<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A No. 1
[x]Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Period Ended March 31, 1996.
[ ]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 1-2691.
American Airlines, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-1502798
(State or other (I.R.S. Employer
jurisdiction Identification No.)
of incorporation or
organization)
4333 Amon Carter Blvd.
Fort Worth, Texas 76155
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, (817) 963-1234
including area code
Not Applicable
(Former name, former address and former fiscal year , if changed
since last report)
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 periods that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practical
date.
Common Stock, $1 par value - 1,000 as of April 30, 1996
<PAGE> 2
INDEX
AMERICAN AIRLINES, INC.
PART I: FINANCIAL INFORMATION
Item 1. Financial Information
Consolidated Statement of Operations -- Three months ended March
31, 1996 and 1995 (as amended June 4, 1996)
Condensed Consolidated Balance Sheet -- March 31, 1996 and December
31, 1995
Condensed Consolidated Statement of Cash Flows -- Three months
ended March 31, 1996 and 1995
Notes to Condensed Consolidated Financial Statements -- March 31,
1996 (as amended June 4, 1996)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (as amended June 4, 1996, to reflect
certain reclassifications between reporting segments)
SIGNATURE
<PAGE> 3
PART 1. FINANCIAL INFORMATION
AMERICAN AIRLINES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited) (In millions)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Revenues
Airline Group:
Passenger $3,287 $3,090
Cargo 160 156
Other 192 158
3,639 3,404
Information Services Group 386 350
Less: Intergroup revenues (123) (128)
Total operating revenues 3,902 3,626
Expenses
Wages, salaries and benefits 1,332 1,263
Aircraft fuel 424 365
Commissions to agents 296 307
Depreciation and amortization 271 287
Other rentals and landing fees 197 195
Food service 154 158
Aircraft rentals 148 153
Maintenance materials and repairs 134 118
Other operating expenses 588 529
Total operating expenses 3,544 3,375
Operating Income 358 251
Other Income (Expense)
Interest income 5 5
Interest expense (111) (145)
Miscellaneous - net (1) (11)
(107) (151)
Earnings Before Income Taxes 251 100
Income tax provision 101 44
Net Earnings $ 150 $ 56
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 4
AMERICAN AIRLINES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions)
<TABLE>
<CAPTION>
March December
31, 31,
1996 1995
Assets (Unaudited) (Note 1)
<S> <C> <C>
Current Assets
Cash $ 31 $ 70
Short-term investments 791 816
Receivables, net 1,222 1,013
Inventories, net 532 516
Other current assets 469 438
Total current assets 3,045 2,853
Equipment and Property
Flight equipment, net 8,902 9,096
Other equipment and property, net 1,811 1,820
10,713 10,916
Equipment and Property Under Capital Leases
Flight equipment, net 1,251 1,274
Other equipment and property, net 160 160
1,411 1,434
Route acquisition costs, net 996 1,003
Other assets, net 1,402 1,423
$ 17,567 $ 17,629
Liabilities and Stockholder's Equity
Current Liabilities
Accounts payable $ 803 $ 742
Payables to affiliates 968 907
Accrued liabilities 1,558 1,789
Air traffic liability 1,707 1,467
Current maturities of long-term debt 33 49
Current maturities of long-term debt due - 193
to Parent
Current obligations under capital leases 125 101
Total current liabilities 5,194 5,248
Long-term debt, less current maturities 1,170 1,318
Long-term debt due to Parent 1,676 1,676
Obligations under capital leases, less 1,702 1,777
current obligations
Deferred income taxes 479 480
Other liabilities, deferred gains, deferred
credits and postretirement benefits 3,552 3,484
Stockholder's Equity
Common stock - -
Additional paid-in capital 1,699 1,699
Retained earnings 2,095 1,947
3,794 3,646
$ 17,567 $ 17,629
</TABLE>
The accompanying notes are an integral part of these financial
statements.
