AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 25, 2003.
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------
AMR CORPORATION AMERICAN AIRLINES, INC.
(EXACT NAME OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)
DELAWARE DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
75-1825172 13-1502798
(I.R.S. EMPLOYER IDENTIFICATION NUMBER)
P.O. BOX 619616
DALLAS/FORT WORTH AIRPORT, TEXAS 75261-9616
(817) 963-1234
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
---------------------------
GARY F. KENNEDY, ESQ. JOHN T. CURRY, III, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL DEBEVOISE & PLIMPTON
AMR CORPORATION 919 THIRD AVENUE
P.O. BOX 619616 NEW YORK, NEW YORK 10022
DALLAS/FORT WORTH AIRPORT, TEXAS 75261-9616 (212) 909-6000
(817) 963-1234
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENTS FOR SERVICE)
COPY TO:
ROHAN S. WEERASINGHE, ESQ.
SHEARMAN & STERLING
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
(212) 848-4000
---------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
===========================
CALCULATION OF REGISTRATION FEE
------------------------------------------------------------------------------------------
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED OFFERING PRICE (1) FEE (2)
------------------------------------------------------------------------------------------
Debt Securities of AMR Corporation(3)
------------------------------------------------------------------------------------------
Common Stock of AMR Corporation, par value
$1.00 per share(4)
------------------------------------------------------------------------------------------
Preferred Stock of AMR Corporation, without
par value(5)
------------------------------------------------------------------------------------------
Depositary Shares of AMR Corporation(6)
------------------------------------------------------------------------------------------
Warrants of AMR Corporation(7)
------------------------------------------------------------------------------------------
Stock Purchase Contracts of AMR Corporation(8)
------------------------------------------------------------------------------------------
Stock Purchase Units of AMR Corporation(9)
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Guarantees of American Airlines, Inc.(10)
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Debt Securities of American Airlines, Inc.(11)
------------------------------------------------------------------------------------------
Debt Warrants of American Airlines, Inc.(12)
------------------------------------------------------------------------------------------
Pass Through Certificates of American
Airlines, Inc.(13)
------------------------------------------------------------------------------------------
Guarantees of AMR Corporation(14)
------------------------------------------------------------------------------------------
Total $3,000,000,000(15)(16) $242,700
==========================================================================================
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o) under the Securities Act of 1933 and exclusive of accrued
interest and dividends, if any.
(2) The registration fee has been calculated in accordance with Rule 457(o)
under the Securities Act of 1933. American Airlines,Inc. paid
aggregate filing fees of $228,506 in connection with $1,628,137,000 of
unsold securities registered under a Registration Statement
(Registration No. 333-84292) filed on March 14, 2002, and AMR
Corporation paid aggregate filing fees of $342,794 in connection with
$1,100,000,000 of unsold securities registered under a Registration
Statement (Registration No. 333-68211) filed on December 1, 1998.
Pursuant to Rule 457(p) under the Securities Act of 1933, AMR Corporation
and American Airlines, Inc. (the "Registrants") are offsetting $242,700 of
the filing fees paid in connection with the Registrants' Registration
Statements (Registration Nos. 333-84292 and 333-68211) against the filing
fee of $242,700 currently due in connection with the filing of this
Registration Statement. Accordingly, no filing fee is paid herewith.
(3) Subject to note (15) below, there is being registered hereunder an
indeterminate principal amount of Debt Securities as may be sold from time
to time by AMR Corporation, including sales upon the exercise of Warrants
or delivery upon settlement of Stock Purchase Contracts. Also includes such
indeterminate principal amount of Debt Securities as may be issued upon
conversion of or exchange for any securities being registered hereunder
that provide for conversion or exchange into Debt Securities.
(4) Subject to note (15) below, there is being registered hereunder an
indeterminate number of shares of Common Stock as may be sold from time to
time by AMR Corporation, including sales upon the exercise of Warrants or
delivery upon settlement of Stock Purchase Contracts. Also includes such
indeterminate number of shares of Common Stock as may be issued upon
conversion of or exchange for any securities being registered hereunder
that provide for conversion or exchange into Common Stock.
(5) Subject to note (15) below, there is being registered hereunder an
indeterminate number of shares of Preferred Stock as may be sold from time
to time by AMR Corporation, including sales upon the exercise of Warrants
or delivery upon settlement of Stock Purchase Contracts. Also includes such
indeterminate number of shares of Preferred Stock as may be issued upon
conversion of or exchange for any securities being registered hereunder
that provide for conversion or exchange into Preferred Stock.
(6) Subject to note (15) below, there is being registered hereunder an
indeterminate number of Depositary Shares to be evidenced by Depositary
Receipts issued pursuant to a Deposit Agreement. In the event AMR
Corporation elects to offer to the public fractional interests in Debt
Securities or shares of the Preferred Stock registered hereunder,
Depositary Receipts will be distributed to those persons purchasing such
fractional interests and Debt Securities or shares of Preferred Stock, as
the case may be, will be issued to the Depositary under the Deposit
Agreement. No separate consideration will be received for the Depositary
Shares.
(7) Subject to note (15) below, there is being registered hereunder an
indeterminate amount and number of Warrants as may be sold from time to
time by AMR Corporation representing rights to purchase Debt Securities,
Preferred Stock, Common Stock or other securities, property or assets.
Warrants may be sold separately or with Debt Securities, Preferred Stock,
Common Stock or other securities registered hereunder.
(8) Subject to note (15) below, there is being registered hereunder an
indeterminate amount and number of Stock Purchase Contracts as may be sold
from time to time by AMR Corporation, representing rights to purchase
Preferred Stock, Common Stock or other securities, property or assets.
(9) Subject to note (15) below, there is being registered hereunder an
indeterminate amount and number of Stock Purchase Units as may be sold from
time to time by AMR Corporation, representing ownership of Stock Purchase
Contracts and Debt Securities, undivided beneficial ownership interests in
Debt Securities, Depositary Shares representing fractional interests in
Debt Securities or shares of Preferred Stock or debt obligations of third
parties, including U.S. Treasury Securities.
(10) American Airlines, Inc. may guarantee the obligations of AMR Corporation
with respect to one or more of the securities of AMR Corporation being
registered hereunder. Pursuant to Rule 457(n) under the Securities Act, no
registration fee is required with respect to any such guarantee by American
Airlines, Inc.
(11) Subject to note (15) below, there is being registered hereunder an
indeterminate principal amount of Debt Securities as may be sold from time
to time by American Airlines, Inc., including sales upon the exercise of
Debt Warrants. Also includes such indeterminate principal amount of Debt
Securities as may be issued upon conversion of or exchange for any
securities being registered hereunder that provide for conversion or
exchange into Debt Securities.
(12) Subject to note (15) below, there is being registered hereunder an
indeterminate amount and number of Debt Warrants as may be sold from time
to time by American Airlines, Inc. representing rights to purchase Debt
Securities of American Airlines, Inc. Debt Warrants may be sold separately
or with Debt Securities.
(13) Subject to note (15) below, there is being registered hereunder an
indeterminate principal amount of Pass Through Certificates as may be sold
from time to time by American Airlines, Inc.
(14) AMR Corporation may guarantee the obligations of American Airlines, Inc.
with respect to one or more of the securities of American Airlines, Inc.
being registered hereunder. Pursuant to Rule 457(n) under the Securities
Act, no registration fee is required with respect to any such guarantee by
AMR Corporation.
(15) The Prospectuses included herein relate to $3,000,000,000 of securities.
Such amount represents the principal amount of any Debt Securities issued
at their principal amount, the issue price rather than the principal amount
of any Debt Securities issued at an original issue discount, the
liquidation preference of any Preferred Stock, the amount computed pursuant
to Rule 457(c) for any Common Stock, the issue price of any Warrants, and
the exercise price of any Offered Securities issuable upon the exercise of
Warrants. Any securities registered hereunder may be sold separately or as
units with other securities registered hereunder.
(16) No separate consideration will be received for any Debt Securities,
Preferred Stock, Common Stock or the Depositary Shares issuable upon
conversion of or in exchange for any securities registered hereunder that
provide for conversion or exchange into such securities.
-------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
EXPLANATORY NOTE
This registration statement contains three separate prospectuses:
- The first prospectus relates to offerings by AMR Corporation of its Debt
Securities, Common Stock, Preferred Stock, Depositary Shares, Warrants,
Stock Purchase Contracts and Stock Purchase Units and any related American
Airlines, Inc. Guarantees;
- The second prospectus relates to offerings by American Airlines, Inc. of
its Debt Securities and Debt Warrants and any related AMR Corporation
Guarantees; and
- The third prospectus relates to offerings by American Airlines, Inc. of its
Pass Through Certificates and any related AMR Corporation Guarantees.
The information in this Prospectus is not complete and may be changed. We cannot
sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This Prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED NOVEMBER 25, 2003
PROSPECTUS
$3,000,000,000
AMR CORPORATION
Debt Securities
Common Stock
Preferred Stock
Depositary Shares
Warrants
Stock Purchase Contracts
Stock Purchase Units
By this prospectus, we may offer from time to time up to $3,000,000,000 of
any combination of the securities described in this prospectus.
We will provide specific terms of the securities in a prospectus supplement
to this prospectus. A prospectus supplement may also change or update
information contained in this prospectus.
Before you invest in any of these securities, you should carefully read
this prospectus, including the documents and other information we have referred
to under the heading "Where You Can Find More Information", and the prospectus
supplement relating to the specific issue of securities.
We will not use this prospectus to confirm sales of any of our securities
unless it is attached to a prospectus supplement.
Unless we state otherwise in a prospectus supplement, we will not list any
of these securities on any securities exchange.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 2003
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR ANY
APPLICABLE PROSPECTUS SUPPLEMENT AND THOSE DOCUMENTS INCORPORATED BY REFERENCE
HEREIN AND THEREIN. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT
INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION,
YOU SHOULD NOT RELY ON IT. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO PURCHASE, THE SECURITIES OFFERED BY THIS
PROSPECTUS IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION OF AN OFFER IN SUCH JURISDICTION.
YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS OR IN
ANY PROSPECTUS SUPPLEMENT OR ANY DOCUMENT INCORPORATED BY REFERENCE IS ACCURATE
AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT COVER OF THE APPLICABLE
DOCUMENT. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT
NOR ANY DISTRIBUTION OF SECURITIES PURSUANT TO THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE INFORMATION SET FORTH OR INCORPORATED INTO THIS PROSPECTUS
OR SUCH PROSPECTUS SUPPLEMENT BY REFERENCE OR IN OUR AFFAIRS SINCE THE DATE OF
THIS PROSPECTUS OR SUCH PROSPECTUS SUPPLEMENT. OUR BUSINESS, FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE THAT DATE.
TABLE OF CONTENTS
PAGE
----
About This Prospectus......................................................... 1
Where You Can Find More Information........................................... 2
Special Note Regarding Forward-Looking Statements............................. 3
The Company................................................................... 3
Ratios of Earnings to Fixed Charges........................................... 4
Use of Proceeds............................................................... 5
Dividend Policy............................................................... 5
Description of Debt Securities................................................ 6
Description of Capital Stock of AMR Corporation............................... 17
Description of Depositary Shares.............................................. 20
Description of Warrants....................................................... 23
Description of Stock Purchase Contracts and Stock Purchase Units.............. 26
Plan of Distribution.......................................................... 27
Legal Opinions................................................................ 28
Experts....................................................................... 28
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that we and
our subsidiary, American Airlines, Inc., filed jointly with the Securities and
Exchange Commission (the "SEC") utilizing a "shelf" registration process. Under
this shelf process, we may sell the securities described in this prospectus from
time to time using this prospectus together with a prospectus supplement. This
prospectus provides you with a general description of the securities we may
offer. Each time we offer securities, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. We may
also add, update or change information contained in this prospectus through one
or more prospectus supplements to this prospectus. If there is any inconsistency
between the information in this prospectus and any prospectus supplement, you
should rely on the information in that prospectus supplement. You should
carefully read both this prospectus and any applicable prospectus supplement
together with the additional information described under the heading "Where You
Can Find More Information".
This prospectus does not contain all of the information set forth in the
registration statement that we filed with the SEC or in the exhibits to that
registration statement. For further information about AMR Corporation, American
Airlines, Inc., or the securities, you should refer to that registration
statement and its exhibits. Statements contained in this prospectus or in any
prospectus supplement as to the contents of any contract or other document are
not necessarily complete, and you should review the full text of those contracts
and other documents.
The registration statement that we filed with the SEC relating to the
securities can be obtained from the SEC, as described below under "Where You Can
Find More Information".
In this prospectus, references to "AMR", the "Company", "we", "us" and
"our" refer to AMR Corporation.
WHERE YOU CAN FIND MORE INFORMATION
We and American Airlines, Inc. file annual, quarterly and special reports,
proxy statements (in the case of AMR Corporation only) and other information
with the SEC. This information may be read and copied at the Public Reference
Room of the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549. Information regarding the operation of the Public Reference Room may be
obtained by calling the SEC at 1-800-SEC-0330. Our SEC filings are also
available from the SEC's Internet site at http://www.sec.gov, which contains
reports, proxy and information statements, and other information regarding
issuers that file electronically.
We "incorporate by reference" in this prospectus certain documents that we
and American Airlines, Inc. file with the SEC, which means:
- we can disclose important information to you by referring you to those
documents;
- information incorporated by reference is considered to be part of this
prospectus, even though it is not repeated in this prospectus; and
- information that we and American Airlines, Inc. file later with the
SEC will automatically update and supersede this prospectus.
We incorporate by reference the documents listed below and all documents
that AMR or American Airlines, Inc. files with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") after the date of this prospectus and until the offering of all
the securities hereunder has been completed, other than current reports (or
portions thereof) furnished under Items 9 or 12 of Form 8-K:
- Annual Reports of AMR and of American Airlines, Inc. on Form 10-K for
the year ended December 31, 2002;
- Quarterly Reports of AMR and American Airlines, Inc. on Form 10-Q for
the quarters ended March 31, 2003, June 30, 2003 and September 30,
2003;
- Current Reports of AMR on Form 8-K filed on January 22, 2003, April 1,
2003 (two Reports filed on this date), April 17, 2003 (Report with
respect to labor matters), April 23, 2003, April 25, 2003, May 2,
2003, June 11, 2003, June 25, 2003, July 3, 2003 (8-K/A), July 16,
2003, August 1, 2003, October 22, 2003 and October 24, 2003 (8-K/A);
and
- Current Reports of American Airlines, Inc. on Form 8-K filed on
January 22, 2003, April 1, 2003 (two Reports filed on this date),
April 17, 2003, April 23, 2003, April 25, 2003, June 12, 2003, June
25, 2003, July 3, 2003 (8-K/A), July 16, 2003, August 1, 2003 and
October 22, 2003.
You may obtain a copy of these filings (other than their exhibits, unless
those exhibits are specifically incorporated by reference in the filings) at no
cost by writing or telephoning us at the following address:
Corporate Secretary
AMR Corporation
P.O. Box 619616, Mail Drop 5675
2
Dallas/Fort Worth Airport, Texas 75261-9616
(817) 967-1254
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference contain various
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act") and Section 21E of the Exchange
Act which represent our expectations or beliefs concerning future events. When
used in this prospectus and in documents incorporated herein by reference, the
words "believes", "expects", "plans", "anticipates", and similar expressions are
intended to identify forward-looking statements.
Forward-looking statements include, without limitation, our 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 us of
the events of September 11, 2001 and of our results of operations for the past
two years and the sufficiency of our 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 prospectus and the documents
incorporated by reference are based upon information available to us on the date
of this prospectus or such document. We undertake 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 factors that could cause actual results to differ materially from
our expectations.
The following factors, in addition to those discussed under the caption
"Risk Factors" in each prospectus supplement and other possible factors not
listed, could cause our actual results to differ materially from those expressed
in forward-looking statements: the uncertain financial and business environment
we face, the struggling economy, high fuel prices and the availability of fuel,
the residual effects of the war in Iraq, conflicts in the Middle East,
historically low fare levels and the general competitive environment, our
ability to implement our restructuring program and the effect of the program on
our operational performance and service levels, uncertainties with respect to
our international operations, changes in our business strategy, actions by U.S.
or foreign government agencies, the possible occurrence of additional terrorist
attacks, another outbreak of SARS, our or American Airlines, Inc.'s inability to
satisfy existing liquidity requirements or other covenants in certain of our or
American Airlines, Inc.'s credit agreements and the availability of future
financing.
Additional information concerning these and other factors is contained in
our and American Airlines, Inc.'s SEC filings, including but not limited to our
and American Airlines, Inc.'s Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2003, June 30, 2003 and September 30, 2003 and our and American
Airlines, Inc.'s Annual Reports on Form 10-K for the year ended December 31,
2002.
THE COMPANY
AMR Corporation was incorporated in October 1982. AMR's operations fall
almost entirely in the airline industry. AMR's principal subsidiary, American
Airlines, Inc., was founded in 1934. On April 9, 2001, American Airlines, Inc.
(through a wholly owned subsidiary, TWA Airlines LLC ("TWA LLC")) purchased
substantially all of the assets and assumed certain liabilities of Trans World
Airlines, Inc. ("TWA"), the eighth largest U.S. carrier. American Airlines,
Inc., including TWA LLC (collectively, "American"), is the largest scheduled
passenger airline in the world. At the end of 2002, American provided scheduled
jet service to more than 152 destinations throughout North America, the
Caribbean, Latin America, Europe and the Pacific. American is also one of the
largest scheduled air freight carriers in the world, providing a wide range of
freight and mail services to shippers throughout its system.
In addition, AMR Eagle Holding Corporation, a wholly-owned subsidiary of
AMR, owns two regional airlines which do business as "American Eagle" --
American Eagle Airlines, Inc. and Executive Airlines, Inc. (collectively the
"American Eagle Carriers"). In addition, American contracts with two
independently owned regional airlines which do business as the
"AmericanConnection" (the "AmericanConnection Carriers"). The American Eagle
3
Carriers and the AmericanConnection Carriers provide connecting service from
eight of American's high-traffic cities to smaller markets throughout the United
States, Canada, the Bahamas and the Caribbean.
AMR Investment Services, Inc., a wholly-owned subsidiary of AMR ("AMR
Investment"), is responsible for the investment and oversight of the assets of
AMR's defined benefit and defined contribution plans, as well as its short-term
investments.
The postal address for AMR's and American's principal executive offices is
P.O. Box 619616, Dallas/Fort Worth Airport, Texas 75261-9616 (Telephone:
817-963-1234). AMR's Internet address is http://www.amrcorp.com. Information on
AMR's website is not incorporated into this prospectus and is not a part of this
prospectus.
AMR conducts all of its business through its wholly owned operating
subsidiaries, including American Airlines, Inc. AMR does not maintain a
borrowing facility and is dependent on the cash flow generated by the operations
of its subsidiaries and on dividends and other payments to it from its
subsidiaries to meet its liquidity needs and obligations, including obligations
with respect to debt securities, dividends on capital stock and other
obligations on the securities described in this prospectus. American Airlines,
Inc. is a separate and distinct legal entity and although it may unconditionally
guarantee AMR's obligations with respect to one or more of securities described
in this prospectus, due to limitations and restrictions in its debt instruments,
it may be unable to pay any amounts due on such guarantee or to provide AMR with
funds for AMR's payment obligations on such securities, by dividend,
distribution, loan or other payment. Future borrowings by AMR, American
Airlines, Inc. and AMR's other subsidiaries may include additional restrictions.
In addition, under applicable state law, American Airlines, Inc. and AMR's other
subsidiaries may be limited in the amounts they are permitted to pay as
dividends on their capital stock.
The securities described in this prospectus and any guarantee by American
Airlines, Inc. with respect to any such securities will represent unsecured
senior obligations and rank equal in right of payment with all the existing and
future unsecured and unsubordinated indebtedness of AMR and American Airlines,
Inc., respectively. In the event of any distribution or payment of assets in any
foreclosure, dissolution, winding-up, liquidation, reorganization or other
bankruptcy proceeding involving AMR or American Airlines, Inc., holders of
secured indebtedness will have a prior claim to those assets that constitute
their collateral. In addition, the securities described in this prospectus and
any guarantee by American Airlines, Inc. with respect to any such securities
will be "structurally subordinated" to all existing and future liabilities
(including debt and trade payables) of the existing and future subsidiaries of
AMR (other than American Airlines, Inc. to the extent of such guarantee) and
American Airlines, Inc., respectively. Such subordination occurs because, as a
general matter, claims of creditors of a subsidiary which is not a guarantor of
parent company debt, including trade creditors, will have priority with respect
to the assets and earnings of the subsidiary over the claims of creditors of its
parent company.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges of
AMR and of American for the periods indicated:
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED
---------------------------------- ------------------
1998 1999 2000 2001 2002 SEPTEMBER 30, 2003
---- ---- ---- ---- ---- ------------------
Ratio of Earnings to Fixed Charges
AMR.............................. 2.55 1.72 1.87 (1) (3) (5)
American......................... 2.82 1.95 2.07 (2) (4) (6)
(1) For the year ended December 31, 2001, AMR earnings were not sufficient
to cover fixed charges. We needed additional earnings of $2,900 million to
achieve a ratio of earnings to fixed charges of 1.0.
(2) In April 2001, the board of directors of American approved the
unconditional guarantee by American (the "American Guarantee") of the existing
debt obligations of AMR. As such, as of December 31, 2001, American
unconditionally guaranteed through the life of the related obligations
approximately $676 million of unsecured debt and approximately $573 million of
secured debt. The impact of these unconditional guarantees is not included in
the
4
above computation. For the year ended December 31, 2001, earnings were not
sufficient to cover fixed charges. American needed additional earnings of $2,584
million to achieve a ratio of earnings to fixed charges of 1.0.
(3) For the year ended December 31, 2002, AMR earnings were not sufficient
to cover fixed charges. We needed additional earnings of $3,946 million to
achieve a ratio of earnings to fixed charges of 1.0.
(4) At December 31, 2002, American's exposure under the American Guarantee
was approximately $636 million with respect to unsecured debt and approximately
$538 million with respect to secured debt. For the year ended December 31, 2002,
earnings were not sufficient to cover fixed charges. American needed additional
earnings of $3,749 million to achieve a ratio of earnings to fixed charges of
1.0.
(5) For the nine months ended September 30, 2003, AMR earnings were not
sufficient to cover fixed charges. We needed additional earnings of $1,171
million to achieve a ratio of earnings to fixed charges of 1.0.
(6) At September 30, 2003, American's exposure under the American Guarantee
was approximately $936 million with respect to unsecured debt and approximately
$503 million with respect to secured debt. For the nine months ended September
30, 2003, earnings were not sufficient to cover fixed charges. American needed
additional earnings of $1,239 million to achieve a ratio of earnings to fixed
charges of 1.0.
For purposes of the table, "earnings" represents consolidated income from
continuing operations before income taxes, extraordinary items, cumulative
effect of accounting change and fixed charges (excluding interest capitalized).
"Fixed charges" consists of interest expense (including interest capitalized),
amortization of debt expense and the portion of rental expense we deem
representative of the interest factor.
Our ratio of earnings to combined fixed charges and preferred stock
dividends has been the same as the ratio of earnings to fixed charges for each
of the above periods because we have not had any shares of preferred stock
outstanding during the last five years and have, therefore, not paid any
dividends on preferred stock.
USE OF PROCEEDS
Except as we may describe otherwise in a prospectus supplement, the net
proceeds from the sale of the securities will be available for general corporate
purposes, including, among other possible uses, the repayment of short-term or
long-term debt or lease obligations, the acquisition of aircraft by American
Airlines, Inc. or our other subsidiaries and other capital expenditures. We may
also use the proceeds for temporary investments until we need them for general
corporate purposes.
DIVIDEND POLICY
We have paid no cash dividends on our common stock and have no current
intention of doing so. Any future determination to pay cash dividends will be at
the discretion of our board of directors, subject to applicable limitations
under Delaware law, and will be dependent upon our results of operations,
financial condition, contractual restrictions and other factors deemed relevant
by our board of directors.
5
DESCRIPTION OF DEBT SECURITIES
INTRODUCTION
We may elect to offer unsecured debt securities. We will issue the debt
securities in one or more series under an indenture, which we refer to as the
"indenture", to be entered into between us and Wilmington Trust Company, as
trustee. The debt securities will rank equal in right of payment with all of our
other unsecured, unsubordinated indebtedness. The debt securities may include
debentures, notes or other kinds of unsecured debt obligations. The amount of
debt securities that we can issue under the indenture is unlimited.
The description of the terms of the debt securities and indenture in this
prospectus is a summary. When we offer to sell a series of debt securities, we
will summarize in a prospectus supplement the particular terms of such series of
debt securities that we believe will be the most important to your decision to
invest in such series of debt securities. As the terms of such series of debt
securities may differ from the summary in this prospectus, the summary in this
prospectus is subject to and qualified by reference to the summary in such
prospectus supplement, and you should rely on the summary in such prospectus
supplement instead of the summary in this prospectus if the summary in such
prospectus supplement is different from the summary in this prospectus. You
should keep in mind, however, that it is the debt securities, and the indenture,
and not the summaries in this prospectus or such prospectus supplement, which
define your rights as a holder of debt securities of such series. There may be
other provisions in such debt securities and the indenture that are also
important to you. You should carefully read these documents for a full
description of the terms of such debt securities. The indenture is filed as an
exhibit to the registration statement that includes this prospectus. See "Where
You Can Find More Information" for information on how to obtain a copy of the
indenture.
In this description, we include references in parentheses to certain
sections of the indenture. Whenever we refer to particular sections or defined
terms of the indenture in this prospectus or in any prospectus supplement, such
sections or defined terms are incorporated by reference here or in the
prospectus supplement.
The debt securities will not be secured by any of our property or assets.
Accordingly, your ownership of debt securities will mean that you will be one of
AMR's unsecured creditors. See "The Company". Unless we tell you otherwise in an
applicable prospectus supplement, the indenture does not limit the amount of
other indebtedness or securities that may be issued by us or any of our
subsidiaries. In addition, unless we tell you otherwise in an applicable
prospectus supplement, the indenture does not contain any financial covenants or
restrictions on the payment of dividends, the incurrence of debt, securing our
debt or the issuance or repurchase of our debt securities, or any covenants or
other provisions to afford protection to holders of debt securities in the event
of a highly leveraged transaction or a change in control.
SPECIFIC TERMS OF DEBT SECURITIES
We may issue the debt securities in one or more series through an indenture
that supplements the indenture or through a resolution of our board of directors
or an authorized committee of our board of directors.
A prospectus supplement will describe specific terms relating to the series
of debt securities then being offered. These terms may include some or all of
the following:
- the title and type of such debt securities;
- any limit on the total principal amount of such debt securities;
- the date or dates on which the principal of such debt securities will
be payable, or the method of determining and/or extending such
date(s), and the amount or amounts of such principal payments;
- the date or dates from which any interest will accrue, or the method
of determining such date(s);
- any interest rate or rates (which may be fixed or variable) that such
debt securities will bear, or the method of determining or resetting
such rate or rates, and the interest payment dates (if any) for such
debt securities;
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- the circumstances, if any, in which payments of principal, premium, if
any, or interest on such debt securities may be deferred;
- the place or places where any principal, premium or interest payments
may be made;
- any optional redemption or other early payment provisions, including
the period(s) within which, the price(s) at which, the currency or
currencies (including currency units) in which, and the terms and
conditions upon which, AMR may redeem or prepay such debt securities;
- any provisions obligating AMR to repurchase or otherwise redeem such
debt securities pursuant to sinking fund or analogous provisions, upon
the occurrence of a specified event or at the holder's option;
- if other than $1,000 denominations, the denominations in which such
debt securities are issuable;
- the amount of discount, if any, with which such debt securities will
be issued;
- if other than U.S. dollars, the currency, composite currency or
currency units of payment of principal, premium, if any, and interest
on such debt securities or in which the debt securities are
denominated;
- if applicable, the time period within which, the manner in which and
the terms and conditions upon which a holder of a debt security can
select the payment currency;
- any index, formula or other method to be used for determining the
amount of any payments on such debt securities;
- if other than the outstanding principal amount, the amount that will
be payable if the maturity of such debt securities is accelerated, or
the method of determining such amount;
- the person to whom any interest on such debt securities will be
payable (if other than the registered holder of such debt securities
on the applicable record date) and the manner in which it shall be
payable;
- any changes to or additional events of default or covenants;
- any additions or changes to the indenture relating to a series of debt
securities necessary to permit or facilitate issuing the series in
bearer form, registrable or not registrable as to principal, and with
or without interest coupons;
- any provisions for the payment of additional amounts on debt
securities, including additional amounts on debt securities held by
non-U.S. persons in respect of taxes or similar charges withheld or
deducted, and for the optional redemption of such debt securities in
lieu of paying such additional amounts;
- any provisions modifying the defeasance or covenant defeasance
provisions that apply to such debt securities;
- whether such debt securities will be issued in whole or in part in the
form of one or more temporary or global securities, and, if so, the
identity of the depositary for such global security or securities;
- if temporary global debt securities are issued, any special terms and
conditions for payments thereon and for exchanges or transfers of
beneficial interests therein;
- appointment of any paying agent(s);
- the terms and conditions of any obligation or right we would have or
any option you would have to convert or exchange the debt securities
into other securities or cash or property of AMR or any other person
and any changes to the indenture to permit or facilitate such
conversion or exchange;
7
- if other than the laws of New York, the law governing such debt
securities and the extent to which such other law governs;
- whether an American Airlines, Inc. guarantee will apply to such debt
securities and, if so, the material terms thereof; and
- any other special terms of such debt securities.
(Section 3.1 of the indenture)
Debt securities may also be issued under the indenture upon the exercise of
warrants or delivery upon settlement of stock purchase contracts. See
"Description of Warrants" and "Description of Stock Purchase Contracts and Stock
Purchase Units".
Unless we tell you otherwise in the applicable prospectus supplement, debt
securities will not be listed on any securities exchange.
Unless we tell you otherwise in the applicable prospectus supplement, debt
securities will be issued in fully registered form without coupons. If debt
securities of any series are issued in bearer form, the applicable prospectus
supplement will describe special restrictions and considerations, including
special offering restrictions and special federal income tax considerations,
applicable to such debt securities and to payments on and transfer and exchange
of such debt securities. Bearer debt securities generally will be transferable
by delivery. (Section 3.5 of the indenture) The indenture refers to the bearer
of a bearer debt security as the "holder" of that debt security.(Section 1.1 of
the indenture)
One or more series of debt securities may be sold at a substantial discount
below their stated principal amount. Such a series of debt securities is issued
at an "original issue discount". Typically, a debt security that is issued at an
"original issue discount" will not bear interest or will bear interest at an
interest rate that is below the market interest rate at the time of issuance. If
we issue debt securities at an "original issue discount", the applicable
prospectus supplement will describe certain special federal income tax and other
considerations applicable to such debt securities.
If the purchase price of any debt securities is payable in foreign
currencies, composite currencies or currency units, if any debt securities are
denominated in foreign currencies, composite currencies or currency units, or if
any debt securities are payable in foreign currencies, composite currencies or
currency units, the applicable prospectus supplement will describe the special
restrictions, elections and other specific terms and federal income tax
considerations and certain other important information, with respect to such
debt securities and such foreign currencies, composite currencies or currency
units.
The principal, premium, interest or other payments on debt securities may
be determined by reference to an index, formula or other method. Such an index,
formula or other method may be based, without limitation, on the price of one or
more commodities, derivatives or securities; a commodities, derivatives,
securities exchange or other index; a foreign currency or currencies or one or
more composite currencies or currency units; or any other variable or variables
or any relationship between any variables or combination of variables. Holders
of such debt securities may receive a principal payment or a payment of interest
that is greater than or less than the amount of principal or interest otherwise
payable on such dates, depending upon the value of the applicable index, formula
or other factor or changes in any applicable variable or variables. If we issue
debt securities the payments on which are based on such an index, formula or
other method, the applicable prospectus supplement will describe that index,
formula or other method and other specific terms and certain special federal
income tax and other considerations applicable to such debt securities.
One or more series of debt securities may be variable rate debt securities
that may be exchangeable for fixed rate debt securities, or fixed rate debt
securities exchangeable for variable rate debt securities. The applicable
prospectus supplement will describe specific terms, federal income tax
considerations and certain other important information.
8
We may issue debt securities of a particular series at different times. In
addition, we may issue debt securities within a series with terms different from
the terms of other debt securities of that series.
Subject to applicable law, we or any of our affiliates may at any time
purchase or repurchase debt securities of any series in any manner and at any
price. Debt securities of any series purchased by us or any of our affiliates
may be held or surrendered by the purchaser of the debt securities for
cancellation.
