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Item 5. Market for Registrant’s Common Equity

2021-02-17 compared with 2020-02-19 · 80 added, 64 removed, 112 unchanged (56% of the section changed)

1 unchanged sentence

Stock Exchange Listing

Our common stock is listed on The Nasdaq Global Select Market under the symbol “AAL.” There is no trading market for the common stock of American, which is a wholly-owned subsidiary of AAG.

Our common stock is listed on The Nasdaq Global Select Market under the trading symbol “AAL.” There is no trading market for the common stock of American, which is a wholly-owned subsidiary of AAG.

As of February 12, 2021, the closing price of our common stock was $17.27 and there were 12,527 holders of record.

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Dividends on Common Stock

In January 2020 , we announced that our Board of Directors declared a $0.10 per share cash dividend for stockholders of record on February 5, 2020 , and payable on February 19, 2020 .

The total cash payment for dividends during the years ended December 31, 2020 and 2019 was $43 million and $178 million, respectively.

Any future dividends that may be declared and paid from time to time will be subject to market and economic conditions, applicable legal requirements and other relevant factors.

We are not obligated to continue a dividend for any fixed period, and the payment of dividends may be suspended or discontinued at any time at our discretion and without prior notice.

In connection with our receipt of financial assistance under PSP1 and PSP2, we agreed not to pay dividends on AAG common stock through at least March 31, 2022.

In addition, we have entered into the Treasury Loan Agreement, and as a result, we are further prohibited from paying dividends on AAG common stock through the date that is one year after the secured loan provided under the Treasury Loan Agreement is fully repaid.

If we determine to make any dividends in the future, such dividends that may be declared and paid from time to time will be subject to market and economic conditions, applicable legal requirements and other relevant factors.

We are not obligated to continue a dividend for any fixed period, and the payment of dividends may be suspended or discontinued again at any time at our discretion and without prior notice.

Stock Performance Graph

The following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Exchange Act, each as amended, except to the extent that we specifically incorporate it by reference into such filing.

The following stock performance graph compares the cumulative total stockholder returns during the period from December 31, 2014 to December 31, 2019 of our common stock to the New York Stock Exchange (NYSE) ARCA Airline Index and the Standard and Poor’s (S&P) 500 Stock Index.

The following stock performance graph compares the cumulative total stockholder returns during the period from December 31, 2015 to December 31, 2020 of our common stock to the New York Stock Exchange (NYSE) ARCA Airline Index and the Standard and Poor’s Financial Services, LLC (S&P) 500 Stock Index.

The comparison assumes $100 was invested on December 31, 2015 in our common stock and in each of the foregoing indices and assumes that all dividends were reinvested.

The stock performance shown on the following graph represents historical stock performance and is not necessarily indicative of future stock price performance.

12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020

American Airlines Group Inc.

(AAL) $ 100 $ 111 $ 125 $ 78 $ 71 $ 39

NYSE ARCA Airline Index (XAL) 100 128 134 104 126 95

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Purchases of Equity Securities by the Issuer and Affiliated Purchasers

In April 2018, we announced that our Board of Directors authorized a $2.0 billion share repurchase program that will expire on December 31, 2020.

Since July 2014, our Board of Directors has approved seven share repurchase programs aggregating $13.0 billion of authority.

Since July 2014, as part of our capital deployment program, our Board of Directors had approved seven share repurchase programs aggregating $13.0 billion of authority.

The $420 million of remaining authority to repurchase shares under our most recent $2.0 billion share repurchase program expired on December 31, 2020.

In connection with our receipt of financial assistance under PSP1 and PSP2, we agreed not to repurchase shares of AAG common stock through at least March 31, 2022.

In addition, we have entered into the Treasury Loan Agreement and, as a result, we are further prohibited from repurchasing shares of AAG common stock through the date that is one year after the secured loan provided under the Treasury Loan Agreement is fully repaid.

In 2020, we repurchased 6.4 million shares of AAG common stock for $145 million at a weighted average cost per share of $22.77, all of which were purchased in the first quarter of 2020.

In 2019, we repurchased 33.8 million shares of AAG common stock for $1.1 billion at a weighted average cost per share of $32.09.

In 2018 , we repurchased 16.6 million shares of AAG common stock for $800 million at a weighted average cost per share of $48.15 .

