What changed in this filing

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Item 1. Business

2025-02-19 compared with 2024-02-21 · 113 added, 120 removed, 285 unchanged (45% of the section changed)

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

In 2023, approximately 211 million passengers boarded our flights.

During 2023, we launched more than 50 new routes, providing service to close to 350 destinations around the world, and we announced several new destinations for customers to explore in 2024:

Copenhagen, Denmark;

Naples, Italy;

Nice, France;

Governor’s Harbour, Bahamas;

Tijuana, Mexico;

Tulum, Mexico;

Ocho Rios, Jamaica;

Pasco, Washington and Hyannis, Massachusetts.

In 2024, we announced new service to Brisbane, Australia and Veracruz, Mexico, as well as additional nonstop service between New York and Tokyo, Japan.

As of December 31, 2023, we operated 965 mainline aircraft supported by our regional airline subsidiaries and third-party regional carriers, which together operated an additional 556 regional aircraft.

We provide service to over 350 destinations around the world, and in 2024, over 226 million passengers boarded our flights as we launched more than 50 new routes, including from New York to Tokyo, Dallas/Fort Worth to Brisbane, Philadelphia to Copenhagen and Philadelphia to Nice.

We also announced over 20 new or expanded routes for customers to explore in 2025, including to trans-Atlantic destinations such as Milan, Rome, Venice and Naples in Italy and Athens, Greece.

As of December 31, 2024, we operated 977 mainline aircraft supported by our wholly-owned regional airline subsidiaries and third-party regional carriers, which together operated an additional 585 regional aircraft.

See Part I, Item 2.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations – “2024 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 1(m) 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 and Note 13 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.

Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include our wholly-owned regional carriers Envoy Air Inc.

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In 2024, 54 million passengers boarded our regional flights, approximately 45% of whom connected to or from our mainline flights.

Our regional carrier arrangements are in the form of capacity purchase agreements with our third-party regional partners and similar arrangements with our wholly-owned affiliates which provide that all revenues, including passenger, in-flight, ancillary, mail and freight revenues, go to us.

In January 2025, we announced a wind-down of our relationship with Air Wisconsin, which we expect to conclude in the second quarter of 2025.

Our regional carrier arrangements are principally in the form of capacity purchase agreements with our third-party regional partners and similar arrangements with our wholly-owned affiliates which provide that all revenues, including passenger, in-flight, ancillary, mail and freight revenues, go to us.

We control marketing, scheduling, ticketing, pricing and seat inventories.

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In addition, these agreements provide that we either reimburse or pay 100% of certain variable costs, such as airport landing fees, fuel and passenger liability insurance.

In 2023, Air Wisconsin began operating scheduled flights under the American Eagle name.

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

In 2023, we served more than 21,000 unique origin and destination pairs, transporting over 900 million pounds of time-sensitive freight and mail across our network.

In 2024, we served approximately 21,000 unique origin and destination pairs, transporting over 1.0 billion pounds of time-sensitive freight and mail across our network.

We continue to focus on enhancements that enable us to better serve our customers, including expanding our digital offerings, which provide greater efficiency, increased accuracy, 24/7 access to search schedules, and the ability to check availability, retrieve rates and make bookings.

Distribution and Marketing Agreements

Passengers can purchase tickets for travel on American through several distribution channels, including our website ( www.aa.com ), our mobile app, our reservations centers and third-party distribution channels, including conventional travel agents, travel management companies and online travel agents (e.g., Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its booking sites Kayak and Priceline).

Passengers can purchase tickets for travel on American through several distribution channels, including our website ( www.aa.com ), our mobile app and our reservations centers, and through third-party distribution channels, including conventional travel agents, travel management companies and online travel agents (e.g., Expedia, including its booking sites Orbitz and Travelocity, and Booking Holdings, including its booking sites Kayak and Priceline).

Over the last decade, American has been a leader in deploying new distribution technologies such as IATA New Distribution Capability (NDC) technology, which is now the primary means by which we distribute our content to third parties through aggregators (e.g., Amadeus, Sabre, Travelport and Travelfusion) or through direct connections.

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

Oman Air is expected to join the one world Alliance in 2024, and Fiji Airways is a one world connect partner offering select alliance benefits to one world frequent flyers.

Oman Air is expected to join the one world Alliance in 2025.

Fiji Airways is currently a one world connect partner offering select alliance benefits to one world frequent flyers and is expected to become a full member of the one world Alliance in 2025.

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 member carriers’ loyalty programs and providing reciprocal access to the carriers’ airport lounge facilities.

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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.

