American Airlines Group Inc. 10-K

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The risk inherent in our market risk sensitive instruments and positions is the potential loss arising from adverse changes in the price of aircraft fuel, foreign currency exchange rates and interest rates as discussed below. The sensitivity analyses presented do not consider the effects that such adverse changes may have on overall economic activity, nor do they consider additional actions we may take to mitigate our exposure to such changes. Therefore, actual results may differ. Aircraft Fuel Our operating results are materially impacted by changes in the availability, price volatility and cost of aircraft fuel, which represents one of the largest single cost items in our business. Because of the amount of fuel needed to operate our business, even a relatively small increase or decrease in the price of aircraft fuel can have a material effect on our operating results and liquidity. Market prices for aircraft fuel have fluctuated substantially over the past several years and prices continue to be highly volatile, with market spot prices ranging from a low of approximately $1.91 per gallon to a high of approximately $4.40 per gallon during the period from January 1, 2022 to December 31, 2024. 78 Table of Contents As of December 31, 2024, we did not have any fuel hedging contracts outstanding to hedge our fuel consumption. Our current policy is not to enter into transactions to hedge our fuel consumption, although we review this policy from time to time based on market conditions and other factors. 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 fuel prices. Based on our 2025 forecasted fuel consumption, we estimate that a one cent per gallon increase in the price of aircraft fuel would increase our 2025 annual fuel expense by approximately $45 million. Foreign Currency We are exposed to the effect of foreign exchange rate fluctuations on the U.S. dollar value of foreign currency-denominated transactions. Our largest exposure comes from the Euro, Canadian dollar, British pound sterling and various Latin American currencies (primarily the Brazilian real). We do not currently have a foreign currency hedge program. We estimate a uniform 10% strengthening in the value of the U.S. dollar from 2024 levels relative to each of the currencies in which we have foreign currency exposure would have resulted in a decrease in pre-tax income of approximately $150 million for the year ended December 31, 2024. Generally, fluctuations in foreign currencies, including devaluations, cannot be predicted by us and can significantly affect the value of our assets located outside the United States. These conditions, devaluations or imposition of more stringent repatriation restrictions, may materially adversely affect our business, results of operations and financial condition. See Part I, Item 1A. Risk Factors – “We operate a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control” for additional discussion of this and other currency risks. Interest Our earnings and cash flow are affected by changes in interest rates due to the impact those changes have on our interest expense from variable-rate debt instruments and our interest income from short-term, interest-bearing investments. Our largest exposure with respect to variable-rate debt comes from changes in the relevant benchmark rate underlying such debt financings, principally SOFR. Variable-rate debt instruments represented 30% of our total long-term debt as of December 31, 2024. We currently do not have an interest rate hedge program to hedge our exposure to floating interest rates on our variable-rate debt obligations. If annual interest rates increase 100 basis points, based on our December 31, 2024 variable-rate debt and short-term investments balances, annual interest expense on variable-rate debt would increase by approximately $100 million and annual interest income on short-term investments would increase by approximately $70 million. Additionally, the fair value of fixed-rate debt would have decreased by approximately $540 million for AAG and $370 million for American. 79 Table of Contents ITEM 8A. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA OF AMERICAN AIRLINES GROUP INC. Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors American Airlines Group Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of American Airlines Group Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, cash flows, and stockholders’ deficit for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 19, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. 80 Table of Contents Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Sufficiency of audit evidence over the realizability of tax net operating loss and other carryforwards As discussed in Notes 1(i) and 6 to the consolidated financial statements, the Company had $4.3 billion of tax net operating loss and other carryforwards, which are recorded as deferred tax assets at December 31, 2024. Deferred tax assets are recognized related to tax net operating loss and other carryforwards that will reduce future taxable income. The Company provides a valuation allowance for deferred tax assets when it is more likely than not that some portion, or all of the deferred tax assets, will not be realized. In evaluating the need for a valuation allowance, management considers the weighting of all available positive and negative evidence. We identified the evaluation of the sufficiency of audit evidence over the realizability of federal tax net operating loss and other carryforwards as a critical audit matter. Evaluating the sufficiency of audit evidence required subjective auditor judgment in order to assess the extent of procedures performed in assessing the realizability of the federal tax net operating loss and other carryforwards. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s deferred tax asset valuation allowance process, including controls related to the realizability of federal tax net operating loss and other carryforwards. We evaluated positive and negative evidence used in assessing whether the federal tax net operating loss and other carryforwards were more likely than not to be realized in the future. We evaluated the reasonableness of management’s projections of future profitability considering historical profitability of the Company, and consistency with industry data. We involved tax professionals with specialized skills and knowledge, who assisted in evaluating the application of tax law. We assessed the sufficiency of audit evidence obtained over the realizability of the federal tax net operating loss and other carryforwards by evaluating the cumulative results of the audit procedures. /s/ KPMG LLP We have served as the Company’s auditor since 2014. Dallas, Texas February 19, 2025 81 Table of Contents AMERICAN AIRLINES GROUP INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except share and per share amounts) Year Ended December 31, 2024 2023 2022 Operating revenues: Passenger $ 49,586 $ 48,512 $ 44,568 Cargo 804 812 1,233 Other 3,821 3,464 3,170 Total operating revenues 54,211 52,788 48,971 Operating expenses: Aircraft fuel and related taxes 11,418 12,257 13,791 Salaries, wages and benefits 16,021 14,580 12,972 Regional expenses 5,042 4,643 4,385 Maintenance, materials and repairs 3,794 3,265 2,684 Other rent and landing fees 3,303 2,928 2,730 Aircraft rent 1,242 1,369 1,395 Selling expenses 1,812 1,799 1,815 Depreciation and amortization 1,926 1,936 1,977 Special items, net 610 971 193 Other 6,429 6,006 5,422 Total operating expenses 51,597 49,754 47,364 Operating income 2,614 3,034 1,607 Nonoperating income (expense): Interest income 468 591 216 Interest expense, net ( 1,934 ) ( 2,145 ) ( 1,962 ) Other income (expense), net 6 ( 359 ) 325 Total nonoperating expense, net ( 1,460 ) ( 1,913 ) ( 1,421 ) Income before income taxes 1,154 1,121 186 Income tax provision 308 299 59 Net income $ 846 $ 822 $ 127 Earnings per common share: Basic $ 1.29 $ 1.26 $ 0.20 Diluted $ 1.24 $ 1.21 $ 0.19 Weighted average shares outstanding (in thousands): Basic 656,996 653,612 650,345 Diluted 721,300 719,669 655,122 See accompanying notes to consolidated financial statements. 82 Table of Contents AMERICAN AIRLINES GROUP INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Year Ended December 31, 2024 2023 2022 Net income $ 846 $ 822 $ 127 Other comprehensive income (loss), net of tax: Pension, retiree medical and other postretirement benefits 327 ( 312 ) 1,360 Investments 2 3 ( 3 ) Total other comprehensive income (loss), net of tax 329 ( 309 ) 1,357 Total comprehensive income $ 1,175 $ 513 $ 1,484 See accompanying notes to consolidated financial statements. 83 Table of Contents AMERICAN AIRLINES GROUP INC. CONSOLIDATED BALANCE SHEETS (In millions, except share and par value amounts) December 31, 2024 2023 ASSETS Current assets Cash $ 804 $ 578 Short-term investments 6,180 7,000 Restricted cash and short-term investments 732 910 Accounts receivable, net 2,006 2,026 Aircraft fuel, spare parts and supplies, net 2,638 2,400 Prepaid expenses and other 794 658 Total current assets 13,154 13,572 Operating property and equipment Flight equipment 43,521 41,794 Ground property and equipment 10,202 10,307 Equipment purchase deposits 1,012 760 Total property and equipment, at cost 54,735 52,861 Less accumulated depreciation and amortization ( 23,608 ) ( 22,097 ) Total property and equipment, net 31,127 30,764 Operating lease right-of-use assets 7,333 7,939 Other assets Goodwill 4,091 4,091 Intangibles, net of accumulated amortization of $ 841 and $ 834 , respectively 2,044 2,051 Deferred tax asset 2,485 2,888 Other assets 1,549 1,753 Total other assets 10,169 10,783 Total assets $ 61,783 $ 63,058 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities Current maturities of long-term debt and finance leases $ 5,322 $ 3,632 Accounts payable 2,455 2,353 Accrued salaries and wages 2,150 2,377 Air traffic liability 6,759 6,200 Loyalty program liability 3,556 3,453 Operating lease liabilities 1,092 1,309 Other accrued liabilities 2,961 2,738 Total current liabilities 24,295 22,062 Noncurrent liabilities Long-term debt and finance leases, net of current maturities 25,154 29,270 Pension and postretirement benefits 2,128 3,044 Loyalty program liability 6,498 5,874 Operating lease liabilities 5,976 6,452 Other liabilities 1,709 1,558 Total noncurrent liabilities 41,465 46,198 Commitments and contingencies (Note 11) Stockholders’ equity (deficit) Common stock, $ 0.01 par value; 1,750,000,000 shares authorized, 657,566,166 shares issued and outstanding at December 31, 2024; 654,273,192 shares issued and outstanding at December 31, 2023 7 7 Additional paid-in capital 7,424 7,374 Accumulated other comprehensive loss ( 4,565 ) ( 4,894 ) Retained deficit ( 6,843 ) ( 7,689 ) Total stockholders’ deficit ( 3,977 ) ( 5,202 ) Total liabilities and stockholders’ equity (deficit) $ 61,783 $ 63,058 See accompanying notes to consolidated financial statements. 84 Table of Contents AMERICAN AIRLINES GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Year Ended December 31, 2024 2023 2022 Cash flows from operating activities: Net income $ 846 $ 822 $ 127 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,245 2,254 2,298 Debt extinguishment costs 9 267 3 Special items, net non-cash ( 1 ) 41 226 Pension and postretirement ( 82 ) ( 13 ) ( 405 ) Deferred income tax provision 308 299 65 Share-based compensation, non-cash 92 102 78 Other, net ( 249 ) ( 205 ) ( 37 ) Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 35 95 ( 637 ) Increase in other assets ( 314 ) ( 11 ) ( 775 ) Increase in accounts payable 257 209 360 Increase (decrease) in air traffic liability 559 ( 545 ) 658 Increase in loyalty program liability 727 182 10 Contributions to pension plans ( 300 ) ( 73 ) ( 5 ) Increase (decrease) in other liabilities ( 149 ) 379 207 Net cash provided by operating activities 3,983 3,803 2,173 Cash flows from investing activities: Capital expenditures and aircraft purchase deposits ( 2,683 ) ( 2,596 ) ( 2,546 ) Proceeds from sale-leaseback transactions and sale of property and equipment 654 230 147 Sales of short-term investments 8,013 8,861 14,972 Purchases of short-term investments ( 7,194 ) ( 7,323 ) ( 11,257 ) Decrease in restricted short-term investments 177 51 1 Purchase of equity investments — — ( 321 ) Other investing activities 65 275 ( 360 ) Net cash provided by (used in) investing activities ( 968 ) ( 502 ) 636 Cash flows from financing activities: Payments on long-term debt and finance leases ( 4,467 ) ( 7,718 ) ( 3,752 ) Proceeds from issuance of long-term debt 1,670 4,822 1,069 Other financing activities 3 ( 310 ) 52 Net cash used in financing activities ( 2,794 ) ( 3,206 ) ( 2,631 ) Net increase in cash and restricted cash 221 95 178 Cash and restricted cash at beginning of year 681 586 408 Cash and restricted cash at end of year (a) $ 902 $ 681 $ 586 (a) The following table provides a reconciliation of cash and restricted cash to amounts reported within the consolidated balance sheets: Cash $ 804 $ 578 $ 440 Restricted cash included in restricted cash and short-term investments 98 103 146 Total cash and restricted cash $ 902 $ 681 $ 586 See accompanying notes to consolidated financial statements. 85 Table of Contents AMERICAN AIRLINES GROUP INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (In millions, except share amounts) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Retained Deficit Total Balance at December 31, 2021 $ 6 $ 7,234 $ ( 5,942 ) $ ( 8,638 ) $ ( 7,340 ) Net income — — — 127 127 Other comprehensive income, net — — 1,357 — 1,357 Issuance of 2,914,866 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes — ( 21 ) — — ( 21 ) Share-based compensation expense — 78 — — 78 Balance at December 31, 2022 6 7,291 ( 4,585 ) ( 8,511 ) ( 5,799 ) Net income — — — 822 822 Other comprehensive loss, net — — ( 309 ) — ( 309 ) Issuance of 3,630,731 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes 1 ( 23 ) — — ( 22 ) Share-based compensation expense — 102 — — 102 Settlement of single-dip unsecured claims held in Disputed Claims Reserve — 4 — — 4 Balance at December 31, 2023 7 7,374 ( 4,894 ) ( 7,689 ) ( 5,202 ) Net income — — — 846 846 Other comprehensive income, net — — 329 — 329 Issuance of 3,292,974 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes — ( 22 ) — — ( 22 ) Share-based compensation expense — 92 — — 92 Modification of share-based awards — ( 20 ) — — ( 20 ) Balance at December 31, 2024 $ 7 $ 7,424 $ ( 4,565 ) $ ( 6,843 ) $ ( 3,977 ) See accompanying notes to consolidated financial statements. 86 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC. 1. Basis of Presentation and Summary of Significant Accounting Policies (a) Basis of Presentation American Airlines Group Inc. (we, us, our and similar terms, or AAG), a Delaware corporation, is a holding company whose primary business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through its mainline operating subsidiary, American Airlines, Inc. (American) and its wholly-owned regional airline subsidiaries, Envoy Aviation Group Inc., PSA Airlines, Inc. (PSA) and Piedmont Airlines, Inc. (Piedmont), that operate under the brand American Eagle. All significant intercompany transactions have been eliminated. The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The most significant areas of judgment relate to passenger revenue recognition, the loyalty program, deferred tax assets, as well as pension and retiree medical and other postretirement benefits. Certain prior year amounts within “changes in operating assets and liabilities” presented in the consolidated statement of cash flows have been reclassified to conform to current year presentation. This change in the presentation on the consolidated statement of cash flows had no impact on net cash provided by operating activities or net change in cash and restricted cash. (b) Recent Accounting Pronouncements Accounting Standards Update (ASU) 2023-09: Income Taxes (Topic 740) Improvements to Income Tax Disclosures This standard enhances transparency of income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information, as well as improvements to the effectiveness and comparability of other income tax disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2024, and early adoption is permitted. We are currently evaluating how the adoption of this standard will impact our income tax disclosures. ASU 2024-03: Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-04) Disaggregation of Income Statement Expenses This standard enhances transparency in reporting by requiring disaggregation of certain costs and expenses in the notes to financial statements. This update is effective for annual periods beginning after December 15, 2026 and interim periods within annual periods beginning after December 15, 2027, and early adoption is permitted. We are currently evaluating how the adoption of this standard will impact our disclosures. (c) Investments Short-term investments primarily include debt securities and are classified as available-for-sale and stated at fair value. Realized gains and losses are recorded as interest income in nonoperating expense, net on our consolidated statements of operations. Unrealized gains and losses are recorded as a component of accumulated other comprehensive loss on our consolidated balance sheets. For investments in an unrealized loss position, we determine whether a credit loss exists by considering information about the collectability of the instrument, current market conditions and reasonable and supportable forecasts of economic conditions. There have been no credit losses. Equity investments are accounted for under the equity method if we are able to exercise significant influence over an investee. Equity investments for which we do not have significant influence are recorded at fair value or at cost, if fair value is not readily determinable, with adjustments for observable changes in price or impairments (referred to as the measurement alternative). Our equity investments are reflected in other assets on our consolidated balance sheets. Our share of equity method investees’ financial results and changes in fair value are recorded in nonoperating other income (expense), net on the consolidated statements of operations. See Note 8 for additional information related to our equity investments. (d) Restricted Cash and Short-term Investments We have restricted cash and short-term investments related primarily to collateral held to support workers’ compensation obligations and collateral associated with the AAdvantage Financing. See Note 4 for further information on the AAdvantage Financing. 87 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . (e) Accounts Receivable, Net Accounts receivable primarily consist of amounts due from credit card processing companies for tickets sold to individual passengers, amounts due from airline and non-airline business partners, including our co-branded credit card partners and cargo customers. Receivables from ticket sales are short-term, mostly settled within seven days after sale. Receivables from our business partners are typically settled within 30 days. All accounts receivable are reported net of an allowance for credit losses, which was not material as of December 31, 2024 and 2023. We consider past and future financial and qualitative factors, including aging, payment history and other credit monitoring indicators, when establishing the allowance for credit losses. (f) Aircraft Fuel, Spare Parts and Supplies, Net Aircraft fuel is recorded on a first-in, first-out basis. Spare parts and supplies are recorded at average costs less an allowance for obsolescence, which is recognized over the weighted average remaining useful life of the related fleet. We also provide an allowance for spare parts and supplies identified as excess or obsolete to reduce the carrying cost to the lower of cost or net realizable value. Aircraft fuel, spare parts and supplies are expensed when used. (g) Operating Property and Equipment Operating property and equipment is recorded at cost and depreciated or amortized to residual values over the asset’s estimated useful life or the lease term, whichever is less, using the straight-line method. Residual values for aircraft, engines and related rotable parts are generally 5 % to 10 % of original cost. Costs of major improvements that enhance the usefulness of the asset are capitalized and depreciated or amortized over the estimated useful life of the asset or the lease term, whichever is less. The estimated useful lives for the principal property and equipment classifications are as follows: Principal Property and Equipment Classification Estimated Useful Life Aircraft, engines and related rotable parts 20 – 30 years Buildings and improvements 5 – 30 years Furniture, fixtures and other equipment 3 – 15 years Capitalized software 5 – 10 years Total mainline and regional depreciation and amortization expense was $ 2.2 billion for the year ended December 31, 2024 and $ 2.3 billion for each of the years ended December 31, 2023 and 2022. We assess impairment of operating property and equipment when events and circumstances indicate that the assets may be impaired. An impairment of an asset or group of assets exists only when the sum of the estimated undiscounted cash flows expected to be generated directly by the assets are less than the carrying value of the assets. We group assets principally by fleet-type when estimating future cash flows, which is generally the lowest level for which identifiable cash flows exist. Estimates of future cash flows are based on historical results adjusted to reflect management’s best estimate of future market and operating conditions, including our current fleet plan. If such assets are impaired, the impairment charge recognized is the amount by which the carrying value of the assets exceed their fair value. Fair value reflects management’s best estimate including inputs from published pricing guides and bids from third parties as well as contracted sales agreements when applicable. (h) Leases We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (ROU) assets, current operating lease liabilities and noncurrent operating lease liabilities on our consolidated balance sheets. Finance leases are included in property and equipment, current maturities of long-term debt and finance leases and long-term debt and finance leases, net of current maturities, on our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. We use our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. We give consideration to our recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating our incremental borrowing rates. 88 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . Our lease term includes options to extend the lease when it is reasonably certain that we will exercise that option. Leases with a term of 12 months or less are not recorded on our consolidated balance sheets. Under certain of our capacity purchase agreements with third-party regional carriers, we do not own the underlying aircraft. However, since we control the marketing, scheduling, ticketing, pricing and seat inventories of these aircraft and therefore control the asset, the aircraft is deemed to be leased for accounting purposes. For these capacity purchase agreements, we account for the lease and non-lease components separately. The lease component consists of the aircraft and the non-lease components consist of services, such as the crew and maintenance. Where applicable, we allocate the consideration in the capacity purchase agreements to the lease and non-lease components using their estimated relative standalone prices. See Note 11(b) for additional information on our capacity purchase agreements. For real estate, we account for the lease and non-lease components as a single lease component. (i) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are recorded net as noncurrent on our consolidated balance sheets. We provide a valuation allowance for our deferred tax assets, which include our NOLs and other carryforwards, when it is more likely than not that some portion, or all of our deferred tax assets, will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. We consider all available positive and negative evidence and make certain assumptions in evaluating the realizability of our deferred tax assets. Many factors are considered that impact our assessment of future profitability, including conditions which are beyond our control, such as the health of the economy, the availability and price volatility of aircraft fuel and travel demand. We have determined that positive factors outweigh negative factors in the determination of the realizability of our deferred tax assets. (j) Goodwill Goodwill represents the purchase price in excess of the fair value of the net assets acquired and liabilities assumed in connection with the 2013 merger with US Airways Group, Inc. (US Airways Group). We have one reporting unit. We assess goodwill for impairment annually or more frequently if events or circumstances indicate that the fair value of goodwill may be lower than the carrying value. Our annual assessment date is October 1. Goodwill is assessed for impairment by initially performing a qualitative assessment. If we determine that it is more likely than not that our goodwill may be impaired, we use a quantitative approach to assess the asset’s fair value and the amount of the impairment, if any. Based upon our annual assessment, there was no goodwill impairment in 2024. The carrying value of our goodwill on our consolidated balance sheets was $ 4.1 billion as of December 31, 2024 and 2023. (k) Other Intangibles, Net Intangible assets consist of certain domestic airport slots and gate leasehold rights, international slots and route authorities, commercial agreements, marketing agreements, customer relationships and tradenames. Definite-Lived Intangible Assets Definite-lived intangible assets are originally recorded at their acquired fair values, subsequently amortized over their respective estimated useful lives and are assessed for impairment whenever events and circumstances indicate that the assets may be impaired. Certain domestic airport slots and airport gate leasehold rights are amortized on a straight-line basis over 25 years. Certain marketing agreements were identified as intangible assets subject to amortization and are amortized on a straight-line basis over approximately 30 years. We had $ 101 million and $ 108 million of definite-lived intangible assets, net of accumulated amortization on our consolidated balance sheets as of December 31, 2024 and 2023, respectively. We expect to record amortization expense related to these assets of approximately $ 6 million for each of the years in 2025 through 2029, and $ 70 million of amortization expense in 2030 and thereafter until fully amortized. 89 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . Indefinite-Lived Intangible Assets Indefinite-lived intangible assets include certain domestic airport slots, international slots and route authorities and our commercial agreement with GOL Linhas Aéreas Inteligentes S.A. (GOL). We assess indefinite-lived intangible assets for impairment annually or more frequently if events or circumstances indicate that the fair values of indefinite-lived intangible assets may be lower than their carrying values. Our annual assessment date is October 1. Indefinite-lived intangible assets are assessed for impairment by initially performing a qualitative assessment. If we determine that it is more likely than not that our indefinite-lived intangible assets may be impaired, we use a quantitative approach to assess the asset’s fair value and the amount of the impairment, if any. Based upon our annual assessment, there were no indefinite-lived intangible asset impairments in 2024. We had $ 1.9 billion of indefinite-lived intangible assets on our consolidated balance sheets as of December 31, 2024 and 2023. (l) Fuel Financing In December 2024, we entered into a fuel financing facility with a bank pursuant to which the bank pays certain fuel invoices on our behalf. The agreement contains a maximum allowable outstanding principal balance at any time of $ 1.0 billion and is required to be repaid at least quarterly. The fuel financing facility bears interest at a base rate equal to one-month Secured Overnight Financing Rate (SOFR) plus a margin of 3.75 %. Our obligations to the counterparty are secured on a second-priority basis by certain intellectual property of American, including the “American Airlines” trademark and the “aa.com” domain name in the United States and certain foreign jurisdictions, as provided in, and subject to the covenants and conditions of, the Second Lien Brand Collateral Security Agreement. Either American or the bank may terminate this agreement at any time and with immediate effect upon sixty days’ prior written notice to the other party. As of December 31, 2024, we had $ 74 million in fuel financing obligations included within other accrued liabilities on our consolidated balance sheet. During the year ended December 31, 2024, we recognized a nominal amount of interest expense related to this agreement. We include payments to designated fuel suppliers as an operating activity in the consolidated statement of cash flows. Proceeds and payments related to fuel financing transactions are presented net as a financing activity in the consolidated statement of cash flows. (m) Revenue Recognition Revenue The following are the significant categories comprising our operating revenues (in millions): Year Ended December 31, 2024 2023 2022 Passenger revenue: Passenger travel $ 45,743 $ 44,914 $ 41,425 Loyalty revenue - travel (1) 3,843 3,598 3,143 Total passenger revenue 49,586 48,512 44,568 Cargo 804 812 1,233 Other: Loyalty revenue - marketing services 3,257 2,929 2,657 Other revenue 564 535 513 Total other revenue 3,821 3,464 3,170 Total operating revenues $ 54,211 $ 52,788 $ 48,971 (1) Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions, which were earned from travel or co-branded credit card and other partners. See “ Loyalty Revenue ” below for further discussion on these mileage credits. 90 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . The following is our total passenger revenue by geographic region (in millions): Year Ended December 31, 2024 2023 2022 Domestic $ 35,336 $ 34,592 $ 32,911 Latin America 6,560 6,719 6,150 Atlantic 6,445 6,205 5,070 Pacific 1,245 996 437 Total passenger revenue $ 49,586 $ 48,512 $ 44,568 We attribute passenger revenue by geographic region based upon the origin and destination of each flight segment. Passenger Revenue We recognize all revenues generated from transportation on American and our regional flights operated under the brand name American Eagle, including associated baggage fees and other inflight services, as passenger revenue when transportation is provided. Ticket and other related sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on our consolidated balance sheets. The air traffic liability principally represents tickets sold for future travel on American and partner airlines. The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. The estimate for tickets expected to expire unused is generally based on an analysis of our historical data and other current applicable factors such as policy changes. We have consistently applied this accounting method to estimate and recognize revenue from unused tickets at the date of travel. This estimate is periodically evaluated based on subsequent activity to validate its accuracy. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are included in passenger revenue during the period in which the evaluations are completed. Various taxes and fees assessed on the sale of tickets to end customers are collected by us as an agent and remitted to taxing authorities. These taxes and fees have been presented on a net basis in the accompanying consolidated statements of operations and recorded as a liability until remitted to the appropriate taxing authority. Loyalty Revenue We currently operate the loyalty program, AAdvantage ® . This program awards mileage credits to passengers who fly on American, any one world airline or other partner airlines, or by using the services of other program participants, such as our co-branded credit cards, and certain hotels and car rental companies. Mileage credits can be redeemed for travel on American and other participating partner airlines, as well as non-air travel awards such as hotels and rental cars. For mileage credits earned by AAdvantage program members, we apply the deferred revenue method. Mileage credits earned through travel For mileage credits earned through travel, we apply a relative selling price approach whereby the total amount collected from each passenger ticket sale is allocated between the air transportation and the mileage credits earned. The portion of each passenger ticket sale attributable to mileage credits earned is initially deferred and then recognized in passenger revenue when mileage credits are redeemed and transportation is provided. The estimated selling price of mileage credits is determined using an equivalent ticket value approach, which uses historical data, including award redemption patterns by geographic region and class of service, as well as similar cash fares as those used to settle award redemptions. The estimated selling price of mileage credits is adjusted for an estimate of mileage credits that will not be redeemed using a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption. Mileage credits sold to co-branded credit cards and other partners We sell mileage credits to participating airline partners and non-airline business partners, including our co-branded credit card partners, under contracts with remaining terms generally from one to 10 years as of December 31, 2024. Consideration received from the sale of mileage credits is predominantly variable and payment terms typically are within 30 days subsequent to the month of mileage sale. Sales of mileage credits to non-airline business partners are comprised 91 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . of two components, transportation and marketing. We allocate the consideration received from these sales of mileage credits based on the relative selling price of each product or service delivered. Our most significant mileage credit partner agreements are our co-branded credit card agreements with Citibank N.A. (Citi) and Barclaycard US. We identified two revenue elements in these co-branded credit card agreements: the transportation component and the marketing component. In December 2024, we announced a 10 -year agreement with Citi to become the exclusive issuer of the AAdvantage co-branded credit card portfolio in the U.S. starting in 2026. Based on the revised terms, the products and services delivered are generally consistent with our previous agreement, and we will continue to allocate the consideration received based on the relative selling prices of these products and services. The transportation component represents the estimated selling price of future travel awards and is determined using the same equivalent ticket value approach described above. The portion of each mileage credit sold attributable to transportation is initially deferred and then recognized in passenger revenue when mileage credits are redeemed and transportation is provided. The marketing component includes the use of intellectual property, including the American brand and access to loyalty program member lists, which is the predominant element in these agreements, as well as advertising and other travel-related benefits. We recognize the marketing component in other revenue in the period of the mileage credit sale following the sales-based royalty method. For the portion of our outstanding mileage credits that we estimate will not be redeemed, we recognize the associated value proportionally as the remaining mileage credits are redeemed. Our estimates use a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption. Cargo Revenue Cargo revenue is recognized when we provide the transportation. Other Revenue Other revenue includes revenue associated with our loyalty program, which is comprised principally of the marketing component of mileage credit sales to co-branded credit card and other partners and other marketing related payments. The accounting and recognition for the loyalty program marketing services are discussed above in “ Loyalty Revenue .” The remaining amounts included within other revenue relate to airport clubs, other commission revenue, advertising and vacation-related services. Contract Balances Our significant contract liabilities are comprised of (1) outstanding loyalty program mileage credits that may be redeemed for future air travel, non-air travel and other awards, reported as loyalty program liability on our consolidated balance sheets and (2) ticket sales for transportation that has not yet been provided, reported as air traffic liability on our consolidated balance sheets. December 31, 2024 2023 (In millions) Loyalty program liability $ 10,054 $ 9,327 Air traffic liability 6,759 6,200 Total $ 16,813 $ 15,527 The balance of the loyalty program liability fluctuates based on seasonal patterns, which impact the volume of mileage credits issued through travel or sold to co-branded credit card and other partners (deferral of revenue) and mileage credits redeemed (recognition of revenue). Changes in loyalty program liability are as follows (in millions): Balance at December 31, 2023 $ 9,327 Deferral of revenue 4,482 Recognition of revenue (1) ( 3,755 ) Balance at December 31, 2024 (2) $ 10,054 92 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . (1) Principally relates to revenue recognized from the redemption of mileage credits for both air travel, non-air travel and other awards. Mileage credits are combined in one homogenous pool and are not separately identifiable. As such, the revenue is comprised of mileage credits that were part of the loyalty program deferred revenue balance at the beginning of the period, as well as mileage credits that were issued during the period. (2) Mileage credits can be redeemed at any time and generally do not expire as long as that AAdvantage member has any type of qualifying activity at least every 24 months or if the AAdvantage member is the primary holder of a co-branded credit card. As of December 31, 2024, our current loyalty program liability was $ 3.6 billion and represents our current estimate of revenue expected to be recognized in the next 12 months based on historical trends, with the balance reflected in long-term loyalty program liability expected to be recognized as revenue in periods thereafter. Additionally, as of December 31, 2024, our loyalty program liability includes a one-time cash payment related to the new co-branded credit card agreement announced in December 2024, which will be amortized over the life of the new agreement beginning in 2026. The air traffic liability principally represents tickets sold for future travel on American and partner airlines. The balance in our air traffic liability also fluctuates with seasonal travel patterns. The contract duration of passenger tickets is generally one year . Accordingly, any revenue associated with tickets sold for future travel will be recognized within 12 months. For 2024, $ 4.9 billion of revenue was recognized in passenger revenue that was included in our air traffic liability at December 31, 2023. (n) Maintenance, Materials and Repairs Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred, except costs incurred for maintenance and repair under certain power-by-the-hour maintenance agreements, which are charged to operating expense based on contractual terms when an obligation exists. (o) Selling Expenses Selling expenses include credit card fees, commissions, third party distribution channel fees and advertising. Selling expenses associated with passenger revenue are expensed when the transportation or service is provided. Advertising costs are expensed as incurred. Advertising expense was $ 143 million, $ 114 million and $ 105 million f or the years ended December 31, 2024, 2023 and 2022, respectively. (p) Share-based Compensation We account for our share-based compensation expense based on the fair value of the equity award at the time of grant, which is recognized ratably over the vesting period of the award. Certain awards have performance conditions that must be achieved prior to vesting and are expensed based on the expected achievement at each reporting period. The majority of our equity awards are time vested restricted stock units. For equity-classified awards, the fair value of such awards is based on the market price of the underlying shares of AAG common stock on the date of grant and is not subsequently remeasured unless modified. For liability-classified awards, the fair value of such awards is remeasured at the end of each reporting period until settled. See Note 14 for further discussion of share-based compensation. (q) Foreign Currency Gains and Losses Foreign currency gains and losses are recorded as part of other income (expense), net within total nonoperating expense, net on our consolidated statements of operations. For the years ended December 31, 2024, 2023 and 2022, foreign currency losses were $ 48 million, $ 30 million and $ 38 million, respectively. (r) Other Operating Expenses Other operating expenses includes costs associated with onboard food and catering, crew travel, ground and cargo handling, passenger accommodation, international navigation fees, aircraft cleaning, airport lounge operations and certain general and administrative expenses. (s) Regional Expenses Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include our wholly-owned regional carriers as well as third-party regional carriers. Our regional carrier arrangements are in the form of capacity purchase agreements with our third-party regional partners and similar 93 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . arrangements with our wholly-owned regional affiliates. Expenses associated with American Eagle operations are classified as regional expenses on the consolidated statements of operations. Regional expenses for the years ended December 31, 2024, 2023 and 2022 include $ 319 million, $ 318 million and $ 321 million of depreciation and amortization, respectively, and $ 9 million, $ 7 million and $ 5 million of aircraft rent, respectively. In 2024, 2023 and 2022, we recognized $ 612 million, $ 636 million and $ 592 million, respectively, of expense under our capacity purchase agreement with Republic Airways Inc. (Republic). We hold a 25 % equity interest in Republic Airways Holdings Inc. (Republic Holdings), the parent company of Republic. 2. Special Items, Net Special items, net on our consolidated statements of operations consisted of the following (in millions): Year Ended December 31, 2024 2023 2022 Labor contract expenses (1) $ 605 $ 989 $ — A330 fleet-related adjustments (2) ( 42 ) — 149 Severance expenses 13 23 — Litigation reserve adjustments — — 37 Other operating special items, net 34 ( 41 ) 7 Mainline operating special items, net 610 971 193 Regional operating special items, net (3) 33 8 5 Operating special items, net 643 979 198 Debt refinancing and extinguishment (4) 16 280 3 Mark-to-market adjustments on equity investments, net (5) 8 82 71 Nonoperating special items, net 24 362 74 Income tax special items, net — — ( 9 ) (1) Labor contract expenses for 2024 related to one-time charges resulting from the ratification of new collective bargaining agreements (CBAs) with our mainline flight attendants and passenger service team members, including one-time payments and adjustments to vacation accruals resulting from pay rate increases. Labor contract expenses for 2023 related to one-time charges resulting from the ratification of a new CBA with our mainline pilots, including a one-time payment of $ 754 million as well as adjustments to other benefit-related items of $ 235 million. (2) We retired our Airbus A330 fleet in 2020 as a result of the decline in demand for air travel due to the COVID-19 pandemic. In 2022, we recorded a non-cash impairment charge to write down the carrying value of our retired Airbus A330 fleet to their then estimated fair value due to the market conditions for certain used aircraft, and in 2024, we entered into a sales agreement for our remaining Airbus A330 aircraft, resulting in a $ 42 million gain. (3) Regional operating special items, net for 2024 included a $ 33 million non-cash write down of regional aircraft resulting from the decision to permanently park 43 Embraer 145 aircraft. (4) Debt refinancing and extinguishment costs in 2023 primarily included cash charges for premiums paid in connection with the early repayment of debt. (5) Mark-to-market adjustments on equity investments, net included net unrealized gains and losses associated with certain equity investments. See Note 8 for further information related to our equity investments. 94 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . 3. Earnings Per Common Share The following table provides the computation of basic and diluted earnings per common share (EPS) (in millions, except share and per share amounts): Year Ended December 31, 2024 2023 2022 Basic EPS: Net income $ 846 $ 822 $ 127 Weighted average common shares outstanding (in thousands) 656,996 653,612 650,345 Basic EPS $ 1.29 $ 1.26 $ 0.20 Diluted EPS: Net income $ 846 $ 822 $ 127 Interest expense on 6.50 % convertible senior notes 51 46 — Net income for purposes of computing diluted EPS $ 897 $ 868 $ 127 Share computation for diluted EPS (in thousands): Basic weighted average common shares outstanding 656,996 653,612 650,345 Dilutive effect of restricted stock unit awards 1,121 1,830 1,579 Dilutive effect of certain PSP Warrants and Treasury Loan Warrants 1,455 2,499 3,198 Assumed conversion of 6.50 % convertible senior notes 61,728 61,728 — Diluted weighted average common shares outstanding 721,300 719,669 655,122 Diluted EPS $ 1.24 $ 1.21 $ 0.19 The following were excluded from the calculation of diluted EPS because inclusion of such shares would be antidilutive (in thousands): Year Ended December 31, 2024 2023 2022 Restricted stock unit awards 2,350 4,371 3,987 6.50 % convertible senior notes — — 61,728 In addition, for the years ended December 31, 2024, 2023 and 2022, excluded from the calculation of diluted EPS because inclusion of such shares would be antidilutive, are certain shares underlying the warrants issued pursuant to (i) the payroll support program established under the Coronavirus Aid, Relief, and Economic Security Act (PSP1), (ii) the payroll support program established under the Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (PSP2), (iii) the payroll support program established under the American Rescue Plan Act of 2021 (PSP3) (collectively, the PSP Warrants) and (iv) the Loan and Guarantee Agreement with the U.S. Department of Treasury (Treasury Loan Warrants). The table below provides a summary of the PSP Warrants and the Treasury Loan Warrants: Warrants Warrants Issued (shares, in thousands) (1) Exercise Price ($) Expiration PSP1 Warrants 14,048 12.51 April 2025 to September 2025 PSP2 Warrants 6,576 15.66 January 2026 to April 2026 PSP3 Warrants 4,407 21.75 April 2026 to June 2026 Treasury Loan Warrants 4,396 12.51 September 2025 95 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . (1) The PSP Warrants and the Treasury Loan Warrants are subject to certain anti-dilution provisions, do not have any voting rights and are freely transferable, with registration rights. Each warrant will be exercisable either through net share settlement or cash, at our option. The warrants were issued solely as compensation to the U.S. Government related to entry into the PSP and Treasury Loan Agreements. No separate proceeds (apart from the financial assistance previously received in 2021 and 2020) were received upon issuance of the warrants or will be received upon exercise thereof. 4. Debt Long-term debt included on our consolidated balance sheets consisted of (in millions): December 31, 2024 2023 Secured 2013 Term Loan Facility, variable interest rate of 6.65 %, installments until due in February 2028 (a) $ 980 $ 990 2014 Term Loan Facility, variable interest rate of 6.17 %, installments until due in January 2027 (a) 1,171 1,183 2023 Term Loan Facility, variable interest rate of 6.96 %, installments until due in June 2029 (a) 1,089 1,100 10.75 % senior secured IP notes, interest and principal payments due through February 2026 (b) 781 1,000 10.75 % senior secured LGA/DCA notes, interest and principal payments due through February 2026 (b) 156 200 7.25 % senior secured notes, interest only payments until due in February 2028 (b) 750 750 8.50 % senior secured notes, interest only payments until due in May 2029 (b) 1,000 1,000 5.50 % senior secured notes, installments until due in April 2026 (c) 1,750 2,917 5.75 % senior secured notes, installments beginning in July 2026 until due in April 2029 (c) 3,000 3,000 AAdvantage Term Loan Facility, variable interest rate of 9.63 %, installments until due in April 2028 (c) 2,450 3,150 Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 2.88 % to 7.15 %, averaging 3.84 %, maturing from 2025 to 2034 (d) 7,271 7,657 Equipment loans and other notes payable, fixed and variable interest rates ranging from 2.55 % to 7.25 %, averaging 6.17 %, maturing from 2025 to 2036 (e) 4,094 3,612 Special facility revenue bonds, fixed interest rates ranging from 2.25 % to 5.38 %, maturing from 2026 to 2036 880 967 25,372 27,526 Unsecured PSP1 Promissory Note, interest only payments until due in April 2030 (f) 1,757 1,757 PSP2 Promissory Note, interest only payments until due in January 2031 (f) 1,030 1,030 PSP3 Promissory Note, interest only payments until due in April 2031 (f) 959 959 6.50 % convertible senior notes, interest only payments until due in July 2025 (g) 1,000 1,000 3.75 % senior notes, interest only payments until due in March 2025 (h) — 487 4,746 5,233 Total long-term debt 30,118 32,759 Less: Total unamortized debt discount, premium and issuance costs 305 363 Less: Current maturities 5,196 3,501 Long-term debt, net of current maturities $ 24,617 $ 28,895 96 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . As of December 31, 2024, the maximum availability under our revolving credit and other facilities is as follows (in millions): 2013 Revolving Facility $ 500 2014 Revolving Facility 1,500 2023 Revolving Facility 890 Other facilities 399 Total $ 3,289 In March 2024, American entered into a revolving credit facility that provides for borrowing capacity of up to $ 350 million, maturing in March 2027 with an option to extend for an additional year. As of December 31, 2024, there were no amounts drawn under this facility. Additionally, American currently has $ 49 million of available borrowing base under a cargo receivables facility that is set to expire in December 2025. As further described below, the aggregate commitments under the 2013, 2014, and 2023 Revolving Facilities are $ 2.9 billion through June 4, 2029. Secured financings, including revolving credit and other facilities, are collateralized by assets, consisting primarily of aircraft, engines, simulators, airport gate leasehold rights, route authorities, airport slots, certain receivables, certain intellectual property and certain loyalty program assets. At December 31, 2024, the maturities of long-term debt are as follows (in millions): 2025 $ 5,196 2026 4,201 2027 4,983 2028 5,304 2029 3,890 2030 and thereafter 6,544 Total $ 30,118 (a) 2013, 2014 and 2023 Credit Facilities 2013 Credit Facilities The Amended and Restated Credit and Guaranty Agreement dated as of May 21, 2015, as amended (the 2013 Credit Agreement), includes a revolving credit facility (the 2013 Revolving Facility) and a term loan facility (the 2013 Term Loan Facility), collectively referred to as the 2013 Credit Facilities. On June 4, 2024, American and AAG entered into the Ninth Amendment to Amended and Restated Credit and Guaranty Agreement (the Ninth Amendment), amending the 2013 Credit Agreement, pursuant to which American terminated all existing revolving commitments and letter of credit commitments available under the 2013 Credit Agreement and established new revolving commitments in an aggregate amount of $ 500 million (which includes the ability to issue letters of credit in an aggregate amount of $ 100 million) (the newly established commitments, the 2013 Revolving Facility), which have a maturity date of June 4, 2029. Additionally, as a result of the Ninth Amendment, the 2013 Revolving Facility bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 2.00 %, 2.25 % or 2.50 %, depending on AAG’s public corporate credit rating, or, at American’s option, SOFR for a tenor of one, three or six months, depending on the interest period selected by American (subject to a floor of 0.00 %), plus an applicable margin of 3.00 %, 3.25 % or 3.50 %, depending on AAG’s public corporate credit rating. Pursuant to the Ninth Amendment, SOFR borrowings under the 2013 Revolving Facility are not subject to a credit spread adjustment. As of December 31, 2024, there were no borrowings or letters of credit outstanding under the 2013 Revolving Facility. On December 19, 2024, American and AAG entered into the Tenth Amendment to Amended and Restated Credit and Guaranty Agreement (the 2013 Credit Agreement Tenth Amendment), amending the 2013 Credit Agreement. As a result of the 2013 Credit Agreement Tenth Amendment, the term loans outstanding under the 2013 Credit Agreement with an outstanding principal amount of $ 980 million were replaced with term loans with a principal amount of $ 980 million. Pursuant to the 2013 Credit Agreement Tenth Amendment, the 2013 Term Loan Facility bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 1.25 % per annum or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American (subject to a floor of 0.00 %), plus 97 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . an applicable margin of 2.25 % per annum. Additionally, the 2013 Credit Agreement Tenth Amendment amended certain other terms of the 2013 Credit Agreement, including, among other things, reducing the minimum liquidity financial covenant threshold from $ 2.2 billion to $ 2.0 billion and removing the cost spread adjustment on the 2013 Term Loan Facility. As of December 31, 2024, the margin elected was 2.25 % per annum. 2014 Credit Facilities The Amended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, as amended (the 2014 Credit Agreement), includes a revolving credit facility (the 2014 Revolving Facility) and term loan facility (the 2014 Term Loan Facility), collectively referred to as the 2014 Credit Facilities. The 2014 Term Loan Facility bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 0.75 % or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American, plus the SOFR adjustment applicable to such interest period (with such SOFR rate plus SOFR adjustment being subject to a floor of 0.00 %) plus an applicable margin of 1.75 %. As of December 31, 2024, the margin elected was 1.75 % per annum. On June 4, 2024, American and AAG entered into the Tenth Amendment to Amended and Restated Credit and Guaranty Agreement (the 2014 Credit Agreement Tenth Amendment), amending the 2014 Credit Agreement, pursuant to which American terminated all existing revolving commitments and letter of credit commitments available under the 2014 Credit Agreement and established new revolving commitments in an aggregate amount of $ 1.5 billion (which includes the ability to issue letters of credit in an aggregate amount of $ 200 million) (the newly established commitments, the 2014 Revolving Facility), which have a maturity date of June 4, 2029. Additionally, as a result of the 2014 Credit Agreement Tenth Amendment, the 2014 Revolving Facility bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 2.00 %, 2.25 % or 2.50 %, depending on AAG’s public corporate credit rating, or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American (subject to a floor of 0.00 %), plus an applicable margin of 3.00 %, 3.25 % or 3.50 %, depending on AAG’s public corporate credit rating. The 2014 Credit Agreement Tenth Amendment also reduced the minimum liquidity financial covenant threshold from $ 2.2 billion to $ 2.0 billion and reduced the liquidity requirement for making certain restricted payments from $ 4.2 billion to $ 4.0 billion. Pursuant to the 2014 Credit Agreement Tenth Amendment, SOFR borrowings under the 2014 Revolving Facility are not subject to a credit spread adjustment. As of December 31, 2024, there were no borrowings or letters of credit outstanding under the 2014 Revolving Facility. 2023 Credit Facilities In December 2023, American and AAG entered into a credit and guaranty agreement (the 2023 Credit Agreement) that provided for a term loan facility (the 2023 Term Loan Facility) in an aggregate principal amount of $ 1.1 billion, maturing in June 2029. On June 4, 2024, American and AAG entered into the First Amendment to Credit and Guaranty Agreement (the First Amendment) and the Second Amendment to Credit and Guaranty Agreement (the Second Amendment), each amending the 2023 Credit Agreement. Pursuant to the First Amendment, American established a revolving credit facility (the 2023 Revolving Facility, collectively with the 2023 Term Loan Facility, referred to as the 2023 Credit Facilities) in an aggregate amount of $ 890 million, maturing June 4, 2029. The 2023 Revolving Facility bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 2.00 %, 2.25 % or 2.50 %, depending on AAG’s public corporate credit rating, or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American (subject to a floor of 0.00 %), plus an applicable margin of 3.00 %, 3.25 % or 3.50 %, depending on AAG’s public corporate credit rating. SOFR borrowings under the 2023 Revolving Facility are not subject to a credit spread adjustment. As of December 31, 2024, there were no borrowings outstanding under the 2023 Revolving Facility. Pursuant to the Second Amendment, American replaced the $ 1.1 billion of initial term loans made pursuant to the 2023 Credit Agreement with new term loans in a principal amount of $ 1.1 billion. On December 23, 2024, American and AAG entered into the Third Amendment to Credit and Guaranty Agreement (the Third Amendment), amending the 2023 Credit Agreement. As a result of the Third Amendment, the term loans outstanding under the 2023 Credit Agreement with an outstanding principal amount of $ 1.1 billion were replaced with term loans with a principal amount of $ 1.1 billion. Pursuant to the Third Amendment, the 2023 Term Loan Facility bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 1.25 % per annum or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American (subject to a floor of 0.00 %), plus an applicable margin of 2.25 % per annum. SOFR borrowings under the 2023 Term Loan Facility are not subject to a credit spread adjustment. As of December 31, 2024, the margin elected was 2.25 % per annum. 98 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . April 2016 Revolving Facility On June 4, 2024, American terminated all revolving commitments under the Credit and Guaranty Agreement, dated as of April 29, 2016 (as amended, the April 2016 Credit Agreement). As a result, the April 2016 Credit Agreement was terminated and all liens securing the April 2016 Credit Agreement were released. Other Terms of the 2013, 2014 and 2023 Credit Facilities The term loans under the 2013, 2014 and 2023 Credit Facilities (collectively referred to as the Credit Facilities) are repayable in annual installments, in an amount equal to 1.00 % of the aggregate principal amount issued, with any unpaid balance due on the respective maturity dates. Voluntary prepayments may be made by American at any time. The 2013, 2014 and 2023 Revolving Facilities provide that American may from time to time borrow, repay and reborrow loans thereunder. The 2013, 2014 and 2023 Revolving Facilities are each subject to an undrawn annual fee of 0.750 %. Subject to certain limitations and exceptions, the Credit Facilities are secured by collateral, including certain slots, route authorities, simulators and leasehold rights. American has the ability to make future modifications to the collateral pledged, subject to certain restrictions. American’s obligations under the Credit Facilities are guaranteed by AAG, and such guarantee is AAG’s senior unsecured obligations (all of the collateral is owned by American, and AAG has not granted a security interest in any assets to secure any of the foregoing obligations). The Credit Facilities contain events of default customary for similar financings, including cross default and cross-acceleration to other material indebtedness. (b) Senior Secured Notes 10.75 % Senior Secured Notes On September 25, 2020 (the 10.75 % Senior Secured Notes Closing Date), American issued $ 1.0 billion in initial principal amount of senior secured IP notes (the IP Notes) and $ 200 million in initial principal amount of senior secured LGA/DCA notes (the LGA/DCA Notes and together with the IP Notes, the 10.75 % Senior Secured Notes). The obligations of American under the 10.75 % Senior Secured Notes are fully and unconditionally guaranteed (the 10.75 % Senior Secured Notes Guarantees) on a senior unsecured basis by AAG. The 10.75 % Senior Secured Notes bear interest at a rate of 10.75 % per annum in cash. Interest on the 10.75 % Senior Secured Notes is payable semiannually in arrears on September 1 and March 1 of each year, which began on March 1, 2021. The 10.75 % Senior Secured Notes will mature on February 15, 2026. The IP Notes are secured by a first lien security interest on certain intellectual property of American, including the “American Airlines” trademark and the “aa.com” domain name in the United States and certain foreign jurisdictions (the IP Collateral), and a second lien on certain slots related to American’s operations at New York LaGuardia and Ronald Reagan Washington National airports and certain other assets (the LGA/DCA Collateral and together with the IP Collateral, the 10.75 % Senior Secured Notes Collateral). LGA/DCA Notes are secured by a first lien security interest in the LGA/DCA Collateral. After the fourth anniversary of the 10.75 % Senior Secured Notes Closing Date and on or prior to the fifth anniversary of the 10.75 % Senior Secured Notes Closing Date, American may redeem all or any part of the 10.75 % Senior Secured Notes, at its option, at a redemption price equal to 105.375 % of the principal amount of the 10.75 % Senior Secured Notes redeemed, together with accrued and unpaid interest thereon, if any. After the fifth anniversary of the 10.75 % Senior Secured Notes Closing Date, American may redeem all or any part of the 10.75 % Senior Secured Notes, at its option, at par, together with accrued and unpaid interest thereon, if any. In December 2024, American redeemed an aggregate amount of $ 263 million toward portions of the outstanding principal amounts of the 10.75 % Senior Secured Notes and agreed to redeem an aggregate amount of $ 308 million by no later than April 15, 2025. American redeemed the aggregate amount of $ 308 million on February 4, 2025. 7.25 % Senior Secured Notes On February 15, 2023, American issued $ 750 million aggregate principal amount of 7.25 % senior secured notes due 2028 (the 7.25 % Senior Secured Notes) in a private offering. The 7.25 % Senior Secured Notes were issued at par and bear interest at a rate of 7.25 % per annum (subject to increase if the collateral coverage ratio described below is not met). Interest on the 7.25 % Senior Secured Notes is payable semiannually in arrears on February 15 and August 15 of each year, which began on August 15, 2023. The 7.25 % Senior Secured Notes will mature on February 15, 2028. The obligations of American under the 7.25 % Senior Secured Notes are fully and unconditionally guaranteed on a senior unsecured basis by AAG. 99 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . The 7.25 % Senior Secured Notes were issued pursuant to an indenture, dated as of February 15, 2023 (the 7.25 % Senior Secured Notes Indenture), by and among American, AAG and Wilmington Trust, National Association, as trustee and collateral agent. The 7.25 % Senior Secured Notes are American’s senior secured obligations and are secured on a first lien basis by security interests in certain assets, rights and properties that American uses to provide non-stop scheduled air carrier services between (a) certain airports in the United States and (b) airports in certain countries in South America and New Zealand (collectively, the 7.25 % Senior Secured Notes Collateral). The 7.25 % Senior Secured Notes Collateral also secures, on a first lien, pari passu basis with the 7.25 % Senior Secured Notes, the 2013 Credit Facilities. American may redeem the 7.25 % Senior Secured Notes, in whole at any time or in part from time to time prior to February 15, 2025, at a redemption price equal to 100 % of the principal amount of the 7.25 % Senior Secured Notes to be redeemed, plus a “make-whole” premium, plus any accrued and unpaid interest thereon to but excluding the date of redemption. At any time on or after February 15, 2025, American may redeem all or any of the 7.25 % Senior Secured Notes in whole at any time, or in part from time to time, at the redemption prices described in the 7.25 % Senior Secured Notes Indenture, plus any accrued and unpaid interest thereon to but excluding the date of redemption. In addition, at any time prior to February 15, 2025, American may redeem up to 40 % of the original aggregate principal amount of the 7.25 % Senior Secured Notes (calculated after giving effect to any issuance of additional notes) with the net cash proceeds of certain equity offerings, at a redemption price equal to 107.250 % of the aggregate principal amount of the 7.25 % Senior Secured Notes to be redeemed, plus any accrued and unpaid interest thereon to but excluding the date of redemption. Twice per year, American is required to deliver an appraisal of the 7.25 % Senior Secured Notes Collateral and an officer’s certificate demonstrating the calculation of a collateral coverage ratio in relation to the 7.25 % Senior Secured Notes Collateral (the 7.25 % Senior Secured Notes Collateral Coverage Ratio) as of the date of delivery of the appraisal for the applicable period. If the 7.25 % Senior Secured Notes Collateral Coverage Ratio is less than 1.6 to 1.0 as of the date of delivery of the appraisal for the applicable period, then, subject to a cure period in which additional collateral can be provided or debt repaid such that American meets the required 7.25 % Senior Secured Notes Collateral Coverage Ratio, American will be required to pay special interest in an additional amount equal to 2.0 % per annum of the principal amount of the 7.25 % Senior Secured Notes until the 7.25 % Senior Secured Notes Collateral Coverage Ratio is established to be at least 1.6 to 1.0. 