UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended March 31, 2024

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period From                     to

Commission file number 1-8400

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.)
1 Skyview Drive,	Fort Worth,	Texas	76155
(Address of principal executive offices)			(Zip code)

	(682)	278-9000
(Registrant’s telephone number, including area code)

Commission file number 1-2691

American Airlines, Inc.

(Exact name of registrant as specified in its charter)

Delaware			13-1502798
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
1 Skyview Drive,	Fort Worth,	Texas	76155
(Address of principal executive offices)			(Zip code)

	(682)	278-9000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	AAL	The Nasdaq Global Select Market
Preferred Stock Purchase Rights	—	(1)

(1) Attached to the Common Stock

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 

American Airlines Group Inc.	☒	Yes	☐	No
American Airlines, Inc.	☒	Yes	☐	No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). 

American Airlines Group Inc.	☒	Yes	☐	No
American Airlines, Inc.	☒	Yes	☐	No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

American Airlines Group Inc.	☐
American Airlines, Inc.	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

American Airlines Group Inc.	☐	Yes	☒	No
American Airlines, Inc.	☐	Yes	☒	No

As of April 19, 2024, there were 656,090,344 shares of American Airlines Group Inc. common stock outstanding.

As of April 19, 2024, there were 1,000 shares of American Airlines, Inc. common stock outstanding, all of which were held by American Airlines Group Inc.

American Airlines Group Inc.

American Airlines, Inc.

Form 10-Q

Quarterly Period Ended March 31, 2024

Table of Contents

		Page
PART I: FINANCIAL INFORMATION
Item 1A.	Condensed Consolidated Financial Statements of American Airlines Group Inc.	6
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Comprehensive Income (Loss)	7
	Condensed Consolidated Balance Sheets	8
	Condensed Consolidated Statements of Cash Flows	9
	Condensed Consolidated Statements of Stockholders’ Deficit	10
	Notes to the Condensed Consolidated Financial Statements	11
Item 1B.	Condensed Consolidated Financial Statements of American Airlines, Inc.	21
	Condensed Consolidated Statements of Operations	21
	Condensed Consolidated Statements of Comprehensive Income (Loss)	22
	Condensed Consolidated Balance Sheets	23
	Condensed Consolidated Statements of Cash Flows	24
	Condensed Consolidated Statements of Stockholder’s Equity	25
	Notes to the Condensed Consolidated Financial Statements	26
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	49
PART II: OTHER INFORMATION
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 5.	Other Information	78
Item 6.	Exhibits	79
SIGNATURES		80

1

General

This report is filed by American Airlines Group Inc. (AAG) and its wholly-owned subsidiary American Airlines, Inc. (American). References in this report to “we,” “us,” “our,” the “Company” and similar terms refer to AAG and its consolidated subsidiaries. References in this report to “mainline” refer to the operations of American only and exclude regional operations.

Note Concerning Forward-Looking Statements

Certain of the statements contained in this report should be considered forward-looking statements within the meaning of the Securities Act of 1933, as amended (the Securities Act), the Securities Exchange Act of 1934, as amended (the Exchange Act), and the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about our plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that are not historical facts. These forward-looking statements are based on our current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the forward-looking statements. These risks and uncertainties include, but are not limited to, those described below under Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Part II, Item 1A. Risk Factors and other risks and uncertainties listed from time to time in our filings with the Securities and Exchange Commission (the SEC).

All of the forward-looking statements are qualified in their entirety by reference to the factors discussed in Part II, Item 1A. Risk Factors and elsewhere in this report. There may be other factors of which we are not currently aware that may affect matters discussed in the forward-looking statements and may also cause actual results to differ materially from those discussed. We do not assume any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting such statements other than as required by law. Any forward-looking statements speak only as of the date of this report or as of the dates indicated in the statements.

2

Summary of Risk Factors

Our business is subject to a number of risks and uncertainties that may affect our business, results of operations and financial condition, or the trading price of our common stock or other securities. We caution the reader that these risk factors may not be exhaustive. We operate in a continually changing business environment, and new risks and uncertainties emerge from time to time. Management cannot predict such new risks and uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or any combination thereof, may impact our business. These risks are more fully described in Part II, Item 1A. Risk Factors. These risks include, among others, the following:

Risks Related to our Business and Industry

•Downturns in economic conditions could adversely affect our business.

•We will need to obtain sufficient financing or other capital to operate successfully.

•Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional financing, may limit our flexibility in responding to competitive developments and may cause our business to be vulnerable to adverse economic and industry conditions.

•We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, results of operations and financial condition.

•If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely affect our liquidity.

•The loss of key personnel upon whom we depend to operate our business or the inability to attract, develop and retain additional qualified personnel could adversely affect our business.

•Our business has been and will continue to be materially affected by many changing economic, geopolitical, commercial, regulatory and other conditions beyond our control, including global events that affect travel behavior, and our results of operations could be volatile and fluctuate materially due to changes in such conditions.

•The airline industry is intensely competitive and dynamic.

•Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations and financial performance.

•If we encounter problems with any of our third-party regional operators or third-party service providers, our operations could be adversely affected by a resulting decline in revenue or negative public perception about our services.