REGISTERED SECURITIES
As noted above, unless we tell you in a prospectus supplement that the
specific debt securities described in that prospectus supplement are bearer debt
securities, the debt securities will be "registered securities". We and the
trustee may treat the person in whose name a registered debt security is
registered under any indenture as the owner of that debt security for all
purposes, including for the purpose of receiving payments on that debt security.
(Section 3.8 of the indenture) The indenture refers to each person in whose name
a registered debt security is registered as the "holder" of that debt security.
(Section 1.1 of the indenture)
Except as described below under "Global Debt Securities" or in the
applicable prospectus supplement, a holder can exchange or transfer debt
securities in registered form at the office of the trustee. Initially, the
trustee will act as our agent for registering such debt securities in the names
of holders and transferring such debt securities. We may appoint another entity
at any time to perform this role or we may perform it ourselves. The entity
performing the role of maintaining the list of registered holders and performing
transfers is called the "registrar". (Sections 3.5 and 9.2 of the indenture)
Unless we tell you otherwise in the applicable prospectus supplement, a
holder seeking to transfer or exchange a registered debt security will not be
required to pay a service charge to us, the registrar or the trustee, but such
holder may be required to pay any tax or other governmental charge associated
with the transfer or exchange. (Section 3.5 of the indenture)
If you are not the holder of any debt securities in registered form, your
rights relating to those debt securities will be governed in part by applicable
laws and by the account rules and policies of the broker, bank or financial
intermediary through which you invest in such debt securities and any other
financial intermediary that holds interests directly or indirectly in such debt
securities (including any depositary referred to below under "Global Debt
Securities"). None of AMR, American Airlines, Inc. or the trustee has any
responsibility for the account rules, policies, actions or records of any
broker, bank or other financial intermediary through which you hold (directly or
indirectly) your beneficial interest in a debt security in registered form.
IF YOU ARE NOT THE HOLDER OF ANY DEBT SECURITIES IN REGISTERED FORM, YOU
SHOULD CONSULT THE BROKER, BANK OR OTHER FINANCIAL INTERMEDIARY THROUGH WHICH
YOU INVEST IN SUCH DEBT SECURITIES FOR INFORMATION ON YOUR RIGHTS IN RESPECT OF
SUCH DEBT SECURITIES. IN PARTICULAR, YOU SHOULD ASK HOW YOU WILL RECEIVE
PAYMENTS, AND WHETHER YOU WILL BE ABLE TO PROVIDE INSTRUCTIONS AS TO HOW SUCH
BROKER, BANK OR OTHER FINANCIAL INTERMEDIARY SHOULD EXERCISE THE RIGHTS OF A
"HOLDER" UNDER THE INDENTURE.
GLOBAL DEBT SECURITIES
We may specify in the applicable prospectus supplement that the debt
securities of a series will be issued in the form of fully registered global
securities ("registered global securities"). Registered global securities will
be registered in the name of a financial institution we select. This financial
institution, which will be the sole direct holder of the registered global
securities, is called the "depositary". We will identify any depositary in the
applicable prospectus supplement. Any person wishing to own a debt security
represented by a registered global security must do so indirectly by virtue of
an account with a broker, bank or other financial intermediary that in turn has
an account with the depositary, or with another financial intermediary that
itself has an account with the depositary. The debt securities represented by
the registered global securities may not be transferred to the name of any other
holder unless the special circumstances described below occur.
Special Investor Considerations for Registered Global Securities. Our
obligations with respect to registered global securities, as well as the
obligations of the trustee and those of any third parties employed by us or the
trustee, run only to persons who are registered holders of those debt
securities. For example, once a payment on a registered global security is made
to the depositary, as sole holder of that registered global security, neither we
nor the trustee
9
has any further responsibility for that payment even if it is not passed along
to the correct owners of the beneficial interests in that registered global
security.
As long as the debt securities are represented by registered global
securities:
- You cannot have debt securities registered in your name under the
indenture.
- You cannot receive physical certificates from us for your interest in
the debt securities.
- You must look to your own bank or broker or other financial
intermediary for payments on the debt securities.
- You will have no rights as a "holder" under the indenture. This means
that, among other things, you will have no right to give any
direction, approval or instruction directly to the trustee under the
indenture.
- You may not be able to sell interests in the debt securities to some
insurance companies and other institutions that are required by law to
own their debt securities in the form of physical certificates.
- The depositary's policies will govern payments, transfers, exchanges
and other matters relating to the registered global security. AMR,
American Airlines, Inc. and the trustee have no responsibility for any
aspect of the depositary's actions or for its records of ownership
interests in the registered global security. AMR, American Airlines,
Inc. and the trustee also do not supervise the depositary in any way.
In addition, AMR , American Airlines, Inc. and the trustee have no
responsibility for the actions or records of any broker, bank or other
financial intermediary through which you hold (directly or indirectly)
your beneficial interest in the registered global security.
- Payment for purchases and sales in the market for corporate debentures
and notes is generally made in next-day funds. In contrast, the
depositary will usually require that interests in a registered global
security be purchased or sold within its system using same-day funds.
This difference could have some effect on how registered global
security interests trade, but we do not know what that effect will be.
YOU SHOULD CONSULT THE BROKER, BANK OR OTHER FINANCIAL INTERMEDIARY THROUGH
WHICH YOU INVEST IN DEBT SECURITIES REPRESENTED BY REGISTERED GLOBAL SECURITIES
FOR INFORMATION ON YOUR RIGHTS IN RESPECT OF SUCH DEBT SECURITIES. IN
PARTICULAR, YOU SHOULD ASK HOW YOU WILL RECEIVE PAYMENTS AND WHETHER YOU WILL BE
ABLE TO PROVIDE INSTRUCTIONS AS TO HOW THE DEPOSITARY SHOULD EXERCISE THE RIGHTS
OF A "HOLDER" UNDER THE INDENTURE.
Special Situations When a Registered Global Security Will Be Terminated. In
the special situations described in the next paragraph, a registered global
security will terminate and interests in it will be exchanged for physical
certificates representing debt securities. After that exchange, we believe that
you likely will be able to choose whether to hold debt securities directly in
your own name or indirectly through an account at a bank or broker or other
financial intermediary. However, when a registered global security terminates,
the depositary (and not AMR, American Airlines, Inc. or the trustee) will be
responsible for determining the names of the institutions that will be the
initial direct holders of the debt securities. You must consult your own bank or
broker or other financial intermediary at such time to find out how to have your
interests in debt securities transferred to your own name, if you wish to become
a direct holder.
The special situations for termination of a registered global security are:
- When the depositary notifies us that it is unwilling, unable or no
longer qualifies to continue as depositary (unless a replacement
depositary is named).
- When we determine not to have any of the debt securities of a series
represented by a registered global security and notify the trustee of
our decision.
(Section 3.5 of the indenture) In addition, a prospectus supplement may list
situations for terminating a registered global security that would apply only to
the particular series of debt securities covered by that prospectus supplement.
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Bearer Global Securities. The debt securities of a series may also be
issued wholly or partially in the form of one or more bearer global securities
("bearer global securities") that will be deposited with a depositary, or with a
nominee for such depositary, identified in the applicable prospectus supplement.
Any such bearer global securities may be issued in temporary or permanent form.
(Sections 3.4 and 3.5 of the indenture) The applicable prospectus supplement
will describe the specific terms and procedures, including the depositary
arrangement, with respect to any portion of a series of debt securities to be
represented by bearer global securities.
PAYMENTS
Unless we tell you otherwise in the applicable prospectus supplement, we
will generally deposit interest, principal and any other money due on the debt
securities, in the designated currency, with the trustee, and the trustee will
act as our agent for making payments on the debt securities. We may change this
appointment to another entity or perform this role ourselves. The entity
performing the role of making payments is called the "paying agent". We may, at
our option, make any interest payments on debt securities in registered form by
having the trustee mail checks or make wire transfers to the registered holders
listed in the registrar's records. (Sections 3.7(a) and 9.2 of the indenture) IF
YOU ARE NOT THE HOLDER OF ANY DEBT SECURITIES IN REGISTERED FORM, YOU MUST MAKE
YOUR OWN ARRANGEMENTS WITH THE BANK, BROKER OR OTHER FINANCIAL INTERMEDIARY
THROUGH WHICH YOU INVEST IN SUCH DEBT SECURITIES TO RECEIVE PAYMENTS.
Unless we tell you otherwise in the applicable prospectus supplement,
interest, if any, will be payable to each holder listed in the registrar's
records at the close of business on a particular day in advance of each due date
for interest, even if such holder no longer owns the debt security on the
interest due date. That particular day is called the "record date" and will be
stated in the prospectus supplement. (Section 3.7(a) of the indenture) Persons
buying and selling debt securities between a record date and an interest payment
date must work out between them how to compensate for the fact that we will pay
all the interest for an interest period to the registered holder on the record
date.
Unless we tell you otherwise in the applicable prospectus supplement,
interest payable on any debt security in registered form that is not punctually
paid or duly provided for on any interest payment date will cease to be payable
to the holder in whose name such debt security is registered on the relevant
record date. Such defaulted interest will instead be payable to the person in
whose name such debt security is registered on the special record date or other
specified date determined in accordance with the indenture. (Section 3.7(b) of
the indenture)
We will make payments on debt securities in bearer form in the currency and
in the manner designated in the applicable prospectus supplement, subject to any
relevant laws and regulations, at such paying agencies outside the United States
as we may appoint from time to time. The paying agents outside the United States
initially appointed by us for a series of debt securities will be named in the
applicable prospectus supplement.
Unless we tell you otherwise in the applicable prospectus supplement, if
any payment date is not a business day, payments scheduled to be made on such
payment date may be made on the next succeeding business day without additional
interest.
We may at any time designate additional paying agents or rescind the
designation of any paying agents, except that, if debt securities of a series
are issuable as registered securities, we will be required to maintain at least
one paying agent in each place of payment designated for such series and, if
debt securities of a series are issuable as bearer securities, we will be
required to maintain a paying agent in a place of payment outside the United
States where debt securities of such series and any related coupons may be
presented and surrendered for payment. (Section 9.2 of the indenture)
Unless we tell you otherwise in the applicable prospectus supplement, any
moneys or governmental obligations (including the proceeds thereof) deposited
with the trustee or any paying agent, or then held by us in trust, for the
payment of the principal of, premium, if any, or interest or other amounts on
any debt security that remains unclaimed for two years after such principal,
premium, if any, or interest or other amounts has become due and payable will,
at our request, be repaid to us. After repayment to us, holders of such debt
securities will be entitled to seek payment only from us as a general unsecured
creditor.
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NOTICES
AMR and the trustee will send notices regarding debt securities in
registered form only to registered holders, using their addresses as listed in
the registrar's records. IF YOU ARE NOT THE HOLDER OF DEBT SECURITIES IN
REGISTERED FORM, YOU SHOULD CONSULT THE BROKER, BANK OR OTHER FINANCIAL
INTERMEDIARY THROUGH WHICH YOU INVEST IN SUCH DEBT SECURITIES FOR INFORMATION ON
HOW YOU WILL RECEIVE SUCH NOTICES. Holders of bearer debt securities will be
notified by publication as described in the prospectus supplement relating to
such debt securities. (Section 1.6 of the indenture)
REDEMPTION
Unless we state otherwise in an applicable prospectus supplement, debt
securities will not be subject to any sinking fund.
The redemption features, if any, of any series of debt securities will be
described in the applicable prospectus supplement. We may redeem debt securities
in denominations larger than $1,000 but, unless we state otherwise in an
applicable prospectus supplement, only in integral multiples of $1,000.
Unless we state otherwise in an applicable prospectus supplement, we will
mail notice of any redemption of debt securities at least 15 days but not more
than 60 days before the redemption date to the holders. Unless we default in
payment of the redemption price, on and after the redemption date interest will
cease to accrue on the debt securities or the portions called for redemption.
CONSOLIDATION, MERGER OR SALE BY AMR
The indenture generally permits AMR to consolidate or merge with or into
another entity and to sell or otherwise dispose of all or substantially all of
its assets. However, we may not take any of these actions unless all the
following conditions are met:
- where we merge out of existence or sell or otherwise dispose of our
assets, the other entity must be a corporation, limited liability
company, partnership, trust or other person organized and existing
under the laws of the United States of America or a State thereof, and
it must agree to be legally responsible for all of AMR's obligations
under the debt securities and the indenture;
- the transaction must not cause a default on the debt securities and
AMR must not already be in default (for this purpose, a "default" is
an event that with notice or passage of time would become an event of
default); and
- AMR must deliver certain certificates and documents to the trustee.
The remaining or acquiring person after any such transaction will be
substituted for AMR under the indenture and the debt securities, and all
obligations of AMR will terminate. (Section 7.1 of the indenture)
EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
The term "event of default" means, with respect to debt securities of any
series, any of the following:
- We fail to pay interest on a debt security of such series within 30
days of its due date.
- We fail to pay principal or any premium on a debt security of such
series, or we fail to deposit any mandatory sinking fund payment,
within 10 days of its due date.
- We remain in breach of a covenant in the indenture for 60 days after
we receive a notice of default stating we are in breach. The notice
must be sent by either the trustee or the holders of at least 25% of
the principal amount of the debt securities of the affected series.
- We file for bankruptcy or certain other events of bankruptcy,
insolvency or reorganization occur.
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- There occurs any other "event of default" described in the applicable
supplemental indenture or board resolution providing for the issuance
of such series of debt securities.
(Section 5.1 of the indenture) An event of default for a particular series of
debt securities will not necessarily constitute an event of default for any
other series of debt securities.
The indenture requires the trustee to notify holders of the applicable
series of debt securities of any uncured default within 90 days after such
default occurs. The trustee may withhold notice, however, of any default (except
in the payment of principal or interest) if it considers such withholding of
notice to be in the holders' best interests. (Section 6.5 of the indenture)
If an event of default has occurred and has not been cured, the trustee or
the holders of at least 25% in aggregate principal amount of the debt securities
of the affected series may declare the entire principal amount (or, if the debt
securities of that series are original issue discount debt securities or debt
securities payable in accordance with an index, formula or other method, such
portion of the principal amount or other amount specified in the prospectus
supplement) of all the debt securities of that series to be due and immediately
payable. (Section 5.2 of the indenture) The holders of a majority in aggregate
principal amount of the debt securities of the affected series may waive, on
behalf of the holders of all debt securities of such series, any past default or
event of default with respect to that series and its consequences, except a
default or event of default in the payment of the principal of or premium, if
any, or interest, if any, on any debt security and certain other defaults.
(Section 5.7 of the indenture)
The holders of a majority in aggregate principal amount of the debt
securities of the affected series (with the debt securities of each such series
voting as a class) may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee for such series, or
exercising any trust or power conferred on such trustee with respect to the debt
securities of such series, as long as such direction does not conflict with any
law or the indenture and subject to certain other limitations, including, if
requested by the trustee, the provision of security or indemnity satisfaction to
the trustee. (Section 5.8 of the indenture)
Before a holder can bypass the trustee and bring its own lawsuit or other
formal legal action or take other steps to enforce its rights or protect its
interests relating to the debt securities, the following must occur:
- such holder must give the trustee written notice that an event of
default has occurred and remains uncured;
- the holders of at least 25% in aggregate principal amount of all debt
securities of the relevant series must request the trustee in writing
to take action because of the event of default, and must offer
security or indemnity to the trustee against the cost and other
liabilities of taking that action;
- the trustee must not have taken action for 60 days after receipt of
the above notice, request and indemnity; and
- the holders of a majority in aggregate principal amount of the debt
securities of that series must not have given the trustee a direction
inconsistent with the above request.
(Section 5.9 of the indenture)
However, a direct holder is entitled to bring a lawsuit at any time for the
payment of principal, premium, if any, and interest due on its debt securities
after the due date. (Section 5.10 of the indenture)
IF YOU ARE NOT THE HOLDER OF DEBT SECURITIES IN REGISTERED FORM, YOU SHOULD
CONSULT THE BROKER, BANK OR FINANCIAL INTERMEDIARY THROUGH WHICH YOU INVEST IN
SUCH DEBT SECURITIES FOR INFORMATION ON YOUR RIGHTS IN RESPECT OF THOSE DEBT
SECURITIES FOLLOWING AN EVENT OF DEFAULT.
We will file annually with the trustee a certificate as to AMR's compliance
with all conditions and covenants of the indenture. (Section 9.7 of the
indenture)
MODIFICATION OF THE INDENTURE
There are three categories of changes we can make to the indenture and the
debt securities.
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Changes Requiring Approval of Each Affected Holder. First, there are
changes that cannot be made to the indenture and the debt securities of any
series without the approval of each holder of such debt securities who would be
affected by such change. Following is a summary of those changes:
- to change the time for payment of principal of or interest on a debt
security;
- to reduce the amounts of principal of or interest on a debt security;
- to reduce the amount of any premium payable upon the redemption of a
debt security;
- to reduce the amount payable upon acceleration of the maturity of an
original issue discount debt security or a debt security payable in
accordance with an index, formula or other method;
- to change the currency of payment on a debt security;
- to impair the right to sue for payment on a debt security;
- to reduce the percentage of holders of debt securities of such series
whose consent is needed to modify or amend the indenture or to waive
compliance with certain provisions of the indenture or to waive
certain defaults; or
- to modify the provisions relating to waiver of certain defaults or
modifications of the indenture and debt securities, other than to
increase any percentage of holders required for such waivers and
modifications, or to provide that other provisions of the indenture
and debt securities may not be modified without consent of each
affected holder.
(Section 8.2 of the indenture)
Changes Not Requiring Approval. The second category of changes to the
indenture and the debt securities does not require any vote by holders of debt
securities. Following is a summary of those changes:
- to reflect that another corporation or entity has succeeded AMR or
American Airlines, Inc. and assumed its covenants and obligations
under, as applicable, the indenture, any debt securities and any
related American Airlines, Inc. guarantee;
- to add to AMR's or American Airlines, Inc.'s covenants, to surrender
any right or power of AMR or American Airlines, Inc., or to comply
with any SEC requirement in connection with the qualification of the
indenture or any American Airlines, Inc. guarantee;
- to add additional events of default with respect to any series;
- to add or change any provisions to the extent necessary to facilitate
the issuance of debt securities in bearer form or in global form;
- to add, or to change or eliminate, any provision affecting debt
securities not yet issued, including to make appropriate provisions
for an American Airlines, Inc. guarantee;
- to secure the debt securities;
- to establish the form or terms of debt securities;
- to provide for the electronic delivery of supplemental indentures or
debt securities of any series;
- to evidence and provide for successor or additional trustees or to
facilitate the appointment of a separate trustee or trustees for one
or more series of debt securities;
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- if allowed without penalty under applicable laws and regulations, to
permit payment in respect of debt securities in bearer form in the
United States;
- to correct or supplement any inconsistent provisions or to cure any
ambiguity or correct any mistake in the indenture, any debt securities
or any American Airlines, Inc. guarantee; or
- to make any other provisions with respect to matters or questions
arising under the indenture, as long as such action does not
materially adversely affect holders of the debt securities.
(Section 8.1 of the indenture)
Changes Requiring a Majority Vote. The third category of changes to the
indenture and the debt securities requires a vote in favor by holders of debt
securities owning a majority of the principal amount of each particular series
adversely affected. This category includes other changes to the indenture and
debt securities not part of the first and second categories of changes to the
indenture and debt securities described above. (Section 8.2 of the indenture)
IF YOU ARE NOT THE HOLDER OF DEBT SECURITIES IN REGISTERED FORM, YOU SHOULD
CONSULT WITH THE BROKER, BANK OR FINANCIAL INTERMEDIARY THROUGH WHICH YOU INVEST
IN SUCH DEBT SECURITIES FOR INFORMATION ON HOW APPROVAL WILL BE GRANTED OR
DENIED IF WE SEEK TO CHANGE THE INDENTURE OR REQUEST A WAIVER OF ANY OF ITS
TERMS.
SATISFACTION AND DISCHARGE
The indenture provides that when, among other things, all debt securities
of a series not previously delivered to the trustee for cancellation:
- have become due and payable,
- will become due and payable at their stated maturity within one year,
or
- are to be called for redemption within one year under arrangements
satisfactory to the trustee for the giving of notice of redemption by
the trustee in our name and at our expense,
and we have deposited or caused to be deposited with the trustee, money or
certain governmental obligations or a combination thereof in an amount to be
sufficient to pay and discharge the entire indebtedness on debt securities of
such series not previously delivered to the trustee for cancellation, for the
principal, and premium, if any, and interest to the date of the deposit or to
the stated maturity or redemption date, as the case may be, then the indenture
will cease to be of further effect with respect to such series of debt
securities, and we will be deemed to have satisfied and discharged the indenture
with respect to such series of debt securities. (Section 4.1 of the indenture)
DEFEASANCE
Unless we tell you otherwise in the applicable prospectus supplement, the
following discussion of full defeasance and covenant defeasance will apply to
each series of debt securities. (Article IV of the indenture)
Full Defeasance. Under certain circumstances, we can legally release
ourselves from any payment or other obligations on the debt securities of any
series (called "full defeasance") if we put in place the following arrangements
for the holders of those debt securities to be repaid:
- we must irrevocably deposit in trust for the holders' benefit a
combination of money and certain governmental obligations specified in
the indenture that will generate enough money to pay when due the
principal of and any premium or interest on the debt securities of
such series and to make any mandatory sinking fund payments on such
debt securities; and
- we must deliver to the trustee a legal opinion of our counsel
confirming that there has been a change in federal tax law as in
effect on the date of this prospectus or an Internal Revenue Service
ruling that lets us make the above deposit without causing holders to
be taxed on the debt securities of such series any differently than if
AMR did not make the deposit and simply repaid such debt securities
itself.
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(Sections 4.4 and 4.6 of the indenture)
If we ever did accomplish full defeasance, as described above, holders
would have to rely solely on the trust deposit for repayment on the debt
securities of the particular series defeased. Holders could not look to AMR or
any American Airlines, Inc. guarantee for repayment if a shortfall occurred.
AMR may exercise its full defeasance option even if it has previously
exercised its covenant defeasance option. If AMR exercises its full defeasance
option, payment of the particular series of debt securities defeased may not be
accelerated because of a default or an event of default. (Section 4.4 of the
indenture)
Covenant Defeasance. Under certain circumstances, we can make the same type
of deposit described above and be released from some of the restrictive
covenants in the debt securities of any series. This is called "covenant
defeasance". In that event, holders of those debt securities would lose the
protection of those restrictive covenants but would gain the protection of
having money and certain governmental obligations set aside in trust to repay
such debt securities. To achieve covenant defeasance, we must do the following:
- we must irrevocably deposit in trust for the holders' benefit a
combination of money and certain governmental obligations specified in
the indenture that will generate enough money to pay when due the
principal of and any premium or interest on the debt securities of
such series and to make any mandatory sinking fund payments on such
debt securities; and
- we must deliver to the trustee a legal opinion of our counsel
confirming that, under federal tax law as in effect at the time of
such deposit, AMR may make such deposit without causing holders to be
taxed on the debt securities of such series any differently than if
AMR did not make the deposit and simply repaid such debt securities
itself.
(Sections 4.5 and 4.6 of the indenture)
If AMR exercises its covenant defeasance option with respect to the debt
securities of a series, certain restrictive covenants of the indenture and
certain events of default would no longer apply to such series. (Section 4.5 of
the indenture) If one of the remaining events of default occurred, however, and
payment of the debt securities of such series was accelerated, there could be a
shortfall between the amount in the trust deposit at that time and the amount
then due on such series. Holders could still look to AMR for payment of such
debt securities if there were such a shortfall. Depending on the event causing
the default (such as AMR's bankruptcy), however, holders may not be able to
obtain payment of the shortfall from AMR.
CONVERSION OR EXCHANGE
We may convert or exchange the debt securities of a series into common
stock or other securities. If so, we will describe the specific terms on which
the debt securities may be converted or exchanged in the applicable prospectus
supplement. The conversion or exchange may be mandatory, at your option, or at
our option. The applicable prospectus supplement will describe the manner in
which the shares of common stock or other securities you would receive would be
converted or exchanged.
GUARANTEE OF AMERICAN AIRLINES, INC.
American Airlines, Inc. may guarantee unconditionally our obligations
under any series of debt securities and the indenture as described in the
applicable prospectus supplement. If American Airlines, Inc. guarantees these
obligations under any series of debt securities, we will tell you in the
applicable prospectus supplement and describe the terms of the guarantee in such
prospectus supplement. Unless we tell you otherwise in the applicable prospectus
supplement, such guarantee will be enforceable without any need to first enforce
the debt securities against AMR, and will be an unsecured obligation of American
Airlines, Inc.
THE TRUSTEE
Wilmington Trust Company is the trustee under the indenture. Wilmington
Trust Company acts as trustee with respect to certain other financing
transactions of ours and of our affiliates. Wilmington Trust Company may from
time to time provide banking or other services to us and our affiliates.
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DESCRIPTION OF CAPITAL STOCK OF AMR CORPORATION
We may elect to offer common stock or preferred stock. AMR's certificate of
incorporation, as amended (the "Certificate of Incorporation") authorizes us to
issue 750,000,000 shares of common stock, par value $1.00 per share, and
20,000,000 shares of preferred stock, without par value. On October 21, 2003,
159,347,481 shares of our common stock were outstanding. Our common stock
currently is listed on the New York Stock Exchange under the trading symbol
"AMR". No shares of our preferred stock are outstanding as of the date hereof.
The description of our capital stock in this prospectus is a summary. When
we offer to sell capital stock, we will summarize in a prospectus supplement the
particular terms of such capital stock that we believe will be the most
important to your decision to invest in such capital stock. As the terms of such
capital stock may differ from the summary in this prospectus, the summary in
this prospectus is subject to and qualified by reference to the summary in such
prospectus supplement, and you should rely on the summary in such prospectus
supplement instead of the summary in this prospectus if the summary in such
prospectus supplement is different from the summary in this prospectus. You
should keep in mind, however, that it is the Certificate of Incorporation and
our by-laws, as amended (the "By-Laws"), and statutory and common law, including
the Delaware General Corporation Law (the "DGCL"), and not the summaries in this
prospectus or such prospectus supplement, which define your rights as a holder
of such capital stock. There may be other provisions in the Certificate of
Incorporation and By-Laws that are also important to you. You should carefully
read these documents for a full description of the terms of such capital stock.
Our Certificate of Incorporation and By-Laws are incorporated by reference as
exhibits to the registration statement that includes this prospectus. See "Where
You Can Find More Information" for information on how to obtain copies of our
Certificate of Incorporation and By-Laws.
COMMON STOCK
Voting Rights. The holders of our common stock are entitled to one vote for
each share held of record on all matters submitted to a vote of stockholders.
Except as otherwise provided by law, the holders of our common stock vote as one
class. The shares of our common stock do not have cumulative voting rights. As a
result, subject to the voting rights, if any, of the holders of any shares of
our preferred stock which may at the time be outstanding, the holders of common
stock entitled to exercise more than 50% of the voting rights in an election of
directors can elect 100% of the directors to be elected if they choose to do so.
In such event, the holders of the remaining shares of our common stock voting
for the election of directors will not be able to elect any persons to the board
of directors.
Delaware General Corporation Law Section 203. As a corporation organized
under the laws of the State of Delaware, we are subject to Section 203 of the
DGCL which restricts certain business combinations between us and an "interested
stockholder" (in general, a stockholder owning 15% or more of our outstanding
voting stock) or its affiliates or associates for a period of three years
following the date on which the stockholder becomes an "interested stockholder".
The restrictions do not apply if (i) prior to an interested stockholder becoming
such, the board of directors approves either the business combination or the
transaction in which the stockholder becomes an interested stockholder, (ii)
upon consummation of the transaction in which any person becomes an interested
stockholder, such interested stockholder owns at least 85% of our voting stock
outstanding at the time the transaction commences (excluding shares owned by
certain employee stock ownership plans and persons who are both directors and
officers of AMR) or (iii) on or subsequent to the date an interested stockholder
becomes such, the business combination is both approved by the board of
directors and authorized at an annual or special meeting of our stockholders,
not by written consent, by the affirmative vote of at least 66 2/3% of the
outstanding voting stock not owned by the interested stockholder.
Liquidation Rights and Other Provisions. Subject to the prior rights of
creditors and the holders of any preferred stock which may be outstanding from
time to time, the holders of our common stock are entitled in the event of
liquidation, dissolution or winding up to share pro rata in the distribution of
all remaining assets.
The holders of our common stock are entitled to such dividends as our board
of directors may declare from time to time from legally available funds subject
to the preferential rights of the holders of any shares of our preferred stock
that we may issue in the future. See "Dividend Policy".
The common stock is not liable to any calls or assessments and is not
convertible into any other securities. The Certificate of Incorporation provides
that the private property of the stockholders shall not be subject to the
payment
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of corporate debts. There are no redemption or sinking funds provisions
applicable to the common stock, and the Certificate of Incorporation provides
that there shall be no preemptive rights.
The Certificate of Incorporation provides that our directors shall not be
personally liable to AMR or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to AMR or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL or (iv) for any
transaction from which the director derived an improper personal benefit.
Section 174 of the DGCL specifies conditions under which directors of Delaware
corporations may be liable for unlawful dividends or unlawful stock purchases or
redemptions.
The transfer agent and registrar for the common stock is EquiServe Trust
Company, N.A.
PREFERRED STOCK
Subject to the limitations prescribed by the DGCL, the Certificate of
Incorporation authorizes our board of directors to provide for the issuance of
shares of preferred stock, from time to time, in one or more series, and to fix
any voting powers, full or limited, and the designation, preferences and
relative, participating, optional or other special rights, applicable to the
shares to be included in any such series and any qualifications, limitations or
restrictions thereon.
A prospectus supplement will describe specific terms of the series of
preferred shares then being offered. These terms may include some or all of the
following:
- title;
- the number of shares offered;
- the liquidation preference per share;
- the purchase price;
- the dividend rates, periods and/or payment dates or methods of
calculation of the dividend rates;
- whether dividends will be cumulative or non-cumulative and, if
cumulative, the date from which dividends will accumulate;
- the procedures for any auction or remarketing, if any;
- the provisions for a sinking fund, if any;
- the provisions for redemption, if applicable;
- the terms and conditions, if applicable, upon which the preferred
shares will be convertible into our common shares or other securities
or property, including whether such conversion is mandatory, at your
option or at our option, the conversion price, or manner of
calculation of the conversion price, and conversion period;
- the terms and conditions, if applicable, upon which preferred shares
will be exchanged into debt securities or other securities or
property, including whether such exchange is mandatory, at your option
or at our option, the exchange price, or manner of calculating the
exchange price, and the exchange period;
- voting rights, if any;
- the relative ranking and preferences of the preferred shares as to
dividend rights upon liquidation, dissolution or winding up of our
affairs;
- the restrictions, if any, on the issue or reissue of any additional
shares of such series;
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- any limitations on issuance of any series of preferred shares ranking
senior to or equal to the series of preferred shares as to dividend
rights upon our liquidation, dissolution or winding up;
- information with respect to book-entry procedures, if any; and
- any other specific terms, preferences, rights, limitations or
restrictions.
Unless we tell you otherwise in the applicable prospectus supplement,
preferred shares will not be listed on any securities exchange.
Unless otherwise specified in the prospectus supplement, the preferred
shares will, with respect to dividend rights and rights upon our liquidation,
dissolution or winding up, rank:
- senior to all series of our common shares, and to all equity
securities issued by us the terms of which specifically provide that
such equity securities rank junior to the preferred shares with
respect to dividend rights or rights upon our liquidation, dissolution
or winding up;
- equal to all equity securities issued by us the terms of which
specifically provide that those equity securities will rank equal to
the preferred shares with respect to dividend rights or rights upon
our liquidation, dissolution or winding up; and
- junior to all equity securities issued by us the terms of which
specifically provide that those equity securities rank senior to the
preferred shares with respect to dividend rights or rights upon our
liquidation, dissolution or winding up.
The applicable prospectus supplement will specify the transfer agent and
registrar for any shares of preferred stock we may offer pursuant to this
prospectus.
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DESCRIPTION OF DEPOSITARY SHARES
GENERAL TERMS
We may elect to offer depositary shares representing receipts for
fractional interests in debt securities or preferred stock. In this case, we
will issue receipts for depositary shares, each of which will represent a
fraction of a debt security or share of a particular series of preferred stock
(or a combination thereof), as the case may be. We will deposit the debt
securities or shares of any series of preferred stock represented by depositary
shares under a deposit agreement between us and a depositary, which we will name
in the applicable prospectus supplement. Subject to the terms of the deposit
agreement, as an owner of a depositary share you will be entitled, in proportion
to the applicable fraction of a debt security or share of preferred stock
represented by the depositary share, to all the rights and preferences of the
debt security or preferred stock, as the case may be, represented by the
depositary share, including, as the case may be, interest, dividend, voting,
conversion, redemption, sinking fund, repayment at maturity, subscription and
liquidation rights.
