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8-K
AMERICAN AIRLINES INC filed this Form 8-K on 01/15/2014
Entire Document
 
8-K

 

 

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 Report (Date of earliest event reported): January 15, 2014

 

 

AMERICAN AIRLINES GROUP INC.

AMERICAN AIRLINES, INC.

US AIRWAYS GROUP, INC.

US AIRWAYS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   1-8400   75-1825172
Delaware   1-2691   13-1502798
Delaware   1-8444   54-1194634

Delaware

 

1-8442

 

53-0218143

(State or other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

4333 Amon Carter Blvd., Fort Worth, Texas   76155
4333 Amon Carter Blvd., Fort Worth, Texas   76155
111 West Rio Salado Parkway, Tempe, Arizona   85281

111 West Rio Salado Parkway, Tempe, Arizona

 

85281

(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code:

(817) 963-1234

(817) 963-1234

(480) 693-0800

(480) 693-0800

 

  N/A  
  (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 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On January 15, 2014, American Airlines Group Inc. (the “Company”) provided an update for investors presenting information relating to its financial and operational outlook for 2013. This investor presentation is located on the Company’s website at www.aa.com under “Investor Relations.” The update is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.

 

Exhibit No.    Description
99.1    Investor Update


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, American Airlines Group Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    AMERICAN AIRLINES GROUP INC.

Date: January 15, 2014

    By:  

/s/ Derek J. Kerr

      Derek J. Kerr
      Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, American Airlines, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    AMERICAN AIRLINES, INC.

Date: January 15, 2014

    By:  

/s/ Derek J. Kerr

      Derek J. Kerr
      Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, US Airways Group, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    US AIRWAYS GROUP, INC.

Date: January 15, 2014

    By:  

/s/ Derek J. Kerr

      Derek J. Kerr
      Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, US Airways, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    US AIRWAYS, INC.

Date: January 15, 2014

    By:  

/s/ Derek J. Kerr

      Derek J. Kerr
      Chief Financial Officer


EXHIBIT INDEX

 

Exhibit No.    Description
99.1    Investor Update
EX-99.1

Exhibit 99.1

 

LOGO

Investor Relations Update

January 15, 2014

On December 9, 2013, the Plan of Reorganization of AMR Corporation became effective and the related merger transaction was completed. As a result, US Airways Group became a wholly-owned subsidiary of the reorganized AMR Corporation (renamed American Airlines Group Inc., or AAG). Notwithstanding these transactions, AAG’s airline operating subsidiaries, principally American Airlines, Inc. (American Airlines or AA) and US Airways, Inc. (US Airways or US) continued to operate as independent airlines. For this investor relations update, AAG is providing guidance for both American Airlines and US Airways as standalone airline operating entities for the fourth quarter 2013. The guidance relates principally to operating items. The financial statements for the fourth quarter and full year ended December 31, 2013 will also reflect material entries related to merger costs, reorganization costs and the application of acquisition accounting. 2014 combined guidance will be provided at a later time.

General Overview

 

    Cash - American Airlines Group Inc. expects to end the fourth quarter with approximately $10.3 billion in total cash and investments on a consolidated basis, of which approximately $1.0 billion is restricted. As previously disclosed in the AMR Corp. third quarter 2013 10Q, the Company has cash that has not been repatriated from Venezuela, which totaled approximately $710 million at year-end.

 

    American Airlines Fuel Guidance - For the fourth quarter 2013, American Airlines expects to pay an average of between $3.06 and $3.11 per gallon of mainline jet fuel (including taxes & hedges). Forecasted volume and fuel prices are provided in the table below.

 

    US Airways Fuel Guidance - For the fourth quarter 2013, US Airways expects to pay an average of between $3.00 and $3.05 per gallon of mainline jet fuel (including taxes, no hedges were in place). Forecasted volume and fuel prices are provided in the table below.

 

    Cargo / Other Revenue - Includes cargo revenue, frequent flier revenue, ticket change fees, excess/overweight baggage fees, first and second bag fees, contract services, simulator rental, airport clubs, and inflight service revenues.

 

    Taxes / NOL - American Airlines - At September 30, 2013, net operating losses (NOLs) available for use by American Airlines were approximately $5.7 billion for federal income tax purposes. AA’s deferred tax asset, which includes this federal NOL as well as state NOLs, is subject to a full valuation allowance. As of September 30, 2013, the valuation allowance associated with AA’s deferred tax assets was approximately $4.3 billion. In accordance with generally accepted accounting principles, utilization of the NOLs results in a corresponding decrease in the valuation allowance and offsets tax provision dollar for dollar.

