aa09188k.htm

 
UNITED STATES
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: September 18, 2008


American Airlines, Inc.
(Exact name of registrant as specified in its charter)


Delaware
1-2691
13-1502798
(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)
  




   (Former name or former address, if changed since last report.)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 8.01
  
Other Events
  

American Airlines, Inc. is filing herewith its Eagle Eye communication to investors by its parent company, AMR Corporation.  This document includes (a) actual unit cost, fuel price, capacity and traffic information for July and August and (b) forecasts of unit cost, revenue performance, fuel prices and fuel hedging, capacity and traffic estimates, liquidity expectations, other income/expense estimates and share count.


 
 
 


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.



 
American Airlines, Inc.
   
   
   
 
/s/ Kenneth W. Wimberly
 
Kenneth W. Wimberly
 
Corporate Secretary



Dated:  September 18, 2008

 
 
 

AMR EAGLE EYE
September 18, 2008

Statements in this report 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 document, the words “expects”, “plans,” “anticipates,” “indicates,” “believes,” “forecast,” “guidance,” “outlook”, “may,” “will,” “should” and similar expressions are intended to identify forward-looking statements.  Similarly, statements that describe our objectives, plans or goals are 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; future financing plans and needs; overall economic conditions; plans and objectives for future operations; and the impact on the Company of its results of operations in recent 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 report are based upon information available to the Company on the date of this report. 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.  This document includes forecasts of unit cost and revenue performance, fuel prices and fuel hedging, capacity and traffic estimates, other income/expense estimates, share count, and statements regarding the Company’s liquidity, each of which is a forward-looking statement.  Forward-looking statements are subject to a number of factors that could cause the Company’s actual results to differ materially from the Company’s 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 materially weakened financial condition of the Company, resulting from its significant losses in recent years; the ability of the Company to generate additional revenues and reduce its costs; changes in economic and other conditions beyond the Company’s control, and the volatile results of the Company’s operations; the Company’s substantial indebtedness and other obligations; the ability of the Company to satisfy existing financial or other covenants in certain of its credit agreements; continued high and volatile fuel prices and further increases in the price of fuel, and the availability of fuel; the fiercely and increasingly competitive business environment faced by the Company; industry consolidation; competition with reorganized and reorganizing carriers; low fare levels by historical standards and the Company’s reduced pricing power; the Company’s potential need to raise additional funds and its ability to do so on acceptable terms; changes in the Company’s corporate or business strategy; government regulation of the Company’s business; conflicts overseas or terrorist attacks; uncertainties with respect to the Company’s international operations; outbreaks of a disease (such as SARS or avian flu) that affects travel behavior; labor costs that are higher than those of the Company’s competitors; uncertainties with respect to the Company’s relationships with unionized and other employee work groups; increased insurance costs and potential reductions of available insurance coverage; the Company’s ability to retain key management personnel; potential failures or disruptions of the Company’s computer, communications or other technology systems; changes in the price of the Company’s common stock; and the ability of the Company to reach acceptable agreements with third parties.  Additional information concerning these and other factors is contained in the Company’s Securities and Exchange Commission filings, including but not limited to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

This Eagle Eye provides updated guidance for the third quarter and the full year 2008.

Performance Update

Costs:  Unit cost forecasts are attached.  


Revenue:  Third quarter mainline unit revenue is expected to increase between 9.5% and 10.5% year over year.  Third quarter consolidated unit revenue is expected to increase between 9.4% and 10.4%.  In total, Cargo and Other Revenue is anticipated to increase substantially relative to third quarter 2007.


Liquidity:  We expect to end the third quarter with a cash and short-term investment balance of approximately $4.9 billion, including approximately $455 million in restricted cash and short-term investments.


Eric Briggle
Managing Director, Investor Relations



 
AMR EAGLE EYE
              
                 
                 
Fuel Forecast
              
                 
Fuel Hedge Position:
              
 
3Q08:  Hedged on approximately 39% of consumption at an average cap of $3.11/gallon jet fuel equivalent.
 
FY08:  Hedged on approximately 37% of consumption at an average cap of $2.77/gallon jet fuel equivalent.
                 
