FORM 10-K | ||
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
American Airlines Group Inc. (Exact name of registrant as specified in its charter) | ||
Delaware | 75-1825172 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
4333 Amon Carter Blvd., Fort Worth, Texas 76155 | (817) 963-1234 |
(Address of principal executive offices, including zip code) | Registrant’s telephone number, including area code |
Name of Exchange on Which Registered | |
Common Stock, $0.01 par value per share | NASDAQ |
American Airlines, Inc. (Exact name of registrant as specified in its charter) | ||
Delaware | 13-1502798 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
4333 Amon Carter Blvd., Fort Worth, Texas 76155 | (817) 963-1234 |
(Address of principal executive offices, including zip code) | Registrant’s telephone number, including area code |
American Airlines Group Inc. | Yes | ☒ | No | ☐ | |
American Airlines, Inc. | Yes | ☒ | No | ☐ |
American Airlines Group Inc. | Yes | ☐ | No | ☒ | |
American Airlines, Inc. | Yes | ☐ | No | ☒ |
American Airlines Group Inc. | Yes | ☒ | No | ☐ | |
American Airlines, Inc. | Yes | ☒ | No | ☐ |
American Airlines Group Inc. | Yes | ☒ | No | ☐ | |
American Airlines, Inc. | Yes | ☒ | No | ☐ |
American Airlines Group Inc. | ☒ |
American Airlines, Inc. | ☒ |
American Airlines Group Inc. | ☒ Large Accelerated Filer | ☐ Accelerated Filer | ☐ Non-accelerated Filer | ☐ Smaller Reporting Company | ☐ Emerging Growth Company |
American Airlines, Inc. | ☐ Large Accelerated Filer | ☐ Accelerated Filer | ☒ Non-accelerated Filer | ☐ Smaller Reporting Company | ☐ Emerging Growth Company |
American Airlines Group Inc. | ☐ | |
American Airlines, Inc. | ☐ |
American Airlines Group Inc. | Yes | ☐ | No | ☒ | |
American Airlines, Inc. | Yes | ☐ | No | ☒ |
American Airlines Group Inc. | Yes | ☒ | No | ☐ | |
American Airlines, Inc. | Yes | ☒ | No | ☐ |
Page | ||
Union | Class or Craft | Employees (1) | Contract Amendable Date | ||||
Mainline: (2) | |||||||
Allied Pilots Association (APA) | Pilots | 13,200 | 2020 | ||||
Association of Professional Flight Attendants (APFA) | Flight Attendants | 24,900 | 2019 | ||||
Airline Customer Service Employee Association –Communications Workers of America and International Brotherhood of Teamsters (CWA-IBT) | Passenger Service | 16,000 | 2020 | ||||
Transport Workers Union and International Association of Machinists & Aerospace Workers (TWU-IAM Association) | Mechanics and Related | 12,400 | 2018 | ||||
TWU-IAM Association | Fleet Service | 16,700 | 2018 | ||||
TWU-IAM Association | Stock Clerks | 1,900 | 2018 | ||||
TWU-IAM Association | Flight Simulator Engineers | 150 | 2021 | ||||
TWU-IAM Association | Maintenance Control Technicians | 200 | 2018 | ||||
TWU-IAM Association | Maintenance Training Instructors | 50 | 2018 | ||||
TWU (Transport Workers Union) | Dispatchers | 450 | 2021 | ||||
TWU | Flight Crew Training Instructors | 300 | 2021 | ||||
Envoy: (3) | |||||||
Air Line Pilots Associations (ALPA) | Pilots | 2,200 | 2024 | ||||
Association of Flight Attendants-CWA (AFA) | Flight Attendants | 1,300 | 2020 | ||||
TWU | Ground School Instructors | 10 | 2019 | ||||
TWU | Mechanics and Related | 1,300 | 2020 | ||||
TWU | Stock Clerks | 150 | 2020 | ||||
TWU | Fleet Service Clerks | 3,500 | 2019 | ||||
TWU | Dispatchers | 60 | 2019 | ||||
Communications Workers of America (CWA) | Passenger Service | 4,300 | Initial Contract in Negotiation | ||||
Piedmont: (3) | |||||||
ALPA | Pilots | 550 | 2024 | ||||
AFA | Flight Attendants | 300 | 2019 | ||||
International Brotherhood of Teamsters (IBT) | Mechanics | 350 | 2021 | ||||
IBT | Stock Clerks | 50 | 2021 | ||||
CWA | Fleet and Passenger Service | 3,400 | 2017 | ||||
IBT | Dispatchers | 20 | 2019 | ||||
ALPA | Flight Crew Training Instructors | 40 | 2024 | ||||
PSA: (3) | |||||||
ALPA | Pilots | 1,500 | 2023 | ||||
AFA | Flight Attendants | 1,000 | 2017 | ||||
International Association of Machinists & Aerospace Workers (IAM) | Mechanics | 350 | 2016 | ||||
TWU | Dispatchers | 50 | 2022 |
(1) | Approximate number of active full-time equivalent employees as of December 31, 2017. |
(2) | Our union-represented mainline employees are covered by agreements that are not currently amendable. Joint collective bargaining agreements (JCBAs) have been reached with post-Merger employee groups, except the maintenance, fleet service, stock clerks, maintenance control technicians and maintenance training instructors represented by the TWU-IAM Association who are covered by separate CBAs that become amendable in the third quarter of 2018. Until those agreements become amendable, negotiations for JCBAs will be conducted outside the traditional RLA bargaining process as described above, and, in the meantime, no self-help will be permissible. |
(3) | Among our wholly-owned regional subsidiaries, the PSA mechanics and flight attendants have agreements that are now amendable and are engaged in traditional RLA negotiations. The Envoy passenger service employees are engaged in traditional RLA negotiations for an initial CBA. The Piedmont fleet and passenger service employees have reached a tentative five-year agreement which is subject to membership ratification. |
Year | Gallons | Average Price per Gallon | Aircraft Fuel Expense | Percent of Total Operating Expenses | |||
2017 | 4,352 | $1.73 | $7,510 | 19.7% | |||
2016 | 4,347 | 1.42 | 6,180 | 17.7% | |||
2015 | 4,323 | 1.72 | 7,456 | 21.4% |
• | Retiring older aircraft and replacing them with new, more fuel-efficient aircraft; |
• | Reducing fuel consumption through our Fuel Smart Program, which is an employee-led effort to safely reduce fuel consumption; |
• | Working with the FAA and vendors to facilitate efficient airspace procedures, which also reduces aircraft emissions; |
• | Replacing existing cargo containers with lightweight versions; |
• | Replacing older, inefficient ground support equipment with new, more fuel-efficient ground support equipment, including alternative-fuel and electric powered equipment; |
• | Purchasing renewable energy to reduce indirect emissions; |
• | Seeking certification of certain buildings to the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) standard; and |
• | Entering into partnerships with certain companies to further explore potential production pathways for sustainable alternative jet fuel. |
• | may make it more difficult for us to satisfy our obligations under our indebtedness; |
• | may limit our ability to obtain additional funding for working capital, capital expenditures, acquisitions, investments, integration costs, and general corporate purposes, and adversely affect the terms on which such funding can be obtained; |
• | require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness and other obligations, thereby reducing the funds available for other purposes; |
• | make us more vulnerable to economic downturns, industry conditions and catastrophic external events, particularly relative to competitors with lower relative levels of financial leverage; |
• | contain covenants requiring us to maintain an aggregate of at least $2.0 billion of unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities; |
• | contain restrictive covenants that could: |
• | limit our ability to merge, consolidate, sell assets, incur additional indebtedness, issue preferred stock, make investments and pay dividends; |
• | significantly constrain our ability to respond, or respond quickly, to unexpected disruptions in our own operations, the U.S. or global economies, or the businesses in which we operate, or to take advantage of opportunities that would improve our business, operations, or competitive position versus other airlines; |
• | limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing business and economic conditions; and |
• | result in an event of default under our indebtedness. |
• | changes in law that affect the services that can be offered by airlines in particular markets and at particular airports, or the types of fees that can be charged to passengers; |
• | the granting and timing of certain governmental approvals (including antitrust or foreign government approvals) needed for codesharing alliances, joint businesses and other arrangements with other airlines; |
• | restrictions on competitive practices (for example, court orders, or agency regulations or orders, that would curtail an airline’s ability to respond to a competitor); |
• | the adoption of new passenger security standards or regulations that impact customer service standards; |
• | restrictions on airport operations, such as restrictions on the use of slots at airports or the auction or reallocation of slot rights currently held by us; and |
• | the adoption of more restrictive locally-imposed noise restrictions. |
• | actual or potential changes in international, national, regional and local economic, business and financial conditions, including recession, inflation, higher interest rates, wars, terrorist attacks and political instability; |
• | changes in consumer preferences, perceptions, spending patterns and demographic trends; |
• | changes in the competitive environment due to industry consolidation, changes in airline alliance affiliations, and other factors; |
• | actual or potential disruptions to the ATC systems; |
• | increases in costs of safety, security, and environmental measures; |
• | outbreaks of diseases that affect travel behavior; and |
• | weather and natural disasters. |
• | AAG’s operating and financial results failing to meet the expectations of securities analysts or investors; |
• | changes in financial estimates or recommendations by securities analysts; |
• | material announcements by us or our competitors; |
• | movements in fuel prices; |
• | expectations regarding our capital deployment program, including any existing or potential future share repurchase programs and any future dividend payments that may be declared by our Board of Directors, or any determination to cease repurchasing stock or paying dividends; |
• | new regulatory pronouncements and changes in regulatory guidelines; |
• | general and industry-specific economic conditions; |
• | changes in our key personnel; |
• | distributions of shares of AAG common stock pursuant to the Plan, including distributions from the disputed claims reserve established under the plan of reorganization upon the resolution of the underlying claims; |
• | public sales of a substantial number of shares of AAG common stock or issuances of AAG common stock upon the exercise or conversion of convertible securities, options, warrants, restricted stock unit awards, stock appreciation rights, or similar rights; |
• | increases or decreases in reported holdings by insiders or other significant stockholders; |
• | fluctuations in trading volume; and |
• | changes in market values of airline companies as well as general market conditions. |
• | advance notice procedures for stockholder proposals to be considered at stockholders’ meetings; |
• | the ability of our Board of Directors to fill vacancies on the board; |
• | a prohibition against stockholders taking action by written consent; |
• | a prohibition against stockholders calling special meetings of stockholders (although our Board of Directors has approved, subject to stockholder approval at the annual meeting, amendments to our Certificate of Incorporation and Bylaws that contemplate the ability of holders of at least 20% of our outstanding shares to call a special meeting, subject to the procedures to be provided for in the amended Bylaws); |
• | a requirement that holders of at least 80% of the voting power of the shares entitled to vote in the election of directors approve any amendment of our Bylaws submitted to stockholders for approval; and |
• | super-majority voting requirements to modify or amend specified provisions of our Certificate of Incorporation. |
Average Seating Capacity | Average Age (Years) | Owned | Leased | Total | ||||||||||
Airbus A319 | 128 | 13.8 | 21 | 104 | 125 | |||||||||
Airbus A320 | 150 | 16.7 | 10 | 38 | 48 | |||||||||
Airbus A321 | 178 | 5.4 | 165 | 54 | 219 | |||||||||
Airbus A330-200 | 251 | 6.0 | 15 | — | 15 | |||||||||
Airbus A330-300 | 291 | 17.4 | 4 | 5 | 9 | |||||||||
Boeing 737-800 | 160 | 8.1 | 132 | 172 | 304 | |||||||||
Boeing 737-8 MAX | 172 | 0.1 | 4 | — | 4 | |||||||||
Boeing 757-200 | 180 | 18.1 | 31 | 3 | 34 | |||||||||
Boeing 767-300ER | 209 | 19.1 | 24 | — | 24 | |||||||||
Boeing 777-200ER | 269 | 17.0 | 44 | 3 | 47 | |||||||||
Boeing 777-300ER | 310 | 3.8 | 18 | 2 | 20 | |||||||||
Boeing 787-8 | 226 | 2.1 | 20 | — | 20 | |||||||||
Boeing 787-9 | 285 | 0.7 | 14 | — | 14 | |||||||||
Embraer 190 | 99 | 10.2 | 20 | — | 20 | |||||||||
McDonnell Douglas MD-80 | 140 | 21.3 | 13 | 32 | 45 | |||||||||
Total | 10.1 | 535 | 413 | 948 |
Average Seating Capacity | Owned | Leased | Owned or Leased by Regional Carrier | Total | Operating Regional Carrier | Number of Aircraft Operated (1) | |||||||||||||
Bombardier CRJ 200 | 50 | 12 | 23 | 33 | 68 | PSA | 35 | ||||||||||||
Air Wisconsin (2) | 23 | ||||||||||||||||||
SkyWest | 10 | ||||||||||||||||||
Total | 68 | ||||||||||||||||||
Bombardier CRJ 700 | 66 | 54 | 7 | 49 | 110 | SkyWest | 37 | ||||||||||||
PSA | 34 | ||||||||||||||||||
Envoy | 27 | ||||||||||||||||||
ExpressJet | 12 | ||||||||||||||||||
Total | 110 | ||||||||||||||||||
Bombardier CRJ 900 | 77 | 54 | — | 64 | 118 | Mesa | 64 | ||||||||||||
PSA | 54 | ||||||||||||||||||
Total | 118 | ||||||||||||||||||
De Havilland Dash 8-100 | 37 | 3 | — | — | 3 | Piedmont | 3 | ||||||||||||
De Havilland Dash 8-300 | 48 | — | 11 | — | 11 | Piedmont | 11 | ||||||||||||
Embraer E175 | 76 | 64 | — | 84 | 148 | Republic | 84 | ||||||||||||
Envoy | 44 | ||||||||||||||||||
Compass | 20 | ||||||||||||||||||
Total | 148 | ||||||||||||||||||
Embraer ERJ 140 | 44 | 21 | — | — | 21 | Envoy | 21 | ||||||||||||
Embraer ERJ 145 | 50 | 118 | — | — | 118 | Envoy | 68 | ||||||||||||
Piedmont | 35 | ||||||||||||||||||
Trans States | 15 | ||||||||||||||||||
Total | 118 | ||||||||||||||||||
Total | 326 | 41 | 230 | 597 | 597 |
(1) | Excluded from the total operating aircraft count above are 38 owned Embraer ERJ 140s that are being held in temporary storage and two Embraer E170s that were operated by Republic under a short-term contract. |
(2) | Air Wisconsin previously operated regional jet aircraft for us; however, this arrangement ended in February 2018. |
2018 | 2019 | 2020 | 2021 | 2022 | 2023 and Thereafter | Total | ||||||||||||||
Airbus | ||||||||||||||||||||
A320neo Family | — | 25 | 25 | 25 | 20 | 5 | 100 | |||||||||||||
A350 XWB | — | — | 2 | 5 | 5 | 10 | 22 | |||||||||||||
Boeing | ||||||||||||||||||||
737 MAX Family | 16 | 20 | 19 | 21 | 20 | — | 96 | |||||||||||||
787 Family | 6 | 2 | — | — | — | — | 8 | |||||||||||||
Embraer | ||||||||||||||||||||
E175 (1) | 5 | 5 | — | — | — | — | 10 | |||||||||||||
Total | 27 | 52 | 46 | 51 | 45 | 15 | 236 |
(1) | These aircraft may be operated by wholly-owned regional subsidiaries which would operate the aircraft under capacity purchase arrangements. |
ITEM 5. | MARKET FOR AMERICAN AIRLINES GROUP’S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Common Stock Prices | ||||||||||||||
Year Ended December 31 | Period | High | Low | Cash Dividends Declared (Per share) | ||||||||||
2017 | First Quarter | $ | 50.00 | $ | 39.21 | $ | 0.10 | |||||||
Second Quarter | 51.95 | 40.82 | 0.10 | |||||||||||
Third Quarter | 54.48 | 42.61 | 0.10 | |||||||||||
Fourth Quarter | 53.74 | 45.27 | 0.10 | |||||||||||
2016 | First Quarter | 43.78 | 34.76 | 0.10 | ||||||||||
Second Quarter | 41.76 | 24.85 | 0.10 | |||||||||||
Third Quarter | 39.52 | 27.12 | 0.10 | |||||||||||
Fourth Quarter | 50.64 | 36.33 | 0.10 |
12/9/2013 | 12/31/2013 | 12/31/2014 | 12/31/2015 | 12/31/2016 | 12/31/2017 | ||||||||||||||||||
American Airlines Group Inc. (AAL) | $ | 100 | $ | 103 | $ | 219 | $ | 175 | $ | 194 | $ | 219 | |||||||||||
NYSE ARCA Airline Index (XAL) | 100 | 102 | 152 | 127 | 162 | 170 | |||||||||||||||||
S&P 500 Index (GSPC) | 100 | 102 | 114 | 113 | 124 | 148 |
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plan or program | Maximum remaining dollar value of shares that may be purchased under the plan or program (in millions) | ||||||
October 2017 | 2,497,462 | $50.37 | 2,497,462 | $551 | ||||||
November 2017 | 1,236,546 | $47.59 | 1,236,546 | $492 | ||||||
December 2017 | 834,577 | $50.96 | 834,577 | $450 |
Year Ended December 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
(In millions, except share and per share data) | |||||||||||||||||||
Consolidated Statements of Operations data: | |||||||||||||||||||
Total operating revenues | $ | 42,207 | $ | 40,180 | $ | 40,990 | $ | 42,650 | $ | 26,743 | |||||||||
Total operating expenses | 38,149 | 34,896 | 34,786 | 38,401 | 25,344 | ||||||||||||||
Operating income | 4,058 | 5,284 | 6,204 | 4,249 | 1,399 | ||||||||||||||
Bankruptcy reorganization items, net | — | — | — | — | (2,655 | ) | |||||||||||||
Net income (loss) | 1,919 | 2,676 | 7,610 | 2,882 | (1,834 | ) | |||||||||||||
Earnings (loss) per common share: (1) | |||||||||||||||||||
Basic | $ | 3.92 | $ | 4.85 | $ | 11.39 | $ | 4.02 | $ | (6.54 | ) | ||||||||
Diluted | 3.90 | 4.81 | 11.07 | 3.93 | (6.54 | ) | |||||||||||||
Shares used for computation (in thousands): (1) | |||||||||||||||||||
Basic | 489,164 | 552,308 | 668,393 | 717,456 | 280,213 | ||||||||||||||
Diluted | 491,692 | 556,099 | 687,355 | 734,016 | 280,213 | ||||||||||||||
Cash dividends declared per common share | $ | 0.40 | $ | 0.40 | $ | 0.40 | $ | 0.20 | $ | — | |||||||||
Consolidated Balance Sheet data (at end of period): | |||||||||||||||||||
Total assets | $ | 51,396 | $ | 51,274 | $ | 48,415 | $ | 43,225 | $ | 41,741 | |||||||||
Long-term debt and capital leases, net of current maturities | 22,511 | 22,489 | 18,330 | 16,043 | 15,212 | ||||||||||||||
Pension and postretirement benefits (2) | 7,497 | 7,842 | 7,450 | 7,562 | 5,828 | ||||||||||||||
Stockholders’ equity (deficit) | 3,926 | 3,785 | 5,635 | 2,021 | (2,731 | ) |
(1) | Former holders of AMR common stock as of December 9, 2013, the effective date of the plan of reorganization, may in the future receive additional distributions of AAG common stock dependent upon the ultimate distribution of shares of AAG common stock to holders of disputed claims. Thus, the shares and related earnings per share calculations prior to December 9, 2013 may change in the future to reflect these distributions. |
(2) | Substantially all defined benefit pension plans were frozen effective November 1, 2012. See Note 9 to AAG’s consolidated financial statements in Part II, Item 8A for further information on pension and postretirement benefits. |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In millions) | |||||||||||
Components of Total Special Items, Net: (1) | |||||||||||
Merger integration costs (2) | $ | 273 | $ | 514 | $ | 826 | |||||
Fleet restructuring costs (3) | 232 | 177 | 210 | ||||||||
Employee 2017 Tax Act bonus expense (4) | 123 | — | — | ||||||||
Labor contract expenses (5) | 46 | — | — | ||||||||
Mark-to-market adjustments for bankruptcy obligations | 27 | 25 | (53 | ) | |||||||
Other operating charges (credits), net | 11 | (7 | ) | 68 | |||||||
Mainline operating special items, net | 712 | 709 | 1,051 | ||||||||
Regional operating special items, net | 22 | 14 | 29 | ||||||||
Operating special items, net | 734 | 723 | 1,080 | ||||||||
Debt refinancing and extinguishment charges | 22 | 49 | 24 | ||||||||
Venezuela foreign currency losses | — | — | 592 | ||||||||
Other nonoperating charges (credits), net | — | — | (22 | ) | |||||||
Nonoperating special items, net | 22 | 49 | 594 | ||||||||
Pre-tax special items, net | 756 | 772 | 1,674 | ||||||||
Impact of the 2017 Tax Act on deferred tax assets and liabilities | (7 | ) | — | — | |||||||
Release of deferred tax valuation allowance | — | — | (3,040 | ) | |||||||
Other tax charges | — | — | 25 | ||||||||
Income tax special items, net | (7 | ) | — | (3,015 | ) | ||||||
Total special items, net | $ | 749 | $ | 772 | $ | (1,341 | ) | ||||
Reconciliation of Pre-Tax Income Excluding Special Items: | |||||||||||
Pre-tax income – GAAP | $ | 3,084 | $ | 4,299 | $ | 4,616 | |||||
Adjusted for: Pre-tax special items, net | 756 | 772 | 1,674 | ||||||||
Pre-tax income excluding special items | $ | 3,840 | $ | 5,071 | $ | 6,290 | |||||
Reconciliation of Net Income Excluding Special Items: | |||||||||||
Net income – GAAP | $ | 1,919 | $ | 2,676 | $ | 7,610 | |||||
Adjusted for: Total special items, net | 749 | 772 | (1,341 | ) | |||||||
Adjusted for: Net tax effect of special items (6) | (269 | ) | (275 | ) | — | ||||||
Net income excluding special items | $ | 2,399 | $ | 3,173 | $ | 6,269 |
(1) | See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on special items. |
(2) | Merger integration expenses included costs related to information technology, professional fees, re-branding of aircraft and airport facilities and training. Additionally in 2016, Merger integration expenses also included costs related to alignment of labor union contracts, the launch of re-branded uniforms, relocation and severance, and in 2015, also included share-based compensation related to awards granted in connection with the Merger that fully vested in December 2015. |
(3) | Fleet restructuring expenses, driven in part by the Merger, principally included the acceleration of depreciation, impairments, remaining lease payments and lease return costs for aircraft and related equipment grounded or expected to be grounded earlier than planned. |
(4) | Employee bonus expense included costs related to the $1,000 cash bonus and associated payroll taxes granted to mainline employees as of December 31, 2017 in recognition of H.R. 1, the 2017 Tax Cuts and Jobs Act (the 2017 Tax Act). |
(5) | Labor contract expenses primarily included one-time charges to adjust the vacation accruals for pilots and flight attendants as a result of the mid-contract pay rate adjustments effective in the second quarter of 2017. |
(6) | In 2015, there was no net tax effect associated with special items. During 2015, our net deferred tax asset, which includes our NOLs, was subject to a full valuation allowance. Accordingly, our NOLs offset our taxable income and resulted in the release of a corresponding portion of valuation allowance, which offset the tax provision dollar for dollar. |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Reconciliation of Mainline Operating Costs per Available Seat Mile (CASM) Excluding Special Items and Fuel: | |||||||||||
(In millions) | |||||||||||
Total operating expenses – GAAP | $ | 38,149 | $ | 34,896 | $ | 34,786 | |||||
Less regional expenses: | |||||||||||
Fuel and related taxes | (1,382 | ) | (1,109 | ) | (1,230 | ) | |||||
Other | (5,164 | ) | (4,935 | ) | (4,753 | ) | |||||
Total mainline operating expenses | 31,603 | 28,852 | 28,803 | ||||||||
Adjusted for: Special items, net (1) | (712 | ) | (709 | ) | (1,051 | ) | |||||
Adjusted for: Aircraft fuel and related taxes | (6,128 | ) | (5,071 | ) | (6,226 | ) | |||||
Mainline operating expenses excluding special items and fuel | $ | 24,763 | $ | 23,072 | $ | 21,526 | |||||
(In millions) | |||||||||||
Available Seat Miles (ASM) | 243,806 | 241,734 | 239,375 | ||||||||
(In cents) | |||||||||||
Mainline CASM | 12.96 | 11.94 | 12.03 | ||||||||
Adjusted for: Special items, net per ASM | (0.29 | ) | (0.29 | ) | (0.44 | ) | |||||
Adjusted for: Aircraft fuel and related taxes per ASM | (2.51 | ) | (2.10 | ) | (2.60 | ) | |||||
Mainline CASM excluding special items and fuel | 10.16 | 9.54 | 8.99 |
(1) | See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on special items. |
Year Ended December 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
(In millions) | |||||||||||||||||||
Consolidated Statements of Operations data: | |||||||||||||||||||
Total operating revenues | $ | 42,195 | $ | 40,163 | $ | 40,938 | $ | 42,676 | $ | 26,701 | |||||||||
Total operating expenses | 38,163 | 34,859 | 34,749 | 38,410 | 25,341 | ||||||||||||||
Operating income | 4,032 | 5,304 | 6,189 | 4,266 | 1,360 | ||||||||||||||
Bankruptcy reorganization items, net | — | — | — | — | (2,640 | ) | |||||||||||||
Net income (loss) | 1,922 | 2,781 | 8,120 | 2,948 | (1,717 | ) | |||||||||||||
Consolidated Balance Sheet data (at end of period): | |||||||||||||||||||
Total assets | $ | 60,012 | $ | 58,092 | $ | 50,439 | $ | 42,787 | $ | 41,699 | |||||||||
Long-term debt and capital leases, net of current maturities | 21,236 | 20,718 | 16,592 | 14,804 | 14,718 | ||||||||||||||
Pension and postretirement benefits (1) | 7,452 | 7,800 | 7,410 | 7,522 | 5,802 | ||||||||||||||
Stockholder’s equity (deficit) | 14,594 | 12,649 | 9,698 | 1,406 | (4,398 | ) |
(1) | Substantially all defined benefit pension plans were frozen effective November 1, 2012. See Note 7 to American’s consolidated financial statements in Part II, Item 8B for further information on pension and postretirement benefits. |
• | Recorded our best on-time departure and arrival performance since 2003, and our best baggage handling performance since the DOT began reporting this information in 1994. |
• | Operated the youngest fleet among the major U.S. network carriers and invested $4.1 billion in new aircraft. |
• | Introduced new streaming-capable, satellite-based internet access on our Boeing 737 MAX aircraft, which will be rolled out across most of our domestic mainline fleet. |
• | Introduced Basic Economy, a product to compete with ultra low-cost carriers, which is now offered nationwide and to leisure markets in Mexico and most of the Caribbean. |
• | Commenced our roll out of Premium Economy, which offers a wider seat, more legroom, an amenity kit and enhanced meal choices on international flights. |
• | Expanded a number of our lounges by opening Flagship First Dining, a new exclusive experience for customers in First Class on international and A321T transcontinental flights, which we now offer in our Miami, Los Angeles and New York-JFK lounges. |
• | Kept team member pay competitive through initiatives such as a mid-contract salary increase for pilots and flight attendants and continued step increases from a mid-contract pay increase for mechanics and fleet service workers. |
• | Invested more than $300 million in facilities and equipment, including renovations to team member spaces, mobile devices for pilots and flight attendants, and the ongoing One Campus One Team initiative at our global support center in Fort Worth, Texas. |
• | Provided customer service instruction to approximately 35,000 team members through “Elevate the Everyday Experience” training and launched training for leaders that emphasizes supporting team members who directly serve customers. |
• | Announced that work on our CFM56-5B engines, which power much of our Airbus narrowbody fleet, will move in-house to our maintenance facility located in Tulsa, Oklahoma beginning later in 2018. |
• | Shared the benefits of the recent Tax Cuts and Jobs Act by issuing $1,000 payments to all non-officer team members at American and its wholly-owned regional carriers. While we do not yet pay federal cash income taxes, we believe the new tax law will reduce our future tax bill and allow more investments in equipment and facilities. |
• | Returned $1.7 billion to our stockholders, including quarterly dividend payments of $198 million and the repurchase of $1.6 billion of common stock, or 33.9 million shares. Since our capital return program commenced in mid-2014, we have returned $11.4 billion to stockholders, including $835 million in quarterly dividend payments and $10.6 billion in share repurchases, or 262.3 million shares. In January 2018, we announced that our Board of Directors declared a $0.10 per share dividend for stockholders of record on February 6, 2018, and payable on February 20, 2018. |
• | Completed several transactions that provided efficient financing. See discussion within “Liquidity” below for more information. |
• | Announced revenue and cost initiatives to improve the customer experience, drive revenue improvements and deliver cost efficiencies. |
• | Acquired 2.7% of the outstanding shares of China Southern Airlines, the largest airline in China. |
• | Executed a new Trans-Atlantic joint business agreement that extends the term of our prior Trans-Atlantic joint business agreement. |
• | Announced a commitment for more than $1.6 billion for improvements of LAX Terminals 4 and 5, setting the stage for us to receive additional gate space and strengthen our Pacific gateway. |
• | Built a five-gate expansion at ORD Terminal 3, which is expected to open in April 2018. |
Year Ended December 31, | Increase (Decrease) | Percent Increase (Decrease) | ||||||||||||
2017 | 2016 | |||||||||||||
(In millions, except percentage changes) | ||||||||||||||
Mainline and regional passenger revenues | $ | 36,133 | $ | 34,579 | $ | 1,554 | 4.5 | |||||||
Other operating revenues | 5,274 | 4,901 | 373 | 7.6 | ||||||||||
Total operating revenues | 42,207 | 40,180 | 2,027 | 5.0 | ||||||||||
Mainline and regional aircraft fuel and related taxes | 7,510 | 6,180 | 1,330 | 21.5 | ||||||||||
Salaries, wages and benefits | 11,816 | 10,890 | 926 | 8.5 | ||||||||||
Total operating expenses | 38,149 | 34,896 | 3,253 | 9.3 | ||||||||||
Operating income | 4,058 | 5,284 | (1,226 | ) | (23.2 | ) | ||||||||
Pre-tax income | 3,084 | 4,299 | (1,215 | ) | (28.3 | ) | ||||||||
Income tax provision | 1,165 | 1,623 | (458 | ) | (28.2 | ) | ||||||||
Net income | 1,919 | 2,676 | (757 | ) | (28.3 | ) | ||||||||
Pre-tax income – GAAP | $ | 3,084 | $ | 4,299 | $ | (1,215 | ) | (28.3 | ) | |||||
Adjusted for: Pre-tax special items (1) | 756 | 772 | (16 | ) | (2.1 | ) | ||||||||
Pre-tax income excluding special items | $ | 3,840 | $ | 5,071 | $ | (1,231 | ) | (24.3 | ) |
(1) | See Part II, Item 6. Selected Consolidated Financial Data – “Reconciliation of GAAP to Non-GAAP Financial Measures” and Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for details on the components of special items. |
• | Repriced $4.9 billion of our term loans at lower rates and extended and increased our revolving credit facilities. |
• | Continued to take advantage of historically low interest rates to finance new aircraft deliveries under our fleet renewal program. We issued an aggregate principal amount of $2.0 billion in Enhanced Equipment Trust Certificate (EETC) equipment notes at an average fixed interest rate of 3.74%, as well as $1.0 billion in other equipment notes, which primarily bear interest at variable rates based on LIBOR plus a margin, averaging 3.08% at December 31, 2017. |
• | Raised approximately $853 million in net proceeds from aircraft sale-leaseback transactions. |
Year Ended December 31, | Increase (Decrease) 2017-2016 | Increase (Decrease) 2016-2015 | ||||||||||
2017 | 2016 | 2015 | ||||||||||
Mainline | ||||||||||||
Revenue passenger miles (millions) (a) | 201,351 | 199,014 | 199,467 | 1.2% | (0.2)% | |||||||
Available seat miles (millions) (b) | 243,806 | 241,734 | 239,375 | 0.9% | 1.0% | |||||||
Passenger load factor (percent) (c) | 82.6 | 82.3 | 83.3 | 0.3pts | (1.0)pts | |||||||
Yield (cents) (d) | 14.52 | 14.02 | 14.56 | 3.5% | (3.7)% | |||||||
Passenger revenue per available seat mile (cents) (e) | 11.99 | 11.55 | 12.13 | 3.9% | (4.8)% | |||||||
Operating cost per available seat mile (cents) (f) | 12.96 | 11.94 | 12.03 | 8.6% | (0.8)% | |||||||
Aircraft at end of period | 948 | 930 | 946 | 1.9% | (1.7)% | |||||||
Fuel consumption (gallons in millions) | 3,579 | 3,596 | 3,611 | (0.5)% | (0.4)% | |||||||
Average aircraft fuel price including related taxes (dollars per gallon) | 1.71 | 1.41 | 1.72 | 21.4% | (18.2)% | |||||||
Full-time equivalent employees at end of period | 103,100 | 101,500 | 98,900 | 1.6% | 2.6% | |||||||
Total Mainline and Regional | ||||||||||||
Revenue passenger miles (millions) (a) | 226,346 | 223,477 | 223,010 | 1.3% | 0.2% | |||||||
Available seat miles (millions) (b) | 276,493 | 273,410 | 268,736 | 1.1% | 1.7% | |||||||
Passenger load factor (percent) (c) | 81.9 | 81.7 | 83.0 | 0.2pts | (1.3)pts | |||||||
Yield (cents) (d) | 15.96 | 15.47 | 15.92 | 3.2% | (2.8)% | |||||||
Passenger revenue per available seat mile (cents) (e) | 13.07 | 12.65 | 13.21 | 3.3% | (4.3)% | |||||||
Total revenue per available seat mile (cents) (g) | 15.27 | 14.70 | 15.25 | 3.9% | (3.7)% | |||||||
Aircraft at end of period | 1,545 | 1,536 | 1,533 | 0.6% | 0.2% | |||||||
Fuel consumption (gallons in millions) | 4,352 | 4,347 | 4,323 | 0.1% | 0.5% | |||||||
Average aircraft fuel price including related taxes (dollars per gallon) | 1.73 | 1.42 | 1.72 | 21.4% | (17.6)% | |||||||
Full-time equivalent employees at end of period (h) | 126,600 | 122,300 | 118,500 | 3.5% | 3.2% |
(a) | Revenue passenger mile (RPM) – A basic measure of sales volume. One RPM represents one passenger flown one mile. |
(b) | Available seat mile (ASM) – A basic measure of production. One ASM represents one seat flown one mile. |
(c) | Passenger load factor – The percentage of available seats that are filled with revenue passengers. |
(d) | Yield – A measure of airline revenue derived by dividing passenger revenue by RPMs. |
(e) | Passenger revenue per available seat mile (PRASM) – Passenger revenues divided by ASMs. |
(f) | Operating cost per available seat mile (CASM) – Operating expenses divided by ASMs. |
(g) | Total revenue per available seat mile (TRASM) – Total revenues divided by total mainline and regional ASMs. |
(h) | Regional full-time equivalent employees only include our wholly-owned regional airline subsidiaries, Envoy, Piedmont and PSA. |
Year Ended December 31, | Increase (Decrease) | Percent Increase (Decrease) | ||||||||||||
2017 | 2016 | |||||||||||||
(In millions, except percentage changes) | ||||||||||||||
Mainline passenger | $ | 29,238 | $ | 27,909 | $ | 1,329 | 4.8 | |||||||
Regional passenger | 6,895 | 6,670 | 225 | 3.4 | ||||||||||
Cargo | 800 | 700 | 100 | 14.3 | ||||||||||
Other | 5,274 | 4,901 | 373 | 7.6 | ||||||||||
Total operating revenues | $ | 42,207 | $ | 40,180 | $ | 2,027 | 5.0 |
Increase (Decrease) vs. Year Ended December 31, 2016 | |||||||||||||||
Year Ended December 31, 2017 | Passenger Revenue | RPMs | ASMs | Load Factor | Passenger Yield | PRASM | |||||||||
(In millions) | |||||||||||||||
Mainline passenger | $ | 29,238 | 4.8% | 1.2% | 0.9% | 0.3pts | 3.5% | 3.9% | |||||||
Regional passenger | 6,895 | 3.4% | 2.2% | 3.2% | (0.7)pts | 1.2% | 0.2% | ||||||||
Total passenger revenues | $ | 36,133 | 4.5% | 1.3% | 1.1% | 0.2pts | 3.2% | 3.3% |
Year Ended December 31, | Increase (Decrease) | Percent Increase (Decrease) | ||||||||||||
2017 | 2016 | |||||||||||||
(In millions, except percentage changes) | ||||||||||||||
Aircraft fuel and related taxes | $ | 6,128 | $ | 5,071 | $ | 1,057 | 20.8 | |||||||
Salaries, wages and benefits | 11,816 | 10,890 | 926 | 8.5 | ||||||||||
Maintenance, materials and repairs | 1,959 | 1,834 | 125 | 6.8 | ||||||||||
Other rent and landing fees | 1,806 | 1,772 | 34 | 1.9 | ||||||||||
Aircraft rent | 1,197 | 1,203 | (6 | ) | (0.4 | ) | ||||||||
Selling expenses | 1,477 | 1,323 | 154 | 11.6 | ||||||||||
Depreciation and amortization | 1,702 | 1,525 | 177 | 11.6 | ||||||||||
Special items, net | 712 | 709 | 3 | 0.5 | ||||||||||
Other | 4,806 | 4,525 | 281 | 6.2 | ||||||||||
Total mainline operating expenses | $ | 31,603 | $ | 28,852 | $ | 2,751 | 9.5 |
Year Ended December 31, | Percent Increase (Decrease) | |||||||
2017 | 2016 | |||||||
(In cents, except percentage changes) | ||||||||
Mainline CASM: | ||||||||
Aircraft fuel and related taxes | 2.51 | 2.10 | 19.8 | |||||
Salaries, wages and benefits | 4.85 | 4.51 | 7.6 | |||||
Maintenance, materials and repairs | 0.80 | 0.76 | 5.9 | |||||
Other rent and landing fees | 0.74 | 0.73 | 1.1 | |||||
Aircraft rent | 0.49 | 0.50 | (1.3 | ) | ||||
Selling expenses | 0.61 | 0.55 | 10.6 | |||||
Depreciation and amortization | 0.70 | 0.63 | 10.7 | |||||
Special items, net | 0.29 | 0.29 | (0.3 | ) | ||||
Other | 1.97 | 1.87 | 5.3 | |||||
Total mainline CASM | 12.96 | 11.94 | 8.6 | |||||
Special items, net | (0.29 | ) | (0.29 | ) | (0.3 | ) | ||
Aircraft fuel and related taxes | (2.51 | ) | (2.10 | ) | 19.8 | |||
Mainline CASM, excluding special items and fuel | 10.16 | 9.54 | 6.4 |
• | Aircraft fuel and related taxes per ASM increased 19.8% primarily due to a 21.4% increase in the average price per gallon of fuel to $1.71 in 2017 from $1.41 in 2016, offset in part by a 0.5% decrease in gallons of fuel consumed. The decrease in fuel consumption was primarily driven by the operation of more fuel efficient aircraft during 2017 in connection with our fleet renewal program. |
• | Salaries, wages and benefits per ASM increased 7.6% primarily due to mid-contract pay rate increases for pilots and flight attendants effective in the second quarter of 2017, as well as rate increases for maintenance and fleet service work groups, which became effective in the third quarter of 2016. |
• | Maintenance, materials and repairs per ASM increased 5.9% as compared to 2016 primarily due to a contract change that accelerated the timing of certain maintenance expenses incurred. Certain flight equipment was transitioned to a new flight hour based contract (referred to as power by the hour) where expense is incurred and recognized based on actual hours flown. Previously, this flight equipment was covered by a time and materials based contract where expense is incurred and recognized as maintenance is performed. |
• | Selling expenses per ASM increased 10.6% due primarily to higher commissions driven by the overall increase in revenues as well as an increase in flown premium tickets, which are subject to higher commissions. |
• | Depreciation and amortization per ASM increased 10.7% primarily due to depreciation related to aircraft purchased in connection with our fleet renewal program. In 2017, we took delivery of 57 new mainline aircraft. |
• | Other operating expenses per ASM increased 5.3% primarily due to expenses associated with improving our product offerings, customer experience and operational reliability, such as food and beverage costs and costs associated with team member training. |
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
(In millions) | |||||||
Merger integration expenses (1) | $ | 273 | $ | 514 | |||
Fleet restructuring expenses (2) | 232 | 177 | |||||
Employee 2017 Tax Act bonus expense (3) | 123 | — | |||||
Labor contract expenses (4) | 46 | — | |||||
Mark-to-market adjustments for bankruptcy obligations | 27 | 25 | |||||
Other operating charges (credits), net | 11 | (7 | ) | ||||
Total mainline operating special items, net | 712 | 709 | |||||
Regional operating special items, net | 22 | 14 | |||||
Total operating special items, net | $ | 734 | $ | 723 |
(1) | Merger integration expenses included costs related to information technology, professional fees, re-branding of aircraft and airport facilities and training, and in 2016, also included costs related to alignment of labor union contracts and the launch of re-branded uniforms, both of which drove the $241 million year-over-year decrease in these expenses. |
(2) | Fleet restructuring expenses, driven in part by the Merger, principally included the acceleration of depreciation and impairments for aircraft and related equipment grounded or expected to be grounded earlier than planned. |
(3) | Employee bonus expense included costs related to the $1,000 cash bonus and associated payroll taxes granted to mainline employees as of December 31, 2017 in recognition of the 2017 Tax Act. |
(4) | Labor contract expenses primarily included one-time charges to adjust the vacation accruals for pilots and flight attendants as a result of the mid-contract pay rate adjustments effective in the second quarter of 2017. |
Year Ended December 31, | Increase (Decrease) | Percent Increase (Decrease) | ||||||||||||
2017 | 2016 | |||||||||||||
(In millions, except percentage changes) | ||||||||||||||
Aircraft fuel and related taxes | $ | 1,382 | $ | 1,109 | $ | 273 | 24.6 | |||||||
Other | 5,164 | 4,935 | 229 | 4.6 | ||||||||||
Total regional operating expenses | $ | 6,546 | $ | 6,044 | $ | 502 | 8.3 |
Year Ended December 31, | Increase (Decrease) | Percent Increase (Decrease) | ||||||||||||
2017 | 2016 | |||||||||||||
(In millions, except percentage changes) | ||||||||||||||
Interest income | $ | 94 | $ | 63 | $ | 31 | 47.8 | |||||||
Interest expense, net | (1,053 | ) | (991 | ) | (62 | ) | 6.2 | |||||||
Other, net | (15 | ) | (57 | ) | 42 | (73.4 | ) | |||||||
Total nonoperating expense, net | $ | (974 | ) | $ | (985 | ) | $ | 11 | (1.0 | ) |
Year Ended December 31, | Increase (Decrease) | Percent Increase (Decrease) | ||||||||||||
2016 | 2015 | |||||||||||||
(In millions, except percentage changes) | ||||||||||||||
Mainline passenger | $ | 27,909 | $ | 29,037 | $ | (1,128 | ) | (3.9 | ) | |||||
Regional passenger | 6,670 | 6,475 | 195 | 3.0 | ||||||||||
Cargo | 700 | 760 | (60 | ) | (7.9 | ) | ||||||||
Other | 4,901 | 4,718 | 183 | 3.9 | ||||||||||
Total operating revenues | $ | 40,180 | $ | 40,990 | $ | (810 | ) | (2.0 | ) |
Increase (Decrease) vs. Year Ended December 31, 2015 | |||||||||||||||
Year Ended December 31, 2016 | Passenger Revenue | RPMs | ASMs | Load Factor | Passenger Yield | PRASM | |||||||||
(In millions) | |||||||||||||||
Mainline passenger | $ | 27,909 | (3.9)% | (0.2)% | 1.0% | (1.0)pts | (3.7)% | (4.8)% | |||||||
Regional passenger | 6,670 | 3.0% | 3.9% | 7.9% | (3.0)pts | (0.9)% | (4.5)% | ||||||||
Total passenger revenues | $ | 34,579 | (2.6)% | 0.2% | 1.7% | (1.3)pts | (2.8)% | (4.3)% |
Year Ended December 31, | Increase (Decrease) | Percent Increase (Decrease) | ||||||||||||
2016 | 2015 | |||||||||||||
(In millions, except percentage changes) | ||||||||||||||
Aircraft fuel and related taxes | $ | 5,071 | $ | 6,226 | $ | (1,155 | ) | (18.5 | ) | |||||
Salaries, wages and benefits | 10,890 | 9,524 | 1,366 | 14.4 | ||||||||||
Maintenance, materials and repairs | 1,834 | 1,889 | (55 | ) | (2.9 | ) | ||||||||
Other rent and landing fees | 1,772 | 1,731 | 41 | 2.4 | ||||||||||
Aircraft rent | 1,203 | 1,250 | (47 | ) | (3.8 | ) | ||||||||
Selling expenses | 1,323 | 1,394 | (71 | ) | (5.0 | ) | ||||||||
Depreciation and amortization | 1,525 | 1,364 | 161 | 11.8 | ||||||||||
Special items, net | 709 | 1,051 | (342 | ) | (32.6 | ) | ||||||||
Other | 4,525 | 4,374 | 151 | 3.4 | ||||||||||
Total mainline operating expenses | $ | 28,852 | $ | 28,803 | $ | 49 | 0.2 |
Year Ended December 31, | Percent Increase (Decrease) | |||||||
2016 | 2015 | |||||||
(In cents, except percentage changes) | ||||||||
Mainline CASM: | ||||||||
Aircraft fuel and related taxes | 2.10 | 2.60 | (19.3 | ) | ||||
Salaries, wages and benefits | 4.51 | 3.98 | 13.2 | |||||
Maintenance, materials and repairs | 0.76 | 0.79 | (3.9 | ) | ||||
Other rent and landing fees | 0.73 | 0.72 | 1.4 | |||||
Aircraft rent | 0.50 | 0.52 | (4.7 | ) | ||||
Selling expenses | 0.55 | 0.58 | (6.0 | ) | ||||
Depreciation and amortization | 0.63 | 0.57 | 10.7 | |||||
Special items, net | 0.29 | 0.44 | (33.2 | ) | ||||
Other | 1.87 | 1.83 | 2.4 | |||||
Total mainline CASM | 11.94 | 12.03 | (0.8 | ) | ||||
Special items, net | (0.29 | ) | (0.44 | ) | (33.2 | ) | ||
Aircraft fuel and related taxes | (2.10 | ) | (2.60 | ) | (19.3 | ) | ||
Mainline CASM, excluding special items and fuel | 9.54 | 8.99 | 6.1 |
• | Aircraft fuel and related taxes per ASM decreased 19.3% primarily due to an 18.2% decrease in the average price per gallon of fuel to $1.41 in 2016 from $1.72 in 2015. |
• | Salaries, wages and benefits per ASM increased 13.2% primarily due to increased costs associated with new labor contracts and the addition of an employee profit sharing program. |
• | Selling expenses per ASM decreased 6.0% primarily due to lower credit card and booking fees. |
• | Depreciation and amortization per ASM increased 10.7% primarily due to depreciation related to aircraft purchased in connection with our fleet renewal program. In 2016, we took delivery of 55 new mainline aircraft. |
Year Ended December 31, | |||||||
2016 | 2015 | ||||||
(In millions) | |||||||
Merger integration expenses (1) | $ | 514 | $ | 826 | |||
Fleet restructuring expenses (2) | 177 | 210 | |||||
Mark-to-market adjustments for bankruptcy obligations | 25 | (53 | ) | ||||
Other operating charges (credits), net | (7 | ) | 68 | ||||
Total mainline operating special items, net | 709 | 1,051 | |||||
Regional operating special items, net | 14 | 29 | |||||
Total operating special items, net | $ | 723 | $ | 1,080 |
(1) | Merger integration expenses included costs related to information technology, re-branding of aircraft, airport facilities and uniforms, alignment of labor union contracts, professional fees, severance, relocation and training, and, in 2015, also included share-based compensation related to awards granted in connection with the Merger that fully vested in December 2015. |
(2) | Fleet restructuring expenses, driven in part by the Merger, principally included the acceleration of depreciation, impairments, remaining lease payments and lease return costs for aircraft and related equipment grounded or expected to be grounded earlier than planned. |
Year Ended December 31, | Increase (Decrease) | Percent Increase (Decrease) | ||||||||||||
2016 | 2015 | |||||||||||||
(In millions, except percentage changes) | ||||||||||||||
Aircraft fuel and related taxes | $ | 1,109 | $ | 1,230 | $ | (121 | ) | (9.8 | ) | |||||
Other | 4,935 | 4,753 | 182 | 3.8 | ||||||||||
Total regional operating expenses | $ | 6,044 | $ | 5,983 | $ | 61 | 1.0 |
Year Ended December 31, | Increase (Decrease) | Percent Increase (Decrease) | ||||||||||||
2016 | 2015 | |||||||||||||
(In millions, except percentage changes) | ||||||||||||||
Interest income | $ | 63 | $ | 39 | 24 | 60.9 | ||||||||
Interest expense, net | (991 | ) | (880 | ) | (111 | ) | 12.6 | |||||||
Other, net | (57 | ) | (747 | ) | 690 | (92.4 | ) | |||||||
Total nonoperating expense, net | $ | (985 | ) | $ | (1,588 | ) | $ | 603 | (38.1 | ) |
Year Ended December 31, | Increase (Decrease) | Percent Increase (Decrease) | |||||||||||
2017 | 2016 | ||||||||||||
(In millions, except percentage changes) | |||||||||||||
Mainline passenger | $ | 29,238 | $ | 27,909 | $ | 1,329 | 4.8 | ||||||
Regional passenger | 6,895 | 6,670 | 225 | 3.4 | |||||||||
Cargo | 800 | 700 | 100 | 14.3 | |||||||||
Other | 5,262 | 4,884 | 378 | 7.7 | |||||||||
Total operating revenues | $ | 42,195 | $ | 40,163 | $ | 2,032 | 5.1 |
Year Ended December 31, | Increase (Decrease) | Percent Increase (Decrease) | ||||||||||||
2017 | 2016 | |||||||||||||
(In millions, except percentage changes) | ||||||||||||||
Aircraft fuel and related taxes | $ | 6,128 | $ | 5,071 | $ | 1,057 | 20.8 | |||||||
Salaries, wages and benefits | 11,804 | 10,881 | 923 | 8.5 | ||||||||||
Maintenance, materials and repairs | 1,959 | 1,834 | 125 | 6.8 | ||||||||||
Other rent and landing fees | 1,806 | 1,772 | 34 | 1.9 | ||||||||||
Aircraft rent | 1,197 | 1,203 | (6 | ) | (0.4 | ) | ||||||||
Selling expenses | 1,477 | 1,323 | 154 | 11.6 | ||||||||||
Depreciation and amortization | 1,702 | 1,525 | 177 | 11.6 | ||||||||||
Special items, net | 712 | 709 | 3 | 0.5 | ||||||||||
Other | 4,806 | 4,532 | 274 | 6.1 | ||||||||||
Total mainline operating expenses | $ | 31,591 | $ | 28,850 | $ | 2,741 | 9.5 |
• | Aircraft fuel and related taxes increased 20.8% primarily due to a 21.4% increase in the average price per gallon of fuel to $1.71 in 2017 from $1.41 in 2016, offset in part by a 0.5% decrease in gallons of fuel consumed. The decrease in fuel consumption was primarily driven by the operation of more fuel efficient aircraft during 2017 in connection with American’s fleet renewal program. |
• | Salaries, wages and benefits increased 8.5% primarily due to mid-contract pay rate increases for pilots and flight attendants effective in the second quarter of 2017, as well as rate increases for maintenance and fleet service work groups, which became effective in the third quarter of 2016. |
• | Maintenance, materials and repairs increased 6.8% as compared to 2016 primarily due to a contract change that accelerated the timing of certain maintenance expenses incurred. Certain flight equipment was transitioned to a new flight hour based contract (referred to as power by the hour) where expense is incurred and recognized based on actual hours flown. Previously, this flight equipment was covered by a time and materials based contract where expense is incurred and recognized as maintenance is performed. |
• | Selling expenses increased 11.6% due primarily to higher commissions driven by the overall increase in revenues as well as an increase in flown premium tickets, which are subject to higher commissions. |
• | Depreciation and amortization increased 11.6% primarily due to depreciation related to aircraft purchased in connection with American’s fleet renewal program. In 2017, American took delivery of 57 new mainline aircraft. |
• | Other operating expenses increased 6.1% primarily due to expenses associated with improving our product offerings, customer experience and operational reliability, such as food and beverage costs and costs associated with team member training. |
