What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2026-02-18 compared with 2025-02-19 · 396 added, 430 removed, 409 unchanged (67% of the section changed)

8 unchanged sentences

Unfavorable conditions in these broader economies have resulted, and may result in the future, in decreased passenger demand for air travel, changes in booking practices and related reactions by our competitors, all of which in turn have had, and may have in the future, a strong negative effect on our business.

For example, the COVID-19 pandemic and associated decline in economic activity and increase in unemployment levels had a severe and prolonged effect on the global economy generally and, in turn, resulted in a prolonged period of depressed demand for air travel.

In addition, a rapid economic expansion following the height of the COVID-19 pandemic resulted in significant inflationary pressures and volatility in certain currencies, which have increased our costs for aircraft fuel, wages and benefits and other goods and services we require to operate our business, as well as increasing the interest expense on our variable-rate indebtedness.

Furthermore, our efforts to regain travel revenue share, including corporate and travel agency revenue share, may not succeed and competitive pressures and shifts in corporate travel preferences could impede our ability to recapture this revenue, negatively affecting our business strategy and financial results.

Furthermore, our efforts to increase travel revenue share, including corporate and travel agency revenue share, may not succeed and competitive pressures and shifts in corporate travel preferences could impede our ability to grow this revenue, negatively affecting our business strategy and financial results.

We will need to obtain sufficient financing or other capital to operate successfully.

Our business plan contemplates continued significant investments related to our fleet, improving the experience of our customers and updating our facilities.

Our business plan contemplates continued significant investments related to our fleet, improving the experience of our customers, updating our facilities and deploying technology.

Significant capital resources will be required to execute this plan.

3 unchanged sentences

It may be difficult for us to raise additional capital on acceptable terms, or at all, due to, among other factors:

our substantial level of existing indebtedness, particularly following transactions we completed in response to the impact of the COVID-19 pandemic;

our non-investment grade credit rating;

our substantial level of existing indebtedness;

our non-investment grade corporate credit rating;

volatile or otherwise unfavorable market conditions;

and the availability of assets to use as collateral for loans or other indebtedness.

and the availability of corporate assets to use as collateral for loans or other indebtedness.

If we are unable to arrange any such required financing at customary advance rates and on terms and conditions acceptable to us, we may need to use cash from operations or cash on hand to purchase aircraft and engines or fund our other corporate requirements, or may seek to negotiate deferrals for such aircraft and engines with the applicable manufacturers or otherwise defer corporate obligations.

Depending on numerous factors applicable at the time we seek capital, many of which are out of our control, such as the state of the domestic and global economies, the capital and credit markets’ view of our prospects and the airline industry in general, and the general availability of debt and equity capital, the financing or other capital resources that we will need may not be available to us, or may be available only on onerous terms and conditions.

Furthermore, we hold significant balances of cash and short-term investments, including as necessary to conduct our day-to-day operations, some of which are held in deposit accounts at commercial banks in excess of the government-provided deposit insurance.

Depending on numerous factors applicable at the time we seek capital, many of which are out of our control, such as the state of the domestic and global economies, the capital and credit markets’ view of our prospects and the airline industry in general, prevailing interest rates, and the general availability of debt and equity capital, the financing or other capital resources that we will need may not be available to us, or may be available only on onerous terms and conditions.

There can be no assurance that we will be successful in obtaining financing or other needed sources of capital to operate successfully or to fund our committed expenditures.

1 unchanged sentence

Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional financing, may limit our flexibility in responding to competitive developments and may cause our business to be vulnerable to adverse economic and industry conditions.

We have significant amounts of indebtedness and other financial obligations, including pension obligations, obligations to make future payments on flight equipment and property leases related to airport and other facilities, and substantial non-cancelable obligations under aircraft and related spare engine purchase agreements.

We have significant amounts of indebtedness and other financial obligations, including obligations to make future payments on flight equipment and property leases related to airport and other facilities, and substantial non-cancelable obligations under aircraft and related spare engine purchase agreements.

Moreover, currently a very significant portion of our assets are pledged to secure our indebtedness.

Our substantial indebtedness and other

obligations, which are generally greater than the indebtedness and other obligations of our competitors, could have important consequences.

Our substantial indebtedness and other obligations, which are generally greater than the indebtedness and other obligations of our competitors, could have important consequences.

For example, they may:

1 unchanged sentence

• limit our ability to obtain additional funding for working capital, capital expenditures, acquisitions, investments and general corporate purposes, and adversely affect the terms on which such funding can be obtained;

• require us to dedicate a substantial portion of our liquidity or cash flow from operations to payments on our indebtedness and other obligations, thereby reducing the funds available for other purposes;

• make us more vulnerable to economic downturns, industry conditions and catastrophic external events, particularly relative to competitors with lower relative levels of financial leverage;

8 unchanged sentences

◦ if breached, result in an event of default under our other indebtedness.

In addition, during the COVID-19 pandemic we were required to obtain a significant amount of additional financing from a variety of sources and we cannot guarantee that we will not need to obtain additional financing in the future.

Such financing may include the issuance of additional unsecured or secured debt securities, equity securities and equity-linked securities as well as additional bilateral and syndicated secured and/or unsecured credit facilities, among other items.

Any additional future financing may include the issuance of additional unsecured or secured debt securities, equity securities and equity-linked securities as well as additional bilateral and syndicated secured and/or unsecured credit facilities, among other items.

There can be no assurance as to the timing of any such financing transactions, which may be in the near term, or that we will be able to obtain such additional financing on favorable terms, or at all.

Any such actions may be material in nature, could result in the incurrence and issuance of significant additional indebtedness or equity and could impose significant covenants and restrictions to which we are not currently subject.

Moreover, as a result of the financing activities we undertook in response to the COVID-19 pandemic, the number of financings with respect to which such covenants and provisions apply has increased, thereby subjecting us to more substantial risk of cross-default and cross-acceleration in the event of breach, and additional covenants and provisions could become binding on us should we seek additional liquidity in the future.

The significant number of financings with respect to which such restrictive covenants and provisions apply subjects us to substantial risk of cross-default and cross-acceleration in the event of breach, and additional covenants and provisions could become binding on us should we seek additional liquidity in the future.

The obligations discussed above, including those imposed as a result of any additional financings we may undertake, could also impact our ability to obtain additional financing, if needed, and our flexibility in the conduct of our business, and could materially adversely affect our liquidity, results of operations and financial condition.

Further, a substantial amount of our long-term indebtedness bears interest at floating interest rates, which tend to fluctuate based on general short-term interest rates, rates set by the U.S.

Federal Reserve and other central banks, the supply of and demand for credit in treasury repurchase or other markets and general economic conditions.

We have not hedged our interest rate exposure with respect to our floating rate debt.

Further, a substantial amount of our long-term indebtedness bears interest at floating interest rates, which tend to fluctuate based on general short-term interest rates, rates set by central banks, the supply of and demand for credit in treasury markets and general economic conditions.

We have not entered into any derivative transactions to hedge our interest rate exposure.

Accordingly, our interest expense for any particular period will fluctuate based on the relevant benchmark rate and other variable interest rates.

In response to rising inflation which coincided with a rapid rebound of economic activity as governments lifted restrictions and economies reopened following the COVID-19 pandemic, central banks around the world—including the U.S.

Federal Reserve, the European Central Bank and the Bank of England—undertook a cycle of raising interest rates, which has consequently

increased the interest we pay on our floating-rate indebtedness.

To the extent the interest rates applicable to our floating rate debt remain elevated or increase, our interest expense will increase, in which event we may have difficulties making interest payments and funding our other fixed costs, and our available cash flow for general corporate requirements may be adversely affected.

We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, results of operations and financial condition.

Our pension funding obligations are significant.

The amount of our pension funding obligations will depend on the performance of investments held in trust by the pension plans, interest rates for determining liabilities and actuarial experience.

We also have significant obligations for retiree medical and other postretirement benefits.

Additionally, we participate in the IAM National Pension Fund (the IAM Pension Fund).

The funding status of the IAM Pension Fund is subject to the risk that other employers may not meet their obligations, which under certain circumstances could cause our obligations to increase.

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 on 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.

Furthermore, if we were to withdraw from the IAM Pension Fund, if the IAM Pension Fund were to terminate, or if the IAM Pension Fund were to undergo a mass withdrawal, we could be subject to liability as imposed by law.

If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely affect our liquidity.

To the extent the interest rates applicable to our floating rate debt increase, our interest expense will increase, in which event we may have difficulties making interest payments and funding our other fixed costs, and our available cash flow for general corporate requirements may be adversely affected.

I f our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely affect our liquidity.

We have agreements with companies that process customer credit card transactions for the sale of air travel and other services.

These agreements allow these credit card processing companies, under certain conditions (including, with respect to certain agreements, our failure to maintain certain levels of liquidity), to hold an amount of our cash (referred to as a holdback) equal to some or all of the advance ticket sales that have been processed by that credit card processor, but for which we have not yet provided the air transportation.

Additionally, such credit card processing companies may require cash or other collateral reserves to be established.

These agreements allow these credit card processing companies, under certain conditions (including, for certain agreements, our failure to maintain certain levels of liquidity), to hold an amount of our cash (referred to as a holdback) equal to some or all of the advance ticket sales that have been processed by that credit card processor, but for which we

have not yet provided the air transportation.

Additionally, those credit card processing companies may require cash or other collateral reserves to be established.

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, up to and including 100% of relevant advanced ticket sales, would materially reduce our liquidity.

Likewise, other of our commercial agreements contain provisions that allow counterparties to impose less-favorable terms, including the acceleration of amounts due, in the event of material adverse changes in our financial condition.

Likewise, some of our other commercial agreements contain provisions that allow counterparties to impose less-favorable terms, including the acceleration of amounts due, in the event of material adverse changes in our financial condition.

For example, we maintain certain letters of credit as well as insurance- and surety-related agreements under which counterparties may require collateral, including cash collateral.

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

The loss of key personnel whom we depend on to operate our business, or the inability to attract, develop and retain additional qualified personnel could adversely affect our business.

We believe that our future success will depend in large part on our ability to attract, develop and retain highly qualified management, technical and other personnel.

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

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

Any inability to attract, develop and retain significant numbers of qualified management and other personnel would have a material adverse effect on our business, results of operations and financial condition.

2 unchanged sentences

• actual or potential changes in international, national, regional and local economic, business and financial conditions, including recession, inflation and elevated interest rates;

• the occurrence of wars or other conflicts and escalations thereof, terrorist attacks and geopolitical instability;

• changes in consumer disposable income, preferences, perceptions, spending patterns and demographic trends;

• changes in the competitive environment due to industry consolidation, changes in airline alliance affiliations, changes in our commercial strategy or that of our competitors and other factors;

• delays in scheduled aircraft deliveries, unexpected grounding of aircraft or aircraft engines whether by regulators or by us, or other loss of anticipated fleet capacity, and failure of new aircraft or aircraft-related equipment to receive regulatory approval, be produced or otherwise perform as and when expected;

• wars or other conflicts and escalations thereof, terrorist attacks and geopolitical instability;

• changes in consumer disposable income, preferences, perceptions, spending patterns and demographics;

• changes in the competitive environment due to industry consolidation, changes in airline alliance affiliations and changes in our or our competitors’ commercial strategies;

• delays in scheduled aircraft deliveries, unexpected grounding of aircraft or aircraft engines by us or by regulators, or other loss of anticipated fleet capacity, and failure of new aircraft or aircraft-related equipment to receive regulatory approval, be produced or perform as and when expected;

• actual or potential disruptions to the U.S.

National Airspace System (the ATC system);

National Airspace System (the ATC system), including due to a government shutdown;

• increases in costs of safety, security and environmental measures or costs of complying with new or more onerous consumer protection laws or regulations;

• increases in costs related to meeting our climate goals or obligations, including in respect of the costs to be incurred to migrate to increased use of SAF in lieu of conventional aviation fuel;

• increases in costs related to meeting our stated climate goals or obligations, including costs incurred to migrate to increase use of SAF in lieu of conventional aviation fuel;

• disruptions in global trade relations, such as increased tariffs or other trade barriers, that could create additional costs, new supply chain risks or a decrease in the demand for international air travel;

• increases in compliance burdens and costs associated with new and emerging national security regulations, including regulations related to access to certain categories of personal information;

• outbreaks of diseases or other public health or safety concerns that affect travel behavior, such as occurred during the COVID-19 pandemic;

• adverse weather and natural disasters, including increases in frequency, severity or duration of such disasters, and related costs caused by more severe weather due to climate change.

A potential resurgence of COVID-19, or an outbreak of another contagious disease, such as has occurred in the past with the Ebola virus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, avian flu, Zika virus or any other similar illness, if it were to become associated with air travel or persist for an extended period, could materially affect the airline industry and us by reducing revenues and adversely impacting our operations and passengers’ travel behavior.

Governments could implement travel restrictions, including testing regimes, “stay at home” and quarantine orders, limitations on public gatherings, cancellation of public events or take or mandate other actions which could result in significant declines in demand for both domestic and international business and leisure travel.

An outbreak of any contagious disease, such as has occurred in the past with COVID-19, the Ebola virus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, avian flu, Zika virus or any other similar illness, if it becomes associated with air travel or persists for an extended period, could materially affect the airline industry and us by reducing revenues and adversely impacting our operations and passengers’ travel behavior.

Governments could implement travel restrictions, including testing regimes, “stay at home” and quarantine orders, limitations on public gatherings, or cancellation of public events or take or mandate other actions that could significantly decrease demand for both domestic and international business and leisure travel.

There can be no assurance that any mitigating actions we take in response will be sufficient to avert a deterioration in our business, financial condition and results of operations.

As a result of these or other conditions beyond our control, our results of operations could be volatile and subject to rapid and unexpected change.

Additionally, the COVID-19 pandemic necessitated changes in business practices which may persist.

For example, businesses and other travelers may continue to forego air travel in favor of remote or flexible working policies and communication alternatives such as videoconferencing.

In addition, businesses may seek to reduce travel costs by requiring the purchase of less expensive tickets, thereby potentially impacting our average revenue per available seat mile.

In addition, due to generally weaker demand for air travel during the winter, our revenues in the first and fourth quarters of the year could be weaker than revenues in the second and third quarters of the year.