The description of our depositary shares in this prospectus is a summary.
When we offer to sell depositary shares, we will summarize in a prospectus
supplement the particular terms of such depositary shares and the applicable
deposit agreement that we believe will be the most important to your decision to
invest in such depositary shares. As the terms of such depositary shares may
differ from the summary in this prospectus, the summary in this prospectus is
subject to and qualified by reference to the summary in such prospectus
supplement, and you should rely on the summary in such prospectus supplement
instead of the summary in this prospectus if the summary in such prospectus
supplement is different from the summary in this prospectus. You should keep in
mind, however, that it is the depositary shares, the deposit agreement and the
indenture (in the case of depositary shares representing fractional interests in
debt securities), or the Certificate of Incorporation and By-Laws (in the case
of depositary shares representing fractional interests in preferred stock) and
not the summaries in this prospectus or such prospectus supplement, which define
your rights as a holder of such depositary shares. There may be other provisions
in these documents that are also important to you. You should carefully read
these documents for a full description of the terms of such depositary shares. A
copy of the form of deposit agreement will be filed with the SEC as an exhibit
to a report on Form 8-K or by a post-effective amendment to the registration
statement that includes this prospectus. See "Where You Can Find More
Information" for information on how to obtain copies of this document.
INTEREST, DIVIDENDS AND OTHER DISTRIBUTIONS
The depositary will distribute all payments of interest, cash dividends or
other cash distributions received on the debt securities or preferred stock, as
the case may be, to you in proportion to the number of depositary shares that
you own.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to you in an equitable manner, unless the
depositary determines that it is not feasible to make a distribution. In that
case the depositary may sell the property and distribute the net proceeds from
the sale to you.
REDEMPTION OF DEPOSITARY SHARES
If we redeem a debt security or series of preferred stock represented by
depositary shares, the depositary will redeem your depositary shares from the
proceeds received by the depositary resulting from the redemption. The
redemption price per depositary share will be equal to the applicable fraction
of the redemption price per debt security or share of preferred stock, as the
case may be, payable in relation to the redeemed series of debt securities or
preferred stock. Whenever we redeem debt securities or shares of preferred stock
held by the depositary, the depositary will redeem as of the same redemption
date the number of depositary shares representing, as the case may be, the debt
securities or shares of preferred stock redeemed. If fewer than all the
depositary shares are to be redeemed, the depositary shares to be redeemed will
be selected by lot, proportionately or by any other equitable method as the
depositary may determine.
EXERCISE OF RIGHTS UNDER THE INDENTURE OR VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which you are entitled to vote, or
of any request for instructions or directions from you as holder of debt
securities, the depositary will mail to you the information contained in that
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notice. Each record holder of the depositary shares on the record date will be
entitled to instruct the depositary how to give instructions or directions with
respect to the debt securities represented by that holder's depositary shares or
how to vote the amount of the preferred stock represented by that holder's
depositary shares. The record date for the depositary shares will be the same
date as the record date for the debt securities or preferred stock, as the case
may be. The depositary will endeavor, to the extent practicable, to give
instructions or directions with respect to the debt securities or to vote the
amount of the preferred stock, as the case may be, represented by the depositary
shares in accordance with those instructions. We will agree to take all
reasonable action which the depositary may deem necessary to enable the
depositary to do so. The depositary will abstain from giving instructions or
directions with respect to the debt securities or voting shares of the preferred
stock, as the case may be, represented by your depositary shares if it does not
receive specific instructions from you.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
We and the depositary may amend the form of depositary receipt evidencing
the depositary shares and any provision of the deposit agreement at any time.
However, any amendment which materially and adversely alters the rights of the
holders of the depositary shares will not be effective unless the amendment has
been approved by the holders of at least a majority of the depositary shares
then outstanding.
The deposit agreement will terminate if:
- all outstanding depositary shares have been redeemed; or
- there has been a complete repayment or redemption of the debt
securities or a final distribution in respect of the preferred stock,
including in connection with our liquidation, dissolution or winding
up, and the repayment, redemption or distribution proceeds, as the
case may be, have been distributed to you.
RESIGNATION AND REMOVAL OF DEPOSITARY
The depositary may resign at any time by delivering to us notice of its
election to do so. We also may, at any time, remove the depositary. Any
resignation or removal will take effect upon the appointment of a successor
depositary and its acceptance of such appointment. We must appoint the successor
depositary within 60 days after delivery of the notice of resignation or
removal. The successor depositary must be a bank or trust company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000.
CHARGES OF DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will pay charges of
the depositary in connection with the initial deposit of the debt securities or
preferred stock, as the case may be, and issuance of depositary receipts, all
withdrawals of shares of debt securities or preferred stock, as the case may be,
by you and any repayment or redemption of the debt securities or preferred
stock, as the case may be. You will pay other transfer and other taxes and
governmental charges, as well as the other charges that are expressly provided
in the deposit agreement to be for your account.
MISCELLANEOUS
The depositary will forward all reports and communications from us which
are delivered to the depositary and which we are required or otherwise determine
to furnish to holders of debt securities or preferred stock, as the case may be.
The depositary will not be obligated to prosecute or defend any legal
proceedings relating to any depositary shares, debt securities or preferred
stock unless satisfactory indemnity is furnished. We and the depositary may rely
upon written advice of counsel or accountants, or upon information provided by
persons presenting debt securities or shares of preferred stock for deposit, you
or other persons believed to be competent and on documents which we and the
depositary believe to be genuine.
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GUARANTEE OF AMERICAN AIRLINES, INC.
American Airlines, Inc. may guarantee unconditionally our obligations
under the depositary shares and the applicable deposit agreement as described in
the applicable prospectus supplement. If American Airlines, Inc. guarantees
these obligations, we will tell you in the applicable prospectus supplement and
describe the terms of the guarantee in such prospectus supplement. Unless we
tell you otherwise in the applicable prospectus supplement, such guarantee will
be enforceable without any need to first enforce the depositary shares against
AMR, and will be an unsecured obligation of American Airlines, Inc.
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DESCRIPTION OF WARRANTS
We may elect to offer warrants, including warrants to purchase debt
securities, preferred stock, common stock or other securities, property or
assets, as well as other types of warrants. We may issue warrants independently
or together with any other securities, and they may be attached to or separate
from those securities. We will issue the warrants under warrant agreements
between us and a bank or trust company, as warrant agent, that we will describe
in the prospectus supplement relating to the warrants that we offer.
The description of our warrants in this prospectus is a summary. When we
offer to sell warrants, we will summarize in a prospectus supplement the
particular terms of such warrants and the applicable warrant agreement that we
believe will be the most important to your decision to invest in such warrants.
As the terms of such warrants may differ from the summary in this prospectus,
the summary in this prospectus is subject to and qualified by reference to the
summary in such prospectus supplement, and you should rely on the summary in
such prospectus supplement instead of the summary in this prospectus if the
summary in such prospectus supplement is different from the summary in this
prospectus. You should keep in mind, however, that it is the warrant certificate
relating to such warrants and the warrant agreement, and not the summaries in
this prospectus or such prospectus supplement, which defines your rights as a
holder of such warrants. There may be other provisions in the warrant
certificate relating to such warrants and the warrant agreement that are also
important to you. You should carefully read these documents for a full
description of the terms of such warrants. Forms of these documents will be
filed with the SEC as exhibits to a report on Form 8-K or by a post-effective
amendment to the registration statement that includes this prospectus. See
"Where You Can Find More Information" for information on how to obtain copies of
these documents.
DEBT WARRANTS
We may offer warrants to purchase debt securities ("debt warrants"). A
prospectus supplement will describe specific terms of the debt warrants, the
warrant agreement relating to the debt warrants and the warrant certificates
representing the debt warrants. These terms may include some or all of the
following:
- the title of the debt warrants;
- the debt securities for which the debt warrants are exercisable;
- the aggregate number of the debt warrants;
- the principal amount of debt securities that you may purchase upon
exercise of each debt warrant, and the price or prices at which we
will issue the debt warrants;
- if other than U.S. dollars, the currency, composite currency or
currency units in which such debt warrants are to be issued or for
which the debt warrants may be exercised;
- the procedures and conditions relating to the exercise of the debt
warrants;
- the designation and terms of any related debt securities issued with
the debt warrants, and the number of debt warrants issued with each
debt security;
- the date, if any, from which you may separately transfer the debt
warrants and the related securities;
- the date on which your rights to exercise the debt warrants commence,
and the date on which your rights expire;
- the maximum or minimum number of the debt warrants which you may
exercise at any time;
- any mandatory or optional redemption provisions;
- information with respect to book entry procedures, if any;
- if applicable, a discussion of material federal income tax
considerations;
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- the terms of the securities you may purchase upon exercise of the debt
warrants; and
- any other terms of the debt warrants and terms, procedures and
limitations relating to your exercise of the debt warrants.
We will also describe in the applicable prospectus supplement any
provisions for a change in the exercise price or expiration date of the debt
warrants and the kind, frequency and timing of any notice to be given. You may
exchange warrant certificates for new warrant certificates of different
denominations and you may exercise debt warrants at the corporate trust office
of the warrant agent or any other office that we indicate in the applicable
prospectus supplement. We will not charge any service charges for any transfer
or exchange of warrant certificates, but we may require payment for tax or other
governmental charges in connection with the exchange or transfer. Unless the
prospectus supplement states otherwise, prior to exercise, you will not have any
of the rights of holders of the debt securities purchasable upon that exercise
and will not be entitled to payments of principal, premium, if any, or interest
on the debt securities purchasable upon the exercise.
OTHER WARRANTS
We may issue other warrants. A prospectus supplement will describe specific
terms of the warrants, the warrant agreement relating to the warrants and the
warrant certificates representing the warrants. These terms may include some or
all of the following:
- the title of the warrants;
- the securities, which may include preferred stock or common stock or
other of our securities, or other property or assets, for which you
may exercise the warrants;
- the aggregate number of the warrants;
- the number of securities, or the amount of other property or assets,
that you may purchase upon exercise of each warrant, and the price or
prices at which we will issue the warrants;
- if other than U.S. dollars, the currency, composite currency or
currency units in which such warrants are to be issued or for which
the warrants may be exercised;
- the procedures and conditions relating to the exercise of the
warrants;
- the designation and terms of any related securities issued with the
warrants, and the number of warrants issued with each security;
- the date, if any, from which you may separately transfer the warrants
and the related securities or other property or assets;
- the date on which your rights to exercise the warrants commence, and
the date on which your rights expire;
- the maximum or minimum number of warrants which you may exercise at
any time;
- any mandatory or optional redemption provisions;
- information with respect to book entry procedures, if any;
- if applicable, a discussion of material federal income tax
considerations;
- the terms of any securities you may purchase upon exercise of the
warrants; and
- any other terms of the warrants, including terms, procedures and
limitations relating to your exchange and exercise of the warrants.
24
We will also describe in the applicable prospectus supplement any
provisions for a change in the exercise price or the expiration date of the
warrants and the kind, frequency and timing of any notice to be given. You may
exchange warrant certificates for new warrant certificates of different
denominations and you may exercise warrants at the corporate trust office of the
warrant agent or any other office that we indicate in the applicable prospectus
supplement. We will not charge any service charges for any transfer or exchange
of warrant certificates, but we may require payment for tax or other
governmental charges in connection with the exchange or transfer. Unless the
prospectus supplement states otherwise, prior to the exercise of your warrants,
you will not have any of the rights of holders of the preferred stock, common
stock or other securities, property or assets purchasable upon that exercise and
will not be entitled to dividend payments, if any, or voting rights of the
preferred stock, common stock or other securities purchasable upon the exercise.
EXERCISE OF WARRANTS
We will describe in the prospectus supplement relating to the warrants the
principal amount, the number of our securities, or amount of other property or
assets that you may purchase for cash upon exercise of a warrant, and the
exercise price. You may exercise a warrant as described in the prospectus
supplement relating to the warrants at any time up to the close of business on
the expiration date stated in the prospectus supplement. Unexercised warrants
will become void after the close of business on the expiration date, or any
later expiration date that we determine.
We will forward the securities, property or assets purchasable upon the
exercise as soon as practicable after receipt of payment and the properly
completed and executed warrant certificate at the corporate trust office of the
warrant agent or other office stated in the applicable prospectus supplement. If
you exercise less than all of the warrants represented by the warrant
certificate, we will issue you a new warrant certificate for the remaining
warrants.
GUARANTEE OF AMERICAN AIRLINES, INC.
American Airlines, Inc. may guarantee unconditionally our obligations
under the warrants and the applicable warrant agreement as described in the
applicable prospectus supplement. If American Airlines, Inc. guarantees these
obligations, we will tell you in the applicable prospectus supplement and
describe the terms of the guarantee in such prospectus supplement. Unless we
tell you otherwise in the applicable prospectus supplement, such guarantee will
be enforceable without any need to first enforce the warrants against AMR, and
will be an unsecured obligation of American Airlines, Inc.
25
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
We may elect to offer, from time to time, stock purchase contracts,
representing contracts obligating holders to purchase from us, and for us to
sell to holders, a specific number of shares of common stock or preferred stock,
or other securities, property or assets, at a future date or dates. We may issue
stock purchase contracts separately or as a part of stock purchase units.
The description of our stock purchase contracts and stock purchase units in
this prospectus is a summary. When we offer to sell a series of stock purchase
contracts or stock purchase units, we will summarize in a prospectus supplement
the particular terms of such series of stock purchase contracts or stock
purchase units, as the case may be, that we believe will be the most important
to your decision to invest in such series. As the terms of such series of stock
purchase contracts or stock purchase units, as the case may be, may differ from
the summary in this prospectus, the summary in this prospectus is subject to and
qualified by reference to the summary in such prospectus supplement, and you
should rely on the summary in such prospectus supplement instead of the summary
in this prospectus if the summary in such prospectus supplement is different
from the summary in this prospectus. You should keep in mind, however, that it
is the stock purchase contract or stock purchase unit, as the case may be, and,
if applicable, any related collateral arrangements and depositary arrangements,
and not the summaries in this prospectus or such prospectus supplement, which
defines your rights as a holder of such series of stock purchase contracts or
stock purchase units, as the case may be. There may be other provisions in the
stock purchase contract or stock purchase unit, and the related collateral
arrangements and depositary arrangements, if any, that are also important to
you. You should carefully read these documents for a full description of the
terms of the stock purchase contracts and stock purchase units. Forms of these
documents will be filed with the SEC as exhibits to a report on Form 8-K or by a
post-effective amendment to the registration statement that includes this
prospectus. See "Where You Can Find More Information" for information on how to
obtain copies of these documents.
The price per share of preferred stock or common stock or the price of any
other securities, property or assets, as the case may be, subject to any stock
purchase contracts may be fixed at the time the stock purchase contracts are
issued or may be determined by reference to a specific formula described in the
stock purchase contracts. The stock purchase units are expected to consist of
the following:
- a stock purchase contract and, if specified in the applicable
prospectus supplement, debt securities; and
- one or more of the following, each of which secures the holders'
obligations to purchase the preferred stock, common stock or other
securities, property or assets under the stock purchase contracts:
- debt securities or undivided beneficial ownership interests
in debt securities;
- depositary shares representing fractional interests in debt
securities or shares of preferred stock; or
- debt obligations of third parties, including U.S. Treasury
securities.
The stock purchase contracts may require us to make periodic payments to holders
of the stock purchase units, or may require the holders of the stock purchase
units to make periodic payments to us. Any such payments may be unsecured or
prefunded on some basis. The stock purchase contracts may require holders to
secure their obligations under the stock purchase contract in a specified
manner.
GUARANTEE OF AMERICAN AIRLINES, INC.
American Airlines, Inc. may guarantee unconditionally our obligations
under the stock purchase contracts or stock purchase units and, if applicable,
collateral arrangements and depositary arrangements, as described in the
applicable prospectus supplement. If American Airlines, Inc. guarantees these
obligations, we will tell you in the applicable prospectus supplement and
describe the terms of the guarantee in such prospectus supplement. Unless we
tell you otherwise in the applicable prospectus supplement, such guarantee will
be enforceable without any need to first enforce the stock purchase contracts or
stock purchase units, as the case may be, against AMR, and will be an unsecured
obligation of American Airlines, Inc.
26
PLAN OF DISTRIBUTION
We may sell securities from time to time in one or more transactions. We
may sell the securities of or within any series to or through agents,
underwriters or dealers or directly to one or more purchasers.
AGENTS
We may use agents to sell securities. We will name any agent involved in
offering or selling securities, and disclose any commissions that we will pay to
the agent, in the applicable prospectus supplement. Unless we tell you otherwise
in the applicable prospectus supplement, the agents will agree to use their
reasonable best efforts to solicit purchases for the period of their
appointment. Our agents may be deemed to be underwriters under the Securities
Act of any of the securities that they offer or sell.
UNDERWRITERS
We may sell securities to underwriters. Unless we tell you otherwise in the
applicable prospectus supplement, the underwriters may resell those securities
in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale.
Unless the applicable prospectus supplement states otherwise, the obligations of
the underwriters to purchase any series of securities will be subject to
conditions precedent, and the underwriters will be obligated to purchase all of
the securities if any are purchased. The underwriters may change any initial
public offering price and any discounts or concessions they give to dealers.
DIRECT SALES
We may solicit directly offers to purchase the securities, and we may sell
securities directly to purchasers without the involvement of underwriters or
agents. We will describe the terms of our direct sale in the applicable
prospectus supplement.
DEALERS
We may use a dealer to sell the securities. If we use a dealer, we, as
principal, will sell the securities to the dealer who will then sell the
securities to the public at varying prices that the dealer will determine at the
time it sells our securities.
OTHER MEANS OF DISTRIBUTION
Securities may also be offered and sold, if we so indicate in the
applicable prospectus supplement, by one or more firms ("remarketing firms")
acting as principals for their own accounts or as our agents in connection with
a remarketing of such securities following their purchase or redemption.
Remarketing firms may be deemed to be underwriters under the Securities Act in
connection with the securities they remarket.
DELAYED DELIVERY CONTRACTS
We may authorize our agents and underwriters to solicit offers by certain
institutions to purchase the securities at the public offering price under
delayed delivery contracts. If we use delayed delivery contracts, we will
disclose that we are using them in the applicable prospectus supplement and will
tell you when we will demand payment and delivery of the securities under the
delayed delivery contracts. These delayed delivery contracts will be subject
only to the conditions that we describe in the prospectus supplement.
GENERAL INFORMATION
Unless the applicable prospectus supplement states otherwise, each series
of securities will be a new issue of securities and will have no established
trading market, other than our common stock which is listed on the New York
Stock Exchange as of the date of this prospectus. We may elect to list any other
series of securities on any exchange or market, but we are not obligated to do
so. Any underwriters to whom the securities are sold for a public offering may
make a market in those securities. However, those underwriters will not be
obligated to do so and may discontinue any market making at any time without
notice. We cannot give any assurance as to the liquidity of, or the trading
market for, any of the securities.
27
Any underwriters, agents, dealers or remarketing firms will be identified
and their compensation described in a prospectus supplement.
We may have agreements with any underwriters, dealers, agents and
remarketing firms to indemnify them against certain civil liabilities, including
liabilities under the Securities Act, or to contribute with respect to payments
they may be required to make.
Any underwriters, dealers, agents and remarketing firms may engage in
transactions with, or perform services for, AMR, American Airlines, Inc. or our
affiliates in the ordinary course of their business.
LEGAL OPINIONS
Unless we tell you otherwise in the applicable prospectus supplement, the
validity of the securities offered hereby will be passed upon for AMR and, if
applicable, American Airlines, Inc. by their General Counsel and for any agents,
underwriters or dealers by Shearman & Sterling LLP, 599 Lexington Avenue, New
York, New York 10022 or other counsel that we may name in the applicable
prospectus supplement. Shearman & Sterling LLP from time to time represents
American Airlines, Inc. and AMR with respect to certain matters.
EXPERTS
The consolidated financial statements and schedules of AMR and American
Airlines, Inc. included in AMR's and American Airlines, Inc.'s Annual Reports on
Form 10-K for the year ended December 31, 2002, incorporated by reference in
this prospectus, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their reports (which contain an explanatory paragraph describing
conditions that raise substantial doubt about AMR's and American Airlines,
Inc.'s ability to continue as a going concern as described in Note 2 to the AMR
and American Airlines, Inc. consolidated financial statements) appearing
therein. Such consolidated financial statements and schedules are, and audited
consolidated financial statements to be included in subsequently filed documents
will be, incorporated herein in reliance upon the reports of Ernst & Young LLP
pertaining to such consolidated financial statements (to the extent covered by
consents filed with the SEC) given on the authority of such firm as experts in
accounting and auditing.
28
The information in this Prospectus is not complete and may be changed. We cannot
sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This Prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED NOVEMBER 25, 2003
PROSPECTUS
$3,000,000,000
AMERICAN AIRLINES, INC.
Debt Securities
Debt Warrants
By this prospectus, we may offer from time to time up to $3,000,000,000 of
any combination of the securities described in this prospectus.
We will provide specific terms of the securities in a prospectus supplement
to this prospectus. A prospectus supplement may also change or update
information contained in this prospectus.
Before you invest in any of these securities, you should carefully read
this prospectus, including the documents and other information we have referred
to under the heading "Where You Can Find More Information", and the prospectus
supplement relating to the specific issue of securities.
We will not use this prospectus to confirm sales of any of our securities
unless it is attached to a prospectus supplement.
Unless we state otherwise in a prospectus supplement, we will not list any
of these securities on any securities exchange.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 2003
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR ANY
APPLICABLE PROSPECTUS SUPPLEMENT AND THOSE DOCUMENTS INCORPORATED BY REFERENCE
HEREIN AND THEREIN. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT
INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION,
YOU SHOULD NOT RELY ON IT. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO PURCHASE, THE SECURITIES OFFERED BY THIS
PROSPECTUS IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION OF AN OFFER IN SUCH JURISDICTION.
YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS OR IN
ANY PROSPECTUS SUPPLEMENT OR ANY DOCUMENT INCORPORATED BY REFERENCE IS ACCURATE
AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT COVER OF THE APPLICABLE
DOCUMENT. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT
NOR ANY DISTRIBUTION OF SECURITIES PURSUANT TO THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE INFORMATION SET FORTH OR INCORPORATED INTO THIS PROSPECTUS
OR SUCH PROSPECTUS SUPPLEMENT BY REFERENCE OR IN OUR AFFAIRS SINCE THE DATE OF
THIS PROSPECTUS OR SUCH PROSPECTUS SUPPLEMENT. OUR BUSINESS, FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE THAT DATE.
TABLE OF CONTENTS
PAGE
----
About This Prospectus........................................................... 1
Where You Can Find More Information............................................. 2
Special Note Regarding Forward-Looking Statements............................... 2
The Company..................................................................... 3
Ratios of Earnings to Fixed Charges............................................. 4
Use of Proceeds................................................................. 4
Description of Debt Securities.................................................. 5
Description of Debt Warrants.................................................... 16
Plan of Distribution............................................................ 18
Legal Opinions.................................................................. 19
Experts......................................................................... 19
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that we and
our parent, AMR Corporation, filed jointly with the Securities and Exchange
Commission (the "SEC") utilizing a "shelf" registration process. Under this
shelf process, we may sell the securities described in this prospectus from time
to time using this prospectus together with a prospectus supplement. This
prospectus provides you with a general description of the securities we may
offer. Each time we offer securities, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. We may
also add, update or change information contained in this prospectus through one
or more prospectus supplements to this prospectus. If there is any inconsistency
between the information in this prospectus and any prospectus supplement, you
should rely on the information in that prospectus supplement. You should
carefully read both this prospectus and any applicable prospectus supplement
together with the additional information described under the heading "Where You
Can Find More Information".
This prospectus does not contain all of the information set forth in the
registration statement that we filed with the SEC or in the exhibits to that
registration statement. For further information about American Airlines, Inc.,
AMR Corporation, or the securities, you should refer to that registration
statement and its exhibits. Statements contained in this prospectus or in any
prospectus supplement as to the contents of any contract or other document are
not necessarily complete, and you should review the full text of those contracts
and other documents.
The registration statement that we filed with the SEC relating to the
securities can be obtained from the SEC, as described below under "Where You Can
Find More Information".
In this prospectus, references to "American", the "Company", "we", "us" and
"our" refer to American Airlines, Inc. and references to "AMR" refer to our
parent, AMR Corporation.
WHERE YOU CAN FIND MORE INFORMATION
We and AMR file annual, quarterly and special reports, proxy statements (in
the case of AMR only) and other information with the SEC. This information may
be read and copied at the Public Reference Room of the SEC at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. Information regarding the
operation of the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330. Our SEC filings are also available from the SEC's Internet site
at http://www.sec.gov, which contains reports, proxy and information statements,
and other information regarding issuers that file electronically.
We "incorporate by reference" in this prospectus certain documents that we
and AMR file with the SEC, which means:
- we can disclose important information to you by referring you to those
documents;
- information incorporated by reference is considered to be part of this
prospectus, even though it is not repeated in this prospectus; and
- information that we and AMR file later with the SEC will automatically
update and supersede this prospectus.
We incorporate by reference the documents listed below and all documents
that American or AMR files with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") after
the date of this prospectus and until the offering of all of the securities
hereunder has been completed, other than current reports (or portions thereof)
furnished under Items 9 or 12 of Form 8-K:
- Annual Reports of American and of AMR on Form 10-K for the year ended
December 31, 2002;
- Quarterly Reports of American and of AMR on Form 10-Q for the quarters
ended March 31, 2003, June 30, 2003 and September 30, 2003;
- Current Reports of American on Form 8-K filed on January 22, 2003,
April 1, 2003 (two Reports filed on this date), April 17, 2003, April
23, 2003, April 25, 2003, June 12, 2003, June 25, 2003, July 3, 2003
(8-K/A), July 16, 2003, August 1, 2003 and October 22, 2003; and
- Current Reports of AMR on Form 8-K filed on January 22, 2003, April 1,
2003 (two Reports filed on this date), April 17, 2003 (Report with
respect to labor matters), April 23, 2003, April 25, 2003, May 2,
2003, June 11, 2003, June 25, 2003, July 3, 2003 (8-K/A), July 16,
2003, August 1, 2003, October 22, 2003 and October 24, 2003 (8-K/A).
You may obtain a copy of these filings (other than their exhibits, unless
those exhibits are specifically incorporated by reference in the filings) at no
cost by writing or telephoning us at the following address:
Corporate Secretary
American Airlines, Inc.
P.O. Box 619616, Mail Drop 5675
Dallas/Fort Worth Airport, Texas 75261-9616
(817) 967-1254
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference contain various
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act") and Section 21E of the Exchange
Act which represent our expectations or beliefs concerning future events. When
used in this
2
prospectus and in documents incorporated herein by reference, the words
"believes", "expects", "plans", "anticipates", and similar expressions are
intended to identify forward-looking statements.
Forward-looking statements include, without limitation, our 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 us of
the events of September 11, 2001 and of our results of operations for the past
two years and the sufficiency of our and AMR's 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 prospectus and the documents
incorporated by reference are based upon information available to us on the date
of this prospectus or such document. We undertake 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 factors that could cause actual results to differ materially from
our expectations.
The following factors, in addition to those discussed under the caption
"Risk Factors" in each prospectus supplement and other possible factors not
listed, could cause our actual results to differ materially from those expressed
in forward-looking statements: the uncertain financial and business environment
we face, the struggling economy, high fuel prices and the availability of fuel,
the residual effects of the war in Iraq, conflicts in the Middle East,
historically low fare levels and the general competitive environment, our
ability to implement our restructuring program and the effect of the program on
our operational performance and service levels, uncertainties with respect to
our international operations, changes in our business strategy, actions by U.S.
or foreign government agencies, the possible occurrence of additional terrorist
attacks, another outbreak of SARS, our or AMR's inability to satisfy existing
liquidity requirements or other covenants in certain of our or AMR's credit
agreements and the availability of future financing.
Additional information concerning these and other factors is contained in
our and AMR's SEC filings, including but not limited to our and AMR's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2003, June 30, 2003 and
September 30, 2003 and our and AMR's Annual Reports on Form 10-K for the year
ended December 31, 2002.
THE COMPANY
American Airlines, Inc., the principal subsidiary of AMR Corporation, was
founded in 1934. On April 9, 2001, American (through a wholly owned subsidiary,
TWA Airlines LLC ("TWA LLC")) purchased substantially all of the assets and
assumed certain liabilities of Trans World Airlines, Inc. ("TWA"), the eighth
largest U.S. carrier. American, including TWA LLC, is the largest scheduled
passenger airline in the world. At the end of 2002, American provided scheduled
jet service to more than 152 destinations throughout North America, the
Caribbean, Latin America, Europe and the Pacific. American is also one of the
largest scheduled air freight carriers in the world, providing a wide range of
freight and mail services to shippers throughout its system.
The postal address for both American's and AMR's principal executive
offices is P.O. Box 619616, Dallas/Fort Worth Airport, Texas 75261-9616
(Telephone: 817-963-1234). AMR's Internet address is http://www.amrcorp.com.
Information on AMR's website is not incorporated into this prospectus and is not
a part of this prospectus.
3
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges of
American (including for purposes of this table and the following footnotes TWA
LLC) and AMR for the periods indicated:
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED
---------------------------------- ------------------
1998 1999 2000 2001 2002 SEPTEMBER 30, 2003
---- ---- ---- ---- ---- ------------------
Ratio of Earnings to Fixed Charges
American......................... 2.82 1.95 2.07 (1) (3) (5)
AMR.............................. 2.55 1.72 1.87 (2) (4) (6)
(1) In April 2001, the board of directors of American approved the
unconditional guarantee by American (the "American Guarantee") of the existing
debt obligations of AMR. As such, as of December 31, 2001, American
unconditionally guaranteed through the life of the related obligations
approximately $676 million of unsecured debt and approximately $573 million of
secured debt. The impact of these unconditional guarantees is not included in
the above computation. For the year ended December 31, 2001, earnings were not
sufficient to cover fixed charges. American needed additional earnings of $2,584
million to achieve a ratio of earnings to fixed charges of 1.0.
(2) For the year ended December 31, 2001, AMR earnings were not sufficient
to cover fixed charges. AMR needed additional earnings of $2,900 million to
achieve a ratio of earnings to fixed charges of 1.0.
(3) At December 31, 2002, American's exposure under the American Guarantee
was approximately $636 million with respect to unsecured debt and approximately
$538 million with respect to secured debt. For the year ended December 31, 2002,
earnings were not sufficient to cover fixed charges. American needed additional
earnings of $3,749 million to achieve a ratio of earnings to fixed charges of
1.0.
(4) For the year ended December 31, 2002, AMR earnings were not sufficient
to cover fixed charges. AMR needed additional earnings of $3,946 million to
achieve a ratio of earnings to fixed charges of 1.0.
(5) At September 30, 2003, American's exposure under the American Guarantee
was approximately $936 million with respect to unsecured debt and approximately
$503 million with respect to secured debt. For the nine months ended September
30, 2003, earnings were not sufficient to cover fixed charges. American needed
additional earnings of $1,239 million to achieve a ratio of earnings to fixed
charges of 1.0.
(6) For the nine months ended September 30, 2003, AMR earnings were not
sufficient to cover fixed charges. AMR needed additional earnings of $1,171
million to achieve a ratio of earnings to fixed charges of 1.0.
For purposes of the table, "earnings" represents consolidated income from
continuing operations before income taxes, extraordinary items, cumulative
effect of accounting change and fixed charges (excluding interest capitalized).
"Fixed charges" consists of interest expense (including interest capitalized),
amortization of debt expense and the portion of rental expense we deem
representative of the interest factor.
USE OF PROCEEDS
Except as we may describe otherwise in a prospectus supplement, the net
proceeds from the sale of the securities will be available for general corporate
purposes, including, among other possible uses, the repayment of short-term or
long-term debt or lease obligations, the acquisition of aircraft and other
capital expenditures. We may also use the proceeds for temporary investments
until we need them for general corporate purposes.
4
DESCRIPTION OF DEBT SECURITIES
INTRODUCTION
We may elect to offer unsecured debt securities. We will issue the debt
securities in one or more series under an indenture, which we refer to as the
"indenture", to be entered into between us and Wilmington Trust Company, as
trustee. The debt securities will rank equal in right of payment with all of our
other unsecured, unsubordinated indebtedness. The debt securities may include
debentures, notes or other kinds of unsecured debt obligations. The amount of
debt securities that we can issue under the indenture is unlimited.