Since the inception of our share repurchase programs in July 2014 through December 31, 2019, we have repurchased 312.7 million shares of AAG common stock for $12.4 billion at a weighted average cost per share of $39.76 .

The following table displays information with respect to our purchases of shares of AAG common stock during the three months ended December 31, 2019 .

Total number of

shares purchased

Average price

paid per share

Total number of shares

purchased as part of

publicly announced

plan or program

Maximum dollar value of shares

that may be purchased under

the plan or program

(in millions)

November 2019

December 2019

Share repurchases under our repurchase programs may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions.

Any such repurchases that may be made from time to time will be subject to market and economic conditions, applicable legal requirements and other relevant factors.

We are not obligated to repurchase any specific number of shares and our repurchase of AAG common stock may be limited, suspended or discontinued at any time at our discretion and without prior notice.

If we determine to make any share repurchases in the future, such repurchases under our repurchase programs may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions.

These share repurchase programs do not obligate us to acquire any specific number of shares or to repurchase any specific number of shares for any fixed period, and may be suspended again at any time at our discretion and without prior notice.

The timing and amount of repurchases, if any, will be subject to market and economic conditions, applicable legal requirements, such as the requirements of the CARES Act, the PSP Extension Law and other relevant factors.

Our repurchase of AAG common stock may be limited, suspended or discontinued at any time at our discretion and without prior notice.

See Part I, Item 1A.

Risk Factors – “ We cannot guarantee that we will continue to repurchase our common stock or pay dividends on our common stock or that our capital deployment program will enhance long-term stockholder value.

Our capital deployment program could increase the volatility of the price of our common stock and diminish our cash reserves .

Risk Factors – “ We have ceased making repurchases of our common stock and paying dividends on our common stock as required by the CARES Act and the PSP Extension Law.

Following the end of those restrictions, if we do decide to make repurchases of or pay dividends on our common stock, we cannot guarantee that we will continue to do so or that our capital deployment program will enhance long-term stockholder value.

Ownership Restrictions

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In addition, to reduce the risk of a potential adverse effect on our ability to use our NOL Carryforwards and certain other tax attributes for federal income tax purposes, our Certificate of Incorporation contains certain restrictions on the acquisition and disposition of our common stock by substantial stockholders (generally holders of more than 4.75%).

This provision is currently scheduled to expire by its terms in December 2021.

See Part I, Item 1A.

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Compensation - Retirement Benefits (the New Retirement Standard).

The 2017 and 2016 financial information presented within Item 6.

The 2017 and 2016 financial information presented within this Item 6.

Selected Consolidated Financial Data has been recast to reflect the impact of the adoption of the New Revenue Standard and the New Retirement Standard.

The New Lease Standard did not require the recast of prior periods.

See Note 1(b) to AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, respectively, of AAG’s and American’s Annual Report on Form 10-K for the year ended December 31, 2018 (the 2018 Form 10-K), for further information on the impacts of these new accounting standards.

See Note 1(b) to each of AAG’s and American’s Consolidated Financial Statements in Part II, Items 8A and 8B, respectively, of AAG’s and American’s Annual Report on Form 10-K for the year ended December 31, 2018, for further information on the impacts of these new accounting standards.

Selected Consolidated Financial Data of AAG

The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and “Consolidated Balance Sheet data” for the years ended December 31, 2019 , 2018 , 2017 , 2016 and 2015 are derived from AAG’s audited consolidated financial statements.

The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and “Consolidated Balance Sheet data” for the years ended and as of December 31, 2020, 2019, 2018, 2017 and 2016, are derived from AAG’s audited consolidated financial statements.

Year Ended December 31,

2020 2019 2018 2017 2016

(In millions, except share and per share amounts)

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Total operating expenses 27,758 42,703 41,885 38,391 35,082

Operating income

Earnings per common share:

Operating income (loss) (10,421) 3,065 2,656 4,231 5,060

Net income (loss) (8,885) 1,686 1,412 1,282 2,584

Earnings (loss) per common share:

Basic $ (18.36) $ 3.80 $ 3.04 $ 2.62 $ 4.68

Diluted (18.36) 3.79 3.03 2.61 4.65

Shares used for computation (in thousands):