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
(In millions) | |||||||
Merger integration expenses (1) | $ | 273 | $ | 514 | |||
Fleet restructuring expenses (2) | 232 | 177 | |||||
Employee 2017 Tax Act bonus expense (3) | 123 | — | |||||
Labor contract expenses (4) | 46 | — | |||||
Mark-to-market adjustments for bankruptcy obligations | 27 | 25 | |||||
Other operating charges (credits), net | 11 | (7 | ) | ||||
Total mainline operating special items, net | 712 | 709 | |||||
Regional operating special items, net | 3 | 13 | |||||
Total operating special items, net | $ | 715 | $ | 722 |
(1) | Merger integration expenses included costs related to information technology, professional fees, re-branding of aircraft and airport facilities and training, and in 2016, also included costs related to alignment of labor union contracts and the launch of re-branded uniforms, both of which drove the $241 million year-over-year decrease in these expenses. |
(2) | Fleet restructuring expenses, driven in part by the Merger, principally included the acceleration of depreciation and impairments for aircraft and related equipment grounded or expected to be grounded earlier than planned. |
(3) | Employee bonus expense included costs related to the $1,000 cash bonus and associated payroll taxes granted to mainline employees as of December 31, 2017 in recognition of the 2017 Tax Act. |
(4) | Labor contract expenses primarily included one-time charges to adjust the vacation accruals for pilots and flight attendants as a result of the mid-contract pay rate adjustments effective in the second quarter of 2017. |
Year Ended December 31, | Increase (Decrease) | Percent Increase (Decrease) | ||||||||||||
2017 | 2016 | |||||||||||||
(In millions, except percentage changes) | ||||||||||||||
Aircraft fuel and related taxes | $ | 1,382 | $ | 1,109 | $ | 273 | 24.6 | |||||||
Other | 5,190 | 4,900 | 290 | 5.9 | ||||||||||
Total regional operating expenses | $ | 6,572 | $ | 6,009 | $ | 563 | 9.4 |
Year Ended December 31, | Increase (Decrease) | Percent Increase (Decrease) | ||||||||||||
2017 | 2016 | |||||||||||||
(In millions, except percentage changes) | ||||||||||||||
Interest income | $ | 215 | $ | 104 | $ | 111 | nm1 | |||||||
Interest expense, net | (988 | ) | (906 | ) | (82 | ) | 9.1 | |||||||
Other, net | (15 | ) | (59 | ) | 44 | (74.5 | ) | |||||||
Total nonoperating expense, net | $ | (788 | ) | $ | (861 | ) | $ | 73 | (8.4 | ) |
(1) | Not meaningful. |
Year Ended December 31, | Increase (Decrease) | Percent Increase (Decrease) | ||||||||||||
2016 | 2015 | |||||||||||||
(In millions, except percentage changes) | ||||||||||||||
Mainline passenger | $ | 27,909 | $ | 29,037 | $ | (1,128 | ) | (3.9 | ) | |||||
Regional passenger | 6,670 | 6,475 | 195 | 3.0 | ||||||||||
Cargo | 700 | 760 | (60 | ) | (7.9 | ) | ||||||||
Other | 4,884 | 4,666 | 218 | 4.7 | ||||||||||
Total operating revenues | $ | 40,163 | $ | 40,938 | $ | (775 | ) | (1.9 | ) |
Year Ended December 31, | Increase (Decrease) | Percent Increase (Decrease) | ||||||||||||
2016 | 2015 | |||||||||||||
(In millions, except percentage changes) | ||||||||||||||
Aircraft fuel and related taxes | $ | 5,071 | $ | 6,226 | $ | (1,155 | ) | (18.5 | ) | |||||
Salaries, wages and benefits | 10,881 | 9,514 | 1,367 | 14.4 | ||||||||||
Maintenance, materials and repairs | 1,834 | 1,889 | (55 | ) | (2.9 | ) | ||||||||
Other rent and landing fees | 1,772 | 1,731 | 41 | 2.4 | ||||||||||
Aircraft rent | 1,203 | 1,250 | (47 | ) | (3.8 | ) | ||||||||
Selling expenses | 1,323 | 1,394 | (71 | ) | (5.0 | ) | ||||||||
Depreciation and amortization | 1,525 | 1,364 | 161 | 11.8 | ||||||||||
Special items, net | 709 | 1,051 | (342 | ) | (32.6 | ) | ||||||||
Other | 4,532 | 4,378 | 154 | 3.5 | ||||||||||
Total mainline operating expenses | $ | 28,850 | $ | 28,797 | $ | 53 | 0.2 |
• | Aircraft fuel and related taxes decreased 18.5% primarily due to an 18.2% decrease in the average price per gallon of fuel to $1.41 in 2016 from $1.72 in 2015. |
• | Salaries, wages and benefits increased 14.4% primarily due to increased costs associated with new labor contracts and the addition of an employee profit sharing program. |
• | Selling expenses decreased 5.0% primarily due to lower credit card and booking fees. |
• | Depreciation and amortization increased 11.8% primarily due to depreciation related to aircraft purchased in connection with American’s fleet renewal program. In 2016, American took delivery of 55 new mainline aircraft. |
Year Ended December 31, | |||||||
2016 | 2015 | ||||||
(In millions) | |||||||
Merger integration expenses (1) | $ | 514 | $ | 826 | |||
Fleet restructuring expenses (2) | 177 | 210 | |||||
Mark-to-market adjustments for bankruptcy obligations | 25 | (53 | ) | ||||
Other operating charges (credits), net | (7 | ) | 68 | ||||
Total mainline operating special items, net | 709 | 1,051 | |||||
Regional operating special items, net | 13 | 18 | |||||
Total operating special items, net | $ | 722 | $ | 1,069 |
(1) | Merger integration expenses included costs related to information technology, re-branding of aircraft, airport facilities and uniforms, alignment of labor union contracts, professional fees, severance, relocation and training, and, in 2015, also included share-based compensation related to awards granted in connection with the Merger that fully vested in December 2015. |
(2) | Fleet restructuring expenses, driven in part by the Merger, principally included the acceleration of depreciation, impairments, remaining lease payments and lease return costs for aircraft and related equipment grounded or expected to be grounded earlier than planned. |
Year Ended December 31, | Increase (Decrease) | Percent Increase (Decrease) | ||||||||||||
2016 | 2015 | |||||||||||||
(In millions, except percentage changes) | ||||||||||||||
Aircraft fuel and related taxes | $ | 1,109 | $ | 1,230 | $ | (121 | ) | (9.8 | ) | |||||
Other | 4,900 | 4,722 | 178 | 3.8 | ||||||||||
Total regional operating expenses | $ | 6,009 | $ | 5,952 | $ | 57 | 1.0 |
Year Ended December 31, | Increase (Decrease) | Percent Increase (Decrease) | |||||||||||
2016 | 2015 | ||||||||||||
(In millions, except percentage changes) | |||||||||||||
Interest income | $ | 104 | $ | 49 | $ | 55 | nm | ||||||
Interest expense, net | (906 | ) | (796 | ) | (110 | ) | 13.8 | ||||||
Other, net | (59 | ) | (774 | ) | 715 | (92.4) | |||||||
Total nonoperating expense, net | $ | (861 | ) | $ | (1,521 | ) | $ | 660 | (43.4) |
AAG | American | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Cash | $ | 295 | $ | 322 | $ | 287 | $ | 310 | |||||||
Short-term investments | 4,771 | 6,037 | 4,768 | 6,034 | |||||||||||
Undrawn revolving credit facilities | 2,500 | 2,425 | 2,500 | 2,425 | |||||||||||
Total available liquidity | $ | 7,566 | $ | 8,784 | $ | 7,555 | $ | 8,769 |
Period | Per share | For stockholders of record as of | Payable on | Total (millions) | ||||||||
First Quarter | $ | 0.10 | February 13, 2017 | February 27, 2017 | $ | 51 | ||||||
Second Quarter | 0.10 | May 16, 2017 | May 30, 2017 | 50 | ||||||||
Third Quarter | 0.10 | August 14, 2017 | August 28, 2017 | 49 | ||||||||
Fourth Quarter | 0.10 | November 13, 2017 | November 27, 2017 | 48 | ||||||||
Total | $ | 0.40 | $ | 198 |
Current Rating | |
S&P Local Issuer Credit Rating | BB- |
Fitch Issuer Default Credit Rating | BB- |
Moody’s Corporate Family Rating (1) | Ba3 |
(1) | This rating is for AAG only. The credit agency does not rate this category for American. |
AAG | American | ||
Long-term debt and debt covenants | Note 5 | Note 3 | |
Employee benefit plans | Note 9 | Note 7 | |
Commitments, contingencies and guarantees | Note 11 | Note 9 |
Payments Due by Period | |||||||||||||||||||||||||||
2018 | 2019 | 2020 | 2021 | 2022 | 2023 and Thereafter | Total | |||||||||||||||||||||
American (a) | |||||||||||||||||||||||||||
Debt and capital lease obligations (b) (d) (See Note 3) | $ | 2,098 | $ | 2,118 | $ | 3,563 | $ | 2,854 | $ | 1,286 | $ | 11,602 | $ | 23,521 | |||||||||||||
Interest obligations (c) (d) | 966 | 904 | 788 | 658 | 535 | 1,409 | 5,260 | ||||||||||||||||||||
Aircraft and engine purchase commitments (e) (See Note 9) | 1,826 | 2,730 | 2,730 | 2,858 | 2,138 | 1,482 | 13,764 | ||||||||||||||||||||
Operating lease commitments (f) (See Note 9) | 2,178 | 1,966 | 1,776 | 1,331 | 1,155 | 3,253 | 11,659 | ||||||||||||||||||||
Regional capacity purchase agreements (g) (See Note 9) | 1,457 | 1,311 | 1,063 | 866 | 699 | 2,073 | 7,469 | ||||||||||||||||||||
Minimum pension obligations (h) (See Note 7) | 464 | 890 | 484 | 495 | 581 | 1,476 | 4,390 | ||||||||||||||||||||
Retiree medical and other postretirement benefits (See Note 7) | 96 | 92 | 80 | 75 | 70 | 314 | 727 | ||||||||||||||||||||
Other purchase obligations (i) (See Note 9) | 2,036 | 1,405 | 894 | 956 | 9 | 2 | 5,302 | ||||||||||||||||||||
Total American Contractual Obligations | $ | 11,121 | $ | 11,416 | $ | 11,378 | $ | 10,093 | $ | 6,473 | $ | 21,611 | $ | 72,092 | |||||||||||||
AAG Parent and Other AAG Subsidiaries (a) | |||||||||||||||||||||||||||
Debt and capital lease obligations (b) (See Note 5) | $ | 500 | $ | 750 | $ | 506 | $ | 2 | $ | 2 | $ | 20 | $ | 1,780 | |||||||||||||
Interest obligations (c) | 82 | 67 | 14 | 2 | 2 | 6 | 173 | ||||||||||||||||||||
Minimum pension obligations (h) (See Note 9) | 3 | 4 | 3 | 3 | 4 | 15 | 32 | ||||||||||||||||||||
Operating lease commitments | 17 | 8 | 8 | 8 | 4 | 13 | 58 | ||||||||||||||||||||
Total AAG Contractual Obligations | $ | 11,723 | $ | 12,245 | $ | 11,909 | $ | 10,108 | $ | 6,485 | $ | 21,665 | $ | 74,135 |
(a) | For additional information, see the Notes to AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B referenced in the table above. |
(b) | Amounts represent contractual amounts due. Excludes $227 million and $236 million of unamortized debt discount, premium and issuance costs as of December 31, 2017 for American and AAG, respectively. |
(c) | For variable-rate debt, future interest obligations are estimated using the current forward rates at December 31, 2017. |
(d) | Includes $11.9 billion of future principal payments and $2.7 billion of future interest payments, respectively, as of December 31, 2017, related to EETCs associated with mortgage financings for the purchase of certain aircraft. |
(e) | See Part I, Item 2. Properties – “Aircraft and Engine Purchase Commitments” for additional information about the firm commitment aircraft delivery schedule. |
(f) | Includes $572 million of future minimum lease payments related to EETC leveraged lease financings of certain aircraft as of December 31, 2017. |
(g) | Represents minimum payments under capacity purchase agreements with third-party regional carriers. These commitments are estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and our actual payments could differ materially. |
(h) | Includes minimum pension contributions based on actuarially determined estimates and is based on estimated payments through 2027. The total expected pension contribution of $467 million in 2018 assumes a supplemental contribution of $425 million in addition to the $42 million minimum required contribution. |
(i) | Includes purchase commitments for jet fuel, facility construction projects and information technology support. |
2017 | 2016 | ||||
Pension weighted average discount rate (1) | 3.80 | % | 4.30 | % | |
Retiree medical and other postretirement benefits weighted average discount rate (1) | 3.60 | % | 4.10 | % | |
Expected rate of return on plan assets (2) | 8.00 | % | 8.00 | % | |
Weighted average health care cost trend rate assumed for next year (3): | |||||
Initial | 4.19 | % | 4.25 | % | |
Ultimate (2025) | 3.76 | % | 3.77 | % | |
Pilot Retirement Age | 62 | 62 |
(1) | When establishing our discount rate to measure our obligations, we match high quality corporate bonds available in the marketplace whose cash flows approximate our projected benefit disbursements. Lowering the discount rate by 50 basis points as of December 31, 2017 would increase our pension and retiree medical and other postretirement benefits obligations by approximately $1.3 billion and $46 million, respectively, and increase both estimated 2018 pension expense and estimated 2018 retiree medical and other postretirement benefits expense by less than $1 million. |
(2) | The expected rate of return on plan assets is based upon an evaluation of our historical trends and experience, taking into account current and expected market conditions and our target asset allocation of 30% U.S. stocks, 22% developed international stocks, 20% long duration corporate and U.S. government/agency bonds, 20% alternative (private) investments and 8% emerging market stocks. The expected rate of return on plan assets component of our net periodic benefit cost is calculated based on the fair value of plan assets and our target asset allocation. Lowering the expected long-term rate of return on plan assets by 50 basis points as of December 31, 2017 would increase estimated 2018 pension expense and retiree medical and other postretirement benefits expense by approximately $57 million and $1 million, respectively. |
(3) | The assumed health care cost trend rate is based upon an evaluation of our historical trends and experience, taking into account current and expected market conditions. Increasing the assumed health care cost trend rate by 100 basis points would increase estimated 2018 retiree medical and other postretirement benefits expense by $5 million. |
New Revenue Standard | New Retirement Standard | ||||||||||||||||||
As Reported | Deferred Revenue Method | Reclassifications | Reclassifications | As Recast | |||||||||||||||
Operating revenues: | |||||||||||||||||||
Passenger | $ | 36,133 | $ | 311 | $ | 2,687 | $ | — | $ | 39,131 | |||||||||
Cargo | 800 | — | 90 | — | 890 | ||||||||||||||
Other | 5,274 | — | (2,673 | ) | — | 2,601 | |||||||||||||
Total operating revenues | 42,207 | 311 | 104 | — | 42,622 | ||||||||||||||
Total operating expenses | 38,149 | — | 104 | 138 | 38,391 | ||||||||||||||
Operating income | 4,058 | 311 | — | (138 | ) | 4,231 | |||||||||||||
Total nonoperating expense, net | (974 | ) | — | — | 138 | (836 | ) | ||||||||||||
Income before income taxes | 3,084 | 311 | — | — | 3,395 | ||||||||||||||
Income tax provision (1) | 1,165 | 948 | — | — | 2,113 | ||||||||||||||
Net income | $ | 1,919 | $ | (637 | ) | $ | — | $ | — | $ | 1,282 | ||||||||
Diluted earnings per common share | $ | 3.90 | $ | 2.61 |
(1) | The adjustment to the 2017 income tax provision includes an $830 million special charge to reduce our deferred tax asset associated with loyalty program liabilities as a result of the 2017 Tax Act enacted in December 2017 that reduced the federal corporate income tax rate from 35% to 21%. |
As Reported | New Revenue Standard | As Recast | |||||||||
Deferred tax asset | $ | 427 | $ | 1,389 | $ | 1,816 | |||||
Air traffic liability | 3,978 | 64 | 4,042 | ||||||||
Current loyalty program liability | 2,791 | 384 | 3,175 | ||||||||
Noncurrent loyalty program liability | — | 5,647 | 5,647 | ||||||||
Total stockholders’ equity (deficit) | 3,926 | (4,706 | ) | (780 | ) |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Operating revenues: | |||||||||||
Mainline passenger | $ | 29,238 | $ | 27,909 | $ | 29,037 | |||||
Regional passenger | 6,895 | 6,670 | 6,475 | ||||||||
Cargo | 800 | 700 | 760 | ||||||||
Other | 5,274 | 4,901 | 4,718 | ||||||||
Total operating revenues | 42,207 | 40,180 | 40,990 | ||||||||
Operating expenses: | |||||||||||
Aircraft fuel and related taxes | 6,128 | 5,071 | 6,226 | ||||||||
Salaries, wages and benefits | 11,816 | 10,890 | 9,524 | ||||||||
Regional expenses | 6,546 | 6,044 | 5,983 | ||||||||
Maintenance, materials and repairs | 1,959 | 1,834 | 1,889 | ||||||||
Other rent and landing fees | 1,806 | 1,772 | 1,731 | ||||||||
Aircraft rent | 1,197 | 1,203 | 1,250 | ||||||||
Selling expenses | 1,477 | 1,323 | 1,394 | ||||||||
Depreciation and amortization | 1,702 | 1,525 | 1,364 | ||||||||
Special items, net | 712 | 709 | 1,051 | ||||||||
Other | 4,806 | 4,525 | 4,374 | ||||||||
Total operating expenses | 38,149 | 34,896 | 34,786 | ||||||||
Operating income | 4,058 | 5,284 | 6,204 | ||||||||
Nonoperating income (expense): | |||||||||||
Interest income | 94 | 63 | 39 | ||||||||
Interest expense, net | (1,053 | ) | (991 | ) | (880 | ) | |||||
Other, net | (15 | ) | (57 | ) | (747 | ) | |||||
Total nonoperating expense, net | (974 | ) | (985 | ) | (1,588 | ) | |||||
Income before income taxes | 3,084 | 4,299 | 4,616 | ||||||||
Income tax provision (benefit) | 1,165 | 1,623 | (2,994 | ) | |||||||
Net income | $ | 1,919 | $ | 2,676 | $ | 7,610 | |||||
Earnings per common share: | |||||||||||
Basic | $ | 3.92 | $ | 4.85 | $ | 11.39 | |||||
Diluted | $ | 3.90 | $ | 4.81 | $ | 11.07 | |||||
Weighted average shares outstanding (in thousands): | |||||||||||
Basic | 489,164 | 552,308 | 668,393 | ||||||||
Diluted | 491,692 | 556,099 | 687,355 | ||||||||
Cash dividends declared per common share | $ | 0.40 | $ | 0.40 | $ | 0.40 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Net income | $ | 1,919 | $ | 2,676 | $ | 7,610 | |||||
Other comprehensive income (loss), net of tax: | |||||||||||
Pension, retiree medical and other postretirement benefits: | |||||||||||
Amortization of actuarial loss and prior service cost | (55 | ) | (65 | ) | (108 | ) | |||||
Current year change | (15 | ) | (293 | ) | (51 | ) | |||||
Investments and derivative financial instruments | (1 | ) | 7 | (14 | ) | ||||||
Total other comprehensive loss, net of tax | (71 | ) | (351 | ) | (173 | ) | |||||
Total comprehensive income | $ | 1,848 | $ | 2,325 | $ | 7,437 |
December 31, | |||||||
2017 | 2016 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash | $ | 295 | $ | 322 | |||
Short-term investments | 4,771 | 6,037 | |||||
Restricted cash and short-term investments | 318 | 638 | |||||
Accounts receivable, net | 1,752 | 1,594 | |||||
Aircraft fuel, spare parts and supplies, net | 1,359 | 1,094 | |||||
Prepaid expenses and other | 651 | 639 | |||||
Total current assets | 9,146 | 10,324 | |||||
Operating property and equipment | |||||||
Flight equipment | 40,318 | 37,028 | |||||
Ground property and equipment | 8,267 | 7,116 | |||||
Equipment purchase deposits | 1,217 | 1,209 | |||||
Total property and equipment, at cost | 49,802 | 45,353 | |||||
Less accumulated depreciation and amortization | (15,646 | ) | (14,194 | ) | |||
Total property and equipment, net | 34,156 | 31,159 | |||||
Other assets | |||||||
Goodwill | 4,091 | 4,091 | |||||
Intangibles, net of accumulated amortization of $622 and $578, respectively | 2,203 | 2,173 | |||||
Deferred tax asset | 427 | 1,498 | |||||
Other assets | 1,373 | 2,029 | |||||
Total other assets | 8,094 | 9,791 | |||||
Total assets | $ | 51,396 | $ | 51,274 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities | |||||||
Current maturities of long-term debt and capital leases | $ | 2,554 | $ | 1,855 | |||
Accounts payable | 1,688 | 1,592 | |||||
Accrued salaries and wages | 1,672 | 1,516 | |||||
Air traffic liability | 3,978 | 3,912 | |||||
Loyalty program liability | 2,791 | 2,789 | |||||
Other accrued liabilities | 2,281 | 2,208 | |||||
Total current liabilities | 14,964 | 13,872 | |||||
Noncurrent liabilities | |||||||
Long-term debt and capital leases, net of current maturities | 22,511 | 22,489 | |||||
Pension and postretirement benefits | 7,497 | 7,842 | |||||
Other liabilities | 2,498 | 3,286 | |||||
Total noncurrent liabilities | 32,506 | 33,617 | |||||
Commitments and contingencies (Note 11) | |||||||
Stockholders’ equity | |||||||
Common stock, $0.01 par value; 1,750,000,000 shares authorized, 475,507,887 shares issued and outstanding at December 31, 2017; 507,294,153 shares issued and outstanding at December 31, 2016 | 5 | 5 | |||||
Additional paid-in capital | 5,714 | 7,223 | |||||
Accumulated other comprehensive loss | (5,154 | ) | (5,083 | ) | |||
Retained earnings | 3,361 | 1,640 | |||||
Total stockholders’ equity | 3,926 | 3,785 | |||||
Total liabilities and stockholders’ equity | $ | 51,396 | $ | 51,274 |
December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 1,919 | $ | 2,676 | $ | 7,610 | |||||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||
Depreciation and amortization | 2,017 | 1,818 | 1,609 | ||||||||
Deferred income tax provision (benefit) | 1,141 | 1,611 | (3,014 | ) | |||||||
Debt discount and lease amortization | (114 | ) | (119 | ) | (122 | ) | |||||
Special items, non-cash | 272 | 270 | 273 | ||||||||
Pension and postretirement | (132 | ) | (68 | ) | (193 | ) | |||||
Share-based compensation | 90 | 100 | 284 | ||||||||
Other, net | (39 | ) | (18 | ) | (12 | ) | |||||
Changes in operating assets and liabilities: | |||||||||||
Decrease (increase) in accounts receivable | (190 | ) | (160 | ) | 352 | ||||||
Increase in other assets | (433 | ) | (184 | ) | (27 | ) | |||||
Increase in accounts payable and accrued liabilities | 299 | 307 | 173 | ||||||||
Increase (decrease) in air traffic liability | 66 | 164 | (505 | ) | |||||||
Increase (decrease) in loyalty program liability | 2 | 264 | (295 | ) | |||||||
Contributions to pension plans | (286 | ) | (32 | ) | (6 | ) | |||||
Increase (decrease) in other liabilities | 132 | (105 | ) | 122 | |||||||
Net cash provided by operating activities | 4,744 | 6,524 | 6,249 | ||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures and aircraft purchase deposits | (5,971 | ) | (5,731 | ) | (6,151 | ) | |||||
Proceeds from sale of property and equipment and sale-leaseback transactions | 947 | 125 | 35 | ||||||||
Purchases of short-term investments | (4,633 | ) | (6,241 | ) | (8,126 | ) | |||||
Sales of short-term investments | 5,915 | 6,092 | 8,517 | ||||||||
Decrease in restricted cash and short-term investments | 319 | 57 | 79 | ||||||||
Purchase of equity investment | (203 | ) | — | — | |||||||
Proceeds from sale of an investment | — | — | 52 | ||||||||
Net cash used in investing activities | (3,626 | ) | (5,698 | ) | (5,594 | ) | |||||
Cash flows from financing activities: | |||||||||||
Proceeds from issuance of long-term debt | 3,058 | 7,701 | 5,009 | ||||||||
Payments on long-term debt and capital leases | (2,332 | ) | (3,827 | ) | (2,153 | ) | |||||
Deferred financing costs | (85 | ) | (77 | ) | (87 | ) | |||||
Treasury stock repurchases | (1,615 | ) | (4,500 | ) | (3,846 | ) | |||||
Dividend payments | (198 | ) | (224 | ) | (278 | ) | |||||
Other financing activities | 27 | 33 | 96 | ||||||||
Net cash used in financing activities | (1,145 | ) | (894 | ) | (1,259 | ) | |||||
Net decrease in cash | (27 | ) | (68 | ) | (604 | ) | |||||
Cash at beginning of year | 322 | 390 | 994 | ||||||||
Cash at end of year | $ | 295 | $ | 322 | $ | 390 |
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Deficit) | Total | |||||||||||||||
Balance at December 31, 2014 | $ | 7 | $ | 15,135 | $ | (4,559 | ) | $ | (8,562 | ) | $ | 2,021 | |||||||
Net income | — | — | — | 7,610 | 7,610 | ||||||||||||||
Changes in pension, retiree medical and other postretirement benefits liability | — | — | (159 | ) | — | (159 | ) | ||||||||||||
Net changes in fair value of derivative financial instruments | — | — | (9 | ) | — | (9 | ) | ||||||||||||
Cash tax withholding on shares issued | — | (306 | ) | — | — | (306 | ) | ||||||||||||
Purchase and retirement of 85,141,691 shares of AAG common stock | (1 | ) | (3,585 | ) | — | — | (3,586 | ) | |||||||||||
Dividends declared on common stock ($0.40 per share) | — | — | — | (278 | ) | (278 | ) | ||||||||||||
Issuance of 12,289,537 shares of common stock pursuant to employee stock plans | — | — | — | — | — | ||||||||||||||
Settlement of single-dip unsecured claims held in distributed claims reserve | — | 63 | — | — | 63 | ||||||||||||||
Share-based compensation expense | — | 284 | — | — | 284 | ||||||||||||||
Change in unrealized loss on investments | — | — | (5 | ) | — | (5 | ) | ||||||||||||
Balance at December 31, 2015 | 6 | 11,591 | (4,732 | ) | (1,230 | ) | 5,635 | ||||||||||||
Net income | — | — | — | 2,676 | 2,676 | ||||||||||||||
Changes in pension, retiree medical and other postretirement benefits liability | — | — | (564 | ) | — | (564 | ) | ||||||||||||
Non-cash tax benefit | — | — | 203 | — | 203 | ||||||||||||||
Cash tax withholding on shares issued | — | (56 | ) | — | — | (56 | ) | ||||||||||||
Purchase and retirement of 119,823,621 shares of AAG common stock | (1 | ) | (4,415 | ) | — | — | (4,416 | ) | |||||||||||
Dividends declared on common stock ($0.40 per share) | — | — | — | (224 | ) | (224 | ) | ||||||||||||
Issuance of 2,506,067 shares of common stock pursuant to employee stock plans | — | — | — | — | — | ||||||||||||||
Settlement of single-dip unsecured claims held in distributed claims reserve | — | 3 | — | — | 3 | ||||||||||||||
Share-based compensation expense | — | 100 | — | — | 100 | ||||||||||||||
Impact of adoption of Accounting Standards Update (ASU) 2016-09 related to share-based compensation (See Note 14) | — | — | — | 418 | 418 | ||||||||||||||
Change in unrealized loss on investments | — | — | 10 | — | 10 | ||||||||||||||
Balance at December 31, 2016 | 5 | 7,223 | (5,083 | ) | 1,640 | 3,785 | |||||||||||||
Net income | — | — | — | 1,919 | 1,919 | ||||||||||||||
Changes in pension, retiree medical and other postretirement benefits liability | — | — | (117 | ) | — | (117 | ) | ||||||||||||
Non-cash tax benefit | — | — | 47 | — | 47 | ||||||||||||||
Cash tax withholding on shares issued | — | (51 | ) | — | — | (51 | ) | ||||||||||||
Purchase and retirement of 33,953,127 shares of AAG common stock | — | (1,563 | ) | — | — | (1,563 | ) | ||||||||||||
Dividends declared on common stock ($0.40 per share) | — | — | — | (198 | ) | (198 | ) | ||||||||||||
Issuance of 2,166,861 shares of common stock pursuant to employee stock plans | — | — | — | — | — | ||||||||||||||
Settlement of single-dip unsecured claims held in distributed claims reserve | — | 15 | — | — | 15 | ||||||||||||||
Share-based compensation expense | — | 90 | — | — | 90 | ||||||||||||||
Change in unrealized loss on investments | — | — | (1 | ) | — | (1 | ) | ||||||||||||
Balance at December 31, 2017 | $ | 5 | $ | 5,714 | $ | (5,154 | ) | $ | 3,361 | $ | 3,926 |
Principal Property and Equipment Classification | Estimated Useful Life |
Aircraft, engines and related rotable parts | 20 – 30 years |
Buildings and improvements | 5 – 30 years |
Furniture, fixtures and other equipment | 3 – 10 years |
Capitalized software | 5 – 10 years |
December 31, | |||||||
2017 | 2016 | ||||||
Domestic airport slots | $ | 365 | $ | 365 | |||
Customer relationships | 300 | 300 | |||||
Marketing agreements | 105 | 105 | |||||
Tradenames | 35 | 35 | |||||
Airport gate leasehold rights | 137 | 137 | |||||
Accumulated amortization | (622 | ) | (578 | ) | |||
Total | $ | 320 | $ | 364 |
2018 | $ | 41 | |
2019 | 41 | ||
2020 | 41 | ||
2021 | 41 | ||
2022 | 41 | ||
2023 and thereafter | 115 | ||
Total | $ | 320 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Aircraft fuel and related taxes | $ | 1,382 | $ | 1,109 | $ | 1,230 | |||||
Salaries, wages and benefits | 1,452 | 1,333 | 1,187 | ||||||||
Capacity purchases from third-party regional carriers (1) | 1,581 | 1,538 | 1,651 | ||||||||
Maintenance, materials and repairs | 281 | 345 | 323 | ||||||||
Other rent and landing fees | 625 | 564 | 504 | ||||||||
Aircraft rent | 35 | 36 | 34 | ||||||||
Selling expenses | 361 | 347 | 333 | ||||||||
Depreciation and amortization | 315 | 301 | 252 | ||||||||
Special items, net | 22 | 14 | 29 | ||||||||
Other | 492 | 457 | 440 | ||||||||
Total regional expenses | $ | 6,546 | $ | 6,044 | $ | 5,983 |
(1) | For the years ended December 31, 2017, 2016 and 2015, the component of capacity purchase expenses representing the lease of aircraft for accounting purposes was approximately $437 million, $405 million and $492 million, respectively. |
New Revenue Standard | New Retirement Standard | ||||||||||||||||||
As Reported | Deferred Revenue Method | Reclassifications | Reclassifications | As Recast | |||||||||||||||
Operating revenues: | |||||||||||||||||||
Passenger | $ | 36,133 | $ | 311 | $ | 2,687 | $ | — | $ | 39,131 | |||||||||
Cargo | 800 | — | 90 | — | 890 | ||||||||||||||
Other | 5,274 | — | (2,673 | ) | — | 2,601 | |||||||||||||
Total operating revenues | 42,207 | 311 | 104 | — | 42,622 | ||||||||||||||
Total operating expenses | 38,149 | — | 104 | 138 | 38,391 | ||||||||||||||
Operating income | 4,058 | 311 | — | (138 | ) | 4,231 | |||||||||||||
Total nonoperating expense, net | (974 | ) | — | — | 138 | (836 | ) | ||||||||||||
Income before income taxes | 3,084 | 311 | — | — | 3,395 | ||||||||||||||
Income tax provision (1) | 1,165 | 948 | — | — | 2,113 | ||||||||||||||
Net income | $ | 1,919 | $ | (637 | ) | $ | — | $ | — | $ | 1,282 | ||||||||
Diluted earnings per common share | $ | 3.90 | $ | 2.61 |
(1) | The adjustment to the 2017 income tax provision includes an $830 million special charge to reduce our deferred tax asset associated with loyalty program liabilities as a result of H.R. 1, the 2017 Tax Cuts and Jobs Act (the 2017 Tax Act), enacted in December 2017 that reduced the federal corporate income tax rate from 35% to 21%. |
As Reported | New Revenue Standard | As Recast | |||||||||
Deferred tax asset | $ | 427 | $ | 1,389 | $ | 1,816 | |||||
Air traffic liability | 3,978 | 64 | 4,042 | ||||||||
Current loyalty program liability | 2,791 | 384 | 3,175 | ||||||||
Noncurrent loyalty program liability | — | 5,647 | 5,647 | ||||||||
Total stockholders’ equity (deficit) | 3,926 | (4,706 | ) | (780 | ) |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Merger integration expenses (1) | $ | 273 | $ | 514 | $ | 826 | |||||
Fleet restructuring expenses (2) | 232 | 177 | 210 | ||||||||
Employee 2017 Tax Act bonus expense (3) | 123 | — | — | ||||||||
Labor contract expenses (4) | 46 | — | — | ||||||||
Mark-to-market adjustments for bankruptcy obligations | 27 | 25 | (53 | ) | |||||||
Other operating charges (credits), net | 11 | (7 | ) | 68 | |||||||
Mainline operating special items, net | 712 | 709 | 1,051 | ||||||||
Regional operating special items, net | 22 | 14 | 29 | ||||||||
Operating special items, net | 734 | 723 | 1,080 | ||||||||
Debt refinancing and extinguishment charges | 22 | 49 | 24 | ||||||||
Venezuela foreign currency losses | — | — | 592 | ||||||||
Other nonoperating charges (credits), net | — | — | (22 | ) | |||||||
Nonoperating special items, net | 22 | 49 | 594 | ||||||||
Impact of the 2017 Tax Act on deferred tax assets and liabilities | (7 | ) | — | — | |||||||
Release of deferred tax valuation allowance | — | — | (3,040 | ) | |||||||
Other tax charges | — | — | 25 | ||||||||
Income tax special items, net | (7 | ) | — | (3,015 | ) |
(1) | Merger integration expenses included costs related to information technology, professional fees, re-branding of aircraft and airport facilities and training, and in 2016, also included costs related to alignment of labor union contracts, the launch of re-branded uniforms, relocation and severance, and in 2015, also included share-based compensation related to awards granted in connection with the Merger that fully vested in December 2015. |
(2) | Fleet restructuring expenses, driven in part by the Merger, principally included the acceleration of depreciation, impairments, remaining lease payments and lease return costs for aircraft and related equipment grounded or expected to be grounded earlier than planned. |
(3) | Employee bonus expense included costs related to the $1,000 cash bonus and associated payroll taxes granted to mainline employees as of December 31, 2017 in recognition of the 2017 Tax Act. |
(4) | Labor contract expenses primarily included one-time charges to adjust the vacation accruals for pilots and flight attendants as a result of the mid-contract pay rate adjustments effective in the second quarter of 2017. |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Basic EPS: | |||||||||||
Net income | $ | 1,919 | $ | 2,676 | $ | 7,610 | |||||
Weighted average common shares outstanding (in thousands) | 489,164 | 552,308 | 668,393 | ||||||||
Basic EPS | $ | 3.92 | $ | 4.85 | $ | 11.39 | |||||
Diluted EPS: | |||||||||||
Net income for purposes of computing diluted EPS | $ | 1,919 | $ | 2,676 | $ | 7,610 | |||||
Share computation for diluted EPS (in thousands): | |||||||||||
Basic weighted average common shares outstanding | 489,164 | 552,308 | 668,393 | ||||||||
Dilutive effect of stock awards | 2,528 | 3,791 | 18,962 | ||||||||
Diluted weighted average common shares outstanding | 491,692 | 556,099 | 687,355 | ||||||||
Diluted EPS | $ | 3.90 | $ | 4.81 | $ | 11.07 | |||||
Restricted stock unit awards excluded from the calculation of diluted EPS because inclusion would be antidilutive (in thousands) | 328 | 1,429 | 764 |
December 31, | |||||||
2017 | 2016 | ||||||
Secured | |||||||
2013 Credit Facilities, variable interest rate of 3.55%, installments through 2020 (a) | $ | 1,825 | $ | 1,843 | |||
2014 Credit Facilities, variable interest rate of 3.43%, installments through 2021 (a) | 728 | 735 | |||||
April 2016 Credit Facilities, variable interest rate of 3.57%, installments through 2023 (a) | 990 | 1,000 | |||||
December 2016 Credit Facilities, variable interest rate of 3.48%, installments through 2023 (a) | 1,238 | 1,250 | |||||
Aircraft enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.00% to 9.75%, averaging 4.30%, maturing from 2018 to 2029 (b) | 11,881 | 10,912 | |||||
Equipment loans and other notes payable, fixed and variable interest rates ranging from 2.34% to 8.48%, averaging 3.29%, maturing from 2018 to 2029 (c) | 5,259 | 5,343 | |||||
Special facility revenue bonds, fixed interest rates ranging from 5.00% to 8.00%, maturing from 2018 to 2035 | 857 | 891 | |||||
Other secured obligations, fixed interest rates ranging from 3.81% to 12.24%, maturing from 2018 to 2028 | 773 | 849 | |||||
23,551 | 22,823 | ||||||
Unsecured | |||||||
5.50% senior notes, interest only payments until due in 2019 (d) | 750 | 750 | |||||
6.125% senior notes, interest only payments until due in 2018 (d) | 500 | 500 | |||||
4.625% senior notes, interest only payments until due in 2020 (d) | 500 | 500 | |||||
1,750 | 1,750 | ||||||
Total long-term debt and capital lease obligations | 25,301 | 24,573 | |||||
Less: Total unamortized debt discount, premium and issuance costs | 236 | 229 | |||||
Less: Current maturities | 2,554 | 1,855 | |||||
Long-term debt and capital lease obligations, net of current maturities | $ | 22,511 | $ | 22,489 |
2013 Revolving Facility | $ | 1,200 | |
2014 Revolving Facility | 1,000 | ||
April 2016 Revolving Facility | 300 | ||
Total | $ | 2,500 |
2018 | $ | 2,598 | |
2019 | 2,868 | ||
2020 | 4,069 | ||
2021 | 2,856 | ||
2022 | 1,288 | ||
2023 and thereafter | 11,622 | ||
Total | $ | 25,301 |
2013 Credit Facilities | 2014 Credit Facilities | April 2016 Credit Facilities | December 2016 Credit Facilities | ||||||||||
2013 Term Loan | 2013 Revolving Facility | 2014 Term Loan | 2014 Revolving Facility | April 2016 Term Loan | April 2016 Revolving Facility | December 2016 Term Loan | |||||||
Aggregate principal issued or credit facility availability (in millions) | $1,900 | $1,200 | $750 | $1,000 | $1,000 | $300 | $1,250 | ||||||
Principal outstanding or drawn (in millions) | $1,825 | $— | $728 | $— | $990 | $— | $1,238 | ||||||
Maturity date | June 2020 | October 2022 | October 2021 | October 2022 | April 2023 | October 2022 | December 2023 | ||||||
LIBOR margin | 2.00% | 2.25% | 2.00% | 2.25% | 2.00% | 2.25% | 2.00% |
2016-3 EETCs | |||||
Series AA | Series A | Series B | |||
Aggregate principal issued | $558 million | $256 million | $193 million | ||
Fixed interest rate per annum | 3.00% | 3.25% | 3.75% | ||
Maturity date | October 2028 | October 2028 | October 2025 |
2017-1 EETCs | |||||
Series AA | Series A | Series B | |||
Aggregate principal issued | $537 million | $248 million | $198 million | ||
Fixed interest rate per annum | 3.65% | 4.00% | 4.95% | ||
Maturity date | February 2029 | February 2029 | February 2025 |
2017-2 EETCs | |||||
Series AA | Series A | Series B | |||
Aggregate principal issued | $545 million | $252 million | $221 million | ||
Remaining escrowed proceeds | $152 million | $70 million | $61 million | ||
Fixed interest rate per annum | 3.35% | 3.60% | 3.70% | ||
Maturity date | October 2029 | October 2029 | October 2025 |
6.125% Senior Notes | 5.50% Senior Notes | 4.625% Senior Notes | |||
Aggregate principal issued and outstanding | $500 million | $750 million | $500 million | ||
Maturity date | June 2018 | October 2019 | March 2020 | ||
Fixed interest rate per annum | 6.125% | 5.50% | 4.625% | ||
Interest payments | Semi-annually in arrears in June and December | Semi-annually in arrears in April and October | Semi-annually in arrears in March and September |
2013 Credit Facilities | 2014 Credit Facilities | April 2016 Credit Facilities | December 2016 Credit Facilities | ||||
Frequency of Appraisals of Appraised Collateral | Annual | Annual | Annual | Annual | |||
LTV Requirement | 1.6x Collateral valuation to amount of debt outstanding (62.5% LTV) | 1.6x Collateral valuation to amount of debt outstanding (62.5% LTV) | 1.6x Collateral valuation to amount of debt outstanding (62.5% LTV) | 1.6x Collateral valuation to amount of debt outstanding (62.5% LTV) | |||
LTV as of Last Measurement Date | 33.9% | 23.1% | 42.7% | 59.0% | |||
Collateral Description | Generally, certain slots, route authorities, and airport gate leasehold rights used by American to operate all services between the U.S. and South America | Generally, certain slots, route authorities and airport gate leasehold rights used by American to operate certain services between the U.S. and London Heathrow | Generally, certain spare parts | Generally, certain Ronald Reagan Washington National Airport (DCA) slots, certain La Guardia Airport (LGA) slots, certain simulators and certain leasehold rights |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Current income tax provision: | |||||||||||
Federal | $ | — | $ | — | $ | — | |||||
State and Local | 24 | 12 | 20 | ||||||||
Current income tax provision | 24 | 12 | 20 | ||||||||
Deferred income tax provision (benefit): | |||||||||||
Federal | 1,085 | 1,508 | (2,884 | ) | |||||||
State and Local | 56 | 103 | (130 | ) | |||||||
Deferred income tax provision (benefit) | 1,141 | 1,611 | (3,014 | ) | |||||||
Total income tax provision (benefit) | $ | 1,165 | $ | 1,623 | $ | (2,994 | ) |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Statutory income tax provision | $ | 1,079 | $ | 1,505 | $ | 1,616 | |||||
State income tax provision, net of federal tax effect | 61 | 63 | 72 | ||||||||
Book expenses not deductible for tax purposes | 33 | 34 | 57 | ||||||||
Bankruptcy administration expenses | 1 | 1 | 3 | ||||||||
2017 Tax Act | (7 | ) | — | — | |||||||
Change in valuation allowance | (3 | ) | 7 | (4,742 | ) | ||||||
Other, net | 1 | 13 | — | ||||||||
Income tax provision (benefit) | $ | 1,165 | $ | 1,623 | $ | (2,994 | ) |
December 31, | |||||||
2017 | 2016 | ||||||
Deferred tax assets: | |||||||
Operating loss carryforwards | $ | 2,281 | $ | 3,853 | |||
Pensions | 1,559 | 2,610 | |||||
Loyalty program liability | 420 | 485 | |||||
Alternative minimum tax (AMT) credit carryforwards | 344 | 344 | |||||
Postretirement benefits other than pensions | 170 | 291 | |||||
Rent expense | 160 | 256 | |||||
Gains from lease transactions | 107 | 213 | |||||
Reorganization items | 35 | 53 | |||||
Other | 678 | 972 | |||||
Total deferred tax assets | 5,754 | 9,077 | |||||
Valuation allowance | (36 | ) | (29 | ) | |||
Net deferred tax assets | 5,718 | 9,048 | |||||
Deferred tax liabilities: | |||||||
Accelerated depreciation and amortization | (5,045 | ) | (7,216 | ) | |||
Other | (279 | ) | (345 | ) | |||
Total deferred tax liabilities | (5,324 | ) | (7,561 | ) | |||
Net deferred tax asset | $ | 394 | $ | 1,487 |
• | Level 1 – Observable inputs such as quoted prices in active markets; |
• | Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and |
• | Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. |
Fair Value Measurements as of December 31, 2017 | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Short-term investments (1) (2): | |||||||||||||||
Money market funds | $ | 188 | $ | 188 | $ | — | $ | — | |||||||
Corporate obligations | 1,620 | — | 1,620 | — | |||||||||||
Bank notes/certificates of deposit/time deposits | 2,663 | — | 2,663 | — | |||||||||||
Repurchase agreements | 300 | — | 300 | — | |||||||||||
4,771 | 188 | 4,583 | — | ||||||||||||
Restricted cash and short-term investments (1) | 318 | 108 | 210 | — | |||||||||||
Total | $ | 5,089 | $ | 296 | $ | 4,793 | $ | — |
(1) | Unrealized gains or losses on short-term investments and restricted cash and short-term investments are recorded in accumulated other comprehensive income (loss) at each measurement date. |
(2) | All short-term investments are classified as available-for-sale and stated at fair value. Our short-term investments mature in one year or less except for $700 million of bank notes/certificates of deposit/time deposits and $341 million of corporate obligations. |
Fair Value Measurements as of December 31, 2016 | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Short-term investments (1) (2): | |||||||||||||||
Money market funds | $ | 589 | $ | 589 | $ | — | $ | — | |||||||
Corporate obligations | 2,550 | — | 2,550 | — | |||||||||||
Bank notes/certificates of deposit/time deposits | 2,898 | — | 2,898 | — | |||||||||||
6,037 | 589 | 5,448 | — | ||||||||||||
Restricted cash and short-term investments (1) | 638 | 638 | — | — | |||||||||||
Total | $ | 6,675 | $ | 1,227 | $ | 5,448 | $ | — |
(1) | Unrealized gains or losses on short-term investments and restricted cash and short-term investments are recorded in accumulated other comprehensive income (loss) at each measurement date. |
(2) | All short-term investments are classified as available-for-sale and stated at fair value. Our short-term investments mature in one year or less except for $385 million of bank notes/certificates of deposit/time deposits and $230 million of corporate obligations. |
December 31, 2017 | December 31, 2016 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Long-term debt, including current maturities | $ | 25,065 | $ | 25,848 | $ | 24,344 | $ | 24,983 |
Pension Benefits | Retiree Medical and Other Postretirement Benefits | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(In millions) | |||||||||||||||
Benefit obligation at beginning of period | $ | 17,238 | $ | 16,395 | $ | 991 | $ | 1,131 | |||||||
Service cost | 2 | 2 | 4 | 3 | |||||||||||
Interest cost | 721 | 749 | 39 | 47 | |||||||||||
Actuarial (gain) loss (1) (2) | 1,016 | 729 | 49 | (105 | ) | ||||||||||
Plan amendments | — | — | — | 7 | |||||||||||
Settlements | (4 | ) | (2 | ) | — | — | |||||||||
Benefit payments | (726 | ) | (635 | ) | (80 | ) | (92 | ) | |||||||
Other | 28 | — | 8 | — | |||||||||||
Benefit obligation at end of period | $ | 18,275 | $ | 17,238 | $ | 1,011 | $ | 991 |
Fair value of plan assets at beginning of period | $ | 10,017 | $ | 9,707 | $ | 266 | $ | 253 | |||||||
Actual return on plan assets | 1,797 | 915 | 37 | 22 | |||||||||||
Employer contributions (3) | 286 | 32 | 72 | 83 | |||||||||||
Settlements | (4 | ) | (2 | ) | — | — | |||||||||
Benefit payments | (726 | ) | (635 | ) | (80 | ) | (92 | ) | |||||||
Other | 25 | — | — | — | |||||||||||
Fair value of plan assets at end of period | $ | 11,395 | $ | 10,017 | $ | 295 | $ | 266 | |||||||
Funded status at end of period | $ | (6,880 | ) | $ | (7,221 | ) | $ | (716 | ) | $ | (725 | ) |
(1) | The December 31, 2017 and 2016 pension actuarial loss primarily relates to weighted average discount rate assumption changes and changes to our mortality assumptions. |
(2) | The December 31, 2017 retiree medical and other postretirement benefits actuarial (gain) loss primarily relates to plan experience adjustments, weighted average discount rate assumption changes and changes to our mortality assumptions and as of December 31, 2016, also includes medical trend and cost assumption changes. |
(3) | During 2017, we contributed $286 million to our defined benefit pension plans, including supplemental contributions of $261 million in addition to a $25 million minimum required cash contribution. |
Pension Benefits | Retiree Medical and Other Postretirement Benefits | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(In millions) | |||||||||||||||
As of December 31, | |||||||||||||||
Current liability | $ | 10 | $ | 7 | $ | 89 | $ | 97 | |||||||
Noncurrent liability | 6,870 | 7,214 | 627 | 628 | |||||||||||
Total liabilities | $ | 6,880 | $ | 7,221 | $ | 716 | $ | 725 |
Net actuarial loss (gain) | $ | 5,351 | $ | 5,484 | $ | (388 | ) | $ | (430 | ) | |||||
Prior service cost (benefit) | 160 | 188 | (600 | ) | (837 | ) | |||||||||
Total accumulated other comprehensive loss (income), pre-tax | $ | 5,511 | $ | 5,672 | $ | (988 | ) | $ | (1,267 | ) |
Pension Benefits | Retiree Medical and Other Postretirement Benefits | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(In millions) | |||||||||||||||
Projected benefit obligation | $ | 18,245 | $ | 17,209 | $ | — | $ | — | |||||||
Accumulated benefit obligation (ABO) | 18,235 | 17,197 | — | — | |||||||||||
Accumulated postretirement benefit obligation | — | — | 1,011 | 990 | |||||||||||
Fair value of plan assets | 11,364 | 9,986 | 295 | 266 | |||||||||||
ABO less fair value of plan assets | 6,871 | 7,211 | — | — |
Pension Benefits | Retiree Medical and Other Postretirement Benefits | ||||||||||||||||||||||
2017 | 2016 | 2015 | 2017 | 2016 | 2015 | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Defined benefit plans: | |||||||||||||||||||||||
Service cost | $ | 2 | $ | 2 | $ | 2 | $ | 4 | $ | 3 | $ | 3 | |||||||||||
Interest cost | 721 | 749 | 737 | 39 | 47 | 50 | |||||||||||||||||
Expected return on assets | (790 | ) | (750 | ) | (851 | ) | (21 | ) | (20 | ) | (19 | ) | |||||||||||
Settlements | 1 | — | 1 | — | — | — | |||||||||||||||||
Amortization of: | |||||||||||||||||||||||
Prior service cost (benefit) | 28 | 28 | 28 | (237 | ) | (240 | ) | (243 | ) | ||||||||||||||
Unrecognized net loss (gain) | 144 | 126 | 112 | (23 | ) | (17 | ) | (9 | ) | ||||||||||||||
Net periodic benefit cost (income) | 106 | 155 | 29 | (238 | ) | (227 | ) | (218 | ) | ||||||||||||||
Defined contribution plan cost | 851 | 766 | 662 | N/A | N/A | N/A | |||||||||||||||||
Total cost (income) | $ | 957 | $ | 921 | $ | 691 | $ | (238 | ) | $ | (227 | ) | $ | (218 | ) |
Pension Benefits | Retiree Medical and Other Postretirement Benefits | ||||||
2017 | 2016 | 2017 | 2016 | ||||
Benefit obligations: | |||||||
Weighted average discount rate | 3.80% | 4.30% | 3.60% | 4.10% |
Pension Benefits | Retiree Medical and Other Postretirement Benefits | ||||||||||
2017 | 2016 | 2015 | 2017 | 2016 | 2015 | ||||||
Net periodic benefit cost: | |||||||||||
Weighted average discount rate | 4.30% | 4.70% | 4.30% | 4.10% | 4.42% | 4.00% | |||||
Weighted average expected rate of return on plan assets | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | |||||
Weighted average health care cost trend rate assumed for next year (1) | N/A | N/A | N/A | 4.19% | 4.25% | 5.21% |
(1) | The weighted average health care cost trend rate at December 31, 2017 is assumed to decline gradually to 3.76% by 2025 and remain level thereafter. |
1% Increase | 1% Decrease | ||||||
Increase (decrease) on 2017 service and interest cost | $ | 2 | $ | (2 | ) | ||
Increase (decrease) on benefit obligation as of December 31, 2017 | 54 | (51 | ) |
2018 | 2019 | 2020 | 2021 | 2022 | 2023-2027 | ||||||||||||||||||
Pension benefits | $ | 715 | $ | 754 | $ | 799 | $ | 843 | $ | 884 | $ | 4,976 | |||||||||||
Retiree medical and other postretirement benefits | 96 | 92 | 80 | 75 | 70 | 315 |
Asset Class/Sub-Class | Allowed Range |
Equity | 65% - 90% |
Public: | |
U.S. Large | 20% - 50% |
U.S. Small/Mid | 0% - 10% |
International | 17% - 27% |
Emerging Markets | 5% - 11% |
Alternative Investments | 5% - 20% |
Fixed Income | 15% - 40% |
Public: | |
U.S. Long Duration | 15% - 30% |
High Yield and Emerging Markets | 0% - 10% |
Private Income | 0% - 10% |
Other | 0% - 5% |
Cash Equivalents | 0% - 5% |
Fair Value Measurements as of December 31, 2017 | |||||||||||||||
Asset Category | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||
Cash and cash equivalents | $ | 28 | $ | — | $ | — | $ | 28 | |||||||
Equity securities: | |||||||||||||||
International markets (a) (b) | 3,837 | — | — | 3,837 | |||||||||||
Large-cap companies (b) | 2,451 | — | — | 2,451 | |||||||||||
Mid-cap companies (b) | 744 | — | — | 744 | |||||||||||
Small-cap companies (b) | 125 | — | — | 125 | |||||||||||
Mutual funds (c) | 55 | — | — | 55 | |||||||||||
Fixed income: | |||||||||||||||
Corporate bonds (d) | — | 2,344 | — | 2,344 | |||||||||||
Government securities (e) | — | 238 | — | 238 | |||||||||||
U.S. municipal securities | — | 39 | — | 39 | |||||||||||
Alternative instruments: | |||||||||||||||
Private equity partnerships (f) | — | — | 14 | 14 | |||||||||||
Private equity partnerships measured at net asset value (f) (h) | — | — | — | 879 | |||||||||||
Common/collective trusts (g) | — | 315 | — | 315 | |||||||||||