The description of the terms of the debt securities and indenture in this
prospectus is a summary. When we offer to sell a series of debt securities, we
will summarize in a prospectus supplement the particular terms of such series of
debt securities that we believe will be the most important to your decision to
invest in such series of debt securities. As the terms of such series of debt
securities may differ from the summary in this prospectus, the summary in this
prospectus is subject to and qualified by reference to the summary in such
prospectus supplement, and you should rely on the summary in such prospectus
supplement instead of the summary in this prospectus if the summary in such
prospectus supplement is different from the summary in this prospectus. You
should keep in mind, however, that it is the debt securities, and the indenture,
and not the summaries in this prospectus or such prospectus supplement, which
define your rights as a holder of debt securities of such series. There may be
other provisions in such debt securities and the indenture that are also
important to you. You should carefully read these documents for a full
description of the terms of such debt securities. The indenture is filed as an
exhibit to the registration statement that includes this prospectus. See "Where
You Can Find More Information" for information on how to obtain a copy of the
indenture.
In this description, we include references in parentheses to certain
sections of the indenture. Whenever we refer to particular sections or defined
terms of the indenture in this prospectus or in any prospectus supplement, such
sections or defined terms are incorporated by reference here or in the
prospectus supplement.
The debt securities will not be secured by any of our property or assets.
Accordingly, your ownership of debt securities will mean that you will be one of
our unsecured creditors. Unless we tell you otherwise in an applicable
prospectus supplement, the indenture does not limit the amount of other
indebtedness or securities that may be issued by us or any of our subsidiaries.
In addition, unless we tell you otherwise in an applicable prospectus
supplement, the indenture does not contain any financial covenants or
restrictions on the payment of dividends, the incurrence of debt, securing our
debt or the issuance or repurchase of our debt securities, or any covenants or
other provisions to afford protection to holders of debt securities in the event
of a highly leveraged transaction or a change in control.
SPECIFIC TERMS OF DEBT SECURITIES
We may issue the debt securities in one or more series through an indenture
that supplements the indenture or through a resolution of our board of directors
or an authorized committee of our board of directors.
A prospectus supplement will describe specific terms relating to the series
of debt securities then being offered. These terms may include some or all of
the following:
- the title and type of such debt securities;
- any limit on the total principal amount of such debt securities;
- the date or dates on which the principal of such debt securities will
be payable, or the method of determining and/or extending such
date(s), and the amount or amounts of such principal payments;
- the date or dates from which any interest will accrue, or the method
of determining such date(s);
- any interest rate or rates (which may be fixed or variable) that such
debt securities will bear, or the method of determining or resetting
such rate or rates, and the interest payment dates (if any) for such
debt securities;
5
- the circumstances, if any, in which payments of principal, premium, if
any, or interest on such debt securities may be deferred;
- the place or places where any principal, premium or interest payments
may be made;
- any optional redemption or other early payment provisions, including
the period(s) within which, the price(s) at which, the currency or
currencies (including currency units) in which, and the terms and
conditions upon which, American may redeem or prepay such debt
securities;
- any provisions obligating American to repurchase or otherwise redeem
such debt securities pursuant to sinking fund or analogous provisions,
upon the occurrence of a specified event or at the holder's option;
- if other than $1,000 denominations, the denominations in which such
debt securities are issuable;
- the amount of discount, if any, with which such debt securities will
be issued;
- if other than U.S. dollars, the currency, composite currency or
currency units of payment of principal, premium, if any, and interest
on such debt securities or in which the debt securities are
denominated;
- if applicable, the time period within which, the manner in which and
the terms and conditions upon which a holder of a debt security can
select the payment currency;
- any index, formula or other method to be used for determining the
amount of any payments on such debt securities;
- if other than the outstanding principal amount, the amount that will
be payable if the maturity of such debt securities is accelerated, or
the method of determining such amount;
- the person to whom any interest on such debt securities will be
payable (if other than the registered holder of such debt securities
on the applicable record date) and the manner in which it shall be
payable;
- any changes to or additional events of default or covenants;
- any additions or changes to the indenture relating to a series of debt
securities necessary to permit or facilitate issuing the series in
bearer form, registrable or not registrable as to principal, and with
or without interest coupons;
- any provisions for the payment of additional amounts on debt
securities, including additional amounts on debt securities held by
non-U.S. persons in respect of taxes or similar charges withheld or
deducted, and for the optional redemption of such debt securities in
lieu of paying such additional amounts;
- any provisions modifying the defeasance or covenant defeasance
provisions that apply to such debt securities;
- whether such debt securities will be issued in whole or in part in the
form of one or more temporary or global securities, and, if so, the
identity of the depositary for such global security or securities;
- if temporary global debt securities are issued, any special terms and
conditions for payments thereon and for exchanges or transfers of
beneficial interests therein;
- appointment of any paying agent(s);
- the terms and conditions of any obligation or right we would have or
any option you would have to convert or exchange the debt securities
into other securities or cash or property of American or any other
person and any changes to the indenture to permit or facilitate such
conversion or exchange;
6
- if other than the laws of New York, the law governing such debt
securities and the extent to which such other law governs;
- whether an AMR guarantee will apply to such debt securities and, if
so, the material terms thereof; and
- any other special terms of such debt securities.
(Section 3.1 of the indenture)
Debt securities may also be issued under the indenture upon the exercise of
warrants. See "Description of Debt Warrants".
Unless we tell you otherwise in the applicable prospectus supplement, debt
securities will not be listed on any securities exchange.
Unless we tell you otherwise in the applicable prospectus supplement, debt
securities will be issued in fully registered form without coupons. If debt
securities of any series are issued in bearer form, the applicable prospectus
supplement will describe special restrictions and considerations, including
special offering restrictions and special federal income tax considerations,
applicable to such debt securities and to payments on and transfer and exchange
of such debt securities. Bearer debt securities generally will be transferable
by delivery. (Section 3.5 of the indenture) The indenture refers to the bearer
of a bearer debt security as the "holder" of that debt security. (Section 1.1 of
the indenture)
One or more series of debt securities may be sold at a substantial discount
below their stated principal amount. Such a series of debt securities is issued
at an "original issue discount". Typically, a debt security that is issued at an
"original issue discount" will not bear interest or will bear interest at an
interest rate that is below the market interest rate at the time of issuance. If
we issue debt securities at an "original issue discount", the applicable
prospectus supplement will describe certain special federal income tax and other
considerations applicable to such debt securities.
If the purchase price of any debt securities is payable in foreign
currencies, composite currencies or currency units, if any debt securities are
denominated in foreign currencies, composite currencies or currency units, or if
any debt securities are payable in foreign currencies, composite currencies or
currency units, the applicable prospectus supplement will describe the special
restrictions, elections and other specific terms and federal income tax
considerations and certain other important information, with respect to such
debt securities and such foreign currencies, composite currencies or currency
units.
The principal, premium, interest or other payments on debt securities may
be determined by reference to an index, formula or other method. Such an index,
formula or other method may be based, without limitation, on the price of one or
more commodities, derivatives or securities; a commodities, derivatives,
securities exchange or other index; a foreign currency or currencies or one or
more composite currencies or currency units; or any other variable or variables
or any relationship between any variables or combination of variables. Holders
of such debt securities may receive a principal payment or a payment of interest
that is greater than or less than the amount of principal or interest otherwise
payable on such dates, depending upon the value of the applicable index, formula
or other factor or changes in any applicable variable or variables. If we issue
debt securities the payments on which are based on such an index, formula or
other method, the applicable prospectus supplement will describe that index,
formula or other method and other specific terms and certain special federal
income tax and other considerations applicable to such debt securities.
One or more series of debt securities may be variable rate debt securities
that may be exchangeable for fixed rate debt securities, or fixed rate debt
securities exchangeable for variable rate debt securities. The applicable
prospectus supplement will describe specific terms, federal income tax
considerations and certain other important information.
We may issue debt securities of a particular series at different times. In
addition, we may issue debt securities within a series with terms different from
the terms of other debt securities of that series.
7
Subject to applicable law, we or any of our affiliates may at any time
purchase or repurchase debt securities of any series in any manner and at any
price. Debt securities of any series purchased by us or any of our affiliates
may be held or surrendered by the purchaser of the debt securities for
cancellation.
REGISTERED SECURITIES
As noted above, unless we tell you in a prospectus supplement that the
specific debt securities described in that prospectus supplement are bearer debt
securities, the debt securities will be "registered securities". We and the
trustee may treat the person in whose name a registered debt security is
registered under any indenture as the owner of that debt security for all
purposes, including for the purpose of receiving payments on that debt security.
(Section 3.8 of the indenture) The indenture refers to each person in whose name
a registered debt security is registered as the "holder" of that debt security.
(Section 1.1 of the indenture)
Except as described below under "Global Debt Securities" or in the
applicable prospectus supplement, a holder can exchange or transfer debt
securities in registered form at the office of the trustee. Initially, the
trustee will act as our agent for registering such debt securities in the names
of holders and transferring such debt securities. We may appoint another entity
at any time to perform this role or we may perform it ourselves. The entity
performing the role of maintaining the list of registered holders and performing
transfers is called the "registrar". (Sections 3.5 and 9.2 of the indenture)
Unless we tell you otherwise in the applicable prospectus supplement, a
holder seeking to transfer or exchange a registered debt security will not be
required to pay a service charge to us, the registrar or the trustee, but such
holder may be required to pay any tax or other governmental charge associated
with the transfer or exchange. (Section 3.5 of the indenture)
If you are not the holder of any debt securities in registered form, your
rights relating to those debt securities will be governed in part by applicable
laws and by the account rules and policies of the broker, bank or financial
intermediary through which you invest in such debt securities and any other
financial intermediary that holds interests directly or indirectly in such debt
securities (including any depositary referred to below under "Global Debt
Securities"). None of American, AMR or the trustee has any responsibility for
the account rules, policies, actions or records of any broker, bank or other
financial intermediary through which you hold (directly or indirectly) your
beneficial interest in a debt security in registered form.
IF YOU ARE NOT THE HOLDER OF ANY DEBT SECURITIES IN REGISTERED FORM, YOU
SHOULD CONSULT THE BROKER, BANK OR OTHER FINANCIAL INTERMEDIARY THROUGH WHICH
YOU INVEST IN SUCH DEBT SECURITIES FOR INFORMATION ON YOUR RIGHTS IN RESPECT OF
SUCH DEBT SECURITIES. IN PARTICULAR, YOU SHOULD ASK HOW YOU WILL RECEIVE
PAYMENTS, AND WHETHER YOU WILL BE ABLE TO PROVIDE INSTRUCTIONS AS TO HOW SUCH
BROKER, BANK OR OTHER FINANCIAL INTERMEDIARY SHOULD EXERCISE THE RIGHTS OF A
"HOLDER" UNDER THE INDENTURE.
GLOBAL DEBT SECURITIES
We may specify in the applicable prospectus supplement that the debt
securities of a series will be issued in the form of fully registered global
securities ("registered global securities"). Registered global securities will
be registered in the name of a financial institution we select. This financial
institution, which will be the sole direct holder of the registered global
securities, is called the "depositary". We will identify any depositary in the
applicable prospectus supplement. Any person wishing to own a debt security
represented by a registered global security must do so indirectly by virtue of
an account with a broker, bank or other financial intermediary that in turn has
an account with the depositary, or with another financial intermediary that
itself has an account with the depositary. The debt securities represented by
the registered global securities may not be transferred to the name of any other
holder unless the special circumstances described below occur.
Special Investor Considerations for Registered Global Securities. Our
obligations with respect to registered global securities, as well as the
obligations of the trustee and those of any third parties employed by us or the
trustee, run only to persons who are registered holders of those debt
securities. For example, once a payment on a registered global security is made
to the depositary, as sole holder of that registered global security, neither we
nor the trustee has any further responsibility for that payment even if it is
not passed along to the correct owners of the beneficial interests in that
registered global security.
8
As long as the debt securities are represented by registered global
securities:
- You cannot have debt securities registered in your name under the
indenture.
- You cannot receive physical certificates from us for your interest in
the debt securities.
- You must look to your own bank or broker or other financial
intermediary for payments on the debt securities.
- You will have no rights as a "holder" under the indenture. This means
that, among other things, you will have no right to give any
direction, approval or instruction directly to the trustee under the
indenture.
- You may not be able to sell interests in the debt securities to some
insurance companies and other institutions that are required by law to
own their debt securities in the form of physical certificates.
- The depositary's policies will govern payments, transfers, exchanges
and other matters relating to the registered global security.
American, AMR and the trustee have no responsibility for any aspect of
the depositary's actions or for its records of ownership interests in
the registered global security. American, AMR and the trustee also do
not supervise the depositary in any way. In addition, American, AMR
and the trustee have no responsibility for the actions or records of
any broker, bank or other financial intermediary through which you
hold (directly or indirectly) your beneficial interest in the
registered global security.
- Payment for purchases and sales in the market for corporate debentures
and notes is generally made in next-day funds. In contrast, the
depositary will usually require that interests in a registered global
security be purchased or sold within its system using same-day funds.
This difference could have some effect on how registered global
security interests trade, but we do not know what that effect will be.
YOU SHOULD CONSULT THE BROKER, BANK OR OTHER FINANCIAL INTERMEDIARY THROUGH
WHICH YOU INVEST IN DEBT SECURITIES REPRESENTED BY REGISTERED GLOBAL SECURITIES
FOR INFORMATION ON YOUR RIGHTS IN RESPECT OF SUCH DEBT SECURITIES. IN
PARTICULAR, YOU SHOULD ASK HOW YOU WILL RECEIVE PAYMENTS AND WHETHER YOU WILL BE
ABLE TO PROVIDE INSTRUCTIONS AS TO HOW THE DEPOSITARY SHOULD EXERCISE THE RIGHTS
OF A "HOLDER" UNDER THE INDENTURE.
Special Situations When a Registered Global Security Will Be Terminated. In
the special situations described in the next paragraph, a registered global
security will terminate and interests in it will be exchanged for physical
certificates representing debt securities. After that exchange, we believe that
you likely will be able to choose whether to hold debt securities directly in
your own name or indirectly through an account at a bank or broker or other
financial intermediary. However, when a registered global security terminates,
the depositary (and not American, AMR or the trustee) will be responsible for
determining the names of the institutions that will be the initial direct
holders of the debt securities. You must consult your own bank or broker or
other financial intermediary at such time to find out how to have your interests
in debt securities transferred to your own name, if you wish to become a direct
holder.
The special situations for termination of a registered global security are:
- When the depositary notifies us that it is unwilling, unable or no
longer qualifies to continue as depositary (unless a replacement
depositary is named).
- When we determine not to have any of the debt securities of a series
represented by a registered global security and notify the trustee of
our decision.
(Section 3.5 of the indenture) In addition, a prospectus supplement may list
situations for terminating a registered global security that would apply only to
the particular series of debt securities covered by that prospectus supplement.
Bearer Global Securities. The debt securities of a series may also be
issued wholly or partially in the form of one or more bearer global securities
("bearer global securities") that will be deposited with a depositary, or with a
nominee for such depositary, identified in the applicable prospectus supplement.
Any such bearer global securities
9
may be issued in temporary or permanent form. (Sections 3.4 and 3.5 of the
indenture) The applicable prospectus supplement will describe the specific terms
and procedures, including the depositary arrangement, with respect to any
portion of a series of debt securities to be represented by bearer global
securities.
PAYMENTS
Unless we tell you otherwise in the applicable prospectus supplement, we
will generally deposit interest, principal and any other money due on the debt
securities, in the designated currency, with the trustee, and the trustee will
act as our agent for making payments on the debt securities. We may change this
appointment to another entity or perform this role ourselves. The entity
performing the role of making payments is called the "paying agent". We may, at
our option, make any interest payments on debt securities in registered form by
having the trustee mail checks or make wire transfers to the registered holders
listed in the registrar's records. (Sections 3.7(a) and 9.2 of the indenture) IF
YOU ARE NOT THE HOLDER OF ANY DEBT SECURITIES IN REGISTERED FORM, YOU MUST MAKE
YOUR OWN ARRANGEMENTS WITH THE BANK, BROKER OR OTHER FINANCIAL INTERMEDIARY
THROUGH WHICH YOU INVEST IN SUCH DEBT SECURITIES TO RECEIVE PAYMENTS.
Unless we tell you otherwise in the applicable prospectus supplement,
interest, if any, will be payable to each holder listed in the registrar's
records at the close of business on a particular day in advance of each due date
for interest, even if such holder no longer owns the debt security on the
interest due date. That particular day is called the "record date" and will be
stated in the prospectus supplement. (Section 3.7(a) of the indenture) Persons
buying and selling debt securities between a record date and an interest payment
date must work out between them how to compensate for the fact that we will pay
all the interest for an interest period to the registered holder on the record
date.
Unless we tell you otherwise in the applicable prospectus supplement,
interest payable on any debt security in registered form that is not punctually
paid or duly provided for on any interest payment date will cease to be payable
to the holder in whose name such debt security is registered on the relevant
record date. Such defaulted interest will instead be payable to the person in
whose name such debt security is registered on the special record date or other
specified date determined in accordance with the indenture. (Section 3.7(b) of
the indenture)
We will make payments on debt securities in bearer form in the currency and
in the manner designated in the applicable prospectus supplement, subject to any
relevant laws and regulations, at such paying agencies outside the United States
as we may appoint from time to time. The paying agents outside the United States
initially appointed by us for a series of debt securities will be named in the
applicable prospectus supplement.
Unless we tell you otherwise in the applicable prospectus supplement, if
any payment date is not a business day, payments scheduled to be made on such
payment date may be made on the next succeeding business day without additional
interest.
We may at any time designate additional paying agents or rescind the
designation of any paying agents, except that, if debt securities of a series
are issuable as registered securities, we will be required to maintain at least
one paying agent in each place of payment designated for such series and, if
debt securities of a series are issuable as bearer securities, we will be
required to maintain a paying agent in a place of payment outside the United
States where debt securities of such series and any related coupons may be
presented and surrendered for payment. (Section 9.2 of the indenture)
Unless we tell you otherwise in the applicable prospectus supplement, any
moneys or governmental obligations (including the proceeds thereof) deposited
with the trustee or any paying agent, or then held by us in trust, for the
payment of the principal of, premium, if any, or interest or other amounts on
any debt security that remains unclaimed for two years after such principal,
premium, if any, or interest or other amounts has become due and payable will,
at our request, be repaid to us. After repayment to us, holders of such debt
securities will be entitled to seek payment only from us as a general unsecured
creditor.
NOTICES
American and the trustee will send notices regarding debt securities in
registered form only to registered holders, using their addresses as listed in
the registrar's records. IF YOU ARE NOT THE HOLDER OF DEBT SECURITIES IN
REGISTERED FORM, YOU SHOULD CONSULT THE BROKER, BANK OR OTHER FINANCIAL
INTERMEDIARY THROUGH WHICH YOU
10
INVEST IN SUCH DEBT SECURITIES FOR INFORMATION ON HOW YOU WILL RECEIVE SUCH
NOTICES. Holders of bearer debt securities will be notified by publication as
described in the prospectus supplement relating to such debt securities.
(Section 1.6 of the indenture)
REDEMPTION
Unless we state otherwise in an applicable prospectus supplement, debt
securities will not be subject to any sinking fund.
The redemption features, if any, of any series of debt securities will be
described in the applicable prospectus supplement. We may redeem debt securities
in denominations larger than $1,000 but, unless we tell you otherwise in an
applicable prospectus supplement, only in integral multiples of $1,000.
Unless we state otherwise in an applicable prospectus supplement, we will
mail notice of any redemption of debt securities at least 15 days but not more
than 60 days before the redemption date to the holders. Unless we default in
payment of the redemption price, on and after the redemption date interest will
cease to accrue on the debt securities or the portions called for redemption.
CONSOLIDATION, MERGER OR SALE BY AMERICAN
The indenture generally permits American to consolidate or merge with or
into another entity and to sell or otherwise dispose of all or substantially all
of its assets. However, we may not take any of these actions unless all the
following conditions are met:
- where we merge out of existence or sell or otherwise dispose of our
assets, the other entity must be a corporation, limited liability
company, partnership, trust or other person organized and existing
under the laws of the United States of America or a State thereof, and
it must agree to be legally responsible for all of American's
obligations under the debt securities and the indenture;
- the transaction must not cause a default on the debt securities and
American must not already be in default (for this purpose, a "default"
is an event that with notice or passage of time would become an event
of default); and
- American must deliver certain certificates and documents to the
trustee.
The remaining or acquiring person after any such transaction will be
substituted for American under the indenture and the debt securities, and all
obligations of American will terminate. (Section 7.1 of the indenture)
EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
The term "event of default" means, with respect to debt securities of any
series, any of the following:
- We fail to pay interest on a debt security of such series within 30
days of its due date.
- We fail to pay principal or any premium on a debt security of such
series, or we fail to deposit any mandatory sinking fund payment,
within 10 days of its due date.
- We remain in breach of a covenant in the indenture for 60 days after
we receive a notice of default stating we are in breach. The notice
must be sent by either the trustee or the holders of at least 25% of
the principal amount of the debt securities of the affected series.
- We file for bankruptcy or certain other events of bankruptcy,
insolvency or reorganization occur.
- There occurs any other "event of default" described in the applicable
supplemental indenture or board resolution providing for the issuance
of such series of debt securities.
(Section 5.1 of the indenture) An event of default for a particular series of
debt securities will not necessarily constitute an event of default for any
other series of debt securities.
11
The indenture requires the trustee to notify holders of the applicable
series of debt securities of any uncured default within 90 days after such
default occurs. The trustee may withhold notice, however, of any default (except
in the payment of principal or interest) if it considers such withholding of
notice to be in the holders' best interests. (Section 6.5 of the indenture)
If an event of default has occurred and has not been cured, the trustee or
the holders of at least 25% in aggregate principal amount of the debt securities
of the affected series may declare the entire principal amount (or, if the debt
securities of that series are original issue discount debt securities or debt
securities payable in accordance with an index, formula or other method, such
portion of the principal amount or other amount specified in the prospectus
supplement) of all the debt securities of that series to be due and immediately
payable. (Section 5.2 of the indenture) The holders of a majority in aggregate
principal amount of the debt securities of the affected series may waive, on
behalf of the holders of all debt securities of such series, any past default or
event of default with respect to that series and its consequences, except a
default or event of default in the payment of the principal of or premium, if
any, or interest, if any, on any debt security and certain other defaults.
(Section 5.7 of the indenture)
The holders of a majority in aggregate principal amount of the debt
securities of the affected series (with the debt securities of each such series
voting as a class) may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee for such series, or
exercising any trust or power conferred on such trustee with respect to the debt
securities of such series, as long as such direction does not conflict with any
law or the indenture and subject to certain other limitations, including, if
requested by the trustee, the provision of security or indemnity satisfaction to
the trustee. (Section 5.8 of the indenture)
Before a holder can bypass the trustee and bring its own lawsuit or other
formal legal action or take other steps to enforce its rights or protect its
interests relating to the debt securities, the following must occur:
- such holder must give the trustee written notice that an event of
default has occurred and remains uncured;
- the holders of at least 25% in aggregate principal amount of all debt
securities of the relevant series must request the trustee in writing
to take action because of the event of default, and must offer
security or indemnity to the trustee against the cost and other
liabilities of taking that action;
- the trustee must not have taken action for 60 days after receipt of
the above notice, request and indemnity; and
- the holders of a majority in aggregate principal amount of the debt
securities of that series must not have given the trustee a direction
inconsistent with the above request.
(Section 5.9 of the indenture)
However, a direct holder is entitled to bring a lawsuit at any time for the
payment of principal, premium, if any, and interest due on its debt securities
after the due date. (Section 5.10 of the indenture)
IF YOU ARE NOT THE HOLDER OF DEBT SECURITIES IN REGISTERED FORM, YOU SHOULD
CONSULT THE BROKER, BANK OR FINANCIAL INTERMEDIARY THROUGH WHICH YOU INVEST IN
SUCH DEBT SECURITIES FOR INFORMATION ON YOUR RIGHTS IN RESPECT OF THOSE DEBT
SECURITIES FOLLOWING AN EVENT OF DEFAULT.
We will file annually with the trustee a certificate as to American's
compliance with all conditions and covenants of the indenture. (Section 9.7 of
the indenture)
MODIFICATION OF THE INDENTURE
There are three categories of changes we can make to the indenture and the
debt securities.
Changes Requiring Approval of Each Affected Holder. First, there are
changes that cannot be made to the indenture and debt securities of any series
without the approval of each holder of such debt securities who would be
affected by such change. Following is a summary of those changes:
- to change the time for payment of principal of or interest on a debt
security;
12
- to reduce the amounts of principal of or interest on a debt security;
- to reduce the amount of any premium payable upon the redemption of a
debt security;
- to reduce the amount payable upon acceleration of the maturity of an
original issue discount debt security or a debt security payable in
accordance with an index, formula or other method;
- to change the currency of payment on a debt security;
- to impair the right to sue for payment on a debt security;
- to reduce the percentage of holders of debt securities of such series
whose consent is needed to modify or amend the indenture or to waive
compliance with certain provisions of the indenture or to waive
certain defaults; or
- to modify the provisions relating to waiver of certain defaults or
modifications of the indenture and debt securities, other than to
increase any percentage of holders required for such waivers and
modifications, or to provide that other provisions of the indenture
and debt securities may not be modified without consent of each
affected holder.
(Section 8.2 of the indenture)
Changes Not Requiring Approval. The second category of changes to the
indenture and the debt securities does not require any vote by holders of debt
securities. Following is a summary of those changes:
- to reflect that another corporation or entity has succeeded American
or AMR and assumed its covenants and obligations under, as applicable,
the indenture, any debt securities and any related AMR guarantee;
- to add to American's or AMR's covenants, to surrender any right or
power of American, or AMR, or to comply with any SEC requirement in
connection with the qualification of the indenture or any AMR
guarantee;
- to add additional events of default with respect to any series;
- to add or change any provisions to the extent necessary to facilitate
the issuance of debt securities in bearer form or in global form;
- to add, or to change or eliminate, any provision affecting debt
securities not yet issued, including to make appropriate provisions
for an AMR guarantee;
- to secure the debt securities;
- to establish the form or terms of debt securities;
- to provide for the electronic delivery of supplemental indentures or
debt securities of any series;
- to evidence and provide for successor or additional trustees or to
facilitate the appointment of a separate trustee or trustees for one
or more series of debt securities;
- if allowed without penalty under applicable laws and regulations, to
permit payment in respect of debt securities in bearer form in the
United States;
- to correct or supplement any inconsistent provisions or to cure any
ambiguity or correct any mistake in the indenture, any debt securities
or any AMR guarantee; or
- to make any other provisions with respect to matters or questions
arising under the indenture, as long as such action does not
materially adversely affect holders of the debt securities.
13
(Section 8.1 of the indenture)
Changes Requiring a Majority Vote. The third category of changes to the
indenture and the debt securities requires a vote in favor by holders of debt
securities owning a majority of the principal amount of each particular series
adversely affected. This category includes other changes to the indenture and
debt securities not part of the first and second categories of changes to the
indenture and debt securities described above. (Section 8.2 of the indenture)
IF YOU ARE NOT THE HOLDER OF DEBT SECURITIES IN REGISTERED FORM, YOU SHOULD
CONSULT WITH THE BROKER, BANK OR FINANCIAL INTERMEDIARY THROUGH WHICH YOU INVEST
IN SUCH DEBT SECURITIES FOR INFORMATION ON HOW APPROVAL WILL BE GRANTED OR
DENIED IF WE SEEK TO CHANGE THE INDENTURE OR REQUEST A WAIVER OF ANY OF ITS
TERMS.
SATISFACTION AND DISCHARGE
The indenture provides that when, among other things, all debt securities
of a series not previously delivered to the trustee for cancellation:
- have become due and payable,
- will become due and payable at their stated maturity within one year,
or
- are to be called for redemption within one year under arrangements
satisfactory to the trustee for the giving of notice of redemption by
the trustee in our name and at our expense,
and we have deposited or caused to be deposited with the trustee, money or
certain governmental obligations or a combination thereof in an amount to be
sufficient to pay and discharge the entire indebtedness on debt securities of
such series not previously delivered to the trustee for cancellation, for the
principal, and premium, if any, and interest to the date of the deposit or to
the stated maturity or redemption date, as the case may be, then the indenture
will cease to be of further effect with respect to such series of debt
securities, and we will be deemed to have satisfied and discharged the indenture
with respect to such series of debt securities. (Section 4.1 of the indenture)
DEFEASANCE
Unless we tell you otherwise in the applicable prospectus supplement, the
following discussion of full defeasance and covenant defeasance will apply to
each series of debt securities. (Article IV of the indenture)
Full Defeasance. Under certain circumstances, we can legally release
ourselves from any payment or other obligations on the debt securities of any
series (called "full defeasance") if we put in place the following arrangements
for the holders of those debt securities to be repaid:
- we must irrevocably deposit in trust for the holders' benefit a
combination of money and certain governmental obligations specified in
the indenture that will generate enough money to pay when due the
principal of and any premium or interest on the debt securities of
such series and to make any mandatory sinking fund payments on such
debt securities; and
- we must deliver to the trustee a legal opinion of our counsel
confirming that there has been a change in federal tax law as in
effect on the date of this prospectus or an Internal Revenue Service
ruling that lets us make the above deposit without causing holders to
be taxed on the debt securities of such series any differently than if
American did not make the deposit and simply repaid such debt
securities itself.
(Sections 4.4 and 4.6 of the indenture)
If we ever did accomplish full defeasance, as described above, holders
would have to rely solely on the trust deposit for repayment on the debt
securities of the particular series defeased. Holders could not look to American
or to any AMR guarantee for repayment if a shortfall occurred.
14
American may exercise its full defeasance option even if it has previously
exercised its covenant defeasance option. If American exercises its full
defeasance option, payment of the particular series of debt securities defeased
may not be accelerated because of a default or an event of default. (Section 4.4
of the indenture)
Covenant Defeasance. Under certain circumstances, we can make the same type
of deposit described above and be released from some of the restrictive
covenants in the debt securities of any series. This is called "covenant
defeasance". In that event, holders of those debt securities would lose the
protection of those restrictive covenants but would gain the protection of
having money and certain governmental obligations set aside in trust to repay
such debt securities. To achieve covenant defeasance, we must do the following:
- we must irrevocably deposit in trust for the holders' benefit a
combination of money and certain governmental obligations specified in
the indenture that will generate enough money to pay when due the
principal of and any premium or interest on the debt securities of
such series and to make any mandatory sinking fund payments on such
debt securities; and
- we must deliver to the trustee a legal opinion of our counsel
confirming that, under federal tax law as in effect at the time of
such deposit, American may make such deposit without causing holders
to be taxed on the debt securities of such series any differently than
if American did not make the deposit and simply repaid such debt
securities itself.
(Sections 4.5 and 4.6 of the indenture)
If American exercises its covenant defeasance option with respect to the
debt securities of a series, certain restrictive covenants of the indenture and
certain events of default would no longer apply to such series. (Section 4.5 of
the indenture) If one of the remaining events of default occurred, however, and
payment of the debt securities of such series was accelerated, there could be a
shortfall between the amount in the trust deposit at that time and the amount
then due on such series. Holders could still look to American for payment of
such debt securities if there were such a shortfall. Depending on the event
causing the default (such as American's bankruptcy), however, holders may not be
able to obtain payment of the shortfall from American.
GUARANTEE OF AMR CORPORATION
Our parent, AMR Corporation, may guarantee unconditionally our obligations
under any series of debt securities and the indenture as described in the
applicable prospectus supplement. If AMR guarantees these obligations under any
series of debt securities, we will tell you in the applicable prospectus
supplement and describe the terms of the guarantee in such prospectus
supplement. Unless we tell you otherwise in the applicable prospectus
supplement, such guarantee will be enforceable without any need to first enforce
the debt securities against American, and will be an unsecured obligation of
AMR.
THE TRUSTEE
Wilmington Trust Company is the trustee under the indenture. Wilmington
Trust Company acts as trustee with respect to certain other financing
transactions of ours and of our affiliates. Wilmington Trust Company may from
time to time provide banking or other services to us and our affiliates.
15
DESCRIPTION OF DEBT WARRANTS
We may elect to offer warrants to purchase debt securities ("Debt
Warrants"). We may issue debt warrants independently or together with any other
securities, and they may be attached to or separate from those securities. We
will issue the debt warrants under warrant agreements between us and a bank or
trust company, as warrant agent, that we will describe in the prospectus
supplement relating to the debt warrants that we offer.