Basic 483,888 443,363 464,236 489,164 552,308

Diluted 483,888 444,269 465,660 491,692 556,099

Cash dividends declared per common share $ 0.10 $ 0.40 $ 0.40 $ 0.40 $ 0.40

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(at end of period):

Total assets $ 62,008 $ 59,995 $ 60,580 $ 52,785 $ 53,610

Debt and finance leases

32,593 24,315 24,473 25,065 24,344

Pension and postretirement obligations (1)

7,131 6,081 6,937 7,596 7,946

Operating lease liabilities 8,428 9,129 9,556 — —

Stockholders’ equity (deficit)

Stockholders’ deficit (6,867) (118) (169) (780) (286)

(1) Substantially all defined benefit pension plans were frozen effective November 1, 2012.

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Reconciliation of GAAP to Non-GAAP Financial Measures

We sometimes use financial measures that are derived from the consolidated financial statements but that are not presented in accordance with accounting principles generally accepted in the United States (GAAP) to understand and evaluate our current operating performance and to allow for period-to-period comparisons.

We sometimes use financial measures that are derived from the consolidated financial statements but that are not presented in accordance with accounting principles generally accepted in the U.S.

(GAAP) to understand and evaluate our current operating performance and to allow for period-to-period comparisons.

We believe these non-GAAP financial measures may also provide useful information to investors and others.

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We are providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis.

The following table presents the components of our total net special items and the reconciliation of pre-tax income and net income (GAAP measures) to pre-tax income excluding net special items and net income excluding net special items (non-GAAP measures).

Management uses pre-tax income excluding net special items and net income excluding net special items to evaluate our current operating performance and to allow for period-to-period comparisons.

The following table presents the components of our total net special items and the reconciliation of pre-tax income (loss) and net income (loss) (GAAP measures) to pre-tax income (loss) excluding net special items and net income (loss) excluding net special items (non-GAAP measures).

Management uses pre-tax income (loss) excluding net special items and net income (loss) excluding net special items to evaluate our current operating performance and to allow for period-to-period comparisons.

As net special items may vary from period-to-period in nature and amount, the adjustment to exclude net special items allows management an additional tool to understand our core operating performance.

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Components of Total Special Items, Net:

Fleet restructuring expenses (2)

PSP1 Financial Assistance (2)

$ (3,710) $ —

Fleet impairment (3)

Merger integration expenses (4)

Litigation reserve adjustments

Mark-to-market adjustments on bankruptcy obligations, net (5)

Severance expenses (4)

Intangible asset impairment (7)

Labor contract expenses (5)

Other operating charges, net

Mark-to-market adjustments on bankruptcy obligations, net (6)

Fleet restructuring expenses (7)

Merger integration expenses (8)

Litigation reserve adjustments — (53)

Other operating special items, net (18) 13

Mainline operating special items, net (657) 635

PSP1 Financial Assistance (2)

Fleet impairment (3)

Severance expenses (4)

Other operating special items, net — 6

Regional operating special items, net (309) 6

Operating special items, net (966) 641

Debt refinancing and extinguishment charges

Mark-to-market adjustments on equity and other investments, net (9)

Other nonoperating income, net

Debt refinancing, extinguishment and other, net 35 8

Nonoperating special items, net 170 3

Pre-tax special items, net (796) 644

Income tax special items, net (9)

Total special items, net $ (796) $ 644

Reconciliation of Pre-Tax Income Excluding Net Special Items:

Pre-tax income – GAAP

Reconciliation of Pre-Tax Income (Loss) Excluding Net Special Items:

Pre-tax income (loss) – GAAP $ (11,453) $ 2,256

Adjusted for:

Pre-tax special items, net (796) 644

Pre-tax income excluding net special items

Reconciliation of Net Income Excluding Net Special Items:

Net income – GAAP

Pre-tax income (loss) excluding net special items $ (12,249) $ 2,900

Reconciliation of Net Income (Loss) Excluding Net Special Items:

Net income (loss) – GAAP $ (8,885) $ 1,686

Adjusted for:

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Net tax effect of net special items 170 (151)

Net income excluding net special items

Net income (loss) excluding net special items $ (9,511) $ 2,179

(1) See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items.

Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment grounded or expected to be grounded earlier than planned.

Fleet impairment principally includes a non-cash write-down of aircraft related to the planned retirement of our Embraer E190 fleet.