 

    Taxes / NOL - US Airways - At September 30, 2013, NOLs available for use by US Airways were approximately $1.2 billion for federal income tax purposes. In Q2 of 2013, US utilized its remaining valuation allowance associated with federal income taxes. With no remaining valuation allowance to release US recorded non-cash federal income tax expense for financial reporting purposes in the second and third quarters of 2013. US will also recognize income tax expense in the fourth quarter of 2013 through the date of merger close (December 9, 2013). US expects its effective tax rate for fourth quarter earnings excluding special items through December 9 will approximate 40%.

US Airways will be required to apply acquisition accounting in conjunction with the merger. As a result, US expects it will be in a net deferred tax asset position post-merger which will be subject to a full valuation allowance and, therefore, not recognize income tax expense for the 23 days through December 31. Overall, US expects its effective tax rate on earnings excluding special items will approximate 25% for the fourth quarter of 2013.

 

    Taxes / NOL - AAG - AAG expects its consolidated NOL position to increase significantly compared to the independent NOLs of AA and US described above as a result of AA’s emergence from bankruptcy. Updated combined NOL information will be provided at a later date.

Under AAG’s certificate of incorporation, AAG common stock (AAL) and convertible preferred stock (AALCP) are subject to certain transfer restrictions designed to preserve its NOLs and related income tax benefits. A copy of the certificate of incorporation was contained in a Form 8-K filed on December 9, 2013 by AAG with the Securities and Exchange Commission.

 

    Shares Outstanding - Per the Plan of Reorganization and the related Merger Agreement, the Company became obligated to issue approximately 756 million shares of common stock (assuming, among other things, conversion of all shares of convertible preferred stock). The Company’s current estimated diluted share count is approximately 746 million. The decrease in diluted share count is primarily due to approximately 13 million shares withheld by the Company during the fourth quarter in satisfaction of employee tax obligations at an average price of $22.55 per share. The Company may withhold additional shares in satisfaction of tax liabilities for eligible employee groups in connection with future issuances contemplated by the Plan of Reorganization, principally to be at the remaining mandatory conversion dates (days 60, 90 and 120 following the effective date).

 

Please refer to the footnotes and the forward looking statements page of this document for additional information


LOGO

American Airlines Mainline Update

January 15, 2014

American Airlines Mainline Comments

 

    Mainline data includes American Airlines operated flights and all operating expenses are for mainline operated flights only. Please refer to the following page for information pertaining to American regional data.

 

    The data in the table below includes the historical non-GAAP financial results, which reflect certain reclassifications to conform to the new American Airlines Group Inc. financial statement presentation.

 

     American Airlines  
     4Q12A     1Q13A     2Q13A     3Q13A     4Q13E  

Mainline Guidance

          

Available Seat Miles (ASMs) (bil)

     37.5        37.4        38.7        40.1        38.3   

CASM ex fuel, special items and profit sharing (YOY % change)1

     8.54        8.67        8.44        8.28        +0% to +2%   

Cargo Revenues ($ mil)

     172        156        169        164        ~185   

Other Revenues

     619        649        640        645        ~650   

Average Fuel Price (incl. taxes & hedges) ($/gal)

   $ 3.22      $ 3.27      $ 3.02      $ 3.03      $ 3.06 to $3.11   

Fuel Gallons Consumed (mil)

     595        592        623        643        ~606   

Interest (Income) ($ mil)

     (6     (4     (5     (5     ~(6

Interest Expense ($ mil)2

     150        138        161        180        ~174   

Other Non-Operating (Income)/Expense ex special items ($ mil)3

     9        24        12        11        ~13   

Notes:

 

1. CASM ex fuel, special items and profit sharing is a non-GAAP financial measure. Please see the GAAP to non-GAAP reconciliation at the end of this document.
2. Interest expense ex special items. Please see the GAAP to non-GAAP reconciliation at the end of this document.
3. Other Non-Operating (Income)/Expense ex special items includes primarily gains and losses from foreign currency.

 

Please refer to the footnotes and the forward looking statements page of this document for additional information


LOGO

American Regional Update

January 15, 2014

American Regional Comments

 

    The airlines providing American with regional feed included wholly owned subsidiary American Eagle and four third-party regional airlines, Chautauqua, ExpressJet, Republic and SkyWest.

