What changed in this filing

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Item 1. Business

2021-02-17 compared with 2020-02-19 · 430 added, 142 removed, 196 unchanged (74% of the section changed)

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Airline Operations

Our primary business activity is the operation of a major network carrier, providing scheduled air transportation for passengers and cargo.

Together with our wholly-owned regional airline subsidiaries and third-party regional carriers operating as American Eagle, our airline operates an average of 6,800 flights per day to more than 365 destinations in 61 countries through our hubs and gateways in Charlotte, Chicago, Dallas/Fort Worth, London Heathrow, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C.

In 2019 , approximately 215 million passengers boarded our flights.

During 2019 , we launched new seasonal nonstop service to transatlantic markets Dubrovnik, Croatia and Berlin, Germany from Philadelphia International Airport (PHL).

We also announced an international expansion beginning in summer 2020 that will, among other things, introduce new seasonal nonstop service between PHL and Casablanca, Morocco, representing our entry into the African market, new seasonal nonstop service between Chicago O’Hare International Airport (ORD) and Krakow, Poland, Prague, Czech Republic and Budapest, Hungary, and the return of service to Tel Aviv, Israel, with year-round nonstop service from Dallas/Fort Worth International Airport (DFW).

Beginning in October 2020, we also plan to operate new seasonal nonstop service between Los Angeles International Airport (LAX) and Christchurch, New Zealand and from DFW to Auckland, New Zealand, to which we currently operate seasonal service from LAX.

Together with our wholly-owned regional airline subsidiaries and third-party regional carriers operating as American Eagle, our primary business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through our hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C.

and partner gateways, including in London, Madrid, Seattle/Tacoma, Sydney and Tokyo (among others).

Approximately 95 million passengers boarded our flights in 2020, a decrease from approximately 215 million passengers in 2019.

During 2020, we experienced an unprecedented decline in the demand for air travel due to the impact of coronavirus (COVID-19).

COVID-19 has been declared a global health pandemic by the World Health Organization and has surfaced in nearly all regions of the world, which has driven the implementation of significant, government-imposed measures to prevent or reduce its spread, including travel restrictions, testing regimes, closing of borders, “stay at home” orders and business closures.

While the length and severity of the reduction in demand due to the COVID-19 pandemic is uncertain, our business, operations and financial condition in 2020 was severely impacted.

As of December 31, 2020, we operated 855 mainline aircraft supported by our regional airline subsidiaries and third-party regional carriers, which operated an additional 544 regional aircraft.

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Properties for further discussion on our mainline and regional aircraft and “ Regional ” below for further discussion on our regional operations.

American is a founding member of the one world ® alliance, whose members serve 1,100 destinations in 180 countries and territories.

American is a founding member of the one world ® Alliance, which brings together a global network of 13 world-class member airlines and their affiliates, working together to provide a superior and seamless travel experience.

See below for further discussion on the one world Alliance and other agreements with domestic and international airlines.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations – “2020 Financial Overview,” “AAG’s Results of Operations” and “American’s Results of Operations” for further discussion of AAG’s and American’s operating results and operating performance.

Also, see Note 14 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 12 to American’s Consolidated Financial Statements in Part II, Item 8B for information regarding operating segments and see Note 1(k) to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, respectively, for passenger revenue by geographic region.

Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include our wholly-owned regional carriers Envoy, PSA and Piedmont, as well as third-party regional carriers including Republic Airline Inc.

(Republic), Mesa Airlines, Inc.

(Mesa), SkyWest Airlines, Inc.

(SkyWest) and Compass Airlines, LLC (Compass).

Also, see Note 14 to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 12 to American’s Consolidated Financial Statements in Part II, Item 8B for information regarding operating segments and see Note 1(l) to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, respectively, for passenger revenue by geographic region.

(Republic), SkyWest Airlines, Inc.

(SkyWest), and Mesa Airlines, Inc.

In addition, Compass Airlines, LLC operated regional jet aircraft for us during 2020;

however, this arrangement ended in April 2020.

Our regional carriers are an integral component of our operating network.

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In addition, regional carriers offer complementary service in many of our mainline markets.

During 2019 , approximately 59 million passengers boarded our regional carriers’ planes, approximately 43% of whom connected to or from our mainline flights.

All American Eagle carriers use logos, service marks, aircraft paint schemes and uniforms similar to those of our mainline operations.

In 2020, approximately 30 million passengers boarded our regional carriers’ planes, approximately 48% of whom connected to or from our mainline flights, a decrease from approximately 59 million passengers in 2019, due to the effects of the COVID-19 pandemic.

Substantially all of our regional carrier arrangements are in the form of capacity purchase agreements.

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Our cargo division provides a wide range of freight and mail services, with facilities and interline connections available across the globe.

In 2020, we expanded our cargo service and launched our first cargo-only flights since 1984 to transport critical goods, including the COVID-19 vaccine, between the U.S.

and Europe, Asia and Latin America.

We operated more than 5,200 cargo-only flights serving 41 destinations.

These cargo-only flights have helped our customers move more than 167 million pounds of critical goods around the world amidst the COVID-19 pandemic.

Distribution and Marketing Agreements

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air carriers’ rights to transport passengers beyond designated gateway cities in foreign countries.

In order to improve access to domestic and foreign markets, we have arrangements with other airlines including through the one world alliance, other cooperation agreements, joint business agreements (JBAs), and marketing relationships, as further discussed below.

In order to improve access to domestic and foreign markets, we have arrangements with other airlines including through the one world Alliance, other cooperation agreements, joint business agreements, and marketing relationships, as further discussed below.

Member of oneworld Alliance

American is a founding member of the one world alliance, which currently includes British Airways, Cathay Pacific Airways, Finnair, Iberia, Japan Airlines, LATAM Airlines Group, Malaysia Airlines, Qantas Airways, Qatar Airways, Royal Jordanian, S7 Airlines and SriLankan Airlines.

The one world alliance links the networks of the member carriers and their respective affiliates to enhance customer service and smooth connections to the destinations served by the alliance, including linking the carriers’ loyalty programs and access to the carriers’ airport lounge facilities.

Royal Air Maroc is expected to join the one world alliance in 2020.

LATAM Airlines Group (LATAM) is in the process of withdrawing from the one world alliance, which is anticipated to be completed in the first half of 2020.

American is a founding member of the one world Alliance, which currently includes British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, Malaysia Airlines, Qantas Airways (Qantas), Qatar Airways, Royal Air Maroc, Royal Jordanian, S7 Airlines and SriLankan Airlines.

Fiji Airways is a one world connect partner and Alaska Airlines is a one world member elect, expected to join the one world Alliance in 2021.

The one world Alliance links the networks of member carriers and their respective affiliates to enhance customer service and provide smooth connections to the destinations served by the alliance, including linking the carriers’ loyalty programs and providing access to the carriers’ airport lounge facilities.

Cooperation and Joint Business Agreements

American has established a transatlantic JBA with British Airways, Iberia and Finnair, a transpacific JBA with Japan Airlines and a JBA relating to Australia and New Zealand with Qantas Airways, each of which has been granted antitrust immunity.

Joint business agreements enable the carriers party to the relevant agreement to cooperate on flights between particular destinations and allow pooling and sharing of certain revenues and costs, enhanced loyalty program reciprocity and cooperation in other areas.

American and its joint business partners received regulatory approval to enter into these JBAs and cooperation agreements.

American has established a transatlantic joint business with British Airways, Aer Lingus, Iberia and Finnair, a transpacific joint business with Japan Airlines and a joint business relating to Australia and New Zealand with Qantas, each of which has been granted antitrust immunity.

Joint business agreements enable the carriers involved to cooperate on flights between particular destinations and allow pooling and sharing of certain revenues and costs, enhanced loyalty program reciprocity and cooperation in other areas.

American and its joint business partners received regulatory approval to enter into these cooperation agreements.

Joint business agreements have become a common approach among major carriers to address key regulatory restrictions typically applicable to international airline service, including limitations on the foreign ownership of airlines and national laws prohibiting foreign airlines from carrying passengers beyond specific gateway cities.

Our competitors, including Delta Air Lines and United Airlines, are party to similar arrangements.

The business relationship under the transatlantic JBA benefits from a grant of antitrust immunity from the U.S.

The business relationship under the transatlantic joint business benefits from a grant of antitrust immunity from the U.S.

Department of Transportation (DOT) and was reviewed by the European Commission (EC) in July 2010.