(2) PSP1 Financial Assistance represents recognition of financial assistance received from Treasury pursuant to the PSP1 Agreement.

See Note 1(b) to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information.

(3) The 2020 fleet impairment resulted from our decision to retire certain aircraft earlier than planned driven by the severe decline in air travel due to the COVID-19 pandemic.

Aircraft retired include Airbus A330-200, Boeing 757, Boeing 767, Airbus A330-300, Embraer 190, certain Embraer 140 and Bombardier CRJ200 aircraft.

This included a $1.5 billion non-cash write-down of mainline and regional aircraft and spare parts and $109 million in cash charges primarily for impairment of right-of-use (ROU) assets and lease return costs.

See Note 1(g) to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information related to these charges.

The 2019 fleet impairment principally included a non-cash write-down of aircraft related to the retirement of our Embraer 190 fleet.

(4) The 2020 severance expenses included salary and medical costs primarily associated with certain team members who opted in to voluntary early retirement programs offered as a result of reductions to our operation due to the COVID-19 pandemic.

Cash payments related to these charges for the year ended December 31, 2020 were approximately $365 million.

The 2019 severance expenses primarily included costs associated with reductions of management and support staff team members.

(5) Labor contract expenses primarily related to one-time charges resulting from the ratification of a new contract with the TWU-IAM Association for our maintenance and fleet service team members, including signing bonuses and adjustments to vacation accruals resulting from pay rate increases.

(6) Bankruptcy obligations that will be settled in shares of AAG common stock are marked-to-market based on AAG’s stock price.

(7) Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment expected to be retired earlier than planned.

(8) Merger integration expenses included costs associated with integration projects, principally our technical operations, flight attendant, human resources and payroll systems.

Bankruptcy obligations that will be settled in shares of our common stock are marked-to-market based on our stock price.

Severance expenses primarily included costs associated with reductions of management and support staff team members.

Intangible asset impairment includes a non-cash charge to write-off our Brazil route authority as a result of the U.S.-Brazil open skies agreement.

Mark-to-market adjustments on equity and other investments, net primarily relates to net unrealized gains and losses associated with our equity investment in China Southern Airlines.

Income tax special items, net for 2018 included an $18 million charge related to an international income tax matter.

(9) Mark-to-market adjustments on equity and other investments, net primarily related to net unrealized gains and losses associated with our equity investment in China Southern Airlines and certain treasury rate lock derivative instruments.

Additionally, the table below presents the reconciliation of total operating expenses (GAAP measure) to total operating costs excluding net special items and fuel (non-GAAP measure).

Management uses total operating costs excluding net special items and fuel to evaluate our current operating performance and for period-to-period comparisons.

Management uses total operating costs excluding net special items and aircraft fuel to evaluate our current operating performance and for period-to-period comparisons.

The price of fuel, over which we have no control, impacts the comparability of period-to-period financial performance.

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Aircraft fuel and related taxes – regional (0.57) (0.66)

Total CASM, excluding net special items and fuel

Total operating CASM, excluding net special items and fuel 17.69 11.46

(1) See Note 2 to AAG’s Consolidated Financial Statements in Part II, Item 8A for further information on net special items.

Selected Consolidated Financial Data of American

The selected consolidated financial data presented below under the captions “Consolidated Statements of Operations data” and “Consolidated Balance Sheet data” for the years ended and as of December 31, 2020, 2019, 2018, 2017 and 2016 are derived from American’s audited consolidated financial statements.

Year Ended December 31,

2020 2019 2018 2017 2016

(In millions)

2 unchanged sentences

Total operating expenses 27,559 42,714 41,807 38,405 35,045

Operating income

Operating income (loss) (10,224) 3,047 2,723 4,205 5,080

Net income (loss) (8,450) 1,972 1,658 1,285 2,689

Consolidated Balance Sheet data

(at end of period):

Total assets $ 69,215 $ 71,890 $ 70,878 $ 61,401 $ 60,428

Debt and finance leases

28,982 23,042 23,197 23,294 22,577

Pension and postretirement obligations (1)

7,089 6,037 6,893 7,550 7,904

Operating lease liabilities 8,380 9,083 9,496 — —

3 unchanged sentences

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 5. Market for Registrant’s Common Equity