We also have established a strategic alliance with Alaska Airlines covering certain routes on the West Coast of the United States and a strategic alliance with Qatar Airways covering the Middle East in order to provide customers with improved schedules and network connection opportunities, enhanced loyalty program reciprocity and cooperation in other areas.

We also have established a strategic alliance with Alaska Airlines and a strategic alliance with Qatar Airways in order to provide customers with improved schedules and network connection opportunities, enhanced loyalty program reciprocity and cooperation in other areas.

In July 2010, in connection with a regulatory review related to our transatlantic joint business, we provided certain commitments to the European Commission (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 were binding for 10 years.

In anticipation of both 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), in October 2018, opened an investigation into the transatlantic joint business.

In anticipation of both the exit of the United Kingdom (UK) 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), in October 2018, opened an investigation into the transatlantic joint business.

In September 2020 and April 2022, the CMA adopted interim measures that effectively extend the EC commitments until March 2026 in light of the uncertainty and other impacts resulting from the COVID-19 pandemic.

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These marketing agreements vary in scope and are intended to provide enhanced customer choice by means of an expanded network with reciprocal loyalty program participation, but do not involve the same level of cooperation as our joint businesses or strategic alliances.

As of December 31, 2023, in addition to the relationships described above, American had codeshare, marketing and/or loyalty program relationships with Air Tahiti Nui, Cape Air, Cathay Pacific, China Southern Airlines Company Limited (China Southern Airlines), EL AL Israel Airlines, Etihad Airways, Fiji Airways, GOL Linhas Aéreas Inteligentes S.A.

(GOL), Gulf Air, Hawaiian Airlines, IndiGo, JetSMART, Jetstar, Jetstar Japan, Malaysia Airlines, Philippine Airlines, Royal Air Maroc, Royal Jordanian Airlines, Silver Airways, SriLankan Airlines and Vueling Airlines.

In 2023, we completed codeshare agreements with JetSMART, enabling American’s customers to book travel on JetSMART’s network beyond Santiago, Chile and Lima, Peru, and which will allow for further extension of our network to other markets in South America, such as Argentina, on JetSMART operated flights, subject to all necessary regulatory approvals.

Also in 2023, we launched a codeshare partnership with Philippine Airlines.

This partnership introduced the first marketed flights by a Philippine carrier to several U.S.

destinations and allows American’s customers to travel to Manila and Cebu, Philippines.

We had a marketing relationship, the Northeast Alliance arrangement (NEA), with JetBlue Airways Corporation (JetBlue) that included an alliance agreement with reciprocal codesharing on certain domestic and international routes from New York (John F.

Kennedy International Airport (JFK), LaGuardia Airport (LGA) and Newark Liberty International Airport) and Boston Logan International Airport.

On May 19, 2023, the U.S.

District Court for the District of Massachusetts issued an order permanently enjoining American and JetBlue from continuing and further implementing the NEA.

In June 2023, JetBlue delivered a notice of termination of the NEA, effective July 29, 2023, and the carriers have commenced wind-down activities to accommodate mutual customers.

As of December 31, 2024, in addition to the relationships described above, American had codeshare, marketing and/or loyalty program relationships with Air Tahiti Nui, Cathay Pacific, China Southern Airlines Company Limited (China Southern Airlines), Etihad Airways, Fiji Airways, GOL Linhas Aéreas Inteligentes S.A.

(GOL), Gulf Air, Hawaiian Airlines, IndiGo, JetSMART, Jetstar, Jetstar Japan, Korean Air Lines, Malaysia Airlines, Philippine Airlines, Royal Air Maroc, Royal Jordanian Airlines, SriLankan Airlines and Vueling Airlines.

AAdvantage ® Program

Our AAdvantage program was established to develop passenger loyalty by offering benefits and rewards to travelers for their continued patronage with American and our partners.

AAdvantage members enjoy exclusive benefits and earn mileage credits for flying on eligible tickets on American, any one world Alliance airline or other partner airlines.

AAdvantage members enjoy exclusive benefits and earn AAdvantage mileage credits (miles) for flying on eligible tickets on American, any one world Alliance airline or other partner airlines.

For every dollar spent by flying on an eligible American ticket, members earn mileage credits, and AAdvantage Gold ® , AAdvantage Platinum ® , AAdvantage Platinum Pro ® and AAdvantage Executive Platinum ® status holders earn additional bonus mileage credits of 40%, 60%, 80% and 120%, respectively.

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The AAdvantage program in general, and our co-branded credit card programs in particular, are material assets of our business and have become increasingly important to our company over time.

During 2023 and 2022, cash payments from co-branded credit card and other partners were $5.2 billion and $4.5 billion, respectively.