Common/collective trusts and 103-12 Investment Trust measured at net asset value (g) (h) | — | — | — | 283 | |||||||||||
Insurance group annuity contracts | — | — | 2 | 2 | |||||||||||
Dividend and interest receivable | 44 | — | — | 44 | |||||||||||
Due to/from brokers for sale of securities – net | 3 | — | — | 3 | |||||||||||
Other liabilities – net | (6 | ) | — | — | (6 | ) | |||||||||
Total | $ | 7,281 | $ | 2,936 | $ | 16 | $ | 11,395 |
a) | Holdings are diversified as follows: 17% United Kingdom, 11% Japan, 9% France, 6% Switzerland, 16% emerging markets and the remaining 41% with no concentration greater than 5% in any one country. |
b) | There are no significant concentrations of holdings by company or industry. |
c) | Investment includes mutual funds invested 39% in equity securities of large-cap, mid-cap and small-cap U.S. companies, 34% in U.S. treasuries and corporate bonds and 27% in equity securities of international companies. |
d) | Includes approximately 76% investments in corporate debt with a S&P rating lower than A and 24% investments in corporate debt with a S&P rating A or higher. Holdings include 85% U.S. companies, 12% international companies and 3% emerging market companies. |
e) | Includes approximately 27% investments in U.S. domestic government securities, 43% in emerging market government securities and 30% in international government securities. There are no significant foreign currency risks within this classification. |
f) | Includes limited partnerships that invest primarily in U.S. (94%) and European (6%) buyout opportunities of a range of privately held companies. The pension plan’s master trust does not have the right to redeem its limited partnership investment at its net asset value, but rather receives distributions as the underlying assets are liquidated. It is estimated that the underlying assets of these funds will be gradually liquidated over the next one to ten years. Additionally, the pension plan’s master trust has future funding commitments of approximately $903 million over the next ten years. |
g) | Investment includes 42% in a collective interest trust investing primarily in short-term securities, 40% in an emerging market 103-12 Investment Trust with investments in emerging country equity securities, 10% in Canadian segregated balanced value, income growth and diversified pooled funds and 8% in a common/collective trust investing in securities of smaller companies located outside the U.S., including developing markets. For some trusts, requests for withdrawals must meet specific requirements with advance notice of redemption preferred. |
h) | Certain investments that are measured using net asset value per share (or its equivalent) as a practical expedient for fair value have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the notes to the consolidated financial statements. |
Fair Value Measurements as of December 31, 2016 | |||||||||||||||
Asset Category | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||
Cash and cash equivalents | $ | 573 | $ | — | $ | — | $ | 573 | |||||||
Equity securities: | |||||||||||||||
International markets (a) (b) | 3,232 | — | — | 3,232 | |||||||||||
Large-cap companies (b) | 2,253 | — | — | 2,253 | |||||||||||
Mid-cap companies (b) | 371 | — | — | 371 | |||||||||||
Small-cap companies (b) | 6 | — | — | 6 | |||||||||||
Mutual funds (c) | 49 | — | — | 49 | |||||||||||
Fixed income: | |||||||||||||||
Corporate bonds (d) | — | 2,337 | — | 2,337 | |||||||||||
Government securities (e) | — | 150 | — | 150 | |||||||||||
U.S. municipal securities | — | 37 | — | 37 | |||||||||||
Alternative instruments: | |||||||||||||||
Private equity partnerships (f) | — | — | 21 | 21 | |||||||||||
Private equity partnerships measured at net asset value (f) (h) | — | — | — | 703 | |||||||||||
Common/collective trusts (g) | — | 32 | — | 32 | |||||||||||
Common/collective trusts and 103-12 Investment Trust measured at net asset value (g) (h) | — | — | — | 227 | |||||||||||
Insurance group annuity contracts | — | — | 2 | 2 | |||||||||||
Dividend and interest receivable | 40 | — | — | 40 | |||||||||||
Due to/from brokers for sale of securities – net | (9 | ) | — | — | (9 | ) | |||||||||
Other liabilities – net | (7 | ) | — | — | (7 | ) | |||||||||
Total | $ | 6,508 | $ | 2,556 | $ | 23 | $ | 10,017 |
a) | Holdings are diversified as follows: 15% United Kingdom, 12% Japan, 10% France, 7% Switzerland, 6% Netherlands, 17% other emerging markets and the remaining 33% with no concentration greater than 5% in any one country. |
b) | There are no significant concentrations of holdings by company or industry. |
c) | Investment includes mutual funds invested 42% in equity securities of large-cap, mid-cap and small-cap U.S. companies, 33% in U.S. treasuries and corporate bonds and 25% in equity securities of international companies. |
d) | Includes approximately 74% investments in corporate debt with a S&P rating lower than A and 26% investments in corporate debt with a S&P rating A or higher. Holdings include 86% U.S. companies, 12% international companies and 2% emerging market companies. |
e) | Includes approximately 61% investments in U.S. domestic government securities and 39% in emerging market government securities. There are no significant foreign currency risks within this classification. |
f) | Includes limited partnerships that invest primarily in U.S. (95%) and European (5%) buyout opportunities of a range of privately held companies. The pension plan’s master trust does not have the right to redeem its limited partnership investment at its net asset value, but rather receives distributions as the underlying assets are liquidated. It is estimated that the underlying assets of these funds will be gradually liquidated over the next one to ten years. Additionally, the pension plan’s master trust has future funding commitments of approximately $456 million over the next ten years. |
g) | Investment includes 73% in an emerging market 103-12 Investment Trust with investments in emerging country equity securities, 12% in Canadian segregated balanced value, income growth and diversified pooled funds and 15% in a common/collective trust investing in securities of smaller companies located outside the U.S., including developing markets. Requests for withdrawals must meet specific requirements with advance notice of redemption preferred. |
h) | Certain investments that are measured using net asset value per share (or its equivalent) as a practical expedient for fair value have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the notes to the consolidated financial statements. |
Private Equity Partnerships | Insurance Group Annuity Contracts | ||||||
Beginning balance at December 31, 2016 | $ | 21 | $ | 2 | |||
Actual loss on plan assets: | |||||||
Relating to assets still held at the reporting date | (4 | ) | — | ||||
Purchases | 1 | — | |||||
Sales | (1 | ) | — | ||||
Transfers out | (3 | ) | — | ||||
Ending balance at December 31, 2017 | $ | 14 | $ | 2 |
Private Equity Partnerships | Insurance Group Annuity Contracts | ||||||
Beginning balance at December 31, 2015 | $ | 16 | $ | 2 | |||
Actual return on plan assets: | |||||||
Relating to assets sold during the period | 7 | — | |||||
Purchases | 7 | — | |||||
Sales | (9 | ) | — | ||||
Ending balance at December 31, 2016 | $ | 21 | $ | 2 |
Fair Value Measurements as of December 31, 2017 | |||||||||||||||
Asset Category | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||
Money market fund | $ | 5 | $ | — | $ | — | $ | 5 | |||||||
Mutual funds – AAL Class | — | 290 | — | 290 | |||||||||||
Total | $ | 5 | $ | 290 | $ | — | $ | 295 |
Fair Value Measurements as of December 31, 2016 | |||||||||||||||
Asset Category | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||
Money market fund | $ | 5 | $ | — | $ | — | $ | 5 | |||||||
Mutual funds – Institutional Class | 261 | — | — | 261 | |||||||||||
Total | $ | 266 | $ | — | $ | — | $ | 266 |
Pension, Retiree Medical and Other Postretirement Benefits | Unrealized Gain (Loss) on Investments | Income Tax Benefit (Provision) (1) | Total | ||||||||||||
Balance at December 31, 2015 | $ | (3,842 | ) | $ | (10 | ) | $ | (880 | ) | $ | (4,732 | ) | |||
Other comprehensive income (loss) before reclassifications | (462 | ) | 10 | 166 | (286 | ) | |||||||||
Amounts reclassified from AOCI | (102 | ) | — | 37 | (2) | (65 | ) | ||||||||
Net current-period other comprehensive income (loss) | (564 | ) | 10 | 203 | (351 | ) | |||||||||
Balance at December 31, 2016 | (4,406 | ) | — | (677 | ) | (5,083 | ) | ||||||||
Other comprehensive income (loss) before reclassifications | (30 | ) | (1 | ) | 15 | (16 | ) | ||||||||
Amounts reclassified from AOCI | (87 | ) | — | 32 | (2) | (55 | ) | ||||||||
Net current-period other comprehensive income (loss) | (117 | ) | (1 | ) | 47 | (71 | ) | ||||||||
Balance at December 31, 2017 | $ | (4,523 | ) | $ | (1 | ) | $ | (630 | ) | $ | (5,154 | ) |
(1) | Relates principally to pension, retiree medical and other postretirement benefits obligations that will not be recognized in net income until the obligations are fully extinguished. |
(2) | Relates to pension, retiree medical and other postretirement benefits obligations and is recognized within the income tax provision on the consolidated statement of operations. |
Amount reclassified from AOCI | Affected line items on the consolidated statement of operations | ||||||||
Year Ended December 31, | |||||||||
AOCI Components | 2017 | 2016 | |||||||
Amortization of pension, retiree medical and other postretirement benefits: | |||||||||
Prior service benefit | $ | (132 | ) | $ | (134 | ) | Salaries, wages and benefits | ||
Actuarial loss | 77 | 69 | Salaries, wages and benefits | ||||||
Total reclassifications for the period, net of tax | $ | (55 | ) | $ | (65 | ) |
2018 | 2019 | 2020 | 2021 | 2022 | 2023 and Thereafter | Total | |||||||||||||||||||||
Payments for aircraft commitments and certain engines (1) | $ | 1,826 | $ | 2,730 | $ | 2,730 | $ | 2,858 | $ | 2,138 | $ | 1,482 | $ | 13,764 |
(1) | These amounts are net of purchase deposits currently held by the manufacturers and include all commitments for regional aircraft. American has granted a security interest in its purchase deposits with Boeing. Our purchase deposits held by all manufacturers totaled $1.2 billion as of December 31, 2017. |
2018 | 2019 | 2020 | 2021 | 2022 | 2023 and Thereafter | Total | |||||||||||||||||||||
Future minimum lease payments | $ | 2,195 | $ | 1,974 | $ | 1,784 | $ | 1,339 | $ | 1,159 | $ | 3,266 | $ | 11,717 |
2018 | 2019 | 2020 | 2021 | 2022 | 2023 and Thereafter | Total | |||||||||||||||||||||
Minimum fixed obligations under capacity purchase agreements with third-party regional carriers (1) | $ | 1,457 | $ | 1,311 | $ | 1,063 | $ | 866 | $ | 699 | $ | 2,073 | $ | 7,469 |
(1) | Represents minimum payments under capacity purchase agreements with third-party regional carriers. These commitments are estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and American’s actual payments could differ materially. These obligations also include the portion of American’s future obligations representing the lease of aircraft for accounting purposes in the amount of approximately $377 million in 2018, $355 million in 2019, $320 million in 2020, $282 million in 2021, $239 million in 2022 and $699 million in 2023 and thereafter. |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Non-cash investing and financing activities: | |||||||||||
Equity investment | $ | 120 | $ | — | $ | — | |||||
Settlement of bankruptcy obligations | 15 | 3 | 63 | ||||||||
Capital lease obligations | — | — | 5 | ||||||||
Supplemental information: | |||||||||||
Interest paid, net | 1,040 | 964 | 873 | ||||||||
Income taxes paid | 20 | 16 | 20 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
DOT Domestic | $ | 29,612 | $ | 28,620 | $ | 28,761 | |||||
DOT Latin America | 5,422 | 4,995 | 5,539 | ||||||||
DOT Atlantic | 5,059 | 4,769 | 5,146 | ||||||||
DOT Pacific | 2,114 | 1,796 | 1,544 | ||||||||
Total operating revenues | $ | 42,207 | $ | 40,180 | $ | 40,990 |
Number of Shares | Weighted Average Grant Date Fair Value | |||||
(In thousands) | ||||||
Outstanding at December 31, 2014 | 21,342 | $ | 26.43 | |||
Granted | 2,213 | 46.62 | ||||
Vested and released | (17,163 | ) | 25.20 | |||
Forfeited | (785 | ) | 27.12 | |||
Outstanding at December 31, 2015 | 5,607 | $ | 38.08 | |||
Granted | 2,655 | 41.34 | ||||
Vested and released | (2,754 | ) | 34.83 | |||
Forfeited | (321 | ) | 40.15 | |||
Outstanding at December 31, 2016 | 5,187 | $ | 41.48 | |||
Granted | 2,309 | 48.58 | ||||
Vested and released | (2,708 | ) | 39.63 | |||
Forfeited | (464 | ) | 44.48 | |||
Outstanding at December 31, 2017 | 4,324 | $ | 46.94 |
Balance at Beginning of Year | Changes Charged to Statement of Operations Accounts | Write-offs (Net of Recoveries) | Sales, Retirements and Transfers | Balance at End of Year | |||||||||||||||
Allowance for obsolescence of spare parts | |||||||||||||||||||
Year ended December 31, 2017 | $ | 765 | $ | 29 | $ | (4 | ) | $ | (21 | ) | $ | 769 | |||||||
Year ended December 31, 2016 | 728 | 37 | (3 | ) | 3 | 765 | |||||||||||||
Year ended December 31, 2015 | 673 | 50 | (4 | ) | 9 | 728 | |||||||||||||
Allowance for uncollectible accounts | |||||||||||||||||||
Year ended December 31, 2017 | $ | 36 | $ | 43 | $ | (55 | ) | $ | — | $ | 24 | ||||||||
Year ended December 31, 2016 | 41 | 47 | (52 | ) | — | 36 | |||||||||||||
Year ended December 31, 2015 | 17 | 46 | (22 | ) | — | 41 |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
2017 | |||||||||||||||
Operating revenues | $ | 9,624 | $ | 11,105 | $ | 10,878 | $ | 10,600 | |||||||
Operating expenses | 9,023 | 9,570 | 9,646 | 9,910 | |||||||||||
Operating income | 601 | 1,535 | 1,232 | 690 | |||||||||||
Net income | 234 | 803 | 624 | 258 | |||||||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.46 | $ | 1.64 | $ | 1.29 | $ | 0.54 | |||||||
Diluted | $ | 0.46 | $ | 1.63 | $ | 1.28 | $ | 0.54 | |||||||
Shares used for computation (in thousands): | |||||||||||||||
Basic | 503,902 | 490,818 | 484,772 | 477,165 | |||||||||||
Diluted | 507,797 | 492,965 | 486,625 | 479,382 | |||||||||||
2016 | |||||||||||||||
Operating revenues | $ | 9,435 | $ | 10,363 | $ | 10,594 | $ | 9,789 | |||||||
Operating expenses | 8,100 | 8,612 | 9,163 | 9,022 | |||||||||||
Operating income | 1,335 | 1,751 | 1,431 | 767 | |||||||||||
Net income | 700 | 950 | 737 | 289 | |||||||||||
Earnings per share: | |||||||||||||||
Basic | $ | 1.15 | $ | 1.69 | $ | 1.40 | $ | 0.56 | |||||||
Diluted | $ | 1.14 | $ | 1.68 | $ | 1.40 | $ | 0.56 | |||||||
Shares used for computation (in thousands): | |||||||||||||||
Basic | 606,245 | 563,000 | 525,415 | 514,571 | |||||||||||
Diluted | 611,488 | 566,040 | 528,510 | 518,358 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Operating revenues: | |||||||||||
Mainline passenger | $ | 29,238 | $ | 27,909 | $ | 29,037 | |||||
Regional passenger | 6,895 | 6,670 | 6,475 | ||||||||
Cargo | 800 | 700 | 760 | ||||||||
Other | 5,262 | 4,884 | 4,666 | ||||||||
Total operating revenues | 42,195 | 40,163 | 40,938 | ||||||||
Operating expenses: | |||||||||||
Aircraft fuel and related taxes | 6,128 | 5,071 | 6,226 | ||||||||
Salaries, wages and benefits | 11,804 | 10,881 | 9,514 | ||||||||
Regional expenses | 6,572 | 6,009 | 5,952 | ||||||||
Maintenance, materials and repairs | 1,959 | 1,834 | 1,889 | ||||||||
Other rent and landing fees | 1,806 | 1,772 | 1,731 | ||||||||
Aircraft rent | 1,197 | 1,203 | 1,250 | ||||||||
Selling expenses | 1,477 | 1,323 | 1,394 | ||||||||
Depreciation and amortization | 1,702 | 1,525 | 1,364 | ||||||||
Special items, net | 712 | 709 | 1,051 | ||||||||
Other | 4,806 | 4,532 | 4,378 | ||||||||
Total operating expenses | 38,163 | 34,859 | 34,749 | ||||||||
Operating income | 4,032 | 5,304 | 6,189 | ||||||||
Nonoperating income (expense): | |||||||||||
Interest income | 215 | 104 | 49 | ||||||||
Interest expense, net | (988 | ) | (906 | ) | (796 | ) | |||||
Other, net | (15 | ) | (59 | ) | (774 | ) | |||||
Total nonoperating expense, net | (788 | ) | (861 | ) | (1,521 | ) | |||||
Income before income taxes | 3,244 | 4,443 | 4,668 | ||||||||
Income tax provision (benefit) | 1,322 | 1,662 | (3,452 | ) | |||||||
Net income | $ | 1,922 | $ | 2,781 | $ | 8,120 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Net income | $ | 1,922 | $ | 2,781 | $ | 8,120 | |||||
Other comprehensive income (loss), net of tax: | |||||||||||
Pension, retiree medical and other postretirement benefits: | |||||||||||
Amortization of actuarial loss and prior service cost | (55 | ) | (65 | ) | (109 | ) | |||||
Current year change | (13 | ) | (292 | ) | (51 | ) | |||||
Investments and derivative financial instruments | (1 | ) | 6 | (15 | ) | ||||||
Total other comprehensive loss, net of tax | (69 | ) | (351 | ) | (175 | ) | |||||
Total comprehensive income | $ | 1,853 | $ | 2,430 | $ | 7,945 |
December 31, | |||||||
2017 | 2016 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash | $ | 287 | $ | 310 | |||
Short-term investments | 4,768 | 6,034 | |||||
Restricted cash and short-term investments | 318 | 638 | |||||
Accounts receivable, net | 1,755 | 1,599 | |||||
Receivables from related parties, net | 8,822 | 6,810 | |||||
Aircraft fuel, spare parts and supplies, net | 1,294 | 1,032 | |||||
Prepaid expenses and other | 647 | 633 | |||||
Total current assets | 17,891 | 17,056 | |||||
Operating property and equipment | |||||||
Flight equipment | 39,993 | 36,671 | |||||
Ground property and equipment | 8,006 | 6,910 | |||||
Equipment purchase deposits | 1,217 | 1,209 | |||||
Total property and equipment, at cost | 49,216 | 44,790 | |||||
Less accumulated depreciation and amortization | (15,354 | ) | (13,909 | ) | |||
Total property and equipment, net | 33,862 | 30,881 | |||||
Other assets | |||||||
Goodwill | 4,091 | 4,091 | |||||
Intangibles, net of accumulated amortization of $622 and $578, respectively | 2,203 | 2,173 | |||||
Deferred tax asset | 682 | 1,912 | |||||
Other assets | 1,283 | 1,979 | |||||
Total other assets | 8,259 | 10,155 | |||||
Total assets | $ | 60,012 | $ | 58,092 | |||
LIABILITIES AND STOCKHOLDER’S EQUITY | |||||||
Current liabilities | |||||||
Current maturities of long-term debt and capital leases | $ | 2,058 | $ | 1,859 | |||
Accounts payable | 1,625 | 1,546 | |||||
Accrued salaries and wages | 1,613 | 1,460 | |||||
Air traffic liability | 3,978 | 3,912 | |||||
Loyalty program liability | 2,791 | 2,789 | |||||
Other accrued liabilities | 2,209 | 2,106 | |||||
Total current liabilities | 14,274 | 13,672 | |||||
Noncurrent liabilities | |||||||
Long-term debt and capital leases, net of current maturities | 21,236 | 20,718 | |||||
Pension and postretirement benefits | 7,452 | 7,800 | |||||
Other liabilities | 2,456 | 3,253 | |||||
Total noncurrent liabilities | 31,144 | 31,771 | |||||
Commitments and contingencies (Note 9) | |||||||
Stockholder’s equity | |||||||
Common stock, $1.00 par value; 1,000 shares authorized, issued and outstanding | — | — | |||||
Additional paid-in capital | 16,716 | 16,624 | |||||
Accumulated other comprehensive loss | (5,251 | ) | (5,182 | ) | |||
Retained earnings | 3,129 | 1,207 | |||||
Total stockholder’s equity | 14,594 | 12,649 | |||||
Total liabilities and stockholder’s equity | $ | 60,012 | $ | 58,092 |
December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 1,922 | $ | 2,781 | $ | 8,120 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 1,964 | 1,762 | 1,560 | ||||||||
Deferred income tax provision (benefit) | 1,298 | 1,652 | (3,467 | ) | |||||||
Debt discount and lease amortization | (119 | ) | (124 | ) | (126 | ) | |||||
Special items, non-cash | 272 | 270 | 295 | ||||||||
Pension and postretirement | (132 | ) | (70 | ) | (194 | ) | |||||
Share-based compensation | 90 | 100 | 284 | ||||||||
Other, net | (25 | ) | (16 | ) | (21 | ) | |||||
Changes in operating assets and liabilities: | |||||||||||
Decrease (increase) in accounts receivable | (189 | ) | (169 | ) | 354 | ||||||
Increase in other assets | (405 | ) | (205 | ) | (22 | ) | |||||
Increase in accounts payable and accrued liabilities | 266 | 336 | 214 | ||||||||
Increase (decrease) in air traffic liability | 66 | 164 | (505 | ) | |||||||
Increase in receivables from related parties, net | (1,994 | ) | (4,862 | ) | (3,695 | ) | |||||
Increase (decrease) in loyalty program liability | 2 | 264 | (295 | ) | |||||||
Contributions to pension plans | (286 | ) | (32 | ) | (6 | ) | |||||
Increase (decrease) in other liabilities | 140 | (101 | ) | 91 | |||||||
Net cash provided by operating activities | 2,870 | 1,750 | 2,587 | ||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures and aircraft purchase deposits | (5,881 | ) | (5,657 | ) | (6,075 | ) | |||||
Proceeds from sale of property and equipment and sale-leaseback transactions | 922 | 115 | 26 | ||||||||
Purchases of short-term investments | (4,633 | ) | (6,241 | ) | (8,126 | ) | |||||
Sales of short-term investments | 5,915 | 6,092 | 8,517 | ||||||||
Decrease in restricted cash and short-term investments | 319 | 57 | 79 | ||||||||
Purchase of equity investment | (203 | ) | — | — | |||||||
Net cash used in investing activities | (3,561 | ) | (5,634 | ) | (5,579 | ) | |||||
Cash flows from financing activities: | |||||||||||
Proceeds from issuance of long-term debt | 3,058 | 7,701 | 4,509 | ||||||||
Payments on long-term debt and capital leases | (2,332 | ) | (3,827 | ) | (2,153 | ) | |||||
Deferred financing costs | (85 | ) | (77 | ) | (80 | ) | |||||
Other financing activities | 27 | 33 | 96 | ||||||||
Net cash provided by financing activities | 668 | 3,830 | 2,372 | ||||||||
Net decrease in cash | (23 | ) | (54 | ) | (620 | ) | |||||
Cash at beginning of year | 310 | 364 | 984 | ||||||||
Cash at end of year | $ | 287 | $ | 310 | $ | 364 |
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Deficit) | Total | |||||||||||||||
Balance at December 31, 2014 | $ | — | $ | 16,174 | $ | (4,656 | ) | $ | (10,112 | ) | $ | 1,406 | |||||||
Net income | — | — | — | 8,120 | 8,120 | ||||||||||||||
Changes in pension, retiree medical and other postretirement benefits liability | — | — | (160 | ) | — | (160 | ) | ||||||||||||
Net changes in fair value of derivative financial instruments | — | — | (9 | ) | — | (9 | ) | ||||||||||||
Share-based compensation expense | — | 284 | — | — | 284 | ||||||||||||||
Intercompany equity transfer | — | 63 | — | — | 63 | ||||||||||||||
Change in unrealized loss on investments | — | — | (6 | ) | — | (6 | ) | ||||||||||||
Balance at December 31, 2015 | — | 16,521 | (4,831 | ) | (1,992 | ) | 9,698 | ||||||||||||
Net income | — | — | — | 2,781 | 2,781 | ||||||||||||||
Changes in pension, retiree medical and other postretirement benefits liability | — | — | (563 | ) | — | (563 | ) | ||||||||||||
Non-cash tax benefit | — | — | 203 | — | 203 | ||||||||||||||
Share-based compensation expense | — | 100 | — | — | 100 | ||||||||||||||
Impact of adoption of Accounting Standards Update (ASU) 2016-09 related to share-based compensation (See Note 12) | — | — | — | 418 | 418 | ||||||||||||||
Intercompany equity transfer | — | 3 | — | — | 3 | ||||||||||||||
Change in unrealized loss on investments | — | — | 9 | — | 9 | ||||||||||||||
Balance at December 31, 2016 | — | 16,624 | (5,182 | ) | 1,207 | 12,649 | |||||||||||||
Net income | — | — | — | 1,922 | 1,922 | ||||||||||||||
Changes in pension, retiree medical and other postretirement benefits liability | — | — | (114 | ) | — | (114 | ) | ||||||||||||
Non-cash tax benefit | — | — | 46 | — | 46 | ||||||||||||||
Share-based compensation expense | — | 90 | — | — | 90 | ||||||||||||||
Intercompany equity transfer | — | 2 | — | — | 2 | ||||||||||||||
Change in unrealized loss on investments | — | — | (1 | ) | — | (1 | ) | ||||||||||||
Balance at December 31, 2017 | $ | — | $ | 16,716 | $ | (5,251 | ) | $ | 3,129 | $ | 14,594 |
Principal Property and Equipment Classification | Estimated Useful Life |
Aircraft, engines and related rotable parts | 20 – 30 years |
Buildings and improvements | 5 – 30 years |
Furniture, fixtures and other equipment | 3 – 10 years |
Capitalized software | 5 – 10 years |
December 31, | |||||||
2017 | 2016 | ||||||
Domestic airport slots | $ | 365 | $ | 365 | |||
Customer relationships | 300 | 300 | |||||
Marketing agreements | 105 | 105 | |||||
Tradenames | 35 | 35 | |||||
Airport gate leasehold rights | 137 | 137 | |||||
Accumulated amortization | (622 | ) | (578 | ) | |||
Total | $ | 320 | $ | 364 |
2018 | $ | 41 | |
2019 | 41 | ||
2020 | 41 | ||
2021 | 41 | ||
2022 | 41 | ||
2023 and thereafter | 115 | ||
Total | $ | 320 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Aircraft fuel and related taxes | $ | 1,382 | $ | 1,109 | $ | 1,230 | |||||
Salaries, wages and benefits | 356 | 327 | 276 | ||||||||
Capacity purchases from third-party regional carriers (1) | 3,283 | 3,186 | 3,137 | ||||||||
Maintenance, materials and repairs | 7 | 4 | 4 | ||||||||
Other rent and landing fees | 602 | 487 | 434 | ||||||||
Aircraft rent | 27 | 28 | 28 | ||||||||
Selling expenses | 361 | 347 | 333 | ||||||||
Depreciation and amortization | 262 | 237 | 197 | ||||||||
Special items, net | 3 | 13 | 18 | ||||||||
Other | 289 | 271 | 295 | ||||||||
Total regional expenses | $ | 6,572 | $ | 6,009 | $ | 5,952 |
(1) | For the years ended December 31, 2017, 2016 and 2015, the component of capacity purchase expenses representing the lease of aircraft for accounting purposes was approximately $437 million, $405 million and $492 million, respectively. |
New Revenue Standard | New Retirement Standard | ||||||||||||||||||
As Reported | Deferred Revenue Method | Reclassifications | Reclassifications | As Recast | |||||||||||||||
Operating revenues: | |||||||||||||||||||
Passenger | $ | 36,133 | $ | 311 | $ | 2,687 | $ | — | $ | 39,131 | |||||||||
Cargo | 800 | — | 90 | — | 890 | ||||||||||||||
Other | 5,262 | — | (2,673 | ) | — | 2,589 | |||||||||||||
Total operating revenues | 42,195 | 311 | 104 | — | 42,610 | ||||||||||||||
Total operating expenses | 38,163 | — | 104 | 138 | 38,405 | ||||||||||||||
Operating income | 4,032 | 311 | — | (138 | ) | 4,205 | |||||||||||||
Total nonoperating expense, net | (788 | ) | — | — | 138 | (650 | ) | ||||||||||||
Income before income taxes | 3,244 | 311 | — | — | 3,555 | ||||||||||||||
Income tax provision (1) | 1,322 | 948 | — | — | 2,270 | ||||||||||||||
Net income | $ | 1,922 | $ | (637 | ) | $ | — | $ | — | $ | 1,285 |
(1) | The adjustment to the 2017 income tax provision includes an $830 million special charge to reduce American’s deferred tax asset associated with loyalty program liabilities as a result of H.R. 1, the 2017 Tax Cuts and Jobs Act (the 2017 Tax Act), enacted in December 2017 that reduced the federal corporate income tax rate from 35% to 21%. |
As Reported | New Revenue Standard | As Recast | |||||||||
Deferred tax asset | $ | 682 | $ | 1,389 | $ | 2,071 | |||||
Air traffic liability | 3,978 | 64 | 4,042 | ||||||||
Current loyalty program liability | 2,791 | 384 | 3,175 | ||||||||
Noncurrent loyalty program liability | — | 5,647 | 5,647 | ||||||||
Total stockholder’s equity (deficit) | 14,594 | (4,706 | ) | 9,888 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Merger integration expenses (1) | $ | 273 | $ | 514 | $ | 826 | |||||
Fleet restructuring expenses (2) | 232 | 177 | 210 | ||||||||
Employee 2017 Tax Act bonus expense (3) | 123 | — | — | ||||||||
Labor contract expenses (4) | 46 | — | — | ||||||||
Mark-to-market adjustments for bankruptcy obligations | 27 | 25 | (53 | ) | |||||||
Other operating charges (credits), net | 11 | (7 | ) | 68 | |||||||
Mainline operating special items, net | 712 | 709 | 1,051 | ||||||||
Regional operating special items, net | 3 | 13 | 18 | ||||||||
Operating special items, net | 715 | 722 | 1,069 | ||||||||
Debt refinancing and extinguishment charges | 22 | 49 | 24 | ||||||||
Venezuela foreign currency losses | — | — | 592 | ||||||||
Nonoperating special items, net | 22 | 49 | 616 | ||||||||
Impact of the 2017 Tax Act on deferred tax assets and liabilities | 93 | — | — | ||||||||
Release of deferred tax valuation allowance | — | — | (3,493 | ) | |||||||
Other tax charges | — | — | 25 | ||||||||
Income tax special items, net | 93 | — | (3,468 | ) |
(1) | Merger integration expenses included costs related to information technology, professional fees, re-branding of aircraft and airport facilities and training, and in 2016, also included costs related to alignment of labor union contracts, the launch of re-branded uniforms, relocation and severance, and in 2015, also included share-based compensation related to awards granted in connection with the Merger that fully vested in December 2015. |
(2) | Fleet restructuring expenses, driven in part by the Merger, principally included the acceleration of depreciation, impairments, remaining lease payments and lease return costs for aircraft and related equipment grounded or expected to be grounded earlier than planned. |
(3) | Employee bonus expense included costs related to the $1,000 cash bonus and associated payroll taxes granted to mainline employees as of December 31, 2017 in recognition of the 2017 Tax Act. |
(4) | Labor contract expenses primarily included one-time charges to adjust the vacation accruals for pilots and flight attendants as a result of the mid-contract pay rate adjustments effective in the second quarter of 2017. |
December 31, | |||||||
2017 | 2016 | ||||||
Secured | |||||||
2013 Credit Facilities, variable interest rate of 3.55%, installments through 2020 (a) | $ | 1,825 | $ | 1,843 | |||
2014 Credit Facilities, variable interest rate of 3.43%, installments through 2021 (a) | 728 | 735 | |||||
April 2016 Credit Facilities, variable interest rate of 3.57%, installments through 2023 (a) | 990 | 1,000 | |||||
December 2016 Credit Facilities, variable interest rate of 3.48%, installments through 2023 (a) | 1,238 | 1,250 | |||||
Aircraft enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 3.00% to 9.75%, averaging 4.30%, maturing from 2018 to 2029 (b) | 11,881 | 10,912 | |||||
Equipment loans and other notes payable, fixed and variable interest rates ranging from 2.34% to 8.48%, averaging 3.29%, maturing from 2018 to 2029 (c) | 5,259 | 5,343 | |||||
Special facility revenue bonds, fixed interest rates ranging from 5.00% to 5.50%, maturing from 2018 to 2035 | 828 | 862 | |||||
Other secured obligations, fixed interest rates ranging from 3.81% to 12.24%, maturing from 2018 to 2028 | 772 | 848 | |||||
Total long-term debt and capital lease obligations | 23,521 | 22,793 | |||||
Less: Total unamortized debt discount, premium and issuance costs | 227 | 216 | |||||
Less: Current maturities | 2,058 | 1,859 | |||||
Long-term debt and capital lease obligations, net of current maturities | $ | 21,236 | $ | 20,718 |
2013 Revolving Facility | $ | 1,200 | |
2014 Revolving Facility | 1,000 | ||
April 2016 Revolving Facility | 300 | ||
Total | $ | 2,500 |
2018 | $ | 2,098 | |
2019 | 2,118 | ||
2020 | 3,563 | ||
2021 | 2,854 | ||
2022 | 1,286 | ||
2023 and thereafter | 11,602 | ||
Total | $ | 23,521 |
2013 Credit Facilities | 2014 Credit Facilities | April 2016 Credit Facilities | December 2016 Credit Facilities | ||||||||||
2013 Term Loan | 2013 Revolving Facility | 2014 Term Loan | 2014 Revolving Facility | April 2016 Term Loan | April 2016 Revolving Facility | December 2016 Term Loan | |||||||
Aggregate principal issued or credit facility availability (in millions) | $1,900 | $1,200 | $750 | $1,000 | $1,000 | $300 | $1,250 | ||||||
Principal outstanding or drawn (in millions) | $1,825 | $— | $728 | $— | $990 | $— | $1,238 | ||||||
Maturity date | June 2020 | October 2022 | October 2021 | October 2022 | April 2023 | October 2022 | December 2023 | ||||||
LIBOR margin | 2.00% | 2.25% | 2.00% | 2.25% | 2.00% | 2.25% | 2.00% |
2016-3 EETCs | |||||
Series AA | Series A | Series B | |||
Aggregate principal issued | $558 million | $256 million | $193 million | ||
Fixed interest rate per annum | 3.00% | 3.25% | 3.75% | ||
Maturity date | October 2028 | October 2028 | October 2025 |
2017-1 EETCs | |||||
Series AA | Series A | Series B | |||
Aggregate principal issued | $537 million | $248 million | $198 million | ||
Fixed interest rate per annum | 3.65% | 4.00% | 4.95% | ||
Maturity date | February 2029 | February 2029 | February 2025 |
2017-2 EETCs | |||||
Series AA | Series A | Series B | |||
Aggregate principal issued | $545 million | $252 million | $221 million | ||
Remaining escrowed proceeds | $152 million | $70 million | $61 million | ||
Fixed interest rate per annum | 3.35% | 3.60% | 3.70% | ||
Maturity date | October 2029 | October 2029 | October 2025 |
2013 Credit Facilities | 2014 Credit Facilities | April 2016 Credit Facilities | December 2016 Credit Facilities | ||||
Frequency of Appraisals of Appraised Collateral | Annual | Annual | Annual | Annual | |||
LTV Requirement | 1.6x Collateral valuation to amount of debt outstanding (62.5% LTV) | 1.6x Collateral valuation to amount of debt outstanding (62.5% LTV) | 1.6x Collateral valuation to amount of debt outstanding (62.5% LTV) | 1.6x Collateral valuation to amount of debt outstanding (62.5% LTV) | |||
LTV as of Last Measurement Date | 33.9% | 23.1% | 42.7% | 59.0% | |||
Collateral Description | Generally, certain slots, route authorities, and airport gate leasehold rights used by American to operate all services between the U.S. and South America | Generally, certain slots, route authorities and airport gate leasehold rights used by American to operate certain services between the U.S. and London Heathrow | Generally, certain spare parts | Generally, certain Ronald Reagan Washington National Airport (DCA) slots, certain La Guardia Airport (LGA) slots, certain simulators and certain leasehold rights |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Current income tax provision: | |||||||||||
Federal | $ | — | $ | — | $ | — | |||||
State and Local | 24 | 10 | 15 | ||||||||
Current income tax provision | 24 | 10 | 15 | ||||||||
Deferred income tax provision (benefit): | |||||||||||
Federal | 1,235 | 1,559 | (3,407 | ) | |||||||
State and Local | 63 | 93 | (60 | ) | |||||||
Deferred income tax provision (benefit) | 1,298 | 1,652 | (3,467 | ) | |||||||
Total income tax provision (benefit) | $ | 1,322 | $ | 1,662 | $ | (3,452 | ) |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Statutory income tax provision | $ | 1,135 | $ | 1,555 | $ | 1,635 | |||||
State income tax provision, net of federal tax effect | 54 | 67 | 71 | ||||||||
Book expenses not deductible for tax purposes | 30 | 32 | 55 | ||||||||
Bankruptcy administration expenses | 1 | 1 | 3 | ||||||||
2017 Tax Act | 93 | — | — | ||||||||
Change in valuation allowance | 4 | (1 | ) | (5,216 | ) | ||||||
Other, net | 5 | 8 | — | ||||||||
Income tax provision (benefit) | $ | 1,322 | $ | 1,662 | $ | (3,452 | ) |
December 31, | |||||||
2017 | 2016 | ||||||
Deferred tax assets: | |||||||
Operating loss carryforwards | $ | 2,409 | $ | 4,087 | |||
Pensions | 1,549 | 2,595 | |||||
Loyalty program liability | 420 | 485 | |||||
Alternative minimum tax (AMT) credit carryforwards | 457 | 456 | |||||
Postretirement benefits other than pensions | 170 | 291 | |||||
Rent expense | 160 | 256 | |||||
Gains from lease transactions | 107 | 213 | |||||
Reorganization items | 35 | 53 | |||||
Other | 638 | 911 | |||||
Total deferred tax assets | 5,945 | 9,347 | |||||
Valuation allowance | (25 | ) | (13 | ) | |||
Net deferred tax assets | 5,920 | 9,334 | |||||
Deferred tax liabilities: | |||||||
Accelerated depreciation and amortization | (4,999 | ) | (7,101 | ) | |||
Other | (274 | ) | (335 | ) | |||
Total deferred tax liabilities | (5,273 | ) | (7,436 | ) | |||
Net deferred tax asset | $ | 647 | $ | 1,898 |
• | Level 1 – Observable inputs such as quoted prices in active markets; |
• | Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and |
• | Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. |
Fair Value Measurements as of December 31, 2017 | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Short-term investments (1) (2): | |||||||||||||||
Money market funds | $ | 186 | $ | 186 | $ | — | $ | — | |||||||
Corporate obligations | 1,620 | — | 1,620 | — | |||||||||||
Bank notes/certificates of deposit/time deposits | 2,662 | — | 2,662 | — | |||||||||||
Repurchase agreements | 300 | — | 300 | — | |||||||||||
4,768 | 186 | 4,582 | — | ||||||||||||
Restricted cash and short-term investments (1) | 318 | 108 | 210 | — | |||||||||||
Total | $ | 5,086 | $ | 294 | $ | 4,792 | $ | — |
(1) | Unrealized gains or losses on short-term investments and restricted cash and short-term investments are recorded in accumulated other comprehensive income (loss) at each measurement date. |
(2) | All short-term investments are classified as available-for-sale and stated at fair value. American’s short-term investments mature in one year or less except for $700 million of bank notes/certificates of deposit/time deposits and $341 million of corporate obligations. |
Fair Value Measurements as of December 31, 2016 | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Short-term investments (1) (2): | |||||||||||||||
Money market funds | $ | 587 | $ | 587 | $ | — | $ | — | |||||||
Corporate obligations | 2,550 | — | 2,550 | — | |||||||||||
Bank notes/certificates of deposit/time deposits | 2,897 | — | 2,897 | — | |||||||||||
6,034 | 587 | 5,447 | — | ||||||||||||
Restricted cash and short-term investments (1) | 638 | 638 | — | — | |||||||||||
Total | $ | 6,672 | $ | 1,225 | $ | 5,447 | $ | — |
(1) | Unrealized gains or losses on short-term investments and restricted cash and short-term investments are recorded in accumulated other comprehensive income (loss) at each measurement date. |
(2) | All short-term investments are classified as available-for-sale and stated at fair value. American’s short-term investments mature in one year or less except for $385 million of bank notes/certificates of deposit/time deposits and $230 million of corporate obligations. |
December 31, 2017 | December 31, 2016 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Long-term debt, including current maturities | $ | 23,294 | $ | 24,029 | $ | 22,577 | $ | 23,181 |
Pension Benefits | Retiree Medical and Other Postretirement Benefits | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(In millions) | |||||||||||||||
Benefit obligation at beginning of period | $ | 17,148 | $ | 16,310 | $ | 990 | $ | 1,129 | |||||||
Service cost | 2 | 2 | 4 | 3 | |||||||||||
Interest cost | 717 | 746 | 39 | 47 | |||||||||||
Actuarial (gain) loss (1) (2) | 1,007 | 725 | 49 | (104 | ) | ||||||||||
Plan amendments | — | — | — | 7 | |||||||||||
Settlements | (4 | ) | (2 | ) | — | — | |||||||||
Benefit payments | (723 | ) | (633 | ) | (80 | ) | (92 | ) | |||||||
Other | 28 | — | 8 | — | |||||||||||
Benefit obligation at end of period | $ | 18,175 | $ | 17,148 | $ | 1,010 | $ | 990 |
Pension Benefits | Retiree Medical and Other Postretirement Benefits | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(In millions) | |||||||||||||||
Fair value of plan assets at beginning of period | $ | 9,968 | $ | 9,660 | $ | 266 | $ | 253 | |||||||
Actual return on plan assets | 1,788 | 911 | 37 | 22 | |||||||||||
Employer contributions (3) | 286 | 32 | 72 | 83 | |||||||||||
Settlements | (4 | ) | (2 | ) | — | — | |||||||||
Benefit payments | (723 | ) | (633 | ) | (80 | ) | (92 | ) | |||||||
Other | 25 | — | — | — | |||||||||||
Fair value of plan assets at end of period | $ | 11,340 | $ | 9,968 | $ | 295 | $ | 266 | |||||||
Funded status at end of period | $ | (6,835 | ) | $ | (7,180 | ) | $ | (715 | ) | $ | (724 | ) |
(1) | The December 31, 2017 and 2016 pension actuarial loss primarily relates to weighted average discount rate assumption changes and changes to American’s mortality assumptions. |
(2) | The December 31, 2017 retiree medical and other postretirement benefits actuarial (gain) loss primarily relates to plan experience adjustments, weighted average discount rate assumption changes and changes to American’s mortality assumptions and as of December 31, 2016, also includes medical trend and cost assumption changes. |
(3) | During 2017, American contributed $286 million to its defined benefit pension plans, including supplemental contributions of $261 million in addition to a $25 million minimum required cash contribution. |
Pension Benefits | Retiree Medical and Other Postretirement Benefits | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(In millions) | |||||||||||||||
As of December 31, | |||||||||||||||
Current liability | $ | 10 | $ | 7 | $ | 88 | $ | 97 | |||||||
Noncurrent liability | 6,825 | 7,173 | 627 | 627 | |||||||||||
Total liabilities | $ | 6,835 | $ | 7,180 | $ | 715 | $ | 724 |
Net actuarial loss (gain) | $ | 5,337 | $ | 5,472 | $ | (388 | ) | $ | (429 | ) | |||||
Prior service cost (benefit) | 159 | 188 | (600 | ) | (837 | ) | |||||||||
Total accumulated other comprehensive loss (income), pre-tax | $ | 5,496 | $ | 5,660 | $ | (988 | ) | $ | (1,266 | ) |
Pension Benefits | Retiree Medical and Other Postretirement Benefits | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(In millions) | |||||||||||||||
Projected benefit obligation | $ | 18,144 | $ | 17,119 | $ | — | $ | — | |||||||
Accumulated benefit obligation (ABO) | 18,135 | 17,108 | — | — | |||||||||||
Accumulated postretirement benefit obligation | — | — | 1,010 | 990 | |||||||||||
Fair value of plan assets | 11,307 | 9,936 | 295 | 266 | |||||||||||
ABO less fair value of plan assets | 6,828 | 7,172 | — | — |
Pension Benefits | Retiree Medical and Other Postretirement Benefits | ||||||||||||||||||||||
2017 | 2016 | 2015 | 2017 | 2016 | 2015 | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Defined benefit plans: | |||||||||||||||||||||||
Service cost | $ | 2 | $ | 2 | $ | 1 | $ | 4 | $ | 3 | $ | 3 | |||||||||||
Interest cost | 717 | 746 | 733 | 39 | 47 | 50 | |||||||||||||||||
Expected return on assets | (786 | ) | (747 | ) | (848 | ) | (21 | ) | (20 | ) | (19 | ) | |||||||||||
Settlements | 1 | — | 1 | — | — | — | |||||||||||||||||
Amortization of: | |||||||||||||||||||||||
Prior service cost (benefit) | 28 | 28 | 28 | (237 | ) | (240 | ) | (243 | ) | ||||||||||||||
Unrecognized net loss (gain) | 144 | 125 | 111 | (23 | ) | (16 | ) | (9 | ) | ||||||||||||||
Net periodic benefit cost (income) | 106 | 154 | 26 | (238 | ) | (226 | ) | (218 | ) | ||||||||||||||
Defined contribution plan cost | 844 | 761 | 657 | N/A | N/A | N/A | |||||||||||||||||
Total cost (income) | $ | 950 | $ | 915 | $ | 683 | $ | (238 | ) | $ | (226 | ) | $ | (218 | ) |
Pension Benefits | Retiree Medical and Other Postretirement Benefits | ||||||
2017 | 2016 | 2017 | 2016 | ||||
Benefit obligations: | |||||||
Weighted average discount rate | 3.80% | 4.30% | 3.60% | 4.10% |
Pension Benefits | Retiree Medical and Other Postretirement Benefits | ||||||||||
2017 | 2016 | 2015 | 2017 | 2016 | 2015 | ||||||
Net periodic benefit cost: | |||||||||||
Weighted average discount rate | 4.30% | 4.70% | 4.30% | 4.10% | 4.42% | 4.00% | |||||
Weighted average expected rate of return on plan assets | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | |||||
Weighted average health care cost trend rate assumed for next year (1) | N/A | N/A | N/A | 4.19% | 4.25% | 5.21% |
(1) | The weighted average health care cost trend rate at December 31, 2017 is assumed to decline gradually to 3.76% by 2025 and remain level thereafter. |
1% Increase | 1% Decrease | ||||||
Increase (decrease) on 2017 service and interest cost | $ | 2 | $ | (2 | ) | ||
Increase (decrease) on benefit obligation as of December 31, 2017 | 54 | (51 | ) |
2018 | 2019 | 2020 | 2021 | 2022 | 2023-2027 | ||||||||||||||||||
Pension benefits | $ | 712 | $ | 750 | $ | 795 | $ | 839 | $ | 879 | $ | 4,951 | |||||||||||
Retiree medical and other postretirement benefits | 96 | 92 | 80 | 75 | 70 | 314 |
Asset Class/Sub-Class | Allowed Range |
Equity | 65% - 90% |
Public: | |
U.S. Large | 20% - 50% |
U.S. Small/Mid | 0% - 10% |
International | 17% - 27% |
Emerging Markets | 5% - 11% |
Alternative Investments | 5% - 20% |
Fixed Income | 15% - 40% |
Public: | |
U.S. Long Duration | 15% - 30% |
High Yield and Emerging Markets | 0% - 10% |
Private Income | 0% - 10% |
Other | 0% - 5% |
Cash Equivalents | 0% - 5% |
Fair Value Measurements as of December 31, 2017 | |||||||||||||||
Asset Category | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||
Cash and cash equivalents | $ | 28 | $ | — | $ | — | $ | 28 | |||||||
Equity securities: | |||||||||||||||
International markets (a) (b) | 3,837 | — | — | 3,837 | |||||||||||
Large-cap companies (b) | 2,451 | — | — | 2,451 | |||||||||||
Mid-cap companies (b) | 744 | — | — | 744 | |||||||||||
Small-cap companies (b) | 125 | — | — | 125 | |||||||||||
Fixed income: | |||||||||||||||
Corporate bonds (c) | — | 2,344 | — | 2,344 | |||||||||||
Government securities (d) | — | 238 | — | 238 | |||||||||||
U.S. municipal securities | — | 39 | — | 39 | |||||||||||
Alternative instruments: | |||||||||||||||
Private equity partnerships (e) | — | — | 14 | 14 | |||||||||||
Private equity partnerships measured at net asset value (e) (g) | — | — | — | 879 | |||||||||||
Common/collective trusts (f) | — | 315 | — | 315 | |||||||||||
Common/collective trusts and 103-12 Investment Trust measured at net asset value (f) (g) | — | — | — | 283 | |||||||||||
Insurance group annuity contracts | — | — | 2 | 2 | |||||||||||
Dividend and interest receivable | 44 | — | — | 44 | |||||||||||
Due to/from brokers for sale of securities – net | 3 | — | — | 3 | |||||||||||
Other liabilities – net | (6 | ) | — | — | (6 | ) | |||||||||
Total | $ | 7,226 | $ | 2,936 | $ | 16 | $ | 11,340 |
a) | Holdings are diversified as follows: 17% United Kingdom, 11% Japan, 9% France, 6% Switzerland, 16% emerging markets and the remaining 41% with no concentration greater than 5% in any one country. |
b) | There are no significant concentrations of holdings by company or industry. |
c) | Includes approximately 76% investments in corporate debt with a S&P rating lower than A and 24% investments in corporate debt with a S&P rating A or higher. Holdings include 85% U.S. companies, 12% international companies and 3% emerging market companies. |
d) | Includes approximately 27% investments in U.S. domestic government securities, 43% in emerging market government securities and 30% in international government securities. There are no significant foreign currency risks within this classification. |
e) | Includes limited partnerships that invest primarily in U.S. (94%) and European (6%) buyout opportunities of a range of privately held companies. The pension plan’s master trust does not have the right to redeem its limited partnership investment at its net asset value, but rather receives distributions as the underlying assets are liquidated. It is estimated that the underlying assets of these funds will be gradually liquidated over the next one to ten years. Additionally, the pension plan’s master trust has future funding commitments of approximately $903 million over the next ten years. |
f) | Investment includes 42% in a collective interest trust investing primarily in short-term securities, 40% in an emerging market 103-12 Investment Trust with investments in emerging country equity securities, 10% in Canadian segregated balanced value, income growth and diversified pooled funds and 8% in a common/collective trust investing in securities of smaller companies located outside the U.S., including developing markets. For some trusts, requests for withdrawals must meet specific requirements with advance notice of redemption preferred. |
g) | Certain investments that are measured using net asset value per share (or its equivalent) as a practical expedient for fair value have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the notes to the consolidated financial statements. |
Fair Value Measurements as of December 31, 2016 | |||||||||||||||
Asset Category | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||
Cash and cash equivalents | $ | 573 | $ | — | $ | — | $ | 573 | |||||||
Equity securities: | |||||||||||||||
International markets (a) (b) | 3,232 | — | — | 3,232 | |||||||||||
Large-cap companies (b) | 2,253 | — | — | 2,253 | |||||||||||
Mid-cap companies (b) | 371 | — | — | 371 | |||||||||||
Small-cap companies (b) | 6 | — | — | 6 | |||||||||||
Fixed income: | |||||||||||||||
Corporate bonds (c) | — | 2,337 | — | 2,337 | |||||||||||
Government securities (d) | — | 150 | — | 150 | |||||||||||
U.S. municipal securities | — | 37 | — | 37 | |||||||||||
Alternative instruments: | |||||||||||||||
Private equity partnerships (e) | — | — | 21 | 21 | |||||||||||
Private equity partnerships measured at net asset value (e) (g) | — | — | — | 703 | |||||||||||
Common/collective trusts (f) | — | 32 | — | 32 | |||||||||||
Common/collective trusts and 103-12 Investment Trust measured at net asset value (f) (g) | — | — | — | 227 | |||||||||||
Insurance group annuity contracts | — | — | 2 | 2 | |||||||||||
Dividend and interest receivable | 40 | — | — | 40 | |||||||||||
Due to/from brokers for sale of securities – net | (9 | ) | — | — | (9 | ) | |||||||||
Other liabilities – net | (7 | ) | — | — | (7 | ) | |||||||||
Total | $ | 6,459 | $ | 2,556 | $ | 23 | $ | 9,968 |