 

    The data in the table below includes the historical non-GAAP financial results, which reflect certain reclassifications to conform to the new American Airlines Group Inc. financial statement presentation.

 

    All operating expenses (including capacity purchase agreements) associated with regional operations are included within the regional non-fuel operating expense line item on the income statement.

 

     American Airlines Regional  
     4Q12A      1Q13A      2Q13A      3Q13A      4Q13E  

Regional Guidance

              

Available Seat Miles (ASMs) (bil)

     3.35         3.32         3.48         3.56         3.47   

CASM ex fuel and special items (YOY % change)1

     15.23         15.47         14.60         14.45         -2% to -4%   

Average Fuel Price (incl. taxes & hedges) ($/gal)

   $ 3.21       $ 3.24       $ 3.00       $ 3.04       $ 3.06 to $3.11   

Fuel Gallons Consumed (mil)

     78         82         87         89         ~85   

American Airlines Regional Carriers

              

AMR Eagle2

              

SkyWest Airlines, Inc.

              

ExpressJet Airlines, Inc.

              

Republic Airline Inc.

              

Chautauqua Airlines, Inc.

              

Notes:

 

1. CASM ex fuel expense and special items is a non-GAAP financial measure. Please see the GAAP to non-GAAP reconciliation at the end of this document.
2. Wholly owned subsidiary of American Airlines Group Inc.

 

Please refer to the footnotes and the forward looking statements page of this document for additional information


LOGO

US Airways Mainline Update

January 15, 2014

US Airways Mainline Comments

 

    Mainline data includes US Airways operated flights and all operating expenses are for mainline operated flights only. Please refer to the following page for information pertaining to Regional.

 

    The data in the table below includes the historical non-GAAP financial results, which reflect certain reclassifications to conform to the new American Airlines Group Inc. financial statement presentation.

 

     US Airways  
     4Q12A     1Q13A      2Q13A     3Q13A     4Q13E  

Mainline Guidance

           

Available Seat Miles (ASMs) (bil)

     17.5        18.0         20.2        20.5        18.7   

CASM ex fuel, special items and profit sharing (YOY % change)1

     8.36        8.52         7.96        7.81        -1% to -3%   

Cargo Revenues ($ mil)

     41        41         35        37        ~40   

Other Revenues

     322        369         367        345        ~350   

Average Fuel Price (incl. taxes) ($/gal)

   $ 3.19      $ 3.24       $ 2.92      $ 3.01      $ 3.00 to $3.05   

Fuel Gallons Consumed (mil)

     260        266         299        304        ~276   

Interest (Income) ($ mil)

     (1     —           (1     —          ~0   

Interest Expense ($ mil)

     87        84         90        88        ~86   

Other Non-Operating (Income)/Expense ex special items ($ mil)2

     1        4         5        (2     ~0   

Notes:

 

1. CASM ex fuel, special items and profit sharing is a non-GAAP financial measure. Please see the GAAP to non-GAAP reconciliation at the end of this document.
2. Other Non-Operating (Income)/Expense ex special items includes primarily gains and losses from foreign currency.

 

Please refer to the footnotes and the forward looking statements page of this document for additional information


LOGO

US Airways Regional Update

January 15, 2014

US Airways Regional Comments

 

    US Airways regional is a network of 7 regional airlines (2 wholly owned) operating under code share and service agreements with US Airways.

 

    The data in the table below includes the historical non-GAAP financial results, which reflect certain reclassifications to conform to the new American Airlines Group Inc. financial statement presentation.

 

    All operating expenses (including capacity purchase agreements) associated with regional operations are included within the regional non-fuel operating expense line item on the income statement.

 

     US Airways Regional
     4Q12A     1Q13A      2Q13A      3Q13A     

4Q13E

US Airways Regional Guidance

             

Available Seat Miles (ASMs) (bil)

     3.49        3.46         3.64         3.63       3.48

CASM ex fuel and special items (YOY %change)1

     15.68        16.18         15.42         15.50       +6% to +8%

Average Fuel Price (incl. taxes) ($/gal)

   $ 3.19      $ 3.23       $ 2.96       $ 3.00       $2.99 to $3.04

Fuel Gallons Consumed (mil)

     84        84         88         88       ~85

US Airways Regional Carriers

             

Air Wisconsin Airlines Corporation

     Republic Airline, Inc.              

