SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of earliest event
reported: July 21, 2004
American Airlines, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-2691 13-1502798
(State of Incorporation) ( Commission File Number) (IRS Employer
Identification No.)
4333 Amon Carter Blvd. Fort Worth, Texas 76155
(Address of principal executive offices) (Zip Code)
(817) 963-1234
(Registrant's telephone number)
Item 12. Disclosure of Results of Operations and Financial
Condition
American Airlines, Inc. is furnishing herewith a press
release issued on July 21, 2004 by its parent company, AMR
Corporation (AMR), as Exhibit 99.1 which is included herein.
This press release was issued to report AMR's second quarter
2004 results.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
American Airlines, Inc.
/s/ Charles D. MarLett
Charles D. MarLett
Corporate Secretary
Dated: July 21, 2004
EXHIBIT INDEX
Exhibit Description
99.1 Press Release
Exhibit 99.1
Contact: Al Becker
Corporate Communications
Fort Worth, Texas
817-967-1577
corp.comm@aa.com
FOR RELEASE: Wednesday, July 21, 2004
Editor's Note: A live Webcast reporting second quarter
results will be broadcast on the internet on July 21 at 2
p.m. EDT. (Windows Media Player required for viewing.)
AMR CORPORATION REPORTS MODEST NET EARNINGS
FOR SECOND QUARTER DESPITE SHARPLY HIGHER FUEL COSTS
AMR Posts Second Quarter Net Earnings of $6 Million
And Operating Profits of $196 Million
Excluding Special Items, AMR Records Second Quarter Net Loss
of $25 Million
And Operating Profits of $165 million
AMR Ends Second Quarter With Cash and Short-Term
Investments of $3.9 Billion, Including Restricted Balance of
$489 Million
FORT WORTH, Texas - AMR Corporation, the parent company
of American Airlines, Inc., today reported earnings of $6
million for the second quarter, or $0.03 per share diluted.
This compares to last year's second quarter loss of $75
million, or $0.47 per share. The second quarter results for
both 2003 and 2004 include special items -- both gains and
losses -- resulting from the company's restructuring efforts
and a prior-year U.S. government grant. Excluding these
special items, the company recorded a second quarter loss of
$25 million, or $0.15 per share, a significant improvement
over last year's loss of $357 million, or $2.26 per share.
Also, excluding these special items, the company recorded
second quarter operating profits of $165 million, an
increase of $360 million over last year's results. (A
reconciliation is provided later in this release.)
- more -
AMR Second Quarter Financial Results
July 21, 2004
Page 2
"Compared to a year ago, we ran a much more efficient,
more productive and smarter airline in the second quarter,"
said Gerard Arpey, AMR's Chairman and CEO. "The hard work
and ingenuity of our people enabled us to drive the highest
level of operating earnings, before special items, we've
seen in four years, despite record fuel prices. The
progress we have achieved under our Turnaround Plan, while
gratifying, was overwhelmed during the period by the record
high fuel prices that afflicted our industry and indeed the
entire economy."
The year-over-year increase in fuel prices adversely
impacted AMR's second quarter net earnings by $232 million.
"Had fuel prices been at 1999 levels, our costs would have
been lower by a staggering $480 million," Arpey noted.
American Airlines' mainline cost per available seat mile
during the second quarter was down 0.9 percent year over
year. Excluding the impact of fuel price increases and
special items, American's mainline cost per available seat
mile during the period was down 10.8 percent year over year.
"However, high fuel prices are not an excuse," Arpey
said. "Rather, they are a reminder that we must continually
work to remove costs and improve the underlying
profitability of our business anywhere and everywhere we
can." Arpey pointed to the fact that this summer, American
is operating nearly 60 fewer aircraft than a year ago, but
has increased capacity, as measured by available seat miles,
by roughly 6 percent. The number of hours flown by each
aircraft operated by American in June increased by 8.3
percent compared to June a year ago.
"Every day, we are making changes that improve the
earnings potential of our company," Arpey said. "But the
industry environment remains a challenge, particularly in
the United States. In May, the Air Transport Association
report on industry results showed domestic revenue down 30
percent compared to levels in May of 2000, yet
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AMR Second Quarter Financial Results
July 21, 2004
Page 3
traffic was down by only 3.6 percent. That means we have no
choice but to keep up the intensity as we strive to
continuously lower costs, and deliver the kinds of products
and services our customers value most."