The description of our debt warrants in this prospectus is a summary. When
we offer to sell debt warrants, we will summarize in a prospectus supplement the
particular terms of such debt warrants and the applicable warrant agreement that
we believe will be the most important to your decision to invest in such debt
warrants. As the terms of such debt warrants may differ from the summary in this
prospectus, the summary in this prospectus is subject to and qualified by
reference to the summary in such prospectus supplement, and you should rely on
the summary in such prospectus supplement instead of the summary in this
prospectus if the summary in such prospectus supplement is different from the
summary in this prospectus. You should keep in mind, however, that it is the
warrant certificate relating to such debt warrants and the warrant agreement,
and not the summaries in this prospectus or such prospectus supplement, which
defines your rights as a holder of such debt warrants. There may be other
provisions in the warrant certificate relating to such debt warrants and the
warrant agreement that are also important to you. You should carefully read
these documents for a full description of the terms of such debt warrants. Forms
of these documents will be filed with the SEC as exhibits to a report on Form
8-K or by a post-effective amendment to the registration statement that includes
this prospectus. See "Where You Can Find More Information" for information on
how to obtain copies of these documents.
A prospectus supplement will describe specific terms of the debt warrants,
the warrant agreement relating to the debt warrants and the warrant certificates
representing the debt warrants. These terms may include some or all of the
following:
- the title of the debt warrants;
- the debt securities for which the debt warrants are exercisable;
- the aggregate number of the debt warrants;
- the principal amount of debt securities that you may purchase upon
exercise of each debt warrant, and the price or prices at which we
will issue the debt warrants;
- if other than U.S. dollars, the currency, composite currency or
currency units in which such debt warrants are to be issued or for
which the debt warrants may be exercised;
- the procedures and conditions relating to the exercise of the debt
warrants;
- the designation and terms of any related debt securities issued with
the debt warrants, and the number of debt warrants issued with each
debt security;
- the date, if any, from which you may separately transfer the debt
warrants and the related securities;
- the date on which your rights to exercise the debt warrants commence,
and the date on which your rights expire;
- the maximum or minimum number of the debt warrants which you may
exercise at any time;
- any mandatory or optional redemption provisions;
- information with respect to book entry procedures, if any;
- if applicable, a discussion of material federal income tax
considerations;
- the terms of the securities you may purchase upon exercise of the debt
warrants; and
16
- any other terms of the debt warrants and terms, procedures and
limitations relating to your exercise of the debt warrants.
We will also describe in the applicable prospectus supplement any
provisions for a change in the exercise price or expiration date of the debt
warrants and the kind, frequency and timing of any notice to be given. You may
exchange warrant certificates for new warrant certificates of different
denominations and you may exercise debt warrants at the corporate trust office
of the warrant agent or any other office that we indicate in the applicable
prospectus supplement. We will not charge any service charges for any transfer
or exchange of warrant certificates, but we may require payment for tax or other
governmental charges in connection with the exchange or transfer. Unless the
prospectus supplement states otherwise, prior to exercise, you will not have any
of the rights of holders of the debt securities purchasable upon that exercise
and will not be entitled to payments of principal, premium, if any, or interest
on the debt securities purchasable upon the exercise.
EXERCISE OF DEBT WARRANTS
We will describe in the prospectus supplement relating to the debt warrants
the principal amount or the number of our debt securities that you may purchase
for cash upon exercise of a debt warrant, and the exercise price. You may
exercise a debt warrant as described in the prospectus supplement relating to
the debt warrants at any time up to the close of business on the expiration date
stated in the prospectus supplement. Unexercised debt warrants will become void
after the close of business on the expiration date, or any later expiration date
that we determine.
We will forward the debt securities purchasable upon the exercise as soon
as practicable after receipt of payment and the properly completed and executed
warrant certificate at the corporate trust office of the warrant agent or other
office stated in the applicable prospectus supplement. If you exercise less than
all of the debt warrants represented by the warrant certificate, we will issue
you a new warrant certificate for the remaining debt warrants.
GUARANTEE OF AMR CORPORATION
Our parent, AMR Corporation, may guarantee unconditionally our obligations
under the debt warrants and the applicable warrant agreement as described in the
applicable prospectus supplement. If AMR guarantees these obligations, we will
tell you in the applicable prospectus supplement and describe the terms of the
guarantee in such prospectus supplement. Unless we tell you otherwise in the
applicable prospectus supplement, such guarantee will be enforceable without any
need to first enforce the debt warrants against American, and will be an
unsecured obligation of AMR.
17
PLAN OF DISTRIBUTION
We may sell securities from time to time in one or more transactions. We
may sell the securities of or within any series to or through agents,
underwriters or dealers or directly to one or more purchasers.
AGENTS
We may use agents to sell securities. We will name any agent involved in
offering or selling securities, and disclose any commissions that we will pay to
the agent, in the applicable prospectus supplement. Unless we tell you otherwise
in the applicable prospectus supplement, the agents will agree to use their
reasonable best efforts to solicit purchases for the period of their
appointment. Our agents may be deemed to be underwriters under the Securities
Act of any of the securities that they offer or sell.
UNDERWRITERS
We may sell securities to underwriters. Unless we tell you otherwise in the
applicable prospectus supplement, the underwriters may resell those securities
in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale.
Unless the applicable prospectus supplement states otherwise, the obligations of
the underwriters to purchase any series of securities will be subject to
conditions precedent, and the underwriters will be obligated to purchase all of
the securities if any are purchased. The underwriters may change any initial
public offering price and any discounts or concessions they give to dealers.
DIRECT SALES
We may solicit directly offers to purchase the securities, and we may sell
securities directly to purchasers without the involvement of underwriters or
agents. We will describe the terms of our direct sale in the applicable
prospectus supplement.
DEALERS
We may use a dealer to sell the securities. If we use a dealer, we, as
principal, will sell the securities to the dealer who will then sell the
securities to the public at varying prices that the dealer will determine at the
time it sells our securities.
OTHER MEANS OF DISTRIBUTION
Securities may also be offered and sold, if we so indicate in the
applicable prospectus supplement, by one or more firms ("remarketing firms")
acting as principals for their own accounts or as our agents in connection with
a remarketing of such securities following their purchase or redemption.
Remarketing firms may be deemed to be underwriters under the Securities Act in
connection with the securities they remarket.
DELAYED DELIVERY CONTRACTS
We may authorize our agents and underwriters to solicit offers by certain
institutions to purchase the securities at the public offering price under
delayed delivery contracts. If we use delayed delivery contracts, we will
disclose that we are using them in the applicable prospectus supplement and will
tell you when we will demand payment and delivery of the securities under the
delayed delivery contracts. These delayed delivery contracts will be subject
only to the conditions that we describe in the prospectus supplement.
GENERAL INFORMATION
Unless the applicable prospectus supplement states otherwise, each series
of securities will be a new issue of securities and will have no established
trading market. We may elect to list any series of securities on any exchange or
market, but we are not obligated to do so. Any underwriters to whom the
securities are sold for a public offering may make a market in those securities.
However, those underwriters will not be obligated to do so and may discontinue
any market making at any time without notice. We cannot give any assurance as to
the liquidity of, or the trading market for, any of the securities.
18
Any underwriters, agents, dealers or remarketing firms will be identified
and their compensation described in a prospectus supplement.
We may have agreements with any underwriters, dealers, agents and
remarketing firms to indemnify them against certain civil liabilities, including
liabilities under the Securities Act, or to contribute with respect to payments
they may be required to make.
Any underwriters, dealers, agents and remarketing firms may engage in
transactions with, or perform services for, American, AMR or our affiliates in
the ordinary course of their business.
LEGAL OPINIONS
Unless we tell you otherwise in the applicable prospectus supplement, the
validity of the securities offered hereby will be passed upon for American and,
if applicable, AMR by their General Counsel and for any agents, underwriters or
dealers by Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York
10022 or other counsel that we may name in the applicable prospectus supplement.
Shearman & Sterling LLP from time to time represents American and AMR with
respect to certain matters.
EXPERTS
The consolidated financial statements and schedules of American and AMR
included in American's and AMR's Annual Reports on Form 10-K for the year ended
December 31, 2002, incorporated by reference in this prospectus, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports (which contain an explanatory paragraph describing conditions that raise
substantial doubt about American's and AMR's ability to continue as a going
concern as described in Note 2 to the American and AMR consolidated financial
statements) appearing therein. Such consolidated financial statements and
schedules are, and audited consolidated financial statements to be included in
subsequently filed documents will be, incorporated herein in reliance upon the
reports of Ernst & Young LLP pertaining to such consolidated financial
statements (to the extent covered by consents filed with the SEC) given on the
authority of such firm as experts in accounting and auditing.
19
The information in this Prospectus is not complete and may be changed. We
cannot sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED NOVEMBER 25, 2003
PROSPECTUS
$3,000,000,000
AMERICAN AIRLINES, INC.
-----------
By this prospectus, we may offer from time to time up to $3,000,000,000 of
the pass through certificates by one or more pass through trusts to be formed by
American Airlines, Inc. described in this prospectus.
We will provide specific terms of the securities in a prospectus supplement
to this prospectus. A prospectus supplement may also change or update
information contained in this prospectus.
Before you invest in any of these securities, you should carefully read
this prospectus, including the documents and other information we have referred
to under the heading "Where You Can Find More Information", and the prospectus
supplement relating to the specific issue of pass through certificates .
We will not use this prospectus to confirm sales of any of our pass through
certificates unless it is attached to a prospectus supplement .
THE PASS THROUGH CERTIFICATES:
-- Will be issued in one or more series.
-- Will be payable at the times and in the amounts specified in the
accompanying prospectus supplement.
-- Will represent interests in the relevant trust only, will be paid only
from the assets of that trust and will not represent obligations of,
or be guaranteed by, American.
-- May have one or more forms of credit support.
EACH PASS THROUGH TRUST:
-- Will own:
- equipment notes of one or more series or notes issued by a trust or
other entity secured by equipment notes, and
- other property described in this prospectus and the accompanying
prospectus supplement.
-- Will pass through payments on the equipment notes and other property
that it owns, subject to any applicable subordination provisions.
THE EQUIPMENT NOTES:
-- Will be, except as otherwise described in the applicable prospectus
supplement, either:
- owned aircraft notes issued by American, or
- leased aircraft notes issued on a non-recourse basis by owner trustees
pursuant to aircraft leveraged leases with American. The amounts due
from American under each such lease will be sufficient to make all
regularly scheduled payments required on the related equipment notes,
subject to some limited exceptions.
AMR CORPORATION GUARANTEES:
-- To the extent stated in the applicable prospectus supplement, our
payment obligations in respect of any equipment notes or the leases
relating to any equipment notes will be fully and unconditionally
guaranteed by our parent, AMR Corporation.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 2003
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR ANY
APPLICABLE PROSPECTUS SUPPLEMENT AND THOSE DOCUMENTS INCORPORATED BY REFERENCE
HEREIN AND THEREIN. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT
INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION,
YOU SHOULD NOT RELY ON IT. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO PURCHASE, THE SECURITIES OFFERED BY THIS
PROSPECTUS IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION OF AN OFFER IN SUCH JURISDICTION.
YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS OR IN
ANY PROSPECTUS SUPPLEMENT OR ANY DOCUMENT INCORPORATED BY REFERENCE IS ACCURATE
AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT COVER OF THE APPLICABLE
DOCUMENT. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT
NOR ANY DISTRIBUTION OF SECURITIES PURSUANT TO THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE INFORMATION SET FORTH OR INCORPORATED INTO THIS PROSPECTUS
OR SUCH PROSPECTUS SUPPLEMENT BY REFERENCE OR IN OUR AFFAIRS SINCE THE DATE OF
THIS PROSPECTUS OR SUCH PROSPECTUS SUPPLEMENT. OUR BUSINESS, FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE THAT DATE.
TABLE OF CONTENTS
PAGE
----
About This Prospectus........................................................................... 1
Where You Can Find More Information............................................................. 2
Special Note Regarding Forward-Looking Statements............................................... 2
The Company..................................................................................... 3
Ratios of Earnings to Fixed Charges............................................................. 4
Formation of the Trusts......................................................................... 4
Use of Proceeds................................................................................. 5
Description of the Pass Through Certificates.................................................... 7
Description of the Equipment Notes.............................................................. 19
Credit Enhancements............................................................................. 24
Certain Federal Income Tax Consequences......................................................... 25
Certain Delaware Taxes.......................................................................... 27
ERISA Considerations............................................................................ 27
Plan of Distribution............................................................................ 28
Legal Opinions.................................................................................. 29
Experts......................................................................................... 29
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that we and
our parent, AMR Corporation, filed jointly with the Securities and Exchange
Commission (the "SEC") utilizing a "shelf" registration process. Under this
shelf process, we may sell the securities described in this prospectus from time
to time using this prospectus together with a prospectus supplement. This
prospectus provides you with a general description of the securities we may
offer. Each time we offer pass through certificates, we will provide a
prospectus supplement that will contain specific information about that
offering. We may also add, update or change information contained in this
prospectus through one or more prospectus supplements to this prospectus. If
there is any inconsistency between the information in this Prospectus and any
prospectus supplement, you should rely on the information in that prospectus
supplement. You should carefully read both this prospectus and any applicable
prospectus supplement together with the additional information described under
the heading "Where You Can Find More Information".
This prospectus does not contain all of the information set forth in the
registration statement that we filed with the SEC or in the exhibits to that
registration statement. For further information about American Airlines, Inc.,
AMR Corporation, or the securities, you should refer to that registration
statement and its exhibits. Statements contained in this prospectus or in any
prospectus supplement as to the contents of any contract or other document are
not necessarily complete, and you should review the full text of those contracts
and other documents.
The registration statement that we filed with the SEC relating to the
securities can be obtained from the SEC, as described below under "Where You Can
Find More Information".
In this prospectus, references to "American", the "Company", "we", "us" and
"our" refer to American Airlines, Inc. and references to "AMR" refer to our
parent, AMR Corporation.
WHERE YOU CAN FIND MORE INFORMATION
We and AMR file annual, quarterly and special reports, proxy statements (in
the case of AMR only) and other information with the SEC. This information may
be read and copied at the Public Reference Room of the SEC at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. Information regarding the
operation of the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330. Our SEC filings are also available from the SEC's Internet site
at http://www.sec.gov, which contains reports, proxy and information statements,
and other information regarding issuers that file electronically.
We "incorporate by reference" in this prospectus certain documents that we
and AMR file with the SEC, which means:
- we can disclose important information to you by referring you to those
documents;
- information incorporated by reference is considered to be part of this
prospectus, even though it is not repeated in this prospectus; and
- information that we and AMR file later with the SEC will automatically
update and supersede this prospectus.
We incorporate by reference the documents listed below and all documents
that American or AMR files with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") after
the date of this prospectus and until the offering of all the pass through
certificates hereunder has been completed, other than current reports (or
portions thereof) furnished under Items 9 or 12 of Form 8-K:
- Annual Reports of American and of AMR on Form 10-K for the year ended
December 31, 2002;
- Quarterly Reports of American and of AMR on Form 10-Q for the quarters
ended March 31, 2003, June 30, 2003 and September 30, 2003;
- Current Reports of American on Form 8-K filed on January 22, 2003,
April 1, 2003 (two Reports filed on this date), April 17, 2003, April
23, 2003, April 25, 2003, June 12, 2003, June 25, 2003, July 3, 2003
(8-K/A), July 16, 2003, August 1, 2003, October 22, 2003; and
- Current Reports of AMR on Form 8-K filed on January 22, 2003, April 1,
2003 (two Reports filed on this date), April 17, 2003 (Report with
respect to labor matters), April 23, 2003, April 25, 2003, May 2,
2003, June 11, 2003, June 25, 2003, July 3, 2003 (8-K/A), July 16,
2003, August 1, 2003, October 22, 2003, October 24, 2003 (8-K/A).
You may obtain a copy of these filings (other than their exhibits, unless
those exhibits are specifically incorporated by reference in the filings) at no
cost by writing or telephoning us at the following address:
Corporate Secretary
American Airlines, Inc.
P.O. Box 619616, Mail Drop 5675
Dallas/Fort Worth Airport, Texas 75261-9616
(817) 967-1254
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference contain various
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act") and Section 21E
2
of the Exchange Act which represent our expectations or beliefs concerning
future events. When used in this prospectus and in documents incorporated herein
by reference, the words "believes", "expects", "plans", "anticipates", and
similar expressions are intended to identify forward-looking statements.
Forward-looking statements include, without limitation, our 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 us of
the events of September 11, 2001 and of our results of operations for the past
two years and the sufficiency of our and AMR's 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 prospectus and the documents
incorporated by reference are based upon information available to us on the date
of this prospectus or such document. We undertake 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 factors that could cause actual results to differ materially from
our expectations.
The following factors, in addition to those discussed under the caption
"Risk Factors" in each prospectus supplement and other possible factors not
listed, could cause our actual results to differ materially from those expressed
in forward-looking statements: the uncertain financial and business environment
we face, the struggling economy, high fuel prices and the availability of fuel,
the residual effects of the war in Iraq, conflicts in the Middle East,
historically low fare levels and the general competitive environment, our
ability to implement our restructuring program and the effect of the program on
our operational performance and service levels, uncertainties with respect to
our international operations, changes in our business strategy, actions by U.S.
or foreign government agencies, the possible occurrence of additional terrorist
attacks, another outbreak of SARS, our or AMR's inability to satisfy existing
liquidity requirements or other covenants in certain of our or AMR's credit
agreements and the availability of future financing.
Additional information concerning these and other factors is contained in
our and AMR's SEC filings, including but not limited to our and AMR's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2003, June 30, 2003 and
September 30, 2003 and our and AMR's Annual Reports on Form 10-K for the year
ended December 31, 2002.
THE COMPANY
American Airlines, Inc., the principal subsidiary of AMR Corporation, was
founded in 1934. On April 9, 2001, American (through a wholly owned subsidiary,
TWA Airlines LLC ("TWA LLC")) purchased substantially all of the assets and
assumed certain liabilities of Trans World Airlines, Inc. ("TWA"), the eighth
largest U.S. carrier. American, including TWA LLC, is the largest scheduled
passenger airline in the world. At the end of 2002, American provided scheduled
jet service to more than 152 destinations throughout North America, the
Caribbean, Latin America, Europe and the Pacific. American is also one of the
largest scheduled air freight carriers in the world, providing a wide range of
freight and mail services to shippers throughout its system.
The postal address for both American's and AMR's principal executive
offices is P.O. Box 619616, Dallas/Fort Worth Airport, Texas 75261-9616
(Telephone: 817-963-1234). AMR's Internet address is http://www.amrcorp.com.
Information on AMR's website is not incorporated into this prospectus and is not
a part of this prospectus.
3
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges of
American (including for purposes of this table and the following footnotes TWA
LLC) and AMR for the periods indicated:
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED
--------------------------------- ------------------
1998 1999 2000 2001 2002 SEPTEMBER 30, 2003
---- ---- ---- ---- ---- ------------------
Ratio of Earnings to Fixed Charges
American......................... 2.82 1.95 2.07 (1) (3) (5)
AMR.............................. 2.55 1.72 1.87 (2) (4) (6)
(1) In April 2001, the board of directors of American approved the
unconditional guarantee by American (the "American Guarantee") of the existing
debt obligations of AMR. As such, as of December 31, 2001, American
unconditionally guaranteed through the life of the related obligations
approximately $676 million of unsecured debt and approximately $573 million of
secured debt. The impact of these unconditional guarantees is not included in
the above computation. For the year ended December 31, 2001, earnings were not
sufficient to cover fixed charges. American needed additional earnings of $2,584
million to achieve a ratio of earnings to fixed charges of 1.0.
(2) For the year ended December 31, 2001, AMR earnings were not sufficient
to cover fixed charges. AMR needed additional earnings of $2,900 million to
achieve a ratio of earnings to fixed charges of 1.0.
(3) At December 31, 2002, American's exposure under the American Guarantee
was approximately $636 million with respect to unsecured debt and approximately
$538 million with respect to secured debt. For the year ended December 31, 2002,
earnings were not sufficient to cover fixed charges. American needed additional
earnings of $3,749 million to achieve a ratio of earnings to fixed charges of
1.0.
(4) For the year ended December 31, 2002, AMR earnings were not sufficient
to cover fixed charges. AMR needed additional earnings of $3,946 million to
achieve a ratio of earnings to fixed charges of 1.0.
(5) At September 30, 2003, American's exposure under the American Guarantee
was approximately $936 million with respect to unsecured debt and approximately
$503 million with respect to secured debt. For the nine months ended September
30, 2003, earnings were not sufficient to cover fixed charges. American needed
additional earnings of $1,239 million to achieve a ratio of earnings to fixed
charges of 1.0.
(6) For the nine months ended September 30, 2003, AMR earnings were not
sufficient to cover fixed charges. AMR needed additional earnings of $1,171
million to achieve a ratio of earnings to fixed charges of 1.0.
For purposes of the table, "earnings" represents consolidated income from
continuing operations before income taxes, extraordinary items, cumulative
effect of accounting change and fixed charges (excluding interest capitalized).
"Fixed charges" consists of interest expense (including interest capitalized),
amortization of debt expense and the portion of rental expense we deem
representative of the interest factor.
FORMATION OF THE TRUSTS
We have entered into a pass through trust agreement (the "basic agreement")
with U.S. Bank Trust National Association (as successor to State Street Bank and
Trust Company of Connecticut, National Association), as trustee (the "trustee").
Each series of pass through certificates will be issued by a separate trust.
Each separate trust will be formed pursuant to the basic agreement and a
specific supplement to the basic agreement (each, a "trust supplement") between
American and the trustee or among American, AMR and the trustee. All pass
through certificates issued by a particular trust will represent fractional
undivided interests in such trust and the property held in such trust, and,
subject to the effect of any cross-subordination or cross-collateralization
provisions described in the applicable prospectus supplement, will have no
rights, benefits or interest in respect of any other trust or the property held
in any other trust.
Concurrently with the execution and delivery of each trust supplement, the
trustee, on behalf of the trust formed by the trust supplement, will enter into
one or more agreements (each such agreement being herein referred to as a "note
purchase agreement") pursuant to which it will agree to purchase one or more
equipment notes. Except to the
4
extent set forth in the applicable prospectus supplement, all of the equipment
notes that constitute the property of any one trust will have an identical
interest rate, and this interest rate will be equal to the rate applicable to
the pass through certificates issued by such trust. The maturity dates of the
equipment notes acquired by each trust will occur on or before the final
expected distribution date applicable to the pass through certificates issued by
such trust. The trustee will distribute principal, premium, if any, and interest
payments received by it as holder of the equipment notes to the registered
holders of pass through certificates (the "certificateholders") of the trust in
which such equipment notes are held, subject to the effect of any
cross-subordination or cross-collateralization provisions described in the
applicable prospectus supplement.
USE OF PROCEEDS
Except as set forth in the applicable prospectus supplement, the trustee
for each trust will use the proceeds from the sale of the pass through
certificates issued by such trust to purchase one or more equipment notes or
notes issued by a separate trust or other entity secured by equipment notes.
Equipment notes may be owned aircraft notes or leased aircraft notes. Any trust
may hold owned aircraft notes and leased aircraft notes simultaneously. The
owned aircraft notes will be secured by certain aircraft owned or to be owned by
American ("owned aircraft"), and the leased aircraft notes will be secured by
certain aircraft leased or to be leased to American ("leased aircraft"). In
certain cases, owned aircraft notes or leased aircraft notes may be issued to
refinance debt, lease or other transactions previously entered into to finance
the applicable aircraft.
In addition, to the extent set forth in the applicable prospectus
supplement, each trust may hold (exclusively, or in combination with owned
aircraft notes, leased aircraft notes or both) equipment notes secured by
aircraft engines, spare parts, appliances or other equipment or personal
property owned or to be owned by, or leased or to be leased to, American. Such
equipment notes, and the property securing them, will be subject to the
considerations, terms, conditions, and other provisions described in the
applicable prospectus supplement, which considerations, terms, conditions and
other provisions will be, except as set forth in the applicable prospectus
supplement, generally analogous to those described in this prospectus with
respect to the equipment notes and the owned or leased aircraft securing them.
Also, to the extent set forth in the applicable trust supplement, a trust
may hold (exclusively, or in combination with equipment notes) pass through
certificates or beneficial interests in such certificates previously issued by a
trust that holds equipment notes.
A trust may hold owned aircraft notes or leased aircraft notes that are
subordinated in right of payment to other equipment notes or other debt related
to the same owned or leased aircraft. In addition, the trustees on behalf of one
or more trusts may enter into an intercreditor or subordination agreement
establishing priorities among series of pass through certificates. Also, a
liquidity facility, surety bond, financial guarantee, interest rate or other
swap or other arrangement may support one or more payments on the equipment
notes or pass through certificates of one or more series. In addition, the
trustee may enter into servicing, remarketing, appraisal, put or other
agreements relating to the collateral securing the equipment notes. We will
describe any such credit enhancements or other arrangements or agreements in the
applicable prospectus supplement.
To the extent that the trustee does not use the proceeds of any offering of
pass through certificates to purchase equipment notes on the date of issuance of
such pass through certificates, it will hold such proceeds for the benefit of
the holders of such pass through certificates under arrangements that we will
describe in the applicable prospectus supplement. If the trustee does not
subsequently use any portion of such proceeds to purchase equipment notes by the
relevant date specified in the applicable prospectus supplement, it will return
that portion of such proceeds to the holders of such pass through certificates.
In addition, we may offer pass through certificates subject to delayed
aircraft financing arrangements, such as the following:
- A trust may purchase leased aircraft notes issued by an owner trustee
prior to the purchase of certain leased aircraft by such owner trustee
or the commencement of the related lease.
- A trust may purchase owned aircraft notes issued by American prior to
the expected delivery date of certain owned aircraft.
5
- The proceeds of the offering of such pass through certificates may be
invested with a depositary or represented by escrow receipts until
used to purchase equipment notes.
- At the date of issuance of the pass through certificates, it may not
yet be determined if the trust will purchase owned aircraft notes or
leased aircraft notes.
In such circumstances, we will describe in the prospectus supplement how the
proceeds of the pass through certificates will be held or applied during any
such delayed aircraft financing period, including any depositary or escrow
arrangements.
6
DESCRIPTION OF THE PASS THROUGH CERTIFICATES
The description of the terms of the pass through certificates and basic
agreement in this prospectus is a summary. When we offer to sell a series of
pass through certificates, we will summarize in a prospectus supplement the
particular terms of such series of pass through certificates that we believe
will be the most important to your decision to invest in such series of pass
through certificates. As the terms of such series of pass through certificates
may differ from the summary in this prospectus, the summary in this prospectus
is subject to and qualified by reference to the summary in such prospectus
supplement, and you should rely on the summary in such prospectus supplement
instead of the summary in this prospectus if the summary in such prospectus
supplement is different from the summary in this prospectus. You should keep in
mind, however, that it is the pass through certificates, the basic agreement and
the applicable trust supplement, and not the summaries in this prospectus or
such prospectus supplement, which define your rights as a holder of pass through
certificates of such series. There may be other provisions in such pass through
certificates, the basic agreement and the applicable trust supplement that are
also important to you. You should carefully read these documents for a full
description of the terms of such pass through certificates. The basic agreement
is incorporated by reference as an exhibit to the registration statement that
includes this prospectus. See "Where You Can Find More Information" for
information on how to obtain a copy of the basic agreement. American will file
with the SEC the trust supplement relating to each series of pass through
certificates and the forms of indenture, lease (if any), note purchase
agreement, intercreditor and subordination agreement (if any) and credit support
agreement (if any) relating to any offering of pass through certificates as
exhibits to a post-effective amendment to the registration statement of which
this prospectus is a part or a Current Report on Form 8-K, a Quarterly Report on
Form 10-Q or an Annual Report on Form 10-K. See "Where You Can Find More
Information" for information on how to obtain copies of these documents.
The aggregate face amount of pass through certificates that we can issue
under the basic agreement is unlimited.
GENERAL
We expect that the pass through certificates of each trust will be issued
in fully registered form only. Each pass through certificate will represent a
fractional undivided interest in the separate trust created by the basic
agreement and the trust supplement pursuant to which such pass through
certificate is issued, and all payments and distributions will be made only from
the trust property of each trust. The trust property is expected to include (i)
the equipment notes, or notes issued by a trust or other entity secured by
equipment notes, held in such trust and all monies at any time paid thereon and
all monies due and to become due thereunder, subject to the effect of any
cross-subordination or cross-collateralization provisions described in the
applicable prospectus supplement, (ii) funds from time to time deposited with
the trustee in accounts relating to such trust and (iii) if so specified in the
applicable prospectus supplement, rights under any cross-subordination or
cross-collateralization arrangements, monies receivable under any credit support
agreement and any other rights or property described therein.
Except to the extent described above under "Use of Proceeds" or in the
applicable prospectus supplement, equipment notes may be owned aircraft notes or
leased aircraft notes. American will issue owned aircraft notes under separate
trust indentures (the "owned aircraft indentures") between American and a bank,
trust company or other institution or person specified in the related prospectus
supplement, as trustee thereunder (in such capacity, herein referred to as the
"loan trustee"). The owned aircraft notes will be recourse obligations of
American. The owned aircraft may secure additional debt or be subject to other
financing arrangements.
Leased aircraft notes will be issued in connection with the leveraged lease
of leased aircraft to American. Except as set forth in the applicable prospectus
supplement, each leased aircraft will be leased to American under a lease (a
"lease") between American and a bank, trust company or other institution acting
not in its individual capacity but solely as trustee (an "owner trustee") of a
separate trust for the benefit of one or more beneficial owners (each, an "owner
participant") of the leased aircraft. Owner participants may include American or
affiliates of American. The owner trustee will issue the leased aircraft notes
on a non-recourse basis under separate trust indentures (the "leased aircraft
indentures") between it and the applicable loan trustee to finance or refinance
a portion of the cost to it of the applicable leased aircraft. The owner trustee
will obtain a portion of the funding for the leased aircraft from the equity
investments of the related owner participants and, to the extent set forth in
the applicable prospectus supplement, additional debt secured by such leased
aircraft or other sources. No owner trustee or owner participant, however, will
be personally liable for any principal or interest payable under the related
leased aircraft indenture or the leased aircraft notes issued thereunder. The
rents and other amounts payable by American
7
under the lease relating to any leased aircraft will be in amounts sufficient to
pay when due all principal and interest payments on the leased aircraft notes
issued under the leased aircraft indenture in respect of such leased aircraft,
subject to some limited exceptions. The leased aircraft also may be subject to
other financing arrangements. Among other things, the owner trustee with respect
to a particular leased aircraft may refinance any existing related leased
aircraft notes through the issuance by a separate trust or other entity of notes
secured by such leased aircraft notes. We will describe any such other financing
arrangements in the applicable prospectus supplement.
Each pass through certificate will represent a pro rata share of the
outstanding principal amount of the equipment notes and, to the extent set forth
in the applicable trust supplement, other property held in the related trust.
Unless otherwise specified in the applicable prospectus supplement, each pass
through certificate will be issued in minimum denominations of $1,000 or any
integral multiple of $1,000 except that one pass through certificate of each
series may be issued in a different denomination. The pass through certificates
do not represent indebtedness of the trusts, and references in this prospectus
or in any prospectus supplement to interest accruing on the pass through
certificates are included for purposes of computation only. The pass through
certificates do not represent an interest in or obligation of American, AMR, the
trustee, any of the loan trustees or owner trustees in their individual
capacities, any owner participant, or any of their respective affiliates. Each
certificateholder by its acceptance of a pass through certificate agrees to look
solely to the income and proceeds from the trust property of the applicable
trust as provided in the basic agreement and the applicable trust supplement.
A trust may hold owned aircraft notes or leased aircraft notes that are
subordinated in right of payment to other equipment notes or other debt relating
to the same or certain related owned aircraft or leased aircraft. In addition,
the trustees on behalf of one or more trusts may enter into an intercreditor or
subordination agreement or similar arrangements establishing priorities among
series of pass through certificates. Also, payments in respect of the pass
through certificates of one or more series, or the equipment notes of one or
more series, or both, may be supported by a credit support arrangement. See
"Credit Enhancements" below. Any such intercreditor, subordination or credit
support arrangements will be described in the applicable prospectus supplement.
This description assumes that the pass through certificates will be issued
without credit enhancements. If any credit enhancements are used, certain terms
of the pass through certificates will differ in some respects from the terms
described in this prospectus. The applicable prospectus supplement will reflect
the material differences arising from any such credit enhancements.
In addition, this description generally assumes that, on or before the date
of the sale of any series of pass through certificates, the related aircraft
shall have been delivered and the ownership or lease financing arrangements for
such aircraft shall have been put in place. However, it is possible that some or
all of the aircraft related to a particular offering of pass through
certificates may be subject to certain delayed aircraft financing arrangements.