Mesa Airlines, Inc.

     SkyWest Airlines, Inc.              

Piedmont Airlines, Inc. 2

     Trans States Airlines, Inc.3              

PSA Airlines, Inc.2

             

Notes:

 

1. CASM ex fuel expense and special items is a non-GAAP financial measure. Please see the GAAP to non-GAAP reconciliation at the end of this document.
2. Wholly owned subsidiary of US Airways Group, Inc.
3. Pro-rate agreement.

 

Please refer to the footnotes and the forward looking statements page of this document for additional information


LOGO

Fleet Update

January 15, 2014

American Fleet Comments

 

    AA took delivery of 20 new Airbus aircraft in 2013 (5 A321 aircraft and 15 A319 aircraft) and 39 new Boeing aircraft (31 B737-800 and 8 B777-300 aircraft). AA retired 45 aircraft in 2013, including 28 MD-80, 12 B757, and 5 B767-200 aircraft.

 

American Airlines Mainline Fleet Update (End of Period)

 

    YE12A     1Q13A     2Q13A     3Q13A     4Q13A  

Mainline

         

A319

    —          —          —          10        15   

MD80

    190        185        180        171        162   

B738

    195        204        213        221        226   

B757

    102        101        96        92        90   

A321

    —          —          —          —          5   

B767-200

    14        12        12        12        9   

B767-300

    58        58        58        58        58   

B777-200

    47        47        47        47        47   

B777-300

    2        5        8        9        10   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    608        612        614        620        622   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

American Regional Fleet Update (End of Period)

 

    YE12A     1Q13A     2Q13A     3Q13A     4Q13A  

Regional

         

ATR

    9        6        —          —          —     

EMB-135

    21        19        11        7        —     

EMB-140

    74        74        74        74        74   

EMB-145

    118        118        118        118        118   

CRJ-200

    12        23        23        23        23   

CRJ-700

    47        47        47        47        47   

EMB-175

    —          —          —          9        18   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    281        287        273        278        280   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
 

 

US Airways Fleet Comments

 

    In 2013, US Airways took delivery of 21 new Airbus aircraft (16 A321 aircraft and five A330-200 aircraft) and retired 20 aircraft, including 18 737-400 aircraft and two A320 aircraft.

 

US Airways Mainline Fleet Update (End of Period)

 

    YE12A     1Q13A     2Q13A     3Q13A     4Q13A  

Mainline

         

EMB-190

    18        20        20        20        20   

B737-400

    32        32        26        18        14   

A319

    93        93        93        93        93   

A320

    72        72        72        72        70   

A321

    75        79        83        88        91   

A330-200

    7        7        9        10        12   

A330-300

    9        9        9        9        9   

B757

    24        24        24        24        24   

B767-200

    10        10        10        10        10   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    340        346        346        344        343   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

US Airways Regional Fleet Update (End of Period)

 

    YE12A     1Q13A     2Q13A     3Q13A     4Q13A  

Regional

         

DH8

    44        44        43        43        40   

CRJ-200

    119        119        119        115        115   

CRJ-700

    14        14        14        14        14   

CRJ-900

    38        38        45        51        51   

EMB-170

    20        20        20        20        20   

EMB-145

    9        9        2        —          —     

EMB-175

    38        38        38        38        38   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    282        282        281        281        278   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
 

 

Please refer to the footnotes and the forward looking statements page of this document for additional information


American Airlines Group Inc. (Formerly AMR Corporation)

Consolidated Statements of Operations

(In millions)

(Unaudited)

Note: The following table presents the historical financial results, which reflect certain reclassifications to conform to the new American Airlines Group Inc. financial statement presentation. See note below table for more detail.

 

     4Q12     1Q13     2Q13     3Q13  

Operating revenues:

        

Mainline passenger

   $ 4,440      $ 4,614      $ 4,888      $ 5,253   

Regional passenger

     706        679        752        766   

Cargo

     172        156        169        164   

Other

     619        649        640        645   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenues

     5,937        6,098        6,449        6,828   

Operating expenses:

        

Aircraft fuel and related taxes

     1,913        1,934        1,880        1,950   

Salaries, wages and benefits

     1,383        1,267        1,284        1,380   

Regional expenses:

        

