Basis of Presentation

6 Months Ended

Jun. 30, 2014

On December 9, 2013 (the Effective Date), AMR Merger Sub, Inc. (Merger Sub) merged with and into US Airways Group, Inc. (US Airways Group) (the Merger), with US Airways Group surviving as a wholly-owned subsidiary of American Airlines Group Inc., a Delaware corporation (formerly known as AMR Corporation and referred to herein as AAG and, together with its consolidated subsidiaries, the Company), following the Merger. "AMR" refers to the Company during the period of time prior to its emergence from Chapter 11 and the Effective Date of the Merger.

The accompanying unaudited condensed consolidated financial statements of AAG should be read in conjunction with the consolidated financial statements contained in AAG's Annual Report on Form 10-K for the year ended December 31, 2013. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Principal subsidiaries include American and, effective December 9, 2013, US Airways Group. Because the Merger did not occur until December 2013, the unaudited condensed consolidated financial statements presented do not include the accounts of US Airways Group for the three and six months ended June 30, 2013. Certain prior period amounts have been reclassified to conform to the current year financial statement presentation as described below. 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 U.S. Generally Accepted Accounting Principles (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 frequent traveler programs, pensions and retiree medical and other benefits and the deferred tax asset valuation allowance.

Chapter 11 Matters

In accordance with GAAP, the Debtors (as defined in Note 2 below) applied ASC 852 "Reorganizations" (ASC 852) in preparing the condensed consolidated financial statements for periods subsequent to the Chapter 11 Cases (as defined in Note 2 below). ASC 852 requires that the financial statements distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, certain revenues, expenses (including professional fees), realized gains and losses and provisions for losses that are realized or incurred in the Chapter 11 Cases for the 2013 period are presented in Reorganization items, net on the accompanying condensed consolidated statement of operations.

Reclassifications

Certain prior period amounts have been reclassified between various financial statement line items to conform to the current year financial statement presentation. These reclassifications do not impact the historic net loss and are comprised principally of the following items:


•	Reclassifications between various operating income line items to conform the presentation of Cargo and Other revenues.


•	Reclassifications between various operating expense line items to conform the presentation of Regional expenses.


•	Reclassifications between Other nonoperating income (expense), net and Operating expenses to conform the presentation of foreign currency gains and losses.

The following table summarizes the historical and revised financial statement amounts for AAG (in millions):



	Three Months Ended June 30,						Six Months Ended June 30,
	2013						2013
	As Reclassified			Historical			As Reclassified			Historical
Operating revenues:
Mainline passenger	$	4,888		$	4,888		$	9,502		$	9,502
Regional passenger	752			752			1,431			1,431
Cargo	169			167			325			322
Other	640			642			1,289			1,292
Total operating revenues	6,449			6,449			12,547			12,547
Operating expenses:
Aircraft fuel and related taxes	1,880			2,139			3,814			4,339
Salaries, wages and benefits	1,284			1,450			2,551			2,934
Regional expenses	769			—			1,549			—
Maintenance, materials and repairs	317			375			643			758
Other rent and landing fees	284			343			572			690
Aircraft rent	181			179			346			343
Selling expenses	273			257			563			533
Depreciation and amortization	207			248			411			494
Special items, net	12			13			83			41
Other	730			956			1,432			1,875
Total operating expenses	5,937			5,960			11,964			12,007
Operating income	512			489			583			540
Nonoperating income (expense):
Interest income	5			5			9			9
Interest expense, net of capitalized interest	(161		)	(156		)	(415		)	(406		)
Other, net	(12		)	6			(37		)	(3		)
Total nonoperating expense, net	$	(168	)	$	(145	)	$	(443	)	$	(400	)

Additionally, on the condensed consolidated statement of cash flows, the Company reclassified $30 million in deferred financing charges from operating to financing cash flow activities for the six months ended June 30, 2013 in order to conform to the current year financial statement presentation.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 completes the joint effort by the FASB and International Accounting Standards Board (IASB) to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and International Financial Reporting Standards (IFRS). ASU 2014-09 applies to all companies that enter into contracts with customers to transfer goods or services. ASU 2014-09 is effective for public entities for interim and annual reporting periods beginning after December 15, 2016. Early application is not permitted and entities have the choice to apply ASU 2014-09 either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying ASU 2014-09 at the date of initial application and not adjusting comparative information. The Company is currently evaluating the requirements of ASU 2014-09 and has not yet determined its impact on the Company's consolidated financial statements.

AA [Member]

Accounting Policies [Line Items]

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of 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, 2013. American is a wholly-owned subsidiary of American Airlines Group Inc. (AAG). Certain prior period amounts have been reclassified to conform to the current year financial statement presentation as described below. 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 U.S. Generally Accepted Accounting Principles (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 long-lived and intangible assets, the frequent traveler program, pensions and retiree medical and other benefits and the deferred tax asset valuation allowance.

Chapter 11 Matters

Reclassifications


•	Reclassifications between various operating income line items to conform the presentation of Cargo and Other revenues.


•	Reclassifications between various operating expense line items to conform the presentation of Regional expenses.


•	Reclassifications between Other nonoperating income (expense), net and Operating expenses to conform the presentation of foreign currency gains and losses.

The following table summarizes the historical and revised financial statement amounts for American (in millions):



	Three Months Ended June 30,						Six Months Ended June 30,
	2013						2013
	As Reclassified			Historical			As Reclassified			Historical
Operating revenues:
Mainline passenger	$	4,888		$	4,888		$	9,502		$	9,502
Regional passenger	752			752			1,431			1,431
Cargo	169			167			325			322
Other	628			630			1,264			1,267
Total operating revenues	6,437			6,437			12,522			12,522
Operating expenses:
Aircraft fuel and related taxes	1,880			2,139			3,814			4,338
Salaries, wages and benefits	1,282			1,286			2,546			2,599
Regional expenses	761			261			1,528			531
Maintenance, materials and repairs	317			310			643			628
Other rent and landing fees	284			338			572			680
Aircraft rent	181			179			346			343
Selling expenses	273			257			563			533
Depreciation and amortization	207			244			411			485
Special items, net	12			12			83			40
Other	739			933			1,449			1,820
Total operating expenses	5,936			5,959			11,955			11,997
Operating income	501			478			567			525
Nonoperating income (expense):
Interest income	5			5			9			9
Interest expense, net of capitalized interest	(147		)	(143		)	(315		)	(306		)
Other, net	(7		)	12			(33		)	—
Total nonoperating expense, net	$	(149	)	$	(126	)	$	(339	)	$	(297	)

Additionally, on the condensed consolidated statement of cash flows, American reclassified $30 million in deferred financing charges from operating to financing cash flow activities for the six months ended June 30, 2013 in order to conform to the current year financial statement presentation.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 completes the joint effort by the FASB and International Accounting Standards Board (IASB) to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and International Financial Reporting Standards (IFRS). ASU 2014-09 applies to all companies that enter into contracts with customers to transfer goods or services. ASU 2014-09 is effective for public entities for interim and annual reporting periods beginning after December 15, 2016. Early application is not permitted and entities have the choice to apply ASU 2014-09 either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying ASU 2014-09 at the date of initial application and not adjusting comparative information. American is currently evaluating the requirements of ASU 2014-09 and has not yet determined its impact on American's consolidated financial statements.