8.50 % Senior Secured Notes On December 4, 2023, American issued $ 1.0 billion aggregate principal amount of 8.50 % senior secured notes due 2029 (the 8.50 % Senior Secured Notes) in a private offering. The 8.50 % Senior Secured Notes were issued at par and bear interest at a rate of 8.50 % per annum (subject to increase if the collateral coverage ratio described below is not met). Interest on the 8.50 % Senior Secured Notes is payable semiannually in arrears on May 15 and November 15 of each year, which began on May 15, 2024. The 8.50 % Senior Secured Notes will mature on May 15, 2029. The obligations of American under the 8.50 % Senior Secured Notes are fully and unconditionally guaranteed on a senior unsecured basis by AAG. The 8.50 % Senior Secured Notes were issued pursuant to an indenture, dated as of December 4, 2023 (the 8.50 % Senior Secured Notes Indenture), by and among American, AAG and Wilmington Trust, National Association, as trustee and collateral agent. The 8.50 % Senior Secured Notes are American’s senior secured obligations and are secured on a first lien basis by security interests in certain assets, rights and properties that American uses to provide non-stop scheduled air carrier services between (a) certain airports in the United States and (b) certain airports in Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, Mexico, South Korea and Switzerland (collectively, the 8.50 % Senior Secured Notes Collateral). The 8.50 % Senior Secured Notes Collateral also secures, on a first lien, pari passu basis with the 8.50 % Senior Secured Notes, the 2023 Term Loan Facility. American may redeem the 8.50 % Senior Secured Notes, in whole at any time or in part from time to time prior to November 15, 2025, at a redemption price equal to 100 % of the principal amount of the 8.50 % Senior Secured Notes to be redeemed, plus a “make-whole” premium, plus any accrued and unpaid interest thereon to but excluding the date of redemption. At any time on or after November 15, 2025, American may redeem all or any of the 8.50 % Senior Secured Notes in whole at any time, or in part from time to time, at the redemption prices described in the 8.50 % Senior Secured Notes Indenture, plus any accrued and unpaid interest thereon to but excluding the date of redemption. In addition, at any time prior to November 15, 2025, American may redeem up to 40 % of the original aggregate principal amount of the 8.50 % Senior Secured Notes (calculated after giving effect to any issuance of additional notes) with the net cash proceeds of certain equity offerings, at a redemption price equal to 108.50 % of the aggregate principal amount of the 8.50 % Senior Secured Notes to be redeemed, plus any accrued and unpaid interest thereon to but excluding the date of redemption. In 100 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . addition, during each twelve-month period beginning on December 4, 2023 and ending on or prior to November 15, 2025, American may redeem up to 10 % of the original aggregate principal amount of the 8.50 % Senior Secured Notes at a redemption price of 103 % of the principal amount thereof, plus any accrued and unpaid interest thereon to, but excluding, the applicable date of redemption. Twice per year, American is required to deliver an appraisal of the 8.50 % Senior Secured Notes Collateral and an officer’s certificate demonstrating the calculation of a collateral coverage ratio in relation to the 8.50 % Senior Secured Notes Collateral (the 8.50 % Senior Secured Notes Collateral Coverage Ratio) as of the date of delivery of the appraisal for the applicable period. If the 8.50 % Senior Secured Notes Collateral Coverage Ratio is less than 1.6 to 1.0 as of the date of delivery of the appraisal for the applicable period, then, subject to a cure period in which additional collateral can be provided or debt repaid such that American meets the required 8.50 % Senior Secured Notes Collateral Coverage Ratio, American will be required to pay special interest in an additional amount equal to 2.0 % per annum of the principal amount of the 8.50 % Senior Secured Notes until the 8.50 % Senior Secured Notes Collateral Coverage Ratio is established to be at least 1.6 to 1.0. (c) AAdvantage Financing On March 24, 2021 (the AAdvantage Financing Closing Date), American and AAdvantage Loyalty IP Ltd., a Cayman Islands exempted company incorporated with limited liability and an indirect wholly-owned subsidiary of American (Loyalty Issuer and, together with American, the AAdvantage Issuers), completed the offering of $ 3.5 billion aggregate principal amount of 5.50 % Senior Secured Notes due 2026 (the 2026 Notes) and $ 3.0 billion aggregate principal amount of 5.75 % Senior Secured Notes due 2029 (the 2029 Notes, and together with the 2026 Notes, the AAdvantage Notes). The AAdvantage Notes are fully and unconditionally guaranteed by the SPV Guarantors and AAG. Concurrent with the issuance of the AAdvantage Notes, the AAdvantage Issuers, as co-borrowers, entered into a term loan credit and guaranty agreement, dated March 24, 2021, as amended, providing for a $ 3.5 billion term loan facility (the AAdvantage Term Loan Facility and collectively with the AAdvantage Notes, the AAdvantage Financing) and pursuant to which the full $ 3.5 billion of term loans (the AAdvantage Loans) were drawn on the AAdvantage Financing Closing Date. The AAdvantage Loans are fully and unconditionally guaranteed (together with the AAdvantage Note Guarantees, the AAdvantage Guarantees) by the SPV Guarantors and AAG. Subject to certain permitted liens and other exceptions, the AAdvantage Notes, AAdvantage Loans and AAdvantage Guarantees provided by the SPV Guarantors are secured by a first-priority security interest in, and pledge of, various agreements with respect to the AAdvantage program (the AAdvantage Agreements) (including all payments thereunder) and certain intellectual property licenses, certain deposit accounts that will receive cash under the AAdvantage Agreements, certain reserve accounts, the equity of each of Loyalty Issuer and the SPV Guarantors and substantially all other assets of Loyalty Issuer and the SPV Guarantors including American’s rights to certain data and other intellectual property used in the AAdvantage program (subject to certain exceptions) (collectively, the AAdvantage Collateral). Payment Terms of the AAdvantage Notes and AAdvantage Loans under the AAdvantage Term Loan Facility Interest on the AAdvantage Notes is payable in cash, quarterly in arrears on the 20th day of each January, April, July and October (each, an AAdvantage Payment Date), which began on July 20, 2021. The 2026 Notes will mature on April 20, 2026, and the 2029 Notes will mature on April 20, 2029. The outstanding principal on the 2026 Notes will be repaid in quarterly installments of $ 292 million on each AAdvantage Payment Date, which began in July 2023. The outstanding principal on the 2029 Notes will be repaid in quarterly installments of $ 250 million on each AAdvantage Payment Date, beginning on July 20, 2026. The AAdvantage Issuers may redeem the AAdvantage Notes, at their option, in whole at any time or in part from time to time, at a redemption price equal to 100 % of the principal amount of the AAdvantage Notes redeemed plus a “make-whole” premium, together with accrued and unpaid interest to the date of redemption. The scheduled maturity date of the AAdvantage Loans under the AAdvantage Term Loan Facility is April 20, 2028. The outstanding principal on the AAdvantage Loans will be repaid in quarterly installments of $ 175 million, on each AAdvantage Payment Date, which began in July 2023. These amortization payments (as well as those for the AAdvantage Notes) will be subject to the occurrence of certain early amortization events, including the failure to satisfy a minimum debt service coverage ratio at specified determination dates. Prepayment of some or all of the AAdvantage Loans outstanding under the AAdvantage Term Loan Facility is permitted, although payment of an applicable premium is required as specified in the AAdvantage Term Loan Facility. 101 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . The AAdvantage Indenture and the AAdvantage Term Loan Facility contain mandatory prepayment provisions triggered upon (i) the issuance or incurrence by Loyalty Issuer or the SPV Guarantors of certain indebtedness or (ii) the receipt by American or its subsidiaries of net proceeds from pre-paid frequent flyer (i.e., AAdvantage) mileage credit sales exceeding $ 505 million. Each of these prepayments would also require payment of an applicable premium. Certain other events, including the occurrence of a change of control with respect to AAG and certain AAdvantage Collateral sales exceeding a specified threshold, will also trigger mandatory repurchase or mandatory prepayment provisions under the AAdvantage Indenture and the AAdvantage Term Loan Facility, respectively. The AAdvantage Term Loan Facility bears interest at a base rate (subject to a floor of 0.00 %) plus an applicable margin of 3.75 % or, at American’s option, the SOFR rate for a tenor of three months, plus a 0.26161 % credit spread adjustment (with such SOFR rate plus SOFR adjustment being subject to a floor of 0.75 %) and an applicable margin of 4.75 %. As of December 31, 2024, the margin elected was 4.75 %. (d) EETCs issued in 2024 In 2024, American entered into agreements under which it borrowed $ 684 million in connection with the financing of certain aircraft that had been previously delivered. Debt incurred under these agreements is junior to existing equipment notes, matures in 2027 through 2028 and bears interest at fixed rates averaging 7.10 %. (e) Equipment Loans and Other Notes Payable Issued in 2024 In 2024, American entered into agreements under which it borrowed $ 990 million in connection with the financing of certain aircraft. Debt incurred under these agreements matures in 2030 through 2036 and bears interest at variable rates (comprised of SOFR plus an applicable margin) averaging 6.28 % as of December 31, 2024. (f) PSP Promissory Notes As partial compensation to the U.S. Government for the provision of financial assistance under the PSP Agreements, AAG issued promissory notes to Treasury (PSP1 Promissory Note, PSP2 Promissory Note and PSP3 Promissory Note, collectively the PSP Promissory Notes), in the aggregate principal amount of $ 3.7 billion which provides for the guarantee of our obligations under the PSP Promissory Notes by AAG’s subsidiaries American, Envoy Air Inc., Piedmont and PSA (together, the Subsidiaries). The PSP Promissory Notes bear interest on the outstanding principal amount at a rate equal to 1.00 % per annum until the fifth anniversary of the applicable PSP closing date and 2.00 % plus an interest rate based on SOFR per annum or other benchmark replacement rate consistent with customary market conventions (but not to be less than 0.00 %) thereafter until maturity on the tenth anniversary of the applicable PSP closing date, and interest accrued thereon is payable in arrears on the last business day of March and September of each year. The aggregate principal amount outstanding under the PSP Promissory Notes, together with all accrued and unpaid interest thereon and all other amounts payable under the PSP Promissory Notes, will be due and payable on the applicable maturity date. The PSP Promissory Notes are our senior unsecured obligation and each guarantee of the PSP Promissory Notes is the senior unsecured obligation of each of the Subsidiaries, respectively. We may, at any time and from time to time, voluntarily prepay amounts outstanding under the PSP Promissory Notes, in whole or in part, without penalty or premium. Within 30 days of the occurrence of certain change of control triggering events, we are required to prepay the aggregate outstanding principal amount of the PSP Promissory Notes at such time, together with any accrued interest or other amounts owing under the PSP Promissory Notes at such time. (g) 6.50 % Convertible Senior Notes In June 2020, AAG completed the public offering of $ 1.0 billion aggregate principal amount of AAG’s 6.50 % convertible senior notes due 2025 (the Convertible Notes). The Convertible Notes are fully and unconditionally guaranteed by American on a senior unsecured basis (the Convertible Notes Guarantee). The net proceeds from the Convertible Notes were approximately $ 970 million, after deducting the underwriters’ discounts and commissions and our offering expenses. The Convertible Notes bear interest at a rate of 6.50 % per annum. Interest on the Convertible Notes is payable semiannually in arrears on January 1 and July 1 of each year, which began on January 1, 2021. The Convertible Notes will mature on July 1, 2025, unless earlier converted, redeemed or repurchased by us. 102 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . Upon conversion, AAG will pay or deliver, as the case may be, cash, shares of AAG common stock or a combination of cash and shares of AAG common stock, at AAG’s election. The initial conversion rate is 61.7284 shares of AAG common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $ 16.20 per share of AAG common stock). The conversion rate is subject to adjustment in some events as described in the Convertible Notes Indenture. Holders may convert their Convertible Notes at their option only in the following circumstances: (1) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on September 30, 2020, if the last reported sale price per share of AAG common stock exceeds 130 % of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the measurement period) in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price per share of AAG common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on AAG common stock; (4) if AAG calls such Convertible Notes for redemption; and (5) at any time from, and including, April 1, 2025 until the close of business on the scheduled trading day immediately before the maturity date of the Convertible Notes. In addition, following certain corporate events that occur prior to the maturity date or upon AAG’s issuance of a notice of redemption, AAG will increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such corporate event or during the related redemption period in certain circumstances by a specified number of shares of AAG common stock as described in the Convertible Notes Indenture. On or after July 5, 2023 and on or before the 20th scheduled trading day immediately before the maturity date, AAG may redeem the Convertible Notes, in whole or in part, if the last reported sale price of AAG common stock has been at least 130 % of the conversion price then in effect on (1) each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the trading day immediately before the date AAG sends the related redemption notice; and (2) the trading day immediately before the date AAG sends such notice. In the case of any optional redemption, AAG will redeem the Convertible Notes at a redemption price equal to 100 % of the principal amount of such Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The following table provides information relating to the Convertible Notes as of December 31, 2024 and 2023 (in millions): December 31, 2024 2023 Principal amount $ 1,000 $ 1,000 Unamortized debt discount ( 3 ) ( 10 ) Net carrying amount $ 997 $ 990 The effective interest rate for the Convertible Notes was 7 % for each of the years ended December 31, 2024, 2023 and 2022. Interest recognized for the Convertible Notes is as follows (in millions): Year Ended December 31, 2024 2023 2022 Contractual coupon interest $ 65 $ 65 $ 65 Non-cash amortization of debt discount 7 6 6 Total interest expense $ 72 $ 71 $ 71 At December 31, 2024, the if-converted value of the Convertible Notes exceeded the principal amount by $ 76 million. The last reported sale price per share of our common stock (as defined in the Convertible Notes Indenture) did not exceed 130 % of the conversion price of the Convertible Notes for at least 20 of the 30 consecutive trading days ending on December 31, 2024. Accordingly, pursuant to the terms of the Convertible Notes Indenture, the holders of the Convertible Notes cannot convert at their option at any time during the quarter ending March 31, 2025. Each $1,000 principal amount of Convertible Notes is convertible at a rate of 61.7284 shares of our common stock, subject to adjustment as provided in the Convertible Notes Indenture. We may settle conversions by paying or delivering, as applicable, cash, shares of our 103 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . common stock or a combination of cash and shares of our common stock, at our election. If certain conditions are not met at maturity, cash settlement is required. (h) Unsecured Senior Notes 3.75 % Senior Notes In February 2020, AAG issued $ 500 million aggregate principal amount of 3.75 % senior notes due 2025 (the 3.75 % Senior Notes). In December 2024, AAG repaid the outstanding principal amount of the 3.75 % Senior Notes in advance of the March 2025 maturity. Guarantees As of December 31, 2024, AAG had issued guarantees covering approximately $ 15.2 billion of American’s secured debt (and interest thereon), including the Credit Facilities, the AAdvantage Financing, certain EETC financings and special facility revenue bonds. Certain Covenants Our debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among other things, may restrict the ability of us and our subsidiaries to incur additional indebtedness, pay dividends or repurchase stock. Our debt agreements also contain customary change of control provisions, which may require us to repay or redeem such indebtedness upon certain events constituting a change of control under the relevant agreement, in certain cases at a premium. Additionally, certain of our debt financing agreements (including our secured notes, term loans, revolving credit facilities and spare engine EETCs) contain loan to value (LTV) or collateral coverage ratio covenants and certain agreements require us to appraise the related collateral annually or semiannually. Pursuant to such agreements, if the applicable LTV or collateral coverage ratio exceeds or falls below a specified threshold, as the case may be, we will be required, as applicable, to pledge additional qualifying collateral (which in some cases may include cash or investment securities), withhold additional cash in certain accounts, or pay down such financing, in whole or in part, or the interest rate for the relevant financing will be increased. Additionally, a significant portion of our debt financing agreements contain covenants requiring us to maintain an aggregate of at least $ 2.0 billion of unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities, and our AAdvantage Financing contains a peak debt service coverage ratio, pursuant to which failure to comply with a certain threshold may result in early repayment, in whole or in part, of the AAdvantage Financing. Specifically, we are required to meet certain collateral coverage tests for our Credit Facilities, 7.25 % Senior Secured Notes, 8.50 % Senior Secured Notes and 10.75 % Senior Secured Notes, as described below: 2013 Credit Facilities 7.25 % Senior Secured Notes 2014 Credit Facilities 2023 Credit Facilities 8.50 % Senior Secured Notes 10.75 % Senior Secured Notes LTV Requirement 1.6 x Collateral valuation to amount of debt outstanding ( 62.5 % LTV) LTV as of Last Measurement Date 35.0 % 15.8 % 24.7 % 5.2 % Frequency of Appraisals of Appraised Collateral Semi-Annual Annual Collateral Description Generally, certain slots, route authorities and airport gate leasehold rights used by American to operate certain services between the U.S. and South America and New Zealand Generally, certain slots, route authorities and airport gate leasehold rights used by American to operate certain services between the U.S. and European Union (including London Heathrow) Generally, certain slots, route authorities and airport gate leasehold rights used by American to operate certain services between the U.S. and Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, Mexico, South Korea and Switzerland Generally, certain DCA slots, certain LGA slots, certain simulators and certain leasehold rights and, in the case of the IP Notes, certain intellectual property of American At December 31, 2024, we were in compliance with the applicable collateral coverage tests as of the most recent measurement dates. 104 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . 5. Leases We lease certain aircraft and engines, including aircraft under capacity purchase agreements. As of December 31, 2024, we operated 716 leased aircraft, including 210 aircraft leased under capacity purchase agreements, with remaining terms ranging from less than one year to approximately 11 years. At each airport where we conduct flight operations, we have agreements, generally with a governmental unit or authority, for the use of passenger, operations and baggage handling space as well as runways and taxiways. These agreements, particularly in the U.S., often contain provisions for periodic adjustments to rates and charges applicable under such agreements. These rates and charges also vary with our level of operations and the operations of the airport. Because of the variable nature of these rates, these leases are not recorded on our consolidated balance sheets as a ROU asset or a lease liability. Additionally, at our hub locations and in certain other cities we serve, we lease administrative offices, catering, cargo, training, maintenance and other facilities. The components of lease expense were as follows (in millions): Year Ended December 31, 2024 2023 2022 Operating lease cost $ 1,851 $ 2,016 $ 2,007 Finance lease cost: Amortization of assets 132 128 143 Interest on lease liabilities 39 45 47 Variable lease cost 3,075 2,720 2,580 Total net lease cost $ 5,097 $ 4,909 $ 4,777 Included in the table above is $ 225 million, $ 274 million and $ 242 million of operating lease cost under our capacity purchase agreement with Republic for the years ended December 31, 2024, 2023 and 2022, respectively. We hold a 25 % equity interest in Republic Holdings, the parent company of Republic. 105 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . Supplemental balance sheet information related to leases was as follows (in millions, except lease term and discount rate): December 31, 2024 2023 Operating leases: Operating lease ROU assets $ 7,333 $ 7,939 Current operating lease liabilities $ 1,092 $ 1,309 Noncurrent operating lease liabilities 5,976 6,452 Total operating lease liabilities $ 7,068 $ 7,761 Finance leases: Property and equipment, at cost $ 1,632 $ 1,380 Accumulated amortization ( 952 ) ( 891 ) Property and equipment, net $ 680 $ 489 Current finance lease liabilities $ 132 $ 131 Noncurrent finance lease liabilities 531 375 Total finance lease liabilities $ 663 $ 506 Weighted average remaining lease term (in years): Operating leases 8.2 8.4 Finance leases 7.4 5.8 Weighted average discount rate: Operating leases 7.5 % 7.6 % Finance leases 7.0 % 7.2 % Supplemental cash flow and other information related to leases was as follows (in millions): Year Ended December 31, 2024 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 1,830 $ 2,033 $ 1,990 Operating cash flows from finance leases 40 48 47 Financing cash flows from finance leases 152 265 190 Gain on sale leaseback transactions, net 76 12 2 106 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . Maturities of lease liabilities were as follows (in millions): December 31, 2024 Operating Leases Finance Leases 2025 $ 1,546 $ 173 2026 1,403 150 2027 1,243 112 2028 1,114 77 2029 1,010 72 2030 and thereafter 3,049 256 Total lease payments 9,365 840 Less: Imputed interest ( 2,297 ) ( 177 ) Total lease obligations 7,068 663 Less: Current obligations ( 1,092 ) ( 132 ) Long-term lease obligations $ 5,976 $ 531 As of December 31, 2024, we had additional operating lease commitments that have not yet commenced of approximately $ 693 million for five Boeing 787 Family aircraft scheduled to be delivered in 2025 with lease terms of 10 years. 6. Income Taxes The significant components of the income tax provision were (in millions): Year Ended December 31, 2024 2023 2022 Current income tax benefit: State, local and foreign $ — $ — $ ( 6 ) Deferred income tax provision: Federal 285 268 59 State and local 23 31 6 Deferred income tax provision 308 299 65 Total income tax provision $ 308 $ 299 $ 59 The income tax provision differed from amounts computed at the statutory federal income tax rate as follows (in millions): Year Ended December 31, 2024 2023 2022 Statutory income tax provision $ 242 $ 235 $ 39 State, local and foreign income tax provision, net of federal tax effect 21 22 — Book expenses not deductible for tax purposes 44 38 22 Change in valuation allowance — 3 — Other, net 1 1 ( 2 ) Income tax provision $ 308 $ 299 $ 59 107 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . The components of our deferred tax assets and liabilities were (in millions): December 31, 2024 2023 Deferred tax assets: Net operating loss and other carryforwards $ 4,292 $ 4,238 Loyalty program liability 1,799 1,774 Leases 1,596 1,758 Pension benefits 234 434 Postretirement benefits other than pension benefits 270 274 Rent expense 60 84 Other 775 902 Total deferred tax assets 9,026 9,464 Valuation allowance ( 22 ) ( 22 ) Net deferred tax assets 9,004 9,442 Deferred tax liabilities: Accelerated depreciation and amortization ( 4,620 ) ( 4,503 ) Leases ( 1,656 ) ( 1,798 ) Other ( 252 ) ( 262 ) Total deferred tax liabilities ( 6,528 ) ( 6,563 ) Net deferred tax asset $ 2,476 $ 2,879 At December 31, 2024, we had approximately $ 12.9 billion of gross federal net operating losses (NOLs) and $ 5.9 billion of other carryforwards available to reduce future federal taxable income, of which $ 2.6 billion will expire beginning in 2033 if unused and $ 16.2 billion can be carried forward indefinitely. We also had approximately $ 5.2 billion of NOL carryforwards to reduce future state taxable income at December 31, 2024, which will expire in taxable years 2024 through 2044 if unused. Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods. We provide a valuation allowance for our deferred tax assets, which include our NOLs and other carryforwards, when it is more likely than not that some portion, or all of our deferred tax assets, will not be realized. We consider all available positive and negative evidence and make certain assumptions in evaluating the realizability of our deferred tax assets. Many factors are considered that impact our assessment of future profitability, including conditions which are beyond our control, such as the health of the economy, the availability and price volatility of aircraft fuel and travel demand. We have determined that positive factors outweigh negative factors in the determination of the realizability of our deferred tax assets. In 2024, we recorded an income tax provision of $ 308 million with an effective rate of approximately 27 %, which was substantially non-cash. Substantially all of our income before income taxes is attributable to the United States. We file our tax returns as prescribed by the tax laws of the jurisdictions in which we operate. Our 2021 through 2023 tax years are still subject to examination by the Internal Revenue Service. Various state, local and foreign jurisdiction tax years remain open to examination, and we are under examination, in administrative appeals or engaged in tax litigation in certain jurisdictions. We believe that the effect of any assessments will not be material to our consolidated financial statements. The amount of, and changes to, our uncertain tax positions were not material in any of the years presented. We accrue interest and penalties related to unrecognized tax benefits in interest expense and operating expense, respectively. 108 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . 7. Fair Value Measurements Assets Measured at Fair Value on a Recurring Basis Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (i.e., an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. Accounting standards include disclosure requirements around fair values used for certain financial instruments and establish a fair value hierarchy. The hierarchy prioritizes valuation inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of three levels: • Level 1 – Observable inputs such as quoted prices in active markets; • Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and • Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. When available, we use quoted market prices to determine the fair value of our financial assets. If quoted market prices are not available, we measure fair value using valuation techniques that use, when possible, current market-based or independently-sourced market parameters, such as interest rates and currency rates. We utilize the market approach to measure the fair value of our financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. Our short-term investments, restricted cash and restricted short-term investments classified as Level 2 utilize significant observable inputs, other than quoted prices in active markets, for valuation of these securities. No changes in valuation techniques or inputs occurred during the year ended December 31, 2024. Assets measured at fair value on a recurring basis are summarized below (in millions): Fair Value Measurements as of December 31, 2024 Total Level 1 Level 2 Level 3 Short-term investments (1), (2) : Money market funds $ 680 $ 680 $ — $ — Corporate obligations 2,909 — 2,909 — Bank notes/certificates of deposit/time deposits 2,041 — 2,041 — Repurchase agreements 550 — 550 — 6,180 680 5,500 — Restricted cash and short-term investments (1), (3) 732 442 290 — Long-term investments (4) 161 161 — — Total $ 7,073 $ 1,283 $ 5,790 $ — Fair Value Measurements as of December 31, 2023 Total Level 1 Level 2 Level 3 Short-term investments (1) : Money market funds $ 818 $ 818 $ — $ — Corporate obligations 4,046 — 4,046 — Bank notes/certificates of deposit/time deposits 1,586 — 1,586 — Repurchase agreements 450 — 450 — U.S. government and agency obligations 100 — 100 — 7,000 818 6,182 — Restricted cash and short-term investments (1), (3) 910 459 451 — Long-term investments (4) 163 163 — — Total $ 8,073 $ 1,440 $ 6,633 $ — 109 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . (1) All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are recorded in accumulated other comprehensive loss at each reporting period. There were no credit losses. (2) Our short-term investments as of December 31, 2024 mature in one year or less. (3) Restricted cash and short-term investments primarily include collateral held to support workers' compensation obligations and collateral associated with the payment of interest for the AAdvantage Financing. Restricted short-term investments mature in one year or less except for $ 155 million and $ 218 million as of December 31, 2024 and December 31, 2023, respectively. (4) Long-term investments include our equity investments in China Southern Airlines Company Limited (China Southern Airlines), Vertical Aerospace Ltd. (Vertical) and GOL. See Note 8 for further information on our equity investments. Fair Value of Debt The fair value of our long-term debt was estimated using quoted market prices or discounted cash flow analyses based on our current estimated incremental borrowing rates for similar types of borrowing arrangements. The fair value of the Convertible Notes, which would have been classified as Level 2, was $ 1.2 billion and $ 1.1 billion as of December 31, 2024 and December 31, 2023, respectively. The carrying value and estimated fair value of our long-term debt, including current maturities, were as follows (in millions): December 31, 2024 Carrying Value Fair Value Total Level 1 Level 2 Level 3 Long-term debt, including current maturities $ 29,813 $ 30,010 $ — $ 26,402 $ 3,608 December 31, 2023 Carrying Value Fair Value Total Level 1 Level 2 Level 3 Long-term debt, including current maturities $ 32,396 $ 32,310 $ — $ 28,594 $ 3,716 8. Investments To help expand our network and as part of our ongoing commitment to sustainability, we enter into various commercial relationships or other strategic partnerships, including equity investments, with other airlines and companies. Our equity investments, ownership interest and carrying value were as follows: Ownership Interest Carrying Value (in millions) December 31, December 31, Accounting Treatment 2024 2023 2024 2023 Republic Holdings Equity Method 25.0 % 25.0 % $ 253 $ 240 China Southern Airlines Fair Value 1.5 % 1.5 % 142 115 Other investments (1) Various 120 186 Total $ 515 $ 541 (1) Primarily includes our investment in JetSMART Holdings Limited, which is accounted for under the equity method, and our investments in Vertical and GOL, which are each accounted for at fair value. 110 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . 9. Employee Benefit Plans We sponsor defined benefit and defined contribution pension plans for eligible employees. The defined benefit pension plans provide benefits for participating employees based on years of service and average compensation for a specified period of time before retirement. Effective November 1, 2012, substantially all of our defined benefit pension plans were frozen and we began providing enhanced benefits under our defined contribution pension plans for certain employee groups. We use a December 31 measurement date for all of our defined benefit pension plans. We also provide certain retiree medical and other postretirement benefits, including health care and life insurance benefits to retired employees and notional retiree health reimbursement arrangements for eligible participants. Benefit Obligations, Fair Value of Plan Assets and Funded Status The following tables provide a reconciliation of the changes in the pension and retiree medical and other postretirement benefits obligations, fair value of plan assets and funded status as of December 31, 2024 and 2023: Pension Benefits Retiree Medical and Other Postretirement Benefits 2024 2023 2024 2023 (In millions) Benefit obligation at beginning of period $ 14,410 $ 14,037 $ 1,325 $ 906 Service cost 2 2 29 17 Interest cost 723 758 64 55 Actuarial loss (gain) (1), (2) ( 741 ) 507 ( 58 ) 92 Plan amendments (3) — — 55 339 Benefit payments ( 913 ) ( 894 ) ( 107 ) ( 84 ) Other ( 132 ) — — — Benefit obligation at end of period $ 13,349 $ 14,410 $ 1,308 $ 1,325 Fair value of plan assets at beginning of period $ 12,431 $ 11,884 $ 133 $ 133 Actual return on plan assets 568 1,368 9 14 Employer contributions (4) 300 73 93 70 Benefit payments ( 913 ) ( 894 ) ( 107 ) ( 84 ) Other ( 132 ) — — — Fair value of plan assets at end of period $ 12,254 $ 12,431 $ 128 $ 133 Funded status at end of period $ ( 1,095 ) $ ( 1,979 ) $ ( 1,180 ) $ ( 1,192 ) (1) The 2024 and 2023 pension actuarial loss (gain) primarily relates to the change in our weighted average discount rate assumption. (2) The 2024 retiree medical and other postretirement benefits actuarial gain primarily relates to changes in certain retirement and weighted average discount rate assumptions, offset by increases in health care premiums and health care cost assumptions. The 2023 retiree medical and other postretirement benefits actuarial loss primarily relates to the change in our weighted average discount rate assumption and change in health care cost assumptions. (3) We remeasured our retiree medical and other postretirement benefits to account for enhanced retirement benefits pursuant to the ratification of new CBAs. As a result, in 2024 and 2023, we increased our postretirement benefits obligation by $ 55 million and $ 339 million, respectively, which was included as a component of prior service cost in accumulated other comprehensive loss. (4) In 2024, we made required contributions of $ 285 million and supplemental contributions of $ 15 million to our defined benefit pension plans, and in 2023, we made required contributions of $ 69 million and supplemental contributions of $ 4 million to our defined benefit pension plans. 111 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . Balance Sheet Position Pension Benefits Retiree Medical and Other Postretirement Benefits 2024 2023 2024 2023 (In millions) As of December 31: Current liability $ 5 $ 5 $ 142 $ 122 Noncurrent liability 1,090 1,974 1,038 1,070 Total liabilities $ 1,095 $ 1,979 $ 1,180 $ 1,192 Pension Benefits Retiree Medical and Other Postretirement Benefits 2024 2023 2024 2023 (In millions) As of December 31: Net actuarial loss (gain) $ 3,128 $ 3,566 $ ( 408 ) $ ( 383 ) Prior service cost 1 — 238 197 Total accumulated other comprehensive loss (income), pre-tax $ 3,129 $ 3,566 $ ( 170 ) $ ( 186 ) Plans with Projected Benefit Obligations Exceeding Fair Value of Plan Assets Pension Benefits 2024 2023 (In millions) As of December 31: Projected benefit obligation $ 13,349 $ 14,410 Fair value of plan assets 12,254 12,431 Plans with Accumulated Benefit Obligations Exceeding Fair Value of Plan Assets Pension Benefits Retiree Medical and Other Postretirement Benefits 2024 2023 2024 2023 (In millions) As of December 31: Accumulated benefit obligation $ 13,341 $ 14,403 $ — $ — Accumulated postretirement benefit obligation — — 1,308 1,325 Fair value of plan assets 12,254 12,431 128 133 112 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . Net Periodic Benefit Cost (Income) Pension Benefits Retiree Medical and Other Postretirement Benefits 2024 2023 2022 2024 2023 2022 (In millions) For the years ended December 31: Defined benefit plans: Service cost $ 2 $ 2 $ 3 $ 29 $ 17 $ 16 Interest cost 723 758 556 64 55 30 Expected return on assets ( 978 ) ( 918 ) ( 1,138 ) ( 10 ) ( 11 ) ( 12 ) Amortization of: Prior service cost (benefit) — 18 28 14 ( 6 ) ( 14 ) Unrecognized net loss (gain) 105 106 156 ( 31 ) ( 34 ) ( 30 ) Net periodic benefit cost (income) $ ( 148 ) $ ( 34 ) $ ( 395 ) $ 66 $ 21 $ ( 10 ) The service cost component of net periodic benefit cost (income) is included in operating expenses and the other components of net periodic benefit cost (income) are included in nonoperating other income (expense), net on our consolidated statements of operations. Assumptions The following actuarial assumptions were used to determine our benefit obligations and net periodic benefit cost (income) for the periods presented: Pension Benefits Retiree Medical and Other Postretirement Benefits 2024 2023 2024 2023 Benefit obligations as of December 31: Weighted average discount rate 5.7 % 5.2 % 5.6 % 5.3 % Pension Benefits Retiree Medical and Other Postretirement Benefits 2024 2023 2022 2024 2023 2022 Net periodic benefit cost (income) for the years ended December 31: Weighted average discount rate 5.2 % 5.6 % 3.0 % 5.3 % 5.7 % 2.8 % Weighted average expected rate of return on plan assets 8.0 % 8.0 % 8.0 % 8.0 % 8.0 % 8.0 % Weighted average health care cost trend rate assumed for next year (1) N/A N/A N/A 6.5 % 6.5 % 5.8 % (1) The weighted average health care cost trend rate at December 31, 2024 is assumed to decline gradually to 4.5 % by 2033 and remain level thereafter. As of January 1, 2025, our estimate of the long-term rate of return on plan assets is 7.75 % based on the target asset allocation. Expected returns on long duration bonds are based on yields to maturity of the bonds held at year-end. Expected returns on other assets are based on a combination of long-term historical returns, actual returns on plan assets achieved over the last 10 years, current and expected market conditions, and expected value to be generated through active management and securities lending programs. 