In connection with this review, we provided certain commitments to the EC regarding, among other things, the availability of take-off and landing slots at London Heathrow (LHR) or London Gatwick (LGW) airports.

The commitments accepted by the EC are binding for 10 years.

In October 2018, in anticipation of the exit of the United Kingdom from the European Union (EU), commonly referred to as Brexit, and the expiry of the EC commitments in July 2020, the United Kingdom Competition and Markets Authority (CMA) opened an investigation into the transatlantic JBA.

We continue to fully cooperate with the CMA.

An application for antitrust immunity is also pending with the DOT to add Aer Lingus, which is owned by the parent company of British Airways and Iberia, to the transatlantic JBA.

As announced in September 2019, we are in the process of unwinding our commercial relationship with LATAM.

We do not expect this change to have a significant financial impact on our company.

After giving effect to this change, American remains the largest U.S.

carrier to Latin America.

The commitments accepted by the EC were binding for 10 years.

In October 2018, in anticipation of the exit of the United Kingdom from the European Union (EU),

commonly referred to as Brexit, and the expiry of the EC commitments in July 2020, the United Kingdom Competition and Markets Authority (CMA) opened an investigation into the transatlantic joint business.

We continue to fully cooperate with the CMA and, in September 2020, the CMA adopted interim measures that effectively extend the EC commitments for an additional three years until March 2024 in light of the uncertainty created by the COVID-19 pandemic.

The CMA plans to complete its investigation before the interim measures expire.

In December 2020, the DOT issued its final approval for the inclusion of Aer Lingus, which is owned by the parent company of British Airways and Iberia, into the transatlantic joint business and granted antitrust immunity.

Marketing Relationships

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These marketing agreements generally provide enhanced customer choice by means of an expanded network with reciprocal loyalty program participation and joint sales cooperation.

As of December 31, 2019 , American had codeshare and/or loyalty program relationships with Air Tahiti Nui, Alaska Airlines, British Airways, Cape Air, Cathay Dragon, Cathay Pacific, China Southern Airlines, EL AL, Etihad Airways, Fiji Airways, Finnair, Gulf Air, Hawaiian Airlines, Iberia, Interjet, Japan Airlines, Jetstar Group (includes Jetstar Airways and Jetstar Japan), Korean Air, LATAM (includes LATAM Airlines, LATAM Argentina, LATAM Brasil, LATAM Peru, LATAM Colombia and LATAM Ecuador), Malaysia Airlines, Qantas Airways, Qatar Airways, Royal Air Maroc, Royal Jordanian, S7 Airlines, Seaborne Airlines, SriLankan Airlines and Vueling Airlines.

In February 2020, American announced that it intends to enter into a codeshare relationship with the Brazilian airline, GOL Linhas Aéreas, which is expected to be implemented in 2020 , subject to the receipt of relevant government approvals.

Recent Developments

On February 13, 2020, we announced our intention to enter into an expanded relationship with Alaska Airlines.

This arrangement, once finalized, will expand our existing codeshare relationship, including codeshare on certain of our international routes from Seattle-Tacoma International Airport (SEA) and LAX, and will provide for reciprocal loyalty program benefits and shared lounge access.

In addition, we announced new nonstop international service from SEA to Bangalore, India and to LHR, expected to commence in October 2020 and March 2021, respectively.

The implementation of this expanded relationship and commencement of these new routes are subject to the negotiation and execution of definitive documentation and governmental review.

As of December 31, 2020, American had codeshare and/or loyalty program relationships with Aer Lingus, Air Tahiti Nui, Alaska Airlines, British Airways, Cape Air, Cathay Pacific, China Southern Airlines Company Limited (China Southern Airlines), EL AL Israel Airlines, Etihad Airways, Fiji Airways, Finnair, GOL, Gulf Air, Hawaiian Airlines, Iberia, Interjet Airlines, Japan Airlines, Jetstar Airways, Jetstar Japan, JetBlue Airways Corporation (JetBlue), Korean Air Lines, Malaysia Airlines, Qantas, Qatar Airways, Royal Air Maroc, Royal Jordanian, S7 Airlines, Seaborne Airlines, SriLankan Airlines and Vueling Airlines.

In 2020, we entered into an expanded marketing relationship with Alaska Airlines.

This arrangement, once implemented, will expand our existing codeshare relationship, including codeshare on certain of our international routes from Seattle-Tacoma International Airport (SEA) and Los Angeles International Airport (LAX), and will provide for reciprocal loyalty program benefits and shared lounge access.

Pursuant to federal law, American and Alaska Airlines submitted this proposed arrangement to the DOT for review.

After the DOT allowed the review period to expire with no further actions, American and Alaska Airlines commenced implementation of this arrangement.

Also, in 2020, we announced our intention to enter into a marketing relationship with JetBlue.

This arrangement, once implemented, will include an alliance agreement with reciprocal codesharing on domestic and international routes from New York (John F.

Kennedy International Airport (JFK), La Guardia Airport (LGA), and Newark Liberty International Airport (EWR)) and Boston Logan International Airport (BOS), and will provide for reciprocal loyalty program benefits.

The arrangement does not include JetBlue’s future transatlantic flying.

Pursuant to federal law, American and JetBlue submitted this proposed alliance arrangement to the DOT for review.

After American, JetBlue and the DOT agreed to a series of commitments, the DOT terminated its review of the proposed alliance.

The commitments include growth commitments to ensure capacity expansion, slot divestitures at JFK and at Ronald Reagan Washington National Airport (DCA) near Washington, D.C.

and antitrust compliance measures.

Beyond this agreement with the DOT, American and JetBlue will also be refraining from certain kinds of coordination on certain city pair markets.

In addition to the DOT review, the U.S.

Department of Justice (DOJ) and the New York Attorney General, the Massachusetts Attorney General, and the Attorneys General of certain other state and local jurisdictions are investigating this proposed alliance, which remains ongoing.

American and JetBlue intend to cooperate with those investigations, but are proceeding with plans to implement this alliance.

Loyalty Program

Our loyalty program, AAdvantage ® , was established to develop passenger loyalty by offering awards to travelers for their continued patronage.

AAdvantage was named Best Elite Program in the Americas for the eighth consecutive year in that category at the 2019 Freddie Awards, which are annual awards that recognize the world’s most outstanding frequent travel programs.

AAdvantage members earn mileage credits by flying on American, any one world airline or other partner airlines, or by using the services of over 1,000 program participants, such as the Citi and Barclaycard US co-branded credit cards, and certain hotels and car rental companies.

For every dollar spent, non-status members earn five mileage credits, but Gold, Platinum, Platinum Pro and Executive Platinum status holders earn bonus mileage credits of seven, eight, nine and eleven mileage credits, respectively.

AAdvantage was named Best Elite Program in the Americas for the ninth consecutive year at the 2020 Freddie Awards, which are annual awards that recognize the world’s most outstanding frequent travel programs.

AAdvantage members earn mileage credits by flying on American, any one world Alliance airline or other partner airlines.

For every dollar spent by flying on American, members earn five mileage credits, but Gold, Platinum, Platinum Pro and Executive Platinum elite status holders earn additional bonus mileage credits of 40%, 60%, 80% and 120%, respectively.

Members also earn mileage credits by using the services of over 1,000 program participants, such as the Citi and Barclaycard US co-branded credit cards, and certain hotels and car rental companies.

All travel on eligible tickets counts toward qualification for elite status in the AAdvantage program.

Mileage credits can be redeemed for free or upgraded travel on American and participating airlines, membership to our Admirals Club ® or for other non-travel awards from our program participants.

Mileage credits can be redeemed for free or upgraded travel on American and participating airlines, membership to our Admirals Club ® or for other non-flight awards from our program participants.

Most travel awards are subject to capacity-controlled seating.

A member’s mileage credit does not expire as long as that member has any type of qualifying activity at least once every 18 months.

Elite members can enjoy additional benefits of the AAdvantage program, including complimentary upgrades, checked bags, and Preferred and Main Cabin Extra seats, as well as priority check-in, security, boarding and baggage delivery.

Additionally, our members earn bonus mileage credits when elite status is obtained.

A member’s mileage credit generally does not expire as long as that member has any type of qualifying activity at least once every 18 months.

In response to the COVID-19 pandemic, we suspended the expiration of mileage credits through June 30, 2021 and eliminated mileage reinstatement fees for canceled award tickets.

Elite members can enjoy additional

benefits of the AAdvantage program, including complimentary upgrades, checked bags, and Preferred and Main Cabin Extra seats, as well as priority check-in, security, boarding and baggage delivery.

