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: August 13, 2002
American Airlines, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-2691 13-1502798
(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
American Airlines, Inc. (American or the Company, a wholly owned
subsidiary of AMR Corporation) is filing herewith a press release
issued on August 13, 2002 by American as Exhibit 99.1 which is
included herein. This press release was issued to announce the
next series of short- and long-term initiatives to further
position American for long-term competitiveness and
profitability. These initiatives include a reduction in capacity
by nine percent, retirement of 74 Fokker 100 aircraft, de-peaks
of its Dallas-Fort Worth hub and other fleet changes.
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.
American Airlines, Inc.
/s/ Charles D. MarLett
Charles D. MarLett
Corporate Secretary
Dated: August 13, 2002
4
EXHIBIT INDEX
Exhibit Description
99.1 Press Release
5
Exhibit 99.1
Contact: Corporate Communications
Fort Worth, Texas
817-967-1577
FOR RELEASE: Tuesday, Aug. 13, 2002
AMERICAN UNVEILS NEXT SERIES OF FUNDAMENTAL BUSINESS CHANGES
- Reduces Capacity by 9 Percent, Retires 74 Fokker 100s,
- De-Peaks DFW Hub and Makes Other Fleet Changes
FORT WORTH, Texas -- American Airlines today unveiled the
latest in a series of short- and long-term initiatives intended to
further position American for long-term competitiveness and
profitability.
"We grasped the need for fundamental change in the airline
industry some time ago, and have undertaken both long-term
structural change and measures responsive to current industry
conditions. This latest round of initiatives is yet another step
toward more solidly positioning American for success in the long
term," said Chairman and CEO Donald J. Carty.
"We believe our future lies in continuing to operate as the
world's leading network carrier - but we must get our costs down in
order to compete and must focus on the products our customers want
and are willing to pay for. Our decisions going forward will be
framed around those objectives and geared toward positioning
American to succeed and be profitable," Carty said.
In the past 18 months, American has implemented a number of
changes:
- de-peaking its Chicago hub,
- simplifying its fleet,
- launching several automation initiatives that improve customer
- service and enhance productivity,
- changing distribution methods,
- modifying its in-flight product, and
- initiating a broad range of cost savings programs.
- more -
6
American Unveils Next Series of Fundamental Business Changes
Aug. 13, 2002
Page 2
The initiatives announced today will increase scheduling
efficiencies at American's largest hub at Dallas/Fort Worth,
further simplify its fleet and sharply adjust capacity for the fall
and winter.
"These are a combination of fundamental structural changes and
tactical moves to re-position and re-size the airline in light of a
continued sluggish economy and changes in consumer flying
behaviors," Carty said. "We view change as an ongoing process at
American as we continue to evaluate every aspect of our business."
The initiatives being announced today include:
- American will expand its successful April 2002 Chicago hub
"de-peaking" to its largest hub at Dallas/Fort Worth beginning Nov.
1 to allow the airline to utilize people, gates and aircraft more
productively - and to give customers better flight options. Since
aircraft will be flying into and out of the hub on a more
continuous schedule, with flights spread out more evenly throughout
the day, spoke cities also will see increased efficiency and
productivity as a result of the DFW and Chicago hub de-peaking
initiatives.
"Our Chicago experience has improved customer service, reduced
costs, improved productivity and allowed us to fly the same
schedule with the equivalent of five fewer aircraft and four fewer
gates," Carty said. "We expect the DFW and spoke de-peak to allow
us to fly an equivalent schedule with 11 fewer aircraft, with an as-
yet-undetermined number of gates saved as well."
- American will retire its 74-jet Fokker 100 fleet -
furthering the fleet simplification efforts that had previously cut
fleet types from 14 to seven. The first F-100 will leave the fleet
in the third quarter of 2003 and the last plane will retire by the
third quarter of 2005.
While regular maintenance will continue unabated, consistent
with AA's high standards and FAA and manufacturer procedures, each
Fokker aircraft will be retired before its next scheduled major
overhaul, resulting in major cost savings. Further, since the F-
100 is not common with other aircraft types, crew-training savings
will be very significant.
- more -
7
American Unveils Next Series of Fundamental Business Changes
Aug. 13, 2002
Page 3
"The Fokker is a small plane with very high operating
costs, complicated by the manufacturer's bankruptcy. Its economics
simply no longer work for us," Carty said.
- American will standardize, reconfigure and consolidate a
number of its fleet types to realize greater scheduling
efficiencies, increase utilization and enhance its product in
international markets.
