Table	of	Contents

# UNITED	STATES	SECURITIES	AND	EXCHANGE	COMMISSION

# ANNUAL	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

For	the	Fiscal	Year	Ended	December	31,	2014

¨ TRANSITION	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

Commission	file	number	1-8400

# American	Airlines	Group	Inc.

(Exact	name	of	registrant	as	specified	in	its	charter)

Delaware

(State	or	other	jurisdiction	of

incorporation	or	organization)

(Address	of	principal	executive	offices,	including	zip	code)

(I.R.S.	Employer

Identification	No.)

Registrant's	telephone	number,	including	area	code

(Former	name,	former	address	and	former	fiscal	year,	if	changed	since	last	report)

Securities	registered	pursuant	to	Section	12(b)	of	the	Act:

Common	Stock,	$0.01	par	value	per	share

Name	of	Exchange	on	Which	Registered

NASDAQ

Securities	registered	pursuant	to	Section	12(g)	of	the	Act:	None

# American	Airlines,	Inc.

# Securities	registered	pursuant	to	Section	12(b)	of	the	Act:	None

Indicate	by	check	mark	if	the	registrant	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the	Securities	Act.

American	Airlines	Group	Inc. Yes	þ No	¨

Indicate	by	check	mark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	Section	15(d)	of	the	Act.

Indicate	by	check	mark	whether	the	registrant	(1)	has	filed	all	reports	required	to	be	filed	by	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934	during	the	preceding	12	months	(or	for	such	shorter	period	that the	registrant	was	required	to	file	such	reports),	and	(2)	has	been	subject	to	such	filing	requirements	for	the	past	90	days.

Indicate	by	check	mark	whether	the	registrant	has	submitted	electronically	and	posted	on	its	corporate	Web	site,	if	any,	every	Interactive	Data	File	required	to	be	submitted	and	posted	pursuant	to	Rule	405	of

Regulation	S-T	(§232.405	of	this	chapter)	during	the	preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	submit	and	post	such	files).

Indicate	by	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	(§	229.405)	is	not	contained	herein,	and	will	not	be	contained,	to	the	best	of	registrant's	knowledge,	in	definitive	proxy or	information	statements	incorporated	by	reference	in	Part	III	of	this	Form	10-K	or	any	amendment	to	this	Form	10-K.

Indicate	by	check	mark	whether	the	registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	or	a	non-accelerated	filer.	See	definition	of	"accelerated	filer"	and	"large	accelerated	filer"	in	Rule	12b-2	of	the	Exchange Act.

American	Airlines	Group	Inc.	þ Large	Accelerated	Filer	¨ 		 Accelerated	Filer	¨ 		 Non-accelerated	Filer	¨ Smaller	Reporting	Company

American	Airlines,	Inc.	¨ Large	Accelerated	Filer	¨ 		 Accelerated	Filer	þ 		 Non-accelerated	Filer	¨ Smaller	Reporting	Company

Indicate	by	check	mark	whether	the	registrant	is	a	shell	company	(as	defined	in	Rule	12b-2	of	the	Act).

Indicate	by	check	mark	whether	the	registrant	has	filed	all	documents	and	reports	required	to	be	filed	by	Section	12,	13,	or	15(d)	of	the	Securities	Exchange	Act	of	1934	subsequent	to	the	distribution	of	securities under	a	plan	confirmed	by	a	court.

As	of	February	20,	2015,	there	were	696,649,850	shares	of	American	Airlines	Group	Inc.	common	stock	outstanding.	The	aggregate	market	value	of	the	voting	stock	held	by	non-affiliates	of	the	registrant	as	of June	30,	2014,	was	approximately	$31	billion.

As	of	February	20,	2015,	there	were	1,000	shares	of	American	Airlines,	Inc.	common	stock	outstanding,	all	of	which	were	held	by	American	Airlines	Group	Inc.

# DOCUMENTS	INCORPORATED	BY	REFERENCE

Portions	of	the	proxy	statement	related	to	American	Airlines	Group	Inc.'s	2015	Annual	Meeting	of	Stockholders,	which	proxy	statement	will	be	filed	under	the	Securities	Exchange	Act	of	1934	within	120	days	of	the end	of	American	Airlines	Group	Inc.'s	fiscal	year	ended	December	31,	2014,	are	incorporated	by	reference	into	Part	III	of	this	Annual	Report	on	Form	10-K.

|  | American	Airlines	Group	Inc.<br>American	Airlines,	Inc.<br>Form	10-K<br>Year	Ended	December	31,	2014<br>Table	of	Contents<br>PART	I | Page |
| :--- | :--- | :--- |
| Item\t1. | \t Business | 5 |
| Item\t1A. | \t Risk\tFactors | 30 |
| Item\t1B. | \t Unresolved\tStaff\tComments | 52 |
| Item\t2. | Properties | 53 |
| Item\t3. | Legal\tProceedings | 56 |
| Item\t4. | \t Mine\tSafety\tDisclosures | 57 |
|  | PART\tII |  |
| Item\t5. | \t Market\tfor\tAmerican\tAirlines\tGroup's\tCommon\tStock,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases | 58 |
| Item\t6. | Selected\tConsolidated\tFinancial\tData | 62 |
| Item\t7. | \t Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 67 |
| Item\t7A. | \t Quantitative\tand\tQualitative\tDisclosures\tAbout\tMarket\tRisk | \t115 |
| Item\t8A. | \t Consolidated\tFinancial\tStatements\tand\tSupplementary\tData\tof\tAmerican\tAirlines\tGroup\tInc. | \t119 |
| Item\t8B. | \t Consolidated\tFinancial\tStatements\tand\tSupplementary\tData\tof\tAmerican\tAirlines,\tInc. | \t190 |
| Item\t9. | \t Changes\tin\tand\tDisagreements\twith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure | \t247 |
| Item\t9A. | \t Controls\tand\tProcedures | \t247 |
|  | PART\tIII |  |
| Item\t10. | \t Directors,\tExecutive\tOfficers\tand\tCorporate\tGovernance | \t251 |
| Item\t11. | Executive\tCompensation | \t251 |
| Item\t12. | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters | \t251 |
| Item\t13. | \t Certain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence | \t251 |
| Item\t14. | Principal\tAccountant\tFees\tand\tServices | \t251 |
|  | PART\tIV |  |
| Item\t15. | Exhibits\tand\tFinancial\tStatement\tSchedules | \t252 |
| SIGNATURES |  | \t253 |