a) | Holdings are diversified as follows: 15% United Kingdom, 12% Japan, 10% France, 7% Switzerland, 6% Netherlands, 17% other emerging markets and the remaining 33% with no concentration greater than 5% in any one country. |
b) | There are no significant concentrations of holdings by company or industry. |
c) | Includes approximately 74% investments in corporate debt with a S&P rating lower than A and 26% investments in corporate debt with a S&P rating A or higher. Holdings include 86% U.S. companies, 12% international companies and 2% emerging market companies. |
d) | Includes approximately 61% investments in U.S. domestic government securities and 39% in emerging market government securities. There are no significant foreign currency risks within this classification. |
e) | Includes limited partnerships that invest primarily in U.S. (95%) and European (5%) buyout opportunities of a range of privately held companies. The pension plan’s master trust does not have the right to redeem its limited partnership investment at its net asset value, but rather receives distributions as the underlying assets are liquidated. It is estimated that the underlying assets of these funds will be gradually liquidated over the next one to ten years. Additionally, the pension plan’s master trust has future funding commitments of approximately $456 million over the next ten years. |
f) | Investment includes 73% in an emerging market 103-12 Investment Trust with investments in emerging country equity securities, 12% in Canadian segregated balanced value, income growth and diversified pooled funds and 15% in a common/collective trust investing in securities of smaller companies located outside the U.S., including developing markets. Requests for withdrawals must meet specific requirements with advance notice of redemption preferred. |
g) | Certain investments that are measured using net asset value per share (or its equivalent) as a practical expedient for fair value have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the notes to the consolidated financial statements. |
Private Equity Partnerships | Insurance Group Annuity Contracts | ||||||
Beginning balance at December 31, 2016 | $ | 21 | $ | 2 | |||
Actual loss on plan assets: | |||||||
Relating to assets still held at the reporting date | (4 | ) | — | ||||
Purchases | 1 | — | |||||
Sales | (1 | ) | — | ||||
Transfers out | (3 | ) | — | ||||
Ending balance at December 31, 2017 | $ | 14 | $ | 2 |
Private Equity Partnerships | Insurance Group Annuity Contracts | ||||||
Beginning balance at December 31, 2015 | $ | 16 | $ | 2 | |||
Actual return on plan assets: | |||||||
Relating to assets sold during the period | 7 | — | |||||
Purchases | 7 | — | |||||
Sales | (9 | ) | — | ||||
Ending balance at December 31, 2016 | $ | 21 | $ | 2 |
Fair Value Measurements as of December 31, 2017 | |||||||||||||||
Asset Category | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||
Money market fund | $ | 5 | $ | — | $ | — | $ | 5 | |||||||
Mutual funds – AAL Class | — | 290 | — | 290 | |||||||||||
Total | $ | 5 | $ | 290 | $ | — | $ | 295 |
Fair Value Measurements as of December 31, 2016 | |||||||||||||||
Asset Category | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||
Money market fund | $ | 5 | $ | — | $ | — | $ | 5 | |||||||
Mutual funds – Institutional Class | 261 | — | — | 261 | |||||||||||
Total | $ | 266 | $ | — | $ | — | $ | 266 |
Pension, Retiree Medical and Other Postretirement Benefits | Unrealized Gain (Loss) on Investments | Income Tax Benefit (Provision) (1) | Total | ||||||||||||
Balance at December 31, 2015 | $ | (3,831 | ) | $ | (9 | ) | $ | (991 | ) | $ | (4,831 | ) | |||
Other comprehensive income (loss) before reclassifications | (461 | ) | 9 | 166 | (286 | ) | |||||||||
Amounts reclassified from AOCI | (102 | ) | — | 37 | (2) | (65 | ) | ||||||||
Net current-period other comprehensive income (loss) | (563 | ) | 9 | 203 | (351 | ) | |||||||||
Balance at December 31, 2016 | (4,394 | ) | — | (788 | ) | (5,182 | ) | ||||||||
Other comprehensive income (loss) before reclassifications | (27 | ) | (1 | ) | 14 | (14 | ) | ||||||||
Amounts reclassified from AOCI | (87 | ) | — | 32 | (2) | (55 | ) | ||||||||
Net current-period other comprehensive income (loss) | (114 | ) | (1 | ) | 46 | (69 | ) | ||||||||
Balance at December 31, 2017 | $ | (4,508 | ) | $ | (1 | ) | $ | (742 | ) | $ | (5,251 | ) |
(1) | Relates principally to pension, retiree medical and other postretirement benefits obligations that will not be recognized in net income until the obligations are fully extinguished. |
(2) | Relates to pension, retiree medical and other postretirement benefits obligations and is recognized within the income tax provision on the consolidated statement of operations. |
Amount reclassified from AOCI | Affected line items on the consolidated statement of operations | ||||||||
Year Ended December 31, | |||||||||
AOCI Components | 2017 | 2016 | |||||||
Amortization of pension, retiree medical and other postretirement benefits: | |||||||||
Prior service benefit | $ | (132 | ) | $ | (134 | ) | Salaries, wages and benefits | ||
Actuarial loss | 77 | 69 | Salaries, wages and benefits | ||||||
Total reclassifications for the period, net of tax | $ | (55 | ) | $ | (65 | ) |
2018 | 2019 | 2020 | 2021 | 2022 | 2023 and Thereafter | Total | |||||||||||||||||||||
Payments for aircraft commitments and certain engines (1) | $ | 1,826 | $ | 2,730 | $ | 2,730 | $ | 2,858 | $ | 2,138 | $ | 1,482 | $ | 13,764 |
(1) | These amounts are net of purchase deposits currently held by the manufacturers and include all commitments for regional aircraft. American has granted a security interest in its purchase deposits with Boeing. American’s purchase deposits held by all manufacturers totaled $1.2 billion as of December 31, 2017. |
2018 | 2019 | 2020 | 2021 | 2022 | 2023 and Thereafter | Total | |||||||||||||||||||||
Future minimum lease payments | $ | 2,178 | $ | 1,966 | $ | 1,776 | $ | 1,331 | $ | 1,155 | $ | 3,253 | $ | 11,659 |
2018 | 2019 | 2020 | 2021 | 2022 | 2023 and Thereafter | Total | |||||||||||||||||||||
Minimum fixed obligations under capacity purchase agreements with third-party regional carriers (1) | $ | 1,457 | $ | 1,311 | $ | 1,063 | $ | 866 | $ | 699 | $ | 2,073 | $ | 7,469 |
(1) | Represents minimum payments under capacity purchase agreements with third-party regional carriers. These commitments are estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and American’s actual payments could differ materially. These obligations also include the portion of American’s future obligations representing the lease of aircraft for accounting purposes in the amount of approximately $377 million in 2018, $355 million in 2019, $320 million in 2020, $282 million in 2021, $239 million in 2022 and $699 million in 2023 and thereafter. |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Non-cash investing and financing activities: | |||||||||||
Equity investment | $ | 120 | $ | — | $ | — | |||||
Settlement of bankruptcy obligations | 15 | 3 | 63 | ||||||||
Capital lease obligations | — | — | 5 | ||||||||
Supplemental information: | |||||||||||
Interest paid, net | 942 | 867 | 787 | ||||||||
Income taxes paid | 18 | 14 | 19 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
DOT Domestic | $ | 29,600 | $ | 28,603 | $ | 28,709 | |||||
DOT Latin America | 5,422 | 4,995 | 5,539 | ||||||||
DOT Atlantic | 5,059 | 4,769 | 5,146 | ||||||||
DOT Pacific | 2,114 | 1,796 | 1,544 | ||||||||
Total operating revenues | $ | 42,195 | $ | 40,163 | $ | 40,938 |
Number of Shares | Weighted Average Grant Date Fair Value | |||||
(In thousands) | ||||||
Outstanding at December 31, 2014 | 21,342 | $ | 26.43 | |||
Granted | 2,213 | 46.62 | ||||
Vested and released | (17,163 | ) | 25.20 | |||
Forfeited | (785 | ) | 27.12 | |||
Outstanding at December 31, 2015 | 5,607 | $ | 38.08 | |||
Granted | 2,655 | 41.34 | ||||
Vested and released | (2,754 | ) | 34.83 | |||
Forfeited | (321 | ) | 40.15 | |||
Outstanding at December 31, 2016 | 5,187 | $ | 41.48 | |||
Granted | 2,309 | 48.58 | ||||
Vested and released | (2,708 | ) | 39.63 | |||
Forfeited | (464 | ) | 44.48 | |||
Outstanding at December 31, 2017 | 4,324 | $ | 46.94 |
Balance at Beginning of Year | Changes Charged to Statement of Operations Accounts | Write-offs (Net of Recoveries) | Sales, Retirements and Transfers | Balance at End of Year | |||||||||||||||
Allowance for obsolescence of spare parts | |||||||||||||||||||
Year ended December 31, 2017 | $ | 720 | $ | 18 | $ | — | $ | (21 | ) | $ | 717 | ||||||||
Year ended December 31, 2016 | 689 | 28 | — | 3 | 720 | ||||||||||||||
Year ended December 31, 2015 | 638 | 42 | — | 9 | 689 | ||||||||||||||
Allowance for uncollectible accounts | |||||||||||||||||||
Year ended December 31, 2017 | $ | 35 | $ | 41 | $ | (55 | ) | $ | — | $ | 21 | ||||||||
Year ended December 31, 2016 | 37 | 47 | (49 | ) | — | 35 | |||||||||||||
Year ended December 31, 2015 | 14 | 45 | (22 | ) | — | 37 |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
2017 | |||||||||||||||
Operating revenues | $ | 9,621 | $ | 11,102 | $ | 10,875 | $ | 10,597 | |||||||
Operating expenses | 9,017 | 9,575 | 9,650 | 9,921 | |||||||||||
Operating income | 604 | 1,527 | 1,225 | 676 | |||||||||||
Net income | 263 | 827 | 649 | 183 | |||||||||||
2016 | |||||||||||||||
Operating revenues | $ | 9,427 | $ | 10,360 | $ | 10,591 | $ | 9,786 | |||||||
Operating expenses | 8,104 | 8,603 | 9,159 | 8,995 | |||||||||||
Operating income | 1,323 | 1,757 | 1,432 | 791 | |||||||||||
Net income | 710 | 972 | 758 | 341 |
December 31, | |||||||
2017 | 2016 | ||||||
AAG (1) | $ | 10,968 | $ | 8,981 | |||
AAG’s wholly-owned subsidiaries (2) | (2,146 | ) | (2,171 | ) | |||
Total | $ | 8,822 | $ | 6,810 |
(1) | The increase in American’s net related party receivable from AAG is primarily due to American providing the cash funding for AAG’s share repurchase and dividend programs. |
(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. |
• | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of AAG or American, respectively; |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of AAG or American are being made only in accordance with authorizations of management and directors of AAG or American, respectively; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of AAG’s or American’s assets that could have a material effect on the financial statements. |
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Exhibit Number | Description |
2.1 | |
2.2 | |
2.3 | |
2.4 | |
2.5 | |
2.6 | |
3.1 | |
3.2 | |
3.3 | |
3.4 | |
4.1 | |
4.2 | |
4.3 | |
4.4 | |
4.5 | |
4.6 |
Exhibit Number | Description |
4.7 | |
4.8 | |
4.9 | |
4.10 | |
4.11 | |
4.12 | |
4.13 | |
4.14 | |
4.15 | |
4.16 | |
4.17 | |
4.18 | |
4.19 | |
4.20 |
Exhibit Number | Description |
4.21 | |
4.22 | |
4.23 | |
4.24 | |
4.25 | |
4.26 | |
4.27 | |
4.28 | |
4.29 | |
4.30 | |
4.31 | |
4.32 | |
4.33 |
Exhibit Number | Description |
4.34 | |
4.35 | |
4.36 | |
4.37 | |
4.38 | |
4.39 | |
4.40 | |
4.41 | |
4.42 | |
4.43 | |
4.44 | |
4.45 | |
4.46 | |
4.47 | |
4.48 | |
4.49 |
Exhibit Number | Description |
4.50 | |
4.51 | |
4.52 | |
4.53 | |
4.54 | |
4.55 | |
4.56 | |
4.57 | |
4.58 | |
4.59 | |
4.60 | |
4.61 | |
4.62 | |
4.63 |
Exhibit Number | Description |
4.64 | |
4.65 | |
4.66 | |
4.67 | |
4.68 | |
4.69 | |
4.70 | |
4.71 | |
4.72 | |
4.73 | |
4.74 | |
4.75 | |
4.76 |
Exhibit Number | Description |
4.77 | |
4.78 | |
4.79 | |
4.80 | |
4.81 | |
4.82 | |
4.83 | |
4.84 | |
4.85 | |
4.86 | |
4.87 | |
4.88 | |
4.89 | |
4.90 |
Exhibit Number | Description |
4.91 | |
4.92 | |
4.93 | |
4.94 | |
4.95 | |
4.96 | |
4.97 | |
4.98 | |
4.99 | |
4.100 | |
4.101 | |
4.102 | |
4.103 | |
4.104 | |
4.105 |
Exhibit Number | Description |
4.106 | |
4.107 | |
4.108 | |
4.109 | |
4.110 | |
4.111 | |
4.112 | |
4.113 | |
4.114 | |
4.115 | |
4.116 | |
4.117 | |
4.118 | |
4.119 |
Exhibit Number | Description |
4.120 | |
4.121 | |
4.122 | |
4.123 | |
4.124 | |
4.125 | |
4.126 | |
4.127 | |
4.128 | |
4.129 | |
4.130 | |
4.131 | |
4.132 | |
4.133 |
Exhibit Number | Description |
4.134 | |
4.135 | |
4.136 | |
4.137 | |
4.138 | |
4.139 | |
4.140 | |
4.141 | |
4.142 | |
4.143 | |
4.144 | |
4.145 | |
4.146 | |
4.147 | |
4.148 |
Exhibit Number | Description |
4.149 | |
4.150 | |
4.151 | |
4.152 | |
4.153 | |
4.154 | |
4.155 | |
4.156 | |
4.157 | |
4.158 | |
4.159 | |
4.160 | |
4.161 | |
4.162 | |
4.163 |
Exhibit Number | Description |
4.164 | |
4.165 | |
4.166 | |
4.167 | |
4.168 | |
4.169 | |
4.170 | |
4.171 | |
4.172 | |
4.173 | |
4.174 | |
4.175 | |
4.176 | |
4.177 | |
4.178 |
Exhibit Number | Description |
4.179 | |
4.180 | |
4.181 | |
4.182 | |
4.183 | |
4.184 | |
4.185 | |
4.186 | |
4.187 | |
4.188 | |
4.189 | |
4.190 | |
4.191 |
Exhibit Number | Description |
4.192 | |
4.193 | |
4.194 | |
4.195 | |
4.196 | |
10.1 | |
10.2 | |
10.3 | |
10.4 | |
10.5 | |
10.6 | |
10.7 |
Exhibit Number | Description |
10.8 | |
10.9 | |
10.10 | |
10.11 | |
10.12 | |
10.13 | |
10.14 | |
10.15 | |
10.16 | |
10.17 | |
10.18 | |
10.19 | |
10.20 |
Exhibit Number | Description |
10.21 | |
10.22 | |
10.23 | |
10.24 | |
10.25 | |
10.26 | |
10.27 | |
10.28 | |
10.29 | |
10.30 | |
10.31 | |
10.32 | |
10.33 | |
10.34 | |
10.35 | |
10.36 |
Exhibit Number | Description |
10.37 | |
10.38 | |
10.39 | |
10.40 | |
10.41 | |
10.42 | |
10.43 | |
10.44 | |
10.45 | |
10.46 | |
10.47 | |
10.48 | |
10.49 | |
10.50 |
Exhibit Number | Description |
10.51 | |
10.52 | |
10.53 | |
10.54 | |
10.55 | |
10.56 | |
10.57 | |
10.58 | |
10.59 | |
10.60 | |
10.61 | |
10.62 | |
10.63 | |
10.64 | |
10.65 |
Exhibit Number | Description |
10.66 | |
10.67 | |
10.68 | |
10.69 | |
10.70 | |
10.71 | |
10.72 | |
10.73 | |
10.74 | |
10.75 | |
10.76 | |
10.77 | |
10.78 | |
10.79 | |
10.80 | |
10.81 | |
10.82 | |
10.83 | |
10.84 | |
10.85 | |
10.86 |
Exhibit Number | Description |
10.87 | |
10.88 | |
12.1 | |
12.2 | |
14.1 | |
21.1 | |
23.1 | |
24.1 | |
31.1 | |
31.2 | |
31.3 | |
31.4 | |
32.1 | |
32.2 | |
101.1 | Interactive data files pursuant to Rule 405 of Regulation S-T. |
# | Pursuant to Item 601(b)(2) of Regulation S-K promulgated by the Securities and Exchange Commission, certain exhibits and schedules to this agreement have been omitted. Such exhibits and schedules are described in the referenced agreement. AAG and American hereby agree to furnish to the Securities and Exchange Commission, upon its request, any or all of such omitted exhibits or schedules. | ||||
* | Confidential treatment has been granted with respect to certain portions of this agreement. | ||||
** | Confidential treatment has been requested with respect to certain portions of this agreement. | ||||
† | Management contract or compensatory plan or arrangement. |
American Airlines Group Inc. | ||
Date: February 21, 2018 | By: | /s/ W. Douglas Parker |
W. Douglas Parker | ||
Chairman and Chief Executive Officer | ||
(Principal Executive Officer) |
American Airlines, Inc. | ||
Date: February 21, 2018 | By: | /s/ W. Douglas Parker |
W. Douglas Parker | ||
Chairman and Chief Executive Officer | ||
(Principal Executive Officer) |
Date: February 21, 2018 | /s/ W. Douglas Parker |
W. Douglas Parker | |
Chairman and Chief Executive Officer | |
(Principal Executive Officer) | |
Date: February 21, 2018 | /s/ Derek J. Kerr |
Derek J. Kerr | |
Executive Vice President and Chief Financial Officer | |
(Principal Financial and Accounting Officer) | |
Date: February 21, 2018 | /s/ James F. Albaugh |
James F. Albaugh, Director | |
Date: February 21, 2018 | /s/ Jeffrey D. Benjamin |
Jeffrey D. Benjamin, Director | |
Date: February 21, 2018 | /s/ John T. Cahill |
John T. Cahill, Director | |
Date: February 21, 2018 | /s/ Michael J. Embler |
Michael J. Embler, Director | |
Date: February 21, 2018 | /s/ Matthew J. Hart |
Matthew J. Hart, Director | |
Date: February 21, 2018 | /s/ Alberto Ibargüen |
Alberto Ibargüen, Director | |
Date: February 21, 2018 | /s/ Richard C. Kraemer |
Richard C. Kraemer, Director |
Date: February 21, 2018 | /s/ Susan D. Kronick |
Susan D. Kronick, Director | |
Date: February 21, 2018 | /s/ Martin H. Nesbitt |
Martin H. Nesbitt, Director | |
Date: February 21, 2018 | /s/ Denise M. O’Leary |
Denise M. O’Leary, Director | |
Date: February 21, 2018 | /s/ Ray M. Robinson |
Ray M. Robinson, Director | |
Date: February 21, 2018 | /s/ Richard P. Schifter |
Richard P. Schifter, Director |
Date: February 21, 2018 | /s/ W. Douglas Parker |
W. Douglas Parker | |
Chairman and Chief Executive Officer | |
(Principal Executive Officer) | |
Date: February 21, 2018 | /s/ Derek J. Kerr |
Derek J. Kerr | |
Executive Vice President and Chief Financial Officer | |
(Principal Financial and Accounting Officer) | |
Date: February 21, 2018 | /s/ Stephen L. Johnson |
Stephen L. Johnson, Director | |
Date: February 21, 2018 | /s/ Robert D. Isom |
Robert D. Isom, Director |
Class of Loans | Applicable Margin Eurodollar Loans | Applicable Margin ABR Loans |
2017 Class B Term Loans | 2.00% | 1.00% |
Revolving Loans | N/A | N/A |
CONSENT (this “Consent”) to the First Amendment to Amended and Restated Credit and Guaranty Agreement (the “Agreement”), by and among American Airlines, Inc., as Borrower, American Airlines Group Inc., as Parent and a Guarantor, the lenders party thereto with a 2017 Class B Term Loan Commitment, each other lender party thereto and Citibank, N.A., as Administrative Agent and as the designated lender of 2017 Class B Term Loans. Capitalized terms used in this Consent but not defined in this Consent have the meanings assigned to such terms in the Agreement. | |||
2017 Term Lender. The undersigned 2017 Term Lender hereby irrevocably and unconditionally approves the Agreement and consents as follows (check ONE option): | |||
Cashless Settlement Option ¨ to exchange 100% of the outstanding principal amount of the Class B Term Loans (i.e. Existing Term Loans) held by such 2017 Term Lender for 2017 Class B Term Loans in an equal principal amount or such lesser amount allocated to such Lender by the Administrative Agent. | Post-Closing Settlement Option ¨ to have 100% of the outstanding principal amount of the Class B Term Loans (i.e. Existing Term Loans) held by such 2017 Term Lender prepaid on the Effective Date and purchase by assignment 2017 Class B Term Loans in an equal principal amount or such lesser amount allocated to such Lender by the Administrative Agent. | ||
IN WITNESS WHEREOF, the undersigned has caused this Consent to be executed and delivered by a duly authorized officer. ________________________________________, as a 2017 Term Lender (type name of the legal entity) By: _____________________________________ Name: Title: If a second signature is necessary: By: _____________________________________ Name: Title: Name of Fund Manager (if any):__________________ Current holding amount: $__________________ |
Name of Bank | Revolving Commitment | LC Commitment |
Citibank, N.A. | [*CTR] | $300,000,000 |
Bank of America, N.A. | [*CTR] | -- |
Barclays Bank PLC | [*CTR] | -- |
Credit Suisse AG, Cayman Islands Branch | [*CTR] | -- |
Deutsche Bank AG New York Branch | [*CTR] | -- |
Goldman Sachs Bank USA | [*CTR] | -- |
Industrial and Commercial Bank of China Limited, New York Branch | [*CTR] | -- |
JPMorgan Chase Bank, N.A. | [*CTR] | -- |
Morgan Stanley Bank, N.A. | [*CTR] | -- |
Morgan Stanley Senior Funding, Inc. | [*CTR] | -- |
BNP Paribas | [*CTR] | -- |
Credit Agricole Corporate and Investment Bank | [*CTR] | -- |
Standard Chartered Bank | [*CTR] | -- |
Sumitomo Mitsui Banking Corporation | [*CTR] | -- |
U.S. Bank National Association | [*CTR] | -- |
Texas Capital Bank, N.A. | [*CTR] | -- |
Total | [*CTR] | $300,000,000 |
Class of Loans | Applicable Margin Eurodollar Loans | Applicable Margin ABR Loans |
2017 Replacement Term Loans | 2.00% | 1.00% |
Revolving Loans | 2.25% | 1.25% |
Name of Bank | Revolving Commitment | LC Commitment |
Deutsche Bank AG New York Branch | [*CTR] | $150,000,000 |
Bank of America, N.A. | [*CTR] | -- |
Barclays Bank PLC | [*CTR] | -- |
Citibank, N.A. | [*CTR] | -- |
Credit Suisse AG, Cayman Islands Branch | [*CTR] | -- |
Industrial and Commercial Bank of China Limited, New York Branch | [*CTR] | -- |
JPMorgan Chase Bank, N.A. | [*CTR] | -- |
Goldman Sachs Bank USA | [*CTR] | -- |
Goldman Sachs Lending Partners LLC | [*CTR] | -- |
Morgan Stanley Bank, N.A. | [*CTR] | -- |
Morgan Stanley Senior Funding Inc. | [*CTR] | -- |
BNP Paribas | [*CTR] | -- |
Credit Agricole Corporate and Investment Bank | [*CTR] | -- |
Standard Chartered Bank | [*CTR] | -- |
Sumitomo Mitsui Banking Corporation | [*CTR] | -- |
U.S. Bank National Association | [*CTR] | -- |
Texas Capital Bank, N.A. | [*CTR] | -- |
Total | $1,200,000,000 | $150,000,000 |
Class of Loans | Applicable Margin Eurodollar Loans | Applicable Margin ABR Loans |
Replacement Class B Term Loans | 2.50% | 1.50% |
Revolving Loans | 2.25% | 1.25% |
Name of Bank | Revolving Commitment | LC Commitment |
Bank of America, N.A. | [*CTR] | -- |
Barclays Bank PLC | [*CTR] | -- |
Citibank, N.A. | [*CTR] | -- |
Credit Suisse AG, Cayman Islands Branch | [*CTR] | -- |
Deutsche Bank AG New York Branch | [*CTR] | -- |
Goldman Sachs Bank USA | [*CTR] | -- |
Industrial and Commercial Bank of China Limited, New York Branch | [*CTR] | -- |
JPMorgan Chase Bank, N.A. | [*CTR] | -- |
Morgan Stanley Bank, N.A. | [*CTR] | -- |
Morgan Stanley Senior Funding Inc. | [*CTR] | -- |
BNP Paribas | [*CTR] | -- |
Credit Agricole Corporate and Investment Bank | [*CTR] | -- |
Standard Chartered Bank | [*CTR] | -- |
Sumitomo Mitsui Banking Corporation | [*CTR] | -- |
U.S. Bank National Association | [*CTR] | -- |
Texas Capital Bank, N.A. | [*CTR] | -- |
Total | $300,000,000 | $0 |
Class of Loans | Applicable Margin Eurodollar Loans | Applicable Margin ABR Loans |
2017 Class B Term Loans | 2.00% | 1.00% |
Revolving Loans | 2.25% | 1.25% |
CONSENT (this “Consent”) to the Third Amendment to Credit and Guaranty Agreement (the “Agreement”), by and among American Airlines, Inc., as Borrower, American Airlines Group Inc., as Parent and a Guarantor, the lenders party thereto with a 2017 Class B Term Loan Commitment, each other lender party thereto and Barclays Bank PLC, as Administrative Agent and as the designated lender of 2017 Class B Term Loans. Capitalized terms used in this Consent but not defined in this Consent have the meanings assigned to such terms in the Agreement. | |||
Replacement Term Lender. The undersigned Replacement Term Lender hereby irrevocably and unconditionally approves the Agreement and consents as follows (check ONE option): | |||
Cashless Settlement Option ¨ to exchange 100% of the outstanding principal amount of the Replacement Class B Term Loans (i.e. Existing Term Loans) held by such Replacement Term Lender for 2017 Class B Term Loans in an equal principal amount or such lesser amount allocated to such Lender by the Administrative Agent. | Post-Closing Settlement Option ¨ to have 100% of the outstanding principal amount of the Replacement Class B Term Loans (i.e. Existing Term Loans) held by such Replacement Term Lender prepaid on the Effective Date and purchase by assignment 2017 Class B Term Loans in an equal principal amount or such lesser amount allocated to such Lender by the Administrative Agent. | ||
IN WITNESS WHEREOF, the undersigned has caused this Consent to be executed and delivered by a duly authorized officer. ________________________________________, as a 2017 Term Lender (type name of the legal entity) By: ____________________________________ Name: Title: If a second signature is necessary: By: ____________________________________ Name: Title: Name of Fund Manager (if any):__________________ Current holding amount: $__________________ |
PA 03735 | SA-8, Page 1 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
PA 03735 | SA-8, Page 2 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
AGREED AND ACCEPTED this | ||
December 7, 2017 | ||
Date | ||
THE BOEING COMPANY | AMERICAN AIRLINES, INC. | |
/s/ The Boeing Company | /s/ American Airlines, Inc. | |
Signature | Signature | |
The Boeing Company | American Airlines, Inc. | |
Printed name | Printed name | |
Attorney-in-Fact | Vice President and Treasurer | |
Title | Title |
PA 03735 | SA-8, Page 3 | |
BOEING PROPRIETARY |
ARTICLES | SA NUMBER | |
Article 1. | Quantity, Model and Description | |
Article 2. | Delivery Schedule | |
Article 3. | Price | |
Article 4. | Payment | |
Article 5. | Additional Terms | |
Article 6. | Confidentiality | |
TABLE | ||
1R3. | Aircraft Information Table | 6 |
EXHIBITS | ||
AR1 | Aircraft Configuration | 6 |
B. | Aircraft Delivery Requirements and Responsibilities | |
C. | Definitions | |
SUPPLEMENTAL EXHIBITS | ||
AE1. | [*CTR] | |
BFE1. | BFE Variables | |
CS1R1. | Customer Support Variables | 4 |
EE1. | [*CTR] | |
SLP1. | [*CTR] | |
LETTER AGREEMENTS | ||
LA-1106648R1 | Special Matters | 6 |
LA-1106649 | [*CTR] | |
LA-1106650R2 | [*CTR] | 3 |
LA-1106651 | [*CTR] | |
LA-1106652 | Aircraft Model Substitution | |
LA-1106654 | AGTA Terms Revisions for MAX | |
LA-1106655 | Open Matters – 737 MAX Withdrawn | 6 |
LA-1106656R1 | [*CTR] | 1 |
LA-1106657R1 | [*CTR] | 2 |
LA-1106663 R1 | [*CTR] | 2 |
LA-1106664 R1 | [*CTR] | 2 |
LA-1106658 | [*CTR] | |
LA-1106659R1 | [*CTR] | 1 |
LA-1106660 | Spare Parts Initial Provisioning | |
PA-03735 | TABLE OF CONTENTS, Page 1 of 2 | SA-8 |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
LETTER AGREEMENTS, continued | SA NUMBER | |
LA-1106661R2 | [*CTR] | 2 |
LA-1106667 | [*CTR] | |
LA-1106668R1 | [*CTR] | 8 |
LA-1106669 | [*CTR] | |
LA-1106670 | Confidentiality | |
LA-1106671R1 | Miscellaneous Commitments | 1 |
LA-1106672 | [*CTR] | |
LA-1106673R1* | CS1 Special Matters | 4 |
LA-1106677 | [*CTR] | |
LA-1600073 | [*CTR] | 4 |
LA-1600852 | [*CTR] | 5 |
LA-1603773 | [*CTR] | 5 |
LA-1605402 | [*CTR] | 6 |
LA-1700919 | [*CTR] | 7 |
PA-03735 | TABLE OF CONTENTS, Page 2 of 2 | SA-8 |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
Reference: | Purchase Agreement No. 03735 (Purchase Agreement) between The Boeing Company (Boeing) and American Airlines, Inc. (Customer) relating to Model 737 MAX aircraft (Aircraft) |
1. | Covered Aircraft. |
2. | Program Term. |
3. | [*CTR]. |
4. | Program Commitment. |
AAL-PA-03735-LA-1106668R1 | SA-8 | |
[*CTR] | Page 1 of 12 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
AAL-PA-03735-LA-1106668R1 | SA-8 | |
[*CTR] | Page 2 of 12 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
AAL-PA-03735-LA-1106668R1 | SA-8 | |
[*CTR] | Page 3 of 12 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
AAL-PA-03735-LA-1106668R1 | SA-8 | |
[*CTR] | Page 4 of 12 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
Aircraft Model | Flight Hours |
[*CTR] | [*CTR] |
AAL-PA-03735-LA-1106668R1 | SA-8 | |
[*CTR] | Page 5 of 12 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
THE BOEING COMPANY | |||
By: | /s/ The Boeing Company | ||
Its: | Attorney-In-Fact | ||
ACCEPTED AND AGREED TO this | |||
Date: | December 7, 2017 | ||
AMERICAN AIRLINES, INC. | |||
By: | /s/ American Airlines, Inc. | ||
Its: | Vice President and Treasurer |
AAL-PA-03735-LA-1106668R1 | SA-8 | |
[*CTR] | Page 6 of 12 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
Reference: | Letter Agreement No. AAL-PA-03735-LA-1106668R1 to Purchase Agreement and [*CTR] |
American Airlines [*CTR] | ||||||
Airplane Type | [*CTR] | |||||
Year | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] |
[*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] |
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American Airlines [*CTR] | ||||||
Year | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] |
[*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] |
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[*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] |
American Airlines [*CTR] | ||||||
Event | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] |
[*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] |
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[*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] |
[*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] |
AAL-PA-03735-LA-1106668R1 | SA-8 | |
[*CTR] | Attachment A, Page 1 of 3 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
AAL-PA-03735-LA-1106668R1 | SA-8 | |
[*CTR] | Attachment A, Page 2 of 3 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
AAL-PA-03735-LA-1106668R1 | SA-8 | |
[*CTR] | Attachment A, Page 3 of 3 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
AAL-PA-03735-LA-1106668R1 | SA-8 | |
[*CTR] | Attachment B, Page 1 of 1 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
Reference: | Letter Agreement No. AAL-PA-03735-LA-1106668R1 to Purchase Agreement and [*CTR] |
Subject: | [*CTR] reported pursuant to Section 5.2 of the referenced Letter Agreement. |
[*CTR] | ||||
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[*CTR] | [*CTR] | [*CTR] | [*CTR] | [*CTR] |
Total | [*CTR] | [*CTR] | [*CTR] | [*CTR] |
AAL-PA-03735-LA-1106668R1 | ||
[*CTR] | Attachment C, Page 1 of 1 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
Reference: | Letter Agreement No. AAL-PA-03735-LA-1106668R1 to Purchase Agreement and [*CTR] |
Subject: | [*CTR] reported pursuant to Section 6 of the referenced Letter Agreement. |
[*CTR]: |
American Airlines [*CTR] | ||||||||||
[*CTR] | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
[*CTR] | ||||||||||
[*CTR] | ||||||||||
[*CTR] |
American Airlines [*CTR] | |||||||||||
[*CTR] | [*CTR] | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
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AAL-PA-03735-LA-1106668R1 | SA-8 | |||
[*CTR] | Attachment D & E, Page 1 of 3 | |||
BOEING PROPRIETARY | ||||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
American Airlines [*CTR] | ||||||||||
Airplane Type | 737 MAX 8 | |||||||||
[*CTR] | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
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AAL-PA-03735-LA-1106668R1 | SA-8 | |
[*CTR] | Attachment D, Page 2 of 3 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
AMERICAN AIRLINES, INC. | |
By: | |
Its: |
AAL-PA-03735-LA-1106668R1 | SA-8 | |
[*CTR] | Attachment D, Page 3 of 3 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
Reference: | Letter Agreement No. AAL-PA-03735-LA-1106668R1 to Purchase Agreement and [*CTR] |
Subject: | [*CTR] reported pursuant to Section 7 of the referenced Letter Agreement. |
American Airlines [*CTR] | ||||||||||
Airplane Type | 737 MAX 8 | |||||||||
[*CTR] | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
[*CTR] | ||||||||||
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AAL-PA-03735-LA-1106668R1 | SA-8 | |
[*CTR] | Attachment E, Page 1 of 2 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
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[*CTR] |
THE BOEING COMPANY | |
By: | |
Its: | |
Date: |
AAL-PA-03735-LA-1106668R1 | SA-8 | |
[*CTR] | Attachment E, Page 2 of 2 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
To: | American Airlines, Inc. |
Reference: | Letter Agreement No. AAL-PA-03735-LA-1106668R1 to Purchase Agreement and [*CTR] |
Subject: | [*CTR] reported pursuant to Section 5.3 of the referenced Letter Agreement. |
AAL-PA-03735-LA-1106668R1 | SA-8 | |
[*CTR] | Attachment F, Page 1 of 1 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
Reference: | Letter Agreement No. AAL-PA-03735-LA-1106668R1 to Purchase Agreement and [*CTR] |
Subject: | [*CTR] reported pursuant to Section 5.2 of the referenced Letter Agreement. |
[*CTR] | ||
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AAL-PA-03735-LA-1106668R1 | SA-8 | |
[*CTR] | Attachment G, Page 1 of 1 | |
BOEING PROPRIETARY | ||
[*CTR]=[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST |
Year Ended December 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
Income (loss) before income taxes | $ | 3,084 | $ | 4,299 | $ | 4,616 | $ | 3,212 | $ | (2,180 | ) | |||||||||
Add: Total fixed charges (per below) | 2,028 | 1,956 | 1,836 | 1,931 | 1,983 | |||||||||||||||
Less: Interest capitalized | 49 | 45 | 52 | 61 | 47 | |||||||||||||||
Total earnings (loss) before income taxes | $ | 5,063 | $ | 6,210 | $ | 6,400 | $ | 5,082 | $ | (244 | ) | |||||||||
Fixed charges: | ||||||||||||||||||||
Interest (1) | $ | 1,102 | $ | 1,036 | $ | 932 | $ | 948 | $ | 902 | ||||||||||
Portion of rental expense representative of the interest factor | 926 | 920 | 904 | 983 | 1,081 | |||||||||||||||
Total fixed charges | $ | 2,028 | $ | 1,956 | $ | 1,836 | $ | 1,931 | $ | 1,983 | ||||||||||
Ratio of earnings to fixed charges | 2.5 | 3.2 | 3.5 | 2.6 | — | |||||||||||||||
Coverage deficiency | $ | — | $ | — | $ | — | $ | — | $ | 2,227 |
(1) | The twelve months ended December 31, 2014 includes non-cash interest accretion related to Bankruptcy Settlement Obligations. |
Year Ended December 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
Income (loss) before income taxes | $ | 3,244 | $ | 4,443 | $ | 4,668 | $ | 3,268 | $ | (2,071 | ) | |||||||||
Add: Total fixed charges (per below) | 1,952 | 1,857 | 1,745 | 1,891 | 1,810 | |||||||||||||||
Less: Interest capitalized | 49 | 45 | 52 | 61 | 47 | |||||||||||||||
Total earnings (loss) before income taxes | $ | 5,147 | $ | 6,255 | $ | 6,361 | $ | 5,098 | $ | (308 | ) | |||||||||
Fixed charges: | ||||||||||||||||||||
Interest (1) | $ | 1,037 | $ | 951 | $ | 848 | $ | 908 | $ | 774 | ||||||||||
Portion of rental expense representative of the interest factor | 915 | 906 | 897 | 983 | 1,036 | |||||||||||||||
Total fixed charges | $ | 1,952 | $ | 1,857 | $ | 1,745 | $ | 1,891 | $ | 1,810 | ||||||||||
Ratio of earnings to fixed charges | 2.6 | 3.4 | 3.6 | 2.7 | — | |||||||||||||||
Coverage deficiency | $ | — | $ | — | $ | — | $ | — | $ | 2,118 |
(1) | The twelve months ended December 31, 2014 includes non-cash interest accretion related to Bankruptcy Settlement Obligations. |
Name of Subsidiary | State or Sovereign Power of Incorporation | |
Subsidiaries included in the Registrant’s consolidated financial statements | ||
AAG Private Placement-1 Parent LLC | Delaware | |
AAG Private Placement-1 LLC | Delaware | |
American Airlines, Inc. | Delaware | |
Aerosan Airport Services S.A.* | Chile | |
Aerosan S.A.* | Chile | |
American Airlines de Mexico, S.A. | Mexico | |
American Airlines Marketing Services LLC | Virginia | |
American Aviation Supply LLC | Delaware | |
American Airlines Retiree Travel LLC | Texas | |
oMC Venture, LLC* | Delaware | |
Texas Aero Engine Services, L.L.C.* | Delaware | |
Americas Ground Services, Inc. | Delaware | |
Caribbean Dispatch Services Limited | St. Lucia | |
Dominicana de Servicios Aeroportuarios (DSA) S.R.L. | Dominican Republic | |
International Ground Services, S.A. de C.V. | Mexico | |
Avion Assurance, Ltd. | Bermuda | |
Envoy Aviation Group Inc. | Delaware | |
Eagle Aviation Services, Inc. | Delaware | |
Envoy Air Inc. (operates under the trade name “American Eagle”) | Delaware | |
Executive Airlines, Inc. | Delaware | |
Executive Ground Services, Inc. | Delaware | |
FLAAG 2017-1 OPP LLC | Delaware | |
FLAAG 2017-1 OP-a LLC | Delaware | |
FLAAG 2017-1 OP-b LLC | Delaware | |
Piedmont Airlines, Inc. (operates under the trade name “American Eagle”) | Maryland | |
PMA Investment Subsidiary, Inc. | Delaware | |
PSA Airlines, Inc. (operates under the trade name “American Eagle”) | Pennsylvania |
/s/ W. Douglas Parker | ||
Name: | W. Douglas Parker | |
Title: | Chief Executive Officer |
/s/ Derek J. Kerr | ||
Name: | Derek J. Kerr | |
Title: | Executive Vice President and Chief | |
Financial Officer |
/s/ W. Douglas Parker | ||
Name: | W. Douglas Parker | |
Title: | Chief Executive Officer |
/s/ Derek J. Kerr | ||
Name: | Derek J. Kerr | |
Title: | Executive Vice President and Chief | |
Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ W. Douglas Parker | ||
Name: | W. Douglas Parker | |
Title: | Chief Executive Officer | |
Date: | February 21, 2018 | |
/s/ Derek J. Kerr | ||
Name: | Derek J. Kerr | |
Title: | Executive Vice President and Chief Financial Officer | |
Date: | February 21, 2018 |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ W. Douglas Parker | ||
Name: | W. Douglas Parker | |
Title: | Chief Executive Officer | |
Date: | February 21, 2018 | |
/s/ Derek J. Kerr | ||
Name: | Derek J. Kerr | |
Title: | Executive Vice President and Chief Financial Officer | |
Date: | February 21, 2018 |
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Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Net income | $ 1,919 | $ 2,676 | $ 7,610 |
Pension, retiree medical and other postretirement benefits: | |||
Amortization of actuarial loss and prior service cost | (55) | (65) | (108) |
Current year change | (15) | (293) | (51) |
Investments and derivative financial instruments | (1) | 7 | (14) |
Total other comprehensive loss, net of tax | (71) | (351) | (173) |
Total comprehensive income | 1,848 | 2,325 | 7,437 |
American Airlines, Inc. [Member] | |||
Net income | 1,922 | 2,781 | 8,120 |
Pension, retiree medical and other postretirement benefits: | |||
Amortization of actuarial loss and prior service cost | (55) | (65) | (109) |
Current year change | (13) | (292) | (51) |
Investments and derivative financial instruments | (1) | 6 | (15) |
Total other comprehensive loss, net of tax | (69) | (351) | (175) |
Total comprehensive income | $ 1,853 | $ 2,430 | $ 7,945 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Accumulated amortization of intangibles | $ 622 | $ 578 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,750,000,000 | 1,750,000,000 |
Common stock, shares issued | 475,507,887 | 507,294,153 |
Common stock, shares outstanding | 475,507,887 | 507,294,153 |
American Airlines, Inc. [Member] | ||
Accumulated amortization of intangibles | $ 622 | $ 578 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized | 1,000 | 1,000 |
Common stock, shares issued | 1,000 | 1,000 |
Common stock, shares outstanding | 1,000 | 1,000 |
Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Statement of Stockholders' Equity [Abstract] | |||
Purchase and retirement of common stock, shares | 33,953,127 | ||
Purchase and retirement of common stock, shares | 33,900,000 | 119,823,621 | 85,141,691 |
Dividends declared on common stock per share (in dollars per share) | $ 0.40 | $ 0.40 | $ 0.40 |
Issuance of shares of common stock pursuant to employee stock plans | 2,166,861 | 2,506,067 | 12,289,537 |
Basis of Presentation and Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies (a) Basis of Presentation American Airlines Group Inc. (we, us, our and similar terms, or AAG), a Delaware corporation, is a holding company whose primary business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through its mainline operating subsidiary, American Airlines, Inc. (American) and its wholly-owned regional airline subsidiaries, Envoy Aviation Group Inc. (Envoy), Piedmont Airlines, Inc. (Piedmont) and PSA Airlines, Inc. (PSA) that operate under the brand American Eagle. On December 9, 2013, a subsidiary of AMR Corporation (AMR) merged with and into US Airways Group, Inc. (US Airways Group), a Delaware corporation, which survived as a wholly-owned subsidiary of AAG, and AAG emerged from Chapter 11 (the Merger). Upon closing of the Merger and emergence from Chapter 11, AMR changed its name to American Airlines Group Inc. On December 30, 2015, in order to simplify AAG’s internal corporate structure, US Airways Group merged with and into AAG, with AAG as the surviving corporation. Immediately thereafter, US Airways, Inc. (US Airways), a wholly-owned subsidiary of US Airways Group, merged with and into American, with American as the surviving corporation. All significant intercompany transactions have been eliminated. The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The most significant areas of judgment relate to passenger revenue recognition, impairment of goodwill, impairment of long-lived and intangible assets, the loyalty program, valuation allowance for deferred tax assets, as well as pension and retiree medical and other postretirement benefits. (b) Short-term Investments Short-term investments are classified as available-for-sale and stated at fair value. Realized gains and losses are recorded in nonoperating expense on the consolidated statement of operations. Unrealized gains and losses are recorded in accumulated other comprehensive loss on the consolidated balance sheets. (c) Restricted Cash and Short-term Investments We have restricted cash and short-term investments related primarily to collateral held to support workers’ compensation obligations. (d) Aircraft Fuel, Spare Parts and Supplies, Net Aircraft fuel is recorded on a first-in, first-out basis. Spare parts and supplies are recorded at average costs less an allowance for obsolescence. These items are expensed when used. (e) Operating Property and Equipment Operating property and equipment is recorded at cost and depreciated or amortized to residual values over the asset’s estimated useful life or the lease term, whichever is less, using the straight-line method. Residual values for aircraft, engines and related rotable parts are generally 5% to 10% of original cost. Costs of major improvements that enhance the usefulness of the asset are capitalized and depreciated or amortized over the estimated useful life of the asset or the lease term, whichever is less. The estimated useful lives for the principal property and equipment classifications are as follows:
We assess impairment on operating property and equipment when events and circumstances indicate that the assets may be impaired. An asset or group of assets is considered impaired when the undiscounted cash flows estimated to be generated by the assets are less than the carrying amount of the assets and the net book value of the assets exceeds their estimated fair value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less the cost to sell. Total depreciation and amortization expense was $2.2 billion, $1.9 billion and $1.7 billion for the years ended December 31, 2017, 2016 and 2015, respectively. (f) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are recorded net as noncurrent deferred income taxes. We provide a valuation allowance for our deferred tax assets when it is more likely than not that some portion, or all of our deferred tax assets, will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. We consider all available positive and negative evidence and make certain assumptions in evaluating the realizability of our deferred tax assets. Many factors are considered that impact our assessment of future profitability, including conditions which are beyond our control, such as the health of the economy, the level and volatility of fuel prices and travel demand. (g) Goodwill Goodwill represents the excess of the purchase price over the fair value of the net assets acquired and liabilities assumed. Goodwill is not amortized but assessed for impairment annually on October 1st or more frequently if events or circumstances indicate that goodwill may be impaired. We have one consolidated reporting unit. Goodwill is assessed for impairment by initially performing a qualitative assessment and, if necessary, then comparing the fair value of the reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit is less than the carrying value, a second step is performed to determine the implied fair value of goodwill. If the implied fair value of goodwill is lower than its carrying value, an impairment charge equal to the difference is recorded. Based upon our annual assessment, there was no goodwill impairment in 2017. The carrying value of the goodwill on our consolidated balance sheets was $4.1 billion as of December 31, 2017 and 2016. (h) Other Intangibles, Net Intangible assets consist primarily of domestic airport slots, customer relationships, marketing agreements, international slots and route authorities, airport gate leasehold rights and tradenames. Finite-Lived Intangible Assets Finite-lived intangible assets are amortized over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The following table provides information relating to our amortizable intangible assets as of December 31, 2017 and 2016 (in millions):
Certain domestic airport slots and airport gate leasehold rights are amortized on a straight-line basis over 25 years. The customer relationships and marketing agreements were identified as intangible assets subject to amortization and are amortized on a straight-line basis over approximately nine years and 30 years, respectively. Tradenames are fully amortized. We recorded amortization expense related to these intangible assets of $44 million, $76 million and $55 million for the years ended December 31, 2017, 2016 and 2015, respectively. We expect to record annual amortization expense for these intangible assets as follows (in millions):
