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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of earliest event
reported: July 16, 2003
AMR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-8400 75-1825172
(State of Incorporation) ( Commission File Number) (IRS Employer
Identification No.)
4333 Amon Carter Blvd. Fort Worth, Texas 76155
(Address of principal executive offices) (Zip Code)
(817) 963-1234
(Registrant's telephone number)
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Item 7. Financial Statements and Exhibits
The following exhibits are included herein:
99.1 Press Release
Item 12. Disclosure of Results of Operations and Financial
Condition
AMR Corporation (the Company) is furnishing herewith a press
release issued on July 16, 2003 by the Company as Exhibit 99.1
which is included herein. This press release was issued to report
the Company's second quarter 2003 results.
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 hereunto duly authorized.
AMR CORPORATION
/s/ Charles D. MarLett
Charles D. MarLett
Corporate Secretary
Dated: July 16, 2003
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EXHIBIT INDEX
Exhibit Description
99.1 Press Release
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Exhibit 99.1
Contact: Corporate Communications
Fort Worth, Texas
817-967-1577
corp.comm@aa.com
FOR RELEASE: Wednesday, July 16, 2003
AMR CORPORATION REPORTS IMPROVED SECOND-QUARTER FINANCIALS AS COST
SAVINGS AND TURNAROUND PLAN BEGIN YIELDING RESULTS
Airline's Second-Quarter Net Loss Significantly Lower Than Last
Year's Quarter; Sees Modest Profit in June; Ends the Quarter with
$2.4 Billion in Total Cash and Short-Term Investments
American to Maintain Positive Momentum on Achieving Turnaround Plan
Objectives by Realigning Mid-Continent Hub Schedules
Third Reservations Office to Close This Year as Consumers Continue
Choosing Alternative Ways to Book Flights
FORT WORTH, Texas - AMR Corporation continues making progress
in its march to profitability, including reporting improved
financial results.
For the quarter, AMR reported a net loss of $75 million, or
$.47 per share. Included in this amount are a handful of special
items, including a $358 million cash payment from the
Transportation Security Administration (TSA) under the 2003
Emergency Wartime Supplemental Appropriation Act. Excluding
special items, AMR reported a net loss of $357 million, or $2.26
per share. While still a loss, these results represent a sizeable
improvement over the second quarter of last year and are
dramatically better than the $1.04 billion net loss AMR recorded in
this year's first quarter.
AMR made significant progress over the course of the second
quarter. April was a difficult month for the company, with
lackluster demand due to the war in Iraq and the outbreak of SARS.
In May, however, AMR reported positive operating cash flow driven
by year-over-year improvements in unit revenue and the
implementation of its new labor
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agreements. These trends continued in June, and AMR achieved a
modest profit for the month.
"Clearly, the tremendous strides we've been able to achieve
have been the result of the unprecedented labor and nonlabor
agreements we reached in May," said Gerard Arpey, AMR's president
and CEO. "The sacrifice of our employee groups is evident in the
dramatically improved performance we"ve seen over the past months.
But, while we're encouraged, we must keep in mind that we're
operating in peak summer season right now, and the winter months
will be more challenging. We have a lot of work to do before we're
able to achieve sustained profitability at acceptable levels."
The company's cash position also improved during the quarter,
with a total cash and short-term investments balance on June 30 of
$2.4 billion (including $550 million in restricted cash and short-
term investments), an increase of $555 million compared to the
comparable balance at the end of the first quarter. Since June 30,
AMR has completed a $250 million aircraft financing, bringing the
total balance to $2.7 billion as of today.
As noted earlier, the company's second-quarter financial
results included several special items -- both gains and losses --
resulting mostly from the company's restructuring efforts. In
addition, in keeping with the provisions of SFAS 109, AMR's second
quarter 2003 results do not reflect a benefit for federal and state
income taxes. Conversely, AMR's second quarter 2002 results did
reflect a tax benefit. To provide better comparability, after
adjusting for these items, the company recorded a loss of $357
million this quarter, or $2.26 per share, versus a loss of $720
million, or $4.64 per share, in the second quarter of last year.