This	combined	Annual	Report	on	Form	10-K	is	filed	by	American	Airlines	Group	Inc.	(formerly	named	AMR	Corporation)	(AAG)	and	its	wholly-owned	subsidiary American	Airlines,	Inc.	(American).	References	in	this	Annual	Report	on	Form	10-K	to	"we,"	"us,"	"our,"	the	"Company"	and	similar	terms	refer	to	AAG	and	its consolidated	subsidiaries.	As	more	fully	described	below,	on	December	9,	2013,	a	subsidiary	of	AMR	Corporation	merged	with	and	into	US	Airways	Group,	Inc.	(US Airways	Group),	which	survived	as	a	wholly-owned	subsidiary	of	AAG	(the	Merger).	Accordingly,	unless	otherwise	indicated,	information	in	this	Annual	Report	on Form	10-K	regarding	the	Company's	consolidated	results	of	operations	includes	the	results	of	US	Airways	Group	and	its	wholly-owned	subsidiaries,	including	US Airways,	Inc.	(US	Airways)	for	the	post-Merger	period	from	December	9,	2013	to	December	31,	2013	and	for	the	year	ended	December	31,	2014.	"AMR"	or	"AMR Corporation"	refers	to	the	Company	during	the	period	of	time	prior	to	its	emergence	from	Chapter	11	and	its	acquisition	of	US	Airways	Group.	References	in	this Annual	Report	on	Form	10-K	to	"mainline"	refer	to	the	operations	of	American	and	US	Airways,	as	applicable,	and	exclude	regional	operations.

# Glossary	of	Terms

For	the	convenience	of	the	reader,	the	definitions	of	certain	capitalized	industry	and	other	terms	used	in	this	report	have	been	consolidated	into	a	Glossary	beginning on	page	23.

# Note	Concerning	Forward-Looking	Statements

Certain	of	the	statements	contained	in	this	report	should	be	considered	forward-looking	statements	within	the	meaning	of	the	Private	Securities	Litigation	Reform	Act of	1995.	These	forward-looking	statements	may	be	identified	by	words	such	as	"may,"	"will,"	"expect,"	"intend,"	"anticipate,"	"believe,"	"estimate,"	"plan,"	"project," "could,"	"should,"	"would,"	"continue,"	"seek,"	"target,"	"guidance,"	"outlook,"	"if	current	trends	continue,"	"optimistic,"	"forecast"	and	other	similar	words.	Such statements	include,	but	are	not	limited	to,	statements	about	the	benefits	of	the	Merger,	including	future	financial	and	operating	results,	our	plans,	objectives,	expectations and	intentions,	and	other	statements	that	are	not	historical	facts,	such	as,	without	limitation,	statements	that	discuss	the	possible	future	effects	of	current	known	trends	or uncertainties,	or	which	indicate	that	the	future	effects	of	known	trends	or	uncertainties	cannot	be	predicted,	guaranteed	or	assured.	These	forward-looking	statements	are based	on	our	current	objectives,	beliefs	and	expectations,	and	they	are	subject	to	significant	risks	and	uncertainties	that	may	cause	actual	results	and	financial	position and	timing	of	certain	events	to	differ	materially	from	the	information	in	the	forward-looking	statements.	These	risks	and	uncertainties	include,	but	are	not	limited	to, those	described	below	under	Part	I,	Item	1A.	Risk	Factors	and	the	following:	significant	operating	losses	in	the	future;	downturns	in	economic	conditions	that	adversely affect	our	business;	the	impact	of	continued	periods	of	high	volatility	in	fuel	costs,	increased	fuel	prices	and	significant	disruptions	in	the	supply	of	aircraft	fuel; competitive	practices	in	the	industry,	including	the	impact	of	low	cost	carriers,	airline	alliances	and	industry	consolidation;	the	challenges	and	costs	of	integrating operations	and	realizing	anticipated	synergies	and	other	benefits	of	the	Merger;	our	substantial	indebtedness	and	other	obligations	and	the	effect	they	could	have	on	our business	and	liquidity;	an	inability	to	obtain	sufficient	financing	or	other	capital	to	operate	successfully	and	in	accordance	with	our	current	business	plan;	increased	costs of	financing,	a	reduction	in	the	availability	of	financing	and	fluctuations	in	interest	rates;	the	effect	our	high	level	of	fixed	obligations	may	have	on	our	ability	to	fund general	corporate	requirements,	obtain	additional	financing	and	respond	to	competitive	developments	and	adverse	economic	and	industry	conditions;	our	significant pension	and	other	post-employment	benefit	funding	obligations;	the	impact	of	any	failure	to	comply	with	the	covenants	contained	in	financing	arrangements;	provisions in	credit	card	processing	and	other	commercial	agreements	that	may	materially	reduce	our	liquidity;	the	limitations	of	our	historical	consolidated	financial	information, which	 is	not	directly	comparable	 to	our	financial	 information	for	prior	or	future	periods;	 the	 impact	of	union	disputes,	employee	strikes	and	other	 labor-related disruptions;	any	inability	to	maintain	labor	costs	at	competitive	levels;	interruptions	or	disruptions	in	service	at	one	or	more	of	our	hub	airports;	costs	of	ongoing	data security	compliance	requirements	and	the	impact	of	any	significant	data	security	breach;	any	inability	to	obtain	and	maintain	adequate	facilities,	infrastructure	and	Slots to	operate	our	flight	schedule	and	expand	or	change	our	route	network;	our	reliance	on	third-party	regional	operators	or	third-party	service	providers	that	have	the	ability to	affect	our	revenue	and	the