Fuel

     250        265        260        270   

Other

     509        515        509        515   

Maintenance, materials and repairs

     290        326        317        289   

Other rent and landing fees

     262        288        284        279   

Aircraft rent

     139        165        181        192   

Selling expenses

     230        290        273        294   

Depreciation and amortization

     196        204        207        204   

Special items, net

     58        71        12        15   

Other

     700        702        730        739   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     5,930        6,027        5,937        6,127   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     7        71        512        701   

Nonoperating income (expense):

        

Interest income

     6        4        5        5   

Interest expense, net

     (150     (254     (161     (226

Other, net

     271        (24     (12     (40
  

 

 

   

 

 

   

 

 

   

 

 

 

Total nonoperating income (expense), net

     127        (274     (168     (261
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before reorganization items, net

     134        (203     344        440   

Reorganization items, net

     (441     (160     (124     (151
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     (307     (363     220        289   

Income tax benefit

     (569     (22     —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 262      $ (341   $ 220      $ 289   
  

 

 

   

 

 

   

 

 

   

 

 

 

The Company is providing the historic income statements above of American Airlines Group to provide investors with the new financial statement line presentation. These income statements reflect certain reclassifications between various financial statement line items. These reclassifications do not impact the historic net income. These reclassifications are comprised principally of the following items for American Airlines Group:

 

    Reclassifications between various operating expense line items to conform the presentation of regional airline expenses.

 

    Reclassifications between other nonoperating expense, net and operating expenses to conform the presentation of foreign currency gains and losses.

 

Please refer to the footnotes and the forward looking statements page of this document for additional information


US Airways Group, Inc.

Consolidated Statements of Operations

(In millions)

(Unaudited)

Note: The following table presents the historical financial results, which reflect certain reclassifications to conform to the new American Airlines Group Inc. financial statement presentation. See note below table for more detail.

 

     4Q12     1Q13     2Q13     3Q13  

Operating revenues:

        

Mainline passenger

   $ 2,080      $ 2,197      $ 2,560      $ 2,594   

Regional passenger

     808        763        888        864   

Cargo

     41        41        35        37   

Other

     322        369        367        345   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenues

     3,251        3,370        3,850        3,840   

Operating expenses:

        

Aircraft fuel and related taxes

     830        861        872        915   

Salaries, wages and benefits

     577        614        679        658   

Regional expenses:

        

Fuel

     268        271        261        265   

Other

     547        561        561        549   

Maintenance, materials and repairs

     177        175        188        180   

Other rent and landing fees

     127        135        148        155   

Aircraft rent

     159        154        153        150   

Selling expenses

     107        112        124        128   

Depreciation and amortization

     66        71        73        77   

Special items, net

     9        39        24        40   

Other

     261        275        288        296   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     3,128        3,268        3,371        3,413   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     123        102        479        427   

Nonoperating income (expense):

        

Interest income

     1        —          1        —     

Interest expense, net

     (87     (84     (90     (88

Other, net

     (1     26        (36     (3
  

 

 

   

 

 

   

 

 

   

 

 

 

Total nonoperating expense, net

     (87     (58     (125     (91
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     36        44        354        336   

Income tax provision (benefit)

     (1     —          67        120   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 37      $ 44      $ 287      $ 216   
  

 

 

   

 

 

   

 

 

   

 

 

 

The Company is providing the historic income statements above of US Airways Group to provide investors with the new financial statement line presentation for American Airlines Group. These income statements reflect certain reclassifications between various financial statement line items. These reclassifications do not impact the historic net income. These historic financial statements also do not reflect the impact of purchase accounting, which US Airways Group will apply prospectively to its financial statements as of December 8, 2013. These reclassifications are comprised principally of the following items for US Airways Group:

 

  Reclassifications between other operating expenses and operating revenues to conform the presentation of frequent flyer revenues.

 

  Reclassifications between various operating expense line items to conform the presentation of regional airline expenses.

 

  Reclassifications between other nonoperating expense, net and operating expenses to conform the presentation.

 

Please refer to the footnotes and the forward looking statements page of this document for additional information


LOGO

GAAP to Non-GAAP Reconciliation

January 15, 2014

American Airlines Reconciliation of GAAP to Non-GAAP Financial Information

The Company is providing disclosure of the reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis. The Company believes that the non-GAAP financial measures provide investors the ability to measure financial performance excluding special items and profit sharing, which is more indicative of the Company’s ongoing performance and is more comparable to measures reported by other major airlines. The Company believes that the presentation of mainline CASM excluding fuel, special items and profit sharing and regional CASM excluding fuel and special items is useful to investors because both the cost and availability of fuel are subject to many economic and political factors beyond the Company’s control.