Mileage credits can be redeemed for travel and upgraded experiences on American and participating airlines, membership to our Admirals Club ® , or for other non-flight awards, such as car rentals and hotels, from our program partners.

In December 2024, we announced a 10-year agreement with Citibank N.A.

(Citi) to become the exclusive issuer of the AAdvantage co-branded credit card portfolio in the U.S.

starting in 2026.

During 2024 and 2023, cash payments from co-branded credit card and other partners were $6.1 billion and $5.2 billion, respectively, an increase of 17% year-over-year.

Cash remuneration in 2024 included a one-time cash payment related to the new co-branded credit card agreement announced in December 2024.

Mileage credits can be redeemed for travel and upgraded experiences on American and participating airlines, access to our Admirals Club ® and Flagship Lounges ® , or for other non-flight awards, such as car rentals and hotels, from our program partners.

Travel awards are available on all flights operated by American and, subject to capacity-controlled seating, on flights operated by our partners.

A member’s mileage credits generally do not expire if that member has any type of qualifying activity at least once every 24 months or if the AAdvantage member is the primary holder of a co-branded credit card.

AAdvantage members qualify for status over a 12-month period beginning on March 1 of each year by earning

Loyalty Points, which can be earned through a variety of qualifying travel and non-travel activities, including use of our co-branded credit cards.

AAdvantage members qualify for status over a 12-month period beginning on March 1 of each year by earning Loyalty Points, which can be earned through a variety of qualifying travel and non-travel activities, including use of our co-branded credit cards.

Status members can enjoy additional travel 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 when traveling on American, any one world Alliance airline or select partner airlines.

In addition, AAdvantage members can unlock benefits, rewards and choices before, between and beyond the traditional status tiers with Loyalty Point Rewards.

In 2023, we introduced a new business loyalty program, AAdvantage Business, which rewards both eligible companies with AAdvantage miles and their travelers with additional Loyalty Points for booking business travel through our website or mobile app.

In 2023, the editorial staff of the digital news outlet, The Points Guy , selected AAdvantage as the Best U.S.

Airline Loyalty Program.

In addition, AAdvantage was recognized for the Best Elite Program in the Americas at the 2023 Freddie Awards, which is based entirely on votes from travelers around the world.

AAdvantage Business, our business loyalty program, rewards both eligible companies with AAdvantage miles and their travelers with additional Loyalty Points when booking business travel.

In 2024, the digital news outlet, The Points Guy , selected AAdvantage as the Best U.S.

Airline Loyalty Program for the second consecutive year based on the ease of earning miles, the value of mileage redemptions and benefits offered by the program.

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.

Program rules, partners, special offers, awards and requisite mileage levels for awards are subject to change.

During 2023, our members redeemed approximately 13 million awards, including travel redemptions for flights and upgrades on American and other air carriers, as well as redemption of car and hotel awards, club memberships and merchandise.

During 2024, our members redeemed approximately 15 million awards, including travel redemptions for flights and upgrades on American and other air carriers, as well as redemption of car and hotel awards, club memberships and merchandise, among others.

Approximately 9% of our 2024 total revenue passenger miles flown were from award travel.

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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, we face pricing pressures from so-called ultra-low-cost carriers, such as Allegiant Air, Frontier Airlines and Spirit Airlines, which compete in many of the markets in which we operate, with competition from these carriers increasing and new entrants regularly announcing their intention to start up new ultra-low-cost carriers.

In addition, we face pricing pressures from so-called ultra-low-cost carriers, such as Allegiant Air, Frontier Airlines and Spirit Airlines, which compete in many of the markets in which we operate.

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.

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International

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

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

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

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We have received recognition for our progress toward our sustainability goals.

American was named the 2023 Air Transport World Eco-Airline of the Year, and in 2023 we were named to the Dow Jones Sustainability World Index for the first time, one of only two passenger airlines included in the index.

We also returned to the Dow Jones Sustainability North America Index in 2023 for the third year in a row.

In 2024, we returned to the Dow Jones Sustainability World Index for the second consecutive year and to the Dow Jones Sustainability North America Index for the fourth consecutive year.

We recognize the challenge of climate change and have set ambitious goals to transition to operating a low-carbon airline over time.

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We have received validation from the Science Based Targets initiative (SBTi) that our 2035 GHG reduction target complies with the criteria in the SBTi’s first aviation pathway.

The vast majority of our direct GHG emissions comes from the use of jet fuel in our operations.

The vast majority of our direct GHG emissions come from the use of jet fuel in our operations.

Our current strategy for reaching net zero GHG emissions by 2050 is focused on running a more fuel-efficient operation, with more fuel-efficient aircraft, powered by low-carbon fuel.