public's	perception	about	our	services;	any	inability	to	effectively	manage	the	costs,	rights	and	functionality	of	third-party	distribution	channels	on	which	we	rely; extensive	government	regulation,	which	may	result	in	increases	in	our	costs,	disruptions	to	our	operations,	limits	on	our	operating	flexibility,	reductions	in	the	demand for	air	travel,	and	competitive	disadvantages;	the	impact	of	the	heavy	taxation	on	the	airline	industry;	changes	to	our	business	model	that	may	not	successfully	increase revenues	and	may	cause	operational	difficulties	or	decreased	demand;	the	loss	of	key	personnel	or	inability	to	attract	and	retain	additional	qualified	personnel;	the	impact of	conflicts	overseas,	terrorist	attacks	and	ongoing	security	concerns;	the	global	scope	of	our	business	and	any	associated	economic	and	political	instability	or	adverse effects	of	events,	circumstances	or	government	actions	beyond	our	control,	including	the	impact	of	foreign	currency	exchange	rate	fluctuations	and	limitations	on	the repatriation	of	cash	held	in	foreign	countries;	the	impact	of	environmental	regulation;	our	reliance	on	technology	and	automated	systems	and	the	impact	of	any	failure	of these	technologies	or	systems;	challenges	in	integrating	our	computer,	communications	and	other	technology	systems;	losses	and	adverse	publicity	stemming	from	any accident	involving	any	of	our	aircraft	or	the	aircraft	of	our	regional	or	codeshare	operators;	delays	in	scheduled	aircraft	deliveries,	or	other	loss	of	anticipated	fleet capacity,	and	failure	of	new	aircraft	to	perform	as	expected;	our	dependence	on	a	limited	number	of	suppliers	for	aircraft,	aircraft	engines	and	parts;	the	impact	of changing	economic	and	other	conditions	beyond	our	control,	including	global	events	that	affect	travel	behavior	such	as	an	outbreak	of	a	contagious	disease,	and volatility	and	fluctuations	in	our	results	of	operations	due	to	seasonality;	the	effect	of	a	higher	than	normal	number	of	pilot	retirements	and	a	potential	shortage	of	pilots; the	impact	of	possible	future	increases	in	insurance	costs	or	reductions	in	available	insurance	coverage;	the	effect	of	a	lawsuit	that	was	filed	in	connection	with	the Merger	remains	pending;	an	inability	to	use	net	operating	losses	(NOLs)	carried	over	from	prior	taxable	years	(NOL	Carryforwards);	any	impairment	in	the	amount	of goodwill	we	recorded	as	a	result	of	the	application	of	the	acquisition	method	of	accounting	and	an	inability	to	realize	the	full	value	of	AAG's	and	American's	respective intangible	or	long-lived	assets	and	any	material	impairment	charges	that	would	be	recorded	as	a	result;	price	volatility	of	our	common	stock;	the	effects	of	our	capital deployment	program	and	 the	 limitation,	suspension	or	discontinuation	of	our	share	repurchase	program	or	dividend	payments	 thereunder;	delay	or	prevention	of stockholders'	ability	to	change	the	composition	of	our	Board	of	Directors	and	the	effect	this	may	have	on	takeover	attempts	that	some	of	our	stockholders	might consider	beneficial;	the	effect	of	provisions	of	our	Restated	Certificate	of	Incorporation	(the	Certificate	of	Incorporation)	and	Amended	and	Restated	Bylaws	(the Bylaws)	that	limit	ownership	and	voting	of	our	equity	interests,	including	our	common	stock;	the	effect	of	limitations	in	our	Certificate	of	Incorporation	on	acquisitions and	dispositions	of	our	common	stock	designed	to	protect	our	NOL	Carryforwards	and	certain	other	tax	attributes,	which	may	limit	the	liquidity	of	our	common	stock; other	economic,	business,	competitive,	and/or	regulatory	factors	affecting	our	business,	including	those	set	forth	in	this	Annual	Report	on	Form	10-K	(especially	in	Part I,	Item	1A.	Risk	Factors	and	Part	II,	Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations)	and	in	our	other	filings	with	the Securities	and	Exchange	Commission	(the	SEC),	and	other	risks	and	uncertainties	listed	from	time	to	time	in	our	filings	with	the	SEC.

All	of	the	forward-looking	statements	are	qualified	in	their	entirety	by	reference	to	the	factors	discussed	in	Part	I,	Item	1A.	Risk	Factors	and	elsewhere	in	this	report. There	may	be	other	factors	of	which	we	are	not	currently	aware	that	may	affect	matters	discussed	in	the	forward-looking	statements	and	may	also	cause	actual	results	to differ	materially	from	those	discussed.	We	do	not	assume	any	obligation	to	publicly	update	or	supplement	any	forward-looking	statement	to	reflect	actual	results, changes	in	assumptions	or	changes	in	other	factors	affecting	such	statements	other	than	as	required	by	law.	Forward-looking	statements	speak	only	as	of	the	date	of	this Annual	Report	on	Form	10-K	or	as	of	the	dates	indicated	in	the	statements.

# PART	I

# ITEM	1.		BUSINESS

# Overview

American	Airlines	Group	Inc.	(AAG),	a	Delaware	corporation,	is	a	holding	company	and	its	principal,	wholly-owned	subsidiaries	are	American	Airlines,	Inc. (American),	US	Airways	Group,	Inc.	(US	Airways	Group)	and	Envoy	Aviation	Group	Inc.	(Envoy,	formerly	known	as	AMR	Eagle	Holding	Corporation).	US	Airways Group's	principal	subsidiary	is	US	Airways,	Inc.	(US	Airways)	and	its	other	wholly-owned	subsidiaries	include	Piedmont	Airlines,	Inc.	(Piedmont),	and	PSA	Airlines, Inc.	(PSA).	AAG	was	formed	in	1982	under	the	name	AMR	Corporation	(AMR)	as	the	parent	company	of	American	which	was	founded	in	1934.	On	December	9,	2013, a	subsidiary	of	AMR	merged	with	and	into	US	Airways	Group,	which	survived	as	a	wholly-owned	subsidiary	of	AAG,	and	AAG	emerged	from	Chapter	11.	Upon closing	of	the	Merger	and	emergence	from	Chapter	11,	AMR	changed	its	name	to	American	Airlines	Group	Inc.	Virtually	all	of	AAG's	operations	fall	within	the	airline industry.

AAG's	and	American's	principal	executive	offices	are	located	at	4333	Amon	Carter	Boulevard,	Fort	Worth,	Texas	76155.	AAG's	and	American's	telephone	number is	817-963-1234,	and	their	Internet	address	is	www.aa.com.	Information	contained	on	AAG's	and	American's	website	is	not	and	should	not	be	deemed	a	part	of	this report	or	any	other	report	or	filing	filed	with	or	furnished	to	the	SEC.

# Chapter	11	Reorganization

On	 November	 29,	 2011	 (the	 Petition	 Date),	AMR	 Corporation,	 its	 principal	 subsidiary,	American,	 and	 certain	 of	AMR's	 other	 direct	 and	 indirect	 domestic subsidiaries	 (collectively,	 the	 Debtors),	 filed	 voluntary	 petitions	 for	 relief	 (the	 Chapter	 11	 Cases)	 under	 Chapter	 11	 of	 the	 United	 States	 Bankruptcy	 Code	 (the Bankruptcy	Code)	in	the	United	States	Bankruptcy	Court	for	the	Southern	District	of	New	York	(the	Bankruptcy	Court).	On	October	21,	2013,	the	Bankruptcy	Court entered	an	order	(the	Confirmation	Order)	approving	and	confirming	the	Debtors'	fourth	amended	joint	plan	of	reorganization	(as	amended,	the	Plan).

On	December	9,	2013	(the	Effective	Date),	the	Debtors	consummated	their	reorganization	pursuant	to	the	Plan,	principally	through	the	transactions	contemplated	by an	Agreement	and	Plan	of	Merger	(as	amended,	the	Merger	Agreement),	dated	as	of	February	13,	2013,	by	and	among	AMR,	AMR	Merger	Sub,	Inc.	(Merger	Sub)	and US	Airways	Group,	pursuant	to	which	Merger	Sub	merged	with	and	into	US	Airways	Group	(the	Merger),	with	US	Airways	Group	surviving	as	a	wholly-owned subsidiary	of	AMR	following	the	Merger.