We also made it easier for top-tier customers to earn AAdvantage elite status in 2020 and 2021 and extended 2020 AAdvantage status into early 2022 for all members.

Under our agreements with AAdvantage members and program partners, we reserve the right to change the terms of the AAdvantage program at any time and without notice, and may end the program with six months’ notice.

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The markets in which we operate are highly competitive.

On most of our domestic nonstop routes, we currently face competing service from other domestic airlines, including major network airlines, low-cost carriers and ultra-low-cost carriers such as Alaska Airlines, Allegiant Air, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, Southwest Airlines, Spirit Airlines and United Airlines.

Competition is even greater between cities that require a connection, where the major airlines compete via their respective hubs.

On most of our domestic nonstop routes, we face competing service from other domestic airlines, including major network airlines, low-cost carriers and ultra-low-cost carriers such as Alaska Airlines, Allegiant Air, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue, Southwest Airlines, Spirit Airlines and United Airlines.

Between cities that require a connection, where the major airlines compete via their respective hubs, competition is significant.

In addition, we face competition on some of our connecting routes from airlines operating point-to-point service on such routes.

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Price competition occurs on a market-by-market basis through price discounts, changes in pricing structures, fare matching, targeted promotions and loyalty program initiatives.

Airlines typically use discounted fares and other promotions to stimulate traffic during normally slack travel periods, when they begin service to new cities or when they have excess capacity, to generate cash flow, to maximize revenue per available seat mile and to establish, increase or preserve market share.

Airlines typically use discounted fares and other promotions to stimulate traffic during normally weak travel periods, when they begin service to new cities, when they have excess capacity, to generate cash flow, to maximize revenue per available seat mile or to establish, increase or preserve market share.

Most airlines will quickly match price reductions in a particular market, and we have often elected to match discounted or promotional fares initiated by other air carriers in certain markets in order to compete in those markets.

In addition, low-fare, low-cost carriers, such as Southwest Airlines and JetBlue Airways, and so-called ultra-low-cost carriers, such as Allegiant Air, Frontier Airlines and Spirit Airlines, compete in many of the markets in which we operate and competition from these carriers is increasing.

In addition, so-called ultra-low-cost carriers, such as Allegiant Air, Frontier Airlines and Spirit Airlines, compete in many of the markets in which we operate, competition from these carriers is increasing and several new entrants have announced their intention to start up new ultra-low-cost carriers.

In addition to price competition, airlines compete for market share by increasing the size of their route system and the number of markets they serve.

The American Eagle regional carriers increase the number of markets we serve by flying to lower demand markets and providing connections at our hubs.

The American Eagle regional carriers increase the number of markets we serve by flying to smaller markets and providing connections at our hubs.

Many of our competitors also own or have agreements with regional airlines that provide similar services at their hubs and other locations.

We also compete on the basis of scheduling (frequency and flight times), availability of nonstop flights, on-time performance, type of equipment, cabin configuration, amenities provided to passengers, loyalty programs, the automation of travel agent reservation systems, onboard products and other services.

International

In addition to our extensive domestic service, we provide international service to Canada, Mexico, the Caribbean, Central and South America, Asia, Europe, Australia and New Zealand, and in 2020, will expand our international service to include Israel as well as Morocco, our first African destination.

In addition to our extensive domestic service, we provide international service to Canada, Mexico, the Caribbean, Central and South America, Asia, Europe, Australia and New Zealand.

In providing international air transportation, we compete with other U.S.

airlines, foreign investor-owned airlines and foreign state-owned or state-affiliated airlines.

Competition is increasing from foreign state-owned and state-affiliated airlines in the Gulf region, including Emirates, Etihad Airways and Qatar Airways .

These carriers have large numbers of international widebody aircraft in service and on order and are increasing service to the U.S.

Before the COVID-19 pandemic, competition had been increasing from foreign state-owned and state-affiliated airlines in the Gulf region .

These carriers have large numbers of international widebody aircraft in service and on order and had been increasing service to the U.S.

from locations both in and outside the Middle East.

Service to and from locations outside of the Middle East is provided by some of these carriers under so-called “fifth freedom” rights permitted under international treaties which allow service to and from stopover points between an airline’s home country and the ultimate destination.

Service to and from locations outside of the Middle East was provided by some of these carriers under so-called “fifth freedom” rights permitted under international treaties which allow service to and from stopover points between an airline’s home country and the ultimate destination.

Such flights, such as a stopover in Europe on flights to the United States, allow the carrier to sell tickets for travel between the stopover point and the United States in competition with service provided by us.

We believe these state-owned and state-affiliated carriers in the Gulf region, including their affiliated carriers, benefit from significant government subsidies, which have allowed them to grow quickly, reinvest in their product and expand their global presence.

Competition is also increasing from low-cost airlines executing international long-haul expansion strategies.

We believe these state-owned and state-affiliated carriers in the Gulf region, including their affiliated carriers, benefit from significant government subsidies,

which have allowed them to grow quickly, reinvest in their product and expand their global presence.

We expect this to continue after the COVID-19 pandemic subsides.

Competition had also been increasing from low-cost airlines executing international long-haul expansion strategies, a trend we also expect to continue after the COVID-19 pandemic subsides and the delivery of planned, long-range narrowbody aircraft commences.

In order to increase our ability to compete for international air transportation service, which is subject to extensive government regulation, U.S.

and foreign carriers have entered into bilateral and multilateral marketing relationships, alliances, cooperation agreements and JBAs to exchange traffic among each other’s flights and route networks.

and foreign carriers have entered into bilateral and multilateral marketing relationships, alliances, cooperation agreements and joint business agreements to exchange traffic among each other’s flights and route networks.

See “ Distribution and Marketing Agreements ” above for further discussion.

Employees and Labor Relations

The airline business is labor intensive.

The airline business is labor intensive, and our team members are our most important asset.

The operational complexity of our business requires a diverse team of personnel trained and experienced in a variety of technical areas such as flight operations, ground operations, safety and maintenance, customer service, and airline scheduling and planning.

We believe that if we create an environment where our team members feel supported, they will take care of our customers and thereby support the success of our business.

To do this, we must continue to build a diverse and inclusive environment, helping all team members reach their full potential and providing them with the right resources and support.

Talent Development

We give our team members the tools, training and resources they need to do their best work and stay true to our purpose – caring for people on life’s journey.

We have a suite of programs aimed at helping our people develop the skills and experience to succeed in their roles and build rewarding, long-term careers within our company.

Additionally, we’ve partnered with leading online learning platforms to make professional development available on-demand to all our team members.

Diversity, Equity and Inclusion

Cultivating an environment that celebrates diversity, equity and inclusion (DEI) is a top priority for us, and we seek to create a workplace where diverse perspectives and experiences are welcomed and encouraged, where team members feel comfortable to be their authentic selves and where we are always learning from one another.

• established the role of Chief Inclusion and Diversity Officer and created the DEI office within our talent function so that hiring and development is viewed through the lens of equity and inclusion;

• formed a team member experience organization to listen to the concerns of team members;

• launched an Executive Sponsorship Program whereby a group of 15 Black leaders have been paired with an executive leader for a year-long mentorship program;

this program will be scaled to an expanded audience starting in late 2021;

• created an implicit bias training program delivered to approximately 105,000 team members;

• launched an external community council composed of executives and a cross-section of Black community leaders to provide feedback on our company initiatives;

• formed a specialized customer relations team to listen to, resolve and learn from customer complaints of discrimination.

Our DEI goals include:

• diversifying our leadership team by establishing specific objectives and laying out a plan to achieve them, including by enhancing our recruiting, development and mentoring programs;

• providing additional learning opportunities beyond implicit bias to generate further education and awareness of diversity and inclusion matters;

• pledging to assist Black youth in developing job skills and expanding access to well-paying careers as part of our overall strategy to increase opportunities in our hub cities and Tulsa, Oklahoma, where our largest maintenance facility is based.

Competitive Pay and Comprehensive Benefits

We offer competitive pay and comprehensive benefits that support the physical, emotional and financial well-being of our team members.

We’re committed to providing medical coverage that is both affordable and flexible along with health care navigation and support tools.

Additionally, we launched a well-being program in 2020 to help team members and their families make lasting changes in four key areas:

physical, emotional, financial and work.

Our internal recognition programs give team members and customers the opportunity to show their appreciation for a job well done.

In 2019, our team members were recognized by customers, peers and company leaders more than 2.5 million times.

