1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of earliest event
reported: January 22, 2003
AMR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-8400 75-1825172
(State of Incorporation) ( Commission File Number) (IRS Employer
Identification No.)
4333 Amon Carter Blvd. Fort Worth, Texas 76155
(Address of principal executive offices) (Zip Code)
(817) 963-1234
(Registrant's telephone number)
2
Item 5. Other Events
AMR Corporation (the Company) is filing herewith a press release
issued on January 22, 2003 by the Company as Exhibit 99.1 which is
included herein. This press release was issued to report the
Company's fourth quarter and full year 2002 earnings.
Item 7. Financial Statements and Exhibits
The following exhibits are included herein:
99.1 Press Release
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
AMR CORPORATION
/s/ Charles D. MarLett
Charles D. MarLett
Corporate Secretary
Dated: January 22, 2003
4
EXHIBIT INDEX
Exhibit Description
99.1 Press Release
5
Exhibit 99.1
Contact: Corporate Communications
Fort Worth, Texas
817-967-1577
corp.comm@aa.com
FOR RELEASE: Wednesday, Jan. 22, 2003
Editor's Note: A live Webcast reporting fourth-quarter results will be
broadcast on the Internet on Jan. 22 at 2 p.m. EST. (Windows Media player
required for viewing.)
AMR REPORTS FOURTH QUARTER LOSS OF $529 MILLION
FORT WORTH, Texas - Consistent with expectations, AMR
Corporation, the parent company of American Airlines, Inc., today
reported a fourth quarter net loss of $529 million, or $3.39 per
share. This compares with last year's fourth quarter net loss of
$734 million before special items, and $798 million -- $5.17 per
share -- after special items.
For full year 2002, AMR reported a net loss of $2.0 billion
before special items, and $3.5 billion -- $22.57 per share -- after
special items. For 2001, the Company reported a net loss of $1.4
billion before special items, and $1.8 billion -- or $11.43 per
share -- after special items.
"Clearly, results such as the ones we reported today are
unsustainable," said Don Carty, AMR's chairman and chief executive
officer. "While there are many factors that impacted our results
during 2002, including a sluggish economy, high fuel prices,
lingering concerns over terrorism and the possibility of a war in
the Middle East, the core issue for our Company remains a cost
structure that is out of step with the revenue environment facing
domestic
- more -
6
airlines. As we've been discussing with our employees, we believe
that a permanent shift has occurred in the airline revenue
environment which will require us to reduce our annual costs by at
least four billion dollars."
Carty continued, "The people of American have made tremendous
strides to reduce our operating costs by de-peaking our Chicago and
Dallas/Ft. Worth hubs, simplifying our fleet, automating customer
ticketing and check-in functions, as well as a host of other
programs designed to reduce our long-term structural costs. These
incredibly significant efforts have resulted in a permanent annual
savings of two billion dollars. Nonetheless, we still have a very
big challenge in front of us to achieve our four billion cost-
reduction target."
While American continues to modify its operations to be more
competitive with low-fare carriers, Carty acknowledged that the
future of the Company cannot be assured until ways are found to
lower significantly its labor and other costs.
Carty noted that American started talks with all of its labor
unions in October and that those discussions continue with both the
unions and their respective financial advisors. Carty stressed
that, to put the Company on a sustainable footing and for its
continued survival, American must move quickly to reduce its labor
costs significantly in conjunction with its broader cost-reduction
program.
Citing the tremendous challenges that the people of American
have overcome during its 75-year history, Carty remains optimistic
that solutions can be found to the problems confronting American.
However, he acknowledges that, "it remains a treacherous time for
our Company."
As the Company faces its challenges, Carty said, it draws
strength from its operational performance and the quality of its
customer service. He noted that American's on-time dependability
and the percentage of flights completed each day are at or near the
top of the industry. At the same time, customer
- more -
7
satisfaction ratings are among the best in years as employees on
the ground and in the air continue to focus on the needs of
passengers and shippers. "Our people remain our greatest asset,"
Carty said.
Lastly, the Company will record a significant minimum pension
liability at year end, driving an approximate $1.1 billion charge
to equity. This minimum pension liability will reflect the amount
that the Company's pension plans' accumulated benefit obligation at
Dec. 31, 2002 exceeded the plans' assets at that date.
Looking forward, the Company said it had specific loan
covenants related to more than $800 million of its debt that it
would seek to renegotiate in order to remain in compliance with the
terms of the borrowing beyond June 30, 2003. American cannot be
certain, but it believes it will be successful in obtaining a
modification or waiver of these covenants on acceptable terms.