113 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . Minimum Contributions We are required to make minimum contributions to our defined benefit pension plans under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (ERISA) and various other laws for U.S. based plans as well as underfunding rules specific to countries where we maintain defined benefit pension plans. Based on current funding assumptions, we have minimum required contributions of $ 224 million for 2025 including contributions to defined benefit pension plans for our wholly-owned subsidiaries. Our future funding obligations will depend on the performance of our investments held in a trust by the pension plans, interest rates for determining funding targets, the amount of and timing of any supplemental contributions and our actuarial experience. Benefit Payments The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (approximately, in millions): 2025 2026 2027 2028 2029 2030-2034 Pension benefits $ 962 $ 982 $ 1,001 $ 1,015 $ 1,025 $ 5,149 Retiree medical and other postretirement benefits 159 163 160 157 153 651 Plan Assets The objectives of our investment policies are to: maintain sufficient income and liquidity to pay retirement benefits; produce a long-term rate of return that meets or exceeds the assumed rate of return for plan assets; limit the volatility of asset performance and funded status; and diversify assets among asset classes and investment managers. Based on these investment objectives, a long-term strategic asset allocation has been established. This strategic allocation seeks to balance the potential benefit of improving the funded position with the potential risk that the funded position would decline. The current strategic target asset allocation with the corresponding allowed range is as follows: Asset Class/Sub-Class Target Allocation Allowed Range Equity 56 % 30 % - 85 % Public: U.S. Large 18 % 10 % - 40 % U.S. Small/Mid 4 % 0 % - 10 % International Large 11.5 % 5 % - 25 % International Small/Mid 2.5 % 0 % - 10 % Emerging Markets 5 % 0 % - 15 % Private Equity 15 % 5 % - 30 % Fixed Income 44 % 15 % - 70 % Public U.S. Fixed Income 35 % 15 % - 60 % Private Income 9 % 0 % - 20 % Other 0 % 0 % - 5 % Cash Equivalents 0 % 0 % - 20 % Public equity investments are intended to provide a real return over a full market cycle and, therefore, to contribute to the pension plan’s long-term objective. Public fixed income investments are intended to provide income to the plan and offer the potential for long term capital appreciation. Private investments, such as private equity and private income, are used to provide higher expected returns than public markets over the long-term by assuming reduced levels of liquidity and higher levels of risk. The pension plan’s master trust participates in securities lending programs to generate additional income by loaning plan assets to borrowers on a fully collateralized basis. The pension plan’s master trust will also engage in derivative instruments to equitize residual levels of cash as well as hedge the pension plan’s exposure to interest rates. Such programs are subject to market risk and counterparty risk. 114 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . Investments in securities traded on recognized securities exchanges are valued at the last reported sales price on the last business day of the year. Securities traded in the over-the-counter market are valued at the last bid price. Investments in limited partnerships are carried at estimated net asset value (NAV) as determined by and reported by the general partners of the partnerships and represent the proportionate share of the estimated fair value of the underlying assets of the limited partnerships. Mutual funds are valued once daily through a NAV calculation provided at the end of each trade day. Common/collective trusts are valued at NAV based on the fair values of the underlying investments of the trusts as determined by the sponsor of the trusts. No changes in valuation techniques or inputs occurred during the year. Benefit Plan Assets Measured at Fair Value on a Recurring Basis The fair value of our pension plan assets at December 31, 2024 and 2023, by asset category, were as follows (in millions) (1) : December 31, 2024 December 31, 2023 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Equity (2) $ 2,498 $ — $ — $ 2,498 $ 3,182 $ — $ — $ 3,182 Fixed income (3) 439 3,723 — 4,162 260 3,238 — 3,498 Other, net (4) 91 144 68 303 ( 6 ) 348 84 426 Measured at NAV (5) : Common collective trusts (6) — — — 1,153 — — — 1,244 Private investments (7) — — — 4,138 — — — 4,081 Total plan assets $ 3,028 $ 3,867 $ 68 $ 12,254 $ 3,436 $ 3,586 $ 84 $ 12,431 (1) See Note 7 for a description of the levels within the fair value hierarchy. (2) Equity investments include domestic and international common stock and preferred stock. (3) Fixed income investments include corporate, government and U.S. municipal bonds, as well as mutual funds invested in fixed income securities. (4) Other primarily includes a short-term investment fund, net receivables and payables of the master trust for dividends, interest and amounts due to or from the sale and purchase of securities and cash and cash equivalents. (5) Includes investments that were measured at NAV per share (or its equivalent) as a practical expedient that have not been classified in the fair value hierarchy. (6) Common collective trusts include commingled funds primarily invested in equity securities. For some trusts, requests for withdrawals must meet specific requirements with advance notice of redemption preferred. (7) Private investments include limited partnerships that invest primarily in domestic private equity and private income opportunities. The pension plan’s master trust does not have the right to redeem its limited partnership investment at its NAV, but rather receives distributions as the underlying assets are liquidated. It is estimated that the underlying assets of these funds will be gradually liquidated over the next 10 years. As of December 31, 2024, the pension plan’s master trust has future funding commitments to these limited partnerships of approximately $ 1.1 billion, most of which are expected to be called over the next five years . Changes in fair value measurements of Level 3 investments during the years ended December 31, 2024 and 2023, were as follows (in millions): 2024 2023 Balance at beginning of year $ 84 $ 75 Actual gain (loss) on plan assets: Relating to assets still held at the reporting date ( 25 ) ( 9 ) Purchases 9 20 Sales — ( 2 ) Balance at end of year $ 68 $ 84 115 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . Plan assets in the retiree medical and other postretirement benefits plans are primarily Level 2 mutual funds valued by quoted prices on the active market, which is fair value, and represents the NAV of the shares of such funds as of the close of business at the end of the period. NAV is based on the fair market value of the funds’ underlying assets and liabilities at the date of determination. Defined Contribution and Multiemployer Plans The costs associated with our defined contribution plans were $ 1.4 billion, $ 1.1 billion and $ 949 million for the years ended December 31, 2024, 2023 and 2022, respectively. We participate in the International Association of Machinists & Aerospace Workers (IAM) National Pension Fund, Employer Identification No. 51-6031295 and Plan No. 002 (the IAM Pension Fund). Our contributions to the IAM Pension Fund were $ 57 million, $ 52 million and $ 46 million for the years ended December 31, 2024, 2023 and 2022, respectively. The IAM Pension Fund reported $ 570 million in employers’ contributions for the year ended December 31, 2023, which is the most recent year for which such information is available. For 2023, our contributions represented more than 5 % of total contributions to the IAM Pension Fund. On March 29, 2019, the actuary for the IAM Pension Fund certified that the fund was in “endangered” status despite reporting a funded status of over 80 %. Additionally, the IAM Pension Fund’s Board voluntarily elected to enter into “critical” status on April 17, 2019. Upon entry into critical status, the IAM Pension Fund was required by law to adopt a rehabilitation plan aimed at restoring the financial health of the pension plan and did so on April 17, 2019 (the Rehabilitation Plan). Under the Rehabilitation Plan, we were subject to an immaterial contribution surcharge, which ceased to apply June 14, 2019 upon our mandatory adoption of a contribution schedule under the Rehabilitation Plan. The contribution schedule requires 2.5 % annual increases to our contribution rate. This contribution schedule will remain in effect through the earlier of December 31, 2031 or the date the IAM Pension Fund emerges from critical status. As of the most recent data available, the IAM Pension Fund remains in critical status. Profit Sharing Program We accrue a percentage of our pre-tax income excluding net special items for our profit sharing program. For the year ended December 31, 2024, we accrued $ 228 million for this program, which will be distributed to employees in the first quarter of 2025. 10. Accumulated Other Comprehensive Loss The components of AOCI are as follows (in millions): Pension, Retiree Medical and Other Postretirement Benefits Unrealized Gain (Loss) on Investments Income Tax Benefit (Provision) (1) Total Balance at December 31, 2022 $ ( 2,978 ) $ ( 6 ) $ ( 1,601 ) $ ( 4,585 ) Other comprehensive income (loss) before reclassifications ( 486 ) 4 108 ( 374 ) Amounts reclassified from AOCI 84 — ( 19 ) (2) 65 Net current-period other comprehensive income (loss) ( 402 ) 4 89 ( 309 ) Balance at December 31, 2023 ( 3,380 ) ( 2 ) ( 1,512 ) ( 4,894 ) Other comprehensive income (loss) before reclassifications 333 2 ( 74 ) 261 Amounts reclassified from AOCI 88 — ( 20 ) (2) 68 Net current-period other comprehensive income (loss) 421 2 ( 94 ) 329 Balance at December 31, 2024 $ ( 2,959 ) $ — $ ( 1,606 ) $ ( 4,565 ) (1) Relates principally to pension, retiree medical and other postretirement benefits obligations that will not be recognized in net income until the obligations are fully extinguished. (2) Relates to pension, retiree medical and other postretirement benefits obligations and is recognized within the income tax provision on our consolidated statements of operations. 116 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . Reclassifications out of AOCI for the years ended December 31, 2024 and 2023 are as follows (in millions): Amounts reclassified from AOCI Affected line items on the consolidated statements of operations Year Ended December 31, AOCI Components 2024 2023 Amortization of pension, retiree medical and other postretirement benefits: Prior service cost $ 11 $ 9 Nonoperating other income (expense), net Actuarial loss 57 56 Nonoperating other income (expense), net Total reclassifications for the period, net of tax $ 68 $ 65 11. Commitments, Contingencies and Guarantees (a) Aircraft, Engine and Other Purchase Commitments Under all of our aircraft and engine purchase agreements, our total future commitments as of December 31, 2024 are expected to be as follows (approximately, in millions): 2025 2026 2027 2028 2029 2030 and Thereafter Total Payments for aircraft and engine commitments (1) $ 2,169 $ 4,186 $ 4,003 $ 3,403 $ 3,345 $ 9,009 $ 26,115 (1) These amounts are net of purchase deposits currently held by the manufacturers. Our purchase deposits held by all manufacturers totaled $ 1.0 billion and $ 760 million as of December 31, 2024 and 2023, respectively. Due to uncertainty surrounding the timing of delivery of certain aircraft, the amounts in the table represent our most current estimate based on contractual delivery schedules adjusted for updates and revisions to such schedules communicated to management by the applicable equipment manufacturer and certain management assumptions. However, the actual delivery schedule may differ, potentially materially, based on various potential factors including production delays by the manufacturer and regulatory concerns. Additionally, the amounts in the table exclude five Boeing 787 Family aircraft scheduled to be delivered in 2025, for which we have obtained committed lease financing. See Note 5 for information regarding this operating lease commitment. Additionally, we have other purchase commitments primarily related to aircraft fuel, flight equipment maintenance and information technology support as follows (approximately): $ 4.6 billion in 2025, $ 2.0 billion in 2026, $ 1.5 billion in 2027, $ 386 million in 2028, $ 502 million in 2029 and $ 3.4 billion in 2030 and thereafter. These amounts exclude obligations under certain fuel offtake agreements or other agreements for which the timing of the related expenditure is uncertain, or which are subject to material contingencies, such as the construction of a production facility. (b) Capacity Purchase Agreements with Third-Party Regional Carriers American has capacity purchase agreements with third-party regional carriers. The capacity purchase agreements provide that all revenues, including passenger, in-flight, ancillary, mail and freight revenues, go to American. American controls marketing, scheduling, ticketing, pricing and seat inventories. In return, American agrees to pay predetermined fees to these airlines for operating an agreed-upon number of aircraft, without regard to the number of passengers on board. In addition, these agreements provide that American either reimburses or pays 100 % of certain variable costs, such as airport landing fees, fuel and passenger liability insurance. As of December 31, 2024, American’s capacity purchase agreements with third-party regional carriers had expiration dates ranging from 2025 to 2033, with rights of American to extend the respective terms of certain agreements. 117 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . As of December 31, 2024, American’s minimum obligations under its capacity purchase agreements with third-party regional carriers are expected to be as follows (approximately, in millions): 2025 2026 2027 2028 2029 2030 and Thereafter Total Minimum obligations under capacity purchase agreements with third-party regional carriers (1) $ 1,114 $ 1,068 $ 1,066 $ 990 $ 829 $ 849 $ 5,916 (1) These commitments are estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and American’s actual payments could differ materially. Rental payments under operating leases for certain aircraft flown under these capacity purchase agreements are reflected in the operating lease commitments in Note 5. (c) Airport Redevelopment Los Angeles International Airport (LAX) In 2018, we executed a lease agreement with Los Angeles World Airports (LAWA), which owns and operates LAX, in connection with a $ 1.6 billion modernization project related to LAX Terminals 4 and 5. Construction started in October 2018 and is expected to be completed in 2028 in a phased approach. Under the lease agreement and subsequent project component approvals, the City of Los Angeles Board of Airport Commissioners has appropriated approximately $ 1.6 billion to purchase completed project assets, representing the maximum allowable reimbursement by LAWA. In September 2024, we executed an agreement to where a substantial majority of the non-proprietary project costs will be funded through the Regional Airports Improvement Corporation (RAIC), a quasigovernmental special purpose entity that acts as a conduit borrower under a syndicated credit facility provided by a group of lenders in the form of a $ 250 million revolving credit facility. Loans made under the credit facility are being repaid with the proceeds from LAWA’s purchase of completed project assets. We guarantee the obligation of the RAIC under the credit facility associated with the Terminals 4 and 5 lease. As of December 31, 2024, our outstanding guaranteed obligation under the credit facility for the Terminals 4 and 5 project was $ 250 million. Additionally, we have recovered $ 1.2 billion since project inception through the end of 2024 and expect to receive approximately $ 450 million in additional reimbursements by the end of 2028. As we control the assets during construction, they are recognized on our consolidated balance sheets within operating property and equipment until the assets are sold and transferred. For the years ended December 31, 2024 and 2023, we have sold and transferred $ 588 million and $ 170 million of non-proprietary improvements, respectively, which are included within proceeds from sale-leaseback transactions and sale of property and equipment on our consolidated statements of cash flows. For the years ended December 31, 2024, 2023 and 2022, we had $ 187 million, $ 283 million and $ 241 million, respectively, of non-proprietary improvement costs relating to the LAX modernization project, which are included within other investing activities on our consolidated statements of cash flows. (d) Off-Balance Sheet Arrangements Pass-Through Trusts American currently has 292 owned aircraft and 60 owned spare aircraft engines, which in each case were financed with EETCs issued by pass-through trusts. These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of flight equipment or to permit issuance of debt backed by existing flight equipment. In the case of aircraft EETCs, rather than finance each aircraft separately when such aircraft is purchased, delivered or refinanced, these trusts allow American to raise the financing for a number of aircraft at one time and, if applicable, place such funds in escrow pending a future purchase, delivery or refinancing of the relevant aircraft. Similarly, in the case of the spare engine EETCs, the trusts allow American to use its existing pool of spare engines to raise financing under a single facility. The trusts have also been structured to provide for certain credit enhancements, such as liquidity facilities to cover certain interest payments, that reduce the risks to the purchasers of the trust certificates and, as a result, reduce the cost of aircraft financing to American. Each trust covers a set number of aircraft or spare engines scheduled to be delivered, financed or refinanced upon the issuance of the EETC or within a specific period of time thereafter. At the time of each covered aircraft or spare engine financing, the relevant trust used the proceeds from the issuance of the EETC (which may have been available at the time of issuance thereof or held in escrow until financing of the applicable aircraft following its delivery) to purchase equipment notes relating to the financed aircraft or engines. The equipment notes are issued, at American’s election, in connection with a mortgage financing of the aircraft or spare engines. The equipment notes are secured by a security interest in the aircraft or engines, as applicable. The pass-through trust certificates are not direct obligations of, nor are they guaranteed 118 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . by, AAG or American. However, the equipment notes issued to the trusts are direct obligations of American and, in certain instances, have been guaranteed by AAG. As of December 31, 2024, $ 7.3 billion associated with these mortgage financings is reflected as debt in the accompanying consolidated balance sheet. Letters of Credit and Other We provide financial assurance, such as letters of credit and surety bonds, primarily to support projected workers’ compensation obligations and airport commitments. As of December 31, 2024, we had $ 343 million of letters of credit and surety bonds securing various obligations, of which $ 98 million is collateralized with our restricted cash. The letters of credit and surety bonds that are subject to expiration will expire on various dates through 2037. (e) Legal Proceedings Government Antitrust Action Related to the Northeast Alliance. On September 21, 2021, the United States Department of Justice, joined by Attorneys General from six states and the District of Columbia, filed an antitrust complaint against American and JetBlue Airways Corporation (JetBlue) in the U.S. District Court for the District of Massachusetts alleging that American and JetBlue violated U.S. antitrust law in connection with the previously disclosed Northeast Alliance arrangement (NEA). 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 substantially completed wind-down activities. Following written submissions by the parties and a hearing on July 26, 2023, the U.S. District Court for the District of Massachusetts entered a Final Judgment and Order Entering Permanent Injunction on July 28, 2023. The parties are complying with the terms of the Final Judgment and Order Entering Permanent Injunction, including by completing wind-down activities related to the NEA. American filed a notice of appeal to the U.S. Court of Appeals for the First Circuit on September 25, 2023. The First Circuit affirmed the District Court’s decision on November 8, 2024. Any petition for writ of certiorari to the U.S. Supreme Court would be due February 27, 2025. Private Party Antitrust Actions Related to the Northeast Alliance. On December 5, 2022 and December 7, 2022, two private party plaintiffs filed putative class action antitrust complaints against American and JetBlue in the U.S. District Court for the Eastern District of New York alleging that American and JetBlue violated U.S. antitrust law in connection with the previously disclosed NEA. These actions were consolidated on January 10, 2023. The private party plaintiffs filed an amended consolidated complaint on February 3, 2023. On February 2, 2023 and February 15, 2023, private party plaintiffs filed two additional putative class action antitrust complaints against American and JetBlue in the U.S. District Court for the District of Massachusetts and the U.S. District Court for the Eastern District of New York, respectively. In March 2023, American filed a motion in the U.S. District Court for the District of Massachusetts case asking to transfer the case to the U.S. District Court for the Eastern District of New York and consolidate it with the cases pending in that venue. The U.S. District Court for the District of Massachusetts granted that motion. The remaining cases were consolidated with the other actions in the Eastern District of New York. In June 2023, the private party plaintiffs filed a second amended consolidated complaint, followed by a third amended complaint filed in August 2023. In September 2023, American, together with JetBlue, filed a motion to dismiss the third amended complaint. In September 2024, the court denied that motion. We believe these lawsuits are without merit and are defending against them vigorously. Securities Litigation. On July 18, 2024, AAG and certain of its current and former officers were named as defendants in a putative class action lawsuit filed in the United States District Court for the Northern District of Texas, captioned Qawasmi v. American Airlines Group Inc., et al . The Qawasmi plaintiff purports to represent investors who acquired AAG securities between January 25, 2024 and May 28, 2024. On August 28, 2024, AAG and certain of its current and former officers were named as defendants in a second putative class action lawsuit filed in the same court, captioned Thornburg v. American Airlines Group Inc., et al . The Thornburg plaintiff purports to represent investors who acquired AAG securities between July 20, 2023 and May 28, 2024. Both the Qawasmi and Thornburg complaints assert violations of Sections 10(b) and 20(a) of the Exchange Act based on allegations that, during the relevant periods, AAG misrepresented and/or omitted material facts related to its financial outlook and certain commercial initiatives. On September 16, 2024, certain purported AAG investors moved for consolidation of the Qawasmi and Thornburg actions as well as appointment as lead plaintiff. On November 22, 2024, the Qawasmi and Thornburg complaints were consolidated into a single action bearing the caption In re American Airlines Group Inc. Securities Litigation. The court also appointed co-lead plaintiffs and lead counsel to represent the putative class in the consolidated action. The parties now anticipate briefing a motion to dismiss the action. Additionally, on September 19, 2024, certain of AAG’s current and former directors and officers were named as defendants in a shareholder derivative lawsuit (in which AAG is a nominal defendant) filed in the United States District 119 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . Court for the Northern District of Texas, captioned Hollin v. Isom, et al . The Hollin complaint asserts violations of Section 10(b) of the Exchange Act, breach of fiduciary duty, and claims for unjust enrichment and corporate waste. On September 26, 2024, a second derivative complaint was filed in the same court, similarly naming certain of AAG’s current and former directors and officers (as well as AAG as a nominal defendant), captioned Leon v. Isom, et al . The Leon complaint asserts violations of Section 14(a) of the Exchange Act, breaches of fiduciary duty, claims of unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and a claim for contribution. The Hollin and Leon complaints generally allege the same purported misconduct as alleged in the securities class actions. On November 25, 2024, the Hollin and Leon complaints were consolidated into a single action bearing the caption In re American Airlines Group Inc. Stockholder Derivative Action. We believe both the securities class actions and shareholder derivative lawsuits are without merit and intend to defend against them vigorously. General. In addition to the specifically identified legal proceedings, we and our subsidiaries are also engaged in other legal proceedings from time to time. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within our control. Therefore, although we will vigorously defend ourselves in each of the actions described above and such other legal proceedings, their ultimate resolution and potential financial and other impacts on us are uncertain but could be material. (f) Guarantees and Indemnifications We are party to many routine contracts in which we provide general indemnities in the normal course of business to third parties for various risks. We are not able to estimate the potential amount of any liability resulting from the indemnities. These indemnities are discussed in the following paragraphs. In our aircraft financing agreements, we generally indemnify the financing parties, trustees acting on their behalf and other relevant parties against liabilities (including certain taxes) resulting from the financing, manufacture, design, ownership, operation and maintenance of the aircraft regardless of whether these liabilities (including certain taxes) relate to the negligence of the indemnified parties. Our loan agreements and certain other financing transactions may obligate us to reimburse the applicable lender for incremental costs due to a change in law that imposes (i) any reserve or special deposit requirement against assets of, deposits with or credit extended by such lender related to the loan, (ii) any tax, duty or other charge with respect to the loan (except standard income tax) or (iii) capital adequacy requirements. In addition, our loan agreements and other financing arrangements typically contain a withholding tax provision that requires us to pay additional amounts to the applicable lender or other financing party, generally if withholding taxes are imposed on such lender or other financing party as a result of a change in the applicable tax law. In certain transactions, including certain aircraft financing leases and loans, the lessors, lenders and/or other parties have rights to terminate the transaction based on changes in foreign tax law, illegality or certain other events or circumstances. In such a case, we may be required to make a lump sum payment to terminate the relevant transaction. We have general indemnity clauses in many of our airport and other real estate leases where we as lessee indemnify the lessor (and related parties) against liabilities related to our use of the leased property. Generally, these indemnifications cover liabilities resulting from the negligence of the indemnified parties, but not liabilities resulting from the gross negligence or willful misconduct of the indemnified parties. In addition, we provide environmental indemnities in many of these leases for contamination related to our use of the leased property. Under certain contracts with third parties, we indemnify the third-party against legal liability arising out of an action by the third-party, or certain other parties. The terms of these contracts vary and the potential exposure under these indemnities cannot be determined. We have liability insurance protecting us from some of the obligations we have undertaken under these indemnities. American is required to make principal and interest payments for certain special facility revenue bonds issued by municipalities primarily to build or improve airport facilities and purchase equipment, which are leased to American. The payment of principal and interest of certain special facility revenue bonds is guaranteed by AAG. As of December 31, 2024, the remaining lease payments through 2035 guaranteeing the principal and interest on these bonds are $ 503 million and the current carrying amount of the associated operating lease liability in the accompanying consolidated balance sheet is $ 321 million. 120 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . As of December 31, 2024, AAG had issued guarantees covering approximately $ 15.2 billion of American’s secured debt (and interest thereon), including the Credit Facilities, the AAdvantage Financing, certain EETC financings and special facility revenue bonds. (g) Credit Card Processing Agreements We have agreements with companies that process customer credit card transactions for the sale of air travel and other services. Our agreements allow these credit card processing companies, under certain conditions, to hold an amount of our cash (referred to as a holdback) equal to all or a portion of advance ticket sales that have been processed by that company, but for which we have not yet provided the air transportation. These holdback requirements can be implemented at the discretion of the credit card processing companies upon the occurrence of specific events, including material adverse changes in our financial condition or the triggering of a liquidity covenant. The imposition of holdback requirements would reduce our liquidity. (h) Labor Contracts In September 2024, American and the Association of Professional Flight Attendants, the union representing our mainline flight attendants, ratified a new CBA. This five-year agreement provides wage rate increases, quality-of-life benefits and other benefit-related items. The ratified agreement also included a provision for a one-time payment. In 2024, one-time charges resulting from the ratification of this new agreement were recorded as mainline operating special items, net in the condensed consolidated statement of operations, including the one-time payment of $ 514 million which was paid in November 2024. As of December 31, 2024, we employed approximately 133,300 active full-time equivalent (FTE) employees, of which 30,600 were employed by our wholly-owned regional subsidiaries. Of the total active FTE employees, 87 % are covered by CBAs with various labor unions and 6 % are covered by CBAs that are currently amendable or that will become amendable within one year. 12. Supplemental Cash Flow Information Supplemental disclosure of cash flow information and non-cash investing and financing activities are as follows (in millions): Year Ended December 31, 2024 2023 2022 Non-cash investing and financing activities: ROU assets acquired through operating leases $ 637 $ 1,180 $ 1,483 Property and equipment acquired through debt, finance leases and other 152 317 46 Operating leases converted to finance leases 293 5 107 Finance leases converted to operating leases 50 42 3 Supplemental information: Interest paid, net 1,933 2,180 1,852 Income taxes paid 8 6 2 121 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . 13. Segment Disclosures Operating segments are defined as components of an enterprise for which separate financial information is available and regularly reviewed by the chief operating decision maker (CODM) in deciding how to allocate resources and in assessing performance. Our Chief Executive Officer is considered to be our CODM. We are managed as a single operating segment that provides scheduled air transportation for passengers and cargo, and includes our loyalty program. Along with our extensive domestic network, we provide international service to Canada, Mexico, the Caribbean, Central and South America, Europe, Qatar, China, Japan, Korea, India, Australia and New Zealand. See Note 1(m) for our passenger revenue by geographic region. Managing the business activities on a consolidated basis allows us to benefit from an integrated revenue pricing and route network that includes American and our wholly-owned and third-party regional carriers that fly under capacity purchase agreements operating as American Eagle. The flight equipment of all these carriers is combined to form one fleet that is deployed through a single route scheduling system. Our tangible assets consist primarily of flight equipment, which are mobile across geographic markets and, therefore, have not been allocated by geographic region. The measure of segment assets is reported on the balance sheet as total consolidated assets. Financial information and operational plans and forecasts are provided to and reviewed by our CODM at the consolidated level and are used to monitor forecast and budget versus actual results. Our CODM assesses performance and decides how to allocate resources based on net income which is reported on the statement of operations as consolidated net income. When making operational and resource allocation decisions, our CODM is indifferent to the results on a geographic region or on a mainline and regional carrier basis. The objective in making resource allocation decisions is to maximize consolidated financial results. 