercises comprehensive regulatory authority over nearly all technical aspects of our operations. Our failure to comply with such requirements has in the past and may in the future result in fines and other enforcement actions by the FAA or other regulators. In the future, any new regulatory requirements, particularly requirements that limit our ability to operate or price our products, could have a material adverse effect on us and the industry.

The DOT consumer rules that took effect in 2010 require procedures for customer handling during long onboard delays, further regulate airline interactions with passengers through the ticketing process, at the airport, and onboard the aircraft, and require disclosures concerning airline fares and ancillary fees such as baggage fees. Other DOT rules apply to post-ticket purchase price increases and an expansion of tarmac delay regulations to international airlines. Further, Congress has proposed the FAIR Fees Act, which would direct the DOT to prescribe regulations prohibiting an air carrier from imposing change or cancellation fees that are unreasonable or disproportional to the costs incurred by the carrier, as well as establish standards for assessing whether all other fees are reasonable and proportional to the costs incurred by the air carrier.

The Aviation and Transportation Security Act mandates the federalization of certain airport security procedures and imposes additional security requirements on airports and airlines, most of which are funded by a per-ticket tax on passengers and a tax on airlines. Present and potential future security requirements can have the effect of imposing costs and inconvenience on travelers, potentially reducing the demand for air travel.

The results of our operations, demand for air travel, and the manner in which we conduct business each may be affected by changes in law and future actions taken by governmental agencies, including:


•	changes in law that affect the services that can be offered by airlines in particular markets and at particular airports, or the types of fees that can be charged to passengers;


•	the granting and timing of certain governmental approvals (including antitrust or foreign government approvals) needed for codesharing alliances, joint businesses and other arrangements with other airlines;


•	restrictions on competitive practices (for example, court orders, or agency regulations or orders, that would curtail an airline’s ability to respond to a competitor);


•	the adoption of new passenger security standards or regulations that impact customer service standards;


•	restrictions on airport operations, such as restrictions on the use of slots at airports or the auction or reallocation of slot rights currently held by us; and


•	the adoption of more restrictive locally-imposed noise restrictions.

Each additional regulation or other form of regulatory oversight increases costs and adds greater complexity to airline operations and, in some cases, may reduce the demand for air travel. There can be no assurance that our compliance with new rules, anticipated rules or other forms of regulatory oversight will not have a material adverse effect on us.

Any significant reduction in air traffic capacity at and in the airspace serving key airports in the U.S. or overseas could have a material adverse effect on our business, results of operations and financial condition. In addition, the United States National Airspace System (the ATC system) is not successfully modernizing to meet the growing demand for U.S. air travel. Air traffic controllers rely on outdated procedures and technologies that routinely compel airlines to fly inefficient routes or take significant delays on the ground. The ATC system’s inability to manage existing travel demand has led government agencies to implement short-term capacity constraints during peak travel periods or adverse weather conditions in certain markets, resulting in delays and disruptions of air traffic. The outdated technologies also cause the ATC to be less resilient in the event of a failure. For example, an automation failure and an evacuation, in 2015 and 2017, respectively, at the Washington Air Route Control Center resulted in cancellations and delays of hundreds of flights traversing the greater Washington, D.C. airspace.

In the early 2000s, the FAA embarked on a path to modernize the national airspace system, including migration from the current radar-based ATC system to a GPS-based system. This ATC modernization, generally referred to as “NextGen,” has been plagued by delays and cost overruns, and it remains uncertain when the full array of benefits expected from ATC modernization will be available to the public and the airlines. Failure to update the ATC system in a timely manner and the substantial funding requirements that may be imposed on airlines of a modernized ATC system may have a material adverse effect on our business. We support legislative efforts that would establish a nimble not-for-profit entity better suited to manage the long-term investments in technology and provide a governance structure needed to successfully implement NextGen and improve the operation of the ATC system.

Our operating authority in international markets is subject to aviation agreements between the U.S. and the respective countries or governmental authorities, such as the EU, and in some cases, fares and schedules require the approval of the DOT and/or the relevant foreign governments. Moreover, alliances with international carriers may be subject to the jurisdiction and regulations of various foreign agencies. Bilateral and multilateral agreements among the U.S. and various foreign governments of countries we serve are subject to periodic renegotiation. We currently operate a number of international routes under government arrangements that limit the number of airlines permitted to operate on the route, the capacity of the airlines providing services on the route, or the number of airlines allowed access to particular airports. If an open skies policy were to be adopted for any of these routes, such an event could have a material adverse impact on us and could result in the impairment of material amounts of our related tangible and intangible assets. In addition, competition from revenue-sharing joint ventures, JBAs, and other alliance arrangements by and among other airlines could impair the value of our business and assets on the open skies routes. For example, the open skies air services agreement between the U.S. and the EU, which took effect in March 2008, provides airlines from the U.S. and EU member states open access to each other’s markets, with freedom of pricing and unlimited rights to fly from the U.S. to any airport in the EU, including LHR. As a result of the agreement, we face increased competition in these markets, including LHR. The pending withdrawal of the United Kingdom from the EU, commonly referred to as Brexit, will mandate further modification in the current regulatory regime. Among other things, Brexit will likely require a transition arrangement or new air services agreement involving the U.S. and United Kingdom, and the United Kingdom and EU, to permit our current air services (including those involving our joint business and code share partners) to continue as we currently conduct them. More generally, changes in U.S. or foreign government aviation policies could result in the alteration or termination of such agreements, diminish the value of route authorities, slots or other assets located abroad, or otherwise adversely affect our international operations. The U.S. government has negotiated “open skies” agreements with many countries, which allow unrestricted route authority access between the U.S. and the foreign markets. While the U.S. has worked to increase the number of countries with which open skies agreements are in effect, a number of markets important to us, including China, do not have open skies agreements.

The airline industry is heavily taxed.

The airline industry is subject to extensive government fees and taxation that negatively impact our revenue and profitability. The U.S. airline industry is one of the most heavily taxed of all industries. These fees and taxes have grown significantly in the past decade for domestic flights, and various U.S. fees and taxes also are assessed on international flights. For example, as permitted by federal legislation, most major U.S. airports impose a passenger facility charge per passenger on us. In addition, the governments of foreign countries in which we operate impose on U.S. airlines, including us, various fees and taxes, and these assessments have been increasing in number and amount in recent years. Moreover, we are obligated to collect a federal excise tax, commonly referred to as the “ticket tax,” on domestic and international air transportation. We collect the excise tax, along with certain other U.S. and foreign taxes and user fees on air transportation (such as passenger security fees), and pass along the collected amounts to the appropriate governmental agencies. Although these taxes and fees are not operating expenses, they represent an additional cost to our customers. There are continuing efforts in Congress and in other countries to raise different portions of the various taxes, fees, and charges imposed on airlines and their passengers, and we may not be able to recover all of these charges from our customers. Increases in such taxes, fees and charges could negatively impact our business, results of operations and financial condition.

Under DOT regulations, all governmental taxes and fees must be included in the prices we quote or advertise to our customers. Due to the competitive revenue environment, many increases in these fees and taxes have been absorbed by the airline industry rather than being passed on to the customer. Further increases in fees and taxes may reduce demand for air travel, and thus our revenues.

Recent U.S. tax legislation may adversely affect our financial condition, results of operations and cash flows.

Recently enacted U.S. tax legislation has significantly changed the U.S. federal income taxation of U.S. corporations, including by reducing the U.S. corporate income tax rate, limiting interest deductions, permitting immediate expensing of certain capital expenditures, adopting elements of a territorial tax system, revising the rules governing NOLs and the rules governing foreign tax credits and introducing new anti-base erosion provisions. Many of these changes are effective immediately, without any transition periods or grandfathering for existing transactions. The legislation is unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations and implementation regulations by the Treasury and Internal Revenue Service, any of which could materially affect the impacts of the legislation. In addition, it is unclear how these U.S. federal income tax changes will affect state and local taxation, which often uses federal taxable income as a starting point for computing state and local tax liabilities. While some of the changes made by the tax legislation may adversely affect us in one or more reporting periods and prospectively, other changes may be beneficial on a going forward basis. We continue to work with our tax advisors to determine the full impact of this legislation on us.

See Note 7 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A and Note 5 to American’s Condensed Consolidated Financial Statements in Part I, Item 1B for additional information on income taxes.

Changes to our business model that are designed to increase revenues may not be successful and may cause operational difficulties or decreased demand.

We have recently instituted, and intend to institute in the future, changes to our business model to increase revenues and offset costs. These measures include premium economy service, basic economy service and other low-cost fares, enhancements to our AAdvantage loyalty program, charging separately for services that had previously been included within the price of a ticket and increasing other pre-existing fees. We may introduce additional initiatives in the future; however, as time goes on, we expect that it will be more difficult to identify and implement additional initiatives. We cannot assure you that these measures or any future initiatives will be successful in increasing our revenues. Additionally, the implementation of these initiatives may create logistical challenges that could harm the operational performance of our airline. Also, any new and increased fees might reduce the demand for air travel on our airline or across the industry in general, particularly if weakened economic conditions make our customers more sensitive to increased travel costs or provide a significant competitive advantage to other carriers that determine not to institute similar charges.

The loss of key personnel upon whom we depend to operate our business or the inability to attract additional qualified personnel could adversely affect our business.

We believe that our future success will depend in large part on our ability to retain or attract highly qualified management, technical and other personnel. We may not be successful in retaining key personnel or in attracting other highly qualified personnel. Any inability to retain or attract significant numbers of qualified management and other personnel would have a material adverse effect on our business, results of operations and financial condition.

We may be adversely affected by conflicts overseas or terrorist attacks; the travel industry continues to face ongoing security concerns.

Acts of terrorism or fear of such attacks, including elevated national threat warnings, wars or other military conflicts, may depress air travel, particularly on international routes, and cause declines in revenues and increases in costs. The attacks of September 11, 2001 and continuing terrorist threats, attacks and attempted attacks materially impacted and continue to impact air travel. Increased security procedures introduced at airports since the attacks of September 11, 2001 and any other such measures that may be introduced in the future generate higher operating costs for airlines. The Aviation and Transportation Security Act mandated improved flight deck security, deployment of federal air marshals on board flights, improved airport perimeter access security, airline crew security training, enhanced security screening of passengers, baggage, cargo, mail, employees and vendors, enhanced training and qualifications of security screening personnel, additional provision of passenger data to the U.S. Customs and Border Protection Agency and enhanced background checks. A concurrent increase in airport security charges and procedures, such as restrictions on carry-on baggage, has also had and may continue to have a disproportionate impact on short-haul travel, which constitutes a significant portion of our flying and revenue. Implementation of and compliance with increasingly-complex security and customs requirements will continue to result in increased costs for us and our passengers, and have caused and likely will continue to cause periodic service disruptions and delays. We have at times found it necessary or desirable to make significant expenditures to comply with security-related requirements while seeking to reduce their impact on our customers, such as expenditures for automated security screening lines at airports. As a result of competitive pressure, and the need to improve security screening throughput to support the pace of our operations, it is unlikely that we will be able to capture all security-related costs through increased fares. In addition, we cannot forecast what new security requirements may be imposed in the future, or their impact on our business.

We operate a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control.

We operate a global business with significant operations outside of the U.S. Our current international activities and prospects have been and in the future could be adversely affected by reversals or delays in the opening of foreign markets, increased competition in international markets, the performance of our alliance, joint business and codeshare partners in a given market, exchange controls or other restrictions on repatriation of funds, currency and political risks (including changes in exchange rates and currency devaluations), environmental regulation, increases in taxes and fees and changes in international government regulation of our operations, including the inability to obtain or retain needed route authorities and/or slots. In particular, fluctuations in foreign currencies, including devaluations, exchange controls and other restrictions on the repatriation of funds, have significantly affected and may continue to significantly affect our operating performance, liquidity and the value of any cash held outside the U.S. in local currency.

The United Kingdom held a referendum in June 2016 regarding its membership in the EU in which a majority of the United Kingdom electorate voted in favor of the British government taking the necessary action for the United Kingdom to leave the EU, commonly referred to as Brexit. In March 2017, the United Kingdom served notice of its decision to withdraw to the EU, formally initiating the withdrawal process. Serving this notice began the two-year period for the United Kingdom to negotiate the terms for its withdrawal from the EU. At this time, it is not certain what steps may be taken to facilitate the United Kingdom’s exit from the EU. The implications of the United Kingdom withdrawing from the EU are similarly unclear at present because it is unclear what relationship the United Kingdom will have with the EU after withdrawal. We face risks associated with the uncertainty following the referendum and the consequences that may flow from the decision to exit the EU, notably given the extent of our passenger and cargo traffic and that of our joint business partners that flows through LHR in the United Kingdom. Among other things, Brexit will likely require a transition arrangement or new air services agreement involving the U.S. and United Kingdom, and the United Kingdom and EU, to permit our current air services (including those involving our joint business and code share partners) to continue as we currently conduct them. Moreover, the exit of the United Kingdom from the EU could adversely affect European or worldwide economic or market conditions and could contribute to further instability in global financial markets. In addition, the exit of the United Kingdom from the EU has created uncertainty as to the future trade relationship between the EU and the United Kingdom, including as to air traffic services. The exit of the United Kingdom could also lead to legal and regulatory uncertainty and potentially divergent treaties, laws and regulations as the United Kingdom determines which EU treaties, laws and regulations to replace or replicate, including those governing aviation, labor, environmental, data protection/privacy, competition and other matters applicable to the provision of air transportation services by us or our alliance, joint business or codeshare partners. The impact on our business of any treaties, laws and regulations that replace the existing EU counterparts cannot be predicted. Any of these effects, and others we cannot anticipate, could materially adversely affect our business, results of operations and financial condition.

We are subject to many forms of environmental and noise regulation and may incur substantial costs as a result.

We are subject to increasingly stringent federal, state, local and foreign laws, regulations and ordinances relating to the protection of the environment and noise reduction, including those relating to emissions to the air, discharges to surface and subsurface waters, safe drinking water, and the management of hazardous substances, oils and waste materials. Compliance with environmental laws and regulations can require significant expenditures, and violations can lead to significant fines and penalties.

We are also subject to other environmental laws and regulations, including those that require us to investigate and remediate soil or groundwater to meet certain remediation standards. Under federal law, generators of waste materials, and current and former owners or operators of facilities, can be subject to liability for investigation and remediation costs at locations that have been identified as requiring response actions. Liability under these laws may be strict, joint and several, meaning that we could be liable for the costs of cleaning up environmental contamination regardless of fault or the amount of waste directly attributable to us. We have liability for investigation and remediation costs at various sites, although such costs currently are not expected to have a material adverse effect on our business.

We have various leases and agreements with respect to real property, tanks and pipelines with airports and other operators. Under these leases and agreements, we have agreed to indemnify the lessor or operator against environmental liabilities associated with the real property or operations described under the agreement, in some cases even if we are not the party responsible for the initial event that caused the environmental damage. We also participate in leases with other airlines in fuel consortiums and fuel committees at airports, where such indemnities are generally joint and several among the participating airlines.

Governmental authorities in several U.S. and foreign cities are also considering, or have already implemented, aircraft noise reduction programs, including the imposition of nighttime curfews and limitations on daytime take offs and landings. We have been able to accommodate local noise restrictions imposed to date, but our operations could be adversely affected if locally-imposed regulations become more restrictive or widespread.

We are subject to risks associated with climate change, including increased regulation to reduce emissions of greenhouse gases.

There is increasing global regulatory focus on climate change and greenhouse gas (GHG) emissions. Efforts by the EU in 2009 to regulate flights arriving from or departing for airports outside of the EU have been postponed as members of the International Civil Aviation Organization (ICAO) are negotiating a global agreement on GHG emissions from the aviation sector. On October 6, 2016, the ICAO passed a resolution adopting the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which is a global, market-based emissions offset program to encourage carbon-neutral growth beyond 2020. The CORSIA was supported by the board of Airlines for America (the principal U.S. airline trade association) and IATA (the principal international airline trade association), and by American and many other U.S. and foreign airlines. The CORSIA will increase operating costs for American and most other airlines, including other U.S. airlines that operate internationally, but the implementation of a global program, as compared to regional emission reduction schemes, should ensure that these costs will be more evenly applied to American and its competitors since there will be a common global regulatory regime. The CORSIA is expected to be implemented in phases, with phase I beginning in 2021. Certain details still need to be developed and the impact of the CORSIA cannot be fully predicted. While we do not anticipate any significant emissions allowance expenditures in 2018, compliance with the CORSIA or similar emissions-related requirements could significantly increase our operating costs after 2020. The potential impact of the CORSIA or other emissions-related requirements on our costs will ultimately depend on a number of factors, including baseline emissions, the price of emission allowances or offsets that American would need to acquire, the GHG efficiency of the American fleet, and the number of future American flights subject to such emissions-related requirements. These costs have not been completely defined and could fluctuate.

In addition, in December 2015, at the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change, over 190 countries, including the United States, reached an agreement (the Paris Agreement) to reduce GHG emissions. While the United States has since announced that it will withdraw from the Paris Agreement and there is no express reference to aviation in that agreement, to the extent countries implement that Agreement or impose other climate change regulations, either with respect to the aviation industry or with respect to related industries such as the aviation fuel industry, it could have an adverse direct or indirect effect on our business.

In 2018 or potentially 2019, the Environmental Protection Agency (EPA) is expected to finalize a rule implementing aircraft engine GHG emission standards developed initially through ICAO. It is anticipated that the EPA rule will closely align with recent ICAO carbon dioxide emission standards. The new standards, which were supported by the airline industry and manufacturers, would apply to new type aircraft certified beginning in 2020, and would be phased in for newly manufactured existing aircraft type designs starting in 2023.

In addition, several states have adopted or are considering initiatives to regulate emissions of GHGs, primarily through the planned development of GHG emissions inventories, regional GHG cap and trade programs or low carbon fuels programs. Depending on the scope of such regulation, certain of our facilities and operations, or the operations of our suppliers, may be subject to additional operating and other permit requirements, likely resulting in increased operating costs.

These regulatory efforts, both internationally and in the U.S. at the federal and state levels, are still developing, and we cannot yet determine what the final regulatory programs or their impact will be in the U.S., the EU or in other areas in which we do business. However, such climate change-related regulatory activity in the future may adversely affect our business and financial results by requiring us to reduce our emissions, purchase allowances or otherwise pay for our emissions. Such activity may also impact us indirectly by increasing our operating costs, including fuel costs.

We face challenges in integrating our computer, communications and other technology systems.

Among the principal risks of integrating our businesses and operations are the risks relating to integrating various computer, communications and other technology systems that are necessary to operate US Airways and American as a single integrated business and to achieve cost synergies by eliminating redundancies. While we have to date successfully integrated several of our systems, including our customer reservations system and our pilot and fleet scheduling system, we still have to complete several additional important system integration projects. The integration of these systems in a number of prior airline mergers has taken longer, been more disruptive and cost more than originally forecast. The implementation process to integrate these various systems will involve a number of risks that could adversely impact our business, results of operations and financial condition. New systems will replace multiple legacy systems and the related implementation will be a complex and time-consuming project involving substantial expenditures for implementation consultants, system hardware, software and implementation activities, as well as the transformation of business and financial processes.

We cannot assure you that our security measures, change control procedures or disaster recovery plans will be adequate to prevent disruptions or delays in connection with systems integration or replacement. Disruptions in or changes to these systems could result in a disruption to our business and the loss of important data. Any of the foregoing could result in a material adverse effect on our business, results of operations and financial condition.

We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or systems could harm our business, results of operations and financial condition.

We are highly dependent on existing and emerging technology and automated systems to operate our business. These technologies and systems include our computerized airline reservation system, flight operations systems, financial planning, management and accounting systems, telecommunications systems, website, maintenance systems and check-in kiosks. In order for our operations to work efficiently, our website and reservation system must be able to accommodate a high volume of traffic, maintain secure information and deliver flight information, as well as issue electronic tickets and process critical financial information in a timely manner. Substantially all of our tickets are issued to passengers as electronic tickets. We depend on our reservation system, which is hosted and maintained under a long-term contract by a third-party service provider, to be able to issue, track and accept these electronic tickets. If our technologies or automated systems are not functioning or if our third-party service providers were to fail to adequately provide technical support, system maintenance or timely software upgrades for any one of our key existing systems, we could experience service disruptions or delays, which could harm our business and result in the loss of important data, increase our expenses and decrease our revenues. In the event that one or more of our primary technology or systems vendors goes into bankruptcy, ceases operations or fails to perform as promised, replacement services may not be readily available on a timely basis, at competitive rates or at all, and any transition time to a new system may be significant.

Our technologies and automated systems cannot be completely protected against events that are beyond our control, including natural disasters, power failures, terrorist attacks, cyber-attacks, data theft, equipment and software failures, computer viruses or telecommunications failures. Substantial or sustained system failures could cause service delays or failures and result in our customers purchasing tickets from other airlines. We cannot assure you that our security measures, change control procedures or disaster recovery plans are adequate to prevent disruptions or delays. Disruption in or changes to these technologies or systems could result in a disruption to our business and the loss of important data. Any of the foregoing could result in a material adverse effect on our business, results of operations and financial condition.

We are at risk of losses and adverse publicity stemming from any public incident involving our company, our people or our brand, including any accident or other public incident involving our personnel or aircraft, or the personnel or aircraft of our regional, codeshare or joint business operators.

In a modern world where news can be captured and travel rapidly, we are at risk of adverse publicity stemming from any public incident involving our company, our people or our brand. Such an incident could involve the alleged behavior of any of our more than 100,000 employees. Further, if our personnel or one of our aircraft, or personnel of, or an aircraft that is operated under our brand by, one of our regional operators or an airline with which we have a marketing alliance, joint business or codeshare relationship, were to be involved in a public incident, accident or catastrophe, we could be exposed to significant reputational harm and potential legal liability. The insurance we carry may be inapplicable or inadequate to cover any such incident, accident or catastrophe. In the event that our insurance is inapplicable or not adequate, we may be forced to bear substantial losses from an incident or accident. In addition, any such incident, accident or catastrophe involving our personnel or one of our aircraft (or personnel and aircraft of our regional operators and our codeshare partners) could create an adverse public perception, which could harm our reputation, result in air travelers being reluctant to fly on our aircraft or those of our regional operators or codeshare partners, and adversely impact our business, results of operations and financial condition.

Delays in scheduled aircraft deliveries or other loss of anticipated fleet capacity, and failure of new aircraft to perform as expected, may adversely impact our business, results of operations and financial condition.

The success of our business depends on, among other things, effectively managing the number and types of aircraft we operate. If for any reason we are unable to accept or secure deliveries of new aircraft on contractually scheduled delivery dates, this could have a negative impact on our business, results of operations and financial condition. Our failure to integrate newly purchased aircraft into our fleet as planned might require us to seek extensions of the terms for some leased aircraft or otherwise delay the exit of certain aircraft from our fleet. Such unanticipated extensions or delays may require us to operate existing aircraft beyond the point at which it is economically optimal to retire them, resulting in increased maintenance costs. If new aircraft orders are not filled on a timely basis, we could face higher operating costs than planned. In addition, if the aircraft we receive do not meet expected performance or quality standards, including with respect to fuel efficiency and reliability, our business, results of operations and financial condition could be adversely impacted.

We depend on a limited number of suppliers for aircraft, aircraft engines and parts.

We depend on a limited number of suppliers for aircraft, aircraft engines and many aircraft and engine parts. These suppliers continue to consolidate as evidenced by the pending United Technologies acquisition of Rockwell Collins, the recently completed transaction involving Airbus and Bombardier and the recently announced transaction involving Boeing and Embraer. Due to the limited number of these suppliers, we are vulnerable to any problems associated with the performance of their obligation to supply key aircraft, parts and engines, including design defects, mechanical problems, contractual performance by suppliers, or adverse perception by the public that would result in customer avoidance or in actions by the FAA resulting in an inability to operate our aircraft.

Our business has been and will continue to be affected by many changing economic and other conditions beyond our control, including global events that affect travel behavior, and our results of operations could be volatile and fluctuate due to seasonality.

Our business, results of operations and financial condition have been and will continue to be affected by many changing economic and other conditions beyond our control, including, among others:


•	actual or potential changes in international, national, regional and local economic, business and financial conditions, including recession, inflation, higher interest rates, wars, terrorist attacks and political instability;


•	changes in consumer preferences, perceptions, spending patterns and demographic trends;


•	changes in the competitive environment due to industry consolidation, changes in airline alliance affiliations, and other factors;


•	actual or potential disruptions to the ATC systems;


•	increases in costs of safety, security, and environmental measures;


•	outbreaks of diseases that affect travel behavior; and


•	weather and natural disasters.

In particular, an outbreak of a contagious disease such as the Ebola virus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, avian flu, Zika virus or any other similar illness, if it were to become associated with air travel or persist for an extended period, could materially affect the airline industry and us by reducing revenues and adversely impacting our operations and passengers’ travel behavior. As a result of these or other conditions beyond our control, our results of operations could be volatile and subject to rapid and unexpected change. In addition, due to generally weaker demand for air travel during the winter, our revenues in the first and fourth quarters of the year could be weaker than revenues in the second and third quarters of the year.

A higher than normal number of pilot retirements, more stringent duty time regulations, increased flight hour requirements for commercial airline pilots, reductions in the number of military pilots entering the commercial workforce and other factors have caused a shortage of pilots that could materially adversely affect our business.

We currently have a higher than normal number of pilots eligible for retirement. Large numbers of pilots in the industry are approaching the FAA’s mandatory retirement age of 65. Further, in July 2013, the FAA issued regulations that increased the flight hours required for pilots working for airlines certificated under Part 121 of the Federal Aviation Regulations. In addition, on January 4, 2014, more stringent pilot flight and duty time requirements under Part 117 of the Federal Aviation Regulations took effect. These and other factors, including reductions in the number of military pilots being trained by the U.S. armed forces and available as commercial pilots upon their retirement from military service, have contributed to a shortage of qualified, entry-level pilots and increased compensation costs, particularly for our regional subsidiaries and our other regional partners who are being required by market conditions to pay significantly increased wages and large signing bonuses to their pilots in an attempt to achieve desired staffing levels. The foregoing factors have also led to increased competition from large, mainline carriers attempting to meet their hiring needs. We believe that this industry-wide pilot shortage is becoming an increasing problem for airlines in the United States. Our regional partners have recently been unable to hire adequate numbers of pilots to meet their needs, resulting in a reduction in the number of flights offered, disruptions, increased costs of operations, financial difficulties and other adverse effects, and these circumstances may become more severe in the future and thereby cause a material adverse effect on our business.

