Under the current Pilot B Plan, contributions are deposited into a common fund from which pilot retirement monies are drawn. But with fluctuations in the economy and the B Plan's available "lock in" feature, pilot retirement activity has the potential to financially affect each remaining participant in the B Plan.

The high number of pilot retirements as of September 30, 2008 has negatively affected all B Plan participants by over $44 million. On average, each remaining pilot in the B Plan lost approximately $4,015 in the value of his or her B Plan units. This analysis is based on comparing the Actual Lump Sum Paid to the Market-Value Based Lump Sums. Between January and September, 444 pilots cashed out of the Plan, leaving 11,056 participants in the Plan.

This is one of the reasons the Company is proposing changes to the B Plan that would empower pilots to control their own investments in individually-operated $uper $aver
401(k) accounts and modernize the benefit currently provided under the B Plan in ways that would benefit both our pilots and the Company. There would be no diminishment in the Company's contribution - the money simply would go directly into the individual pilot accounts in the $uper $aver Plan instead of a common fund that is susceptible to the actions of other pilots. American believes this change would be in the best interests of all pilots.

The Company advised the APA negotiating committee that it is prepared to address this issue with a side letter of agreement that could be implemented fairly quickly, rather than waiting until a new collective bargaining agreement is ratified. Agreeing to this proposal, and consequently eliminating the current "lock in" feature, would protect pilots from losing additional B Plan value if there is another downturn in the economy that triggers early retirements.

Pilot B Plan Summary

* Calculations are estimates based on the independent review commissioned to analyze the financial impact of recent retirements.