In	connection	with	the	Chapter	11	Cases,	trading	in	AMR's	common	stock	and	certain	debt	securities	on	the	New	York	Stock	Exchange	(NYSE)	was	suspended	on January	5,	2012,	and	AMR's	common	stock	and	such	debt	securities	were	delisted	by	the	SEC	from	the	NYSE	on	January	30,	2012.	On	January	5,	2012,	AMR's common	stock	began	trading	under	the	symbol	"AAMRQ"	(CUSIP	001765106)	on	the	OTCQB	marketplace,	operated	by	OTC	Markets	Group.	Pursuant	to	the	Plan,	on the	Effective	Date	(i)	all	existing	shares	of	AAG's	old	common	stock	formerly	traded	under	the	symbol	"AAMRQ"	were	canceled	and	(ii)	the	Company	was	authorized to	issue	up	to	approximately	544	million	shares	of	common	stock,	par	value	$0.01	per	share,	of	AAG	(AAG	Common	Stock)	by	operation	of	the	Plan	(excluding	shares of	AAG	Common	Stock	issuable	pursuant	to	the	Merger	Agreement).	On	the	Effective	Date,	the	AAG	Common	Stock	was	listed	on	the	NASDAQ	Global	Select	Market under	the	symbol	"AAL,"	and	AAMRQ	ceased	trading	on	the	OTCQB	marketplace.

Upon	emergence	from	Chapter	11,	AAG	issued	approximately	53	million	shares	of	AAG	Common	Stock	to	AMR's	old	equity	holders	and	certain	of	the	Debtors' employees,	and	issued	168	million	shares	of	AAG	Series	A	Convertible	Preferred	Stock,	par	value	$0.01	per	share	(the	AAG	Series	A	Preferred	Stock),	which	was mandatorily	convertible	into	new	AAG	Common	Stock	during	the	120-day	period	after	the	Effective	Date,	to

certain	creditors	and	employees	of	the	Debtors	(including	shares	deposited	in	the	Disputed	Claims	Reserve	(as	defined	in	the	Plan)).	In	accordance	with	the	terms	of	the Plan,	former	holders	of	AMR	common	stock	(previously	traded	under	the	symbol	"AAMRQ")	received,	for	each	share	of	AMR	common	stock,	an	initial	distribution	of approximately	0.0665	shares	of	the	AAG	Common	Stock	as	of	the	Effective	Date.	Following	the	Effective	Date,	former	holders	of	AMR	common	stock	and	those deemed	to	be	treated	as	such	in	connection	with	the	elections	made	pursuant	to	the	Plan	have	received	through	December	31,	2014,	additional	aggregate	distributions	of shares	of	AAG	Common	Stock	of	approximately	0.6776	shares	of	AAG	Common	Stock	for	each	share	of	AMR	common	stock	previously	held,	and	may	continue	to receive	additional	distributions.	As	of	the	Effective	Date,	the	adjusted	total	Double-Dip	General	Unsecured	Claims	(as	defined	in	the	Plan)	were	approximately	$2.45 billion	and	the	Allowed	Single-Dip	General	Unsecured	Claims	(as	defined	in	the	Plan)	were	approximately	$2.45	billion.	The	Disputed	Claims	Reserve	established	under the	Plan	initially	was	issued	30.4	million	shares,	which	shares	are	reserved	for	distributions	to	holders	of	disputed	Single-Dip	Unsecured	Claims	(Single-Dip	Equity Obligations)	whose	claims	ultimately	become	allowed	as	well	as	to	certain	AMR	labor	groups	and	employees	who	received	a	deemed	claim	amount	based	upon	a	fixed percentage	of	the	distributions	to	be	made	to	general	unsecured	claimholders.	As	of	December	31,	2014,	the	Disputed	Claims	Reserve	held	26.8	million	shares	of	AAG Common	Stock	pending	distribution	of	those	shares	in	accordance	with	the	Plan.

See	Part	II,	Item	5.	Market	for	American	Airlines	Group's	Common	Stock,	Related	Stockholder	Matters	and	Issuer	Purchases,	Item	7.	Management's	Discussion	and Analysis	of	Financial	Condition	and	Results	of	Operations,	Note	2	and	Note	4	to	AAG's	Consolidated	Financial	Statements	in	Item	8A	and	Note	2	to	American's Consolidated	Financial	Statements	in	Item	8B	for	further	information	regarding	the	Chapter	11	Cases,	the	Merger	and	the	Disputed	Claims	Reserve.

# Merger

Pursuant	to	the	Merger	Agreement	and	consistent	with	the	Plan,	each	share	of	common	stock,	par	value	$0.01	per	share,	of	US	Airways	Group	(the	US	Airways Group	Common	Stock)	was	converted	into	the	right	to	receive	one	share	of	AAG	Common	Stock.	The	aggregate	number	of	shares	of	AAG	Common	Stock	issuable	in the	Merger	to	holders	of	US	Airways	Group	equity	instruments	(including	stockholders,	holders	of	convertible	notes,	optionees,	and	holders	of	restricted	stock	units (RSUs))	represented	28%	of	the	diluted	equity	ownership	of	AAG.	The	remaining	72%	diluted	equity	ownership	in	AAG	(up	to	approximately	544	million	shares)	was or	is	distributable,	pursuant	to	the	Plan	(see	"Chapter	11	Reorganization"	above),	to	stakeholders,	labor	unions,	certain	employees	of	AMR	and	the	other	Debtors,	and former	holders	of	AMR	common	stock	(previously	traded	under	the	symbol	"AAMRQ")	such	that	the	aggregate	number	of	shares	of	AAG	Common	Stock	issuable under	the	Plan	will	not	exceed	72%	of	the	diluted	equity	ownership	of	AAG	as	of	the	time	of	the	Merger.

In	connection	with	the	completion	of	the	Merger,	the	NYSE	suspended	trading	in	the	US	Airways	Group	Common	Stock	prior	to	the	opening	of	the	market	on December	9,	2013.	The	US	Airways	Group	Common	Stock	was	delisted	from	the	NYSE	and	registration	of	the	US	Airways	Group	Common	Stock	under	Section	12(b) of	the	Exchange	Act	was	terminated.

See	Part	II,	Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	–"American	Airlines	Group	–	Year in	Review," Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	–	"AAG	Results	of	Operations,"	Note	2	and	Note	4	to	AAG's	Consolidated Financial	Statements	in	Item	8A	and	Note	2	to	American's	Consolidated	Financial	Statements	in	Item	8B	for	further	information	regarding	the	Chapter	11	Cases	and	the Merger.

# Airline	Operations

As	noted	above,	AAG	is	a	holding	company	whose	primary	business	activity	is	the	operation	of	two	major	network	carriers	through	its	principal,	wholly-owned mainline	operating	subsidiaries:	American	and,	as	of	December	9,	2013,	US	Airways.