Increases in insurance costs or reductions in insurance coverage may adversely impact our operations and financial results.

The terrorist attacks of September 11, 2001 led to a significant increase in insurance premiums and a decrease in the insurance coverage available to commercial air carriers. Accordingly, our insurance costs increased significantly, and our ability to continue to obtain insurance even at current prices remains uncertain. If we are unable to maintain adequate insurance coverage, our business could be materially and adversely affected. Additionally, severe disruptions in the domestic and global financial markets could adversely impact the claims paying ability of some insurers. Future downgrades in the ratings of enough insurers could adversely impact both the availability of appropriate insurance coverage and its cost. Because of competitive pressures in our industry, our ability to pass along additional insurance costs to passengers is limited. As a result, further increases in insurance costs or reductions in available insurance coverage could have an adverse impact on our financial results.

We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity.

From time to time, we are a party to or otherwise involved in legal proceedings, claims and government inspections or investigations and other legal matters, both inside and outside the United States, arising in the ordinary course of our business or otherwise. We are currently involved in various legal proceedings and claims that have not yet been fully resolved, and additional claims may arise in the future. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within our control. Litigation is subject to significant uncertainty and may be expensive, time-consuming, and disruptive to our operations. Although we will vigorously defend ourselves in such legal proceedings, their ultimate resolution and potential financial and other impacts on us are uncertain. For these and other reasons, we may choose to settle legal proceedings and claims, regardless of their actual merit. If a legal proceeding is resolved against us, it could result in significant compensatory damages, and in certain circumstances punitive or trebled damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief imposed on us. If our existing insurance does not cover the amount or types of damages awarded, or if other resolution or actions taken as a result of the legal proceeding were to restrain our ability to operate or market our services, our consolidated financial position, results of operations or cash flows could be materially adversely affected. In addition, legal proceedings, and any adverse resolution thereof, can result in adverse publicity and damage to our reputation, which could adversely impact our business. Additional information regarding certain legal matters in which we are involved can be found in Part II, Item 1. Legal Proceedings.

Our ability to utilize our NOL Carryforwards may be limited.

Under the Internal Revenue Code of 1986, as amended (the Code), a corporation is generally allowed a deduction for NOLs carried over from prior taxable years (NOL Carryforwards). As of December 31, 2017, we had available NOL Carryforwards of approximately $10.0 billion for regular federal income tax purposes that will expire, if unused, beginning in 2022, and approximately $3.4 billion for state income tax purposes that will expire, if unused, between 2018 and 2037. Our NOL Carryforwards are subject to adjustment on audit by the Internal Revenue Service and the respective state taxing authorities.

A corporation’s ability to deduct its federal NOL Carryforwards and to utilize certain other available tax attributes can be substantially constrained under the general annual limitation rules of Section 382 of the Code (Section 382) if it undergoes an “ownership change” as defined in Section 382 (generally where cumulative stock ownership changes among material stockholders exceed 50 percent during a rolling three-year period). We experienced an ownership change in connection with our emergence from the Chapter 11 Cases and US Airways Group experienced an ownership change in connection with the Merger. The general limitation rules for a debtor in a bankruptcy case are liberalized where the ownership change occurs upon emergence from bankruptcy. We elected to be covered by certain special rules for federal income tax purposes that permitted approximately $9.0 billion (with $8.4 billion of unlimited NOL still remaining at December 31, 2017) of our federal NOL Carryforwards to be utilized without regard to the annual limitation generally imposed by Section 382. If the special rules are determined not to apply, our ability to utilize such federal NOL Carryforwards may be subject to limitation. Substantially all of our remaining federal NOL Carryforwards (attributable to US Airways Group and its subsidiaries) are subject to limitation under Section 382 as a result of the Merger; however, our ability to utilize such NOL Carryforwards is not anticipated to be effectively constrained as a result of such limitation. Similar limitations may apply for state income tax purposes.

Notwithstanding the foregoing, an ownership change subsequent to our emergence from the Chapter 11 Cases may severely limit or effectively eliminate our ability to utilize our NOL Carryforwards and other tax attributes. To reduce the risk of a potential adverse effect on our ability to utilize our NOL Carryforwards, our Restated Certificate of Incorporation (Certificate of Incorporation) contains transfer restrictions applicable to certain substantial stockholders. These restrictions may adversely affect the ability of certain holders of AAG common stock to dispose of or acquire shares of AAG common stock. Although the purpose of these transfer restrictions is to prevent an ownership change from occurring, no assurance can be given that an ownership change will not occur even with these restrictions in place.

Our ability to use our NOL Carryforwards also will depend on the amount of taxable income generated in future periods. The NOL Carryforwards may expire before we can generate sufficient taxable income to use them.

We have a significant amount of goodwill, which is assessed for impairment at least annually. In addition, we may never realize the full value of our intangible assets or long-lived assets, causing us to record material impairment charges.

Goodwill and indefinite-lived intangible assets are not amortized, but are assessed for impairment at least annually, or more frequently if conditions indicate that an impairment may have occurred. In accordance with applicable accounting standards, we first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test. In addition, we are required to assess certain of our other long-lived assets for impairment if conditions indicate that an impairment may have occurred.

Future impairment of goodwill or other long-lived assets could be recorded in results of operations as a result of changes in assumptions, estimates, or circumstances, some of which are beyond our control. There can be no assurance that a material impairment charge of goodwill or tangible or intangible assets will be avoided. The value of our aircraft could be impacted in future periods by changes in supply and demand for these aircraft. Such changes in supply and demand for certain aircraft types could result from grounding of aircraft by us or other airlines. An impairment charge could have a material adverse effect on our business, results of operations and financial condition.

The price of AAG common stock has recently been and may in the future be volatile.

The market price of AAG common stock may fluctuate substantially due to a variety of factors, many of which are beyond our control, including:


•	AAG’s operating and financial results failing to meet the expectations of securities analysts or investors;


•	changes in financial estimates or recommendations by securities analysts;


•	material announcements by us or our competitors;


•	movements in fuel prices;


•	expectations regarding our capital deployment program, including any existing or potential future share repurchase programs and any future dividend payments that may be declared by our Board of Directors, or any determination to cease repurchasing stock or paying dividends;


•	new regulatory pronouncements and changes in regulatory guidelines;


•	general and industry-specific economic conditions;


•	changes in our key personnel;


•	distributions of shares of AAG common stock pursuant to the Plan, including distributions from the disputed claims reserve established under the plan of reorganization upon the resolution of the underlying claims;


•	public sales of a substantial number of shares of AAG common stock or issuances of AAG common stock upon the exercise or conversion of convertible securities, options, warrants, restricted stock unit awards, stock appreciation rights, or similar rights;


•	increases or decreases in reported holdings by insiders or other significant stockholders;


•	fluctuations in trading volume; and


•	changes in market values of airline companies as well as general market conditions.

We cannot guarantee that we will continue to repurchase our common stock or pay dividends on our common stock or that our capital deployment program will enhance long-term stockholder value. Our capital deployment program could increase the volatility of the price of our common stock and diminish our cash reserves.

Since July 2014, as part of our capital deployment program, our Board of Directors has approved seven share repurchase programs aggregating $13.0 billion of authority. As of June 30, 2018, there was $1.7 billion remaining authority to repurchase shares under our share repurchase programs. Share repurchases under our repurchase programs may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. These share repurchase programs do not obligate us to acquire any specific number of shares or to repurchase any specific number of shares for any fixed period, and may be suspended at any time at our discretion. The timing and amount of repurchases, if any, will be subject to market and economic conditions, applicable legal requirements and other relevant factors. Our repurchase of common stock may be limited, suspended or discontinued at any time without prior notice.

Although our Board of Directors commenced declaring quarterly cash dividends in July 2014 as part of our capital deployment program, any future dividends that may be declared and paid from time to time will be subject to market and economic conditions, applicable legal requirements and other relevant factors. We are not obligated to continue a dividend for any fixed period, and the payment of dividends may be suspended at any time at our discretion. We will continue to retain future earnings to develop our business, as opportunities arise, and evaluate on a quarterly basis the amount and timing of future dividends based on our operating results, financial condition, capital requirements and general business conditions. The amount and timing of any future dividends may vary, and the payment of any dividend does not assure that we will be able to pay dividends in the future.

In addition, any future repurchases of AAG common stock or dividends, or any determination to cease repurchasing stock or paying dividends, could affect our stock price and increase its volatility. The existence of a share repurchase program and any future dividends could cause our stock price to be higher than it would otherwise be and could potentially reduce the market liquidity for our stock. Additionally, any future repurchases of common stock or dividends will diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future strategic opportunities and acquisitions. Further, our repurchase of common stock may fluctuate such that our cash flow may be insufficient to fully cover our share repurchases. Although our share repurchase programs are intended to enhance long-term stockholder value, there is no assurance that it will do so because the market price of our common stock may decline below the levels at which we repurchased shares of stock and short-term stock price fluctuations could reduce the program’s effectiveness.

Certain provisions of AAG’s Certificate of Incorporation and Bylaws make it difficult for stockholders to change the composition of our Board of Directors and may discourage takeover attempts that some of our stockholders might consider beneficial.

Certain provisions of our Certificate of Incorporation and Second Amended and Restated Bylaws (Bylaws) may have the effect of delaying or preventing changes in control if our Board of Directors determines that such changes in control are not in our best interest and the best interest of our stockholders. These provisions include, among other things, the following:


•	advance notice procedures for stockholder proposals to be considered at stockholders’ meetings;


•	the ability of our Board of Directors to fill vacancies on the board;


•	a prohibition against stockholders taking action by written consent;


•	holders are restricted from calling a special meeting unless they hold at least 20% of our outstanding shares and follow the procedures provided for in the amended Bylaws;


•	a requirement that holders of at least 80% of the voting power of the shares entitled to vote in the election of directors approve any amendment of our Bylaws submitted to stockholders for approval; and


•	super-majority voting requirements to modify or amend specified provisions of our Certificate of Incorporation.

These provisions are not intended to prevent a takeover, but are intended to protect and maximize the value of the interests of our stockholders. While these provisions have the effect of encouraging persons seeking to acquire control of our company to negotiate with our Board of Directors, they could enable our Board of Directors to prevent a transaction that some, or a majority, of our stockholders might believe to be in their best interest and, in that case, may prevent or discourage attempts to remove and replace incumbent directors. In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which prohibits business combinations with interested stockholders. Interested stockholders do not include stockholders whose acquisition of our securities is approved by the Board of Directors prior to the investment under Section 203.

AAG’s Certificate of Incorporation and Bylaws include provisions that limit voting and acquisition and disposition of our equity interests.

Our Certificate of Incorporation and Bylaws include certain provisions that limit voting and ownership and disposition of our equity interests. These restrictions may adversely affect the ability of certain holders of AAG common stock and our other equity interests to vote such interests and adversely affect the ability of persons to acquire shares of AAG common stock and our other equity interests.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table displays information with respect to our purchases of shares of AAG common stock during the three months ended June 30, 2018.



Period	Total number of shares purchased	Average price paid per share	Total number of shares purchased as part of publicly announced plan or program	Maximum dollar value of shares that may be purchased under the plan or program (in millions)
April 2018	637,201	$43.15	637,201	$1,973
May 2018	7,537,806	$42.79	7,537,806	$1,650
June 2018	—	—	—	$1,650

ITEM 6. EXHIBITS

Exhibits required to be filed by Item 601 of Regulation S-K: Where the amount of securities authorized to be issued under any of our long-term debt agreements does not exceed 10 percent of our assets, pursuant to paragraph (b)(4) of Item 601 of Regulation S-K, in lieu of filing such as an exhibit, we hereby agree to furnish to the Commission upon request a copy of any agreement with respect to such long-term debt.



Exhibit Number	Description

3.1	Restated Certificate of Incorporation of American Airlines Group Inc., including the Certificate of Designations, Powers, Preferences and Rights of the American Airlines Group Inc. Series A Convertible Preferred Stock attached as Annex I thereto (incorporated by reference to Exhibit 3.1 to AAG’s Current Report on Form 8-K filed on December 9, 2013 (Commission File No. 1-8400)).
3.2	Certificate of Amendment of Restated Certificate of Incorporation of American Airlines Group Inc. (incorporated by reference to Exhibit 3.1 to American Airlines Group Inc.’s Current Report on Form 8-K filed on June 13, 2018 (Commission File No. 1-8400)).
3.3	Third Amended and Restated Bylaws of American Airlines Group Inc. (incorporated by reference to Exhibit 3.2 to American Airlines Group Inc.’s Current Report on Form 8-K filed on June 13, 2018 (Commission File No. 1-8400)).



4.1	Trust Supplement No. 2012-2C(R), dated as of May 15, 2018, between American Airlines, Inc. and Wilmington Trust Company, as Trustee, to the Pass Through Trust Agreement, dated as of September 16, 2014 (incorporated by reference to Exhibit 4.2 to American Airlines, Inc.’s Current Report on Form 8-K filed on May 16, 2018 (Commission File No. 1-2691)).
4.2	Form of Amendment No. 2 to Intercreditor Agreement (2012-2C(R)) among Wilmington Trust Company, not in its individual capacity but solely as Trustee of the American Airlines, Inc. Pass Through Trust 2012-2C(R), American Airlines, Inc. and Wilmington Trust Company, not in its individual capacity but solely as Subordination Agent and Trustee (incorporated by reference to Exhibit C to Exhibit 4.6 to American Airlines, Inc.’s Current Report on Form 8-K filed on May 16, 2018 (Commission File No. 1-2691)).
4.3	Deposit Agreement (Class C(R)), dated as of May 15, 2018, between Wilmington Trust, National Association, as Escrow Agent, and Natixis S.A., acting through its New York Branch, as Depositary (incorporated by reference to Exhibit 4.4 to American Airlines, Inc.’s Current Report on Form 8-K filed on May 16, 2018 (Commission File No. 1- 2691)).
4.4	Escrow and Paying Agent Agreement (Class C(R)), dated as of May 15, 2018, among Wilmington Trust, National Association, as Escrow Agent, Deutsche Bank Securities Inc., as Underwriter, Wilmington Trust Company, not in its individual capacity, but solely as Pass Through Trustee for and on behalf of American Airlines, Inc. Pass Through Trust 2012-2C(R), and Wilmington Trust Company, as Paying Agent (incorporated by reference to Exhibit 4.5 to American Airlines, Inc.’s Current Report on Form 8-K filed on May 16, 2018 (Commission File No. 1- 2691)).
4.5	Note Purchase Agreement, dated as of May 15, 2018, among American Airlines, Inc., Wilmington Trust Company, not in its individual capacity, but solely as Pass Through Trustee under the Class C(R) Pass Through Trust Agreement, as Subordination Agent and as Indenture Trustee, Wilmington Trust, National Association, as Escrow Agent, and Wilmington Trust Company, as Paying Agent (incorporated by reference to Exhibit 4.6 to American Airlines, Inc.’s Current Report on Form 8-K filed on May 16, 2018 (Commission File No. 1- 2691)).
4.6	Form of Amendment to Participation Agreement (Amendment to Participation Agreement among American Airlines, Inc., Wilmington Trust Company, not in its individual capacity, but solely as Subordination Agent and as Indenture Trustee, and Wilmington Trust Company, not in its individual capacity, but solely as Pass Through Trustee under each of the Pass Through Trust Agreements) (incorporated by reference to Exhibit A to Exhibit 4.6 to American Airlines, Inc.’s Current Report on Form 8-K filed on May 16, 2018 (Commission File No. 1- 2691)).
4.7	Form of Amendment to Trust Indenture and Security Agreement (Amendment to Trust Indenture and Security Agreement between American Airlines, Inc., Wilmington Trust Company, not in its individual capacity, but solely as Indenture Trustee, and Wilmington Trust, National Association, as Securities Intermediary) (incorporated by reference to Exhibit B to Exhibit 4.6 to American Airlines, Inc.’s Current Report on Form 8-K filed on May 16, 2018 (Commission File No. 1-2691)).
4.8	Form of Pass Through Trust Certificate, Series 2012-2C(R) (incorporated by reference to Exhibit A to Exhibit 4.2 to American Airlines, Inc.’s Current Report on Form 8-K filed on May 16, 2018 (Commission File No. 1-2691)).
10.1	Supplemental Agreement No. 11, dated as of April 6, 2018, to Purchase Agreement No. 3219 dated as of October 15, 2008, by and between American Airlines, Inc. and The Boeing Company. *
10.2	Supplemental Agreement No. 9, dated as of April 6, 2018, to Purchase Agreement No. 03735 dated as of February 1, 2013, by and between American Airlines, Inc. and The Boeing Company. *
10.3	Fourth Amendment to Amended and Restated Credit and Guaranty Agreement, dated as of May 15, 2018, amending the Amended and Restated Credit and Guaranty Agreement, dated as of May 21, 2015, among American Airlines, Inc., American Airlines Group Inc., the lenders from time to time party thereto, Deutsche Bank AG New York Branch, as administrative agent, and Barclays Bank PLC, as designated replacement term lender.
12.1	Computation of ratio of earnings to fixed charges of American Airlines Group Inc. for the six months ended June 30, 2018.
12.2	Computation of ratio of earnings to fixed charges of American Airlines, Inc. for the six months ended June 30, 2018.
31.1	Certification of AAG Chief Executive Officer pursuant to Rule 13a-14(a).
31.2	Certification of AAG Chief Financial Officer pursuant to Rule 13a-14(a).
31.3	Certification of American Chief Executive Officer pursuant to Rule 13a-14(a).
31.4	Certification of American Chief Financial Officer pursuant to Rule 13a-14(a).
32.1	AAG Certification pursuant to Rule 13a-14(b) and section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code).
32.2	American Certification pursuant to Rule 13a-14(b) and section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code).
101.1	Interactive data files pursuant to Rule 405 of Regulation S-T.

^*Confidential treatment has been requested with respect to certain portions of this agreement.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




		American Airlines Group Inc.

Date: July 26, 2018	By:	/s/ Derek J. Kerr
		Derek J. Kerr
		Executive Vice President and Chief Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)




		American Airlines, Inc.

Date: July 26, 2018	By:	/s/ Derek J. Kerr
		Derek J. Kerr
		Executive Vice President and Chief Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)

Exhibit

SUPPLEMENTAL AGREEMENT NO. 11

Purchase Agreement No. 3219

between

THE BOEING COMPANY

and

AMERICAN AIRLINES, INC.

Relating to Boeing Model 787 Aircraft

THIS SUPPLEMENTAL AGREEMENT No. 11 (SA-11) is made between THE BOEING COMPANY, a Delaware corporation with offices in Seattle, Washington (Boeing), and AMERICAN AIRLINES, INC., a Delaware corporation with offices in Fort Worth, Texas, together with its successors and permitted assigns (Customer);

WHEREAS, Boeing and Customer entered into Purchase Agreement No. 3219 dated October 15, 2008, relating to Boeing Model 787 aircraft, as amended and supplemented (Purchase Agreement) and capitalized terms used herein without definitions shall have the meanings specified in such Purchase Agreement;

WHEREAS, Boeing and Customer entered into that certain Letter Agreement 6-1162-TRW-0664R1 entitled “Aircraft Purchase Rights and Substitution Rights” referencing SA-3 in the footer, including the following (collectively, the Original 787 Rights Letter): Attachment A(R2) referencing SA-6 in footer, Attachment B(R2) referencing SA-6 in the footer, Attachment C(R3) referencing SA-8 in the footer, Attachment D referencing SA-3 in the footer, and Attachment E referencing SA-3 in the footer;

WHEREAS, the Original 787 Rights Letter sets forth, among other things, the treatment of aircraft Purchase Rights (as defined in the Original 787 Rights Letter);

WHEREAS, in addition to the forty-two (42) Aircraft that Customer previously agreed to purchase as set forth on Table 1(R7), Table 2(R1), and Table 3(R1),

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[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Customer desires to purchase twenty-five (25) additional 787-9 Aircraft and twenty-two (22) additional 787-8 Aircraft not contemplated in the original Purchase Agreement; and, therefore, Customer hereby [*CTR] for twenty-five (25) 787-9 Aircraft (the 2018 787-9 [*CTR] Aircraft) and twenty-two (22) 787-8 Aircraft (2018 787-8 [*CTR] Aircraft, and together with the 2018 787-9 Exercised Aircraft, the 2018 [*CTR] Aircraft) pursuant to the terms and conditions of the Original 787 Rights Letter;

WHEREAS, to commit Boeing to sell and Customer to purchase the 2018 [*CTR] Aircraft, Boeing and Customer hereby agree that such 2018 [*CTR] Aircraft are hereby now considered Firm Aircraft as defined in the Original Rights Letter and no further Purchase Agreement Supplements or supplemental agreements will be required to be executed in regard to the 2018 [*CTR] Aircraft;

WHEREAS, Customer and Boeing agree that as a result of the commitment to purchase the 2018 [*CTR] Aircraft there are [*CTR] available to Customer pursuant to the Original 787 Rights Letter;

WHEREAS, Customer and Boeing agree to the addition of [*CTR] for Customer to [*CTR] 787-9 Aircraft, the addition of [*CTR] for Customer to *CTR] 787-9 Aircraft and the related [*CTR] for Customer to [*CTR] such [*CTR] Aircraft to [*CTR] Aircraft; and

WHEREAS, on or about the date hereof Customer, Boeing, and Boeing Capital Corporation (BCC) entered into that certain Letter Agreement No. 5-1005-PS-3235 (the [*CTR] Letter) whereby [*CTR]; and

WHEREAS, on or about the date hereof Customer, Boeing, and [*CTR] entered into that certain “[*CTR]” (the [*CTR]) whereby, subject to Customer’s option to [*CTR] certain 2018 787-8 [*CTR] Aircraft, [*CTR], each of the 2018 787-8 [*CTR] Aircraft, in which event [*CTR] each of the 2018 787-8 [*CTR] Aircraft back to Customer (each such [*CTR], a [*CTR]).

NOW, THEREFORE, the parties agree that the Purchase Agreement is amended as set forth below and otherwise agree as follows:

1.Table of Contents.

The Table of Contents referencing SA-10 in the footer is deleted in its entirety and is replaced with the new Table of Contents (attached hereto) referencing SA-11 in the footer. Such new Table of Contents is hereby incorporated into the Purchase Agreement in replacement of its predecessor.

2. Tables.

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[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

2.1 Table 5. Table 5 entitled “787-9 [*CTR] Aircraft, Aircraft Delivery, Description, Price and Advance Payments” (Table 5) is hereby incorporated into the Purchase Agreement.

2.1.1 For the avoidance of doubt, Boeing and Customer confirm that the [*CTR] set forth on Table 5 was [*CTR] by Customer that are listed on the attachment to Exhibit A(R3) and [*CTR]. Boeing and Customer further confirm that in the event that the [*CTR] listed on the attachment to Exhibit A(R3) (or its replacement document) are ever amended or revised, for any reason, the [*CTR] on Table 5 (or its replacement document) will be [*CTR] listed on Exhibit A(R3) (or its replacement document) and [*CTR]. Additionally, the parties agree that in the event the Customer [*CTR] as a 787-9 aircraft pursuant to Letter Agreement 6-1162-TRW-0664R2, or any of the 2018 [*CTR] Aircraft as defined in Letter Agreement AAL-PA-03219-LA1804779, the [*CTR] for such [*CTR] and 2018 [*CTR] Aircraft will be [*CTR] on Exhibit A(R3) (or its replacement document) and [*CTR]. The [*CTR] is expressed in [*CTR] and is to be [*CTR] in accordance with the provisions of Supplemental Exhibit AE1 entitled “[*CTR]” as such provision have been applied to the Airframe Price.

2.1.2 The scheduled nominal delivery month for each 2018 787-9 [*CTR] (Nominal Delivery Month), as of the execution of this SA-11, is listed in Table 5. Each of the 2018 787-9 [*CTR] may be delivered in a [*CTR] consisting of the Nominal Delivery Month [*CTR] for each 2018 787-9 [*CTR] Aircraft. No later than [*CTR] prior to the Nominal Delivery Month of the first 2018 787-9 [*CTR] Aircraft in each calendar year as set forth in Table 5, Boeing will provide written notice to Customer setting forth the calendar month in the [*CTR] which will be the Scheduled Delivery Month for each 2018 787-9 [*CTR] Aircraft with a Nominal Delivery Month in such calendar year. Such notice will constitute an amendment to Table 5 and Table 5 will be restated at the execution of the next supplemental agreement to the Purchase Agreement to reflect such amendment.

2.1.3 Prior to providing such notice described in Article 2.1.2, [*CTR] of 2018 787-9 [*CTR] Aircraft scheduled for delivery in [*CTR]. Boeing agrees that, [*CTR] 2018 787-9 [*CTR] Aircraft be scheduled for delivery or delivered in any calendar month.

2.1.4 The Scheduled Delivery Month for each 2018 787-9 [*CTR] Aircraft as determined in accordance with Section 2.1.2 in this Letter Agreement for each Aircraft shall be used for purposes of applying all provisions of the Purchase Agreement, including without limitation, the [*CTR], and the [*CTR].

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2.2 Table 6. Table 6 entitled “787-8 [*CTR] Aircraft, Aircraft Delivery, Description, Price and Advance Payments” (Table 6) is hereby incorporated into the Purchase Agreement.

