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Net cash provided by (used in) operating activities

2,295

2,335

Cash flows from investing activities:

Capital expenditures and aircraft purchase deposits

(1,208)

(2,255)

Proceeds from sale-leaseback transactions

376

518

Proceeds from sale of property and equipment

148

Purchases of short-term investments

(7,936)

(2,190)

Sales of short-term investments

2,131

1,611

Increase in restricted short-term investments

(386)

(2)

Other investing activities

(62)

(35)

Net cash used in investing activities

(6,937)

(2,334)

Cash flows from financing activities:

Proceeds from issuance of long-term debt

6,868

1,839

Payments on long-term debt and finance leases

(1,971)

(1,781)

Deferred financing costs

(75)

(13)

Net cash provided by financing activities

4,822

Net increase in cash and restricted cash

180

Cash and restricted cash at beginning of period

277

276

Cash and restricted cash at end of period

^[2]

457

322

Non-cash transactions:

Right-of-use (ROU) assets acquired through operating leases

412

708

Settlement of bankruptcy obligations

Deferred financing costs paid through issuance of debt

Property and equipment acquired through finance leases

Supplemental information:

Interest paid, net

469

526

Income taxes paid

$ 2

$ 4

[1]

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



Cash	$	462	$	319
Restricted cash included in restricted cash and short-term investments	5		11
Total cash and restricted cash	$	467	$	330

[2]

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



Cash	$	452	$	311
Restricted cash included in restricted cash and short-term investments	5		11
Total cash and restricted cash	$	457	$	322

Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($)
$ in Millions

Jun. 30, 2020

Dec. 31, 2019

Jun. 30, 2019

Cash

$ 462

$ 280

$ 319

Restricted cash included in restricted cash and short-term investments

Total cash and restricted cash

467

^[1]

290

330

^[1]

Restricted cash included in restricted cash and short-term investments

Cash

452

267

311

Total cash and restricted cash

$ 457

^[2]

$ 277

$ 322

^[2]

[1]

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



Cash	$	462	$	319
Restricted cash included in restricted cash and short-term investments	5		11
Total cash and restricted cash	$	467	$	330

[2]

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



Cash	$	452	$	311
Restricted cash included in restricted cash and short-term investments	5		11
Total cash and restricted cash	$	457	$	322

Condensed Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) $ in Millions	Total	American Airlines, Inc. [Member]	Common Stock [Member]	Common Stock [Member] American Airlines, Inc. [Member]	Additional Paid-in Capital [Member]	Additional Paid-in Capital [Member] American Airlines, Inc. [Member]	Accumulated Other Comprehensive Loss [Member]	Accumulated Other Comprehensive Loss [Member] American Airlines, Inc. [Member]	Retained Earnings (Deficit) [Member]	Retained Earnings (Deficit) [Member] American Airlines, Inc. [Member]
Beginning Balance at Dec. 31, 2018	$ (169)	$ 11,770	$ 5	$ 0	$ 4,964	$ 16,802	$ (5,896)	$ (5,992)	$ 758	$ 960
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	185	230							185	230
Other comprehensive loss, net	(13)	(13)					(13)	(13)
Purchase and retirement of AAG common stock	(610)				(610)
Dividends declared on AAG common stock	(46)								(46)
Issuance of shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes	(8)				(8)
Share-based compensation expense	25	25			25	25
Ending Balance at Mar. 31, 2019	(636)	12,012	5	0	4,371	16,827	(5,909)	(6,005)	897	1,190
Beginning Balance at Dec. 31, 2018	(169)	11,770	5	0	4,964	16,802	(5,896)	(5,992)	758	960
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	847	944
Other comprehensive loss, net	(31)	(31)
Ending Balance at Jun. 30, 2019	(22)	12,740	5	0	4,386	16,859	(5,927)	(6,023)	1,514	1,904
Beginning Balance at Mar. 31, 2019	(636)	12,012	5	0	4,371	16,827	(5,909)	(6,005)	897	1,190
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	662	714							662	714
Other comprehensive loss, net	(18)	(18)					(18)	(18)
Dividends declared on AAG common stock	(45)								(45)
Issuance of shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes	(17)				(17)
Settlement of single-dip unsecured claims held in Disputed Claims Reserve	7				7
Share-based compensation expense	25	25			25	25
Intercompany equity transfer		7				7
Ending Balance at Jun. 30, 2019	(22)	12,740	5	0	4,386	16,859	(5,927)	(6,023)	1,514	1,904
Beginning Balance at Dec. 31, 2019	(118)	13,422	4	0	3,945	16,903	(6,331)	(6,423)	2,264	2,942
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(2,241)	(2,169)							(2,241)	(2,169)
Other comprehensive loss, net	(149)	(149)					(149)	(149)
Purchase and retirement of AAG common stock	(145)				(145)
Dividends declared on AAG common stock	(44)								(44)
Issuance of shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes	(13)				(13)
Settlement of single-dip unsecured claims held in Disputed Claims Reserve	56				56
Share-based compensation expense	18	18			18	18
Intercompany equity transfer		56				56
Ending Balance at Mar. 31, 2020	(2,636)	11,178	4	0	3,861	16,977	(6,480)	(6,572)	(21)	773
Beginning Balance at Dec. 31, 2019	(118)	13,422	4	0	3,945	16,903	(6,331)	(6,423)	2,264	2,942
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(4,308)	(4,137)
Other comprehensive loss, net	(132)	(132)
Purchase and retirement of AAG common stock	(145)
Issuance of AAG common stock pursuant to a public stock offering	1,100
Ending Balance at Jun. 30, 2020	(3,169)	9,258	5	0	5,377	17,008	(6,463)	(6,555)	(2,088)	(1,195)
Beginning Balance at Mar. 31, 2020	(2,636)	11,178	4	0	3,861	16,977	(6,480)	(6,572)	(21)	773
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(2,067)	(1,968)							(2,067)	(1,968)
Other comprehensive loss, net	17	17					17	17
Settlement of single-dip unsecured claims held in Disputed Claims Reserve	(2)				(2)
Payroll Support Program Warrants	55				55
Equity component of convertible debt issued, net of tax and offering costs	320				320
Issuance of AAG common stock pursuant to a public stock offering	1,113		1		1,112
Share-based compensation expense	31	31			31	31
Ending Balance at Jun. 30, 2020	$ (3,169)	$ 9,258	$ 5	$ 0	$ 5,377	$ 17,008	$ (6,463)	$ (6,555)	$ (2,088)	$ (1,195)

Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Parenthetical) - $ / shares	3 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019
Statement of Stockholders' Equity [Abstract]
Purchase and retirement of common stock (in shares)		6,378,025		16,947,393
Dividends declared on common stock (in dollars per share)	$ 0	$ 0.10	$ 0.10	$ 0.10
Issuance of shares of common stock pursuant to employee stock plans (in shares)	454,621	1,062,052	1,046,122	552,752
Issuance of shares of AAG common stock pursuant to a public stock offering (in shares)	85,215,000

Basis of Presentation and Recent Accounting Pronouncement

6 Months Ended

Jun. 30, 2020

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Basis of Presentation and Recent Accounting Pronouncement

(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, 2019. 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.

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, as well as pension and retiree medical and other postretirement benefits.

(b) Impact of Coronavirus (COVID-19)

COVID-19 has been declared a global health pandemic by the World Health Organization. COVID-19 has surfaced in nearly all regions of the world, which has driven the implementation of significant, government-imposed measures to prevent or reduce its spread, including travel restrictions, closing of borders, “shelter in place” orders and business closures. As a result, we have experienced an unprecedented decline in the demand for air travel, which has resulted in a material deterioration in our revenues. While our business performed largely as expected in January and February of 2020, a severe reduction in air travel starting in March 2020 resulted in our total operating revenues decreasing approximately 20% in the first quarter of 2020 and 86% in the second quarter of 2020 as compared to the first and second quarter of 2019, respectively. While the length and severity of the reduction in demand due to COVID-19 is uncertain, we expect our results of operations for the remainder of 2020 to be severely impacted.

We have taken aggressive actions to mitigate the effect of COVID-19 on our business including deep capacity reductions, structural changes to our fleet, cost reductions, and steps to preserve cash and improve our overall liquidity position. We remain extremely focused on taking all self-help measures available to manage our business during this unprecedented time, consistent with the terms of the financial assistance we have received from the U.S. Government under the Coronavirus Aid, Relief, and Economic Security (CARES) Act which, among other things, includes obligations regarding minimum air service and restrictions on involuntary workforce actions.

Capacity Reductions

We have significantly reduced our capacity (as measured by available seat miles), with the second quarter of 2020 flying decreased by 76% year-over-year and third quarter of 2020 flying expected to decrease by approximately 60% year-over-year. The demand environment continues to be uncertain as COVID-19 cases have increased and new travel restrictions have been put into place. Due to this uncertainty, we will continue to adjust our future capacity to match developing trends in bookings for future travel and make further adjustments to our capacity as needed.

Fleet

To better align our network with lower passenger demand, we accelerated the retirement of Boeing 757, Boeing 767, Airbus A330-300 and Embraer 190 fleets as well as certain regional aircraft, including certain Embraer 140 and Bombardier CRJ200 aircraft. These retirements remove complexity from our operation and bring forward cost savings and efficiencies associated with operating fewer aircraft types. See Note 13 for further information on the accounting for our fleet retirements. Due to the inherent uncertainties of the current operating environment, we will continue to evaluate our current fleet and may decide to permanently retire additional aircraft. In addition, we have placed a significant number of aircraft, including our A330-200 fleet and a number of Boeing 737-800 and certain regional aircraft, into temporary storage.

Cost Reductions

We are moving quickly to better align our costs with our reduced schedule. In aggregate, we estimate that we have reduced our 2020 operating and capital expenditures by more than $15.0 billion. These savings have been achieved primarily through capacity reductions. In addition, we have implemented a series of actions, including the accelerated fleet retirements discussed above as well as reductions in maintenance expense and non-aircraft capital expenditures through less fleet modification work, the elimination of ground service equipment purchases and pausing all non-critical facility investments and information technology projects. We have also suspended all non-essential hiring, paused non-contractual pay rate increases, reduced executive and board of director compensation, implemented voluntary leave and early retirement programs and decreased our management and support staff team, including officers, by approximately 5,100 positions, or 30%, to reduce our labor costs consistent with our obligations under the CARES Act. In total, more than 41,000 team members have opted for an early retirement, a reduced work schedule or partially paid leave. Additionally, we have made reductions in marketing, contractor, event and training expenses as well as consolidated space at airport facilities.

Liquidity

At June 30, 2020, we had $10.2 billion in total available liquidity, consisting of $9.8 billion in unrestricted cash and short-term investments and $400 million in an undrawn short-term revolving facility.

During the first six months of 2020, we completed the following financing transactions (see Note 6 for further information):


•	refinanced the $1.2 billion 2014 Term Loan Facility at a lower interest rate and extended the maturity from 2021 to 2027;


•	issued $500 million in aggregate principal amount of 3.75% unsecured senior notes due 2025 and repaid $500 million of 4.625% unsecured senior notes that matured in March 2020;


•	borrowed $750 million under the 2013 Revolving Facility, $1.6 billion under the 2014 Revolving Facility and $450 million under the April 2016 Revolving Facility;


•	issued $1.0 billion in aggregate principal amount of 6.50% convertible senior notes due 2025;


•	issued 85.2 million shares of AAG common stock at a price of $13.50 per share pursuant to a public offering of common stock for net proceeds of $1.1 billion;


•	issued $2.5 billion in aggregate principal amount of 11.75% senior secured notes due 2025 and repaid the $1.0 billion senior secured delayed draw term loan credit facility that we borrowed in March 2020;


•	issued approximately $360 million in special facility revenue bonds, of which $47 million was used to fund the redemption of certain outstanding bonds;


•	raised $336 million from aircraft sale-leaseback transactions; and


•	raised $197 million from aircraft financings, of which $17 million was used to repay existing indebtedness.

We have also been approved to receive an aggregate of $5.8 billion in financial assistance to be paid in installments through the payroll support program (Payroll Support Program) under the CARES Act. As of June 30, 2020, we had received $5.2 billion of such financial assistance and we had issued a promissory note (the PSP Promissory Note) to the U.S. Department of the Treasury (Treasury) for $1.5 billion in aggregate principal amount as well as warrants to purchase up to an aggregate of approximately 12.3 million shares (the Warrant Shares) of AAG common stock. See below for further discussion on the Payroll Support Program. Separately, American has signed a term sheet with Treasury for a $4.75 billion secured loan under the CARES Act.

Also, we are permitted to, and will, defer payment of the employer portion of Social Security taxes through the end of 2020 (with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022). This deferral is expected to provide approximately $300 million in additional liquidity during 2020. Additionally, we have suspended our capital return program, including share repurchases and the payment of future dividends for at least the period that the restrictions imposed by the CARES Act are applicable.

We continue to evaluate future financing opportunities and have engaged third-party appraisers to evaluate some of our unencumbered assets. We expect to pledge a portion of these unencumbered assets as collateral for future financings,

including as part of the approximately $4.75 billion secured loan under the CARES Act for which American has signed a term sheet with Treasury.

Certain of our debt financing agreements 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 and/or contain loan to value ratio covenants.

Given the above actions and our assumptions about the future impact of COVID-19 on travel demand, which could be materially different due to the inherent uncertainties of the current operating environment, we expect to meet our cash obligations as well as remain in compliance with the debt covenants in our existing financing agreements for the next 12 months based on our current level of unrestricted cash and short-term investments, our anticipated access to liquidity (including via proceeds from financings and funds from government assistance to be provided pursuant to the CARES Act) and projected cash flows from operations.

Payroll Support Program

On April 20, 2020 (the PSP Closing Date), American, Envoy Air Inc. (Envoy), Piedmont Airlines, Inc. (Piedmont) and PSA Airlines, Inc. (PSA and together with American, Envoy and Piedmont, the Subsidiaries), each our wholly-owned subsidiary, entered into a Payroll Support Program Agreement (the PSP Agreement) with Treasury, with respect to the Payroll Support Program provided pursuant to the CARES Act. In connection with our entry into the PSP Agreement, on the PSP Closing Date, we also entered into a warrant agreement (the PSP Warrant Agreement) with Treasury, and we issued the PSP Promissory Note to Treasury, with the Subsidiaries as guarantors (the Guarantors).