AMR will host a conference call with the financial community
from 2 p.m. to 3 p.m. EST today. During this call, AMR will review
details of its fourth quarter and full-year 2002 results, revenue
and cost performance, balance sheet and liquidity positions,
capital market financings and related contingencies, tax status,
labor update (including the status of labor discussion), impacts
from industry restructurings and provide an outlook for the first
quarter and full-year 2003.
A live webcast of this call will be available on the AMR Web
site (www.amrcorp.com) under the Investor information page. A
replay of the webcast will also be available for several days
following the call.
- more -
8
Note: Reconciliation of Losses Before and After Special Items
Impact of Special Items
(in millions, after tax) Fourth Quarter
2002 2001
Amount Amount
(net of tax) (net of tax)
Net loss before special items ($529) ($734)
Special charges:
Aircraft charges --- (35)
Facility exit costs --- (34)
Employee charges --- (10)
Other --- (14)
Total special charges --- (93)
Special credit: U.S. Govn't grant --- 29
Net loss after special items ($529) ($798)
Impact of Special Items
(in millions, after tax) Full Year
2002 2001
Amount Amount
(net of tax) (net of tax)
Net loss before special items ($2,018) ($1,407)
Special charges:
Cum. effect of accting change (988) ---
Aircraft charges (416) (777)
Foreign tax credit (57) ---
Employee charges (36) (45)
Facility exit costs (2) (72)
Other --- 1
Total special charges (1,499) (893)
Special credit: U.S. Govn't grant 6 538
Net loss after special items ($3,511) ($1,762)
- more -
9
Editor's note: AMR's Chief Financial Officer, Jeffrey C. Campbell,
will be available to answer questions during a telephone news
conference on Wednesday, Jan. 22, from 3 p.m. to 3:45 p.m. EST.
Reporters interested in joining the conference should call 817-967-
1577 for details.
Statements in this report contain various forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, which represent the Company's expectations or
beliefs concerning future events. When used in this document and
in documents incorporated herein by reference, the words "expects,"
"plans," "anticipates," "believes," and similar expressions are
intended to identify forward-looking statements. 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 report are based upon information available to
the Company on the date of this report. The Company undertakes 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. Additional information concerning these and
other factors is contained in the Company's Securities and Exchange
Commission filings, including but not limited to the Form 10-K for
the year ended Dec. 31, 2001.
Detailed financial information follows:
###
Current AMR Corp. news releases can be accessed via the
Internet:
The address is http://amrcorp.com
10
AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Three Months Ended
December 31, Percent
2002 2001 Change
Revenues
Passenger - American Airlines $3,455 $ 3,169 9.0
- AMR Eagle 341 277 23.1
Cargo 146 138 5.8
Other revenues 248 220 12.7
Total operating revenues 4,190 3,804 10.1
Expenses
Wages, salaries and benefits 2,065 2,027 1.9
Aircraft fuel 682 563 21.1
Depreciation and amortization 347 371 (6.5)
Other rentals and landing fees 290 297 (2.4)
Maintenance, materials and
repairs 268 255 5.1
Aircraft rentals 190 225 (15.6)
Food service 159 167 (4.8)
Commissions to agents 109 144 (24.3)
Other operating expenses 759 801 (5.2)
Special charges - 149 (100.0)
U.S. Government grant - (47) (100.0)
Total operating expenses 4,869 4,952 (1.7)
Operating Loss (679) (1,148) (40.9)
Other Income (Expense)
Interest income 17 30 (43.3)
Interest expense (184) (165) 11.5
Interest capitalized 19 28 (32.1)
Miscellaneous - net (1) (15) (93.3)
(149) (122) 22.1
Loss Before Income Taxes (828) (1,270) (34.8)
Income tax benefit (299) (472) (36.7)
Net Loss $ (529) $ (798) (33.7)
Loss Per Share
Basic and Diluted $ (3.39) $ (5.17)
Number of Shares Used in Computation
Basic and Diluted 156 154
Note: Certain amounts have been reclassified to conform with 2002
presentation
11
AMR CORPORATION
OPERATING STATISTICS
(Unaudited)
Three Months Ended
December 31, Percent
2002 2001 Change
American Airlines
Revenue passenger miles (millions) 29,471 25,423 15.9
Available seat miles (millions) 42,232 39,757 6.2
Cargo ton miles (millions) 528 445 18.7
Passenger load factor 69.8% 64.0% 5.8 pts.
Breakeven load factor (*) 87.7% 89.3% (1.6)pts.