As a result of these or other conditions beyond our control, our results of operations could be volatile and subject to rapid and unexpected changes.

The airline industry is intensely competitive and dynamic.

Our competitors include other major domestic airlines and foreign, regional and new entrant airlines, as well as joint ventures formed by some of these airlines, many of which have greater financial or other resources and/or lower cost structures than ours, as well as other forms of transportation, such as rail and private automobiles or alternatives to

commuting or business travel including remote or flexible working policies and communication alternatives such as videoconferencing.

In many of our markets, we compete with at least one low-cost carrier (including so-called ultra-low-cost carriers).

Our revenues are sensitive to the actions of other carriers in many areas, including pricing, scheduling, capacity, fees (including cancellation, change and baggage fees), amenities, loyalty benefits and promotions, which can have a substantial adverse impact not only on our revenues, but on overall industry revenues.

These factors may become even more significant in periods when the industry experiences large losses (such as occurred during the COVID-19 pandemic), as airlines under financial stress, or in bankruptcy, may institute pricing or fee structures intended to attract more customers to achieve near-term survival at the expense of long-term viability.

These factors may become even more significant when the industry experiences large losses, as airlines under financial stress, or in bankruptcy, may institute pricing or fee structures intended to attract more customers to achieve near-term survival at the expense of long-term viability.

Low-cost carriers (including so-called ultra-low-cost carriers) have a profound impact on industry revenues.

Using the advantage of low unit costs, these carriers offer lower fares in order to shift demand from larger, more established airlines, and represent significant competitors, particularly for customers who fly infrequently or are price sensitive and therefore tend not to be loyal to any one particular carrier.

Many of these carriers, including several that have recently commenced operations, have announced growth strategies including commitments to acquire significant numbers of new aircraft for delivery in the next few years.

These low-cost carriers are attempting to continue to increase their market share through growth and consolidation, and are expected to continue to have an impact on our revenues and overall performance.

These low-cost carriers are attempting to continue to increase their market share through growth and consolidation and are expected to continue to affect our revenues and overall performance.

We and several other large network carriers have implemented “Basic Economy” fares designed to more effectively compete against low-cost carriers, but we cannot predict whether these initiatives will be successful.

Low-cost carriers may also implement, and in some cases have implemented, changes to their strategies or business models that could, and in some cases have, put them in more direct competition with network carriers.

While historically these carriers have provided competition in domestic markets, we have recently experienced new competition from low-cost carriers on international routes, including low-cost airlines executing international long-haul expansion strategies, a trend likely to continue, in particular with the planned introduction of long-range narrowbody aircraft in coming years.

Moreover, we may have to compete with other carriers emerging from bankruptcy with lower cost structures.

While historically these carriers have provided competition in domestic markets, we have recently experienced new competition from low-cost carriers on international routes, including low-cost airlines executing international long-haul expansion strategies, a trend likely to continue with the introduction of long-range narrowbody aircraft.

Additionally, other carriers focused on premium passenger travel are attempting to implement growth strategies.

The actions of existing or future carriers, including those described above, could have a material adverse effect on our operations and financial performance.

In certain instances, other air carriers are operating scheduled service with a business model that relies on the FAA Part 135, a regulatory environment that is generally less stringent than the rules applicable to our airline and similar airlines that operate under FAA Part 121 and which provides those airlines certain competitive advantages that Part 121 airlines cannot replicate.

In certain instances, other air carriers operate scheduled service with a business model that relies on FAA Part 135, a regulatory environment that is generally less stringent than the rules applicable to our airline and similar airlines that operate under FAA Part 121, and which provides those airlines certain competitive advantages that Part 121 airlines cannot replicate.

We have objected to the DOT and the TSA that the less stringent Part 135 rules were never intended as a basis for scheduled passenger service and that business model should not be permissible, and the agencies’ review is ongoing.

While both the DOT and TSA are actively reviewing these operations, if they ultimately allow scheduled passenger service in any form under Part 135 and the actions of existing or future carriers using that business model, including those described above, it could adversely impact our business, financial condition and results of operations.

While both the DOT and the TSA are actively reviewing these operations, if they ultimately allow scheduled passenger service in any form under Part 135 and the actions of existing or future carriers using that business model, including those described above, it could adversely impact our business, financial condition and results of operations.

We provide air travel internationally directly as well as through joint businesses, strategic alliances, codeshare and similar arrangements to which we are a party.

While our network is comprehensive, compared to some of our key global competitors, we generally have somewhat greater relative exposure to certain regions (for example, Latin America) and somewhat lower relative exposure to others (for example, Asia).

Our financial performance relative to our key competitors will therefore be influenced significantly by macro-economic conditions in particular regions around the world and the relative exposure of our network to the markets in those regions, including the duration of any declines in demand for travel to specific regions as a result of health emergencies (such as during the COVID-19 pandemic), geopolitical instability or other factors, and the speed with which demand for travel to these regions returns.

Our international service exposes us to foreign economies and the potential for reduced demand when any foreign country we serve suffers adverse local economic conditions or if governments restrict commercial air service to or from any of these markets.

For example, the COVID-19 pandemic resulted in a precipitous and prolonged decline in demand for air travel, in particular international travel, in part as a result of the imposition by the U.S.

and foreign governments of restrictions on travel from certain regions.

travel to specific regions as a result of health emergencies, geopolitical instability or other factors, and the speed with which demand for travel to these regions returns.

In addition, “open skies” agreements, which are now in place with a substantial number of countries around the world, provide international airlines with open access to U.S.

markets, potentially subjecting us to increased competition on our international routes.

See also “ Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages.”

To the extent alliances formed by our competitors can undertake activities that are not available to us, including as to regulatory approvals, access slots, gates and routes and other matters, our ability to effectively compete may be hindered.

Our ability to attract and retain customers is dependent upon, among other things, our ability to offer our customers

convenient access to desired markets.

See also “ Our business is subject to extensive government regulation, which may increase our costs, disrupt our operations, limit our operating flexibility, reduce the demand for air travel, and create competitive disadvantages.”

To the extent alliances formed by our competitors can undertake activities not available to us, including regulatory approvals, access slots, gates and routes and other matters, our ability to effectively compete may be hindered.

Our ability to attract and retain customers is dependent upon, among other things, our ability to offer our customers convenient access to desired markets.

Our business could be adversely affected if we are unable to maintain or obtain alliance and marketing relationships with other air carriers in desired markets.

American has established a transatlantic joint business with British Airways, Aer Lingus, Iberia and Finnair, a transpacific joint business with Japan Airlines and a joint business relating to Australia and New Zealand with Qantas.

We have also established a strategic alliance with Alaska Airlines relating to certain routes on the West Coast of the United States and a strategic alliance relating to the Middle East with Qatar Airways.

We have also established a strategic alliance with Alaska Airlines relating to certain routes and a strategic alliance relating to the Middle East with Qatar Airways.

Legal challenges to our joint businesses and strategic alliances could negatively impact our operations and equity value, disrupt our strategic plans and affect our ability to offer competitive services in key markets.

In July 2010, in connection with a regulatory review related to our transatlantic joint business, we provided certain commitments to the EC regarding, among other things, the availability of take-off and landing slots at LHR or LGW airports.

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

In anticipation of both the exit of the UK from the EU, commonly referred to as Brexit, and the expiry of the EC commitments in July 2020, the CMA, in October 2018, opened an investigation into the transatlantic joint business.

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

The CMA restarted its investigation in September 2023 after a pause related to the COVID-19 pandemic and plans to complete the investigation before the scheduled expiration of the interim measures in March 2026.

We continue to cooperate fully with the CMA.

The foregoing arrangements are important aspects of our international network and we are dependent on the performance and continued cooperation of the other airlines party to those arrangements.

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 Northeast Alliance arrangement (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.

American appealed the District Court’s decision to the U.S.

Court of Appeals for the First Circuit;

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.

Separately, in December 2022, two putative class action lawsuits were filed in the U.S.

In anticipation of both the exit of the UK from the EU, commonly referred to as Brexit, and the expiration of the EC commitments in July 2020, the CMA, in October 2018, opened an investigation into the transatlantic joint business.

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

In August 2025, the CMA accepted binding commitments and closed the case.

The commitments will replace the prior interim measures.

These arrangements are important aspects of our international network, and we are dependent on the performance and continued cooperation of the other airlines party to those arrangements.

In December 2022, two putative class action lawsuits were filed 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.

antitrust law in connection with the previously disclosed Northeast Alliance arrangement.

In February 2023, private party plaintiffs filed two additional putative class action antitrust complaints against American and JetBlue in the U.S.

5 unchanged sentences

No assurances can be given as to any benefits that we may derive from any of the foregoing arrangements or any other arrangements that may ultimately be implemented, or whether regulators will, or if granted continue to, approve or impose material conditions on our business activities.

Other mergers and other forms of airline partnerships, including regulatory approvals such as antitrust immunity grants, may take place and may not involve us as a participant, or could result in unforeseen impacts on the industry generally and our company in particular.

Other mergers and other forms of airline partnerships, including regulatory approvals such as antitrust immunity grants, may take place and may not involve us, or could result in unforeseen impacts on the industry generally and our company in particular.

Depending on which carriers combine or integrate and which assets, if any, are sold or otherwise transferred to other carriers in connection with any such transactions, our competitive position relative to the post-transaction carriers or other carriers that acquire such assets could be harmed.

In addition, as carriers combine through traditional mergers or integrate their operations through other arrangements, their route networks will grow, and that growth will result in greater overlap with our network, which in turn could decrease our overall market share and revenues.

Such combination or collaboration is not limited to the U.S., but could include further transactions among international carriers in Europe and elsewhere that result in broader networks offered by rival airlines.

Such combination or collaboration is not limited to the U.S.

but could include transactions among international carriers in Europe and elsewhere that result in broader networks offered by rival airlines.

Additionally, our AAdvantage program, which is an important element of our business, faces significant and increasing competition from the loyalty programs offered by other travel companies, as well as from similar loyalty benefits offered by banks and other financial services companies.

Competition among loyalty programs is intense regarding the rewards, fees, required usage, and other terms and conditions of these programs.

In addition, we have used certain assets from our AAdvantage program as collateral for the AAdvantage Financing (defined in the accompanying notes to the consolidated financial statements to this Annual Report on Form 10-K), which contains covenants that impose restrictions on certain amendments or changes to certain of our AAdvantage program agreements provided as collateral under the AAdvantage Financing and other aspects of the AAdvantage program.

In addition, we have used certain assets from

our AAdvantage program as collateral for the AAdvantage Financing (defined in the accompanying notes to the consolidated financial statements to this Annual Report on Form 10-K), which contains covenants that impose restrictions on certain amendments or changes to certain of our AAdvantage program agreements provided as collateral under the AAdvantage Financing and other aspects of the AAdvantage program.

These competitive factors and covenants (to the extent applicable) may affect our ability to attract and retain customers, increase usage of our loyalty program and maximize the revenue generated by our loyalty program.

Further, we rely on partners to provide available space for mileage credit redemptions on their aircraft.

Should partners not make available enough inventory within their cabins for

our members, the attractiveness of our program may be decreased, potentially impacting customer loyalty and program revenue.

We may also be impacted by regulations affecting certain of our major commercial partners, including our co-branded credit card partners or our loyalty program.

For example, there has been bipartisan legislation proposed in Congress called the Credit Card Competition Act designed to increase credit card transaction routing options for merchants which, if enacted, could result in a reduction of the fees levied on credit card transactions.

If this legislation or any similar legislation or regulation were enacted, it could fundamentally alter the profitability of our agreements with co-branded credit card partners and the benefits we provide to our consumers through the co-branded credit cards issued by these partners.

Additionally, the DOT recently launched an inquiry into certain airline loyalty programs, including AAdvantage, to investigate potential competition or consumer protection issues in airlines’ administration of these programs, and draft legislation introduced in Congress called the Protect Your Points Act similarly aims to regulate the management of these programs.

The Consumer Financial Protection Bureau has recently cautioned companies against what it views as illegal or unlawful credit card practices, including purported devaluation of earned points, hidden conditions and failure to deliver on promised benefits.

Should partners not make available enough inventory within their cabins for our members, the attractiveness of our program may be decreased, potentially impacting customer loyalty and program revenue.

We may also be impacted by regulations affecting certain of our major commercial partners, including our co-branded credit card partner, or our loyalty program.

For example, there has been bipartisan legislation proposed in Congress called the Credit Card Competition Act designed to increase credit card transaction routing options for merchants which, if enacted, could result in a material reduction of the fees levied on credit card transactions.

Additionally, the executive branch recently proposed a temporary 10% cap on credit card interest rates and called on Congress to pass legislation establishing a cap.

If either of these proposals were enacted through legislation or regulation, they could fundamentally alter the profitability of our agreement with our co-branded credit card partner and the benefits we provide to our consumers through the co-branded credit cards issued by our partner.

The Consumer Financial Protection Bureau cautioned companies in December 2024 against what it views as illegal or unlawful credit card practices, including purported devaluation of earned points, hidden conditions and failure to deliver promised benefits.

If regulatory or legislative efforts to impose restrictions on airline loyalty programs and regulations against credit card point devaluations were successful, they could materially reduce the revenues we derive from the AAdvantage program and adversely impact our results of operations.

18 unchanged sentences

Personnel shortages, and general wage inflation have impacted and are expected to continue to impact our labor costs.

We recently reached agreements with the unions representing mainline pilots, flight attendants, passenger service team members, and mechanic and fleet service workgroups.

These agreements include significant increases in pay and benefits, in many cases in line with agreements recently concluded by our large network competitors with their unions.

We have agreements with the unions representing mainline pilots, flight attendants, passenger service team members, and mechanic and fleet service workgroups.

These agreements include significant increases in pay and benefits compared to the prior agreements, in many cases in line with agreements concluded by our large network competitors with their unions.

We remain in negotiations for other new labor agreements and anticipate that any new contracts we agree to with our labor groups will include increases in salaries and other benefits, which will increase our labor expense.

If we encounter problems with any of our third-party regional operators or third-party service providers, our operations could be adversely affected by a resulting decline in revenue or negative public perception about our services.

A significant portion of our regional operations are conducted by third-party operators on our behalf and are provided for under capacity purchase agreements.

