View:
May 22,
2008
VIA
EDGAR
David R.
Humphrey, Accounting Branch Chief
Division
of Corporate Finance
U.S.
Securities and Exchange Commission
100 F
Street N.E.
Washington,
DC 20549
Re: AMR
Corporation
Form 10-K filed for the year ended
December 31, 2007
Filed February 20, 2008
File No. 1-8400
Dear Mr.
Humphrey:
This
letter sets forth AMR Corporation’s (AMR or the Company) responses with respect
to the staff’s comment letter dated April 7, 2008 and received on May 15, 2008
regarding AMR’s Form 10-K for the year ended December 31, 2007. The
numbered responses in this letter correspond to the numbered paragraphs from the
comment letter. Both the staff’s comments and AMR’s responses have
been included.
Item
7. Management’s Discussion and Analysis
Overview
|
1.
|
Refer
to the discussion announcing plans to divest AMR Eagle, your wholly-owned
regional carrier. Please tell us in detail your reasons for not
reflecting the operations of AMR Eagle as either held for disposal (other
than by sale) or held for sale at December 31, 2007, in accordance with
paragraphs 27 through 31 of SFAS No. 144. We note you expect to
complete the divestiture in 2008 and further, that you are able to
determine the amount of revenues and pre-tax income generated by AMR Eagle
as disclosed in the Business section of the filing. We may have
further comments after review of your
response.
|
Response:
In
paragraph 30 of Statement of Financial Accounting Standards No. 144 “Accounting
for the Impairment or Disposal of Long-lived Assets” (SFAS 144), the FASB
defines the criteria a long-lived asset (disposal group) to be sold must meet to
be classified as held for sale. The Company did not meet these
criteria specified in paragraph 30 as of December 31, 2007, nor did it meet
these criteria as of the date of filing the 2007 Form 10-K.
The
Company disclosed in its 2007 Form 10-K the following with respect to AMR
Eagle:
“On
November 28, 2007, the Company announced that it plans to divest AMR Eagle
(American Eagle Airlines, Inc., and Executive Airlines, Inc.), its wholly-owned
regional carrier. AMR believes that a divestiture of AMR Eagle is in the
long-term best interests of the Company and its shareholders. The
Company continues to evaluate the form of the divestiture, which may include a
spin-off to AMR shareholders, a sale to a third party, or some other form of
separation from AMR. The Company expects to complete the divestiture in 2008;
however, the completion of any transaction and its timing will depend on a
number of factors, including general economic, industry and financial market
conditions, as well as the ultimate form of the divestiture.”
As
described above, although AMR intends to divest AMR Eagle, the Company did not
as of December 31, 2007 have a decision as to the form of the divestiture.
Currently, the Company anticipates that the form of the transaction will likely
be either a spin-off to shareholders or a sale to a third party buyer. The
background materials and financial information on AMR Eagle were just made
available to interested parties in early May. Because the form of the
transaction, through either sale or distribution to shareholders has not yet
been determined, nor approved by the Board of Directors, the criteria in
paragraph 30 of SFAS 144 have not been met. Additionally, the Company
has not yet determined which assets are expected to be disposed of, transferred,
or sold. Accordingly, AMR concluded AMR Eagle should remain
classified as held and used as of December 31, 2007.
Additionally,
it is expected that the Company will have significant continuing involvement
with AMR Eagle after the divestiture, and therefore, AMR Eagle will not be
accounted for as discontinued operations in accordance with paragraph 42(b) SFAS
144.
Item
7. Management’s Discussion and Analysis
Overview
|
2.
|
Please
also tell us whether and how the 24 planes grounded and held for disposal
have been presented in your financial statements at December 31,
2007.
|
Response: The
12 owned aircraft of the 24 planes grounded and held for disposal were presented
as Other current assets. As these aircraft were written down to fair
value of less than $10 million, they were not separately stated in the
Consolidated Balance Sheets nor separately disclosed in the Notes to the
Consolidated Financial Statements of the 2007 Form 10-K.
AMR
acknowledges that the adequacy and accuracy of the disclosures in its filing
with the Commission are the responsibility of the Company. The
Company acknowledges that staff comments or changes to disclosures in response
to staff comments do not foreclose the Commission from taking any action with
respect to the filing. The Company also acknowledges that staff
comments may not be asserted as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United
States.
We
appreciate the staff’s assistance in this process and would be pleased to
discuss with you at your earliest convenience any additional comments the staff
may have.
Very
truly yours,
/s/ Thomas W.
Horton
Thomas W.
Horton
Executive Vice
President and Chief Financial Officer