2.2.2 For the avoidance of doubt, Boeing and Customer confirm that the [*CTR] set forth on Table 6 was [*CTR] by Customer that are listed on the attachment to Exhibit A2(R4) and [*CTR]. Boeing and Customer further confirm that in the event that the [*CTR] listed on the attachment to Exhibit A2(R4) (or its replacement document) are ever amended or revised, for any reason, the [*CTR] on Table 6 (or its replacement document) will be [*CTR] listed on Exhibit A2(R4) (or its replacement document) and [*CTR]. Additionally, the parties agree that in the event the Customer [*CTR] as a 787-8 aircraft pursuant to Letter Agreement 6-1162-TRW-0664R2, or any of the 2018 [*CTR] Aircraft as defined in Letter Agreement AAL-PA-03219-LA1804779, the [*CTR] for such [*CTR] or 2018 [*CTR] Aircraft will be [*CTR] listed on Exhibit A2(R4) (or its replacement document) and [*CTR]. The [*CTR] is expressed in [*CTR] and is to be [*CTR] in accordance with the provisions of Supplemental Exhibit AE1 entitled “[*CTR]” as such provision have been applied to the Airframe Price.

3. Exhibits.

3.1 Exhibit A(R2) entitled “Aircraft Configuration Dated as Effective Date of SA-7 relating to Boeing Model [*CTR] Aircraft” referencing SA-7 in the footer is deleted in its entirety and replaced with Exhibit A(R3) entitled “Aircraft Configuration Dated as of the Effective Date of SA-11 relating to Boeing Model [*CTR]” (attached hereto) referencing SA-11 in the footer. Exhibit A(R3) is hereby incorporated into the Purchase Agreement.

3.2 Exhibit A2(R3) entitled “Aircraft Configuration Dated as Effective Date of SA-7 relating to Boeing Model [*CTR] Aircraft” referencing SA-6 in the footer is deleted in its entirety and replaced with the Exhibit A2(R4) entitled “Aircraft Configuration Dated as Effective Date of SA-11 relating to Boeing Model [*CTR] Aircraft” (attached hereto) referencing SA-11 in the footer. Exhibit A2(R4) is hereby incorporated into the Purchase Agreement.

4. Letter Agreements.

4.1 Letter Agreement 6-1162-CLO-1047R3 entitled “[*CTR]” referencing SA-6 in the footer is deleted in its entirety and replaced with the similarly titled Letter Agreement 6-1162-CLO-1047R4 (attached hereto) referencing SA-11 in the footer. Letter Agreement 6-1162-CLO-1047R4 is hereby incorporated into the Purchase Agreement.

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4.2 The Original 787 Rights Letter is deleted in its entirety and replaced with the similarly titled Letter Agreement 6-1162-TRW-0664R2 (attached hereto) referencing SA-11 in the footer. Letter Agreement 6-1162-TRW-0664R2 is hereby incorporated into the Purchase Agreement.

4.3 Letter Agreement 6-1162-TRW-0667R2 entitled “[*CTR]” referencing SA – 6 in the footer is deleted in its entirety and replaced with the similarly titled Letter Agreement 6-1162-TRW-0667R3 (attached hereto) referencing SA-11 in the footer. Letter Agreement 6-1162-TRW-0667R3 is hereby incorporated into the Purchase Agreement.

4.4 Letter Agreement 6-1162-TRW-0674R3 entitled “Business Considerations” referencing SA-6 in the footer is deleted in its entirety and replaced with the similarly titled Letter Agreement 6-1162-TRW-0674R4 (attached hereto) referencing SA-11 in the footer. Letter Agreement 6-1162-TRW-0674R4 is hereby incorporated into the Purchase Agreement.

4.5 Letter Agreement AAL-PA-3219-0883R1 entitled “[*CTR]” referencing SA – 6 in the footer is deleted in its entirety and replaced with the similarly titled Letter Agreement AAL-PA-3219-0883R2 (attached hereto) referencing SA-11 in the footer. AAL-PA-3219-0883R2 is hereby incorporated into the Purchase Agreement.

4.6 Letter Agreement AAL-PA-3219-1804779, entitled “[*CTR]”, including Attachments A and B thereto, is hereby incorporated into the Purchase Agreement.

4.7 Letter Agreement AAL-PA-3219-1802262, entitled “[*CTR],” including Attachments A and B thereto, is hereby incorporated into the Purchase Agreement.

4.8 Letter Agreement AAL-PA-3219-1802492, entitled “Open Configuration Matters,” is hereby incorporated into the Purchase Agreement.

5. Miscellaneous

5.1 Attachment 1 is added to this SA-11 to show the Scheduled Delivery Month and distribution of the 2018 [*CTR] Aircraft for the [*CTR] aircraft. For the avoidance of doubt, Attachment 1 is for historical purposes only and imposes no rights or obligations as it relates to either Boeing or Customer.

5.2 Attachment 2 is added to this SA-11 to show the Scheduled Delivery Month and distribution of the 2018 [*CTR] Aircraft for the [*CTR] aircraft. For the avoidance of doubt, Attachment 2 is for historical purposes only and imposes no rights or obligations as it relates to either Boeing or Customer.

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5.3 It is noted that the Optional Feature, [*CTR]) with an [*CTR] in the amount [*CTR], as set forth on Exhibit A(R3) will be [*CTR] on the 2018 787-9 [*CTR] Aircraft. If the [*CTR] by Customer for the 2018 787-9 [*CTR] Aircraft are the same [*CTR] described in this Section 5.3, then (i) the [*CTR] apply to the 2018 787-9 [*CTR] Aircraft Price, and (ii) the [*CTR] to Customer.

5.4 The definition of “Aircraft” in Exhibit C(R1) to the Purchase Agreement is hereby deleted in its entirety and replaced with the following:

Aircraft means any or all, as the context requires, of the Boeing Model 787 aircraft described in Tables 1(R7), 2(R1), 3(R1), 5 and 6 to the Purchase Agreement, together with the [*CTR], Engines and Parts that are incorporated or installed in or attached to such aircraft.

6. 787-9 Aircraft [*CTR].

[*CTR] set forth on Attachment 3 hereto. Customer shall [*CTR]. For the avoidance of doubt, [*CTR].

Notwithstanding the foregoing, if (i) [*CTR].

For purposes of this Section 6, [*CTR] in the Aircraft General Terms Agreement entered into by and between Boeing and Customer dated October 31, 1997 (as amended by the Purchase Agreement, the AGTA), the Purchase Agreement or any Letter Agreement or Supplemental Agreement to the Purchase Agreement that [*CTR], including but not limited to, the following: Sections 7.4 or 7.5 of the AGTA, Section 1.13 of the Letter Agreement No. 6-1162-TRW-0670R1 entitled “Miscellaneous Commitments for Model 787 Aircraft” (Misc Commitments LA), or Section 9.2 and 9.3 of this SA-11 entered into by and between Boeing and Customer dated as of the date hereof.

7. [*CTR] Pricing.

7.1 Table 5 787-9 Aircraft. The parties hereby confirm that in accordance with Supplemental Agreement No. 5, for the 787-9 Aircraft listed in Table 5 equipped with GEnx-1B74/75 engines, the [*CTR]. Such [*CTR] in accordance with the Purchase Agreement.

7.2 Table 6 787-8 Aircraft. The parties hereby confirm that in accordance with Supplemental Agreement No. 5, for the 787-8 Aircraft listed in Table 6 equipped

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with GEnx-1B70 engines, the [*CTR]. Such [*CTR] in accordance with the Purchase Agreement.

8. Advance Payments.

At execution of this SA-11, Advance Payments by Customer are [*CTR] per Letter Agreement No. 6-1162-CLO-1047R4 [*CTR] in Table 5 and Table 6. For the avoidance of doubt, the [*CTR] for Table 5 is [*CTR] and for Table 6 is [*CTR]. The [*CTR]. The parties agree that such [*CTR] between Customer and Boeing as set forth in the table below. The [*CTR].



Purchase Agreement	[*CTR]
Purchase Agreement No. 1977 dated October 31, 1997, relating to Boeing Model 737-823 aircraft	[*CTR]
Purchase Agreement No. 1979 dated October 31, 1997, relating to Boeing Model 767 aircraft	[*CTR]
Purchase Agreement No. 1980 dated October 31, 1980, relating to Boeing Model 777 aircraft	[*CTR]
Purchase Agreement No. 3219 dated October 15, 2008, relating to Boeing Model 787 aircraft	[*CTR
Total	[*CTR]

9. [*CTR].

9.1 If a [*CTR] pursuant to the proviso in the section of the [*CTR], Boeing agrees to [*CTR] of the applicable 2018 787-9 [*CTR] Aircraft, for a [*CTR]. Customer shall [*CTR] the applicable 2018 787-9 [*CTR] Aircraft during such [*CTR] notwithstanding the fact that such 2018 787-9 [*CTR] Aircraft may otherwise be [*CTR] during such period. For the avoidance of doubt, the [*CTR] shall be deemed an [*CTR] as defined in the AGTA as amended by the Misc Commitments LA, in which case the [*CTR] subject to the terms and conditions of the AGTA and the Purchase Agreement.

9.2 Customer and Boeing will [*CTR]:

9.2.1 the [*CTR] for any 2018 787-8 [*CTR] Aircraft following satisfaction by Customer of the applicable [*CTR]; or

9.2.2 Boeing, [*CTR] for such 2018 787-8 [*CTR] Aircraft.

In the event of a [*CTR], Boeing agrees to [*CTR] of the applicable 2018 787-8 [*CTR] Aircraft for the [*CTR]. Customer shall not be [*CTR] the applicable 2018 787-8 [*CTR] Aircraft during such [*CTR], as applicable, notwithstanding the fact that such

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2018 787-8 [*CTR] Aircraft may otherwise be [*CTR] during such [*CTR]. For the avoidance of doubt, the [*CTR] shall be deemed a [*CTR] as defined in Section 1.13 of the Misc Commitments LA, the [*CTR] is otherwise subject to the terms and conditions of the AGTA and the Purchase Agreement.

If prior to the [*CTR], Boeing and Customer are [*CTR], Customer may, within [*CTR] following the [*CTR], and in its sole discretion, either (i) [*CTR] the applicable 2018 787-8 [*CTR] Aircraft for which the [*CTR] occurred, or (ii) [*CTR] the Purchase Agreement with respect to (A) the applicable 2018 787-8 [*CTR] Aircraft for which the [*CTR] occurred, or (B) any [*CTR] 2018 787-8 [*CTR] Aircraft, including the applicable 2018 787-8 [*CTR] Aircraft for which the [*CTR] occurred, without [*CTR] with respect to any such 2018 787-8 [*CTR] Aircraft [*CTR] by Customer in accordance with clause (ii) of this paragraph. If Customer [*CTR] the Purchase Agreement as to [*CTR] 2018 787-8 [*CTR] Aircraft under this Section 9.2, Boeing shall (x) [*CTR] by Customer for the [*CTR] 2018 787-8 [*CTR] Aircraft with [*CTR] from Customer to Boeing of the [*CTR] to Customer by Boeing pursuant to this Section 9.2, (y) [*CTR] from Customer all [*CTR] related to the [*CTR] 2018 787-8 [*CTR] Aircraft at the [*CTR], by Customer, and (z) [*CTR] Customer for all [*CTR] related to the anticipated [*CTR] of such [*CTR] 2018 787-8 [*CTR] Aircraft, including, but not limited to, all 2018 787-8 [*CTR] Aircraft that have been [*CTR] in accordance with this Section 9.2 but are not yet [*CTR].

9.3 Customer and Boeing will [*CTR]:

9.3.1 the [*CTR] for any 2018 787-9 [*CTR] Aircraft (as defined in the [*CTR]) following [*CTR].

In the event of a [*CTR], Boeing agrees to [*CTR] of the applicable 2018 787-9 [*CTR] Aircraft for the [*CTR]. Customer shall not be [*CTR] the applicable 2018 787-9 [*CTR] Aircraft during such [*CTR], as applicable, notwithstanding the fact that such 2018 787-9 [*CTR] Aircraft may otherwise be [*CTR] during such [*CTR]. For the avoidance of doubt, the [*CTR] shall be deemed a [*CTR] as defined in Section 1.13 of the Misc Commitments LA, the [*CTR] is otherwise subject to the terms and conditions of the AGTA and the Purchase Agreement.

If prior to the [*CTR], Boeing and Customer are [*CTR], Customer may, within [*CTR] following the [*CTR], and in its sole discretion, either (i) proceed to [*CTR] the applicable 2018 787-9 [*CTR] Aircraft for which the [*CTR] occurred, or (ii) [*CTR] the Purchase Agreement with respect to the applicable 2018 787-9 [*CTR] Aircraft for which the [*CTR] occurred, without [*CTR] with respect to such 2018 787-9 [*CTR] Aircraft [*CTR] by Customer in accordance with clause (ii) of this paragraph. If Customer elects to [*CTR] the Purchase Agreement as to such 2018 787-9 [*CTR]

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Aircraft under this Section 9.3, Boeing shall (x) [*CTR] by Customer for the [*CTR] 2018 787-9 [*CTR] Aircraft with [*CTR] from Customer to Boeing of the [*CTR] pursuant to this Section 9.3, (y) [*CTR] from Customer all [*CTR] related to the [*CTR] 2018 787-9 [*CTR] Aircraft at the [*CTR], by Customer, and (z) [*CTR] Customer for all [*CTR] related to the anticipated [*CTR] of such [*CTR] 2018 787-9 [*CTR] Aircraft, including, but not limited to, all 2018 787-9 [*CTR] Aircraft that have been [*CTR] in accordance with this Section 9.3 but are not yet ready to be delivered.

10. Effect on Purchase Agreement.

10.1 Table 1 Reference Clarifications.

10.1.1 References in the Purchase Agreement and the associated exhibits, supplemental exhibits, and letter agreements to the Purchase Agreement to “Table 1(R7), Table 2(R1) and Table 3(R1)” are now deemed to refer to “Table 1(R7), Table 2(R1), Table 3(R1), Table 5, and Table 6.” Specifically, the locations of such references are as follows:


•	Articles 1, 2, 3 (all sections), 4 (all sections), and Section 5.1 of the Basic Articles


•	Definitions of “Aircraft” and “Engine” in Exhibit C(R1)


•	Section 1 of Supplemental Exhibit AE1


•	Section 1.1 of Letter Agreement 6-1162-TRW-0672R1 entitled “Promotional Support Agreement”

10.1.2 The reference to “Table 1(R4)” in Section 1.3.1.1 of the Letter Agreement AAL-PA-3219-LA-1604503 entitled “787 Aircraft [*CTR] Matters” (787 [*CTR] Letter) is deemed to refer to “Table 1(R7) and Table 5.”

10.1.3. The references to “Table 1(R5)” in Section 3.1 of the 787 [*CTR] Letter is deemed to refer to “Table 1(R7).”

10.1.4 The reference to “Table 1(R7)” in Section 1 of Supplemental Exhibit EE1 is now deemed to refer “Table 1(R7) and Table 5”.

10.1.5 The reference to “Table 2(R1) and Table 3(R1)” in Section 1 of Supplemental Exhibit EE2 is now deemed to refer to “Table 2(R1), Table 3(R1), and Table 6”.

10.2 Supplemental Exhibit EE1 and Supplemental Exhibit EE2 Clarifications.

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10.2.1 For the avoidance of doubt, since the effective date of Supplemental Agreement No. 4 to the Purchase Agreement (SA-4) the following references to “Supplemental Exhibit EE1” have been deemed to refer to, and shall continue to be deemed to refer to, “Supplement Exhibit EE1 or Supplemental Exhibit EE2, as applicable.”


•	Section 2.15 of the Aircraft General Terms Agreement by and between Boeing and Customer dated October 31, 1997


•	Section 5.5 of the Basic Articles


•	Definition of “[*CTR]” in Exhibit C(R1)

10.2.2 For the avoidance of doubt, since the effective date of SA-4, the reference to “Supplemental Exhibit EE1” in Section 2.3 of Supplemental Exhibit EE2 has been deemed to refer to, and shall continue to be deemed to refer to, “Supplemental Exhibit EE2.”

10.2.3 For the avoidance of doubt, since the effective date of SA-4, the reference to “Supplemental Exhibit EE1” in Section 3.1 of Letter Agreement 6-1162-TRW-0670R1 entitled “Miscellaneous Commitments for Model 787 Aircraft” has been deemed to refer to, and shall continue to be deemed to refer to, “Supplemental Exhibit EE1 or Supplemental Exhibit EE2.”

10.3 References in the Purchase Agreement and any supplemental agreements and associated letter agreements to the tables, exhibits, supplemental exhibits and letter agreements listed in the left column of the below table shall be deemed to refer to the corresponding tables, exhibits, supplemental exhibits and letter agreements listed in the right column of the below table.



Reference	Replacement Reference
Exhibit A(R2)	Exhibit A(R3)
Exhibit A2(R3)	Exhibit A2(R4)
Letter Agreement 6-1162-TRW-1047R3	Letter Agreement 6-1162-TRW-1047R4
Letter Agreement 6-1162-TRW-0664R1	Letter Agreement 6-1162-TRW-0664R2
Letter Agreement 6-1162-TRW-0667R2	Letter Agreement 6-1162-TRW-0667R3
Letter Agreement 6-1162-TRW-0674R3	Letter Agreement 6-1162-TRW-0674R4
Letter Agreement AAL-PA-3219-LA-08836R1	Letter Agreement AAL-PA-3219-LA-08836R2

10.4 For the avoidance of doubt, for purposes of Section 1.2.2.3 of the 787 [*CTR] Letter, the 2018 787-8 [*CTR] Aircraft are Rights Aircraft that are both (i) being

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delivered pursuant to an [*CTR] (as both are defined in the Original 787 Rights Letter) and (ii) a 787-8 model type Aircraft.

10.5 Except as expressly set forth herein, all terms and provisions contained in the Purchase Agreement shall remain in full force and effect. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all previous proposals, and agreements, understandings, commitments or representations whatsoever, oral or written, with respect to the subject matter hereof and may be changed only in writing signed by authorized representatives of the parties.

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AGREED AND ACCEPTED

April 6, 2018
Date

THE BOEING COMPANY		AMERICAN AIRLINES, INC.

/s/ The Boeing Company		/s/ American Airlines, Inc.
Signature		Signature

The Boeing Company		American Airlines, Inc.
Printed name		Printed name

Attorney-in-Fact		Vice President and Treasurer
Title		Title

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TABLE OF CONTENTS, continued

TABLE OF CONTENTS



ARTICLES			SA NUMBER
1.	Quantity, Model and Description		SA-3
2.	Delivery Schedule		SA-3
3.	Price		SA-3
4.	Payment		SA-3
5.	Miscellaneous		SA-3
6.	Confidential Treatment

TABLE
1.	Aircraft Information Table – TRENT WITHDRAWN		SA-2
1(R7)	787-9 Aircraft Information Table – GENX
2(R1)	787-8 Aircraft Information Table – GENX ([*CTR] (12) 787-8 Aircraft)		SA-5
3(R1)	787-8 Aircraft Information Table – GENX ([*CTR] Eight (8) 787-8 Aircraft, yielding Twenty (20) 787-8 Aircraft)		SA-5
4	WITHDRAWN		SA-6
5 6	2018 787-9 [CTR] Aircraft Information Table – GENX 2018 787-8 [CTR] Aircraft Information Table-GENX		SA-11 SA-11

EXHIBIT
A(R3).	Aircraft Configuration for [*CTR] Aircraft		SA-11
A2(R4)	Aircraft Configuration for [*CTR] Aircraft		SA-11
B(R1).	Aircraft Delivery Requirements and Responsibilities		SA-3
C(R1).	Defined Terms		SA-3

SUPPLEMENTAL EXHIBITS
AE1.		[*CTR]
BFE1(R1).		Buyer Furnished Equipment Variables 787-9	SA-3
BFE2.		Buyer Furnished Equipment Variables 787-8	SA-3
CS1.		787 Customer Support Document
EE1.		[*CTR]
EE1.		[*CTR] WITHDRAWN	SA-2
EE2.		[*CTR]	SA-4
SLP1.		Service Life Policy Components

LETTER AGREEMENTS			SA NUMBER
3219-01		[*CTR]
3219-02		Special Terms – Seats and In-Flight Entertainment

P.A. No. 3219 SA-11

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TABLE OF CONTENTS, continued



3219-04	[*CTR]
3219-05R1	Spare Parts Commitments	SA-3
3219-06R1	Spare Parts Initial Provisioning	SA-3
3219-08R2	Open Configuration Matters WITHDRAWN	SA-8
6-1162-AKP-071R1	[*CTR] Terminated per AAL-PA-1977-LA-1105595
6-1162-AKP-072R2	[*CTR] Terminated per AAL-PA-1977-LA-1105595
6-1162-AKP-073R1	Accident Claims and Litigation
6-1162-CLO-1031R1	[*CTR] WITHDRAWN	SA-2 SA-3
6-1162-CLO-1032R1	[*CTR] Terminated	SA-3
6-1162-CLO-1039	[*CTR]
6-1162-CLO-1042	[*CTR]
6-1162-CLO-1043R1	787 Inspection Process	SA-3
6-1162-CLO-1045R1	[*CTR]	SA-2
6-1162-CLO-1046	SA-eE, COTS Software and End User License Matters WITHDRAWN	SA-3
6-1162-CLO-1047R4	[*CTR]	SA-11
6-1162-CLO-1048	Final Matters WITHDRAWN	SA-2
6-1162-CLO-1049R2	CS1 Matters	SA-6
6-1162-TRW-0664R2	Aircraft Purchase Rights and Substitution Rights	SA-11
	Attachment A(R2) – MADP Exercise Dates WITHDRAWN	SA-11
	Attachment B(R2) – QADP Exercise Dates WITHDRAWN	SA-11
	Attachment C(R3) – MADP & QADP Rights Aircraft: Description/Price Data Attachment C(R4)	SA-11
	Attachment D – Form of Purchase Agreement Supplement	SA-11
	Attachment E – Letter Agreements To Be Included In Purchase Agreement Supplement	SA-6
LETTER AGREEMENTS		SA NUMBER
6-1162-TRW-0665	[*CTR] WITHDRAWN	SA-3
6-1162-TRW-0666	[*CTR] WITHDRAWN	SA-3
6-1162-TRW-0667R3	[*CTR]	SA-11
6-1162-TRW-0668R1	Special Matters Relating to COTS Software and End User License Agreements	SA-3
6-1162-TRW-0670R1	Miscellaneous Commitments for Model 787 Aircraft	SA-3

P.A. No. 3219 SA-11

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TABLE OF CONTENTS, continued



6-1162-TRW-0671	[*CTR] WITHDRAWN	SA-3
6-1162-TRW-0672R1	Promotional Support Agreement	SA-3
6-1162-TRW-0673R1	Confidentiality	SA-3
6-1162-TRW-0674R4	Business Considerations	SA-11
AAL-PA-3219-LA-08836R2	[*CTR]	SA-11
AAL-PA-3219-LA-08837R1	[*CTR]	SA-6
AAL-PA-3219-LA-08838	[*CTR]	SA-3
AAL-LA-1106678	Assignment Matters	SA-3
AAL-PA-3219-LA-1302236R1	[*CTR]	SA-6
AAL-PA-3219-LA-1604503R1	787 [*CTR] Matters	SA-8
AAL-PA-03219-LA-1701988 AAL-PA-03219_LA-1804779 AAL-PA-03219-LA-1802262 AAL-PA-03219-LA-1802492	[CTR] [CTR] [*CTR] Open Configuration Matters	SA-10 SA-11 SA-11 SA-11
ATTACHMENTS
Attachment 1	Schedule for [*CTR] of 787-9 [MADP Rights]	SA-11
Attachment 2	Schedule for [*CTR] of 787-9 [QADP Rights]	SA-11
Attachment 3	787-9 Purchase Rights Aircraft [*CTR] Schedule	SA-11

P.A. No. 3219 SA-11

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Attachment 1: [*CTR] SA-11 Aircraft Distribution



	787-8	787-9	Delivery Month/Year
1.	[*CTR]	[*CTR]	[*CTR]
2.	[*CTR]	[*CTR]	[*CTR]
3.	[*CTR]	[*CTR]	[*CTR]
4.	[*CTR]	[*CTR]	[*CTR]
5.	[*CTR]	[*CTR]	[*CTR]
6.	[*CTR]	[*CTR]	[*CTR]
7.	[*CTR]		[*CTR]
8.	[*CTR]		[*CTR]
9.	[*CTR]		[*CTR]
10.	[*CTR]		[*CTR]
11.	[*CTR]		[*CTR]
12.	[*CTR]		[*CTR]
13.	[*CTR]		[*CTR]
14.	[*CTR]		[*CTR]
15.		[*CTR]	[*CTR]
16.		[*CTR]	[*CTR]
17.		[*CTR]	[*CTR]
18.		[*CTR]	[*CTR]
19.		[*CTR]	[*CTR]
20.		[*CTR]	[*CTR]
21.		[*CTR]	[*CTR]
22.		[*CTR]	[*CTR]
23.		[*CTR]	[*CTR]
24.		[*CTR]	[*CTR]
25.		[*CTR]	[*CTR]
26.		[*CTR]	[*CTR]
27.		[*CTR]	[*CTR]
28.		[*CTR]	[*CTR]
29.		[*CTR]	[*CTR]
	[*CTR]	[*CTR]

SA-11

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Attachment 2: [*CTR] SA-11 Aircraft Distribution



	787-8	787-9	Delivery Quarter/Year
1.	[*CTR]	[*CTR]	[*CTR]
2.	[*CTR]	[*CTR]	[*CTR]
3.	[*CTR]	[*CTR]	[*CTR]
4.	[*CTR]	[*CTR]	[*CTR]
5.	[*CTR]	[*CTR]	[*CTR]
6.	[*CTR]	[*CTR]	[*CTR]
7.	[*CTR]	[*CTR]	[*CTR]
8.	[*CTR]	[*CTR]	[*CTR]
9.	[*CTR]		[*CTR]
10.	[*CTR]		[*CTR]
11.	[*CTR]		[*CTR]
12.	[*CTR]		[*CTR]
13.	[*CTR]		[*CTR]
14.	[*CTR]		[*CTR]
15.	[*CTR]		[*CTR]
16.	[*CTR]		[*CTR]
17.	[*CTR]		[*CTR]
18.	[*CTR]		[*CTR]
19.	[*CTR]		[*CTR]
20.		[*CTR]	[*CTR]
21.		[*CTR]	[*CTR]
22.		[*CTR]	[*CTR]
23.		[*CTR]	[*CTR]
24.		[*CTR]	[*CTR]
25.		[*CTR]	[*CTR]
26.		[*CTR]	[*CTR]
27.		[*CTR]	[*CTR]
28.		[*CTR]	[*CTR]
29.		[*CTR]	[*CTR]
	[*CTR]	[*CTR]

SA-11

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Attachment 3: 787-9 Aircraft [*CTR]



787-9 Aircraft	787-9 Aircraft [*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]

SA-11

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Table 5 To

Purchase Agreement No. PA-03219

787-9 [*CTR], Aircraft Delivery, Description, Price and Advance Payments



Airframe Model/MTOW:	787-9	[*CTR] pounds	Detail Specification:	[*CTR]
Engine Model/Thrust:	GENX-1B74/75	[*CTR] pounds	Airframe Price Base Year/Escalation Formula:	[*CTR]		[*CTR]
Airframe Price:		$[*CTR]	Engine Price Base Year/Escalation Formula:	[*CTR]		[*CTR]
Optional Features:		$[*CTR]
Sub-Total of Airframe and	Features:	$[*CTR]	Airframe Escalation Data:
Engine Price (Per Aircraft)	:	$[*CTR]	Base Year Index (ECI):		[*CTR]
Aircraft Basic Price (Excluding BFE/SPE):		$[*CTR]	Base Year Index (CPI):		[*CTR]
Buyer Furnished Equipment (BFE) Estimate:		$[*CTR]	Engine Escalation Data:
//Seller Purchased Equipment (SPE)/In-Flight Ent		$[*CTR]	Base Year Index (ECI):		[*CTR]
LIFT Seats Provided by Boeing (Estimate):		$[*CTR]	Base Year Index (CPI):		[*CTR]
Deposit per Aircraft:		$[*CTR]



Nominal Delivery Month*	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Nominal Delivery Month*	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2023	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

AL-PA-03219 108759-1F.txt SA-11, Table 5

Boeing Proprietary Page 1

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Table 5 To

Purchase Agreement No. PA-03219

787-9 [*CTR], Aircraft Delivery, Description, Price and Advance Payments



Nominal Delivery Month*	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Nominal Delivery Month*	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2025	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

Total: 25

Note: The Advance Payment Base Price includes the [*CTR].