According to Arpey, "While the spike in fuel prices
masked a lot of our progress in the second quarter, the fact
is we were able to absorb what a year ago would have been a
crippling blow. It's also important to note that we ended
the quarter with total cash and short-term investments of
$3.9 billion, including a restricted balance of $489
million, and we have contributed $461 million to our
employee pension funds. Bottom line, while our financial
results were driven by the high price of fuel, we are not
discouraged. In fact, we are more determined than ever to
complete our turnaround."
Editor's Note: AMR's chairman and chief executive officer,
Gerard Arpey, and its chief financial officer, James Beer,
will make a presentation to analysts during a teleconference
on Wednesday, July 21, from 2 p.m. to 2:45 p.m. EDT.
Following the analyst call, they will hold a question-and-
answer conference call for media from 3 p.m. to 3:45 p.m.
EDT. Reporters interested in listening to the presentation
or participating in the media Q&A should call 817-967-1577
for details.
Statements in this news release contain various forward-
looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which represent
the Company's expectations or beliefs concerning future
events. When used in this news release, the words
"expects," "plans," "anticipates," "believes," and similar
expressions are intended to identify forward-looking
statements. Forward-looking statements include, without
limitation, the Company's expectations concerning operations
and financial conditions, including changes in capacity,
revenues, and costs, future financing needs, overall
economic conditions, plans and objectives for future
operations, and the impact on the Company of its results of
operations in recent years and the sufficiency of its
financial resources to absorb that impact. Other forward-
looking statements include statements which do not relate
solely to historical facts, such as, without limitation,
statements which discuss the possible future effects of
current known trends or uncertainties, or which indicate
that the future effects of known trends or uncertainties
cannot be predicted, guaranteed or assured. All forward-
looking statements in this release are based upon
information available to the Company on the date of this
release. The Company undertakes no obligation to publicly
update or revise any forward-looking statement, whether as a
result of new information, future events, or otherwise.
- more -
AMR Second Quarter Financial Results
July 21, 2004
Page 4
Forward-looking statements are subject to a number of risk
factors that could cause actual results to differ materially
from our expectations. The following factors, in addition to
other possible factors not listed, could cause the Company's
actual results to differ materially from those expressed in
forward-looking statements: changes in economic, business
and financial conditions; the Company's substantial
indebtedness; continued high fuel prices and the availability
of fuel; the residual effects of the war in Iraq; conflicts
in the Middle East or elsewhere; the highly competitive
business environment faced by the Company, with increasing
competition from low cost carriers and historically low fare
levels (which could result in a deterioration in the revenue
environment); the ability of the Company to implement its
restructuring program and the effect of the program on
operational performance and service levels; uncertainties
with respect to the Company's international operations;
changes in the Company's business strategy; actions by U.S.
or foreign government agencies; the possible occurrence of
additional terrorist attacks; another outbreak of a disease
(such as SARS) that affects travel behavior; uncertainties
with respect to the Company's relationships with unionized
and other employee work groups; the inability of the Company
to satisfy existing financial or other covenants in certain
of its credit agreements; the availability of future
financing; and increased insurance costs and potential
reductions of available insurance coverage. Additional
information concerning these and other factors is contained
in the Company's Securities and Exchange Commission filings,
including but not limited to the Form 10-K for the year
ended Dec. 31, 2003.
Detailed financial information follows:
- more -
AMR Second Quarter Financial Results
July 21, 2004
Page 5
AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Three Months Ended June 30, Percent
2004 2003 Change
Revenues
Passenger - American Airlines $ 3,895 $ 3,544 9.9
- Regional Affiliates 505 387 30.5
Cargo 155 140 10.7
Other revenues 275 253 8.7
Total operating revenues 4,830 4,324 11.7
Expenses
Wages, salaries and benefits 1,703 1,869 (8.9)
Aircraft fuel 917 647 41.7
Depreciation and amortization 320 344 (7.0)
Other rentals and landing fees 301 298 1.0
Commissions, booking fees and
credit card expense 287 260 10.4
Maintenance, materials and
repairs 245 187 31.0