 

     American Airlines GAAP to Non-GAAP Reconciliation  
     ($ mil except ASM and CASM data)  
     4Q12     1Q13      2Q13      3Q13      4Q13 Range  
     Actual     Actual      Actual      Actual      Low      High  

Mainline

                

Mainline operating expenses1

   $ 5,171      $ 5,247       $ 5,168       $ 5,342       $ 5,126       $ 5,221   

Less mainline fuel

     1,913        1,934         1,880         1,950         1,854         1,885   

Less special items

     58        71         12         15         —           —     

Less profit sharing

     —          —           6         59         —           —     
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Mainline operating expense excluding fuel, special items and profit sharing

     3,200        3,242         3,270         3,318         3,272         3,336   

Mainline CASM (cts)1

     13.80        14.03         13.35         13.33         13.38         13.63   

Mainline CASM excluding fuel, special items and profit sharing (Non-GAAP) (cts)

     8.54        8.67         8.44         8.28         8.54         8.71   

Mainline ASMs (bil)

     37.5        37.4         38.7         40.1         38.3         38.3   

Regional

                

Regional operating expenses

   $ 759      $ 780       $ 769       $ 785       $ 767       $ 782   

Less regional fuel expense

     250        265         260         270         260         264   

Less special items

     —          2         1         —           —           —     
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Regional operating expenses excluding fuel and special items

     509        513         508         515         507         518   

Regional CASM (cts)

     22.68        23.51         22.08         22.02         22.11         22.54   

Regional CASM excluding fuel and special items (Non-GAAP) (cts)

     15.23        15.47         14.60         14.45         14.62         14.92   

Regional ASMs (bil)

     3.35        3.32         3.48         3.56         3.47         3.47   

Interest Expense

                

Reported interest expense

   $ 150      $ 254       $ 161       $ 226       $ 174       $ 174   

Special items

     —          116         —           46         —           —     
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Interest Expense excluding special items

     150        138         161         180         174         174   

Other Non-Operating (Income)/Expense

                

Reported other non-operating (income)/expense

   $ (271   $ 24       $ 12       $ 40       $ 13       $ 13   

Less special items

     (280     —           —           29         —           —     
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Other non-operating (income)/expense excluding special items

     9        24         12         11         13         13   

Notes: Amounts may not recalculate due to rounding.

(1) Forecasted mainline operating expenses exclude profit sharing and special items.

 

Please refer to the footnotes and the forward looking statements page of this document for additional information


LOGO

GAAP to Non-GAAP Reconciliation

January 15, 2014

US Airways Reconciliation of GAAP to Non-GAAP Financial Information

The Company is providing disclosure of the reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis. The Company believes that the non-GAAP financial measures provide investors the ability to measure financial performance excluding special items and profit sharing, which is more indicative of the Company’s ongoing performance and is more comparable to measures reported by other major airlines. The Company believes that the presentation of mainline CASM excluding fuel, special items and profit sharing and regional CASM excluding fuel and special items is useful to investors because both the cost and availability of fuel are subject to many economic and political factors beyond the Company’s control.

 

     US Airways Group GAAP to Non-GAAP Reconciliation  
     ($ mil except ASM and CASM data)  
     4Q12      1Q13     2Q13      3Q13     4Q13 Range  
     Actual      Actual     Actual      Actual     Low      High  

Mainline

               

Mainline operating expenses1

   $ 2,313       $ 2,436      $ 2,549       $ 2,599      $ 2,345       $ 2,390   

Less mainline fuel

     830         861        872         915        828         842   

Less special items

     9         39        24         40        —           —     

Less profit sharing

     6         6        47         42        —           —     
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Mainline operating expense excluding fuel, special items and profit sharing

     1,468         1,530        1,606         1,602        1,517         1,548   

Mainline CASM (cts)1

     13.18         13.57        12.63         12.67        12.54         12.78   

Mainline CASM excluding fuel, special items and profit sharing (Non-GAAP) (cts)

     8.36         8.52        7.96         7.81        8.11         8.28   

Mainline ASMs (bil)

     17.5         18.0        20.2         20.5        18.7         18.7   

Regional

               

Regional operating expenses

   $ 815       $ 832      $ 822       $ 814      $ 832       $ 847   

Less regional fuel expense

     268         271        261         265        254         258   

Less special items

     —           2        —           (14     —           —     
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Regional operating expenses excluding fuel and special items

