Leases

12 Months Ended

Dec. 31, 2020

Lessee, Lease, Description [Line Items]

Leases

Leases

We lease certain aircraft and engines, including aircraft under capacity purchase agreements. As of December 31, 2020, we had 641 leased aircraft, with remaining terms ranging from less than one year to 12 years.

At each airport where we conduct flight operations, we have agreements, generally with a governmental unit or authority, for the use of passenger, operations and baggage handling space as well as runways and taxiways. These agreements, particularly in the U.S., often contain provisions for periodic adjustments to rates and charges applicable under such agreements. These rates and charges also vary with our level of operations and the operations of the airport. Because of the variable nature of these rates, these leases are not recorded on our balance sheet as a ROU asset or a lease liability. Additionally, at our hub locations and in certain other cities we serve, we lease administrative offices, catering, cargo, training, maintenance and other facilities.

The components of lease expense were as follows (in millions):

	Year Ended December 31,
	2020		2019		2018
Operating lease cost	$	1,957	$	2,027	$	1,907
Finance lease cost:
Amortization of assets	92		79		78
Interest on lease liabilities	38		43		48
Variable lease cost	1,801		2,558		2,353
Total net lease cost	$	3,888	$	4,707	$	4,386

Included in the table above is $172 million, $236 million and $226 million of operating lease cost under our capacity purchase agreement with Republic for the years ended December 31, 2020, 2019 and 2018, respectively. We hold a 25% equity interest in Republic Holdings, the parent company of Republic.

Additionally, not included in the table above, we recognized $109 million in cash special charges in 2020 related to the impairment of ROU assets and lease return costs resulting from our decision to retire certain leased aircraft earlier than planned driven by the severe decline in air travel due to the COVID-19 pandemic.

Supplemental balance sheet information related to leases was as follows (in millions, except lease term and discount rate):

	December 31,
	2020			2019
Operating leases:
Operating lease ROU assets	$	8,039		$	8,737
Current operating lease liabilities	$	1,651		$	1,708
Noncurrent operating lease liabilities	6,777			7,421
Total operating lease liabilities	$	8,428		$	9,129
Finance leases:
Property and equipment, at cost	$	1,021		$	954
Accumulated amortization	(539)			(447)
Property and equipment, net	$	482		$	507
Current finance lease liabilities	$	100		$	112
Noncurrent finance lease liabilities	472			558
Total finance lease liabilities	$	572		$	670
Weighted average remaining lease term (in years):
Operating leases	7.4			7.4
Finance leases	5.4			6.2
Weighted average discount rate:
Operating leases	5.6		%	4.7		%
Finance leases	6.3		%	6.2		%

Supplemental cash flow and other information related to leases was as follows (in millions):

	Year Ended December 31,
	2020		2019		2018
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,028	$	2,013	$	1,931
Operating cash flows from finance leases	39		43		48
Financing cash flows from finance leases	114		83		78
Non-cash transactions:
ROU assets acquired through operating leases	917		1,145		1,292
Operating lease conversion to finance lease	5		41		—
Property and equipment acquired through finance leases	11		20		—
Gain on sale leaseback transactions, net	107		107		59

Maturities of lease liabilities were as follows (in millions):

	December 31, 2020
	Operating Leases		Finance Leases
2021	$	1,946	$	131
2022	1,777		136
2023	1,586		114
2024	1,192		120
2025	812		85
2026 and thereafter	3,307		89
Total lease payments	10,620		675
Less: Imputed interest	(2,192)		(103)
Total lease obligations	8,428		572
Less: Current obligations	(1,651)		(100)
Long-term lease obligations	$	6,777	$	472

As of December 31, 2020, we have additional operating lease commitments that have not yet commenced of approximately $1.7 billion for 19 Boeing 787-8 aircraft to be delivered in 2021 with lease terms of 10 years.

Leases

Leases

We lease certain aircraft and engines, including aircraft under capacity purchase agreements. As of December 31, 2020, we had 641 leased aircraft, with remaining terms ranging from less than one year to 12 years.

At each airport where we conduct flight operations, we have agreements, generally with a governmental unit or authority, for the use of passenger, operations and baggage handling space as well as runways and taxiways. These agreements, particularly in the U.S., often contain provisions for periodic adjustments to rates and charges applicable under such agreements. These rates and charges also vary with our level of operations and the operations of the airport. Because of the variable nature of these rates, these leases are not recorded on our balance sheet as a ROU asset or a lease liability. Additionally, at our hub locations and in certain other cities we serve, we lease administrative offices, catering, cargo, training, maintenance and other facilities.

The components of lease expense were as follows (in millions):

	Year Ended December 31,
	2020		2019		2018
Operating lease cost	$	1,957	$	2,027	$	1,907
Finance lease cost:
Amortization of assets	92		79		78
Interest on lease liabilities	38		43		48
Variable lease cost	1,801		2,558		2,353
Total net lease cost	$	3,888	$	4,707	$	4,386

Included in the table above is $172 million, $236 million and $226 million of operating lease cost under our capacity purchase agreement with Republic for the years ended December 31, 2020, 2019 and 2018, respectively. We hold a 25% equity interest in Republic Holdings, the parent company of Republic.