We	continue	to	move	toward	operating	under	the	single	brand	name	of	"American	Airlines"	through	our	mainline	operating	subsidiaries.	We	have	made	substantial progress	towards	integrating	the	operations	of	our	mainline	operating	subsidiaries	and	towards	obtaining	a	single	operating	certificate,	which	we	expect	to	obtain	in 2015.	We	are	the	largest	airline	in	the	world	as	measured	by	revenue	passenger	miles	(RPMs)	and	available	seat	miles	(ASMs).	Together	with	our	wholly-owned	regional airline	subsidiaries	and	third-party	regional	carriers	operating	as	American	Eagle	and	US	Airways	Express,	our	airlines	operate	an	average	of	nearly	6,700	flights	per day	to	339	destinations	in	54	countries	from	our	hubs	in	Charlotte,	Chicago,	Dallas/Fort	Worth	(DFW),	Los	Angeles,	Miami,	New	York,	Philadelphia,	Phoenix	and Washington,	D.C.	In	2014,	we	had	approximately	197	million	passengers	boarding	our	mainline	and	regional	flights.	As	of	December	31,	2014,	we	operated	983 mainline	jets	and	were	supported	by	our	regional	airline	subsidiaries	and	third-party	regional	carriers,	which	operated	an	additional	566	regional	aircraft.

American	and	US	Airways	are	members	of	the	oneworld ®	alliance	whose	members	and	members-elect	serve	nearly	1,000	destinations	with	14,250	daily	flights	to 150	countries.

See	Part	II,	Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	–"American	Airlines	Group	–	Year	in	Review,"	"AAG Results	of	Operations"	and	"American's	Results	of	Operations"	for	further	discussion	of	AAG's	and	American's	operating	results	and	operating	performance.	Also,	see Note	17	 to	AAG's	Consolidated	Financial	Statements	 in	Part	II,	Item	8A	and	Note	14	 to	American's	Consolidated	Financial	Statements	 in	Part	II,	Item	8B	for information	regarding	our	operating	segments	and	operating	revenue	in	principal	geographic	areas.

# Regional	Operations

Certain	air	carriers,	including	our	wholly-owned	regional	carriers,	Envoy,	Piedmont	and	PSA,	and	third-party	regional	carriers,	have	arrangements	with	us	to	provide regional	feed	under	the	trade	name	"American	Eagle"	or	"US	Airways	Express."	American	Eagle	and	US	Airways	Express	carriers	are	an	integral	component	of	our operating	network.	We	rely	heavily	on	feeder	traffic	from	these	regional	carriers,	which	carry	passengers	to	our	hubs	from	low-density	markets	that	are	uneconomical for	us	to	serve	with	large	jets.	In	addition,	regional	carriers	offer	complementary	service	in	our	existing	mainline	markets	by	operating	flights	during	off-peak	periods between	mainline	flights.	During	2014,	approximately	52	million	passengers	boarded	our	regional	carriers'	planes,	approximately	45%	of	whom	connected	to	or	from our	mainline	flights.	Of	these	passengers,	approximately	25	million	were	enplaned	by	our	wholly	owned	regional	carriers	and	approximately	27	million	were	enplaned by	third-party	regional	carriers	operating	under	capacity	purchase	agreements.

The	American	Eagle	and	US	Airways	Express	arrangements	are	principally	in	the	form	of	capacity	purchase	agreements.	The	capacity	purchase	agreements	provide that	all	revenues,	including	passenger,	mail	and	freight	revenues,	go	to	us.	In	return,	we	agree	to	pay	predetermined	fees	to	these	airlines	for	operating	an	agreed-upon number	of	aircraft,	without	regard	to	the	number	of	passengers	on	board.	In	addition,	these	agreements	provide	that	we	will	reimburse	100%	of	certain	variable	costs, such	as	airport	landing	fees	and	passenger	liability	insurance.	We	control	marketing,	scheduling,	ticketing,	pricing	and	seat	inventories.	A	very	small	number	of	regional aircraft	are	operated	for	us	under	prorate	agreements,	under	which	the	regional	carriers	receive	a	prorated	share	of	ticket	revenue	and	pay	certain	service	fees	to	us.	The prorate	carriers	are	responsible	for	all	costs	incurred	operating	the	applicable	aircraft.	All	American	Eagle	and	US	Airways	Express	carriers	have	logos,	service	marks, aircraft	paint	schemes	and	uniforms	similar	to	our	mainline	operations.

# Cargo

Our	cargo	division	is	one	of	the	largest	air	cargo	operations	in	the	world,	providing	a	wide	range	of	freight	and	mail	services,	with	facilities	and	interline	connections available	across	the	globe.

# Other	Revenues

Other	revenues	include	revenue	from	the	marketing	services	related	to	the	sale	of	mileage	credits	in	the	AAdvantage	and	Dividend	Miles	programs	as	discussed below	under	"Frequent	Flyer	Program,"	membership	fees	and	related	revenue	from	our	Admirals	Club	operations,	our	US	Airways	Club	operations,	and	other miscellaneous	service	revenue,	including	administrative	service	charges	and	baggage	handling	fees.

# The	U.S.	Airline	Industry

In	2014,	the	U.S.	airline	industry	continued	to	experience	year-over-year	growth	in	passenger	revenues	driven	by	strong	demand	for	air	travel.

In	its	most	recent	data	available,	Airlines	for	America,	the	trade	association	for	U.S.	airlines,	reported	that	annual	U.S.	industry	passenger	revenues	and	yields increased	4.2%	and	1.8%,	respectively,	as	compared	to	2013.	With	respect	to	international	versus	domestic	performance,	Airlines	for	America	reported	that	domestic markets	 outperformed	 international	 markets.	Atlantic	 and	 Latin	America	 markets	 experienced	 year-over-year	 growth	 in	 passenger	 revenues	 of	 2.8%	 and	 3.4%, respectively,	while	the	Pacific	market	experienced	year-over-year	declines	in	passenger	revenues	of	1.4%.

Jet	fuel	prices	continue	to	follow	the	price	of	Brent	crude	oil	more	closely	than	the	price	of	West	Texas	Intermediate	crude	oil.	On	average,	fuel	costs	were	lower	in 2014	as	compared	to	2013,	driven	by	a	significant	decline	in	fuel	prices	in	the	fourth	quarter	of	2014.	On	December	31,	2014,	the	price	of	Brent	crude	oil	fell	to	$55	per barrel,	its	lowest	price	since	May	2009.

While	the	U.S.	airline	industry	is	currently	benefiting	from	a	favorable	revenue	environment	and	significantly	reduced	fuel	prices	as	described	above,	uncertainty exists	regarding	the	economic	conditions	driving	these	factors.	See	Part	I,	Item	1A.	Risk	Factors	–	"Downturns	in	economic	conditions	adversely	affect	our	business" and	"Our	business	is	dependent	on	the	price	and	availability	of	aircraft	fuel.	Continued	periods	of	high	volatility	in	fuel	costs,	increased	fuel	prices	and	significant disruptions	in	the	supply	of	aircraft	fuel	could	have	a	significant	negative	impact	on	our	operating	results	and	liquidity."