Indefinite-Lived Intangible Assets Indefinite-lived intangible assets include certain domestic airport slots at our hubs and international slots and route authorities. Indefinite-lived intangible assets are not amortized but instead are assessed for impairment annually on October 1st or more frequently if events or circumstances indicate that the asset may be impaired. As of December 31, 2017 and 2016, we had $1.9 billion and $1.8 billion, respectively, of indefinite-lived intangible assets on our consolidated balance sheets. Indefinite-lived intangible assets are assessed for impairment by initially performing a qualitative assessment to determine whether we believe it is more likely than not that an asset has been impaired. If we believe impairment has occurred, we then evaluate for impairment by comparing the estimated fair value of assets to the carrying value. An impairment charge is recognized if the asset’s estimated fair value is less than its carrying value. Based upon our annual assessment, there was no indefinite-lived intangible asset impairment in 2017. (i) Loyalty Program We currently operate the loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American, any oneworld airline or other partner airlines, or by using the services of other program participants, such as the Citi and Barclaycard US co-branded credit cards, hotels and car rental companies. Mileage credits can be redeemed for travel on American or other participating partner airlines. Through December 31, 2017, we used the incremental cost method to account for the portion of our loyalty program liability incurred when AAdvantage members earn mileage credits by flying on American, any oneworld airline or other partner airlines. We have an obligation to provide future travel when these mileage credits are redeemed and therefore have recorded a liability for mileage credits outstanding. The incremental cost liability includes all mileage credits, even mileage credits for members whose account balances have not yet reached the minimum level required to redeem an award. Mileage credits are subject to expiration. The liability for outstanding mileage credits is valued based on the estimated incremental cost of carrying one additional passenger. The estimated incremental cost primarily includes unit costs incurred for fuel, food and insurance as well as fees incurred when travel awards are redeemed on partner airlines. In calculating the liability, we estimate how many mileage credits will never be redeemed for travel and exclude those mileage credits from the estimate of the liability. Estimates are also made for the number of miles that will be used per award redemption and the number of travel awards that will be redeemed on partner airlines. These costs and estimates are based on our historical program experience as well as consideration of enacted program changes, as applicable. Changes in the liability resulting from members earning additional mileage credits or changes in estimates are recorded in the consolidated statements of operations as a part of passenger revenue. As of December 31, 2017 and 2016, the liability for outstanding mileage credits accounted for under the incremental cost method was $677 million and $669 million, respectively, and is included on the consolidated balance sheets within loyalty program liability. We also sell loyalty program mileage credits to participating airline partners and non-airline business partners, such as the Citi and Barclaycard US co-branded credit cards. Sales of mileage credits to non-airline business partners is comprised of two components, transportation and marketing. We account for mileage sales under our agreements with non-airline business partners in accordance with ASU 2009-13, “Revenue Recognition (Topic 605) – Multiple-Deliverable Revenue Arrangements.” In accordance with ASU 2009-13, we allocate the consideration received from the sale of mileage credits based on the relative selling price of each product or service delivered. As a result of our co-branded credit card program agreements with Citi and Barclaycard US that we entered into in 2016, we identified the following revenue elements in these co-branded credit card agreements: the transportation component; and the use of the American brand including access to loyalty program member lists, advertising and other travel related benefits (collectively, the marketing component). The transportation component represents the estimated selling price of future travel awards and is determined using historical transaction information, including information related to customer redemption patterns. The transportation component is deferred based on its relative selling price and is amortized into passenger revenue on a straight-line basis over the period in which the mileage credits are expected to be redeemed for travel. As of December 31, 2017 and 2016, we had $2.1 billion in deferred revenue from the sale of mileage credits recorded within loyalty program liability on our consolidated balance sheets. The services under the marketing component are provided periodically, but no less than monthly. Accordingly, the marketing component is considered earned and recognized in other revenues in the period of the mileage sale. For the years ended December 31, 2017, 2016 and 2015, the marketing component of mileage sales and other marketing related payments included in other revenues was approximately $2.2 billion, $1.9 billion and $1.7 billion, respectively. Effective January 1, 2018, we are adopting ASU 2014-09: Revenue from Contracts with Customers (Topic 606). See Recent Accounting Pronouncements in Note 1(r) below for further discussion. (j) Revenue Passenger Revenue Passenger revenue is recognized when transportation is provided. Ticket sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on the consolidated balance sheets. The air traffic liability represents tickets sold for future travel dates and estimated future refunds and exchanges of tickets sold for past travel dates. The balance in the air traffic liability fluctuates throughout the year based on seasonal travel patterns. Our air traffic liability was $4.0 billion and $3.9 billion as of December 31, 2017 and 2016, respectively. The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. Due to complex pricing structures, refund and exchange policies, and interline agreements with other airlines, certain amounts are recognized in passenger revenue using estimates regarding both the timing of the revenue recognition and the amount of revenue to be recognized. These estimates are generally based on the analysis of our historical data. We and other airline industry participants have consistently applied this accounting method to estimate revenue from forfeited tickets at the date of travel. Estimated future refunds and exchanges included in the air traffic liability are routinely evaluated based on subsequent activity to validate the accuracy of our estimates. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are included in passenger revenue during the period in which the evaluations are completed. Regional carriers provide scheduled air transportation under the brand name American Eagle. We classify revenues generated from transportation on these carriers as regional passenger revenues. Liabilities related to tickets sold by us for travel on these air carriers is also included in our air traffic liability and are subsequently recognized as revenue in the same manner as described above. Passenger Taxes and Fees Various taxes and fees assessed on the sale of tickets to end customers are collected by us as an agent and remitted to taxing authorities. These taxes and fees have been presented on a net basis in the accompanying consolidated statements of operations and recorded as a liability until remitted to the appropriate taxing authority. Cargo Revenue Cargo revenue is recognized when we provide the transportation. Other Revenue Other revenue includes revenue associated with marketing services provided to our business partners as part of our loyalty program, baggage fees, ticketing change fees, airport clubs and inflight services. The accounting and recognition for the loyalty program marketing services are discussed in Note 1(i) above. Baggage fees, ticketing change fees, airport clubs and inflight service revenues are recognized when we provide the service. Effective January 1, 2018, we are adopting ASU 2014-09: Revenue from Contracts with Customers (Topic 606). See Recent Accounting Pronouncements in Note 1(r) below for further discussion. (k) Maintenance, Materials and Repairs Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred, except costs incurred for maintenance and repair under flight hour maintenance contract agreements, which are accrued based on contractual terms when an obligation exists. (l) Selling Expenses Selling expenses include credit card fees, commissions, computerized reservations systems fees and advertising. Advertising costs are expensed as incurred. Advertising expense was $135 million, $116 million and $110 million for the years ended December 31, 2017, 2016 and 2015, respectively. (m) Share-based Compensation We account for our share-based compensation expense based on the fair value of the stock award at the time of grant, which is recognized ratably over the vesting period of the stock award. Certain awards have performance conditions that must be achieved prior to vesting and are expensed based on the expected achievement at each reporting period. The fair value of stock appreciation rights is estimated using a Black-Scholes option pricing model. The fair value of restricted stock units is based on the market price of the underlying shares of common stock on the date of grant. See Note 14 for further discussion of share-based compensation. (n) Deferred Gains and Credits, Net Included within deferred gains and credits, net are amounts deferred and amortized into future periods associated with the adjustment of leases to fair value in connection with the application of acquisition accounting, deferred gains on the sale-leaseback of aircraft and certain vendor incentives. We periodically receive vendor incentives in connection with acquisition of aircraft and engines. These credits are deferred until aircraft and engines are delivered and then applied as a reduction to the cost of the related equipment. (o) Foreign Currency Gains and Losses Foreign currency gains and losses are recorded as part of other nonoperating expense, net in our consolidated statements of operations. Foreign currency losses for 2017 were $4 million. Foreign currency gains were $1 million for 2016. For 2015, foreign currency losses were $751 million and included a $592 million nonoperating special charge to write off all of the value of Venezuelan bolivars held by us due to continued lack of repatriations and deterioration of economic conditions in Venezuela. (p) Other Operating Expenses Other operating expenses includes costs associated with ground and cargo handling, crew travel, aircraft food and catering, passenger accommodation, airport security, international navigation fees and certain general and administrative expenses. (q) Regional Expenses Expenses associated with American Eagle operations are classified as regional expenses on the consolidated statements of operations. Regional expenses consist of the following (in millions):
(r) Recent Accounting Pronouncements Standards Effective for 2018 Reporting Periods Effective January 1, 2018, we are adopting the accounting pronouncements described below. The adoption and related required disclosures will be reported in our first quarter 2018 Quarterly Report on Form 10-Q. ASU 2014-09: Revenue from Contracts with Customers (Topic 606) (the New Revenue Standard) The New Revenue Standard applies to all companies that enter into contracts with customers to transfer goods or services. We are adopting the New Revenue Standard using the full retrospective method, which results in the recast of each prior reporting period presented. The adoption of the New Revenue Standard will impact our accounting for outstanding mileage credits earned through travel by AAdvantage loyalty program members. There is no change in accounting for sales of mileage credits to co-branded card or other partners as those are currently reported in accordance with the New Revenue Standard. Through December 31, 2017, we used the incremental cost method to account for the portion of our loyalty program liability related to mileage credits earned through travel, which were valued based on the estimated incremental cost of carrying one additional passenger (see (i) Loyalty Program above). The New Revenue Standard requires us to change our policy to the deferred revenue method and apply a relative selling price approach whereby a portion of each passenger ticket sale attributable to mileage credits earned is deferred and recognized in passenger revenue upon future mileage redemption. The value of the earned mileage credits is materially greater under the deferred revenue method than the value attributed to these mileage credits under the incremental cost method. The New Revenue Standard will also require certain reclassifications, principally the reclassification of certain ancillary revenues previously classified and reported as other revenue to passenger revenue and as applicable to cargo revenue. Additionally, the New Revenue Standard requires a gross presentation on the face of our statement of operations for certain revenues and expenses that had previously been presented on a net basis. See recast 2017 statement of operations and balance sheet data presented below for the expected effects of adoption. ASU 2017-07: Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (the New Retirement Standard) The New Retirement Standard requires all components of our net periodic benefit cost (income), with the exception of service cost, previously reported within operating expenses as salaries, wages and benefits, to be reclassified and reported within nonoperating income (expense). The New Retirement Standard is required to be applied retrospectively, which results in the recast of each prior reporting period presented. The adoption of the New Retirement Standard has no impact on pre-tax income or net income reported. See recast 2017 statement of operations data presented below for the expected effects of adoption. ASU 2016-01: Financial Instruments - Overall (Subtopic 825-10) This ASU makes several modifications to Subtopic 825-10, including the elimination of the available-for-sale classification of equity investments, and it requires equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income. This standard is applied prospectively as of the beginning of the year of adoption. The adoption of this standard is not expected to have a material impact on our consolidated financial statements. ASU 2016-18: Statement of Cash Flows (Topic 230): Restricted Cash This ASU requires that the change in total cash, cash at beginning of period and cash at end of period on the statement of cash flows include restricted cash and restricted cash equivalents and also requires companies who report cash and restricted cash separately on the balance sheet to reconcile those amounts to the statement of cash flows. This standard is required to be applied retrospectively, which results in the recast of each prior reporting period statement of cash flows presented. The adoption of this standard is not expected to have a material impact on our consolidated financial statements. Impacts to 2017 Results The expected effects of adoption of the New Revenue Standard and New Retirement Standard to our statement of operations for the twelve months ended December 31, 2017 are as follows:
The expected effects of adoption of the New Revenue Standard to our December 31, 2017 balance sheet are as follows:
Standards Effective for 2019 Reporting Periods ASU 2016-02: Leases (Topic 842) (the New Lease Standard) The New Lease Standard requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet and aligns many of the underlying principles of the new lessor model with those in the New Revenue Standard. The New Lease Standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We expect we will adopt the New Lease Standard effective January 1, 2019. Entities are required to adopt the New Lease Standard using a modified retrospective approach, which results in the recast of each prior reporting period presented, for all leases existing at or commencing after the date of initial application with an option to use certain practical expedients. We are currently evaluating how the adoption of the New Lease Standard will impact our consolidated financial statements. Interpretations are on-going and could have a material impact on our implementation. Currently, we expect that the adoption of the New Lease Standard will have a material impact on our consolidated balance sheet due to the recognition of right-of-use assets and lease liabilities principally for certain leases currently accounted for as operating leases. |
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American Airlines, Inc. [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies (a) Basis of Presentation American Airlines, Inc. (American) is a Delaware corporation whose primary business activity is the operation of a major network air carrier. American is the principal wholly-owned subsidiary of American Airlines Group Inc. (AAG), which owns all of American’s outstanding common stock, par value $1.00 per share. On December 9, 2013, a subsidiary of AMR Corporation (AMR) merged with and into US Airways Group, Inc. (US Airways Group), a Delaware corporation, which survived as a wholly-owned subsidiary of AAG, and AAG emerged from Chapter 11 (the Merger). Upon closing of the Merger and emergence from Chapter 11, AMR changed its name to American Airlines Group Inc. On December 30, 2015, in order to simplify AAG’s internal corporate structure, US Airways, Inc. (US Airways), a wholly-owned subsidiary of US Airways Group, merged with and into American, with American as the surviving corporation. All significant intercompany transactions have been eliminated. The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The most significant areas of judgment relate to passenger revenue recognition, impairment of goodwill, impairment of long-lived and intangible assets, the loyalty program, valuation allowance for deferred tax assets, as well as pension and retiree medical and other postretirement benefits. (b) Short-term Investments Short-term investments are classified as available-for-sale and stated at fair value. Realized gains and losses are recorded in nonoperating expense on the consolidated statement of operations. Unrealized gains and losses are recorded in accumulated other comprehensive loss on the consolidated balance sheets. (c) Restricted Cash and Short-term Investments American has restricted cash and short-term investments related primarily to collateral held to support workers’ compensation obligations. (d) Aircraft Fuel, Spare Parts and Supplies, Net Aircraft fuel is recorded on a first-in, first-out basis. Spare parts and supplies are recorded at average costs less an allowance for obsolescence. These items are expensed when used. (e) Operating Property and Equipment Operating property and equipment is recorded at cost and depreciated or amortized to residual values over the asset’s estimated useful life or the lease term, whichever is less, using the straight-line method. Residual values for aircraft, engines and related rotable parts are generally 5% to 10% of original cost. Costs of major improvements that enhance the usefulness of the asset are capitalized and depreciated or amortized over the estimated useful life of the asset or the lease term, whichever is less. The estimated useful lives for the principal property and equipment classifications are as follows:
American assesses impairment on operating property and equipment when events and circumstances indicate that the assets may be impaired. An asset or group of assets is considered impaired when the undiscounted cash flows estimated to be generated by the assets are less than the carrying amount of the assets and the net book value of the assets exceeds their estimated fair value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less the cost to sell. Total depreciation and amortization expense was $2.1 billion, $1.8 billion and $1.6 billion for the years ended December 31, 2017, 2016 and 2015, respectively. (f) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are recorded net as noncurrent deferred income taxes. American provides a valuation allowance for its deferred tax assets when it is more likely than not that some portion, or all of its deferred tax assets, will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. American considers all available positive and negative evidence and makes certain assumptions in evaluating the realizability of its deferred tax assets. Many factors are considered that impact American’s assessment of future profitability, including conditions which are beyond American’s control, such as the health of the economy, the level and volatility of fuel prices and travel demand. (g) Goodwill Goodwill represents the excess of the purchase price over the fair value of the net assets acquired and liabilities assumed. Goodwill is not amortized but assessed for impairment annually on October 1st or more frequently if events or circumstances indicate that goodwill may be impaired. American has one consolidated reporting unit. Goodwill is assessed for impairment by initially performing a qualitative assessment and, if necessary, then comparing the fair value of the reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit is less than the carrying value, a second step is performed to determine the implied fair value of goodwill. If the implied fair value of goodwill is lower than its carrying value, an impairment charge equal to the difference is recorded. Based upon American’s annual assessment, there was no goodwill impairment in 2017. The carrying value of the goodwill on American’s consolidated balance sheets was $4.1 billion as of December 31, 2017 and 2016. (h) Other Intangibles, Net Intangible assets consist primarily of domestic airport slots, customer relationships, marketing agreements, international slots and route authorities, airport gate leasehold rights and tradenames. Finite-Lived Intangible Assets Finite-lived intangible assets are amortized over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The following table provides information relating to American’s amortizable intangible assets as of December 31, 2017 and 2016 (in millions):
Certain domestic airport slots and airport gate leasehold rights are amortized on a straight-line basis over 25 years. The customer relationships and marketing agreements were identified as intangible assets subject to amortization and are amortized on a straight-line basis over approximately nine years and 30 years, respectively. Tradenames are fully amortized. American recorded amortization expense related to these intangible assets of $44 million, $76 million and $55 million for the years ended December 31, 2017, 2016 and 2015, respectively. American expects to record annual amortization expense for these intangible assets as follows (in millions):
Indefinite-Lived Intangible Assets Indefinite-lived intangible assets include certain domestic airport slots at American’s hubs and international slots and route authorities. Indefinite-lived intangible assets are not amortized but instead are assessed for impairment annually on October 1st or more frequently if events or circumstances indicate that the asset may be impaired. As of December 31, 2017 and 2016, American had $1.9 billion and $1.8 billion, respectively, of indefinite-lived intangible assets on its consolidated balance sheets. Indefinite-lived intangible assets are assessed for impairment by initially performing a qualitative assessment to determine whether American believes it is more likely than not that an asset has been impaired. If American believes impairment has occurred, American then evaluates for impairment by comparing the estimated fair value of assets to the carrying value. An impairment charge is recognized if the asset’s estimated fair value is less than its carrying value. Based upon American’s annual assessment, there was no indefinite-lived intangible asset impairment in 2017. (i) Loyalty Program American currently operates the loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American, any oneworld airline or other partner airlines, or by using the services of other program participants, such as the Citi and Barclaycard US co-branded credit cards, hotels and car rental companies. Mileage credits can be redeemed for travel on American or other participating partner airlines. Through December 31, 2017, American used the incremental cost method to account for the portion of its loyalty program liability incurred when AAdvantage members earn mileage credits by flying on American, any oneworld airline or other partner airlines. American has an obligation to provide future travel when these mileage credits are redeemed and therefore have recorded a liability for mileage credits outstanding. The incremental cost liability includes all mileage credits, even mileage credits for members whose account balances have not yet reached the minimum level required to redeem an award. Mileage credits are subject to expiration. The liability for outstanding mileage credits is valued based on the estimated incremental cost of carrying one additional passenger. The estimated incremental cost primarily includes unit costs incurred for fuel, food and insurance as well as fees incurred when travel awards are redeemed on partner airlines. In calculating the liability, American estimates how many mileage credits will never be redeemed for travel and excludes those mileage credits from the estimate of the liability. Estimates are also made for the number of miles that will be used per award redemption and the number of travel awards that will be redeemed on partner airlines. These costs and estimates are based on American’s historical program experience as well as consideration of enacted program changes, as applicable. Changes in the liability resulting from members earning additional mileage credits or changes in estimates are recorded in the consolidated statements of operations as a part of passenger revenue. As of December 31, 2017 and 2016, the liability for outstanding mileage credits accounted for under the incremental cost method was $677 million and $669 million, respectively, and is included on the consolidated balance sheets within loyalty program liability. American also sells loyalty program mileage credits to participating airline partners and non-airline business partners, such as the Citi and Barclaycard US co-branded credit cards. Sales of mileage credits to non-airline business partners is comprised of two components, transportation and marketing. American accounts for mileage sales under its agreements with non-airline business partners in accordance with ASU 2009-13, “Revenue Recognition (Topic 605) — Multiple-Deliverable Revenue Arrangements.” In accordance with ASU 2009-13, American allocates the consideration received from the sale of mileage credits based on the relative selling price of each product or service delivered. As a result of American’s co-branded credit card program agreements with Citi and Barclaycard US that it entered into in 2016, American identified the following revenue elements in these co-branded credit card agreements: the transportation component; and the use of the American brand including access to loyalty program member lists, advertising and other travel related benefits (collectively, the marketing component). The transportation component represents the estimated selling price of future travel awards and is determined using historical transaction information, including information related to customer redemption patterns. The transportation component is deferred based on its relative selling price and is amortized into passenger revenue on a straight-line basis over the period in which the mileage credits are expected to be redeemed for travel. As of December 31, 2017 and 2016, American had $2.1 billion in deferred revenue from the sale of mileage credits recorded within loyalty program liability on its consolidated balance sheets. The services under the marketing component are provided periodically, but no less than monthly. Accordingly, the marketing component is considered earned and recognized in other revenues in the period of the mileage sale. For the years ended December 31, 2017, 2016 and 2015, the marketing component of mileage sales and other marketing related payments included in other revenues was approximately $2.2 billion, $1.9 billion and $1.7 billion, respectively. Effective January 1, 2018, American is adopting ASU 2014-09: Revenue from Contracts with Customers (Topic 606). See Recent Accounting Pronouncements in Note 1(r) below for further discussion. (j) Revenue Passenger Revenue Passenger revenue is recognized when transportation is provided. Ticket sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on the consolidated balance sheets. The air traffic liability represents tickets sold for future travel dates and estimated future refunds and exchanges of tickets sold for past travel dates. The balance in the air traffic liability fluctuates throughout the year based on seasonal travel patterns. American’s air traffic liability was $4.0 billion and $3.9 billion as of December 31, 2017 and 2016, respectively. The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. Due to complex pricing structures, refund and exchange policies, and interline agreements with other airlines, certain amounts are recognized in passenger revenue using estimates regarding both the timing of the revenue recognition and the amount of revenue to be recognized. These estimates are generally based on the analysis of American’s historical data. American and other airline industry participants have consistently applied this accounting method to estimate revenue from forfeited tickets at the date of travel. Estimated future refunds and exchanges included in the air traffic liability are routinely evaluated based on subsequent activity to validate the accuracy of American’s estimates. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are included in passenger revenue during the period in which the evaluations are completed. Regional carriers provide scheduled air transportation under the brand name American Eagle. American classifies revenues generated from transportation on these carriers as regional passenger revenues. Liabilities related to tickets sold by American for travel on these air carriers are also included in American’s air traffic liability and are subsequently recognized as revenue in the same manner as described above. Passenger Taxes and Fees Various taxes and fees assessed on the sale of tickets to end customers are collected by American as an agent and remitted to taxing authorities. These taxes and fees have been presented on a net basis in the accompanying consolidated statements of operations and recorded as a liability until remitted to the appropriate taxing authority. Cargo Revenue Cargo revenue is recognized when American provides the transportation. Other Revenue Other revenue includes revenue associated with marketing services provided to American’s business partners as part of its loyalty program, baggage fees, ticketing change fees, airport clubs and inflight services. The accounting and recognition for the loyalty program marketing services are discussed in Note 1(i) above. Baggage fees, ticketing change fees, airport clubs and inflight service revenues are recognized when American provides the service. Effective January 1, 2018, American is adopting ASU 2014-09: Revenue from Contracts with Customers (Topic 606). See Recent Accounting Pronouncements in Note 1(r) below for further discussion. (k) Maintenance, Materials and Repairs Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred, except costs incurred for maintenance and repair under flight hour maintenance contract agreements, which are accrued based on contractual terms when an obligation exists. (l) Selling Expenses Selling expenses include credit card fees, commissions, computerized reservations systems fees and advertising. Advertising costs are expensed as incurred. Advertising expense was $135 million, $116 million and $110 million for the years ended December 31, 2017, 2016 and 2015, respectively. (m) Share-based Compensation American accounts for its share-based compensation expense based on the fair value of the stock award at the time of grant, which is recognized ratably over the vesting period of the stock award. Certain awards have performance conditions that must be achieved prior to vesting and are expensed based on the expected achievement at each reporting period. The fair value of stock appreciation rights is estimated using a Black-Scholes option pricing model. The fair value of restricted stock units is based on the market price of the underlying shares of common stock on the date of grant. See Note 12 for further discussion of share-based compensation. (n) Deferred Gains and Credits, Net Included within deferred gains and credits, net are amounts deferred and amortized into future periods associated with the adjustment of leases to fair value in connection with the application of acquisition accounting, deferred gains on the sale-leaseback of aircraft and certain vendor incentives. American periodically receives vendor incentives in connection with acquisition of aircraft and engines. These credits are deferred until aircraft and engines are delivered and then applied as a reduction to the cost of the related equipment. (o) Foreign Currency Gains and Losses Foreign currency gains and losses are recorded as part of other nonoperating expense, net in American’s consolidated statements of operations. Foreign currency losses for 2017 were $4 million. Foreign currency gains were $1 million for 2016. For 2015, foreign currency losses were $751 million and included a $592 million nonoperating special charge to write off all of the value of Venezuelan bolivars held by American due to continued lack of repatriations and deterioration of economic conditions in Venezuela. (p) Other Operating Expenses Other operating expenses includes costs associated with ground and cargo handling, crew travel, aircraft food and catering, passenger accommodation, airport security, international navigation fees and certain general and administrative expenses. (q) Regional Expenses Expenses associated with American Eagle operations are classified as regional expenses on the consolidated statements of operations. Regional expenses consist of the following (in millions):
(r) Recent Accounting Pronouncements Standards Effective for 2018 Reporting Periods Effective January 1, 2018, American is adopting the accounting pronouncements described below. The adoption and related required disclosures will be reported in American’s first quarter 2018 Quarterly Report on Form 10-Q. ASU 2014-09: Revenue from Contracts with Customers (Topic 606) (the New Revenue Standard) The New Revenue Standard applies to all companies that enter into contracts with customers to transfer goods or services. American is adopting the New Revenue Standard using the full retrospective method, which results in the recast of each prior reporting period presented. The adoption of the New Revenue Standard will impact American’s accounting for outstanding mileage credits earned through travel by AAdvantage loyalty program members. There is no change in accounting for sales of mileage credits to co-branded card or other partners as those are currently reported in accordance with the New Revenue Standard. Through December 31, 2017, American used the incremental cost method to account for the portion of its loyalty program liability related to mileage credits earned through travel, which were valued based on the estimated incremental cost of carrying one additional passenger (see (i) Loyalty Program above). The New Revenue Standard requires American to change its policy to the deferred revenue method and apply a relative selling price approach whereby a portion of each passenger ticket sale attributable to mileage credits earned is deferred and recognized in passenger revenue upon future mileage redemption. The value of the earned mileage credits is materially greater under the deferred revenue method than the value attributed to these mileage credits under the incremental cost method. The New Revenue Standard will also require certain reclassifications, principally the reclassification of certain ancillary revenues previously classified and reported as other revenue to passenger revenue and as applicable to cargo revenue. Additionally, the New Revenue Standard requires a gross presentation on the face of American’s statement of operations for certain revenues and expenses that had previously been presented on a net basis. See recast 2017 statement of operations and balance sheet data presented below for the expected effects of adoption. ASU 2017-07: Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (the New Retirement Standard) The New Retirement Standard requires all components of American’s net periodic benefit cost (income), with the exception of service cost, previously reported within operating expenses as salaries, wages and benefits, to be reclassified and reported within nonoperating income (expense). The New Retirement Standard is required to be applied retrospectively, which results in the recast of each prior reporting period presented. The adoption of the New Retirement Standard has no impact on pre-tax income or net income reported. See recast 2017 statement of operations data presented below for the expected effects of adoption. ASU 2016-01: Financial Instruments - Overall (Subtopic 825-10) This ASU makes several modifications to Subtopic 825-10, including the elimination of the available-for-sale classification of equity investments, and it requires equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income. This standard is applied prospectively as of the beginning of the year of adoption. The adoption of this standard is not expected to have a material impact on American’s consolidated financial statements. ASU 2016-18: Statement of Cash Flows (Topic 230): Restricted Cash This ASU requires that the change in total cash, cash at beginning of period and cash at end of period on the statement of cash flows include restricted cash and restricted cash equivalents and also requires companies who report cash and restricted cash separately on the balance sheet to reconcile those amounts to the statement of cash flows. This standard is required to be applied retrospectively, which results in the recast of each prior reporting period statement of cash flows presented. The adoption of this standard is not expected to have a material impact on American’s consolidated financial statements. Impacts to 2017 Results The expected effects of adoption of the New Revenue Standard and New Retirement Standard to American’s statement of operations for the twelve months ended December 31, 2017 are as follows:
The expected effects of adoption of the New Revenue Standard to American’s December 31, 2017 balance sheet are as follows:
Standards Effective for 2019 Reporting Periods ASU 2016-02: Leases (Topic 842) (the New Lease Standard) The New Lease Standard requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet and aligns many of the underlying principles of the new lessor model with those in the New Revenue Standard. The New Lease Standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. American expects it will adopt the New Lease Standard effective January 1, 2019. Entities are required to adopt the New Lease Standard using a modified retrospective approach, which results in the recast of each prior reporting period presented, for all leases existing at or commencing after the date of initial application with an option to use certain practical expedients. American is currently evaluating how the adoption of the New Lease Standard will impact its consolidated financial statements. Interpretations are on-going and could have a material impact on its implementation. Currently, American expects that the adoption of the New Lease Standard will have a material impact on its consolidated balance sheet due to the recognition of right-of-use assets and lease liabilities principally for certain leases currently accounted for as operating leases. |
Special Items, Net |
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Restructuring Cost and Reserve [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Items, Net | Special Items, Net Special items, net on the consolidated statements of operations consisted of the following (in millions):
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Special Items, Net | Special Items, Net Special items, net on the consolidated statements of operations consisted of the following (in millions):
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Earnings Per Common Share |
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Earnings Per Common Share | Earnings Per Common Share The following table sets forth the computation of basic and diluted earnings per common share (EPS) (in millions, except share and per share amounts):
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Share Repurchase Programs and Dividends |
12 Months Ended |
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Dec. 31, 2017 | |
Equity [Abstract] | |
Share Repurchase Programs and Dividends | Share Repurchase Programs and Dividends Since July 2014, our Board of Directors has approved six share repurchase programs aggregating $11.0 billion of authority. As of December 31, 2017, $450 million remained unused under a repurchase program that expires on December 31, 2018. Share repurchases under our repurchase programs may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Any such repurchases will be made from time to time subject to market and economic conditions, applicable legal requirements and other relevant factors. We are not obligated to repurchase any specific number of shares and our repurchase of common stock may be limited, suspended or discontinued at any time at our discretion. During the year ended December 31, 2017, we repurchased 33.9 million shares of AAG common stock for $1.6 billion at a weighted average cost per share of $45.68. During the year ended December 31, 2016, we repurchased 119.8 million shares of AAG common stock for $4.4 billion at a weighted average cost per share of $36.86. During the year ended December 31, 2015, we repurchased 85.1 million shares of AAG common stock for $3.6 billion at a weighted average cost per share of $42.09. Since the inception of the share repurchase programs in July 2014 through December 31, 2017, we have repurchased 262.3 million shares of AAG common stock for $10.6 billion at a weighted average cost per share of $40.22. Our Board of Directors declared quarterly cash dividends of $0.10 per share totaling $198 million, $224 million and $269 million in 2017, 2016 and 2015, respectively. Any future dividends that may be declared and paid from time to time will be subject to market and economic conditions, applicable legal requirements and other relevant factors. We are not obligated to continue a dividend for any fixed period, and the payment of dividends may be suspended at any time at our discretion. |
Debt |
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Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Long-term debt and capital lease obligations included in the consolidated balance sheets consisted of (in millions):
The table below shows the maximum availability under revolving credit facilities, all of which were undrawn, as of December 31, 2017 (in millions):
Secured financings are collateralized by assets, primarily aircraft, engines, simulators, aircraft spare parts, airport gate leasehold rights, route authorities and airport slots. At December 31, 2017, we were operating 33 aircraft under capital leases. Leases can generally be renewed at rates based on fair market value at the end of the lease term for a number of additional years. At December 31, 2017, the maturities of long-term debt and capital lease obligations are as follows (in millions):
(a) 2013, 2014, April 2016 and December 2016 Credit Facilities 2013 Credit Facilities In March 2017, American and AAG entered into the Second Amendment to the Amended and Restated Credit and Guaranty Agreement, amending the Amended and Restated Credit and Guaranty Agreement dated as of May 21, 2015 (which amended and restated the Credit and Guaranty Agreement dated as of June 27, 2013), as previously amended by the First Amendment to Amended and Restated Credit and Guaranty Agreement dated as of October 26, 2015, pursuant to which AAG refinanced the $1.8 billion term loan facility due June 2020 established thereunder (the 2013 Term Loan Facility and, together with the $1.4 billion revolving credit facility established under such agreement (the 2013 Revolving Facility), the 2013 Credit Facilities) to reduce the LIBOR margin from 2.50% to 2.00% and the base rate margin from 1.50% to 1.00%. In August 2017, American and AAG entered into the Third Amendment to the Amended and Restated Credit and Guaranty Agreement pursuant to which the maturity date of the 2013 Revolving Facility was extended to October 2022, the LIBOR margin thereon was reduced from 3.00% to 2.25%, and the maximum principal amount of such facility was reduced to $1.2 billion. 2014 Credit Facilities In June 2017, American and AAG entered into the Third 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 (which amended and restated the Credit and Guaranty Agreement dated as of October 10, 2014), as previously amended by the First Amendment to Amended and Restated Credit and Guaranty Agreement dated as of October 26, 2015 and the Second Amendment to Amended and Restated Credit and Guaranty Agreement dated as of September 22, 2016, pursuant to which AAG refinanced the $735 million term loan facility due October 2021 established thereunder (the 2014 Term Loan Facility and, together with the $1.025 billion revolving credit facility established under such agreement (the 2014 Revolving Facility), the 2014 Credit Facilities) to reduce the LIBOR margin from 2.50% to 2.00% and the base rate margin from 1.50% to 1.00%. In August 2017, American and AAG entered into the Fourth Amendment to the Amended and Restated Credit and Guaranty Agreement pursuant to which the maturity date of the 2014 Revolving Facility was extended to October 2022, the LIBOR margin thereon was reduced from 3.00% to 2.25%, and the maximum principal amount of such facility was reduced to $1.0 billion. April 2016 Credit Facilities In August 2017, American and AAG entered into the Second Amendment to the Credit and Guaranty Agreement, amending the Credit and Guaranty Agreement dated as of April 29, 2016 (the April 2016 Credit Facilities), as previously amended by the First Amendment to the Credit and Guaranty Agreement, dated as of October 31, 2016, pursuant to which a new $300 million revolving credit facility (the April 2016 Revolving Facility) was established with a maturity date of October 2022 and a LIBOR margin of 2.25%. In November 2017, American and AAG entered into the Third Amendment to the Credit and Guaranty Agreement, amending the April 2016 Credit Facilities, pursuant to which AAG refinanced the $990 million term loan facility due April 2023 established thereunder (the April 2016 Term Loan Facility), to reduce the LIBOR margin from 2.50% to 2.00% and the base rate margin from 1.50% to 1.00%. December 2016 Credit Facilities In November 2017, American and AAG entered into the First Amendment to the Amended and Restated Credit and Guaranty Agreement, amending the Amended and Restated Credit and Guaranty Agreement, dated as of December 15, 2016, pursuant to which AAG refinanced the $1.25 billion term loan facility due December 2023 established thereunder (the December 2016 Term Loan Facility), to reduce the LIBOR margin from 2.50% to 2.00% and the base rate margin from 1.50% to 1.00%. Certain details of our 2013, 2014, April 2016 and December 2016 Credit Facilities (collectively referred to as the Credit Facilities) are shown in the table below as of December 31, 2017:
The Term Loans are repayable in annual installments in an amount equal to 1.00% of the aggregate principal amount issued, with any unpaid balance due on the respective maturity dates. Voluntary prepayments may be made by American at any time. The 2013, 2014 and April 2016 Revolving Facilities provide that American may from time to time borrow, repay and reborrow loans thereunder. The 2013 and 2014 Revolving Facilities have the ability to issue letters of credit thereunder in an aggregate amount outstanding at any time up to $150 million and $300 million, respectively. The 2013, 2014 and April 2016 Revolving Facilities are each subject to an undrawn annual fee of 0.75%. As of December 31, 2017, there were no borrowings or letters of credit outstanding under the 2013, 2014 or April 2016 Revolving Facilities. The December 2016 Credit Facilities provide for a revolving credit facility that may be established in the future. Subject to certain limitations and exceptions, the Credit Facilities are secured by collateral, including certain spare parts, certain slots, certain route authorities, certain simulators and certain leasehold rights. American has the ability to make future modifications to the collateral pledged, subject to certain restrictions. American’s obligations under the Credit Facilities are guaranteed by AAG. American is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans as further described below in “Collateral-Related Covenants.” The Credit Facilities contain events of default customary for similar financings, including cross default to other material indebtedness. Upon the occurrence of an event of default, the outstanding obligations may be accelerated and become due and payable immediately. In addition, if a “change of control” occurs, American will (absent an amendment or waiver) be required to repay at par the loans outstanding under the Credit Facilities and terminate the 2013, 2014 and April 2016 Revolving Facilities and any revolving credit facilities established under the December 2016 Credit Facilities. The Credit Facilities also include covenants that, among other things, require AAG to maintain a minimum aggregate liquidity (as defined in the Credit Facilities) of not less than $2.0 billion, and limit the ability of AAG and its restricted subsidiaries to pay dividends and make certain other payments, make certain investments, incur additional indebtedness, incur liens on the collateral, dispose of the collateral, enter into certain affiliate transactions and engage in certain business activities, in each case subject to certain exceptions. (b) EETCs 2016-3 EETCs During the first quarter of 2017, all remaining net proceeds of the Series 2016-3 Class AA and Class A EETCs (the 2016-3 EETCs), in the amount of $109 million, were used to purchase equipment notes issued by American in connection with the financing of two of the 25 aircraft financed under the 2016-3 EETCs (such 25 aircraft, the 2016-3 Aircraft). In October 2017, American created one additional pass-through trust which issued approximately $193 million aggregate principal amount of Series 2016-3 Class B EETCs (the 2016-3 Class B EETCs) in connection with the financing of the 2016-3 Aircraft. The proceeds received from the sale of the 2016-3 Class B EETCs were used on the date of issuance of the 2016-3 Class B EETCs to acquire Series B equipment notes issued by American in connection with the financing of the 2016-3 Aircraft. Interest and principal payments on equipment notes issued in connection with the 2016-3 EETCs are payable semi-annually in April and October of each year, with interest payments that began in April 2017 and principal payments that began in October 2017 for the Class AA and Class A EETCs and interest and principal payments beginning in April 2018 for the Class B EETCs. These equipment notes are secured by liens on the 2016-3 Aircraft. Certain information regarding the 2016-3 EETC equipment notes, as of December 31, 2017, is set forth in the table below.
2017-1 EETCs In January 2017, American created three pass-through trusts which issued approximately $983 million aggregate principal amount of Series 2017-1 Class AA, Class A and Class B EETCs (the 2017-1 EETCs) in connection with the financing of 24 aircraft delivered to American through May 2017 (the 2017-1 Aircraft). During the first six months of 2017, all of the net proceeds received from the sale of the 2017-1 EETCs were used to purchase equipment notes issued by American in connection with the financing of the 2017-1 Aircraft. Interest and principal payments on equipment notes issued in connection with the 2017-1 EETCs are payable semi-annually in February and August of each year, with interest payments that began in August 2017 and principal payments beginning in February 2018. These equipment notes are secured by liens on the 2017-1 Aircraft. Certain information regarding the 2017-1 EETC equipment notes, as of December 31, 2017, is set forth in the table below.