Due to our reliance on third parties to provide these essential services, we are subject to the risk of disruptions to their operations, which has in the past and may in the future result from many of the same risk factors disclosed in this report, such as the impact of adverse economic conditions, the inability of third parties to hire or retain skilled personnel, including in particular pilots and mechanics, and other risk factors, such as an out-of-court or bankruptcy restructuring of any of our regional operators.

A significant portion of our regional operations are conducted by third-party operators on our behalf and are principally provided for under capacity purchase agreements.

Due to our reliance on third parties to provide these essential services, we are subject to the risk of disruptions to their operations, which has in the past and may in the future result from many of the same risk factors disclosed in this report, such as the impact of adverse economic conditions, the inability of third parties to hire or retain skilled personnel, and other risk factors, such as an out-of-court or bankruptcy restructuring of any of our regional operators.

Several of these third-party regional operators provide significant regional capacity that we would be unable to replace in a short period of time should that operator fail to perform its obligations to us.

Disruptions to capital markets, shortages of pilots, mechanics and other skilled personnel and adverse economic conditions in general have subjected certain of these third-party regional operators to significant financial pressures, which have in the past and may in the future lead to bankruptcies among these operators.

In particular, the severe decline in demand for air travel resulting from the COVID-19 pandemic and related governmental restrictions on travel materially impacted demand for services provided by our regional carriers and, as a result, we temporarily significantly reduced our regional capacity.

Further, as airlines restored capacity in line with increased demand for air travel following the height of the COVID-19 pandemic, these third-party operators experienced difficulties in recruiting and retaining sufficient personnel to operate significantly increased schedules, and have in some instances been required to offer significant increases in pay and other benefits to recruit and retain pilots and other personnel.

Disruptions to capital markets, labor difficulties, shortages of pilots, mechanics and other skilled personnel and adverse economic conditions in general have subjected certain of these third-party regional operators to significant financial pressures, which have in the past and may in the future lead to bankruptcies among these operators.

Periods of volatility in travel demand have the potential to adversely affect our regional operators, some of whom may experience significant financial stress, declare bankruptcy or otherwise cease to operate.

5 unchanged sentences

These agreements are generally subject to termination after notice by the third-party service provider.

We are also at risk should one of these service providers cease operations, and there is no guarantee that we could replace these providers on a timely basis with comparably priced providers, or at all.

We are also at risk should one of these service providers cease operations temporarily or permanently, and there is no guarantee that we could replace these providers on a timely basis with comparably priced providers, or at all.

These third parties have faced challenges retaining and recruiting people with the appropriate skills to meet our requirements.

We rely on the operation of complex supply chains and a large number of third parties for the procurement and fulfillment of parts, components, consumable or disposable goods and other products and services essential to our business.

The COVID-19 pandemic also caused significant disruption in global supply chains and staffing shortages, which affected and, if there is a resurgence, or similar event in the future, may affect the availability and timely delivery and fulfillment of many goods, including certain of those that we purchase directly or which are required by third parties to perform contracted services for us.

Following a faster than expected return of demand for air travel as COVID-19 cases declined worldwide and governments lifted travel restrictions, suppliers and many of the airports we serve experienced acute shortages of personnel, resulting in increased delays, cancellations and, in certain cases, restrictions on passenger numbers or the number of flights to or from certain airports.

We cannot guarantee that, as a result of ongoing or future supply chain disruptions or staffing shortages, we, our third-party partners, or the airports we serve will be able to timely source all of the products and services we require in the course of our business, or that we will be successful in procuring suitable alternatives.

2 unchanged sentences

Maintaining a good reputation globally is critical to our business.

Our reputation or brand image could be adversely impacted by, among other things, any failure to maintain high ethical, social and environmental sustainability practices for all of our operations and activities, our impact on the environment, public pressure from investors or policy groups to change our policies, such as movements to institute a “living wage,” customer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs, customer perceptions of our use of social media, customer concerns in the nature of “greenwashing” allegations that may surround any of our advertising campaigns, marketing programs or commercial offerings related to our sustainability initiatives, or customer perceptions of statements made by us, our

employees and executives, agents or other third parties.

Our reputation or brand image could be adversely impacted by, among other things, any failure to maintain high ethical, social and environmental sustainability practices for all of our operations and activities, our impact on the environment, public pressure from investors or policy groups to change our policies, customer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs, customer perceptions of our use of social media, customer concerns in the nature of “greenwashing” allegations that may surround any of our advertising campaigns, marketing programs or commercial offerings related to our sustainability initiatives, or customer perceptions of statements made by us, our employees and executives, agents or other third parties.

In addition, we operate in a highly visible industry that has significant exposure to social media.

1 unchanged sentence

Should we not respond in a timely and appropriate manner to address negative publicity, our brand and reputation may be significantly harmed.

Damage to our reputation or brand image or loss of customer confidence in our services could adversely affect our business and financial results, as well as require additional resources to rebuild our reputation.

Damage to our reputation or brand image or loss of customer confidence in

our services could adversely affect our business and financial results, as well as require additional resources to rebuild our reputation.

Moreover, an outbreak and spread of an infectious disease could adversely impact consumer perceptions of the health and safety of travel, and in particular airline travel, such as occurred during the COVID-19 pandemic.

2 unchanged sentences

However, we cannot assure that any actions we might take in response to an infectious disease outbreak will be sufficient to restore the confidence of consumers in the safety of air travel.

We have experienced an increase in the incidence of aggressive customer behavior and physical confrontation on our flights in the past, certain of which resulted in injuries to our personnel, and we may experience such behavior in the future.

We have experienced incidences of aggressive customer behavior and physical confrontation on our flights in the past, certain of which resulted in injuries to our personnel, and we may experience such behavior in the future.

If our employees feel unsafe or believe that we are not doing enough to prevent and prosecute such incidents, we could experience higher rates of employee absence or attrition and we may suffer reputational harm which could make it more difficult to attract and retain employees, and which could in turn negatively affect our business, financial condition and results of operations.

We are at risk of losses and adverse publicity stemming from any public incident involving our company, our people or our brand, including any accident or other public incident involving our personnel or aircraft, or the personnel or aircraft of our regional, codeshare or joint business operators.

We are at risk of adverse publicity stemming from any public incident involving our company, our people or our brand, particularly given the ease with which individuals can now capture and rapidly disseminate information via social media.

We are at risk of adverse publicity from any public incident involving our company, our people or our brand, particularly given the ease with which individuals can now capture and rapidly disseminate information via social media.

Such an incident could involve the actual or alleged behavior of any of our employees, contractors or passengers.

Further, if our personnel, one of our aircraft, a type of aircraft in our fleet, or personnel of, or an aircraft that is operated under our brand by, one of our regional operators or an airline with which we have a marketing alliance, joint business or codeshare relationship, were to be involved in a public incident, accident, catastrophe or regulatory enforcement action, we could be exposed to significant reputational harm and potential legal liability.

On January 29, 2025, American Eagle flight 5342 was involved in a fatal accident in Washington, D.C.

The Bombardier CRJ700 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.

We estimate that the accident reduced first quarter 2025 total operating revenues by approximately $200 million, and the families of multiple passengers have filed lawsuits against the U.S.

Government, PSA and American seeking unspecified damages.

If other aircraft in our fleet or aircraft operated under our brand, were to be involved in an accident, or if our personnel, one of our aircraft, a type of aircraft in our fleet, or the personnel or aircraft of one of our regional operators or an airline with which we have a marketing alliance, joint business or codeshare relationship were to be involved in a public incident, accident, catastrophe or regulatory enforcement action, we could be exposed to significant reputational harm and potential legal liability.

The insurance we carry may be inapplicable or inadequate to cover any such incident, accident, catastrophe or action.

In the event that our insurance is inapplicable or inadequate, we may be forced to bear substantial losses from an incident or accident.

In addition, any such incident, accident, catastrophe or action involving our personnel, one of our aircraft (or personnel and aircraft of our regional operators and our codeshare partners), or a type of aircraft in our fleet could create an adverse public perception, which could harm our reputation, result in air travelers being reluctant to fly on our aircraft or those of our regional operators or codeshare partners, and adversely impact our business, results of operations and financial condition.

Also, please see Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations – “2024 Financial Overview – Recent Developments .”

In addition, any such future incident, accident, catastrophe or action involving our personnel, one of our aircraft (or personnel and aircraft of our regional operators, marketing alliance, joint business and codeshare partners), or a type of aircraft in our fleet could create an adverse public perception, which could harm our reputation, result in air travelers being reluctant to fly on our aircraft or those of our regional operators, marketing alliance, joint business or codeshare partners, and adversely impact our business, results of operations and financial condition.

Changes to our business model that are designed to increase revenues and reduce costs may not be successful and may cause operational difficulties or decreased demand.

2 unchanged sentences

For example, in 2020, we eliminated change fees for most domestic and international tickets, which has reduced our change fee revenue, a trend which is expected to continue assuming this policy remains in place.

In addition, during the second quarter of 2024 we concluded that certain changes to our distribution strategy contributed to softness in customer bookings relative to our expectations and we reversed many of these measures late in the quarter.

We may introduce additional initiatives in the future;

however, as time goes on, we expect that it will be more difficult to identify and implement additional initiatives.

We cannot assure that these measures or any future initiatives will be successful in increasing our revenues or offsetting our costs.

Additionally,

the implementation of these initiatives may create logistical challenges that could harm the operational performance of our airline or result in decreased demand.

We cannot assure that these measures or any future

initiatives will be successful in increasing our revenues or offsetting our costs.

Additionally, the implementation of these initiatives may create logistical challenges that could harm the operational performance of our airline or result in decreased demand.

Also, our implementation of any new or increased fees, or changes to the operation of or benefits offered by our loyalty program, could reduce the demand for air travel on our airline or across the industry in general, particularly if weakened economic conditions make our customers more sensitive to increased travel costs or provide a significant competitive advantage to other carriers that determine not to institute similar changes.

Such changes could result in adverse brand perceptions, reputational harm or regulatory scrutiny.

For example, the DOT recently launched an inquiry into certain airline loyalty programs, including our AAdvantage program, to investigate potential competition or consumer protection issues in airlines’ administration of these programs, and draft legislation introduced in Congress called the Protect Your Points Act similarly aims to regulate the management of these programs.

If regulatory or legislative efforts to impose restrictions on airline loyalty programs were successful, they could materially reduce the revenues we derive from the AAdvantage program and adversely impact our results of operations.

4 unchanged sentences

Any litigation or disputes regarding intellectual property may be costly and time-consuming and may divert the attention of our management and key personnel from our business operations, either of which may adversely affect our business and financial results.

In addition, we have used certain of our branding and AAdvantage program intellectual property as collateral for various financings, including the AAdvantage Financing, which contain covenants that impose restrictions on the use of such intellectual property and, in the case of the AAdvantage Financing, on certain amendments or changes to our AAdvantage program.

In addition, we use certain of our branding and intellectual property as collateral for various financings, including the AAdvantage Financing, which contain covenants that impose restrictions on the use of such intellectual property and, in the case of the AAdvantage Financing, on certain amendments or changes to our AAdvantage program.

These covenants may have an adverse effect on our ability to use such intellectual property.

10 unchanged sentences

Additional information regarding certain legal matters in which we are involved can be found in Note 11(e) to AAG’s Consolidated Financial Statements in Part II, Item 8A and Note 10(e) to American’s Consolidated Financial Statements in Part II, Item 8B.

Our ability to utilize our NOLs and other carryforwards may be limited.

Under the Internal Revenue Code of 1986, as amended (the Code), a corporation is generally allowed a deduction for net operating losses (NOLs) carried over from prior taxable years.

At December 31, 2024, we had approximately $12.9 billion of gross federal 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 NOL carryforwards are subject to adjustment on audit by the Internal Revenue Service and the respective state taxing authorities.

Additionally, due to the impact of the COVID-19

pandemic and other economic factors, certain of the NOL carryforwards may expire before we can generate sufficient taxable income to use them.

Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods.

There can be no assurance that an additional valuation allowance on our net deferred tax assets will not be required should our financial performance be negatively impacted in the future.

Such valuation allowance could be material.

An ownership change may severely limit or effectively eliminate our ability to utilize our NOL carryforwards and other tax attributes.

In connection with the expiration in December 2021 of certain transfer restrictions applicable to substantial shareholders contained in our Certificate of Incorporation, the Board of Directors of AAG adopted a tax benefit preservation plan (the Tax Benefit Preservation Plan) in order to preserve our ability to use our NOLs and certain other tax attributes to reduce potential future income tax obligations.

The Tax Benefit Preservation Plan was subsequently ratified by our stockholders at the 2022 Annual Meeting of Stockholders of AAG.

On October 31, 2024, AAG entered into Amendment No.

1 to the Tax Benefit Preservation Plan to extend the expiration date to October 29, 2027, subject to approval by stockholders prior to October 29, 2025.

The Tax Benefit Preservation Plan is designed to reduce the likelihood that we experience an ownership change by deterring certain acquisitions of AAG common stock.

There is no assurance, however, that the deterrent mechanism will be effective, and such acquisitions may still occur.

In addition, the Tax Benefit Preservation Plan may adversely affect the marketability of AAG common stock by discouraging existing or potential investors from acquiring AAG common stock or additional shares of AAG common stock, because any non-exempt third party that acquires 4.9% or more of the then-outstanding shares of AAG common stock would suffer substantial dilution of its ownership interest in AAG.

We rely heavily on technology and automated systems, including AI, to operate our business and any failure of these technologies or systems could harm our business, results of operations and financial condition.

We are highly dependent on existing and emerging technology and automated systems, including AI, to operate our business.

These technologies and systems include but may not be limited to our computerized airline reservation system, flight operations and crew scheduling systems, financial planning, management and accounting systems, telecommunications systems, website, maintenance systems and check-in kiosks.

In order for our operations to work efficiently, our website and reservation system must be able to accommodate a high volume of traffic, maintain secure information and deliver flight information, as well as issue electronic tickets and process critical financial information in a timely manner.

Substantially all of our tickets are issued to passengers as electronic tickets.

We depend on our reservation system, which is hosted and maintained under a long-term contract by a third-party service provider, to be

able to issue, track and accept these electronic tickets.