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Achieving our ambitious goals will require significant action and investments by governments, manufacturers and other stakeholders.

We are committed to engaging with our stakeholders to seek to advance these initiatives, and we have dedicated resources to advance our own progress.

Our Board and Corporate Governance and Public Responsibility Committee receive updates on our climate strategy, progress and key risks regularly.

We are committed to engaging with our stakeholders to seek to advance these initiatives and have dedicated resources to advance our own progress.

Our Board of Directors and Corporate Governance and Public Responsibility Committee receive updates on our climate strategy, progress and key risks regularly.

Our Chief Executive Officer is responsible for oversight of our climate change strategy.

The safety of our customers and team members is a top priority.

Our approach to safety is guided by our FAA-approved safety management systems (SMS), an organization-wide approach to identifying and managing risk.

Our approach to safety is guided by our Federal Aviation Administration (FAA)-approved safety management systems (SMS), an organization-wide approach to identifying and managing risk.

Each SMS is comprised of four components:

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Lastly, the Safety Promotion component includes training and raising awareness among team members so that they can spot potential safety events.

We fly to close to 350 destinations in the United States and internationally, and we are committed to providing our customers with a world-class travel experience.

We fly to over 350 destinations in the United States and internationally, and we are committed to providing our customers with a world-class travel experience.

We continued to rigorously measure and track customer satisfaction through passenger surveys in 2024, efforts that led to further improvements in our operations and the services we provide.

In 2023, we achieved our best-ever full year completion factor, with the lowest number of cancellations annually since the 2013 merger with US Airways Group, Inc., which led to a record Likelihood to Recommend score for the full year.

Additionally in 2023, we were recognized for the sixth consecutive year with the prestigious Five Star rating in The APEX Official Airline Ratings – Global Airline category.

In 2024, we were recognized for the seventh consecutive year with the prestigious Five Star rating in The APEX Official Airline Ratings – Global Airline category.

This rating is based on verified customer feedback on the overall travel experience.

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Fostering a culture where our team members feel supported to take care of our customers is critical to our success.

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.

To do this, we must continue to hire the best and the brightest, ensure that people from all backgrounds are aware of the opportunities that exist in aviation, and create a culture where everyone can reach their full potential and thrive.

In 2024, mainline and regional salaries, wages and benefits were our largest expense and represented 36% of our total operating expenses.

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Talent Development

We focus on providing our team members the tools, training and resources they need to do their best work.

We focus on providing our team members with the tools, training and resources they need to do their best work.

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

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

Diversity, Equity and Inclusion

Cultivating an environment that celebrates diversity, equity and inclusion (DEI) is a 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.

We seek to hire the best and brightest and to create a workplace where all perspectives and experiences are welcomed, valued and encouraged and where every individual, regardless of their national origin, religion, race, gender, sexual orientation or background, not only knows they belong, but that they can thrive at our company.

Our goal is to make culture a competitive advantage so people will want to work with us, fly with us and invest in us.

We are implementing a multiyear strategy focused on embedding DEI throughout our company by:

• Hiring, engaging and retaining talent for growth;

We believe in:

• Hiring, engaging and retaining the best and the brightest talent for growth;

• Delivering excellence in our operations to serve and expand our global markets;

• Striving to have our teams effectively serve the communities we represent;

• Driving innovation to build competitive advantages.

In 2023, we received a perfect score on the Disability Equality Index for the eighth consecutive year and were named one of the best places to work for disability inclusion.

We also received a top score of 100 on the Human Rights Campaign Foundation’s 2023-2024 Corporate Equality Index, an assessment of LGBTQ+ workplace equality.

• Striving to have our teams build connections and trust with all who fly with us;

• Driving industry innovation to build competitive advantages.

In 2024, we received a perfect score on the Disability Equality Index for the ninth consecutive year and were named one of the best places to work for disability inclusion.

Competitive Pay and Comprehensive Benefits

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

Retaining and recruiting people with the appropriate skills became particularly challenging as the economy in general, and the airline industry in particular, recovered from the COVID-19 pandemic, and there remains intense competition for the human resources necessary to operate our business successfully.

Like many other airlines, we have experienced and continue to experience periodic shortages of frontline team members as a result.

We may not be successful in attracting, developing or retaining key personnel or other highly qualified personnel.

In addition, competition for skilled personnel has intensified and may continue to intensify if overall industry capacity continues to increase and/or we were to incur attrition at levels higher than we have historically.

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, develop and retain additional qualified personnel could adversely affect our business.”