Payroll Support Program Agreement

In connection with the Payroll Support Program, we are required to comply with the relevant provisions of the CARES Act, including the requirement that funds provided pursuant to the PSP Agreement be used exclusively for the continuation of payment of employee wages, salaries and benefits, the requirement against involuntary furloughs and reductions in employee pay rates and benefits through September 30, 2020, the requirement that certain levels of commercial air service be maintained and the provisions that prohibit the repurchase of AAG common stock, and the payment of common stock dividends through September 30, 2021, as well as those that restrict the payment of certain executive compensation until March 24, 2022. The PSP Agreement also imposes substantial reporting obligations on us. If we receive a secured loan from Treasury under the loan program, the stock repurchase, dividend and executive compensation restrictions will remain in place through the date that is one year after such secured loan is fully repaid.

Pursuant to the PSP Agreement, Treasury is to provide us financial assistance to be paid in installments (each, an Installment) expected to total in the aggregate approximately $5.8 billion, of which $5.2 billion has been received as of June 30, 2020 (representing 90% of the current expected total). We currently anticipate receiving one additional Installment in July 2020. As partial compensation to the U.S. Government for the provision of financial assistance under the Payroll Support Program, we expect to issue a total aggregate principal amount of approximately $1.7 billion under the PSP Promissory Note and issue warrants (each a PSP Warrant and, collectively, the PSP Warrants) to Treasury to purchase up to an aggregate of approximately 13.7 million shares of AAG common stock. See Note 6 for further information on the PSP Promissory Note and below for more information on the PSP Warrant Agreement and the PSP Warrants.

For accounting purposes, the $5.8 billion of aggregate financial assistance pursuant to the PSP Agreement is allocated to the PSP Promissory Note, the PSP Warrants and other Payroll Support Program financial assistance (the PSP Financial Assistance). The aggregate principal amount of approximately $1.7 billion of PSP Promissory Note will be recorded as unsecured long-term debt, and the total fair value of the PSP Warrants, estimated using a Black-Scholes option pricing model, will be recorded in stockholders' equity in the condensed consolidated balance sheet. The remaining amount of approximately $4.0 billion of PSP Financial Assistance will be recognized as a credit to special items, net in the condensed consolidated statement of operations in the second and third quarters of 2020, the period over which the continuation of payment of employee wages, salaries and benefits is required. At June 30, 2020, approximately $1.7 billion of the PSP Financial Assistance was deferred in other accrued liabilities in the condensed consolidated balance sheet and approximately $2.0 billion was recognized as a credit to special items, net in the condensed consolidated statement of operations.

We also applied for a secured loan from Treasury of approximately $4.75 billion under the CARES Act, which if granted will involve the issuance of additional warrants to purchase approximately 38.0 million shares of AAG common stock. As of the date of this report, American has signed a term sheet with Treasury for this secured loan. However, we have not yet finalized a definitive agreement for this secured loan, and thus final terms and conditions and closing remain subject to ongoing negotiation, entry by the parties into definitive documentation and satisfaction of closing conditions.

PSP Warrant Agreement and Warrants

As partial compensation to the U.S. Government for the provision of financial assistance under the PSP Agreement, and pursuant to the PSP Warrant Agreement, we have agreed to issue warrants to Treasury to purchase up to an aggregate of approximately 13.7 million Warrant Shares of AAG common stock. The exercise price of the Warrant Shares is $12.51 per share (which was the closing price of AAG common stock on The Nasdaq Global Select Market on April 9, 2020) (the Exercise Price) subject to certain anti-dilution provisions provided for in the PSP Warrant.

Pursuant to the PSP Warrant Agreement, on the PSP Closing Date, May 29, 2020 and June 30, 2020, we issued to Treasury a PSP Warrant to purchase up to an aggregate of approximately 6.7 million shares, 2.8 million shares and 2.8 million shares, respectively, of AAG common stock based on the terms described herein. We anticipate issuing the final PSP Warrant for approximately 1.4 million shares of AAG common stock on or about July 30, 2020.

The PSP Warrants do not have any voting rights and are freely transferrable, with registration rights. Each PSP Warrant expires on the fifth anniversary of the date of issuance of such PSP Warrant. The PSP Warrants will be exercisable either through net share settlement or cash, at our option. The PSP Warrants were issued solely as compensation to the U.S. Government related to entry into the PSP Agreement. No separate proceeds (apart from the financial assistance described above) were received upon issuance of the PSP Warrants or will be received upon exercise thereof.

Accounting Standards Update (ASU) 2016-13: Financial Instruments – Credit Losses (Topic 326)

This ASU requires the use of an expected loss model for certain types of financial instruments and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates. For trade receivables, loans and held-to-maturity debt securities, an estimate of lifetime expected credit losses is required. For available-for-sale debt securities, an allowance for credit losses will be required rather than a reduction to the carrying value of the asset. We adopted this accounting standard prospectively as of January 1, 2020, and it did not have a material impact on our condensed consolidated financial statements.

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Basis of Presentation and Recent Accounting Pronouncement

(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, 2019. American is the principal wholly-owned subsidiary of American Airlines Group Inc. (AAG). All significant intercompany transactions have been eliminated.

(b) Impact of Coronavirus (COVID-19)

COVID-19 has been declared a global health pandemic by the World Health Organization. COVID-19 has surfaced in nearly all regions of the world, which has driven the implementation of significant, government-imposed measures to prevent or reduce its spread, including travel restrictions, closing of borders, “shelter in place” orders and business closures. As a result, American has experienced an unprecedented decline in the demand for air travel, which has resulted in a material deterioration in its revenues. While American's business performed largely as expected in January and February of 2020, a severe reduction in air travel starting in March 2020 resulted in its total operating revenues decreasing approximately 20% in the first quarter of 2020 and 86% in the second quarter of 2020 as compared to the first and second quarter of 2019, respectively. While the length and severity of the reduction in demand due to COVID-19 is uncertain, American expects its results of operations for the remainder of 2020 to be severely impacted.

American has taken aggressive actions to mitigate the effect of COVID-19 on its business including deep capacity reductions, structural changes to its fleet, cost reductions, and steps to preserve cash and improve its overall liquidity position. American remains extremely focused on taking all self-help measures available to manage its business during this unprecedented time, consistent with the terms of the financial assistance it has received from the U.S. Government under the Coronavirus Aid, Relief, and Economic Security (CARES) Act which, among other things, includes obligations regarding minimum air service and restrictions on involuntary workforce actions.

Capacity Reductions

American has significantly reduced its capacity (as measured by available seat miles), with the second quarter of 2020 flying decreased by 76% year-over-year and third quarter of 2020 flying expected to decrease by approximately 60% year-over-year. The demand environment continues to be uncertain as COVID-19 cases have increased and new travel restrictions have been put into place. Due to this uncertainty, American will continue to adjust its future capacity to match developing trends in bookings for future travel and make further adjustments to its capacity as needed.

Fleet

To better align American’s network with lower passenger demand, American accelerated the retirement of Boeing 757, Boeing 767, Airbus A330-300 and Embraer 190 fleets as well as certain regional aircraft, including certain Embraer 140 and Bombardier CRJ200 aircraft. These retirements remove complexity from its operation and bring forward cost savings and efficiencies associated with operating fewer aircraft types. See Note 12 for further information on the accounting for American's fleet retirements. Due to the inherent uncertainties of the current operating environment, American will continue to evaluate its current fleet and may decide to permanently retire additional aircraft. In addition, American has placed a significant number of aircraft, including its A330-200 fleet and a number of Boeing 737-800 and certain regional aircraft, into temporary storage.

Cost Reductions

American is moving quickly to better align its costs with its reduced schedule. In aggregate, American estimates that it has reduced its 2020 operating and capital expenditures by more than $15.0 billion. These savings have been achieved primarily through capacity reductions. In addition, American has implemented a series of actions, including the accelerated fleet retirements discussed above as well as reductions in maintenance expense and non-aircraft capital expenditures through less fleet modification work, the elimination of ground service equipment purchases and pausing all non-critical facility investments and information technology projects. American has also suspended all non-essential hiring, paused non-contractual pay rate increases, reduced executive and board of director compensation, implemented voluntary leave and early retirement programs and decreased its management and support staff team, including officers, by approximately 5,100 positions, or 30%, to reduce its labor costs consistent with its obligations under the CARES Act. In total, more than 41,000 team members have opted for an early retirement, a reduced work schedule or partially paid leave. Additionally, American has made reductions in marketing, contractor, event and training expenses as well as consolidated space at airport facilities.

Liquidity

At June 30, 2020, American had $10.2 billion in total available liquidity, consisting of $9.8 billion in unrestricted cash and short-term investments and $400 million in an undrawn short-term revolving facility.

During the first six months of 2020, American completed the following financing transactions (see Note 4 for further information):


•	refinanced the $1.2 billion 2014 Term Loan Facility at a lower interest rate and extended the maturity from 2021 to 2027;


•	borrowed $750 million under the 2013 Revolving Facility, $1.6 billion under the 2014 Revolving Facility and $450 million under the April 2016 Revolving Facility;


•	issued $2.5 billion in aggregate principal amount of 11.75% senior secured notes due 2025 and repaid the $1.0 billion senior secured delayed draw term loan credit facility that American borrowed in March 2020;


•	issued approximately $360 million in special facility revenue bonds, of which $47 million was used to fund the redemption of certain outstanding bonds;


•	raised $336 million from aircraft sale-leaseback transactions; and


•	raised $197 million from aircraft financings, of which $17 million was used to repay existing indebtedness.

AAG and the Subsidiaries (as defined below) have also been approved to receive an aggregate of $5.8 billion in financial assistance to be paid in installments through the payroll support program (Payroll Support Program) under the CARES Act. As of June 30, 2020, AAG and the Subsidiaries had received $5.2 billion of such financial assistance and AAG had issued a promissory note (the PSP Promissory Note) to the U.S. Department of the Treasury (Treasury) for $1.5 billion in aggregate principal amount as well as warrants to purchase up to an aggregate of approximately 12.3 million shares (the Warrant Shares) of AAG common stock. See below for further discussion on the Payroll Support Program. Separately, American has signed a term sheet with Treasury for a $4.75 billion secured loan under the CARES Act.

Also, American is permitted to, and will, defer payment of the employer portion of Social Security taxes through the end of 2020 (with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022). This deferral is expected to provide approximately $300 million in additional liquidity during 2020. Additionally, AAG has suspended its capital return program, including share repurchases and the payment of future dividends for at least the period that the restrictions imposed by the CARES Act are applicable.

American continues to evaluate future financing opportunities and has engaged third-party appraisers to evaluate some of its unencumbered assets. American expects to pledge a portion of these unencumbered assets as collateral for future financings, including as part of the approximately $4.75 billion secured loan under the CARES Act for which American has signed a term sheet with Treasury.

Certain of American’s debt financing agreements contain covenants requiring it 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 and/or contain loan to value ratio covenants.

Given the above actions and American’s assumptions about the future impact of COVID-19 on travel demand, which could be materially different due to the inherent uncertainties of the current operating environment, American expects to meet its cash obligations as well as remain in compliance with the debt covenants in its existing financing agreements for the next 12 months based on its current level of unrestricted cash and short-term investments, its anticipated access to liquidity (including via proceeds from financings and funds from government assistance to be provided pursuant to the CARES Act) and projected cash flows from operations.

Payroll Support Program

On April 20, 2020 (the PSP Closing Date), American, Envoy Air Inc. (Envoy), Piedmont Airlines, Inc. (Piedmont) and PSA Airlines, Inc. (PSA and together with American, Envoy and Piedmont, the Subsidiaries), each a wholly-owned subsidiary, entered into a Payroll Support Program Agreement (the PSP Agreement) with Treasury, with respect to the Payroll Support Program provided pursuant to the CARES Act. In connection with the Subsidiaries' entry into the PSP Agreement, on the PSP Closing Date, AAG also entered into a warrant agreement (the PSP Warrant Agreement) with Treasury, and AAG issued the PSP Promissory Note to Treasury, with the Subsidiaries as guarantors (the Guarantors).

Payroll Support Program Agreement

In connection with the Payroll Support Program, AAG and the Subsidiaries are required to comply with the relevant provisions of the CARES Act, including the requirement that funds provided pursuant to the PSP Agreement be used exclusively for the continuation of payment of employee wages, salaries and benefits, the requirement against involuntary furloughs and reductions in employee pay rates and benefits through September 30, 2020, the requirement that certain levels of commercial air service be maintained and the provisions that prohibit the repurchase of AAG common stock, and the payment of common stock dividends through September 30, 2021, as well as those that restrict the payment of certain executive compensation until March 24, 2022. The PSP Agreement also imposes substantial reporting obligations on AAG and the Subsidiaries. If AAG and the Subsidiaries receive a secured loan from Treasury under the loan program, the stock repurchase, dividend and executive compensation restrictions will remain in place through the date that is one year after such secured loan is fully repaid.

Pursuant to the PSP Agreement, Treasury is to provide to AAG and the Subsidiaries financial assistance to be paid in installments (each, an Installment) expected to total in the aggregate approximately $5.8 billion, of which $5.2 billion has been received as of June 30, 2020 (representing 90% of the current expected total). AAG currently anticipates receiving one additional Installment in July 2020. As partial compensation to the U.S. Government for the provision of financial assistance under the Payroll Support Program, AAG is expected to issue a total aggregate principal amount of approximately $1.7 billion under the PSP Promissory Note and issue warrants (each a PSP Warrant and, collectively, the PSP Warrants) to Treasury to purchase up to an aggregate of approximately 13.7 million shares of AAG common stock. See Note 6 to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A for further information on the PSP Promissory Note and below for more information on the PSP Warrant Agreement and the PSP Warrants.