•Any damage to our reputation or brand image could adversely affect our business or financial results.

•Changes to our business model that are designed to increase revenues may not be successful and may cause operational difficulties or decreased demand.

•Our intellectual property rights, particularly our branding rights, are valuable, and any inability to protect them may adversely affect our business and financial results.

•We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity.

•Our ability to utilize our NOLs and other carryforwards may be limited, and any new U.S. tax legislation may adversely affect our business and financial results.

•We have a significant amount of goodwill, which is assessed for impairment at least annually. In addition, we may never realize the full value of our intangible assets or long-lived assets, causing us to record material impairment charges.

3

•The commercial relationships that we have with other companies, including any related equity investments, may not produce the returns or results we expect.

•Our business is very dependent on the price and availability of aircraft fuel. Continued periods of high volatility in fuel costs, increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on consumer demand, our operating results and liquidity.

•Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages.

•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.

•We may be adversely affected by conflicts overseas, terrorist attacks or other acts of violence, domestically or abroad; the travel industry continues to face ongoing security concerns.

•We are subject to risks associated with climate change, including increased regulation of our greenhouse gas (GHG) emissions, changing consumer preferences and the potential for increased impacts of severe weather events on our operations and infrastructure.

•A shortage of pilots or other personnel has in the past and could continue to materially adversely affect our business.

•We depend on a limited number of suppliers for aircraft, aircraft engines and parts. Delays in scheduled aircraft deliveries, unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or other loss of anticipated fleet capacity, and failure of new aircraft to receive regulatory approval, be produced or otherwise perform as and when expected, will adversely impact our business, results of operations and financial condition.

•We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or systems could harm our business, results of operations and financial condition.

•Evolving data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling of personal information about individuals) could increase our costs, and any significant data privacy incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of operations and financial condition.

•We are exposed to risks from cyberattacks, and any cybersecurity incidents involving us, our third-party service providers, or one of our AAdvantage partners or other business partners, could materially adversely affect our business, results of operations and financial condition.

•We rely on third-party distribution channels and must effectively manage the costs, rights and functionality of these channels.

•If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may have a material adverse impact on our operations and interruptions or disruptions in service at one of our key facilities could have a material adverse impact on our operations.

•Increases in insurance costs or reductions in insurance coverage may adversely impact our operations and financial results.

4

PART I: FINANCIAL INFORMATION

This report on Form 10-Q is filed by both AAG and American and includes the Condensed Consolidated Financial Statements of each company in Item 1A and Item 1B, respectively.

5

ITEM 1A. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

AMERICAN AIRLINES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share amounts)(Unaudited)

	Three Months Ended March 31,
	2024		2023
Operating revenues:
Passenger	$	11,458	$	11,103
Cargo	187		223
Other	925		863
Total operating revenues	12,570		12,189
Operating expenses:
Aircraft fuel and related taxes	2,980		3,167
Salaries, wages and benefits	3,867		3,281
Regional expenses	1,201		1,142
Maintenance, materials and repairs	884		712
Other rent and landing fees	819		708
Aircraft rent	328		344
Selling expenses	408		438
Depreciation and amortization	470		486
Special items, net	70		13
Other	1,536		1,460
Total operating expenses	12,563		11,751
Operating income	7		438
Nonoperating income (expense):
Interest income	118		125
Interest expense, net	(497)		(540)
Other expense, net	(41)		(6)
Total nonoperating expense, net	(420)		(421)
Income (loss) before income taxes	(413)		17
Income tax provision (benefit)	(101)		7
Net income (loss)	$	(312)	$	10
Earnings (loss) per common share:
Basic	$	(0.48)	$	0.02
Diluted	$	(0.48)	$	0.02
Weighted average shares outstanding (in thousands):
Basic	655,847		652,000
Diluted	655,847		656,707

See accompanying notes to condensed consolidated financial statements.

6

AMERICAN AIRLINES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)(Unaudited)

	Three Months Ended March 31,
	2024		2023
Net income (loss)	$	(312)	$	10
Other comprehensive income (loss), net of tax:
Pension, retiree medical and other postretirement benefits	19		17
Investments	(2)		1
Total other comprehensive income, net of tax	17		18
Total comprehensive income (loss)	$	(295)	$	28

See accompanying notes to condensed consolidated financial statements.

7

AMERICAN AIRLINES GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share and par value amounts)