If our technologies or automated systems are not functioning or if our third-party service providers were to fail to adequately provide technical support, system maintenance or timely software upgrades for any one of our key existing systems, we could experience service disruptions or delays, which could harm our business and result in the loss of important data, increase our expenses and decrease our revenues.

Furthermore, certain critical aspects of our operation rely on legacy technological systems which may grow more difficult or expensive to support and maintain over time, and such systems may fail to perform as required or become more vulnerable to malfunction or failure over time.

In the event that one or more of our primary technology or systems vendors goes into bankruptcy, ceases operations or fails to perform as promised, replacement services may not be readily available on a timely basis, at competitive rates or at all, and any transition time to a new system may be significant.

Our aircraft employ a number of sophisticated radio and satellite-based navigation and safety technologies, and we are subject to risks associated with the introduction or expansion of technologies that could interfere with the safe operation of these flight systems.

For example, telecommunications companies are expanding and increasing the commercial and consumer applications of 5G cellular communication networks, and regulators, manufacturers and operators have expressed concerns that certain 5G applications could interfere with certain flight systems.

In December 2021, the FAA issued a special airworthiness information bulletin (SAIB), in which it indicated that further testing and assessment is needed regarding the effects of 5G on certain aircraft equipped with radar altimeters, which measure the aircraft’s altitude and guide pilots during landings.

While the FAA and the telecommunications industry reached an agreement to delay the full implementation of 5G deployment near airports until 2028, there could be future impacts once the current agreement expires.

Additionally, there has been an increase in the reported use of jamming or “spoofing” technologies by bad actors intended to disrupt the operation of GPS navigation and other flight systems by relaying fake or erroneous flight information and signals to crews.

These technologies could pose risks to the safe operation of aircraft by diverting pilots’ attention and potentially resulting in operational disruptions.

Our technologies and automated systems are not completely protected against events that are beyond our control, including natural disasters, power failures, terrorist attacks, cyberattacks, data theft, defects, errors, equipment and software failures, computer viruses or telecommunications failures.

For example, the CrowdStrike-caused systems outage in July 2024 significantly impacted airline operations, including our own, and forced several carriers to ground flights for a prolonged period and incur significant costs associated with reaccommodating and compensating affected passengers.

Similarly, in September 2025, hundreds of our flights were delayed or cancelled out of Dallas/Fort Worth International Airport (DFW) when FAA fiberoptic cables were accidentally cut by a third party.

When service interruptions occur as a result of any of the aforementioned events, we address them in accordance with applicable laws, rules and regulations.

However, substantial or sustained system failures could cause service delays or failures and result in our customers purchasing tickets from other airlines.

We cannot assure that our security measures, change control procedures or disaster recovery plans are adequate to prevent disruptions or delays.

Disruption in or changes to these technologies or systems could result in a disruption to our business and the loss of important data.

Any of the foregoing could result in a material adverse effect on our business, results of operations and financial condition.

Additionally, new technologies, such as the use of AI and machine learning, present evolving and significant legal and operational risks for us and our third-party vendors.

We use AI and machine learning technologies, including those licensed from third parties, in our technologies and our ability to continue to use such technologies at the scale may depend on access to specific third-party software and infrastructure.

We cannot control the availability or pricing of such third-party AI and machine learning technologies, especially in a highly competitive environment, and we may be unable to negotiate favorable economic terms with the applicable providers.

If any such third-party AI and machine learning technologies become incompatible with our solutions or are unavailable for use, or if the providers of such models unfavorably change the terms on which their AI technologies are offered or terminate their relationship with us, our solutions may become less appealing to our customers, and our business will be harmed.

In addition, to the extent any third party AI and machine learning technologies are used as a hosted service, any disruption, outage, or loss of information through such hosted services could disrupt our operations or solutions, damage our reputation, cause a loss of confidence in our solutions, or result in legal claims or proceedings, for which we may be unable to recover damages from the affected provider.

We expect that increased investment will be required in the future to continuously improve our use of AI (including generative AI) and machine learning technologies.

As with many technological innovations, there are significant risks involved in developing, maintaining and deploying these technologies and there can be no assurance that the usage of our investments in such technologies will always enhance our products or services or be beneficial to our business, including our efficiency or profitability.

Additionally, the development of generative AI technologies is complex, with practical and competitive challenges in achieving desired accuracy, efficiency and reliability.

Generative AI training

content, algorithms, models, software and other related systems may have limitations, including biases, errors or inability to process or restrict certain data types or scenarios.

In particular, if the models underlying our AI and machine learning technologies are incorrectly designed or implemented, or used without sufficient oversight and governance to ensure their responsible use, the performance of our business, as well as our reputation could suffer or we could incur liability resulting from the violation of laws or contracts to which we are a party or civil claims.

Further, there is a risk of system failures, disruptions or vulnerabilities compromising the confidentiality of personal data and intellectual property, or the integrity or availability of training content, input content and prompts, as well as generated content, including disinformation and deepfakes.

Use of AI technologies could also expose us to intellectual property risks, such as allegations of infringement of third-party patents or copyrights, which could result in significant fees or damages.

Our competitors or other third parties may incorporate AI into their products or services more quickly or more successfully than us, which could impair our ability to compete effectively.

AI also presents emerging ethical issues, and if our use of AI becomes controversial, we may experience brand or reputational harm, competitive harm or legal liability.

For example, with the increased use of AI and social media, adverse publicity, even if unfounded, can be disseminated quickly and broadly without context, making it increasingly difficult for us to effectively respond.

The rapid evolution of AI, including existing and proposed government regulation, may require significant resources to develop, test and maintain our AI technologies and services to ensure compliance and minimize adverse impacts.

Any limitations or failures relating to any of the foregoing could result in reputational damage, legal liabilities or loss of customer confidence.

There can be no assurance that the usage of AI will enhance our strategies or initiatives.

Evolving data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling of personal information about individuals) could increase our costs, and any significant cybersecurity incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of operations and financial condition.

In the normal course of our business, we collect, process, use and disclose personal information about individuals and rely on third party service providers to host or otherwise process personal information.

Many federal, state and foreign governmental bodies and agencies have adopted, or are considering adopting, laws and regulations that impose limits on the collection, processing, use, disclosure and security of personal information about individuals.

In some cases, such laws and regulations can be enforced by private parties in addition to government entities.

In addition, privacy advocacy and industry groups may propose new and different self-regulatory standards or guidance that may legally or contractually apply to us and our vendors.

These non-uniform laws, regulations, standards and guidance are complex and currently evolving and can be subject to significant change and interpretation, and may be inconsistently applied and enforced from one jurisdiction to another.

Our business requires the secure processing and storage of personal information relating to our customers, employees, business partners and others, and other data such as confidential information.

However, like any global enterprise operating in today’s digital business environment, we and our third party service providers have experienced cybersecurity incidents and data breaches.

We react and respond to these cybersecurity incidents in accordance with the applicable legal requirements, our own cybersecurity protocols, as well as our commercial partners’ standards (as appropriate), but we cannot ensure that our responses (or those of our partners and service providers) will be sufficient to prevent or mitigate the potential adverse impacts of these cybersecurity incidents, which may be material.

There has been heightened legislative and regulatory focus on AI, data privacy and cybersecurity in the U.S., EU, U.K., China and elsewhere, particularly with respect to critical infrastructure providers, including those in the transportation sector.

For example, in March 2024, the DOT launched a privacy review of the ten largest U.S.

airlines’ collection, handling, maintenance and use of passengers’ personal information, indicating the DOT may seek to increase its regulation, investigation, and enforcement of airlines’ privacy practices, including ours.

As a result, we must comply with a proliferating and fast-evolving set of legal requirements in this area, including substantive data privacy and cybersecurity standards as well as requirements for notifying regulators and affected individuals in the event of a cybersecurity incident.

In addition, we are subject to an increasing number of reporting obligations in respect of certain cybersecurity incidents.

These reporting requirements have been proposed or implemented by a number of regulators in different jurisdictions, may vary in their scope and application, and could contain conflicting requirements.

Certain of these rules and regulations may require us to report a cybersecurity incident before we have been able to fully assess its impact or remediate the underlying issue.

Efforts to comply with such reporting requirements could divert management’s attention from our cybersecurity incident response and could potentially reveal system vulnerabilities to threat actors.

Failure to timely report cybersecurity incidents under these rules could also result in regulatory investigations, litigation, monetary fines, sanctions, or subject us to other forms of liability.

Additionally, in 2024, the National Security Division of the Department of Justice (DOJ) issued a new rule, referred to as the “Data Security Program” (DSP), to implement Executive Order 14117 aimed at preventing access to “bulk U.S.

sensitive personal data” and “government-related data” by “countries of concern” (including China, Russia, Iran, North Korea, Cuba, and Venezuela) and so-called “covered persons.” The DSP imposes stringent obligations on companies that engage in transactions with persons and companies with a connection to countries of concern including by prohibiting or restricting certain data transfers and data transactions.

The DSP is new, complex and has yet to be enforced, and as such, there is a risk that our interpretation of its applicability, scope, and requirements is incorrect, incomplete, or misapplied.

Compliance with the DSP may require us to invest heavily in data security and compliance measures, such as implementing and complying with certain security requirements and guidelines and other burdensome recordkeeping, reporting, and auditing requirements.

It may also require us to implement new processes, stop or restrict certain data transfers, alter the geographic scope of our operations, cease doing business with certain third parties or using certain tools or vendors, or change how data flows throughout our business, any of which could materially impact our business operations or hinder our ability to grow our business.

Finally, non-compliance with the DSP could result in significant civil or criminal penalties, which could materially adversely affect our business, results of operations, and financial condition.

Even though we believe we and our third-party service providers are generally in compliance with applicable laws, rules and regulations relating to AI, data privacy and security, the regulatory environment is increasingly challenging as AI, data privacy and cybersecurity laws, rules, regulations, industry standards and other requirements are continually developing.

These changing requirements, along with their evolving application, interpretation, and amendment, may present material obligations and risks to our business, including significantly expanded compliance burdens, costs and enforcement risks.

In addition, many of our commercial partners, including credit card companies, have imposed data security standards that we must meet.

In particular, we are required by the Payment Card Industry Security Standards Council, founded by the credit card companies, to comply with their highest level of data security standards (the Payment Card Industry Data Security Standard (PCI DSS)).

While we and our service providers continue our efforts to meet these standards, new and revised standards may be imposed that may be difficult for us to meet and could increase our costs, and if we are unable to comply with revised standards, we may be subject to fines, restrictions or other liability, which could materially and adversely affect our business.

Moreover, it is not guaranteed that PCI DSS compliance will prevent illegal or improper use of our payment systems or the theft, loss or misuse of payment card data or transaction information.

Litigation, claims and enforcement related to data privacy, biometrics and other provisions of state privacy laws may involve new interpretations of privacy laws.

There has also been a noticeable increase in class actions in the U.S.

wherein plaintiffs have utilized a variety of laws, including state wiretapping laws, in relation to companies’ use of tracking technologies, such as cookies and pixels.

Compliance with these laws and regulations may be inconsistent from jurisdiction to jurisdiction, increasing the cost of compliance and our risk of liability from litigation.

Any litigation, claims or enforcement actions to which we are or become a party could potentially result in substantial monetary damages or fines, and negative reputational impacts that cause us to lose existing or future customers, which could materially adversely affect our business, results of operations and financial condition.

We are exposed to risks from cyberattacks, and any cybersecurity incidents involving us, our third-party service providers, or one of our AAdvantage partners or other business partners, could materially adversely affect our business, results of operations and financial condition.

Significant cybersecurity incidents involving us, our third-party service providers, or one of our AAdvantage partners or other business partners, have in the past and may in the future result in a range of potentially material negative consequences for us, including unauthorized access to, disclosure, modification, misuse, loss or destruction of company systems or data;

theft of sensitive, regulated or confidential data, such as personal information or our intellectual property;

the loss of functionality of critical systems through ransomware, denial of service or other cyberattacks;

a diminished ability to retain or attract new customers;

a deterioration in our relationships with business partners and other third parties;

interruptions or failures in our technology systems;

and business delays, service or system disruptions, damage to equipment and injury to persons or property.

The methods used to obtain unauthorized access, disable or degrade service or sabotage systems are constantly evolving and may be difficult to anticipate or to detect for long periods of time.

The constantly changing nature of the threats means that we cannot and have not been able to prevent all data security breaches or misuse of data, and there is a risk that our security measures will not be fully effective in the future.

Similarly, we depend on the ability of our key commercial partners, including AAdvantage partners, other business partners, our regional carriers, distribution partners and technology vendors, to conduct their businesses in a manner that complies with applicable security standards and ensures their ability to perform on a timely basis.

A security failure, including a failure to meet data security requirements, breach or other significant cybersecurity incident affecting one of our partners,

interruptions or failures in our technology systems, could result in potentially material negative consequences for us, including loss of critical data, service interruptions, delays in operations, and the potential for fines, restrictions and expulsion from credit card acceptance programs.

In addition, we use third party service providers to help us deliver services to customers.

These service providers may store personal information, credit card information and/or other confidential information.

Such information has been and will be the target of unauthorized access or subject to security breaches because of third-party action, employee error, malfeasance or otherwise.

Any of these could (a) result in the loss of information, litigation, indemnity obligations, expensive and inconsistent cybersecurity incident and data breach notification requirements, damage to our reputation, regulatory scrutiny, and other liability, or (b) have a material adverse effect on our business, financial condition and results of operations.

The threat of cybersecurity incidents continues to increase as the frequency, intensity and sophistication of cyberattacks and intrusions increase around the world.

The rapid evolution and increased adoption of AI and machine learning technologies may increase certain cybersecurity risks.

To the extent AI and/or machine learning capabilities improve and are increasingly adopted, they may be used to identify vulnerabilities and craft increasingly sophisticated cybersecurity attacks.

Vulnerabilities may be introduced from the use of AI and/or machine learning by us, our counterparties, vendors and other business partners and third-party providers.

Diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as diverse attack vectors such as social engineering/phishing, use of AI techniques such as deepfakes, malware (including ransomware), malfeasance by insiders, human or technological error, denial of service attacks or exploitation of vulnerabilities, threaten the confidentiality, integrity, and availability of our and our third party service providers’ and business partners’ information systems, personal information and confidential information.