14. Share-based Compensation In May 2023, the stockholders of AAG approved the 2023 Incentive Award Plan (the 2023 Plan). The 2023 Plan replaces and supersedes AAG’s 2013 Incentive Award Plan (the 2013 Plan). No further awards will be granted under the 2013 Plan; however, the terms and conditions of the 2013 Plan will continue to govern any outstanding awards granted thereunder. The 2023 Plan provides that an award may be in the form of a stock option, including an incentive stock option and nonqualified stock option, stock appreciation right, restricted stock, restricted stock unit, performance bonus award, performance stock unit, other stock or cash-based award and dividend equivalent to eligible individuals. The 2023 Plan authorizes the grant of awards for the issuance of 17.2 million shares less any shares granted under the 2013 Plan after March 22, 2023, the date the Board of Directors of AAG approved the 2023 Plan. Any shares underlying awards granted under the 2023 Plan or 2013 Plan that are forfeited, terminate or are settled in cash (in whole or in part) without the delivery of shares will again be available for grant under the 2023 Plan. Share-based compensation expense for our equity awards, including awards settled in AAG common stock or cash, was $ 130 million, $ 102 million and $ 78 million for the years ended December 31, 2024, 2023 and 2022, respectively, and is included in salaries, wages and benefits on our consolidated statements of operations. During 2024, 2023 and 2022, we withheld approximately 1.6 million, 1.5 million and 1.2 million shares of AAG common stock, respectively, and paid approximately $ 27 million, $ 23 million and $ 21 million, respectively, in satisfaction of certain tax withholding obligations associated with employee equity awards. Restricted Stock Unit Awards (RSUs) We have granted RSUs with service conditions (time vested primarily over three years ) and performance conditions. The grant-date fair value of these RSUs is equal to the market price of the underlying shares of AAG common stock on the date of grant. For time vested awards, the expense is recognized on a straight-line basis over the vesting period for the entire award. For awards with performance conditions, the expense is recognized based on the expected achievement at each reporting period. Stock-settled RSUs are equity-classified as the vesting results in the issuance of shares of AAG common stock. Cash-settled restricted stock unit awards (CRSUs) are liability-classified as the vesting results in payment of cash by AAG. 122 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . Stock-settled RSU award activity for all plans for the years ended December 31, 2024, 2023 and 2022 is as follows: Number of Shares Weighted Average Grant Date Fair Value (In thousands) Outstanding at December 31, 2021 9,401 $ 20.17 Granted 5,882 15.93 Vested and released ( 4,131 ) 21.04 Forfeited ( 889 ) 18.04 Outstanding at December 31, 2022 10,263 $ 17.51 Granted 9,834 14.54 Vested and released ( 5,161 ) 17.81 Forfeited ( 701 ) 20.49 Outstanding at December 31, 2023 14,235 $ 15.18 Granted 2,580 15.76 Modified (1) ( 2,809 ) 16.18 Vested and released ( 4,833 ) 15.91 Forfeited ( 827 ) 15.83 Outstanding at December 31, 2024 8,346 $ 15.59 (1) The settlement terms of 2.8 million stock-settled RSUs were modified from settlement in AAG common stock to settlement in cash. This change in award settlement method was the only modification to these awards, and the vesting, forfeiture and all other terms and conditions were unchanged. The modification resulted in a $ 20 million reclassification from additional paid-in capital to accrued salaries and wages on our consolidated balance sheet. As of December 31, 2024, there was $ 46 million of unrecognized compensation cost related to stock-settled RSUs. These costs are expected to be recognized over a weighted average period of one year . The total fair value of stock-settled RSUs vested during the years ended December 31, 2024, 2023 and 2022 was $ 69 million, $ 78 million and $ 70 million, respectively. CRSU award activity for all plans for the year ended December 31, 2024 is as follows: Number of Shares Weighted Average Fair Value (In thousands) Outstanding at December 31, 2023 37 $ 13.74 Granted 5,634 17.43 Modified (1) 2,809 16.18 Vested and released ( 1,337 ) 14.75 Forfeited ( 136 ) 17.42 Outstanding at December 31, 2024 7,007 $ 17.43 (1) The settlement terms of 2.8 million stock-settled RSUs were modified from settlement in AAG common stock to settlement in cash. See table above for further discussion. As of December 31, 2024, the liability related to CRSUs was $ 39 million, which will continue to be remeasured at fair value at each reporting date until all awards are vested. As of December 31, 2024, there was $ 83 million of unrecognized compensation cost related to CRSUs. These costs are expected to be recognized over a weighted average period of one year . The total cash paid for CRSUs vested during the year ended December 31, 2024 was $ 18 million. For the years ended December 31, 2023 and 2022, CRSU award activity was nominal. 123 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC . 15. Valuation and Qualifying Accounts (in millions) Balance at Beginning of Year Additions Charged to Statement of Operations Accounts Deductions and Other Balance at End of Year Allowance for obsolescence of spare parts Year ended December 31, 2024 $ 728 $ 116 $ ( 47 ) $ 797 Year ended December 31, 2023 616 98 14 728 Year ended December 31, 2022 634 96 ( 114 ) 616 16. Subsequent Event On January 29, 2025, American Eagle flight 5342 was involved in a fatal accident in Washington, D.C. The Bombardier CRJ 700 aircraft operated by PSA was en route to Washington, D.C. from Wichita, Kansas when it was involved in a midair collision near Ronald Reagan Washington National Airport. American has industry standard insurance coverage for this incident, and is continuing its assessment of the impact on its business resulting from the accident. 124 Table of Contents ITEM 8B. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA OF AMERICAN AIRLINES, INC. Report of Independent Registered Public Accounting Firm To the Stockholder and Board of Directors American Airlines, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of American Airlines, Inc. and subsidiaries (American) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, cash flows, and stockholder’s equity for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of American as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), American’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 19, 2025 expressed an unqualified opinion on the effectiveness of American’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of American’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to American in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. 125 Table of Contents Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Sufficiency of audit evidence over the realizability of tax net operating loss and other carryforwards As discussed in Notes 1(i) and 5 to the consolidated financial statements, American had $3.9 billion of tax net operating loss and other carryforwards, which are recorded as deferred tax assets at December 31, 2024. Deferred tax assets are recognized related to tax net operating loss and other carryforwards that will reduce future taxable income. American provides a valuation allowance for deferred tax assets when it is more likely than not that some portion, or all of the deferred tax assets, will not be realized. In evaluating the need for a valuation allowance, management considers the weighting of all available positive and negative evidence. We identified the evaluation of the sufficiency of audit evidence over the realizability of federal tax net operating loss and other carryforwards as a critical audit matter. Evaluating the sufficiency of audit evidence required subjective auditor judgment in order to assess the extent of procedures performed in assessing the realizability of the federal tax net operating loss and other carryforwards. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to American’s deferred tax asset valuation allowance process, including controls related to the realizability of federal tax net operating loss and other carryforwards. We evaluated positive and negative evidence used in assessing whether the federal tax net operating loss and other carryforwards were more likely than not to be realized in the future. We evaluated the reasonableness of management’s projections of future profitability considering historical profitability of American, and consistency with industry data. We involved tax professionals with specialized skills and knowledge, who assisted in evaluating the application of tax law. We assessed the sufficiency of audit evidence obtained over the realizability of the federal tax net operating loss and other carryforwards by evaluating the cumulative results of the audit procedures. /s/ KPMG LLP We have served as American’s auditor since 2014. Dallas, Texas February 19, 2025 126 Table of Contents AMERICAN AIRLINES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions) Year Ended December 31, 2024 2023 2022 Operating revenues: Passenger $ 49,586 $ 48,512 $ 44,568 Cargo 804 812 1,233 Other 3,814 3,460 3,164 Total operating revenues 54,204 52,784 48,965 Operating expenses: Aircraft fuel and related taxes 11,418 12,257 13,791 Salaries, wages and benefits 16,012 14,572 12,965 Regional expenses 5,009 4,619 4,345 Maintenance, materials and repairs 3,794 3,265 2,684 Other rent and landing fees 3,303 2,928 2,730 Aircraft rent 1,242 1,369 1,395 Selling expenses 1,812 1,799 1,815 Depreciation and amortization 1,919 1,927 1,969 Special items, net 610 971 193 Other 6,431 6,008 5,425 Total operating expenses 51,550 49,715 47,312 Operating income 2,654 3,069 1,653 Nonoperating income (expense): Interest income 1,058 1,078 349 Interest expense, net ( 2,029 ) ( 2,206 ) ( 1,872 ) Other income (expense), net 5 ( 359 ) 324 Total nonoperating expense, net ( 966 ) ( 1,487 ) ( 1,199 ) Income before income taxes 1,688 1,582 454 Income tax provision 426 394 116 Net income $ 1,262 $ 1,188 $ 338 See accompanying notes to consolidated financial statements. 127 Table of Contents AMERICAN AIRLINES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Year Ended December 31, 2024 2023 2022 Net income $ 1,262 $ 1,188 $ 338 Other comprehensive income (loss), net of tax: Pension, retiree medical and other postretirement benefits 320 ( 312 ) 1,354 Investments 2 3 ( 3 ) Total other comprehensive income (loss), net of tax 322 ( 309 ) 1,351 Total comprehensive income $ 1,584 $ 879 $ 1,689 See accompanying notes to consolidated financial statements. 128 Table of Contents AMERICAN AIRLINES, INC. CONSOLIDATED BALANCE SHEETS (In millions, except share and par value amounts) December 31, 2024 2023 ASSETS Current assets Cash $ 795 $ 567 Short-term investments 6,177 6,998 Restricted cash and short-term investments 732 910 Accounts receivable, net 1,977 1,995 Receivables from related parties, net 8,187 7,070 Aircraft fuel, spare parts and supplies, net 2,476 2,266 Prepaid expenses and other 675 561 Total current assets 21,019 20,367 Operating property and equipment Flight equipment 43,158 41,440 Ground property and equipment 9,709 9,848 Equipment purchase deposits 1,012 760 Total property and equipment, at cost 53,879 52,048 Less accumulated depreciation and amortization ( 23,060 ) ( 21,588 ) Total property and equipment, net 30,819 30,460 Operating lease right-of-use assets 7,274 7,886 Other assets Goodwill 4,091 4,091 Intangibles, net of accumulated amortization of $ 841 and $ 834 , respectively 2,044 2,051 Deferred tax asset 2,068 2,589 Other assets 1,440 1,630 Total other assets 9,643 10,361 Total assets $ 68,755 $ 69,074 LIABILITIES AND STOCKHOLDER’S EQUITY Current liabilities Current maturities of long-term debt and finance leases $ 4,326 $ 3,625 Accounts payable 2,372 2,232 Accrued salaries and wages 1,995 2,210 Air traffic liability 6,759 6,200 Loyalty program liability 3,556 3,453 Operating lease liabilities 1,082 1,292 Other accrued liabilities 2,812 2,605 Total current liabilities 22,902 21,617 Noncurrent liabilities Long-term debt and finance leases, net of current maturities 21,410 24,050 Pension and postretirement benefits 2,115 3,020 Loyalty program liability 6,498 5,874 Operating lease liabilities 5,926 6,416 Other liabilities 1,670 1,520 Total noncurrent liabilities 37,619 40,880 Commitments and contingencies (Note 10) Stockholder’s equity Common stock, $ 1.00 par value; 1,000 shares authorized, issued and outstanding — — Additional paid-in capital 17,408 17,335 Accumulated other comprehensive loss ( 4,677 ) ( 4,999 ) Retained deficit ( 4,497 ) ( 5,759 ) Total stockholder’s equity 8,234 6,577 Total liabilities and stockholder’s equity $ 68,755 $ 69,074 See accompanying notes to consolidated financial statements. 129 Table of Contents AMERICAN AIRLINES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Year Ended December 31, 2024 2023 2022 Cash flows from operating activities: Net income $ 1,262 $ 1,188 $ 338 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,198 2,198 2,238 Debt extinguishment costs 9 267 1 Special items, net non-cash ( 1 ) 41 226 Pension and postretirement ( 82 ) ( 14 ) ( 404 ) Deferred income tax provision 426 394 122 Share-based compensation, non-cash 89 97 75 Other, net ( 260 ) ( 216 ) ( 48 ) Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 33 104 ( 636 ) Increase in other assets ( 287 ) ( 2 ) ( 744 ) Increase in accounts payable 284 147 406 Increase (decrease) in air traffic liability 559 ( 545 ) 658 Increase in receivables from related parties, net ( 1,099 ) ( 482 ) ( 1,044 ) Increase in loyalty program liability 727 182 10 Contributions to pension plans ( 295 ) ( 71 ) ( 4 ) Increase (decrease) in other liabilities ( 154 ) 418 135 Net cash provided by operating activities 3,409 3,706 1,329 Cash flows from investing activities: Capital expenditures and aircraft purchase deposits ( 2,624 ) ( 2,542 ) ( 2,489 ) Proceeds from sale-leaseback transactions and sale of property and equipment 654 230 147 Sales of short-term investments 8,013 8,861 14,972 Purchases of short-term investments ( 7,194 ) ( 7,324 ) ( 11,257 ) Decrease in restricted short-term investments 177 51 1 Purchase of equity investments — — ( 321 ) Other investing activities 65 275 ( 360 ) Net cash provided by (used in) investing activities ( 909 ) ( 449 ) 693 Cash flows from financing activities: Payments on long-term debt and finance leases ( 3,973 ) ( 7,697 ) ( 2,991 ) Proceeds from issuance of long-term debt 1,670 4,822 1,069 Other financing activities 26 ( 287 ) 75 Net cash used in financing activities ( 2,277 ) ( 3,162 ) ( 1,847 ) Net increase in cash and restricted cash 223 95 175 Cash and restricted cash at beginning of year 670 575 400 Cash and restricted cash at end of year (a) $ 893 $ 670 $ 575 (a) The following table provides a reconciliation of cash and restricted cash to amounts reported within the consolidated balance sheets: Cash $ 795 $ 567 $ 429 Restricted cash included in restricted cash and short-term investments 98 103 146 Total cash and restricted cash $ 893 $ 670 $ 575 See accompanying notes to consolidated financial statements. 130 Table of Contents AMERICAN AIRLINES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY (In millions) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Retained Deficit Total Balance at December 31, 2021 $ — $ 17,152 $ ( 6,041 ) $ ( 7,285 ) $ 3,826 Net income — — — 338 338 Other comprehensive income, net — — 1,351 — 1,351 Share-based compensation expense — 75 — — 75 Intercompany equity transfer — 3 — — 3 Balance at December 31, 2022 — 17,230 ( 4,690 ) ( 6,947 ) 5,593 Net income — — — 1,188 1,188 Other comprehensive loss, net — — ( 309 ) — ( 309 ) Share-based compensation expense — 97 — — 97 Intercompany equity transfer — 8 — — 8 Balance at December 31, 2023 — 17,335 ( 4,999 ) ( 5,759 ) 6,577 Net income — — — 1,262 1,262 Other comprehensive income, net — — 322 — 322 Share-based compensation expense — 89 — — 89 Modification of share-based awards — ( 20 ) — — ( 20 ) Intercompany equity transfer — 4 — — 4 Balance at December 31, 2024 $ — $ 17,408 $ ( 4,677 ) $ ( 4,497 ) $ 8,234 See accompanying notes to consolidated financial statements. 131 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. 1. Basis of Presentation and Summary of Significant Accounting Policies (a) Basis of Presentation American Airlines, Inc. (American) is a Delaware corporation whose primary business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo. American is the principal wholly-owned subsidiary of American Airlines Group Inc. (AAG), which owns all of American’s outstanding common stock, par value $ 1.00 per share. All significant intercompany transactions have been eliminated. The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The most significant areas of judgment relate to passenger revenue recognition, the loyalty program, deferred tax assets, as well as pension and retiree medical and other postretirement benefits. Certain prior year amounts within “changes in operating assets and liabilities” presented in the consolidated statement of cash flows have been reclassified to conform to current year presentation. This change in the presentation on the consolidated statement of cash flows had no impact on net cash provided by operating activities or net change in cash and restricted cash. (b) Recent Accounting Pronouncements Accounting Standards Update (ASU) 2023-09: Income Taxes (Topic 740) Improvements to Income Tax Disclosures This standard enhances transparency of income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information, as well as improvements to the effectiveness and comparability of other income tax disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2024, and early adoption is permitted. American is currently evaluating how the adoption of this standard will impact its income tax disclosures. ASU 2024-03: Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-04) Disaggregation of Income Statement Expenses This standard enhances transparency in reporting by requiring disaggregation of certain costs and expenses in the notes to financial statements. This update is effective for annual periods beginning after December 15, 2026 and interim periods within annual periods beginning after December 15, 2027, and early adoption is permitted. American is currently evaluating how the adoption of this standard will impact its disclosures. (c) Investments Short-term investments primarily include debt securities and are classified as available-for-sale and stated at fair value. Realized gains and losses are recorded as interest income in nonoperating expense, net on American’s consolidated statements of operations. Unrealized gains and losses are recorded as a component of accumulated other comprehensive loss on American’s consolidated balance sheets. For investments in an unrealized loss position, American determines whether a credit loss exists by considering information about the collectability of the instrument, current market conditions and reasonable and supportable forecasts of economic conditions. There have been no credit losses. Equity investments are accounted for under the equity method if American is able to exercise significant influence over an investee. Equity investments for which American does not have significant influence are recorded at fair value or at cost, if fair value is not readily determinable, with adjustments for observable changes in price or impairments (referred to as the measurement alternative). American’s equity investments are reflected in other assets on its consolidated balance sheets. American’s share of equity method investees’ financial results and changes in fair value are recorded in nonoperating other income (expense), net on the consolidated statements of operations. See Note 7 for additional information related to American’s equity investments. (d) Restricted Cash and Short-term Investments American has restricted cash and short-term investments related primarily to collateral held to support workers’ compensation obligations and collateral associated with the AAdvantage Financing. See Note 3 for further information on the AAdvantage Financing. 132 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. (e) Accounts Receivable, Net Accounts receivable primarily consist of amounts due from credit card processing companies for tickets sold to individual passengers, amounts due from airline and non-airline business partners, including American’s co-branded credit card partners and cargo customers. Receivables from ticket sales are short-term, mostly settled within seven days after sale. Receivables from American’s business partners are typically settled within 30 days. All accounts receivable are reported net of an allowance for credit losses, which was not material as of December 31, 2024 and 2023. American considers past and future financial and qualitative factors, including aging, payment history and other credit monitoring indicators, when establishing the allowance for credit losses. (f) Aircraft Fuel, Spare Parts and Supplies, Net Aircraft fuel is recorded on a first-in, first-out basis. Spare parts and supplies are recorded at average costs less an allowance for obsolescence, which is recognized over the weighted average remaining useful life of the related fleet. American also provides an allowance for spare parts and supplies identified as excess or obsolete to reduce the carrying cost to the lower of cost or net realizable value. Aircraft fuel, spare parts and supplies are expensed when used. (g) Operating Property and Equipment Operating property and equipment is recorded at cost and depreciated or amortized to residual values over the asset’s estimated useful life or the lease term, whichever is less, using the straight-line method. Residual values for aircraft, engines and related rotable parts are generally 5 % to 10 % of original cost. Costs of major improvements that enhance the usefulness of the asset are capitalized and depreciated or amortized over the estimated useful life of the asset or the lease term, whichever is less. The estimated useful lives for the principal property and equipment classifications are as follows: Principal Property and Equipment Classification Estimated Useful Life Aircraft, engines and related rotable parts 20 – 30 years Buildings and improvements 5 – 30 years Furniture, fixtures and other equipment 3 – 15 years Capitalized software 5 – 10 years Total mainline and regional depreciation and amortization expense was $ 2.2 billion for each of the years ended December 31, 2024, 2023 and 2022. American assesses impairment of operating property and equipment when events and circumstances indicate that the assets may be impaired. An impairment of an asset or group of assets exists only when the sum of the estimated undiscounted cash flows expected to be generated directly by the assets are less than the carrying value of the assets. American groups assets principally by fleet-type when estimating future cash flows, which is generally the lowest level for which identifiable cash flows exist. Estimates of future cash flows are based on historical results adjusted to reflect management’s best estimate of future market and operating conditions, including American’s current fleet plan. If such assets are impaired, the impairment charge recognized is the amount by which the carrying value of the assets exceed their fair value. Fair value reflects management’s best estimate including inputs from published pricing guides and bids from third parties as well as contracted sales agreements when applicable. (h) Leases American determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (ROU) assets, current operating lease liabilities and noncurrent operating lease liabilities on American’s consolidated balance sheets. Finance leases are included in property and equipment, current maturities of long-term debt and finance leases and long-term debt and finance leases, net of current maturities, on American’s consolidated balance sheets. ROU assets represent American’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. American uses its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. American gives consideration to its recent debt 133 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. issuances as well as publicly available data for instruments with similar characteristics when calculating its incremental borrowing rates. American’s lease term includes options to extend the lease when it is reasonably certain that it will exercise that option. Leases with a term of 12 months or less are not recorded on its consolidated balance sheets. Under certain of American’s capacity purchase agreements with third-party regional carriers, American does not own the underlying aircraft. However, since American controls the marketing, scheduling, ticketing, pricing and seat inventories of these aircraft and therefore control the asset, the aircraft is deemed to be leased for accounting purposes. For these capacity purchase agreements, American accounts for the lease and non-lease components separately. The lease component consists of the aircraft and the non-lease components consist of services, such as the crew and maintenance. Where applicable, American allocates the consideration in the capacity purchase agreements to the lease and non-lease components using their estimated relative standalone prices. See Note 10(b) for additional information on its capacity purchase agreements. For real estate, American accounts for the lease and non-lease components as a single lease component. (i) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are recorded net as noncurrent on American’s consolidated balance sheets. American provides a valuation allowance for its deferred tax assets, which include its NOLs and other carryforwards, when it is more likely than not that some portion, or all of its deferred tax assets, will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. American considers all available positive and negative evidence and makes certain assumptions in evaluating the realizability of its deferred tax assets. Many factors are considered that impact American’s assessment of future profitability, including conditions which are beyond its control, such as the health of the economy, the availability and price volatility of aircraft fuel and travel demand. American has determined that positive factors outweigh negative factors in the determination of the realizability of its deferred tax assets. (j) Goodwill Goodwill represents the purchase price in excess of the fair value of the net assets acquired and liabilities assumed in connection with the 2013 merger with US Airways Group, Inc. (US Airways Group). American has one reporting unit. American assesses goodwill for impairment annually or more frequently if events or circumstances indicate that the fair value of goodwill may be lower than the carrying value. American’s annual assessment date is October 1. Goodwill is assessed for impairment by initially performing a qualitative assessment. If American determines that it is more likely than not that its goodwill may be impaired, it uses a quantitative approach to assess the asset’s fair value and the amount of the impairment, if any. Based upon American’s annual assessment, there was no goodwill impairment in 2024. The carrying value of American’s goodwill on its consolidated balance sheets was $ 4.1 billion as of December 31, 2024 and 2023. (k) Other Intangibles, Net Intangible assets consist of certain domestic airport slots and gate leasehold rights, international slots and route authorities, commercial agreements, marketing agreements, customer relationships and tradenames. Definite-Lived Intangible Assets Definite-lived intangible assets are originally recorded at their acquired fair values, subsequently amortized over their respective estimated useful lives and are assessed for impairment whenever events and circumstances indicate that the assets may be impaired. 134 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. Certain domestic airport slots and airport gate leasehold rights are amortized on a straight-line basis over 25 years. Certain marketing agreements were identified as intangible assets subject to amortization and are amortized on a straight-line basis over approximately 30 years. American had $ 101 million and $ 108 million of definite-lived intangible assets, net of accumulated amortization on its consolidated balance sheets as of December 31, 2024 and 2023, respectively. American expects to record amortization expense related to these assets of approximately $ 6 million for each of the years in 2025 through 2029, and $ 70 million of amortization expense in 2030 and thereafter until fully amortized. Indefinite-Lived Intangible Assets Indefinite-lived intangible assets include certain domestic airport slots, international slots and route authorities and American’s commercial agreement with GOL Linhas Aéreas Inteligentes S.A. (GOL). American assesses indefinite-lived intangible assets for impairment annually or more frequently if events or circumstances indicate that the fair values of indefinite-lived intangible assets may be lower than their carrying values. American’s annual assessment date is October 1. Indefinite-lived intangible assets are assessed for impairment by initially performing a qualitative assessment. If American determines that it is more likely than not that its indefinite-lived intangible assets may be impaired, American uses a quantitative approach to assess the asset’s fair value and the amount of the impairment, if any. Based upon American’s annual assessment, there were no indefinite-lived intangible asset impairments in 2024. American had $ 1.9 billion of indefinite-lived intangible assets on its consolidated balance sheets as of December 31, 2024 and 2023. (l) Fuel Financing In December 2024, American entered into a fuel financing facility with a bank pursuant to which the bank pays certain fuel invoices on its behalf. The agreement contains a maximum allowable outstanding principal balance at any time of $ 1.0 billion and is required to be repaid at least quarterly. The fuel financing facility bears interest at a base rate equal to one-month Secured Overnight Financing Rate (SOFR) plus a margin of 3.75 %. American’s obligations to the counterparty are secured on a second-priority basis by certain intellectual property of American, including the “American Airlines” trademark and the “aa.com” domain name in the United States and certain foreign jurisdictions, as provided in, and subject to the covenants and conditions of, the Second Lien Brand Collateral Security Agreement. Either American or the bank may terminate this agreement at any time and with immediate effect upon sixty days’ prior written notice to the other party. As of December 31, 2024, American had $ 74 million in fuel financing obligations included within other accrued liabilities on American’s consolidated balance sheet. During the year ended December 31, 2024, American recognized a nominal amount of interest expense related to this agreement. American includes payments to designated fuel suppliers as an operating activity in the consolidated statement of cash flows. Proceeds and payments related to fuel financing transactions are presented net as a financing activity in the consolidated statement of cash flows. ( m) Revenue Recognition Revenue The following are the significant categories comprising American’s operating revenues (in millions): Year Ended December 31, 2024 2023 2022 Passenger revenue: Passenger travel $ 45,743 $ 44,914 $ 41,425 Loyalty revenue - travel (1) 3,843 3,598 3,143 Total passenger revenue 49,586 48,512 44,568 Cargo 804 812 1,233 Other: Loyalty revenue - marketing services 3,257 2,929 2,657 Other revenue 557 531 507 Total other revenue 3,814 3,460 3,164 Total operating revenues $ 54,204 $ 52,784 $ 48,965 135 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. (1) Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions, which were earned from travel or co-branded credit card and other partners. See “ Loyalty Revenue” below for further discussion on these mileage credits. The following is American’s total passenger revenue by geographic region (in millions): Year Ended December 31, 2024 2023 2022 Domestic $ 35,336 $ 34,592 $ 32,911 Latin America 6,560 6,719 6,150 Atlantic 6,445 6,205 5,070 Pacific 1,245 996 437 Total passenger revenue $ 49,586 $ 48,512 $ 44,568 American attributes passenger revenue by geographic region based upon the origin and destination of each flight segment. Passenger Revenue American recognizes all revenues generated from transportation on American and its regional flights operated under the brand name American Eagle, including associated baggage fees and other inflight services, as passenger revenue when transportation is provided. Ticket and other related sales for transportation that has not yet been provided are initially deferred and recorded as air traffic liability on American’s consolidated balance sheets. The air traffic liability principally represents tickets sold for future travel on American and partner airlines. The majority of tickets sold are nonrefundable. A small percentage of tickets, some of which are partially used tickets, expire unused. The estimate for tickets expected to expire unused is generally based on an analysis of American’s historical data and other current applicable factors such as policy changes. American has consistently applied this accounting method to estimate and recognize revenue from unused tickets at the date of travel. This estimate is periodically evaluated based on subsequent activity to validate its accuracy. Any adjustments resulting from periodic evaluations of the estimated air traffic liability are included in passenger revenue during the period in which the evaluations are completed. Various taxes and fees assessed on the sale of tickets to end customers are collected by American as an agent and remitted to taxing authorities. These taxes and fees have been presented on a net basis in the accompanying consolidated statements of operations and recorded as a liability until remitted to the appropriate taxing authority. Loyalty Revenue American currently operates the loyalty program, AAdvantage ® . This program awards mileage credits to passengers who fly on American, any one world airline or other partner airlines, or by using the services of other program participants, such as American’s co-branded credit cards, and certain hotels and car rental companies. Mileage credits can be redeemed for travel on American and other participating partner airlines, as well as non-air travel awards such as hotels and rental cars. For mileage credits earned by AAdvantage program members, American applies the deferred revenue method. Mileage credits earned through travel For mileage credits earned through travel, American applies a relative selling price approach whereby the total amount collected from each passenger ticket sale is allocated between the air transportation and the mileage credits earned. The portion of each passenger ticket sale attributable to mileage credits earned is initially deferred and then recognized in passenger revenue when mileage credits are redeemed and transportation is provided. The estimated selling price of mileage credits is determined using an equivalent ticket value approach, which uses historical data, including award redemption patterns by geographic region and class of service, as well as similar cash fares as those used to settle award redemptions. The estimated selling price of mileage credits is adjusted for an estimate of mileage credits that will not be redeemed using a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption. 