	March 31, 2024		December 31, 2023
	(Unaudited)
ASSETS
Current assets
Cash	$	604	$	578
Short-term investments	7,696		7,000
Restricted cash and short-term investments	895		910
Accounts receivable, net	2,070		2,026
Aircraft fuel, spare parts and supplies, net	2,500		2,400
Prepaid expenses and other	777		658
Total current assets	14,542		13,572
Operating property and equipment
Flight equipment	42,074		41,794
Ground property and equipment	10,397		10,307
Equipment purchase deposits	1,126		760
Total property and equipment, at cost	53,597		52,861
Less accumulated depreciation and amortization	(22,440)		(22,097)
Total property and equipment, net	31,157		30,764
Operating lease right-of-use assets	7,899		7,939
Other assets
Goodwill	4,091		4,091
Intangibles, net of accumulated amortization of $835 and $834, respectively	2,049		2,051
Deferred tax asset	2,986		2,888
Other assets	1,660		1,753
Total other assets	10,786		10,783
Total assets	$	64,384	$	63,058
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Current maturities of long-term debt and finance leases	$	4,102	$	3,632
Accounts payable	2,927		2,353
Accrued salaries and wages	1,726		2,377
Air traffic liability	8,526		6,200
Loyalty program liability	3,618		3,453
Operating lease liabilities	1,273		1,309
Other accrued liabilities	2,821		2,738
Total current liabilities	24,993		22,062
Noncurrent liabilities
Long-term debt and finance leases, net of current maturities	28,228		29,270
Pension and postretirement benefits	2,709		3,044
Loyalty program liability	5,994		5,874
Operating lease liabilities	6,457		6,452
Other liabilities	1,503		1,558
Total noncurrent liabilities	44,891		46,198
Commitments and contingencies
Stockholders’ equity (deficit)
Common stock, $0.01 par value; 1,750,000,000 shares authorized, 656,045,635 shares issued and outstanding at March 31, 2024; 654,273,192 shares issued and outstanding at December 31, 2023	7		7
Additional paid-in capital	7,371		7,374
Accumulated other comprehensive loss	(4,877)		(4,894)
Retained deficit	(8,001)		(7,689)
Total stockholders’ deficit	(5,500)		(5,202)
Total liabilities and stockholders’ equity (deficit)	$	64,384	$	63,058

See accompanying notes to condensed consolidated financial statements.

8

AMERICAN AIRLINES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)(Unaudited)

	Three Months Ended March 31,
	2024		2023
Net cash provided by operating activities	$	2,180	$	3,333
Cash flows from investing activities:
Capital expenditures and aircraft purchase deposits	(824)		(505)
Purchases of short-term investments	(3,287)		(5,131)
Sales of short-term investments	2,585		2,666
Decrease in restricted short-term investments	12		29
Other investing activities	(2)		145
Net cash used in investing activities	(1,516)		(2,796)
Cash flows from financing activities:
Payments on long-term debt and finance leases	(873)		(2,326)
Proceeds from issuance of long-term debt	248		1,824
Other financing activities	(17)		(37)
Net cash used in financing activities	(642)		(539)
Net increase (decrease) in cash and restricted cash	22		(2)
Cash and restricted cash at beginning of period	681		586
Cash and restricted cash at end of period (1)	$	703	$	584
Non-cash transactions:
Right-of-use (ROU) assets acquired through operating leases	$	320	$	88
Property and equipment acquired through finance leases and other	120		6
Operating leases converted to finance leases	51		—
Finance leases converted to operating leases	30		14
Supplemental information:
Interest paid, net	557		646
Income taxes paid	5		1

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

Cash	$	604	$	452
Restricted cash included in restricted cash and short-term investments	99		132
Total cash and restricted cash	$	703	$	584

See accompanying notes to condensed consolidated financial statements.

9

AMERICAN AIRLINES GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(In millions, except share amounts)(Unaudited)

	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Deficit		Total
Balance at December 31, 2023	$	7	$	7,374	$	(4,894)	$	(7,689)	$	(5,202)
Net loss	—		—		—		(312)		(312)
Other comprehensive income, net	—		—		17		—		17
Issuance of 1,772,443 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes	—		(11)		—		—		(11)
Share-based compensation expense	—		28		—		—		28
Modification of share-based awards	—		(20)		—		—		(20)
Balance at March 31, 2024	$	7	$	7,371	$	(4,877)	$	(8,001)	$	(5,500)

	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Deficit		Total
Balance at December 31, 2022	$	6	$	7,291	$	(4,585)	$	(8,511)	$	(5,799)
Net income	—		—		—		10		10
Other comprehensive income, net	—		—		18		—		18
Issuance of 2,175,213 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes	1		(16)		—		—		(15)
Share-based compensation expense	—		15		—		—		15
Balance at March 31, 2023	$	7	$	7,290	$	(4,567)	$	(8,501)	$	(5,771)

See accompanying notes to condensed consolidated financial statements.

10

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of American Airlines Group Inc. (we, us, our and similar terms, or AAG) should be read in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2023. The accompanying unaudited condensed consolidated financial statements include the accounts of AAG and its wholly-owned subsidiaries. AAG’s principal subsidiary is American Airlines, Inc. (American). All significant intercompany transactions have been eliminated.

Management believes that all adjustments necessary for the fair presentation of results, consisting of normally recurring items, have been included in the unaudited condensed consolidated financial statements for the interim periods presented. The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The most significant areas of judgment relate to passenger revenue recognition, the loyalty program, deferred tax assets, as well as pension and retiree medical and other postretirement benefits.

2. Special Items, Net

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

	Three Months Ended March 31,
	2024		2023
Labor contract expenses (1)	$	57	$	—
Severance expenses	13		21
Other operating special items, net	—		(8)
Mainline operating special items, net	70		13
Mark-to-market adjustments on equity investments, net (2)	46		—
Debt refinancing and extinguishment	—		15
Nonoperating special items, net	46		15

(1)Labor contract expenses relate to one-time charges resulting from the ratification of a new collective bargaining agreement with our mainline passenger service team members, including a one-time signing bonus which was principally paid in the first quarter of 2024.

