1
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 18, 2001
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)
2
Item 5. Other Events
American Airlines, Inc. (American, a wholly owned subsidiary of AMR
Corporation) collective bargaining agreement with the Association
of Professional Flight Attendants (APFA) became amendable on
November 1, 1998. In May 1999, American and the APFA reached a
tentative agreement on a new labor contract. The tentative
agreement was approved by the APFA Board of Directors and sent out
for membership ratification, but subsequently was rejected by the
APFA membership. Negotiations continued between American and the
APFA with the assistance of a federal mediator. On May 23, 2001,
the National Mediation Board (NMB) declared an impasse and
proffered binding arbitration to the APFA and American. American
agreed to arbitration but because the APFA did not also agree, the
proffer was rejected and on May 31, 2001, a 30-day "cooling off"
period commenced. Beginning July 1, 2001, either party could
resort to self-help remedies, including a strike against American
by the members of the APFA. On June 25, 2001, the White House
announced that it would appoint a Presidential Emergency Board
(PEB) to intervene in American's negotiations with the APFA if a
negotiated settlement had not been reached by July 1, 2001.
However, on June 30, 2001, prior to the appointment of a PEB,
American and the APFA reached a tentative agreement on a new
contract. The APFA Board approved the tentative agreement on July
11, 2001, and the agreement has been submitted to the APFA
membership for ratification. It is anticipated that the
membership's decision will be known in September 2001. If the
tentative agreement is rejected by the APFA, then unless the
President then appoints a PEB, either party will be permitted to
resort to self-help remedies, which include, but are not limited
to, a strike by the members of the APFA. However, the Company and
the APFA have agreed to a timetable under which neither party will
resort to self-help remedies for a period of 30 days following the
failure of the APFA membership to ratify the tentative agreement.
Any work stoppage by the APFA members would have a material adverse
impact on American and AMR Corporation.
In another matter, on June 26, 2001, the U.S. Department of Justice
appealed the granting of American's motion for summary judgment in
the U.S. government's 1999 civil lawsuit alleging predatory pricing
by American. The government has requested that the 10th Circuit
Court of Appeals set the following briefing schedule: the
government's brief to be filed on September 28, 2001; American's
response to be filed November 20, 2001; and the government's reply
to be filed on December 11, 2001. American did not oppose the
government's request. No date has been set for oral argument.
Also, AMR Corporation (the Company) is filing herewith a press
release issued on July 18, 2001 by the Company as Exhibit 99.1
which is included herein. This press release was issued to report
the Company's second quarter 2001 earnings.
Item 7. Financial Statements and Exhibits
The following exhibits are included herein:
99.1 Press Release
3
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 19, 2001
4
EXHIBIT INDEX
Exhibit Description
99.1 Press Release
5
Exhibit 99.1
Contact: Corporate Communications
Fort Worth, Texas
817-967-1577
FOR RELEASE: Wednesday, July 18, 2001
Editor's Note: A live webcast reporting second quarter results will be
broadcast on the Internet today at 2 p.m. EDT. Visit
www.amrcorp.com then click on "Investor Relations." Real Player or
Windows Media required for viewing.
AMR POSTS $105 MILLION SECOND QUARTER LOSS BEFORE SPECIAL ITEMS
AS ECONOMIC DOWNTURN CONTINUES
FORT WORTH, Texas - AMR Corp., the parent company of both
American Airlines, Inc., and TWA Airlines LLC, today reported a
second quarter net loss of $105 million, or $0.68 loss per share,
before special items. This compares with net earnings of $285
million, or $1.75 per share diluted, before a special item,
recorded in the second quarter of 2000. The company attributed the
poor results to the continuing weakness in the U.S. economy and
high fuel prices.
"During the second quarter, we experienced a significant
reduction in demand for business travel that severely eroded our
revenue," said Don Carty, AMR's chairman and chief executive
officer. "And despite our fuel hedging program, fuel prices
remained high, which put further pressure on earnings."
Carty also said that if current conditions persist, the
company anticipates a loss for the third quarter and full year
2001.