See "Description of the Equipment Notes -- General" below. In the event of any
delayed aircraft financing arrangements, certain terms of the pass through
certificates will differ in some respects from the terms described in this
Prospectus. The applicable prospectus supplement will reflect the material
differences arising from any such delayed aircraft financing arrangements.
Interest will be passed through to certificateholders of each trust at the
rate per annum payable on the equipment notes held in such trust, as set forth
for such trust on the cover page of the applicable prospectus supplement,
subject to the effect of any cross-subordination or cross-collateralization
provisions described in the applicable prospectus supplement.
Reference is made to the applicable prospectus supplement for a description
of the specific series of pass through certificates being offered thereby, which
may include:
- the specific designation and title of such pass through certificates
and the related trust;
- the regular distribution dates (as defined below) and special
distribution dates (as defined below) applicable to such pass through
certificates;
- if other then U.S. dollars, the currency or currencies (including
composite currencies or currency units) in which such pass through
certificates may be denominated or payable;
- the specific form of such pass through certificates, including whether
or not such pass through certificates are to be issued in accordance
with a book-entry system or in bearer form;
8
- a description of the equipment notes to be purchased by such trust,
including (a) the period or periods within which, the price or prices
at which, and the terms and conditions upon which such equipment notes
may or must be redeemed, purchased or defeased, in whole or in part,
by American or, with respect to leased aircraft notes, the owner
trustee or owner participant, (b) the payment priority of such
equipment notes in relation to any other equipment notes or other debt
issued with respect to the same aircraft, (c) any additional security
or liquidity or other credit enhancements therefor and (d) any
intercreditor or other rights or limitations between or among the
holders of equipment notes of different priorities issued with respect
to the same aircraft;
- a summary description of the related aircraft or other collateral
securing the equipment notes, including, if determined, whether any
such aircraft is a leased aircraft or an owned aircraft;
- a description of the related note purchase agreement and related
indentures, including a description of the events of default under the
related indentures, the remedies exercisable upon the occurrence of
such events of default and any limitations on the exercise of such
remedies with respect to such equipment notes;
- if such pass through certificates relate to leased aircraft, a
description of the related leases, including (a) the names of the
related owner trustees, (b) a description of the events of default
under the related leases, the remedies exercisable upon the occurrence
of such events of default and any material limitations on the exercise
of such remedies with respect to the applicable leased aircraft notes,
and (c) the rights, if any, of the related owner trustee or owner
participant to cure failures of American to pay rent under the related
Lease;
- the extent, if any, to which the provisions of the operative documents
applicable to such equipment notes may be amended by the parties
thereto without the consent of the holders of, or only upon the
consent of the holders of a specified percentage of aggregate
principal amount of, such equipment notes;
- cross-default or cross-collateralization provisions in the related
indentures, if any;
- a description of any intercreditor, subordination or similar
provisions among the holders of pass through certificates, including
any cross-subordination provisions and provisions relating to control
of remedies and other rights among the holders of pass through
certificates issued by separate trusts;
- any arrangements for the investment or other use of proceeds of the
pass through certificates prior to the purchase of equipment notes,
and any arrangements relating to any delayed aircraft financing
arrangements;
- a description of any deposit or escrow agreement, any liquidity or
credit facility, surety bond, financial guarantee or other arrangement
providing collateralization, credit support or liquidity enhancements
for any series of pass through certificates or any class of equipment
notes; and
- a description of any other special terms pertaining to such pass
through certificates, including any modification of the terms set
forth herein.
If any pass through certificates relate to equipment notes that are
denominated in one or more foreign or composite currencies or currency units,
any restrictions, special United States federal income tax considerations and
other special information with respect to such pass through certificates and
such foreign or composite currency or currency units will be set forth in the
applicable prospectus supplement.
If any pass through certificates relate to equipment notes that are sold at
a substantial discount below the principal amount of such equipment notes,
special United States federal income tax considerations and other special
information with respect to such pass through certificates will be set forth in
the applicable prospectus supplement.
Unless we state otherwise in an applicable prospectus supplement, the basic
agreement does not and the indentures will not contain any financial covenants
or other provisions that protect certificateholders in the event we issue a
large amount of debt or are acquired by another entity (including in a highly
leveraged transaction). However, the certificateholders of each series will have
the benefit of a lien on the specific aircraft or, to the extent
9
set forth in the applicable trust supplement, other property securing the
related equipment notes held in the related trust. See "Description of the
Equipment Notes -- Security".
To the extent described in a prospectus supplement, American will have the
right to surrender pass through certificates issued by a trust to the trustee
for such trust. In such event, the trustee will transfer to American an equal
principal amount of equipment notes under the related indentures designated by
American and will cancel the surrendered pass through certificates.
BOOK-ENTRY REGISTRATION
General.
Except as otherwise described in the applicable prospectus supplement, pass
through certificates will be subject to the provisions described below.
Upon issuance, each series of pass through certificates will be represented
by one or more fully registered global certificates. Unless otherwise provided
in a prospectus supplement, each global certificate will be deposited with, or
on behalf of, The Depository Trust Company ("DTC") and registered in the name of
Cede & Co. ("Cede"), the nominee of DTC. No person acquiring an interest in such
pass through certificates (a "certificate owner") will be entitled to receive a
certificate representing such person's interest in such pass through
certificates, except as set forth below under "-- Definitive Certificates".
Unless and until definitive certificates (as defined below) are issued under the
limited circumstances described herein, all references in this prospectus and in
any prospectus supplement to actions by certificateholders will refer to actions
taken by DTC upon instructions from DTC participants (as defined below), and all
references to distributions, notices, reports and statements to
certificateholders will refer, as the case may be, to distributions, notices,
reports and statements to DTC or Cede, as the registered holder of such pass
through certificates, or to DTC participants for distribution to certificate
owners in accordance with DTC procedures.
DTC has advised American that DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered pursuant to Section
17A of the Exchange Act. DTC was created to hold securities for its participants
("DTC participants") and to facilitate the clearance and settlement of
securities transactions between DTC participants through electronic
book-entries, thereby eliminating the need for physical transfer of
certificates. DTC participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. Indirect
access to the DTC system also is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a DTC participant, either directly or indirectly ("indirect
participants").
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "DTC rules"), DTC is required to make book-entry transfers
of pass through certificates among DTC participants on whose behalf it acts with
respect to the pass through certificates. Certificate owners that are not DTC
participants but that desire to purchase, sell or otherwise transfer ownership
of, or other interests in, pass through certificates may do so only through DTC
participants. DTC participants and indirect participants with which certificate
owners have accounts with respect to the pass through certificates, however, are
required to make book-entry transfers on behalf of their respective customers.
In addition, under the DTC rules, DTC is required to receive and transmit to the
DTC participants distributions of principal of, premium, if any, and interest
with respect to the pass through certificates. Certificate owners thus will
receive all distributions of principal, premium, if any, and interest from the
trustee through DTC participants or indirect participants, as the case may be.
Under this book-entry system, certificate owners may experience some delay in
their receipt of payments because such payments will be forwarded by the trustee
to Cede, as nominee for DTC, and DTC in turn will forward the payments to the
appropriate DTC participants in amounts proportionate to the amount of such DTC
participants' respective holdings of beneficial interests in the pass through
certificates, as shown on the records of DTC or its nominee. Distributions by
DTC participants to indirect participants or certificate owners, as the case may
be, will be the responsibility of such DTC participants.
Unless and until definitive certificates are issued under the limited
circumstances described herein, the only "certificateholder" under the basic
agreement will be Cede, as nominee of DTC. Certificate owners therefore will
10
not be recognized by the trustee as certificateholders, as such term is used in
the basic agreement, and certificate owners will be permitted to exercise the
rights of certificateholders only indirectly through DTC and DTC participants.
DTC has advised American that it will take any action permitted to be taken by
certificateholders under the basic agreement only at the direction of one or
more DTC participants to whose accounts with DTC the pass through certificates
are credited. Additionally, DTC has advised American that in the event any
action requires approval by certificateholders of a certain percentage of
beneficial interest in each trust, DTC will take such action only at the
direction of and on behalf of DTC participants whose holdings include undivided
interests that satisfy any such percentage. DTC may take conflicting actions
with respect to other undivided interests to the extent that such actions are
taken on behalf of DTC participants whose holdings include such undivided
interests. Conveyance of notices and other communications by DTC to DTC
participants and by DTC participants to indirect participants and to certificate
owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Because DTC can only act on behalf of DTC participants, who in turn act on
behalf of indirect participants, the ability of a certificate owner to pledge
pass through certificates to persons or entities that do not participate in the
DTC system, or to otherwise act with respect to such pass through certificates,
may be limited due to the lack of a physical certificate for such pass through
certificates.
None of American, AMR or the trustee or any agent of American, AMR or the
trustee will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in the
pass through certificates held by Cede, as nominee for DTC; for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests; or for the performance by DTC, any DTC participant or any indirect
participant of their respective obligations under the DTC rules or any other
statutory, regulatory, contractual or customary procedures governing their
operations.
The applicable prospectus supplement will specify any additional book-entry
registration procedures applicable to pass through certificates denominated in a
currency other than United States dollars.
The information contained in this prospectus concerning DTC and its
book-entry system has been obtained from sources American believes to be
reliable, but American has not verified such information and takes no
responsibility for the accuracy thereof.
Same-Day Settlement and Payment.
As long as pass through certificates are registered in the name of DTC or
its nominee, all payments made by American to the loan trustee under any lease
or any owned aircraft indenture will be in immediately available funds. Such
payments, including the final distribution of principal with respect to the pass
through certificates of any trust, will be passed through to DTC in immediately
available funds.
Any pass through certificates registered in the name of DTC or its nominee
will trade in DTC's Same-Day Funds Settlement System until maturity, and
secondary market trading activity in the pass through certificates will
therefore be required by DTC to settle in immediately available funds.
Definitive Certificates.
Pass through certificates will be issued in certificated form ("definitive
certificates") to certificate owners or their nominees, rather than to DTC or
its nominee, only if (i) American advises the trustee in writing that DTC is no
longer willing or able to discharge properly its responsibilities as depository
with respect to such pass through certificates and American is unable to locate
a qualified successor, (ii) American, at its option, elects to terminate the
book-entry system through DTC or (iii) after the occurrence of certain events of
default or other events specified in the related prospectus supplement,
certificate owners with fractional undivided interests aggregating not less than
a majority in interest in such trust advise the trustee, American and DTC
through DTC participants in writing that the continuation of a book-entry system
through DTC (or a successor thereto) is no longer in the certificate owners'
best interest.
Upon the occurrence of any event described in the immediately preceding
paragraph, the trustee will be required to notify all affected certificate
owners through DTC participants of the availability of definitive certificates.
Upon surrender by DTC of the global certificates representing the pass through
certificates and receipt
11
of instructions for re-registration, the trustee will reissue the pass through
certificates as definitive certificates to certificate owners.
Distributions of principal of, premium, if any, and interest on the pass
through certificates will thereafter be made by the trustee, in accordance with
the procedures set forth in the basic agreement and the applicable trust
supplements, directly to holders in whose names such definitive certificates
were registered at the close of business on the applicable record date. Such
distributions will be made by check mailed to the address of each such holder as
it appears on the register maintained by the trustee. The final payment on any
pass through certificate, however, will be made only upon presentation and
surrender of such pass through certificate at the office or agency specified in
the notice of final distribution to certificateholders.
Definitive certificates will be transferable and exchangeable at the office
of the trustee upon compliance with the requirements set forth in the basic
agreement and the applicable trust supplements. Unless otherwise provided in the
applicable prospectus supplement, no service charge will be imposed for any
registration of transfer or exchange, but payment of a sum sufficient to cover
any tax or other governmental charge will be required.
PAYMENTS AND DISTRIBUTIONS
American will make scheduled payments of principal and interest on the
owned aircraft notes to the loan trustee under the related indenture, and the
loan trustee will distribute such payments to the trustee for each trust that
holds such owned aircraft notes.
Upon the commencement of the lease for any leased aircraft, American will
make scheduled rental payments for each leased aircraft under the related lease,
and these scheduled rental payments will be assigned under the applicable
indenture by the related owner trustee to the loan trustee to provide the funds
necessary to make the corresponding scheduled payments of principal and interest
due on the leased aircraft notes issued by such owner trustee. The loan trustee
will distribute such payments to the trustee for each trust that holds such
leased aircraft notes. After the loan trustee has distributed such payments of
principal and interest on the leased aircraft notes to the trustee for such
trusts, the loan trustee will, except under certain circumstances, pay the
remaining balance, if any, of such scheduled rental payments to the owner
trustee for the benefit of the related owner participant.
Subject to the effect of any cross-subordination or cross-collateralization
provisions set forth in the applicable prospectus supplement, payments of
principal, premium, if any, and interest with respect to the equipment notes
held in each trust received by the trustee will be distributed by the trustee to
certificateholders of such trust on the dates and in the currency specified in
the applicable prospectus supplement, except in certain cases when some or all
of such equipment notes are in default as described in the applicable prospectus
supplement.
Payments of principal of and interest on the equipment notes held in each
trust will be scheduled to be received by the trustee on the dates specified in
the applicable prospectus supplement (such scheduled payments of principal and
interest are referred to as "scheduled payments", and the dates specified in the
applicable prospectus supplement for distribution of scheduled payments by the
trustee to the certificateholders are referred to as "regular distribution
dates"). Subject to the effect of any cross-subordination or
cross-collateralization provisions set forth in the applicable prospectus
supplement, the pass through trustee will distribute on each regular
distribution date to the related certificateholders any scheduled payments
received by the pass through trustee on or before such regular distribution
date. If a scheduled payment is not received by the pass through trustee on or
before a regular distribution date, but is received within five days thereafter,
it will be distributed on the date received to the certificateholders. Each such
distribution of a scheduled payment will be made by the pass through trustee to
the holders in whose names the certificates of such trust are registered at the
close of business on the 15th day preceding such regular distribution date,
subject to certain exceptions. Subject to the effect of any cross-subordination
or cross-collateralization provisions set forth in the applicable prospectus
supplement, each certificateholder of a trust will be entitled to receive a pro
rata share of any distribution in respect of scheduled payments of principal and
interest made on the equipment notes held in such trust.
Payments of principal, premium, if any, and interest received by the
trustee on account of the early redemption or purchase, if any, of any of the
equipment notes relating to one or more aircraft held in a trust, payments
received by the trustee following an event of default in respect of any such
equipment notes (including payments received by the trustee on account of the
sale of such equipment notes by the trustee or payments received by the trustee
with
12
respect to the leased aircraft notes on account of the purchase of such notes by
the related owner trustee or owner participant) and any other payments
designated as special payments in the applicable trust supplement ("special
payments") will be distributed on the date or dates determined as described in
the applicable prospectus supplement (each, a "special distribution date"). The
trustee will mail notice to the certificateholders of record of the applicable
trust stating any such anticipated special distribution date.
If any regular distribution date or special distribution date is not a
business day, distributions scheduled to be made on such regular distribution
date or special distribution date may be made on the next succeeding business
day without additional interest.
POOL FACTORS
Unless otherwise described in the applicable prospectus supplement, the
"pool balance" for each trust indicates, as of any date, the original aggregate
face amount of the pass through certificates of such trust less the aggregate
amount of all payments made in respect of the pass through certificates of such
trust other than payments made in respect of interest or premium or
reimbursement of any costs and expenses in connection therewith. The pool
balance for each trust as of any regular distribution date or special
distribution date will be computed after giving effect to the payment of
principal, if any, on the equipment notes or other trust property held in such
trust and the distribution thereof to be made on that date.
Unless otherwise described in the applicable prospectus supplement, the
"pool factor" for each trust as of any regular distribution date or special
distribution date is the quotient (rounded to the seventh decimal place)
computed by dividing (1) the pool balance, by (2) the aggregate original face
amount of the pass through certificates of such trust. The pool factor for each
trust as of any regular distribution date or special distribution date shall be
computed after giving effect to the payment of principal, if any, on the
equipment notes or other trust property held in such trust and the distribution
thereof to be made on that date. The pool factor for each trust will initially
be 1.0000000; thereafter, the pool factor for each trust will decline as
described above to reflect reductions in the pool balance of such trust. The
amount of a certificateholder's pro rata share of the pool balance of a trust
can be determined by multiplying the original denomination of the
certificateholder's pass through certificate of such trust by the pool factor
for such trust as of the applicable regular distribution date or special
distribution date. The pool factor and the pool balance for each trust will be
mailed to certificateholders of such trust on each regular distribution date and
special distribution date.
Unless there has been an early redemption, a purchase of one or more of the
equipment notes held in a trust by the related owner trustee or owner
participant after an indenture default (as defined below), a default in the
payment of principal in respect of one or more issues of the equipment notes
held in a trust or certain actions have been taken following a default thereon,
as described in the applicable prospectus supplement, the pool factor for each
trust will decline in proportion to the scheduled repayments of principal on the
equipment notes held in such trust as described in the applicable prospectus
supplement. In the event of such redemption, purchase or payment default (if
such payment is not made within five days of the regular distribution date), the
pool factor and the pool balance of each trust so affected will be recomputed
after giving effect thereto, and notice thereof will be mailed to
certificateholders of such trust. Each trust will have a separate pool factor.
REPORTS TO CERTIFICATEHOLDERS
On each regular distribution date and special distribution date, the
trustee will include with each distribution of a scheduled payment or special
payment to certificateholders of the related trust a statement, giving effect to
such distribution to be made on such regular distribution date or special
distribution date, setting forth the following information (per $1,000 in
aggregate principal amount of pass through certificates for such trust, as to
(1) and (2) below):
(1) the amount of such distribution allocable to principal and the amount
allocable to premium if any;
(2) the amount of such distribution allocable to interest;
(3) the pool balance and the pool factor for such trust; and
(4) such additional or different information as may be described in the
applicable prospectus supplement.
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As long as the pass through certificates are registered in the name of
Cede, as nominee for DTC, on the record date prior to each regular distribution
date and special distribution date, the trustee will request from DTC a
securities position listing setting forth the names of all DTC participants
reflected on DTC's books as holding interests in the pass through certificates
on such record date. On each regular distribution date and special distribution
date, the applicable trustee will mail to each such DTC participant the
statement described above and will make available additional copies as requested
by such DTC participant for forwarding to certificate owners.
In addition, after the end of each calendar year, the trustee will prepare
for each certificateholder of each trust at any time during the preceding
calendar year a report containing the sum of the amounts determined pursuant to
clauses (1) and (2) above with respect to the trust for such calendar year or,
in the event such person was a certificateholder during only a portion of such
calendar year, for the applicable portion of such calendar year, and such other
items as are readily available to the trustee and which a certificateholder will
reasonably request as necessary for the purpose of such certificateholder's
preparation of its federal income tax returns. Such report and such other items
will be prepared on the basis of information supplied to the trustee by the DTC
participants and will be delivered by the trustee to such DTC participants to be
available for forwarding by such DTC participants to certificate owners in the
manner described above.
At such time, if any, as the pass through certificates are issued in the
form of definitive certificates, the trustee will prepare and deliver the
information described above to each certificateholder of record of each trust as
the name and period of record ownership of such certificateholder appears on the
records of the registrar of the pass through certificates.
VOTING OF EQUIPMENT NOTES
Subject to the effect of any cross-subordination, cross-collateralization
or intercreditor provisions described in the related prospectus supplement and
to the rights of the providers of any credit support agreement, the trustee, as
holder of the equipment notes held in a trust, has the right to vote and give
consents and waivers in respect of such equipment notes under the related
indentures. The basic agreement and related trust supplement will set forth:
- the circumstances in which the trustee may direct any action or cast
any vote as the holder of the equipment notes held in the applicable
trust at its own discretion;
- the circumstances in which the trustee will seek instructions from the
certificateholders of such trust; and
- if applicable, the percentage of certificateholders required to direct
the trustee to take any such action.
If specified in the related prospectus supplement, the right of a trustee
to vote and give consents and waivers with respect to the equipment notes held
in the related trust may, in the circumstances set forth in an intercreditor,
subordination or similar agreement to be executed by such trustee, be
exercisable by another person specified in such prospectus supplement.
EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN EVENT OF DEFAULT
The basic agreement defines an "event of default" for any trust as the
occurrence and continuance of an indenture event of default under one or more of
the related indentures. What constitutes an "event of default" for any
particular trust, however, may be varied by the applicable trust supplement and
described in the applicable prospectus supplement. In addition, the prospectus
supplement will specify the events of default under the related indentures (an
"indenture event of default"). The indenture events of default in the case of
leased aircraft indentures are expected to include certain events of default
under the related leases (a "lease event of default"). With respect to any
equipment notes that are supported by a credit support agreement, the indenture
events of default may include events of default under such credit support
agreement.
Unless otherwise provided in a prospectus supplement, all of the equipment
notes issued under the same indenture will relate only to a single specific
aircraft and there will be no cross-collateralization or cross-default
provisions in the indentures. As a result, events resulting in an indenture
event of default under any particular indenture will not necessarily result in
an indenture event of default under any other indenture. However, since the
equipment notes issued under any single indenture may be held in more than one
trust, a continuing indenture event
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of default under such single indenture could result in an event of default in
respect of each such trust. If an indenture event of default occurs in fewer
than all of the indentures related to a trust, notwithstanding the treatment of
equipment notes issued under those indentures under which an indenture event of
default has occurred, payments of principal and interest on the equipment notes
issued pursuant to the indentures with respect to which an indenture event of
default has not occurred will continue to be made as originally scheduled and
distributed to certificateholders, subject to the terms of any intercreditor,
subordination, cross-collateralization or similar arrangements applicable to
such trust.
The ability of the applicable owner trustee or owner participant under a
leased aircraft indenture to cure indenture events of default, including an
indenture event of default that results from the occurrence of a lease event of
default under the related lease, will be described in the prospectus supplement.
Unless otherwise provided in a prospectus supplement, in the case of any pass
through certificates or equipment notes entitled to the benefits of a credit
support agreement, a drawing or other payment under any such credit support
agreement for the purpose of making a payment of interest as a result of the
failure by American to have made a corresponding payment will not cure an
indenture event of default related to such failure by American.
The ability of the holders of the pass through certificates issued with
respect to any one trust to cause the loan trustee with respect to any equipment
notes held in such trust to accelerate the payment of such equipment notes under
the applicable indenture or to direct the exercise of remedies by such loan
trustee under the applicable indenture will depend, in part, upon the proportion
of the aggregate principal amount of the equipment notes outstanding under such
indenture and held in such trust to the aggregate principal amount of all
equipment notes outstanding under such indenture. In addition, if
cross-subordination provisions are applicable to any series of pass through
certificates, then the ability of the certificateholders of any one trust
holding equipment notes issued under an indenture to cause the loan trustee to
accelerate such equipment notes or to direct the exercise of remedies by the
loan trustee under such indenture will depend, in part, upon the relative
ranking of the equipment notes held in such trust.
Each trust will hold equipment notes with different terms than the
equipment notes held in the other trusts and therefore the certificateholders of
each trust may have divergent or conflicting interests from those of the
certificateholders of those other trusts holding equipment notes issued under
the same indenture. In addition, as long as the same institution acts as trustee
of each trust, in the absence of instructions from the certificateholders of any
such trust, the trustee for such trust could for the same reason be faced with a
potential conflict of interest upon an indenture event of default. In such
event, the initial trustee has indicated that it would likely resign as trustee
of one or all such trusts, and a successor trustee or successor trustees would
be appointed in accordance with the terms of the basic agreement.
The prospectus supplement for a series of pass through certificates will
specify whether and under what circumstances the trustee may or will sell for
cash to any person all or part of the equipment notes held in the related trust.
The right to make any such sale may be exercisable by a person other than the
trustee in the event that the applicable series of pass through certificates are
subject to any intercreditor, subordination or similar arrangements, or any
credit support arrangements, and the proceeds of any such sale will be
distributed as contemplated by such arrangements. Any proceeds received by the
trustee upon any such sale that are distributable to the certificateholders of
such trust will be deposited in an account established by the trustee for the
benefit of the certificateholders of such trust and will be distributed to the
certificateholders of such trust on a special distribution date. The market for
equipment notes in default may be very limited and there can be no assurance
that they could be sold for a reasonable price. Furthermore, as long as the same
institution acts as trustee of multiple trusts, it may be faced with a conflict
in deciding from which trust to sell equipment notes to available buyers. If the
trustee sells any such equipment notes with respect to which an indenture event
of default exists for less than their outstanding principal amount, the
certificateholders of such trust will receive a smaller amount of principal
distributions than anticipated and will not have any claim for the shortfall
against American, the trustee or any other person, including, in the case of any
leased aircraft, the related owner trustee or owner participant. Neither the
trustee nor the certificateholders of such trust, furthermore, could take any
action with respect to any remaining equipment notes held in such trust as long
as no indenture events of default existed with respect thereto.
Any amount, other than scheduled payments received on a regular
distribution date or within five days thereafter, distributed to the trustee of
any trust by the loan trustee under any indenture on account of the equipment
notes held in such trust following an indenture event of default under such
indenture will be deposited in the special
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payments account for such trust and will be distributed to the
certificateholders of such trust on a special distribution date. In addition, if
an indenture provides that the applicable owner trustee or owner participant
may, under circumstances specified therein, redeem or purchase some or all of
the outstanding equipment notes issued under such indenture, the price paid by
such owner trustee or owner participant to the trustee of any trust for any of
the equipment notes issued under such indenture and held in such trust will be
deposited in the special payments account for such trust and will be distributed
to the certificateholders of such trust on a special distribution date.
Any funds representing payments received with respect to any equipment
notes held in a trust and which are in default, or the proceeds from the sale by
the trustee of any such equipment notes, held by the trustee in the special
payments account for such trust will, to the extent practicable, be invested and
reinvested by the trustee in permitted investments pending the distribution of
such funds on a special distribution date. "Permitted investments" will be
described in the related prospectus supplement.
The basic agreement provides that the trustee of each trust will, within 90
days after the occurrence of a default (as defined below) in respect of such
trust, give to the certificateholders of such trust notice, transmitted by mail,
of all uncured or unwaived defaults with respect to such trust known to it;
provided that, except in the case of default in the payment of principal of,
premium, if any, or interest on any of the equipment notes held in such trust,
the trustee will be protected in withholding such notice if it in good faith
determines that the withholding of such notice is in the interests of such
certificateholders. Except as otherwise described in the applicable prospectus
supplement, the term "default", for the purpose of the provision described in
this paragraph only, means the occurrence of any event of default with respect
to a trust, as specified above, except that in determining whether any such
event of default has occurred, any grace period or notice in connection
therewith will be disregarded.
The basic agreement contains a provision entitling the trustee of each
trust, subject to the duty of the trustee during a default to act with the
required standard of care, to be offered reasonable security or indemnity by the
certificateholders of such trust before proceeding to exercise any right or
power under the basic agreement at the request of such certificateholders.
The applicable prospectus supplement will specify the percentage of
certificateholders entitled to waive, or to instruct the trustee to waive, any
past default or event of default with respect to such trust and its consequences
and also will specify the percentage of certificateholders (and whether of such
trust or of any other trust holding equipment notes issued under related
indentures) entitled to waive, or to instruct the trustee or the loan trustee to
waive, any past indenture event of default under any related indenture and
thereby annul any direction given with respect thereto.
MODIFICATIONS OF THE BASIC AGREEMENT
The basic agreement contains provisions permitting American and the trustee
to enter into a supplement to the basic agreement or, if applicable, to any note
purchase agreement or to any intercreditor, subordination or like agreement or
to any credit support agreement, without the consent of the holders of any of
the pass through certificates, to, among other things:
- provide for the formation of a trust and the issuance of a series of
pass through certificates, or to add, or to change or eliminate, any
provision affecting pass through certificates not yet issued,
including to make appropriate provisions for an AMR guarantee;
- evidence the succession of another entity to American and the
assumption by such entity of American's obligations under the basic
agreement and any trust supplement, any note purchase agreement and
any intercreditor, subordination or like agreement or any credit
support agreement or, if applicable, to evidence the succession of
another entity to AMR and the assumption by such entity of AMR's
obligations under any AMR guarantee;
- add to the covenants of American or AMR for the benefit of the holders
of a series of pass through certificates or surrender any right or
power conferred upon American or AMR in the basic agreement, any note
purchase agreement or any intercreditor, subordination or like
agreement or any credit support agreement or AMR guarantee;
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- cure any ambiguity or correct any mistake or inconsistency contained
in the pass through certificates of any series, the basic agreement,
any trust supplement, any note purchase agreement or any
intercreditor, subordination or like agreement or any credit support
agreement or any AMR guarantee;
- make or modify any other provisions with respect to matters or
questions arising under the pass through certificates of any series,
the basic agreement, any trust supplement, any note purchase agreement
or any intercreditor, subordination or like agreement or any credit
support agreement or any AMR guarantee as the Company may deem
necessary or desirable and that will not materially adversely affect
the interests of the holders of the series of pass through
certificates issued under such trust supplement;
- comply with any requirement of the SEC, any applicable law, rules or
regulations of any exchange or quotation system on which any pass
through certificates may be listed or of any regulatory body;
- modify, eliminate or add to the provisions of the basic agreement or
any intercreditor, subordination or like agreement or any credit
support agreement or any AMR guarantee to the extent necessary to
continue or obtain the qualification of the basic agreement (including
any supplemental agreement) or any such agreement or facility or other
agreement or any AMR guarantee under the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act") and add to the basic agreement
or any intercreditor, subordination or like agreement or any credit
support agreement such other provisions as may be expressly permitted
by the Trust Indenture Act;
- provide for a successor trustee for some or all of the trusts or add
to or change any provision of the basic agreement or any
intercreditor, subordination or like agreement or any credit support
agreement or any AMR guarantee as necessary to facilitate the
administration of the trusts thereunder by more than one trustee or to
provide multiple liquidity facilities or other credit enhancements for
any trust or trusts;
- provide certain information to the trustee as required in the basic
agreement;
- add to or change the pass through certificates of any series, the
basic agreement and any trust supplement to facilitate the issuance of
any pass through certificates of such series in bearer form or to
facilitate or provide for the issuance of any pass through
certificates of such series in global form in addition to or in place
of pass through certificates of such series in certificated form;
- provide for the delivery of pass through certificates or any
supplement to the basic agreement in or by means of any computerized,
electronic or other medium, including computer diskette;
- correct or supplement the description of any property of any trust;
- modify, eliminate or add to the provisions of the basic agreement, any
applicable trust supplement or any applicable note purchase agreement
to reflect the substitution of a substitute aircraft for any owned or
leased aircraft; and
- make any other amendments or modifications to the basic agreement,
provided such amendments or modifications will only apply to pass
through certificates of one or more series to be issued thereafter;
provided, however, that unless we tell you otherwise in the applicable
prospectus supplement, unless there shall have been obtained from certain rating
agencies written confirmation that such supplement would not result in a
reduction of the then current rating for pass through certificates of the
relevant trust or a withdrawal or suspension of the rating of any class of pass
through certificates, American shall provide the trustee of the relevant trust
with an opinion of counsel to the effect that such supplement will not cause
such trust to be treated as other than a grantor trust for U.S. federal income
tax purposes unless an event of default shall have occurred and be continuing,
in which case such opinion shall be to the effect that such supplement will not
cause such trust to become an association taxable as a corporation for U.S.
federal income tax purposes.
The basic agreement also contains provisions permitting American and the
trustee of each trust, with the consent of the certificateholders of such trust
evidencing fractional undivided interests aggregating not less than a majority
in interest of such trust and, in the case of leased aircraft, with the consent
of the owner trustee, to execute
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supplemental agreements adding any provisions to or changing or eliminating any
of the provisions of the basic agreement, to the extent relating to such trust,
the applicable trust supplement or any applicable intercreditor, subordination
or like agreement or any credit support agreement, or modifying the rights of
such certificateholders, except that no such supplemental agreement may, without
the consent of the holder of each such pass through certificate so affected, (a)
reduce in any manner the amount of, or delay the timing of, any receipt by the
trustee of payments on the equipment notes held in such trust, or distributions
in respect of any pass through certificate of such trust, or change any date or
place of payment or change the coin or currency in which such pass through
certificate is payable, other than that provided for in such pass through
certificate, or impair the right of any certificateholder of such trust to
institute suit for the enforcement of any such payment when due, (b) permit the
disposition of any equipment note held in such trust, except as provided in the
basic agreement or the applicable trust supplement or in any intercreditor,
subordination or like agreement or any credit support agreement, (c) alter the
priority of distributions specified in the relevant intercreditor agreement, if
any, in a manner materially adverse to the holders of pass through certificates
of such series, or (d) reduce the percentage of the aggregate fractional
undivided interests of the trust provided for in the basic agreement or the
applicable trust supplement, the consent of the holders of which is required for
any such supplemental agreement or for any waiver provided for in the basic
agreement or such trust supplement.