(2)Mark-to-market adjustments on equity investments, net included unrealized gains and losses associated with certain equity investments.

11

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

3. Earnings (Loss) Per Common Share

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

	Three Months Ended March 31,
	2024		2023
Basic EPS:
Net income (loss)	$	(312)	$	10
Weighted average common shares outstanding (in thousands)	655,847		652,000
Basic EPS	$	(0.48)	$	0.02
Diluted EPS:
Net income (loss) for purposes of computing diluted EPS	$	(312)	$	10
Share computation for diluted EPS (in thousands):
Basic weighted average common shares outstanding	655,847		652,000
Dilutive effect of restricted stock unit awards	—		1,064
Dilutive effect of certain PSP Warrants and Treasury Loan Warrants	—		3,643
Diluted weighted average common shares outstanding	655,847		656,707
Diluted EPS	$	(0.48)	$	0.02

The following were excluded from the calculation of diluted EPS because inclusion of such shares would be antidilutive (in thousands):

	Three Months Ended March 31,
	2024	2023
6.50% convertible senior notes	61,728	61,728
Restricted stock unit awards	4,318	4,099

In addition, for the three months ended March 31, 2024 and 2023, excluded from the calculation of diluted EPS because inclusion of such shares would be antidilutive, are certain shares underlying the warrants we issued to the U.S. Department of Treasury (Treasury) pursuant to (i) the payroll support program established under the Coronavirus Aid, Relief, and Economic Security Act (PSP1), (ii) the payroll support program established under the Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (PSP2), (iii) the payroll support program established under the American Rescue Plan Act of 2021 (PSP3) (collectively, the PSP Warrants) and (iv) the Loan and Guarantee Agreement with Treasury (Treasury Loan Warrants).

The table below provides a summary of the PSP Warrants and the Treasury Loan Warrants:

Warrants	Warrants Issued (shares, in thousands)	Exercise Price		Expiration
PSP1 Warrants	14,048	$	12.51	April 2025 to September 2025
PSP2 Warrants	6,576	15.66		January 2026 to April 2026
PSP3 Warrants	4,407	21.75		April 2026 to June 2026
Treasury Loan Warrants	4,396	12.51		September 2025

12

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

4. Revenue Recognition

Revenue

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

	Three Months Ended March 31,
	2024		2023
Passenger revenue:
Passenger travel	$	10,582	$	10,291
Loyalty revenue - travel (1)	876		812
Total passenger revenue	11,458		11,103
Cargo	187		223
Other:
Loyalty revenue - marketing services	786		722
Other revenue	139		141
Total other revenue	925		863
Total operating revenues	$	12,570	$	12,189

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

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

	Three Months Ended March 31,
	2024		2023
Domestic	$	8,262	$	8,037
Latin America	1,902		1,915
Atlantic	992		931
Pacific	302		220
Total passenger revenue	$	11,458	$	11,103

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

Contract Balances

Our significant contract liabilities are comprised of (1) outstanding loyalty program mileage credits that may be redeemed for future travel and non-air travel awards, reported as loyalty program liability on the condensed consolidated balance sheets and (2) ticket sales for transportation that has not yet been provided, reported as air traffic liability on the condensed consolidated balance sheets.

	March 31, 2024		December 31, 2023
	(In millions)
Loyalty program liability	$	9,612	$	9,327
Air traffic liability	8,526		6,200
Total	$	18,138	$	15,527

13

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

The balance of the loyalty program liability fluctuates based on seasonal patterns, which impact the volume of mileage credits issued through travel or sold to co-branded credit card and other partners (deferral of revenue) and mileage credits redeemed (recognition of revenue). Changes in loyalty program liability are as follows (in millions):

Balance at December 31, 2023	$	9,327
Deferral of revenue	1,159
Recognition of revenue (1)	(874)
Balance at March 31, 2024 (2)	$	9,612

(1)Principally relates to revenue recognized from the redemption of mileage credits for both air and non-air travel awards. Mileage credits are combined in one homogenous pool and are not separately identifiable. As such, the revenue is comprised of mileage credits that were part of the loyalty program deferred revenue balance at the beginning of the period, as well as mileage credits that were issued during the period.

(2)Mileage credits can be redeemed at any time and generally do not expire as long as that AAdvantage member has any type of qualifying activity at least every 24 months or if the AAdvantage member is the primary holder of a co-branded credit card. As of March 31, 2024, our current loyalty program liability was $3.6 billion and represents our current estimate of revenue expected to be recognized in the next 12 months based on historical trends, with the balance reflected in long-term loyalty program liability expected to be recognized as revenue in periods thereafter.

The air traffic liability principally represents tickets sold for future travel on American and partner airlines. The balance in our air traffic liability also fluctuates with seasonal travel patterns. The contract duration of passenger tickets is generally one year. Accordingly, any revenue associated with tickets sold for future travel will be recognized within 12 months. For the three months ended March 31, 2024, $3.8 billion of revenue was recognized in passenger revenue that was included in our air traffic liability at December 31, 2023.