For example, starting in 2025, a sophisticated and well-known threat actor began targeting the aviation industry using social engineering tactics.

Geopolitical issues also continue to increase our cybersecurity risk and potential for cybersecurity incidents, for example, the conflict involving Russia and Ukraine, which has resulted in a heightened risk of cyberattacks against companies like ours that have operations, vendors and/or supply chain providers located in or around the region of conflict or are otherwise related to the conflict.

Despite ongoing efforts to maintain and improve the security of our information systems and digital information, individuals, including employees, contractors, and external threat actors, may be able to circumvent the security measures we put in place, and we may be unable to anticipate new techniques used for these attacks and intrusions, such as the use of AI applications, and implement adequate preventative measures.

We, our business partners and service providers have been the target of cybersecurity attacks in the past and expect that we, our business and service partners, will continue to experience cybersecurity incidents in the future.

The costs and operational consequences of defending against, preparing for, responding to and remediating a cybersecurity incident are substantial.

As cybersecurity incidents become more frequent, intense and sophisticated, costs of proactive defense measures are increasing.

Further, we could be exposed to litigation, regulatory enforcement or other legal action as a result of an incident, carrying the potential for damages, fines, sanctions or other penalties, as well as injunctive relief and enforcement actions requiring costly compliance measures.

The airline industry, including other large airlines, have suffered a significant number of data privacy and cybersecurity incidents and these incidents have resulted in substantial adverse financial consequences to those companies.

A cybersecurity incident could also impact our brand, including that of the AAdvantage program, harm our reputation and adversely impact our relationship with our customers, employees and stockholders.

The increased regulatory focus on data privacy practices apart from how personal information is secured, such as how personal information is collected, used for marketing purposes, and shared with third parties – including with our AAdvantage and other business partners – also may require changes to our processes and increase compliance costs.

There is also an increased risk to our business in the event of a significant cybersecurity or data privacy violation, including additional compliance costs, reputational harm, disruption to the manner in which we provide our services, including the geographies we service, and being subject to complaints and/or regulatory investigations, significant monetary liability, fines, penalties, regulatory enforcement, individual or class action lawsuits, public criticism, loss of customers, loss of goodwill or other additional liabilities, such as claims by industry groups or other third parties.

Accordingly, failure to appropriately address data privacy and cybersecurity issues could result in material financial and other liabilities and cause significant reputational harm to our company.

and international tax legislation may adversely affect our financial condition, results of operations and cash flows.

We are subject to taxation at the federal, state and local levels in the United States, as well as taxation in a number of international jurisdictions in which we operate.

We are subject to taxation at the federal, state and local levels in the United States, as well as taxation in international jurisdictions in which we operate.

New taxes, rates and charges may be imposed from time to time that significantly increase our costs, reduce revenues or otherwise negatively impact our results of operations.

Government may enact significant changes to the taxation of business entities.

For example, on August 16, 2022, the Inflation Reduction Act was signed into law, introducing, among other changes, a corporate minimum tax on certain corporations and an excise tax on certain stock repurchases by certain corporations.

With numerous provisions of the Tax Cuts and Jobs Act set to expire in 2025, we expect that consideration of legislation related to tax laws is likely in coming quarters, but the likelihood of any proposed changes to the tax law being enacted or implemented is unclear, and we are currently unable to predict whether such changes will occur.

If changes to tax laws are implemented, we are currently unable to predict the ultimate impact on our business and therefore there can be no assurance our business will not be adversely affected.

For example, on July 4, 2025, the “One, Big, Beautiful Bill Act” (OBBBA), was signed into law, permanently extending many of the business tax provisions originally introduced in the 2017 Tax Cuts and Jobs Act.

If, in the future, any additional changes to tax laws are implemented or new regulations and other IRS guidance are issued impacting existing tax laws, such changes or new regulations may give rise to new costs or other issues that we did not foresee.

We are currently unable to predict the ultimate impact of any such changes or new regulations may have on our business and therefore there can be no assurance our business will not be adversely affected.

In recent years, numerous legislative, judicial and administrative changes have been made to international tax laws applicable to us and similar companies.

The Organization for Economic Co-operation and Development (OECD) is continuing discussions regarding fundamental changes in allocation of profits among tax jurisdictions in which companies do business, as well as the implementation of a global minimum tax, referred to as the “Pillar One” and “Pillar Two” proposals.

The Organization for Economic Co-operation and Development (OECD) has issued numerous announcements regarding fundamental changes in allocation of profits among tax jurisdictions in which companies do business, as well as the implementation of a global minimum tax, referred to as the “Pillar One” and “Pillar Two” proposals.

Many countries in which we operate have enacted or are in the process of enacting laws based on the Pillar Two proposal.

Our effective tax rate and cash tax payments could increase in future years because of these changes.

On June 28, 2025, the G7 nations issued a statement indicating the G7’s commitment to a side-by-side system that would fully exclude U.S.

parented groups from certain aspects of the Pillar Two framework in respect of both their domestic and foreign profits.

On January 5, 2026, more than 145 countries in the OECD/G20 Inclusive Framework agreed to have U.S.-headquartered companies remain subject to only U.S.

global minimum taxes while exempting them from Pillar Two.

This side-by-side agreement recognizes the tax sovereignty of the United States over the worldwide operations of U.S.

companies and the tax sovereignty of other countries over business activity within their own borders.

However, the precise contours of this side-by-side agreement as well as the details about its implementation by specific jurisdictions are uncertain.

Therefore, even with this agreement, our effective tax rate and cash tax payments could increase in future years from efforts related to a global minimum tax.

We have a significant amount of goodwill, which is assessed for impairment at least annually.

7 unchanged sentences

Such changes in supply and demand for certain aircraft types could result from grounding of aircraft by us or other airlines, including as a result of significant or prolonged declines in demand for air travel and corresponding reductions to capacity.

We can provide no

assurance that a material impairment loss of tangible or intangible assets will not occur in a future period;

we have previously incurred significant impairment charges associated with our decision to retire certain aircraft as a result of the severe decline in demand for air travel due to the COVID-19 pandemic, and the risk of future material impairments remains uncertain.

We can provide no assurance that a material impairment loss of tangible or intangible assets will not occur in a future period;

for example, we have previously incurred significant impairment charges associated with our decision to retire certain aircraft as a result of the severe decline in demand for air travel due to the COVID-19 pandemic, and the risk of future material impairments remains uncertain.

Such impairment charges could have a material adverse effect on our business, results of operations and financial condition.

The commercial relationships that we have with other companies, including any related equity investments, may not produce the returns or results we expect.

An important part of our strategy to expand our network has been to initiate or expand our commercial relationships with other airlines, such as by entering into global alliance, joint business and codeshare relationships, and, in certain instances, including China Southern Airlines, GOL and JetSMART, by making an equity investment in another airline in connection with initiating or expanding such a commercial relationship.

An important part of our strategy to expand our network has been to initiate or expand our commercial relationships with other airlines, such as by entering into global alliance, joint business and codeshare relationships, and, in certain instances, including China Southern Airlines, GOL and JetSMART, by agreeing to make an equity investment in another airline in connection with initiating or expanding such a commercial relationship.

We may explore additional investments in, and joint ventures and strategic alliances with, other carriers as part of our global business strategy.

We face competition in forming and maintaining these commercial relationships since there are a limited number of potential arrangements and other airlines are looking to enter into similar relationships, and our inability to form or maintain these relationships, or inability to form as many of these relationships as our competitors, may have an adverse effect on our business.

We face competition in forming and maintaining these commercial relationships since there are a limited number of potential

arrangements and other airlines are looking to enter into similar relationships, and our inability to form or maintain these relationships, or inability to form as many of these relationships as our competitors, may have an adverse effect on our business.

Any such existing or future investment could involve significant challenges and risks, including that we may not realize a satisfactory return on our investment, if any, or that they may not generate the expected revenue synergies, and they may distract management focus from our operations or other strategic options.

We may also be subject to consequences from any illegal conduct of joint business partners as well as to any political or regulatory change that negatively impacts or prohibits our arrangements with any such business partners.

In addition, volatility in demand for air travel, such as occurred during the COVID-19 pandemic, could materially disrupt our partners’ abilities to provide air service, the timely execution of our strategic operating plans, including the finalization, approval and implementation of new strategic relationships or the maintenance or expansion of existing relationships.

For example, in January 2024, GOL commenced bankruptcy proceedings in the U.S.

Federal Bankruptcy Court for the Southern District of New York and submitted a plan of reorganization that, if approved, may increase the risk of impairment to our commercial agreement with GOL in addition to negatively impacting the value of our equity investment in GOL.

If any carriers with which we partner or in which we hold an equity stake were to cease trading or be declared insolvent, we could lose the value of any such investment or experience significant operational disruption.

In addition, volatility in demand for air travel, could materially disrupt our partners’ abilities to provide air service, the timely execution of our strategic operating plans, including the finalization, approval and implementation of new strategic relationships or the maintenance or expansion of existing relationships.

For example, in August 2025, the U.S.

Federal Bankruptcy Court for the Southern District of New York approved GOL’s plan of reorganization, and as a result, we have lost substantially all of the value of our equity investment in GOL.

If any other carriers with which we partner or in which we hold an equity stake were to cease trading or be declared insolvent, we could lose the value of any such investment or experience significant operational disruption.

These events could have a material adverse effect on our business, results of operations and financial condition.

6 unchanged sentences

Aircraft fuel prices reflect not only the price of underlying crude oil, but also the price charged to refine crude oil into aircraft fuel (often referred to as the “crack spread”), transportation costs, handling costs and taxes, and increases in any of these underlying components would increase the price we ultimately pay for aircraft fuel.

Because of the amount of fuel needed to operate our business, even a relatively small increase or decrease in the price of fuel can have a material effect on our operating results and liquidity.

Because of the very large amount of fuel needed to operate our business, even a relatively small increase or decrease in the price of fuel can have a material effect on our operating results and liquidity.

Due to the competitive nature of the airline industry and unpredictability of the market for air travel, we can offer no assurance that we may be able to increase our fares, impose fuel surcharges or otherwise increase revenues or decrease other operating costs sufficiently to offset fuel price increases.

1 unchanged sentence

We cannot predict the future availability, price volatility or cost of aircraft fuel, weather-related events, natural disasters (including hurricanes or similar events in the U.S.

Southeast and on the Gulf Coast where a significant portion of domestic

refining capacity is located), terrorism, political disruptions, disputes, or armed conflicts involving oil-producing countries or impacting global trade routes, changes in production levels of individual nations or associations of oil-producing states, economic sanctions imposed against oil-producing countries or specific industry participants, changes in fuel-related governmental policy, the strength of the U.S.

dollar against foreign currencies, changes in the cost to transport or store petroleum products and any related staffing or transportation equipment shortages, changes in access to petroleum product pipelines and terminals, speculation in the energy futures markets, changes in aircraft fuel production capacity, unplanned interruptions or disruption of production at refineries, environmental concerns and other unpredictable events, may result in fuel supply shortages, variations in the applicable crack spread, distribution challenges, additional fuel price volatility and cost increases in the future.

Southeast and on the Gulf Coast where a significant portion of domestic refining capacity is located), terrorism, political disruptions, disputes, or armed conflicts involving oil-producing countries or impacting global trade routes, changes in production levels of individual nations or associations of oil-producing states, economic sanctions imposed against oil-producing countries or specific industry participants, changes in fuel-related governmental policy, the strength of the U.S.

dollar against foreign currencies, changes in the cost to refine, transport or store petroleum products and any related staffing or transportation equipment shortages, changes in access to petroleum product pipelines and terminals, speculation in the energy futures markets, changes in aircraft fuel production capacity, unplanned interruptions or disruption of production at refineries, environmental concerns and other unpredictable events, may result in fuel supply shortages, variations in the applicable crack spread, distribution challenges, additional fuel price volatility and cost increases in the future.

Any of these factors or events could cause a disruption in, or increased demands on, oil production, refinery operations, pipeline capacity or terminal access, and possibly result in significant increases in the price of aircraft fuel and diminished availability of aircraft fuel supply.

7 unchanged sentences

Quantitative and Qualitative Disclosures About Market Risk – “Aircraft Fuel.”

In addition, as part of our emissions reduction goals, we and other airlines have publicly announced long-term targets for the increased use of SAF in our fleet.

In addition, as part of our emissions reduction goals, we and other airlines have publicly announced long-term targets for the increased use of SAF in our operation.

Currently, industrial production of SAF is small in scale and inadequate to meet growing industry demand, and while additional production capacity is expected to become operational in the coming years, we anticipate that competition for SAF among industry participants will remain intense.

4 unchanged sentences

In the event that the SAF is not delivered on schedule or in sufficient volumes, there can be no assurance that we will be able to source a supply of SAF sufficient to meet our stated goals, or that we will be able to do so on favorable economic terms.

Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages.

Our business is subject to extensive government regulation, which may increase our costs, disrupt our operations, limit our operating flexibility, reduce the demand for air travel, and create competitive disadvantages.

Airlines are subject to extensive domestic and international regulatory requirements.

In the last several years, Congress and state and local governments have passed laws and regulatory initiatives, and the DOT, the FAA, the TSA, the Centers for Disease Control and several of their respective international counterparts have issued regulations and a number of other directives that affect the airline industry.

In the last several years, the U.S.

executive branch, Congress and state and local and foreign governments have issued orders, passed laws, and launched regulatory initiatives, and federal agencies, including but not limited to the DOT, the FAA, the TSA, the Centers for Disease Control, the DOJ, and their respective international counterparts have issued regulations and a number of other directives that affect the airline industry.

These requirements impose substantial costs on us and restrict the ways we may conduct our business.

For example, the FAA from time-to-time issues directives and other regulations relating to the maintenance and operation of aircraft that require significant expenditures or operational restrictions.

These requirements can be issued with little or no notice, or can otherwise impact our ability to efficiently or fully utilize our aircraft, and in some instances have resulted in the temporary and prolonged grounding of aircraft or engine types altogether including, for example, the March 2019 grounding of all Boeing 737 MAX Family aircraft, which was not lifted in the United States until November 2020, the January 2024 grounding of 737-9 MAX aircraft (a model that we do not operate), and the significant limitations imposed on the use of Pratt & Whitney GTF aircraft engines on certain Airbus aircraft (an engine that we do not use in our fleet), or otherwise caused substantial disruption and resulted in material costs to us and lost revenues.

