One of the company’s goals in negotiations is to ensure that any contract provision makes sound economic sense. To measure this, we rely on our financial performance data and economic projections that include the company’s structural costs, expenses and revenues, as well as industry forecasts.
As part of this effort, the company shared this financial presentation with the National Mediation Board on April 21, 2009. The information in the presentation was current as of April 21, but has not been updated since. In addition, we regularly share this type of financial information with union leaders as part of our Joint Leadership Team activities.
Among the highlights:
• The economic recession continues to pose severe burdens on American Airlines and the U.S. airline industry overall, in most cases
outweighing the short-term benefits that came from the decline in oil prices since summer of 2008.
• Air traffic has fallen precipitously as U.S. job losses mount. Air Transport Association carriers report that passenger revenues have declined
even more than capacity. AA passenger revenue dropped by 16 percent year over year.
• AA posted a net loss of $375 million in the first quarter of 2009, with total revenues down 15 percent over the same quarter last year.
• Non-fuel costs rose over the last 12 months while fuel prices fell.
• At $2.9 billion on March 31, American’s cash on hand has fallen significantly, down from $5.4 billion two years earlier.
• Required capital costs for the remainder of 2009 exceed $2.5 billion, including necessary capital expenditures, principal payments on long-
term debt and capital leases.
• Among the cost-savings implemented since 2008, the company has put in place a pay and hiring freeze for management, support staff and
agents and reduced spending on information technology, consulting and capital investments.
More information can be found in the company’s filings with the Securities and Exchange Commission, which are available on the Investor Relations page of www.aa.com.