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These amounts are detailed in the table below:
Impact of Special Items and Second Quarter
Income Taxes (in millions, 2003 2002
except per share amounts) Amount EPS Amount EPS
Net loss as reported ($75) ($0.47) ($495) ($3.19)
Income tax benefit --- --- ( 225) ( 1.45)
Loss before income taxes ( 75) ( 0.47) ( 720) ( 4.64)
Special charges (net):
Employee charges 47 0.29 --- ---
Aircraft and facility costs 29 0.18 --- ---
Special credits:
Payment from TSA ( 358) ( 2.26) --- ---
Loss before income taxes
and special items ($357) ($2.26) ($720) ($4.64)
Other tenets of AMR's Turnaround Plan are also gaining
momentum.
"We have set a firm course with our Turnaround Plan, and are
taking additional steps today to make American an even more vibrant
competitor," Arpey said. "When we launched the Turnaround Plan in
May, we said we were going to measure all of our future decisions
by its four primary objectives. We are doing just that. And while
some of these decisions are painful, they are also absolutely
critical to our future."
As previously announced, American's fleet, which already has
57 fewer airplanes in revenue service than a year ago, will shrink
another 57 airplanes by summer 2004. At that point, the airline's
fleet will be roughly the same size it was in mid-2000.
This projected fleet size prompted, in part, a review of
American's network and operational efficiency. After weeks of
careful study, American has decided to reduce the size of its St.
Louis hub.
"We are going to make it a smaller hub that will primarily
cater to the people who live, work, or do business there," Arpey
said. "Our other options were far less palatable,
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including the extreme of simply making St. Louis a spoke city with
service only to our other hubs. Our current plan allows us to
provide key services for the local community while strengthening
our hubs at Chicago and Dallas/Fort Worth."
Arpey also acknowledged the support for the airline and
genuine concern for the community shown by government officials and
local business leaders during American's decision-making process,
particularly St. Louis Mayor Francis Slay, County Executive Buzz
Westfall and Missouri Governor Bob Holden.
Between American, American Eagle and the AmericanConnection
carriers, St. Louis will offer 207 flights a day to 68 cities after
the change, which is effective Nov. 1. American will maintain its
pilot and flight attendant bases there. More information on
American's new hub schedule in St. Louis can be found in the
attached fact sheet.
The efficiency review also concluded that the airline had too
much domestic Reservations capacity, even though it had closed two
Reservations facilities earlier this year. Accordingly, the
airline will close its St. Louis Reservations office effective
Sept. 15.
Arpey said the decisions affecting St. Louis were "extremely
difficult but vital to American's future." And he said he "truly
regretted" the impact this would have on former TWA employees.
American will make available a variety of support services to
employees impacted by the closing of the St. Louis Reservations
office and to employees at American's St. Louis airport operation
who may be displaced by the schedule changes.
Additionally, the airline has been looking at how it schedules
maintenance work at its three major maintenance bases. That
portion of the study is ongoing. American expects to announce its
decision on this issue by the fall.
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Editor's Note: AMR's president and chief executive officer, Gerard
Arpey, and its chief financial officer, Jeff Campbell, will make a
presentation to analysts during a teleconference on Wednesday, July
16, from 2 p.m. to 2:45 p.m. EDT. Following the analyst call, they
will hold a question and answer conference call for media from 3
p.m. to 3:45 p.m. EDT. Reporters interested in listening to the
presentation or participating in the media Q&A should call 817-967-
1577 for details.