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

Labor Relations

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Transport Workers Union (TWU) Flight Crew Training Instructors 370 2025

Union Class or Craft Employees (1)

Amendable Date

Air Line Pilots Associations (ALPA) Pilots 2,120 2029

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ALPA Flight Crew Training Instructors 60 2029

Union Class or Craft Employees (1)

Amendable Date

ALPA Pilots 1,710 2028

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(1) Represents approximate number of active employees as of December 31, 2024.

In 2023, a new four-year CBA was ratified by the APA, the union representing our mainline pilots.

Additionally, in January 2024, a new five-year CBA was ratified by the CWA-IBT, which is amendable in 2029.

The CBA covering our mainline flight attendants is now amendable and negotiations continue.

Among our wholly-owned regional subsidiaries, Piedmont fleet and passenger service and PSA flight attendants have agreements that are now amendable and are engaged in negotiations.

In 2024, new five-year CBAs were ratified by the APFA and CWA-IBT, the unions representing our mainline flight attendants and passenger service team members, respectively.

Also in 2024, the TWU-IAM ratified a two-year contract extension for our mainline maintenance and fleet service team members.

Among our wholly-owned regional subsidiaries, Piedmont fleet and passenger service and PSA flight attendants and dispatchers have agreements that are now amendable and we are engaged in negotiations.

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

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Airlines are subject to extensive domestic and international regulatory requirements.

Domestically, the DOT and the Federal Aviation Administration (FAA) exercise significant regulatory authority over air carriers.

Domestically, the U.S.

Department of Transportation (DOT) and the FAA exercise significant regulatory authority over air carriers.

The DOT, among other things, oversees and regulates domestic and international codeshare agreements, international route authorities, competition and consumer protection matters including accessibility, the display and sharing of ancillary fee information and refund practices.

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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 (JFK and LGA in New York City, and Ronald Reagan Washington National Airport (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.

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

Kennedy International Airport (JFK) and LaGuardia Airport (LGA) in New York City, and Ronald Reagan Washington National Airport (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 and take off from the particular airport during a specified time period.

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In certain circumstances, such as during the COVID-19 pandemic, regulators may issue slot waivers which temporarily suspend or amend slot usage requirements, and we have used slot waivers at times to reduce flying levels during periods of reduced demand for travel.

Moreover, on multiple occasions in 2023, the FAA issued slot waivers for New York City area airports as a result of operational challenges arising from air traffic control staffing shortages;

those waivers expire in October 2024, and we cannot guarantee that such waivers will be made available to us, or that upon expiration or cancellation of such waivers it will be economical for us to resume prior levels of flying to destinations where we have operated a reduced service.

Moreover, on occasions in 2023 and 2024, the FAA issued slot waivers for New York City area airports as a result of operational challenges arising from ATC staffing shortages;

those waivers are now set to expire in October 2025, and we cannot guarantee that such waivers will be made available to us, or that upon expiration or cancellation of such waivers it will be economical for us to resume prior levels of flying to destinations where we have operated a reduced service.

If we are forced to surrender slots or other rights, we may be unable to provide our desired level of service to or from certain destinations in the future.

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The DOT maintains authority over certain international fares, rates and charges, but only applies this authority on a limited basis.

In addition, international fares and rates are sometimes subject to the jurisdiction of the governments of the foreign countries which we serve.

In addition, international fares, rates and charges are sometimes subject to the jurisdiction of the governments of the foreign countries which we serve.

Airlines are obligated to collect a federal excise tax, commonly referred to as the “ticket tax,” on domestic and international air transportation, and to collect other taxes and charge other fees, such as foreign taxes, security fees and passenger facility charges.

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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 2023, the DOT finalized rules for accessible lavatories on single-aisle aircraft and has continued to work through proposals for a number of disability regulations that will impact us, including penalties for wheelchair loss or damage and prompt wheelchair assistance.

The DOT has also proposed rules requiring refunds for cancellations and significant delays and rules mandating the display of ancillary fees during the initial itinerary search.

In April 2024, the DOT issued a final rule mandating refunds in certain circumstances (refund rule), and a final rule requiring disclosure of certain ancillary fees by air carriers and travel agents (ancillary fee rule).

We met the compliance deadline of October 28, 2024 for the refund rule.

In July 2024, the U.S.

Court of Appeals for the Fifth Circuit granted the airline associations and individual airlines’ motion for a stay of the ancillary fee rule.

In August 2024, the DOT issued a proposed rulemaking related to family seating, which would require airlines to seat children aged 13 and under adjacent to at least one accompanying adult at no additional cost beyond the fare, subject to limited exceptions.