Per Section 5.3 of SA-11, this will be [*CTR] for the 2018 787-9 [*CTR] Aircraft. Upon final configuration of the 2018 787-9 [*CTR] Aircraft, the Advance Payment Base Price will be [*CTR] for the Aircraft.

Note: Please see section 2.1.2, 2.1.3, and 2.1.4 of SA-11, Basic Articles for details on the "Nominal Delivery Month."

AL-PA-03219 108759-1F.txt SA-11, Table 5

Boeing Proprietary Page 2

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Table 6 To

Purchase Agreement No. PA-03219

787-8 [*CTR] Aircraft, Aircraft Delivery, Description, Price and Advance Payments



Airframe Model/MTOW:	787-8	[*CTR] pounds	Detail Specification:	[*CTR]
Engine Model/Thrust:	GENX-1B70	[*CTR] pounds	Airframe Price Base Year/Escalation Formula:	[*CTR]		[*CTR]
Airframe Price:		$[*CTR]	Engine Price Base Year/Escalation Formula:	[*CTR]		[*CTR]
Optional Features:		$[*CTR]
Sub-Total of Airframe and Features:		$[*CTR]	Airframe Escalation Data:
Engine Price (Per Aircraft):		$[*CTR]	Base Year Index (ECI):		[*CTR]
Aircraft Basic Price	Excluding BFE/SPE):	$[*CTR]	Base Year Index (CPI):		[*CTR]
Buyer Furnished Equipment (BFE) Estimate:		$[*CTR]	Engine Escalation Data:
//Seller Purchased Equipment (SPE)/In-Flight Ent		$[*CTR]	Base Year Index (ECI):		[*CTR]
LIFT Seats Provided by Boeing (Estimate):		$[*CTR]	Base Year Index (CPI):		[*CTR]
Deposit per Aircraft:		$[*CTR]



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2020	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

AAL-PA-03219 108757-1F.txt SA-11, Table 6

Boeing Proprietary Page 1

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Table 6 To

Purchase Agreement No. PA-03219

787-8 [*CTR] Aircraft, Aircraft Delivery, Description, Price and Advance Payments



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2021	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021	1	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

Total: 22

AAL-PA-03219 108757-1F.txt SA-11, Table 6

Boeing Proprietary Page 2

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

AIRCRAFT CONFIGURATION

between

THE BOEING COMPANY

and

AMERICAN AIRLINES, INC.

Exhibit A(R3) to Purchase Agreement Number 3219

PA No. 3219 SA-11 Exhibit A(R3)

BOEING PROPRIETARY

Exhibit A(R3)

AIRCRAFT CONFIGURATION

Dated as of the effective Date of SA-11

relating to

BOEING MODEL [*CTR] AIRCRAFT

The Detail Specification is Boeing Detail Specification [*CTR] (the [*CTR] due to the Detail Specification being [*CTR], e.g., for the [*CTR], the Detail Specification is [*CTR]). The Detail Specification provides [*CTR] set forth in this Exhibit A. Such Detail Specification will be comprised of Boeing 787 Airplane [*CTR] by Customer, including the effects on [*CTR], that are specified herein. [*CTR], Boeing will furnish to Customer copies of the Detail Specification, which copies will [*CTR]. The [*CTR], except such [*CTR].

PA 3219 SA-11 Exhibit A(R3), Page 1

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]



Option Number	Description	[CTR] [CTR] A/P Price Per A/C	[CTR] [CTR] Per A/C
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]

PA 3219 SA-11 Exhibit A(R3), Page 1

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]



Option Number	Description	[CTR] [CTR] A/P Price Per A/C	[CTR] [CTR] Per A/C
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]

PA 3219 SA-11 Exhibit A(R3), Page 2

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]



Option Number	Description	[CTR] [CTR] A/P Price Per A/C	[CTR] [CTR] Per A/C
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]

PA 3219 SA-11 Exhibit A(R3), Page 3

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]



Option Number	Description	[CTR] [CTR] A/P Price Per A/C	[CTR] [CTR] Per A/C
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]

PA 3219 SA-11 Exhibit A(R3), Page 4

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]



Option Number	Description	[CTR] [CTR] A/P Price Per A/C	[CTR] [CTR] Per A/C
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]

[*CTR]



[*CTR]	[*CTR]	[*CTR]	[*CTR]

[*CTR]

[*CTR] [*CTR] [*CTR] [*CTR]


[*CTR]	[CTR] [CTR] [*CTR]


[*CTR]	[CTR] [CTR] [*CTR]


[*CTR]	[CTR] [CTR] [*CTR]


[*CTR]	[CTR] [CTR] [*CTR]


[*CTR]	[CTR] [CTR] [*CTR]


[*CTR]	[CTR] [CTR] [*CTR]


[*CTR]	[CTR] [CTR] [*CTR]

PA 3219 SA-11 Exhibit A(R3), Page 5

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]



Option Number	Description	[CTR] [CTR] A/P Price Per A/C	[CTR] [CTR] Per A/C

[*CTR]

[*CTR] [*CTR] [*CTR] [*CTR]

[*CTR]

[*CTR] [*CTR] [*CTR] [*CTR]

[*CTR]

[*CTR] [*CTR]

PA 3219 SA-11 Exhibit A(R3), Page 6

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

AIRCRAFT CONFIGURATION

between

THE BOEING COMPANY

and

AMERICAN AIRLINES, INC.

Exhibit A2(R4) to Purchase Agreement Number 3219

Exhibit A2(R4)

AIRCRAFT CONFIGURATION

Dated as of the effective Date of SA-11

relating to

BOEING MODEL [*CTR] AIRCRAFT

The Detail Specification is Boeing document number [*CTR] (the [*CTR] due to the Detail Specification being [*CTR]). The Detail Specification provides [*CTR] set forth in this Exhibit A. Such Detail Specification is comprised of Boeing 787 Airplane [*CTR] by Customer, including the effects on [*CTR], that are specified herein. [*CTR], Boeing will furnish to Customer copies of the Detail Specification, which copies will [*CTR]. The [*CTR], except such [*CTR].


PA No. 3219	SA-11 Exhibit A2(R4), Page 1

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]



Option Number	Description	[CTR] [CTR] A/P Price Per A/C
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]

Exhibit A2(R4)


PA 3219	SA-11 Page: 1 of 5

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]



Number	Description	Per A/C
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]

Exhibit A2(R4)


PA 3219	SA-11 Page: 2 of 5

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]



Number	Description	Per A/C
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]

Exhibit A2(R4)


PA 3219	SA-11 Page: 3 of 5

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]



Number	Description	Per A/C
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]

Exhibit A2(R4)


PA 3219	SA-11 Page: 4 of 5

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]



Number	Description	Per A/C
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]

Options: [*CTR]	[*CTR]	[*CTR]

Exhibit A2(R4)


PA 3219	SA-11 Page: 5 of 5

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

The Boeing Company

P.O. Box 3707

Seattle, WA 98124-2207

6-1162-CLO-1047R4

American Airlines, Inc.

P.O. Box 619616

Dallas-Fort Worth Airport

Texas 75261-9616

Subject: [*CTR]


Reference:	Purchase Agreement No. 3219 (Purchase Agreement) between The Boeing Company (Boeing) and American Airlines, Inc. (Customer) relating to Model 787 aircraft (Aircraft)

This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not defined in this Letter Agreement have the same meaning as in the Purchase Agreement.


1.	[*CTR].

1.1 [*CTR].

1.2 [*CTR].

1.3 [*CTR].

1.4 [*CTR].

1.4.1 [*CTR].

1.4.2 [*CTR].

1.5 [*CTR].

1.6 [*CTR].


2.	Assignment.

Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter Agreement are provided to Customer in consideration of Customer becoming the operator of the Aircraft and cannot be assigned, in whole or in part, without the prior written consent of Boeing.

PA No. 3219 SA-11

L.A. 6-1162-CLO-1047R4

[*CTR] Page 1

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

3. Confidential Treatment.

The information contained herein represents confidential business information and has value precisely because it is not available generally or to other parties. Customer will limit the disclosure of its contents to employees of Customer with a need to know the contents for purposes of helping Customer perform its obligations under the Purchase Agreement and who understand they are not to disclose its contents to any other person or entity without the prior written consent of Boeing. Subject to the terms and conditions of Letter Agreement 6-1162-TRW-0673R1 entitled “Confidentiality”, either party may disclose the information contained herein without the consent of the other party when and to the extent required by any law applicable to such party or by a Governmental Authority.

Very truly yours,

THE BOEING COMPANY

By: /s/ The Boeing Company

Its: Attorney‑In‑Fact

ACCEPTED AND AGREED TO this

Date: April 6, 2018

AMERICAN AIRLINES, INC.

By: /s/ American Airlines, Inc.

Its: Vice President and Treasurer

PA No. 3219 SA-11

L.A. 6-1162-CLO-1047R4

[*CTR] Page 2

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

The Boeing Company

P.O. Box 3707

Seattle, WA 98124-2207

6-1162-TRW-0664R2

American Airlines, Inc.

P.O. Box 619616

Dallas/Ft. Worth Airport, Texas 75261-9616

Subject: Aircraft Purchase Rights and Substitution Rights


Reference:	Purchase Agreement No. 3219 (Purchase Agreement) between The Boeing Company (Boeing) and American Airlines, Inc. (Customer) relating to Model 787 aircraft (Aircraft)

This letter agreement (Letter Agreement) is entered into on the date below, and constitutes a part of the Purchase Agreement, as the same may hereafter be amended, modified or supplemented and including, without limitation, as part thereof the exhibits, appendices, schedules, attachments and letter agreements thereto.

[*CTR]

1. Definitions. Capitalized terms used herein and not defined pursuant to this Letter Agreement have the meanings set forth in the Purchase Agreement. The following terms, when used in capitalized form, have the following meanings:

Applicable Delivery Month means: (a) with respect to each Firm Aircraft, the Scheduled Delivery Month for such aircraft and (b) with respect to each [*CTR] specified therefore (or such other month in which a Delivery Position has been reserved for such aircraft in accordance with the procedures set forth in Section 4.3).

Applicable Purchase Agreement means: (a) when used with respect to any Rights Aircraft or Substitute Aircraft that is a model 787-923 or a 787-8, the Purchase Agreement, as may be supplemented, amended or modified, or (b) when used with respect to any Derivative made available for purchase by Customer, the purchase agreement executed and delivered pursuant to Section 8.2 hereof in connection with Customer's first purchase (if any) of such Derivative, as may be supplemented, amended or modified.

PA No. 3219 SA-11 L.A. 6-1162-TRW-0664R2

Aircraft Purchase Rights and Substitution Rights Page 1

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Available Position means any Delivery Position that is available in Boeing's judgment for the delivery of a Rights Aircraft to Customer in connection with the exercise of a [*CTR].

Available Introduction Position means an Introduction Position that is available in Boeing's judgment for the delivery of a Rights Aircraft or Substitute Aircraft (as the case may be) with an interior configuration not previously certified by the FAA.

Business Day means Monday through Friday, except for U.S. federal or state holidays.

Delivery Position means that portion of the production rate that is or may from time to time be allocated by Boeing or its Affiliate for the manufacture of a model 787 aircraft (or any Derivative or Successor) and delivery of such aircraft in a specified month.

Derivative means any airframe model that is a derivative of the model 787 (other than a model 787-8 or model 787-3) that is developed by Boeing or an Affiliate of Boeing subsequent to the date hereof.

Eligible Model means all or any combination thereof, as the context requires, of the following listed airframe model types, in each case manufactured in accordance with the applicable Detail Specification identified on Attachment C(R4) (as may be subsequently revised) hereto, as such Detail Specification may be modified from time to time in accordance with Article 4 of the AGTA or as otherwise mutually agreed to by Boeing and Customer:

(a) at any time, the Boeing model 787-923;


(b)	in the case of the Boeing model 787-8, such model will be an Eligible Model:

(i) [*CTR]; or

(ii) [*CTR].

(c) any Derivative or Successor Model from and after such time as it is deemed to be an Eligible Model in accordance with the provisions of Section 9 hereof.

Expiration Date means [*CTR].

PA No. 3219 SA-11 L.A. 6-1162-TRW-0664R2

Aircraft Purchase Rights and Substitution Rights Page 2

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Firm Advance Payments has the meaning set forth in Section 5.3 hereof.

Firm Aircraft means: (a) the eighty-nine (89) Boeing model 787 aircraft identified as of the date hereof on Tables 1(R7), Table 2(R1), Table 3(R1), Table 5, and Table 6 to the Purchase Agreement; and (b) any aircraft incorporated after the date hereof in an Applicable Purchase Agreement pursuant to Section 9 hereof.

Introduction Position means each Delivery Position for an Aircraft with an interior configuration not previously certified by the FAA that is designated by Boeing in the ordinary course of business as a customer introduction production position.

Launch Program means a program initiated by Boeing to design, manufacture and obtain FAA type certification for a new model type of aircraft (e.g., Model B797), or a new sub-model type of aircraft (e.g., Model 787-10). A Launch Program may require that certain conditions be met by customers ordering aircraft subject to the Launch Program, which may include but not be limited to: (i) minimum number of customers; (ii) engine availability; (iii) use of customers’ aircraft for certification and development purposes; (iv) additional restrictions on optional features available; and (v) restrictions on the availability of Delivery Positions for aircraft purchased pursuant to the exercise of certain purchase rights. Such conditions will no longer be applicable upon completion of the Launch Program.

Modified Exercise Notice means a notice delivered by Customer pursuant to Section 4.3(b) hereof.

Proposal Deposit means, with respect to each Eligible Model, that amount designated in Attachment C(R4) (as may be subsequently revised) hereto as the “[*CTR]” for such model.

Purchase Agreement Supplement means any supplement to an Applicable Purchase Agreement, substantially in the form of Attachment D hereto or otherwise in form and substance reasonably satisfactory to Boeing and Customer, from time to time executed and delivered pursuant to Section 8.1.

Purchase Rights means the [*CTR] granted pursuant hereto.

Requested Delivery Month means such month(s) in which Customer desires delivery of a Rights Aircraft subject to a [*CTR], as specified by Customer in a [*CTR].

Rights Aircraft [*CTR].

[*CTR] has the meaning set forth in Section 4.3 hereof.

PA No. 3219 SA-11 L.A. 6-1162-TRW-0664R2

Aircraft Purchase Rights and Substitution Rights Page 3

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

[*CTR] has the meaning set forth in Section 2 hereof.

Substitute Aircraft means any aircraft which Customer has designated, pursuant to Section 5.1 hereof, to be delivered in lieu of a Firm Aircraft.

Substitution Notice has the meaning set forth in Section 5.1 hereof.

Successor Model means [*CTR].

Then Current Engine Price means the Engine Price of Rights Aircraft or Substitute Aircraft set by the Engine Supplier as of the date of execution of a Purchase Agreement Supplement entered into by Boeing and Customer.

[*CTR].

2. [*CTR].

3. Information.

3.1 [*CTR].

3.2 [*CTR].

3.3 Concurrently with the disclosure by Boeing or any Affiliate of Boeing to any other customer or potential customer of plans to study the development of a Derivative or a Successor Model, Boeing will make available to Customer information, in reasonable detail, regarding such Derivative or Successor Model, including, but not limited to, the product development activities and schedule with respect thereto.

3.4 Boeing will inform Customer of, and offer Customer the opportunity to participate in, any airline working group or other forum sponsored by Boeing for the purpose of soliciting the input of potential customers in connection with the development of any Derivative or any Successor Model.

3.5 [*CTR]

3.6 [*CTR].

PA No. 3219 SA-11 L.A. 6-1162-TRW-0664R2

Aircraft Purchase Rights and Substitution Rights Page 4

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

4. Exercise of Purchase Rights.

4.1 Intentionally Omitted.

4.2 Intentionally Omitted.

4.3 [*CTR]:

(a) [*CTR].

(b) [*CTR]:

(i) [*CTR]; and

(ii) [*CTR].

[*CTR].

4.4 [*CTR]. Intentionally Omitted.

5. Substitution Right.

5.1 [*CTR].

5.2 [*CTR].

5.3 [*CTR].

6. Aircraft Price and Credit Memoranda.

6.1 [*CTR].

6.2 [*CTR].

6.3 [*CTR].

6.3.1 [*CTR].

6.3.2 [*CTR].

6.4. [*CTR].

PA No. 3219 SA-11 L.A. 6-1162-TRW-0664R2

Aircraft Purchase Rights and Substitution Rights Page 5

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

7. Payments.

7.1 [*CTR].

7.2 [*CTR].

7.3. [*CTR].

8. Forms of Agreement.

8.1 [*CTR].

8.2 [*CTR]:

(a) [*CTR];

(b) [*CTR];

(d) [*CTR].

[*CTR].

9. Derivative and Successor Models. If prior to the Expiration Date Boeing and Customer agree upon terms and conditions (including, without limitation, any applicable launch program conditions) for the purchase of a Derivative or Successor Model, such Derivative or Successor Model shall be deemed to be an Eligible Model hereunder, and Customer shall be entitled, subject to the terms hereof, to exercise any Purchase Right for the purchase of such Derivative or Successor Model and/or to exercise its right of substitution to have such Derivative or Successor Model delivered in lieu of any Firm Aircraft.

10. Production Capacity Assurances. If Customer desires to purchase a sufficient number of Rights Aircraft that would, in Boeing's reasonable judgment, economically justify an increase in the production rate for the model type of aircraft Customer desires to purchase, Boeing shall use its best reasonable efforts to increase the production rate for such aircraft.

11. Intentionally Omitted.

PA No. 3219 SA-11 L.A. 6-1162-TRW-0664R2

Aircraft Purchase Rights and Substitution Rights Page 6

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

The Boeing Company

P.O. Box 3707

Seattle, WA 98124‑2207

12. Confidential Treatment. Customer and Boeing understand that certain commercial and financial information contained in this Letter Agreement are considered by Boeing and Customer as confidential. Customer and Boeing agree that each will treat this Letter Agreement and the information contained herein as confidential and will not, without the prior written consent of the other, disclose this Letter Agreement or any information contained herein to any other person or entity, except as provided in this Letter Agreement or in the Applicable Purchase Agreements. Subject to the terms and conditions of Letter Agreement 6-1162-TRW-0673R1 entitled “Confidentiality”, either party may disclose the information contained in this Letter Agreement without the consent of the other party when and to the extent required by any law applicable to such party or by a Governmental Authority.

Very truly yours,

THE BOEING COMPANY

By: /s/ The Boeing Company

Its: Attorney‑In‑Fact

ACCEPTED AND AGREED TO this 6th day of April of 2018

AMERICAN AIRLINES, INC.

By: /s/ American Airlines, Inc.

Its: Vice President and Treasurer

PA No. 3219 SA-11 L.A. 6-1162-TRW-0664R2

Aircraft Purchase Rights and Substitution Rights Page 7

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

The Boeing Company

P.O. Box 3707

Seattle, WA 98124‑2207

Attachment A(R2): Information regarding [*CTR] WITHDRAWN

Attachment B(R2): Information regarding [*CTR] WITHDRAWN

Attachment C(R4): Description and Price for Eligible Models

Attachment D: Form of Purchase Agreement Supplement

Attachment E: Letter Agreements

PA No. 3219 SA-11 L.A. 6-1162-TRW-0664R2

Aircraft Purchase Rights and Substitution Rights Page 8

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

[*CTR] Attachment A(R2) to Letter Agreement 6-1162-TRW-0664R1 (Model 787)

Information Regarding 787-9 [*CTR] Rights (WITHDRAWN)

PA No. 3219 SA-11 L.A. 6-1162-TRW-0664R2

MADP Attachment A(R2) Page 1

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

[*CTR] Attachment B(R2) to Letter Agreement 6-1162-TRW-0664R1 (Model 787)

Information Regarding 787-9 [*CTR] Rights (WITHDRAWN)

PA No. 3219 SA-11 L.A. 6-1162-TRW-0664R2

QADP Attachment B(R2) Page 2

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Attachment C(R4) to

6-1162-TRW-0664R2



Eligible Model	[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	[*CTR]
Derivatives	TBD*	TBD*	TBD*	TBD*
Successor Models	TBD*	TBD*	TBD*	TBD*

*The Parties will [*CTR].

PA No. 3219 SA-11 L.A. 6-1162-TRW-0664R2

Aircraft Purchase Rights and Substitution Rights, Attachment Page 1

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Attachment D to

6-1162-TRW-0664R2

PURCHASE AGREEMENT SUPPLEMENT NO. [___]

PURCHASE AGREEMENT SUPPLEMENT NO. 3219, dated [__________, ____], between The Boeing Company (“Boeing”) and American Airlines, Inc. (“Customer”).

R E C I T A L S:

A. Boeing and Customer have heretofore entered into (i) that certain Purchase Agreement No. 3219, dated [__________], 2007 (as amended, supplemented, or otherwise modified, the Purchase Agreement, and capitalized terms used herein without definition shall have the meanings specified therefore in such Purchase Agreement), and (ii) that certain Letter Agreement 6-1162-TRW-0664R1 (the Rights Letter), providing for the execution and delivery from time to time of Purchase Agreement Supplements, each substantially in the form hereof, for the purpose of subjecting Rights Aircraft and Substitute Aircraft to the Purchase Agreement as and when purchased by Customer in accordance with the terms of the Rights Letter.

B. Customer has exercised its right under the Rights Letter to purchase the aircraft described below pursuant to the terms and conditions of the Purchase Agreement as supplemented by this Purchase Agreement Supplement.

In consideration of the foregoing premises and other good and sufficient consideration, Boeing and Customer hereby agree as follows:

1. Aircraft Description. Boeing will manufacture and sell to Customer, and Customer will purchase, the aircraft described in Table [__] attached hereto and made a part hereof.

2. Delivery Schedule. The Scheduled Delivery Month of each aircraft is set forth in Table [__].

3. Price. The Aircraft Basic Price and each component thereof and the Advance Payment Base Price for the aircraft are set forth in Table [__].

4. Payment.

4.1 Boeing acknowledges receipt of a Deposit in the amount of [$_________] for each aircraft.

4.2 Customer will make advance payments to Boeing in the amount of [____%] of the Advance Payment Base Price of each aircraft, beginning with a payment of [__%], less the Deposit, on the date of this Purchase Agreement

Supplement for each aircraft. Additional payments for each aircraft are due on the first Business Day of the months and in the amounts listed in Table [__].

PA No. 3219 SA-11 L.A. 6-1162-TRW-0664R2

Aircraft Purchase Rights and Substitution Rights, Attachment Page 1

BOEING PROPRIETARY

Attachment D to

6-1162-TRW-0664R2

4.3 For any aircraft described on Table [___] having a Scheduled Delivery Month less than twenty-four (24) months from the date of this Purchase Agreement Supplement, the total amount of advance payments due upon the date of this Purchase Agreement Supplement will include all advance payments that are or were due on or before such date in accordance with the advance payment schedule set forth in Table [___].

5. Purchase Agreement. All of the terms and provisions of the Purchase Agreement are hereby incorporated by reference in this Purchase Agreement Supplement to the same extent as if fully set forth herein; and each reference therein to “Aircraft” shall be deemed to include the aircraft described in Table [__] attached hereto.

IN WITNESS WHEREOF, Boeing and Customer have each caused this Purchase Agreement Supplement No. [____] to be duly executed as of the day and year first above written.

THE BOEING COMPANY

By: _____________________________

Name: __________________________

Title: ___________________________

AMERICAN AIRLINES, INC.