Carty noted that AMR has taken steps to trim capacity in
response to the decline in business travel. Last month, AMR
announced that it will retire 22 aircraft, including TWA's entire
fleet of 19 DC-9s. These aircraft, originally scheduled to leave
the fleet over the next three years, will now be retired by the
first quarter of 2002.
"Keeping capacity in line with demand is one of the most
important actions we can take in response to these adverse economic
conditions," Carty said. "We have also instituted rigorous cost
controls, including a management hiring freeze, and have deferred a
number of capital spending projects. All of these measures are
being taken to maintain our financial strength so that we will be
well positioned once the economy does recover."
- more -
6
AMR Second Quarter Results
July 18, 2001
Page 2
Carty noted that AMR achieved several strategic successes in
recent weeks, including reaching tentative agreements with its
mechanics and flight attendants, and ratification of an agreement
with its pilots regarding the process for integrating TWA assets
into American. Carty said these agreements underscore the
company's desire to work cooperatively with all of its employee
groups to create the world's greatest airline.
Carty also noted that the TWA integration project has achieved
numerous milestones and continues to move forward briskly.
During the second quarter, the company recorded two special
items. First, the company recorded a $29 million after tax gain
from the settlement of a legal matter. Second, the company
recorded a $430 million after tax charge for the writedown of
certain aircraft values in accordance with SFAS 121, "Accounting
for the Impairment of Long-Lived Assets."
Including these items, AMR recorded a loss of $507 million, or
$3.29 per share, for the second quarter.
Second Quarter
Results 2001 2000
(in millions, except
per share amounts)
Amount Earnings Amount Diluted
(net of per (net of earnings
tax) share tax) per share
Net income (loss)
before special items ($105) ($0.68) $285 $1.75
Legal settlement 29 0.19 -- --
Aircraft charge (430) (2.79) -- --
Sale of priceline.com stock -- -- 36 0.21
Net income (loss) ($507) ($3.29) $321 $1.96
-- more --
7
AMR Second Quarter Results
July 18, 2001
Page 3
---
Editor's Note: AMR's Chief Financial Officer, Tom Horton, will
make a presentation to analysts during a teleconference on
Wednesday, July 18, from 2 p.m. to 2:45 p.m. EDT. Following the
analyst call, he will hold a question and answer conference call
for media from 3 p.m. to 3:45 p.m. Reporters interested in
listening to Mr. Horton's presentation or participating in the
media Q & A conference call should call 817-967-1577 for details.
---
Statements in this news release contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Act of 1934, as amended,
which represent the Company's expectations or beliefs concerning
future events. When used in this release, the words "expects,"
"anticipates," and similar expressions are intended to identify
forward-looking statements. 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 statements, whether
as a result of new information, future events or otherwise.
Forward-looking statements are subject to a number of factors that
could cause actual results to differ materially from our
expectations. 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, 2000.
Detailed financial information follows.
8
AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Three Months Ended June 30, Percent
2001 (1) 2000 Change
Revenues
Passenger - American Airlines $3,974 $4,191 (5.2)
- TWA LLC 671 - -
- AMR Eagle 409 368 11.1
Cargo 190 180 5.6
Other revenues 339 272 24.6
Total operating revenues 5,583 5,011 11.4
Expenses
Wages, salaries and benefits 2,126 1,674 27.0
Aircraft fuel 842 567 48.5
Depreciation and amortization 352 294 19.7
Maintenance, materials
and repairs 298 272 9.6
Other rentals and landing fees 320 256 25.0
Commissions to agents 260 273 (4.8)
Food service 218 198 10.1
Aircraft rentals 226 151 49.7
Asset impairment charge 685 - -
Other operating expenses 1,016 809 25.6
Total operating expenses 6,343 4,494 41.1
Operating Income (Loss) (760) 517 *
Other Income (Expense)
Interest income 24 34 (29.4)
Interest expense (132) (115) 14.8
Interest capitalized 38 36 5.6
Miscellaneous - net 37 50 (26.0)
(33) 5 *
Income (Loss) Before Income Taxes (793) 522 *
Income tax provision (benefit) (286) 201 *
Net Earnings (Loss) $(507) $ 321 *
Earnings (Loss) Per Share
Basic $ (3.29) $ 2.15
Diluted $ (3.29) $ 1.96
Number of Shares Used in
Computation
Basic 154 150
Diluted 154 164
(1) Includes the results of TWA LLC for the period April 10,
2001 through June 30, 2001.