MODIFICATION OF INDENTURE AND RELATED AGREEMENTS
The prospectus supplement will specify the trustee's obligations in the
event that the trustee, as the holder of any equipment notes held in a trust,
receives a request for its consent to any amendment or modification of or waiver
under the indenture or other documents relating to such equipment notes
(including any lease with respect to leased aircraft notes).
TERMINATION OF THE TRUSTS
The obligations of American and the trustee with respect to a trust will
terminate upon the distribution to certificateholders of such trust of all
amounts required to be distributed to them pursuant to the basic agreement and
the applicable trust supplement and the disposition of all property held in such
trust. The trustee will mail to each certificateholder of record of such trust
notice of the termination of such trust, the amount of the proposed final
payment and the proposed date for the distribution of such final payment for
such trust. The final distribution to any certificateholder of such trust will
be made only upon surrender of such certificateholder's pass through
certificates at the office or agency of the trustee specified in such notice of
termination.
DELAYED PURCHASE OF EQUIPMENT NOTES
In the event that, on the issuance date of any pass through certificates,
all of the proceeds from the sale of such pass through certificates are not used
to purchase the equipment notes contemplated to be held in the related trust,
such equipment notes may be purchased by the trustee at any time on or prior to
the date specified in the applicable prospectus supplement. In such event, the
proceeds from the sale of such pass through certificates not used to purchase
equipment notes will be held under an arrangement described in the applicable
prospectus supplement. Such an arrangement may include, without limitation, (1)
the investment of such proceeds by the trustee in specified permitted
investments; (2) the deposit of such proceeds in a deposit or escrow account
held by a separate depositary or escrow agent; (3) the purchase by the trustee
of debt instruments issued on an interim basis by American; or (4) the purchase
of leased aircraft notes or owned aircraft notes issued prior to the purchase of
leased aircraft or the delivery of owned aircraft, as the case may be. Any such
debt instrument may be secured by a collateral account or other security or
property described in the applicable prospectus supplement. The arrangements
with respect to the payment of interest on funds so held will be described in
the applicable prospectus supplement. If any such proceeds are not subsequently
utilized to purchase equipment notes by the relevant date specified in the
applicable prospectus supplement, including by reason of a casualty to one or
more aircraft, such proceeds will be returned to the holders of such pass
through certificates.
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
American will be prohibited from consolidating with or merging into any
other entity or transferring substantially all of its assets as an entirety to
any other entity unless, in the case of a merger or consolidation where American
is not the surviving entity or in the case of the transfer of substantially all
of American's assets, the
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successor or transferee entity shall be organized and existing under the laws of
the United States or any State or the District of Columbia and shall expressly
assume all the obligations of American contained in the basic agreement.
THE TRUSTEE
Unless otherwise provided in the prospectus supplement for any series of
pass through certificates, U.S. Bank Trust National Association, will be the
trustee for each of the trusts. With certain exceptions, the trustee will make
no representations as to the validity or sufficiency of the basic agreement, the
trust supplements, the pass through certificates, the equipment notes, the
indentures, the leases, if any, or other related documents. The trustee will not
be liable with respect to any series of pass through certificates for any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the holders of a majority in face amount of outstanding pass
through certificates of such series issued under the basic agreement. Subject to
such provisions, such trustee will be under no obligation to exercise any of its
rights or powers under the basic agreement at the request of any holders of pass
through certificates issued thereunder unless they have offered to the trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by the trustee in exercising such rights or powers. The
basic agreement provides that the trustee in its individual or any other
capacity may acquire and hold pass through certificates issued thereunder and,
subject to certain conditions, may otherwise deal with AMR and American and,
with respect to the leased aircraft, with any owner trustee and owner
participant with the same rights it would have if it were not the trustee.
Unless otherwise provided in the prospectus supplement for any series of
pass through certificates, U.S. Bank Trust National Association, will also be
the loan trustee of the indentures under which the equipment notes are issued.
It also serves as indenture trustee and as pass through trustee in numerous
other aircraft financing transactions involving American.
The trustee may resign with respect to any or all of the trusts at any
time, in which event American will be obligated to appoint a successor trustee.
If the trustee ceases to be eligible to continue as trustee with respect to a
trust or becomes incapable of acting as trustee or becomes insolvent, American
may remove such trustee, or any holder of pass through certificates of such
trust for at least six months may, on behalf of itself and all others similarly
situated, petition any court of competent jurisdiction for the removal of such
trustee and the appointment of a successor trustee. Any resignation or removal
of the trustee with respect to a trust and appointment of the successor trustee
for such trust does not become effective until acceptance of the appointment by
the successor trustee. Pursuant to such resignation and successor trustee
provisions, it is possible that a different trustee could be appointed to act as
the successor trustee with respect to each trust. All references in this
prospectus to the trustee are to the trustee acting in such capacity under each
of the trusts and should be read to take into account the possibility that each
of the trusts could have a different successor trustee in the event of such a
resignation or removal.
The basic agreement provides that American will pay the trustee's fees and
expenses and indemnify the trustee against certain liabilities. In certain
circumstances, the trustee will have a priority claim on the related trust
property to the extent such fees, expenses or indemnities are not paid.
DESCRIPTION OF THE EQUIPMENT NOTES
The description of the terms of the equipment notes in this prospectus is a
summary of the leased aircraft notes and owned aircraft notes. Where no
distinction is made between the leased aircraft notes and the owned aircraft
notes or between their respective indentures, such statements refer to any
equipment notes and any indenture. We will summarize in a prospectus supplement
the particular terms of any series of equipment notes. As the terms of such
series of equipment notes may differ from the summary in this prospectus, the
summary in this prospectus is subject to and qualified by reference to the
summary in such prospectus supplement, and you should rely on the summary in
such prospectus supplement instead of the summary in this prospectus if the
summary in such prospectus supplement is different from the summary in this
prospectus.
Because the descriptions of equipment notes in this prospectus and in any
prospectus supplement are summaries, they do not describe every aspect of the
equipment notes, and they are subject to and qualified in their entirety by
reference to all the provisions of the applicable equipment notes, indentures,
leases, note purchase agreements, trust agreements, participation agreements,
intercreditor and subordination agreements or credit support agreements and
other agreements and arrangements relating to any series of equipment notes.
Forms of these
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documents will be filed with the SEC as exhibits to a report on Form 8-K or by a
post-effective amendment to the registration statement that includes this
prospectus. See "Where You Can Find More Information" for information on how to
obtain copies of these documents.
GENERAL
The equipment notes will be owned aircraft notes or leased aircraft notes
or, to the extent described in "Use of Proceeds" above, equipment notes secured
by certain other equipment or other property. Owned aircraft notes and leased
aircraft notes will be issued under indentures between (a) in the case of owned
aircraft notes, the related loan trustee and American or (b) in the case of
leased aircraft notes, the related loan trustee and the owner trustee of a trust
for the benefit of the owner participant who is the beneficial owner of such
leased aircraft.
American's obligations under each indenture relating to an owned aircraft
and under the related owned aircraft notes will be direct obligations of
American. All of the owned aircraft notes issued under the same indenture will
relate to, and will be secured by, one or more specific owned aircraft and,
unless otherwise specified in the applicable prospectus supplement, will not be
secured by any other aircraft.
The leased aircraft notes will be nonrecourse obligations of the owner
trustee. All of the leased aircraft notes issued under the same indenture will
relate to and will be secured by one or more specific leased aircraft and,
unless otherwise specified in the applicable prospectus supplement, will not be
secured by any other aircraft. In each case, the owner trustee will lease the
related leased aircraft to American pursuant to a separate lease between such
owner trustee and American.
Equipment notes may be issued pursuant to delayed aircraft financing
arrangements, such as the following:
- The owner trustee may issue leased aircraft notes prior to the
purchase of the related leased aircraft by such owner trustee or the
commencement of the related leases.
- American may issue owned aircraft notes prior to the expected delivery
date of the related owned aircraft.
The applicable prospectus supplement will describe any such delayed
aircraft financing arrangements, including any arrangements for the
collateralization of any such leased aircraft notes or owned aircraft notes with
cash, permitted investments or other property, and any depositary or escrow
arrangement pursuant to which the proceeds from the sale of such leased aircraft
notes or owned aircraft notes will be deposited with a third party depositary or
escrow agent.
If the anticipated aircraft financing transactions have not been completed
by the relevant date specified in the applicable prospectus supplement,
including by reason of a casualty to one or more aircraft, such leased aircraft
notes or owned aircraft notes will be prepaid at the price specified in such
prospectus supplement. Alternatively, if the lease related to any such leased
aircraft notes has not commenced by such relevant date, if so specified in the
applicable prospectus supplement, American at its option may convert the
proposed leveraged lease financing into a type of financing available for owned
aircraft and such leased aircraft notes (with certain modifications) will become
owned aircraft notes.
Upon the commencement of the lease for any leased aircraft, American will
be obligated to make or cause to be made rental payments under such lease that
will be sufficient to pay the principal of and accrued interest on the related
leased aircraft notes when due, subject to some limited exceptions. The leased
aircraft notes will not be direct obligations of, or guaranteed by, American.
American's rental obligations under each lease, however, will be general
obligations of American.
If specified in a prospectus supplement, American will have the right (a)
to arrange a sale and leaseback of one or more owned aircraft referred to in
such prospectus supplement and the assumption, on a non-recourse basis, of the
related owned aircraft notes by an owner trustee or (b) to substitute other
aircraft, cash or U.S. government securities or a combination thereof in place
of the owned aircraft securing the related owned aircraft notes. The terms and
conditions of any such sale and leaseback or substitution will be described in
the applicable prospectus supplement.
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The applicable prospectus supplement will describe any special financing or
refinancing arrangements with respect to any aircraft, including whether a
separate trust or other entity will issue notes secured by leased aircraft
notes.
PRINCIPAL AND INTEREST PAYMENTS
Interest received by the trustee on the equipment notes held in each trust
will be passed through to the certificateholders of such trust on the dates and
at the rate per annum set forth in the applicable prospectus supplement until
the final distribution date for such trust. The equipment notes may bear
interest at a fixed or a floating rate or may be issued at a discount. Principal
payments received by the trustee on the equipment notes held in each trust will
be passed through to the certificateholders of such trust in scheduled amounts
on the dates set forth in the applicable prospectus supplement until the final
distribution date for such trust. Payments on the equipment notes, and
distributions to certificateholders, may be subject to the terms of any
intercreditor, subordination or similar agreement or arrangement.
If any date scheduled for any payment of principal of, premium, if any, or
interest on the equipment notes is not a business day, such payment may be made
on the next succeeding business day without any additional interest, unless
otherwise provided in the applicable prospectus supplement.
REDEMPTION
The applicable prospectus supplement will describe the circumstances,
whether voluntary or involuntary, under which the related equipment notes will
or may be redeemed or purchased prior to the stated maturity thereof, whether in
whole or in part, the premium, if any, applicable to certain redemptions or
purchases and other terms applying to such redemptions or purchases.
SECURITY
The owned aircraft notes will be secured by a security interest granted by
American to the related loan trustee in the related owned aircraft. Under the
terms of each owned aircraft indenture, American will be obligated, among other
things, to pay all costs of operating and maintaining such aircraft.
The leased aircraft notes will be secured by:
- an assignment by the related owner trustee to the related loan trustee
of such owner trustee's rights (except for certain limited rights,
including those described below) under the lease or leases with
respect to the related leased aircraft, including the right to receive
payments of rent thereunder; and
- a security interest granted by such owner trustee to such loan trustee
in such aircraft, subject to the rights of American under such lease
or leases, and other equipment or rights, if any, described in the
applicable prospectus supplement.
Unless and until an indenture event of default with respect to a leased
aircraft has occurred and is continuing, the loan trustee may exercise only
limited rights of the owner trustee under the related lease. The assignment by
the owner trustee to the loan trustee of its rights under the related lease will
exclude, among other things, rights of such owner trustee and the related owner
participant relating to indemnification by American for certain matters,
insurance proceeds payable to such owner trustee in its individual capacity and
to such owner participant under liability insurance maintained by American under
such lease or by such owner trustee or such owner participant, insurance
proceeds payable to such owner trustee in its individual capacity or to such
owner participant under certain casualty insurance maintained by such owner
trustee or such owner participant, any rights of such owner participant or such
owner trustee to enforce payment of the foregoing amounts and certain
reimbursement payments made by American to such owner trustee.
American's obligations in respect of each leased aircraft will be those of
a lessee under a "net lease". Accordingly, American will be obligated, among
other things, to pay all costs of operating and maintaining such aircraft.
The prospectus supplement will describe the required insurance coverage
with respect to the aircraft.
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Unless otherwise specified in the applicable prospectus supplement, the
equipment notes will not be cross-collateralized and consequently the equipment
notes issued in respect of any one aircraft will not be secured by any of the
other aircraft (or any of the other security related thereto, including, in the
case of leased aircraft notes, the lease related to any other aircraft).
Unless otherwise specified in the applicable prospectus supplement,
American will be permitted to register an aircraft in certain jurisdictions
outside the United States, subject to certain conditions specified in the
related indenture or the related lease, as the case may be. These conditions may
include a requirement that the laws of the new jurisdiction of registration will
give effect to the lien of and the security interest created by the related
indenture or the related lease in the applicable aircraft. American also will be
permitted, subject to certain limitations, to lease any aircraft to any United
States certificated air carrier or to certain foreign air carriers. In addition,
subject to certain limitations, American will be permitted to transfer
possession of any aircraft other than by lease, including transfers of
possession by American or any lessee in connection with certain interchange and
pooling arrangements, "wet leases" and transfers in connection with maintenance
or modifications and transfers to certain governments or any instrumentalities
or agencies thereof. Unless otherwise specified in the applicable prospectus
supplement, there will be no general geographical restrictions on American's (or
any lessee's) ability to operate aircraft. The extent to which the relevant loan
trustee's lien will be recognized in an aircraft if such aircraft is located in
certain countries is uncertain. In addition, any exercise of the right to
repossess an aircraft may be difficult, expensive and time consuming,
particularly when such aircraft is located outside the United States or has been
registered in a foreign jurisdiction or leased to a foreign operator, and may be
subject to the limitations and requirements of applicable law, including the
need to obtain consents or approvals for deregistration or re-export of the
aircraft, which may be subject to delays and political risk. When a defaulting
lessee or other permitted transferee is the subject of a bankruptcy, insolvency
or similar event such as protective administration, additional limitations may
apply.
Funds, if any, held from time to time by the loan trustee with respect to
any aircraft, including funds held as the result of an event of loss to such
aircraft or termination of the lease, if any, relating thereto, will be invested
and reinvested by such loan trustee, at the direction of American (except, with
respect to a leased aircraft, in the case of a lease event of default under the
applicable lease or, with respect to an owned aircraft, in the case of an
indenture event of default under the applicable indenture), in investments
described in the related indenture. American will pay the amount of any net loss
resulting from any such investment directed by it.
In the case of Chapter 11 bankruptcy proceedings in which an air carrier is
a debtor, Section 1110 of the U.S. Bankruptcy Code ("Section 1110") provides
special rights to lessors and holders of security interests with respect to
"equipment" (as defined in Section 1110). Under Section 1110, the right of such
financing parties to take possession of such equipment in compliance with the
provisions of a lease or security agreement is not affected by any other
provision of the U.S. Bankruptcy Code or any power of the bankruptcy court. Such
right to take possession may not be exercised for 60 days following the date of
commencement of the reorganization proceedings. Thereafter, such right to take
possession may be exercised during such proceedings unless, within the 60-day
period or any longer period consented to by the relevant parties, the debtor
agrees to perform its future obligations and cures all existing and future
defaults on a timely basis. Defaults resulting solely from the financial
condition, bankruptcy, insolvency or reorganization of the debtor need not be
cured.
"Equipment" is defined in Section 1110, in part, as an aircraft, aircraft
engine, appliance or spare part (as defined in Section 40102 of Title 49 of the
United States Code) that is subject to a security interest granted by, or that
is leased to, a debtor that, at the time such transaction is entered into, holds
an air carrier operating certificate issued by the Secretary of Transportation
pursuant to Chapter 447 of Title 49 of the United States Code for aircraft
capable of carrying ten or more individuals or 6,000 pounds or more of cargo.
The prospectus supplement for each offering of pass through certificates
will discuss the availability of Section 1110 with respect to the related
aircraft and, if applicable, aircraft engines, appliances or spare parts.
ADDITIONAL NOTES
Under certain circumstances and conditions as described in the applicable
prospectus supplement, American may issue and sell, in the case of an owned
aircraft, or cause the owner trustee to issue and sell, in the case of a leased
aircraft, additional equipment notes (the "additional notes") relating to such
aircraft, including for the purpose of financing certain modifications,
alterations, additions, improvements or replacement parts to or for such
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aircraft. The terms, conditions and designations of such additional notes will
be set forth in a supplement to the related indenture.
PAYMENTS AND LIMITATION OF LIABILITY
Each leased aircraft will be leased by the related owner trustee to
American for a term expiring on a date not earlier than the latest maturity date
of the leased aircraft notes issued with respect to such leased aircraft, unless
previously terminated as permitted by the terms of the related lease. The basic
rent and certain other payments by American under each such lease will be
assigned by the owner trustee under the related indenture to the related loan
trustee to provide the funds necessary to pay principal of and interest due from
such owner trustee on the leased aircraft notes issued under such indenture. In
certain cases, the rent and other mandatory payments under a lease may be
adjusted, but each lease will provide that under no circumstances will rent and
other mandatory payments by American be less than the scheduled payments of
principal and interest on the related leased aircraft notes, subject to limited
exceptions. The balance of any basic rent payments under each lease, after
payment of amounts due on the leased aircraft notes issued under the indenture
relating to such lease, will be paid over to the related owner trustee.
American's obligation to pay rent and to cause other payments to be made under
each lease will be general obligations of American.
Except when American purchases a leased aircraft and assumes the leased
aircraft notes related thereto, the leased aircraft notes will not be
obligations of, or guaranteed by, American. Neither the owner trustee nor the
owner participant nor the loan trustee will be personally liable to any holder
of any leased aircraft notes for any amounts payable thereunder, or, except as
provided in the indenture relating thereto in the case of the owner trustee and
the loan trustee, for any liability under such indenture. Except when American
has assumed any leased aircraft notes, all amounts payable under any leased
aircraft notes (other than payments made in connection with an optional
redemption or purchase of leased aircraft notes by the related owner trustee or
the related owner participant) will be made only from the assets subject to the
lien of the indenture with respect to such aircraft and their proceeds
(including rent payable by American under the lease with respect to such leased
aircraft), or from any applicable credit support arrangement.
American's obligations under each owned aircraft indenture and under the
owned aircraft notes will be general obligations of American.
DEFEASANCE OF THE INDENTURES AND THE EQUIPMENT NOTES IN CERTAIN CIRCUMSTANCES
Unless otherwise specified in the applicable prospectus supplement, the
obligations under the applicable indenture of, with respect to any leased
aircraft notes, the related owner trustee or, with respect to any owned aircraft
notes, American will be deemed to have been discharged (except for certain
obligations, including the obligations to register the transfer or exchange of
equipment notes, to replace stolen, lost, destroyed or mutilated equipment notes
and to maintain paying agencies and hold money for payment in trust) on the date
of irrevocable deposit with the related loan trustee of money or certain
obligations of the United States or any agency or instrumentality thereof the
payment of which is backed by the full faith and credit of the United States
which, through the payment of principal and interest in respect thereof in
accordance with their terms, will provide money in an aggregate amount
sufficient to pay when due (including as a consequence of redemption in respect
of which notice is given on or prior to the date of such deposit) principal of,
premium, if any, and interest on all equipment notes issued thereunder in
accordance with the terms of such indenture. Such discharge may occur only if,
among other things, there has been a change in federal tax law as in effect on
the date of this prospectus or there has been published by the Internal Revenue
Service a ruling to the effect that holders of such equipment notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to federal income tax
on the same amounts and in the same manner and at the same times as would have
been the case if such deposit, defeasance and discharge had not occurred.
Upon such defeasance, or upon payment in full of the principal of, premium,
if any, and interest on all equipment notes issued under any indenture on the
maturity date therefor or deposit with the applicable loan trustee of money
sufficient therefor no earlier than one year prior to the date of such maturity,
the holders of such equipment notes will have no beneficial interest in or other
rights with respect to the related aircraft or other equipment subject to the
lien of such indenture and such lien will terminate.
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ASSUMPTION OF OBLIGATIONS BY AMERICAN
If specified in the applicable prospectus supplement with respect to any
leased aircraft, American may purchase such leased aircraft prior to the end of
the term of the related lease and, in connection with such purchase, may assume
on a full recourse basis all of the obligations of the owner trustee (other than
its obligations in its individual capacity) under the indenture with respect to
such aircraft, including the obligations to make payments in respect of the
related leased aircraft notes. In such event, certain relevant provisions of the
related lease, including (among others) provisions relating to maintenance,
possession and use of the related aircraft, liens, insurance and events of
default will be incorporated into such indenture, and the leased aircraft notes
issued under such indenture will continue to be outstanding and secured by such
aircraft. The terms and conditions of any such assumption will be described in
the applicable prospectus supplement.
OWNER PARTICIPANT; REVISIONS TO AGREEMENTS
If specified in the applicable prospectus supplement, at the time pass
through certificates are issued, American may still be seeking owner
participants with respect to the trusts relating to certain of the aircraft.
American or an affiliate will hold the beneficial interest under the trust
agreement relating to each such aircraft until the date upon which a prospective
owner participant commits to participate in the purchase price of such aircraft.
Any outside limit on such date will be specified in the applicable prospectus
supplement. American or its affiliate will transfer to such owner participant on
such date American's or such affiliate's beneficial interest under such trust
agreement. Such prospective owner participants may request revisions to the
participation agreement, lease, trust agreement and indenture so that the terms
of such agreements applicable to these aircraft may differ from the description
of such agreements contained in the applicable prospectus supplement. Such
prospectus supplement will describe the extent to which such terms can be varied
at the request of prospective owner participants.
CREDIT ENHANCEMENTS
RANKING; CROSS-SUBORDINATION
Some of the equipment notes related to a specific aircraft may be
subordinated and junior in right of payment to other equipment notes or other
debt related to the same or certain related aircraft. In such event, the
applicable prospectus supplement will describe the terms of such subordination,
including the priority of distributions among such classes of equipment notes,
the ability of each such class of equipment notes to exercise remedies with
respect to the relevant aircraft (and, if such aircraft are leased aircraft, the
leases) and certain other intercreditor terms and provisions.
The equipment notes issued under an indenture may be held in more than one
trust, and a trust may hold equipment notes issued under more than one related
indenture. Unless otherwise described in a prospectus supplement, however, only
equipment notes having the same priority of payment may be held in the same
trust. A trust that holds equipment notes that are junior in payment priority to
the equipment notes held in another related trust formed as part of the same
offering of pass through certificates as a practical matter will be subordinated
to such latter trust. In addition, the trustees on behalf of one or more trusts
may enter into an intercreditor or subordination agreement that establishes
priorities among series of pass through certificates or provides that
distributions on the pass through certificates will be made to the
certificateholders of a certain trust or trusts before they are made to the
certificateholders of one or more other trusts. For example, such an agreement
may provide that payments made to a trust on account of a subordinate class of
equipment notes issued under one indenture may be subordinated to the prior
payment of all amounts owing to certificateholders of a trust that holds senior
equipment notes issued under that indenture or any related indentures.
The applicable prospectus supplement will describe any such intercreditor
or subordination agreement or arrangements and the relevant cross-subordination
provisions. Such description will specify the percentage of certificateholders
under any trust that is permitted to (1) grant waivers of defaults under any
related indenture, (2) consent to the amendment or modification of any related
indenture or (3) direct the exercise of remedies under any related indenture.
Payments made on account of the pass through certificates of a particular series
also may be subordinated to the rights of the provider of any credit support
agreement described below.
CREDIT SUPPORT AGREEMENTS
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The applicable prospectus supplement may provide that a "credit support
agreement" will support, insure or guarantee one or more payments of principal,
premium, if any, or interest on the equipment notes of one or more series, or
one or more distributions in respect of the pass through certificates of one or
more series. A credit support agreement may include a letter of credit, a bank
guarantee, a revolving credit agreement, an insurance policy, surety bond or
financial guarantee, a liquidity facility or any other type of agreement or
arrangement for the provision of insurance, a guarantee or other credit
enhancement or liquidity support. In addition, if any equipment notes bear
interest at a floating rate, there may be a cap or swap agreement or other
arrangement in case the interest rate becomes higher than is covered by the
credit support agreement. The institution or institutions providing any credit
support agreement will be identified in the applicable prospectus supplement.
Unless otherwise provided in the applicable prospectus supplement, the provider
of any credit support agreement will have a senior claim on the assets securing
the affected equipment notes and on the trust property of the affected trusts.
GUARANTEE OF AMR CORPORATION
Our parent, AMR Corporation, may guarantee unconditionally our obligations
under the leases and equipment notes as described in the applicable prospectus
supplement. If AMR guarantees such obligations, we will tell you in the
applicable prospectus supplement and describe the terms of the guarantee in the
applicable prospectus supplement. Unless we tell you otherwise in the applicable
prospectus supplement, such guarantee will be enforceable without any need to
first enforce any related lease or any related equipment note against American,
and will be an unsecured obligation of AMR.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the principal federal income tax
consequences of the purchase, ownership and disposition of pass through
certificates with respect to a certificate owner that purchases pass through
certificates in the initial offering thereof at the offering price set forth in
the applicable prospectus supplement and holds such pass through certificates as
capital assets. This discussion should be read in conjunction with any
additional discussion of federal income tax consequences included in the
applicable prospectus supplement. The discussion is based on laws, regulations,
rulings and decisions in effect as of the date hereof, all of which are subject
to change, possibly with retroactive effect, or different interpretation. The
discussion does not address all of the federal income tax consequences that may
be relevant to all certificate owners in light of their particular circumstances
(including, for example, any special rules applicable to tax-exempt
organizations, broker-dealers, banks, insurance companies, foreign investors,
securities traders who elect mark-to-market accounting, persons whose functional
currency is not the U.S. dollar or persons holding pass through certificates as
part of a hedging, integrated, constructive sale or conversion transaction or
straddle). The statements of law and legal conclusion set forth herein are based
upon the opinion of Debevoise & Plimpton, counsel to American. Persons
considering an investment in the pass through certificates should consult their
own tax advisors regarding the federal, state, local and any other tax
consequences to them of the purchase, ownership and disposition of pass through
certificates in light of their own particular circumstances. The trusts are not
indemnified for any federal income taxes or, with certain exceptions, other
taxes that may be imposed upon them, and the imposition of any such taxes on a
trust could result in a reduction in the amounts available for distribution to
the certificate owners of such trust.
TAX STATUS OF THE TRUSTS
The trusts will not be classified as associations (or publicly traded
partnerships) taxable as corporations for federal income tax purposes and will
not be subject to federal income tax. Each trust will file federal income tax
returns and report to investors on the basis that it is a grantor trust. If any
trust were treated as a partnership for federal income tax purposes rather than
a grantor trust, the consequences to certificate owners would not be materially
different. The discussion below assumes that the trusts will be classified as
grantor trusts.
TAXATION OF CERTIFICATE HOLDERS GENERALLY
Each certificate owner will be treated as the owner of a pro rata undivided
interest in each equipment note and any other property held in the related trust
and will be required to report on its federal income tax return its pro rata
share of the entire income from each of the equipment notes and any other
property held in the related trust, in accordance with such certificate owner's
method of accounting. A certificate owner using the cash method of accounting
must take into account its pro rata share of income as and when received by the
trustee. A certificate
25
owner using an accrual method of accounting must take into account its pro rata
share of income as it accrues or is received by the trustee, whichever is
earlier.
A certificate owner will be entitled to deduct, consistent with its method
of accounting, its pro rata share of fees and expenses paid or incurred by the
related trust to the extent provided in Section 162 or 212 of the Internal
Revenue Code. Certain fees and expenses, including fees paid to the trustee and
any credit support provider, will be borne by parties other than the certificate
owners. It is possible that such fees and expenses will be treated as
constructively received by the related trust, in which event a certificate owner
will be required to include in income and will be entitled to deduct its pro
rata share of such fees and expenses to the extent provided in Section 162 or
212 of the Internal Revenue Code. If a certificate owner is an individual,
estate or trust, the deduction for such certificate owner's share of such fees
or expenses will generally be allowed only to the extent that all of such
certificate owner's miscellaneous itemized deductions, including such
certificate owner's share of such fees and expenses, exceed 2% of such
certificate owner's adjusted gross income. In addition, in the case of a
certificate owner who is an individual, certain otherwise allowable itemized
deductions will be subject to additional limitations on itemized deductions.
SALES OF PASS THROUGH CERTIFICATES
A certificate owner that sells a pass through certificate will recognize
capital gain or loss (in the aggregate) equal to the difference between the
amount realized on the sale (except to the extent attributable to accrued
interest, which will be taxable as interest income if not previously included in
income) and such certificate owner's adjusted tax basis in the pass through
certificate. Any such gain or loss generally will be long-term capital gain or
loss if the pass through certificate was held for more than one year (except to
the extent attributable to any property held by the related trust for one year
or less). Any long-term capital gains with respect to the pass through
certificates are taxable to corporate taxpayers at the rates applicable to
ordinary income and to individual taxpayers at a reduced rate. Any capital
losses will be deductible by corporate taxpayers only to the extent of capital
gains and by an individual taxpayer only to the extent of capital gains plus a
limited amount of other income.
BOND PREMIUM
A certificate owner generally will be considered to have acquired an
interest in an equipment note held in the related trust at a bond premium to the
extent such certificate owner's tax basis allocable to such equipment note
exceeds the remaining principal amount of the equipment note allocable to such
certificate owner's pass through certificate. In that event, such certificate
owner may, in certain circumstances, be able to amortize that bond premium
(generally on a constant yield basis) as an offset to interest income with
corresponding reductions in such certificate owner's tax basis in such equipment
note. Special rules apply to an equipment note that may be called at a
redemption premium prior to maturity. It is unclear how these rules apply to an
equipment note when there is more than one possible call date and the amount of
any redemption premium is uncertain. certificate owners should consult their own
tax advisors regarding the advisability and consequences of an election to
amortize any bond premium with respect to the equipment notes.
ORIGINAL ISSUE DISCOUNT
Except to the extent specified in the applicable prospectus supplement, the
equipment notes will not be issued with original issue discount unless certain
aggregation rules set forth in the Treasury regulations apply. Under those
rules, if one investor purchases pass through certificates issued by more than
one trust, certain of that investor's interests in the equipment notes in those
trusts must in certain circumstances be treated together as a single debt
instrument, which, for purposes of calculating and amortizing any original issue
discount, has a single issue price, maturity date, stated redemption price at
maturity and yield to maturity. If the aggregation rules apply to an investor,
such equipment notes could be treated with respect to such investor as having
been issued with original issue discount. Generally, a holder of a debt
instrument issued with original issue discount that is not de minimis must
include such original issue discount in income for federal income tax purposes
as it accrues, in advance of the receipt of the cash attributable to such
income, under a method that takes into account the compounding of interest.
certificate owners should consult their own tax advisors regarding the
aggregation rules.
TRUSTS CLASSIFIED AS PARTNERSHIPS
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If a trust is classified as a partnership (and not as a publicly traded
partnership taxable as a corporation) for federal income tax purposes, income or
loss with respect to the assets held by such trust will be calculated at the
trust level but such trust itself will not be subject to federal income tax. A
certificate owner's basis in its interest in such trust would be equal to the
purchase price therefor, plus its share of the trust's net income, minus its
share of any net losses of the trust, and minus the amount of any distributions
from the trust. In the case of an original purchaser of a pass through
certificate of such trust that is a calendar year taxpayer, income and loss
generally should be the same as it would be if the trust were classified as a
grantor trust, except that income or loss would be reported on an accrual basis
even if the certificate owner otherwise uses the cash method of accounting. A
subsequent purchaser, however, generally would be subject to tax on the same
basis as an original holder with respect to its interest in such trust, and
would not be subject to the bond premium rules described above under "--Bond
Premium" or to certain rules relating to market discount during the duration of
the trust.
BACKUP WITHHOLDING
Payments made on pass through certificates, and proceeds from the sale of
pass through certificates to or through certain brokers, will be subject to
information reporting requirements. Such payments may be subject to a "backup"
withholding tax at a rate of 28% in 2003 (or at applicable rates in subsequent
years), unless the certificate owner complies with certain reporting procedures
or is exempt from such requirements. Any such withheld amounts will be allowed
as a credit against the certificate owner's federal income tax and may entitle
such certificate owner to a refund if the required information is furnished to
the Internal Revenue Service. Certain penalties may be imposed by the Internal
Revenue Service on a certificate owner who is required to supply information but
who does not do so in the proper manner.