14

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

5. Debt

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

	March 31, 2024		December 31, 2023
Secured
2013 Term Loan Facility, variable interest rate of 8.60%, installments through February 2028	$	990	$	990
2014 Term Loan Facility, variable interest rate of 7.07%, installments through January 2027	1,171		1,183
2023 Term Loan Facility, variable interest rate of 8.77%, installments beginning in December 2024 through June 2029	1,100		1,100
10.75% senior secured IP notes, interest only payments until due in February 2026	1,000		1,000
10.75% senior secured LGA/DCA notes, interest only payments until due in February 2026	200		200
7.25% senior secured notes, interest only payments until due in February 2028	750		750
8.50% senior secured notes, interest only payments until due in May 2029	1,000		1,000
5.50% senior secured notes, installments through April 2026 (1)	2,625		2,917
5.75% senior secured notes, installments beginning in July 2026 until due in April 2029 (1)	3,000		3,000
AAdvantage Term Loan Facility, variable interest rate of 10.33%, installments through April 2028 (1)	2,975		3,150
Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 2.88% to 5.90%, averaging 3.58%, maturing from 2024 to 2034	7,418		7,657
Equipment loans and other notes payable, fixed and variable interest rates ranging from 2.55% to 8.85%, averaging 6.93%, maturing from 2024 to 2035	3,746		3,612
Special facility revenue bonds, fixed interest rates ranging from 2.25% to 5.38%, maturing from 2026 to 2036	967		967
	26,942		27,526
Unsecured
PSP1 Promissory Note, interest only payments until due in April 2030	1,757		1,757
PSP2 Promissory Note, interest only payments until due in January 2031	1,030		1,030
PSP3 Promissory Note, interest only payments until due in April 2031	959		959
6.50% convertible senior notes, interest only payments until due in July 2025	1,000		1,000
3.75% senior notes, interest only payments until due in March 2025	487		487
	5,233		5,233
Total long-term debt	32,175		32,759
Less: Total unamortized debt discount, premium and issuance costs	348		363
Less: Current maturities	3,974		3,501
Long-term debt, net of current maturities	$	27,853	$	28,895

(1)Collectively referred to as the AAdvantage Financing.

As of March 31, 2024, the maximum availability under our revolving credit and other facilities is as follows (in millions):

2013 Revolving Facility	$	736
2014 Revolving Facility	1,631
April 2016 Revolving Facility	446
Other facilities	398
Total	$	3,211

15

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

In March 2024, American entered into a revolving credit facility that provides for borrowing capacity of up to $350 million, maturing in March 2027 with an option to extend for an additional year. As of March 31, 2024, there were no amounts drawn under this facility. Additionally, American currently has $48 million of available borrowing base under a cargo receivables facility that is set to expire in December 2024. The aggregate commitments under the 2013, 2014 and April 2016 Revolving Facilities will be $2.8 billion through October 11, 2024, and thereafter through October 13, 2026, such aggregate commitments will decrease to $2.2 billion.

Secured financings, including revolving credit and other facilities, are collateralized by assets, consisting primarily of aircraft, engines, simulators, aircraft spare parts, airport gate leasehold rights, route authorities, airport slots, certain receivables, certain intellectual property and certain loyalty program assets.

6.50% Convertible Senior Notes

At March 31, 2024, the if-converted value of the 6.50% convertible senior notes due 2025 (the Convertible Notes) did not exceed the principal amount. The last reported sale price per share of our common stock (as defined in the indenture governing our Convertible Notes, the Convertible Notes Indenture) did not exceed 130% of the conversion price of the Convertible Notes for at least 20 of the 30 consecutive trading days ending on March 31, 2024. Accordingly, pursuant to the terms of the Convertible Notes Indenture, the holders of the Convertible Notes cannot convert at their option at any time during the quarter ending June 30, 2024. Each $1,000 principal amount of Convertible Notes is convertible at a rate of 61.7284 shares of our common stock, subject to adjustment as provided in the Convertible Notes Indenture. We may settle conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.

2024 Financing Activities

Equipment Loans and Other Notes Payable Issued in 2024

During the first three months of 2024, American entered into agreements under which it borrowed $251 million in connection with the financing of certain aircraft. Debt incurred under these agreements matures in 2030 through 2035 and bears interest at variable rates (comprised of the Secured Overnight Financing Rate plus an applicable margin) averaging 7.02% as of March 31, 2024.

6. Income Taxes

At December 31, 2023, we had approximately $13.7 billion of gross federal net operating losses (NOLs) and $4.7 billion of other carryforwards available to reduce future federal taxable income, of which $3.4 billion will expire beginning in 2029 if unused and $15.0 billion can be carried forward indefinitely. We also had approximately $5.5 billion of NOL carryforwards to reduce future state taxable income at December 31, 2023, which will expire in taxable years 2023 through 2043 if unused.

Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods. We provide a valuation allowance for our deferred tax assets, which include our NOLs, when it is more likely than not that some portion, or all of our deferred tax assets, will not be realized. 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 availability and price volatility of aircraft fuel and travel demand. We have determined that positive factors outweigh negative factors in the determination of the realizability of our deferred tax assets. There can be no assurance that an additional valuation allowance on our net deferred tax assets will not be required. Such valuation allowance could be material.