Last year, we launched a new Nonstop Thanks program whereby team members award each other points for a job well done or as an expression of gratitude.

Those points can be redeemed for items in an online catalog.

Every quarter, hundreds of team members are nominated for the Chairman’s Award, the highest honor that we bestow upon our team members.

Effects of the COVID-19 Pandemic

The COVID-19 pandemic has resulted in a severe decline in demand for our services.

In 2020, we moved quickly to better align our costs with our reduced schedule.

In addition to other cost reduction measures discussed below, we suspended all non-essential hiring, paused non-contractual pay rate increases, reduced executive and board of director compensation, implemented voluntary leave and early retirement programs and decreased our management and support staff team, including officers, by approximately 30%.

In total, more than 20,000 team members opted for an early retirement or long-term partially paid leave.

Pursuant to the payroll support program (PSP1) established under the Coronavirus Aid, Relief, and Economic Security Act, as amended (the CARES Act), the U.S.

Department of the Treasury (Treasury) provided us with an aggregate of $6.0 billion of financial assistance in 2020.

These funds were used to fund eligible salaries, wages and benefits of our team members.

Due to the effects of the COVID-19 pandemic, we involuntarily furloughed certain team members starting October 1, 2020.

Pursuant to the payroll support program (PSP2) established under Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (PSP Extension Law), Treasury is to provide us financial assistance to be paid in installments expected to total at least $3.0 billion in the aggregate, of which $1.5 billion was received on January 15, 2021.

Using these funds, we recalled the involuntarily furloughed team members covered by PSP2 and provided them with back pay to December 1, 2020.

PSP2 includes restrictions on involuntary furloughs and reductions in employee pay rates and benefits through March 31, 2021.

On February 5, 2021, we informed approximately 13,000 U.S.-based team members of the possibility of a workforce reduction at their work location.

We expect that any workforce reductions will take effect on or after April 1, 2021.

In connection with this notification, we announced the reopening of the voluntary early out and long-term leave of absence programs for team members of certain represented workgroups.

Eligible team members must opt in by February 26, 2021 for the early out program and March 12, 2021 for the voluntary leave program.

Our future success depends in large part on our ability to attract, develop and retain highly qualified management, technical and other personnel.

For more discussion, see Part I, Item 1A.

Risk Factors – “The loss of key personnel upon whom we depend to operate our business or the inability to attract and develop additional qualified personnel could adversely affect our business.”

Labor Relations

In 2020, salaries, wages and benefits were our largest expense and represented 45% of our total operating expenses.

As of December 31, 2019 , we had approximately 133,700 active full-time equivalent employees, approximately 85% of whom were represented by various labor unions responsible for negotiating the collective bargaining agreements (CBAs) covering them.

As of December 31, 2020, we had approximately 102,700 active full-time equivalent employees, approximately 84% of whom were represented by various labor unions responsible for negotiating the collective bargaining agreements (CBAs) governing their compensation and job duties, among other things.

Labor relations in the air transportation industry are regulated under the Railway Labor Act (RLA), which vests in the National Mediation Board (NMB) certain functions with respect to disputes between airlines and labor unions relating to union representation and CBAs.

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The following table shows our domestic airline employee groups that are represented by unions:

Class or Craft

Employees (1)

Union Class or Craft Employees (1)

Amendable Date

Allied Pilots Association (APA)

Association of Professional Flight Attendants (APFA)

Flight Attendants

Allied Pilots Association (APA) Pilots 13,400 2020

Association of Professional Flight Attendants (APFA) Flight Attendants 24,550 2019

Airline Customer Service Employee Association – Communications Workers of America and International Brotherhood of Teamsters (CWA-IBT)

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Mechanics and Related 12,300 2025

TWU-IAM Association

Fleet Service

TWU-IAM Association

Flight Simulator Engineers

TWU-IAM Association

Maintenance Control Technicians

TWU-IAM Association

Maintenance Training Instructors

Professional Airline Flight Control Association (PAFCA)

Transport Workers Union (TWU)

Flight Crew Training Instructors

Air Line Pilots Associations (ALPA)

Association of Flight Attendants-CWA (AFA)

Flight Attendants

Ground School Instructors

Mechanics and Related

Class or Craft

Employees (1)

TWU-IAM Association Fleet Service 16,600 2025

TWU-IAM Association Stock Clerks 1,750 2025

TWU-IAM Association Flight Simulator Engineers 140 2021

TWU-IAM Association Maintenance Control Technicians 190 2025

TWU-IAM Association Maintenance Training Instructors 50 2025

Professional Airline Flight Control Association (PAFCA) Dispatchers 470 2021

Transport Workers Union (TWU) Flight Crew Training Instructors 350 2021

Air Line Pilots Associations (ALPA) Pilots 2,150 2024

Association of Flight Attendants-CWA (AFA) Flight Attendants 1,500 2020

TWU Ground School Instructors 10 2023

TWU Mechanics and Related 1,400 2020

TWU Stock Clerks 140 2020

TWU Fleet Service 3,800 2019

TWU Dispatchers 70 2025

Communications Workers of America (CWA) Passenger Service 4,850 2026

Union Class or Craft Employees (1)

Amendable Date

Fleet Service Clerks

Communications Workers of America (CWA)

Passenger Service

Flight Attendants

International Brotherhood of Teamsters (IBT)

Fleet and Passenger Service

Flight Crew Training Instructors

Flight Attendants

ALPA Pilots 550 2024

AFA Flight Attendants 350 2019

International Brotherhood of Teamsters (IBT) Mechanics and Related 450 2021

IBT Stock Clerks 60 2021

CWA Fleet and Passenger Service 5,950 2023

IBT Dispatchers 30 2019

ALPA Flight Crew Training Instructors 30 2024

ALPA Pilots 1,750 2023

AFA Flight Attendants 1,150 2023

International Association of Machinists & Aerospace Workers (IAM)

Approximate number of active employees represented as of December 31, 2019 .

Joint collective bargaining agreements (JCBAs) have been reached with post-Merger employee groups, except for contracts with the TWU-IAM Association which represents the mechanics and related, fleet service, stock clerks, maintenance control technicians and maintenance training instructors whose contracts became amendable in the third quarter of 2018.

Agreements in principle were reached with the TWU-IAM Association on January 30, 2020 for JCBAs covering all of these workgroups.

Those agreements are subject to membership ratification vote.

Additionally, the post-Merger JCBAs covering our pilots and flight attendants became amendable in January 2020 and December 2019, respectively.

Negotiations continue for new agreements.

Among our wholly-owned regional subsidiaries, the Envoy fleet service clerks, Piedmont flight attendants and Piedmont dispatchers have agreements that are now amendable and are engaged in traditional RLA negotiations.

Envoy is also in negotiations with the union representing its flight attendants, whose contract becomes amendable in 2020.

Mechanics and Related 800 2022

TWU Dispatchers 60 2022

(1) Represents approximate number of active employees as well as employees who opted for a voluntary partially paid leave as a result of the COVID-19 pandemic as of December 31, 2020.

Joint collective bargaining agreements (JCBAs) have been reached with post-Merger employee groups, including a new five-year JCBA ratified on March 26, 2020 by the TWU-IAM Association, which represents the mechanics and related, fleet service, stock clerks, maintenance control technicians and maintenance training instructors.

Additionally, the post-Merger JCBAs covering our pilots and flight attendants are now amendable.

JCBAs covering passenger service employees and dispatchers are also amendable.

Among our wholly-owned regional subsidiaries, the Envoy flight attendants, Envoy mechanics and related, Envoy stock clerks, Envoy fleet service clerks, Piedmont flight attendants and Piedmont dispatchers have agreements that are now amendable and are engaged in traditional RLA negotiations.

For more discussion, see Part I, Item 1A.

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Aircraft Fuel

Our operations and financial results are significantly affected by the availability and price of aircraft fuel, which in 2019 was our second largest expense.

Our operations and financial results are materially affected by the availability and price of aircraft fuel, which represents one of the largest single cost items in our business.

Based on our 2021 forecasted mainline and regional fuel consumption, we estimate that a one cent per gallon increase in the price of aircraft fuel would increase our 2021 annual fuel expense by $38 million.

The following table shows annual aircraft fuel consumption and costs, including taxes, for our mainline and regional operations for 2020 and 2019 (gallons and aircraft fuel expense in millions).

Average Price

Aircraft Fuel

Percent of Total

Year Gallons Average Price

per Gallon Aircraft Fuel

Expense Percent of Total

Operating Expenses

2020 2,297 $1.48 $3,402 12.3%

2019 4,537 2.07 9,395 22.0%

As of December 31, 2020, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption.