Additionally, not included in the table above, we recognized $109 million in cash special charges in 2020 related to the impairment of ROU assets and lease return costs resulting from our decision to retire certain leased aircraft earlier than planned driven by the severe decline in air travel due to the COVID-19 pandemic.

Supplemental balance sheet information related to leases was as follows (in millions, except lease term and discount rate):

	December 31,
	2020			2019
Operating leases:
Operating lease ROU assets	$	8,039		$	8,737
Current operating lease liabilities	$	1,651		$	1,708
Noncurrent operating lease liabilities	6,777			7,421
Total operating lease liabilities	$	8,428		$	9,129
Finance leases:
Property and equipment, at cost	$	1,021		$	954
Accumulated amortization	(539)			(447)
Property and equipment, net	$	482		$	507
Current finance lease liabilities	$	100		$	112
Noncurrent finance lease liabilities	472			558
Total finance lease liabilities	$	572		$	670
Weighted average remaining lease term (in years):
Operating leases	7.4			7.4
Finance leases	5.4			6.2
Weighted average discount rate:
Operating leases	5.6		%	4.7		%
Finance leases	6.3		%	6.2		%

Supplemental cash flow and other information related to leases was as follows (in millions):

	Year Ended December 31,
	2020		2019		2018
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,028	$	2,013	$	1,931
Operating cash flows from finance leases	39		43		48
Financing cash flows from finance leases	114		83		78
Non-cash transactions:
ROU assets acquired through operating leases	917		1,145		1,292
Operating lease conversion to finance lease	5		41		—
Property and equipment acquired through finance leases	11		20		—
Gain on sale leaseback transactions, net	107		107		59

Maturities of lease liabilities were as follows (in millions):

	December 31, 2020
	Operating Leases		Finance Leases
2021	$	1,946	$	131
2022	1,777		136
2023	1,586		114
2024	1,192		120
2025	812		85
2026 and thereafter	3,307		89
Total lease payments	10,620		675
Less: Imputed interest	(2,192)		(103)
Total lease obligations	8,428		572
Less: Current obligations	(1,651)		(100)
Long-term lease obligations	$	6,777	$	472

As of December 31, 2020, we have additional operating lease commitments that have not yet commenced of approximately $1.7 billion for 19 Boeing 787-8 aircraft to be delivered in 2021 with lease terms of 10 years.

American Airlines, Inc.

Lessee, Lease, Description [Line Items]

Leases

Leases

American leases certain aircraft and engines, including aircraft under capacity purchase agreements. As of December 31, 2020, American had 641 leased aircraft, with remaining terms ranging from less than one year to 12 years.

At each airport where American conducts flight operations, American has agreements, generally with a governmental unit or authority, for the use of passenger, operations and baggage handling space as well as runways and taxiways. These agreements, particularly in the U.S., often contain provisions for periodic adjustments to rates and charges applicable under such agreements. These rates and charges also vary with American’s level of operations and the operations of the airport. Because of the variable nature of these rates, these leases are not recorded on American’s balance sheet as a ROU asset or a lease liability. Additionally, at American’s hub locations and in certain other cities it serves, American leases administrative offices, catering, cargo, training, maintenance and other facilities.

The components of lease expense were as follows (in millions):

	Year Ended December 31,
	2020		2019		2018
Operating lease cost	$	1,943	$	2,012	$	1,889
Finance lease cost:
Amortization of assets	92		79		78
Interest on lease liabilities	38		43		48
Variable lease cost	1,786		2,542		2,353
Total net lease cost	$	3,859	$	4,676	$	4,368

Included in the table above is $172 million, $236 million and $226 million of operating lease cost under American’s capacity purchase agreement with Republic for the years ended December 31, 2020, 2019 and 2018, respectively. American holds a 25% equity interest in Republic Holdings, the parent company of Republic.

Additionally, not included in the table above, American recognized $109 million in cash special charges in 2020 related to the impairment of ROU assets and lease return costs resulting from its decision to retire certain leased aircraft earlier than planned driven by the severe decline in air travel due to the COVID-19 pandemic.

Supplemental balance sheet information related to leases was as follows (in millions, except lease term and discount rate):

	December 31,
	2020			2019
Operating leases:
Operating lease ROU assets	$	7,994		$	8,694
Current operating lease liabilities	$	1,641		$	1,695
Noncurrent operating lease liabilities	6,739			7,388
Total operating lease liabilities	$	8,380		$	9,083
Finance leases:
Property and equipment, at cost	$	1,021		$	954
Accumulated amortization	(539)			(447)
Property and equipment, net	$	482		$	507
Current finance lease liabilities	$	100		$	112
Noncurrent finance lease liabilities	472			558
Total finance lease liabilities	$	572		$	670
Weighted average remaining lease term (in years):
Operating leases	7.4			7.4
Finance leases	5.4			6.2
Weighted average discount rate:
Operating leases	5.6		%	4.7		%
Finance leases	6.3		%	6.2		%

