Achieving a competitive pilot cost per block hour is critical. At American, significant drivers of pilot cost per block hour are wage rates, pensions, vacation, pay guarantees, sick time, social security benefits, profit sharing, health benefits and training.

Block hours represent the actual amount of time a pilot spends operating an aircraft - from the time the plane pushes back from the departure gate to the time it's parked at the arrival gate. How much an airline pays for these block hours is a key measurement of pilot cost competitiveness.

To compare how American's total pilot costs per block hour stack up against the competition, the company regularly reviews publicly available data from the U.S. Department of Transportation's Form 41 reports. This database is a compilation of financial and operating statistics that all major U.S. air carriers are required to submit on a quarterly basis. Based on these numbers, American has a pilot cost disadvantage against all of the other network passenger carriers and all of the low-cost carriers, many of which the company competes with on a head-to-head basis, bar one.

Source: US DOT Form 41; total pilot cost includes pilot/co-pilot salaries, personnel expenses, pension/benefits, and payroll taxes; US Airways and America West were reported separately until 4Q07- they are combined in this analysis for full year 2007; block hours augmented by crew compliment as estimated using reported entity mix.