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Statements in this news release contain various forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, which represent the Company's expectations or
beliefs concerning future events. When used in this news release,
the words "expects," "plans," "anticipates," "believes," and
similar expressions are intended to identify forward-looking
statements. Forward-looking statements include, without limitation,
the Company's expectations concerning operations and financial
conditions, including changes in capacity, revenues, and costs,
expectations as to future financing needs, overall economic
conditions and plans and objectives for future operations, the
impact on the Company of the events of Sept. 11, 2001, and its
results of operations for the past two years and the sufficiency of
its financial resources to absorb that impact. Other forward-
looking statements include statements which do not relate solely to
historical facts, such as, without limitation, statements which
discuss the possible future effects of current known trends or
uncertainties, or which indicate that the future effects of known
trends or uncertainties cannot be predicted, guaranteed or assured.
All forward-looking statements in this release are based upon
information available to the Company on the date of this release.
The Company undertakes no obligation to publicly update or revise
any forward-looking statement, whether as a result of new
information, future events or otherwise. Forward-looking
statements are subject to a number of risk factors that could cause
actual results to differ materially from our expectations. The
following factors, in addition to other possible factors not
listed, could cause the Company's actual results to differ
materially from those expressed in forward-looking statements: the
uncertain financial and business environment the Company faces, the
struggling economy, high fuel prices and the availability of fuel,
the residual effects of the war in Iraq, conflicts in the Middle
East, the residual effects of the SARS outbreak, historically low
fare levels, the competitive environment, uncertainties with
respect to the Company's international operations, changes in its
business strategy, actions by U.S. or foreign government agencies,
the possible occurrence of additional terrorist attacks, the
inability of the Company to satisfy existing liquidity requirements
or other covenants in certain of its credit agreements and the
availability of future financing. Additional information
concerning these and other factors is contained in the Company's
Securities and Exchange Commission filings, including but not
limited to the Form 10-K for the year ended Dec. 31, 2002, and the
Form 10-Q for the quarter ended March 31, 2003
THE TURNAROUND PLAN - A ROAD MAP FOR AMERICAN'S FUTURE
Lower Costs to Compete
Fly Smart - Give Customers What They Value
Pull Together, Win Together
Build a Financial Foundation for Our Future
Detailed financial information follows:
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AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Three Months Ended June 30, Percent
2003 2002 Change
Revenues
Passenger - American Airlines $3,544 $3,747 (5.4)
- Regional Affiliates ** 387 372 4.0
Cargo 140 142 (1.4)
Other revenues 253 247 2.4
Total operating revenues 4,324 4,508 (4.1)
Expenses
Wages, salaries and benefits 1,869 2,126 (12.1)
Aircraft fuel 647 656 (1.4)
Depreciation and amortization 344 338 1.8
Other rentals and landing fees 298 306 (2.6)
Commissions, booking fees
and credit card expense 260 311 (16.4)
Maintenance, materials and repairs 187 285 (34.4)
Aircraft rentals 177 214 (17.3)
Food service 151 180 (16.1)
Other operating expenses 586 693 (15.4)
Special charges 76 - *
U.S. government grant (358) - *
Total operating expenses 4,237 5,109 (17.1)
Operating Income (Loss) 87 (601) *
Other Income (Expense)
Interest income 8 18 (55.6)
Interest expense (190) (164) 15.9
Interest capitalized 18 22 (18.2)
Miscellaneous - net 2 5 (60.0)
(162) (119) 36.1
Loss Before Income Taxes (75) (720) (89.6)
Income tax benefit - (225) *
Net Loss $ (75) $(495) (84.8)
Continued on next page
* Greater than 100%
** Regional Affiliates include the fixed fee per block
hour agreements with American Eagle Airlines, Inc.,
Executive Airlines, Inc., Trans States Airlines, Inc.
and Chautauqua Airlines, Inc.
Note: Certain amounts have been reclassified to conform with
the 2003 presentation.