136 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. Mileage credits sold to co-branded credit cards and other partners American sells mileage credits to participating airline partners and non-airline business partners, including American’s co-branded credit card partners, under contracts with remaining terms generally from one to 10 years as of December 31, 2024. Consideration received from the sale of mileage credits is predominantly variable and payment terms typically are within 30 days subsequent to the month of mileage sale. Sales of mileage credits to non-airline business partners are comprised of two components, transportation and marketing. American allocates the consideration received from these sales of mileage credits based on the relative selling price of each product or service delivered. American’s most significant mileage credit partner agreements are its co-branded credit card agreements with Citibank N.A. (Citi) and Barclaycard US. American identified two revenue elements in these co-branded credit card agreements: the transportation component and the marketing component. In December 2024, American announced a 10 -year agreement with Citi to become the exclusive issuer of the AAdvantage co-branded credit card portfolio in the U.S. starting in 2026. Based on the revised terms, the products and services delivered are generally consistent with American’s previous agreement, and American will continue to allocate the consideration received based on the relative selling prices of these products and services. The transportation component represents the estimated selling price of future travel awards and is determined using the same equivalent ticket value approach described above. The portion of each mileage credit sold attributable to transportation is initially deferred and then recognized in passenger revenue when mileage credits are redeemed and transportation is provided. The marketing component includes the use of intellectual property, including the American brand and access to loyalty program member lists, which is the predominant element in these agreements, as well as advertising and other travel-related benefits. American recognizes the marketing component in other revenue in the period of the mileage credit sale following the sales-based royalty method. For the portion of American’s outstanding mileage credits that it estimates will not be redeemed, American recognizes the associated value proportionally as the remaining mileage credits are redeemed. American’s estimates use a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption. Cargo Revenue Cargo revenue is recognized when American provides the transportation. Other Revenue Other revenue includes revenue associated with American’s loyalty program, which is comprised principally of the marketing component of mileage credit sales to co-branded credit card and other partners and other marketing related payments. The accounting and recognition for the loyalty program marketing services are discussed above in “ Loyalty Revenue .” The remaining amounts included within other revenue relate to airport clubs, other commission revenue, advertising and vacation-related services. Contract Balances American’s significant contract liabilities are comprised of (1) outstanding loyalty program mileage credits that may be redeemed for future air travel, non-air travel and other awards, reported as loyalty program liability on American’s consolidated balance sheets and (2) ticket sales for transportation that has not yet been provided, reported as air traffic liability on American’s consolidated balance sheets. December 31, 2024 2023 (In millions) Loyalty program liability $ 10,054 $ 9,327 Air traffic liability 6,759 6,200 Total $ 16,813 $ 15,527 137 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. The balance of the loyalty program liability fluctuates based on seasonal patterns, which impact the volume of mileage credits issued through travel or sold to co-branded credit card and other partners (deferral of revenue) and mileage credits redeemed (recognition of revenue). Changes in loyalty program liability are as follows (in millions): Balance at December 31, 2023 $ 9,327 Deferral of revenue 4,482 Recognition of revenue (1) ( 3,755 ) Balance at December 31, 2024 (2) $ 10,054 (1) Principally relates to revenue recognized from the redemption of mileage credits for both air travel, non-air travel and other awards. Mileage credits are combined in one homogenous pool and are not separately identifiable. As such, the revenue is comprised of mileage credits that were part of the loyalty program deferred revenue balance at the beginning of the period, as well as mileage credits that were issued during the period. (2) Mileage credits can be redeemed at any time and generally do not expire as long as that AAdvantage member has any type of qualifying activity at least every 24 months or if the AAdvantage member is the primary holder of a co-branded credit card. As of December 31, 2024, American’s current loyalty program liability was $ 3.6 billion and represents American’s current estimate of revenue expected to be recognized in the next 12 months based on historical trends, with the balance reflected in long-term loyalty program liability expected to be recognized as revenue in periods thereafter. Additionally, as of December 31, 2024, American’s loyalty program liability includes a one-time cash payment related to the new co-branded credit card agreement announced in December 2024, which will be amortized over the life of the new agreement beginning in 2026. The air traffic liability principally represents tickets sold for future travel on American and partner airlines. The balance in American’s air traffic liability also fluctuates with seasonal travel patterns. The contract duration of passenger tickets is generally one year . Accordingly, any revenue associated with tickets sold for future travel will be recognized within 12 months. For 2024, $ 4.9 billion of revenue was recognized in passenger revenue that was included in American’s air traffic liability at December 31, 2023. (n) Maintenance, Materials and Repairs Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred, except costs incurred for maintenance and repair under certain power-by-the-hour maintenance agreements, which are charged to operating expense based on contractual terms when an obligation exists. (o) Selling Expenses Selling expenses include credit card fees, commissions, third party distribution channel fees and advertising. Selling expenses associated with passenger revenue are expensed when the transportation or service is provided. Advertising costs are expensed as incurred. Advertising expense was $ 143 million, $ 114 million and $ 105 million for the years ended December 31, 2024, 2023 and 2022, respectively. (p) Share-based Compensation American accounts for its share-based compensation expense based on the fair value of the equity award at the time of grant, which is recognized ratably over the vesting period of the award. Certain awards have performance conditions that must be achieved prior to vesting and are expensed based on the expected achievement at each reporting period. The majority of American’s equity awards are time vested restricted stock units. For equity-classified awards, the fair value of such awards is based on the market price of the underlying shares of AAG common stock on the date of grant and is not subsequently remeasured unless modified. For liability-classified awards, the fair value of such awards is remeasured at the end of each reporting period until settled. See Note 13 for further discussion of share-based compensation. (q) Foreign Currency Gains and Losses Foreign currency gains and losses are recorded as part of other income (expense), net within total nonoperating expense, net on American’s consolidated statements of operations. For the years ended December 31, 2024, 2023 and 2022, foreign currency losses were $ 47 million, $ 30 million and $ 38 million, respectively. 138 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. (r) Other Operating Expenses Other operating expenses includes costs associated with onboard food and catering, crew travel, ground and cargo handling, passenger accommodation, international navigation fees, aircraft cleaning, airport lounge operations and certain general and administrative expenses. (s) Regional Expenses American's regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include AAG's wholly-owned regional carriers as well as third-party regional carriers. American's regional carrier arrangements are in the form of capacity purchase agreements with its third-party regional partners and similar arrangements with AAG’s wholly-owned regional affiliates. Expenses associated with American Eagle operations are classified as regional expenses on the consolidated statements of operations. Regional expenses for the years ended December 31, 2024, 2023 and 2022 include $ 279 million, $ 271 million and $ 269 million of depreciation and amortization, respectively, and $ 9 million, $ 7 million and $ 5 million of aircraft rent, respectively. In 2024, 2023 and 2022, American recognized $ 612 million, $ 636 million and $ 592 million, respectively, of expense under its capacity purchase agreement with Republic Airways Inc. (Republic). American holds a 25 % equity interest in Republic Airways Holdings Inc. (Republic Holdings), the parent company of Republic. 2. Special Items, Net Special items, net on American’s consolidated statements of operations consisted of the following (in millions): Year Ended December 31, 2024 2023 2022 Labor contract expenses (1) $ 605 $ 989 $ — A330 fleet-related adjustments (2) ( 42 ) — 149 Severance expenses 13 23 — Litigation reserve adjustments — — 37 Other operating special items, net 34 ( 41 ) 7 Mainline operating special items, net 610 971 193 Regional operating special items, net (3) 33 — — Operating special items, net 643 971 193 Debt refinancing and extinguishment (4) 16 280 1 Mark-to-market adjustments on equity investments, net (5) 8 82 71 Nonoperating special items, net 24 362 72 Income tax special items, net — — ( 9 ) (1) Labor contract expenses for 2024 related to one-time charges resulting from the ratification of new collective bargaining agreements (CBAs) with American’s mainline flight attendants and passenger service team members, including one-time payments and adjustments to vacation accruals resulting from pay rate increases. Labor contract expenses for 2023 related to one-time charges resulting from the ratification of a new CBA with American’s mainline pilots, including a one-time payment of $ 754 million as well as adjustments to other benefit-related items of $ 235 million. (2) American retired its Airbus A330 fleet in 2020 as a result of the decline in demand for air travel due to the COVID-19 pandemic. In 2022, American recorded a non-cash impairment charge to write down the carrying value of its retired Airbus A330 fleet to their then estimated fair value due to the market conditions for certain used aircraft, and in 2024, American entered into a sales agreement for its remaining Airbus A330 aircraft, resulting in a $ 42 million gain. (3) Regional operating special items, net for 2024 included a $ 33 million non-cash write down of regional aircraft resulting from the decision to permanently park 43 Embraer 145 aircraft. 139 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. (4) Debt refinancing and extinguishment costs in 2023 primarily included cash charges for premiums paid in connection with the early repayment of debt. (5) Mark-to-market adjustments on equity investments, net included net unrealized gains and losses associated with certain equity investments. See Note 7 for further information related to American’s equity investments. 3. Debt Long-term debt included on American’s consolidated balance sheets consisted of (in millions): December 31, 2024 2023 Secured 2013 Term Loan Facility, variable interest rate of 6.65 %, installments until due in February 2028 (a) $ 980 $ 990 2014 Term Loan Facility, variable interest rate of 6.17 %, installments until due in January 2027 (a) 1,171 1,183 2023 Term Loan Facility, variable interest rate of 6.96 %, installments until due in June 2029 (a) 1,089 1,100 10.75 % senior secured IP notes, interest and principal payments due through February 2026 (b) 781 1,000 10.75 % senior secured LGA/DCA notes, interest and principal payments due through February 2026 (b) 156 200 7.25 % senior secured notes, interest only payments until due in February 2028 (b) 750 750 8.50 % senior secured notes, interest only payments until due in May 2029 (b) 1,000 1,000 5.50 % senior secured notes, installments until due in April 2026 (c) 1,750 2,917 5.75 % senior secured notes, installments beginning in July 2026 until due in April 2029 (c) 3,000 3,000 AAdvantage Term Loan Facility, variable interest rate of 9.63 %, installments until due in April 2028 (c) 2,450 3,150 Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 2.88 % to 7.15 %, averaging 3.84 %, maturing from 2025 to 2034 (d) 7,271 7,657 Equipment loans and other notes payable, fixed and variable interest rates ranging from 2.55 % to 7.25 %, averaging 6.17 %, maturing from 2025 to 2036 (e) 4,094 3,612 Special facility revenue bonds, fixed interest rates ranging from 2.25 % to 5.38 %, maturing from 2026 to 2036 880 967 Total long-term debt 25,372 27,526 Less: Total unamortized debt discount, premium and issuance costs 300 349 Less: Current maturities 4,196 3,501 Long-term debt, net of current maturities $ 20,876 $ 23,676 As of December 31, 2024, the maximum availability under American’s revolving credit and other facilities is as follows (in millions): 2013 Revolving Facility $ 500 2014 Revolving Facility 1,500 2023 Revolving Facility 890 Other facilities 399 Total $ 3,289 In March 2024, American entered into a revolving credit facility that provides for borrowing capacity of up to $ 350 million, maturing in March 2027 with an option to extend for an additional year. As of December 31, 2024, there were no amounts drawn under this facility. Additionally, American currently has $ 49 million of available borrowing base under a cargo receivables facility that is set to expire in December 2025. As further described below, the aggregate commitments under the 2013, 2014, and 2023 Revolving Facilities are $ 2.9 billion through June 4, 2029. 140 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. Secured financings, including revolving credit and other facilities, are collateralized by assets, consisting primarily of aircraft, engines, simulators, airport gate leasehold rights, route authorities, airport slots, certain receivables, certain intellectual property and certain loyalty program assets. At December 31, 2024, the maturities of long-term debt are as follows (in millions): 2025 $ 4,196 2026 4,201 2027 4,983 2028 5,304 2029 3,890 2030 and thereafter 2,798 Total $ 25,372 (a) 2013, 2014 and 2023 Credit Facilities 2013 Credit Facilities The Amended and Restated Credit and Guaranty Agreement dated as of May 21, 2015, as amended (the 2013 Credit Agreement), includes a revolving credit facility (the 2013 Revolving Facility) and a term loan facility (the 2013 Term Loan Facility), collectively referred to as the 2013 Credit Facilities. On June 4, 2024, American and AAG entered into the Ninth Amendment to Amended and Restated Credit and Guaranty Agreement (the Ninth Amendment), amending the 2013 Credit Agreement, pursuant to which American terminated all existing revolving commitments and letter of credit commitments available under the 2013 Credit Agreement and established new revolving commitments in an aggregate amount of $ 500 million (which includes the ability to issue letters of credit in an aggregate amount of $ 100 million) (the newly established commitments, the 2013 Revolving Facility), which have a maturity date of June 4, 2029. Additionally, as a result of the Ninth Amendment, the 2013 Revolving Facility bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 2.00 %, 2.25 % or 2.50 %, depending on AAG’s public corporate credit rating, or, at American’s option, SOFR for a tenor of one, three or six months, depending on the interest period selected by American (subject to a floor of 0.00 %), plus an applicable margin of 3.00 %, 3.25 % or 3.50 %, depending on AAG’s public corporate credit rating. Pursuant to the Ninth Amendment, SOFR borrowings under the 2013 Revolving Facility are not subject to a credit spread adjustment. As of December 31, 2024, there were no borrowings or letters of credit outstanding under the 2013 Revolving Facility. On December 19, 2024, American and AAG entered into the Tenth Amendment to Amended and Restated Credit and Guaranty Agreement (the 2013 Credit Agreement Tenth Amendment), amending the 2013 Credit Agreement. As a result of the 2013 Credit Agreement Tenth Amendment, the term loans outstanding under the 2013 Credit Agreement with an outstanding principal amount of $ 980 million were replaced with term loans with a principal amount of $ 980 million. Pursuant to the 2013 Credit Agreement Tenth Amendment, the 2013 Term Loan Facility bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 1.25 % per annum or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American (subject to a floor of 0.00 %), plus an applicable margin of 2.25 % per annum. Additionally, the 2013 Credit Agreement Tenth Amendment amended certain other terms of the 2013 Credit Agreement, including, among other things, reducing the minimum liquidity financial covenant threshold from $ 2.2 billion to $ 2.0 billion and removing the cost spread adjustment on the 2013 Term Loan Facility. As of December 31, 2024, the margin elected was 2.25 % per annum. 2014 Credit Facilities The Amended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, as amended (the 2014 Credit Agreement), includes a revolving credit facility (the 2014 Revolving Facility) and term loan facility (the 2014 Term Loan Facility), collectively referred to as the 2014 Credit Facilities. The 2014 Term Loan Facility bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 0.75 % or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American, plus the SOFR adjustment applicable to such interest period (with such SOFR rate plus SOFR adjustment being subject to a floor of 0.00 %) plus an applicable margin of 1.75 %. As of December 31, 2024, the margin elected was 1.75 % per annum. 141 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. On June 4, 2024, American and AAG entered into the Tenth Amendment to Amended and Restated Credit and Guaranty Agreement (the 2014 Credit Agreement Tenth Amendment), amending the 2014 Credit Agreement, pursuant to which American terminated all existing revolving commitments and letter of credit commitments available under the 2014 Credit Agreement and established new revolving commitments in an aggregate amount of $ 1.5 billion (which includes the ability to issue letters of credit in an aggregate amount of $ 200 million) (the newly established commitments, the 2014 Revolving Facility), which have a maturity date of June 4, 2029. Additionally, as a result of the 2014 Credit Agreement Tenth Amendment, the 2014 Revolving Facility bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 2.00 %, 2.25 % or 2.50 %, depending on AAG’s public corporate credit rating, or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American (subject to a floor of 0.00 %), plus an applicable margin of 3.00 %, 3.25 % or 3.50 %, depending on AAG’s public corporate credit rating. The 2014 Credit Agreement Tenth Amendment also reduced the minimum liquidity financial covenant threshold from $ 2.2 billion to $ 2.0 billion and reduced the liquidity requirement for making certain restricted payments from $ 4.2 billion to $ 4.0 billion. Pursuant to the 2014 Credit Agreement Tenth Amendment, SOFR borrowings under the 2014 Revolving Facility are not subject to a credit spread adjustment. As of December 31, 2024, there were no borrowings or letters of credit outstanding under the 2014 Revolving Facility. 2023 Credit Facilities In December 2023, American and AAG entered into a credit and guaranty agreement (the 2023 Credit Agreement) that provided for a term loan facility (the 2023 Term Loan Facility) in an aggregate principal amount of $ 1.1 billion, maturing in June 2029. On June 4, 2024, American and AAG entered into the First Amendment to Credit and Guaranty Agreement (the First Amendment) and the Second Amendment to Credit and Guaranty Agreement (the Second Amendment), each amending the 2023 Credit Agreement. Pursuant to the First Amendment, American established a revolving credit facility (the 2023 Revolving Facility, collectively with the 2023 Term Loan Facility, referred to as the 2023 Credit Facilities) in an aggregate amount of $ 890 million, maturing June 4, 2029. The 2023 Revolving Facility bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 2.00 %, 2.25 % or 2.50 %, depending on AAG’s public corporate credit rating, or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American (subject to a floor of 0.00 %), plus an applicable margin of 3.00 %, 3.25 % or 3.50 %, depending on AAG’s public corporate credit rating. SOFR borrowings under the 2023 Revolving Facility are not subject to a credit spread adjustment. As of December 31, 2024, there were no borrowings outstanding under the 2023 Revolving Facility. Pursuant to the Second Amendment, American replaced the $ 1.1 billion of initial term loans made pursuant to the 2023 Credit Agreement with new term loans in a principal amount of $ 1.1 billion. On December 23, 2024, American and AAG entered into the Third Amendment to Credit and Guaranty Agreement (the Third Amendment), amending the 2023 Credit Agreement. As a result of the Third Amendment, the term loans outstanding under the 2023 Credit Agreement with an outstanding principal amount of $ 1.1 billion were replaced with term loans with a principal amount of $ 1.1 billion. Pursuant to the Third Amendment, the 2023 Term Loan Facility bears interest at a base rate (subject to a floor of 1.00 %) plus an applicable margin of 1.25 % per annum or, at American’s option, the SOFR rate for a tenor of one, three or six months, depending on the interest period selected by American (subject to a floor of 0.00 %), plus an applicable margin of 2.25 % per annum. SOFR borrowings under the 2023 Term Loan Facility are not subject to a credit spread adjustment. As of December 31, 2024, the margin elected was 2.25 % per annum. April 2016 Revolving Facility On June 4, 2024, American terminated all revolving commitments under the Credit and Guaranty Agreement, dated as of April 29, 2016 (as amended, the April 2016 Credit Agreement). As a result, the April 2016 Credit Agreement was terminated and all liens securing the April 2016 Credit Agreement were released. Other Terms of the 2013, 2014 and 2023 Credit Facilities The term loans under the 2013, 2014 and 2023 Credit Facilities (collectively referred to as the Credit Facilities) are repayable in annual installments, in an amount equal to 1.00 % of the aggregate principal amount issued, with any unpaid balance due on the respective maturity dates. Voluntary prepayments may be made by American at any time. The 2013, 2014 and 2023 Revolving Facilities provide that American may from time to time borrow, repay and reborrow loans thereunder. The 2013, 2014 and 2023 Revolving Facilities are each subject to an undrawn annual fee of 0.750 %. 142 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. Subject to certain limitations and exceptions, the Credit Facilities are secured by collateral, including certain slots, route authorities, simulators and leasehold rights. American has the ability to make future modifications to the collateral pledged, subject to certain restrictions. American’s obligations under the Credit Facilities are guaranteed by AAG, and such guarantee is AAG’s senior unsecured obligations (all of the collateral is owned by American, and AAG has not granted a security interest in any assets to secure any of the foregoing obligations). The Credit Facilities contain events of default customary for similar financings, including cross default and cross-acceleration to other material indebtedness. (b) Senior Secured Notes 10.75 % Senior Secured Notes On September 25, 2020 (the 10.75 % Senior Secured Notes Closing Date), American issued $ 1.0 billion in initial principal amount of senior secured IP notes (the IP Notes) and $ 200 million in initial principal amount of senior secured LGA/DCA notes (the LGA/DCA Notes and together with the IP Notes, the 10.75 % Senior Secured Notes). The obligations of American under the 10.75 % Senior Secured Notes are fully and unconditionally guaranteed (the 10.75 % Senior Secured Notes Guarantees) on a senior unsecured basis by AAG. The 10.75 % Senior Secured Notes bear interest at a rate of 10.75 % per annum in cash. Interest on the 10.75 % Senior Secured Notes is payable semiannually in arrears on September 1 and March 1 of each year, which began on March 1, 2021. The 10.75 % Senior Secured Notes will mature on February 15, 2026. The IP Notes are secured by a first lien security interest on certain intellectual property of American, including the “American Airlines” trademark and the “aa.com” domain name in the United States and certain foreign jurisdictions (the IP Collateral), and a second lien on certain slots related to American’s operations at New York LaGuardia and Ronald Reagan Washington National airports and certain other assets (the LGA/DCA Collateral and together with the IP Collateral, the 10.75 % Senior Secured Notes Collateral). LGA/DCA Notes are secured by a first lien security interest in the LGA/DCA Collateral. After the fourth anniversary of the 10.75 % Senior Secured Notes Closing Date and on or prior to the fifth anniversary of the 10.75 % Senior Secured Notes Closing Date, American may redeem all or any part of the 10.75 % Senior Secured Notes, at its option, at a redemption price equal to 105.375 % of the principal amount of the 10.75 % Senior Secured Notes redeemed, together with accrued and unpaid interest thereon, if any. After the fifth anniversary of the 10.75 % Senior Secured Notes Closing Date, American may redeem all or any part of the 10.75 % Senior Secured Notes, at its option, at par, together with accrued and unpaid interest thereon, if any. In December 2024, American redeemed an aggregate amount of $ 263 million toward portions of the outstanding principal amounts of the 10.75 % Senior Secured Notes and agreed to redeem an aggregate amount of $ 308 million by no later than April 15, 2025. American redeemed the aggregate amount of $ 308 million on February 4, 2025. 7.25 % Senior Secured Notes On February 15, 2023, American issued $ 750 million aggregate principal amount of 7.25 % senior secured notes due 2028 (the 7.25 % Senior Secured Notes) in a private offering. The 7.25 % Senior Secured Notes were issued at par and bear interest at a rate of 7.25 % per annum (subject to increase if the collateral coverage ratio described below is not met). Interest on the 7.25 % Senior Secured Notes is payable semiannually in arrears on February 15 and August 15 of each year, which began on August 15, 2023. The 7.25 % Senior Secured Notes will mature on February 15, 2028. The obligations of American under the 7.25 % Senior Secured Notes are fully and unconditionally guaranteed on a senior unsecured basis by AAG. The 7.25 % Senior Secured Notes were issued pursuant to an indenture, dated as of February 15, 2023 (the 7.25 % Senior Secured Notes Indenture), by and among American, AAG and Wilmington Trust, National Association, as trustee and collateral agent. The 7.25 % Senior Secured Notes are American’s senior secured obligations and are secured on a first lien basis by security interests in certain assets, rights and properties that American uses to provide non-stop scheduled air carrier services between (a) certain airports in the United States and (b) airports in certain countries in South America and New Zealand (collectively, the 7.25 % Senior Secured Notes Collateral). The 7.25 % Senior Secured Notes Collateral also secures, on a first lien, pari passu basis with the 7.25 % Senior Secured Notes, the 2013 Credit Facilities. American may redeem the 7.25 % Senior Secured Notes, in whole at any time or in part from time to time prior to February 15, 2025, at a redemption price equal to 100 % of the principal amount of the 7.25 % Senior Secured Notes to be redeemed, plus a “make-whole” premium, plus any accrued and unpaid interest thereon to but excluding the date of redemption. At any time on or after February 15, 2025, American may redeem all or any of the 7.25 % Senior Secured 143 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. Notes in whole at any time, or in part from time to time, at the redemption prices described in the 7.25 % Senior Secured Notes Indenture, plus any accrued and unpaid interest thereon to but excluding the date of redemption. In addition, at any time prior to February 15, 2025, American may redeem up to 40 % of the original aggregate principal amount of the 7.25 % Senior Secured Notes (calculated after giving effect to any issuance of additional notes) with the net cash proceeds of certain equity offerings, at a redemption price equal to 107.250 % of the aggregate principal amount of the 7.25 % Senior Secured Notes to be redeemed, plus any accrued and unpaid interest thereon to but excluding the date of redemption. Twice per year, American is required to deliver an appraisal of the 7.25 % Senior Secured Notes Collateral and an officer’s certificate demonstrating the calculation of a collateral coverage ratio in relation to the 7.25 % Senior Secured Notes Collateral (the 7.25 % Senior Secured Notes Collateral Coverage Ratio) as of the date of delivery of the appraisal for the applicable period. If the 7.25 % Senior Secured Notes Collateral Coverage Ratio is less than 1.6 to 1.0 as of the date of delivery of the appraisal for the applicable period, then, subject to a cure period in which additional collateral can be provided or debt repaid such that American meets the required 7.25 % Senior Secured Notes Collateral Coverage Ratio, American will be required to pay special interest in an additional amount equal to 2.0 % per annum of the principal amount of the 7.25 % Senior Secured Notes until the 7.25 % Senior Secured Notes Collateral Coverage Ratio is established to be at least 1.6 to 1.0. 