16

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

7. Fair Value Measurements

Assets Measured at Fair Value on a Recurring Basis

We utilize the market approach to measure the fair value of our financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. Our short-term investments, restricted cash and restricted short-term investments classified as Level 2 utilize significant observable inputs, other than quoted prices in active markets, for valuation of these securities. No changes in valuation techniques or inputs occurred during the three months ended March 31, 2024.

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

	Fair Value Measurements as of March 31, 2024
	Total		Level 1		Level 2		Level 3
Short-term investments (1), (2):
Money market funds	$	350	$	350	$	—	$	—
Corporate obligations	5,010		—		5,010		—
Bank notes/certificates of deposit/time deposits	1,886		—		1,886		—
Repurchase agreements	450		—		450		—
	7,696		350		7,346		—
Restricted cash and short-term investments (1), (3)	895		436		459		—
Long-term investments (4)	117		117		—		—
Total	$	8,708	$	903	$	7,805	$	—

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

(2)Our short-term investments mature in one year or less.

(3)Restricted cash and short-term investments primarily include collateral held to support workers’ compensation obligations and collateral associated with the payment of interest for the AAdvantage Financing. Restricted short-term investments mature in one year or less except for $207 million as of March 31, 2024.

(4)Long-term investments include our equity investments in China Southern Airlines Company Limited (China Southern Airlines), Vertical Aerospace Ltd. (Vertical) and GOL Linhas Aéreas Inteligentes S.A. (GOL). See Note 8 for further information on our equity investments.

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 except for $3.7 billion as of March 31, 2024 and December 31, 2023, which would have been classified as Level 3 in the fair value hierarchy. The fair value of the Convertible Notes, which would have been classified as Level 2, was $1.2 billion and $1.1 billion as of March 31, 2024 and December 31, 2023, respectively.

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

	March 31, 2024				December 31, 2023
	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current maturities	$	31,827	$	32,159	$	32,396	$	32,310

17

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

8. Investments

To help expand our network and as part of our ongoing commitment to sustainability, we enter into various commercial relationships or other strategic partnerships, including equity investments, with other airlines and companies. Our equity investments are reflected in other assets on our condensed consolidated balance sheets. Our share of equity method investees’ financial results and changes in fair value are recorded in nonoperating other expense, net on the condensed consolidated statements of operations.

Our equity investment ownership interests and carrying values are as follows:

		Ownership Interest				Carrying Value (in millions)
	Accounting Treatment	March 31, 2024		December 31, 2023		March 31, 2024		December 31, 2023
Republic Airways Holdings Inc.	Equity Method	25.0	%	25.0	%	$	238	$	240
China Southern Airlines	Fair Value	1.5	%	1.5	%	97		115
Other investments (1)	Various					149		186
Total						$	484	$	541

(1)Primarily includes our investment in JetSMART Holdings Limited, which is accounted for under the equity method, and our investments in Vertical and GOL, which are each accounted for at fair value.

9. Employee Benefit Plans

The following table provides the components of net periodic benefit cost (income) (in millions):

	Pension Benefits				Retiree Medical and Other Postretirement Benefits
Three Months Ended March 31,	2024		2023		2024		2023
Service cost	$	—	$	—	$	8	$	3
Interest cost	181		190		17		12
Expected return on assets	(244)		(229)		(2)		(3)
Amortization of:
Prior service cost (benefit)	—		7		3		(3)
Unrecognized net loss (gain)	27		27		(6)		(9)
Net periodic benefit cost (income)	$	(36)	$	(5)	$	20	$	—

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

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

During the first three months of 2024, we made required contributions of $280 million to our defined benefit pension plans.

18

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

10. Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss (AOCI) are as follows (in millions):

	Pension, Retiree Medical and Other Postretirement Benefits		Unrealized Loss on Investments		Income Tax Benefit (Provision) (1)			Total
Balance at December 31, 2023	$	(3,380)	$	(2)	$	(1,512)		$	(4,894)
Other comprehensive income (loss) before reclassifications	—		(3)		1			(2)
Amounts reclassified from AOCI	24		—		(5)		(2)	19
Net current-period other comprehensive income (loss)	24		(3)		(4)			17
Balance at March 31, 2024	$	(3,356)	$	(5)	$	(1,516)		$	(4,877)

(1)Relates principally to pension, retiree medical and other postretirement benefits obligations that will not be recognized in net income (loss) until the obligations are fully extinguished.

(2)Relates to pension, retiree medical and other postretirement benefits obligations and is recognized within the income tax provision (benefit) on the condensed consolidated statements of operations.

Reclassifications out of AOCI are as follows (in millions):

	Amounts reclassified from AOCI				Affected line items on the condensed consolidated statements of operations
AOCI Components	Three Months Ended March 31,
	2024		2023
Amortization of pension, retiree medical and other postretirement benefits:
Prior service cost	$	3	$	3	Nonoperating other expense, net
Actuarial loss	16		14		Nonoperating other expense, net
Total reclassifications for the period, net of tax	$	19	$	17

11. Regional Expenses

Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include our wholly-owned regional carriers as well as third-party regional carriers. Our regional carrier arrangements are in the form of capacity purchase agreements. Expenses associated with American Eagle operations are classified as regional expenses on the condensed consolidated statements of operations.

