1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarter ended: June 30, 1994
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ____________________________________
to ____________________________________
Commission file number: 1-2691
AMERICAN AIRLINES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-1502798
(State or other jurisdiction of (IRS Employer identification No.)
incorporation or organization)
4333 AMON CARTER BLVD.
FORT WORTH, TEXAS 76155
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 963-1234
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Common Stock, $1 Par Value - 1,000 shares outstanding as
of July 22, 1994
The registrant meets the conditions set forth in, and is filing
this form with the reduced disclosure format prescribed by,
General Instructions H(1)(a) and H(1)(b) of Form 10-Q.
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AMERICAN AIRLINES, INC.
INDEX
Page
Number
Part I: FINANCIAL INFORMATION
Consolidated Statement of Operations for the three and
six months ended June 30, 1994 and 1993 1
Condensed Consolidated Balance Sheet
at June 30, 1994 and December 31, 1993 2
Condensed Consolidated Statement of Cash Flows for
the six months ended June 30, 1994 and 1993 3
Notes to Financial Statements 4
Management's Discussion and Analysis of
Financial Condition and Results of Operations 5
Part II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 7
Signature 8
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PART I
Item 1. Consolidated Financial Statements
AMERICAN AIRLINES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended June 30, Six Months Ended June 30,
(Unaudited) (in millions) 1994 1993 1994 1993
Revenues
Passenger $ 3,267 $ 3,484 $ 6,295 $ 6,611
Cargo 163 163 317 313
Other 333 305 659 591
Total operating revenues 3,763 3,952 7,271 7,515
Expenses
Wages, salaries and benefits 1,262 1,256 2,503 2,461
Aircraft fuel 373 481 755 942
Commissions to agents 324 362 635 684
Depreciation and amortization 292 278 581 545
Other rentals and landing fees 192 196 385 394
Food service 169 181 330 348
Aircraft rentals 155 159 312 318
Maintenance materials and
repairs 113 142 227 287
Other operating expenses 510 569 1,066 1,123
Total operating expenses 3,390 3,624 6,794 7,102
Operating Income 373 328 477 413
Other Income (Expense)
Interest income - 1 1 2
Interest expense (92) (109) (189) (216)
Interest capitalized 5 13 11 30
Miscellaneous - net (15) (125) (24) (126)
(102) (220) (201) (310)
Earnings Before Income Taxes 271 108 276 103
Provision for income taxes 99 41 107 42
Net Earnings $ 172 $ 67 $ 169 $ 61
See accompanying notes.
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AMERICAN AIRLINES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
June 30, December 31,
(Unaudited) (in millions) 1994 1993
Current Assets
Cash $ 59 $ 55
Short-term investments for affiliates 546 514
Receivables, net 908 731
Receivables from affiliates 403 223
Inventories, net 593 606
Other current assets 424 399
Total current assets 2,933 2,528
Equipment and Property
Flight equipment, net 9,400 9,192
Purchase deposits for flight equipment 120 313
9,520 9,505
Other equipment and property, net 1,895 1,964
11,415 11,469
Equipment and Property under Capital Leases
Flight equipment, net 1,320 1,188
Other equipment and property, net 172 172
1,492 1,360
Route acquisition costs, net 1,046 1,061
Other assets, net 1,373 1,331
$18,259 $17,749
Current Liabilities
Accounts payable $ 843 $ 857
Payable to affiliates 636 479
Accrued liabilities 1,508 1,281
Air traffic liability 1,627 1,461
Current maturities of long-term debt 45 70
Current obligations under capital leases 110 92
Total current liabilities 4,769 4,240
Long-term debt 1,521 1,453
Long-term debt due to Parent 3,498 4,045
Obligations under capital leases 1,948 1,792
Deferred income taxes 443 338
Other liabilities, deferred gains,
deferred credits and postretirement benefits 2,743 2,713
Stockholder's Equity
Common stock - -
Additional paid-in capital 1,699 1,699
Retained earnings 1,638 1,469
3,337 3,168
$18,259 $17,749
See accompanying notes.