2
<PAGE> 5
AMERICAN AIRLINES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (In millions)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Net Cash Provided by Operating Activities $ 296 $ 228
Cash Flow from Investing Activities:
Capital expenditures (94) (440)
Net decrease in short-term investments 25 270
Proceeds from sale of equipment and property 73 57
Net cash provided by (used for)
investing activities 4 (113)
Cash Flow from Financing Activities:
Payments on long-term debt and capital lease
obligations (207) (52)
Funds transferred to affiliates, net (132) (21)
Net cash used for financing activities (339) (73)
Net increase (decrease) in cash (39) 42
Cash at beginning of period 70 13
Cash at end of period $ 31 $ 55
Cash Payments For:
Interest $ 114 $ 135
Income taxes 133 17
</TABLE>
The accompanying notes are an integral part of these financial
statements.
3
<PAGE> 6
AMERICAN AIRLINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, these
financial statements contain all adjustments, consisting of normal
recurring accruals, necessary to present fairly the financial
position, results of operations and cash flows for the periods
indicated. The balance sheet at December 31, 1995 has been derived
from the audited financial statements at that date. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the American Airlines, Inc. (American
or the Company) Annual Report on Form 10-K for the year ended
December 31, 1995.
2.Certain amounts from 1995 have been reclassified to conform with
the 1996 presentation.
3.Accumulated depreciation of owned equipment and property at March
31, 1996 and December 31, 1995, was $5.6 billion and $5.4 billion,
respectively. Accumulated amortization of equipment and property
under capital leases at March 31, 1996 and December 31, 1995, was
$788 million and $778 million, respectively.
4.As discussed in the notes to the consolidated financial statements
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995, the Miami International Airport Authority
is currently remediating various environmental conditions at Miami
International Airport (Airport) and funding the remediation costs
through landing fee revenues. Some of the costs of the remediation
effort may be borne by carriers currently operating at the Airport,
including American, through increased landing fees. The ultimate
resolution of this matter is not expected to have a significant
impact on the financial position or liquidity of American.
5.On April 17, 1996, the Company announced that the Board of
Directors of AMR Corporation (AMR) and American had approved a
reorganization of The SABRE Group as a separate, wholly-owned
subsidiary of AMR subject to the receipt of a favorable tax ruling
and certain other conditions. This reorganization will involve the
dividend of American's SABRE Travel Information Network, SABRE
Computer Services, SABRE Development Services and SABRE Interactive
divisions (collectively, the Information Services Group) to AMR.
Subject to meeting the conditions noted above, the reorganization
should be completed sometime during the third quarter. The
business units comprising the Information Services Group along with
certain other units of AMR form The SABRE Group, one of AMR's three
major lines of business.
Operating income for the Information Services Group was $118
million and $115 million for the three months ended March 31, 1996
and 1995, respectively. Selected financial data for the
Information Services Group for the years ended December 31, 1995,
1994 and 1993 is included in Note 12 to the consolidated financial
statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995. It is anticipated that upon
completion of the reorganization approximately $850 million of
American's debt owed to AMR will be replaced by an equivalent
amount of debt owed to AMR by The SABRE Group, thereby reducing
American's annual interest costs -- and increasing The SABRE
Group's annual interest costs -- by approximately $50-60 million.
AMR also continues to study, as it has in the past, other
transactions which may involve The SABRE Group, such as strategic
partnerships or an initial public offering of a portion of The
SABRE Group's stock. No decisions, however, have been made at this
time as to what, if any, transactions involving The SABRE Group may
occur after the reorganization is complete.
4
<PAGE> 7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6.In April of 1996, American and The SABRE Group completed
negotiations on the economics of a new market rate services
agreement between the two business units, pursuant to which The
SABRE Group performs data processing and solutions services for
American. The new agreement will reflect the recent downward trend
in market prices for such data processing services. Additionally,
the two business units completed negotiations on the economics of
new agreements covering the provision of air travel and certain
marketing services by American to The SABRE Group. As these
agreements will be effective retroactive to January 1, 1996, their
estimated impact has been reflected in the consolidated statement
of operations.
5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
American recorded net earnings for the three months ended March 31,
1996, of $150 million. This compares to net earnings of $56 million
for first quarter 1995. American's operating income was $358 million
for first quarter 1996 compared with $251 million for first quarter
1995.