In December 2024, the DOT published an Advance Notice of Proposed Rulemaking titled “Airline Passenger Rights.” Specifically, the DOT is soliciting comments on requiring airlines to pay passengers cash compensation, to provide free rebooking, to cover meals and to provide overnight lodging and related transportation expenses when a disruption is airline-caused.

The DOT is also soliciting comments on requiring airlines to provide free rebooking, to cover meals and to provide lodging and related transportation expenses for significant domestic flight disruptions, regardless of the cause of the disruption.

Also in December 2024, the DOT published a final rule on “Ensuring Safe Accommodations for Air Travelers with Disabilities Using Wheelchairs” which sets new standards for assistance, mandates hands-on training for airline employees and contractors who physically assist passengers with disabilities and handle passengers’ wheelchairs, and specifies actions that airlines must take to protect passengers when a wheelchair is damaged or delayed during transport.

Individual requirements in the final rule have varying implementation timelines, ranging from January 16, 2025 (the effective date of the final rule) to June 17, 2026.

International

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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 and curfew restrictions at their local airports.

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

All aspects of civil aviation and border security in the U.S.

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The CBP is responsible for securing the nation’s borders by combining customs, immigration and agricultural protection.

The CBP regulatory requirements include the transmission of advanced passport data to facilitate the U.S.

entry process.

The CBP regulatory requirements include the advanced transmission of reservation records, passport and cargo data to facilitate lawful travel and trade into the U.S.

Funding for a portion of CBP operations is provided by a combination of fees collected by airlines.

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Environmental Regulation

The airline industry is subject to various laws and government regulations concerning environmental matters in the U.S.

The airline industry is subject to various environmental laws and regulations in the U.S.

and other countries.

federal laws that have a particular impact on our operations include the Airport Noise and Capacity Act of 1990, the Clean Air Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act and the Comprehensive Environmental Response, Compensation and Liability Act.

Environmental Protection Agency (EPA) and other federal agencies may promulgate regulations that have an impact on our operations.

In addition to these federal activities, various states have been delegated certain authorities under the aforementioned federal statutes.

Many state and local governments have adopted environmental laws and regulations that are similar to or stricter than federal requirements.

Revised underground storage tank regulations issued by the EPA in 2015 have affected certain airport fuel hydrant systems, with modifications of such systems needed in order to comply with applicable portions of the revised regulations.

In addition, related to the EPA and state regulations pertaining to storm water management, several U.S.

airport authorities are actively engaged in efforts to limit discharges of deicing fluid into the environment, often by requiring airlines to participate in the building or reconfiguring of airport deicing facilities.

Additionally, compliance with updated federal and state regulations governing fire extinguishing foams are expected to require modification to fire suppression systems that we operate, as well as those maintained by airports.

federal laws with a particular effect on our operations include the Airport Noise and Capacity Act of 1990, the Clean Air Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act and the Comprehensive Environmental Response, Compensation and Liability Act.

Environmental Protection Agency (EPA) and other federal agencies promulgate regulations that affect our operations.

In addition to these federal activities, various states have been delegated certain authorities under these aforementioned federal statutes.

Many state and local governments have adopted environmental laws and regulations that are similar to or stricter than the federal requirements.

Revised underground storage tank regulations issued by the EPA in 2015 have affected certain airport fuel hydrant systems, with modifications of those systems needed to comply with the revised regulations.

As part of EPA and state regulations of storm water management, several U.S.

airport authorities are trying to limit discharges of deicing fluid into the environment, which can include requiring airlines to help build or reconfigure airport deicing facilities.

Additionally, compliance with updated federal and state regulations governing firefighting foams are requiring modifications to the fire suppression systems we operate, as well as those maintained by airports.

On November 23, 2022, the EPA also published the final rule for particulate matter emission standards and test procedures for civil aircraft engines, which took effect on December 23, 2022.

These or similar regulations could directly or indirectly result in increased compliance costs, but at this time we do not expect these costs to be material.

These or similar regulations could result in increased compliance costs, but at this time we do not expect these costs to be material.

The environmental laws include those related to responsibility for potential soil and groundwater contamination.

We are conducting investigation and remediation activities to address soil and groundwater conditions at several sites, including airports and maintenance bases.

We presently anticipate that the ongoing costs of such activities will not have a material impact on our operations.

We employ an environmental management system that provides a systematic approach for compliance with environmental regulations and management of a broad range of environmental issues, including but not limited to air emissions, hazardous waste, underground tanks, and aircraft water quality.

We anticipate that the ongoing costs of those activities will not materially affect our operations.

We employ an environmental management system that provides a systematic approach for monitoring changes to and compliance with environmental regulations, and for managing a broad range of environmental issues, including air emissions, hazardous waste, underground tanks, and aircraft water quality.