By: _____________________________

Name: __________________________

Title: ___________________________

PA No. 3219 SA-11 L.A. 6-1162-TRW-0664R2

Aircraft Purchase Rights and Substitution Rights, Attachment D Page 2

BOEING PROPRIETARY

Attachment E to

6-1162-TRW-0664R2

The following letter agreements, as may be amended from time to time, between Boeing and Customer will be expressly incorporated by reference in any purchase agreement executed and delivered by the parties pursuant to Section 8.2 of this Letter Agreement:

Letter Agreement No. Subject


6-1162-TRW-0670R1	Miscellaneous Commitments for Model 787


6-1162-AKP-073R1	Accident Claims and Litigation


6-1162-TRW-0674R2	Business Considerations


3219-05R1	Spares Commitments


6-1162-TRW-0673R1	Confidentiality

PA No. 3219 SA-11 LA 6-1162-TRW-0664R2

Aircraft Purchase Rights and Substitution Rights, Attachment E Page 1

BOEING PROPRIETARY

The Boeing Company

P.O. Box 3707

Seattle, WA 98124-2207

6‑1162‑TRW‑0667R3

American Airlines, Inc.

P.O. Box 619616

Dallas-Fort Worth Airport

Texas 75261-9616


Subject:	[*CTR]


Reference:	Purchase Agreement No. 3219 (Purchase Agreement) between The Boeing Company (Boeing) and American Airlines, Inc. (Customer) relating to Model 787 Aircraft (Aircraft).

This Letter Agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not defined in this Letter Agreement have the same meaning as in the Purchase Agreement.

Boeing recognizes that performance retention within reasonable limits is essential to maintain the economy of operation of the Aircraft. Therefore the parties hereto agree as follows with respect to performance retention.


1.	Aircraft Commitment.

For the purposes of this Letter Agreement, the “Covered Aircraft” shall be defined as a [*CTR].

Boeing commits to Customer that, for the Covered Aircraft, the [*CTR], as defined in Attachment A, during the Performance Retention Term, as defined in Paragraph 2 below, will not exceed the levels shown in the table below (Aircraft Commitment).



Time After Delivery of the First Covered Aircraft	Cumulative Fleet Average Fuel Mileage Deterioration Commitment (%)
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]

[*CTR].


2.	Applicability and Performance Retention Term.

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[*CTR].


2.1	Delivery Schedule for Covered Aircraft.

For the purposes of this Letter Agreement, it is anticipated that Boeing will deliver the Covered Aircraft to Customer in accordance with the following delivery schedule set forth in Attachment C. If the fleet size and delivery schedule is significantly different, the Aircraft Commitment may be appropriately adjusted to reflect such changes.


2.2	Performance Retention Term.

[*CTR].


3.	Conditions.


3.1	Operation and Maintenance.

Customer shall operate and maintain the Covered Aircraft in accordance with Customer’s FAA‑approved operations and maintenance programs. Customer shall operate and maintain the engines in accordance with the Operation and Maintenance Manuals and Customer's Maintenance Program and an Engine Management Program mutually defined and agreed to by the Engine Manufacturer and Customer.


3.2	Powerback.

[*CTR].

3.3 Flight Cycle Utilization and Derate.

[*CTR].


4.	Determination of Fuel Mileage Deterioration.

[*CTR].

Following the delivery of each Covered Aircraft to Customer by Boeing, and continuing until expiration of the Performance Retention Term, Customer shall record, analyze, and forward to Boeing cruise fuel mileage data obtained on such Covered Aircraft as specified in Attachment B (Basic Data).

[*CTR].


5.	Notice of Performance Deterioration.

[*CTR].


6.	Election of Actions.

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Upon Boeing's receipt of any notice that the Cumulative Fleet Average Fuel Mileage Deterioration exceeds, or is likely to exceed the Aircraft Commitment, Boeing and Customer, as appropriate, will take the following actions:

6.1 Data.

Boeing will evaluate the Basic Data. At its option, Boeing may accomplish such evaluation by analysis of Customer’s raw ACMS data or by obtaining additional performance data on such Covered Aircraft in accordance with Attachment B. Such additional data may include data acquired during revenue service with Boeing personnel aboard as observers. The Basic Data and any additional data obtained by Boeing in its evaluation shall be appropriately adjusted to reflect any material changes elected by Customer to the Covered Aircraft which have occurred subsequent to delivery of the Covered Aircraft, including any replacement of one or more of the engines installed on a Covered Aircraft. Additionally, adjustments will be applied for any relevant factors as agreed by Customer and Boeing (e.g., inaccuracies in flight deck instrumentation, a sudden increase in deterioration that is attributed to a foreign object damage event such as severe hail and the additional rate of deterioration for Aircraft used for pilot training). If Boeing and Customer are in disagreement as to such evaluation of the Basic Data, such disagreement shall be resolved by good faith technical negotiation between the parties including, as necessary, the Engine Manufacturer.

6.2 Surveys.

[*CTR].

6.3 Weight.

Boeing may request that Customer weigh such Covered Aircraft, in which event Customer agrees to weigh such Covered Aircraft in conjunction with its normally scheduled maintenance and will report its findings to Boeing.


6.4	Corrective Actions.

Boeing shall promptly make such recommendations to Customer that Boeing believes would result in improvement of the cruise fuel mileage performance of such Covered Aircraft based on analysis of the surveys and available data pursuant to Paragraphs 6.1 ‑ 6.3. Boeing, Engine Manufacturer and Customer shall thereafter mutually agree on the appropriate corrective action to be taken based on any such recommendations. Corrective actions, which involve maintenance and/or refurbishment, as described in Paragraph 6.2, both on‑wing and off‑wing, shall be performed at no cost to Boeing and/or Engine Manufacturer.

6.5 Improvement Parts and Engine Refurbishment.

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Following the completion of any corrective action pursuant to Paragraph 6.4, if subsequent Basic Data show that the [*CTR].

[*CTR].


7.	Payments.

[*CTR].

7.1 Annual Excess Fuel Burn Amount.

[*CTR]:

[*CTR]

[*CTR]:

[*CTR].

7.2 Credit Memorandum.

[*CTR].

7.3. Credit Adjustments.

[*CTR]

7.4 Limitation on Amount of Credits.

[*CTR].


8.	Duplication of Benefits

[*CTR].


9.	Assignment Prohibited.

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Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft, and cannot be assigned, in whole or in part, without the prior written consent of Boeing.


10.	Exclusive Remedy.

[*CTR].

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11.	Confidential Treatment.

Customer understands and agrees that the information contained herein represents confidential business information and has value precisely because it is not available generally or to other parties. Customer agrees to limit the disclosure of its contents to employees of Customer with a need to know the contents for purposes of helping Customer perform its obligations under the Purchase Agreement and who understand they are not to disclose its contents to any other person or entity without the prior written consent of Boeing. Subject to the terms and conditions of Letter Agreement 6-1162-TRW-0673R1 entitled “Confidentiality”, either party may disclose the information contained herein without the consent of the other party when and to the extent required by any law applicable to such party or by a Governmental Authority.

Very truly yours,

THE BOEING COMPANY

By /s/ The Boeing Company

Its Attorney‑In‑Fact

If the foregoing correctly sets forth your understanding of our agreement with respect to the matters treated above, please indicate your acceptance and approval.

ACCEPTED AND AGREED TO this 6th day of _April____ of 2018

AMERICAN AIRLINES, INC.

By: /s/ American Airlines, Inc.

Its: Vice President and Treasurer

P.A. No. 3219 SA-11 L.A.6‑1162‑TRW‑0667R3

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Attachment A: Determination of Cumulative Fleet Average Fuel Mileage Deterioration

For purposes of this Letter Agreement, the Cumulative Fleet Average Fuel Mileage Deterioration is the average cruise fuel mileage deterioration of the Covered Aircraft. The determination of the Fleet Average Mileage Deterioration will be based on fuel mileage deterioration of individual Covered Aircraft relative to their Baseline Performance Level cruise fuel mileage performance as defined below.

1. Boeing will provide Customer with the Boeing Airplane Performance Monitoring Program (APM), in effect at the time of delivery of the first Covered Aircraft, that shall be used for data analysis during the Performance Retention Term. For purposes of this Letter Agreement, the Model Reference Level cruise fuel mileage performance for the Covered Aircraft shall be as set forth in the APM.

2. [*CTR].

3. [*CTR].

4. The Current Deterioration (expressed as a percentage) for each Covered Aircraft is the difference between the Current Performance Level and the Baseline Performance Level.

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Attachment A:	Determination of Cumulative Fleet Average Fuel Mileage Deterioration, continued

5. [*CTR].

6. The Cumulative Fleet Average Fuel Mileage Deterioration (expressed as a percentage) will be determined for each Subsequent Monitoring Period by summing the Fleet Average Fuel Mileage Deterioration values as determined in Paragraph 5 for each calendar month according to the following equation:

[*CTR]

[*CTR]:

[*CTR]

7. [*CTR].

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Attachment B: Cruise Fuel Mileage Performance Determination

Customer shall obtain cruise fuel mileage performance data in revenue service using the Airplane Condition Monitoring System (ACMS). This data will be recorded during level flight cruise in steady state conditions. Data shall be obtained in accordance with the then current revision of the Airplane Performance Monitoring Software User Guide (APM User Guide) and shall include the parameters defined in the airplane model specific appendix during each such data recording (Data Events).

Boeing will provide Customer with the Boeing Airplane Performance Monitoring Software for data analysis. Customer shall reduce and analyze data obtained from the Data Events. Such analysis shall be in accordance with the methods set forth in the APM User Guide. Customer’s analysis shall include the determination of the fuel mileage, thrust required and fuel flow required relative to the Model Reference Level.

Customer will maintain records of factors relating to fuel mileage deterioration. These factors will include (a) engine history, cockpit instrumentation history and airframe history and condition of such Covered Aircraft, (b) pertinent Covered Aircraft maintenance and operational procedures used by Customer, (c) drag effects of any post delivery airframe and/or engine changes incorporated in such Covered Aircraft, (d) sudden shifts in engine EGT condition monitoring data, and (e) any other relevant factors.

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Attachment C: Delivery Schedule for Covered Aircraft



Aircraft	Delivery Date
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]

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[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]

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Attachment D: ANNUAL LIMITATION ADJUSTMENT EQUATION

(CALENDAR YEARS 2015 AND ON)


(a)	[*CTR]:

[*CTR]


(b)	[*CTR]:

[*CTR]

[*CTR].


(c)	[*CTR]:

(i) [*CTR].

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Attachment D: ANNUAL LIMITATION ADJUSTMENT EQUATION, continued


(ii)	[*CTR].

(iii) [*CTR].


NOTE:	[*CTR].

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BOEING PROPRIETARY

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The Boeing Company

P.O. Box 3707

Seattle, WA 98124-2207

6-1162-TRW-0674R4

American Airlines, Inc.

P.O. Box 619616

Dallas-Fort Worth Airport, Texas 75261-9616

Subject: Business Considerations


Reference:	Purchase Agreement No. 3219 (Purchase Agreement) between The Boeing Company (Boeing) and American Airlines, Inc. (Customer) relating to Model 787 aircraft (Aircraft)

This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not defined in this Letter Agreement have the same meaning as in the Purchase Agreement.

1. Basic Credit.

[*CTR]:

[*CTR] [*CTR]

[*CTR].

2. Simulator Package [*CTR].

[*CTR].

3. Delivery Reschedule Credit Memorandum.

[*CTR]:

[*CTR] [*CTR]

[*CTR].

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4. [*CTR].

4a. [*CTR].

4a.1 [*CTR] (as defined in Section 4a.2 herein) and each [*CTR] (as defined in Section 4a.2 herein), [*CTR]. The [*CTR] in accordance with the provisions of the [*CTR] as such provisions have been applied to the [*CTR]. Such [*CTR]. The [*CTR] in addition to the [*CTR] pursuant to Section 3 of this Letter Agreement.

4a.2 Section 4a Definitions: For purposes of this Section 4a, the following definitions shall apply:

[*CTR] means each of the [*CTR] at the effective date of this Letter Agreement 6-1162-TRW-0674R4.

5. [*CTR].

[*CTR].

6. 2018 787-9 [*CTR] Aircraft [*CTR].

In consideration of [*CTR] pursuant to Letter Agreement 6-1162-TRW-0664R1, as such [*CTR] is further described in Supplemental Agreement No. 11, Boeing [*CTR] the 2018 787-9 [*CTR] Aircraft [*CTR] pursuant to the terms of this Section 6 for [*CTR] at the time of execution of this Letter Agreement (2018 787-9 [*CTR] Aircraft). Boeing will [*CTR] at the time of delivery of each 787-9 [*CTR] Aircraft a [*CTR]. The [*CTR] in accordance with the provisions of the [*CTR] as such provisions have been applied to the [*CTR]. Such [*CTR] at the time of delivery of the applicable 2018 787-9 [*CTR] Aircraft. The 2018 787-9 [*CTR] Aircraft [*CTR] in addition to the [*CTR] pursuant to Section 4 of this Letter Agreement.

7. 2018 787-9 [*CTR] Aircraft [*CTR].

7.1 In [*CTR] of the [*CTR] Aircraft, Boeing [*CTR]. Each [*CTR] Aircraft [*CTR] in accordance with the provisions of the [*CTR] as such provisions have been applied to the [*CTR]. Except as provided in Section 7.2, below, a [*CTR] Aircraft [*CTR] of a [*CTR] Aircraft, the [*CTR] of a [*CTR] Aircraft, the [*CTR] of a [*CTR] Aircraft, and the [*CTR] of a [*CTR] Aircraft. Such [*CTR] Aircraft [*CTR] of the applicable [*CTR] Aircraft.

7.2 If either [*CTR] the Purchase Agreement as to the delivery of one or more [*CTR] Aircraft as and when permitted under a [*CTR] (as defined in Section 7.3 below), such [*CTR] Aircraft will be [*CTR], and shall be [*CTR], solely for purposes of [*CTR] a [*CTR] Aircraft [*CTR].

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If a [*CTR] Aircraft is [*CTR] in accordance with the [*CTR], the applicable [*CTR] Aircraft [*CTR] as follows:

(a) the [*CTR];

(b) the [*CTR];

(d) the [*CTR].

(e) If the [*CTR].

7.3 For purposes of Section 7.2, [*CTR] means any provision in the Aircraft General Terms Agreement entered into by and between Boeing and Customer dated October 31, 1997 (as amended by the Purchase Agreement, AGTA), the Purchase Agreement or any Letter Agreement or Supplemental Agreement to the Purchase Agreement that [*CTR] Aircraft, including but not limited to, the following: Sections 7.4 or 7.5 of the AGTA, Section 1.13 of the Letter Agreement No. 6-1162-TRW-0670R1 entitled “Miscellaneous Commitments for Model 787 Aircraft”, or Section 9.2 and 9.3 of Supplemental Agreement No. 11 entered into by and between Boeing and Customer dated as of the date hereof.

7.4 Notwithstanding anything to the contrary in this Section 7, once a [*CTR] Aircraft [*CTR] in accordance with this Letter Agreement, [*CTR] as provided in Section 7.1 of this Letter Agreement and in no event will Customer [*CTR] Aircraft [*CTR] by this Letter Agreement to be [*CTR] Customer.

8. [*CTR].

In consideration of [*CTR] pursuant to Letter Agreement 6-1162-TRW-0664R2 as further described in Supplemental Agreement No. 11, at the time of execution of this Letter Agreement, Boeing will [*CTR].

9. 787 [*CTR].

In consideration of Customer’s [*CTR] pursuant to Letter Agreement 6-1162-TRW-0664R2 as further described in Supplemental Agreement No. 11, Boeing will [*CTR] the following:

9.1 At time of execution of this Letter Agreement, [*CTR] by Customer. This [*CTR]. [*CTR].

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9.2 At the time of execution of this Letter Agreement, Boeing will [*CTR] Aircraft ([*CTR] Aircraft): [*CTR]. The [*CTR]. At the delivery of each [*CTR] Aircraft, Boeing [*CTR]. The [*CTR] of the applicable Aircraft in accordance with the provisions of the [*CTR] as such provisions have been applied to the [*CTR]. Such [*CTR].

10. [*CTR].

[*CTR].

11. Confidential Treatment.

Customer and Boeing understand that certain commercial and financial information contained in this Letter Agreement are considered by Boeing and Customer as confidential. Customer and Boeing agree that each will treat this Letter Agreement and the information contained herein as confidential and will not, without the prior written consent of the other, disclose this Letter Agreement or any information contained herein to any other person or entity, except as provided in this Letter Agreement and or the Purchase Agreement. Customer and Boeing will limit the disclosure of its contents to employees of Customer or Boeing, as applicable, with a need to know the contents for purposes of helping the applicable party perform its obligations under the Purchase Agreement and who understand they are not to disclose its contents to any other person or entity without the prior written consent of the other party. Subject to the terms and conditions of Letter Agreement 6-1162-TRW-0673R1 entitled “Confidentiality”, either party may disclose the information contained herein without the consent of the other party when and to the extent required by any law applicable to such party or by a Governmental Authority.

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Very truly yours,

THE BOEING COMPANY

By: /s/ The Boeing Company

Its: Attorney‑In‑Fact

ACCEPTED AND AGREED TO this

Date: April 6, 2018

AMERICAN AIRLINES, INC.

By: /s/American Airlines, Inc.

Its: Vice President and Treasurer

P.A. No. 3219 SA-11 L.A.6-1162-TRW-0674R4

Business Considerations Page 1

BOEING PROPRIETARY

The Boeing Company

P.O. Box 3707

Seattle, WA 98124-2207

AAL-PA-3219-LA-08836R2

American Airlines, Inc.

P.O. Box 619616

Dallas-Fort Worth Airport

Texas 75261-9616


Subject:	[*CTR]


Reference:	Purchase Agreement No. 3219 (Purchase Agreement) between The Boeing Company (Boeing) and American Airlines, Inc. (Customer) relating to Model 787 Aircraft (Aircraft).

This Letter Agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not defined in this Letter Agreement have the same meaning as in the Purchase Agreement.


1.	Aircraft Commitment.

For the purposes of this Letter Agreement, the Covered Aircraft shall be defined as a [*CTR].

Boeing commits to Customer that, [*CTR], as defined in Attachment A, during the Performance Retention Term, as defined in Paragraph 2 below, will not exceed the levels shown in the table below (Aircraft Commitment).



Time After Delivery of the First Covered Aircraft	Cumulative Fleet Average Fuel Mileage Deterioration Commitment (%)
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]

[*CTR]


2.	Applicability and Performance Retention Term.

[*CTR]

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2.1	Delivery Schedule for Covered Aircraft.


2.2	Performance Retention Term.

[*CTR].


3.	Conditions.


3.1	Operation and Maintenance.


3.2	Powerback.

[*CTR].

3.3 Flight Cycle Utilization and Derate.

[*CTR].


4.	Determination of Fuel Mileage Deterioration.

[*CTR].


5.	Notice of Performance Deterioration.

[*CTR]

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6.	Election of Actions.

6.1 Data.

6.2 Surveys.

[*CTR].

6.3 Weight.


6.4	Corrective Actions.

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6.5 Improvement Parts and Engine Refurbishment.

Following the completion of any corrective action pursuant to Paragraph 6.4, if subsequent Basic Data show that the [*CTR].

[*CTR].


7.	Payments.

[*CTR].

7.1 Annual Excess Fuel Burn Amount.

[*CTR]:

[*CTR].

7.2 Credit Memorandum.

[*CTR].

7.3. Credit Adjustments.

[*CTR]

7.4 Limitation on Amount of Credits.

[*CTR].


8.	Duplication of Benefits

[*CTR].


9.	Assignment Prohibited.

Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft, and cannot be assigned, in whole or in part, without the prior written consent of Boeing.


10.	Exclusive Remedy.

[*CTR].

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11.	Confidential Treatment.

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Very truly yours,

THE BOEING COMPANY

By /s/ The Boeing Company

Its Attorney‑In‑Fact

If the foregoing correctly sets forth your understanding of our agreement with respect to the matters treated above, please indicate your acceptance and approval.

ACCEPTED AND AGREED TO this 6th day of April of 2018

AMERICAN AIRLINES, INC.

By: /s/ American Airlines

Its: Vice President and Treasurer

P.A. No. 3219 SA-11 AAL-PA-3219-LA-08836R2

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Attachment A: Determination of Cumulative Fleet Average Fuel Mileage Deterioration

For purposes of this Letter Agreement, the “Cumulative Fleet Average Fuel Mileage Deterioration” is the average cruise fuel mileage deterioration of the Covered Aircraft. The determination of the Fleet Average Mileage Deterioration will be based on fuel mileage deterioration of individual Covered Aircraft relative to their Baseline Performance Level cruise fuel mileage performance as defined below.

2. [*CTR].

3. [*CTR].

4. The Current Deterioration (expressed as a percentage) for each Covered Aircraft is the difference between the Current Performance Level and the Baseline Performance Level.

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Attachment A:	Determination of Cumulative Fleet Average Fuel Mileage Deterioration, continued

5. [*CTR].

[*CTR]

7. [*CTR].

P.A. No. 3219 SA-11 AAL-PA-3219-LA-08836R2

[*CTR]- Attachment A Page 2

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT

Attachment B: Cruise Fuel Mileage Performance Determination

P.A. No. 3219 SA-11 AAL-PA-3219-LA-08836R2

[*CTR] - Attachment B Page 1

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Attachment C: Delivery Schedule for Covered Aircraft



Aircraft	Delivery Date
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]

P.A. No. 3219 SA-11 AAL-PA-3219-LA-08836R2

[*CTR] - Attachment C Page 1

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]



[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]
[*CTR]	[*CTR]

P.A. No. 3219 SA-11 AAL-PA-3219-LA-08836R2

[*CTR] - Attachment C Page 2

BOEING PROPRIETARY

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Attachment D: ANNUAL LIMITATION ADJUSTMENT EQUATION

(CALENDAR YEARS 2015 AND ON)


(a)	[*CTR]:

[*CTR]


(b)	[*CTR]:

[*CTR]

[*CTR].


(c)	[*CTR]:

(i) [*CTR]

P.A. No. 3219 SA-11 AAL-PA-3219-LA-08836R2

[*CTR] - Attachment D Page 1

BOEING PROPRIETARY

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Attachment D: ANNUAL LIMITATION ADJUSTMENT EQUATION, continued

(ii) [*CTR].

(iii) [*CTR].


NOTE:	[*CTR].

P.A. No. 3219 SA-11 AAL-PA-3219-LA-08836R2

[*CTR] - Attachment D Page 2

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

The Boeing Company

P.O. Box 3707

Seattle, WA 98124-2207

AAL‑PA‑03219‑LA‑1804779

American Airlines, Inc.

P.O. Box 619616

Dallas‑Fort Worth Airport, Texas 75261‑9616


Subject:	[*CTR]


Reference:	Purchase Agreement No. 03219 (Purchase Agreement) between The Boeing Company (Boeing) and American Airlines, Inc. (Customer) relating to Model 787 aircraft (Aircraft)

This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not defined in this Letter Agreement shall have the same meaning as in the Purchase Agreement.


1.	Right to [*CTR] Aircraft.

Subject to the terms and conditions contained in this Letter Agreement, in [*CTR] to the Aircraft described in Table 1(R7) and Table 5 to the Purchase Agreement as of the date of execution of this Letter Agreement, [*CTR].

2. Delivery.

The number of initial [*CTR] are listed in Attachment A to this Letter Agreement. No later than [*CTR] in each calendar year as listed in Attachment A to this Letter Agreement, Boeing will provide written notice [*CTR] in such calendar year. Such [*CTR] will constitute an amendment to Attachment A.

3. [*CTR].

3.1 Customer may [*CTR] by giving written notice to Boeing [*CTR] on or before the date that is the later of [*CTR]. Upon the giving of such [*CTR] referenced in such [*CTR] shall be deemed an Aircraft for all purposes of the Purchase Agreement and an [*CTR] for the purposes of this Letter Agreement.

3.2 If Boeing must [*CTR], subject to Customer's agreement. Such [*CTR]. If Boeing [*CTR]. If within [*CTR]. If the parties are [*CTR]. Immediately upon the [*CTR] to Customer by Boeing. When making any such [*CTR] to other customers.

4. [*CTR].

Customer will have the [*CTR], subject to the following terms:

AAL‑PA‑03219‑LA‑1804779 SA-11

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4.1 The [*CTR] are shown in Attachments A and B to this Letter Agreement are [*CTR], subject to the provisions in Section 4.2 below.

4.2 For each of the [*CTR] indicated in Attachment A to this Letter Agreement. Customer may [*CTR]. By way of example, if an [*CTR].

4.2.1 Notwithstanding the foregoing, Customer may [*CTR] in Attachment A to this Letter Agreement by giving Boeing written notice of such [*CTR] in the event of any of the following: (i) an [*CTR] in accordance with Section 3.2 above, (ii) such [*CTR] in accordance with Section 3.2 above, or (iii) a [*CTR], in accordance with Section 2 of Letter Agreement No. AAL-PA-03219-LA-1802262, entitled “[*CTR]”.

4.2.2 If Customer provides Boeing with an [*CTR]. If Boeing [*CTR] as set forth on Attachment B to this Letter Agreement.

4.2.3 If Boeing is [*CTR] set forth on Attachment B to this Letter Agreement, then Boeing shall [*CTR]. If Customer [*CTR].

4.2.4 [*CTR] in accordance with Section 4.2.3 shall be [*CTR] until the Limited Scope Supplemental Agreement is executed by the parties.

4.3 A [*CTR], as follows:

4.3.1 Upon the [*CTR] as set forth on Attachment B of this Letter Agreement; or

4.3.2 Upon Customer’s [*CTR] as set forth on Attachment B of this Letter Agreement and [*CTR].

4.4 For avoidance of doubt, all [*CTR].

5. [*CTR].

5.1 Subject to the provisions of Section 5.2, below, the [*CTR] shown in Attachment A to this Letter Agreement.

5.2 Boeing [*CTR] pursuant to the provisions of Section 5.1 at [*CTR] to Customer.

6. [*CTR].

6.1 The [*CTR] are identified in Attachment A to this Letter Agreement. The [*CTR] are identified in Attachment B to this Letter Agreement.

6.2 The [*CTR] in accordance with the terms set forth in [*CTR] as such provisions have been applied to the [*CTR].

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6.3 At the time of execution of each Limited Scope Supplemental Agreement, the [*CTR] in accordance with the terms of the Purchase Agreement.