Passenger revenue yield per
passenger mile (cents) 11.72 12.47 (6.0)
Passenger revenue per available
seat mile (cents) 8.18 7.97 2.6
Cargo revenue yield per ton
mile (cents) 27.49 30.80 (10.7)
Operating expenses per available
seat mile (cents) (*) 10.73 11.33 (5.3)
Fuel consumption (gallons,in
millions) 771 735 4.9
Fuel price per gallon (cents) 82.7 72.1 14.7
Fuel price per gallon, excluding
fuel taxes (cents) 77.1 67.2 14.7
Operating aircraft at period-end 819 881 (7.0)
AMR Eagle
Revenue passenger miles (millions) 1,086 873 24.4
Available seat miles (millions) 1,767 1,539 14.8
Passenger load factor 61.4% 56.7% 4.7 pts.
Operating aircraft at period-end 286 276 3.6
AMR Corporation
Average Equivalent Number of Employees
American Airlines 93,500 97,900
Other 12,000 11,400
Total 105,500 109,300
(*) Excludes the impact of special charges and U.S. Government grant
12
AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Twelve Months Ended
December 31, Percent
2002 2001 Change
Revenues
Passenger - American Airlines $14,440 $ 15,780 (8.5)
- AMR Eagle 1,332 1,378 (3.3)
Cargo 561 662 (15.3)
Other revenues 966 1,143 (15.5)
Total operating revenues 17,299 18,963 (8.8)
Expenses
Wages, salaries and benefits 8,392 8,032 4.5
Aircraft fuel 2,562 2,888 (11.3)
Depreciation and amortization 1,366 1,404 (2.7)
Other rentals and landing fees 1,198 1,197 0.1
Maintenance, materials and
repairs 1,108 1,165 (4.9)
Aircraft rentals 840 829 1.3
Food service 698 778 (10.3)
Commissions to agents 532 835 (36.3)
Other operating expenses 3,225 3,695 (12.7)
Special charges 718 1,466 (51.0)
U.S. Government grant (10) (856) (98.8)
Total operating expenses 20,629 21,433 (3.8)
Operating Loss (3,330) (2,470) 34.8
Other Income (Expense)
Interest income 71 110 (35.5)
Interest expense (685) (538) 27.3
Interest capitalized 86 144 (40.3)
Miscellaneous - net (2) (2) -
(530) (286) 85.3
Loss Before Income Taxes and
Cumulative Effect of Accounting
Change (3,860) (2,756) 40.1
Income tax benefit (1,337) (994) 34.5
Loss Before Cumulative Effect of
Accounting Change (2,523) (1,762) 43.2
Cumulative Effect of Accounting
Change, Net of Tax Benefit (988) - -
Net Loss $(3,511) $ (1,762) 99.3
Continued on next page
Note: Certain amounts have been reclassified to conform with 2002 presentation
13
AMR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(in millions, except per share amounts)
(Unaudited)
Twelve Months Ended
December 31,
2002 2001
Basic and Diluted Loss Per Share
Before Cumulative Effect of
Accounting Change $(16.22) $(11.43)
Cumulative Effect of Accounting Change (6.35) -
Net Loss $(22.57) $(11.43)
Number of Shares Used in Computation
Basic and Diluted 156 154
Note 1: 2002 results include TWA whereas the 2001 amounts include
TWA for the period
April 10, 2001 through December 31, 2001
14
AMR CORPORATION
OPERATING STATISTICS
(Unaudited)
Twelve Months Ended
December 31, Percent
2002 2001 Change
American Airlines (*)
Revenue passenger miles (millions) 121,747 120,606 0.9
Available seat miles (millions) 172,200 174,688 (1.4)
Cargo ton miles (millions) 2,007 2,130 (5.8)
Passenger load factor 70.7% 69.0% 1.7 pts.
Breakeven load factor (**) 87.2% 79.2% 8.0 pts.
Passenger revenue yield per
passenger mile (cents) 11.86 13.08 (9.3)
Passenger revenue per available seat
mile (cents) 8.39 9.04 (7.2)
Cargo revenue yield per ton mile (cents) 27.73 30.80 (10.0)
Operating expenses per available
seat mile (cents) (**) 10.78 11.07 (2.6)
Fuel consumption (gallons, in millions) 3,163 3,294 (4.0)
Fuel price per gallon (cents) 76.0 81.3 (6.5)
Fuel price per gallon, excluding
fuel taxes (cents) 70.4 76.0 (7.4)
Operating aircraft at period-end 819 881 (7.0)
AMR Eagle
Revenue passenger miles (millions) 4,134 3,725 11.0
Available seat miles (millions) 6,592 6,471 1.9
Passenger load factor 62.7% 57.6% 5.1 pts.
Operating aircraft at period-end 286 276 3.6
(*) 2002 results include TWA whereas the 2001 amounts include TWA
for the period April 10, 2001 through December 31, 2001
(**) Excludes the impact of special charges and U.S. Government grant