AMR Files 2002 Financial Report

When you open the document on the net, just click on the "quick links" at the top left of the form, it will give you a short menu that helps you jump to specific topics of interest in the filing.

I''d like to give you the high points, but I believe every employee owes it to themselves to read this document in detail. It answers a lot of questions, and lays to rest may speculations and rumors.
 
Now that''s an ugly financial statement. For comparison purposes I went to the WN website and got their data as compared to AA.

Passenger Revenue Yield Per RPM AA- 11.86 WN - 11.69
Operating Expenses Per ASM AA- 11.41 WN - 7.41

The problem is not only the costs, it''s a revenue problem.
Until we solve the revenue problem, all the concessions in the world won''t save us. Look at all the markets where we have business class, premium class, first class and international flying. With all that considered it''s very depressing that WN who guarantees full fares no more than 299.00 on any market has an RPM .17 cents lower than ours.
 
My thoughts:

- 2002 Operating Cash Flow = -1,111M (Woaw! That is not good)
- CAPEX has been cut by 2,000M (not sustainable, business is eating itself)
- Cash flow gap is being funded by debt (not sustainable)
- negative 2B working cap

Not sure if this is a sustainable business model.
 
A couple of other AMR SEC filing goodies have just come to light. On October 14, 2002, AMR established an "irrevocable trust" with Wachovia Bank in Delaware, to provide a shelter for senior management retirement funds from any possible future creditor claims, including bankruptcy (SEC pg. 301). Also, AMR's own internal auditors thought bankruptcy was nearly inevitable, even if all labor concessions were realised. When AMR requested an extension beyond the April 1st SEC filing deadline, an April 15th extension was approved. Is this why the TA ratification voting was originally scheduled to be complete by April 14th? Will the FA's learn of these developments by vote closing tomorrow?
 
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On 4/15/2003 10:24:18 PM AOA wrote:

A couple of other AMR SEC filing goodies have just come to light. On October 14, 2002, AMR established an "irrevocable trust" with Wachovia Bank, to provide a shelter for senior management retirement funds from any possible future creditor claims, including bankruptcy. Also, AMR''s own internal auditors thought bankruptcy was nearly inevitable, even if all labor concessions were realised. When AMR requested an extension beyond the April 1st SEC filing deadline, an April 15th extension was approved. Is this why the TA ratification voting was originally scheduled to be complete by April 14th? Will the FA''s learn of these developments by vote closing tomorrow?

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AMR gave labor groups until 4/15 because it had millions of dollars of debt payments due today (the expiration of the grace period). By not filing today, AMR paid millions of that debt service. Read it for yourself at:

http://biz.yahoo.com/djus/030415/1748001337_1.html

April 15 was a real deadline, not an arbitrary date. AMR''s payment of this debt (necessary because of the delay) at least demonstrates how much management wants to avoid Chapter 11.
 
The SEC filing was on time - April 15th. Which is why I believe AA wanted the voting completed and counted on the 14th.

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The whole point is that it is extremely likely that the deadline extension for the SEC filing was requested to prevent the report from surfacing until after the TA's were voted upon. The filing contains information that would prove highly inflammatory to unionized employees being asked for huge pay and benefit concessions under the threat of bankruptcy.