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AMERICAN AIRLINES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended June 30,
(Unaudited) (in millions) 1994 1993
Net Cash Provided by Operating Activities $ 977 $ 796
Cash Flow from Investing Activities:
Capital expenditures (486) (1,207)
Net increase in short-term investments
for affiliates (32) (275)
Funds transferred from affiliates for
investment, net 32 275
Other, net 9 12
Net cash used for investing activities (477) (1,195)
Cash Flow from Financing Activities:
Proceeds from issuance of long-term debt 93 166
Net short-term borrowings (repayments)
on instruments with maturities of
90 days or less - (350)
Other short-term borrowings 200 -
Payments on other short-term borrowings (200) (29)
Payments on long-term debt and capital
lease obligations (45) (118)
Funds transferred (to) from affiliates, net (547) 757
Other, net 3 4
Net cash (used) provided by financing
activities (496) 430
Net increase in cash 4 31
Cash at beginning of period 55 45
Cash at end of period $ 59 $ 76
Cash Payments (Refunds) For:
Interest (net of amounts capitalized) $ 110 $ 110
Interest on intercompany note to Parent 62 72
Income taxes 2 (90)
Financing Activities Not Affecting Cash:
Capital lease obligations incurred $ 190 $ -
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See accompanying notes.
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AMERICAN AIRLINES, INC.
Notes to Financial Statements
1. American Airlines, Inc. (American) is a wholly-owned subsidiary
of AMR Corporation (AMR). In the opinion of management, these
financial statements contain all adjustments necessary to
present fairly the financial position, results of operations and
cash flows for the periods indicated. Such adjustments are of a
normal recurring nature except as disclosed. These financial
statements and related notes should be read in conjunction with
the financial statements and notes contained in American's
Annual Report on Form 10-K for the year ended December 31, 1993.
2. Passenger revenues for the three and six months ended June 30,
1994, include a $35 million favorable adjustment ($22 million
after tax) produced by a change in the Company's estimate of the
usage patterns of miles sold to participating companies in
American's AAdvantage frequent flyer program. Passenger
Revenues for the three and six months ended June 30, 1993,
reflect a $115 million favorable adjustment ($67 million net of
related commission expense and taxes) resulting from a change in
estimate relating to certain earned passenger revenues.
3. Included in Miscellaneous - net for the three and six months
ended June 30, 1993, is a $125 million charge ($79 million after
tax) related to the retirement of 31 DC-10 aircraft. The charge
represents the Company's best estimate of the expected loss
based upon the anticipated method of disposition. However,
should the ultimate method of disposition differ, the actual
loss could be different than the amount estimated.
4. Accumulated depreciation of owned equipment and property at June
30, 1994 and December 31, 1993, was $4.9 billion and $4.7
billion, respectively. Accumulated amortization of equipment
and property under capital leases at June 30, 1994 and December
31, 1993, was $761 million and $707 million, respectively.
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Item 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
RESULTS OF OPERATIONS
American's results for the six months ended June 30, 1994, reflected
the improved performance of the Company's Passenger and SABRE Travel
Information Network (STIN) divisions. The Company's plan to
maximize Passenger division revenue per available seat mile (ASM) by
reducing capacity and optimizing the deployment of flight assets
resulted in a 2.5 percent reduction in passenger traffic on a 7.1
percent decline in ASMs. As a result, passenger load factor
increased 2.9 points and revenue per ASM improved by 2.4 percent.
Average stage length increased approximately 6.0 percent,
contributing to a decline in Passenger division yield since fares on
longer trips tend to be lower on a per ASM basis. In addition,
yields continued to be hampered by competitive fare actions and the
impact of low fare carriers in certain domestic markets. STIN's
improved performance resulted from increased booking volumes and an
increase in the average fee per booking.
Operating costs decreased 4.3 percent, driven primarily by the
impact of reduced capacity and a decline in fuel prices.
The results for the six months ended June 30, 1994, include a $35
million favorable adjustment ($22 million after tax) to passenger
revenues produced by a change in the Company's estimate of the usage
patterns of miles sold to participating companies in American's
AAdvantage frequent flyer program.
The results for the six months ended June 30, 1993, included a $125
million charge ($79 million after tax) for the retirement of 31
McDonnell Douglas DC10 aircraft and a positive $115 million
adjustment ($67 million net of related commission expense and taxes)
to passenger revenues for a change in estimate related to certain
earned passenger revenues.