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AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(in millions, except per share amounts)
(Unaudited)
Three Months Ended June 30,
2003 2002
Basic and Diluted Loss Per Share $ (.47) $ (3.19)
Number of Shares Used in Computation
Basic and Diluted 158 155
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AMR CORPORATION
OPERATING STATISTICS
(Unaudited)
Three Months Ended June 30, Percent
2003 2002 Change
American Airlines, Inc. Mainline Jet Operations
Revenue passenger miles (millions) 30,180 31,379 (3.8)
Available seat miles (millions) 40,566 43,958 (7.7)
Cargo ton miles (millions) 493 518 (4.8)
Passenger load factor 74.4% 71.4% 3.0 pts.
Passenger revenue yield
per passenger mile (cents) 11.74 11.94 (1.7)
Passenger revenue per available
seat mile (cents) 8.74 8.52 2.6
Cargo revenue yield per ton
mile (cents) 28.34 27.21 4.2
Operating expenses per available seat
mile, excluding Special charges, U.S.
government grant, and Regional
Affiliates (cents) (1) (2) 10.18 10.78 (5.6)
Operating expenses per available
seat mile (cents) (3) 10.68 10.85 (1.6)
Fuel consumption (gallons, in millions) 727 808 (10.0)
Fuel price per gallon (cents) 83.0 75.5 9.9
Operating aircraft at period-end 812 828 (1.9)
Regional Affiliates
Revenue passenger miles (millions) 1,389 1,177 18.0
Available seat miles (millions) 2,110 1,757 20.1
Passenger load factor 65.8% 67.0% (1.2) pts.
AMR Corporation
Average Equivalent Number of Employees
American Airlines 86,800 100,100
Other 11,500 11,800
Total 98,300 111,900
* Greater than 100%
(1) Excludes $441 million, or 1.09 cents per available seat
mile (ASM), and $32 million, or .07 cents per ASM, of
expenses incurred related to Regional Affiliates in 2003 and
2002, respectively. Calculated using American mainline jet
operations ASMs. Therefore both the numerator and the
denominator exclude Regional Affiliates. The Company
believes that excluding costs related to Regional Affiliates
provides a measure which is more comparable to American's
historical operating expenses per ASM.
(2) Excludes the receipt of government reimbursement of
security fees of $(315) million and Special charges of $76
million, or a total of (.59) cents per ASM, in 2003. The
Company believes that excluding the reimbursement of
security fees and Special charges provides a measure that is
more representative of ongoing costs and therefore more
comparable to American's historical operating expense per ASM.
(3) Calculated using mainline jet operations ASMs.
Note: Certain amounts have been reclassified to conform with the
2003 presentation.
American Airlines, Inc. 2003 operating expenses include
expenses incurred related to fixed fee per block hour
agreements with Regional Affiliates - American Eagle Airlines
Inc., Executive Airlines, Inc., Trans States Airlines, Inc.
and Chautauqua Airlines, Inc. whereas 2002 operating expenses
include expenses incurred related to fixed fee per block hour
agreements with Regional Affiliate - Chautauqua Airlines, Inc.
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AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Six Months Ended June 30, Percent
2003 2002 Change
Revenues
Passenger - American Airlines $6,938 $7,231 (4.1)
- Regional Affiliates ** 713 698 2.1
Cargo 274 276 (0.7)
Other revenues 519 466 11.4
Total operating revenues 8,444 8,671 (2.6)
Expenses
Wages, salaries and benefits 3,967 4,206 (5.7)
Aircraft fuel 1,376 1,183 16.3
Depreciation and amortization 682 679 0.4
Other rentals and landing fees 589 595 (1.0)
Commissions, booking fees and
credit card expense 515 631 (18.4)
Maintenance, materials and repairs 418 551 (24.1)
Aircraft rentals 367 440 (16.6)
Food service 300 350 (14.3)
Other operating expenses 1,269 1,366 (7.1)
Special charges 101 - -
U.S. Government grant (358) - -
Total operating expenses 9,226 10,001 (7.7)
Operating Loss (782) (1,330) (41.2)
Other Income (Expense)
Interest income 21 36 (41.7)
Interest expense (382) (330) 15.8
Interest capitalized 37 44 (15.9)
Miscellaneous - net (12) (3) *
(336) (253) 32.8
Loss Before Income Taxes and
Cumulative Effect of
Accounting Change (1,118) (1,583) (29.4)
Income tax benefit - (513) *
Loss Before Cumulative Effect
of Accounting Change (1,118) (1,070) 4.5
Cumulative Effect of Accounting
Change, Net of Tax Benefit - (988) *
Net Loss $(1,118) $(2,058) (45.7)
Continued on next page
* Greater than 100%
** Regional Affiliates include the fixed fee per block
hour agreements with American Eagle Airlines, Inc.,
Executive Airlines, Inc., Trans States Airlines, Inc.