* Greater than 100%
Note: Certain amounts have been reclassified to conform with
2001 presentation.
9
AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
EXCLUDES THE RESULTS OF TWA LLC
Three Months Ended June 30, Percent
2001 2000 Change
Revenues
Passenger - American Airlines $3,974 $ 4,191 (5.2)
- AMR Eagle 409 368 11.1
Cargo 174 180 (3.3)
Other revenues 281 272 3.3
Total operating revenues 4,838 5,011 (3.5)
Expenses
Wages, salaries and benefits 1,840 1,674 9.9
Aircraft fuel 721 567 27.2
Depreciation and amortization 327 294 11.2
Maintenance, materials
and repairs 282 272 3.7
Other rentals and landing fees 274 256 7.0
Commissions to agents 229 273 (16.1)
Food service 200 198 1.0
Aircraft rentals 144 151 (4.6)
Asset impairment charge 685 - -
Other operating expenses 884 809 9.3
Total operating expenses 5,586 4,494 24.3
Operating Income (Loss) (748) 517 *
Other Income (Expense)
Interest income 23 34 (32.4)
Interest expense (123) (115) 7.0
Interest capitalized 38 36 5.6
Miscellaneous - net 37 50 (26.0)
(25) 5 *
Income (Loss) Before Income Taxes (773) 522 *
Income tax provision (benefit) (279) 201 *
Net Earnings (Loss) $(494) $ 321 *
Earnings (Loss) Per Share
Basic $ (3.20) $ 2.15
Diluted $ (3.20) $ 1.96
Number of Shares Used in
Computation
Basic 154 150
Diluted 154 164
* Greater than 100%
Note: Certain amounts have been reclassified to conform with
2001 presentation.
10
AMR CORPORATION
OPERATING STATISTICS
(Unaudited)
Three Months Ended June 30, Percent
2001 2000 Change
American Airlines
Revenue passenger miles (millions) 29,506 30,449 (3.1)
Available seat miles (millions) 41,016 40,095 2.3
Cargo ton miles (millions) 574 571 0.5
Passenger load factor 71.9% 75.9% (4.0) pts.
Breakeven load factor (*) 74.2% 65.6% 8.6 pts.
Passenger revenue yield per
passenger mile (cents) 13.47 13.76 (2.1)
Passenger revenue per available
seat mile (cents) 9.69 10.45 (7.3)
Cargo revenue yield per ton
mile (cents) 30.01 31.04 (3.3)
Operating expenses per available
seat mile (cents) (*) 10.98 10.32 6.4
Fuel consumption (gallons,
in millions) 784 759 3.3
Fuel price per gallon (cents) 86.8 71.0 22.3
Fuel price per gallon, excluding
fuel taxes (cents) 81.3 65.9 23.4
Operating aircraft at period-end 725 712 1.8
TWA LLC (**)
Revenue passenger miles (millions) 5,682
Available seat miles (millions) 8,028
Passenger load factor 70.8%
Passenger revenue yield per
passenger mile (cents) 11.81
Passenger revenue per available
seat mile (cents) 8.36
Operating expenses per available
seat mile (cents) 9.43
Operating aircraft at period-end 180
AMR Eagle
Revenue passenger miles (millions) 1,030 961 7.2
Available seat miles (millions) 1,680 1,546 8.7
Passenger load factor 61.3% 62.2% (0.9) pts.