Regional expenses for the three months ended March 31, 2024 and 2023 include $79 million and $80 million of depreciation and amortization, respectively, and $2 million and $1 million of aircraft rent, respectively.

During the three months ended March 31, 2024 and 2023, we recognized $149 million and $168 million, respectively, of expense under our capacity purchase agreement with Republic Airways Inc. (Republic). We hold a 25% equity interest in Republic Airways Holdings Inc., the parent company of Republic.

12. Legal Proceedings

Government Antitrust Action Related to the Northeast Alliance. On September 21, 2021, the United States Department of Justice, joined by Attorneys General from six states and the District of Columbia, filed an antitrust complaint against American and JetBlue Airways Corporation (JetBlue) in the U.S. District Court for the District of Massachusetts alleging that American and JetBlue violated U.S. antitrust law in connection with the previously disclosed Northeast Alliance arrangement (NEA).

On May 19, 2023, the U.S. District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue from continuing and further implementing the NEA. In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, 2023, and the carriers have commenced wind-down activities to accommodate mutual customers. Following written submissions by the parties and a hearing on July 26, 2023, the U.S. District Court for the District of Massachusetts entered a Final Judgment and Order Entering Permanent Injunction on July 28, 2023. The

19

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.

(Unaudited)

parties are complying with the terms of the Final Judgment and Order Entering Permanent Injunction, including winding down activities related to the NEA. American filed a notice of appeal to the U.S. Court of Appeals for the First Circuit on September 25, 2023, and such appeal remains pending.

Private Party Antitrust Actions Related to the Northeast Alliance. On December 5, 2022 and December 7, 2022, two private party plaintiffs filed putative class action antitrust complaints against American and JetBlue in the U.S. District Court for the Eastern District of New York alleging that American and JetBlue violated U.S. antitrust law in connection with the previously disclosed NEA. These actions were consolidated on January 10, 2023. The private party plaintiffs filed an amended consolidated complaint on February 3, 2023. On February 2, 2023 and February 15, 2023, private party plaintiffs filed two additional putative class action antitrust complaints against American and JetBlue in the U.S. District Court for the District of Massachusetts and the U.S. District Court for the Eastern District of New York, respectively. In March 2023, American filed a motion in the U.S. District Court for the District of Massachusetts case asking to transfer the case to the U.S. District Court for the Eastern District of New York and consolidate it with the cases pending in that venue. The U.S. District Court for the District of Massachusetts granted that motion. The remaining cases were consolidated with the other actions in the Eastern District of New York. In June 2023, the private party plaintiffs filed a second amended consolidated complaint, followed by a third amended complaint filed in August 2023. In September 2023, American, together with JetBlue, filed a motion to dismiss the third amended complaint, and that motion remains pending. We believe these lawsuits are without merit and are defending against them vigorously.

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.

20

ITEM 1B. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

AMERICAN AIRLINES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions)(Unaudited)

	Three Months Ended March 31,
	2024		2023
Operating revenues:
Passenger	$	11,458	$	11,103
Cargo	187		223
Other	924		862
Total operating revenues	12,569		12,188
Operating expenses:
Aircraft fuel and related taxes	2,980		3,167
Salaries, wages and benefits	3,865		3,280
Regional expenses	1,197		1,143
Maintenance, materials and repairs	884		712
Other rent and landing fees	819		708
Aircraft rent	328		344
Selling expenses	408		438
Depreciation and amortization	468		484
Special items, net	70		13
Other	1,537		1,460
Total operating expenses	12,556		11,749
Operating income	13		439
Nonoperating income (expense):
Interest income	262		231
Interest expense, net	(520)		(550)
Other expense, net	(41)		(6)
Total nonoperating expense, net	(299)		(325)
Income (loss) before income taxes	(286)		114
Income tax provision (benefit)	(70)		29
Net income (loss)	$	(216)	$	85

See accompanying notes to condensed consolidated financial statements.

21

AMERICAN AIRLINES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions)(Unaudited)

	Three Months Ended March 31,
	2024		2023
Net income (loss)	$	(216)	$	85
Other comprehensive income (loss), net of tax:
Pension, retiree medical and other postretirement benefits	19		17
Investments	(2)		1
Total other comprehensive income, net of tax	17		18
Total comprehensive income (loss)	$	(199)	$	103

See accompanying notes to condensed consolidated financial statements.