We do not currently view the market opportunities to hedge fuel prices as attractive because, among other things, our future fuel needs remain unclear due to uncertainties regarding air travel demand and any hedging would potentially require significant capital or collateral to be placed at risk.

As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully exposed to fluctuations in aircraft fuel prices.

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Risk Factors – “ Our business is very dependent on the price and availability of aircraft fuel.

Continued periods of high volatility in fuel costs, increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on our operating results and liquidity .”

Continued periods of high volatility in fuel costs, increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on consumer demand, our operating results and liquidity .”

Seasonality and Other Factors

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Therefore, our quarterly results of operations are not necessarily indicative of operating results for the entire year, and historical operating results in a quarterly or annual period are not necessarily indicative of future operating results.

The COVID-19 outbreak, along with the measures governments and private organizations worldwide have implemented in an attempt to contain the spread of this pandemic, has resulted in a severe decline in demand for air travel, which has adversely affected our business, operations and financial condition to an unprecedented extent, and affected the traditional seasonal trends of the airline business.

Measures ranging from travel restrictions, including testing regimes, “stay at home” and quarantine orders, limitations on public gatherings to cancellation of public events and many others have resulted in a precipitous decline in demand for both domestic and international business and leisure travel .

Domestic and Global Regulatory Landscape

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The DOT, among other things, oversees and regulates domestic and international codeshare agreements, international route authorities, competition and consumer protection matters such as advertising, denied boarding compensation and baggage liability.

The Antitrust Division of the Department of Justice (DOJ), along with the DOT in certain instances, have jurisdiction over airline antitrust matters.

The Antitrust Division of the DOJ, along with the DOT in certain instances, have jurisdiction over airline antitrust matters.

The FAA similarly exercises safety oversight and regulates most operational matters of our business, including how we operate and maintain our aircraft.

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Additionally, our pilots and other employees are subject to rigorous certification standards, and our pilots and other crew members must adhere to flight time and rest requirements.

In 2021, the FAA is expected to issue a number of rules that will impact us, including regulations mandating certain rest requirements for flight attendants.

The FAA also controls the national airspace system, including operational rules and fees for air traffic control (ATC) services.

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and its territories, with the exception of certain airports that require landing and take-off rights and authorizations (slots) and other facilities, and certain airports that impose geographic limitations on operations or curtail operations based on the time of day.

Operations at three major domestic airports we serve (John F.

Kennedy International Airport (JFK) and La Guardia Airport (LGA) in New York City, and Ronald Reagan Washington National Airport (DCA) in Washington, D.C.) and many foreign airports we serve (including LHR) are regulated by governmental entities through allocations of slots or similar regulatory mechanisms that limit the rights of carriers to conduct operations at those airports.

Operations at three major domestic airports we serve (JFK and LGA in New York City, and DCA near Washington, D.C.) and many foreign airports we serve (including LHR) are regulated by governmental entities through allocations of slots or similar regulatory mechanisms that limit the rights of carriers to conduct operations at those airports.

Each slot represents the authorization to land at or take off from the particular airport during a specified time period.

In addition to slot restrictions, operations at LGA and DCA are also limited based on a so-called “perimeter rule” which generally limits the stage length of the flights that can be operated from those airports to 1,500 and 1,250 miles, respectively.

Our ability to provide service can also be impaired at airports, such as ORD and LAX where the airport gate and other facilities are currently inadequate to accommodate all of the service that we would like to provide, or airports such as Dallas Love Field Airport where we have no access to gates at all.

In addition to slot restrictions, operations at DCA and LGA are also limited based on a so-called “perimeter rule” which generally limits the stage length of the flights that can be operated from those airports to 1,250 and 1,500 miles, respectively.

Our ability to provide service can also be impaired at airports, such as Chicago O’Hare International Airport (ORD) and LAX where the airport gate and other facilities are currently inadequate to accommodate all of the service that we would like to provide, or airports such as Dallas Love Field Airport where we have no access to gates at all.

Existing law also permits domestic local airport authorities to implement procedures and impose restrictions designed to abate noise, provided such procedures and restrictions do not unreasonably interfere with interstate or foreign commerce or the national transportation system.

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These taxes and fees are subject to increase from time to time.

The CARES Act provided for a temporary tax holiday from collecting and remitting certain government ticket taxes for tickets purchased between March 28, 2020 and December 31, 2020.

DOT Passenger Protection Rules

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Among other things, these regulations govern how our fares are displayed online, required customer disclosures, access by disabled passengers, handling of long onboard flight delays and reporting of mishandled bags.

In 2020, the DOT is expected to implement a number of new regulations that will impact us, including disability rules for accessible lavatories and refunds for checked bag fees in the event of certain delays in delivery.

In 2021, the DOT is expected to implement a number of new regulations that will impact us, including disability rules for accessible lavatories and wheelchair assistance, and refunds for checked bag fees in the event of certain delays in delivery.

International

International air transportation is subject to extensive government regulation, including aviation agreements between the U.S.

and other countries or governmental authorities, such as the EU.

and other countries or governmental authorities, such as the EU and the United Kingdom.

Moreover, our alliances with international carriers may be subject to the jurisdiction and regulations of various foreign agencies.

government has negotiated “open skies” agreements with many countries, which allow unrestricted route authority access between the U.S.

government has negotiated “open skies” agreements with 130 trading partners, which allow unrestricted route authority access between the U.S.

and the foreign markets.

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In cases where these foreign requirements exceed the DOT rules, we may bear additional burdens and liabilities.

Further, various foreign airport authorities impose noise restrictions at their local airports.

Further, various foreign airport authorities impose noise and curfew restrictions at their local airports.

Since shortly after the events of September 11, 2001, substantially all aspects of civil aviation security in the U.S.

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Funding for the TSA is provided by a combination of air carrier fees, passenger fees and taxpayer funds.

Customs and Border Protection, which, like the TSA, is part of the Department of Homeland Security (DHS), also promulgates requirements, performs services and collects fees that impact our provision of services.

Customs and Border Protection, which, like the TSA, is part of the Department of Homeland Security, also promulgates requirements, performs services and collects fees that impact our provision of services.

Additionally, we have at times found it necessary or desirable to make significant expenditures to comply with security-related requirements while seeking to reduce their impact on our customers, such as expenditures for automated security screening lines at airports.

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Aircraft Emissions and Climate Change Requirements

Many aspects of our operations are subject to a number of increasingly stringent environmental regulations and concerns about climate change and greenhouse gas (GHG) emissions, including carbon dioxide (CO 2 ) emissions.

In particular, the International Civil Aviation Organization (ICAO) is in the process of adopting rules that will require us to limit the CO 2 emissions of a significant majority of our international flights to a baseline level equal to our 2019-2020 average emissions from such flights.

In 2016, ICAO passed a resolution adopting the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), an international, market-based emissions offset program intended to achieve carbon-neutral growth in the international aviation sector after 2020.

CORSIA is expected to be implemented in three phases:

the Pilot Phase (from 2021 to 2023);

the First Phase (from 2024 to 2027);

and the Second Phase (from 2027 to 2035).

American and the majority of other U.S.

airlines currently report their CO 2 emissions to the FAA in accordance with CORSIA requirements.

It is expected that the FAA (with the support of Congress) will implement regulations to establish a carbon offset credit surrender mechanism and to provide for the oversight and compliance auditing of the CORSIA obligations of U.S.

carriers, including American.

To meet their obligations under CORSIA, airlines will have the option to increase the efficiency of their fleet, use sustainable or lower carbon aircraft fuel, or purchase carbon offset credits.

At this time, the costs of complying with our future obligations under CORSIA are uncertain and cannot be fully predicted.

For example, we will not directly control our CORSIA compliance costs during the CORSIA Pilot and First Phases because such phases include a sharing mechanism for the growth in emissions for the global aviation sector.

In addition, and with respect to all phases of CORSIA including after 2027, there is uncertainty with respect to the future supply, demand and price of sustainable or lower carbon aircraft fuel, carbon offset credits and technologies that could allow airlines to reduce their emissions of CO 2 .

In the event that CORSIA does not come into force as expected, American and other airlines could become subject to an unpredictable and inconsistent array of national or regional emissions restrictions, creating a patchwork of complex regulatory requirements that will often affect global competitors differently and frequently offer no meaningful aviation environmental improvements.