Supplemental cash flow and other information related to leases was as follows (in millions):

	Year Ended December 31,
	2020		2019		2018
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,015	$	1,996	$	1,914
Operating cash flows from finance leases	39		43		48
Financing cash flows from finance leases	114		83		78
Non-cash transactions:
ROU assets acquired through operating leases	898		1,144		1,258
Operating lease conversion to finance lease	5		41		—
Property and equipment acquired through finance leases	11		20		—
Gain on sale leaseback transactions, net	107		107		59

Maturities of lease liabilities were as follows (in millions):

	December 31, 2020
	Operating Leases		Finance Leases
2021	$	1,932	$	131
2022	1,764		136
2023	1,575		114
2024	1,184		120
2025	808		85
2026 and thereafter	3,291		89
Total lease payments	10,554		675
Less: Imputed interest	(2,174)		(103)
Total lease obligations	8,380		572
Less: Current obligations	(1,641)		(100)
Long-term lease obligations	$	6,739	$	472

As of December 31, 2020, American has additional operating lease commitments that have not yet commenced of approximately $1.7 billion for 19 Boeing 787-8 aircraft to be delivered in 2021 with lease terms of 10 years.

Leases

Leases

American leases certain aircraft and engines, including aircraft under capacity purchase agreements. As of December 31, 2020, American had 641 leased aircraft, with remaining terms ranging from less than one year to 12 years.

At each airport where American conducts flight operations, American has agreements, generally with a governmental unit or authority, for the use of passenger, operations and baggage handling space as well as runways and taxiways. These agreements, particularly in the U.S., often contain provisions for periodic adjustments to rates and charges applicable under such agreements. These rates and charges also vary with American’s level of operations and the operations of the airport. Because of the variable nature of these rates, these leases are not recorded on American’s balance sheet as a ROU asset or a lease liability. Additionally, at American’s hub locations and in certain other cities it serves, American leases administrative offices, catering, cargo, training, maintenance and other facilities.

The components of lease expense were as follows (in millions):

	Year Ended December 31,
	2020		2019		2018
Operating lease cost	$	1,943	$	2,012	$	1,889
Finance lease cost:
Amortization of assets	92		79		78
Interest on lease liabilities	38		43		48
Variable lease cost	1,786		2,542		2,353
Total net lease cost	$	3,859	$	4,676	$	4,368

Included in the table above is $172 million, $236 million and $226 million of operating lease cost under American’s capacity purchase agreement with Republic for the years ended December 31, 2020, 2019 and 2018, respectively. American holds a 25% equity interest in Republic Holdings, the parent company of Republic.

Additionally, not included in the table above, American recognized $109 million in cash special charges in 2020 related to the impairment of ROU assets and lease return costs resulting from its decision to retire certain leased aircraft earlier than planned driven by the severe decline in air travel due to the COVID-19 pandemic.

Supplemental balance sheet information related to leases was as follows (in millions, except lease term and discount rate):

	December 31,
	2020			2019
Operating leases:
Operating lease ROU assets	$	7,994		$	8,694
Current operating lease liabilities	$	1,641		$	1,695
Noncurrent operating lease liabilities	6,739			7,388
Total operating lease liabilities	$	8,380		$	9,083
Finance leases:
Property and equipment, at cost	$	1,021		$	954
Accumulated amortization	(539)			(447)
Property and equipment, net	$	482		$	507
Current finance lease liabilities	$	100		$	112
Noncurrent finance lease liabilities	472			558
Total finance lease liabilities	$	572		$	670
Weighted average remaining lease term (in years):
Operating leases	7.4			7.4
Finance leases	5.4			6.2
Weighted average discount rate:
Operating leases	5.6		%	4.7		%
Finance leases	6.3		%	6.2		%

Supplemental cash flow and other information related to leases was as follows (in millions):

	Year Ended December 31,
	2020		2019		2018
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,015	$	1,996	$	1,914
Operating cash flows from finance leases	39		43		48
Financing cash flows from finance leases	114		83		78
Non-cash transactions:
ROU assets acquired through operating leases	898		1,144		1,258
Operating lease conversion to finance lease	5		41		—
Property and equipment acquired through finance leases	11		20		—
Gain on sale leaseback transactions, net	107		107		59

Maturities of lease liabilities were as follows (in millions):

	December 31, 2020
	Operating Leases		Finance Leases
2021	$	1,932	$	131
2022	1,764		136
2023	1,575		114
2024	1,184		120
2025	808		85
2026 and thereafter	3,291		89
Total lease payments	10,554		675
Less: Imputed interest	(2,174)		(103)
Total lease obligations	8,380		572
Less: Current obligations	(1,641)		(100)
Long-term lease obligations	$	6,739	$	472

As of December 31, 2020, American has additional operating lease commitments that have not yet commenced of approximately $1.7 billion for 19 Boeing 787-8 aircraft to be delivered in 2021 with lease terms of 10 years.