6.4. [*CTR]. Boeing will [*CTR] to Customer:

6.4.1 [*CTR]. Boeing will [*CTR] to Customer at the [*CTR]. The [*CTR] is:

[*CTR] [*CTR]

Each such [*CTR] as such provisions have been applied to the [*CTR].

6.4.2 [*CTR]. Boeing will [*CTR] to Customer at the [*CTR]. The [*CTR] in accordance with the provisions of the [*CTR] as such provisions have been applied to the [*CTR]. Such [*CTR].

6.4.3 [*CTR]. Boeing will [*CTR] to Customer at the [*CTR]. The [*CTR] in accordance with the provisions of the [*CTR] as such provisions have been applied to the [*CTR]. Such [*CTR].

6.4.4 [*CTR]. In recognition of Customer [*CTR] per this Letter Agreement, Boeing will [*CTR] to Customer up to [*CTR]. The [*CTR] in accordance with the provisions of the [*CTR] as such provisions have been applied to the [*CTR]. Except as set forth below in this Section 6.4.4, the [*CTR]. Each [*CTR].

6.4.4.1 If (i) Customer [*CTR] or (ii) the [*CTR]. The [*CTR] in accordance with the provisions of the [*CTR] Letter Agreement, as such provisions have been applied to the [*CTR]. The [*CTR]; provided that:

(i) if the [*CTR];

(ii) if the [*CTR];

(iii) if the [*CTR];

(iv) if the [*CTR].

Such [*CTR].

AAL‑PA‑03219‑LA‑1804779 SA-11

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7. [*CTR].

7.1 Customer will [*CTR], on the date of execution of this Letter Agreement. If Customer [*CTR]. If Customer [*CTR].

7.2 Customer shall [*CTR]. For the avoidance of doubt, there shall be no [*CTR].

7.3 Notwithstanding the amount shown in Attachment A, the [*CTR]. Upon execution of this Letter Agreement, [*CTR].

7.4 Upon execution of a Limited Scope Supplemental Agreement [*CTR] as specified in Section 1.4.2 of Letter Agreement 6-1162-CLO-1047R4, entitled “[*CTR]” of the Purchase Agreement. The remainder of the [*CTR] in accordance with the provisions of the Purchase Agreement. For the avoidance of doubt, [*CTR] until the applicable Limited Scope Supplemental Agreement has been entered into by the parties.

8. [*CTR].

Upon Customer’s [*CTR], Boeing and Customer will enter into a Supplemental Agreement with respect to each [*CTR], the scope and purpose of which shall be limited to [*CTR] into the Purchase Agreement as an [*CTR] into this Letter Agreement as an [*CTR] (Limited Scope Supplemental Agreement). The Limited Scope Supplemental Agreement will incorporate the provisions of the Purchase Agreement as modified to reflect the provisions of this Letter Agreement (including, but not limited to, modifications to Attachment A to this Letter Agreement to reflect the addition of new [*CTR] and modifications to Attachment A to Letter Agreement AAL-PA-03219-LA-1802262 entitled “[*CTR]” to reflect the addition of the new Aircraft).

9. Assignment.

Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be assigned in whole or, in part, without the prior written consent of Boeing.

AAL‑PA‑03219‑LA‑1804779 SA-11

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BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

10. Confidential Treatment.

Very truly yours,



THE BOEING COMPANY

By:	/s/ The Boeing Company

Its:	Attorney‑In‑Fact

ACCEPTED AND AGREED TO this

Date:		April 6, 2018

AMERICAN AIRLINES, INC.

By:	/s/ American Airlines, Inc.

Its:	Vice President and Treasurer

AAL‑PA‑03219‑LA‑1804779 SA-11

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BOEING PROPRIETARY

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Attachment A To

Letter Agreement No. AAL-03219-LA-1804779

[*CTR] Aircraft Delivery, Description, Price and Advance Payments

Airframe Model/MTOW:

787-9

[*CTR] pounds

Detail Specification:

[*CTR]

Engine Model/Thrust:

GENX-1B74/75

[*CTR] pounds

Airframe Price Base Year/Escalation Formula:

[*CTR]

Airframe Price:

$[*CTR]

Engine Price Base Year/Escalation Formula:

[*CTR]

Optional Features:

$[*CTR]

Sub-Total of Airframe and Features:

$[*CTR]

Airframe Escalation Data:

Engine Price (Per Aircraft):

$[*CTR

Base Year Index (ECI):

[*CTR]

Aircraft Basic Price (Excluding BFE/SPE):

$[*CTR]

Base Year Index (CPI):

[*CTR]

Buyer Furnished Equipment (BFE) Estimate:

$[*CTR]

Engine Escalation Data:

//Seller Purchased Equipment (SPE)/In-Flight Entert

$[*CTR]

Base Year Index (ECI):

[*CTR]

LIFT Seats Provided by Boeing (Estimate):

$[*CTR]

Base Year Index (CPI):

[*CTR]

Non-Refundable Deposit/Aircraft at Def Agreemt:

$[*CTR]

Delivery Date

Number of Aircraft

Escalation Factor

(Airframe)

Escalation Factor

(Engine)

[*CTR]

Escalation Estimate Adv Payment Base

Price Per A/P

Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):

At Signing

[*CTR]

Total

[*CTR]

$[*CTR]

[*CTR]

$[*CTR]

[*CTR]

$[*CTR]

[*CTR]

$[*CTR]

[*CTR]

$[*CTR]

[*CTR]

$[*CTR]

[*CTR]

$[*CTR]

[*CTR]

$[*CTR]

[*CTR]

$[*CTR]

[*CTR]

$[*CTR]

[*CTR]

$[*CTR]

[*CTR]

$[*CTR]

[*CTR]

$[*CTR]

AAL-PA-1804779, Attach A, [*CTR], 108758-1O.txt SA-11 Page 1

Boeing Proprietary

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Attachment A To

Letter Agreement No. AAL-03219-LA-1804779

[*CTR] Aircraft Delivery, Description, Price and Advance Payments



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	[*CTR]	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	[*CTR]	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

Total: [*CTR]

Note: Each [*CTR] represents the [*CTR]: [*CTR]

Note: The [*CTR] includes the [*CTR] selected for the Aircraft.

AAL-PA-1804779, Attach A, [*CTR], 108758-1O.txt SA-11 Page 2

Boeing Proprietary

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Attachment B To

Letter Agreement No. AAL-03219-LA-1804779

[*CTR] Aircraft Delivery, Description, Price and Advance Payments



Airframe Model/MTOW:	787-9	[*CTR] pounds	Detail Specification:	[*CTR]
Engine Model/Thrust:	GENX-1B74/75	[*CTR] pounds	Airframe Price Base Year/Escalation Formula:	[*CTR]		[*CTR]
Airframe Price:		$[*CTR]	Engine Price Base Year/Escalation Formula:	[*CTR]		[*CTR]
Optional Features:		$[*CTR]
Sub-Total of Airframe and Features:		$[*CTR]	Airframe Escalation Data:
Engine Price (Per Aircraft):		$[*CTR]	Base Year Index (ECI):		[*CTR]
Aircraft Basic Price (Excluding BFE/SPE):		$[*CTR]	Base Year Index (CPI):		[*CTR]
Buyer Furnished Equipment (BFE) Estimate:		$[*CTR]	Engine Escalation Data:
//Seller Purchased Equipment (SPE)/In-Flight Entert		$[*CTR]	Base Year Index (ECI):		[*CTR]
LIFT Seats Provided by Boeing (Estimate):		$[*CTR]	Base Year Index (CPI):		[*CTR]
Non-Refundable Deposit/Aircraft at Def Agreemt:		$[*CTR]



[*CTR] Aircraft Scheduled Delivery Quarter	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
[*CTR] Aircraft Scheduled Delivery Quarter	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

AAL-PA-1804779, Attach B, [*CTR], 108758-1O.txt SA-11 Page 1

Boeing Proprietary

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Attachment B To

Letter Agreement No. AAL-03219-LA-1804779

[*CTR] Aircraft Delivery, Description, Price and Advance Payments



[*CTR] Aircraft Scheduled Delivery Quarter	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery:
[*CTR] Aircraft Scheduled Delivery Quarter	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

Total: 14

Note: Each [*CTR] represents the [*CTR]: [*CTR]

Note: The [*CTR] includes the [*CTR] selected for the Aircraft.

AAL-PA-1804779, Attach B, [*CTR], 108758-1O.txt SA-11 Page 2

Boeing Proprietary

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

The Boeing Company

P.O. Box 3707

Seattle, WA 98124-2207

AAL-PA-03219-LA-1802262

American Airlines, Inc.

P.O. Box 619616

Dallas-Fort Worth Airport, Texas 75261-9616

Subject: [*CTR]

Reference: Purchase Agreement No. 03219 (Purchase Agreement) between The Boeing Company (Boeing) and American Airlines, Inc. (Customer) relating to Model 787 aircraft (Aircraft)

Boeing and Customer agree that Customer may substitute the purchase of a Boeing Model 787-8 aircraft in place of any 2018 Option Aircraft, as defined in article 1 below (Substitution Right), subject to the following terms and conditions:

1.Definitions.

[*CTR], for purposes of this Letter Agreement, has the definition ascribed to such term in Section 1 of Letter Agreement AAL‑PA‑03219‑LA‑1804779 entitled “[*CTR]” (the [*CTR]).

[*CTR] for purposes of this Letter Agreement, means [*CTR].

2. Customer’s Written Notice.

Customer shall provide written notice to Boeing [*CTR].

Such [*CTR].

3. Boeing’s [*CTR].

3.1 Customer’s [*CTR]. Within [*CTR], Boeing will provide a [*CTR].

AAL-PA-03219-LA-1802262 SA-11

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3.2 If Boeing is [*CTR]. Customer will have [*CTR].

3.3 All of Boeing’s [*CTR]; however, such [*CTR].

3.4 If the [*CTR].

4. [*CTR] Limited Scope Supplemental Agreement.

Upon Customer’s [*CTR], Boeing and Customer will enter into a supplemental agreement with respect to each [*CTR], the scope and purpose of which shall be limited to incorporating the [*CTR] into the Purchase Agreement as an [*CTR] ([*CTR] Limited Scope Supplemental Agreement). The [*CTR] Limited Scope Supplemental Agreement will incorporate the provisions of the Purchase Agreement as modified to reflect the provisions of this Letter Agreement (including, but not limited to, modifications to Attachment A to this Letter Agreement to reflect the addition of [*CTR]). Upon the execution and delivery of a [*CTR] Limited Scope Supplemental Agreement pursuant to this Section 4, the [*CTR] identified in such [*CTR] Limited Scope Supplemental Agreement shall be [*CTR] as defined in the Purchase Agreement and shall for all purposes be governed by the Purchase Agreement.

5. [*CTR].

5.1 The [*CTR] for the [*CTR] are set forth in Attachment A to this Letter Agreement.

5.2 The [*CTR] for each of [*CTR] shall be [*CTR] in accordance with the terms set forth in [*CTR] as such provisions have been applied to the [*CTR].

5.3 At the time of execution of each [*CTR] Limited Scope Supplemental Agreement, the [*CTR].

5.4 Any [*CTR] made by Customer to Boeing with respect to an applicable [*CTR] Limited Scope Supplemental Agreement relating thereto. If the parties had previously entered into a Limited Scope Supplemental Agreement pursuant to the [*CTR] Limited Scope Supplemental Agreement had been entered into as of the as of the date the applicable Limited Scope Supplemental Agreement as defined in the [*CTR]. If the amount of any [*CTR], then [*CTR]. If the amount of the [*CTR].

5.5 [*CTR]. At the time of [*CTR]:

5.5.1 In [*CTR] is:

[*CTR] [*CTR]

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[*CTR]	[*CTR]

Each such [*CTR].

5.5.2 Boeing will [*CTR].

6. Assignment.

Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be assigned, in whole or in part, without the prior consent of Boeing.

7. Confidential Treatment.

AAL-PA-03219-LA-1802262 SA-11

[*CTR] Page 3 of 5

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Very truly yours,



THE BOEING COMPANY

By:	/s/ The Boeing Company

Its:	Attorney-In-Fact

ACCEPTED AND AGREED TO this

Date:		April 6, 2018

AMERICAN AIRLINES, INC.

By:	/s/ American Airlines, Inc.

Its:	Vice President and Treasurer

AAL-PA-03219-LA-1802262 SA-11

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BOEING PROPRIETARY

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Attachment A

Airframe Price, Optional Features Prices, and Aircraft Basic Price for the 787-8

AAL-PA-03219-LA-1802262 SA-11

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Attachment A To

Letter Agreement No. AAL-03219-LA-1802262

[*CTR] Aircraft Delivery, Description, Price and Advance Payments

Airframe Model/MTOW: 787-8 [*CTR] pounds Detail Specification: [*CTR]



Engine Model/Thrust:	GENX-1B70		[*CTR] pounds	Airframe Price Base Year/Escalation Formula:	[*CTR]		[*CTR]
Airframe Price:			$[*CTR]	Engine Price Base Year/Escalation Formula:	[*CTR]		[*CTR]
Optional Features:			$[*CTR]
Sub-Total of Airframe and Features:			$[*CTR]	Airframe Escalation Data:
Engine Price (Per Aircraft):			$[*CTR]	Base Year Index (ECI):		[*CTR]
Aircraft Basic Price (Excluding BFE/SPE):			$[*CTR]	Base Year Index (CPI):		[*CTR]
Buyer Furnished Equipment (BFE) Estimate:			$[*CTR]	Engine Escalation Data:
//Seller Purchased Equipment (SPE)/In-Flight Enter $2,388,000		$[*CTR]		Base Year Index (ECI):		[*CTR]
LIFT Seats Provided by Boeing (Estimate):			$[*CTR]	Base Year Index (CPI):		[*CTR]
Deposit per Aircraft:			$[*CTR]



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	[*CTR]	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	[*CTR]	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

SA-11 Page 1

AAL-LA-1802262, 787-8, [*CTR], 108818-1F.txt

Boeing Proprietary

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Attachment A To

Letter Agreement No. AAL-03219-LA-1802262

[*CTR] Aircraft Delivery, Description, Price and Advance Payments



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	[*CTR]	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	[*CTR]	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

Total: 14

Note: Each [*CTR] represents the [*CTR]: [*CTR]

SA-11 Page 2

AAL-LA-1802262, 787-8, [*CTR], 108818-1F.txt

Boeing Proprietary

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Attachment B To

Letter Agreement No. AAL-03219-LA-1802262

[*CTR] Aircraft Delivery, Description, Price and Advance Payments

Airframe Model/MTOW: 787-8 [*CTR] pounds Detail Specification: [*CTR]



Engine Model/Thrust:	GENX-1B70	[*CTR] pounds		Airframe Price Base Year/Escalation Formula:	[*CTR]		[*CTR]
Airframe Price:		$[*CTR]		Engine Price Base Year/Escalation Formula:	[*CTR]		[*CTR]
Optional Features:		$[*CTR]
Sub-Total of Airframe and Features:		$[*CTR]		Airframe Escalation Data:
Engine Price (Per Aircraft):		$[*CTR]		Base Year Index (ECI):		[*CTR]
Aircraft Basic Price (Excluding BFE/SPE):		$[*CTR]		Base Year Index (CPI):		[*CTR]
Buyer Furnished Equipment (BFE) Estimate:			$[*CTR]	Engine Escalation Data:
//Seller Purchased Equipment (SPE)/In-Flight Entertai			$[*CTR]	Base Year Index (ECI):		[*CTR]
LIFT Seats Provided by Boeing (Estimate):			$[*CTR]	Base Year Index (CPI):		[*CTR]
Deposit per Aircraft:			$[*CTR]



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

SA-11 Page 1

AAL-LA-1802262, 787-8, [*CTR], 108818-1F.txt

Boeing Proprietary

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Attachment B To

Letter Agreement No. AAL-03219-LA-1802262

[*CTR] Aircraft Delivery, Description, Price and Advance Payments



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Escalation Factor (Engine)	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]	[*CTR]	[*CTR]	[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

Total: 14

Note: Each [*CTR] represents the [*CTR]: [*CTR]

SA-11 Page 2

AAL-LA-1802262, 787-8, [*CTR], 108818-1F.txt

Boeing Proprietary

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

The Boeing Company

P.O. Box 3707

Seattle, WA 98124-2207

AAL-PA-3219-LA-1802492

American Airlines, Inc.

P.O. Box 619616

Dallas-Fort Worth Airport

Texas 75261-9616

Subject: Open Configuration Matters


Reference:	Purchase Agreement 3219 (Purchase Agreement) between The Boeing Company (Boeing) and American Airlines, Inc. (Customer) relating to Model 787 aircraft (Aircraft)

This Letter Agreement amends the Purchase Agreement. All terms used but not defined in this Letter Agreement have the same meaning as in the Purchase Agreement.


1.	Aircraft Configuration.

1.1 [*CTR]. The initial configuration of Customer's Model 787-8 Aircraft has been defined by [*CTR] as described in Article 1 and Exhibit A2(R4) of the Purchase Agreement as modified by Boeing document number [*CTR] (787-8 Aircraft Configuration). Given the [*CTR]. Boeing and Customer agree to [*CTR] attached hereto as Attachment A [*CTR] in order to [*CTR]. Such [*CTR] by the mutual agreement of the parties. The [*CTR].

1.2 [*CTR]. The initial configuration of Customer's Model 787-9 Aircraft has been defined by [*CTR] as described in Article 1 and Exhibit A(R3) of the Purchase Agreement as modified by [*CTR] (787-9 Aircraft Configuration). Given the [*CTR] set forth in Section 6 of Supplemental Agreement No. 11. The [*CTR].


2.	Effect on Purchase Agreement.

2.1 [*CTR]. Such [*CTR] by written amendment.

2.2 [*CTR].

2.2.1 [*CTR] between

2.2.1.1 the [*CTR]; and

2.2.1.2 the [*CTR].

P.A. No. 3219 SA-11 AAL-PA-3219-LA1802492

Open Configuration Matters Page 1

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Figure 1



Article 3.4.3.2 Table	787-923	787-8
The [*CTR]	[*CTR]	[*CTR]

2.2.1.3 Such [*CTR].

2.2.2 For avoidance of doubt, there will be [*CTR] that are listed on Exhibit A(R3) (inclusive of the list of [*CTR]) and Exhibit A2(R4) and that remain as part of the [*CTR], as applicable (i.e. that is that the [*CTR] listed on Exhibit A(R3) or A2(R4) as applicable).


3.	Purchase Agreement Amendment.

3.1 Within [*CTR] of the Boeing Model 787‑9 and 787-8 Aircraft, Boeing and Customer will [*CTR] for the Boeing Model 787-9 and 787-8 aircraft to reflect the following:

3.1.1 [*CTR]; and

3.1.2 [*CTR].


4.	Confidential Treatment.

The confidentiality of this Letter Agreement is governed by Letter Agreement 6‑1162-TRW-0673R1 entitled “Confidentiality”.

P.A. No. 3219 SA-11 AAL-PA-3219-LA1802492

Open Configuration Matters Page 2

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

The Boeing Company

P.O. Box 3707

Seattle, WA 98124-2207

Very truly yours,

THE BOEING COMPANY

By: /s/ The Boeing Company

Its: Attorney‑In‑Fact

ACCEPTED AND AGREED TO this

Date: April 6, 2018

AMERICAN AIRLINES, INC.

By: American Airlines, Inc.

Its: Vice President and Treasurer

P.A. No. 3219 SA-11 AAL-PA-3219-LA1802492

Open Configuration Matters Page 3

BOEING PROPRIETARY

Attachment A

[to be inserted]

P.A. No. 3219 SA-11 AAL-PA-3219-LA1802492

Open Configuration Matters Page 4

BOEING PROPRIETARY

Boeing Proprietary

787 for [*CTR]

[*CTR]

Page 1 of 3 [*CTR]

https://cdn.kscope.io/c69364edbfc526135449edc773b3a8fa-pg1a01.jpg

[*CTR]

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Boeing Proprietary

787 for [*CTR]

[*CTR]

Page 2 of 3 [*CTR]

https://cdn.kscope.io/c69364edbfc526135449edc773b3a8fa-pg2.jpg

[*CTR]

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Boeing Proprietary

787 for [*CTR]

[*CTR]

Page 3 of 3 [*CTR]

https://cdn.kscope.io/c69364edbfc526135449edc773b3a8fa-pg33.jpg

[*CTR]

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Exhibit

SUPPLEMENTAL AGREEMENT NO. 9

Purchase Agreement No. 03735

between

THE BOEING COMPANY

and

AMERICAN AIRLINES, INC.

Relating to Boeing Model 737 MAX Aircraft

This SUPPLEMENTAL AGREEMENT No. 9 (SA-9), entered into as of April _6__, 2018 (Effective Date), by and between THE BOEING COMPANY, a Delaware corporation with offices in Seattle, Washington (Boeing) and AMERICAN AIRLINES, INC. a Delaware corporation with offices in Fort Worth, Texas, together with its successors and permitted assigns (Customer);

WHEREAS, Boeing and Customer entered into Purchase Agreement No. 03735 dated February 1, 2013 relating to Boeing Model 737 MAX Aircraft, as amended and supplemented (Purchase Agreement) and capitalized terms used herein without definitions shall have the meanings specified therefore in such Purchase Agreement;

WHEREAS, Customer and Boeing desire to (i) revise the Schedule Delivery Month for forty (40) 737-8 Aircraft (Revised Delivery Aircraft) currently scheduled to deliver in calendar years 2020, 2021, and 2022 and move the applicable Scheduled Delivery Months of the Revised Delivery Aircraft to [*CTR], (ii) revise certain [*CTR], and (iii) provide [*CTR] for the Revised Delivery Aircraft; and

WHEREAS, Customer and Boeing desire to revise letter agreement AAL-PA-3735-1106651, entitled “[*CTR]”, to [*CTR] aircraft.

NOW, THEREFORE, the parties agree that the Purchase Agreement is amended as set forth below and otherwise agree as follows:


1.	Table of Contents.

PA 03735 SA-9, Page 1

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

The “Table Of Contents” to the Purchase Agreement referencing SA-8 in the footer is deleted in its entirety and is replaced with the new “Table Of Contents” (attached hereto) referencing SA-9 in the footer to reflect changes made to the Purchase Agreement by this SA-9. Such new Table of Contents is hereby incorporated into the Purchase Agreement in replacement of its predecessor.


2.	Tables.

2.1 Table 1R3. Table 1R3, entitled “Base Weight 737-8 Aircraft Delivery, Description, Price, and Advance Payments,” referencing SA-6 in the footer is deleted in its entirety and replaced with Table 1R4, entitled “737-8 Aircraft Delivery, Description, Price, and Advance Payments,” (attached hereto) referencing SA-9 in the footer. Such Table 1R4 is hereby incorporated into the Purchase Agreement in replacement of Table 1R3.

2.2 Table 1-2. Table 1-2, entitled “737-8 Revised Delivery Aircraft Delivery, Description, Price, and Advance Payments,” referencing SA-9 in the footer (Table 1-2) is hereby incorporated into the Purchase Agreement.


3.	Exhibit.

Exhibit A2. Exhibit A2, entitled “Revised Aircraft Configuration,” reflecting the Optional Features of the Revised Delivery Aircraft (Exhibit A2) is hereby incorporated into the Purchase Agreement. For the avoidance of doubt, Boeing will (i) manufacture and sell to Customer Aircraft conforming to the configuration described in Exhibit AR1 and with the Optional Features Prices set forth in Exhibit AR1 in the quantities listed in Table 1R4 and (ii) manufacture and sell to Customer Revised Delivery Aircraft conforming to the configuration described in Exhibit A2 and with the Optional Features Prices set forth in Exhibit A2 in the quantities listed in Table 1-2.


4.	Letter Agreement.

4.1 Letter Agreement No. AAL-PA-3735-1106650R2, entitled “[*CTR],” is deleted in its entirety and replaced with the similarly titled Letter Agreement No. AAL-PA-3735-1106650R3 (attached hereto) referencing SA-9 in the footer (Revised [*CTR]). The Revised [*CTR] is hereby incorporated into the Purchase Agreement.

4.2 Letter Agreement No. AAL-PA-3735-1106651, entitled “[*CTR],” inclusive of Attachment A, is deleted in its entirety and replaced with the similarly titled Letter Agreement No. AAL-PA-3735-1106651R1, inclusive of a revised Attachment A (attached hereto) and referencing SA-9 in the footer (Revised [*CTR] Agreement). The Revised [*CTR] Agreement is hereby incorporated into the Purchase Agreement.

PA 03735 SA-9, Page 2

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

4.3 Letter Agreement No. AAL-PA-3735-1801206, entitled “[*CTR],” inclusive of Attachment A and referencing SA-9 in the footer ([*CTR] Agreement) is hereby incorporated into the Purchase Agreement.


5.	Miscellaneous.

5.1 For avoidance of doubt, Revised Delivery Aircraft remain Aircraft under the Purchase Agreement.

5.2 The definition of “Aircraft” in Exhibit C to the Purchase Agreement is hereby deleted in its entirety and replaced with the following:

Aircraft means any or all, as the context requires, of the Boeing Model 737 MAX aircraft described in Section 1 of the Basic Articles to the Purchase Agreement, and as further specified in Table 1(R4) or Table 1-2 to the Purchase Agreement, together with the Aircraft Software, Engines and Parts that are incorporated or installed in or attached to such aircraft.

5.3 The Purchase Agreement is amended as set forth above by the revised Table Of Contents, Table 1R4, Table 1-2, Exhibit A2, the Revised [*CTR], the Revised [*CTR] Agreement, and the [*CTR] Agreement. All other terms and conditions of the Purchase Agreement remain unchanged and are in full force and effect.

5.4 References in the Purchase Agreement and any supplemental agreements and associated letter agreements to Table 1 or Table 1R2 or Table 1R3, are deemed to refer to Table 1R4 and Table 1-2.

5.5 References in the Purchase Agreement and any supplemental agreements and associated letter agreements to the tables, exhibits, supplemental exhibits and letter agreements listed in the left column of the below table shall be deemed to refer to the corresponding tables, exhibits, supplemental exhibits and letter agreements listed in the right column of the below table.