Global and Domestic Regulation Related to Climate Change

Climate change-related regulatory activity and developments may adversely affect our business and financial results by requiring us to adapt to rapidly evolving domestic and international regulation and to achieve emission reductions before cost-effective technologies are available, for example, through requirements to make capital investments to purchase specific types of equipment or technologies, purchase carbon offset credits or otherwise incur additional costs related to our emissions.

Such trends may also impact us indirectly by increasing our operating costs, including fuel costs.

Climate change-related regulatory activity and developments may adversely affect our business and financial results by requiring us to adapt to rapidly evolving domestic and international regulations and to achieve emission reductions before cost-effective technologies are available, for example, through requirements to make capital investments to purchase specific types of equipment or technologies, purchase carbon offset credits or incur additional costs related to our emissions.

These trends may also affect us by increasing our operating costs, including fuel costs.

The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA)

We are subject to the requirements of the 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 until 2035 through the purchase of certain types of carbon offset credits or the use of eligible renewable fuels.

For each year from 2021 through 2032, CORSIA requires airlines to compensate for the rate of growth of GHG emissions of the aviation sector as a whole, relative to a predetermined baseline as determined by ICAO.

CORSIA is intended to achieve carbon-neutral

growth in the international aviation sector from 2021 until 2035 through the purchase of certain types of carbon offset credits or the use of eligible renewable fuels.

For each year from 2021 through 2032, CORSIA requires airlines to compensate for the rate of growth of GHG emissions of the aviation sector, relative to a predetermined ICAO baseline.

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

However, due to the impact of the COVID-19 pandemic on air travel, in June 2020, ICAO removed 2020 from the baseline calculation for the CORSIA pilot phase (2021-2023).

However, due to the effect of the COVID-19 pandemic on air travel, in June 2020, ICAO removed 2020 from the baseline calculation for the CORSIA pilot phase (2021-2023).

In October 2022, ICAO member countries agreed that 85% of 2019 emissions would be used as the baseline for the remainder of CORSIA’s term (2024-2035).

The CORSIA program is being implemented in three phases:

a pilot phase that ran from 2021 through 2023, followed by a first phase of the program beginning in 2024 through 2026 and a second phase beginning in 2027 through 2035.

a pilot phase that ran from 2021 through 2023, followed by a first phase of the program that began in 2024 through 2026 and a second phase beginning in 2027 through 2035.

ICAO member countries are expected to enact legislation to implement CORSIA.

We expect to be required to purchase carbon offset credits to comply with CORSIA’s first phase, however, the U.S.

government has not yet enacted implementation legislation.

Our future costs of CORSIA compliance are uncertain due to the uncertainty with respect to the future growth of covered GHG emissions, the supply and price of CORSIA-eligible carbon offset credits and development of the market for eligible renewable fuels.

We expect to be required to purchase carbon offset credits to comply with CORSIA’s first phase, but the U.S.

government has not enacted implementation legislation.

Our future costs of CORSIA compliance are uncertain due to the uncertainty in the growth of covered GHG emissions, the supply and price of CORSIA-eligible carbon offset credits and development of the market for eligible renewable fuels.

European GHG Emissions Regulations

On May 16, 2023, revisions to the EU Emissions Trading System (EU ETS) were published in the Official Journal of the EU.

Pursuant to these revisions, the allocation of emissions allowances currently granted for free to aircraft operators under the EU ETS will be phased out by 2026, and CORSIA will apply to flights to and from EU countries that are ICAO member countries.

The EC will also be required to undertake a review in 2026 to determine whether CORSIA is sufficiently delivering on the goals of the Paris Agreement and, to the extent it is determined not to be, would extend the scope of the EU ETS to include all departing flights from the European Economic Area (EEA) (and not just flights within the EEA and flights departing the EEA to the United Kingdom and Switzerland).

In 2023, the European Parliament and the European Council formally adopted the EU’s ReFuelEU Aviation initiative to create a SAF blending mandate for aviation fuel suppliers.

The agreed text requires fuel suppliers to ensure that minimum shares of SAF are made available to aircraft operators at EU airports starting January 1, 2025.

Such minimum requirements are 2% in 2025, 6% in 2030, 20% in 2035, 34% in 2040, 42% in 2045 and 70% in 2050.

In addition, a specific proportion of the fuel mix (1.2% in 2030, 2% in 2032, 5% in 2035 and progressively reaching 35% in 2050) must comprise synthetic fuels such as e-kerosene, and as of 2025, there will be an EU label for the environmental performance of flights, such that airlines may market their flights indicating the expected carbon footprint per passenger.

The potential effects on our business of such requirements are uncertain at this time.

