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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: May 10, 2001
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)
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Item 5. Other Events
On May 10, 2001, AMR Corporation (AMR) hosted a security
analyst meeting to discuss the recent Trans World
Airlines, Inc. (TWA) acquisition and to provide information on
how the TWA transaction is expected to impact AMR. The meeting
was simultaneously webcast via the AMR website. The following
information was discussed at that meeting.
On April 9, 2001, a wholly owned subsidiary of American Airlines,
Inc. purchased substantially all of the assets of TWA for
approximately $625 million in cash (subject to certain working
capital adjustments), including the satisfaction of $312 million
in debtor-in-possession financing which was funded by AMR. American
Airlines, Inc. (American or the Company) also assumed certain
liabilities of TWA, primarily aircraft lease obligations.
As part of the acquisition of TWA, the Company acquired the
following assets:
- A hub operation in St. Louis
- Maintenance facilities in Kansas City, Los Angeles and St. Louis
- Approximately 18,000 highly trained professional line employees
- 171 slots and leases on 138 gates
- 173 aircraft, comprised of the following fleet types:
Equipment Type Owned Leased Total
Boeing 717-200 - 15 15
Boeing 757-200 - 27 27
Boeing 767-300 Extended Range - 9 9
McDonnell Douglas DC-9 - 19 19
McDonnell Douglas MD-80 17 86(1) 103
Total 17 156 173
(1) American has agreed to purchase three leased McDonnell
Douglas MD-80 aircraft
- Firm aircraft purchase commitments for 15 Boeing 717-200 aircraft
The Company expects to realize certain synergies from the
acquisition of TWA. On a steady state basis, the Company expects
to generate revenue synergies of approximately $400 - $500
million annually (or an approximate two percent improvement in
unit revenue), primarily driven by share shift/city presence
enhancements, yield improvements, scheduling efficiencies and the
elimination of certain discounted ticketing agreements. With
regard to costs, although the Company expects annual labor cost
increases of approximately $260 million as a result of
transitioning TWA employees to American's contracts, the Company
expects to recognize certain cost savings associated with the
acquisition. These cost savings, estimated at approximately $350
million annually on a steady state basis, are driven primarily by
a reduction in rental expense from renegotiated aircraft lease
obligations, elimination of duplicative overhead and facility
rentals, contract purchasing and the impact of the Company's fuel
hedging program on TWA's operations. The foregoing are estimates
only and are based on the Company's current expectations. Actual
revenue synergies and cost savings could vary materially from
these estimates.
In addition, the Company expects to incur integration costs
primarily over the next three years, mainly due to aircraft fleet
modifications, facility integration, training costs and certain
other integration-related items.
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The following represents the Company's estimates for TWA's 2001
operations (these estimates are based on current expectations and
could change materially based on market conditions or other factors):
Second Third Fourth
Quarter Quarter Quarter
2001* 2001 2001 2001
Revenue passenger miles (millions) 6,234 6,395 5,909 18,538
Available seat miles (millions) 8,840 8,954 8,976 26,770
Passenger load factor 70.5% 71.4% 65.8% 69.2%
Departures 67,546 68,288 68,288 204,122
Cost per available seat
mile (cents) 9.40 9.29 9.35 9.34
Fuel cost per gallon (cents) 85 83 85 84
Fuel consumption (millions) 152.9 154.2 153.6 460.6
* Includes the period April 10, 2001 through June 30, 2001
Although the Company does not expect the acquisition of TWA to
have a significantly accretive or dilutive impact on the
Company's 2001 earnings, the potential exists for some earnings
reduction if the underlying revenue environment continues to
soften as a result of lower demand for air travel.
In addition, the integration of two airlines is complex,
requiring consideration of computer systems, customer service
programs, labor issues and their interdependencies. The Company
may encounter customer service, labor or other issues as a result
of its acquisition of TWA and in connection with integrating
TWA's operations into those of American.
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 and
Exchange Act of 1934, as amended, which represent the Company's
expectations or beliefs concerning future events. When used in
this report, the words "expects", "plans", "anticipates", and
similar expressions are intended to identify forward-looking
statements. These statements are based on current expectations
or beliefs of management and are subject to a number of factors
and uncertainties that could cause actual results to differ
materially from those described in this report. The forward-
looking statements contained in this report address the
anticipated benefits of acquiring TWA's assets and the future
financial and operating results of the Company with the assets
acquired from TWA. 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. The
following factors, among others, could cause actual results and
benefits to differ materially from those expressed in this
report: inability to successfully integrate the operations of TWA
into those of American and to improve their profitability; the
inability of the Company to successfully integrate the workforce
of TWA with that of American; higher than expected acquisition or
integration costs; actions of competitors, including competitive
or strategic responses to this transaction; and other factors,
including but not limited to, those discussed in the section
entitled "Forward-Looking Information" in Item 7 of the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
2000, which section is incorporated herein by reference.
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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/ Charles D. MarLett
Charles D. MarLett
Corporate Secretary
Dated: May 11, 2001