# Competition

The	markets	in	which	we	operate	are	highly	competitive.	Price	competition	occurs	on	a	market-by-market	basis	through	price	discounts,	changes	in	pricing	structures, fare	matching,	target	promotions	and	frequent	flyer	initiatives.	On	most	of	our	domestic	non-stop	routes,	we	currently	face	competing	service	from	at	least	one,	and sometimes	more	than	one,	domestic	airline,	including:	Alaska	Airlines,	Allegiant	Air,	Delta	Air	Lines,	Frontier	Airlines,	Hawaiian	Airlines,	JetBlue	Airways,	Southwest Airlines,	Spirit	Airlines,	United	Airlines	and	Virgin	America.	Competition	is	even	greater	between	cities	that	require	a	connection,	where	the	major	airlines	compete	via their	respective	hubs.	In	addition,	we	face	competition	on	some	of	our	connecting	routes	from	airlines	operating	point-to-point	service	on	such	routes.	We	also	compete with	all-cargo	and	charter	airlines	and,	particularly	on	shorter	segments,	ground	and	rail	transportation.

On	all	of	our	routes,	pricing	decisions	are	affected,	in	large	part,	by	the	need	to	meet	competition	from	other	airlines.	Airlines	typically	use	discount	fares	and	other promotions	to	stimulate	traffic	during	normally	slack	travel	periods,	when	they	begin	service	to	new	cities	or	when	they	have	excess	capacity,	to	generate	cash	flow	and maximize	revenue	per	ASM	and	to	establish,	increase	or	preserve	market	share.	Discount	and	promotional	fares	are	generally	non-refundable	and	may	be	subject	to various	restrictions	such	as	minimum	stay	requirements,	advance	ticketing,	limited	seating	and	change	fees.	We	have	often	elected	to	match	discount	or	promotional fares	initiated	by	other	air	carriers	in	certain	markets	in	order	to	compete	in	those	markets.	Most	airlines	will	quickly	match	price	reductions	in	a	particular	market.	Our ability	to	compete	on	the	basis	of	price	is	limited	by	our	fixed	costs	and	depends	on	our	ability	to	manage	our	operating	costs	effectively.	Some	of	our	competitors	have greater

financial	or	other	resources	and/or	lower	cost	structures	than	we	do.	In	addition,	low-fare,	low-cost	carriers	compete	in	many	of	the	markets	in	which	we	operate	and competition	from	these	carriers	is	increasing.	For	example,	as	a	result	of	divestitures	completed	in	connection	with	gaining	regulatory	approval	for	the	Merger,	low-fare, low-cost	carriers	have	gained	additional	access	in	a	number	of	markets,	including	Chicago,	Dallas	and	Washington,	D.C.	These	low-cost	carriers	generally	have	lower cost	structures	than	American	and	US	Airways.

In	addition	to	price	competition,	airlines	compete	for	market	share	by	increasing	the	size	of	their	route	system	and	the	number	of	markets	they	serve.	The	American Eagle	and	US	Airways	Express	regional	carriers	increase	the	number	of	markets	we	serve	by	flying	to	lower	demand	markets	and	providing	connections	at	our	hubs. Many	of	our	competitors	also	own	or	have	marketing	agreements	with	regional	airlines	which	provide	similar	services	at	their	hubs	and	other	locations.	We	also	compete on	the	basis	of	scheduling	(frequency	and	flight	times),	availability	of	nonstop	flights,	on-time	performance,	type	of	equipment,	cabin	configuration,	amenities	provided to	passengers,	frequent	flyer	programs,	the	automation	of	travel	agent	reservation	systems,	onboard	products,	markets	served	and	other	services.	We	compete	with	both major	network	airlines	and	low-cost	airlines	throughout	our	network.

In	addition	to	our	extensive	domestic	service,	we	provide	international	service	to	Canada,	Mexico,	Europe,	the	Middle	East,	the	Caribbean,	Central	and	South America,	and	Asia.	Revenues	from	foreign	operations	(flights	serving	international	destinations)	were	approximately	33%	of	our	total	operating	revenues	in	2014.	In providing	international	air	transportation,	we	compete	with	U.S.	airlines	to	provide	scheduled	passenger	and	cargo	service	between	the	U.S.	and	various	overseas locations,	foreign	investor-owned	airlines,	and	foreign	state-owned	or	state-affiliated	airlines,	including	carriers	based	in	the	Middle	East,	the	three	largest	of	which	we believe	benefit	from	significant	government	subsidies.	During	2014,	 international	capacity	grew	more	quickly	 than	domestic	service	creating	a	very	competitive operating	environment.

# Marketing	and	Alliance	Agreements	with	Other	Airlines

In	general,	carriers	that	have	the	greatest	ability	to	seamlessly	connect	passengers	to	and	from	markets	beyond	the	nonstop	city	pair	have	a	competitive	advantage.	In some	cases,	however,	foreign	governments	limit	U.S.	air	carriers'	rights	to	carry	passengers	beyond	designated	gateway	cities	in	foreign	countries.	To	improve	access	to each	other's	markets,	various	U.S.	and	foreign	air	carriers,	including	American	and	US	Airways,	have	established	marketing	relationships	with	other	airlines	and	rail companies.	American	currently	has	marketing	relationships	with	Air	Berlin,	Air	Tahiti	Nui,	Alaska	Airlines,	British	Airways,	Cape	Air,	Cathay	Pacific,	Dragonair,	EL AL,	Etihad	Airways,	Fiji	Airways,	Finnair,	Gulf	Air,	Hainan	Airlines,	Hawaiian	Airlines,	Iberia,	Interjet,	Japan	Airlines,	Jet	Airways,	Jetstar	Group	(includes	Jetstar Airways	and	Jetstar	Japan),	Korean	Air,	LAN	(includes	LAN	Airlines,	LAN	Argentina,	LAN	Colombia,	LAN	Ecuador	and	LAN	Peru),	Malaysia	Airlines,	Niki	Airlines, Qantas	Airways,	Qatar	Airways,	Royal	Jordanian,	S7	Airlines,	Seaborne	Airlines,	TAM	Airlines	and	WestJet.

American	is	also	a	founding	member	of	the	oneworld	alliance,	which	includes	Air	Berlin,	British	Airways,	Cathay	Pacific	Airways,	Finnair,	Iberia,	Japan	Airlines, LAN	Airlines,	Malaysia	Airlines,	Qantas	Airways,	Qatar	Airways,	Royal	Jordanian,	S7	Airlines,	SriLankan	Airlines	and	TAM	Airlines.	The	 oneworld	alliance	links	the networks	of	the	member	carriers	to	enhance	customer	service	and	smooth	connections	to	the	destinations	served	by	the	alliance,	including	linking	the	carriers'	frequent flyer	programs	and	access	to	the	carriers'	airport	lounge	facilities.	Together,	 oneworld	members	and	members-elect	serve	nearly	1,000	destinations	with	over	14,250 daily	flights	to	150	countries.