Reference	Replacement Reference
Exhibit A or Exhibit AR1	Exhibit AR1 and Exhibit A2
Letter Agreement No. AAL-PA-3735-1106650R2	Letter Agreement No. AAL-PA-3735-1106650R3
Letter Agreement No. AAL-PA-3735-1106651	Letter Agreement No. AAL-PA-3735-1106651R1

5.6 Upon the execution of this SA-9, Boeing shall [*CTR]. Such [*CTR] Customer to Boeing in accordance with the Purchase Agreement. The [*CTR].

Intentionally Left Blank

PA 03735 SA-9, Page 3

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]



AGREED AND ACCEPTED this

April 6, 2018
Date

THE BOEING COMPANY		AMERICAN AIRLINES, INC.

/s/ The Boeing Company		/s/ American Airlines, Inc.
Signature		Signature

The Boeing Company		American Airlines, Inc.
Printed name		Printed name

Attorney-in-Fact		Vice President and Treasurer
Title		Title

PA 03735 SA-9, Page 4

BOEING PROPRIETARY

TABLE OF CONTENTS



ARTICLES		SA NUMBER
Article 1.	Quantity, Model and Description
Article 2.	Delivery Schedule
Article 3.	Price
Article 4.	Payment
Article 5.	Additional Terms
Article 6.	Confidentiality
TABLE
1R4. 1-2	Aircraft Information Table Revised Delivery Aircraft Information Table	9 9
EXHIBITS
AR1 A2	Aircraft Configuration Revised Delivery Aircraft Configuration	6 9
B.	Aircraft Delivery Requirements and Responsibilities
C.	Definitions
SUPPLEMENTAL EXHIBITS
AE1.	[*CTR]
BFE1.	BFE Variables
CS1R1.	Customer Support Variables	4
EE1.	[*CTR]
SLP1.	[*CTR]
LETTER AGREEMENTS
LA-1106648R1	Special Matters	6
LA-1106649	[*CTR]
LA-1106650R3	[*CTR]	9
LA-1106651R1	[*CTR]	9
LA-1106652	Aircraft Model Substitution
LA-1106654	AGTA Terms Revisions for MAX
LA-1106655	Open Matters - 737 MAX Withdrawn	6
LA-1106656R1	[*CTR]	1
LA-1106657R1	[*CTR]	2
LA-1106663 R1	[*CTR]	2
LA-1106664 R1	[*CTR]	2
LA-1106658	[*CTR]
LA-1106659R1	[*CTR]	1
LA-1106660	Spare Parts Initial Provisioning

PA-03735 TABLE OF CONTENTS, Page 1 of 2 SA-9

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]




LETTER AGREEMENTS, continued		SA NUMBER
LA-1106661R2	[*CTR]	2
LA-1106667	[*CTR]
LA-1106668R1	[*CTR]	8
LA-1106669	[*CTR]
LA-1106670	Confidentiality
LA-1106671R1	Miscellaneous Commitments	1
LA-1106672	[*CTR]
LA-1106673R1*	CS1 Special Matters	4
LA-1106677	[*CTR]
LA-1600073	[*CTR]	4
LA-1600852	[*CTR]	5
LA-1603773	[*CTR]	5
LA-1605402	[*CTR]	6
LA-1700919	[*CTR]	7
LA-1801206	[*CTR]	9

* ‑ This is an intended gap as there are no Letter Agreements LA-1106674 through LA‑1106676 incorporated by the Purchase Agreement.

PA-03735 TABLE OF CONTENTS, Page 2 of 2 SA-9

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]



Airframe Model/MTOW: 737-8	[*CTR] pounds	Detail Specification:	[*CTR]
Engine Model/Thrust: CFMLEAP-1B25	[*CTR] pounds	Airframe Price Base Year/Escalation Formula:	[*CTR]	[*CTR]
Airframe Price:	$[*CTR]	Engine Price Base Year/Escalation Formula:
Optional Features:	$[*CTR]
Sub-Total of Airframe and Features:	$[*CTR]	Airframe Escalation Data:
Engine Price (Per Aircraft):	$[*CTR]	Base Year Index (ECI):	[*CTR]
Aircraft Basic Price (Excluding BFE/SPE):	$[*CTR]	Base Year Index (CPI):	[*CTR]
Buyer Furnished Equipment (BFE) Estimate:	$[*CTR]
Seller Purchased Equipment (SPE) Estimate:	$[*CTR]
LIFT Seats Provided by Boeing (Estimate):	$[*CTR]
Deposit per Aircraft:	$[*CTR]



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Manufacturer Serial Number	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Manufacturer Serial Number	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2017	1	[*CTR]	44459	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2017	1	[*CTR]	44463	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2017	1	[*CTR]	44465	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2017	1	[*CTR]	44446	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2018	1	[*CTR]	44447	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2018	1	[*CTR]	44451	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2018	1	[*CTR]	44448	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2018	1	[*CTR]	44449	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2018	1	[*CTR]	44455	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2018	1	[*CTR]	44450	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2018	1	[*CTR]	44452	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2018	1	[*CTR]	44453	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2018	1	[*CTR]	44454	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Table 1R4 To

Purchase Agreement No. PA-03735

737-8 Aircraft Delivery, Description, Price and Advance Payments



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Manufacturer Serial Number	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Manufacturer Serial Number	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2018	1	[*CTR]	44456	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2018	1	[*CTR]	44457	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2018	1	[*CTR]	44458	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2018	1	[*CTR]	44460	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2018	1	[*CTR]	44461	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2018	1	[*CTR]	44462	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2018	1	[*CTR]	44464	N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

AAL-PA-03735 108567-1F.txt Boeing Proprietary SA-9

Page 2

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Table 1R4 To

Purchase Agreement No. PA-03735

737-8 Aircraft Delivery, Description, Price and Advance Payments



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Manufacturer Serial Number	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Manufacturer Serial Number	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2019	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021	1	[*CTR]		N/A	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2020	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

AAL-PA-03735 108567-1F.txt Boeing Proprietary SA-9

Page 3

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Table 1R4 To

Purchase Agreement No. PA-03735

737-8 Aircraft Delivery, Description, Price and Advance Payments



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Manufacturer Serial Number	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Manufacturer Serial Number	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2021	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021	2	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2021		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

Total 60

AAL-PA-03735 108567-1F.txt Boeing Proprietary SA-9

Page 4

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Table 1-2 To

Purchase Agreement No. PA-03735

737-8 Revised Delivery Aircraft Delivery, Description, Price and Advance Payments



Airframe Model/MTOW: 737-8	[*CTR] pounds	Detail Specification:	[*CTR]
Engine Model/Thrust: CFMLEAP-1B25	[*CTR] pounds	Airframe Price Base Year/Escalation Formula:	[*CTR]	[*CTR]
Airframe Price:	$[*CTR]	Engine Price Base Year/Escalation Formula:
Optional Features:	$[*CTR]
Sub-Total of Airframe and Features:	$[*CTR]	Airframe Escalation Data:
Engine Price (Per Aircraft):	$[*CTR]	Base Year Index (ECI):	[*CTR]
Aircraft Basic Price (Excluding BFE/SPE):	$[*CTR]	Base Year Index (CPI):	[*CTR]
Buyer Furnished Equipment (BFE) Estimate:	$[*CTR]
Seller Purchased Equipment (SPE) Estimate:	$[*CTR]
LIFT Seats Provided by Boeing (Estimate):	$[*CTR]
Deposit per Aircraft:	$[*CTR]



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Manufacturer Serial Number	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Manufacturer Serial Number	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2024	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	2	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] SA-9

AAL-PA-03735 108716-1F.txt Boeing Proprietary Page 1

Table 1-2 To

Purchase Agreement No. PA-03735

737-8 Revised Delivery Aircraft Delivery, Description, Price and Advance Payments



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Manufacturer Serial Number	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Manufacturer Serial Number	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2025	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	2	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	2	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	2	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	2	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	2	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] SA-9

AAL-PA-03735 108716-1F.txt Boeing Proprietary Page 2

Table 1-2 To

Purchase Agreement No. PA-03735

737-8 Revised Delivery Aircraft Delivery, Description, Price and Advance Payments



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Manufacturer Serial Number	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Manufacturer Serial Number	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2026	2	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	2	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	2	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	2	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	2	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	2	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	2	[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]		Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]		No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

Total 40

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] SA-9

AAL-PA-03735 108716-1F.txt Boeing Proprietary Page 3

AIRCRAFT CONFIGURATION

between

THE BOEING COMPANY

and American Airlines, Inc.

Exhibit A2 to Purchase Agreement Number 03735

AAL-PA-03735-EXA2 SA-9, Page 1 of 2

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Exhibit A2

AIRCRAFT CONFIGURATION

Dated as of the SA-9 Effective Date relating to

BOEING MODEL 737-8 MAX AIRCRAFT

The Detail Specification is Boeing document number [*CTR], as may subsequently be amended. The Detail Specification provides [*CTR] set forth in this Exhibit A2. Such Detail Specification will be comprised of Boeing configuration specification [*CTR]. [*CTR], Boeing will furnish to Customer copies of the Detail Specification, which will reflect [*CTR]. The [*CTR], except such [*CTR].

AAL-PA-03735-EXA2 SA-9, Page 2 of 2

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

BOEING PROPRIETARY



Configuration Item Number	Title	[CTR] Revised Delivery Aircraft [CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] SA-9

AAL-PA-03735 108716-1F.txt Boeing Proprietary Page 1

BOEING PROPRIETARY



Configuration Item Number	Title	[CTR] Revised Delivery Aircraft [CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] SA-9

AAL-PA-03735 108716-1F.txt Boeing Proprietary Page 2

BOEING PROPRIETARY



Configuration Item Number	Title	[CTR] Revised Delivery Aircraft [CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] SA-9

AAL-PA-03735 108716-1F.txt Boeing Proprietary Page 3

BOEING PROPRIETARY



Configuration Item Number	Title	[CTR] Revised Delivery Aircraft [CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] SA-9

AAL-PA-03735 108716-1F.txt Boeing Proprietary Page 4

BOEING PROPRIETARY



Configuration Item Number	Title	[CTR] Revised Delivery Aircraft [CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] SA-9

AAL-PA-03735 108716-1F.txt Boeing Proprietary Page 5

BOEING PROPRIETARY



Configuration Item Number	Title	[CTR] Revised Delivery Aircraft [CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]

	TOTAL – [*CTR] - EXHBIT A:		[*CTR]

[*CTR]: 191

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT] SA-9

AAL-PA-03735 108716-1F.txt Boeing Proprietary Page 6

The Boeing Company

P.O. Box 3707

Seattle, WA 98124‑2207

AAL-PA-03735-LA-1801206

American Airlines, Inc.

P.O. Box 619616

Dallas-Fort Worth Airport, Texas 75261-9616


Subject:	[*CTR]


Reference:	Purchase Agreement No. PA-3735 (Purchase Agreement) between The Boeing Company (Boeing) and American Airlines, Inc. (Customer) relating to Model 737-8 aircraft (Aircraft)

This letter agreement (Letter Agreement) amends and supplements the Purchase Agreement. All terms used but not defined in this Letter Agreement will have the same meaning as in the Purchase Agreement.

The terms and conditions described in this Letter Agreement are applicable only to the aircraft described in Section 1 below.


1.	Revised Delivery Schedule.

This Letter Agreement revises the Scheduled Delivery Month of forty (40) Aircraft currently scheduled to deliver in calendar years [*CTR] (Revised Delivery Aircraft) and moves the Scheduled Delivery Months to calendar years [*CTR]. For avoidance of doubt, Revised Delivery Aircraft remain Aircraft under the Purchase Agreement. Attachment A of this Letter Agreement identifies the Revised Delivery Aircraft by the original delivery month (Original Contract Delivery Month) and sets forth the revised delivery month (Revised Contract Delivery Month) for the Revised Delivery Aircraft. Additionally, Table 1-2 of the Purchase Agreement includes the Revised Delivery Aircraft per the revisions of this Letter Agreement.


2.	[*CTR].

Boeing agrees that it is [*CTR] revising the delivery schedule of the Revised Delivery Aircraft.


3.	Delivery [*CTR].

3.1 The Aircraft Basic Price for each of the Revised Delivery Aircraft [*CTR]. For the avoidance of doubt, Boeing agrees to [*CTR] the Aircraft Basic Price for the Revised Delivery Aircraft for [*CTR].

PA No. 3735 SA-9

Attachment A to AAL-PA-03735-LA-1801206

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

3.2 If the delivery of the Revised Delivery Aircraft [*CTR] in the Revised Contract Delivery Month, then [*CTR] in accordance with and subject to the terms and conditions of the Purchase Agreement (that is, if the Purchase Agreement [*CTR]).

3.3. The delivery [*CTR] for the Revised Delivery Aircraft will [*CTR] the Aircraft Basic Price in accordance with Sections 3.1 and 3.2, above.


4.	Advance Payments.

Advance Payments for the Revised Delivery Aircraft are [*CTR] Letter Agreement AAL-PA-03735-LA-1106650R3 entitled “[*CTR]”. The Advance Payments for the Revised Delivery Aircraft will be paid per the Advance Payment Base Price as found on Table 1-2 [*CTR] as set forth in Section 3.1 of this Letter Agreement.


5.	Confidentiality.

The information contained herein represents confidential business information and has value precisely because it is not available generally or to other parties. This Letter Agreement shall be subject to the terms and conditions of Letter Agreement No. AAL-PA-03735-LA-1106670 entitled “Confidentiality”.


6.	Assignment.

Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be assigned, in whole or in part, without the prior written consent of Boeing, except to the extent permissible under the terms of the AGTA.

AAL-PA-03735-LA-1801206 SA-9

[*CTR] Page 2 of 3

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Very truly yours,



THE BOEING COMPANY

By	/s/ The Boeing Company

Its	Attorney-In-Fact

ACCEPTED AND AGREED TO this

Date:		April 6, 2016

AMERICAN AIRLINES, INC.

By	/s/ American Airlines, Inc.

Its	Vice President and Treasurer

AAL-PA-03735-LA-1801206 SA-9

[*CTR] Page 3 of 3

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

The Boeing Company

P.O. Box 3707

Seattle, WA 98124‑2207



Attachment A to AAL-PA-03735-LA-1801206
	Original Contract Delivery Month	Original Contract Delivery Month
1	[*CTR]	[*CTR]
2	[*CTR]	[*CTR]
3	[*CTR]	[*CTR]
4	[*CTR]	[*CTR]
5	[*CTR]	[*CTR]
6	[*CTR]	[*CTR]
7	[*CTR]	[*CTR]
8	[*CTR]	[*CTR]
9	[*CTR]	[*CTR]
10	[*CTR]	[*CTR]
11	[*CTR]	[*CTR]
12	[*CTR]	[*CTR]
13	[*CTR]	[*CTR]
14	[*CTR]	[*CTR]
15	[*CTR]	[*CTR]
16	[*CTR]	[*CTR]
17	[*CTR]	[*CTR]
18	[*CTR]	[*CTR]
19	[*CTR]	[*CTR]
20	[*CTR]	[*CTR]
21	[*CTR]	[*CTR]
22	[*CTR]	[*CTR]
23	[*CTR]	[*CTR]
24	[*CTR]	[*CTR]
25	[*CTR]	[*CTR]
26	[*CTR]	[*CTR]
27	[*CTR]	[*CTR]
28	[*CTR]	[*CTR]
29	[*CTR]	[*CTR]
30	[*CTR]	[*CTR]
31	[*CTR]	[*CTR]
32	[*CTR]	[*CTR]
33	[*CTR]	[*CTR]
34	[*CTR]	[*CTR]
35	[*CTR]	[*CTR]
36	[*CTR]	[*CTR]
37	[*CTR]	[*CTR]
38	[*CTR]	[*CTR]
39	[*CTR]	[*CTR]
40	[*CTR]	[*CTR]

PA No. 3735 SA-9

Attachment A to AAL-PA-03735-LA-1801206

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

The Boeing Company

P.O. Box 3707

Seattle, WA 98124‑2207

AAL-PA-03735-LA-1106650R3

American Airlines, Inc.

P.O. Box 619616

Dallas-Fort Worth Airport, Texas 75261-9616


Subject:	[*CTR]


Reference:	Purchase Agreement No. 03735 (Purchase Agreement) between The Boeing Company (Boeing) and American Airlines, Inc. (Customer) relating to Model 737 MAX aircraft (Aircraft)

The Purchase Agreement incorporates the terms and conditions of the AGTA. This Letter Agreement modifies certain terms and conditions of the AGTA and the Purchase Agreement with respect to the Aircraft.

1.[*CTR].

[*CTR]:



[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]
[*CTR]	[*CTR]	[*CTR]

2. [*CTR].

[*CTR].

3. [*CTR].

3.1 [*CTR].

AAL-PA-03735-LA-1106650R3 SA-9

[*CTR] LA Page 1 of 3

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

3.2 The parties agree that on the SA-3 Effective Date, [*CTR] in accordance with Section 2 of this Letter Agreement [*CTR] the SA-3 Effective Date.

4. [*CTR].

4.1 Notwithstanding anything in Sections 1 through 3 above or the [*CTR], Customer will [*CTR] for the [*CTR] of Supplemental Agreement No. 9, and [*CTR]. [*CTR]. All [*CTR].

4.2 Notwithstanding anything to the contrary in this Letter Agreement, [*CTR].

5. Confidentiality.

Customer understands and agrees that the information contained herein represents confidential business information and has value precisely because it is not available generally or to other parties. This Letter Agreement shall be subject to the terms and conditions of Letter Agreement No. AAL-PA-03735-LA-1106670 entitled “Confidentiality”.

6. Assignment.

6.1 Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be assigned, in whole or in part, without the prior written consent of Boeing, except to the extent permissible under the terms of the AGTA.

6.2 [*CTR].

If the foregoing correctly sets forth your understanding of our agreement with respect to the matters treated above, please indicate your acceptance and approval below.

AAL-PA-03735-LA-1106650R3 SA-9

[*CTR] LA Page 2 of 3

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Very truly yours,



THE BOEING COMPANY

By:	/s/ The Boeing Company

Its:	Attorney‑In‑Fact

ACCEPTED AND AGREED TO this

Date:		April 6, 2018

AMERICAN AIRLINES, INC.

By:	/s/ American Airlines, Inc.

Its:	Vice President and Treasurer

AAL-PA-03735-LA-1106650R3 SA-9

[*CTR] LA Page 3 of 3

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

The Boeing Company

P.O. Box 3707

Seattle, WA 98124‑2207

AAL‑PA‑03735‑LA‑1106651R1

American Airlines, Inc.

P.O. Box 619616

Dallas‑Fort Worth Airport, Texas 75261‑9616


Subject:	[*CTR]


Reference:	Purchase Agreement No. 03735 (Purchase Agreement) between The Boeing Company (Boeing) and American Airlines, Inc. (Customer) relating to Model 737 MAX aircraft (Aircraft)

1.Right to Purchase [*CTR].

Subject to the terms and conditions contained in this Letter Agreement, in addition to the Aircraft described in Table 1R4 and Table 1-2 to the Purchase Agreement as of the date of execution of this Letter Agreement, [*CTR].

2. Delivery.

The number of Option Aircraft and the [*CTR] is listed in Attachment A(R1) to this Letter Agreement. No later than [*CTR] in each calendar year, Boeing will provide written notice setting forth [*CTR] with a [*CTR] in such calendar year. Such notice will constitute an amendment to Attachment A(R1).

3. Configuration.

3.1 Subject to the provisions of Section 3.2 below, the configuration for the [*CTR] will be the Detail Specification for the Aircraft at the revision level in effect at the time of Limited Scope Supplemental Agreement (as defined in Section 7 below). Such Detail Specification will be revised to include:

(i) [*CTR],

(ii) [*CTR], and

(iii) [*CTR].

3.2 Boeing reserves the right to [*CTR] the [*CTR] starting from a [*CTR]; so long as Boeing can achieve the same configuration which would result pursuant to the provisions of Section 3.1.

AAL‑PA‑03735‑LA‑1106651R1 SA-9

[*CTR] Page 1 of 3

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

4. Price.

4.1 The [*CTR] Aircraft Basic Price for each of the [*CTR] are identified in Attachment A(R1) to this Letter Agreement.

4.2 The [*CTR] Aircraft Basic Price for each of the [*CTR] shall be [*CTR].

4.3 The Advance Payment Base Price shall be developed in accordance with the terms of the Purchase Agreement and determined at the time of Limited Scope Supplemental Agreement.

5. Payment.

5.1 [*CTR].

5.2 [*CTR].

5.3 [*CTR].

6. [*CTR].

[*CTR].

7. Limited Scope Supplemental Agreement.

[*CTR].

8. Assignment.

Notwithstanding any other provisions of the Purchase Agreement, the rights and obligations described in this Letter Agreement are provided to Customer in consideration of Customer’s becoming the operator of the Aircraft and cannot be assigned in whole or, in part, without the prior written consent of Boeing.

9. Confidential Treatment.

AAL‑PA‑03735‑LA‑1106651R1 SA-9

[*CTR] Page 2 of 3

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Very truly yours,



THE BOEING COMPANY

By:	/s/ The Boeing Company

Its:	Attorney‑In‑Fact

ACCEPTED AND AGREED TO this

Date:		April 6, 2018

AMERICAN AIRLINES, INC.

By:	/s/ American Airlines, Inc.

Its:	Vice President and Treasurer

AAL‑PA‑03735‑LA‑1106651R1 SA-9

[*CTR] Page 3 of 3

BOEING PROPRIETARY

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Attachment A(R1) To

Letter Agreement No. AAL-PA-0375-LA-1106651

737-8 [*CTR] Aircraft Delivery, Description, Price and Advance Payments



Airframe Model/MTOW: 737-8	[*CTR] pounds	Detail Specification:	[*CTR]
Engine Model/Thrust: CFMLEAP-1B25	[*CTR] pounds	Airframe Price Base Year/Escalation Formula:	[*CTR]	[*CTR]
Airframe Price:	$[*CTR]	Engine Price Base Year/Escalation Formula:
Optional Features:	$*CTR]
Sub-Total of Airframe and Features:	$[*CTR]	Airframe Escalation Data:
Engine Price (Per Aircraft):	$[*CTR]	Base Year Index (ECI):	[*CTR]
Aircraft Basic Price (Excluding BFE/SPE):	$[*CTR]	Base Year Index (CPI):	[*CTR]
Buyer Furnished Equipment (BFE) Estimate:	$[*CTR]
Seller Purchased Equipment (SPE) Estimate:	$[*CTR]
LIFT Seats Provided by Boeing (Estimate):	$[*CTR]
Deposit per Aircraft:	$[*CTR]



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2022	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2022		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2022		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2022	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2022		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2022		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2022	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2022		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2022		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2022	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2022		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2022		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

SA-9

AAL-PA-03735 108567-1O.txt Boeing Proprietary Page 1

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Attachment A(R1) To

Letter Agreement No. AAL-PA-0375-LA-1106651

737-8 [*CTR] Aircraft Delivery, Description, Price and Advance Payments



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2022	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2022		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2022		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2022	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

SA-9

AAL-PA-03735 108567-1O.txt Boeing Proprietary Page 2

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Attachment A(R1) To

Letter Agreement No. AAL-PA-0375-LA-1106651

737-8 [*CTR] Aircraft Delivery, Description, Price and Advance Payments



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2023	1	[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2023	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

SA-9

AAL-PA-03735 108567-1O.txt Boeing Proprietary Page 3

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Attachment A(R1) To

Letter Agreement No. AAL-PA-0375-LA-1106651

737-8 [*CTR] Aircraft Delivery, Description, Price and Advance Payments



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2024		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2024	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

SA-9

AAL-PA-03735 108567-1O.txt Boeing Proprietary Page 4

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Attachment A(R1) To

Letter Agreement No. AAL-PA-0375-LA-1106651

737-8 [*CTR] Aircraft Delivery, Description, Price and Advance Payments



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2025	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR-2025		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2025	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

SA-9

AAL-PA-03735 108567-1O.txt Boeing Proprietary Page 5

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Attachment A(R1) To

Letter Agreement No. AAL-PA-0375-LA-1106651

737-8 [*CTR] Aircraft Delivery, Description, Price and Advance Payments



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2026	1	[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2026	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027	1	[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

SA-9

AAL-PA-03735 108567-1O.txt Boeing Proprietary Page 6

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Attachment A(R1) To

Letter Agreement No. AAL-PA-0375-LA-1106651

737-8 [*CTR] Aircraft Delivery, Description, Price and Advance Payments



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2027		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

SA-9

AAL-PA-03735 108567-1O.txt Boeing Proprietary Page 7

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Attachment A(R1) To

Letter Agreement No. AAL-PA-0375-LA-1106651

737-8 [*CTR] Aircraft Delivery, Description, Price and Advance Payments



Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	Advance Payment Per Aircraft (Amts. Due/Mos. Prior to Delivery):
Delivery Date	Number of Aircraft	Escalation Factor (Airframe)	Nominal Delivery Month	Escalation Estimate Adv Payment Base Price Per A/P	At Signing [*CTR]	[*CTR]	[*CTR]	Total [*CTR]
[*CTR]-2027	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2027	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2028		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2028		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2028	1	[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2028		[*CTR]	Yes	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]
[*CTR]-2028		[*CTR]	No	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]	$[*CTR]

Total: 57

SA-9

AAL-PA-03735 108567-1O.txt Boeing Proprietary Page 8

[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT]

Exhibit

FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT

FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT (this “Fourth Amendment”), dated as of May 15, 2018 among American Airlines, Inc., a Delaware corporation (the “Borrower”), American Airlines Group Inc., a Delaware corporation (the “Parent” or the “Guarantor”), the lenders party hereto with a 2018 Replacement Term Loan Commitment referred to below (the “Replacement Term Lenders”), Deutsche Bank AG New York Branch (“Deutsche Bank”), as administrative agent (the “Administrative Agent”) and Barclays Bank PLC as the designated lender of 2018 Replacement Term Loans referred to below (the “Designated Replacement Term Lender”). Unless otherwise indicated, all capitalized terms used herein and not otherwise defined shall have the respective meanings provided such terms in the Credit Agreement referred to below (as amended by this Fourth Amendment).