The recent telecom industry roll-out of 5G technology, and concerns regarding its possible interference with aircraft navigation systems, also resulted in regulatory uncertainty and the potential for operational impacts, including possible suspension of service to certain airports or the operation of certain aircraft, though the issue has since been resolved.

See “ We rely heavily on technology and automated systems, including artificial intelligence (AI), to operate our business, and any failure of these technologies or systems could harm our business, results of operations and financial condition.” The FAA also exercises comprehensive regulatory authority over nearly all technical aspects of our operations.

Our failure to comply

with such requirements has in the past and may in the future result in fines and other enforcement actions by the FAA or other regulators.

These requirements can be issued with little or no notice, or can otherwise impact our ability to efficiently or fully utilize our aircraft, and in some instances have resulted in the temporary or prolonged grounding of aircraft or engine types altogether including, for example, the March 2019 grounding of all Boeing 737 MAX Family aircraft, which was not lifted in the United States until November 2020, the January 2024 grounding of 737-9 MAX aircraft (a model we do not operate), and the significant limitations imposed on the use of Pratt & Whitney GTF aircraft engines on certain Airbus aircraft (an engine we do not use in our fleet), or otherwise caused substantial disruption and resulted in material costs to us and lost revenues.

In 2023, the telecom industry rolled out 5G technology, and concerns were raised by the FAA regarding its possible interference with aircraft navigation systems, which resulted in regulatory uncertainty and the potential for operational impacts, including possible suspension of service to certain airports or the operation of certain aircraft.

Although the issue was resolved through an agreement between the FAA, the FCC, and telecommunications industry, that agreement expires in 2028 and will need to be extended or modified.

Additionally, the passage of OBBBA included the requirement for the FCC to auction additional spectrum, which could lead to new impacts on aviation.

See “ We rely heavily on technology and automated systems, including AI, to operate our business and any failure of these technologies or systems could harm our business, results of operations and financial condition.” The FAA also exercises comprehensive regulatory authority over nearly all technical aspects of our operations.

Our failure to comply with such requirements has in the past and may in the future result in fines and other enforcement actions by the FAA or other regulators.

In the future, any new regulatory requirements, particularly requirements that limit our ability to operate or price our products, could have a material adverse effect on us and the industry.

2 unchanged sentences

The FAA Authorization Renewal also codified several consumer protection rulemakings that could be challenging to implement and have negative financial impacts.

Any new or enhanced requirements resulting from the FAA Authorization Renewal, including any new fees, costs we may be required to incur to comply with new rules and compensation or other penalties we may be required to pay for violations of such rules, have the potential to increase our costs or adversely impact our operation.

DOT consumer rules, and rules promulgated by certain analogous agencies in other countries we serve, dictate procedures for many aspects of our customer’s journey, including at the time of ticket purchase, at the airport and onboard the aircraft.

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

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

In July 2024, the U.S.

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

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

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

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

costs or adversely impact our operation.

The OBBBA included $12.5 billion in additional funding for ATC infrastructure and modernization.

While this recent law and new funding should lead to ATC improvements, there is uncertainty on how and when the funding will be spent and if there will be any operational impacts as certain systems and infrastructure are modernized.

DOT consumer rules, and rules promulgated by certain comparable agencies in other countries we serve, dictate procedures for many aspects of our customer’s journey, including at the time of ticket purchase, at the airport and onboard the aircraft.

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

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

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

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

On September 4, 2025, the Trump Administration released its Unified Agenda of Regulatory and Deregulatory Actions, outlining planned priorities, timelines, and policy directions across federal agencies.

The agenda signals DOT’s intent to roll back existing regulations, including the refund rule, ancillary fee rule, compensation rule, and wheelchair rule.

DOT has already begun taking action, such as rescinding an Advance Notice of Proposed Rulemaking titled “Airline Passenger Rights,” which sought comments on requiring airlines to provide cash compensation, free rebooking, meal coverage, and overnight lodging with related transportation when disruptions are airline-caused.

The Aviation and Transportation Security Act mandates the federalization of certain airport security procedures and imposes additional security requirements on airports and airlines, most of which are funded by a per-ticket tax on passengers and a tax on airlines.

Present and potential future security requirements can have the effect of imposing costs and inconvenience on travelers, potentially reducing the demand for air travel.

Present and potential future security requirements may impose costs and inconvenience on travelers, potentially reducing the demand for air travel.

Similarly, there are a number of legislative and regulatory initiatives and reforms at the state and local levels in the U.S.

that may affect airlines.

These initiatives include increasingly stringent laws to protect the environment, wage/hour requirements, mandatory paid sick or family leave and healthcare mandates.

These laws could affect our relationship with our workforce and the vendors that serve our airline and cause our expenses to increase without an ability to pass through these costs.

In recent years, the airline industry has experienced an increase in litigation over the application of state and local employment laws, particularly in California.

In recent years, the airline industry has experienced an increase in litigation over the scope of the application of state and local employment laws to the airline industry.

Application of these laws may result in operational disruption, increased litigation risk and impact our negotiated labor agreements.

For example, we are currently involved in legal proceedings in California concerning alleged violations of the state’s labor code including, among other things, violations of certain meal and rest break laws, and an adverse determination in any of these cases could adversely impact our operational flexibility and result in the imposition of damages and fines, which could potentially be significant.

We recently settled a class litigation brought by flight attendants in California, which covered all wage and hour claims brought by the class through January 1, 2024.

In addition, legislation passed by the California legislature in March 2023 should effectively foreclose future meal and rest break claims from flight attendants in California.

However, there is still risk of future litigation from flight attendants and other work groups involving other types of wage and hour laws in California and other jurisdictions which have or could seek to implement similar laws.

For example, we are currently involved in legal proceedings in California and other states concerning alleged violations of state labor laws including, among other things, overtime pay and violations of certain meal and rest break laws, and an adverse determination in any of these cases could adversely impact our operational flexibility and result in damages and fines, which could potentially be significant.

The results of our operations, demand for air travel and the manner in which we conduct business each may be affected by changes in law and future actions taken by governmental agencies, including:

• changes in law that affect the services that can be offered by airlines in particular markets and at particular airports, or the types of fares offered or fees that can be charged to passengers;

• changes in law that affect the services that airlines can offer in particular markets and at particular airports, or the types of fares offered or fees that can be charged to passengers;

• the granting and timing of certain governmental approvals (including antitrust or foreign government approvals) needed for codesharing alliances, joint businesses and other arrangements with other airlines, and the imposition of regulatory investigations or commencement of litigation related to any of the foregoing;

1 unchanged sentence

• the adoption of new passenger security standards or regulations that impact customer service standards;

• restrictions on airport operations, such as restrictions on the use of slots at airports or the auction or reallocation of slot rights currently held by us;

• restrictions on airport operations, such as restrictions on the use of slots at airports or the auction or reallocation of slot rights we currently hold;

• the adoption of more restrictive locally-imposed noise restrictions;

• restrictions on travel or special guidelines regarding aircraft occupancy or hygiene in response to outbreaks of illness, such as occurred during the COVID-19 pandemic, including the imposition of preflight testing regimes or vaccination confirmation requirements which have in the past and may in the future have the effect of reducing demand for air travel in the markets where such requirements are imposed.

• the institution of airspace and overflight closures and restrictions;

• restrictions on travel or special guidelines regarding aircraft occupancy or hygiene in response to outbreaks of illness, including the imposition of preflight testing regimes or vaccination confirmation requirements that have in the past and may in the future have the effect of reducing demand for air travel in the markets where such requirements are imposed.

Each additional regulation or other form of regulatory oversight increases costs and adds greater complexity to airline operations and, in some cases, may reduce the demand for air travel.

2 unchanged sentences

or overseas could have a material adverse effect on our business, results of operations and financial condition.

In addition, the ATC system is not successfully modernizing to meet the growing demand for U.S.

In addition, the ATC system has not to date modernized sufficiently to meet the growing demand for U.S.

Air traffic controllers rely on outdated procedures and technologies that routinely compel airlines, including ourselves, to fly inefficient routes or take significant delays on the ground.

The ATC system’s inability to manage existing travel demand, including due to significant staffing shortages, has led government agencies to implement short-term capacity constraints during peak travel periods or adverse weather conditions in certain markets, resulting in delays and disruptions of air traffic.

The ATC system’s inability to manage existing travel demand, including due to staffing shortages, has led government agencies to implement short-term capacity constraints during peak travel periods or adverse weather conditions in certain markets, causing delays and disruptions of air traffic.

The outdated technologies also cause the ATC system to be less resilient in the event of a failure, and past system disruptions have resulted in large-scale flight cancellations and delays.

In the early 2000s, the FAA embarked on a path to modernize the national airspace system, including migration from the current radar-based ATC system to a GPS-based system.

We experienced this challenge in January 2023 when an outage in the ATC Notice to Air Missions system led to a nationwide ground-stop for nearly two hours, resulting in significant operational disruption throughout the day, and in September 2025 when a local outage severely reduced traffic in the Dallas metropolitan area.

Even though the OBBBA includes $12.5 billion in additional funding for ATC infrastructure and modernization, the outcome of this initiative remains uncertain.

For example, in the early 2000s, the FAA embarked on a path to modernize the national airspace system, including migration from the current radar-based ATC system to a GPS-based system.

This modernization of the ATC system, generally referred to as “NextGen,” has been plagued by delays and cost overruns, and it remains uncertain when the full array of benefits expected from this modernization will be available to the public and the airlines, including ourselves.

Failure to update the ATC system and the substantial costs that may be imposed on airlines, including ourselves, to fund a modernized ATC system may have a material adverse effect on our business.

Further, our business has been adversely impacted when government agencies have ceased to operate as expected, including due to partial shutdowns, sequestrations or similar events and the COVID-19 pandemic.

These events have resulted in, among other things, reduced demand for air travel, an actual or perceived reduction in air traffic control and security screening resources and related travel delays, as well as disruption in the ability of the FAA to grant required regulatory approvals, such as those that are involved when a new aircraft is first placed into service.

Failure to update the ATC system and the substantial costs that may be imposed on airlines, including ourselves, to fully fund a modernized ATC system may have a material adverse effect on our business.

Our operating authority in international markets is subject to aviation agreements between the U.S.

1 unchanged sentence

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

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

government has negotiated “open skies” agreements with more than 130 trading partners.

These agreements allow unrestricted route authority access between the U.S.

and the foreign markets.

While the U.S.

has worked to increase the number of countries with which open skies agreements are in effect, a number of markets important to us, including China, do not have open skies agreements.

For example, the open skies air services agreement between the U.S.

and the EU, which took effect in March 2008, provides airlines from the U.S.

and EU member states open access to each other’s markets, with freedom of pricing and unlimited rights to fly from the U.S.

to any airport in the EU.

As a result of the agreement and a subsequent open skies agreement involving the U.S.

and the United Kingdom, which was agreed in anticipation of Brexit, we face increased competition in these markets,

including LHR.

Bilateral and multilateral agreements among the U.S.

has worked to increase the number of countries with open skies agreements, a number of significant markets, including China, do not have open skies agreements.

In other instances, where there are open skies agreements, countries fail to fully implement the agreements or take actions that contravene the agreements.

In these instances, we may be unable to fully realize the benefit of “open skies” agreements in foreign markets.

In addition, bilateral and multilateral agreements among the U.S.

and various foreign governments of countries we serve but which are not covered by an open skies treaty are subject to periodic renegotiation.

We currently operate a number of international routes under government arrangements that limit the number of airlines permitted to operate on the route, the capacity of the airlines providing services on the route, or the number of airlines allowed access to particular airports.

If an open skies policy were to be adopted for any of these markets, it could adversely impact us and could result in impairments of our related tangible and intangible assets.

If an open skies policy were to be adopted for any of these markets, it could adversely impact us and could impair our related tangible and intangible assets.

In addition, competition from foreign airlines, revenue-sharing joint ventures, joint business agreements, and other alliance arrangements by and among other airlines could impair the value of our business and assets on the open skies routes.

On May 1, 2021 the EU and United Kingdom entered into a new trade and cooperation agreement (the EU-UK Trade and Cooperation Agreement) to govern certain aspects of their relationship following Brexit.

We continue to face risks associated with Brexit, notably given the extent of our passenger and cargo traffic and that of our joint business partners that flows through LHR in the United Kingdom.

The EU-UK Trade and Cooperation Agreement includes provisions in relation to commercial air service that we expect to be sufficient to sustain our current services under the transatlantic joint business.

However, the scope of traffic rights under the EU-UK Trade and Cooperation Agreement is less extensive than before Brexit and therefore the full impact of the EU-UK Trade and Cooperation Agreement is uncertain.

As a result, the continuation of our current services, and those of our partners could be disrupted.

This could materially adversely affect our business, results of operations and financial condition.

The change in government in the United Kingdom in July 2024 may lead to new aviation policies that could materially adversely affect our business, results of operations and financial condition.

More generally, changes in U.S.

or foreign government aviation policies could result in the alteration or termination of such agreements, diminish the value of route authorities, slots or other assets located abroad, or otherwise adversely affect our international operations.

We can be adversely affected by any prolonged U.S.

Government shutdown.

A prolonged disruption in U.S.

federal government operations, including lapses in appropriations or extended continuing resolutions, has in the past and could in the future materially and adversely affect our business, financial condition and results of operations.

When government agencies reduce or suspend operations, aviation system regulators—including the FAA and the TSA—may experience staffing constraints, furloughs, curtailed activities, and related operational limitations.

In the fourth quarter of 2025, conditions led to mandated schedule reductions, strained air traffic control and security screening resources, reduced air traffic capacity at key U.S.

airports, and increased delays and cancellations.

Shutdown-related uncertainty can also dampen both business and leisure travel demand and slow booking trends, causing short-term business challenges.

In addition, curtailed FAA activities during shutdowns can delay regulatory

approvals and certifications necessary for airline operations, including those related to placing new aircraft into service, which can disrupt execution of fleet and growth plans.