Aircraft rentals 153 177 (13.6)
Food service 139 151 (7.9)
Other operating expenses 600 586 2.4
Special charges (31) 76 *
U.S. government grant - (358) *
Total operating expenses 4,634 4,237 9.4
Operating Income 196 87 *
Other Income (Expense)
Interest income 14 8 75.0
Interest expense (217) (190) 14.2
Interest capitalized 20 18 11.1
Miscellaneous - net (7) 2 *
(190) (162) 17.3
Income (Loss) Before Income Taxes 6 (75) *
Income tax - - -
Net Earnings (Loss) $ 6 $ (75) *
Earnings (Loss) Per Share
Basic $ 0.04 $ (0.47)
Diluted $ 0.03 $ (0.47)
Number of Shares Used in Computation
Basic 160 158
Diluted 183 158
* Greater than 100%
AMR Second Quarter Financial Results
July 21, 2004
Page 6
AMR CORPORATION
NON-GAAP RECONCILIATIONS
(Unaudited)
Impact of Special Items (in Three Months Ended June 30,
millions, except per share amounts) 2004 2003
Amount EPS Amount EPS
Net earnings (loss) as reported $ 6 $ 0.03 $ (75) $ (0.47)
Special items:
Employee charges (11) 47
Aircraft and facility costs (20) 29
U.S. government grant - (358)
Loss before special items $ (25) $ (0.15) $ (357) $ (2.26)
Impact of Special Items (in millions) Three Months Ended
June 30,
2004 2003
Operating income as reported $ 196 $ 87
Special items (31) (282)
Operating income (loss) before special items $ 165 $(195)
Impact of Fuel Price Variance Three Months Ended
June 30, 2004 vs
2003 1999
Fuel price per gallon (cents)
2004 111.4 111.4
2003 83.2 -
1999 * - 53.1
Change in price 28.2 58.3
2004 consumption (gallons, in millions) 824 824
Impact of fuel price variance (in millions) $ 232 $ 480
* Fuel prices were lower and more stable in 1999
AMR Second Quarter Financial Results
July 21, 2004
Page 7
AMR CORPORATION
OPERATING STATISTICS
(Unaudited)
Three Months Ended
June 30, Percent
2004 2003 Change
American Airlines, Inc. Mainline Jet Operations
Revenue passenger miles (millions) 33,323 30,180 10.4
Available seat miles (millions) 43,997 40,566 8.5
Cargo ton miles (millions) 567 493 15.0
Passenger load factor 75.7% 74.4% 1.3 pts.
Passenger revenue yield per
passenger mile (cents) 11.69 11.74 (0.4)
Passenger revenue per available
seat mile (cents) 8.85 8.74 1.3
Cargo revenue yield per ton
mile (cents) 27.24 28.34 (3.9)
Operating expenses per available seat
mile, excluding Regional Affiliates
(cents) (1) 9.50 9.59 (0.9)
Operating expenses per available seat
mile, excluding Special charges, U.S.
government grant and Regional
Affiliates (cents) (2) 9.57 10.18 (6.0)
Fuel consumption (gallons, in millions) 762 727 4.8
Fuel price per gallon (cents) 111.2 83.0 34.0
Regional Affiliates
Revenue passenger miles (millions) 1,857 1,389 33.7
Available seat miles (millions) 2,665 2,110 26.3
Passenger load factor 69.7% 65.8% 3.9 pts.
AMR Corporation
Average Equivalent Number of Employees
American Airlines 79,900 92,200
Other 12,600 11,800
Total 92,500 104,000
(1) Excludes $517 million and $441 million of expense
incurred related to Regional Affiliates in 2004 and 2003,
respectively.
(2) The company believes that excluding Special charges and
U.S. government grant receipts provides a measure that is
more representative of ongoing costs and therefore more
comparable to American's historical operating expenses per
ASM. Following is a reconciliation of total operating
expenses to operating expenses excluding Special charges,
U.S. government grant and Regional Affiliates.
AMR Second Quarter Financial Results
July 21, 2004
Page 8
AMR CORPORATION
NON-GAAP RECONCILIATIONS
(Unaudited)
American Airlines, Inc. Mainline Jet Operations Three Months Ended June 30,
(in millions, except as noted) 2004 2003
Total operating expenses as reported $ 4,698 $ 4,332
Less: Operating expenses incurred related
to Regional Affiliates 517 441
Plus: Special charges and U.S. government grant 31 239
Operating expenses excluding Special
charges, U.S. government grant and
expenses incurred related to
Regional Affiliates $ 4,212 $ 4,130
American mainline jet operations
available seat miles 43,997 40,566
Operating expenses per available seat
mile, excluding Special charges, U.S.
government grant and Regional
Affiliates (cents) 9.57 10.18
Operating expenses excluding Special
charges, U.S. government grant and
expenses incurred related to
Regional Affiliates $ 4,212 $ 4,130
Less: American Airlines aircraft fuel
price variance * 215 -
Operating expenses excluding Special
charges, U.S. government grant,
aircraft fuel price variance and
expenses incurred related to
Regional Affiliates $ 3,997 $ 4,130
American mainline jet operations
available seat miles 43,997 40,566
Operating expenses per available seat
mile, excluding Special charges, U.S.
government grant, aircraft fuel price
variance and Regional Affiliates (cents) 9.08 10.18
Percent change 10.8
* Change in price times current year consumption
(28.2 cents x 762 million gallons)
Note: The company believes that operating expenses per
available seat mile, excluding fuel price variance,
assists investors in understanding the impact of changes
in fuel prices on the company's operations.