Operating aircraft at period-end 271 272 (0.4)
AMR Corporation
Average Equivalent Number of Employees
American Airlines 96,000 93,100
TWA LLC 19,200 -
Other 13,100 12,800
Total 128,300 105,900
(*) Excludes the second quarter 2001 asset impairment charge.
(**) For the period April 10, 2001 through June 30, 2001.
11
AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Six Months Ended June 30, Percent
2001 (1) 2000 Change
Revenues
Passenger - American Airlines $ 7,909 $ 7,965 (0.7)
- TWA LLC 671 - -
- AMR Eagle 763 706 8.1
Cargo 366 347 5.5
Other revenues 634 570 11.2
Total operating revenues 10,343 9,588 7.9
Expenses
Wages, salaries and benefits 3,872 3,291 17.7
Aircraft fuel 1,549 1,120 38.3
Depreciation and amortization 665 582 14.3
Maintenance, materials and repairs 578 543 6.4
Other rentals and landing fees 577 493 17.0
Commissions to agents 484 530 (8.7)
Food service 402 383 5.0
Aircraft rentals 374 304 23.0
Asset impairment charge 685 - -
Other operating expenses 1,921 1,613 19.1
Total operating expenses 11,107 8,859 25.4
Operating Income (Loss) (764) 729 *
Other Income (Expense)
Interest income 64 66 (3.0)
Interest expense (251) (234) 7.3
Interest capitalized 79 74 6.8
Miscellaneous - net 22 44 (50.0)
(86) (50) 72.0
Income (Loss) From Continuing
Operations Before Income Taxes (850) 679 *
Income tax provision (benefit) (300) 269 *
Income (Loss) From Continuing
Operations (550) 410 *
Income From Discontinued Operations
(net of applicable income taxes and
minority interest) - 43 -
Net Earnings (Loss) $(550) $ 453 *
Continued on next page.
12
AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(in millions, except per share amounts)
(Unaudited)
Six Months Ended June 30,
2001 (1) 2000
Earnings (Loss) Per Share
Basic
Income (Loss) from
Continuing Operations $ (3.58) $ 2.75
Discontinued Operations - 0.29
Net Earnings (Loss) $ (3.58) $ 3.04
Diluted
Income (Loss) from
Continuing Operations $ (3.58) $ 2.58
Discontinued Operations - 0.27
Net Earnings (Loss) $ (3.58) $ 2.85
Number of Shares Used in
Computation
Basic 154 149
Diluted 154 159
(1) Includes the results of TWA LLC for the period April 10,
2001 through June 30, 2001.
* Greater than 100%
Note: Certain amounts have been reclassified to conform with
2001 presentation.
13
AMR CORPORATION
OPERATING STATISTICS
(Unaudited)
Six Months Ended June 30, Percent
2001 2000 Change
American Airlines (*)
Revenue passenger miles (millions) 55,958 57,471 (2.6)
Available seat miles (millions) 79,993 80,115 (0.2)
Cargo ton miles (millions) 1,123 1,117 0.5
Passenger load factor 70.0% 71.7% (1.7) pts.
Breakeven load factor (**) 71.2% 64.6% 6.6 pts.
Passenger revenue yield per
passenger miles (cents) 14.13 13.86 1.9
Passenger revenue per available
seat mile (cents) 9.89 9.94 (0.5)
Cargo revenue yield per ton
mile (cents) 30.83 30.69 0.5
Operating expenses per available
seat mile (cents) (**) 11.12 10.18 9.2
Fuel consumption (gallons, in
millions) 1,527 1,489 2.6
Fuel price per gallon (cents) 88.5 71.6 23.6
Fuel price per gallon, excluding
fuel taxes (cents) 83.0 66.3 25.2
Operating aircraft at period-end 725 712 1.8
AMR Eagle
Revenue passenger miles (millions) 1,890 1,822 3.7
Available seat miles (millions) 3,268 3,060 6.8
Passenger load factor 57.8% 59.6% (1.8) pts.
Operating aircraft at period-end 271 272 (0.4)
(*) Does not include the operating results of TWA LLC.
(**) Excludes the second quarter 2001 asset impairment charge.
###