8.50 % Senior Secured Notes On December 4, 2023, American issued $ 1.0 billion aggregate principal amount of 8.50 % senior secured notes due 2029 (the 8.50 % Senior Secured Notes) in a private offering. The 8.50 % Senior Secured Notes were issued at par and bear interest at a rate of 8.50 % per annum (subject to increase if the collateral coverage ratio described below is not met). Interest on the 8.50 % Senior Secured Notes is payable semiannually in arrears on May 15 and November 15 of each year, which began on May 15, 2024. The 8.50 % Senior Secured Notes will mature on May 15, 2029. The obligations of American under the 8.50 % Senior Secured Notes are fully and unconditionally guaranteed on a senior unsecured basis by AAG. The 8.50 % Senior Secured Notes were issued pursuant to an indenture, dated as of December 4, 2023 (the 8.50 % Senior Secured Notes Indenture), by and among American, AAG and Wilmington Trust, National Association, as trustee and collateral agent. The 8.50 % Senior Secured Notes are American’s senior secured obligations and are secured on a first lien basis by security interests in certain assets, rights and properties that American uses to provide non-stop scheduled air carrier services between (a) certain airports in the United States and (b) certain airports in Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, Mexico, South Korea and Switzerland (collectively, the 8.50 % Senior Secured Notes Collateral). The 8.50 % Senior Secured Notes Collateral also secures, on a first lien, pari passu basis with the 8.50 % Senior Secured Notes, the 2023 Term Loan Facility. American may redeem the 8.50 % Senior Secured Notes, in whole at any time or in part from time to time prior to November 15, 2025, at a redemption price equal to 100 % of the principal amount of the 8.50 % Senior Secured Notes to be redeemed, plus a “make-whole” premium, plus any accrued and unpaid interest thereon to but excluding the date of redemption. At any time on or after November 15, 2025, American may redeem all or any of the 8.50 % Senior Secured Notes in whole at any time, or in part from time to time, at the redemption prices described in the 8.50 % Senior Secured Notes Indenture, plus any accrued and unpaid interest thereon to but excluding the date of redemption. In addition, at any time prior to November 15, 2025, American may redeem up to 40 % of the original aggregate principal amount of the 8.50 % Senior Secured Notes (calculated after giving effect to any issuance of additional notes) with the net cash proceeds of certain equity offerings, at a redemption price equal to 108.50 % of the aggregate principal amount of the 8.50 % Senior Secured Notes to be redeemed, plus any accrued and unpaid interest thereon to but excluding the date of redemption. In addition, during each twelve-month period beginning on December 4, 2023 and ending on or prior to November 15, 2025, American may redeem up to 10 % of the original aggregate principal amount of the 8.50 % Senior Secured Notes at a redemption price of 103 % of the principal amount thereof, plus any accrued and unpaid interest thereon to, but excluding, the applicable date of redemption. Twice per year, American is required to deliver an appraisal of the 8.50 % Senior Secured Notes Collateral and an officer’s certificate demonstrating the calculation of a collateral coverage ratio in relation to the 8.50 % Senior Secured Notes Collateral (the 8.50 % Senior Secured Notes Collateral Coverage Ratio) as of the date of delivery of the appraisal for the applicable period. If the 8.50 % Senior Secured Notes Collateral Coverage Ratio is less than 1.6 to 1.0 as of the date of delivery of the appraisal for the applicable period, then, subject to a cure period in which additional collateral can be provided or debt repaid such that American meets the required 8.50 % Senior Secured Notes Collateral Coverage Ratio, American will be required to pay special interest in an additional amount equal to 2.0 % per annum of the principal 144 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. amount of the 8.50 % Senior Secured Notes until the 8.50 % Senior Secured Notes Collateral Coverage Ratio is established to be at least 1.6 to 1.0. (c) AAdvantage Financing On March 24, 2021 (the AAdvantage Financing Closing Date), American and AAdvantage Loyalty IP Ltd., a Cayman Islands exempted company incorporated with limited liability and an indirect wholly-owned subsidiary of American (Loyalty Issuer and, together with American, the AAdvantage Issuers), completed the offering of $ 3.5 billion aggregate principal amount of 5.50 % Senior Secured Notes due 2026 (the 2026 Notes) and $ 3.0 billion aggregate principal amount of 5.75 % Senior Secured Notes due 2029 (the 2029 Notes, and together with the 2026 Notes, the AAdvantage Notes). The AAdvantage Notes are fully and unconditionally guaranteed by the SPV Guarantors and AAG. Concurrent with the issuance of the AAdvantage Notes, the AAdvantage Issuers, as co-borrowers, entered into a term loan credit and guaranty agreement, dated March 24, 2021, as amended, providing for a $ 3.5 billion term loan facility (the AAdvantage Term Loan Facility and collectively with the AAdvantage Notes, the AAdvantage Financing) and pursuant to which the full $ 3.5 billion of term loans (the AAdvantage Loans) were drawn on the AAdvantage Financing Closing Date. The AAdvantage Loans are fully and unconditionally guaranteed (together with the AAdvantage Note Guarantees, the AAdvantage Guarantees) by the SPV Guarantors and AAG. Subject to certain permitted liens and other exceptions, the AAdvantage Notes, AAdvantage Loans and AAdvantage Guarantees provided by the SPV Guarantors are secured by a first-priority security interest in, and pledge of, various agreements with respect to the AAdvantage program (the AAdvantage Agreements) (including all payments thereunder) and certain intellectual property licenses, certain deposit accounts that will receive cash under the AAdvantage Agreements, certain reserve accounts, the equity of each of Loyalty Issuer and the SPV Guarantors and substantially all other assets of Loyalty Issuer and the SPV Guarantors including American’s rights to certain data and other intellectual property used in the AAdvantage program (subject to certain exceptions) (collectively, the AAdvantage Collateral). Payment Terms of the AAdvantage Notes and AAdvantage Loans under the AAdvantage Term Loan Facility Interest on the AAdvantage Notes is payable in cash, quarterly in arrears on the 20th day of each January, April, July and October (each, an AAdvantage Payment Date), which began on July 20, 2021. The 2026 Notes will mature on April 20, 2026, and the 2029 Notes will mature on April 20, 2029. The outstanding principal on the 2026 Notes will be repaid in quarterly installments of $ 292 million on each AAdvantage Payment Date, which began in July 2023. The outstanding principal on the 2029 Notes will be repaid in quarterly installments of $ 250 million on each AAdvantage Payment Date, beginning on July 20, 2026. The AAdvantage Issuers may redeem the AAdvantage Notes, at their option, in whole at any time or in part from time to time, at a redemption price equal to 100 % of the principal amount of the AAdvantage Notes redeemed plus a “make-whole” premium, together with accrued and unpaid interest to the date of redemption. The scheduled maturity date of the AAdvantage Loans under the AAdvantage Term Loan Facility is April 20, 2028. The outstanding principal on the AAdvantage Loans will be repaid in quarterly installments of $ 175 million, on each AAdvantage Payment Date, which began in July 2023. These amortization payments (as well as those for the AAdvantage Notes) will be subject to the occurrence of certain early amortization events, including the failure to satisfy a minimum debt service coverage ratio at specified determination dates. Prepayment of some or all of the AAdvantage Loans outstanding under the AAdvantage Term Loan Facility is permitted, although payment of an applicable premium is required as specified in the AAdvantage Term Loan Facility. The AAdvantage Indenture and the AAdvantage Term Loan Facility contain mandatory prepayment provisions triggered upon (i) the issuance or incurrence by Loyalty Issuer or the SPV Guarantors of certain indebtedness or (ii) the receipt by American or its subsidiaries of net proceeds from pre-paid frequent flyer (i.e., AAdvantage) mileage credit sales exceeding $ 505 million. Each of these prepayments would also require payment of an applicable premium. Certain other events, including the occurrence of a change of control with respect to AAG and certain AAdvantage Collateral sales exceeding a specified threshold, will also trigger mandatory repurchase or mandatory prepayment provisions under the AAdvantage Indenture and the AAdvantage Term Loan Facility, respectively. The AAdvantage Term Loan Facility bears interest at a base rate (subject to a floor of 0.00 %) plus an applicable margin of 3.75 % or, at American’s option, the SOFR rate for a tenor of three months, plus a 0.26161 % credit spread adjustment 145 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. (with such SOFR rate plus SOFR adjustment being subject to a floor of 0.75 %) and an applicable margin of 4.75 %. As of December 31, 2024, the margin elected was 4.75 %. (d) EETCs issued in 2024 In 2024, American entered into agreements under which it borrowed $ 684 million in connection with the financing of certain aircraft that had been previously delivered. Debt incurred under these agreements is junior to existing equipment notes, matures in 2027 through 2028 and bears interest at fixed rates averaging 7.10 %. (e) Equipment Loans and Other Notes Payable Issued in 2024 In 2024, American entered into agreements under which it borrowed $ 990 million in connection with the financing of certain aircraft. Debt incurred under these agreements matures in 2030 through 2036 and bears interest at variable rates (comprised of SOFR plus an applicable margin) averaging 6.28 % as of December 31, 2024. Guarantees As of December 31, 2024, American had issued guarantees covering AAG’s $ 1.8 billion aggregate principal amount of the PSP1 Promissory Note due April 2030, $ 1.0 billion aggregate principal amount of the PSP2 Promissory Note due January 2031, $ 959 million aggregate principal amount of the PSP3 Promissory Note due April 2031 and $ 1.0 billion aggregate principal amount of 6.50 % convertible senior notes due July 2025. Certain Covenants American’s debt agreements contain customary terms and conditions as well as various affirmative, negative and financial covenants that, among other things, may restrict the ability of American to incur additional indebtedness. American’s debt agreements also contain customary change of control provisions, which may require it to repay or redeem such indebtedness upon certain events constituting a change of control under the relevant agreement, in certain cases at a premium. Additionally, certain of American’s debt financing agreements (including its secured notes, term loans, revolving credit facilities and spare engine EETCs) contain loan to value (LTV) or collateral coverage ratio covenants and certain agreements require American to appraise the related collateral annually or semiannually. Pursuant to such agreements, if the applicable LTV or collateral coverage ratio exceeds or falls below a specified threshold, as the case may be, American will be required, as applicable, to pledge additional qualifying collateral (which in some cases may include cash or investment securities), withhold additional cash in certain accounts, or pay down such financing, in whole or in part, or the interest rate for the relevant financing will be increased. Additionally, a significant portion of American’s debt financing agreements contain covenants requiring it to maintain an aggregate of at least $ 2.0 billion of unrestricted cash and cash equivalents and amounts available to be drawn under revolving credit facilities, and its AAdvantage Financing contains a peak debt service coverage ratio, pursuant to which failure to comply with a certain threshold may result in early repayment, in whole or in part, of the AAdvantage Financing. Specifically, American is required to meet certain collateral coverage tests for its Credit Facilities, 7.25 % Senior Secured Notes, 8.50 % Senior Secured Notes and 10.75 % Senior Secured Notes, as described below: 2013 Credit Facilities 7.25 % Senior Secured Notes 2014 Credit Facilities 2023 Credit Facilities 8.50 % Senior Secured Notes 10.75 % Senior Secured Notes LTV Requirement 1.6 x Collateral valuation to amount of debt outstanding ( 62.5 % LTV) LTV as of Last Measurement Date 35.0 % 15.8 % 24.7 % 5.2 % Frequency of Appraisals of Appraised Collateral Semi-Annual Annual Collateral Description Generally, certain slots, route authorities and airport gate leasehold rights used by American to operate certain services between the U.S. and South America and New Zealand Generally, certain slots, route authorities and airport gate leasehold rights used by American to operate certain services between the U.S. and European Union (including London Heathrow) Generally, certain slots, route authorities and airport gate leasehold rights used by American to operate certain services between the U.S. and Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, Mexico, South Korea and Switzerland Generally, certain DCA slots, certain LGA slots, certain simulators and certain leasehold rights and, in the case of the IP Notes, certain intellectual property of American 146 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. At December 31, 2024, American was in compliance with the applicable collateral coverage tests as of the most recent measurement dates. 4. Leases American leases certain aircraft and engines, including aircraft under capacity purchase agreements. As of December 31, 2024, American operated 716 leased aircraft, including 210 aircraft leased under capacity purchase agreements, with remaining terms ranging from less than one year to approximately 11 years. At each airport where American conducts flight operations, American has agreements, generally with a governmental unit or authority, for the use of passenger, operations and baggage handling space as well as runways and taxiways. These agreements, particularly in the U.S., often contain provisions for periodic adjustments to rates and charges applicable under such agreements. These rates and charges also vary with American’s level of operations and the operations of the airport. Because of the variable nature of these rates, these leases are not recorded on American’s consolidated balance sheets as a ROU asset or a lease liability. Additionally, at American’s hub locations and in certain other cities it serves, American leases administrative offices, catering, cargo, training, maintenance and other facilities. The components of lease expense were as follows (in millions): Year Ended December 31, 2024 2023 2022 Operating lease cost $ 1,828 $ 1,992 $ 1,987 Finance lease cost: Amortization of assets 125 119 135 Interest on lease liabilities 39 44 46 Variable lease cost 3,059 2,703 2,572 Total net lease cost $ 5,051 $ 4,858 $ 4,740 Included in the table above is $ 225 million, $ 274 million and $ 242 million of operating lease cost under American’s capacity purchase agreement with Republic for the years ended December 31, 2024, 2023 and 2022, respectively. American holds a 25 % equity interest in Republic Holdings, the parent company of Republic. 147 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. Supplemental balance sheet information related to leases was as follows (in millions, except lease term and discount rate): December 31, 2024 2023 Operating leases: Operating lease ROU assets $ 7,274 $ 7,886 Current operating lease liabilities $ 1,082 $ 1,292 Noncurrent operating lease liabilities 5,926 6,416 Total operating lease liabilities $ 7,008 $ 7,708 Finance leases: Property and equipment, at cost $ 1,604 $ 1,352 Accumulated amortization ( 924 ) ( 870 ) Property and equipment, net $ 680 $ 482 Current finance lease liabilities $ 132 $ 124 Noncurrent finance lease liabilities 531 374 Total finance lease liabilities $ 663 $ 498 Weighted average remaining lease term (in years): Operating leases 8.2 8.4 Finance leases 7.4 5.8 Weighted average discount rate: Operating leases 7.5 % 7.6 % Finance leases 7.0 % 7.1 % Supplemental cash flow and other information related to leases was as follows (in millions): Year Ended December 31, 2024 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 1,810 $ 2,011 $ 1,968 Operating cash flows from finance leases 40 47 46 Financing cash flows from finance leases 145 255 179 Gain on sale leaseback transactions, net 76 12 2 148 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. Maturities of lease liabilities were as follows (in millions): December 31, 2024 Operating Leases Finance Leases 2025 $ 1,532 $ 173 2026 1,390 150 2027 1,235 112 2028 1,107 77 2029 1,004 72 2030 and thereafter 3,009 256 Total lease payments 9,277 840 Less: Imputed interest ( 2,269 ) ( 177 ) Total lease obligations 7,008 663 Less: Current obligations ( 1,082 ) ( 132 ) Long-term lease obligations $ 5,926 $ 531 As of December 31, 2024, American had additional operating lease commitments that have not yet commenced of approximately $ 693 million for five Boeing 787 Family aircraft scheduled to be delivered in 2025 with lease terms of 10 years. 5. Income Taxes The significant components of the income tax provision were (in millions): Year Ended December 31, 2024 2023 2022 Current income tax benefit: State, local and foreign $ — $ — $ ( 6 ) Deferred income tax provision: Federal 391 361 112 State and local 35 33 10 Deferred income tax provision 426 394 122 Total income tax provision $ 426 $ 394 $ 116 The income tax provision differed from amounts computed at the statutory federal income tax rate as follows (in millions): Year Ended December 31, 2024 2023 2022 Statutory income tax provision $ 354 $ 332 $ 95 State, local and foreign income tax provision, net of federal tax effect 30 25 3 Book expenses not deductible for tax purposes 40 35 20 Change in valuation allowance — 3 — Other, net 2 ( 1 ) ( 2 ) Income tax provision $ 426 $ 394 $ 116 149 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. The components of American’s deferred tax assets and liabilities were (in millions): December 31, 2024 2023 Deferred tax assets: Net operating loss and other carryforwards $ 3,891 $ 3,960 Loyalty program liability 1,799 1,774 Leases 1,582 1,746 Pension benefits 228 428 Postretirement benefits other than pension benefits 270 273 Rent expense 59 84 Other 726 846 Total deferred tax assets 8,555 9,111 Valuation allowance ( 12 ) ( 12 ) Net deferred tax assets 8,543 9,099 Deferred tax liabilities: Accelerated depreciation and amortization ( 4,599 ) ( 4,479 ) Leases ( 1,642 ) ( 1,786 ) Other ( 244 ) ( 254 ) Total deferred tax liabilities ( 6,485 ) ( 6,519 ) Net deferred tax asset $ 2,058 $ 2,580 At December 31, 2024, American had approximately $ 12.8 billion of gross federal net operating losses (NOLs) and $ 4.2 billion of other carryforwards available to reduce future federal taxable income, of which $ 2.9 billion will expire beginning in 2033 if unused and $ 14.1 billion can be carried forward indefinitely. American is a member of AAG’s consolidated federal and certain state income tax returns. American also had approximately $ 5.0 billion of NOL carryforwards to reduce future state taxable income at December 31, 2024, which will expire in taxable years 2024 through 2044 if unused. American’s ability to use its NOLs and other carryforwards depends on the amount of taxable income generated in future periods. American provides a valuation allowance for its deferred tax assets, which include the NOLs, when it is more likely than not that some portion, or all of its deferred tax assets, will not be realized. American considers all available positive and negative evidence and makes certain assumptions in evaluating the realizability of its deferred tax assets. Many factors are considered that impact American’s assessment of future profitability, including conditions which are beyond its control, such as the health of the economy, the availability and price volatility of aircraft fuel and travel demand. American has determined that positive factors outweigh negative factors in the determination of the realizability of its deferred tax assets. In 2024, American recorded an income tax provision of $ 426 million with an effective rate of approximately 25 %, which was substantially non-cash. Substantially all of American’s income before income taxes is attributable to the United States. American files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. American’s 2021 through 2023 tax years are still subject to examination by the Internal Revenue Service. Various state, local and foreign jurisdiction tax years remain open to examination, and American is under examination, in administrative appeals or engaged in tax litigation in certain jurisdictions. American believes that the effect of any assessments will not be material to its consolidated financial statements. The amount of, and changes to, American’s uncertain tax positions were not material in any of the years presented. American accrues interest and penalties related to unrecognized tax benefits in interest expense and operating expense, respectively. 150 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. 6. Fair Value Measurements Assets Measured at Fair Value on a Recurring Basis Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (i.e., an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. Accounting standards include disclosure requirements around fair values used for certain financial instruments and establish a fair value hierarchy. The hierarchy prioritizes valuation inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of three levels: • Level 1 – Observable inputs such as quoted prices in active markets; • Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and • Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. When available, American uses quoted market prices to determine the fair value of its financial assets. If quoted market prices are not available, American measures fair value using valuation techniques that use, when possible, current market-based or independently-sourced market parameters, such as interest rates and currency rates. American utilizes the market approach to measure the fair value of its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. American’s short-term investments, restricted cash and restricted short-term investments classified as Level 2 utilize significant observable inputs, other than quoted prices in active markets, for valuation of these securities. No changes in valuation techniques or inputs occurred during the year ended December 31, 2024. Assets measured at fair value on a recurring basis are summarized below (in millions): Fair Value Measurements as of December 31, 2024 Total Level 1 Level 2 Level 3 Short-term investments (1), (2) : Money market funds $ 678 $ 678 $ — $ — Corporate obligations 2,909 — 2,909 — Bank notes/certificates of deposit/time deposits 2,040 — 2,040 — Repurchase agreements 550 — 550 — 6,177 678 5,499 — Restricted cash and short-term investments (1), (3) 732 442 290 — Long-term investments (4) 161 161 — — Total $ 7,070 $ 1,281 $ 5,789 $ — Fair Value Measurements as of December 31, 2023 Total Level 1 Level 2 Level 3 Short-term investments (1) : Money market funds $ 817 $ 817 $ — $ — Corporate obligations 4,046 — 4,046 — Bank notes/certificates of deposit/time deposits 1,585 — 1,585 — Repurchase agreements 450 — 450 — U.S. government and agency obligations 100 — 100 — 6,998 817 6,181 — Restricted cash and short-term investments (1), (3) 910 459 451 — Long-term investments (4) 163 163 — — Total $ 8,071 $ 1,439 $ 6,632 $ — 151 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. (1) All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are recorded in accumulated other comprehensive loss at each reporting period. There were no credit losses. (2) American’s short-term investments as of December 31, 2024 mature in one year or less. (3) Restricted cash and short-term investments primarily include collateral held to support workers' compensation obligations and collateral associated with the payment of interest for the AAdvantage Financing. Restricted short-term investments mature in one year or less except for $ 155 million and $ 218 million as of December 31, 2024 and December 31, 2023, respectively. (4) Long-term investments include American's equity investments in China Southern Airlines Company Limited (China Southern Airlines), Vertical Aerospace Ltd. (Vertical) and GOL. See Note 7 for further information on American’s equity investments. Fair Value of Debt The fair value of American’s long-term debt was estimated using quoted market prices or discounted cash flow analyses based on American’s current estimated incremental borrowing rates for similar types of borrowing arrangements. The carrying value and estimated fair value of American’s long-term debt, including current maturities, were as follows (in millions): December 31, 2024 Carrying Value Fair Value Total Level 1 Level 2 Level 3 Long-term debt, including current maturities $ 25,072 $ 25,234 $ — $ 25,234 $ — December 31, 2023 Carrying Value Fair Value Total Level 1 Level 2 Level 3 Long-term debt, including current maturities $ 27,177 $ 27,008 $ — $ 27,008 $ — 7. Investments To help expand American’s network and as part of its ongoing commitment to sustainability, American enters into various commercial relationships or other strategic partnerships, including equity investments, with other airlines and companies. American’s equity investments, ownership interest and carrying value were as follows: Ownership Interest Carrying Value (in millions) December 31, December 31, Accounting Treatment 2024 2023 2024 2023 Republic Holdings Equity Method 25.0 % 25.0 % $ 253 $ 240 China Southern Airlines Fair Value 1.5 % 1.5 % 142 115 Other investments (1) Various 120 186 Total $ 515 $ 541 (1) Primarily includes American’s investment in JetSMART Holdings Limited, which is accounted for under the equity method, and American’s investments in Vertical and GOL, which are each accounted for at fair value. 152 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. 8. Employee Benefit Plans American sponsors defined benefit and defined contribution pension plans for eligible employees. The defined benefit pension plans provide benefits for participating employees based on years of service and average compensation for a specified period of time before retirement. Effective November 1, 2012, substantially all of American’s defined benefit pension plans were frozen and American began providing enhanced benefits under its defined contribution pension plans for certain employee groups. American uses a December 31 measurement date for all of its defined benefit pension plans. American also provides certain retiree medical and other postretirement benefits, including health care and life insurance benefits to retired employees and notional retiree health reimbursement arrangements for eligible participants. Benefit Obligations, Fair Value of Plan Assets and Funded Status The following tables provide a reconciliation of the changes in the pension and retiree medical and other postretirement benefits obligations, fair value of plan assets and funded status as of December 31, 2024 and 2023: Pension Benefits Retiree Medical and Other Postretirement Benefits 2024 2023 2024 2023 (In millions) Benefit obligation at beginning of period $ 14,314 $ 13,948 $ 1,325 $ 906 Service cost 2 2 29 17 Interest cost 718 753 64 55 Actuarial loss (gain) (1), (2) ( 737 ) 501 ( 58 ) 92 Plan amendments (3) — — 54 339 Benefit payments ( 907 ) ( 890 ) ( 107 ) ( 84 ) Other ( 132 ) — — — Benefit obligation at end of period $ 13,258 $ 14,314 $ 1,307 $ 1,325 Fair value of plan assets at beginning of period $ 12,358 $ 11,821 $ 133 $ 133 Actual return on plan assets 561 1,356 9 14 Employer contributions (4) 295 71 93 70 Benefit payments ( 907 ) ( 890 ) ( 107 ) ( 84 ) Other ( 132 ) — — — Fair value of plan assets at end of period $ 12,175 $ 12,358 $ 128 $ 133 Funded status at end of period $ ( 1,083 ) $ ( 1,956 ) $ ( 1,179 ) $ ( 1,192 ) (1) The 2024 and 2023 pension actuarial loss (gain) primarily relates to the change in American’s weighted average discount rate assumption. (2) The 2024 retiree medical and other postretirement benefits actuarial gain primarily relates to changes in certain retirement and weighted average discount rate assumptions, offset by increases in health care premiums and health care cost assumptions. The 2023 retiree medical and other postretirement benefits actuarial loss primarily relates to the change in American’s weighted average discount rate assumption and change in health care cost assumptions. (3) American remeasured its retiree medical and other postretirement benefits to account for enhanced retirement benefits pursuant to the ratification of new CBAs. As a result, in 2024 and 2023, American increased its postretirement benefits obligation by $ 54 million and $ 339 million, respectively, which was included as a component of prior service cost in accumulated other comprehensive loss. (4) In 2024, American made required contributions of $ 280 million and supplemental contributions of $ 15 million to its defined benefit pension plans, and in 2023, American made required contributions of $ 67 million and supplemental contributions of $ 4 million to its defined benefit pension plans. 153 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. Balance Sheet Position Pension Benefits Retiree Medical and Other Postretirement Benefits 2024 2023 2024 2023 (In millions) As of December 31: Current liability $ 5 $ 6 $ 142 $ 122 Noncurrent liability 1,078 1,950 1,037 1,070 Total liabilities $ 1,083 $ 1,956 $ 1,179 $ 1,192 Pension Benefits Retiree Medical and Other Postretirement Benefits 2024 2023 2024 2023 (In millions) As of December 31: Net actuarial loss (gain) $ 3,130 $ 3,561 $ ( 407 ) $ ( 382 ) Prior service cost 1 — 238 197 Total accumulated other comprehensive loss (income), pre-tax $ 3,131 $ 3,561 $ ( 169 ) $ ( 185 ) Plans with Projected Benefit Obligations Exceeding Fair Value of Plan Assets Pension Benefits 2024 2023 (In millions) As of December 31: Projected benefit obligation $ 13,258 $ 14,314 Fair value of plan assets 12,175 12,358 Plans with Accumulated Benefit Obligations Exceeding Fair Value of Plan Assets Pension Benefits Retiree Medical and Other Postretirement Benefits 2024 2023 2024 2023 (In millions) As of December 31: Accumulated benefit obligation $ 13,251 $ 14,307 $ — $ — Accumulated postretirement benefit obligation — — 1,307 1,325 Fair value of plan assets 12,175 12,358 128 133 154 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. Net Periodic Benefit Cost (Income) Pension Benefits Retiree Medical and Other Postretirement Benefits 2024 2023 2022 2024 2023 2022 (In millions) For the years ended December 31: Defined benefit plans: Service cost $ 2 $ 2 $ 3 $ 29 $ 17 $ 16 Interest cost 718 753 552 64 55 30 Expected return on assets ( 973 ) ( 914 ) ( 1,133 ) ( 10 ) ( 11 ) ( 12 ) Amortization of: Prior service cost (benefit) — 18 28 14 ( 6 ) ( 14 ) Unrecognized net loss (gain) 105 106 156 ( 31 ) ( 34 ) ( 30 ) Net periodic benefit cost (income) $ ( 148 ) $ ( 35 ) $ ( 394 ) $ 66 $ 21 $ ( 10 ) The service cost component of net periodic benefit cost (income) is included in operating expenses and the other components of net periodic benefit cost (income) are included in nonoperating other income (expense), net on American’s consolidated statements of operations. Assumptions The following actuarial assumptions were used to determine American’s benefit obligations and net periodic benefit cost (income) for the periods presented: Pension Benefits Retiree Medical and Other Postretirement Benefits 2024 2023 2024 2023 Benefit obligations as of December 31: Weighted average discount rate 5.7 % 5.2 % 5.6 % 5.3 % Pension Benefits Retiree Medical and Other Postretirement Benefits 2024 2023 2022 2024 2023 2022 Net periodic benefit cost (income) for the years ended December 31: Weighted average discount rate 5.2 % 5.6 % 3.0 % 5.3 % 5.7 % 2.8 % Weighted average expected rate of return on plan assets 8.0 % 8.0 % 8.0 % 8.0 % 8.0 % 8.0 % Weighted average health care cost trend rate assumed for next year (1) N/A N/A N/A 6.5 % 6.5 % 5.8 % (1) The weighted average health care cost trend rate at December 31, 2024 is assumed to decline gradually to 4.5 % by 2033 and remain level thereafter. As of January 1, 2025, American’s estimate of the long-term rate of return on plan assets is 7.75 % based on the target asset allocation. Expected returns on long duration bonds are based on yields to maturity of the bonds held at year-end. Expected returns on other assets are based on a combination of long-term historical returns, actual returns on plan assets achieved over the last 10 years, current and expected market conditions, and expected value to be generated through active management and securities lending programs. 155 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. Minimum Contributions American is required to make minimum contributions to its defined benefit pension plans under the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (ERISA) and various other laws for U.S. based plans as well as underfunding rules specific to countries where American maintains defined benefit pension plans. Based on current funding assumptions, American has minimum required contributions of $ 221 million for 2025. American’s future funding obligations will depend on the performance of American’s investments held in a trust by the pension plans, interest rates for determining funding targets, the amount of and timing of any supplemental contributions and American’s actuarial experience. Benefit Payments The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (approximately, in millions): 2025 2026 2027 2028 2029 2030-2034 Pension benefits $ 957 $ 977 $ 995 $ 1,009 $ 1,019 $ 5,115 Retiree medical and other postretirement benefits 158 163 160 156 153 650 Plan Assets The objectives of American’s investment policies are to: maintain sufficient income and liquidity to pay retirement benefits; produce a long-term rate of return that meets or exceeds the assumed rate of return for plan assets; limit the volatility of asset performance and funded status; and diversify assets among asset classes and investment managers. Based on these investment objectives, a long-term strategic asset allocation has been established. This strategic allocation seeks to balance the potential benefit of improving the funded position with the potential risk that the funded position would decline. The current strategic target asset allocation with the corresponding allowed range is as follows: Asset Class/Sub-Class Target Allocation Allowed Range Equity 56 % 30 % - 85 % Public: U.S. Large 18 % 10 % - 40 % U.S. Small/Mid 4 % 0 % - 10 % International Large 11.5 % 5 % - 25 % International Small/Mid 2.5 % 0 % - 10 % Emerging Markets 5 % 0 % - 15 % Private Equity 15 % 5 % - 30 % Fixed Income 44 % 15 % - 70 % Public U.S. Fixed Income 35 % 15 % - 60 % Private Income 9 % 0 % - 20 % Other 0 % 0 % - 5 % Cash Equivalents 0 % 0 % - 20 % Public equity investments are intended to provide a real return over a full market cycle and, therefore, to contribute to the pension plan’s long-term objective. Public fixed income investments are intended to provide income to the plan and offer the potential for long term capital appreciation. Private investments, such as private equity and private income, are used to provide higher expected returns than public markets over the long-term by assuming reduced levels of liquidity and higher levels of risk. The pension plan’s master trust participates in securities lending programs to generate additional income by loaning plan assets to borrowers on a fully collateralized basis. The pension plan’s master trust will also engage in derivative instruments to equitize residual levels of cash as well as hedge the pension plan’s exposure to interest rates. Such programs are subject to market risk and counterparty risk. 156 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. Investments in securities traded on recognized securities exchanges are valued at the last reported sales price on the last business day of the year. Securities traded in the over-the-counter market are valued at the last bid price. Investments in limited partnerships are carried at estimated net asset value (NAV) as determined by and reported by the general partners of the partnerships and represent the proportionate share of the estimated fair value of the underlying assets of the limited partnerships. Mutual funds are valued once daily through a NAV calculation provided at the end of each trade day. Common/collective trusts are valued at NAV based on the fair values of the underlying investments of the trusts as determined by the sponsor of the trusts. No changes in valuation techniques or inputs occurred during the year. Benefit Plan Assets Measured at Fair Value on a Recurring Basis The fair value of American’s pension plan assets at December 31, 2024 and 2023, by asset category, were as follows (in millions) (1) : December 31, 2024 December 31, 2023 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Equity (2) $ 2,498 $ — $ — $ 2,498 $ 3,134 $ — $ — $ 3,134 Fixed income (3) 427 3,723 — 4,150 235 3,238 — 3,473 Other, net (4) 91 144 68 303 ( 6 ) 348 84 426 Measured at NAV (5) : Common collective trusts (6) — — — 1,086 — — — 1,244 Private investments (7) — — — 4,138 — — — 4,081 Total plan assets $ 3,016 $ 3,867 $ 68 $ 12,175 $ 3,363 $ 3,586 $ 84 $ 12,358 (1) See Note 6 for a description of the levels within the fair value hierarchy. (2) Equity investments include domestic and international common stock and preferred stock. (3) Fixed income investments include corporate, government and U.S. municipal bonds, as well as mutual funds invested in fixed income securities. (4) Other primarily includes a short-term investment fund, net receivables and payables of the master trust for dividends, interest and amounts due to or from the sale and purchase of securities and cash and cash equivalents. (5) Includes investments that were measured at NAV per share (or its equivalent) as a practical expedient that have not been classified in the fair value hierarchy. (6) Common collective trusts include commingled funds primarily invested in equity securities. For some trusts, requests for withdrawals must meet specific requirements with advance notice of redemption preferred. (7) Private investments include limited partnerships that invest primarily in domestic private equity and private income opportunities. The pension plan’s master trust does not have the right to redeem its limited partnership investment at its NAV, but rather receives distributions as the underlying assets are liquidated. It is estimated that the underlying assets of these funds will be gradually liquidated over the next 10 years. As of December 31, 2024, the pension plan’s master trust has future funding commitments to these limited partnerships of approximately $ 1.1 billion, most of which are expected to be called over the next five years . Changes in fair value measurements of Level 3 investments during the years ended December 31, 2024 and 2023, were as follows (in millions): 2024 2023 Balance at beginning of year $ 84 $ 75 Actual gain (loss) on plan assets: Relating to assets still held at the reporting date ( 25 ) ( 9 ) Purchases 9 20 Sales — ( 2 ) Balance at end of year $ 68 $ 84 157 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. Plan assets in the retiree medical and other postretirement benefits plans are primarily Level 2 mutual funds valued by quoted prices on the active market, which is fair value, and represents the NAV of the shares of such funds as of the close of business at the end of the period. NAV is based on the fair market value of the funds’ underlying assets and liabilities at the date of determination. Defined Contribution and Multiemployer Plans The costs associated with American’s defined contribution plans were $ 1.4 billion, $ 1.1 billion and $ 916 million for the years ended December 31, 2024, 2023 and 2022, respectively. American participates in the International Association of Machinists & Aerospace Workers (IAM) National Pension Fund, Employer Identification No. 51-6031295 and Plan No. 002 (the IAM Pension Fund). American’s contributions to the IAM Pension Fund were $ 57 million, $ 52 million and $ 46 million for the years ended December 31, 2024, 2023 and 2022, respectively. The IAM Pension Fund reported $ 570 million in employers’ contributions for the year ended December 31, 2023, which is the most recent year for which such information is available. For 2023, American’s contributions represented more than 5 % of total contributions to the IAM Pension Fund. On March 29, 2019, the actuary for the IAM Pension Fund certified that the fund was in “endangered” status despite reporting a funded status of over 80 %. Additionally, the IAM Pension Fund’s Board voluntarily elected to enter into “critical” status on April 17, 2019. Upon entry into critical status, the IAM Pension Fund was required by law to adopt a rehabilitation plan aimed at restoring the financial health of the pension plan and did so on April 17, 2019 (the Rehabilitation Plan). Under the Rehabilitation Plan, American was subject to an immaterial contribution surcharge, which ceased to apply June 14, 2019 upon American’s mandatory adoption of a contribution schedule under the Rehabilitation Plan. The contribution schedule requires 2.5 % annual increases to its contribution rate. This contribution schedule will remain in effect through the earlier of December 31, 2031 or the date the IAM Pension Fund emerges from critical status. As of the most recent data available, the IAM Pension Fund remains in critical status. Profit Sharing Program American accrues a percentage of its pre-tax income excluding net special items for its profit sharing program. For the year ended December 31, 2024, American accrued $ 228 million for this program, which will be distributed to employees in the first quarter of 2025. 