Because the timing, duration, scope and operational effects of shutdowns and related capacity reduction mandates are uncertain—and can vary across airports and regions—future events of this nature could result in lower load factors and yields, higher unit costs, and reduced operational reliability.

The cumulative impact of these factors could be material to our operations and financial performance.

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.

We operate a global business with significant operations outside of the U.S.

Our current international activities and prospects have been, and in the future could be, adversely affected by government policies, reversals or delays in the opening of foreign markets, increased competition in international markets, the performance of our alliance, joint business and codeshare partners in a given market, exchange controls or other restrictions on repatriation of funds, currency and political risks (including changes in exchange rates and currency devaluations), environmental regulation, increases in taxes and fees and changes in international governmental regulation of our operations, including the inability to obtain or retain needed route authorities and/or slots, and new or evolved policies related to consumer protections.

In particular, the COVID-19 pandemic severely impacted the demand for international travel for a prolonged period, and resulted in the imposition of significant governmental restrictions on commercial air service to or from certain regions.

For example, the COVID-19 pandemic severely impacted the demand for international travel for a prolonged period, and resulted in the imposition of significant governmental restrictions on commercial air service to or from certain regions.

We responded by temporarily suspending a significant portion of our long-haul international flights and delaying the introduction of certain new long-haul international routes.

In spite of the elimination of COVID-19 related travel restrictions, we can provide no assurance as to when demand for international travel will return to pre-COVID-19 pandemic levels in certain markets, if at all, or whether certain international destinations we previously served will be economical in the future.

We are subject to varying registration requirements and ongoing reporting obligations in the countries where we operate.

Our permission to continue doing business in these countries may depend on our ability to timely fulfil or remedy any noncompliance with these and other governmental requirements.

We may also be subject to the risk that relevant government agencies will be delayed in granting or renewing required approvals, including as a result of shutdowns (such as occurred in certain jurisdictions during the COVID-19 pandemic), cybersecurity incidents or other events.

We may also be subject to the risk that relevant government agencies will be delayed in granting or renewing required approvals, including as a result of shutdowns, cybersecurity incidents or other events.

Any lapse, revocation, suspension or delay in approval of our authority to do business in a given jurisdiction may prevent us from serving certain destinations and could adversely impact our business, financial condition and results of operations.

More generally, our industry may be affected by any deterioration in global trade relations, including shifts in the trade policies of individual nations.

More generally, our industry may be affected by any deterioration in global trade relations, including shifts in the trade policies of the U.S.

and other nations.

For example, much of the demand for international air travel is the result of business travel in support of global trade.

Should protectionist governmental policies, such as increased tariff or other trade barriers, travel limitations and other regulatory actions, have the effect of reducing global commercial activity, the result could be a material decrease in the demand for international air travel.

Additionally, certain of the products and services that we purchase, including certain of our aircraft and related parts, are sourced from suppliers located outside the U.S., and the imposition of new tariffs, or any increase in existing tariffs, by the U.S.

Should protectionist governmental policies, such as tariff or other trade barriers, travel limitations and other regulatory actions, have the effect of reducing global commercial activity, the result could be a material decrease in the demand for international air travel.

Additionally, certain products and services we purchase, including certain of our aircraft and related parts, are sourced from suppliers located outside the U.S., and the imposition of new tariffs, or any increase in existing tariffs, by the U.S.

government in respect of the importation of such products could materially increase the amounts we pay for them.

In addition, should additional or different retaliatory tariffs be imposed, our business could be harmed.

We continue to face risks associated with Brexit, notably given the extent of our passenger and cargo traffic and that of our joint business partners that flows through LHR in the United Kingdom.

As a result, the continuation of our current services, and those of our partners could be disrupted.

Moreover, Brexit has created uncertainty as to the future trade relationship between the EU and the United Kingdom, including air traffic services.

LHR is presently a very important element of our international network, however it may become less desirable as a destination or as a hub location after Brexit when compared to other airports in Europe, where we do not have as strong a presence.

This could materially adversely affect our business, results of operations and financial condition.

The change in government in the United Kingdom in July 2024 may lead to new aviation policies that could materially adversely affect our business, results of operations and financial condition.

Brexit has also led to legal and regulatory uncertainty such as new regulatory action and/or potentially divergent treaties, laws and regulations as the United Kingdom determines which EU treaties, laws and regulations to replace or replicate, including those governing aviation, labor, environmental, data protection/privacy, competition and other matters applicable to the provision of air transportation services by us or our alliance, joint business or codeshare partners.

The impact on our business of any treaties, laws and regulations that replace the existing EU counterparts, or other governmental or regulatory actions taken by the United Kingdom or the EU in connection with or subsequent to Brexit, cannot be predicted, including whether or not regulators will continue to approve or impose material conditions on our business activities such as the transatlantic joint business.

See also “The airline industry is intensely competitive and dynamic.” Any of these effects, and others we cannot anticipate, could materially adversely affect our business, results of operations and financial condition.

We continue to examine any ongoing risks associated with Brexit, notably given the extent of our passenger and cargo traffic and that of our joint business partners that flows through LHR in the United Kingdom.

The EU-UK Trade and Cooperation Agreement (TCA) has been in force since May 1, 2021.

The TCA includes a set of review dates, including a general provision in Article 776 of the TCA for review of implementation of the entire TCA five years after it comes into force, and then every five years thereafter.

The first review is due in 2026.

We will continue to monitor whether the review will impact air traffic services and whether the UK government’s desire for a reset in EU-UK relations will result in any material changes to the operation of air transport under the TCA.

LHR remains a very important element of our international network and significant adverse changes to the EU-UK relationship could materially adversely affect our business, results of operations and financial condition.

Additionally, fluctuations in foreign currencies, including devaluations, exchange controls and other restrictions on the repatriation of funds, have significantly affected and may continue to significantly affect our operating performance, liquidity and the value of any cash held outside the U.S.

in local currency.

Such 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.

We cannot predict fluctuations in foreign currencies, including devaluations, which can significantly affect the value of our assets 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.

2 unchanged sentences

Acts of terrorism and other violence, domestically or abroad, or fear of such attacks, including elevated national threat warnings, wars or other military conflicts, may depress air travel, particularly on international routes, and cause declines in revenues and increases in costs.

The attacks of September 11, 2001 and continuing terrorist threats, attacks and attempted attacks materially impacted and continue to impact air travel.

Increased security procedures introduced at airports since the attacks of September 11, 2001 and any other such measures that may be introduced in the future generate higher operating costs for airlines.

The September 11, 2001 attacks and continuing terrorist threats, attacks and attempted attacks materially impacted and continue to impact air travel.

Increased security procedures introduced at airports since September 11, 2001 and any other such future measures generate higher operating costs for airlines.

The Aviation and Transportation Security Act mandated improved flight deck security, deployment of federal air marshals on-board flights, improved airport perimeter access security, airline crew security training, enhanced security screening of passengers, baggage, cargo, mail, employees and vendors, enhanced training and qualifications of security screening personnel, additional provision of passenger data to the U.S.

7 unchanged sentences

For instance, airspace closures or restrictions may require us to alter flight paths or make further operational adjustments, such as changes to preferred diversion locations, thereby increasing the distance, duration and amount of fuel required to operate certain international flights, in particular relative to competitors not subject to these airspace restrictions.

Armed conflicts in or affecting international markets we serve could also adversely impact our

business by, among other things, depressing demand for travel to certain regions or requiring us to suspend air service to certain destinations.

For example, in October 2023, we suspended our service to Tel Aviv, Israel, and cannot predict when, or if, we will be in a position to restore such service.

The outbreak or spread of armed conflict could force us to make additional reductions or changes to our service and could result in volatility in oil markets and disruptions to global trade, which could materially increase our costs or impact our supply chains.

Armed conflicts in or affecting international markets we serve could also adversely impact our business by, among other things, depressing demand for travel to certain regions or requiring us to suspend air service to certain destinations.

Recent or threatened armed conflicts, security events and geopolitical risks, involving countries such as Cuba, Iran, Israel, Russia, Ukraine and Venezuela, could impact our business.

The outbreak or spread of armed conflict and security threats could force us to make additional reductions or changes to our service and could result in volatility in oil markets, disruptions to global trade and airspace restrictions, which could materially increase our costs or impact our supply chains.

We are subject to risks associated with climate change, including increased regulation of our GHG emissions, changing consumer preferences and the potential for increased impacts of severe weather events on our operations and infrastructure.

Efforts to combat climate change have increased the focus by regulators worldwide on the need to reduce GHG emissions, including those from the airline industry.

Concerns over GHG emissions have prompted regulators around the world, including but not limited to the EU and UK, to develop regulations to increase demand and investments in SAF.

These mandates may also lead to further attempts to adopt requirements or change business environments related to aviation that may result in increased costs to the airline industry and us.

In addition, several countries and U.S.

states have adopted or are considering adopting programs, including potentially new taxes, to regulate GHG emissions.

In addition, certain airports have proposed, and could in the future adopt, GHG emission or climate-related goals or measures that could impact our operations or require us to make changes or investments in our infrastructure.

In particular, ICAO has adopted rules, including those pertaining to CORSIA, which will require us to mitigate the growth of GHG emissions associated with a significant majority of our international flights.

At this time, the costs of complying with our future obligations under CORSIA are uncertain, primarily due to significant uncertainty with respect to the future growth of covered GHG emissions, the supply and price of eligible carbon credits and the future development of the market for eligible renewable fuels.

Due to the competitive nature of the airline industry and unpredictability of the market for air travel, we can offer no assurance that we may be able to increase our fares, impose surcharges or otherwise increase revenues or decrease other operating costs sufficiently to offset the costs of meeting our obligations under CORSIA.

Due to the uncertainty surrounding the applicability of CORSIA to our operations in the long-term, we and other airlines are increasingly subject to an unpredictable and inconsistent array of national or regional emissions restrictions, creating a patchwork of complex regulatory requirements that could lead to increased expenses related to the emissions of our flights.

Global efforts to address climate change have prompted regulators worldwide to promulgate regulations to reduce GHG emissions, including those from the airline industry.

Several countries and U.S.

states have adopted or are considering adopting programs, including potentially new taxes, designed to cap or reduce aviation’s GHG emissions.

In addition, certain airports have proposed, and in the future could adopt, GHG emission or climate-related goals or measures that could impact our operations or require us to make further investments in our infrastructure.

These regulations may also lead to attempts to adopt requirements or change business environments related to aviation that may result in increased costs to us and the airline industry.

Internationally, ICAO has adopted rules, including those pertaining to CORSIA, which will require us to mitigate the growth of emissions associated with a significant majority of our international flights.

At this time, the costs of complying with our future obligations under CORSIA are uncertain, primarily due to significant uncertainty with respect to the status of the U.S.

government implementation of CORSIA requirements, the future growth of covered GHG emissions, the supply and price of eligible carbon credits and the future development of the market for eligible renewable fuels.

We and other airlines are increasingly subject to an unpredictable and inconsistent array of international, national and regional emissions restrictions, creating a patchwork of complex regulatory requirements that could lead to increased expenses related to the emissions of our flights.

Furthermore, recent implementation of and potential for other new regulatory initiatives to reduce airline GHG emissions may increase our compliance costs.

1 unchanged sentence

Business – “Domestic and Global Regulatory Landscape.

In addition, as part of our emissions reduction goals, we and other airlines have publicly announced long-term targets for the increased use of SAF in our fleet.

As a result, SAF may be significantly more costly than conventional jet fuel.

To secure future SAF supply, we have entered into multiple agreements for the purchase of future SAF production, and we continue to engage with producers regarding potential future SAF purchases, which may include investments and other commitments to support these producers.

Certain existing or potential future agreements pertain to SAF production from facilities that are planned but not yet financed, and which may utilize technology that has not been proven at commercial scale.

We have published a number of sustainability-related targets and goals, including reducing our GHG emissions and the GHG-intensity of our operations.

These goals are often long-term in nature, and in many cases rely on assumptions about the future availability and efficacy of technologies that are not yet commercially viable or do not yet exist.

Our ability to meet our publicly stated targets depends on a number of factors outside our control, including the ability of third parties, such as engine and airframe manufacturers, SAF producers and other industry participants, to timely develop and commercialize these technological solutions at scale and competitive prices.

In addition, as part of our emissions reduction goals, we and other airlines have publicly announced future targets to increase our use of SAF.

Industrial production of SAF continues to be small in scale and well below the volumes needed to meet these goals.

Furthermore, current SAF prices are significantly higher than the price of conventional jet fuel.

While production capacity is expected to grow in the coming years, we anticipate that SAF will remain significantly more costly than conventional jet fuel.

To secure SAF supply, we have entered into multiple agreements for the purchase of current and future SAF production, and we continue to engage with producers regarding potential future SAF purchases, which may include investments and other commitments to support these producers.

Certain existing or potential future agreements pertain to SAF production from facilities that are planned but not yet financed and may utilize technology that has not been proven on a commercial scale.

There is no assurance that these facilities will be built or that they will meet contracted production timelines and volumes.

Additionally, growing recognition among consumers of the dangers of climate change may mean some customers choose to fly less frequently or fly on an airline they perceive as operating in a manner that produces fewer GHG emissions.

In the event that SAF is not delivered on schedule or in sufficient volumes, there can be no assurance that we will be able to source a supply of SAF sufficient to meet our stated goals, or that we will be able to do so on favorable economic terms.

We face risks associated with allegations or similar claims that our public statements, including but not limited to press releases, advertising campaigns, marketing programs or commercial offerings describing our sustainability efforts are exaggerated, unsubstantiated or inconsistent with then-current regulations, sometimes referred to as “greenwashing.” We could be subject to litigation or regulatory enforcement actions challenging the basis for such statements which could be costly and disruptive, whether or not meritorious.

Additionally, growing recognition among consumers of the risks of climate change may mean some customers choose to fly less frequently or fly on an airline they perceive as operating in a manner that produces fewer GHG emissions.

Business customers may choose to use alternatives to travel, such as virtual meetings and workspaces.

Greater development of high-speed rail in markets now served by short-haul flights could provide passengers with lower-carbon alternatives to flying with us.

Customers may also elect to travel on flights that produce comparatively fewer GHG emissions, particularly after commencement of the EU environmental labelling scheme for flights in 2025.