2017-2 EETCs In August 2017, American created two pass-through trusts which issued approximately $797 million aggregate principal amount of Series 2017-2 Class AA and Class A EETCs (the 2017-2 EETCs) in connection with the financing of 30 aircraft previously delivered to American or scheduled to be delivered to American through April 2018 (the 2017-2 Aircraft). A portion of the net proceeds received from the sale of the 2017-2 EETCs has been used to acquire Series AA and A equipment notes issued by American to the pass-through trusts and the balance of such proceeds is being held in escrow for the benefit of the holders of the 2017-2 EETCs until such time as American issues additional Series AA and A equipment notes to the pass-through trusts, which trusts will purchase such additional equipment notes with the escrowed funds. These escrowed funds are not guaranteed by American and are not reported as debt on our consolidated balance sheet because the proceeds held by the depository are not American’s assets. In October 2017, American created one additional pass-through trust which issued approximately $221 million aggregate principal amount of Series 2017-2 Class B EETCs (the 2017-2 Class B EETCs) in connection with the financing of the 2017-2 Aircraft. A portion of the net proceeds received from the sale of the Series 2017-2 Class B EETCs was used on the date of issuance of the 2017-2 Class B EETCs to acquire Series B equipment notes issued by American in connection with the financing of certain 2017-2 Aircraft, and the balance of such proceeds is being held in escrow for the benefit of the holders of the 2017-2 Class B EETCs until such time as American issues additional Series B equipment notes to the pass-through trust, which will purchase such additional equipment notes with a portion of the escrowed funds. These escrowed funds are not guaranteed by American and are not reported as debt on our consolidated balance sheet because the proceeds held by the depository are not American’s assets. As of December 31, 2017, approximately $735 million of the escrowed proceeds from the 2017-2 EETCs have been used to purchase equipment notes issued by American. Interest and principal payments on equipment notes issued in connection with the 2017-2 EETCs are payable semi-annually in April and October of each year, with interest payments beginning in April 2018 and principal payments beginning in October 2018. These equipment notes are secured by liens on the aircraft financed with the proceeds of the 2017-2 EETCs. Certain information regarding the 2017-2 EETC equipment notes and the remaining escrowed proceeds of the 2017-2 EETCs, as of December 31, 2017, is set forth in the table below.
(c) Equipment Loans and Other Notes Payable Issued in 2017 In 2017, American entered into agreements under which it borrowed $1.0 billion in connection with the financing of certain aircraft. Debt incurred under these agreements matures in 2027 through 2029 and bears interest at fixed and variable rates of LIBOR plus an applicable margin averaging 3.08% at December 31, 2017. (d) Senior Notes The details of our 6.125%, 5.50% and 4.625% senior notes are shown in the table below as of December 31, 2017:
The 6.125%, 5.50% and 4.625% senior notes are senior unsecured obligations of AAG. The senior notes are fully and unconditionally guaranteed by American. The indentures for the senior notes contain covenants and events of default generally customary for similar financings. In addition, if we experience specific kinds of changes of control, we must offer to repurchase the senior notes at a price of 101% of the principal amount plus accrued and unpaid interest, if any, to (but not including) the repurchase date. Upon the occurrence of certain events of default, the senior notes may be accelerated and become due and payable. Guarantees As of December 31, 2017, AAG had issued guarantees covering approximately $810 million of American’s special facility revenue bonds (and interest thereon) and $8.5 billion of American’s secured debt (and interest thereon), including the Credit Facilities and certain EETC financings. Collateral-Related Covenants Certain of our debt financing agreements contain loan to value (LTV) ratio covenants and require us to annually appraise the related collateral. Pursuant to such agreements, if the LTV ratio exceeds a specified threshold, we are required, as applicable, to pledge additional qualifying collateral (which in some cases may include cash collateral), or pay down such financing, in whole or in part. Specifically, we are required to meet certain collateral coverage tests on an annual basis for four credit facilities, as described below:
At December 31, 2017, we were in compliance with the applicable collateral coverage tests as of the most recent measurement dates. |
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Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Long-term debt and capital lease obligations included in the consolidated balance sheets consisted of (in millions):
The table below shows the maximum availability under revolving credit facilities, all of which were undrawn, as of December 31, 2017 (in millions):
Secured financings are collateralized by assets, primarily aircraft, engines, simulators, aircraft spare parts, airport gate leasehold rights, route authorities and airport slots. At December 31, 2017, American was operating 33 aircraft under capital leases. Leases can generally be renewed at rates based on fair market value at the end of the lease term for a number of additional years. At December 31, 2017, the maturities of long-term debt and capital lease obligations are as follows (in millions):
(a) 2013, 2014, April 2016 and December 2016 Credit Facilities 2013 Credit Facilities In March 2017, American and AAG entered into the Second Amendment to the Amended and Restated Credit and Guaranty Agreement, amending the Amended and Restated Credit and Guaranty Agreement dated as of May 21, 2015 (which amended and restated the Credit and Guaranty Agreement dated as of June 27, 2013), as previously amended by the First Amendment to Amended and Restated Credit and Guaranty Agreement dated as of October 26, 2015, pursuant to which AAG refinanced the $1.8 billion term loan facility due June 2020 established thereunder (the 2013 Term Loan Facility and, together with the $1.4 billion revolving credit facility established under such agreement (the 2013 Revolving Facility), the 2013 Credit Facilities) to reduce the LIBOR margin from 2.50% to 2.00% and the base rate margin from 1.50% to 1.00%. In August 2017, American and AAG entered into the Third Amendment to the Amended and Restated Credit and Guaranty Agreement pursuant to which the maturity date of the 2013 Revolving Facility was extended to October 2022, the LIBOR margin thereon was reduced from 3.00% to 2.25%, and the maximum principal amount of such facility was reduced to $1.2 billion. 2014 Credit Facilities In June 2017, American and AAG entered into the Third 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 (which amended and restated the Credit and Guaranty Agreement dated as of October 10, 2014), as previously amended by the First Amendment to Amended and Restated Credit and Guaranty Agreement dated as of October 26, 2015 and the Second Amendment to Amended and Restated Credit and Guaranty Agreement dated as of September 22, 2016, pursuant to which AAG refinanced the $735 million term loan facility due October 2021 established thereunder (the 2014 Term Loan Facility and, together with the $1.025 billion revolving credit facility established under such agreement (the 2014 Revolving Facility), the 2014 Credit Facilities) to reduce the LIBOR margin from 2.50% to 2.00% and the base rate margin from 1.50% to 1.00%. In August 2017, American and AAG entered into the Fourth Amendment to the Amended and Restated Credit and Guaranty Agreement pursuant to which the maturity date of the 2014 Revolving Facility was extended to October 2022, the LIBOR margin thereon was reduced from 3.00% to 2.25%, and the maximum principal amount of such facility was reduced to $1.0 billion. April 2016 Credit Facilities In August 2017, American and AAG entered into the Second Amendment to the Credit and Guaranty Agreement, amending the Credit and Guaranty Agreement dated as of April 29, 2016 (the April 2016 Credit Facilities), as previously amended by the First Amendment to the Credit and Guaranty Agreement, dated as of October 31, 2016, pursuant to which a new $300 million revolving credit facility (the April 2016 Revolving Facility) was established with a maturity date of October 2022 and a LIBOR margin of 2.25%. In November 2017, American and AAG entered into the Third Amendment to the Credit and Guaranty Agreement, amending the April 2016 Credit Facilities, pursuant to which AAG refinanced the $990 million term loan facility due April 2023 established thereunder (the April 2016 Term Loan Facility), to reduce the LIBOR margin from 2.50% to 2.00% and the base rate margin from 1.50% to 1.00%. December 2016 Credit Facilities In November 2017, American and AAG entered into the First Amendment to the Amended and Restated Credit and Guaranty Agreement, amending the Amended and Restated Credit and Guaranty Agreement, dated as of December 15, 2016, pursuant to which AAG refinanced the $1.25 billion term loan facility due December 2023 established thereunder (the December 2016 Term Loan Facility), to reduce the LIBOR margin from 2.50% to 2.00% and the base rate margin from 1.50% to 1.00%. Certain details of American’s 2013, 2014, April 2016 and December 2016 Credit Facilities (collectively referred to as the Credit Facilities) are shown in the table below as of December 31, 2017:
The Term Loans are repayable in annual installments in an amount equal to 1.00% of the aggregate principal amount issued, with any unpaid balance due on the respective maturity dates. Voluntary prepayments may be made by American at any time. The 2013, 2014 and April 2016 Revolving Facilities provide that American may from time to time borrow, repay and reborrow loans thereunder. The 2013 and 2014 Revolving Facilities have the ability to issue letters of credit thereunder in an aggregate amount outstanding at any time up to $150 million and $300 million, respectively. The 2013, 2014 and April 2016 Revolving Facilities are each subject to an undrawn annual fee of 0.75%. As of December 31, 2017, there were no borrowings or letters of credit outstanding under the 2013, 2014 or April 2016 Revolving Facilities. The December 2016 Credit Facilities provide for a revolving credit facility that may be established in the future. Subject to certain limitations and exceptions, the Credit Facilities are secured by collateral, including certain spare parts, certain slots, certain route authorities, certain simulators and certain leasehold rights. American has the ability to make future modifications to the collateral pledged, subject to certain restrictions. American’s obligations under the Credit Facilities are guaranteed by AAG. American is required to maintain a certain minimum ratio of appraised value of the collateral to the outstanding loans as further described below in “Collateral-Related Covenants.” The Credit Facilities contain events of default customary for similar financings, including cross default to other material indebtedness. Upon the occurrence of an event of default, the outstanding obligations may be accelerated and become due and payable immediately. In addition, if a “change of control” occurs, American will (absent an amendment or waiver) be required to repay at par the loans outstanding under the Credit Facilities and terminate the 2013, 2014 and April 2016 Revolving Facilities and any revolving credit facilities established under the December 2016 Credit Facilities. The Credit Facilities also include covenants that, among other things, require AAG to maintain a minimum aggregate liquidity (as defined in the Credit Facilities) of not less than $2.0 billion, and limit the ability of AAG and its restricted subsidiaries to pay dividends and make certain other payments, make certain investments, incur additional indebtedness, incur liens on the collateral, dispose of the collateral, enter into certain affiliate transactions and engage in certain business activities, in each case subject to certain exceptions. (b) EETCs 2016-3 EETCs During the first quarter of 2017, all remaining net proceeds of the Series 2016-3 Class AA and Class A EETCs (the 2016-3 EETCs), in the amount of $109 million, were used to purchase equipment notes issued by American in connection with the financing of two of the 25 aircraft financed under the 2016-3 EETCs (such 25 aircraft, the 2016-3 Aircraft). In October 2017, American created one additional pass-through trust which issued approximately $193 million aggregate principal amount of Series 2016-3 Class B EETCs (the 2016-3 Class B EETCs) in connection with the financing of the 2016-3 Aircraft. The proceeds received from the sale of the 2016-3 Class B EETCs were used on the date of issuance of the 2016-3 Class B EETCs to acquire Series B equipment notes issued by American in connection with the financing of the 2016-3 Aircraft. Interest and principal payments on equipment notes issued in connection with the 2016-3 EETCs are payable semi-annually in April and October of each year, with interest payments that began in April 2017 and principal payments that began in October 2017 for the Class AA and Class A EETCs and interest and principal payments beginning in April 2018 for the Class B EETCs. These equipment notes are secured by liens on the 2016-3 Aircraft. Certain information regarding the 2016-3 EETC equipment notes, as of December 31, 2017, is set forth in the table below.
2017-1 EETCs In January 2017, American created three pass-through trusts which issued approximately $983 million aggregate principal amount of Series 2017-1 Class AA, Class A and Class B EETCs (the 2017-1 EETCs) in connection with the financing of 24 aircraft delivered to American through May 2017 (the 2017-1 Aircraft). During the first six months of 2017, all of the net proceeds received from the sale of the 2017-1 EETCs were used to purchase equipment notes issued by American in connection with the financing of the 2017-1 Aircraft. Interest and principal payments on equipment notes issued in connection with the 2017-1 EETCs are payable semi-annually in February and August of each year, with interest payments that began in August 2017 and principal payments beginning in February 2018. These equipment notes are secured by liens on the 2017-1 Aircraft. Certain information regarding the 2017-1 EETC equipment notes, as of December 31, 2017, is set forth in the table below.
2017-2 EETCs In August 2017, American created two pass-through trusts which issued approximately $797 million aggregate principal amount of Series 2017-2 Class AA and Class A EETCs (the 2017-2 EETCs) in connection with the financing of 30 aircraft previously delivered to American or scheduled to be delivered to American through April 2018 (the 2017-2 Aircraft). A portion of the net proceeds received from the sale of the 2017-2 EETCs has been used to acquire Series AA and A equipment notes issued by American to the pass-through trusts and the balance of such proceeds is being held in escrow for the benefit of the holders of the 2017-2 EETCs until such time as American issues additional Series AA and A equipment notes to the pass-through trusts, which trusts will purchase such additional equipment notes with the escrowed funds. These escrowed funds are not guaranteed by American and are not reported as debt on American’s consolidated balance sheet because the proceeds held by the depository are not American’s assets. In October 2017, American created one additional pass-through trust which issued approximately $221 million aggregate principal amount of Series 2017-2 Class B EETCs (the 2017-2 Class B EETCs) in connection with the financing of the 2017-2 Aircraft. A portion of the net proceeds received from the sale of the Series 2017-2 Class B EETCs was used on the date of issuance of the 2017-2 Class B EETCs to acquire Series B equipment notes issued by American in connection with the financing of certain 2017-2 Aircraft, and the balance of such proceeds is being held in escrow for the benefit of the holders of the 2017-2 Class B EETCs until such time as American issues additional Series B equipment notes to the pass-through trust, which will purchase such additional equipment notes with a portion of the escrowed funds. These escrowed funds are not guaranteed by American and are not reported as debt on American’s consolidated balance sheet because the proceeds held by the depository are not American’s assets. As of December 31, 2017, approximately $735 million of the escrowed proceeds from the 2017-2 EETCs have been used to purchase equipment notes issued by American. Interest and principal payments on equipment notes issued in connection with the 2017-2 EETCs are payable semi-annually in April and October of each year, with interest payments beginning in April 2018 and principal payments beginning in October 2018. These equipment notes are secured by liens on the aircraft financed with the proceeds of the 2017-2 EETCs. Certain information regarding the 2017-2 EETC equipment notes and the remaining escrowed proceeds of the 2017-2 EETCs, as of December 31, 2017, is set forth in the table below.
(c) Equipment Loans and Other Notes Payable Issued in 2017 In 2017, American entered into agreements under which it borrowed $1.0 billion in connection with the financing of certain aircraft. Debt incurred under these agreements matures in 2027 through 2029 and bears interest at fixed and variable rates of LIBOR plus an applicable margin averaging 3.08% at December 31, 2017. Guarantees As of December 31, 2017, American had issued guarantees covering AAG’s $500 million aggregate principal amount of 6.125% senior notes due 2018, $750 million aggregate principal amount of 5.50% senior notes due 2019 and $500 million aggregate principal amount of 4.625% senior notes due 2020. Collateral-Related Covenants Certain of American’s debt financing agreements contain loan to value (LTV) ratio covenants and require American to annually appraise the related collateral. Pursuant to such agreements, if the LTV ratio exceeds a specified threshold, American is required, as applicable, to pledge additional qualifying collateral (which in some cases may include cash collateral), or pay down such financing, in whole or in part. Specifically, American is required to meet certain collateral coverage tests on an annual basis for four credit facilities, as described below:
At December 31, 2017, American was in compliance with the applicable collateral coverage tests as of the most recent measurement dates. |
Income Taxes |
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Income Taxes | Income Taxes The significant components of the income tax provision (benefit) were (in millions):
The income tax provision (benefit) differed from amounts computed at the statutory federal income tax rate as follows (in millions):
We provide a valuation allowance for our deferred tax assets, which include our net operating losses (NOLs), when it is more likely than not that some portion, or all of our deferred tax assets, will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. We consider all available positive and negative evidence and make certain assumptions in evaluating the realizability of our deferred tax assets. Many factors are considered that impact our assessment of future profitability, including conditions which are beyond our control, such as the health of the economy, the level and volatility of fuel prices and travel demand. In connection with the preparation of our financial statements at the end of 2015, we determined that after considering all positive and negative evidence, including the completion of certain critical Merger integration milestones as well as our financial performance, it was more likely than not that substantially all of our deferred income tax assets, which include our NOLs, would be realized. Accordingly, during the year ended December 31, 2015, we reversed $3.0 billion of the valuation allowance, which resulted in a special non-cash tax benefit recorded in the consolidated statement of operations. In addition to the changes in the valuation allowance from operations described above, the valuation allowance was also impacted by the changes in the components of accumulated other comprehensive income (loss), described in Note 10. The total increase to the valuation allowance was $7 million in 2017, $10 million of which is included in the 2017 Tax Act amount in the table above. In 2016, the total increase to the valuation allowance was $7 million and in 2015, the total decrease to the valuation allowance was $4.8 billion. The components of our deferred tax assets and liabilities were (in millions):
At December 31, 2017, we had approximately $10.0 billion of federal NOLs carried over from prior taxable years (NOL Carryforwards) to reduce future federal taxable income, substantially all of which we expect to be available for use in 2018. The federal NOL Carryforwards will expire beginning in 2022 if unused. We also had approximately $3.4 billion of NOL Carryforwards to reduce future state taxable income at December 31, 2017, which will expire in years 2018 through 2037 if unused. Our ability to deduct our NOL Carryforwards and to utilize certain other available tax attributes can be substantially constrained under the general annual limitation rules of Section 382 where an “ownership change” has occurred. Substantially all of our remaining federal NOL Carryforwards attributable to US Airways Group are subject to limitation under Section 382; however, our ability to utilize such NOL Carryforwards is not anticipated to be effectively constrained as a result of such limitation. We elected to be covered by certain special rules for federal income tax purposes that permitted approximately $9.0 billion (with $8.4 billion of unlimited NOL still remaining at December 31, 2017) of our federal NOL Carryforwards to be utilized without regard to the annual limitation generally imposed by Section 382. Similar limitations may apply for state income tax purposes. Our ability to utilize any new NOL Carryforwards arising after the ownership changes is not affected by the annual limitation rules imposed by Section 382 unless another future ownership change occurs. Under the Section 382 limitation, cumulative stock ownership changes among material stockholders exceeding 50% during a rolling three-year period can potentially limit a company’s future use of NOLs and tax credits. See Part I, Item 1A. Risk Factors – “Our ability to utilize our NOL Carryforwards may be limited” for unaudited additional discussion of this risk. At December 31, 2017, we had an AMT credit carryforward of approximately $339 million available for federal income tax purposes, which is now expected to be refunded in 2019 and 2020 as a result of the repeal of corporate AMT. In 2017, we recorded an income tax provision of $1.2 billion, with an effective rate of approximately 38%, which was substantially non-cash as we utilized our NOLs described above. Substantially all of our income before income taxes is attributable to the United States. We file our tax returns as prescribed by the tax laws of the jurisdictions in which we operate. Our 2014 through 2016 tax years are still subject to examination by the Internal Revenue Service. Various state and foreign jurisdiction tax years remain open to examination and we are under examination, in administrative appeals, or engaged in tax litigation in certain jurisdictions. We believe that the effect of any assessments will not be material to our consolidated financial statements. The amount of, and changes to, our uncertain tax positions were not material in any of the years presented. We accrue interest and penalties related to unrecognized tax benefits in interest expense and operating expense, respectively. The 2017 Tax Act was enacted on December 22, 2017. The 2017 Tax Act is the most comprehensive tax change in more than 30 years. As of December 31, 2017, we have not completed our evaluation of the 2017 Tax Act; however, to the extent possible, we have made a reasonable estimate of its effects, including the impact of lower corporate income tax rates (21% vs. 35%) on our deferred tax assets and liabilities and the one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred. For the year ended December 31, 2017, we recognized a special income tax benefit of $7 million to reflect these impacts of the 2017 Tax Act. The 2017 Tax Act is unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations and implementation regulations by the Treasury and Internal Revenue Service. In addition, it is unclear how these U.S. federal income tax changes will affect state and local taxation, which often uses federal taxable income as a starting point for computing state and local tax liabilities. Accordingly, we have not yet been able to make a reasonable estimate of the impact of certain items and continue to account for those items based on the tax laws in effect prior to the 2017 Tax Act. As further interpretations, clarifications and amendments to the 2017 Tax Act are made, our future financial statements could be materially impacted. |
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American Airlines, Inc. [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Income Taxes | Income Taxes The significant components of the income tax provision (benefit) were (in millions):
The income tax provision (benefit) differed from amounts computed at the statutory federal income tax rate as follows (in millions):
American provides a valuation allowance for its deferred tax assets, which include the net operating losses (NOLs), when it is more likely than not that some portion, or all of its deferred tax assets, will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. American considers all available positive and negative evidence and makes certain assumptions in evaluating the realizability of its deferred tax assets. Many factors are considered that impact American’s assessment of future profitability, including conditions which are beyond its control, such as the health of the economy, the level and volatility of fuel prices and travel demand. In connection with the preparation of American’s financial statements at the end of 2015, American determined that after considering all positive and negative evidence, including the completion of certain critical Merger integration milestones as well as its financial performance, it was more likely than not that substantially all of its deferred income tax assets, which include its NOLs, would be realized. Accordingly, during the year ended December 31, 2015, American reversed $3.5 billion of the valuation allowance, which resulted in a special non-cash tax benefit recorded in the consolidated statement of operations. In addition to the changes in the valuation allowance from operations described above, the valuation allowance was also impacted by the changes in the components of accumulated other comprehensive income (loss), described in Note 8. The total increase to the valuation allowance was $12 million in 2017, $8 million of which is included in the 2017 Tax Act amount in the table above. In 2016 and 2015, the decrease in the valuation allowance was $1 million and $5.2 billion, respectively. The components of American’s deferred tax assets and liabilities were (in millions):
At December 31, 2017, American had approximately $10.6 billion of federal NOLs carried over from prior taxable years (NOL Carryforwards) to reduce future federal taxable income, substantially all of which American expects to be available for use in 2018. American is a member of AAG’s consolidated federal and certain state income tax returns. The amount of federal NOL Carryforwards available in those returns is $10.0 billion, substantially all of which is expected to be available for use in 2018. The federal NOL Carryforwards will expire beginning in 2022 if unused. American also had approximately $3.2 billion of NOL Carryforwards to reduce future state taxable income at December 31, 2017, which will expire in years 2018 through 2037 if unused. American’s ability to deduct its NOL Carryforwards and to utilize certain other available tax attributes can be substantially constrained under the general annual limitation rules of Section 382 where an “ownership change” has occurred. Substantially all of American’s remaining federal NOL Carryforwards attributable to US Airways Group are subject to limitation under Section 382; however, American’s ability to utilize such NOL Carryforwards is not anticipated to be effectively constrained as a result of such limitation. American elected to be covered by certain special rules for federal income tax purposes that permitted approximately $9.5 billion (with $8.6 billion of unlimited NOL still remaining at December 31, 2017) of its federal NOL Carryforwards to be utilized without regard to the annual limitation generally imposed by Section 382. Similar limitations may apply for state income tax purposes. American’s ability to utilize any new NOL Carryforwards arising after the ownership changes is not affected by the annual limitation rules imposed by Section 382 unless another future ownership change occurs. Under the Section 382 limitation, cumulative stock ownership changes among material stockholders exceeding 50% during a rolling three-year period can potentially limit a company’s future use of NOLs and tax credits. See Part I, Item 1A. Risk Factors – “Our ability to utilize our NOL Carryforwards may be limited” for unaudited additional discussion of this risk. At December 31, 2017, American had an AMT credit carryforward of approximately $452 million available for federal income tax purposes, which is now expected to be refunded in 2019 and 2020 as a result of the repeal of corporate AMT. In 2017, American recorded an income tax provision of $1.3 billion, with an effective rate of approximately 41%, which was substantially non-cash as American utilized the NOLs described above. Substantially all of American’s income before income taxes is attributable to the United States. American is part of the AAG consolidated income tax return. American files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. American’s 2014 through 2016 tax years are still subject to examination by the Internal Revenue Service. Various state and foreign jurisdiction tax years remain open to examination and American is under examination, in administrative appeals, or engaged in tax litigation in certain jurisdictions. American believes that the effect of any assessments will not be material to its consolidated financial statements. The amount of, and changes to, American’s uncertain tax positions were not material in any of the years presented. American accrues interest and penalties related to unrecognized tax benefits in interest expense and operating expense, respectively. The 2017 Tax Act was enacted on December 22, 2017. The 2017 Tax Act is the most comprehensive tax change in more than 30 years. As of December 31, 2017, American has not completed its evaluation of the 2017 Tax Act; however, to the extent possible, American has made a reasonable estimate of its effects, including the impact of lower corporate income tax rates (21% vs. 35%) on its deferred tax assets and liabilities and the one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred. For the year ended December 31, 2017, American recognized a special income tax expense of $93 million to reflect these impacts of the 2017 Tax Act. The 2017 Tax Act is unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations and implementation regulations by the Treasury and Internal Revenue Service. In addition, it is unclear how these U.S. federal income tax changes will affect state and local taxation, which often uses federal taxable income as a starting point for computing state and local tax liabilities. Accordingly, American has not yet been able to make a reasonable estimate of the impact of certain items and continues to account for those items based on the tax laws in effect prior to the 2017 Tax Act. As further interpretations, clarifications and amendments to the 2017 Tax Act are made, American’s future financial statements could be materially impacted. |
Risk Management |
12 Months Ended |
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Dec. 31, 2017 | |
Debt Instrument [Line Items] | |
Risk Management | Risk Management Our economic prospects are heavily dependent upon two variables we cannot control: the health of the economy and the price of fuel. Due to the discretionary nature of business and leisure travel spending and the highly competitive nature of the airline industry, our revenues are heavily influenced by the condition of the U.S. economy and economies in other regions of the world. Unfavorable conditions in these broader economies have resulted, and may result in the future, in decreased passenger demand for air travel, changes in booking practices and related reactions by our competitors, all of which in turn have had, and may have in the future, a negative effect on our business. In addition, during challenging economic times, actions by our competitors to increase their revenues can have an adverse impact on our revenues. Our operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of the largest single cost items in our business. Jet fuel market prices have fluctuated substantially over the past several years and prices continue to be highly volatile. Because of the amount of fuel needed to operate our business, even a relatively small increase or decrease in the price of fuel can have a material effect on our operating results and liquidity. These additional factors could impact our results of operations, financial performance and liquidity: (a) Credit Risk Most of our receivables relate to tickets sold to individual passengers through the use of major credit cards or to tickets sold by other airlines and used by passengers on American. These receivables are short-term, mostly settled within seven days after sale. Bad debt losses, which have been minimal in the past, have been considered in establishing allowances for doubtful accounts. We do not believe we are subject to any significant concentration of credit risk. (b) Interest Rate Risk We have exposure to market risk associated with changes in interest rates related primarily to our variable rate debt obligations. Interest rates on $9.6 billion principal amount of long-term debt as of December 31, 2017 are subject to adjustment to reflect changes in floating interest rates. The weighted average effective interest rate on our variable rate debt was 3.4% at December 31, 2017. We do not currently have an interest rate hedge program. (c) Foreign Currency Risk We are exposed to the effect of foreign exchange rate fluctuations on the U.S. dollar value of foreign currency-denominated operating revenues and expenses. Our largest exposure comes from the British pound, Euro, Canadian dollar and various Latin American currencies, primarily the Brazilian real. We do not currently have a foreign currency hedge program. See Part I, Item 1A. Risk Factors – “We operate a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control” for unaudited additional discussion of this risk. |
American Airlines, Inc. [Member] | |
Debt Instrument [Line Items] | |
Risk Management | Risk Management American’s economic prospects are heavily dependent upon two variables it cannot control: the health of the economy and the price of fuel. Due to the discretionary nature of business and leisure travel spending and the highly competitive nature of the airline industry, American’s revenues are heavily influenced by the condition of the U.S. economy and economies in other regions of the world. Unfavorable conditions in these broader economies have resulted, and may result in the future, in decreased passenger demand for air travel, changes in booking practices and related reactions by American’s competitors, all of which in turn have had, and may have in the future, a negative effect on American’s business. In addition, during challenging economic times, actions by its competitors to increase their revenues can have an adverse impact on American’s revenues. American’s operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of the largest single cost items in American’s business. Jet fuel market prices have fluctuated substantially over the past several years and prices continue to be highly volatile. Because of the amount of fuel needed to operate American’s business, even a relatively small increase or decrease in the price of fuel can have a material effect on American’s operating results and liquidity. These additional factors could impact American’s results of operations, financial performance and liquidity: (a) Credit Risk Most of American’s receivables relate to tickets sold to individual passengers through the use of major credit cards or to tickets sold by other airlines and used by passengers on American. These receivables are short-term, mostly settled within seven days after sale. Bad debt losses, which have been minimal in the past, have been considered in establishing allowances for doubtful accounts. American does not believe it is subject to any significant concentration of credit risk. (b) Interest Rate Risk American has exposure to market risk associated with changes in interest rates related primarily to its variable rate debt obligations. Interest rates on $9.6 billion principal amount of long-term debt as of December 31, 2017 are subject to adjustment to reflect changes in floating interest rates. The weighted average effective interest rate on American’s variable rate debt was 3.4% at December 31, 2017. American does not currently have an interest rate hedge program. (c) Foreign Currency Risk American is exposed to the effect of foreign exchange rate fluctuations on the U.S. dollar value of foreign currency-denominated operating revenues and expenses. American’s largest exposure comes from the British pound, Euro, Canadian dollar and various Latin American currencies, primarily the Brazilian real. American does not currently have a foreign currency hedge program. See Part I, Item 1A. Risk Factors – “We operate a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control” for unaudited additional discussion of this risk. |
Fair Value Measurements and Other Investments |
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements and Other Investments | Fair Value Measurements and Other Investments Assets Measured at Fair Value on a Recurring Basis Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (i.e. an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. Accounting standards include disclosure requirements around fair values used for certain financial instruments and establish a fair value hierarchy. The hierarchy prioritizes valuation inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of three levels:
When available, we use quoted market prices to determine the fair value of our financial assets. If quoted market prices are not available, we measure fair value using valuation techniques that use, when possible, current market-based or independently-sourced market parameters, such as interest rates and currency rates. We utilize the market approach to measure fair value for our financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. Our short-term investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuation of these securities. No changes in valuation techniques or inputs occurred during the year ended December 31, 2017. Assets measured at fair value on a recurring basis are summarized below (in millions):
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):
Other Investments We have an approximate 25% ownership interest in Republic Airways Holdings Inc. (Republic), which we received in the second quarter of 2017 in consideration for our unsecured claim in Republic’s bankruptcy case. This ownership interest is accounted for under the equity method and our portion of Republic’s financial results is recognized within other, net on the consolidated statements of operations. In 2017, we recognized $544 million of regional expense from our capacity purchase agreement with Republic. Additionally, in the third quarter of 2017, we acquired 2.7% of the outstanding shares of China Southern Airlines Company Limited for $203 million. Since our subscription agreement restricts the sale or transfer of these shares for three years, we account for this investment under the cost method. These investments are reflected within other assets on our consolidated balance sheets. |
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American Airlines, Inc. [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements and Other Investments | Fair Value Measurements and Other Investments Assets Measured at Fair Value on a Recurring Basis Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (i.e. an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. Accounting standards include disclosure requirements around fair values used for certain financial instruments and establish a fair value hierarchy. The hierarchy prioritizes valuation inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of three levels:
When available, American uses quoted market prices to determine the fair value of its financial assets. If quoted market prices are not available, American measures fair value using valuation techniques that use, when possible, current market-based or independently-sourced market parameters, such as interest rates and currency rates. American utilizes the market approach to measure fair value for its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. American’s short-term investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuation of these securities. No changes in valuation techniques or inputs occurred during the year ended December 31, 2017. Assets measured at fair value on a recurring basis are summarized below (in millions):
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):
Other Investments American has an approximate 25% ownership interest in Republic Airways Holdings Inc. (Republic), which it received in the second quarter of 2017 in consideration for its unsecured claim in Republic’s bankruptcy case. This ownership interest is accounted for under the equity method and American’s portion of Republic’s financial results is recognized within other, net on the consolidated statements of operations. In 2017, American recognized $544 million of regional expense from its capacity purchase agreement with Republic. Additionally, in the third quarter of 2017, American acquired 2.7% of the outstanding shares of China Southern Airlines Company Limited for $203 million. Since American’s subscription agreement restricts the sale or transfer of these shares for three years, American accounts for this investment under the cost method. These investments are reflected within other assets on American’s consolidated balance sheets. |
Employee Benefit Plans |
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Defined Benefit Plan Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Employee Benefit Plans We sponsor defined benefit and defined contribution pension plans for eligible employees. The defined benefit pension plans provide benefits for participating employees based on years of service and average compensation for a specified period of time before retirement. Effective November 1, 2012, substantially all of our defined benefit pension plans were frozen and we began providing enhanced benefits under our defined contribution pension plans for certain employee groups. We use a December 31 measurement date for all of our defined benefit pension plans. We also provide certain retiree medical and other postretirement benefits, including health care and life insurance benefits, to retired employees. Effective November 1, 2012, we modified our retiree medical and other postretirement benefits plans to eliminate the company subsidy for employees who retire on or after November 1, 2012. As a result of modifications to our retiree medical and other postretirement benefits plans in 2012, we recognized a negative plan amendment of $1.9 billion, which is included as a component of prior service benefit in OCI and will be amortized over the future service life of the active plan participants for whom the benefit was eliminated, or approximately eight years. As of December 31, 2017, $631 million of prior service benefit remains to be amortized. Benefit Obligations, Fair Value of Plan Assets and Funded Status The following tables provide a reconciliation of the changes in the pension and retiree medical and other postretirement benefits obligations, fair value of plan assets and a statement of funded status as of December 31, 2017 and 2016:
Balance Sheet Position
Plans with Accumulated Benefit Obligations Exceeding Fair Value of Plan Assets
Net Periodic Benefit Cost (Income)
The estimated amount of unrecognized actuarial net loss and prior service cost for the defined benefit pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is $172 million. The estimated amount of unrecognized actuarial net gain and prior service benefit for the retiree medical and other postretirement benefits plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is $258 million. Assumptions The following actuarial assumptions were used to determine our benefit obligations and net periodic benefit cost for the periods presented:
As of December 31, 2017, our estimate of the long-term rate of return on plan assets was 8% based on the target asset allocation. Expected returns on long duration bonds are based on yields to maturity of the bonds held at year-end. Expected returns on other assets are based on a combination of long-term historical returns, actual returns on plan assets achieved over the last ten years, current and expected market conditions, and expected value to be generated through active management, currency overlay and securities lending programs. A one percentage point change in the assumed health care cost trend rates would have the following effects on our retiree medical and other postretirement benefits plans (in millions):
Minimum Contributions We are required to make minimum contributions to our defined benefit pension plans under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (ERISA) and various other laws for U.S. based plans as well as under funding rules specific to countries where we maintain defined benefit plans. Based on current funding assumptions, we have minimum required contributions of $42 million for 2018 including contributions to defined benefit plans for our wholly-owned regional subsidiaries. We expect to make supplemental contributions of $425 million to our U.S. based defined benefit pension plans in 2018. The minimum funding obligation for our U.S. based defined benefit pension plans was subject to temporary favorable rules that expired at the end of 2017. Our pension funding obligations are likely to increase materially beginning in 2019, when we will be required to make contributions relating to the 2018 fiscal year. The amount of these obligations will depend on the performance of our investments held in trust by the pension plans, interest rates for determining liabilities, the amount of and timing of any supplemental contributions and our actuarial experience. Benefit Payments The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (approximately, in millions):
Plan Assets The objectives of our investment policies are to: maintain sufficient income and liquidity to pay retirement benefits; produce a long-term rate of return that meets or exceeds the assumed rate of return for plan assets; limit the volatility of asset performance and funded status; and diversify assets among asset classes and investment managers. Based on these investment objectives, a long-term strategic asset allocation has been established. This strategic allocation seeks to balance the potential benefit of improving funded position with the potential risk that the funded position would decline. The current strategic target asset allocation is as follows:
Public equity and emerging market fixed income securities are used to provide diversification and are expected to generate higher returns over the long-term than U.S. long duration bonds. Public stocks are managed using a value investment approach in order to participate in the returns generated by stocks in the long-term, while reducing year-over-year volatility. U.S. long duration bonds are used to partially hedge the assets from declines in interest rates. Alternative (private) investments are used to provide expected returns in excess of the public markets over the long-term. Additionally, the pension plan’s master trust engages currency overlay managers in an attempt to increase returns by protecting non-U.S. dollar denominated assets from a rise in the relative value of the U.S. dollar. The pension plan’s master trust also participates in securities lending programs to generate additional income by loaning plan assets to borrowers on a fully collateralized basis. These programs are subject to market risk. Investments in securities traded on recognized securities exchanges are valued at the last reported sales price on the last business day of the year. Securities traded in the over-the-counter market are valued at the last bid price. The money market fund is valued at fair value which represents the net asset value of the shares of such fund as of the close of business at the end of the period. Investments in limited partnerships are carried at estimated net asset value as determined by and reported by the general partners of the partnerships and represent the proportionate share of the estimated fair value of the underlying assets of the limited partnerships. Common/collective trusts are valued at net asset value based on the fair values of the underlying investments of the trusts as determined by the sponsor of the trusts. The pension plan’s master trust also invests in a 103-12 investment entity (the 103-12 Investment Trust) which is designed to invest plan assets of more than one unrelated employer. The 103-12 Investment Trust is valued at net asset value which is determined by the issuer at the end of each month and is based on the aggregate fair value of trust assets less liabilities, divided by the number of units outstanding. No changes in valuation techniques or inputs occurred during the year. Benefit Plan Assets Measured at Fair Value on a Recurring Basis The fair value of our pension plan assets at December 31, 2017 and 2016, by asset category, are as follows (in millions):
Changes in fair value measurements of Level 3 investments during the year ended December 31, 2017, were as follows (in millions):
Changes in fair value measurements of Level 3 investments during the year ended December 31, 2016, were as follows (in millions):
The fair value of our retiree medical and other postretirement benefits plans assets at December 31, 2017 by asset category, were as follows (in millions):
The fair value of our retiree medical and other postretirement benefits plans assets at December 31, 2016 by asset category, were as follows (in millions):
Investments in the retiree medical and other postretirement benefits plans’ mutual funds are valued by quoted prices on the active market, which is fair value and represents the net asset value of the shares of such funds as of the close of business at the end of the period. At December 31, 2017, these funds were invested in an AAL Class mutual fund, in which trading is restricted only to American, resulting in a fair value classification of Level 2. At December 31, 2016, these investments were part of an Institutional Class of mutual funds and were actively traded on the open market resulting in a fair value classification of Level 1. Investments include approximately 30% and 27% of investments in non-U.S. common stocks in 2017 and 2016, respectively. Net asset value is based on the fair market value of the funds’ underlying assets and liabilities at the date of determination. Profit Sharing Program We accrue 5% of our pre-tax income excluding special items for our profit sharing program. For the year ended December 31, 2017, we accrued $241 million for this program, which will be distributed to employees in the first quarter of 2018. |
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American Airlines, Inc. [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Employee Benefit Plans American sponsors defined benefit and defined contribution pension plans for eligible employees. The defined benefit pension plans provide benefits for participating employees based on years of service and average compensation for a specified period of time before retirement. Effective November 1, 2012, substantially all of American’s defined benefit pension plans were frozen and American began providing enhanced benefits under its defined contribution pension plans for certain employee groups. American uses a December 31 measurement date for all of its defined benefit pension plans. American also provides certain retiree medical and other postretirement benefits, including health care and life insurance benefits, to retired employees. Effective November 1, 2012, American modified its retiree medical and other postretirement benefits plans to eliminate the company subsidy for employees who retire on or after November 1, 2012. As a result of modifications to its retiree medical and other postretirement benefits plans in 2012, American recognized a negative plan amendment of $1.9 billion, which is included as a component of prior service benefit in OCI and will be amortized over the future service life of the active plan participants for whom the benefit was eliminated, or approximately eight years. As of December 31, 2017, $631 million of prior service benefit remains to be amortized. Benefit Obligations, Fair Value of Plan Assets and Funded Status The following tables provide a reconciliation of the changes in the pension and retiree medical and other postretirement benefits obligations, fair value of plan assets and a statement of funded status as of December 31, 2017 and 2016:
Balance Sheet Position
Plans with Accumulated Benefit Obligations Exceeding Fair Value of Plan Assets
Net Periodic Benefit Cost (Income)
The estimated amount of unrecognized actuarial net loss and prior service cost for the defined benefit pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is $171 million. The estimated amount of unrecognized actuarial net gain and prior service benefit for the retiree medical and other postretirement benefits plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is $258 million. Assumptions The following actuarial assumptions were used to determine American’s benefit obligations and net periodic benefit cost for the periods presented:
As of December 31, 2017, American’s estimate of the long-term rate of return on plan assets was 8% based on the target asset allocation. Expected returns on long duration bonds are based on yields to maturity of the bonds held at year-end. Expected returns on other assets are based on a combination of long-term historical returns, actual returns on plan assets achieved over the last ten years, current and expected market conditions, and expected value to be generated through active management, currency overlay and securities lending programs. A one percentage point change in the assumed health care cost trend rates would have the following effects on American’s retiree medical and other postretirement benefits plans (in millions):
Minimum Contributions American is required to make minimum contributions to its defined benefit pension plans under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (ERISA) and various other laws for U.S. based plans as well as under funding rules specific to countries where American maintains defined benefit plans. Based on current funding assumptions, American has minimum required contributions of $39 million for 2018. American expects to make supplemental contributions of $425 million to its U.S. based defined benefit pension plans in 2018. The minimum funding obligation for American’s U.S. based defined benefit pension plans was subject to temporary favorable rules that expired at the end of 2017. American’s pension funding obligations are likely to increase materially beginning in 2019, when American will be required to make contributions relating to the 2018 fiscal year. The amount of these obligations will depend on the performance of American’s investments held in trust by the pension plans, interest rates for determining liabilities, the amount of and timing of any supplemental contributions and American’s actuarial experience. Benefit Payments The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (approximately, in millions):
Plan Assets The objectives of American’s investment policies are to: maintain sufficient income and liquidity to pay retirement benefits; produce a long-term rate of return that meets or exceeds the assumed rate of return for plan assets; limit the volatility of asset performance and funded status; and diversify assets among asset classes and investment managers. Based on these investment objectives, a long-term strategic asset allocation has been established. This strategic allocation seeks to balance the potential benefit of improving funded position with the potential risk that the funded position would decline. The current strategic target asset allocation is as follows:
Public equity and emerging market fixed income securities are used to provide diversification and are expected to generate higher returns over the long-term than U.S. long duration bonds. Public stocks are managed using a value investment approach in order to participate in the returns generated by stocks in the long-term, while reducing year-over-year volatility. U.S. long duration bonds are used to partially hedge the assets from declines in interest rates. Alternative (private) investments are used to provide expected returns in excess of the public markets over the long-term. Additionally, the pension plan’s master trust engages currency overlay managers in an attempt to increase returns by protecting non-U.S. dollar denominated assets from a rise in the relative value of the U.S. dollar. The pension plan’s master trust also participates in securities lending programs to generate additional income by loaning plan assets to borrowers on a fully collateralized basis. These programs are subject to market risk. Investments in securities traded on recognized securities exchanges are valued at the last reported sales price on the last business day of the year. Securities traded in the over-the-counter market are valued at the last bid price. The money market fund is valued at fair value which represents the net asset value of the shares of such fund as of the close of business at the end of the period. Investments in limited partnerships are carried at estimated net asset value as determined by and reported by the general partners of the partnerships and represent the proportionate share of the estimated fair value of the underlying assets of the limited partnerships. Common/collective trusts are valued at net asset value based on the fair values of the underlying investments of the trusts as determined by the sponsor of the trusts. The pension plan’s master trust also invests in a 103-12 investment entity (the 103-12 Investment Trust) which is designed to invest plan assets of more than one unrelated employer. The 103-12 Investment Trust is valued at net asset value which is determined by the issuer at the end of each month and is based on the aggregate fair value of trust assets less liabilities, divided by the number of units outstanding. No changes in valuation techniques or inputs occurred during the year. Benefit Plan Assets Measured at Fair Value on a Recurring Basis The fair value of American’s pension plan assets at December 31, 2017 and 2016, by asset category, are as follows (in millions):
Changes in fair value measurements of Level 3 investments during the year ended December 31, 2017, were as follows (in millions):
Changes in fair value measurements of Level 3 investments during the year ended December 31, 2016, were as follows (in millions):
The fair value of American’s retiree medical and other postretirement benefits plans assets at December 31, 2017 by asset category, were as follows (in millions):
The fair value of American’s retiree medical and other postretirement benefits plans assets at December 31, 2016 by asset category, were as follows (in millions):
Investments in the retiree medical and other postretirement benefits plans’ mutual funds are valued by quoted prices on the active market, which is fair value and represents the net asset value of the shares of such funds as of the close of business at the end of the period. At December 31, 2017, these funds were invested in an AAL Class mutual fund, in which trading is restricted only to American, resulting in a fair value classification of Level 2. At December 31, 2016, these investments were part of an Institutional Class of mutual funds and were actively traded on the open market resulting in a fair value classification of Level 1. Investments include approximately 30% and 27% of investments in non-U.S. common stocks in 2017 and 2016, respectively. Net asset value is based on the fair market value of the funds’ underlying assets and liabilities at the date of determination. Profit Sharing Program American accrues 5% of its pre-tax income excluding special items for its profit sharing program. For the year ended December 31, 2017, American accrued $241 million for this program, which will be distributed to employees in the first quarter of 2018. |
Accumulated Other Comprehensive Income (Loss) |
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Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive income (loss) (AOCI) are as follows (in millions):
Reclassifications out of AOCI for the years ended December 31, 2017 and 2016 are as follows (in millions):
Amounts allocated to OCI for income taxes as further described in Note 6 will remain in AOCI until we cease all related activities, such as termination of the pension plan. |
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American Airlines, Inc. [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive income (loss) (AOCI) are as follows (in millions):
Reclassifications out of AOCI for the years ended December 31, 2017 and 2016 are as follows (in millions):
Amounts allocated to OCI for income taxes as further described in Note 4 will remain in AOCI until American ceases all related activities, such as termination of the pension plan. |
Commitments, Contingencies and Guarantees |
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Commitments, Contingencies and Guarantees | Commitments, Contingencies and Guarantees (a) Aircraft and Engine Purchase Commitments Under all of our aircraft and engine purchase agreements, our total future commitments as of December 31, 2017 are expected to be as follows (approximately, in millions):
(b) Operating Leases and Other We lease certain aircraft, engines and ground equipment, in addition to the majority of our ground facilities and terminal space. As of December 31, 2017, we had 421 aircraft under operating leases, with remaining terms ranging from three months to approximately 12 years. Airports are utilized for flight operations under lease arrangements with the municipalities or agencies owning or controlling such airports. Substantially all leases provide that the lessee must pay taxes, maintenance, insurance and certain other operating expenses applicable to the leased property. Some leases also include renewal and purchase options. As of December 31, 2017, obligations under noncancellable operating leases for future minimum lease payments are as follows (approximately, in millions):
Mainline and regional rent expense, excluding landing fees, was $2.8 billion in each of 2017, 2016 and 2015. Additionally, we have purchase commitments related to jet fuel, facility construction projects and information technology support as follows (approximately): $2.0 billion in 2018, $1.4 billion in 2019, $890 million in 2020 and $950 million in 2021. (c) Capacity Purchase Agreements with Third-Party Regional Carriers American has capacity purchase agreements with third-party regional carriers. The capacity purchase agreements provide that all revenues, including passenger, in-flight, ancillary, mail and freight revenues, go to American. In return, American agrees to pay predetermined fees to these airlines for operating an agreed-upon number of aircraft, without regard to the number of passengers on board. In addition, these agreements provide that American reimburses 100% of certain variable costs, such as airport landing fees and passenger liability insurance. American controls marketing, scheduling, ticketing, pricing and seat inventories. As of December 31, 2017, American’s capacity purchase agreements with third-party regional carriers had expiration dates ranging from 2018 to 2027, with rights of American to extend the respective terms of certain agreements. See Part I, Item 2. Properties for unaudited information on the aircraft operated by third-party regional carriers under such capacity purchase agreements. As of December 31, 2017, American’s minimum fixed obligations under its capacity purchase agreements with third-party regional carriers are as follows (approximately, in millions):