AMR Second Quarter Financial Results
July 21, 2004
Page 9
AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Six Months Ended June 30, Percent
2004 2003 Change
Revenues
Passenger - American Airlines $ 7,573 $ 6,938 9.2
- Regional Affiliates 925 713 29.7
Cargo 303 274 10.6
Other revenues 541 519 4.2
Total operating revenues 9,342 8,444 10.6
Expenses
Wages, salaries and benefits 3,343 3,967 (15.7)
Aircraft fuel 1,725 1,376 25.4
Depreciation and amortization 646 682 (5.3)
Other rentals and landing fees 606 589 2.9
Commissions, booking fees and
credit card expense 575 515 11.7
Maintenance, materials and
repairs 476 418 13.9
Aircraft rentals 306 367 (16.6)
Food service 276 300 (8.0)
Other operating expenses 1,182 1,269 (6.9)
Special charges (31) 101 *
U.S. government grant - (358) *
Total operating expenses 9,104 9,226 (1.3)
Operating Income (Loss) 238 (782) *
Other Income (Expense)
Interest income 28 21 33.3
Interest expense (429) (382) 12.3
Interest capitalized 38 37 2.7
Miscellaneous - net (35) (12) *
(398) (336) 18.5
Loss Before Income Taxes (160) (1,118) (85.7)
Income tax - - -
Net Loss $ (160) $(1,118) (85.7)
Basic and Diluted Loss Per Share $ (1.00) $ (7.11)
Number of Shares Used in
Computation
Basic and Diluted 160 157
* Greater than 100%
AMR Second Quarter Financial Results
July 21, 2004
Page 10
AMR CORPORATION
OPERATING STATISTICS
(Unaudited)
Six Months Ended
June 30, Percent
2004 2003 Change
American Airlines, Inc. Mainline Jet Operations
Revenue passenger miles (millions) 63,613 58,019 9.6
Available seat miles (millions) 86,594 80,840 7.1
Cargo ton miles (millions) 1,088 983 10.7
Passenger load factor 73.5% 71.8% 1.7 pts.
Passenger revenue yield per passenger
mile (cents) 11.90 11.96 (0.5)
Passenger revenue per available seat
mile (cents) 8.75 8.58 2.0
Cargo revenue yield per ton mile (cents) 27.83 27.86 (0.1)
Operating expenses per available seat
mile, excluding Regional Affiliates
(cents) (1) 9.49 10.49 (9.5)
Operating expenses per available seat
mile, excluding Special charges, U.S.
government grant and Regional
Affiliates (cents) (2) 9.53 10.75 (11.3)
Fuel consumption (gallons, in millions) 1,503 1,453 3.4
Fuel price per gallon (cents) 106.2 88.5 20.0
Regional Affiliates
Revenue passenger miles (millions) 3,396 2,554 33.0
Available seat miles (millions) 5,118 4,096 25.0
Passenger load factor 66.3% 62.3% 4.0 pts.
(1) Excludes $1.0 billion and $865 million of expense incurred
related to Regional Affiliates in 2004 and 2003, respectively.
(2) The company believes that excluding Special charges and
U.S. government grant receipts provides a measure that is
more representative of ongoing costs and therefore more
comparable to American's historical operating expenses per
ASM. Following is a reconciliation of total operating
expenses to operating expenses excluding Special charges,
U.S. government grant and Regional Affiliates.
AMR Second Quarter Financial Results
July 21, 2004
Page 11
AMR CORPORATION
NON-GAAP RECONCILIATIONS
(Unaudited)
American Airlines, Inc. Mainline Jet Operations Six Months Ended June 30,
(in millions, except as noted) 2004 2003
Total operating expenses as reported $ 9,226 $ 9,343
Less: Operating expenses incurred related
to Regional Affiliates 1,004 865
Plus: Special charges and U.S. government grant 31 214
Operating expenses excluding Special
charges, U.S. government grant and
expenses incurred related to
Regional Affiliates $ 8,253 $ 8,692
American mainline jet operations
available seat miles 86,594 80,840
Operating expenses per available seat
mile, excluding Special charges, U.S.
government grant and Regional
Affiliates (cents) 9.53 10.75
###
Current AMR Corp news releases can be accessed via the Internet.
The address is http://www.aa.com