The UK and other countries have adopted or are considering adoption of a SAF blending mandate similar to that of the EU.

Under these revisions, the allocation of emissions allowances currently granted for free to aircraft operators under the EU ETS will be phased out by 2026.

In 2026, the EC will also have to undertake a review to determine whether CORSIA is sufficiently delivering on the goals of the Paris Agreement and, to the extent it is determined not to be, extend the scope of the EU ETS to include all departing flights from the European Economic Area (EEA).

Should the EU decide to extend the EU ETS to all departing flights from the EEA, there could be serious repercussions for our business and our industry and our compliance costs would likely be significant.

The UK and Switzerland have similar emissions trading schemes that often align with the EU ETS;

our compliance cost would further increase if both countries decided to follow the EU in extending their regulation of GHG emissions from aviation.

In 2023, the EU enacted the ReFuelEU Aviation initiative to create a SAF blending mandate for aviation fuel suppliers.

This requires fuel suppliers to, over the course of each year, blend minimum shares of SAF with petroleum jet fuel prior to the fuel’s delivery to aircraft operators at EU airports, starting from January 1, 2025.

The minimum requirements are 2% in 2025, 6% in 2030, 20% in 2035, 34% in 2040, 42% in 2045 and 70% in 2050.

A specific proportion of the fuel mix (1.2% in 2030, 2% in 2032, 5% in 2035 and progressively reaching 35% in 2050) must comprise synthetic fuels such as e-kerosene.

The UK also adopted a SAF mandate for aviation fuel suppliers, starting January 1, 2025, with minimum requirements that increase linearly from 2% in 2025, to 10% in 2030 and 22% in 2040.

The UK SAF mandate policy includes blending targets for e-kerosene and a cap, starting in 2027, on the amount of SAF made from waste fats and oils that fuel suppliers may use to reach the annual blending targets.

The potential effects on our business of these requirements are uncertain, and there is uncertainty with regard to how the EU and UK SAF mandates will be implemented, the extent to which the relevant governments will adopt policies such as flexibility mechanisms for suppliers (e.g., book and claim) and revenue certainty programs for SAF producers.

Other countries have adopted or are considering adoption of SAF blending mandates.

Emissions Standards for Aircraft Engines

In January 2021, the EPA adopted GHG emission standards for new aircraft engines, which are aligned with the 2017 ICAO aircraft engine GHG emission standards.

Like the ICAO standards, the final EPA standards for new aircraft engines would not apply retroactively to engines on in-service aircraft.

On November 15, 2021, the EPA announced that it would not rewrite the existing aircraft engine GHG emissions standards but would seek more ambitious new aircraft GHG emission standards within the ICAO process.

Since then, the EPA and ICAO’s Committee on Aviation Environmental Protection have had several meetings on this issue, but no further progress has been made.

In addition, several states and environmental groups have challenged the EPA’s standards and on June 30, 2023, the U.S.

Court of Appeals for the D.C.

Circuit denied such petitions and upheld the EPA’s GHG emissions standards.

In January 2021, the EPA adopted GHG emission standards for new aircraft engines, aligning with the 2017 ICAO aircraft engine GHG emission standards.

Similar to the ICAO standards, the EPA’s standards do not apply retroactively to engines on in-service aircraft.

Pursuant to the Clean Air Act, the FAA issued a final rule in February 2024 to implement these standards, introducing new fuel efficiency certification regulations.

These regulations apply to airplanes manufactured after January 1, 2028, as well as to uncertified large business and commercial jet aircrafts.

The new requirements took effect in April 2024.

For more information on our approach to climate change, see our 2023 Sustainability Report on our website www .

aa.com available under “Environmental, Social and Governance.” None of the information or contents under our “Environmental, Social and Governance” page, 2022 Sustainability Report, or our website are incorporated into this Annual Report on Form 10-K.

aa.com available under “Environmental, Social and Governance.” None of the information or contents under our

“Environmental, Social and Governance” page, 2023 Sustainability Report, or our website are incorporated into this Annual Report on Form 10-K.

Impact of Regulatory Requirements on Our Business

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For additional information, see Part I, Item 1A.

Risk Factors – “ Evolving cybersecurity and data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling of personal information about individuals) could increase our costs, and any significant cybersecurity or data privacy 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 GHG emissions, changing consumer preferences and the potential for increased impacts of severe weather events on our operations and infrastructure.”

Risk Factors – “ Evolving data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling of personal information about individuals) could increase our costs, and any significant data privacy 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 GHG emissions, changing consumer preferences and the potential for increased impacts of severe weather events on our operations and infrastructure.”

Available Information

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Item 1. Business