Our collateral to secure loans, in the form of aircraft, airport slots, gates and routes, could lose value as customer demand shifts and economies move to low-carbon alternatives, which may increase our financing cost.

We have published a number of sustainability-related targets and goals, including with respect to reducing our GHG emissions.

These goals are often long-term in nature, and in many cases rely on assumptions about the future availability

and efficacy of technologies that do not yet exist or are not yet commercially viable.

Our ability to meet our publicly stated targets is dependent on a number of factors outside our control, including but not limited to the ability of third parties, such as engine and airframe manufacturers, SAF producers and other industry participants, to timely develop and commercialize these technological solutions.

Additionally, we face risks associated with allegations or similar claims that our public statements concerning our sustainability efforts or our advertising campaigns, marketing programs or commercial offerings are exaggerated, unsubstantiated or inconsistent with then-current regulations, sometimes referred to as “greenwashing,” and could be subject to litigation or regulatory enforcement actions challenging the basis for such statements which could be costly and disruptive, whether or not meritorious.

Finally, the potential acute and chronic physical effects of climate change, such as increased frequency and severity of storms, floods, fires, sea-level rise, excessive heat, longer-term changes in weather patterns and other climate-related events, could affect our operations, infrastructure and financial results as well as the safety of our team members.

Operational impacts, such as more frequent or widespread flight cancellations, could result in loss of revenue.

We could incur significant costs to improve the climate resiliency of our infrastructure and otherwise prepare for, respond to, and mitigate such physical effects of climate change.

We could incur significant costs to improve the climate resiliency of our infrastructure and operations and otherwise prepare for, respond to, and mitigate such physical effects of climate change.

We are not able to predict accurately the materiality of any potential losses or costs associated with the physical effects of climate change.

We are subject to various risks associated with environmental and social matters.

There is increased scrutiny from investors, customers, policymakers, governmental officials and other stakeholders regarding company management of climate change, human capital, and various other environmental and social matters.

We engage in various initiatives to manage such matters and address stakeholder expectations;

however, such initiatives can be costly and may not have the desired effect.

For example, many of our initiatives leverage methodologies, standards, and data that are complex and continue to evolve.

As with other companies, our approach to such matters also evolves, and we cannot guarantee that our approach will align with the expectations or preferences of any particular stakeholder.

Moreover, various stakeholders have different, and at times conflicting, expectations.

There is increased scrutiny from investors, customers, policymakers, regulators and other stakeholders regarding company management of climate change, human capital and other environmental and social matters.

We engage in various initiatives and programs to manage these matters and address stakeholder expectations.

However, such initiatives and programs can be costly and at times controversial;

they also may not achieve their intended outcome.

Moreover, we cannot guarantee that our approach will align with the expectations or preferences of any particular stakeholder.

Various stakeholders have different, and at times conflicting, expectations.

For example, while some policymakers (such as the State of California and the European Union) have adopted requirements for various disclosures or actions on environmental and social matters, policymakers in other jurisdictions have sought to constrain companies’ consideration of such matters in certain circumstances.

Proponents and opponents of such matters are increasingly resorting to activism, including litigation, to advance their perspectives.

Addressing stakeholder expectations or requirements may be costly and any failure to successfully navigate such expectations, as well as evolving interpretations of any existing governmental laws or requirements, may result in reputational harm, loss of customers or contracts, regulatory or investor engagement, or other adverse impacts to our business.

We are subject to many forms of environmental and noise regulation and may incur substantial costs as a result.

We are subject to a number of increasingly stringent federal, state, local and foreign laws, regulations and ordinances relating to the protection of human health and the environment and noise reduction, including those relating to emissions to the air, discharges to land and surface and subsurface waters, safe drinking water, and the management of hazardous substances, oils and waste materials.

to the air, discharges to land and surface and subsurface waters, safe drinking water, and the management of hazardous substances, oils and waste materials.

This universe of substances is evolving to encompass many substances not previously regulated.

5 unchanged sentences

Governmental authorities in the U.S.

and abroad are increasingly focused on potential contamination resulting from the use of certain chemicals, most notably per- and polyfluoroalkyl, substances (PFAS).

and abroad (including in the EU) are increasingly focused on potential contamination resulting from the use of certain chemicals, most notably per- and polyfluoroalkyl substances (PFAS).

Products containing PFAS have been used in manufacturing, industrial, and consumer applications over many decades, including those related to aviation.

Among other things, recent changes to federal requirements for firefighting foams containing PFAS, as well as related state regulations affecting their use, will require operational and infrastructure changes.

In February 2024, the EPA published, for public comment, a new rulemaking to list nine PFAS as hazardous constituents under the Resource

Conservation and Recovery Act.

In February 2024, the EPA published, for public comment, a new rulemaking to list nine PFAS as hazardous constituents under the Resource Conservation and Recovery Act.

In April 2024, the EPA published a final rule designating two PFAS substances (perfluorooctanoic acid and perfluorooctanesulfonic acid) as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act.

This new rule requires entities to immediately report current and past releases of such substances that meet or exceed the reportable quantity to EPA’s National Response Center.

These rulemakings could require additional oversight and management of PFAS-containing waste.

This rule requires entities to immediately report releases of such substances that meet or exceed the reportable quantity to EPA’s National Response Center.

These rulemakings could require additional oversight and management of PFAS-containing materials and waste.

We may incur costs in connection with current and future reporting obligations, costs related to materials management and historic usage and disposal of PFAS-containing materials, transitioning away from the usage of PFAS-containing products and firefighting systems, or remediating any environmental impacts.

5 unchanged sentences

We have been able to accommodate local noise restrictions imposed to date, but our operations could be adversely affected if locally-imposed regulations become more restrictive or widespread.

At the international level, we are closely monitoring noise-related regulations and relevant standards set forth in aviation agreements between the U.S.

government and other applicable authorities.

The FAA is also currently evaluating possible changes to how aircraft noise is measured and the resulting standards that are based on them.

Ultimately, these changes could have an impact on, or limit, our operations, or make it more difficult for the FAA to modernize and increase the efficiency of the airspace and airports we utilize.

However, at this time we do not expect such impact to be material.

A high level of pilot retirements, stringent duty time regulations, increased flight hour requirements for commercial airline pilots, reductions in the number of military pilots entering the commercial workforce, increased training requirements and other factors have caused a shortage of pilots that could materially adversely affect our business.

2 unchanged sentences

armed forces and available as commercial pilots upon their retirement from military service has decreased.

These and other factors have contributed to a prolonged shortage of pilots and increased compensation costs.

These and other factors have contributed to a shortage of pilots that at times have been severe and increased compensation costs.

We believe that pilot shortages will remain a problem for the foreseeable future.

Our recruitment efforts or other incentives to recruit pilots may not be successful.

Our regional airline subsidiaries and other regional partners have been unable to hire adequate numbers of pilots to meet their needs, resulting in a reduction in the number of flights offered, operational disruptions, increased compensation expense and costs of operations, financial difficulties and other adverse effects.

The pilot shortage has been most acute for regional airlines.

It remains possible that our regional airline subsidiaries and other regional

partners could have difficulties hiring adequate numbers of pilots to meet their needs, which could result in a reduction in the number of flights offered, operational disruptions, increased compensation expense and costs of operations, financial difficulties and other adverse effects.

We depend on a limited number of suppliers for aircraft, aircraft engines and parts.

2 unchanged sentences

For example, all of our mainline aircraft were manufactured by either Airbus or Boeing and all of our regional aircraft were manufactured by either Bombardier or Embraer.

Further, our supplier base continues to consolidate as evidenced by recent transactions involving Airbus and Bombardier and Mitsubishi and Bombardier, and the cessation of production of certain Bombardier regional aircraft that we and our regional partners currently operate in large numbers.

Further, our supplier base continues to consolidate as evidenced by the cessation of production of Bombardier regional aircraft that we and our regional partners currently operate in large numbers.

Due to the limited number of suppliers, constraints on production capacity, large order books and long production lead times, manufacturers have faced and are expected to continue to face challenges in timely fulfilling our aircraft on order, and we may face competition from other carriers in securing an adequate supply of aircraft in the future.

2 unchanged sentences

In addition, we are vulnerable to any problems associated with the performance of these suppliers’ obligation to supply key aircraft, parts and engines, including design defects, mechanical problems, contractual performance by suppliers or adverse perception by the public that would result in customer avoidance of any of our aircraft.

We may also experience delivery delays with respect to components or equipment that we have contracted to

purchase from third-party suppliers (so-called “buyer-furnished equipment”) and required for the outfitting of our aircraft.

Failure of our suppliers to timely deliver such components or equipment could delay certification of these aircraft and their entry into service, and could prevent us from financing such aircraft, requiring us to pay for new deliveries using cash on hand.

We may also experience delivery delays with respect to components or equipment that we have contracted to purchase from third-party suppliers (so-called “buyer-furnished equipment”) and required for the outfitting of our aircraft.

Failure of our suppliers to timely deliver such components or equipment has in the past and could in the future delay certification of these aircraft or components and their entry into service, and could prevent us from financing such aircraft, requiring us to pay for new deliveries using cash on hand.

If the aircraft we receive do not meet expected performance or quality standards, including with respect to fuel efficiency, safety and reliability, we could also face higher financing and operating costs than planned and our business, results of operations and financial condition could be adversely impacted.

2 unchanged sentences

An additional grounding of Boeing aircraft occurred in January 2024 involving the Boeing 737-9 MAX, a model that we do not operate.

Further, significant limitations imposed on the use of Pratt & Whitney GTF aircraft engines (an engine that we do not use in our fleet) on certain Airbus aircraft have resulted in very significant numbers of the related aircraft being grounded while awaiting refurbished engines.

Regulatory concerns raised by the FAA also previously forced Boeing to suspend deliveries of certain 787 aircraft, temporarily resulting in significant reductions to our planned long-haul flying.

More generally, we have recently experienced delivery delays across manufacturers of aircraft engines and components due to regulatory matters such as those described above, regulatory restrictions on production rate increases (such as those that the FAA has recently imposed on Boeing 737 production), supply chain limitations, development delays, certification delays, and other factors, which have created significant challenges in planning our fleet, and the FAA has publicly stated that the restrictions on Boeing’s production rate are likely to continue for the foreseeable future.

For example, due to a strike action affecting certain of its production facilities, Boeing suspended production of its 737 MAX Family aircraft until December 2024.

As a result, certain of our Boeing 737 MAX Family aircraft on order could be delayed, and such delays could be significant.

More generally, we have recently experienced delivery delays across manufacturers of aircraft engines and components due to regulatory matters such as those described above.

There is also the prospect that new aircraft models will continue to face certification delays further impeding the delivery of new aircraft to the airline industry and increasing competition for the production capacity that is available.

In addition, we source a portion of our aircraft, aircraft engines and parts from outside the U.S., and any additional tariffs imposed may lead to higher costs, negatively affect our supply chains and adversely affect our business and results of operations.

There have also been challenges leading to aircraft delivery delays specifically around the certification of new seats and seat designs.

In addition, we source a portion of our aircraft, aircraft engines and parts from outside the U.S., and any tariffs imposed may lead to higher costs, negatively affect our supply chains and adversely affect our business and results of operations.

For example, there are presently in place tariffs on certain goods, including aircraft, from Brazil, which is the sole source of our new regional jets.

Finally, we also face supply chain risks from disruptions in global trade, including the imposition of tariffs and non-tariff barriers with respect to aircraft and related parts that we are not able to mitigate.

The success of our business depends on, among other things, effectively managing the number and types of aircraft we operate.

3 unchanged sentences

Repeated or prolonged delays in the production, delivery or induction of our new aircraft could also require us to scale back our growth plans, reduce frequencies or forgo service entirely to certain markets, which could adversely affect our business, financial condition and results of operations.

W e rely heavily on technology and automated systems, including artificial intelligence (AI), to operate our business and any failure of these technologies or systems could harm our business, results of operations and financial condition.

We are highly dependent on existing and emerging technology and automated systems, including AI, to operate our business.

Substantially all of our tickets are issued to passengers as electronic tickets.

We depend on our reservation system, which is hosted and maintained under a long-term contract by a third-party service provider, to be able to issue, track and accept these electronic tickets.

These technologies could pose risks to the safe operation of aircraft by diverting pilots’ attention and potentially resulting in operational disruptions.

When service interruptions occur as a result of any of the aforementioned events, we address them in accordance with applicable laws, rules and regulations.

However, substantial or sustained system failures could cause service delays or failures and result in our customers purchasing tickets from other airlines.

We cannot assure that our security measures, change control procedures or disaster recovery plans are adequate to prevent disruptions or delays.

Disruption in or changes to these technologies or systems could result in a disruption to our business and the loss of important data.

Any of the foregoing could result in a material adverse effect on our business, results of operations and financial condition.

Additionally, new technologies, such as the use of AI and machine learning, may present evolving and significant legal and operational risks for us and our third-party vendors.

The development of generative AI technologies is complex, with practical and competitive challenges in achieving desired accuracy, efficiency and reliability.

Generative AI training content, algorithms, models, software and other related systems may have limitations, including biases, errors or inability to process or restrict certain data types or scenarios.

Additionally, there is a risk of system failures, disruptions or vulnerabilities compromising the confidentiality of personal data and intellectual property, or the integrity or availability of training content, input content and prompts, as well as generated content, including disinformation and deepfakes.

Our competitors or other third parties may incorporate AI into their products or services more quickly or more successfully than us, which could impair our ability to compete effectively.

AI also presents emerging ethical issues, and if our use of AI becomes controversial, we may experience brand or reputational harm, competitive harm or legal liability.

For example, with the increased use of artificial intelligence and social media, adverse publicity, even if unfounded, can be disseminated quickly and broadly without context, making it increasingly difficult for us to effectively respond.

The rapid evolution of AI, including proposed government regulation, may require significant resources to develop, test and maintain our AI technologies and services to ensure compliance and minimize adverse impacts.

Any limitations or failures relating to any of the foregoing could result in reputational damage, legal liabilities or loss of customer confidence.

There can be no assurance that the usage of AI will enhance our strategies or initiatives.

Evolving data privacy requirements (in particular, compliance with applicable federal, state and foreign laws relating to handling of personal information about individuals) could increase our costs, and any significant data privacy incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of operations and financial condition.