For the Six Months Ended June 30, 1994 and 1993
American recorded net earnings of $169 million for the six months
ended June 30, 1994. For the same period in 1993, American recorded
net earnings of $61 million. Operating income was $477 million in
the 1994 six months compared to $413 million in the 1993 six months.
American's operating revenues decreased 3.2 percent to $7.3 billion
and passenger revenues decreased 4.8 percent to $6.3 billion. Yield
decreased 2.3 percent to 13.44 cents compared to the same period of
1993. Domestic yields were moderately lower while international
yields improved in every region except the Pacific.
Traffic or revenue passenger miles (RPMs) decreased 2.5 percent to
46.8 billion miles for the six months ended June 30, 1994. The
decrease is primarily due to reductions in capacity as the jet
aircraft fleet decreased from 687 at June 30, 1993, to 650 at June
30, 1994. From the first six months of 1993 to the same period in
1994, domestic traffic decreased 4.1 percent from 34.9 billion RPMs
to 33.5 billion RPMs. International traffic grew 1.7 percent from
13.1 billion RPMs to 13.4 billion RPMs. The major growth was in
Latin America, where traffic increased 8.8 percent on capacity
growth of 0.4 percent. In Europe, traffic fell 4.5 percent on a
capacity decrease of 10.9 percent.
Cargo revenues increased 1.3 percent to $317 million, reflecting a
7.2 percent increase in cargo ton miles offset by a 4.4 percent
decrease in revenue yield per ton mile. Growth in cargo ton miles
is primarily attributable to our Europe and Latin America markets,
combined with steady increases in postal volumes.
Other revenues increased 11.5 percent to $659 million primarily as a
result of the improved performance of STIN and increased revenues
from aircraft maintenance contracts.
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RESULTS OF OPERATIONS (CONTINUED)
Capacity or available passenger seat miles (ASMs) decreased 7.1
percent to 74.7 billion miles in the first half of 1994. Operating
expenses decreased 4.3 percent to $6.8 billion from the six months
ended June 30, 1993, to the same period in 1994. Passenger division
cost per ASM increased 2.0 percent to 8.51 cents. Wages, salaries
and benefits rose 1.7 percent to $2.5 billion, resulting from salary
adjustments for existing employees and rising health-care and
pension costs, offset by headcount reductions. Aircraft fuel
expense decreased 19.9 percent to $755 million due to a 9.1 percent
decrease in gallons consumed and an 11.8 percent decrease in
American's average price per gallon. Commissions to agents
decreased 7.2 percent to $635 million, due principally to the
decrease in passenger revenues subject to commissions. Additions of
new aircraft and the acquisitions of other capital equipment raised
depreciation and amortization 6.6 percent to $581 million. Food
service costs decreased 5.2 percent to $330 million due to the
decrease in passenger traffic. Maintenance materials and repairs
costs decreased 20.9 percent to $227 million reflecting the
retirement of older jet aircraft and increased operational
efficiencies. Other operating expenses decreased 5.1 percent to
$1.1 billion primarily due to the decrease in capacity.
Interest expense decreased 12.5 percent to $189 million due
primarily to a decrease in rates on external debt and a decrease in
the outstanding balance of intercompany debt due to parent.
Included in Miscellaneous - net for the six months ended June 30,
1993, is a charge of $125 million related to the retirement of 31
McDonnell Douglas DC10 aircraft.
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PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed with this report:
None
(b) Reports on Form 8-K:
On May 26, 1994 American filed a report on Form 8-K
relating to its issuance of 1994A Pass Through
Certificates.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
AMERICAN AIRLINES, INC.
BY: /s/ Michael J. Durham
Michael J. Durham
Senior Vice President and
Chief Financial Officer
DATE: July 22, 1994
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5
1,000,000
6-MOS
DEC-31-1994
JUN-30-1994
59
546
1,340
29
593
2,933
18,580
5,673
18,259
4,769
0
1,699
0
0
1,638
18,259
0
7,271
0
6,794
0
0
189
276
107
169
0
0
0
169
0
0