     547         559        561         563        578         589   

Regional CASM (cts)

     23.35         24.07        22.60         22.41        23.93         24.36   

Regional CASM excluding fuel and special items (Non-GAAP) (cts)

     15.68         16.18        15.42         15.50        16.62         16.93   

Regional ASMs (bil)

     3.49         3.46        3.64         3.63        3.48         3.48   

Other Non-Operating (Income)/Expense

               

Reported other non-operating (income)/expense

   $ 1       $ (26   $ 36       $ 3      $ 1       $ 1   

Less special items

   $ —         $ (30   $ 31       $ 5      $ 1       $ 1   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Other non-operating (income)/expense excluding special items

   $ 1       $ 4      $ 5       $ (2   $ 0       $ 0   

Notes: Amounts may not recalculate due to rounding.

(1) Forecasted mainline operating expenses exclude profit sharing and special items.

 

Please refer to the footnotes and the forward looking statements page of this document for additional information


LOGO

Forward Looking Statements

January 15, 2014

Cautionary Statement Regarding Forward-Looking Statements

This document includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “forecast” and other similar words. Such statements include, but are not limited to, statements about the benefits of the business combination transaction involving American Airlines Group Inc. (formerly named AMR Corporation) (the “Company”) and US Airways Group, Inc. (“US Airways”), including future financial and operating results, the Company’s plans, objectives, expectations and intentions, and other statements that are not historical facts. These forward-looking statements are based on the Company’s current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the forward-looking statements. The following factors, among others, could cause actual results and financial position and timing of certain events to differ materially from those described in the forward-looking statements: the challenges and costs of integrating operations and achieving anticipated synergies; the effects of divestitures pursuant to the settlement with the Department of Justice and certain states; the price of, market for and potential market price volatility of the Company’s common stock and preferred stock; the Company’s significant liquidity requirements and substantial levels of indebtedness; the impact of significant operating losses in the future; downturns in economic conditions that adversely affect our business; the impact of the price and availability of fuel and significant disruptions in the supply of aircraft fuel; competitive practices in the industry, including the impact of industry consolidation; increased costs of financing, a reduction in the availability of financing and fluctuations in interest rates; the Company’s high level of fixed obligations and ability to fund general corporate requirements, obtain additional financing and respond to competitive developments; any failure to comply with the liquidity covenants contained in financing arrangements; provisions in credit card processing and other commercial agreements that may affect the Company’s liquidity; the impact of union disputes, employee strikes and other labor-related disruptions; the inability to maintain labor costs at competitive levels; interruptions or disruptions in service at one or more of the Company’s hub airports; regulatory changes affecting the allocation of slots; the Company’s reliance on third-party regional operators or third-party service providers; the Company’s reliance on and costs, rights and functionality of third-party distribution channels, including those provided by global distribution systems, conventional travel agents and online travel agents; the impact of extensive government regulation; the impact of heavy taxation; the impact of changes to the Company’s business model; the loss of key personnel or inability to attract and retain qualified personnel; the impact of conflicts overseas or terrorist attacks, and the impact of ongoing security concerns; the Company’s ability to operate and grow its route network; the impact of environmental regulation; the Company’s reliance on technology and automated systems and the impact of any failure or disruption of, or delay in, these technologies or systems; costs of ongoing data security compliance requirements and the impact of any significant data security breach; the impact of any accident involving the Company’s aircraft or the aircraft of its regional operators; delays in scheduled aircraft deliveries or other loss of anticipated fleet capacity; the Company’s dependence on a limited number of suppliers for aircraft, aircraft engines and parts; the impact of changing economic and other conditions and seasonality of the Company’s business; the impact of possible future increases in insurance costs or reductions in available insurance coverage; the impact of global events that affect travel behavior, such as an outbreak of a contagious disease; the impact of foreign currency exchange rate fluctuations and limitations on the repatriation of cash held in foreign countries; the Company’s ability to use NOLs and certain other tax attributes; and other economic, business, competitive, and/or regulatory factors affecting the Company’s business, including those set forth in the filings of US Airways and the Company with the SEC, especially in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of their respective annual reports on Form 10-K and quarterly reports on Form 10-Q, current reports on Form 8-K and other SEC filings. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statements. The Company does not assume any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these forward-looking statements except as required by law.

 

Please refer to the footnotes and the forward looking statements page of this document for additional information