(d) Off-Balance Sheet Arrangements Aircraft American currently operates 387 owned aircraft and 113 leased aircraft which were financed with EETCs issued by pass-through trusts. These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of flight equipment. Rather than finance each aircraft separately when such aircraft is purchased, delivered or refinanced, these trusts allow American to raise the financing for a number of aircraft at one time and, if applicable, place such funds in escrow pending a future purchase, delivery or refinancing of the relevant aircraft. The trusts were also structured to provide for certain credit enhancements, such as liquidity facilities to cover certain interest payments, that reduce the risks to the purchasers of the trust certificates and, as a result, reduce the cost of aircraft financing to American. Each trust covers a set number of aircraft scheduled to be delivered or refinanced upon the issuance of the EETC or within a specific period of time thereafter. At the time of each covered aircraft financing, the relevant trust used the proceeds of the issuance of the EETC (which may have been available at the time of issuance thereof or held in escrow until financing of the applicable aircraft following its delivery) to purchase equipment notes relating to the financed aircraft. The equipment notes are issued, at American’s election, in connection with a mortgage financing of the aircraft or, in certain cases, by a separate owner trust in connection with a leveraged lease financing of the aircraft. In the case of a leveraged lease financing, the owner trust then leases the aircraft to American. In both cases, the equipment notes are secured by a security interest in the aircraft. The pass-through trust certificates are not direct obligations of, nor are they guaranteed by, AAG or American. However, in the case of mortgage financings, the equipment notes issued to the trusts are direct obligations of American and, in certain instances, have been guaranteed by AAG. As of December 31, 2017, $11.9 billion associated with these mortgage financings is reflected as debt in the accompanying consolidated balance sheet. With respect to leveraged leases, American evaluated whether the leases had characteristics of a variable interest entity. American concluded the leasing entities met the criteria for variable interest entities. American generally is not the primary beneficiary of the leasing entities if the lease terms are consistent with market terms at the inception of the lease and do not include a residual value guarantee, fixed-price purchase option or similar feature that obligates American to absorb decreases in value or entitles American to participate in increases in the value of the aircraft. American does not provide residual value guarantees to the bondholders or equity participants in the trusts. Some leases have a fair market value or a fixed price purchase option that allows American to purchase the aircraft at or near the end of the lease term. However, the option price approximates an estimate of the aircraft’s fair value at the option date. Under this feature, American does not participate in any increases in the value of the aircraft. American concluded it is not the primary beneficiary under these arrangements. Therefore, American accounts for the majority of its EETC leveraged lease financings as operating leases. American’s total future obligations to the trusts of each of the relevant EETCs under these leveraged lease financings are $572 million as of December 31, 2017, which are included in the future minimum lease payments table above. Letters of Credit and Other We provide financial assurance, such as letters of credit, surety bonds or restricted cash and investments, to primarily support projected workers’ compensation obligations and airport commitments. As of December 31, 2017, we had $448 million of letters of credit and surety bonds securing various obligations, of which $88 million is collateralized with our restricted cash. The letters of credit and surety bonds that are subject to expiration will expire on various dates through 2022. (e) Legal Proceedings Chapter 11 Cases. On November 29, 2011, AMR, American, and certain of AMR’s other direct and indirect domestic subsidiaries (the Debtors) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court). On October 21, 2013, the Bankruptcy Court entered an order approving and confirming the Debtors’ fourth amended joint plan of reorganization (as amended, the Plan). On the Effective Date, December 9, 2013, the Debtors consummated their reorganization pursuant to the Plan and completed the Merger. Pursuant to rulings of the Bankruptcy Court, the Plan established the Disputed Claims Reserve to hold shares of AAG common stock reserved for issuance to disputed claimholders at the Effective Date that ultimately become holders of allowed claims. As of December 31, 2017, there were approximately 24.5 million shares of AAG common stock remaining in the Disputed Claims Reserve. As disputed claims are resolved, the claimants will receive distributions of shares from the Disputed Claims Reserve on the same basis as if such distributions had been made on or about the Effective Date. However, we are not required to distribute additional shares above the limits contemplated by the Plan, even if the shares remaining for distribution are not sufficient to fully pay any additional allowed unsecured claims. To the extent that any of the reserved shares remain undistributed upon resolution of all remaining disputed claims, such shares will not be returned to us but rather will be distributed to former AMR stockholders. There is also pending in the Bankruptcy Court an adversary proceeding relating to an action brought by American to seek a determination that certain non-pension, postemployment benefits are not vested benefits and thus may be modified or terminated without liability to American. On April 18, 2014, the Bankruptcy Court granted American’s motion for summary judgment with respect to certain non-union employees, concluding that their benefits were not vested and could be terminated. The summary judgment motion was denied with respect to all other retirees. The Bankruptcy Court has not yet scheduled a trial on the merits concerning whether those retirees’ benefits are vested, and American cannot predict whether it will receive relief from obligations to provide benefits to any of those retirees. Our financial statements presently reflect these retirement programs without giving effect to any modification or termination of benefits that may ultimately be implemented based upon the outcome of this proceeding. DOJ Antitrust Civil Investigative Demand. In June 2015, we received a Civil Investigative Demand (CID) from the United States Department of Justice (DOJ) as part of an investigation into whether there have been illegal agreements or coordination of air passenger capacity. The CID seeks documents and other information from us, and other airlines have announced that they have received similar requests. We are cooperating fully with the DOJ investigation. Private Party Antitrust Action. Subsequent to announcement of the delivery of CIDs by the DOJ, we, along with Delta Air Lines, Inc., Southwest Airlines Co., United Airlines, Inc. and, in the case of litigation filed in Canada, Air Canada, have been named as defendants in approximately 100 putative class action lawsuits alleging unlawful agreements with respect to air passenger capacity, although Southwest has entered into a settlement with the plaintiffs that is pending approval by the court. The U.S. lawsuits have been consolidated in the Federal District Court for the District of Columbia. On October 28, 2016, the Court denied a motion by the airline defendants to dismiss all claims in the class actions. These lawsuits are in their relatively early stages and we intend to defend these matters vigorously. Private Party Antitrust Action Related to the Merger. On July 2, 2013, a lawsuit captioned Carolyn Fjord, et al., v. US Airways Group, Inc., et al., was filed in the United States District Court for the Northern District of California. The complaint named as defendants US Airways Group and US Airways, Inc., 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 August 6, 2013, the plaintiffs re-filed their complaint in the Bankruptcy Court, adding AMR and American as defendants. On November 27, 2013, the Bankruptcy Court denied plaintiffs’ motion to preliminarily enjoin the Merger. On May 12, 2017, defendants filed a motion for summary judgment. On June 23, 2017, plaintiffs filed an opposition to defendants’ motion and cross-motion for summary judgment. Briefing of the parties’ respective motions concluded on September 1, 2017; a hearing date has not yet been set. We believe this lawsuit is without merit and intend to vigorously defend against the allegations. DOJ Investigation Related to the United States Postal Service. In April 2015, the DOJ informed us of an inquiry regarding American’s 2009 and 2011 contracts with the United States Postal Service for the international transportation of mail by air. In October 2015, we received a CID from the DOJ seeking certain information relating to these contracts and the DOJ has also sought information concerning certain of the airlines that transport mail on a codeshare basis. The DOJ has indicated it is investigating potential violations of the False Claims Act or other statutes. We are cooperating fully with the DOJ with regard to its investigation. General. In addition to the specifically identified legal proceedings, we and our subsidiaries are also engaged in other legal proceedings from time to time. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within our control. Therefore, although we will vigorously defend ourselves in each of the actions described above and such other legal proceedings, their ultimate resolution and potential financial and other impacts on us are uncertain but could be material. See Part I, Item 1A. Risk Factors –“We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity” for unaudited additional discussion. (f) Guarantees and Indemnifications We are party to many routine contracts in which we provide general indemnities in the normal course of business to third parties for various risks. We are not able to estimate the potential amount of any liability resulting from the indemnities. These indemnities are discussed in the following paragraphs. In our aircraft financing agreements, we generally indemnify the financing parties, trustees acting on their behalf and other relevant parties against liabilities (including certain taxes) resulting from the financing, manufacture, design, ownership, operation and maintenance of the aircraft regardless of whether these liabilities (or taxes) relate to the negligence of the indemnified parties. Our loan agreements and other LIBOR-based financing transactions (including certain leveraged aircraft leases) generally obligate us to reimburse the applicable lender for incremental costs due to a change in law that imposes (i) any reserve or special deposit requirement against assets of, deposits with or credit extended by such lender related to the loan, (ii) any tax, duty or other charge with respect to the loan (except standard income tax) or (iii) capital adequacy requirements. In addition, our loan agreements and other financing arrangements typically contain a withholding tax provision that requires us to pay additional amounts to the applicable lender or other financing party, generally if withholding taxes are imposed on such lender or other financing party as a result of a change in the applicable tax law. In certain transactions, including certain aircraft financing leases and loans, the lessors, lenders and/or other parties have rights to terminate the transaction based on changes in foreign tax law, illegality or certain other events or circumstances. In such a case, we may be required to make a lump sum payment to terminate the relevant transaction. We have general indemnity clauses in many of our airport and other real estate leases where we as lessee indemnify the lessor (and related parties) against liabilities related to our use of the leased property. Generally, these indemnifications cover liabilities resulting from the negligence of the indemnified parties, but not liabilities resulting from the gross negligence or willful misconduct of the indemnified parties. In addition, we provide environmental indemnities in many of these leases for contamination related to our use of the leased property. Under certain contracts with third parties, we indemnify the third-party against legal liability arising out of an action by the third-party, or certain other parties. The terms of these contracts vary and the potential exposure under these indemnities cannot be determined. We have liability insurance protecting us for some of the obligations we have undertaken under these indemnities. American is required to make principal and interest payments for certain special facility revenue bonds issued by municipalities primarily to build or improve airport facilities and purchase equipment, which are leased to American. The payment of principal and interest of certain special facility revenue bonds is guaranteed by AAG. As of December 31, 2017, the remaining lease payments through 2035 guaranteeing the principal and interest on these bonds are $589 million, which are accounted for as operating leases. As of December 31, 2017, AAG had issued guarantees covering approximately $810 million principal amount of American’s special facility revenue bonds (and interest thereon) and $8.5 billion principal amount of American’s secured debt (and interest thereon), including the Credit Facilities and certain EETC financings. (g) Credit Card Processing Agreements We have agreements with companies that process customer credit card transactions for the sale of air travel and other services. Our agreements allow these processing companies, under certain conditions, to hold an amount of our cash (referred to as a holdback) equal to a portion of advance ticket sales that have been processed by that company, but for which we have not yet provided the air transportation. Additional holdback requirements in the event of material adverse changes in our financial condition will reduce our liquidity in the form of unrestricted cash by the amount of the holdbacks. We are not currently required to maintain any holdbacks pursuant to these requirements. (h) Labor Negotiations As of December 31, 2017, we employed approximately 126,600 active full-time equivalent employees, of which 23,500 were employed by our regional operations. Approximately 85% of employees are covered by collective bargaining agreements with various labor unions. Negotiations for joint collective bargaining agreements covering our mainline maintenance, fleet service, stock clerks, maintenance control technicians and maintenance training instructors employees as well as for certain employee groups at our wholly-owned regional subsidiaries are continuing. There is no assurance that a successful or timely resolution of these labor negotiations will be achieved. (i) Other As a result of the terrorist attacks of September 11, 2001 and the subsequent liability protections provided for by the Air Transportation Safety and System Stabilization Act (the Stabilization Act), we recorded a liability for these terrorist attacks claims equal to the related insurance receivable due to us. The Stabilization Act provides that, notwithstanding any other provision of law, liability for all claims, whether compensatory or punitive, arising from these terrorist attacks, against any air carrier shall not exceed the liability coverage maintained by the air carrier. As of December 31, 2017, claims relating to this matter have been substantially resolved and the remaining liability and the amount of the offsetting receivable are not material. |
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Commitments, Contingencies and Guarantees | Commitments, Contingencies and Guarantees (a) Aircraft and Engine Purchase Commitments Under all of American’s aircraft and engine purchase agreements, its total future commitments as of December 31, 2017 are expected to be as follows (approximately, in millions):
(b) Operating Leases and Other American leases certain aircraft, engines and ground equipment, in addition to the majority of its ground facilities and terminal space. As of December 31, 2017, American had 410 aircraft under operating leases, with remaining terms ranging from three months to approximately 12 years. Airports are utilized for flight operations under lease arrangements with the municipalities or agencies owning or controlling such airports. Substantially all leases provide that the lessee must pay taxes, maintenance, insurance and certain other operating expenses applicable to the leased property. Some leases also include renewal and purchase options. As of December 31, 2017, obligations under noncancellable operating leases for future minimum lease payments are as follows (approximately, in millions):
Mainline and regional rent expense, excluding landing fees, was $2.8 billion in 2017 and $2.7 billion in each of 2016 and 2015. Additionally, American has purchase commitments related to jet fuel, facility construction projects and information technology support as follows (approximately): $2.0 billion in 2018, $1.4 billion in 2019, $890 million in 2020 and $950 million in 2021. (c) Capacity Purchase Agreements with Third-Party Regional Carriers American has capacity purchase agreements with third-party regional carriers. The capacity purchase agreements provide that all revenues, including passenger, in-flight, ancillary, mail and freight revenues, go to American. In return, American agrees to pay predetermined fees to these airlines for operating an agreed-upon number of aircraft, without regard to the number of passengers on board. In addition, these agreements provide that American reimburses 100% of certain variable costs, such as airport landing fees and passenger liability insurance. American controls marketing, scheduling, ticketing, pricing and seat inventories. As of December 31, 2017, American’s capacity purchase agreements with third-party regional carriers had expiration dates ranging from 2018 to 2027, with rights of American to extend the respective terms of certain agreements. See Part I, Item 2. Properties for unaudited information on the aircraft operated by third-party regional carriers under such capacity purchase agreements. As of December 31, 2017, American’s minimum fixed obligations under its capacity purchase agreements with third-party regional carriers are as follows (approximately, in millions):
(d) Off-Balance Sheet Arrangements Aircraft American currently operates 387 owned aircraft and 113 leased aircraft which were financed with EETCs issued by pass-through trusts. These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of flight equipment. Rather than finance each aircraft separately when such aircraft is purchased, delivered or refinanced, these trusts allow American to raise the financing for a number of aircraft at one time and, if applicable, place such funds in escrow pending a future purchase, delivery or refinancing of the relevant aircraft. The trusts were also structured to provide for certain credit enhancements, such as liquidity facilities to cover certain interest payments, that reduce the risks to the purchasers of the trust certificates and, as a result, reduce the cost of aircraft financing to American. Each trust covers a set number of aircraft scheduled to be delivered or refinanced upon the issuance of the EETC or within a specific period of time thereafter. At the time of each covered aircraft financing, the relevant trust used the proceeds of the issuance of the EETC (which may have been available at the time of issuance thereof or held in escrow until financing of the applicable aircraft following its delivery) to purchase equipment notes relating to the financed aircraft. The equipment notes are issued, at American’s election, in connection with a mortgage financing of the aircraft or, in certain cases, by a separate owner trust in connection with a leveraged lease financing of the aircraft. In the case of a leveraged lease financing, the owner trust then leases the aircraft to American. In both cases, the equipment notes are secured by a security interest in the aircraft. The pass-through trust certificates are not direct obligations of, nor are they guaranteed by, AAG or American. However, in the case of mortgage financings, the equipment notes issued to the trusts are direct obligations of American and, in certain instances, have been guaranteed by AAG. As of December 31, 2017, $11.9 billion associated with these mortgage financings is reflected as debt in the accompanying consolidated balance sheet. With respect to leveraged leases, American evaluated whether the leases had characteristics of a variable interest entity. American concluded the leasing entities met the criteria for variable interest entities. American generally is not the primary beneficiary of the leasing entities if the lease terms are consistent with market terms at the inception of the lease and do not include a residual value guarantee, fixed-price purchase option or similar feature that obligates American to absorb decreases in value or entitles American to participate in increases in the value of the aircraft. American does not provide residual value guarantees to the bondholders or equity participants in the trusts. Some leases have a fair market value or a fixed price purchase option that allows American to purchase the aircraft at or near the end of the lease term. However, the option price approximates an estimate of the aircraft’s fair value at the option date. Under this feature, American does not participate in any increases in the value of the aircraft. American concluded it is not the primary beneficiary under these arrangements. Therefore, American accounts for the majority of its EETC leveraged lease financings as operating leases. American’s total future obligations to the trusts of each of the relevant EETCs under these leveraged lease financings are $572 million as of December 31, 2017, which are included in the future minimum lease payments table above. Letters of Credit and Other American provides financial assurance, such as letters of credit, surety bonds or restricted cash and investments, to primarily support projected workers’ compensation obligations and airport commitments. As of December 31, 2017, American had $448 million of letters of credit and surety bonds securing various obligations, of which $88 million is collateralized with its restricted cash. The letters of credit and surety bonds that are subject to expiration will expire on various dates through 2022. (e) Legal Proceedings Chapter 11 Cases. On November 29, 2011, AMR, American, and certain of AMR’s other direct and indirect domestic subsidiaries (the Debtors) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court). On October 21, 2013, the Bankruptcy Court entered an order approving and confirming the Debtors’ fourth amended joint plan of reorganization (as amended, the Plan). On the Effective Date, December 9, 2013, the Debtors consummated their reorganization pursuant to the Plan and completed the Merger. Pursuant to rulings of the Bankruptcy Court, the Plan established the Disputed Claims Reserve to hold shares of AAG common stock reserved for issuance to disputed claimholders at the Effective Date that ultimately become holders of allowed claims. As of December 31, 2017, there were approximately 24.5 million shares of AAG common stock remaining in the Disputed Claims Reserve. As disputed claims are resolved, the claimants will receive distributions of shares from the Disputed Claims Reserve on the same basis as if such distributions had been made on or about the Effective Date. However, American is not required to distribute additional shares above the limits contemplated by the Plan, even if the shares remaining for distribution are not sufficient to fully pay any additional allowed unsecured claims. To the extent that any of the reserved shares remain undistributed upon resolution of all remaining disputed claims, such shares will not be returned to American but rather will be distributed to former AMR stockholders. There is also pending in the Bankruptcy Court an adversary proceeding relating to an action brought by American to seek a determination that certain non-pension, postemployment benefits are not vested benefits and thus may be modified or terminated without liability to American. On April 18, 2014, the Bankruptcy Court granted American’s motion for summary judgment with respect to certain non-union employees, concluding that their benefits were not vested and could be terminated. The summary judgment motion was denied with respect to all other retirees. The Bankruptcy Court has not yet scheduled a trial on the merits concerning whether those retirees’ benefits are vested, and American cannot predict whether it will receive relief from obligations to provide benefits to any of those retirees. American’s financial statements presently reflect these retirement programs without giving effect to any modification or termination of benefits that may ultimately be implemented based upon the outcome of this proceeding. DOJ Antitrust Civil Investigative Demand. In June 2015, American received a Civil Investigative Demand (CID) from the United States Department of Justice (DOJ) as part of an investigation into whether there have been illegal agreements or coordination of air passenger capacity. The CID seeks documents and other information from American, and other airlines have announced that they have received similar requests. American is cooperating fully with the DOJ investigation. Private Party Antitrust Action. Subsequent to announcement of the delivery of CIDs by the DOJ, American, along with Delta Air Lines, Inc., Southwest Airlines Co., United Airlines, Inc. and, in the case of litigation filed in Canada, Air Canada, have been named as defendants in approximately 100 putative class action lawsuits alleging unlawful agreements with respect to air passenger capacity, although Southwest has entered into a settlement with the plaintiffs that is pending approval by the court. The U.S. lawsuits have been consolidated in the Federal District Court for the District of Columbia. On October 28, 2016, the Court denied a motion by the airline defendants to dismiss all claims in the class actions. These lawsuits are in their relatively early stages and American intends to defend these matters vigorously. Private Party Antitrust Action Related to the Merger. On July 2, 2013, a lawsuit captioned Carolyn Fjord, et al., v. US Airways Group, Inc., et al., was filed in the United States District Court for the Northern District of California. The complaint named as defendants US Airways Group and US Airways, Inc., 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 August 6, 2013, the plaintiffs re-filed their complaint in the Bankruptcy Court, adding AMR and American as defendants. On November 27, 2013, the Bankruptcy Court denied plaintiffs’ motion to preliminarily enjoin the Merger. On May 12, 2017, defendants filed a motion for summary judgment. On June 23, 2017, plaintiffs filed an opposition to defendants’ motion and cross-motion for summary judgment. Briefing of the parties’ respective motions concluded on September 1, 2017; a hearing date has not yet been set. American believes this lawsuit is without merit and intends to vigorously defend against the allegations. DOJ Investigation Related to the United States Postal Service. In April 2015, the DOJ informed American of an inquiry regarding American’s 2009 and 2011 contracts with the United States Postal Service for the international transportation of mail by air. In October 2015, American received a CID from the DOJ seeking certain information relating to these contracts and the DOJ has also sought information concerning certain of the airlines that transport mail on a codeshare basis. The DOJ has indicated it is investigating potential violations of the False Claims Act or other statutes. American is cooperating fully with the DOJ with regard to its investigation. General. In addition to the specifically identified legal proceedings, American and its subsidiaries are also engaged in other legal proceedings from time to time. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within American’s control. Therefore, although American will vigorously defend itself in each of the actions described above and such other legal proceedings, their ultimate resolution and potential financial and other impacts on American are uncertain but could be material. See Part I, Item 1A. Risk Factors –“We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity” for unaudited additional discussion. (f) Guarantees and Indemnifications American is a party to many routine contracts in which it provides general indemnities in the normal course of business to third parties for various risks. American is not able to estimate the potential amount of any liability resulting from the indemnities. These indemnities are discussed in the following paragraphs. In its aircraft financing agreements, American generally indemnifies the financing parties, trustees acting on their behalf and other relevant parties against liabilities (including certain taxes) resulting from the financing, manufacture, design, ownership, operation and maintenance of the aircraft regardless of whether these liabilities (or taxes) relate to the negligence of the indemnified parties. American’s loan agreements and other LIBOR-based financing transactions (including certain leveraged aircraft leases) generally obligate American to reimburse the applicable lender for incremental costs due to a change in law that imposes (i) any reserve or special deposit requirement against assets of, deposits with or credit extended by such lender related to the loan, (ii) any tax, duty or other charge with respect to the loan (except standard income tax) or (iii) capital adequacy requirements. In addition, American’s loan agreements and other financing arrangements typically contain a withholding tax provision that requires American to pay additional amounts to the applicable lender or other financing party, generally if withholding taxes are imposed on such lender or other financing party as a result of a change in the applicable tax law. In certain transactions, including certain aircraft financing leases and loans, the lessors, lenders and/or other parties have rights to terminate the transaction based on changes in foreign tax law, illegality or certain other events or circumstances. In such a case, American may be required to make a lump sum payment to terminate the relevant transaction. American has general indemnity clauses in many of its airport and other real estate leases where American as lessee indemnifies the lessor (and related parties) against liabilities related to American’s use of the leased property. Generally, these indemnifications cover liabilities resulting from the negligence of the indemnified parties, but not liabilities resulting from the gross negligence or willful misconduct of the indemnified parties. In addition, American provides environmental indemnities in many of these leases for contamination related to American’s use of the leased property. Under certain contracts with third parties, American indemnifies the third-party against legal liability arising out of an action by the third-party, or certain other parties. The terms of these contracts vary and the potential exposure under these indemnities cannot be determined. American has liability insurance protecting American for some of the obligations it has undertaken under these indemnities. American is required to make principal and interest payments for certain special facility revenue bonds issued by municipalities primarily to build or improve airport facilities and purchase equipment, which are leased to American. The payment of principal and interest of certain special facility revenue bonds is guaranteed by American. As of December 31, 2017, the remaining lease payments through 2035 guaranteeing the principal and interest on these bonds are $589 million, which are accounted for as operating leases. As of December 31, 2017, American had issued guarantees covering AAG’s $500 million aggregate principal amount of 6.125% senior notes due 2018, $750 million aggregate principal amount of 5.50% senior notes due 2019 and $500 million aggregate principal amount of 4.625% senior notes due 2020. (g) Credit Card Processing Agreements American has agreements with companies that process customer credit card transactions for the sale of air travel and other services. American’s agreements allow these processing companies, under certain conditions, to hold an amount of its cash (referred to as a holdback) equal to a portion of advance ticket sales that have been processed by that company, but for which American has not yet provided the air transportation. Additional holdback requirements in the event of material adverse changes in American’s financial condition will reduce its liquidity in the form of unrestricted cash by the amount of the holdbacks. American is not currently required to maintain any holdbacks pursuant to these requirements. (h) Labor Negotiations As of December 31, 2017, American employed approximately 103,100 active full-time equivalent employees. Approximately 84% of employees are covered by collective bargaining agreements with various labor unions. Negotiations for joint collective bargaining agreements covering American’s maintenance, fleet service, stock clerks, maintenance control technicians and maintenance training instructors employees are continuing. There is no assurance that a successful or timely resolution of these labor negotiations will be achieved. (i) Other As a result of the terrorist attacks of September 11, 2001 and the subsequent liability protections provided for by the Air Transportation Safety and System Stabilization Act (the Stabilization Act), American recorded a liability for these terrorist attacks claims equal to the related insurance receivable due to American. The Stabilization Act provides that, notwithstanding any other provision of law, liability for all claims, whether compensatory or punitive, arising from these terrorist attacks, against any air carrier shall not exceed the liability coverage maintained by the air carrier. As of December 31, 2017, claims relating to this matter have been substantially resolved and the remaining liability and the amount of the offsetting receivable are not material. |
Supplemental Cash Flow Information |
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Supplemental Cash Flow Information | Supplemental Cash Flow Information Supplemental disclosure of cash flow information and non-cash investing and financing activities are as follows (in millions):
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Supplemental Cash Flow Information | Supplemental Cash Flow Information Supplemental disclosure of cash flow information and non-cash investing and financing activities are as follows (in millions):
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Operating Segments and Related Disclosures |
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Operating Segments and Related Disclosures | Operating Segments and Related Disclosures We are managed as a single business unit that provides air transportation for passengers and cargo. This allows us to benefit from an integrated revenue pricing and route network that includes American and our wholly-owned and third-party regional carriers that fly under capacity purchase agreements operating as American Eagle. The flight equipment of all these carriers is combined to form one fleet that is deployed through a single route scheduling system. Financial information and annual operational plans and forecasts are prepared and reviewed by the chief operating decision maker at the consolidated level. When making operational decisions, the chief operating decision maker evaluates flight profitability data, which considers aircraft type and route economics, but is indifferent to the results of the individual wholly-owned regional carriers. The objective in making operational decisions is to maximize consolidated financial results, not the individual results of American or American Eagle. Our operating revenues by geographic region as defined by the U.S. Department of Transportation (DOT) are summarized below (in millions):
We attribute operating revenues by geographic region based upon the origin and destination of each flight segment. Our tangible assets consist primarily of flight equipment, which are mobile across geographic markets and, therefore, have not been allocated. |
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American Airlines, Inc. [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Operating Segments and Related Disclosures | Operating Segments and Related Disclosures American is managed as a single business unit that provides air transportation for passengers and cargo. This allows it to benefit from an integrated revenue pricing and route network that includes American and AAG’s wholly-owned and third-party regional carriers that fly under capacity purchase agreements operating as American Eagle. The flight equipment of all these carriers is combined to form one fleet that is deployed through a single route scheduling system. Financial information and annual operational plans and forecasts are prepared and reviewed by the chief operating decision maker at the consolidated level. When making operational decisions, the chief operating decision maker evaluates flight profitability data, which considers aircraft type and route economics, but is indifferent to the results of the individual regional carriers. The objective in making operational decisions is to maximize consolidated financial results, not the individual results of American or American Eagle. American’s operating revenues by geographic region as defined by the U.S. Department of Transportation (DOT) are summarized below (in millions):
American attributes operating revenues by geographic region based upon the origin and destination of each flight segment. American’s tangible assets consist primarily of flight equipment, which are mobile across geographic markets and, therefore, have not been allocated. |
Share-based Compensation |
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Share-based Compensation | Share-based Compensation The 2013 AAG Incentive Award Plan (the 2013 Plan) provides that awards may be in the form of an option, restricted stock award, restricted stock unit award, performance award, dividend equivalent award, deferred stock award, deferred stock unit award, stock payment award or stock appreciation right. The 2013 Plan initially authorized the grant of awards for the issuance of up to 40 million shares. Any shares underlying awards granted under the 2013 Plan, or any pre-existing US Airways Group plan, that are forfeited, terminate or are settled in cash (in whole or in part) without the delivery of shares will again be available for grant. Our salaries, wages and benefits expense for the years ended December 31, 2017, 2016 and 2015 included $90 million, $102 million and $274 million, respectively, of share-based compensation costs. Of the 2015 amount, $198 million was related to awards granted to certain employees in connection with the Merger and recorded in special items, net on the accompanying consolidated statements of operations. During 2017, 2016 and 2015, we withheld approximately 1.1 million, 1.4 million and 7.0 million shares of AAG common stock, respectively, and paid approximately $51 million, $56 million and $306 million, respectively, in satisfaction of certain tax withholding obligations associated with employee equity awards. (a) Restricted Stock Unit Awards (RSUs) We have granted RSUs with service conditions (time vested primarily over three years) and performance conditions. The grant-date fair value of RSUs is equal to the market price of the underlying shares of common stock on the date of grant. For time vested awards, the expense is recognized on a straight-line basis over the vesting period for the entire award. For awards with performance conditions, the expense is recognized based on the expected achievement at each reporting period. Stock-settled RSUs are classified as equity awards as the vesting results in the issuance of shares of AAG common stock. Stock-settled RSU award activity for all plans for the years ended December 31, 2017, 2016 and 2015 is as follows:
As of December 31, 2017, there was $121 million of unrecognized compensation cost related to stock-settled RSUs. These costs are expected to be recognized over a weighted average period of one year. The total fair value of stock-settled RSUs vested during the years ended December 31, 2017, 2016 and 2015 was $123 million, $107 million and $750 million, respectively. (b) Stock Appreciation Rights (SARs) We assumed US Airways Group’s outstanding SARs in connection with the Merger using an exchange ratio of one to one. These SARs were granted with an exercise price equal to the underlying common stock’s fair value at the date of each grant, have service conditions, become exercisable over a three-year vesting period and expire if unexercised at the end of their term, which ranges from seven to ten years. During 2017, 2016 and 2015, 0.8 million, 1.7 million and 3.0 million SARs, respectively, were exercised at weighted average exercise prices of $15.71, $14.49 and $12.09, respectively, for a total intrinsic value of $27 million, $49 million and $102 million, respectively. As of December 31, 2017, we had 1.2 million SARs outstanding with an aggregate intrinsic value of $54 million and weighted average exercise price of $8.08 that expire between 2018 and 2020 if unexercised. (c) ASU 2016-09: Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting This ASU simplified the accounting for share-based payment award transactions including the financial statement presentation of excess tax benefits and deficiencies. We adopted this ASU during the second quarter of 2016, which resulted in the recognition of $418 million of previously unrecognized excess tax benefits in deferred tax assets and an increase to retained earnings on the consolidated balance sheet as of the beginning of 2016. |
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation | Share-based Compensation The 2013 AAG Incentive Award Plan (the 2013 Plan) provides that awards may be in the form of an option, restricted stock award, restricted stock unit award, performance award, dividend equivalent award, deferred stock award, deferred stock unit award, stock payment award or stock appreciation right. The 2013 Plan initially authorized the grant of awards for the issuance of up to 40 million shares. Any shares underlying awards granted under the 2013 Plan, or any pre-existing US Airways Group plan, that are forfeited, terminate or are settled in cash (in whole or in part) without the delivery of shares will again be available for grant. American’s salaries, wages and benefits expense for the years ended December 31, 2017, 2016 and 2015 included $90 million, $102 million and $274 million, respectively, of share-based compensation costs. Of the 2015 amount, $198 million was related to awards granted to certain employees in connection with the Merger and recorded in special items, net on the accompanying consolidated statements of operations. During 2017, 2016 and 2015, AAG withheld approximately 1.1 million, 1.4 million and 7.0 million shares of AAG common stock, respectively, and paid approximately $51 million, $56 million and $306 million, respectively, in satisfaction of certain tax withholding obligations associated with employee equity awards. (a) Restricted Stock Unit Awards (RSUs) AAG has granted RSUs with service conditions (time vested primarily over three years) and performance conditions. The grant-date fair value of RSUs is equal to the market price of the underlying shares of common stock on the date of grant. For time vested awards, the expense is recognized on a straight-line basis over the vesting period for the entire award. For awards with performance conditions, the expense is recognized based on the expected achievement at each reporting period. Stock-settled RSUs are classified as equity awards as the vesting results in the issuance of shares of AAG common stock. Stock-settled RSU award activity for all plans for the years ended December 31, 2017, 2016 and 2015 is as follows:
As of December 31, 2017, there was $121 million of unrecognized compensation cost related to stock-settled RSUs. These costs are expected to be recognized over a weighted average period of one year. The total fair value of stock-settled RSUs vested during the years ended December 31, 2017, 2016 and 2015 was $123 million, $107 million and $750 million, respectively. (b) Stock Appreciation Rights (SARs) AAG assumed US Airways Group’s outstanding SARs in connection with the Merger using an exchange ratio of one to one. These SARs were granted with an exercise price equal to the underlying common stock’s fair value at the date of each grant, have service conditions, become exercisable over a three-year vesting period and expire if unexercised at the end of their term, which ranges from seven to ten years. During 2017, 2016 and 2015, 0.8 million, 1.7 million and 3.0 million SARs, respectively, were exercised at weighted average exercise prices of $15.71, $14.49 and $12.09, respectively, for a total intrinsic value of $27 million, $49 million and $102 million, respectively. As of December 31, 2017, AAG had 1.2 million SARs outstanding with an aggregate intrinsic value of $54 million and weighted average exercise price of $8.08 that expire between 2018 and 2020 if unexercised. (c) ASU 2016-09: Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting This ASU simplified the accounting for share-based payment award transactions including the financial statement presentation of excess tax benefits and deficiencies. American adopted this ASU during the second quarter of 2016, which resulted in the recognition of $418 million of previously unrecognized excess tax benefits in deferred tax assets and an increase to retained earnings on the consolidated balance sheet as of the beginning of 2016. |
Valuation and Qualifying Accounts |
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Valuation and Qualifying Accounts | Valuation and Qualifying Accounts (in millions)
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Valuation and Qualifying Accounts | Valuation and Qualifying Accounts (in millions)
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Quarterly Financial Data (Unaudited) |
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Quarterly Financial Data (Unaudited) | Quarterly Financial Data (Unaudited) Unaudited summarized financial data by quarter for 2017 and 2016 (in millions, except share and per share amounts):
Our fourth quarter 2017 results include $307 million of total net special items that principally included a $149 million charge for the $1,000 cash bonus and associated payroll taxes granted to our employees as of December 31, 2017 in recognition of the 2017 Tax Act, $81 million of Merger integration expenses, $58 million of fleet restructuring expenses, a $20 million net charge resulting from fair value adjustments to bankruptcy obligations and a $7 million special non-cash benefit to income tax expense to reflect the impact on our deferred tax assets and liabilities resulting from the 2017 Tax Act. Our fourth quarter 2016 results include $273 million of total net special items that principally included $121 million of Merger integration expenses, $104 million of fleet restructuring expenses and a $47 million net charge resulting from fair value adjustments to bankruptcy obligations. |
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Quarterly Financial Data (Unaudited) | Quarterly Financial Data (Unaudited) Unaudited summarized financial data by quarter for 2017 and 2016 (in millions):
American’s fourth quarter 2017 results include $384 million of total net special items that principally included a $123 million charge for the $1,000 cash bonus and associated payroll taxes granted to mainline employees as of December 31, 2017 in recognition of the 2017 Tax Act, $81 million of Merger integration expenses, $58 million of fleet restructuring expenses, a $20 million net charge resulting from fair value adjustments to bankruptcy obligations and a $93 million special non-cash charge to income tax expense to reflect the impact on American’s deferred tax assets and liabilities resulting from the 2017 Tax Act. American’s fourth quarter 2016 results include $273 million of total net special items that principally included $121 million of Merger integration expenses, $104 million of fleet restructuring expenses and a $47 million net charge resulting from fair value adjustments to bankruptcy obligations. |
Subsequent Event |
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Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event Dividend Declaration In January 2018, we announced that our Board of Directors declared a $0.10 per share dividend for stockholders of record on February 6, 2018, and payable on February 20, 2018. Any future dividends that may be declared and paid from time to time will be subject to market and economic conditions, applicable legal requirements and other relevant factors. We are not obligated to continue a dividend for any fixed period, and payment of dividends may be suspended at any time at our discretion. |
Transactions with Related Parties |
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Related Party Transaction [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transactions with Related Parties | Transactions with Related Parties The following represents the net receivables (payables) to related parties (in millions):
Pursuant to a capacity purchase agreement between American and AAG’s wholly-owned regional airlines operating as American Eagle, American purchases all of the capacity from these carriers and recognizes passenger revenue from flights operated by American Eagle. In 2017, 2016 and 2015, American recognized expense of approximately $1.7 billion, $1.5 billion and $1.2 billion, respectively, related to wholly-owned regional airline capacity purchase agreements. |
Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
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Organization Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | (a) Basis of Presentation American Airlines Group Inc. (we, us, our and similar terms, or AAG), a Delaware corporation, is a holding company whose primary business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through its mainline operating subsidiary, American Airlines, Inc. (American) and its wholly-owned regional airline subsidiaries, Envoy Aviation Group Inc. (Envoy), Piedmont Airlines, Inc. (Piedmont) and PSA Airlines, Inc. (PSA) that operate under the brand American Eagle. On December 9, 2013, a subsidiary of AMR Corporation (AMR) merged with and into US Airways Group, Inc. (US Airways Group), a Delaware corporation, which survived as a wholly-owned subsidiary of AAG, and AAG emerged from Chapter 11 (the Merger). Upon closing of the Merger and emergence from Chapter 11, AMR changed its name to American Airlines Group Inc. On December 30, 2015, in order to simplify AAG’s internal corporate structure, US Airways Group merged with and into AAG, with AAG as the surviving corporation. Immediately thereafter, US Airways, Inc. (US Airways), a wholly-owned subsidiary of US Airways Group, merged with and into American, with American as the surviving corporation. All significant intercompany transactions have been eliminated. The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The most significant areas of judgment relate to passenger revenue recognition, impairment of goodwill, impairment of long-lived and intangible assets, the loyalty program, valuation allowance for deferred tax assets, as well as pension and retiree medical and other postretirement benefits. |
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Short-term Investments | (b) Short-term Investments Short-term investments are classified as available-for-sale and stated at fair value. Realized gains and losses are recorded in nonoperating expense on the consolidated statement of operations. Unrealized gains and losses are recorded in accumulated other comprehensive loss on the consolidated balance sheets. |
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Restricted Cash and Short-term Investments | (c) Restricted Cash and Short-term Investments We have restricted cash and short-term investments related primarily to collateral held to support workers’ compensation obligations. |
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Aircraft Fuel, Spare Parts, and Supplies, Net | (d) Aircraft Fuel, Spare Parts and Supplies, Net Aircraft fuel is recorded on a first-in, first-out basis. Spare parts and supplies are recorded at average costs less an allowance for obsolescence. These items are expensed when used. |
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Operating Property and Equipment | (e) Operating Property and Equipment Operating property and equipment is recorded at cost and depreciated or amortized to residual values over the asset’s estimated useful life or the lease term, whichever is less, using the straight-line method. Residual values for aircraft, engines and related rotable parts are generally 5% to 10% of original cost. Costs of major improvements that enhance the usefulness of the asset are capitalized and depreciated or amortized over the estimated useful life of the asset or the lease term, whichever is less. The estimated useful lives for the principal property and equipment classifications are as follows:
We assess impairment on operating property and equipment when events and circumstances indicate that the assets may be impaired. An asset or group of assets is considered impaired when the undiscounted cash flows estimated to be generated by the assets are less than the carrying amount of the assets and the net book value of the assets exceeds their estimated fair value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less the cost to sell. |
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Income Taxes | (f) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are recorded net as noncurrent deferred income taxes. We provide a valuation allowance for our deferred tax assets when it is more likely than not that some portion, or all of our deferred tax assets, will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. We consider all available positive and negative evidence and make certain assumptions in evaluating the realizability of our deferred tax assets. Many factors are considered that impact our assessment of future profitability, including conditions which are beyond our control, such as the health of the economy, the level and volatility of fuel prices and travel demand. |
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Goodwill | (g) Goodwill Goodwill represents the excess of the purchase price over the fair value of the net assets acquired and liabilities assumed. Goodwill is not amortized but assessed for impairment annually on October 1st or more frequently if events or circumstances indicate that goodwill may be impaired. We have one consolidated reporting unit. Goodwill is assessed for impairment by initially performing a qualitative assessment and, if necessary, then comparing the fair value of the reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit is less than the carrying value, a second step is performed to determine the implied fair value of goodwill. If the implied fair value of goodwill is lower than its carrying value, an impairment charge equal to the difference is recorded. |
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Other Intangibles, Net | (h) Other Intangibles, Net Intangible assets consist primarily of domestic airport slots, customer relationships, marketing agreements, international slots and route authorities, airport gate leasehold rights and tradenames. Finite-Lived Intangible Assets Finite-lived intangible assets are amortized over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The following table provides information relating to our amortizable intangible assets as of December 31, 2017 and 2016 (in millions):
Certain domestic airport slots and airport gate leasehold rights are amortized on a straight-line basis over 25 years. The customer relationships and marketing agreements were identified as intangible assets subject to amortization and are amortized on a straight-line basis over approximately nine years and 30 years, respectively. Tradenames are fully amortized. We recorded amortization expense related to these intangible assets of $44 million, $76 million and $55 million for the years ended December 31, 2017, 2016 and 2015, respectively. We expect to record annual amortization expense for these intangible assets as follows (in millions):
Indefinite-Lived Intangible Assets Indefinite-lived intangible assets include certain domestic airport slots at our hubs and international slots and route authorities. Indefinite-lived intangible assets are not amortized but instead are assessed for impairment annually on October 1st or more frequently if events or circumstances indicate that the asset may be impaired. As of December 31, 2017 and 2016, we had $1.9 billion and $1.8 billion, respectively, of indefinite-lived intangible assets on our consolidated balance sheets. Indefinite-lived intangible assets are assessed for impairment by initially performing a qualitative assessment to determine whether we believe it is more likely than not that an asset has been impaired. If we believe impairment has occurred, we then evaluate for impairment by comparing the estimated fair value of assets to the carrying value. An impairment charge is recognized if the asset’s estimated fair value is less than its carrying value. Based upon our annual assessment, there was no indefinite-lived intangible asset impairment in 2017. |
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Loyalty Program | (i) Loyalty Program We currently operate the loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American, any oneworld airline or other partner airlines, or by using the services of other program participants, such as the Citi and Barclaycard US co-branded credit cards, hotels and car rental companies. Mileage credits can be redeemed for travel on American or other participating partner airlines. Through December 31, 2017, we used the incremental cost method to account for the portion of our loyalty program liability incurred when AAdvantage members earn mileage credits by flying on American, any oneworld airline or other partner airlines. We have an obligation to provide future travel when these mileage credits are redeemed and therefore have recorded a liability for mileage credits outstanding. The incremental cost liability includes all mileage credits, even mileage credits for members whose account balances have not yet reached the minimum level required to redeem an award. Mileage credits are subject to expiration. The liability for outstanding mileage credits is valued based on the estimated incremental cost of carrying one additional passenger. The estimated incremental cost primarily includes unit costs incurred for fuel, food and insurance as well as fees incurred when travel awards are redeemed on partner airlines. In calculating the liability, we estimate how many mileage credits will never be redeemed for travel and exclude those mileage credits from the estimate of the liability. Estimates are also made for the number of miles that will be used per award redemption and the number of travel awards that will be redeemed on partner airlines. These costs and estimates are based on our historical program experience as well as consideration of enacted program changes, as applicable. Changes in the liability resulting from members earning additional mileage credits or changes in estimates are recorded in the consolidated statements of operations as a part of passenger revenue. As of December 31, 2017 and 2016, the liability for outstanding mileage credits accounted for under the incremental cost method was $677 million and $669 million, respectively, and is included on the consolidated balance sheets within loyalty program liability. We also sell loyalty program mileage credits to participating airline partners and non-airline business partners, such as the Citi and Barclaycard US co-branded credit cards. Sales of mileage credits to non-airline business partners is comprised of two components, transportation and marketing. We account for mileage sales under our agreements with non-airline business partners in accordance with ASU 2009-13, “Revenue Recognition (Topic 605) – Multiple-Deliverable Revenue Arrangements.” In accordance with ASU 2009-13, we allocate the consideration received from the sale of mileage credits based on the relative selling price of each product or service delivered. As a result of our co-branded credit card program agreements with Citi and Barclaycard US that we entered into in 2016, we identified the following revenue elements in these co-branded credit card agreements: the transportation component; and the use of the American brand including access to loyalty program member lists, advertising and other travel related benefits (collectively, the marketing component). The transportation component represents the estimated selling price of future travel awards and is determined using historical transaction information, including information related to customer redemption patterns. The transportation component is deferred based on its relative selling price and is amortized into passenger revenue on a straight-line basis over the period in which the mileage credits are expected to be redeemed for travel. As of December 31, 2017 and 2016, we had $2.1 billion in deferred revenue from the sale of mileage credits recorded within loyalty program liability on our consolidated balance sheets. The services under the marketing component are provided periodically, but no less than monthly. Accordingly, the marketing component is considered earned and recognized in other revenues in the period of the mileage sale. |
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Revenue | (j) Revenue Passenger Revenue Passenger revenue is recognized when transportation is provided. Ticket sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on the consolidated balance sheets. The air traffic liability represents tickets sold for future travel dates and estimated future refunds and exchanges of tickets sold for past travel dates. The balance in the air traffic liability fluctuates throughout the year based on seasonal travel patterns. Our air traffic liability was $4.0 billion and $3.9 billion as of December 31, 2017 and 2016, respectively. The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. Due to complex pricing structures, refund and exchange policies, and interline agreements with other airlines, certain amounts are recognized in passenger revenue using estimates regarding both the timing of the revenue recognition and the amount of revenue to be recognized. These estimates are generally based on the analysis of our historical data. We and other airline industry participants have consistently applied this accounting method to estimate revenue from forfeited tickets at the date of travel. Estimated future refunds and exchanges included in the air traffic liability are routinely evaluated based on subsequent activity to validate the accuracy of our estimates. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are included in passenger revenue during the period in which the evaluations are completed. Regional carriers provide scheduled air transportation under the brand name American Eagle. We classify revenues generated from transportation on these carriers as regional passenger revenues. Liabilities related to tickets sold by us for travel on these air carriers is also included in our air traffic liability and are subsequently recognized as revenue in the same manner as described above. Passenger Taxes and Fees Various taxes and fees assessed on the sale of tickets to end customers are collected by us as an agent and remitted to taxing authorities. These taxes and fees have been presented on a net basis in the accompanying consolidated statements of operations and recorded as a liability until remitted to the appropriate taxing authority. Cargo Revenue Cargo revenue is recognized when we provide the transportation. Other Revenue Other revenue includes revenue associated with marketing services provided to our business partners as part of our loyalty program, baggage fees, ticketing change fees, airport clubs and inflight services. The accounting and recognition for the loyalty program marketing services are discussed in Note 1(i) above. Baggage fees, ticketing change fees, airport clubs and inflight service revenues are recognized when we provide the service. |
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Maintenance, Materials and Repairs | (k) Maintenance, Materials and Repairs Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred, except costs incurred for maintenance and repair under flight hour maintenance contract agreements, which are accrued based on contractual terms when an obligation exists. |
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Selling Expenses | (l) Selling Expenses Selling expenses include credit card fees, commissions, computerized reservations systems fees and advertising. Advertising costs are expensed as incurred. |
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Share-based Compensation | (m) Share-based Compensation We account for our share-based compensation expense based on the fair value of the stock award at the time of grant, which is recognized ratably over the vesting period of the stock award. Certain awards have performance conditions that must be achieved prior to vesting and are expensed based on the expected achievement at each reporting period. The fair value of stock appreciation rights is estimated using a Black-Scholes option pricing model. The fair value of restricted stock units is based on the market price of the underlying shares of common stock on the date of grant. See Note 14 for further discussion of share-based compensation. |
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Deferred Gains and Credits, Net | (n) Deferred Gains and Credits, Net Included within deferred gains and credits, net are amounts deferred and amortized into future periods associated with the adjustment of leases to fair value in connection with the application of acquisition accounting, deferred gains on the sale-leaseback of aircraft and certain vendor incentives. We periodically receive vendor incentives in connection with acquisition of aircraft and engines. These credits are deferred until aircraft and engines are delivered and then applied as a reduction to the cost of the related equipment. |
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Foreign Currency Gains and Losses | (o) Foreign Currency Gains and Losses Foreign currency gains and losses are recorded as part of other nonoperating expense, net in our consolidated statements of operations. |
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Other Operating Expenses | (p) Other Operating Expenses Other operating expenses includes costs associated with ground and cargo handling, crew travel, aircraft food and catering, passenger accommodation, airport security, international navigation fees and certain general and administrative expenses. |
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Regional Expenses | (q) Regional Expenses Expenses associated with American Eagle operations are classified as regional expenses on the consolidated statements of operations. |