22

AMERICAN AIRLINES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share and par value amounts)

	March 31, 2024		December 31, 2023
	(Unaudited)
ASSETS
Current assets
Cash	$	592	$	567
Short-term investments	7,692		6,998
Restricted cash and short-term investments	895		910
Accounts receivable, net	2,030		1,995
Receivables from related parties, net	7,238		7,070
Aircraft fuel, spare parts and supplies, net	2,363		2,266
Prepaid expenses and other	680		561
Total current assets	21,490		20,367
Operating property and equipment
Flight equipment	41,718		41,440
Ground property and equipment	9,935		9,848
Equipment purchase deposits	1,126		760
Total property and equipment, at cost	52,779		52,048
Less accumulated depreciation and amortization	(21,921)		(21,588)
Total property and equipment, net	30,858		30,460
Operating lease right-of-use assets	7,848		7,886
Other assets
Goodwill	4,091		4,091
Intangibles, net of accumulated amortization of $835 and $834, respectively	2,049		2,051
Deferred tax asset	2,655		2,589
Other assets	1,542		1,630
Total other assets	10,337		10,361
Total assets	$	70,533	$	69,074
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities
Current maturities of long-term debt and finance leases	$	3,611	$	3,625
Accounts payable	2,820		2,232
Accrued salaries and wages	1,550		2,210
Air traffic liability	8,526		6,200
Loyalty program liability	3,618		3,453
Operating lease liabilities	1,257		1,292
Other accrued liabilities	2,711		2,605
Total current liabilities	24,093		21,617
Noncurrent liabilities
Long-term debt and finance leases, net of current maturities	23,493		24,050
Pension and postretirement benefits	2,685		3,020
Loyalty program liability	5,994		5,874
Operating lease liabilities	6,421		6,416
Other liabilities	1,461		1,520
Total noncurrent liabilities	40,054		40,880
Commitments and contingencies
Stockholder’s equity
Common stock, $1.00 par value; 1,000 shares authorized, issued and outstanding	—		—
Additional paid-in capital	17,343		17,335
Accumulated other comprehensive loss	(4,982)		(4,999)
Retained deficit	(5,975)		(5,759)
Total stockholder’s equity	6,386		6,577
Total liabilities and stockholder’s equity	$	70,533	$	69,074

See accompanying notes to condensed consolidated financial statements.

23

AMERICAN AIRLINES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)(Unaudited)

	Three Months Ended March 31,
	2024		2023
Net cash provided by operating activities	$	2,155	$	3,306
Cash flows from investing activities:
Capital expenditures and aircraft purchase deposits	(815)		(494)
Purchases of short-term investments	(3,285)		(5,131)
Sales of short-term investments	2,585		2,666
Decrease in restricted short-term investments	12		29
Other investing activities	(2)		145
Net cash used in investing activities	(1,505)		(2,785)
Cash flows from financing activities:
Payments on long-term debt and finance leases	(870)		(2,324)
Proceeds from issuance of long-term debt	248		1,824
Other financing activities	(7)		(21)
Net cash used in financing activities	(629)		(521)
Net increase in cash and restricted cash	21		—
Cash and restricted cash at beginning of period	670		575
Cash and restricted cash at end of period (1)	$	691	$	575
Non-cash transactions:
Right-of-use (ROU) assets acquired through operating leases	$	317	$	84
Property and equipment acquired through finance leases and other	120		6
Operating leases converted to finance leases	51		—
Finance leases converted to operating leases	30		14
Supplemental information:
Interest paid, net	497		585
Income taxes paid	5		1

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

Cash	$	592	$	443
Restricted cash included in restricted cash and short-term investments	99		132
Total cash and restricted cash	$	691	$	575

See accompanying notes to condensed consolidated financial statements.

24

AMERICAN AIRLINES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

(In millions)(Unaudited)

	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Deficit		Total
Balance at December 31, 2023	$	—	$	17,335	$	(4,999)	$	(5,759)	$	6,577
Net loss	—		—		—		(216)		(216)
Other comprehensive income, net	—		—		17		—		17
Share-based compensation expense	—		27		—		—		27
Modification of share-based awards	—		(20)		—		—		(20)
Intercompany equity transfer			1						1
Balance at March 31, 2024	$	—	$	17,343	$	(4,982)	$	(5,975)	$	6,386

	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Deficit		Total
Balance at December 31, 2022	$	—	$	17,230	$	(4,690)	$	(6,947)	$	5,593
Net income	—		—		—		85		85
Other comprehensive income, net	—		—		18		—		18
Share-based compensation expense	—		14		—		—		14
Balance at March 31, 2023	$	—	$	17,244	$	(4,672)	$	(6,862)	$	5,710

See accompanying notes to condensed consolidated financial statements.

25

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.

(Unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of American Airlines, Inc. (American) should be read in conjunction with the consolidated financial statements contained in American’s Annual Report on Form 10-K for the year ended December 31, 2023. American is the principal wholly-owned subsidiary of American Airlines Group Inc. (AAG). All significant intercompany transactions have been eliminated.

Management believes that all adjustments necessary for the fair presentation of results, consisting of normally recurring items, have been included in the unaudited condensed consolidated financial statements for the interim periods presented. The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The most significant areas of judgment relate to passenger revenue recognition, the loyalty program, deferred tax assets, as well as pension and retiree medical and other postretirement benefits.

2. Special Items, Net

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

	Three Months Ended March 31,
	2024		2023
Labor contract expenses (1)	$	57	$	—
Severance expenses	13		21
Other operating special items, net	—		(8)
Mainline operating special items, net	70		13
Mark-to-market adjustments on equity investments, net (2)	46		—
Debt refinancing and extinguishment	—		15
Nonoperating special items, net	46		15