- With a total of 43 Boeing 777s now in its fleet, American will
concentrate this three-class premium aircraft to serve its primary
business markets in Europe, deep South America and Asia. The
company will standardize and reconfigure its fleet of 49 Boeing 767-
300s to serve other markets in continental Europe, Latin America
and Hawaii. The reconfigured aircraft will feature 30 business-
class seats with 60-inch pitch, as well as 182 More Room Throughout
Coach seats. A common 767-300 fleet will save the equivalent of
two aircraft because of routing efficiencies.
- In order to achieve greater scheduling efficiency from the 777
fleet, the company will move to one standard configuration, rather
than operating separate configurations across the Atlantic and
Pacific. The 777s will continue to offer three-class service on
all routings - with fully flat first class, 60-inch business class
and More Room Throughout Coach seating. Carty said eliminating
separate fleet types for the 777 increases its utilization by an
equivalent of two aircraft.
"With these changes, we will actually be providing a superior
product in our international markets, which will be served either
with the three-class 777s or with an expanded business class on the
767-300s," Carty said. "As a result, we will have a more efficient
mix of aircraft ideally suited for a large, international network
carrier."
- In addition to reducing the number of fleets and sub-
fleets, American has deferred 35 aircraft deliveries in 2002 and
will seek every opportunity to defer or cancel new deliveries going
forward.
- Given recent economic and consumer confidence reports,
American will reduce capacity by 9 percent by November, versus
summer 2002.
- more -
8
American Unveils Next Series of Fundamental Business Changes
Aug. 13, 2002
Page 4
- As part of the capacity reduction, American will accelerate
the retirement of its nine TWA 767-300 aircraft to November 2002.
"While some of these reductions and changes are seasonal, this
more broadly represents a re-sizing of the airline to draw down
some of the excess capacity we see in the marketplace," Carty said.
"American will remain the world's largest network carrier, even
after these changes, but we believe fundamental, ongoing change is
necessary for the company to return to profitability and achieve
long-term success."
- American will reduce, between now and March 2003, an
estimated 7,000 jobs in order to realign its workforce with the
planned fall capacity reductions, fleet simplification and hub
restructurings.
Once the October and November schedules are in place, the
company will be communicating specific job reduction impacts
internally to the affected workgroups and locations.
"As the company goes through fundamental and structural
change, one unpleasant reality, as we have said many times, is that
we simply will need fewer people to operate the airline. We've
also said many times that we will be guided during these times by a
principle and commitment to do what we can to take care of our
people who are impacted. Fortunately, in addition to a new age-60
retirement plan, we have been able to fashion a number of options,
including selective voluntary programs, a variety of leaves, part-
time, and stand-in-stead programs to minimize the impact on our
people," Carty said.
Once fully implemented, the initiatives announced today -
coupled with those already implemented - will result in structural
annual operating savings of more than $1.1 billion, independent of
capacity reductions.
"And, as I've said many times, we're going to see even greater
savings as a host of cost-saving suggestions from employees,
automation programs and additional structural and process changes
currently under review get implemented," Carty said.
- more -
9
American Unveils Next Series of Fundamental Business Changes
Aug. 13, 2002
Page 5
In addition, the aircraft utilization efficiencies that result
from the de-peaking and fleet actions announced today create the
equivalent of 17 "new" aircraft, which save the company more than
$1.3 billion of capital spending in the future. The company
already has cut or deferred an additional $5 billion in capital
spending since early 2001.
Carty said these initiatives also bolster American's
substantial liquidity. The company ended the second quarter with
$2.6 billion in cash and significant untapped financing capacity,
including approximately $6 billion in unencumbered aircraft and
several billion dollars in available non-aircraft assets. In July,
American completed a $500 million tax-exempt financing at JFK,
further bolstering its cash balances.
"We were pleased with our JFK financing, which was larger than
expected," Carty said. "We were able to place bonds with a 26-year
final maturity at less than 9 percent in a very difficult market."
This transaction followed a number of other financings
American has completed in the period since September 2001,
including a $1.9 billion public secured financing, a $300 million
tax-exempt funding and several bank facilities.
"This breadth of financing demonstrates that the public and
private markets are open to us for a variety of different
transactions, which is important as we continue to make the
business changes that we see as crucial to our future success and
industry leadership," Carty said.
Note: AMR's CFO, Jeffrey Campbell, will be conducting a
conference call with select members of the financial community this
morning at 10 am CDT to discuss today's announcement. The call
will be webcast live and will also be available for replay. To
access the Webcast, please visit the Investor Information page at
www.amrcorp.com.
###
Current AMR Corp. news releases can be accessed via the Internet.
The address is http://www.amrcorp