For accounting purposes, the $5.8 billion of aggregate financial assistance pursuant to the PSP Agreement is allocated to the PSP Promissory Note, the PSP Warrants and other Payroll Support Program financial assistance (the PSP Financial Assistance). The aggregate principal amount of approximately $1.7 billion of PSP Promissory Note will be recorded as unsecured long-term debt, and the total fair value of the PSP Warrants, estimated using a Black-Scholes option pricing model, will be recorded in stockholders' equity in AAG's condensed consolidated balance sheet. The remaining amount of approximately $4.0 billion of PSP Financial Assistance will be recognized as a credit to special items, net in the condensed consolidated statement of operations in the second and third quarters of 2020, the period over which the continuation of payment of employee wages, salaries and benefits is required. At June 30, 2020, approximately $1.5 billion of the PSP Financial Assistance was deferred in other accrued liabilities in the condensed consolidated balance sheet and approximately $2.0 billion was recognized as a credit to special items, net in the condensed consolidated statement of operations.

AAG and the Subsidiaries also applied for a secured loan from Treasury of approximately $4.75 billion under the CARES Act, which if granted will involve the issuance of additional warrants to purchase approximately 38.0 million shares of AAG common stock. As of the date of this report, American has signed a term sheet with Treasury for this secured loan. However, American has not yet finalized a definitive agreement for this secured loan, and thus final terms and conditions and closing remain subject to ongoing negotiation, entry by the parties into definitive documentation and satisfaction of closing conditions.

PSP Warrant Agreement and Warrants

As partial compensation to the U.S. Government for the provision of financial assistance under the PSP Agreement, and pursuant to the PSP Warrant Agreement, AAG has agreed to issue warrants to Treasury to purchase up to an aggregate of

approximately 13.7 million Warrant Shares of AAG common stock. The exercise price of the Warrant Shares is $12.51 per share (which was the closing price of AAG common stock on The Nasdaq Global Select Market on April 9, 2020) (the Exercise Price) subject to certain anti-dilution provisions provided for in the PSP Warrant.

Pursuant to the PSP Warrant Agreement, on the PSP Closing Date, May 29, 2020 and June 30, 2020, AAG issued to Treasury a PSP Warrant to purchase up to an aggregate of approximately 6.7 million shares, 2.8 million shares and 2.8 million shares, respectively, of AAG common stock based on the terms described herein. AAG anticipates issuing the final PSP Warrant for approximately 1.4 million shares of AAG common stock on or about July 30, 2020.

The PSP Warrants do not have any voting rights and are freely transferrable, with registration rights. Each PSP Warrant expires on the fifth anniversary of the date of issuance of such PSP Warrant. The PSP Warrants will be exercisable either through net share settlement or cash, at AAG's option. The PSP Warrants were issued solely as compensation to the U.S. Government related to entry into the PSP Agreement. No separate proceeds (apart from the financial assistance described above) were received upon issuance of the PSP Warrants or will be received upon exercise thereof.

Accounting Standards Update (ASU) 2016-13: Financial Instruments – Credit Losses (Topic 326)

This ASU requires the use of an expected loss model for certain types of financial instruments and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates. For trade receivables, loans and held-to-maturity debt securities, an estimate of lifetime expected credit losses is required. For available-for-sale debt securities, an allowance for credit losses will be required rather than a reduction to the carrying value of the asset. American adopted this accounting standard prospectively as of January 1, 2020, and it did not have a material impact on American's condensed consolidated financial statements.

Special Items, Net

6 Months Ended

Jun. 30, 2020

Special Items, Net

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



	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
PSP Financial Assistance ⁽¹⁾	$	(1,803	)	$	—	$	(1,803	)	$	—
Severance expenses ⁽²⁾	332			—		537			—
Labor contract expenses ⁽³⁾	10			—		228			—
Fleet impairment ⁽⁴⁾	—			—		743			—
Fleet restructuring expenses ⁽⁵⁾	—			77		—			160
Merger integration expenses	—			39		—			76
Mark-to-market adjustments on bankruptcy obligations, net ⁽⁶⁾	—			5		(49		)	5
Other operating special items, net	(33		)	—		(18		)	18
Mainline operating special items, net	(1,494		)	121		(362		)	259

PSP Financial Assistance ⁽¹⁾	(216		)	—		(216		)	—
Fleet impairment ⁽⁴⁾	24			—		117			—
Severance expenses ⁽²⁾	14			—		14			—
Regional operating special items, net	(178		)	—		(85		)	—
Operating special items, net	(1,672		)	121		(447		)	259

Mark-to-market adjustments on equity and other investments, net ⁽⁷⁾	—			61		180			(9		)
Debt refinancing, extinguishment and other charges	11			8		48			8
Nonoperating special items, net	11			69		228			(1		)


⁽¹⁾	PSP Financial Assistance represents recognition of a portion of financial assistance received from Treasury pursuant to the PSP Agreement. See Note 1 for further information.


⁽²⁾	Severance expenses principally include salary and medical costs associated with certain team members who opted in to voluntary early retirement programs offered as a result of reductions to our operation due to COVID-19.


⁽³⁾	Labor contract expenses primarily relate to one-time charges resulting from the ratification of a new contract with the Transport Workers Union and International Association of Machinists & Aerospace Workers for our maintenance and fleet service team members, including signing bonuses and adjustments to vacation accruals resulting from pay rate increases.


⁽⁴⁾	Fleet impairment resulted from our decision to retire certain aircraft earlier than planned driven by the decline in air travel due to COVID-19. Aircraft retired include Boeing 757, Boeing 767, Airbus A330-300, Embraer 190, certain Embraer 140 and Bombardier CRJ200 aircraft.

The three months ended June 30, 2020 primarily included a non-cash write-down of regional aircraft and spare parts. The six months ended June 30, 2020 included a $784 million non-cash write-down of mainline and regional aircraft and spare parts and $76 million in write-offs of ROU assets and lease return costs. See Note 13 for further information related to these charges.


⁽⁵⁾	Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment expected to be retired earlier than planned.


⁽⁶⁾	Bankruptcy obligations that will be settled in shares of our common stock are marked-to-market based on our stock price.

⁽⁷⁾

Mark-to-market adjustments on equity and other investments, net primarily relates to net unrealized gains and losses associated with our equity investment in China Southern Airlines Company Limited (China Southern Airlines) and certain treasury rate lock derivative instruments.

Earnings (Loss) Per Common Share

Special Items, Net

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



	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
PSP Financial Assistance ⁽¹⁾	$	(1,803	)	$	—	$	(1,803	)	$	—
Severance expenses ⁽²⁾	332			—		537			—
Labor contract expenses ⁽³⁾	10			—		228			—
Fleet impairment ⁽⁴⁾	—			—		743			—
Fleet restructuring expenses ⁽⁵⁾	—			77		—			160
Merger integration expenses	—			39		—			76
Mark-to-market adjustments on bankruptcy obligations, net ⁽⁶⁾	—			5		(49		)	5
Other operating special items, net	(33		)	—		(18		)	18
Mainline operating special items, net	(1,494		)	121		(362		)	259

PSP Financial Assistance ⁽¹⁾	(216		)	—		(216		)	—
Fleet impairment ⁽⁴⁾	13			—		106			—
Regional operating special items, net	(203		)	—		(110		)	—
Operating special items, net	(1,697		)	121		(472		)	259

Mark-to-market adjustments on equity and other investments, net ⁽⁷⁾	—			61		180			(9		)
Debt refinancing, extinguishment and other charges	11			8		48			8
Nonoperating special items, net	11			69		228			(1		)


⁽¹⁾	PSP Financial Assistance represents recognition of a portion of financial assistance received from Treasury pursuant to the PSP Agreement. See Note 1 for further information.


⁽²⁾	Severance expenses principally include salary and medical costs associated with certain team members who opted in to voluntary early retirement programs offered as a result of reductions to American's operation due to COVID-19.


⁽³⁾	Labor contract expenses primarily relate to one-time charges resulting from the ratification of a new contract with the Transport Workers Union and International Association of Machinists & Aerospace Workers for American's maintenance and fleet service team members, including signing bonuses and adjustments to vacation accruals resulting from pay rate increases.


⁽⁴⁾	Fleet impairment resulted from American's decision to retire certain aircraft earlier than planned driven by the decline in air travel due to COVID-19. Aircraft retired include Boeing 757, Boeing 767, Airbus A330-300, Embraer 190, certain Embraer 140 and Bombardier CRJ200 aircraft.

The three months ended June 30, 2020 primarily included a non-cash write-down of regional aircraft and spare parts. The six months ended June 30, 2020 included a $773 million non-cash write-down of mainline and regional aircraft and spare parts and $76 million in write-offs of ROU assets and lease return costs. See Note 12 for further information related to these charges.


⁽⁵⁾	Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment expected to be retired earlier than planned.


⁽⁶⁾	Bankruptcy obligations that will be settled in shares of AAG common stock are marked-to-market based on AAG's stock price.

⁽⁷⁾

Mark-to-market adjustments on equity and other investments, net primarily relates to net unrealized gains and losses associated with American's equity investment in China Southern Airlines Company Limited (China Southern Airlines) and certain treasury rate lock derivative instruments.

Earnings (Loss) Per Common Share

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

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



	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Basic EPS:
Net income (loss)	$	(2,067	)	$	662	$	(4,308	)	$	847
Weighted average common shares outstanding (in thousands)	428,807			445,008		427,260			448,479
Basic EPS	$	(4.82	)	$	1.49	$	(10.08	)	$	1.89

Diluted EPS:
Net income (loss) for purposes of computing diluted EPS	$	(2,067	)	$	662	$	(4,308	)	$	847
Share computation for diluted EPS (in thousands):
Basic weighted average common shares outstanding	428,807			445,008		427,260			448,479
Dilutive effect of stock awards	—			579		—			1,029
Diluted weighted average common shares outstanding	428,807			445,587		427,260			449,508
Diluted EPS	$	(4.82	)	$	1.49	$	(10.08	)	$	1.88

Securities that could potentially dilute EPS in the future, and which were excluded from the calculation of diluted EPS because inclusion of such shares would be antidilutive, are as follows (in thousands):



Restricted stock unit awards	5,781	3,087	5,357	2,677
PSP Warrants	6,368	—	3,184	—
6.50% convertible senior notes	4,070	—	2,035	—

Share Repurchase Programs and Cash Dividends	6 Months Ended
Share Repurchase Programs and Cash Dividends	Jun. 30, 2020
Equity [Abstract]
Share Repurchase Programs and Cash Dividends	Share Repurchase Programs and Cash Dividends During the six months ended June 30, 2020, we repurchased 6.4 million shares of AAG common stock for $145 million at a weighted average cost per share of $22.77, all of which were purchased in the first quarter of 2020. In January 2020, our Board of Directors declared a cash dividend of $0.10 per share for stockholders of record as of February 5, 2020 and paid on February 19, 2020, totaling $43 million. We have suspended our capital return program, including share repurchases and the payment of future dividends. In connection with our receipt of financial assistance under the Payroll Support Program, we agreed not to repurchase shares of or make dividend payments in respect of AAG common stock through September 30, 2021. If we receive a secured loan from Treasury pursuant to the CARES Act, we will be prohibited from repurchasing shares of AAG common stock and the payment of common stock dividends through the date that is one year after such secured loan is fully repaid.

Revenue Recognition

6 Months Ended

Jun. 30, 2020

Revenue Recognition

Revenue

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



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Passenger revenue:
Passenger travel	$	1,006	$	10,217	$	8,085	$	18,989
Loyalty revenue - travel ⁽¹⁾	102		794		703		1,680
Total passenger revenue	1,108		11,011		8,788		20,669
Cargo	130		221		277		439
Other:
Loyalty revenue - marketing services	356		594		927		1,172
Other revenue	28		134		145		264
Total other revenue	384		728		1,072		1,436
Total operating revenues	$	1,622	$	11,960	$	10,137	$	22,544


⁽¹⁾	Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions, which were earned from travel or co-branded credit card and other partners.

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



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Domestic	$	1,026	$	8,009	$	6,806	$	15,235
Latin America	34		1,241		1,214		2,612
Atlantic	42		1,407		565		2,080
Pacific	6		354		203		742
Total passenger revenue	$	1,108	$	11,011	$	8,788	$	20,669

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

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 the condensed consolidated balance sheets and (2) ticket sales for transportation that has not yet been provided, reported as air traffic liability on the condensed consolidated balance sheets.



	June 30, 2020		December 31, 2019
	(In millions)
Loyalty program liability	$	8,962	$	8,615
Air traffic liability	5,119		4,808
Total	$	14,081	$	13,423

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 credit 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, 2019	$	8,615
Deferral of revenue	1,149
Recognition of revenue ⁽¹⁾	(802		)
Balance at June 30, 2020 ⁽²⁾	$	8,962

⁽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 generally do not expire as long as that AAdvantage member has any type of qualifying activity at least every 18 months. As of June 30, 2020, our current loyalty program liability was $2.4 billion and represents our current estimate of revenue expected to be recognized in the next 12 months based on historical trends, with the balance reflected in long-term loyalty program liability expected to be recognized as revenue in periods thereafter. Given the inherent uncertainty of the current operating environment due to COVID-19, we will continue to monitor redemption patterns and may adjust our estimates in the future.

The air traffic liability principally represents tickets sold for future travel on American and partner airlines, as well as estimated future refunds and exchanges of tickets sold for past travel. The balance in our air traffic liability also fluctuates with seasonal travel patterns. The contract duration of passenger tickets is generally one year. Accordingly, any revenue associated with tickets sold for future travel will be recognized within 12 months. For the six months ended June 30, 2020, $2.7 billion of revenue was recognized in passenger revenue that was included in our air traffic liability at December 31, 2019. In response to COVID-19, we extended the contract duration for certain tickets to December 31, 2021, principally those with travel scheduled March 1, 2020 through September 30, 2020. Accordingly, any revenue associated with these tickets will be recognized within the next 18 months. Given this change in contract duration and uncertainty surrounding the future demand for air travel, our estimates of revenue that will be recognized from future flown or unused tickets may be subject to variability and differ from historical experience.