AMR Fuel Price (Including Effective Hedges and Taxes) and Consumption (based on 9/5/08 forward curve)
  
                 
     
Actual
    
 
Forecast
  
     
Jul
Aug
  
Sep
3Q08
2008
 
Fuel Price (dollars/gal)
  
            3.79
             3.57
  
            3.25
             3.55
             3.17
 
Fuel Consumption (MM gals)
  
         264.8
         263.2
  
         234.9
          762.9
      2,983.6
                 
Unit Cost Forecast (cents)
              
                 
AMR Consolidated Cost per ASM
              
     
Actual
    
 
Forecast
  
     
Jul
Aug
  
Sep
3Q08
2008
 
AMR Cost per ASM
  
          14.94
           14.45
  
          14.46
          14.62
           14.76
 
AMR Cost per ASM (ex-special items) 1/ 2/
          14.89
          14.40
  
          14.38
           14.56
          14.08
 
AMR Cost per ASM (ex-fuel and special items) 1/ 2/
            8.49
             8.41
  
            8.87
            8.58
             8.71
                 
American Mainline Cost per ASM
              
     
Actual
    
 
Forecast
  
     
Jul
Aug
  
Sep
3Q08
2008
 
AA Cost per ASM
  
          14.24
           13.81
  
           13.76
          13.94
           14.05
 
AA Cost per ASM (ex-special items) 1/ 2/
           14.19
           13.75
  
           13.67
          13.88
           13.31
 
AA Cost per ASM (ex-fuel and special items) 1/ 2/
            7.96
            7.89
  
            8.33
            8.05
            8.09
                 
Notes:
3Q08 and FY2008 unit cost estimates incorporate effects of capacity reductions as announced in the second quarter.  The increase in ex-fuel unit cost versus prior guidance is primarily due to cost headwinds associated with reduced capacity.
                 
                 
 
1/  The Company believes that unit costs excluding fuel and/or special items is a useful measurement to investors in monitoring the Company's ongoing cost performance.
                 
                 
 
2/  Special items include aircraft and severance charges associated with announced capacity reductions, expected to total approximately $27 million for the third quarter.
                 

 
 
 

Capacity and Traffic Forecast (millions)
              
                 
AA Mainline Operations
              
     
Actual
    
 
Forecast
  
     
Jul
Aug
  
Sep
3Q08
2008
 
ASMs
  
        14,526
         14,565
  
        12,859
        41,950
      163,619
 
  Domestic
  
          9,018
         9,048
  
           7,971
       26,037
       101,805
 
  International
  
          5,508
            5,517
  
         4,888
         15,913
         61,814
                 
 
Traffic
  
        12,466
         12,164
  
          9,845
       34,474
       132,911
                 
Regional Affiliate Operations
              
     
Actual
    
 
Forecast
  
     
Jul
Aug
  
Sep
3Q08
2008
 
ASMs
  
            1,159
           1,126
  
           1,018
         3,303
        12,652
                 
 
Traffic
  
             852
             786
  
             649
         2,288
          8,995
                 
Below the Line Income/Expenses
              
                 
 
Total Other Income(Expense) is estimated at ($143) million in the third quarter of 2008. 1/
    
                 
Notes:
1/  Excludes gain from the sale of American Beacon Advisors.
        
                 


 
 
 
AMR EAGLE EYE
              
                 
                 
Share Count (millions)
              
                 
 
3Q08
              
 
Earnings
Basic
Diluted
          
 
Over $67 million
258
296
          
 
$50-$66 million
258
281
          
 
$0-$49 million
258
268
          
 
Loss
258
258
          
                 
 
FY2008
              
 
Earnings
Basic
Diluted
          
 
Over $268 million
259
296
          
 
$199-$267 million
259
281
          
 
$0-$198 million
259
269
          
 
Loss
259
259
          
                 
Reconciliation to GAAP
              
                 
     
Actual
    
 
Forecast
  
     
Jul
Aug
  
Sep
3Q08
2008
Cents
                
AMR CASM
  
          14.94
           14.45
  
          14.46
          14.62
           14.76
Less Special Items CASM
  
            0.05
            0.05
  
            0.08
            0.06
            0.68
AMR CASM Excluding Special Items
  
          14.89
          14.40
  
          14.38
           14.56
          14.08
                 
Less Fuel CASM
  
            6.40
            5.99
  
              5.51
            5.98
             5.37
AMR CASM Excluding Fuel and Special Items
  
            8.49
             8.41
  
            8.87
            8.58
             8.71
                 
                 
                 
     
Actual
    
 
Forecast
  
     
Jul
Aug
  
Sep
3Q08
2008
Cents
                
AA CASM
  
          14.24
           13.81
  
           13.76
          13.94
           14.05
Less Special Items CASM
  
            0.05
            0.06
  
            0.09
            0.06
            0.74
AA CASM Excluding Special Items
  
           14.19
           13.75
  
           13.67
          13.88
           13.31
                 
Less Fuel CASM
  
            6.23
            5.86
  
            5.34
            5.83
            5.22
AA CASM Excluding Fuel and Special Items
  
            7.96
            7.89
  
            8.33
            8.05
            8.09