and Chautauqua Airlines, Inc.
Note: Certain amounts have been reclassified to conform with
the 2003 presentation.
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AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(in millions, except per share amounts)
(Unaudited)
Six Months Ended June 30,
2003 2002
Basic and Diluted Loss Per Share
Before Cumulative Effect of
Accounting Change $ (7.11) $ (6.90)
Cumulative Effect of
Accounting Change - (6.37)
Net Loss $ (7.11) $(13.27)
Number of Shares Used in Computation
Basic and Diluted 157 155
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AMR CORPORATION
OPERATING STATISTICS
(Unaudited)
Six Months Ended June 30, Percent
2003 2002 Change
American Airlines, Inc. Mainline Jet Operations
Revenue passenger miles (millions) 58,019 59,197 (2.0)
Available seat miles (millions) 80,840 84,047 (3.8)
Cargo ton miles (millions) 983 981 0.2
Passenger load factor 71.8% 70.4% 1.4 pts.
Passenger revenue yield per
passenger mile (cents) 11.96 12.22 (2.1)
Passenger revenue per available
seat mile (cents) 8.58 8.60 (0.2)
Cargo revenue yield per ton mile (cents) 27.86 27.93 (0.3)
Operating expenses per available seat
mile, excluding Special charges, U.S.
government grant, and Regional
Affiliates (cents) (1) (2) 10.78 11.03 (2.3)
Operating expenses per available
seat mile (cents) (3) 11.56 11.10 4.1
Fuel consumption (gallons, in millions) 1,453 1,553 (6.4)
Fuel price per gallon (cents) 88.5 71.5 23.8
Regional Affiliates
Revenue passenger miles (millions) 2,554 2,199 16.1
Available seat miles (millions) 4,096 3,485 17.5
Passenger load factor 62.3% 63.1% (0.8) pts.
* Greater than 100%
(1) Excludes $865 million, or 1.07 cents per available seat
mile (ASM), and $59 million, or .07 cents per ASM, of
expenses incurred related to Regional Affiliates in 2003 and
2002, respectively. Calculated using American mainline jet
operations ASMs. Therefore both the numerator and the
denominator exclude Regional Affiliates. The Company
believes that excluding costs related to Regional Affiliates
provides a measure which is more comparable to American's
historical operating expenses per ASM.
(2) Excludes the receipt of government reimbursement of
security fees of $(315) million and Special charges of $76
million, or a total of (.29) cents per ASM, in 2003. The
Company believes that excluding the reimbursement of
security fees and Special charges provides a measure that is
more representative of ongoing costs and therefore more
comparable to American's historical operating expense per ASM.
(3) Calculated using mainline jet operations ASMs.
Note: Certain amounts have been reclassified to conform with
the 2003 presentation.
American Airlines, Inc. 2003 operating expenses include
expenses incurred related to fixed fee per block hour
agreements with Regional Affiliates - American Eagle Airlines
Inc., Executive Airlines, Inc., Trans States Airlines, Inc.
and Chautauqua Airlines, Inc. whereas 2002 operating expenses
include expenses incurred related to fixed fee per block hour
agreements with Regional Affiliate - Chautauqua Airlines, Inc.