Revenue Recognition

Revenue

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



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Passenger revenue:
Passenger travel	$	1,006	$	10,217	$	8,085	$	18,989
Loyalty revenue - travel ⁽¹⁾	102		794		703		1,680
Total passenger revenue	1,108		11,011		8,788		20,669
Cargo	130		221		277		439
Other:
Loyalty revenue - marketing services	356		594		927		1,172
Other revenue	28		132		144		259
Total other revenue	384		726		1,071		1,431
Total operating revenues	$	1,622	$	11,958	$	10,136	$	22,539


⁽¹⁾	Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions, which were earned from travel or co-branded credit card and other partners.

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



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Domestic	$	1,026	$	8,009	$	6,806	$	15,235
Latin America	34		1,241		1,214		2,612
Atlantic	42		1,407		565		2,080
Pacific	6		354		203		742
Total passenger revenue	$	1,108	$	11,011	$	8,788	$	20,669

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

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 the condensed consolidated balance sheets and (2) ticket sales for transportation that has not yet been provided, reported as air traffic liability on the condensed consolidated balance sheets.



	June 30, 2020		December 31, 2019
	(In millions)
Loyalty program liability	$	8,962	$	8,615
Air traffic liability	5,119		4,808
Total	$	14,081	$	13,423



Balance at December 31, 2019	$	8,615
Deferral of revenue	1,149
Recognition of revenue ⁽¹⁾	(802		)
Balance at June 30, 2020 ⁽²⁾	$	8,962

⁽¹⁾

⁽²⁾

Mileage credits can be redeemed at any time and generally do not expire as long as that AAdvantage member has any type of qualifying activity at least every 18 months. As of June 30, 2020, American's current loyalty program liability was $2.4 billion and represents American's current estimate of revenue expected to be recognized in the next 12 months based on historical trends, with the balance reflected in long-term loyalty program liability expected to be recognized as revenue in periods thereafter. Given the inherent uncertainty of the current operating environment due to COVID-19, American will continue to monitor redemption patterns and may adjust its estimates in the future.

The air traffic liability principally represents tickets sold for future travel on American and partner airlines, as well as estimated future refunds and exchanges of tickets sold for past travel. The balance in American's air traffic liability also fluctuates with seasonal travel patterns. The contract duration of passenger tickets is generally one year. Accordingly, any revenue associated with tickets sold for future travel will be recognized within 12 months. For the six months ended June 30, 2020, $2.7 billion of revenue was recognized in passenger revenue that was included in American's air traffic liability at December 31, 2019. In response to COVID-19, American extended the contract duration for certain tickets to December 31, 2021, principally those with travel scheduled March 1, 2020 through September 30, 2020. Accordingly, any revenue associated

with these tickets will be recognized within the next 18 months. Given this change in contract duration and uncertainty surrounding the future demand for air travel, American's estimates of revenue that will be recognized from future flown or unused tickets may be subject to variability and differ from historical experience.

Debt

6 Months Ended

Jun. 30, 2020

Debt

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



	June 30, 2020		December 31, 2019
Secured
2013 Term Loan Facility, variable interest rate of 1.93%, installments through 2025	$	1,788	$	1,807
2013 Revolving Facility, variable interest rate of 2.17%, due 2024	750		—
2014 Term Loan Facility, variable interest rate of 1.93%, installments through 2027	1,220		1,202
2014 Revolving Facility, variable interest rate of 2.17%, due 2024	1,643		—
April 2016 Term Loan Facility, variable interest rate of 2.18%, installments through 2023	960		970
April 2016 Revolving Facility, variable interest rate of 2.17%, due 2024	450		—
December 2016 Term Loan Facility, variable interest rate of 2.18%, installments through 2023	1,213		1,213
11.75% senior secured notes, interest only payments until due in July 2025	2,500		—
Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.00% to 8.39%, averaging 4.03%, maturing from 2020 to 2032	11,410		11,933
Equipment loans and other notes payable, fixed and variable interest rates ranging from 1.38% to 5.83%, averaging 2.20%, maturing from 2020 to 2032	4,610		4,727
Special facility revenue bonds, fixed interest rates ranging from 5.00% to 8.00%, maturing from 2021 to 2036	1,064		754
	27,608		22,606
Unsecured
PSP Promissory Note	1,540		—
6.50% convertible senior notes, interest only payments until due in July 2025	1,000		—
5.000% senior notes, interest only payments until due in June 2022	750		750
3.75% senior notes, interest only payments until due in March 2025	500		—
4.625% senior notes	—		500
	3,790		1,250
Total long-term debt	31,398		23,856
Less: Total unamortized debt discount, premium and issuance costs	734		211
Less: Current maturities	2,471		2,749
Long-term debt, net of current maturities	$	28,193	$	20,896

The maximum availability we had under any undrawn, revolving credit facility was $400 million in a short-term revolving credit facility we entered into in December 2019, all of which was undrawn, as of June 30, 2020. The December 2016 Credit Facilities provide for a revolving credit facility that may be established thereunder in the future.

Secured financings are collateralized by assets, primarily aircraft, engines, simulators, aircraft spare parts, airport gate leasehold rights, route authorities, airport slots and certain pre-delivery payments.

2020 Financing Activities

2014 Credit Facilities

In January 2020, American and AAG entered into the Eighth Amendment to the Amended and Restated Credit and Guaranty Agreement, amending the Amended and Restated Credit and Guaranty Agreement dated as of April 20, 2015 (as previously amended, the 2014 Credit Agreement; the revolving credit facility established thereunder, the 2014 Revolving Facility; the term loan facility established thereunder, the 2014 Term Loan Facility; and collectively, the 2014 Credit Facilities), pursuant to which American refinanced the 2014 Term Loan Facility, increasing the total aggregate principal amount outstanding to $1.2 billion, reducing the LIBOR margin from 2.00% to 1.75%, with a LIBOR floor of 0%, and reducing the base rate margin from 1.00% to 0.75%. In addition, the maturity date for the 2014 Term Loan Facility was extended to January 2027 from October 2021.

In April and May 2020, American borrowed $1.6 billion under the 2014 Revolving Facility. The 2014 Revolving Facility bears interest at LIBOR plus a margin of 2.00% and has a final maturity date of October 2024. Following the April and May draws, American had no remaining borrowing capacity available under the 2014 Revolving Facility.

2013 Revolving Facility and April 2016 Revolving Facility

In April 2020, American borrowed $750 million under the 2013 Revolving Facility. The 2013 Revolving Facility bears interest at LIBOR plus a margin of 2.00% and has a final maturity date of October 2024. Following the April draw, American had no remaining borrowing capacity available under the 2013 Revolving Facility.

In April 2020, American borrowed $450 million under the April 2016 Revolving Facility. The April 2016 Revolving Facility bears interest at LIBOR plus a margin of 2.00% and has a final maturity date of October 2024. Following the April draw, American had no remaining borrowing capacity available under the April 2016 Revolving Facility.

Delayed Draw Term Loan Credit Facility

In March 2020, American and AAG entered into a Credit and Guaranty Agreement which provided for a 364-day $1.0 billion senior secured delayed draw term loan credit facility (the Delayed Draw Term Loan Credit Facility), which was scheduled to be due and payable in a single installment on the maturity date in March 2021. In connection with the issuance of the 11.75% senior secured notes due 2025, as described below, the Delayed Draw Term Loan Credit Facility was repaid and the Delayed Draw Term Loan Credit Facility and all of the security documents and other loan documents related thereto were terminated as of June 30, 2020.

11.75% Senior Secured Notes

In June 2020, American issued $2.5 billion aggregate principal amount of 11.75% senior secured notes due 2025 (the Senior Secured Notes) at a price equal to 99% of their aggregate principal amount. The Senior Secured Notes bear interest at a rate of 11.75% per annum (subject to increase if a certain collateral coverage ratio is not met). Interest on the Senior Secured Notes is payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2021. The Senior Secured Notes will mature on July 15, 2025. The obligations of American under the Senior Secured Notes are fully and unconditionally guaranteed on a senior unsecured basis by AAG. The proceeds from the Senior Secured Notes were used to repay and terminate the $1.0 billion Delayed Draw Term Loan Credit Facility (and to terminate all security documents and all other loan documents related thereto) with the remaining amount for general corporate purposes and to enhance our liquidity position.

American may redeem the Senior Secured Notes, in whole at any time or in part from time to time, at a redemption price equal to 100% of the principal amount of the notes being redeemed plus a make whole premium, together with accrued and unpaid interest, if any, to (but not including) the redemption date.

The Senior Secured Notes are American’s senior secured obligations. Subject to certain limitations and exceptions, the Senior Secured Notes are secured on a first-lien basis by security interests in certain assets, rights and properties utilized by American in providing its scheduled air carrier services to and from certain airports in the United States and certain airports in Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, Mexico, South Korea, and Switzerland. American’s obligations with respect to the Senior Secured Notes are also secured on a second-lien basis by security interests in certain assets, rights and properties utilized by American in providing its scheduled air carrier services to and from certain airports in the United States and certain airports in the European Union and the United Kingdom. American may be required to pledge additional collateral in the future under the terms of the Senior Secured Notes, and in certain circumstances may

elect to pledge additional collateral as a replacement for existing collateral. The collateral that secures the Senior Secured Notes on a second-lien basis presently secures the 2014 Credit Facilities, on a first-lien basis.

Special Facility Revenue Bonds

In January 2020, American and British Airways announced the start of construction on a $344 million investment to upgrade New York's John F. Kennedy International Airport (JFK) Terminal 8.

In June 2020, the New York Transportation Development Corporation (NYTDC) issued approximately $360 million of special facility revenue bonds (the 2020 JFK Bonds) on behalf of American. A portion of the net proceeds from the 2020 JFK Bonds have been or will be used to fund costs of issuance of the 2020 JFK Bonds, to fund a substantial portion of the cost of the renovation and expansion of a passenger terminal facility (the Terminal) leased and utilized by American at JFK and to fund the August 2020 maturity of the outstanding bonds issued by NYTDC on behalf of American in 2016 (the 2016 JFK Bonds).

American is required to pay debt service on the 2020 JFK Bonds through payments under a loan agreement with NYTDC (as amended), and American and AAG guarantee the 2020 JFK Bonds. American continues to pay debt service on the outstanding 2016 JFK Bonds and American and AAG continue to guarantee the 2016 JFK Bonds. American’s and AAG’s obligations under these guarantees are secured by a leasehold mortgage on American’s lease of the Terminal and related property from the Port Authority of New York and New Jersey.

The 2020 JFK Bonds, in aggregate, were priced at approximately 98% of par value. The gross proceeds from the issuance of the 2020 JFK Bonds were approximately $353 million. Of this amount, approximately $8 million was used to fund the costs of issuance of the 2020 JFK Bonds, approximately $47 million was used to fund the redemption of the 2016 JFK Bonds due August 2020 and approximately $17 million was reimbursed to American for the Terminal construction costs incurred, with the remaining amount of proceeds received to be held in restricted cash and short-term investments on the condensed consolidated balance sheet and to be used to finance a substantial portion of the cost of the renovation and expansion of the Terminal. The 2020 JFK Bonds are comprised of term bonds, $214 million of which bear interest at 5.25% per annum and mature on August 1, 2031, and $146 million of which bear interest at 5.375% per annum and mature on August 1, 2036.

PSP Promissory Note

In April 2020, as partial compensation to the U.S. Government for the provision of financial assistance under the PSP Agreement, we issued the PSP Promissory Note to Treasury, which provides for our unconditional promise to pay to Treasury the initial principal sum of approximately $842 million, subject to an increase equal to 30% of the amount of each additional Installment disbursed under the PSP Agreement after the PSP Closing Date, and the guarantee of our obligations by the Guarantors. Assuming the total Installments to be paid pursuant to the PSP Agreement aggregate approximately $5.8 billion, the PSP Promissory Note will have a total principal sum of approximately $1.7 billion. As of June 30, 2020, the principal amount of the PSP Promissory Note was approximately $1.5 billion.

The PSP Promissory Note bears interest on the outstanding principal amount at a rate equal to 1.00% per annum until the fifth anniversary of the PSP Closing Date and 2.00% plus an interest rate based on the secured overnight financing rate per annum or other benchmark replacement rate consistent with customary market conventions (but not to be less than 0.00%) thereafter until the tenth anniversary of the PSP Closing Date (the Maturity Date), and interest accrued thereon will be payable in arrears on the last business day of March and September of each year, beginning on September 30, 2020. The aggregate principal amount outstanding under the PSP Promissory Note, together with all accrued and unpaid interest thereon and all other amounts payable under the PSP Promissory Note, will be due and payable on the Maturity Date.

We may, at any time and from time to time, voluntarily prepay amounts outstanding under the PSP Promissory Note, in whole or in part, without penalty or premium. Within 30 days of the occurrence of certain change of control triggering events, we are required to prepay the aggregate outstanding principal amount of the PSP Promissory Note at such time, together with any accrued interest or other amounts owing under the PSP Promissory Note at such time.

The PSP Promissory Note is our senior unsecured obligation and each guarantee of the PSP Promissory Note is the senior unsecured obligation of each of the Guarantors, respectively.

The PSP Promissory Note contains events of default, including cross-default with respect to acceleration or failure to pay at maturity other material indebtedness. Upon the occurrence of an event of default and subject to certain grace periods, the outstanding obligations under the PSP Promissory Note may, and in certain circumstances will automatically, be accelerated and become due and payable immediately.

6.50% Convertible Senior Notes

In June 2020, AAG completed the public offering of $1.0 billion aggregate principal amount of AAG’s 6.50% convertible senior notes due 2025 (the Convertible Notes). The Convertible Notes are fully and unconditionally guaranteed by American (the Guarantee). In connection with the offering of the Convertible Notes by the underwriters thereof, AAG granted the underwriters an option, exercisable for 30 days, to purchase up to an additional $150 million aggregate principal amount of the Convertible Notes solely to cover overallotments. The net proceeds to us from the Convertible Notes were approximately $970 million, after deducting the underwriters’ discounts and commissions and our estimated offering expenses. The net proceeds from the Convertible Notes are being used for general corporate purposes and to enhance our liquidity position.