American's passenger revenues increased by 6.4 percent, or $197
million. American's yield (the average amount one passenger pays to
fly one mile) of 13.34 cents increased by 2.9 percent compared to the
same period in 1995. Domestic yields increased 4.0 percent from
first quarter 1995, while international yields were up 0.6 percent.
American's traffic or revenue passenger miles (RPMs) increased 3.3
percent to 24.6 billion miles for the quarter ended March 31, 1996.
American's capacity or available seat miles (ASMs) increased 0.4
percent to 37.6 billion miles in the first quarter of 1996, primarily
as a result of increases in jet stage length and aircraft
productivity. Jet stage length increased 8.7 percent and aircraft
productivity, as measured by miles flown per aircraft per day,
increased 2.1 percent compared with first quarter 1995. American's
domestic traffic increased 0.9 percent on capacity decreases of 1.9
percent and international traffic grew 9.4 percent on capacity
increases of 6.3 percent. The increase in international traffic was
led by a 13.4 percent increase in traffic to Europe on capacity
growth of 5.1 percent, and a 5.6 percent increase in traffic to Latin
America on capacity growth of 7.2 percent.
Although not quantifiable, some portion of the passenger revenue
increase is attributable to the January 1, 1996 expiration of the ten
percent federal excise tax on airline travel.
Airline Group other revenues increased 21.5 percent, $34 million,
primarily due to contract maintenance work performed by American for
other airlines. The new agreement covering air travel to be signed
by American and The SABRE Group discussed in Note 6, increased
American's other revenues by $4 million.
Information Services Group revenues increased 10.3 percent, $36
million, primarily due to higher booking fee prices and increased
volumes. Absent the new technology services agreement to be signed
by American and The SABRE Group as discussed in Note 6, revenues
would have increased an additional $8 million.
American's operating expenses increased 5.0 percent, or $169 million.
Jet Airline cost per ASM increased by 3.5 percent to 8.97 cents.
Wages, salaries and benefits rose 5.5 percent, $69 million, due
primarily to contractual wage rate and seniority increases that are
built into the Company's labor contracts and an increase in the
provision for profit sharing, partially offset by a decrease due to
the outsourcing of certain services. Aircraft fuel expense increased
16.2 percent, $59 million, due to a 9.1 cent increase in American's
average price per gallon, which includes the impact of the October
1995 expiration of the fuel tax exemption for the airline industry.
Maintenance materials and repairs expense increased 13.6 percent, $16
million, due to the maturing of the Boeing 757 and 767 fleets, the
timing of scheduled maintenance occurring in first quarter 1996
compared to first quarter 1995, and maintenance work performed in
first quarter 1996 on certain Boeing 727 aircraft purchased off lease
in late 1995. Other operating expenses increased 11.2 percent, $59
million, primarily due to an increase in outsourced services, costs
associated with increased contract maintenance work performed for
other airlines, and adverse winter weather.
Other Income (Expense) decreased 29.1 percent or $44 million.
Interest expense decreased $34 million primarily due to scheduled
debt repayments and the retirement of debt prior to scheduled
maturity.
6
<PAGE> 8
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
AMERICAN AIRLINES, INC.
Date: June 4, 1996 BY: /s/ Gerard J. Arpey
Gerard J. Arpey
Senior Vice President - Finance and
Planning and Chief Financial Officer
7
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 31
<SECURITIES> 791
<RECEIVABLES> 1,232
<ALLOWANCES> 10
<INVENTORY> 532
<CURRENT-ASSETS> 3,045
<PP&E> 18,541
<DEPRECIATION> 6,417
<TOTAL-ASSETS> 17,567
<CURRENT-LIABILITIES> 5,194
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 3,794
<TOTAL-LIABILITY-AND-EQUITY> 17,567
<SALES> 0
<TOTAL-REVENUES> 3,902
<CGS> 0
<TOTAL-COSTS> 3,544
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 111
<INCOME-PRETAX> 251
<INCOME-TAX> 101
<INCOME-CONTINUING> 150
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 150
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