For example, a directive adopted in 2008 by the EU currently covers CO 2 emissions from flights operating within the mostly European countries participating in the EU Emissions Trading System (ETS).

The EU ETS does not apply to CO 2 emissions from the vast majority of American flights serving EU countries because, in 2012, the EU agreed to suspend the application of its rules to international flights to pursue, instead, a global effort solely through ICAO.

The EU has extended the suspension of its rules to international flights through the end of 2023, contingent on the successful implementation of CORSIA.

We have taken a number of actions that mitigate our GHG emissions and conserve fuel such as:

Efforts to transition to a low-carbon future have increased the focus by global, regional and national regulators on climate change and greenhouse gas (GHG) emissions.

We have taken a number of actions that mitigate the GHG emitted by our operations both en route and on the ground, such as:

• retiring older, less fuel-efficient aircraft and replacing them with new, more fuel-efficient aircraft, resulting in the youngest mainline fleet of any U.S.

network carrier;

reducing fuel consumption through operational initiatives such as single-engine taxi and engine washing;

• reducing fuel consumption through operational initiatives such as single-engine taxi, optimal planned arrival fuel and our new flight planning system;

• entering into an agreement with a leading producer of renewable fuels to purchase nine million gallons of sustainable alternative aircraft fuel over three years;

• working with the FAA and vendors to facilitate efficient airspace procedures, which also reduces aircraft emissions;

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• purchasing renewable electricity to reduce indirect emissions associated with the production of the power we consume;

seeking certification of certain of our buildings to the U.S.

• obtaining certification of certain of our buildings to the U.S.

Green Building Council’s Leadership in Energy and Environmental Design (LEED) standard.

entering into discussions with potential vendors to explore potential production pathways for sustainable alternative aircraft fuel;

collaborating with airports and other stakeholders to accelerate the introduction of sustainable or lower carbon fuels.

For further information, see our annual Corporate Responsibility Report, available on our website at www.aa.com/CRR .

None of the information or contents of our website is incorporated into this Annual Report on Form 10-K.

In addition, American is subject to the requirements of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), an international, market-based emissions reduction program adopted by the International Civil Aviation Organization (ICAO) in 2016.

CORSIA is intended to achieve carbon-neutral growth in the international aviation sector from 2021 through 2035 by requiring airlines to compensate for the growth in carbon dioxide (CO 2 ) emissions, relative to a predetermined baseline, of a significant majority of international flights through the purchase of carbon offsets or the use of low-carbon fuels.

For each year from 2021 through 2029, CORSIA requires each airline to compensate for the rate of growth of the CO 2 emissions of the aviation sector as a whole as determined by ICAO.

Starting in 2030, CORSIA will require airlines to compensate for growth in CO 2 emissions using a formula determined by ICAO that will combine the growth in aviation sector emissions and the growth in the individual airline’s emissions, with the proportion of the latter rising from at least 20 percent over the period 2030-2032 to at least 70 percent over the period 2033-2035.

ICAO originally defined the baseline as the average emissions from covered flights in 2019 and 2020.

However, due to the impact of the pandemic on air travel, in June 2020 ICAO determined to remove 2020 from the baseline for the first few years of CORSIA implementation (2021-2023).

Accordingly, we do not expect to be required to purchase offset credits over that period, unless the recovery in demand for international travel is unexpectedly strong and exceeds that of 2019 in those years.

At this time, the costs of complying with our future obligations under CORSIA are uncertain, primarily because of the difficulty in estimating the return of demand for international air travel in the recovery from the pandemic.

There is also significant uncertainty with respect to the future supply and price of carbon offset credits and sustainable or lower carbon aircraft fuels that could allow us to reduce our emissions of CO 2 .

In addition, as described above, we will not directly control our CORSIA compliance costs because our compliance obligations through 2029 are based on the growth in emissions of the global aviation sector and begin to incorporate a factor for individual airline operator emissions growth starting in 2030.

For more information on American’s approach to environmental, social and governance issues, see our 2019-2020 Environmental, Social and Governance Report at aa.com/esg .

None of the information or contents of our 2019-2020 Environmental, Social and Governance Report is incorporated into this Annual Report on Form 10-K.

Impact of Regulatory Requirements on Our Business

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See Part I, Item 1A.

Risk Factors – “ Evolving data security and privacy requirements could increase our costs, and any significant data security incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of operations and financial condition,” “If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may have a material adverse impact on our operations,” “Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages,” “The airline industry is heavily taxed, ” “We are subject to many forms of environmental and noise regulation and may incur substantial costs as a result,” and “We are subject to risks associated with climate change, including increased regulation of our CO 2 emissions and the potential increased impacts of severe weather events on our operations and infrastructure” for additional information.

Risk Factors – “ Evolving data security and privacy requirements could increase our costs, and any significant data security incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of operations and financial condition,” “If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may have a material adverse impact on our operations,” “Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages,” “The airline industry is heavily taxed, ” “We are subject to many forms of environmental and noise regulation and may incur substantial costs as a result,” and “We are subject to risks associated with climate change, including increased regulation of our CO 2 emissions, changing consumer preferences and the potential increased impacts of severe weather events on our operations and infrastructure” for additional information.

Available Information

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The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov .

GLOSSARY OF TERMS

“103-12 Investment Trust” means the 103-12 investment entity into which our pension plan master trust invests plan assets and which facilitates investing the plan assets of more than one unrelated employer.

“2013 Credit Agreement” means the Amended and Restated Credit and Guaranty Agreement dated as of May 21, 2015, among American, AAG, the lenders from time to time party thereto, Deutsche Bank AG New York Branch, as administrative agent, and certain other parties thereto, as amended.

“2013 Credit Facilities” means the 2013 Revolving Facility and 2013 Term Loan Facility provided for by the 2013 Credit Agreement.

“2013 Framework” means the criteria for internal control over financial reporting as set forth in the Internal Control – Internal Framework by the Committee of Sponsoring Organizations of the Treadway Commission.

“2013 Plan” means the AAG 2013 Incentive Award Plan.

“2013 Revolving Facility” means the $750 million revolving credit facility provided for by the 2013 Credit Agreement.

“2013 Term Loan Facility” means the $1.9 billion term loan facility provided for under the 2013 Credit Agreement.

“2014 Credit Agreement” means the Amended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, among American, AAG, the lenders from time to time party thereto, Citibank N.A., as administrative agent, and certain other parties thereto, as amended.

“2014 Credit Facilities” means the 2014 Revolving Facility and the 2014 Term Loan Facility provided for by the 2014 Credit Agreement.

“2014 Revolving Facility” means the $1.6 billion revolving credit facility provided for by the 2014 Credit Agreement.

“2014 Term Loan Facility” means the $1.2 billion term loan facility provided for by the 2014 Credit Agreement.

“2016 JFK Bonds” means special facility revenue bonds issued on behalf of American by NYTDC in June 2016.

“2019 Form 10-K” means AAG’s and American’s Annual Report on Form 10-K for the year ended December 31, 2019.

“2019-1 Aircraft” means the 35 aircraft financed by American under the 2019-1 Aircraft EETCs.

“2019-1 Aircraft EETCs” means the three pass-through trusts created by American in August 2019 that have issued approximately $1.1 billion aggregate face amount of Series 2019-1 Class AA, Class A and Class B EETCs.

“2019-1 Engine EETCs” means the $650 million in aggregate face amount of 2019-1 Engine EETCs.

“2020 JFK Bonds” means the approximately $360 million of special facility revenue bonds issued on behalf of American by NYTDC in June 2020.

“3.75% Senior Notes” mean 3.75% senior notes due 2025 with an aggregate principal amount of $500 million.

“5.000% Senior Notes” means the 5.000% senior notes due in 2022 with an aggregate principal amount of $750 million.

“10.75% Senior Secured Notes” means, collectively, the LGA/DCA Notes and the IP Notes.

“10.75% Senior Secured Notes Closing Date” means September 25, 2020.

“10.75% Senior Secured Notes Collateral” means the IP Collateral and LGA/DCA Collateral.

“10.75% Senior Secured Notes Indentures” means the IP Notes Indenture and the LGA/DCA Notes Indenture.

“10.75% Senior Secured Notes Trustee” means Wilmington Trust, National Association, as trustee with respect to the 10.75% Senior Secured Notes.

“11.75% Senior Secured Notes” means the 11.75% senior secured notes due in 2025 with an aggregate principal amount of $2.5 billion.