The Convertible Notes were issued pursuant to an indenture, dated as of June 25, 2020 (the Base Indenture), between AAG and Wilmington Trust, National Association as trustee (the Trustee), as supplemented by that certain first supplemental indenture, dated as of June 25, 2020, among AAG, American and the Trustee (the Supplemental Indenture and, together with the Base Indenture, the Indenture). The Convertible Notes bear interest at a rate of 6.50% per annum. Interest on the Convertible Notes is payable semi-annually in arrears on January 1 and July 1 of each year, beginning on January 1, 2021. The Convertible Notes will mature on July 1, 2025, unless earlier converted or redeemed or repurchased by us.

The Convertible Notes were priced to investors in the offering at 100% of their principal amount. The Convertible Notes and the Guarantee will rank pari passu in right of payment with all of AAG’s and American's respective existing and future senior indebtedness and senior in right of payment to all of AAG’s and American's respective future subordinated indebtedness. The Convertible Notes and the Guarantee will be effectively subordinated to all of AAG's and American's respective existing and future secured indebtedness to the extent of the value of the assets pledged to secure those obligations. The Convertible Notes will also be structurally subordinated to all existing and future indebtedness of AAG’s non-guarantor subsidiaries.

Upon conversion, AAG will pay or deliver, as the case may be, cash, shares of AAG common stock or a combination of cash and shares of AAG common stock, at AAG’s election. The initial conversion rate is 61.7284 shares of AAG common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $16.20 per share of AAG common stock). The conversion rate is subject to adjustment in some events as described in the Indenture.

Holders may convert their Convertible Notes at their option only in the following circumstances: (1) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on September 30, 2020, if the last reported sale price per share of AAG common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the measurement period) in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of AAG common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on AAG common stock; (4) if AAG calls such Convertible Notes for redemption; and (5) at any time from, and including, April 1, 2025 until the close of business on the scheduled trading day immediately before the maturity date of the Convertible Notes.

In addition, following certain corporate events that occur prior to the maturity date or upon AAG’s issuance of a notice of redemption, AAG will increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such corporate event or during the related redemption period in certain circumstances by a specified number of shares of AAG common stock as described in the Indenture.

AAG will not have the right to redeem the Convertible Notes prior to July 5, 2023. On or after July 5, 2023 and on or before the 20th scheduled trading day immediately before the maturity date, AAG may redeem the Convertible Notes, in whole or in part, if the last reported sale price of AAG common stock has been at least 130% of the conversion price then in effect on (1) each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the trading day immediately before the date AAG sends the related redemption notice; and (2) the trading day immediately before the date AAG sends such notice. In the case of any optional redemption, AAG will redeem the Convertible Notes at a redemption price equal to 100% of the principal amount of such Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

If AAG undergoes a fundamental change described in the Indenture prior to the maturity date of the Convertible Notes, except as described in the Indenture, holders of the Convertible Notes may require AAG to repurchase for cash all or part of their Convertible Notes at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Indenture provides for customary terms and covenants, including that upon certain events of default, either the trustee or the holders of not less than 25% in aggregate principal amount of the Convertible Notes then outstanding may declare the unpaid principal amount of the Convertible Notes and accrued and unpaid interest, if any, thereon immediately due and payable. In the case of certain events of bankruptcy, insolvency or reorganization, the principal amount of the Convertible Notes together with accrued and unpaid interest, if any, thereon will automatically become and be immediately due and payable.

As the Convertible Notes can be settled in cash upon conversion, for accounting purposes, the Convertible Notes were bifurcated into a debt component that was recorded at fair value and an equity component. The following table details the debt and equity components recognized related to the Convertible Notes as of June 30, 2020 (in millions):



	June 30, 2020
Principal amount of 6.50% convertible senior notes	$	1,000
Unamortized debt discount	(444		)
Net carrying amount of 6.50% convertible senior notes	556
Additional paid-in capital	415

The effective interest rate on the liability component for the second quarter of 2020 approximated 20%. We recognized $2 million of interest expense in the second quarter of 2020 including $1 million of non-cash amortization of the debt discount as well as $1 million of contractual coupon interest. The remaining period over which the unamortized debt discount will be recognized as non-cash interest expense is five years as follows: $27 million in 2020, $63 million in 2021, $77 million in 2022, $95 million in 2023, $116 million in 2024 and $66 million in 2025.

At June 30, 2020, the if-converted value of the Convertible Notes did not exceed the principal amount.

3.75% Senior Notes

In February 2020, AAG issued $500 million aggregate principal amount of 3.75% senior notes due 2025 (the 3.75% senior notes). These notes bear interest at a rate of 3.75% per annum, payable semi-annually in arrears in March and September of each year, beginning in September 2020. The 3.75% senior notes are senior unsecured obligations of AAG and are fully and unconditionally guaranteed by American. The 3.75% senior notes mature in March 2025.

Equipment Notes and Other Notes Payable Issued in 2020

In the six months ended June 30, 2020, American entered into agreements under which it borrowed $197 million in connection with the financing or refinancing, as the case may be, of certain aircraft, of which $17 million was used to repay existing indebtedness. Debt incurred under these agreements matures in 2029 through 2032 and bears interest at variable rates (comprised of LIBOR plus an applicable margin) averaging 2.27% at June 30, 2020.

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Debt

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



	June 30, 2020		December 31, 2019
Secured
2013 Term Loan Facility, variable interest rate of 1.93%, installments through 2025	$	1,788	$	1,807
2013 Revolving Facility, variable interest rate of 2.17%, due 2024	750		—
2014 Term Loan Facility, variable interest rate of 1.93%, installments through 2027	1,220		1,202
2014 Revolving Facility, variable interest rate of 2.17%, due 2024	1,643		—
April 2016 Term Loan Facility, variable interest rate of 2.18%, installments through 2023	960		970
April 2016 Revolving Facility, variable interest rate of 2.17%, due 2024	450		—
December 2016 Term Loan Facility, variable interest rate of 2.18%, installments through 2023	1,213		1,213
11.75% senior secured notes, interest only payments until due in July 2025	2,500		—
Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.00% to 8.39%, averaging 4.03%, maturing from 2020 to 2032	11,410		11,933
Equipment loans and other notes payable, fixed and variable interest rates ranging from 1.38% to 5.83%, averaging 2.20%, maturing from 2020 to 2032	4,610		4,727
Special facility revenue bonds, fixed interest rates ranging from 5.00% to 5.38%, maturing from 2021 to 2036	1,040		725
Total long-term debt	27,584		22,577
Less: Total unamortized debt discount, premium and issuance costs	277		205
Less: Current maturities	2,474		2,246
Long-term debt, net of current maturities	$	24,833	$	20,126

The maximum availability American had under any undrawn, revolving credit facility was $400 million in a short-term revolving credit facility American entered into in December 2019, all of which was undrawn, as of June 30, 2020. The December 2016 Credit Facilities provide for a revolving credit facility that may be established thereunder in the future.

2020 Financing Activities

2014 Credit Facilities

2013 Revolving Facility and April 2016 Revolving Facility

Delayed Draw Term Loan Credit Facility

11.75% Senior Secured Notes

Special Facility Revenue Bonds

In January 2020, American and British Airways announced the start of construction on a $344 million investment to upgrade New York's John F. Kennedy International Airport (JFK) Terminal 8.

obligations under these guarantees are secured by a leasehold mortgage on American’s lease of the Terminal and related property from the Port Authority of New York and New Jersey.

Equipment Notes and Other Notes Payable Issued in 2020

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2020
Income Taxes [Line Items]
Income Taxes	Income Taxes At December 31, 2019, we had approximately $9.1 billion of federal net operating losses (NOLs) carried over from prior taxable years (NOL Carryforwards) to reduce future federal taxable income. The federal NOL Carryforwards will expire beginning in 2023 if unused. We also had approximately $3.0 billion of NOL Carryforwards to reduce future state taxable income at December 31, 2019, which will expire in years 2020 through 2039 if unused. At December 31, 2019, we had an Alternative Minimum Tax (AMT) credit carryforward of approximately $170 million available for federal income tax purposes, which is presently expected to be fully refunded in 2020 as a result of the CARES Act enacted in March of 2020. During the three and six months ended June 30, 2020, we recorded an income tax benefit of $592 million and $1.2 billion, respectively.
American Airlines, Inc. [Member]
Income Taxes [Line Items]
Income Taxes	Income Taxes At December 31, 2019, American had approximately $9.2 billion of federal net operating losses (NOLs) carried over from prior taxable years (NOL Carryforwards) to reduce future federal taxable income. 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 $9.1 billion to reduce AAG's future federal taxable income. The federal NOL Carryforwards will expire beginning in 2023 if unused. American also had approximately $2.9 billion of NOL Carryforwards to reduce future state taxable income at December 31, 2019, which will expire in years 2020 through 2039 if unused. At December 31, 2019, American had an Alternative Minimum Tax (AMT) credit carryforward of approximately $226 million available for federal income tax purposes, which is presently expected to be fully refunded in 2020 as a result of the CARES Act enacted in March of 2020. During the three and six months ended June 30, 2020, American recorded an income tax benefit of $564 million and $1.2 billion, respectively.

Fair Value Measurements and Other Investments

6 Months Ended

Jun. 30, 2020

Fair Value Measurements and Other Investments

Assets Measured at Fair Value on a Recurring Basis

We utilize the market approach to measure the fair value of 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, 2020.

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



	Fair Value Measurements as of June 30, 2020
	Total		Level 1		Level 2		Level 3
Short-term investments ^{(1), (2)}:
Money market funds	$	7,853	$	7,853	$	—	$	—
Bank notes/certificates of deposit/time deposits	1,131		—		1,131		—
Corporate obligations	367		—		367		—
	9,351		7,853		1,498		—
Restricted cash and short-term investments ^{(1), (4)}	539		390		149		—
Long-term investments ⁽³⁾	128		128		—		—
Total	$	10,018	$	8,371	$	1,647	$	—


⁽¹⁾	All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are recorded in accumulated other comprehensive loss at each reporting period. There were no credit losses.


⁽²⁾	Our short-term investments mature in one year or less except for $484 million of bank notes/certificates of deposit/time deposits and $120 million of corporate obligations.


⁽³⁾	Long-term investments primarily include our equity investment in China Southern Airlines, in which we presently own a 1.8% equity interest, and are classified in other assets on the condensed consolidated balance sheet.


⁽⁴⁾	Restricted cash and short-term investments primarily includes money market funds to be used to finance a substantial portion of the cost of the renovation and expansion of Terminal 8 at JFK and collateral held to support workers' compensation obligations.

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, 2020				December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current maturities	$	30,664	$	26,081	$	23,645	$	24,508

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Fair Value Measurements and Other Investments

Assets Measured at Fair Value on a Recurring Basis

American utilizes the market approach to measure the fair value of 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, 2020.

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



	Fair Value Measurements as of June 30, 2020
	Total		Level 1		Level 2		Level 3
Short-term investments ^(1), (2):
Money market funds	$	7,851	$	7,851	$	—	$	—
Bank notes/certificates of deposit/time deposits	1,131		—		1,131		—
Corporate obligations	367		—		367		—
	9,349		7,851		1,498		—
Restricted cash and short-term investments ^{(1), (4)}	539		390		149		—
Long-term investments ⁽³⁾	128		128		—		—
Total	$	10,016	$	8,369	$	1,647	$	—


⁽¹⁾	All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are recorded in accumulated other comprehensive loss at each reporting period. There were no credit losses.


⁽²⁾	American’s short-term investments mature in one year or less except for $484 million of bank notes/certificates of deposit/time deposits and $120 million of corporate obligations.


⁽³⁾	Long-term investments primarily include American's equity investment in China Southern Airlines, in which American presently owns a 1.8% equity interest, and are classified in other assets on the condensed consolidated balance sheet.


⁽⁴⁾	Restricted cash and short-term investments primarily includes money market funds to be used to finance a substantial portion of the cost of the renovation and expansion of Terminal 8 at JFK and collateral held to support workers' compensation obligations.

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, 2020				December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current maturities	$	27,307	$	23,284	$	22,372	$	23,196

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Employee Benefit Plans

6 Months Ended

Jun. 30, 2020

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,	2020			2019			2020			2019
Service cost	$	1		$	1		$	2		$	1
Interest cost	154			176			8			8
Expected return on assets	(252		)	(204		)	(3		)	(4		)
Settlements	4			—			—			—
Amortization of:
Prior service cost (benefit)	7			7			(52		)	(59		)
Unrecognized net loss (gain)	41			38			(5		)	(8		)
Net periodic benefit cost (income)	$	(45	)	$	18		$	(50	)	$	(62	)

	Pension Benefits						Retiree Medical and Other Postretirement Benefits
Six Months Ended June 30,	2020			2019			2020			2019
Service cost	$	2		$	1		$	3		$	2
Interest cost	307			352			14			17
Expected return on assets	(505		)	(406		)	(6		)	(8		)
Settlements	4			—			—			—
Amortization of:
Prior service cost (benefit)	14			14			(106		)	(118		)
Unrecognized net loss (gain)	83			76			(12		)	(16		)
Net periodic benefit cost (income)	$	(95	)	$	37		$	(107	)	$	(123	)

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

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

Pursuant to the CARES Act, minimum required pension contributions to be made in the calendar year 2020 can be deferred to January 1, 2021, with interest accruing from the original due date to the new payment date. We expect to defer our $196 million 2020 minimum required contributions to January 1, 2021, which we intend to pay on December 31, 2020.

Accumulated Other Comprehensive Income (Loss) [Line Items]

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,	2020			2019			2020			2019
Service cost	$	1		$	1		$	2		$	1
Interest cost	153			175			8			8
Expected return on assets	(251		)	(203		)	(3		)	(4		)
Settlements	4			—			—			—
Amortization of:
Prior service cost (benefit)	7			7			(52		)	(59		)
Unrecognized net loss (gain)	41			38			(5		)	(8		)
Net periodic benefit cost (income)	$	(45	)	$	18		$	(50	)	$	(62	)

	Pension Benefits						Retiree Medical and Other Postretirement Benefits
Six Months Ended June 30,	2020			2019			2020			2019
Service cost	$	1		$	1		$	3		$	2
Interest cost	306			350			14			17
Expected return on assets	(503		)	(405		)	(6		)	(8		)
Settlements	4			—			—			—
Amortization of:
Prior service cost (benefit)	14			14			(106		)	(118		)
Unrecognized net loss (gain)	83			76			(12		)	(16		)
Net periodic benefit cost (income)	$	(95	)	$	36		$	(107	)	$	(123	)

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

Pursuant to the CARES Act, minimum required pension contributions to be made in the calendar year 2020 can be deferred to January 1, 2021, with interest accruing from the original due date to the new payment date. American expects to defer its $193 million 2020 minimum required contributions to January 1, 2021, which American intends to pay on December 31, 2020.

Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2020

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, 2019	$	(5,238	)	$	(2	)	$	(1,091	)		$	(6,331	)
Other comprehensive income (loss) before reclassifications	(152		)	(1		)	34				(119		)
Amounts reclassified from AOCI	(17		)	—			4			(2)	(13		)
Net current-period other comprehensive income (loss)	(169		)	(1		)	38				(132		)
Balance at June 30, 2020	$	(5,407	)	$	(3	)	$	(1,053	)		$	(6,463	)


⁽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 (benefit) on the condensed consolidated statement of operations.

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	2020			2019			2020			2019
Amortization of pension, retiree medical and other postretirement benefits:
Prior service benefit	$	(34	)	$	(41	)	$	(71	)	$	(81	)	Nonoperating other income (expense), net
Actuarial loss	30			23			58			47			Nonoperating other income (expense), net
Total reclassifications for the period, net of tax	$	(4	)	$	(18	)	$	(13	)	$	(34	)

Accumulated Other Comprehensive Income (Loss) [Line Items]

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, 2019	$	(5,218	)	$	(2	)	$	(1,203	)		$	(6,423	)
Other comprehensive income (loss) before reclassifications	(152		)	(1		)	34				(119		)
Amounts reclassified from AOCI	(17		)	—			4			(2)	(13		)
Net current-period other comprehensive income (loss)	(169		)	(1		)	38				(132		)
Balance at June 30, 2020	$	(5,387	)	$	(3	)	$	(1,165	)		$	(6,555	)


⁽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 (benefit) on the condensed consolidated statement of operations.

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	2020			2019			2020			2019
Amortization of pension, retiree medical and other postretirement benefits:
Prior service benefit	$	(34	)	$	(41	)	$	(71	)	$	(81	)	Nonoperating other income (expense), net
Actuarial loss	30			23			57			47			Nonoperating other income (expense), net
Total reclassifications for the period, net of tax	$	(4	)	$	(18	)	$	(14	)	$	(34	)

Regional Expenses

6 Months Ended

Jun. 30, 2020

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,
	2020			2019		2020			2019
Aircraft fuel and related taxes	$	92		$	487	$	480		$	909
Salaries, wages and benefits	368			439		838			848
Capacity purchases from third-party regional carriers ⁽¹⁾	179			352		533			692
Maintenance, materials and repairs	56			101		171			195
Other rent and landing fees	104			162		257			329
Aircraft rent	3			8		8			15
Selling expenses	14			106		94			197
Depreciation and amortization	84			83		168			162
Special items, net	(178		)	—		(85		)	—
Other	79			148		260			301
Total regional expenses	$	801		$	1,886	$	2,724		$	3,648

⁽¹⁾

During the three months ended June 30, 2020 and 2019, we recognized $61 million and $149 million, respectively, of expense under our capacity purchase agreement with Republic Airline Inc. (Republic). During the six months ended June 30, 2020 and 2019, we recognized $211 million and $292 million, respectively, of expense under our capacity purchase agreement with Republic. We hold a 25% equity interest in Republic Airways Holdings Inc., the parent company of Republic.

Regional Expenses



	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Aircraft fuel and related taxes	$	92		$	487	$	480		$	909
Salaries, wages and benefits	71			85		155			165
Capacity purchases from third-party regional carriers ⁽¹⁾	570			907		1,483			1,765
Maintenance, materials and repairs	1			5		6			9
Other rent and landing fees	98			154		242			313
Aircraft rent	3			8		8			15
Selling expenses	14			105		94			197
Depreciation and amortization	71			71		141			138
Special items, net	(203		)	—		(110		)	—
Other	39			89		148			191
Total regional expenses	$	756		$	1,911	$	2,647		$	3,702

⁽¹⁾

During the three months ended June 30, 2020 and 2019, American recognized $61 million and $149 million, respectively, of expense under its capacity purchase agreement with Republic Airline Inc. (Republic). During the six months ended June 30, 2020 and 2019, American recognized $211 million and $292 million, respectively, of expense under its capacity purchase agreement with Republic. American holds a 25% equity interest in Republic Airways Holdings Inc., the parent company of Republic.

Transactions with Related Parties

6 Months Ended

Jun. 30, 2020

Transactions with Related Parties

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



	June 30, 2020			December 31, 2019
AAG ⁽¹⁾	$	11,229		$	14,597
AAG’s wholly-owned subsidiaries ⁽²⁾	(2,082		)	(2,146		)
Total	$	9,147		$	12,451


⁽¹⁾	The decrease in American’s net related party receivable from AAG is primarily due to cash received from the proceeds of AAG financing transactions including the PSP Promissory Note, the 6.50% convertible senior notes and the issuance of 85.2 million shares of AAG common stock pursuant to a public stock offering.

⁽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.

Legal Proceedings	6 Months Ended
Legal Proceedings	Jun. 30, 2020
Long-term Purchase Commitment [Line Items]
Legal Proceedings	Legal Proceedings Chapter 11 Cases. On November 29, 2011, AMR Corporation (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 acquisition of US Airways Group, Inc. by AMR (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. The shares of AAG common stock issued to the Disputed Claims Reserve were originally issued on December 13, 2013 and have at all times since been included in the number of shares issued and outstanding as reported from time to time in our quarterly and annual reports, including for calculating earnings per common share. As disputed claims are resolved, the claimants receive distributions of shares from the Disputed Claims Reserve. We are not required to distribute additional shares above the limits contemplated by the Plan, even if the shares remaining for distribution in the Disputed Claims Reserve are not sufficient to fully pay any additional allowed unsecured claims. If 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 and former convertible noteholders treated as stockholders under the Plan. In February 2020, 2.2 million shares of AAG common stock were distributed from the Disputed Claims Reserve. After giving effect to this distribution, as of June 30, 2020, the Disputed Claims Reserve held 4.8 million shares of AAG common stock. Private Party Antitrust Action Related to Passenger Capacity. We, along with Delta Air Lines, Inc., Southwest Airlines Co., United Airlines, Inc. and, in the case of litigation filed in Canada, Air Canada, were named as defendants in approximately 100 putative class action lawsuits alleging unlawful agreements with respect to air passenger capacity. The U.S. lawsuits were consolidated in the Federal District Court for the District of Columbia (the DC Court). On June 15, 2018, we reached a settlement agreement with the plaintiffs in the amount of $45 million to resolve all class claims in the U.S. lawsuits. That settlement was approved by the DC Court on May 13, 2019, however three parties who objected to the settlement have appealed that decision to the United States Court of Appeals for the District of Columbia. We believe these appeals are without merit and intend to vigorously defend against them. 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 Bankruptcy Court. The complaint named as defendants US Airways Group, Inc., US Airways, Inc., 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 August 29, 2018, the Bankruptcy Court denied in part defendants' motion for summary judgment, and fully denied plaintiffs' cross-motion for summary judgment. The parties' evidentiary cases were presented before the Bankruptcy Court in a bench trial in March 2019. The parties submitted proposed findings of fact and conclusions of law and made closing arguments in April 2019, and we are awaiting the Bankruptcy Court's decision. We believe this lawsuit is without merit and intend to vigorously defend against the allegations. Pension Benefits Action. On December 11, 2018, a lawsuit captioned Torres, et al. v. American Airlines, Inc., The Employee Benefits Committee and John/Jane Does 1-5, was filed in the United States District Court for the Northern District of Texas. The plaintiffs in this lawsuit purport to represent a class consisting of all participants in and beneficiaries under each of American's defined benefit pension plans (except the pilot plan) who elected to receive an optional form of benefit other than a lump sum distribution of a participant’s vested benefit. Under the Employee Retirement Income Security Act, participants covered by defined benefit plans accrue retirement benefits in the form of a single life annuity payable upon retirement on a monthly basis until the employee’s death, and may elect certain alternative forms of benefit payments. Plaintiffs contend that the mortality tables used by American for purposes of calculations related to these alternative forms of benefits are outdated and that more recent mortality tables would have provided more generous benefits and should have been used to make those calculations. The parties have agreed to settle the case on an individual basis with the named plaintiffs, as well as a pilot who has threatened to bring suit under the pilot plan, for less than $1 million, which represents actual damages to the named and purported plaintiffs and attorneys' fees. The court has vacated the trial setting and all other deadlines and administratively closed the case, pending receipt of dismissal papers. 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.
American Airlines, Inc. [Member]
Long-term Purchase Commitment [Line Items]
Legal Proceedings	Legal Proceedings Chapter 11 Cases. On November 29, 2011, AMR Corporation (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 acquisition of US Airways Group, Inc. by AMR (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. The shares of AAG common stock issued to the Disputed Claims Reserve were originally issued on December 13, 2013 and have at all times since been included in the number of shares issued and outstanding as reported by AAG from time to time in its quarterly and annual reports, including for calculating earnings per common share. As disputed claims are resolved, the claimants receive distributions of shares from the Disputed Claims Reserve. American is not required to distribute additional shares above the limits contemplated by the Plan, even if the shares remaining for distribution in the Disputed Claims Reserve are not sufficient to fully pay any additional allowed unsecured claims. If any of the reserved shares remain undistributed upon resolution of all remaining disputed claims, such shares will not be returned to AAG but rather will be distributed to former AMR stockholders and former convertible noteholders treated as stockholders under the Plan. In February 2020, 2.2 million shares of AAG common stock were distributed from the Disputed Claims Reserve. After giving effect to this distribution, as of June 30, 2020, the Disputed Claims Reserve held 4.8 million shares of AAG common stock. Private Party Antitrust Action Related to Passenger Capacity. American, along with Delta Air Lines, Inc., Southwest Airlines Co., United Airlines, Inc. and, in the case of litigation filed in Canada, Air Canada, were named as defendants in approximately 100 putative class action lawsuits alleging unlawful agreements with respect to air passenger capacity. The U.S. lawsuits were consolidated in the Federal District Court for the District of Columbia (the DC Court). On June 15, 2018, American reached a settlement agreement with the plaintiffs in the amount of $45 million to resolve all class claims in the U.S. lawsuits. That settlement was approved by the DC Court on May 13, 2019, however three parties who objected to the settlement have appealed that decision to the United States Court of Appeals for the District of Columbia. American believes these appeals are without merit and intends to vigorously defend against them. 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 Bankruptcy Court. The complaint named as defendants US Airways Group, Inc., US Airways, Inc., 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 August 29, 2018, the Bankruptcy Court denied in part defendants' motion for summary judgment, and fully denied plaintiffs' cross-motion for summary judgment. The parties' evidentiary cases were presented before the Bankruptcy Court in a bench trial in March 2019. The parties submitted proposed findings of fact and conclusions of law and made closing arguments in April 2019, and they are awaiting the Bankruptcy Court's decision. American believes this lawsuit is without merit and intends to vigorously defend against the allegations. Pension Benefits Action. On December 11, 2018, a lawsuit captioned Torres, et al. v. American Airlines, Inc., The Employee Benefits Committee and John/Jane Does 1-5, was filed in the United States District Court for the Northern District of Texas. The plaintiffs in this lawsuit purport to represent a class consisting of all participants in and beneficiaries under each of American's defined benefit pension plans (except the pilot plan) who elected to receive an optional form of benefit other than a lump sum distribution of a participant’s vested benefit. Under the Employee Retirement Income Security Act, participants covered by defined benefit plans accrue retirement benefits in the form of a single life annuity payable upon retirement on a monthly basis until the employee’s death, and may elect certain alternative forms of benefit payments. Plaintiffs contend that the mortality tables used by American for purposes of calculations related to these alternative forms of benefits are outdated and that more recent mortality tables would have provided more generous benefits and should have been used to make those calculations. The parties have agreed to settle the case on an individual basis with the named plaintiffs, as well as a pilot who has threatened to bring suit under the pilot plan, for less than $1 million, which represents actual damages to the named and purported plaintiffs and attorneys' fees. The court has vacated the trial setting and all other deadlines and administratively closed the case, pending receipt of dismissal papers. 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.