W I T N E S S E T H:

WHEREAS, the Borrower, the Guarantor, the lenders from time to time party thereto, the Administrative Agent and certain other parties thereto are parties to that certain Amended and Restated Credit and Guaranty Agreement, dated as of May 21, 2015 (as amended by that First Amendment to Amended and Restated Credit and Guaranty Agreement, dated as of October 26, 2015, Second Amendment to Amended and Restated Credit and Guaranty Agreement, dated as of March 14, 2017, Third Amendment to Amended and Restated Credit and Guaranty Agreement, dated as of August 21, 2017, and as further amended, amended and restated, supplemented or otherwise modified to but not including the Fourth Amendment Effective Date as defined below, the “Credit Agreement”);

WHEREAS, on the date hereof, there are outstanding 2017 Replacement Term Loans under the Credit Agreement (the “Existing Term Loans”) in an aggregate principal amount of $1,824,748,125.00;

WHEREAS, pursuant to Section 10.08(e) of the Credit Agreement, the Borrower desires to refinance in full the Existing Term Loans with the proceeds of the 2018 Replacement Term Loans (as defined below) (the “Refinancing”); and

WHEREAS, the Borrower, the Administrative Agent, the Replacement Term Lenders and the other Lenders party hereto wish to amend the Credit Agreement to provide for (i) the Refinancing and (ii) certain other modifications to the Credit Agreement, in each case, on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

SECTION ONE - Credit Agreement Amendments. Effective as of the Fourth Amendment Effective Date (as defined below):

(a) The Credit Agreement is hereby amended as follows:

(i) Section 1.01 of the Credit Agreement is hereby amended by inserting the following definitions in appropriate alphabetical order:

“2018 Replacement Term Loans” shall be the Term Loans incurred pursuant to the Fourth Amendment.

“2018 Replacement Term Loan Commitment” shall mean the Term Loan Commitment of each Replacement Term Lender to make 2018 Replacement Term Loans pursuant to the Fourth Amendment.

“2018 Replacement Term Loan Commitment Schedule” shall mean the schedule of 2018 Replacement Term Loan Commitments of each Replacement Term Lender provided to the Borrower on the Fourth Amendment Effective Date by the Administrative Agent pursuant to the Fourth Amendment.

“Fourth Amendment” shall mean the Fourth Amendment to this Agreement, dated as of May 15, 2018.

“Fourth Amendment Effective Date” shall have the meaning provided in the Fourth Amendment.

(ii) The definition of “Replacement Term Lender” appearing in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“Replacement Term Lender” shall mean each Lender having a Term Loan Commitment to provide 2018 Replacement Term Loans or, as the case may be, with an outstanding 2018 Replacement Term Loan.

(iii) The definition of “Applicable Margin” appearing in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“Applicable Margin” shall mean the rate per annum determined pursuant to the following:



Class of Loans	Applicable Margin Eurodollar Loans	Applicable Margin ABR Loans
Term Loans outstanding prior to the Fourth Amendment Effective Date	2.00%	1.00%
2018 Replacement Term Loans	From and after Fourth Amendment Effective Date: 1.75%	From and after the Fourth Amendment Effective Date: 0.75%
Revolving Loans	2.25%	1.25%

(iv) The definition of “Class” is hereby amended by deleting “2017 Replacement Term Loans” where it appears and replacing such term with “2018 Replacement Term Loans”.

(v) The definition of “Pari Passu Notes” is hereby amended by deleting “2017 Replacement Term Loans” where it appears and replacing it with “2018 Replacement Term Loans”.

(vi) The definition of “Repricing Event” is hereby amended by deleting “2017 Replacement Term Loans” each place it appears and replacing it with “2018 Replacement Term Loans”.

(vii) The definition of “Term Loan” is hereby amended by deleting “2017 Replacement Term Loans” and replacing it with “2018 Replacement Term Loans”.

(viii) The definition of “Term Loan Commitment” appearing in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“Term Loan Commitment” shall mean the commitment of each Term Lender to make Term Loans hereunder and, in the case of the 2018 Replacement Term Loans, in an aggregate principal amount not to exceed the amount set forth under the heading “2018 Replacement Term Loans” opposite its name in the 2018 Replacement Term Loan Commitment Schedule or in the Assignment and Acceptance pursuant to which such Term Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The aggregate amount of the Term Loan Commitments as of the Fourth Amendment Effective Date is $1,824,748,125.00. The Term Loan Commitments as of the Fourth Amendment Effective Date are for 2018 Replacement Term Loans.

(ix) The definition of “Term Loan Maturity Date” appearing in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“Term Loan Maturity Date” shall mean, with respect to (a) 2018 Replacement Term Loans that have not been extended pursuant to Section 2.28, June 27, 2025 and (b) with respect to Extended Term Loans, the final maturity date therefor as specified in the applicable Extension Offer accepted by the respective Term Lenders (as the same may be further extended pursuant to Section 2.28).

(x) Section 2.01(b) is hereby amended and restated in its entirety as follows:

(b) Term Loan Commitments. Each Replacement Term Lender has made the 2018 Replacement Term Loans pursuant to the Fourth Amendment. The 2018 Replacement Term Loans shall constitute Term Loans for all purposes of this Agreement and shall be repaid in accordance with the provisions of this Agreement.

(xi) Section 2.10(b) is hereby amended and restated in its entirety as follows:

(b) The principal amounts of the 2018 Replacement Term Loans shall be repaid in consecutive annual installments (each, an “Installment”) of 1.00% of the

sum of (i) the original aggregate principal amount of the Existing Term Loans as of the Fourth Amendment Effective Date plus (ii) the original aggregate principal amount of any Incremental Term Loans of the same Class as the 2018 Replacement Term Loans from time to time after the Fourth Amendment Effective Date, on each anniversary of the Closing Date occurring prior to the Term Loan Maturity Date with respect to such 2018 Replacement Term Loans commencing on June 27, 2019. Notwithstanding the foregoing, (1) such Installments shall be reduced in connection with any mandatory or voluntary prepayments of the 2018 Replacement Term Loans in accordance with Sections 2.12 and 2.13, as applicable and (2) the Term Loans, together with all other amounts owed hereunder with respect thereto, shall, in any event, be paid in full no later than the applicable Term Loan Termination Date.

(xii) Section 2.13(a) is hereby amended by (A) deleting “2017 Replacement Term Loans” each place it appears and replacing it with “2018 Replacement Term Loans”, and (B) deleting “Second Amendment” each place it appears and replace it with “Fourth Amendment”.

(xiii) Section 2.13(d) is hereby amended by (A) deleting “2017 Replacement Term Loans” each place it appears and replacing it with “2018 Replacement Term Loans” and (B) deleting “Second Amendment Effective Date” and replacing it with “Fourth Amendment Effective Date”.

(xiv) Section 2.27(c) is hereby amended by deleting “2017 Replacement Term Loans” each place it appears and replacing it with “2018 Replacement Term Loans”.

(b) (i) Subject to the satisfaction (or waiver) of the conditions set forth in Section Two hereof, the Replacement Term Lenders hereby agree to make 2018 Replacement Term Loans (as defined below) to the Borrower on the Fourth Amendment Effective Date (as defined below) in the aggregate principal amount of $1,824,748,125.00, which shall be used solely to refinance in full all outstanding Existing Term Loans.

(i) As of the Fourth Amendment Effective Date, immediately prior to the effectiveness of the Fourth Amendment, the Administrative Agent has prepared and provided a true and correct copy to the Borrower of a schedule (the “2018 Replacement Term Loan Commitments Schedule”) which sets forth the allocated commitments received by it (the “2018 Replacement Term Loan Commitments”) from the Lenders providing the 2018 Replacement Term Loans. The Administrative Agent has notified each Replacement Term Lender of its allocated 2018 Replacement Term Loan Commitment. On the Fourth Amendment Effective Date, all Existing Term Loans shall be refinanced in full as follows:

(w) the outstanding aggregate principal amount of Existing Term Loans of each Lender which does not have a 2018 Replacement Term Loan Commitment (each, a “Non-Converting Term Lender”) shall be repaid in full in cash;

(x) to the extent any Lender has a 2018 Replacement Term Loan Commitment that is less than the full outstanding aggregate principal amount of Existing Term Loans of such Lender, such Lender shall be repaid in cash in an amount equal to the difference between the outstanding aggregate principal amount of

Existing Term Loans of such Lender and such Lender’s 2018 Replacement Term Loan Commitment (the “Non-Converting Term Portion”);

(y) the outstanding aggregate principal amount of Existing Term Loans of each Lender which has a 2018 Replacement Term Loan Commitment (each, a “Converting Term Lender,” and, together with the Non-Converting Term Lenders, the “Existing Term Lenders”) shall automatically be converted into 2018 Replacement Term Loans (a “Converted 2018 Replacement Term Loan”) in a principal amount equal to such Converting Term Lender’s Existing Term Loans outstanding on the Fourth Amendment Effective Date immediately prior to such conversion, less an amount equal to any Non-Converting Term Portion; and

(z) (1) each Replacement Term Lender that is not an Existing Term Lender (each, a “New Term Lender”) and (2) each Converting Term Lender with a 2018 Replacement Term Loan Commitment in an amount in excess of the aggregate principal amount of Existing Term Loans of such Converting Term Lender (such difference, the “New Term Commitment”), agrees to make to the Borrower a new Term Loan (each, a “New Term Loan” and, collectively, the “New Term Loans” and, together with the Converted 2018 Replacement Term Loans, the “2018 Replacement Term Loans”) in a principal amount equal to such Converting Term Lender’s New Term Commitment or such New Term Lender’s 2018 Replacement Term Loan Commitment, as the case may be, on the Fourth Amendment Effective Date, which 2018 Replacement Term Loans shall be subject to the terms of the Credit Agreement after giving effect to this Fourth Amendment.

(ii) On the Fourth Amendment Effective Date, each Replacement Term Lender hereby agrees to fund its 2018 Replacement Term Loans in an aggregate principal amount equal to such Replacement Term Lender’s 2018 Replacement Term Loan Commitment as follows: (x) each Converting Term Lender shall fund its 2018 Replacement Term Loans to the Borrower by converting its then outstanding principal amount of Existing Term Loans into 2018 Replacement Term Loans in an equal principal amount as provided in clause (ii)(y) above, (y) (1) each Converting Term Lender with a New Term Commitment shall fund in cash an amount equal to its New Term Commitment to the Designated Replacement Term Lender and (2) each New Term Lender shall fund in cash an amount equal to its 2018 Replacement Term Loan Commitment to the Designated Replacement Term Lender, and (z) the Designated Replacement Term Lender shall fund in cash to the Borrower an amount equal to the New Term Commitment of each Converting Term Lender and the 2018 Replacement Term Loan Commitment of each New Term Lender.

(iii) All outstanding Borrowings of Existing Term Loans shall continue in effect for the equivalent principal amount of 2018 Replacement Term Loans after the Fourth Amendment Effective Date and each resulting “borrowing” of 2018 Replacement Term Loans shall be deemed to constitute a new deemed “borrowing” under the Credit Agreement and be subject to the same Interest Period (and the same LIBO Rate) applicable to the Existing Term Loans to which it relates immediately prior to the Fourth Amendment Effective Date, which Interest Period shall continue in effect (until such Interest Periods expire, at which time subsequent Interest Periods shall be

determined in accordance with the provisions of Section 2.05 of the Credit Agreement). New Term Loans shall be initially incurred as Eurodollar Loans and shall be allocated ratably to the outstanding deemed “borrowings” of 2018 Replacement Term Loans on the Fourth Amendment Effective Date. Each such Borrowing of New Term Loans shall be subject to (x) an Interest Period which commences on the Fourth Amendment Effective Date and ends on the last day of the Interest Period applicable to the Existing Term Loans and (y) the same LIBO Rate applicable to the 2018 Replacement Term Loans. The 2018 Replacement Term Loans of each Replacement Term Lender shall be allocated ratably to such Interest Periods (based upon the relative principal amounts of Borrowings of Existing Term Loans subject to such Interest Periods immediately prior to the Fourth Amendment Effective Date), with the effect being that Existing Term Loans which are converted into Converted 2018 Replacement Term Loans hereunder shall continue to be subject to the same Interest Periods and any 2018 Replacement Term Loans that are funded in cash on the Fourth Amendment Effective Date shall be ratably allocated to the various Interest Periods as described above.

(iv) On the Fourth Amendment Effective Date, the Borrower shall pay in cash (a) all interest accrued on the Existing Term Loans through the Fourth Amendment Effective Date and (b) to each Non-Converting Term Lender and each Converting Term Lender with a Non-Converting Term Portion, any breakage loss or expenses due under Section 2.15 of the Credit Agreement (it being understood that existing Interest Periods of the Existing Term Loans held by Replacement Term Lenders prior to the Fourth Amendment Effective Date shall continue on and after the Fourth Amendment Effective Date and shall accrue interest in accordance with Section 2.07 of the Credit Agreement on and after the Fourth Amendment Effective Date). Each Converting Term Lender hereby waives any entitlement to any breakage loss or expenses due under Section 2.15 of the Credit Agreement with respect to the repayment of that portion of its Existing Term Loans with the proceeds of Converted 2018 Replacement Term Loans.

(v) On the Fourth Amendment Effective Date, all promissory notes, if any, evidencing the Existing Term Loans shall be automatically cancelled, and any Replacement Term Lender may request that its 2018 Replacement Term Loan be evidenced by a promissory pursuant to Section 2.10(f) of the Credit Agreement.

SECTION TWO - Conditions to Effectiveness. The provisions of Section One of this Fourth Amendment shall become effective on the date (the “Fourth Amendment Effective Date”) when each of the following conditions specified below shall have been satisfied:

(a) The Borrower, the Guarantor, the Administrative Agent, the Designated Replacement Term Lender, the Replacement Term Lenders and such other lenders constituting the Required Lenders shall have signed a counterpart hereof (whether the same or different counterparts) and shall have delivered the same to Milbank, Tweed, Hadley & McCloy LLP, 28 Liberty Street, New York, NY 10005, attention: Dylan Scher;

(b) all reasonable invoiced out-of-pocket expenses incurred by the Lenders and the Administrative Agent pursuant to Section 10.04 of the Credit Agreement (including the reasonable and documented fees, charges and disbursements of counsel) and all accrued and unpaid fees, owing and payable (including any fees agreed to in connection with this Fourth Amendment)

shall have been paid to the extent invoiced at least two (2) Business Days prior to the Fourth Amendment Effective Date (or such shorter period as may be agreed by the Borrower);

(c) the Administrative Agent shall have received an Officer’s Certificate certifying as to the Collateral Coverage Ratio in accordance with Section 4.02(d) of the Credit Agreement;

(d) the Administrative Agent shall have received a customary written opinion of Latham & Watkins LLP, special counsel for the Borrower and the Guarantor addressed to the Administrative Agent and the Replacement Term Lenders party hereto, and dated the Fourth Amendment Effective Date;

(e) the Administrative Agent shall have received a certificate of the Secretary or Assistant Secretary (or similar Responsible Officer), dated the Fourth Amendment Effective Date (i) certifying as to the incumbency and specimen signature of each Responsible Officer of the Borrower and the Guarantor executing this Fourth Amendment or any other document delivered by it in connection herewith (such certificate to contain a certification of another Responsible Officer of that entity as to the incumbency and signature of the Responsible Officer signing the certificate referred to in this clause (e)), (ii) attaching each constitutional document of each Loan Party or certifying that each constitutional document of each Loan Party previously delivered to the Administrative Agent has not been amended, supplemented, rescinded or otherwise modified and remains in full force and effect as of the date hereof, (iii) attaching resolutions of each Loan Party approving the transactions contemplated by the Fourth Amendment and (iv) attaching a certificate of good standing for the Borrower and the Guarantor of the state of such entity’s incorporation or formation, dated as of a recent date, as to the good standing of that entity (to the extent available in the applicable jurisdiction);

(f) the Administrative Agent shall have received an Officer’s Certificate certifying (A) the truth in all material respects of the representations and warranties set forth in the Credit Agreement and the other Loan Documents (other than representations and warranties set forth in Sections 3.05(b), 3.06, 3.09(a) and 3.19 of the Credit Agreement) as though made on the date hereof, or, in the case of any such representation and warranty that relates to a specified date, as though made as of such date; provided, that any representation or warranty that is qualified by materiality (it being understood that any representation or warranty that excludes circumstances that would not result in a “Material Adverse Change” or “Material Adverse Effect” shall not be considered (for purposes of this proviso) to be qualified by materiality) shall be true and correct in all respects as of the applicable date; and provided, further, that for purposes of this clause (f), the representations and warranties contained in (i) Section 3.04(a) of the Credit Agreement shall be deemed to refer to Parent’s Annual Report on Form 10-K for 2017 filed with the SEC (as amended) and all Quarterly Reports on Form 10-Q or Current Reports on Form 8-K that have been filed since December 31, 2017 by Parent with the SEC (as amended) and (ii) Section 3.05(a) of the Credit Agreement shall be deemed to refer to the audited consolidated financial statements of Parent and its Subsidiaries for the fiscal year ended December 31, 2017, included in Parent’s Annual Report on Form 10-K for 2017 filed with the SEC (as amended) and the unaudited consolidated financial statements of Parent and its Subsidiaries for the fiscal quarter ended March 31, 2018, and (B) as to

the absence of any event occurring and continuing, or resulting from this Fourth Amendment on, the Fourth Amendment Effective Date, that constitutes a Default or Event of Default; and

(g) the Administrative Agent shall have received a Loan Request delivered in compliance with Section 2.03(b) of the Credit Agreement not later than 1:00 p.m. New York City time one (1) Business Day before the Fourth Amendment Effective Date or such shorter time as the Administrative Agent may agree.

SECTION THREE - No Default; Representations and Warranties. In order to induce the Replacement Term Lenders and the Administrative Agent to enter into this Fourth Amendment, the Borrower represents and warrants to each of the Replacement Term Lenders and the Administrative Agent that, on and as of the date hereof after giving effect to this Fourth Amendment, (i) no Default or Event of Default has occurred and is continuing or would result from giving effect to this Fourth Amendment and (ii) the representations and warranties contained in the Credit Agreement and the other Loan Documents (other than representations and warranties set forth in Sections 3.05(b), 3.06, 3.09(a) and 3.19 of the Credit Agreement) are true and correct in all material respects on and as of the date hereof with the same effect as if made on and as of the date hereof or, in the case of any representations and warranties that expressly relate to an earlier date, as though made as of such date; provided, that any representation or warranty that is qualified by materiality (it being understood that any representation or warranty that excludes circumstances that would not result in a “Material Adverse Change” or “Material Adverse Effect” shall not be considered (for purposes of this proviso) to be qualified by materiality) shall be true and correct in all respects as of the applicable date; and provided, further, that for purposes of this Section Five, the representations and warranties contained in (i) Section 3.04(a) of the Credit Agreement shall be deemed to refer to Parent’s Annual Report on Form 10-K for 2017 filed with the SEC (as amended) and all Quarterly Reports on Form 10-Q or Current Reports on Form 8-K that have been filed since December 31, 2017 by Parent with the SEC (as amended) and (ii) Section 3.05(a) of the Credit Agreement shall be deemed to refer to the audited consolidated financial statements of Parent and its Subsidiaries for the fiscal year ended December 31, 2017, included in Parent’s Annual Report on Form 10-K for 2017 filed with the SEC (as amended) and the unaudited consolidated financial statements of Parent and its Subsidiaries for the fiscal quarter ended March 31, 2018.

SECTION FOUR - Confirmation. The Borrower and the Guarantor hereby confirm that all of their obligations under the Credit Agreement (as amended hereby) are, and shall continue to be, in full force and effect. The parties hereto (i) confirm and agree that the term “Obligations” and “Guaranteed Obligations” as used in the Credit Agreement and the other Loan Documents shall include, without limitation, all obligations of the Borrower with respect to the 2018 Replacement Term Loans (after giving effect to this Fourth Amendment) and all obligations of the Guarantor with respect to the guarantee of such obligations, respectively, and (ii) reaffirm the grant of Liens on the Collateral to secure the Obligations (including the Obligations under the 2018 Replacement Term Loans incurred pursuant to this Fourth Amendment) pursuant to the Collateral Documents.

SECTION FIVE - Reference to and Effect on the Credit Agreement. On and after the Fourth Amendment Effective Date, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import referring to the Credit Agreement, shall mean and

be a reference to the Credit Agreement as amended by this Fourth Amendment. The Credit Agreement and each of the other Loan Documents, as specifically amended by this Fourth Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. This Fourth Amendment shall be deemed to be a “Loan Document” for all purposes of the Credit Agreement (as amended hereby) and the other Loan Documents. The execution, delivery and effectiveness of this Fourth Amendment shall not, except as expressly provided herein, operate as an amendment or waiver of any right, power or remedy of any Lender or any Agent under any of the Loan Documents, nor constitute an amendment or waiver of any provision of any of the Loan Documents.

SECTION SIX - Execution in Counterparts. This Fourth Amendment may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Fourth Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Fourth Amendment by facsimile or electronic .pdf copy shall be effective as delivery of a manually executed counterpart of this Fourth Amendment.

SECTION SEVEN - Governing Law. THIS FOURTH AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS FOURTH AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION EIGHT - Miscellaneous. (a) The provisions set forth in Sections 10.03, 10.04, 10.05(b)-(d), 10.09, 10.10, 10.11, 10.13, 10.15, 10.16 and 10.17 of the Credit Agreement are hereby incorporated mutatis mutandis herein by reference thereto as fully and to the same extent as if set forth herein.

(b) For purposes of determining withholding Taxes imposed under FATCA, from and after the effective date of this Fourth Amendment, the Borrower and the Administrative Agent shall treat (and the Lenders party hereto hereby authorize the Administrative Agent to treat) the Term Loan Facility as not qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).

[REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]

IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to be duly executed and delivered as of the day and year first above written.

AMERICAN AIRLINES, INC., as the Borrower

By: /s/ Thomas T. Weir

Name: Thomas T. Weir

Title: Vice President and Treasurer

AMERICAN AIRLINES GROUP INC., as Parent and Guarantor

By: /s/ Thomas T. Weir

Name: Thomas T. Weir

Title: Vice President and Treasurer

[Fourth Amendment to Credit and Guaranty Agreement]

DEUTSCHE BANK AG NEW YORK BRANCH, as Administrative Agent

By: /s/ Alicia Schug

Name: Alicia Schug

Title: Vice President

By: /s/ Marguerite Sutton

Name: Marguerite Sutton

Title: Vice President

[Fourth Amendment to Credit and Guaranty Agreement]

BARCLAYS BANK PLC,
as the Designated Replacement Term Lender

By: /s/ Craig Malloy

Name: Craig Malloy

Title: Director

[Fourth Amendment to Credit and Guaranty Agreement]

Exhibit

Exhibit 12.1

American Airlines Group Inc.

Computation of Ratio of Earnings to Fixed Charges

(In millions)



	Six Months Ended June 30, 2018
Income before income taxes	$	1,042
Add: Total fixed charges (per below)	1,042
Less: Interest capitalized	36
Total earnings before income taxes	$	2,048
Fixed charges:
Interest	$	566
Portion of rental expense representative of the interest factor	476
Total fixed charges	$	1,042
Ratio of earnings to fixed charges	2.0

Exhibit

Exhibit 12.2

American Airlines, Inc.

Computation of Ratio of Earnings to Fixed Charges

(In millions)



	Six Months Ended June 30, 2018
Income before income taxes	$	1,189
Add: Total fixed charges (per below)	1,016
Less: Interest capitalized	36
Total earnings before income taxes	$	2,169
Fixed charges:
Interest	$	546
Portion of rental expense representative of the interest factor	470
Total fixed charges	$	1,016
Ratio of earnings to fixed charges	2.1

Exhibit

Exhibit 31.1

CEO CERTIFICATION

I, W. Douglas Parker, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of American Airlines Group Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 26, 2018



		/s/ W. Douglas Parker
		Name: W. Douglas Parker
		Title: Chief Executive Officer

Exhibit

Exhibit 31.2

CFO CERTIFICATION

I, Derek J. Kerr, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of American Airlines Group Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 26, 2018



		/s/ Derek J. Kerr
		Name: Derek J. Kerr
		Title: Executive Vice President and Chief
		Financial Officer

Exhibit

Exhibit 31.3

CEO CERTIFICATION

I, W. Douglas Parker, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of American Airlines, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 26, 2018



		/s/ W. Douglas Parker
		Name: W. Douglas Parker
		Title: Chief Executive Officer

Exhibit

Exhibit 31.4

CFO CERTIFICATION

I, Derek J. Kerr, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of American Airlines, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 26, 2018



		/s/ Derek J. Kerr
		Name: Derek J. Kerr
		Title: Executive Vice President and Chief
		Financial Officer

Exhibit

Exhibit 32.1

Certification of CEO and CFO Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of American Airlines Group Inc. (the “Company”) for the quarterly period ended June 30, 2018 (the “Report”), W. Douglas Parker, as Chief Executive Officer of the Company, and Derek J. Kerr, as Executive Vice President and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ W. Douglas Parker

Name: W. Douglas Parker

Title: Chief Executive Officer

Date: July 26, 2018

/s/ Derek J. Kerr

Name: Derek J. Kerr

Title: Executive Vice President and Chief Financial Officer

Date: July 26, 2018

This certification is being furnished to accompany the Report pursuant to 18 U.S.C. § 1350 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Exhibit

Exhibit 32.2

Certification of CEO and CFO Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of American Airlines, Inc. (the “Company”) for the quarterly period ended June 30, 2018 (the “Report”), W. Douglas Parker, as Chief Executive Officer of the Company, and Derek J. Kerr, as Executive Vice President and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ W. Douglas Parker

Name: W. Douglas Parker

Title: Chief Executive Officer

Date: July 26, 2018

/s/ Derek J. Kerr

Name: Derek J. Kerr

Title: Executive Vice President and Chief Financial Officer

Date: July 26, 2018