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Recent Accounting Pronouncements | (r) Recent Accounting Pronouncements Standards Effective for 2018 Reporting Periods Effective January 1, 2018, we are adopting the accounting pronouncements described below. The adoption and related required disclosures will be reported in our first quarter 2018 Quarterly Report on Form 10-Q. ASU 2014-09: Revenue from Contracts with Customers (Topic 606) (the New Revenue Standard) The New Revenue Standard applies to all companies that enter into contracts with customers to transfer goods or services. We are adopting the New Revenue Standard using the full retrospective method, which results in the recast of each prior reporting period presented. The adoption of the New Revenue Standard will impact our accounting for outstanding mileage credits earned through travel by AAdvantage loyalty program members. There is no change in accounting for sales of mileage credits to co-branded card or other partners as those are currently reported in accordance with the New Revenue Standard. Through December 31, 2017, we used the incremental cost method to account for the portion of our loyalty program liability related to mileage credits earned through travel, which were valued based on the estimated incremental cost of carrying one additional passenger (see (i) Loyalty Program above). The New Revenue Standard requires us to change our policy to the deferred revenue method and apply a relative selling price approach whereby a portion of each passenger ticket sale attributable to mileage credits earned is deferred and recognized in passenger revenue upon future mileage redemption. The value of the earned mileage credits is materially greater under the deferred revenue method than the value attributed to these mileage credits under the incremental cost method. The New Revenue Standard will also require certain reclassifications, principally the reclassification of certain ancillary revenues previously classified and reported as other revenue to passenger revenue and as applicable to cargo revenue. Additionally, the New Revenue Standard requires a gross presentation on the face of our statement of operations for certain revenues and expenses that had previously been presented on a net basis. See recast 2017 statement of operations and balance sheet data presented below for the expected effects of adoption. ASU 2017-07: Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (the New Retirement Standard) The New Retirement Standard requires all components of our net periodic benefit cost (income), with the exception of service cost, previously reported within operating expenses as salaries, wages and benefits, to be reclassified and reported within nonoperating income (expense). The New Retirement Standard is required to be applied retrospectively, which results in the recast of each prior reporting period presented. The adoption of the New Retirement Standard has no impact on pre-tax income or net income reported. See recast 2017 statement of operations data presented below for the expected effects of adoption. ASU 2016-01: Financial Instruments - Overall (Subtopic 825-10) This ASU makes several modifications to Subtopic 825-10, including the elimination of the available-for-sale classification of equity investments, and it requires equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income. This standard is applied prospectively as of the beginning of the year of adoption. The adoption of this standard is not expected to have a material impact on our consolidated financial statements. ASU 2016-18: Statement of Cash Flows (Topic 230): Restricted Cash This ASU requires that the change in total cash, cash at beginning of period and cash at end of period on the statement of cash flows include restricted cash and restricted cash equivalents and also requires companies who report cash and restricted cash separately on the balance sheet to reconcile those amounts to the statement of cash flows. This standard is required to be applied retrospectively, which results in the recast of each prior reporting period statement of cash flows presented. The adoption of this standard is not expected to have a material impact on our consolidated financial statements. Impacts to 2017 Results The expected effects of adoption of the New Revenue Standard and New Retirement Standard to our statement of operations for the twelve months ended December 31, 2017 are as follows:
The expected effects of adoption of the New Revenue Standard to our December 31, 2017 balance sheet are as follows:
Standards Effective for 2019 Reporting Periods ASU 2016-02: Leases (Topic 842) (the New Lease Standard) The New Lease Standard requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet and aligns many of the underlying principles of the new lessor model with those in the New Revenue Standard. The New Lease Standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We expect we will adopt the New Lease Standard effective January 1, 2019. Entities are required to adopt the New Lease Standard using a modified retrospective approach, which results in the recast of each prior reporting period presented, for all leases existing at or commencing after the date of initial application with an option to use certain practical expedients. We are currently evaluating how the adoption of the New Lease Standard will impact our consolidated financial statements. Interpretations are on-going and could have a material impact on our implementation. Currently, we expect that the adoption of the New Lease Standard will have a material impact on our consolidated balance sheet due to the recognition of right-of-use assets and lease liabilities principally for certain leases currently accounted for as operating leases. |
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American Airlines, Inc. [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | (a) Basis of Presentation American Airlines, Inc. (American) is a Delaware corporation whose primary business activity is the operation of a major network air carrier. American is the principal wholly-owned subsidiary of American Airlines Group Inc. (AAG), which owns all of American’s outstanding common stock, par value $1.00 per share. On December 9, 2013, a subsidiary of AMR Corporation (AMR) merged with and into US Airways Group, Inc. (US Airways Group), a Delaware corporation, which survived as a wholly-owned subsidiary of AAG, and AAG emerged from Chapter 11 (the Merger). Upon closing of the Merger and emergence from Chapter 11, AMR changed its name to American Airlines Group Inc. On December 30, 2015, in order to simplify AAG’s internal corporate structure, US Airways, Inc. (US Airways), a wholly-owned subsidiary of US Airways Group, merged with and into American, with American as the surviving corporation. All significant intercompany transactions have been eliminated. The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The most significant areas of judgment relate to passenger revenue recognition, impairment of goodwill, impairment of long-lived and intangible assets, the loyalty program, valuation allowance for deferred tax assets, as well as pension and retiree medical and other postretirement benefits. |
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Short-term Investments | (b) Short-term Investments Short-term investments are classified as available-for-sale and stated at fair value. Realized gains and losses are recorded in nonoperating expense on the consolidated statement of operations. Unrealized gains and losses are recorded in accumulated other comprehensive loss on the consolidated balance sheets. |
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Restricted Cash and Short-term Investments | (c) Restricted Cash and Short-term Investments American has restricted cash and short-term investments related primarily to collateral held to support workers’ compensation obligations. |
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Aircraft Fuel, Spare Parts, and Supplies, Net | (d) Aircraft Fuel, Spare Parts and Supplies, Net Aircraft fuel is recorded on a first-in, first-out basis. Spare parts and supplies are recorded at average costs less an allowance for obsolescence. These items are expensed when used. |
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Operating Property and Equipment | (e) Operating Property and Equipment Operating property and equipment is recorded at cost and depreciated or amortized to residual values over the asset’s estimated useful life or the lease term, whichever is less, using the straight-line method. Residual values for aircraft, engines and related rotable parts are generally 5% to 10% of original cost. Costs of major improvements that enhance the usefulness of the asset are capitalized and depreciated or amortized over the estimated useful life of the asset or the lease term, whichever is less. The estimated useful lives for the principal property and equipment classifications are as follows:
American assesses impairment on operating property and equipment when events and circumstances indicate that the assets may be impaired. An asset or group of assets is considered impaired when the undiscounted cash flows estimated to be generated by the assets are less than the carrying amount of the assets and the net book value of the assets exceeds their estimated fair value. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less the cost to sell. |
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Income Taxes | (f) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are recorded net as noncurrent deferred income taxes. American provides a valuation allowance for its deferred tax assets when it is more likely than not that some portion, or all of its deferred tax assets, will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. American considers all available positive and negative evidence and makes certain assumptions in evaluating the realizability of its deferred tax assets. Many factors are considered that impact American’s assessment of future profitability, including conditions which are beyond American’s control, such as the health of the economy, the level and volatility of fuel prices and travel demand. |
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Goodwill | (g) Goodwill Goodwill represents the excess of the purchase price over the fair value of the net assets acquired and liabilities assumed. Goodwill is not amortized but assessed for impairment annually on October 1st or more frequently if events or circumstances indicate that goodwill may be impaired. American has one consolidated reporting unit. Goodwill is assessed for impairment by initially performing a qualitative assessment and, if necessary, then comparing the fair value of the reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit is less than the carrying value, a second step is performed to determine the implied fair value of goodwill. If the implied fair value of goodwill is lower than its carrying value, an impairment charge equal to the difference is recorded. Based upon American’s annual assessment, there was no goodwill impairment in 2017. The carrying value of the goodwill on American’s consolidated balance sheets was $4.1 billion as of December 31, 2017 and 2016. |
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Other Intangibles, Net | (h) Other Intangibles, Net Intangible assets consist primarily of domestic airport slots, customer relationships, marketing agreements, international slots and route authorities, airport gate leasehold rights and tradenames. Finite-Lived Intangible Assets Finite-lived intangible assets are amortized over their respective estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The following table provides information relating to American’s amortizable intangible assets as of December 31, 2017 and 2016 (in millions):
Certain domestic airport slots and airport gate leasehold rights are amortized on a straight-line basis over 25 years. The customer relationships and marketing agreements were identified as intangible assets subject to amortization and are amortized on a straight-line basis over approximately nine years and 30 years, respectively. Tradenames are fully amortized. American recorded amortization expense related to these intangible assets of $44 million, $76 million and $55 million for the years ended December 31, 2017, 2016 and 2015, respectively. American expects to record annual amortization expense for these intangible assets as follows (in millions):
Indefinite-Lived Intangible Assets Indefinite-lived intangible assets include certain domestic airport slots at American’s hubs and international slots and route authorities. Indefinite-lived intangible assets are not amortized but instead are assessed for impairment annually on October 1st or more frequently if events or circumstances indicate that the asset may be impaired. As of December 31, 2017 and 2016, American had $1.9 billion and $1.8 billion, respectively, of indefinite-lived intangible assets on its consolidated balance sheets. Indefinite-lived intangible assets are assessed for impairment by initially performing a qualitative assessment to determine whether American believes it is more likely than not that an asset has been impaired. If American believes impairment has occurred, American then evaluates for impairment by comparing the estimated fair value of assets to the carrying value. An impairment charge is recognized if the asset’s estimated fair value is less than its carrying value. Based upon American’s annual assessment, there was no indefinite-lived intangible asset impairment in 2017. |
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Loyalty Program | (i) Loyalty Program American currently operates the loyalty program, AAdvantage. This program awards mileage credits to passengers who fly on American, any oneworld airline or other partner airlines, or by using the services of other program participants, such as the Citi and Barclaycard US co-branded credit cards, hotels and car rental companies. Mileage credits can be redeemed for travel on American or other participating partner airlines. Through December 31, 2017, American used the incremental cost method to account for the portion of its loyalty program liability incurred when AAdvantage members earn mileage credits by flying on American, any oneworld airline or other partner airlines. American has an obligation to provide future travel when these mileage credits are redeemed and therefore have recorded a liability for mileage credits outstanding. The incremental cost liability includes all mileage credits, even mileage credits for members whose account balances have not yet reached the minimum level required to redeem an award. Mileage credits are subject to expiration. The liability for outstanding mileage credits is valued based on the estimated incremental cost of carrying one additional passenger. The estimated incremental cost primarily includes unit costs incurred for fuel, food and insurance as well as fees incurred when travel awards are redeemed on partner airlines. In calculating the liability, American estimates how many mileage credits will never be redeemed for travel and excludes those mileage credits from the estimate of the liability. Estimates are also made for the number of miles that will be used per award redemption and the number of travel awards that will be redeemed on partner airlines. These costs and estimates are based on American’s historical program experience as well as consideration of enacted program changes, as applicable. Changes in the liability resulting from members earning additional mileage credits or changes in estimates are recorded in the consolidated statements of operations as a part of passenger revenue. As of December 31, 2017 and 2016, the liability for outstanding mileage credits accounted for under the incremental cost method was $677 million and $669 million, respectively, and is included on the consolidated balance sheets within loyalty program liability. American also sells loyalty program mileage credits to participating airline partners and non-airline business partners, such as the Citi and Barclaycard US co-branded credit cards. Sales of mileage credits to non-airline business partners is comprised of two components, transportation and marketing. American accounts for mileage sales under its agreements with non-airline business partners in accordance with ASU 2009-13, “Revenue Recognition (Topic 605) — Multiple-Deliverable Revenue Arrangements.” In accordance with ASU 2009-13, American allocates the consideration received from the sale of mileage credits based on the relative selling price of each product or service delivered. As a result of American’s co-branded credit card program agreements with Citi and Barclaycard US that it entered into in 2016, American identified the following revenue elements in these co-branded credit card agreements: the transportation component; and the use of the American brand including access to loyalty program member lists, advertising and other travel related benefits (collectively, the marketing component). The transportation component represents the estimated selling price of future travel awards and is determined using historical transaction information, including information related to customer redemption patterns. The transportation component is deferred based on its relative selling price and is amortized into passenger revenue on a straight-line basis over the period in which the mileage credits are expected to be redeemed for travel. As of December 31, 2017 and 2016, American had $2.1 billion in deferred revenue from the sale of mileage credits recorded within loyalty program liability on its consolidated balance sheets. The services under the marketing component are provided periodically, but no less than monthly. Accordingly, the marketing component is considered earned and recognized in other revenues in the period of the mileage sale. For the years ended December 31, 2017, 2016 and 2015, the marketing component of mileage sales and other marketing related payments included in other revenues was approximately $2.2 billion, $1.9 billion and $1.7 billion, respectively. |
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Revenue | (j) Revenue Passenger Revenue Passenger revenue is recognized when transportation is provided. Ticket sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on the consolidated balance sheets. The air traffic liability represents tickets sold for future travel dates and estimated future refunds and exchanges of tickets sold for past travel dates. The balance in the air traffic liability fluctuates throughout the year based on seasonal travel patterns. American’s air traffic liability was $4.0 billion and $3.9 billion as of December 31, 2017 and 2016, respectively. The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. Due to complex pricing structures, refund and exchange policies, and interline agreements with other airlines, certain amounts are recognized in passenger revenue using estimates regarding both the timing of the revenue recognition and the amount of revenue to be recognized. These estimates are generally based on the analysis of American’s historical data. American and other airline industry participants have consistently applied this accounting method to estimate revenue from forfeited tickets at the date of travel. Estimated future refunds and exchanges included in the air traffic liability are routinely evaluated based on subsequent activity to validate the accuracy of American’s estimates. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are included in passenger revenue during the period in which the evaluations are completed. Regional carriers provide scheduled air transportation under the brand name American Eagle. American classifies revenues generated from transportation on these carriers as regional passenger revenues. Liabilities related to tickets sold by American for travel on these air carriers are also included in American’s air traffic liability and are subsequently recognized as revenue in the same manner as described above. Passenger Taxes and Fees Various taxes and fees assessed on the sale of tickets to end customers are collected by American as an agent and remitted to taxing authorities. These taxes and fees have been presented on a net basis in the accompanying consolidated statements of operations and recorded as a liability until remitted to the appropriate taxing authority. Cargo Revenue Cargo revenue is recognized when American provides the transportation. Other Revenue Other revenue includes revenue associated with marketing services provided to American’s business partners as part of its loyalty program, baggage fees, ticketing change fees, airport clubs and inflight services. The accounting and recognition for the loyalty program marketing services are discussed in Note 1(i) above. Baggage fees, ticketing change fees, airport clubs and inflight service revenues are recognized when American provides the service. |
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Maintenance, Materials and Repairs | (k) Maintenance, Materials and Repairs Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred, except costs incurred for maintenance and repair under flight hour maintenance contract agreements, which are accrued based on contractual terms when an obligation exists. |
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Selling Expenses | (l) Selling Expenses Selling expenses include credit card fees, commissions, computerized reservations systems fees and advertising. Advertising costs are expensed as incurred. |
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Share-based Compensation | (m) Share-based Compensation American accounts for its share-based compensation expense based on the fair value of the stock award at the time of grant, which is recognized ratably over the vesting period of the stock award. Certain awards have performance conditions that must be achieved prior to vesting and are expensed based on the expected achievement at each reporting period. The fair value of stock appreciation rights is estimated using a Black-Scholes option pricing model. The fair value of restricted stock units is based on the market price of the underlying shares of common stock on the date of grant. See Note 12 for further discussion of share-based compensation. |
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Deferred Gains and Credits, Net | (n) Deferred Gains and Credits, Net Included within deferred gains and credits, net are amounts deferred and amortized into future periods associated with the adjustment of leases to fair value in connection with the application of acquisition accounting, deferred gains on the sale-leaseback of aircraft and certain vendor incentives. American periodically receives vendor incentives in connection with acquisition of aircraft and engines. These credits are deferred until aircraft and engines are delivered and then applied as a reduction to the cost of the related equipment. |
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Foreign Currency Gains and Losses | (o) Foreign Currency Gains and Losses Foreign currency gains and losses are recorded as part of other nonoperating expense, net in American’s consolidated statements of operations. |
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Other Operating Expenses | (p) Other Operating Expenses Other operating expenses includes costs associated with ground and cargo handling, crew travel, aircraft food and catering, passenger accommodation, airport security, international navigation fees and certain general and administrative expenses. |
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Regional Expenses | (q) Regional Expenses Expenses associated with American Eagle operations are classified as regional expenses on the consolidated statements of operations. Regional expenses consist of the following (in millions):
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Recent Accounting Pronouncements | (r) Recent Accounting Pronouncements Standards Effective for 2018 Reporting Periods Effective January 1, 2018, American is adopting the accounting pronouncements described below. The adoption and related required disclosures will be reported in American’s first quarter 2018 Quarterly Report on Form 10-Q. ASU 2014-09: Revenue from Contracts with Customers (Topic 606) (the New Revenue Standard) The New Revenue Standard applies to all companies that enter into contracts with customers to transfer goods or services. American is adopting the New Revenue Standard using the full retrospective method, which results in the recast of each prior reporting period presented. The adoption of the New Revenue Standard will impact American’s accounting for outstanding mileage credits earned through travel by AAdvantage loyalty program members. There is no change in accounting for sales of mileage credits to co-branded card or other partners as those are currently reported in accordance with the New Revenue Standard. Through December 31, 2017, American used the incremental cost method to account for the portion of its loyalty program liability related to mileage credits earned through travel, which were valued based on the estimated incremental cost of carrying one additional passenger (see (i) Loyalty Program above). The New Revenue Standard requires American to change its policy to the deferred revenue method and apply a relative selling price approach whereby a portion of each passenger ticket sale attributable to mileage credits earned is deferred and recognized in passenger revenue upon future mileage redemption. The value of the earned mileage credits is materially greater under the deferred revenue method than the value attributed to these mileage credits under the incremental cost method. The New Revenue Standard will also require certain reclassifications, principally the reclassification of certain ancillary revenues previously classified and reported as other revenue to passenger revenue and as applicable to cargo revenue. Additionally, the New Revenue Standard requires a gross presentation on the face of American’s statement of operations for certain revenues and expenses that had previously been presented on a net basis. See recast 2017 statement of operations and balance sheet data presented below for the expected effects of adoption. ASU 2017-07: Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (the New Retirement Standard) The New Retirement Standard requires all components of American’s net periodic benefit cost (income), with the exception of service cost, previously reported within operating expenses as salaries, wages and benefits, to be reclassified and reported within nonoperating income (expense). The New Retirement Standard is required to be applied retrospectively, which results in the recast of each prior reporting period presented. The adoption of the New Retirement Standard has no impact on pre-tax income or net income reported. See recast 2017 statement of operations data presented below for the expected effects of adoption. ASU 2016-01: Financial Instruments - Overall (Subtopic 825-10) This ASU makes several modifications to Subtopic 825-10, including the elimination of the available-for-sale classification of equity investments, and it requires equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income. This standard is applied prospectively as of the beginning of the year of adoption. The adoption of this standard is not expected to have a material impact on American’s consolidated financial statements. ASU 2016-18: Statement of Cash Flows (Topic 230): Restricted Cash This ASU requires that the change in total cash, cash at beginning of period and cash at end of period on the statement of cash flows include restricted cash and restricted cash equivalents and also requires companies who report cash and restricted cash separately on the balance sheet to reconcile those amounts to the statement of cash flows. This standard is required to be applied retrospectively, which results in the recast of each prior reporting period statement of cash flows presented. The adoption of this standard is not expected to have a material impact on American’s consolidated financial statements. Impacts to 2017 Results The expected effects of adoption of the New Revenue Standard and New Retirement Standard to American’s statement of operations for the twelve months ended December 31, 2017 are as follows:
The expected effects of adoption of the New Revenue Standard to American’s December 31, 2017 balance sheet are as follows:
Standards Effective for 2019 Reporting Periods ASU 2016-02: Leases (Topic 842) (the New Lease Standard) The New Lease Standard requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet and aligns many of the underlying principles of the new lessor model with those in the New Revenue Standard. The New Lease Standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. American expects it will adopt the New Lease Standard effective January 1, 2019. Entities are required to adopt the New Lease Standard using a modified retrospective approach, which results in the recast of each prior reporting period presented, for all leases existing at or commencing after the date of initial application with an option to use certain practical expedients. American is currently evaluating how the adoption of the New Lease Standard will impact its consolidated financial statements. Interpretations are on-going and could have a material impact on its implementation. Currently, American expects that the adoption of the New Lease Standard will have a material impact on its consolidated balance sheet due to the recognition of right-of-use assets and lease liabilities principally for certain leases currently accounted for as operating leases. |
Basis of Presentation and Summary of Significant Accounting Policies (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Useful Lives of Principal Property and Equipment | The estimated useful lives for the principal property and equipment classifications are as follows:
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Schedule of Amortizable Intangible Assets | The following table provides information relating to our amortizable intangible assets as of December 31, 2017 and 2016 (in millions):
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Schedule of Future Amortization Expense | We expect to record annual amortization expense for these intangible assets as follows (in millions):
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Components of Regional Expenses | Regional expenses consist of the following (in millions):
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Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The expected effects of adoption of the New Revenue Standard and New Retirement Standard to our statement of operations for the twelve months ended December 31, 2017 are as follows:
The expected effects of adoption of the New Revenue Standard to our December 31, 2017 balance sheet are as follows:
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American Airlines, Inc. [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Useful Lives of Principal Property and Equipment | The estimated useful lives for the principal property and equipment classifications are as follows:
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Schedule of Amortizable Intangible Assets | The following table provides information relating to American’s amortizable intangible assets as of December 31, 2017 and 2016 (in millions):
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Schedule of Future Amortization Expense | American expects to record annual amortization expense for these intangible assets as follows (in millions):
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Components of Regional Expenses | Regional expenses consist of the following (in millions):
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Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The expected effects of adoption of the New Revenue Standard and New Retirement Standard to American’s statement of operations for the twelve months ended December 31, 2017 are as follows:
The expected effects of adoption of the New Revenue Standard to American’s December 31, 2017 balance sheet are as follows:
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Special Items, Net (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Restructuring Cost and Reserve [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Special Items, Net Included in Consolidated Statements of Operations | Special items, net on the consolidated statements of operations consisted of the following (in millions):
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American Airlines, Inc. [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Special Items, Net Included in Consolidated Statements of Operations | Special items, net on the consolidated statements of operations consisted of the following (in millions):
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Earnings Per Common Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Earnings per Common Share | The following table sets forth the computation of basic and diluted earnings per common share (EPS) (in millions, except share and per share amounts):
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Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | Long-term debt and capital lease obligations included in the consolidated balance sheets consisted of (in millions):
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Schedule of Credit Facilities | Certain details of our 2013, 2014, April 2016 and December 2016 Credit Facilities (collectively referred to as the Credit Facilities) are shown in the table below as of December 31, 2017:
The table below shows the maximum availability under revolving credit facilities, all of which were undrawn, as of December 31, 2017 (in millions):
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Schedule of Maturities of Long-Term Debt and Capital Lease Obligations | At December 31, 2017, the maturities of long-term debt and capital lease obligations are as follows (in millions):
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Schedule of Collateral Coverage Tests | Specifically, we are required to meet certain collateral coverage tests on an annual basis for four credit facilities, as described below:
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Secured Debt [Member] | Enhanced Equipment Trust Certificates (EETC) [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | December 31, 2017, is set forth in the table below.
Certain information regarding the 2016-3 EETC equipment notes, as of December 31, 2017, is set forth in the table below.
Certain information regarding the 2017-1 EETC equipment notes, as of December 31, 2017, is set forth in the table below.
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Unsecured Debt [Member] | Senior Notes [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | The details of our 6.125%, 5.50% and 4.625% senior notes are shown in the table below as of December 31, 2017:
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American Airlines, Inc. [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | Long-term debt and capital lease obligations included in the consolidated balance sheets consisted of (in millions):
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Schedule of Credit Facilities | Certain details of American’s 2013, 2014, April 2016 and December 2016 Credit Facilities (collectively referred to as the Credit Facilities) are shown in the table below as of December 31, 2017:
The table below shows the maximum availability under revolving credit facilities, all of which were undrawn, as of December 31, 2017 (in millions):
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Schedule of Maturities of Long-Term Debt and Capital Lease Obligations | At December 31, 2017, the maturities of long-term debt and capital lease obligations are as follows (in millions):
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Schedule of Collateral Coverage Tests | Specifically, American is required to meet certain collateral coverage tests on an annual basis for four credit facilities, as described below:
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American Airlines, Inc. [Member] | Secured Debt [Member] | Enhanced Equipment Trust Certificates (EETC) [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | Certain information regarding the 2017-1 EETC equipment notes, as of December 31, 2017, is set forth in the table below.
Certain information regarding the 2017-2 EETC equipment notes and the remaining escrowed proceeds of the 2017-2 EETCs, as of December 31, 2017, is set forth in the table below.
Certain information regarding the 2016-3 EETC equipment notes, as of December 31, 2017, is set forth in the table below.
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Income Tax Provision (Benefit) | The significant components of the income tax provision (benefit) were (in millions):
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Computation of Income Tax Provision (Benefit) | The income tax provision (benefit) differed from amounts computed at the statutory federal income tax rate as follows (in millions):
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Deferred Tax Assets and Liabilities | The components of our deferred tax assets and liabilities were (in millions):
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American Airlines, Inc. [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Income Tax Provision (Benefit) | The significant components of the income tax provision (benefit) were (in millions):
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Computation of Income Tax Provision (Benefit) | The income tax provision (benefit) differed from amounts computed at the statutory federal income tax rate as follows (in millions):
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Deferred Tax Assets and Liabilities | The components of American’s deferred tax assets and liabilities were (in millions):
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Fair Value Measurements and Other Investments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
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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):
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American Airlines, Inc. [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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):
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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):
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Employee Benefit Plans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Projected Benefit Obligations | The following tables provide a reconciliation of the changes in the pension and retiree medical and other postretirement benefits obligations, fair value of plan assets and a statement of funded status as of December 31, 2017 and 2016:
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Schedule of Changes in Fair Value of Plan Assets |
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Schedule of Amounts Recognized in Consolidated Balance Sheets | Balance Sheet Position
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Schedule of Amounts Recognized in Other Comprehensive Income |
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Schedule of Accumulated Benefit Obligations Exceeding Fair Value of Plan Assets | Plans with Accumulated Benefit Obligations Exceeding Fair Value of Plan Assets
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Components of Net Periodic Benefit Cost (Income) | Net Periodic Benefit Cost (Income)
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Schedule of Assumptions Used to Determine Benefit Obligations and Net Periodic Benefit Cost | The following actuarial assumptions were used to determine our benefit obligations and net periodic benefit cost for the periods presented:
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Schedule of One Percentage Point Change in Assumed Health Care Cost Trend Rates | A one percentage point change in the assumed health care cost trend rates would have the following effects on our retiree medical and other postretirement benefits plans (in millions):
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Schedule of Expected Future Service Benefit Payments | The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (approximately, in millions):
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Schedule of Allocation of Plan Assets | The current strategic target asset allocation is as follows:
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Changes in Fair Value Measurements of Level 3 Investments | Changes in fair value measurements of Level 3 investments during the year ended December 31, 2017, were as follows (in millions):
Changes in fair value measurements of Level 3 investments during the year ended December 31, 2016, were as follows (in millions):
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Pension Benefits [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Allocation of Plan Assets | The fair value of our pension plan assets at December 31, 2017 and 2016, by asset category, are as follows (in millions):
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Retiree Medical And Other Postretirement Benefits [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Allocation of Plan Assets | The fair value of our retiree medical and other postretirement benefits plans assets at December 31, 2017 by asset category, were as follows (in millions):
The fair value of our retiree medical and other postretirement benefits plans assets at December 31, 2016 by asset category, were as follows (in millions):
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American Airlines, Inc. [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Projected Benefit Obligations | The following tables provide a reconciliation of the changes in the pension and retiree medical and other postretirement benefits obligations, fair value of plan assets and a statement of funded status as of December 31, 2017 and 2016:
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Schedule of Changes in Fair Value of Plan Assets |
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Schedule of Amounts Recognized in Consolidated Balance Sheets |
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Schedule of Amounts Recognized in Other Comprehensive Income |
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Schedule of Accumulated Benefit Obligations Exceeding Fair Value of Plan Assets | Plans with Accumulated Benefit Obligations Exceeding Fair Value of Plan Assets
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Components of Net Periodic Benefit Cost (Income) |
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Schedule of Assumptions Used to Determine Benefit Obligations and Net Periodic Benefit Cost | The following actuarial assumptions were used to determine American’s benefit obligations and net periodic benefit cost for the periods presented:
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Schedule of One Percentage Point Change in Assumed Health Care Cost Trend Rates | A one percentage point change in the assumed health care cost trend rates would have the following effects on American’s retiree medical and other postretirement benefits plans (in millions):
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Schedule of Expected Future Service Benefit Payments | The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (approximately, in millions):
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Schedule of Allocation of Plan Assets | The current strategic target asset allocation is as follows:
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Changes in Fair Value Measurements of Level 3 Investments | Changes in fair value measurements of Level 3 investments during the year ended December 31, 2017, were as follows (in millions):
Changes in fair value measurements of Level 3 investments during the year ended December 31, 2016, were as follows (in millions):
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American Airlines, Inc. [Member] | Pension Benefits [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Allocation of Plan Assets | The fair value of American’s pension plan assets at December 31, 2017 and 2016, by asset category, are as follows (in millions):
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American Airlines, Inc. [Member] | Retiree Medical And Other Postretirement Benefits [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Allocation of Plan Assets | The fair value of American’s retiree medical and other postretirement benefits plans assets at December 31, 2017 by asset category, were as follows (in millions):
The fair value of American’s retiree medical and other postretirement benefits plans assets at December 31, 2016 by asset category, were as follows (in millions):
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Accumulated Other Comprehensive Income (Loss) (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accumulated Other Comprehensive Income (Loss) | The components of accumulated other comprehensive income (loss) (AOCI) are as follows (in millions):
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Reclassifications out of Accumulated Other Comprehensive Income (Loss) | Reclassifications out of AOCI for the years ended December 31, 2017 and 2016 are as follows (in millions):
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American Airlines, Inc. [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accumulated Other Comprehensive Income (Loss) | The components of accumulated other comprehensive income (loss) (AOCI) are as follows (in millions):
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Reclassifications out of Accumulated Other Comprehensive Income (Loss) | Reclassifications out of AOCI for the years ended December 31, 2017 and 2016 are as follows (in millions):
|
Commitments, Contingencies and Guarantees (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Purchase Commitments | Under all of our aircraft and engine purchase agreements, our total future commitments as of December 31, 2017 are expected to be as follows (approximately, in millions):
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Future Minimum Operating Lease Payments | As of December 31, 2017, obligations under noncancellable operating leases for future minimum lease payments are as follows (approximately, in millions):
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Minimum Fixed Obligations under Capacity Purchase Agreements with Third-Party Regional Carriers | As of December 31, 2017, American’s minimum fixed obligations under its capacity purchase agreements with third-party regional carriers are as follows (approximately, in millions):
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American Airlines, Inc. [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Purchase Commitments | Under all of American’s aircraft and engine purchase agreements, its total future commitments as of December 31, 2017 are expected to be as follows (approximately, in millions):
|
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Future Minimum Operating Lease Payments | As of December 31, 2017, obligations under noncancellable operating leases for future minimum lease payments are as follows (approximately, in millions):
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Minimum Fixed Obligations under Capacity Purchase Agreements with Third-Party Regional Carriers | As of December 31, 2017, American’s minimum fixed obligations under its capacity purchase agreements with third-party regional carriers are as follows (approximately, in millions):
|
Supplemental Cash Flow Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Significant Noncash Transactions [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Flow Information and Non-Cash Investing and Financing Activities | Supplemental disclosure of cash flow information and non-cash investing and financing activities are as follows (in millions):
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American Airlines, Inc. [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Significant Noncash Transactions [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Flow Information and Non-Cash Investing and Financing Activities | Supplemental disclosure of cash flow information and non-cash investing and financing activities are as follows (in millions):
|
Operating Segments and Related Disclosures (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Revenues by Geographic Region | Our operating revenues by geographic region as defined by the U.S. Department of Transportation (DOT) are summarized below (in millions):
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American Airlines, Inc. [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Revenues by Geographic Region | American’s operating revenues by geographic region as defined by the U.S. Department of Transportation (DOT) are summarized below (in millions):
|
Share-based Compensation (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-Settled RSU Award Activity | Stock-settled RSU award activity for all plans for the years ended December 31, 2017, 2016 and 2015 is as follows:
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American Airlines, Inc. [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-Settled RSU Award Activity | Stock-settled RSU award activity for all plans for the years ended December 31, 2017, 2016 and 2015 is as follows:
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Valuation and Qualifying Accounts (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Valuation and Qualifying Accounts Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Valuation and Qualifying Accounts |
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American Airlines, Inc. [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Valuation and Qualifying Accounts |
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Quarterly Financial Data (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Selected Quarterly Financial Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summarized Financial Data | Unaudited summarized financial data by quarter for 2017 and 2016 (in millions, except share and per share amounts):
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American Airlines, Inc. [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summarized Financial Data | Unaudited summarized financial data by quarter for 2017 and 2016 (in millions):
|
Transactions with Related Parties (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
American Airlines, Inc. [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Net Receivables (Payables) to Related Parties | The following represents the net receivables (payables) to related parties (in millions):
|
Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Future Amortization Expense (Detail) - USD ($) $ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
2018 | $ 41 | |
2019 | 41 | |
2020 | 41 | |
2021 | 41 | |
2022 | 41 | |
2023 and thereafter | 115 | |
Total | 320 | $ 364 |
American Airlines, Inc. [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
2018 | 41 | |
2019 | 41 | |
2020 | 41 | |
2021 | 41 | |
2022 | 41 | |
2023 and thereafter | 115 | |
Total | $ 320 | $ 364 |
Special Items - Additional Disclosures (Detail) - $ / Employees |
3 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2017 |
|
Restructuring Cost and Reserve [Line Items] | ||
Tax reform bonus, amount per employee | 1,000 | |
Mainline [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Tax reform bonus, amount per employee | 1,000 | |
American Airlines, Inc. [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Tax reform bonus, amount per employee | 1,000 | |
American Airlines, Inc. [Member] | Mainline [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Tax reform bonus, amount per employee | 1,000 |
Earnings (Loss) per Share - Computation of Basic and Diluted Earnings per Common Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Basic EPS: | |||||||||||
Net income | $ 258 | $ 624 | $ 803 | $ 234 | $ 289 | $ 737 | $ 950 | $ 700 | $ 1,919 | $ 2,676 | $ 7,610 |
Weighted average common shares outstanding | 477,165 | 484,772 | 490,818 | 503,902 | 514,571 | 525,415 | 563,000 | 606,245 | 489,164 | 552,308 | 668,393 |
Basic EPS (in dollars per share) | $ 0.54 | $ 1.29 | $ 1.64 | $ 0.46 | $ 0.56 | $ 1.40 | $ 1.69 | $ 1.15 | $ 3.92 | $ 4.85 | $ 11.39 |
Diluted EPS: | |||||||||||
Net income for purposes of computing diluted EPS | $ 1,919 | $ 2,676 | $ 7,610 | ||||||||
Share computation for diluted EPS (in thousands): | |||||||||||
Basic weighted average common shares outstanding | 477,165 | 484,772 | 490,818 | 503,902 | 514,571 | 525,415 | 563,000 | 606,245 | 489,164 | 552,308 | 668,393 |
Dilutive effect of stock awards | 2,528 | 3,791 | 18,962 | ||||||||
Diluted weighted average common shares outstanding | 479,382 | 486,625 | 492,965 | 507,797 | 518,358 | 528,510 | 566,040 | 611,488 | 491,692 | 556,099 | 687,355 |
Diluted EPS (in dollars per share) | $ 0.54 | $ 1.28 | $ 1.63 | $ 0.46 | $ 0.56 | $ 1.40 | $ 1.68 | $ 1.14 | $ 3.90 | $ 4.81 | $ 11.07 |
Restricted stock unit awards excluded from the calculation of diluted EPS because inclusion would be antidilutive | 328 | 1,429 | 764 |
Share Repurchase Programs and Dividends - Share Repurchase Programs (Detail) - USD ($) |
12 Months Ended | 42 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2017 |
|
Equity [Abstract] | ||||
Stock repurchase programs, authorized amount | $ 11,000,000,000 | $ 11,000,000,000 | ||
Stock repurchase programs, remaining authorized amount | $ 450,000,000 | $ 450,000,000 | ||
Stock repurchased (in shares) | 33,900,000 | 119,823,621 | 85,141,691 | 262,300,000 |
Aggregate stock repurchase price | $ 1,563,000,000 | $ 4,416,000,000 | $ 3,586,000,000 | $ 10,600,000,000 |
Average cost per share (in dollars per share) | $ 45.68 | $ 36.86 | $ 42.09 | $ 40.22 |
Share Repurchase Programs and Dividends - Dividends (Detail) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Equity [Abstract] | |||||||||||||||
Cash dividends declared (in dollars per share) | $ 0.10 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.40 | $ 0.40 | $ 0.40 |
Cash paid | $ 198 | $ 224 | $ 269 |
Debt - Additional Information (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2017
Aircraft
Transactions
| |
Debt Instrument [Line Items] | |
Number of jet aircraft committed to capital leases | Aircraft | 33 |
Collateral coverage tests, number of financing transactions | Transactions | 4 |
American Airlines, Inc. [Member] | |
Debt Instrument [Line Items] | |
Number of jet aircraft committed to capital leases | Aircraft | 33 |
Collateral coverage tests, number of financing transactions | Transactions | 4 |
Debt - Schedule of Maturities of Long-Term Debt and Capital Leases (Detail) $ in Millions |
Dec. 31, 2017
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
2018 | $ 2,598 |
2019 | 2,868 |
2020 | 4,069 |
2021 | 2,856 |
2022 | 1,288 |
2023 and thereafter | 11,622 |
Total | 25,301 |
American Airlines, Inc. [Member] | |
Debt Instrument [Line Items] | |
2018 | 2,098 |
2019 | 2,118 |
2020 | 3,563 |
2021 | 2,854 |
2022 | 1,286 |
2023 and thereafter | 11,602 |
Total | $ 23,521 |
Debt - Components of Long-Term Debt - Equipment Loans and Other Notes Payable Issued in 2016 (Detail) - Secured Debt [Member] - Equipment Loans and Other Notes Payable [Member] $ in Billions |
12 Months Ended |
---|---|
Dec. 31, 2017
USD ($)
| |
Debt Instrument [Line Items] | |
Proceeds from notes payable | $ 1.0 |
LIBOR [Member] | |
Debt Instrument [Line Items] | |
Long-term debt average interest rate | 3.08% |
American Airlines, Inc. [Member] | |
Debt Instrument [Line Items] | |
Proceeds from notes payable | $ 1.0 |
American Airlines, Inc. [Member] | LIBOR [Member] | |
Debt Instrument [Line Items] | |
Long-term debt average interest rate | 3.08% |
Debt - Details of Senior Notes (Detail) - Unsecured Debt [Member] |
Dec. 31, 2017
USD ($)
|
---|---|
Senior Notes 6.125% Due in 2018 [Member] | |
Debt Instrument [Line Items] | |
Principal amount | $ 500,000,000 |
Interest rate | 6.125% |
Senior Notes 5.50% Due in 2019 [Member] | |
Debt Instrument [Line Items] | |
Principal amount | $ 750,000,000 |
Interest rate | 5.50% |
Senior Notes 4.625% Due in 2020 [Member] | |
Debt Instrument [Line Items] | |
Principal amount | $ 500,000,000 |
Interest rate | 4.625% |
Debt - Components of Long-Term Debt - Senior Notes (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Unsecured Debt [Member] | Senior Notes [Member] | |
Debt Instrument [Line Items] | |
Redemption price percentage | 101.00% |
Income Taxes - Components of Income Tax Provision (Benefit) (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Current income tax provision: | |||
Federal | $ 0 | $ 0 | $ 0 |
State and Local | 24 | 12 | 20 |
Current income tax provision (benefit) | 24 | 12 | 20 |
Deferred income tax provision (benefit): | |||
Federal | 1,085 | 1,508 | (2,884) |
State and Local | 56 | 103 | (130) |
Deferred income tax provision (benefit) | 1,141 | 1,611 | (3,014) |
Income tax provision (benefit) | 1,165 | 1,623 | (2,994) |
American Airlines, Inc. [Member] | |||
Current income tax provision: | |||
Federal | 0 | 0 | 0 |
State and Local | 24 | 10 | 15 |
Current income tax provision (benefit) | 24 | 10 | 15 |
Deferred income tax provision (benefit): | |||
Federal | 1,235 | 1,559 | (3,407) |
State and Local | 63 | 93 | (60) |
Deferred income tax provision (benefit) | 1,298 | 1,652 | (3,467) |
Income tax provision (benefit) | $ 1,322 | $ 1,662 | $ (3,452) |
Income Taxes - Computation of Income Tax Provision (Benefit) (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Line Items] | |||
Statutory income tax provision | $ 1,079 | $ 1,505 | $ 1,616 |
State income tax provision, net of federal tax effect | 61 | 63 | 72 |
Book expenses (benefits) not deductible for tax purposes | 33 | 34 | 57 |
Bankruptcy administration expenses | 1 | 1 | 3 |
2017 Tax Act | (7) | 0 | 0 |
Change in valuation allowance | (3) | 7 | (4,742) |
Other, net | 1 | 13 | 0 |
Income tax provision (benefit) | 1,165 | 1,623 | (2,994) |
American Airlines, Inc. [Member] | |||
Income Tax Disclosure [Line Items] | |||
Statutory income tax provision | 1,135 | 1,555 | 1,635 |
State income tax provision, net of federal tax effect | 54 | 67 | 71 |
Book expenses (benefits) not deductible for tax purposes | 30 | 32 | 55 |
Bankruptcy administration expenses | 1 | 1 | 3 |
2017 Tax Act | 93 | 0 | 0 |
Change in valuation allowance | 4 | (1) | (5,216) |
Other, net | 5 | 8 | 0 |
Income tax provision (benefit) | $ 1,322 | $ 1,662 | $ (3,452) |
Risk Management - Additional Information (Detail) $ in Billions |
Dec. 31, 2017
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
Principal amount of long-term variable rate debt | $ 9.6 |
Variable Rate Debt [Member] | |
Debt Instrument [Line Items] | |
Weighted average effective interest rate on variable rate debt | 3.40% |
American Airlines, Inc. [Member] | |
Debt Instrument [Line Items] | |
Principal amount of long-term variable rate debt | $ 9.6 |
American Airlines, Inc. [Member] | Variable Rate Debt [Member] | |
Debt Instrument [Line Items] | |
Weighted average effective interest rate on variable rate debt | 3.40% |
Employee Benefit Plans - Schedule of One Percentage Point Change in Assumed Health Care Cost Trend Rates (Detail) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2017
USD ($)
| |
Defined Benefit Plan Disclosure [Line Items] | |
Increase (decrease) on 2017 service and interest cost, 1% Increase | $ 2 |
Increase (decrease) on benefit obligation as of December 31, 2017, 1% Increase | 54 |
Increase (decrease) on 2017 service and interest cost, 1% Decrease | (2) |
Increase(decrease) on benefits obligation as of December 31, 2017, 1% Decrease | (51) |
American Airlines, Inc. [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Increase (decrease) on 2017 service and interest cost, 1% Increase | 2 |
Increase (decrease) on benefit obligation as of December 31, 2017, 1% Increase | 54 |
Increase (decrease) on 2017 service and interest cost, 1% Decrease | (2) |
Increase(decrease) on benefits obligation as of December 31, 2017, 1% Decrease | $ (51) |
Employee Benefit Plans - Schedule of Expected Future Service Benefit Payments (Detail) $ in Millions |
Dec. 31, 2017
USD ($)
|
---|---|
Pension Benefits [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
2018 | $ 715 |
2019 | 754 |
2020 | 799 |
2021 | 843 |
2022 | 884 |
2023-2027 | 4,976 |
Retiree Medical And Other Postretirement Benefits [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
2018 | 96 |
2019 | 92 |
2020 | 80 |
2021 | 75 |
2022 | 70 |
2023-2027 | 315 |
American Airlines, Inc. [Member] | Pension Benefits [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
2018 | 712 |
2019 | 750 |
2020 | 795 |
2021 | 839 |
2022 | 879 |
2023-2027 | 4,951 |
American Airlines, Inc. [Member] | Retiree Medical And Other Postretirement Benefits [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
2018 | 96 |
2019 | 92 |
2020 | 80 |
2021 | 75 |
2022 | 70 |
2023-2027 | $ 314 |
Employee Benefit Plans Employee Benefit Plans - Profit Sharing Program (Details) - Deferred Profit Sharing [Member] $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2017
USD ($)
| |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |
Pre-tax income excluding special items for employee profit sharing, percentage | 5.00% |
Employee profit sharing program, amount | $ 241 |
American Airlines, Inc. [Member] | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |
Pre-tax income excluding special items for employee profit sharing, percentage | 5.00% |
Employee profit sharing program, amount | $ 241 |
Commitments, Contingencies and Guarantees - Long-term Purchase Commitments (Detail) - USD ($) $ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Long-term Purchase Commitment [Line Items] | ||
Equipment purchase deposits | $ 1,217 | $ 1,209 |
Aircraft and Engine Purchase Commitments [Member] | ||
Long-term Purchase Commitment [Line Items] | ||
2018 | 1,826 | |
2019 | 2,730 | |
2020 | 2,730 | |
2021 | 2,858 | |
2022 | 2,138 | |
2023 and Thereafter | 1,482 | |
Total | 13,764 | |
American Airlines, Inc. [Member] | ||
Long-term Purchase Commitment [Line Items] | ||
Equipment purchase deposits | 1,217 | $ 1,209 |
American Airlines, Inc. [Member] | Aircraft and Engine Purchase Commitments [Member] | ||
Long-term Purchase Commitment [Line Items] | ||
2018 | 1,826 | |
2019 | 2,730 | |
2020 | 2,730 | |
2021 | 2,858 | |
2022 | 2,138 | |
2023 and Thereafter | 1,482 | |
Total | $ 13,764 |
Commitments, Contingencies and Guarantees - Other Purchase Commitments (Details) - Jet Fuel, Facility Construction Projects and Information Technology Support [Member] $ in Millions |
Dec. 31, 2017
USD ($)
|
---|---|
Unrecorded Unconditional Purchase Obligation [Line Items] | |
Purchase commitments, 2018 | $ 2,000 |
Purchase commitments, 2019 | 1,400 |
Purchase commitments, 2020 | 890 |
Purchase commitments, 2021 | 950 |
American Airlines, Inc. [Member] | |
Unrecorded Unconditional Purchase Obligation [Line Items] | |
Purchase commitments, 2018 | 2,000 |
Purchase commitments, 2019 | 1,400 |
Purchase commitments, 2020 | 890 |
Purchase commitments, 2021 | $ 950 |
Supplemental Cash Flow Information - Cash Flow Information and Non-Cash Investing and Financing Activities (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Non-cash investing and financing activities: | |||
Equity investment | $ 120 | $ 0 | $ 0 |
Settlement of bankruptcy obligations | 15 | 3 | 63 |
Capital lease obligations | 0 | 0 | 5 |
Supplemental information: | |||
Interest paid, net of amounts capitalized | 1,040 | 964 | 873 |
Income taxes paid | 20 | 16 | 20 |
American Airlines, Inc. [Member] | |||
Non-cash investing and financing activities: | |||
Equity investment | 120 | 0 | 0 |
Settlement of bankruptcy obligations | 15 | 3 | 63 |
Capital lease obligations | 0 | 0 | 5 |
Supplemental information: | |||
Interest paid, net of amounts capitalized | 942 | 867 | 787 |
Income taxes paid | $ 18 | $ 14 | $ 19 |
Operating Segments and Related Disclosures - Additional Information (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2017
Segments
| |
Segment Reporting Information [Line Items] | |
Number of operating segments | 1 |
American Airlines, Inc. [Member] | |
Segment Reporting Information [Line Items] | |
Number of operating segments | 1 |
Quarterly Financial Data - Summarized Financial Data (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Selected Quarterly Financial Information [Line Items] | |||||||||||
Operating revenues | $ 10,600 | $ 10,878 | $ 11,105 | $ 9,624 | $ 9,789 | $ 10,594 | $ 10,363 | $ 9,435 | $ 42,207 | $ 40,180 | $ 40,990 |
Operating expenses | 9,910 | 9,646 | 9,570 | 9,023 | 9,022 | 9,163 | 8,612 | 8,100 | 38,149 | 34,896 | 34,786 |
Operating income | 690 | 1,232 | 1,535 | 601 | 767 | 1,431 | 1,751 | 1,335 | 4,058 | 5,284 | 6,204 |
Net income | $ 258 | $ 624 | $ 803 | $ 234 | $ 289 | $ 737 | $ 950 | $ 700 | $ 1,919 | $ 2,676 | $ 7,610 |
Earnings per share: | |||||||||||
Basic (in dollars per share) | $ 0.54 | $ 1.29 | $ 1.64 | $ 0.46 | $ 0.56 | $ 1.40 | $ 1.69 | $ 1.15 | $ 3.92 | $ 4.85 | $ 11.39 |
Diluted (in dollars per share) | $ 0.54 | $ 1.28 | $ 1.63 | $ 0.46 | $ 0.56 | $ 1.40 | $ 1.68 | $ 1.14 | $ 3.90 | $ 4.81 | $ 11.07 |
Shares used for computation (in thousands): | |||||||||||
Basic (in shares) | 477,165 | 484,772 | 490,818 | 503,902 | 514,571 | 525,415 | 563,000 | 606,245 | 489,164 | 552,308 | 668,393 |
Diluted (in shares) | 479,382 | 486,625 | 492,965 | 507,797 | 518,358 | 528,510 | 566,040 | 611,488 | 491,692 | 556,099 | 687,355 |
American Airlines, Inc. [Member] | |||||||||||
Selected Quarterly Financial Information [Line Items] | |||||||||||
Operating revenues | $ 10,597 | $ 10,875 | $ 11,102 | $ 9,621 | $ 9,786 | $ 10,591 | $ 10,360 | $ 9,427 | $ 42,195 | $ 40,163 | $ 40,938 |
Operating expenses | 9,921 | 9,650 | 9,575 | 9,017 | 8,995 | 9,159 | 8,603 | 8,104 | 38,163 | 34,859 | 34,749 |
Operating income | 676 | 1,225 | 1,527 | 604 | 791 | 1,432 | 1,757 | 1,323 | 4,032 | 5,304 | 6,189 |
Net income | $ 183 | $ 649 | $ 827 | $ 263 | $ 341 | $ 758 | $ 972 | $ 710 | $ 1,922 | $ 2,781 | $ 8,120 |
Subsequent Event - Additional Information (Detail) - $ / shares |
1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Subsequent Event [Line Items] | ||||||||||||||||
Common stock dividends per share declared (in dollars per share) | $ 0.10 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.40 | $ 0.40 | $ 0.40 | |
Subsequent Event [Member] | ||||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||||
Common stock dividends per share declared (in dollars per share) | $ 0.10 |
Transactions with Related Parties (Detail) - American Airlines, Inc. [Member] - USD ($) $ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Related Party Transaction [Line Items] | ||
Net receivables (payables) to related parties | $ 8,822 | $ 6,810 |
AAG [Member] | ||
Related Party Transaction [Line Items] | ||
Net receivables (payables) to related parties | 10,968 | 8,981 |
AAG's Wholly-owned Subsidiaries [Member] | ||
Related Party Transaction [Line Items] | ||
Net receivables (payables) to related parties | $ (2,146) | $ (2,171) |
Transactions with Related Parties - Additional Information (Detail) - USD ($) $ in Billions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
American Airlines, Inc. [Member] | Regional Carrier [Member] | AAG's Wholly-owned Subsidiaries [Member] | Airline Capacity Purchase Arrangements [Member] | |||
Related Party Transaction [Line Items] | |||
Related party transaction, expense recognized | $ 1.7 | $ 1.5 | $ 1.2 |
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