Impairment	6 Months Ended
Impairment	Jun. 30, 2020
Restructuring Cost and Reserve [Line Items]
Impairment	Impairment Long-lived Assets Accounting Standards Codification (ASC) 360 - Property, Plant, and Equipment (ASC 360) requires long-lived assets to be assessed for impairment when events and circumstances indicate that the assets may be impaired. Long-lived assets consist of owned flight and ground equipment, ROU assets and definite-lived intangible assets such as certain domestic airport slots and gate leasehold rights, customer relationships and marketing agreements. As previously discussed, in the first six months of 2020, our operations, liquidity and stock price were significantly impacted by decreased passenger demand and government travel restrictions due to COVID-19. Additionally, we decided to retire certain mainline aircraft earlier than planned including Boeing 757, Boeing 767, Airbus A330-300 and Embraer 190 aircraft as well as regional aircraft, including certain Embraer 140 and Bombardier CRJ200 aircraft. As a result of these events and circumstances, we performed impairment tests on our long-lived assets in connection with the preparation of our financial statements. In accordance with ASC 360, an impairment of a long-lived asset or group of long-lived assets exists only when the sum of the estimated undiscounted future cash flows expected to be generated directly by the assets are less than the carrying value of the assets. We group assets principally by fleet-type when estimating future cash flows, which is generally the lowest level for which identifiable cash flows exist. Estimates of future cash flows are based on historical results adjusted to reflect management’s best estimate of future market and operating conditions, including our current fleet plan. As a result of the impairment tests performed on our long-lived assets, we determined the sum of the estimated undiscounted future cash flows exceeded the $43.4 billion carrying value for our long-lived assets except for the aircraft being retired earlier than planned as discussed above. For those aircraft and certain related spare parts, we recorded impairment charges reflecting the difference between the carrying values of these assets and their fair values of $23 million and $838 million for the three and six months ended June 30, 2020, respectively. Fair value reflects management’s best estimate including inputs from published pricing guides and bids from third parties as well as contracted sales agreements when applicable. Due to the inherent uncertainties of the current operating environment, we will continue to evaluate our current fleet (including aircraft in temporary storage) and may decide to permanently retire additional aircraft. Goodwill and Indefinite-lived Intangible Assets ASC 350 - Intangibles - Goodwill and Other (ASC 350) requires goodwill and indefinite-lived intangible assets to be assessed for impairment annually or more frequently if events or circumstances indicate that the fair values of goodwill and indefinite-lived intangible assets may be lower than their carrying values. Goodwill represents the purchase price in excess of the fair value of the net assets acquired and liabilities assumed in connection with the merger with US Airways Group, Inc. We have one reporting unit. Indefinite-lived intangible assets consist of certain domestic airport slots and international slots and route authorities. We performed interim impairment tests on our goodwill and indefinite-lived intangible assets as a result of the events and circumstances previously discussed due to the impact of COVID-19 on our business. In accordance with ASC 350, for goodwill, we performed a quantitative analysis by using a market approach. Under the market approach, the fair value of the reporting unit was determined based on quoted market prices for equity and the fair value of debt as described in Note 8. The fair value exceeded the carrying value of the reporting unit, and our $4.1 billion of goodwill was not impaired. Additionally, we performed interim qualitative impairment tests on our $1.8 billion of indefinite-lived intangible assets and determined there was no material impairment. As discussed above, due to the inherent uncertainties of the current operating environment, we will continue to evaluate our goodwill and indefinite-lived intangible assets for events or circumstances that indicate that their fair values may be lower than their carrying values.
American Airlines, Inc. [Member]
Restructuring Cost and Reserve [Line Items]
Impairment	Impairment Long-lived Assets Accounting Standards Codification (ASC) 360 - Property, Plant, and Equipment (ASC 360) requires long-lived assets to be assessed for impairment when events and circumstances indicate that the assets may be impaired. Long-lived assets consist of owned flight and ground equipment, ROU assets and definite-lived intangible assets such as certain domestic airport slots and gate leasehold rights, customer relationships and marketing agreements. As previously discussed, in the first six months of 2020, American's operations, liquidity and stock price were significantly impacted by decreased passenger demand and government travel restrictions due to COVID-19. Additionally, American decided to retire certain mainline aircraft earlier than planned including Boeing 757, Boeing 767, Airbus A330-300 and Embraer 190 aircraft as well as regional aircraft, including certain Embraer 140 and Bombardier CRJ200 aircraft. As a result of these events and circumstances, American performed impairment tests on its long-lived assets in connection with the preparation of American's financial statements. In accordance with ASC 360, an impairment of a long-lived asset or group of long-lived assets exists only when the sum of the estimated undiscounted future cash flows expected to be generated directly by the assets are less than the carrying value of the assets. American groups assets principally by fleet-type when estimating future cash flows, which is generally the lowest level for which identifiable cash flows exist. Estimates of future cash flows are based on historical results adjusted to reflect management’s best estimate of future market and operating conditions, including American's current fleet plan. As a result of the impairment tests performed on American's long-lived assets, American determined the sum of the estimated undiscounted future cash flows exceeded the $43.0 billion carrying value for its long-lived assets except for the aircraft being retired earlier than planned as discussed above. For those aircraft and certain related spare parts, American recorded impairment charges reflecting the difference between the carrying values of these assets and their fair values of $12 million and $827 million for the three and six months ended June 30, 2020, respectively. Fair value reflects management’s best estimate including inputs from published pricing guides and bids from third parties as well as contracted sales agreements when applicable. Due to the inherent uncertainties of the current operating environment, American will continue to evaluate its current fleet (including aircraft in temporary storage) and may decide to permanently retire additional aircraft. Goodwill and Indefinite-lived Intangible Assets ASC 350 - Intangibles - Goodwill and Other (ASC 350) requires goodwill and indefinite-lived intangible assets to be assessed for impairment annually or more frequently if events or circumstances indicate that the fair values of goodwill and indefinite-lived intangible assets may be lower than their carrying values. Goodwill represents the purchase price in excess of the fair value of the net assets acquired and liabilities assumed in connection with the merger of AAG with US Airways Group, Inc. American has one reporting unit. Indefinite-lived intangible assets consist of certain domestic airport slots and international slots and route authorities. American performed interim impairment tests on its goodwill and indefinite-lived intangible assets as a result of the events and circumstances previously discussed due to the impact of COVID-19 on its business. In accordance with ASC 350, for goodwill, American performed a quantitative analysis by using a market approach. Under the market approach, the fair value of the reporting unit was determined based on quoted market prices for equity and the fair value of debt as described in Note 6. The fair value exceeded the carrying value of the reporting unit, and American's $4.1 billion of goodwill was not impaired. Additionally, American performed interim qualitative impairment tests on its $1.8 billion of indefinite-lived intangible assets and determined there was no material impairment. As discussed above, due to the inherent uncertainties of the current operating environment, American will continue to evaluate its goodwill and indefinite-lived intangible assets for events or circumstances that indicate that their fair values may be lower than their carrying values.

Basis of Presentation and Recent Accounting Pronouncement (Policies)	6 Months Ended
	Jun. 30, 2020
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Basis of Presentation	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, 2019. 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. 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, as well as pension and retiree medical and other postretirement benefits.
Recent Accounting Pronouncements	ecent Accounting Pronouncement Accounting Standards Update (ASU) 2016-13: Financial Instruments – Credit Losses (Topic 326) This ASU requires the use of an expected loss model for certain types of financial instruments and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates. For trade receivables, loans and held-to-maturity debt securities, an estimate of lifetime expected credit losses is required. For available-for-sale debt securities, an allowance for credit losses will be required rather than a reduction to the carrying value of the asset. We adopted this accounting standard prospectively as of January 1, 2020, and it did not have a material impact on our condensed consolidated financial statements.
American Airlines, Inc. [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Basis of Presentation	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, 2019. American is the principal wholly-owned subsidiary of American Airlines Group Inc. (AAG). All significant intercompany transactions have been eliminated. 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, as well as pension and retiree medical and other postretirement benefits.
Recent Accounting Pronouncements	Recent Accounting Pronouncement Accounting Standards Update (ASU) 2016-13: Financial Instruments – Credit Losses (Topic 326) This ASU requires the use of an expected loss model for certain types of financial instruments and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates. For trade receivables, loans and held-to-maturity debt securities, an estimate of lifetime expected credit losses is required. For available-for-sale debt securities, an allowance for credit losses will be required rather than a reduction to the carrying value of the asset. American adopted this accounting standard prospectively as of January 1, 2020, and it did not have a material impact on American's condensed consolidated financial statements.

Special Items, Net (Tables)

6 Months Ended

Jun. 30, 2020

Components of Special Items, Net in Condensed Consolidated Statements of Operations

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



	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
PSP Financial Assistance ⁽¹⁾	$	(1,803	)	$	—	$	(1,803	)	$	—
Severance expenses ⁽²⁾	332			—		537			—
Labor contract expenses ⁽³⁾	10			—		228			—
Fleet impairment ⁽⁴⁾	—			—		743			—
Fleet restructuring expenses ⁽⁵⁾	—			77		—			160
Merger integration expenses	—			39		—			76
Mark-to-market adjustments on bankruptcy obligations, net ⁽⁶⁾	—			5		(49		)	5
Other operating special items, net	(33		)	—		(18		)	18
Mainline operating special items, net	(1,494		)	121		(362		)	259

PSP Financial Assistance ⁽¹⁾	(216		)	—		(216		)	—
Fleet impairment ⁽⁴⁾	24			—		117			—
Severance expenses ⁽²⁾	14			—		14			—
Regional operating special items, net	(178		)	—		(85		)	—
Operating special items, net	(1,672		)	121		(447		)	259

Mark-to-market adjustments on equity and other investments, net ⁽⁷⁾	—			61		180			(9		)
Debt refinancing, extinguishment and other charges	11			8		48			8
Nonoperating special items, net	11			69		228			(1		)


⁽¹⁾	PSP Financial Assistance represents recognition of a portion of financial assistance received from Treasury pursuant to the PSP Agreement. See Note 1 for further information.


⁽²⁾	Severance expenses principally include salary and medical costs associated with certain team members who opted in to voluntary early retirement programs offered as a result of reductions to our operation due to COVID-19.


⁽³⁾	Labor contract expenses primarily relate to one-time charges resulting from the ratification of a new contract with the Transport Workers Union and International Association of Machinists & Aerospace Workers for our maintenance and fleet service team members, including signing bonuses and adjustments to vacation accruals resulting from pay rate increases.


⁽⁴⁾	Fleet impairment resulted from our decision to retire certain aircraft earlier than planned driven by the decline in air travel due to COVID-19. Aircraft retired include Boeing 757, Boeing 767, Airbus A330-300, Embraer 190, certain Embraer 140 and Bombardier CRJ200 aircraft.


⁽⁵⁾	Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment expected to be retired earlier than planned.


⁽⁶⁾	Bankruptcy obligations that will be settled in shares of our common stock are marked-to-market based on our stock price.

⁽⁷⁾

Components of Special Items, Net in Condensed Consolidated Statements of Operations

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



	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
PSP Financial Assistance ⁽¹⁾	$	(1,803	)	$	—	$	(1,803	)	$	—
Severance expenses ⁽²⁾	332			—		537			—
Labor contract expenses ⁽³⁾	10			—		228			—
Fleet impairment ⁽⁴⁾	—			—		743			—
Fleet restructuring expenses ⁽⁵⁾	—			77		—			160
Merger integration expenses	—			39		—			76
Mark-to-market adjustments on bankruptcy obligations, net ⁽⁶⁾	—			5		(49		)	5
Other operating special items, net	(33		)	—		(18		)	18
Mainline operating special items, net	(1,494		)	121		(362		)	259

PSP Financial Assistance ⁽¹⁾	(216		)	—		(216		)	—
Fleet impairment ⁽⁴⁾	13			—		106			—
Regional operating special items, net	(203		)	—		(110		)	—
Operating special items, net	(1,697		)	121		(472		)	259

Mark-to-market adjustments on equity and other investments, net ⁽⁷⁾	—			61		180			(9		)
Debt refinancing, extinguishment and other charges	11			8		48			8
Nonoperating special items, net	11			69		228			(1		)


⁽¹⁾	PSP Financial Assistance represents recognition of a portion of financial assistance received from Treasury pursuant to the PSP Agreement. See Note 1 for further information.


⁽²⁾	Severance expenses principally include salary and medical costs associated with certain team members who opted in to voluntary early retirement programs offered as a result of reductions to American's operation due to COVID-19.


⁽³⁾	Labor contract expenses primarily relate to one-time charges resulting from the ratification of a new contract with the Transport Workers Union and International Association of Machinists & Aerospace Workers for American's maintenance and fleet service team members, including signing bonuses and adjustments to vacation accruals resulting from pay rate increases.


⁽⁴⁾	Fleet impairment resulted from American's decision to retire certain aircraft earlier than planned driven by the decline in air travel due to COVID-19. Aircraft retired include Boeing 757, Boeing 767, Airbus A330-300, Embraer 190, certain Embraer 140 and Bombardier CRJ200 aircraft.


⁽⁵⁾	Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment expected to be retired earlier than planned.


⁽⁶⁾	Bankruptcy obligations that will be settled in shares of AAG common stock are marked-to-market based on AAG's stock price.

⁽⁷⁾

Mark-to-ma

Earnings (Loss) Per Common Share (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings (Loss) per Common Share

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



	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Basic EPS:
Net income (loss)	$	(2,067	)	$	662	$	(4,308	)	$	847
Weighted average common shares outstanding (in thousands)	428,807			445,008		427,260			448,479
Basic EPS	$	(4.82	)	$	1.49	$	(10.08	)	$	1.89

Diluted EPS:
Net income (loss) for purposes of computing diluted EPS	$	(2,067	)	$	662	$	(4,308	)	$	847
Share computation for diluted EPS (in thousands):
Basic weighted average common shares outstanding	428,807			445,008		427,260			448,479
Dilutive effect of stock awards	—			579		—			1,029
Diluted weighted average common shares outstanding	428,807			445,587		427,260			449,508
Diluted EPS	$	(4.82	)	$	1.49	$	(10.08	)	$	1.88

Anti-Dilutive Securities Excluded From Calculation of Diluted EPS



Restricted stock unit awards	5,781	3,087	5,357	2,677
PSP Warrants	6,368	—	3,184	—
6.50% convertible senior notes	4,070	—	2,035	—

Revenue Recognition (Tables)

6 Months Ended

Jun. 30, 2020

Disaggregation of Revenue

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



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Passenger revenue:
Passenger travel	$	1,006	$	10,217	$	8,085	$	18,989
Loyalty revenue - travel ⁽¹⁾	102		794		703		1,680
Total passenger revenue	1,108		11,011		8,788		20,669
Cargo	130		221		277		439
Other:
Loyalty revenue - marketing services	356		594		927		1,172
Other revenue	28		134		145		264
Total other revenue	384		728		1,072		1,436
Total operating revenues	$	1,622	$	11,960	$	10,137	$	22,544


⁽¹⁾	Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions, which were earned from travel or co-branded credit card and other partners.