American	is	party	to	antitrust-immunized	cooperation	agreements	with	British	Airways,	Iberia,	Finnair,	Japan	Airlines	and	Royal	Jordanian.	Over	the	last	several years,	American	has	also	established	joint	business	agreements	(JBAs)	with	British	Airways,	Iberia,	Japan	Airlines,	Qantas	Airways	and	Finnair	that	enable	the	carriers to	cooperate	on	flights	between	particular	destinations	and	allow	pooling	and	sharing	of	certain	revenues	and	costs,	enhanced	frequent	flyer	program	reciprocity	and cooperation	in	other	areas.	American	and	its	joint	business	partners	received	regulatory	approval	to	enter	into	these	JBAs.

On	January	23,	2014,	American	and	US	Airways	began	offering	enhanced	connectivity	of	their	respective	networks	through	the	implementation	of	a	codeshare agreement	between	the	two	carriers.	Through	the	codeshare,	each	airline	started	selling	tickets	operated	by	the	other	carrier	using	its	own	code	and	flight	number, providing	customers	the	ability	to	easily	combine	flights	and	seamlessly	transfer	bags	when	traveling	on	an	itinerary	that	includes	flights	operated	by	both	carriers.

US	Airways	was	previously	a	member	of	the	Star	Alliance ®	 and	 joined	oneworld	on	March	31,	2014.	As	part	of	this	transition,	codeshare	and	frequent	flyer reciprocity	between	US	Airways	and	many	members	of	the	Star	Alliance	ended	on	March	30,	2014.	Some	of	the	largest	airlines	with	whom	relationships	were	phased out	at	that	time	included	United	Airlines,	Lufthansa,	Swiss,	Brussels	Airlines,	and	All	Nippon	Airways,	while	relationships	with	others	have	been,	or	are	in	the	process of	being,	phased	out.	US	Airways	also	entered	the	transatlantic	joint	business	on	March	31,	2014	and	is	now	pooling	and	sharing	certain	revenues	and	costs	and	enjoying enhanced	frequent	flyer	program	reciprocity	and	coordinating	in	other	areas	with	British	Airways,	Iberia	and	Finnair	in	the	same	manner	as	American	Airlines.	In 2014,	US	Airways	also	entered	into	codeshare	cooperation	with	British	Airways,	Iberia,	Finnair	and	AirBerlin	and	frequent	flyer	reciprocity	with	oneworld	members.

# Industry	Regulation	and	Airport	Access

# General

Our	airlines	are	subject	 to	extensive	domestic	and	 international	regulatory	requirements.	The	Airline	Deregulation	Act	of	1978,	as	amended,	eliminated	most domestic	economic	regulation	of	passenger	and	freight	transportation.	However,	the	U.S.	Department	of	Transportation	(DOT)	and	the	Federal	Aviation	Administration (FAA)	still	exercise	significant	regulatory	authority	over	air	carriers.	DOT	maintains	jurisdiction	over	the	approval	of	domestic	and	international	codeshare	agreements, international	route	authorities,	and	consumer	protection	and	competition	matters,	such	as	advertising,	denied	boarding	compensation	and	baggage	liability.

The	FAA	regulates	flying	operations,	primarily	in	the	areas	of	flight	operations,	maintenance,	and	other	operational	and	safety	areas.	Pursuant	to	these	regulations, our	airline	subsidiaries	have	FAA-approved	maintenance	programs	for	each	type	of	aircraft	they	operate.	The	programs	provide	for	the	ongoing	maintenance	of	such aircraft,	ranging	from	periodic	routine	inspections	to	major	overhauls.	FAA	requirements	cover,	among	other	things,	retirement	and	maintenance	of	older	aircraft,	safety measures,	collision	avoidance	systems,	airborne	windshear	avoidance	systems,	noise	abatement,	other	environmental	concerns,	fuel	tank	inerting,	crew	scheduling	and experience,	and	aircraft	operations.	We	are	also	progressing	toward	the	completion	of	numerous	airworthiness	directives,	a	number	of	which	will	require	us	to	perform significant	maintenance	work	and	to	incur	additional	expenses.	Based	on	the	current	implementation	schedule,	we	expect	to	be	in	full	compliance	with	the	applicable requirements	within	the	required	time	periods.	Our	failure	to	timely	comply	with	these	requirements	has	in	the	past,	and	could	in	the	future,	result	in	fines	and	other enforcement	actions	by	the	FAA	or	other	regulators.	The	FAA	also	operates	the	air	traffic	control	(ATC)	system	in	the	United	States.

Additionally,	the	FAA	recently	implemented	rules	on	pilot	flight	and	duty	times	and	finalized	rules	on	minimum	requirements	for	all	pilots	operating	commercial aircraft.	Both	rules	have	increased	our	costs	and	reduced	staffing	flexibility,	particularly	during	irregular	operations.	We	are	also	working	with	the	FAA	on	integrating US	Airways	and	American	into	a	single	operating	certificate	under	the	American	operations	specifications.

Airlines	are	obligated	to	collect	a	federal	excise	tax,	commonly	referred	to	as	the	"ticket	tax,"	on	domestic	and	international	air	transportation.	Airlines	collect	the ticket	tax,	along	with	certain	other	U.S.	and	foreign	taxes	and	user	fees	on	air	transportation,	and	pass	along	the	collected	amounts	to	the	appropriate	governmental agencies.	Although	these	taxes	are	not	our	operating	expenses,	they	represent	an	additional	cost	to	our	customers.	See	"Industry	Regulation	and	Airport	Access	– Security,"	below	for	a	discussion	of	passenger	fees.

Most	major	U.S.	airports	impose	a	passenger	facility	charge	(PFC).	The	ability	of	airports	to	increase	this	charge	(and	the	ability	of	airlines	to	contest	such	increases) is	restricted	by	federal	legislation,	DOT	regulations

and	judicial	decisions.	With	certain	exceptions,	air	carriers	pass	these	charges	on	to	passengers.	However,	our	ability	to	pass	through	the	total	amount	of	the	PFC	to	our customers	is	subject	to	various	factors,	including	market	conditions	and	competitive	factors.	The	current	cap	on	the	PFC	is	$4.50	per	passenger,	but	the	industry	has faced	repeated	efforts	in	Congress	to	raise	the	cap	to	a	higher	level.

DOT	consumer	rules	that	took	effect	in	2010	require	procedures	for	customer	handling	during	long	onboard	delays,	including	additional	reporting	requirements	for airlines,	that	have	increased	the	cost	of	airline	operations	and	reduced	revenues.	The	DOT	has	been	aggressively	investigating	alleged	violations	of	these	rules.	In addition,	the	DOT	finalized	a	second	set	of	rules	that	further	regulate	airline	interactions	with	passengers	through	the	reservations	process,	at	the	airport	and	on	board	the aircraft.	These	rules	require	airlines	to	display	all	fares	in	an	"all	in"	basis,	with	the	price	of	the	air	travel	and	all	taxes	and	government	imposed	fees	rolled	into	the displayed	fare.	Enhanced	disclosure	of	ancillary	fees	such	as	baggage	fees	is	also	required.	Other	rules	apply	to	post-ticket	purchase	price	increases	and	an	expansion	of tarmac	delay	regulations	to	international	carriers.	A	third	rulemaking	that	would	further	regulate	consumer	interaction	with	airlines	is	pending	before	DOT,	with	a	final rule	expected	in	2015.