CERTAIN DELAWARE TAXES
The trustee is a national banking association headquartered in Delaware
with a corporate trust office in Delaware. Richards, Layton & Finger, P.A.,
special Delaware counsel to the trustee, has advised American that, in its
opinion, under currently applicable law, assuming that each trust will not be
taxable as a corporation for federal income tax purposes, but, rather, will be
classified for such purposes as a grantor trust or as a partnership, (i) the
trusts will not be subject to any tax (including, without limitation, net or
gross income, tangible or intangible property, net worth, capital, franchise, or
doing business tax), fee or other governmental charge under the laws of the
State of Delaware or any political subdivision thereof and (ii) certificate
owners that are not residents of or otherwise subject to tax in Delaware will
not be subject to any tax (including, without limitation, net or gross income,
tangible or intangible property, net worth, capital, franchise, or doing
business tax), fee or other governmental charge under the laws of the State of
Delaware or any political subdivision thereof as a result of purchasing, owning
(including receiving payments with respect to) or selling a certificate. Neither
the trusts nor the certificate owners will be indemnified for any state or local
taxes imposed on them, and the imposition of any such taxes on a trust could
result in a reduction in the amounts available for distribution to the
certificate owners of such trust. In general, should a certificate owner or a
trust be subject to any state or local tax that would not be imposed if the
trust were administered in a different jurisdiction in the United States or if
the trustee were located in a different jurisdiction in the United States, the
trustee will either relocate the administration of the trust to such other
jurisdiction or resign and, in the event of such a resignation, a new trustee in
such other jurisdiction will be appointed.
ERISA CONSIDERATIONS
Unless otherwise indicated in the applicable prospectus supplement, pass
through certificates may, subject to certain legal restrictions, be purchased
and held by an employee benefit plan (an "ERISA plan") subject to Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or an
individual retirement account or an employee benefit plan subject to section
4975 of the Internal Revenue Code. A fiduciary of an ERISA plan must determine
that the purchase and holding of a pass through certificate is consistent with
its fiduciary duties under ERISA and does not result in a non-exempt prohibited
transaction as defined in Section 406 of ERISA or Section 4975 of the Internal
Revenue Code. Employee benefit plans which are governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of
ERISA) are not subject to the fiduciary responsibility provisions of ERISA. The
pass through certificates may, subject to certain legal restrictions, be
purchased and held by such plans.
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PLAN OF DISTRIBUTION
We may sell pass through certificates from time to time in one or more
transactions. We may sell the pass through certificates of or within any series
to or through agents, underwriters or dealers or directly to one or more
purchasers.
AGENTS
We may use agents to sell pass through certificates. We will name any agent
involved in offering or selling pass through certificates, and disclose any
commissions that we will pay to the agent, in the applicable prospectus
supplement. Unless we tell you otherwise in the applicable prospectus
supplement, the agents will agree to use their reasonable best efforts to
solicit purchases for the period of their appointment. Our agents may be deemed
to be underwriters under the Securities Act of any of the pass through
certificates that they offer or sell.
UNDERWRITERS
We may sell pass through certificates to underwriters. Unless we tell you
otherwise in the applicable prospectus supplement, the underwriters may resell
those pass through certificates in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of sale. Unless the applicable prospectus supplement
states otherwise, the obligations of the underwriters to purchase any series of
pass through certificates will be subject to conditions precedent, and the
underwriters will be obligated to purchase all of the pass through certificates
if any are purchased. The underwriters may change any initial public offering
price and any discounts or concessions they give to dealers.
DIRECT SALES
We may solicit directly offers to purchase the pass through certificates,
and we may sell pass through certificates directly to purchasers without the
involvement of underwriters or agents. We will describe the terms of our direct
sale in the applicable prospectus supplement.
DEALERS
We may use a dealer to sell the pass through certificates. If we use a
dealer, we, as principal, will sell the pass through certificates to the dealer
who will then sell the pass through certificates to the public at varying prices
that the dealer will determine at the time it sells our pass through
certificates.
OTHER MEANS OF DISTRIBUTION
Pass through certificates may also be offered and sold, if we so indicate
in the applicable prospectus supplement, by one or more firms ("remarketing
firms") acting as principals for their own accounts or as our agents in
connection with a remarketing of such pass through certificates following their
purchase or redemption. Remarketing firms may be deemed to be underwriters under
the Securities Act in connection with the pass through certificates they
remarket.
DELAYED DELIVERY CONTRACTS
We may authorize our agents and underwriters to solicit offers by certain
institutions to purchase the pass through certificates at the public offering
price under delayed delivery contracts. If we use delayed delivery contracts, we
will disclose that we are using them in the applicable prospectus supplement and
will tell you when we will demand payment and delivery of the pass through
certificates under the delayed delivery contracts. These delayed delivery
contracts will be subject only to the conditions that we describe in the
prospectus supplement.
GENERAL INFORMATION
Unless the applicable prospectus supplement states otherwise, each series
of pass through certificates will be a new issue of pass through certificates
and will have no established trading market. We may elect to list a series of
pass through certificates on any exchange or market, but we are not obligated to
do so. Any underwriters to whom the pass through certificates are sold for a
public offering may make a market in those pass through certificates. However,
those underwriters will not be obligated to do so and may discontinue any market
making at any time
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without notice. We cannot give any assurance as to the liquidity of, or the
trading market for, any of the pass through certificates.
Any underwriters, agents, dealers or remarketing firms will be identified
and their compensation described in a prospectus supplement.
Unless we state otherwise in a prospectus supplement, we will not list any
of these pass through certificates on any securities exchange.
We may have agreements with any underwriters, dealers, agents and
remarketing firms to indemnify them against certain civil liabilities, including
liabilities under the Securities Act, or to contribute with respect to payments
they may be required to make.
Any underwriters, dealers, agents and remarketing firms may engage in
transactions with, or perform services for American, AMR or our affiliates in
the ordinary course of their business.
LEGAL OPINIONS
Unless we tell you otherwise in the applicable prospectus supplement, the
validity of the securities offered hereby will be passed upon for American by
Debevoise & Plimpton, 919 Third Avenue, New York, New York 10022 and for any
agents, underwriters or dealers by Shearman & Sterling LLP, 599 Lexington
Avenue, New York, New York 10022. Unless we tell you otherwise in the applicable
prospectus supplement, Debevoise & Plimpton and Shearman & Sterling LLP will
rely on the opinions of counsel for the trustee as to certain matters relating
to the authorization, execution and delivery of such pass through certificates
by such trustee and on the opinion of the General Counsel of American and of AMR
as to certain matters relating to the authorization, execution and delivery of
the basic agreement by American and of any guarantee by AMR. Shearman & Sterling
LLP from time to time represents American and AMR with respect to certain
matters.
EXPERTS
The consolidated financial statements and schedules of American and AMR
included in American's and AMR's Annual Reports on Form 10-K for the year ended
December 31, 2002, incorporated by reference in this prospectus, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports (which contain an explanatory paragraph describing conditions that raise
substantial doubt about American's and AMR's ability to continue as a going
concern as described in Note 2 to the American and AMR consolidated financial
statements) appearing therein. Such consolidated financial statements and
schedules are, and audited consolidated financial statements to be included in
subsequently filed documents will be, incorporated herein in reliance upon the
reports of Ernst & Young LLP pertaining to such consolidated financial
statements (to the extent covered by consents filed with the SEC) given on the
authority of such firm as experts in accounting and auditing.
29
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses (other than underwriting
discounts and commissions) expected to be incurred by AMR and American Airlines,
Inc. in connection with the issuance and distribution of the securities being
registered. All amounts are estimated except the registration fee.
Registration fee $ 242,700
Trustees' fees and expenses $ 10,000
Printing costs for registration statement, prospectus and related $ 15,000
documents
Accounting fees and expenses $ 20,000
Legal fees and expenses $ 200,000
Blue Sky fees and expenses $ 10,000
Miscellaneous $ 2,300
---------
Total $ 500,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the DGCL, as amended, provides in regard to indemnification
of directors and officers as follows:
Section 145.Indemnification of officers, directors, employees and agents;
insurance
(a) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that the
person's conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in
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defense of any claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the present or
former director, officer, employee or agent is proper in the circumstances
because the person has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made, with
respect to a person who is a director or officer at the time of such
determination, (1) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (2) by a
committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (3) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or (4)
by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that such person is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses (including attorneys'
fees) incurred by former directors and officers or other employees and agents
may be so paid upon such terms and conditions, if any, as the corporation deems
appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person against such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
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(k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).
Article VII of each of AMR's and American Airlines, Inc.'s by-laws provide
in regard to indemnification of directors and officers as follows:
Section 1. Nature of Indemnity. The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he is
or was or has agreed to become a director or officer of the corporation, or
is or was serving or has agreed to serve at the request of the corporation
as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or by reason of any action alleged to
have been taken or omitted in such capacity, and may indemnify any person
who was or is a party or is threatened to be made a party to such an action
by reason of the fact that he is or was or has agreed to become an employee
or agent of the corporation, or is or was serving or has agreed to serve at
the request of the corporation as an employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or on his behalf in
connection with such action, suit or proceeding and any appeal therefrom,
if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding had no reasonable cause to believe his
conduct was unlawful; except that in the case of an action or suit by or in
the right of the corporation to procure a judgment in its favor (1) such
indemnification shall be limited to expenses (including attorneys' fees)
actually and reasonably incurred by such person in the defense or
settlement of such action or suit, and (2) no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent
that the Delaware Court of Chancery or the court in which such action or
suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall
deem proper.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
Section 2. Successful Defense. To the extent that a director, officer,
employee or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
Section l hereof or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith.
Section 3. Determination That Indemnification Is Proper. (a) Any
indemnification of a director or officer of the corporation under Section l
hereof (unless ordered by a court) shall be made by the corporation unless
a determination is made that indemnification of the director or officer is
not proper in the circumstances because he has not met the applicable
standard of conduct set forth in Section l hereof. Such determination shall
be made, with respect to a director or officer, (1) by a majority vote of
the directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (2) by a committee of such directors
designated by a majority vote of such directors, even though less than a
quorum, or (3) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, or (4) by the
stockholders.
(b) Any indemnification of an employee or agent of the corporation (who
is not also a director or officer of the corporation) under Section l
hereof (unless ordered by a court) may be made by the corporation upon a
determination that indemnification of the employee or agent is proper in
the circumstances because such person has met the applicable standard of
conduct set forth in Section l hereof. Such determination, in the case of
an employee or agent, may be made (1) in accordance with the procedures
outlined in the second sentence of this
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Section 3(a), or (2) by an officer of the corporation, upon delegation of
such authority by a majority of the Board of Directors.
Section 4. Advance Payment of Expenses. Expenses (including attorneys'
fees) incurred by a director or officer in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by
the corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director
or officer to repay such amount if it shall ultimately be determined that
he is not entitled to be indemnified by the corporation as authorized in
this Article. Such expenses (including attorneys' fees) incurred by other
employees and agents may be so paid upon such terms and conditions, if any,
as the corporation deems appropriate. The board of directors may authorize
the corporation's counsel to represent a director, officer, employee or
agent in any action, suit or proceeding, whether or not the corporation is
a party to such action, suit or proceeding.
Section 5. Procedure for Indemnification of Directors or Officers. Any
indemnification of a director or officer of the corporation under Sections
l and 2, or advance of costs, charges and expenses of a director or officer
under Section 4 of this Article, shall be made promptly, and in any event
within 60 days, upon the written request of the director or officer. If the
corporation fails to respond within 60 days, then the request for
indemnification shall be deemed to be approved. The right to
indemnification or advances as granted by this Article shall be enforceable
by the director or officer in any court of competent jurisdiction if the
corporation denies such request, in whole or in part. Such person's costs
and expenses incurred in connection with successfully establishing his
right to indemnification, in whole or in part, in any such action shall
also be indemnified by the corporation. It shall be a defense to any such
action (other than an action brought to enforce a claim for the advance of
costs, charges and expenses under Section 4 of this Article where the
required undertaking, if any, has been received by the corporation) that
the claimant has not met the standard of conduct set forth in Section l of
this Article, but the burden of proving such defense shall be on the
corporation. Neither the failure of the corporation (including its board of
directors or a committee thereof, its independent legal counsel, and its
stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the
circumstances because he has met the applicable standard of conduct set
forth in Section l of this Article, nor the fact that there has been an
actual determination by the corporation (including its board of directors
or a committee thereof, its independent legal counsel, and its
stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 6. Survival; Preservation of Other Rights. The foregoing
indemnification provisions shall be deemed to be a contract between the
corporation and each director, officer, employee and agent who serves in
such capacity at any time while these provisions as well as the relevant
provisions of the Delaware Corporation Law are in effect and any repeal or
modification thereof shall not affect any right or obligation then existing
with respect to any state of facts then or previously existing or any
action, suit, or proceeding previously or thereafter brought or threatened
based in whole or in part upon any such state of facts. Such a "contract
right" may not be modified retroactively without the consent of such
director, officer, employee or agent.
The indemnification provided by this Article VII shall not be deemed
exclusive of any other rights to which those indemnified may be entitled
under any bylaw, agreement, vote of stockholders or disinterested directors
or otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of
such a person.
Section 7. Insurance. The corporation shall purchase and maintain
insurance on behalf of any person who is or was or has agreed to become a
director or officer of the corporation, or is or was serving at the request
of the corporation as director or officer of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him or on his behalf in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under the provisions of this Article, provided that such insurance is
available on acceptable terms, which determination shall be made by a vote
of a majority of the entire board of directors.
Section 8. Savings Clause. If this Article or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then
the corporation shall nevertheless indemnify each director or officer and
II-4
may indemnify each employee or agent of the corporation as to costs,
charges and expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, including an
action by or in the right of the corporation, to the full extent permitted
by any applicable portion of this Article that shall not have been
invalidated and to the full extent permitted by applicable law.
Section 102(b)(7) of the DGCL, as amended, provides in regard to the
limitation of liability of directors and officers as follows:
(b) In addition to the matters required to be set forth in the
certificate of incorporation by subsection (a) of this section, the
certificate of incorporation may also contain any or all of the following
matters:
* * * *
(7) A provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, provided that such provision shall
not eliminate or limit the liability of a director: (i) For any breach of
the director's duty of loyalty to the corporation or its stockholders; (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) under Section 174 of this
title; or (iv) for any transaction from which the director derived an
improper personal benefit. No such provision shall eliminate or limit the
liability of a director for any act or omission occurring prior to the date
when such provision becomes effective. All references in this paragraph to
a director shall also be deemed to refer (x) to a member of the governing
body of a corporation which is not authorized to issue capital stock, and
(y) to such other person or persons, if any, who, pursuant to a provision
of the certificate of incorporation in accordance with Section 141(a) of
this title, exercise or perform any of the powers or duties otherwise
conferred or imposed upon the board of directors by this title.
Article Ninth of AMR's and American Airlines, Inc.'s certificates of
incorporation provide in regard to the limitation of liability of directors and
officers as follows:
NINTH: No director of the corporation shall be liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its shareholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit.
AMR's and American Airlines, Inc.'s directors and officers are also insured
against claims arising out of the performance of their duties in such
capacities.
ITEM 16. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
1.1 Form of Underwriting Agreement relating to Debt Securities of AMR Corporation*
1.2 Form of Distribution Agreement relating to Debt Securities of AMR Corporation*
1.3 Form of Underwriting Agreement relating to Common Stock of AMR Corporation*
1.4 Form of Underwriting Agreement relating to Preferred Stock of AMR Corporation*
1.5 Form of Underwriting Agreement relating to Warrants of AMR Corporation*
1.6 Form of Underwriting Agreement relating to Stock Purchase Contracts of AMR Corporation*
1.7 Form of Underwriting Agreement relating to Stock Purchase Units of AMR Corporation*
II-5
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
1.8 Form of Underwriting Agreement relating to Debt Securities of American Airlines, Inc.*
1.9 Form of Distribution Agreement relating to Debt Securities of American Airlines, Inc.*
1.10 Form of Underwriting Agreement relating to Debt Warrants of American Airlines, Inc.*
1.11 Form of Underwriting Agreement relating to Pass Through Certificates of American Airlines,
Inc.*
3.1 Certificate of Incorporation of AMR Corporation, as amended (filed as Exhibit 4(a) to AMR Corporation's
Registration Statement on Form S-4, File No. 33-55191, with amendments filed as Exhibit 3.1 to AMR Corporation's
Quarterly Report on Form 10-Q for the quarter ended September 30, 2003, and incorporated herein by reference)
3.2 By-Laws of AMR Corporation, amended as of April 24, 2003 (filed as Exhibit 3.2 to AMR Corporation's Quarterly
Report on Form 10-Q for the quarter ended September 30, 2003, and incorporated herein by reference)
4.1 Form of Indenture relating to Debt Securities of AMR Corporation
4.2 Form of Debt Security to be issued by AMR Corporation*
4.3 Form of Guarantee of American Airlines, Inc. with respect to Debt Securities of AMR Corporation
4.4 Form of Deposit Agreement of AMR Corporation*
4.5 Form of Deposit Receipt for Depositary Shares of AMR Corporation*
4.6 Form of Guarantee of American Airlines, Inc. with respect to Depositary Shares of AMR Corporation*
4.7 Form of Warrant Agreement of AMR Corporation*
4.8 Form of Warrant to be issued by AMR Corporation*
4.9 Form of Guarantee of American Airlines, Inc. with respect to Warrants of AMR Corporation*
4.10 Form of Stock Purchase Contract to be issued by AMR Corporation*
4.11 Form of Guarantee of American Airlines, Inc. with respect to Stock Purchase Contracts of
AMR Corporation*
4.12 Specimen of Common Stock Certificate (filed as Exhibit 4(c) to AMR Corporation's Registration Statement on Form
S-3, File No. 33-38393, and incorporated herein by reference)
4.13 Form of Indenture relating to Debt Securities of American Airlines, Inc.
4.14 Form of Debt Security to be issued by American Airlines, Inc.*
4.15 Form of Guarantee of AMR Corporation with respect to Debt Securities of American Airlines, Inc.
II-6
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
4.16 Form of Warrant Agreement of American Airlines, Inc.*
4.17 Form of Debt Warrant to be issued by American Airlines, Inc.*
4.18 Form of Guarantee of AMR Corporation with respect to Debt Warrants of American Airlines, Inc.*
4.19 Pass Through Trust Agreement, dated as of March 21, 2002, relating to Pass Through Trust Certificates of American
Airlines, Inc. (filed as Exhibit 4.3 to American Airlines, Inc.'s Registration Statement on Form S-3, File No.
333-84292, and incorporated herein by reference)
4.20 Form of Pass Through Trust Certificate to be issued by American Airlines, Inc.*
4.21 Instrument of Resignation, Appointment and Acceptance, dated as of June 30, 2003, between American Airlines, Inc.,
U.S. Bank National Association (as successor-in-interest to State Street) and U.S. Bank Trust National Association
5.1 Opinion of Gary F. Kennedy, Senior Vice President and General Counsel for AMR Corporation and American Airlines,
Inc.
5.2 Opinion of Debevoise & Plimpton, counsel for American Airlines, Inc. and AMR Corporation, relating to Pass Through
Certificates
5.3 Opinion of Shipman & Goodwin LLP, counsel for the Pass Through Trustee, relating to Pass Through Certificates
5.4 Opinion of Richards, Layton & Finger, P.A., counsel for the Pass Through Trustee, relating to Pass Through
Certificates
8.1 Tax Opinion of Debevoise & Plimpton, counsel for American Airlines, Inc. and AMR Corporation, relating to Pass
Through Certificates (included in Exhibit 5.2)
12.1 Statement regarding computation of ratio of earnings to fixed charges for each year in the five-year period ended
December 31, 2002 (filed as Exhibit 12 to AMR Corporation's Annual Report on Form 10-K for the year ended December
31, 2002, and incorporated herein by reference)
12.2 Statement regarding computation of ratio of earnings to fixed charges for the nine months ended September 30, 2003
and 2002 (filed as Exhibit 12 to AMR Corporation's Quarterly Report on Form 10-Q for the quarter ended September
30, 2003, and incorporated herein by reference)
12.3 Statement regarding computation of ratio of earnings to fixed charges for each year in the five-year period ended
December 31, 2002 (filed as Exhibit 12 to American Airlines, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 2002, and incorporated herein by reference)
12.4 Statement regarding computation of ratio of earnings to fixed charges for the nine months ended September 30, 2003
and 2002 (filed as Exhibit 12 to American Airlines, Inc.'s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2003, and incorporated herein by reference)
23.1 Consent of Ernst & Young LLP
II-7
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
23.2 Consent of Gary F. Kennedy, Senior Vice President and General Counsel for AMR Corporation and American Airlines,
Inc. (included in Exhibit 5.1)
23.3 Consent of Debevoise & Plimpton, counsel for American Airlines, Inc. and AMR Corporation (included in Exhibits 5.2
and 8.1)
23.4 Consent of Shipman & Goodwin LLP, counsel for the Pass Through Trustee (included in Exhibit 5.3)
23.5 Consent of Richards, Layton & Finger, P.A., counsel for the Pass Through Trustee (included in Exhibit 5.4)
24.1 Powers of Attorney (AMR Corporation)
24.2 Powers of Attorney (American Airlines, Inc.)
25.1 Statement of Eligibility on Form T-1 of Wilmington Trust Company, as Trustee under the Indenture for Debt
Securities of AMR Corporation
25.2 Statement of Eligibility on Form T-1 of Wilmington Trust Company, as Trustee under the Indenture for Debt
Securities of American Airlines, Inc.
25.3 Statement of Eligibility on Form T-1 of U.S. Bank Trust National Association, as Pass Through Trustee under the
Pass Through Trust Agreement
26.1 Invitation for Competitive Bids*
------------
* To be filed by amendment or as an exhibit to a report on Form 10-K, 10-Q or
8-K pursuant to Item 601 of Regulation S-K.
ITEM 17. UNDERTAKINGS.
(a) Rule 415 Offering.
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, a post-effective amendment to this
registration statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
II-8
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the SEC by the registrants pursuant to section 13 or
section 15(d) of the Exchange Act that are incorporated by reference in
this registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference.
The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of the
registrants' annual reports pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in this registration statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Competitive Bids.
The undersigned registrants hereby undertake (1) to use their best efforts
to distribute prior to the opening of bids, to prospective bidders,
underwriters, and dealers, a reasonable number of copies of a prospectus which
at that time meets the requirements of section 10(a) of the Securities Act, and
relating to the securities offered at competitive bidding, as contained in this
registration statement, together with any supplements thereto, and (2) to file
an amendment to this registration statement reflecting the results of bidding,
the terms of the reoffering and related matters to the extent required by the
applicable form, not later than the first use, authorized by the issuer after
the opening of bids, of a prospectus relating to the securities offered at
competitive bidding, unless no further public offering of such securities by the
issuer and no reoffering of such securities by the purchasers is proposed to be
made.
(d) Acceleration of Effective Date.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrants of expenses incurred or
paid by a director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by them is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(e) Registration Statement Permitted by Rule 430A under the Securities Act.
The undersigned registrants hereby undertake that:
(1) for purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrants pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.
(2) for the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
II-9
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, AMR
Corporation certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fort Worth, State of Texas, on this 25th day of
November, 2003.
AMR CORPORATION
By /s/ Gary F. Kennedy
-----------------------------------------
GARY F. KENNEDY
Senior Vice President and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Gerard J. Arpey President, Chief Executive Officer and November 25, 2003
------------------------------------- Director
Gerard J. Arpey (Principal Executive Officer)
/s/ Jeffrey C. Campbell Senior Vice President-Finance and Chief November 25, 2003
------------------------------------- Financial Officer
Jeffrey C. Campbell (Principal Financial and Accounting Officer)
*
-------------------------------------
Edward A. Brennan Director
*
-------------------------------------
John W. Bachmann Director
*
-------------------------------------
David L. Boren Director
*
-------------------------------------
Armando M. Codina Director
*
-------------------------------------
Earl G. Graves Director
*
-------------------------------------
Ann McLaughlin Korologos Director
*
-------------------------------------
Michael A. Miles Director
*
-------------------------------------
Philip J. Purcell Director
II-11
*
-------------------------------------
Joe M. Rodgers Director
*
-------------------------------------
Judith Rodin Director
*
-------------------------------------
Roger T. Staubach Director
*By: /s/ Gary F. Kennedy
-------------------------------------
Gary F. Kennedy Attorney-in-Fact November 25, 2003
II-12
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, American
Airlines, Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fort Worth, State of Texas, on this 25th day of
November, 2003.
AMERICAN AIRLINES, INC.
By /s/ Gary F. Kennedy
----------------------------------------
GARY F. KENNEDY
Senior Vice President and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Gerard J. Arpey President, Chief Executive Officer and November 25, 2003
------------------------------------ Director
Gerard J. Arpey (Principal Executive Officer)
/s/ Jeffrey C. Campbell Senior Vice President-Finance and Chief November 25, 2003
------------------------------------ Financial Officer
Jeffrey C. Campbell (Principal Financial and Accounting Officer)
*
------------------------------------
Edward A. Brennan Director
*
------------------------------------
John W. Bachmann Director
*
------------------------------------
David L. Boren Director
*
------------------------------------
Armando M. Codina Director
*
------------------------------------
Earl G. Graves Director
*
------------------------------------
Ann McLaughlin Korologos Director
*
------------------------------------
Michael A. Miles Director
*
------------------------------------
Philip J. Purcell Director
II-13
*
------------------------------------
Joe M. Rodgers Director
*
------------------------------------
Judith Rodin Director
*
------------------------------------
Roger T. Staubach Director
By: /s/ Gary F. Kennedy
---------------------------------
Gary F. Kennedy Attorney-in-Fact November 25, 2003
II-14
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
1.1 Form of Underwriting Agreement relating to Debt Securities of
AMR Corporation*
1.2 Form of Distribution Agreement relating to Debt Securities of
AMR Corporation*
1.3 Form of Underwriting Agreement relating to Common Stock of AMR
Corporation*
1.4 Form of Underwriting Agreement relating to Preferred Stock of
AMR Corporation*
1.5 Form of Underwriting Agreement relating to Warrants of AMR
Corporation*
1.6 Form of Underwriting Agreement relating to Stock Purchase
Contracts of AMR Corporation*
1.7 Form of Underwriting Agreement relating to Stock Purchase
Units of AMR Corporation*
1.8 Form of Underwriting Agreement relating to Debt Securities of
American Airlines, Inc.*
1.9 Form of Distribution Agreement relating to Debt Securities of
American Airlines, Inc.*
1.10 Form of Underwriting Agreement relating to Debt Warrants of
American Airlines, Inc.*
1.11 Form of Underwriting Agreement relating to Pass Through
Certificates of American Airlines, Inc.*
3.1 Certificate of Incorporation of AMR Corporation, as amended
(filed as Exhibit 4(a) to AMR Corporation's Registration
Statement on Form S-4, File No. 33-55191, with amendments
filed as Exhibit 3.1 to AMR Corporation's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2003, and
incorporated herein by reference)
3.2 By-Laws of AMR Corporation, amended as of April 24, 2003
(filed as Exhibit 3.2 to AMR Corporation's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2003, and
incorporated herein by reference)
4.1 Form of Indenture relating to Debt Securities of AMR
Corporation
4.2 Form of Debt Security to be issued by AMR Corporation*
4.3 Form of Guarantee of American Airlines, Inc. with respect to
Debt Securities of AMR Corporation
4.4 Form of Deposit Agreement of AMR Corporation*
4.5 Form of Deposit Receipt for Depositary Shares of AMR
Corporation*
4.6 Form of Guarantee of American Airlines, Inc. with respect to
Depositary Shares of AMR Corporation*
4.7 Form of Warrant Agreement of AMR Corporation*
4.8 Form of Warrant to be issued by AMR Corporation*
4.9 Form of Guarantee of American Airlines, Inc. with respect to
Warrants of AMR Corporation*
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
4.10 Form of Stock Purchase Contract to be issued by AMR
Corporation*
4.11 Form of Guarantee of American Airlines, Inc. with respect to
Stock Purchase Contracts of AMR Corporation*
4.12 Specimen of Common Stock Certificate (filed as Exhibit 4(c) to
AMR Corporation's Registration Statement on Form S-3, File No.
33-38393, and incorporated herein by reference)
4.13 Form of Indenture relating to Debt Securities of American
Airlines, Inc.
4.14 Form of Debt Security to be issued by American Airlines, Inc.*
4.15 Form of Guarantee of AMR Corporation with respect to Debt
Securities of American Airlines, Inc.
4.16 Form of Warrant Agreement of American Airlines, Inc.*
4.17 Form of Debt Warrant to be issued by American Airlines, Inc.*
4.18 Form of Guarantee of AMR Corporation with respect to Debt
Warrants of American Airlines, Inc.*
4.19 Pass Through Trust Agreement, dated as of March 21, 2002,
relating to Pass Through Trust Certificates of American
Airlines, Inc. (filed as Exhibit 4.3 to American Airlines,
Inc.'s Registration Statement on Form S-3, File No. 333-84292,
and incorporated herein by reference)
4.20 Form of Pass Through Trust Certificate to be issued by
American Airlines, Inc.*
4.21 Instrument of Resignation, Appointment and Acceptance, dated
as of June 30, 2003, between American Airlines, Inc., U.S.
Bank National Association (as successor-in-interest to State
Street) and U.S. Bank Trust National Association
5.1 Opinion of Gary F. Kennedy, Senior Vice President and General
Counsel for AMR Corporation and American Airlines, Inc.
5.2 Opinion of Debevoise & Plimpton, counsel for American
Airlines, Inc. and AMR Corporation, relating to Pass Through
Certificates
5.3 Opinion of Shipman & Goodwin LLP, counsel for the Pass Through
Trustee, relating to Pass Through Certificates
5.4 Opinion of Richards, Layton & Finger, P.A., counsel for the
Pass Through Trustee, relating to Pass Through Certificates
8.1 Tax Opinion of Debevoise & Plimpton, counsel for American
Airlines, Inc. and AMR Corporation, relating to Pass Through
Certificates (included in Exhibit 5.2)
12.1 Statement regarding computation of ratio of earnings to fixed
charges for each year in the five-year period ended December
31, 2002 (filed as Exhibit 12 to AMR Corporation's Annual
Report on Form 10-K for the year ended December 31, 2002, and
incorporated herein by reference)
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
12.2 Statement regarding computation of ratio of earnings to fixed
charges for the nine months ended September 30, 2003 and 2002
(filed as Exhibit 12 to AMR Corporation's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2003, and
incorporated herein by reference)
12.3 Statement regarding computation of ratio of earnings to fixed
charges for each year in the five-year period ended December
31, 2002 (filed as Exhibit 12 to American Airlines, Inc.'s
Annual Report on Form 10-K for the year ended December 31,
2002, and incorporated herein by reference)
12.4 Statement regarding computation of ratio of earnings to fixed
charges for the nine months ended September 30, 2003 and 2002
(filed as Exhibit 12 to American Airlines, Inc.'s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2003,
and incorporated herein by reference)
23.1 Consent of Ernst & Young LLP
23.2 Consent of Gary F. Kennedy, Senior Vice President and General
Counsel for AMR Corporation and American Airlines, Inc.
(included in Exhibit 5.1)
23.3 Consent of Debevoise & Plimpton, counsel for American
Airlines, Inc. and AMR Corporation (included in Exhibits 5.2
and 8.1)
23.4 Consent of Shipman & Goodwin LLP, counsel for the Pass Through
Trustee (included in Exhibit 5.3)
23.5 Consent of Richards, Layton & Finger, P.A., counsel for the
Pass Through Trustee (included in Exhibit 5.4)
24.1 Powers of Attorney (AMR Corporation)
24.2 Powers of Attorney (American Airlines, Inc.)
25.1 Statement of Eligibility on Form T-1 of Wilmington Trust
Company, as Trustee under the Indenture for Debt Securities of
AMR Corporation
25.2 Statement of Eligibility on Form T-1 of Wilmington Trust
Company, as Trustee under the Indenture for Debt Securities of
American Airlines, Inc.
25.3 Statement of Eligibility on Form T-1 of U.S. Bank Trust
National Association, as Pass Through Trustee under the Pass
Through Trust Agreement
26.1 Invitation for Competitive Bids*
------------------
* To be filed by amendment or as an exhibit to a report on Form 10-K,
10-Q or 8-K pursuant to Item 601 of Regulation S-K.