“11.75% Senior Secured Notes Collateral” means the First Lien 11.75% Senior Secured Notes Collateral and the Second Lien 11.75% Senior Secured Notes Collateral.

“11.75% Senior Secured Notes Indenture” means the indenture, dated as of June 30, 2020, by and among American, AAG and Wilmington Trust, National Association, as trustee.

“11.75% Senior Secured Notes Trustee” means Wilmington Trust, National Association, as trustee with respect to the 11.75% Senior Secured Notes.

“AAdvantage” means the AAdvantage ® frequent flyer program.

“AAG”, “we”, “us”, “our” and similar terms means American Airlines Group Inc.

and its consolidated subsidiaries.

“ABO” means accumulated benefit obligation.

“AFA” means Association of Flight Attendants-CWA.

“ALPA” means Air Line Pilots Association.

“American” means American Airlines, Inc., a wholly-owned subsidiary of AAG.

“American Eagle” means our regional carriers, including our wholly-owned regional carriers Envoy, PSA and Piedmont, as well as third-party regional carriers including Mesa, Republic and SkyWest.

“AMR” or “AMR Corporation” means AMR Corporation and is used to reference AAG during the period of time prior to its emergence from Chapter 11 and the Merger.

“AMT” means alternative minimum tax.

“AOCI” means accumulated other comprehensive income (loss).

“APA” means Allied Pilots Association.

“APFA” means Association of Professional Flight Attendants.

“April 2016 Credit Agreement” means the Credit and Guaranty Agreement, dated as of April 29, 2016, among American, AAG, the lenders from time to time party thereto, Barclays Bank PLC, as administrative agent, and certain other parties thereto, as amended.

“April 2016 Credit Facilities” means the April 2016 Revolving Facility and April 2016 Term Loan Facility provided for by the 2016 Credit Agreement.

“April 2016 Revolving Facility” means the $450 million revolving credit facility provided for by the April 2016 Credit Agreement.

“April 2016 Term Loan Facility” means the $1,000 million term loan facility provided for by the April 2016 Credit Agreement.

“ASC” means the FASB Accounting Standards Codification.

“ASC 350” means the FASB Accounting Standards Codification relating to “Intangibles - Goodwill and Other.”

“ASC 360” means the FASB Accounting Standards Codification relating to “Property, Plant, and Equipment.”

“ASM” means available seat mile and is a basic measure of production.

One ASM represents one seat flown one mile.

“ASU” means Accounting Standards Update.

“ATC” means air traffic control.

“ATC system” means the U.S.

National Airspace System.

“Aviation Act” means subtitle VII of Title 49 of the United States Code, as amended.

“Bankruptcy Court” means the United States Bankruptcy Court for the Southern District of New York.

“Base Indenture” means the indenture, dated as of June 25, 2020, between AAG and the Convertible Notes Trustee.

“Bylaws” means AAG’s Amended and Restated Bylaws, as amended.

“CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act, as amended.

“CASM” means operating cost per available seat mile and is equal to operating expenses divided by ASMs.

“CBAs” means collective bargaining agreements.

“CEO” means Chief Executive Officer.

“CFO” means Chief Financial Officer.

“Chapter 11 Cases” means the voluntary petitions for relief filed on November 29, 2011 by the Debtors.

“China Southern Airlines” means China Southern Airlines Company Limited.

“CMA” means the United Kingdom Competition and Markets Authority.

“CO 2 ” means carbon dioxide.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” means AAG and its consolidated subsidiaries.

“Convertible Notes” means AAG’s 6.50% convertible senior notes due 2025.

“Convertible Notes Indenture” means the Base Indenture and the Convertible Notes Supplemental Indenture.

“Convertible Notes Guarantee” means the full and unconditional guarantee of the Convertible Notes by American.

“Convertible Notes Supplemental Indenture” means the first supplemental indenture, dated as of June 25, 2020, among AAG, American and the Convertible Notes Trustee.

“Convertible Notes Trustee” means Wilmington Trust, National Association, as trustee with respect to the Convertible Notes.

“CORSIA” means the Carbon Offsetting and Reduction Scheme for International Aviation.

“COVID-19” means coronavirus.

“Credit Facilities” means, collectively, the 2013 Credit Facilities, 2014 Credit Facilities, April 2016 Credit Facilities and December 2016 Credit Facilities.

“CWA” means Communications Workers of America.

“CWA-IBT” means the Airline Employees Customer Service Association – Communications Workers of America and International Brotherhood of Teamsters.

“DCA” means Ronald Reagan Washington National Airport.

“DC Court” means the Federal District Court for the District of Columbia.

“Debtors” means AMR, American, and certain of AMR’s other direct and indirect domestic subsidiaries.

“December 2016 Credit Agreement” means the Credit and Guaranty Agreement dated as of December 15, 2016, among American, AAG, the lenders from time to time party thereto, Citibank N.A., as administrative agent, and certain other parties thereto, as amended.

“December 2016 Credit Facilities” means the revolving credit facility that may be established under the December 2016 Credit Agreement and the December 2016 Term Loan Facility provided for by the December 2016 Credit Agreement.

“December 2016 Term Loan Facility” means the $1.2 billion term loan facility provided for under the December 2016 Credit Agreement.

“Delayed Draw Term Loan Credit Facility” means the Credit and Guaranty Agreement dated as of March 18, 2020, among American, AAG, the lenders from time to time party thereto, Citibank N.A., as administrative agent, and certain other parties thereto, as amended.

“Disputed Claims Reserve” means a reserve established by the Bankruptcy Court, pursuant to the Plan, to hold shares of AAG common stock for issuance to disputed claimholders at the Effective Date.

“DOJ” means the U.S.

Department of Justice.

“DOT” means the U.S.

Department of Transportation.

“EC” means the European Commission.

“EETC” means enhanced equipment trust certificate.

“Effective Date” means December 9, 2013.

“Eighth Amendment” means the Eighth Amendment entered into in January 2020 to the 2014 Credit Agreement.

“Envoy” means Envoy Air Inc.

“EPA” means the U.S.

Environmental Protection Agency.

“EPS” means earnings (loss) per common share.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Ethics Standards” means AAG’s and American’s Standards of Business Conduct.

“ETS” means EU Emissions Trading Scheme.

“EU” means European Union.

"EWR" means Newark Liberty International Airport.

“Exchange Act” means Securities Exchange Act of 1934, as amended.

“FAA” means Federal Aviation Administration.

“First Lien 11.75% Senior Secured Notes Collateral” means certain assets, rights and properties utilized by American in providing its scheduled air carrier services to and from certain airports in the United States and certain airports in Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, Mexico, South Korea, and Switzerland which are used to secure the 11.75% Senior Secured Notes on a first-lien basis.

“GAAP” means generally accepted accounting principles in the U.S.

“GDSs” means global distribution systems.

“GHG” means greenhouse gas.

“GSPC” means S&P 500 Index.

“holdback” means an amount of cash held by our credit card processors in certain circumstances (including, with respect to certain agreements, our failure to maintain certain levels of liquidity).

“IAM” means International Association of Machinists & Aerospace Workers.

“IAM Pension Fund” means the IAM National Pension Fund.

“IBT” means International Brotherhood of Teamsters.

“ICAO” means International Civil Aviation Organization.

“IP Collateral” means certain intellectual property of American, including the “American Airlines” trademark and the “aa.com” domain name in the United States and certain foreign jurisdictions, to which American has given a first lien security interest to secure the IP Notes.

“IP Notes” means American’s $1.0 billion in initial principal amount of 10.75% senior secured IP notes.

“IP Notes Indenture” means the indenture, dated as of September 25, 2020, by and among American, AAG and Wilmington Trust, National Association, as trustee and as collateral trustee, pursuant to which the IP Notes were issued.

“Installment” means the financial assistance payment, in installments, by Treasury pursuant to the PSP2 Agreement.

“JCBA” means joint collective bargaining agreement.

“JetBlue” means JetBlue Airways Corporation.

“JFK” means John F.

Kennedy International Airport.

“LAWA” means the Los Angeles World Airports.

“LAX” means Los Angeles International Airport.

“LEED” means U.S.

Green Building Council’s Leadership in Energy and Environmental Design.

“LGA/DCA Collateral” means certain slots related to American’s operations at LGA and DCA and certain other assets that are used as (a) a first-lien security interest to secure the December 2016 Credit Facilities, (b) a first lien security interest to secure the LGA/DCA Notes and (c) a second lien security interest to secure the IP Notes.

“LGA/DCA Notes” means American’s $200 million in initial principal amount of 10.75% senior secured LGA/DCA notes.