9. Accumulated Other Comprehensive Loss The components of AOCI are as follows (in millions): Pension, Retiree Medical and Other Postretirement Benefits Unrealized Gain (Loss) on Investments Income Tax Benefit (Provision) (1) Total Balance at December 31, 2022 $ ( 2,974 ) $ ( 6 ) $ ( 1,710 ) $ ( 4,690 ) Other comprehensive income (loss) before reclassifications ( 486 ) 4 108 ( 374 ) Amounts reclassified from AOCI 84 — ( 19 ) (2) 65 Net current-period other comprehensive income (loss) ( 402 ) 4 89 ( 309 ) Balance at December 31, 2023 ( 3,376 ) ( 2 ) ( 1,621 ) ( 4,999 ) Other comprehensive income (loss) before reclassifications 326 2 ( 74 ) 254 Amounts reclassified from AOCI 88 — ( 20 ) (2) 68 Net current-period other comprehensive income (loss) 414 2 ( 94 ) 322 Balance at December 31, 2024 $ ( 2,962 ) $ — $ ( 1,715 ) $ ( 4,677 ) (1) Relates principally to pension, retiree medical and other postretirement benefits obligations that will not be recognized in net income until the obligations are fully extinguished. (2) Relates to pension, retiree medical and other postretirement benefits obligations and is recognized within the income tax provision on American’s consolidated statements of operations. 158 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. Reclassifications out of AOCI for the years ended December 31, 2024 and 2023 are as follows (in millions): Amounts reclassified from AOCI Affected line items on the consolidated statements of operations Year Ended December 31, AOCI Components 2024 2023 Amortization of pension, retiree medical and other postretirement benefits: Prior service cost $ 11 $ 9 Nonoperating other income (expense), net Actuarial loss 57 56 Nonoperating other income (expense), net Total reclassifications for the period, net of tax $ 68 $ 65 10. Commitments, Contingencies and Guarantees (a) Aircraft, Engine and Other Purchase Commitments Under all of American’s aircraft and engine purchase agreements, its total future commitments as of December 31, 2024 are expected to be as follows (approximately, in millions): 2025 2026 2027 2028 2029 2030 and Thereafter Total Payments for aircraft and engine commitments (1) $ 2,169 $ 4,186 $ 4,003 $ 3,403 $ 3,345 $ 9,009 $ 26,115 (1) These amounts are net of purchase deposits currently held by the manufacturers. American’s purchase deposits held by all manufacturers totaled $ 1.0 billion and $ 760 million as of December 31, 2024 and 2023, respectively. Due to uncertainty surrounding the timing of delivery of certain aircraft, the amounts in the table represent American’s most current estimate based on contractual delivery schedules adjusted for updates and revisions to such schedules communicated to management by the applicable equipment manufacturer and certain management assumptions. However, the actual delivery schedule may differ, potentially materially, based on various potential factors including production delays by the manufacturer and regulatory concerns. Additionally, the amounts in the table exclude five Boeing 787 Family aircraft scheduled to be delivered in 2025, for which American has obtained committed lease financing. See Note 4 for information regarding this operating lease commitment. Additionally, American has other purchase commitments primarily related to aircraft fuel, flight equipment maintenance and information technology support as follows (approximately): $ 4.6 billion in 2025, $ 2.0 billion in 2026, $ 1.5 billion in 2027, $ 381 million in 2028, $ 500 million in 2029 and $ 3.4 billion in 2030 and thereafter. These amounts exclude obligations under certain fuel offtake agreements or other agreements for which the timing of the related expenditure is uncertain, or which are subject to material contingencies, such as the construction of a production facility. (b) Capacity Purchase Agreements with Third-Party Regional Carriers American has capacity purchase agreements with third-party regional carriers. The capacity purchase agreements provide that all revenues, including passenger, in-flight, ancillary, mail and freight revenues, go to American. American controls marketing, scheduling, ticketing, pricing and seat inventories. In return, American agrees to pay predetermined fees to these airlines for operating an agreed-upon number of aircraft, without regard to the number of passengers on board. In addition, these agreements provide that American either reimburses or pays 100 % of certain variable costs, such as airport landing fees, fuel and passenger liability insurance. As of December 31, 2024, American’s capacity purchase agreements with third-party regional carriers had expiration dates ranging from 2025 to 2033, with rights of American to extend the respective terms of certain agreements. 159 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. As of December 31, 2024, American’s minimum obligations under its capacity purchase agreements with third-party regional carriers are expected to be as follows (approximately, in millions): 2025 2026 2027 2028 2029 2030 and Thereafter Total Minimum obligations under capacity purchase agreements with third-party regional carriers (1) $ 1,114 $ 1,068 $ 1,066 $ 990 $ 829 $ 849 $ 5,916 (1) These commitments are estimates of costs based on assumed minimum levels of flying under the capacity purchase agreements and American’s actual payments could differ materially. Rental payments under operating leases for certain aircraft flown under these capacity purchase agreements are reflected in the operating lease commitments in Note 4. (c) Airport Redevelopment Los Angeles International Airport (LAX) In 2018, American executed a lease agreement with Los Angeles World Airports (LAWA), which owns and operates LAX, in connection with a $ 1.6 billion modernization project related to LAX Terminals 4 and 5. Construction started in October 2018 and is expected to be completed in 2028 in a phased approach. Under the lease agreement and subsequent project component approvals, the City of Los Angeles Board of Airport Commissioners has appropriated approximately $ 1.6 billion to purchase completed project assets, representing the maximum allowable reimbursement by LAWA. In September 2024, American executed an agreement to where a substantial majority of the non-proprietary project costs will be funded through the Regional Airports Improvement Corporation (RAIC), a quasigovernmental special purpose entity that acts as a conduit borrower under a syndicated credit facility provided by a group of lenders in the form of a $ 250 million revolving credit facility. Loans made under the credit facility are being repaid with the proceeds from LAWA’s purchase of completed project assets. American guarantees the obligation of the RAIC under the credit facility associated with the Terminals 4 and 5 lease. As of December 31, 2024, American’s outstanding guaranteed obligation under the credit facility for the Terminals 4 and 5 project was $ 250 million. Additionally, American has recovered $ 1.2 billion since project inception through the end of 2024 and expects to receive approximately $ 450 million in additional reimbursements by the end of 2028. As American controls the assets during construction, they are recognized on its consolidated balance sheets within operating property and equipment until the assets are sold and transferred. For the years ended December 31, 2024 and 2023, American has sold and transferred $ 588 million and $ 170 million of non-proprietary improvements, respectively, which are included within proceeds from sale-leaseback transactions and sale of property and equipment on American’s consolidated statements of cash flows. For the years ended December 31, 2024, 2023 and 2022, American had $ 187 million, $ 283 million and $ 241 million, respectively, of non-proprietary improvement costs relating to the LAX modernization project, which are included within other investing activities on American’s consolidated statements of cash flows. (d) Off-Balance Sheet Arrangements Pass-Through Trusts American currently has 292 owned aircraft and 60 owned spare aircraft engines, which in each case were financed with EETCs issued by pass-through trusts. These trusts are off-balance sheet entities, the primary purpose of which is to finance the acquisition of flight equipment or to permit issuance of debt backed by existing flight equipment. In the case of aircraft EETCs, rather than finance each aircraft separately when such aircraft is purchased, delivered or refinanced, these trusts allow American to raise the financing for a number of aircraft at one time and, if applicable, place such funds in escrow pending a future purchase, delivery or refinancing of the relevant aircraft. Similarly, in the case of the spare engine EETCs, the trusts allow American to use its existing pool of spare engines to raise financing under a single facility. The trusts have also been structured to provide for certain credit enhancements, such as liquidity facilities to cover certain interest payments, that reduce the risks to the purchasers of the trust certificates and, as a result, reduce the cost of aircraft financing to American. Each trust covers a set number of aircraft or spare engines scheduled to be delivered, financed or refinanced upon the issuance of the EETC or within a specific period of time thereafter. At the time of each covered aircraft or spare engine financing, the relevant trust used the proceeds from the issuance of the EETC (which may have been available at the time of issuance thereof or held in escrow until financing of the applicable aircraft following its delivery) to purchase equipment notes relating to the financed aircraft or engines. The equipment notes are issued, at American’s election, in connection 160 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. with a mortgage financing of the aircraft or spare engines. The equipment notes are secured by a security interest in the aircraft or engines, as applicable. The pass-through trust certificates are not direct obligations of, nor are they guaranteed by, AAG or American. However, the equipment notes issued to the trusts are direct obligations of American and, in certain instances, have been guaranteed by AAG. As of December 31, 2024, $ 7.3 billion associated with these mortgage financings is reflected as debt in the accompanying consolidated balance sheet. Letters of Credit and Other American provides financial assurance, such as letters of credit and surety bonds, primarily to support projected workers’ compensation obligations and airport commitments. As of December 31, 2024, American had $ 343 million of letters of credit and surety bonds securing various obligations, of which $ 98 million is collateralized with American’s restricted cash. The letters of credit and surety bonds that are subject to expiration will expire on various dates through 2037. (e) Legal Proceedings Government Antitrust Action Related to the Northeast Alliance. On September 21, 2021, the United States Department of Justice, joined by Attorneys General from six states and the District of Columbia, filed an antitrust complaint against American and JetBlue Airways Corporation (JetBlue) in the U.S. District Court for the District of Massachusetts alleging that American and JetBlue violated U.S. antitrust law in connection with the previously disclosed Northeast Alliance arrangement (NEA). 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 substantially completed wind-down activities. Following written submissions by the parties and a hearing on July 26, 2023, the U.S. District Court for the District of Massachusetts entered a Final Judgment and Order Entering Permanent Injunction on July 28, 2023. The parties are complying with the terms of the Final Judgment and Order Entering Permanent Injunction, including by completing wind-down activities related to the NEA. American filed a notice of appeal to the U.S. Court of Appeals for the First Circuit on September 25, 2023. The First Circuit affirmed the District Court’s decision on November 8, 2024. Any petition for writ of certiorari to the U.S. Supreme Court would be due February 27, 2025. Private Party Antitrust Actions Related to the Northeast Alliance. On December 5, 2022 and December 7, 2022, two private party plaintiffs filed putative class action antitrust complaints against American and JetBlue in the U.S. District Court for the Eastern District of New York alleging that American and JetBlue violated U.S. antitrust law in connection with the previously disclosed NEA. These actions were consolidated on January 10, 2023. The private party plaintiffs filed an amended consolidated complaint on February 3, 2023. On February 2, 2023 and February 15, 2023, private party plaintiffs filed two additional putative class action antitrust complaints against American and JetBlue in the U.S. District Court for the District of Massachusetts and the U.S. District Court for the Eastern District of New York, respectively. In March 2023, American filed a motion in the U.S. District Court for the District of Massachusetts case asking to transfer the case to the U.S. District Court for the Eastern District of New York and consolidate it with the cases pending in that venue. The U.S. District Court for the District of Massachusetts granted that motion. The remaining cases were consolidated with the other actions in the Eastern District of New York. In June 2023, the private party plaintiffs filed a second amended consolidated complaint, followed by a third amended complaint filed in August 2023. In September 2023, American, together with JetBlue, filed a motion to dismiss the third amended complaint. In September 2024, the court denied that motion. American believes these lawsuits are without merit and is defending against them vigorously. Securities Litigation. On July 18, 2024, AAG and certain of its current and former officers were named as defendants in a putative class action lawsuit filed in the United States District Court for the Northern District of Texas, captioned Q awasmi v. American Airlines Group Inc., et al . The Qawasmi plaintiff purports to represent investors who acquired AAG securities between January 25, 2024 and May 28, 2024. On August 28, 2024, AAG and certain of its current and former officers were named as defendants in a second putative class action lawsuit filed in the same court, captioned Thornburg v. American Airlines Group Inc., et al . The Thornburg plaintiff purports to represent investors who acquired AAG securities between July 20, 2023 and May 28, 2024. Both the Qawasmi and Thornburg complaints assert violations of Sections 10(b) and 20(a) of the Exchange Act based on allegations that, during the relevant periods, AAG misrepresented and/or omitted material facts related to its financial outlook and certain commercial initiatives. On September 16, 2024, certain purported AAG investors moved for consolidation of the Qawasmi and Thornburg actions as well as appointment as lead plaintiff. On November 22, 2024, the Qawasmi and Thornburg complaints were consolidated into a single action bearing the caption In re American Airlines Group Inc. Securities Litigation. The court also appointed co-lead plaintiffs and lead counsel to represent the putative class in the consolidated action. The parties now anticipate briefing a motion to dismiss the action. 161 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. Additionally, on September 19, 2024, certain of AAG’s current and former directors and officers were named as defendants in a shareholder derivative lawsuit (in which AAG is a nominal defendant) filed in the United States District Court for the Northern District of Texas, captioned Hollin v. Isom, et al. The Hollin complaint asserts violations of Section 10(b) of the Exchange Act, breach of fiduciary duty, and claims for unjust enrichment and corporate waste. On September 26, 2024, a second derivative complaint was filed in the same court, similarly naming certain of AAG’s current and former directors and officers (as well as AAG as a nominal defendant), captioned Leon v. Isom, et al. The Leon complaint asserts violations of Section 14(a) of the Exchange Act, breaches of fiduciary duty, claims of unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and a claim for contribution. The Hollin and Leon complaints generally allege the same purported misconduct as alleged in the securities class actions. On November 25, 2024, the Hollin and Leon complaints were consolidated into a single action bearing the caption In re American Airlines Group Inc. Stockholder Derivative Action. American believes both the securities class actions and shareholder derivative lawsuits are without merit and intends to defend against them vigorously. General. In addition to the specifically identified legal proceedings, American and its subsidiaries are also engaged in other legal proceedings from time to time. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within American’s control. Therefore, although American will vigorously defend itself in each of the actions described above and such other legal proceedings, their ultimate resolution and potential financial and other impacts on American are uncertain but could be material. (f) Guarantees and Indemnifications American is a party to many routine contracts in which it provides general indemnities in the normal course of business to third parties for various risks. American is not able to estimate the potential amount of any liability resulting from the indemnities. These indemnities are discussed in the following paragraphs. In its aircraft financing agreements, American generally indemnifies the financing parties, trustees acting on their behalf and other relevant parties against liabilities (including certain taxes) resulting from the financing, manufacture, design, ownership, operation and maintenance of the aircraft regardless of whether these liabilities (including certain taxes) relate to the negligence of the indemnified parties. American’s loan agreements and certain other financing transactions may obligate American to reimburse the applicable lender for incremental costs due to a change in law that imposes (i) any reserve or special deposit requirement against assets of, deposits with or credit extended by such lender related to the loan, (ii) any tax, duty or other charge with respect to the loan (except standard income tax) or (iii) capital adequacy requirements. In addition, American’s loan agreements and other financing arrangements typically contain a withholding tax provision that requires American to pay additional amounts to the applicable lender or other financing party, generally if withholding taxes are imposed on such lender or other financing party as a result of a change in the applicable tax law. In certain transactions, including certain aircraft financing leases and loans, the lessors, lenders and/or other parties have rights to terminate the transaction based on changes in foreign tax law, illegality or certain other events or circumstances. In such a case, American may be required to make a lump sum payment to terminate the relevant transaction. American has general indemnity clauses in many of its airport and other real estate leases where American as lessee indemnifies the lessor (and related parties) against liabilities related to American’s use of the leased property. Generally, these indemnifications cover liabilities resulting from the negligence of the indemnified parties, but not liabilities resulting from the gross negligence or willful misconduct of the indemnified parties. In addition, American provides environmental indemnities in many of these leases for contamination related to American’s use of the leased property. Under certain contracts with third parties, American indemnifies the third-party against legal liability arising out of an action by the third-party, or certain other parties. The terms of these contracts vary and the potential exposure under these indemnities cannot be determined. American has liability insurance protecting American from some of the obligations it has undertaken under these indemnities. 162 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. American is required to make principal and interest payments for certain special facility revenue bonds issued by municipalities primarily to build or improve airport facilities and purchase equipment, which are leased to American. The payment of principal and interest of certain special facility revenue bonds is guaranteed by American. As of December 31, 2024, the remaining lease payments through 2035 guaranteeing the principal and interest on these bonds are $ 503 million and the current carrying amount of the associated operating lease liability in the accompanying consolidated balance sheet is $ 321 million. As of December 31, 2024, American had issued guarantees covering AAG’s $ 1.8 billion aggregate principal amount of the PSP1 Promissory Note due April 2030, $ 1.0 billion aggregate principal amount of the PSP2 Promissory Note due January 2031, $ 959 million aggregate principal amount of the PSP3 Promissory Note due April 2031 and $ 1.0 billion aggregate principal amount of 6.50 % convertible senior notes due July 2025. (g) Credit Card Processing Agreements American has agreements with companies that process customer credit card transactions for the sale of air travel and other services. American’s agreements allow these credit card processing companies, under certain conditions, to hold an amount of its cash (referred to as a holdback) equal to all or a portion of advance ticket sales that have been processed by that company, but for which American has not yet provided the air transportation. These holdback requirements can be implemented at the discretion of the credit card processing companies upon the occurrence of specific events, including material adverse changes in American’s financial condition or the triggering of a liquidity covenant. The imposition of holdback requirements would reduce American’s liquidity. (h) Labor Contracts In September 2024, American and the Association of Professional Flight Attendants, the union representing American’s mainline flight attendants, ratified a new CBA. This five-year agreement provides wage rate increases, quality-of-life benefits and other benefit-related items. The ratified agreement also included a provision for a one-time payment. In 2024, one-time charges resulting from the ratification of this new agreement were recorded as mainline operating special items, net in the condensed consolidated statement of operations, including the one-time payment of $ 514 million which was paid in November 2024. As of December 31, 2024, American employed approximately 102,700 active full-time equivalent (FTE) employees. Of the total active FTE employees, 87 % are covered by CBAs with various labor unions and 1 % are covered by CBAs that are currently amendable or that will become amendable within one year. 11. Supplemental Cash Flow Information Supplemental disclosure of cash flow information and non-cash investing and financing activities are as follows (in millions): Year Ended December 31, 2024 2023 2022 Non-cash investing and financing activities: ROU assets acquired through operating leases $ 614 $ 1,172 $ 1,448 Property and equipment acquired through debt, finance leases and other 151 317 46 Operating leases converted to finance leases 293 5 107 Finance leases converted to operating leases 50 42 3 Supplemental information: Interest paid, net 1,806 2,058 1,716 Income taxes paid 8 6 2 163 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. 12. Segment Disclosures Operating segments are defined as components of an enterprise for which separate financial information is available and regularly reviewed by the chief operating decision maker (CODM) in deciding how to allocate resources and in assessing performance. American’s Chief Executive Officer is considered to be its CODM. American is managed as a single operating segment that provides scheduled air transportation for passengers and cargo, and includes American’s loyalty program. Along with its extensive domestic network, American provides international service to Canada, Mexico, the Caribbean, Central and South America, Europe, Qatar, China, Japan, Korea, India, Australia and New Zealand. See Note 1(m) for American’s passenger revenue by geographic region. Managing the business activities on a consolidated basis allows American to benefit from an integrated revenue pricing and route network that includes American and AAG’s wholly-owned and third-party regional carriers that fly under capacity purchase agreements operating as American Eagle. The flight equipment of all these carriers is combined to form one fleet that is deployed through a single route scheduling system. American’s tangible assets consist primarily of flight equipment, which are mobile across geographic markets and, therefore, have not been allocated by geographic region. The measure of segment assets is reported on the balance sheet as total consolidated assets. Financial information and operational plans and forecasts are provided to and reviewed by American’s CODM at the consolidated level and are used to monitor forecast and budget versus actual results. American’s CODM assesses performance and decides how to allocate resources based on net income which is reported on the statement of operations as consolidated net income. When making operational and resource allocation decisions, American’s CODM is indifferent to the results on a geographic region or on a mainline and regional carrier basis. The objective in making resource allocation decisions is to maximize consolidated financial results. 13. Share-based Compensation In May 2023, the stockholders of AAG approved the 2023 Incentive Award Plan (the 2023 Plan). The 2023 Plan replaces and supersedes AAG’s 2013 Incentive Award Plan (the 2013 Plan). No further awards will be granted under the 2013 Plan; however, the terms and conditions of the 2013 Plan will continue to govern any outstanding awards granted thereunder. The 2023 Plan provides that an award may be in the form of a stock option, including an incentive stock option and nonqualified stock option, stock appreciation right, restricted stock, restricted stock unit, performance bonus award, performance stock unit, other stock or cash-based award and dividend equivalent to eligible individuals. The 2023 Plan authorizes the grant of awards for the issuance of 17.2 million shares less any shares granted under the 2013 Plan after March 22, 2023, the date the Board of Directors of AAG approved the 2023 Plan. Any shares underlying awards granted under the 2023 Plan or 2013 Plan that are forfeited, terminate or are settled in cash (in whole or in part) without the delivery of shares will again be available for grant under the 2023 Plan. Share-based compensation expense for American’s equity awards, including awards settled in AAG common stock or cash, was $ 124 million, $ 97 million and $ 75 million for the years ended December 31, 2024, 2023 and 2022, respectively, and is included in salaries, wages and benefits on its consolidated statements of operations. During 2024, 2023 and 2022, AAG withheld approximately 1.6 million, 1.5 million and 1.2 million shares of AAG common stock, respectively, and paid approximately $ 27 million, $ 23 million and $ 21 million, respectively, in satisfaction of certain tax withholding obligations associated with employee equity awards. Restricted Stock Unit Awards (RSUs) AAG has granted RSUs with service conditions (time vested primarily over three years ) and performance conditions. The grant-date fair value of these RSUs is equal to the market price of the underlying shares of AAG common stock on the date of grant. For time vested awards, the expense is recognized on a straight-line basis over the vesting period for the entire award. For awards with performance conditions, the expense is recognized based on the expected achievement at each reporting period. Stock-settled RSUs are equity-classified as the vesting results in the issuance of shares of AAG common stock. Cash-settled restricted stock unit awards (CRSUs) are liability-classified as the vesting results in payment of cash by AAG. 164 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. Stock-settled RSU award activity for all plans for the years ended December 31, 2024, 2023 and 2022 is as follows: Number of Shares Weighted Average Grant Date Fair Value (In thousands) Outstanding at December 31, 2021 9,401 $ 20.17 Granted 5,882 15.93 Vested and released ( 4,131 ) 21.04 Forfeited ( 889 ) 18.04 Outstanding at December 31, 2022 10,263 $ 17.51 Granted 9,834 14.54 Vested and released ( 5,161 ) 17.81 Forfeited ( 701 ) 20.49 Outstanding at December 31, 2023 14,235 $ 15.18 Granted 2,580 15.76 Modified (1) ( 2,809 ) 16.18 Vested and released ( 4,833 ) 15.91 Forfeited ( 827 ) 15.83 Outstanding at December 31, 2024 8,346 $ 15.59 (1) The settlement terms of 2.8 million stock-settled RSUs were modified from settlement in AAG common stock to settlement in cash. This change in award settlement method was the only modification to these awards, and the vesting, forfeiture and all other terms and conditions were unchanged. The modification resulted in a $ 20 million reclassification from additional paid-in capital to accrued salaries and wages on American’s consolidated balance sheet. As of December 31, 2024, there was $ 44 million of unrecognized compensation cost related to stock-settled RSUs. These costs are expected to be recognized over a weighted average period of one year . The total fair value of stock-settled RSUs vested during the years ended December 31, 2024, 2023 and 2022 was $ 69 million, $ 78 million and $ 70 million, respectively. CRSU award activity for all plans for the year ended December 31, 2024 is as follows: Number of Shares Weighted Average Fair Value (In thousands) Outstanding at December 31, 2023 37 $ 13.74 Granted 5,634 17.43 Modified (1) 2,809 16.18 Vested and released ( 1,337 ) 14.75 Forfeited ( 136 ) 17.42 Outstanding at December 31, 2024 7,007 $ 17.43 (1) The settlement terms of 2.8 million stock-settled RSUs were modified from settlement in AAG common stock to settlement in cash. See table above for further discussion. As of December 31, 2024, the liability related to CRSUs was $ 39 million, which will continue to be remeasured at fair value at each reporting date until all awards are vested. As of December 31, 2024, there was $ 77 million of unrecognized compensation cost related to CRSUs. These costs are expected to be recognized over a weighted average period of one year . The total cash paid for CRSUs vested during the year ended December 31, 2024 was $ 18 million. For the years ended December 31, 2023 and 2022, CRSU award activity was nominal. 165 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC. 14. Valuation and Qualifying Accounts (in millions) Balance at Beginning of Year Additions Charged to Statement of Operations Accounts Deductions and Other Balance at End of Year Allowance for obsolescence of spare parts Year ended December 31, 2024 $ 675 $ 94 $ ( 24 ) $ 745 Year ended December 31, 2023 566 83 26 675 Year ended December 31, 2022 588 82 ( 104 ) 566 15. Transactions with Related Parties The following represents the net receivables (payables) from or to related parties (in millions): December 31, 2024 2023 AAG (1) $ 10,258 $ 9,144 AAG’s wholly-owned subsidiaries (2) ( 2,071 ) ( 2,074 ) Total $ 8,187 $ 7,070 (1) The increase in American’s net related party receivable from AAG is due in part to American providing the cash funding for AAG’s financing transactions. (2) The net payable to AAG’s wholly-owned subsidiaries consists primarily of amounts due under regional capacity purchase agreements with AAG’s wholly-owned regional airlines operating under the brand name of American Eagle. Pursuant to a capacity purchase agreement between American and AAG’s wholly-owned regional airlines operating as American Eagle, American purchases all of the capacity from these carriers and recognizes passenger revenue from flights operated by American Eagle. In 2024, 2023 and 2022, American recognized expense of approximately $ 2.9 billion, $ 2.7 billion and $ 2.5 billion, respectively, related to wholly-owned regional airline capacity purchase agreements. 16. Subsequent Event On January 29, 2025, American Eagle flight 5342 was involved in a fatal accident in Washington, D.C. The Bombardier CRJ 700 aircraft operated by PSA was en route to Washington, D.C. from Wichita, Kansas when it was involved in a midair collision near Ronald Reagan Washington National Airport. American has industry standard insurance coverage for this incident, and is continuing its assessment of the impact on its business resulting from the accident. 166 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.