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



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Domestic	$	1,026	$	8,009	$	6,806	$	15,235
Latin America	34		1,241		1,214		2,612
Atlantic	42		1,407		565		2,080
Pacific	6		354		203		742
Total passenger revenue	$	1,108	$	11,011	$	8,788	$	20,669

Schedule of Contract Liabilities



	June 30, 2020		December 31, 2019
	(In millions)
Loyalty program liability	$	8,962	$	8,615
Air traffic liability	5,119		4,808
Total	$	14,081	$	13,423



Balance at December 31, 2019	$	8,615
Deferral of revenue	1,149
Recognition of revenue ⁽¹⁾	(802		)
Balance at June 30, 2020 ⁽²⁾	$	8,962

⁽¹⁾

⁽²⁾

Disaggregation of Revenue

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



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Passenger revenue:
Passenger travel	$	1,006	$	10,217	$	8,085	$	18,989
Loyalty revenue - travel ⁽¹⁾	102		794		703		1,680
Total passenger revenue	1,108		11,011		8,788		20,669
Cargo	130		221		277		439
Other:
Loyalty revenue - marketing services	356		594		927		1,172
Other revenue	28		132		144		259
Total other revenue	384		726		1,071		1,431
Total operating revenues	$	1,622	$	11,958	$	10,136	$	22,539


⁽¹⁾	Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions, which were earned from travel or co-branded credit card and other partners.

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



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Domestic	$	1,026	$	8,009	$	6,806	$	15,235
Latin America	34		1,241		1,214		2,612
Atlantic	42		1,407		565		2,080
Pacific	6		354		203		742
Total passenger revenue	$	1,108	$	11,011	$	8,788	$	20,669

Schedule of Contract Liabilities



	June 30, 2020		December 31, 2019
	(In millions)
Loyalty program liability	$	8,962	$	8,615
Air traffic liability	5,119		4,808
Total	$	14,081	$	13,423



Balance at December 31, 2019	$	8,615
Deferral of revenue	1,149
Recognition of revenue ⁽¹⁾	(802		)
Balance at June 30, 2020 ⁽²⁾	$	8,962

⁽¹⁾

⁽²⁾

Mileage credits can be redeemed at any time and generally do not expire as long as that AAdvantage member has any type of qualifying activity at least every 18 months. As of June 30, 2020, American's current loyalty program liability was $2.4 billion and represents American's current estimate of revenue expected to be recognized in the next 12 months based on historical trends, with the balance reflected in long-term loyalty program liability expected to be recognized as revenue in periods thereafter. Given the inherent uncertainty of the current operating environment due to COVID-19, American will continue to monitor redemption patterns and may adjust its estimates in the future.

Debt (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Long-Term Debt

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



	June 30, 2020		December 31, 2019
Secured
2013 Term Loan Facility, variable interest rate of 1.93%, installments through 2025	$	1,788	$	1,807
2013 Revolving Facility, variable interest rate of 2.17%, due 2024	750		—
2014 Term Loan Facility, variable interest rate of 1.93%, installments through 2027	1,220		1,202
2014 Revolving Facility, variable interest rate of 2.17%, due 2024	1,643		—
April 2016 Term Loan Facility, variable interest rate of 2.18%, installments through 2023	960		970
April 2016 Revolving Facility, variable interest rate of 2.17%, due 2024	450		—
December 2016 Term Loan Facility, variable interest rate of 2.18%, installments through 2023	1,213		1,213
11.75% senior secured notes, interest only payments until due in July 2025	2,500		—
Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.00% to 8.39%, averaging 4.03%, maturing from 2020 to 2032	11,410		11,933
Equipment loans and other notes payable, fixed and variable interest rates ranging from 1.38% to 5.83%, averaging 2.20%, maturing from 2020 to 2032	4,610		4,727
Special facility revenue bonds, fixed interest rates ranging from 5.00% to 8.00%, maturing from 2021 to 2036	1,064		754
	27,608		22,606
Unsecured
PSP Promissory Note	1,540		—
6.50% convertible senior notes, interest only payments until due in July 2025	1,000		—
5.000% senior notes, interest only payments until due in June 2022	750		750
3.75% senior notes, interest only payments until due in March 2025	500		—
4.625% senior notes	—		500
	3,790		1,250
Total long-term debt	31,398		23,856
Less: Total unamortized debt discount, premium and issuance costs	734		211
Less: Current maturities	2,471		2,749
Long-term debt, net of current maturities	$	28,193	$	20,896

Components of Convertible Debt

The following table details the debt and equity components recognized related to the Convertible Notes as of June 30, 2020 (in millions):



	June 30, 2020
Principal amount of 6.50% convertible senior notes	$	1,000
Unamortized debt discount	(444		)
Net carrying amount of 6.50% convertible senior notes	556
Additional paid-in capital	415

Schedule of Long-Term Debt

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



	June 30, 2020		December 31, 2019
Secured
2013 Term Loan Facility, variable interest rate of 1.93%, installments through 2025	$	1,788	$	1,807
2013 Revolving Facility, variable interest rate of 2.17%, due 2024	750		—
2014 Term Loan Facility, variable interest rate of 1.93%, installments through 2027	1,220		1,202
2014 Revolving Facility, variable interest rate of 2.17%, due 2024	1,643		—
April 2016 Term Loan Facility, variable interest rate of 2.18%, installments through 2023	960		970
April 2016 Revolving Facility, variable interest rate of 2.17%, due 2024	450		—
December 2016 Term Loan Facility, variable interest rate of 2.18%, installments through 2023	1,213		1,213
11.75% senior secured notes, interest only payments until due in July 2025	2,500		—
Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.00% to 8.39%, averaging 4.03%, maturing from 2020 to 2032	11,410		11,933
Equipment loans and other notes payable, fixed and variable interest rates ranging from 1.38% to 5.83%, averaging 2.20%, maturing from 2020 to 2032	4,610		4,727
Special facility revenue bonds, fixed interest rates ranging from 5.00% to 5.38%, maturing from 2021 to 2036	1,040		725
Total long-term debt	27,584		22,577
Less: Total unamortized debt discount, premium and issuance costs	277		205
Less: Current maturities	2,474		2,246
Long-term debt, net of current maturities	$	24,833	$	20,126

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Summary of Assets Measured at Fair Value on Recurring Basis

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



	Fair Value Measurements as of June 30, 2020
	Total		Level 1		Level 2		Level 3
Short-term investments ^{(1), (2)}:
Money market funds	$	7,853	$	7,853	$	—	$	—
Bank notes/certificates of deposit/time deposits	1,131		—		1,131		—
Corporate obligations	367		—		367		—
	9,351		7,853		1,498		—
Restricted cash and short-term investments ^{(1), (4)}	539		390		149		—
Long-term investments ⁽³⁾	128		128		—		—
Total	$	10,018	$	8,371	$	1,647	$	—


⁽¹⁾	All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are recorded in accumulated other comprehensive loss at each reporting period. There were no credit losses.


⁽²⁾	Our short-term investments mature in one year or less except for $484 million of bank notes/certificates of deposit/time deposits and $120 million of corporate obligations.


⁽³⁾	Long-term investments primarily include our equity investment in China Southern Airlines, in which we presently own a 1.8% equity interest, and are classified in other assets on the condensed consolidated balance sheet.

⁽⁴⁾

Restricted cash and short-term investments primarily includes money market funds to be used to finance a substantial portion of the cost of the renovation and expansion of Terminal 8 at JFK and collateral held to support workers' compensation obligations.

Schedule of Carrying Value and Estimated Fair Value of Long-Term Debt, Including Current Maturities

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



	June 30, 2020				December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current maturities	$	30,664	$	26,081	$	23,645	$	24,508

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Summary of Assets Measured at Fair Value on Recurring Basis

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



	Fair Value Measurements as of June 30, 2020
	Total		Level 1		Level 2		Level 3
Short-term investments ^(1), (2):
Money market funds	$	7,851	$	7,851	$	—	$	—
Bank notes/certificates of deposit/time deposits	1,131		—		1,131		—
Corporate obligations	367		—		367		—
	9,349		7,851		1,498		—
Restricted cash and short-term investments ^{(1), (4)}	539		390		149		—
Long-term investments ⁽³⁾	128		128		—		—
Total	$	10,016	$	8,369	$	1,647	$	—


⁽¹⁾	All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are recorded in accumulated other comprehensive loss at each reporting period. There were no credit losses.


⁽²⁾	American’s short-term investments mature in one year or less except for $484 million of bank notes/certificates of deposit/time deposits and $120 million of corporate obligations.


⁽³⁾	Long-term investments primarily include American's equity investment in China Southern Airlines, in which American presently owns a 1.8% equity interest, and are classified in other assets on the condensed consolidated balance sheet.

⁽⁴⁾

Schedule of Carrying Value and Estimated Fair Value of Long-Term Debt, Including Current Maturities

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



	June 30, 2020				December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current maturities	$	27,307	$	23,284	$	22,372	$	23,196

Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2020

Components of Net Periodic Benefit Cost (Income)

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,	2020			2019			2020			2019
Service cost	$	1		$	1		$	2		$	1
Interest cost	154			176			8			8
Expected return on assets	(252		)	(204		)	(3		)	(4		)
Settlements	4			—			—			—
Amortization of:
Prior service cost (benefit)	7			7			(52		)	(59		)
Unrecognized net loss (gain)	41			38			(5		)	(8		)
Net periodic benefit cost (income)	$	(45	)	$	18		$	(50	)	$	(62	)

	Pension Benefits						Retiree Medical and Other Postretirement Benefits
Six Months Ended June 30,	2020			2019			2020			2019
Service cost	$	2		$	1		$	3		$	2
Interest cost	307			352			14			17
Expected return on assets	(505		)	(406		)	(6		)	(8		)
Settlements	4			—			—			—
Amortization of:
Prior service cost (benefit)	14			14			(106		)	(118		)
Unrecognized net loss (gain)	83			76			(12		)	(16		)
Net periodic benefit cost (income)	$	(95	)	$	37		$	(107	)	$	(123	)

Components of Net Periodic Benefit Cost (Income)

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,	2020			2019			2020			2019
Service cost	$	1		$	1		$	2		$	1
Interest cost	153			175			8			8
Expected return on assets	(251		)	(203		)	(3		)	(4		)
Settlements	4			—			—			—
Amortization of:
Prior service cost (benefit)	7			7			(52		)	(59		)
Unrecognized net loss (gain)	41			38			(5		)	(8		)
Net periodic benefit cost (income)	$	(45	)	$	18		$	(50	)	$	(62	)

	Pension Benefits						Retiree Medical and Other Postretirement Benefits
Six Months Ended June 30,	2020			2019			2020			2019
Service cost	$	1		$	1		$	3		$	2
Interest cost	306			350			14			17
Expected return on assets	(503		)	(405		)	(6		)	(8		)
Settlements	4			—			—			—
Amortization of:
Prior service cost (benefit)	14			14			(106		)	(118		)
Unrecognized net loss (gain)	83			76			(12		)	(16		)
Net periodic benefit cost (income)	$	(95	)	$	36		$	(107	)	$	(123	)

Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2020

Accumulated Other Comprehensive Income (Loss) [Line Items]

Components of 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, 2019	$	(5,238	)	$	(2	)	$	(1,091	)		$	(6,331	)
Other comprehensive income (loss) before reclassifications	(152		)	(1		)	34				(119		)
Amounts reclassified from AOCI	(17		)	—			4			(2)	(13		)
Net current-period other comprehensive income (loss)	(169		)	(1		)	38				(132		)
Balance at June 30, 2020	$	(5,407	)	$	(3	)	$	(1,053	)		$	(6,463	)


⁽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 (benefit) on the condensed consolidated statement of operations.

Reclassifications out of Accumulated Other Comprehensive Loss

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	2020			2019			2020			2019
Amortization of pension, retiree medical and other postretirement benefits:
Prior service benefit	$	(34	)	$	(41	)	$	(71	)	$	(81	)	Nonoperating other income (expense), net
Actuarial loss	30			23			58			47			Nonoperating other income (expense), net
Total reclassifications for the period, net of tax	$	(4	)	$	(18	)	$	(13	)	$	(34	)

Accumulated Other Comprehensive Income (Loss) [Line Items]

Components of 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, 2019	$	(5,218	)	$	(2	)	$	(1,203	)		$	(6,423	)
Other comprehensive income (loss) before reclassifications	(152		)	(1		)	34				(119		)
Amounts reclassified from AOCI	(17		)	—			4			(2)	(13		)
Net current-period other comprehensive income (loss)	(169		)	(1		)	38				(132		)
Balance at June 30, 2020	$	(5,387	)	$	(3	)	$	(1,165	)		$	(6,555	)


⁽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 (benefit) on the condensed consolidated statement of operations.

Reclassifications out of Accumulated Other Comprehensive Loss

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	2020			2019			2020			2019
Amortization of pension, retiree medical and other postretirement benefits:
Prior service benefit	$	(34	)	$	(41	)	$	(71	)	$	(81	)	Nonoperating other income (expense), net
Actuarial loss	30			23			57			47			Nonoperating other income (expense), net
Total reclassifications for the period, net of tax	$	(4	)	$	(18	)	$	(14	)	$	(34	)

Regional Expenses (Tables)

6 Months Ended

Jun. 30, 2020

Components of Regional Expenses

Regional expenses consist of the following (in millions):



	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Aircraft fuel and related taxes	$	92		$	487	$	480		$	909
Salaries, wages and benefits	368			439		838			848
Capacity purchases from third-party regional carriers ⁽¹⁾	179			352		533			692
Maintenance, materials and repairs	56			101		171			195
Other rent and landing fees	104			162		257			329
Aircraft rent	3			8		8			15
Selling expenses	14			106		94			197
Depreciation and amortization	84			83		168			162
Special items, net	(178		)	—		(85		)	—
Other	79			148		260			301
Total regional expenses	$	801		$	1,886	$	2,724		$	3,648

⁽¹⁾

Components of Regional Expenses

Regional expenses consist of the following (in millions):



	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Aircraft fuel and related taxes	$	92		$	487	$	480		$	909
Salaries, wages and benefits	71			85		155			165
Capacity purchases from third-party regional carriers ⁽¹⁾	570			907		1,483			1,765
Maintenance, materials and repairs	1			5		6			9
Other rent and landing fees	98			154		242			313
Aircraft rent	3			8		8			15
Selling expenses	14			105		94			197
Depreciation and amortization	71			71		141			138
Special items, net	(203		)	—		(110		)	—
Other	39			89		148			191
Total regional expenses	$	756		$	1,911	$	2,647		$	3,702

⁽¹⁾

Transactions with Related Parties (Tables)

6 Months Ended

Jun. 30, 2020