“LGA/DCA Notes Indenture” means the indenture, dated as of September 25, 2020, by and among American, AAG and Wilmington Trust, National Association, as trustee and as collateral trustee, pursuant to which the LGA/DCA Notes were issued.

“LGA” means LaGuardia Airport.

“LGW” or “London Gatwick” means London Gatwick Airport.

“LHR” or “London Heathrow” means London Heathrow Airport.

“LIBOR” means the London interbank offered rate for deposits of U.S.

“Loyalty Program Revenues” means the revenues received by American and AAG from the AAdvantage loyalty program.

“LTV” means loan to value ratio.

“Mainline” means the operations of American and excludes regional operations.

“marketing component” means, with respect to the AAdvantage program, the use of intellectual property, including the American brand and access to loyalty program member lists, which is the predominant element in the co-branded credit card agreements, as well as advertising.

“Merger” means the merger of US Airways Group and AMR Corporation on December 9, 2013.

“Mesa” means Mesa Airlines, Inc.

“New Lease Standard” means ASU 2016-02:

Leases (Topic 842)

“New Retirement Standard” means ASU 2017-07:

Compensation – Retirement Benefits.

“New Revenue Standard” means ASU 2014-09:

Revenue from Contracts with Customers.

“NMB” means National Mediation Board.

“NOL Carryforwards” means a deduction in any taxable year for net operating losses carried over from prior taxable years.

“NOLs” means net operating losses.

“NYSE” means the New York Stock Exchange.

“NYTDC” means the New York Transportation Development Corporation.

“ORD” means Chicago O’Hare International Airport.

“OTAs” means online travel agents.

“PAFCA” means Professional Airline Flight Control Association.

“Passenger load factor” means the percentage of available seats that are filled with revenue passengers.

“PCAOB” means the Public Company Accounting Oversight Board in the U.S.

“PEB” means Presidential Emergency Board.

“Piedmont” means Piedmont Airlines, Inc.

“Plan” means the Debtors’ fourth amended joint plan of reorganization.

“PRASM” means passenger revenue per available seat mile and is equal to passenger revenues divided by ASMs.

“Proxy Statement” means American Airlines Group Inc.’s Proxy Statement for the 2021 Annual Meeting of Stockholders of American Airlines Group Inc.

“PRP” means potentially responsible party.

“PSA” means PSA Airlines, Inc.

“PSP1” means the payroll support program established under the CARES Act.

“PSP1 Agreement” means the Payroll Support Program Agreement entered into by the Subsidiaries with Treasury on the PSP1 Closing Date.

“PSP1 Closing Date” means April 20, 2020.

"PSP1 Financial Assistance" means the portion of financial assistance received from Treasury pursuant to the PSP1 Agreement that is not allocated to the PSP1 Warrants or PSP1 Promissory Note.

“PSP1 Maturity Date” means the tenth anniversary of the PSP1 Closing Date.

“PSP1 Promissory Note” means the promissory note issued to Treasury in connection with PSP1.

“PSP1 Warrant Agreement” means the agreement entered into between AAG and Treasury in connection with the PSP1 Agreement, pursuant to which AAG issued PSP1 Warrants to Treasury to purchase up to an aggregate of approximately 14.1 million shares of AAG common stock.

“PSP1 Warrant Shares” means up to approximately 14.1 million shares of AAG common stock which Treasury will have the right to purchase pursuant to PSP1 Warrants issued by AAG in accordance with the PSP1 Warrant Agreement.

“PSP1 Warrants” means the warrants issued or to be issued to Treasury pursuant to the PSP1 Warrant Agreement.

“PSP2” means the payroll support program established under the PSP Extension Law.

“PSP2 Agreement” means the Payroll Support Program Extension Agreement entered into by the Subsidiaries with Treasury on the PSP2 Closing Date.

“PSP2 Closing Date” means January 15, 2021.

“PSP2 Maturity Date” means the tenth anniversary of the PSP2 Closing Date.

“PSP2 Promissory Note” means the promissory note issued to Treasury in connection with PSP2.

“PSP2 Warrant Agreement” means the agreement entered into between AAG and Treasury in connection with the PSP2 Agreement, pursuant to which AAG issued PSP2 Warrants to Treasury to purchase at least 5.7 million shares of AAG common stock.

“PSP2 Warrant Shares” means at least 5.7 million shares of AAG common stock which Treasury will have the right to purchase pursuant to PSP2 Warrants issued or to be issued by AAG in accordance with the PSP2 Warrant Agreement.

“PSP2 Warrants” means the warrants issued or to be issued to Treasury pursuant to the PSP2 Warrant Agreement.

“PSP Extension Law” means Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021.

“Rehabilitation Plan” means the rehabilitation plan adopted by the IAM Pension Fund on April 17, 2019.

“Republic” means Republic Airways Inc.

“Republic Holdings” means Republic Airways Holdings Inc., the parent company of Republic.

“RLA” means Railway Labor Act.

“ROU” means right-of-use.

“RPM” or “RPMs” means revenue passenger mile or miles and is a basic measure of sales volume.

One RPM represents one passenger flown one mile.

“RSUs” means restricted stock units.

“S&P” means Standard and Poor’s Financial Services, LLC.

“SEA” means Seattle-Tacoma International Airport.

“SEC” means Securities and Exchange Commission.

“Second Lien 11.75% Senior Secured Notes Collateral” means certain assets, rights and properties utilized by American in providing its scheduled air carrier services to and from certain airports in the United States and certain airports in the European Union and the United Kingdom which are used to secure the 11.75% Senior Secured Notes on a first-lien basis.

“Section 382” means Section 382 of the Internal Revenue Code.

“Securities Act” means Securities Act of 1933, as amended.

“SGRs” means slots, foreign gate leaseholds, and routine authorities.

“SkyWest” means SkyWest Airlines, Inc.

“slots” means landing and take-off rights and authorizations, as required by certain airports.

“SOFR” means the Secured Overnight Financing Rate.

“Subsidiaries” means American, Envoy, PSA and Piedmont, each a wholly-owned subsidiary of AAG.

“Superfund Act” means Comprehensive Environmental Response, Compensation and Liability Act.

“Terminal” means the passenger terminal facility used by American at JFK.

“TRASM” means the total revenue per available seat mile and is equal to the total revenues divided by total mainline and third-party regional carrier ASMs.

“Treasury” means the U.S.

Department of the Treasury.

“Treasury Collateral” means American's rights under U.S.

co-branded credit card agreements and certain other loyalty program partner participation agreements (including rights to receive cash flows thereunder), documents, deposit accounts, securities accounts, books and records and intellectual property related to American's AAdvantage loyalty program and all proceeds, accessions, rents or profits related to the foregoing.

“Treasury Loan Agreement” means the Loan and Guarantee Agreement, dated as of September 25, 2020, between AAG, American and Treasury which provides for the Treasury Term Loan Facility.

“Treasury Loan Closing Date” means September 25, 2020.

“Treasury Loan Restatement Agreement” means the Restatement Agreement, dated as of October 21, 2020, to the Treasury Loan Agreement.

“Treasury Loan Warrant Agreement” means the warrant agreement, dated as of September 25, 2020, between AAG and Treasury entered into in connection with the Treasury Loan Agreement, pursuant to which AAG will issue Treasury Loan Warrants to Treasury to purchase shares of AAG common stock.

“Treasury Loan Warrants” means the warrants issued or to be issued to Treasury pursuant to the Treasury Loan Warrant Agreement.

“Treasury Loan Warrant Shares” means shares of AAG common stock which Treasury will have the right to purchase pursuant to Treasury Loan Warrants issued by AAG in accordance with the Treasury Loan Warrant Agreement.

“Treasury Term Loan Facility” means the term loan facility provided for under the Treasury Loan Agreement.

“Treasury Term Loan Maturity Date” means June 30, 2025.

“TSA” means Transportation Security Administration.

“TWU” means Transport Workers Union.

“TWU-IAM Association” means Transport Workers Union and International Association of Machinists & Aerospace Workers.

“US Airways” means US Airways, Inc.

“US Airways Group” means US Airways Group, Inc.

and its consolidated subsidiaries.

“USTR” means the Office of the U.S.

Trade Representative.

“Withdrawal Agreement” means the agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community.

“WTO” means World Trade Organization.

“XAL” means NYSE ARCA Airline Index.

“Yield” means a measure of airline revenue derived by dividing passenger revenue by RPMs.

Tab le of Contents

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business