DOT	has	continued	 its	efforts	 to	further	regulate	airlines	 through	 increased	data	reporting	requirements,	expansion	of	 the	Air	Carrier	Access	Act	and	greater oversight	of	the	methods	airlines	use	to	describe	and	sell	air	transportation	and	other	products	and	services.	Each	additional	regulation	or	other	form	of	regulatory oversight	increases	costs	and	adds	greater	complexity	to	our	operation.	In	this	environment,	no	assurance	can	be	given	that	compliance	with	these	new	rules,	anticipated rules	or	other	forms	of	regulatory	oversight	from	the	Department	of	Justice	(DOJ),	the	FAA	or	other	regulatory	bodies,	will	not	have	a	material	adverse	effect	on	our business.

Among	its	regulatory	responsibilities,	DOT	also	enforces	equal	access	to	air	transportation	for	disabled	passengers.	Over	time,	a	number	of	carriers,	including American	and	US	Airways,	have	entered	into	consent	orders	with	DOT	over	their	handling	of	disabled	passengers.	DOT	has	been	aggressive	in	prosecuting	disability violations	and	seeks	large	penalties.	We	expect	to	see	continued	DOT	emphasis	in	this	area	through	both	regulation	and	enforcement.

DOT	and	the	Antitrust	Division	of	the	DOJ	have	jurisdiction	over	airline	antitrust	matters.	The	U.S.	Postal	Service	has	jurisdiction	over	certain	aspects	of	the transportation	of	mail	and	related	services.	Labor	relations	in	the	air	transportation	industry	are	regulated	under	the	Railway	Labor	Act,	which	vests	in	the	National Mediation	 Board	 (NMB)	 certain	 functions	 with	 respect	 to	 disputes	 between	 airlines	 and	 labor	 unions	 relating	 to	 union	 representation	 and	 collective	 bargaining agreements	(CBAs).	In	addition,	as	a	result	of	heightened	levels	of	concern	regarding	data	privacy,	we	are	subject	to	an	increasing	number	of	domestic	and	foreign	laws regarding	the	privacy	and	security	of	passenger	and	employee	data.

# International

International	air	transportation	is	subject	to	extensive	government	regulation.	Our	operating	authority	in	international	markets	is	subject	to	aviation	agreements between	the	U.S.	and	the	respective	countries	or	governmental	authorities,	such	as	the	European	Union	(EU),	and	in	some	cases,	fares	and	schedules	require	the	approval of	the	DOT	and/or	the	relevant	foreign	governments.	Moreover,	alliances	with	international	carriers	may	be	subject	to	the	jurisdiction	and	regulations	of	various	foreign agencies.	Bilateral	and	multilateral	agreements	among	the	U.S.	and	various	foreign	governments	of	countries	we	serve	are	periodically	subject	to	renegotiation.	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.	While	the	U.S.	has	worked	to	increase	the	number	of	countries	with	which	open	skies agreements	are	in	effect,	a	number	of	important	markets	to	us	do	not	have	open	skies	agreements,	including	China,	Hong	Kong	and	Mexico.	In	addition,	at	some	foreign airports,	an	air	carrier	needs	Slots	and	other	facilities	before	the	air	carrier	can	introduce	new	service	or	increase	existing	service.	The	availability	of	Slots	is	not	assured, and	our	inability	to	obtain	and	retain	needed	Slots	and	facilities	could

therefore	inhibit	our	efforts	to	compete	in	certain	international	markets.	See	"Industry	Regulation	and	Airport	Access	–	Airport	Access	and	Operations,"	below	and	Part I,	Item	1A.	Risk	Factors	–	"If	we	are	unable	to	obtain	and	maintain	adequate	facilities	and	infrastructure	throughout	our	system	and,	at	some	airports,	adequate	Slots, we	may	be	unable	to	operate	our	existing	flight	schedule	and	to	expand	or	change	our	route	network	in	the	future,	which	may	have	a	material	adverse	impact	on	our operations"	for	additional	information.

# Security

The	Aviation	and	Transportation	Security	Act	(the	Aviation	Security	Act)	was	enacted	in	November	2001.	Under	the	Aviation	Security	Act,	substantially	all	aspects of	civil	aviation	security	screening	were	federalized	and	a	new	Transportation	Security	Administration	(TSA)	under	the	DOT	was	created.	The	TSA	was	then	transferred to	the	Department	of	Homeland	Security	pursuant	to	the	Homeland	Security	Act	of	2002.	The	Aviation	Security	Act,	among	other	matters,	mandates	improved	flight deck	security;	carriage	of	federal	air	marshals	at	no	charge;	enhanced	security	screening	of	passengers,	baggage,	cargo,	mail,	employees	and	vendors;	enhanced	security training;	fingerprint-based	background	checks	of	all	employees	and	vendor	employees	with	access	to	secure	areas	of	airports	pursuant	to	regulations	issued	in	connection with	the	Aviation	Security	Act;	and	the	provision	of	certain	passenger	data	to	the	U.S.	Customs	and	Border	Protection	Agency.	Funding	for	the	TSA	is	provided	by	a combination	of	air	carrier	fees,	passenger	fees	and	taxpayer	monies.	A	"passenger	security	fee,"	which	is	collected	by	air	carriers	from	their	passengers,	was	set	at	a	rate of	$2.50	per	flight	segment	but	not	more	than	$10	per	round	trip.	However,	the	Bipartisan	Budget	Act	of	2013	and	the	Consolidated	Appropriations	Act	of	2014 increased	the	passenger	security	fee	to	$5.60	per	one-way	trip	effective	on	July	11,	2014	on	qualifying	air	transportation	sold.	On	December	19,	2014,	H.R.	5462	was signed	into	law,	which	set	the	round	trip	passenger	security	fee	at	not	more	than	$11.20	per	round	trip	on	qualifying	air	transportation	sold.	The	TSA	continues	to	refine its	guidance	on	how	to	calculate	the	round	trip	fee.	The	TSA's	application	of	screening	fees	to	one-way	trips	originating	outside	of	the	United	States	is	currently	being challenged	by	industry	trade	groups,	the	International	Air	Transport	Association	and	Airlines	for	America,	as	outside	the	scope	of	the	current	legislation.	In	addition,	an air	carrier	fee,	or	Aviation	Security	Infrastructure	Fee	(ASIF),	was	previously	imposed	with	an	annual	cap	equivalent	to	the	amount	that	an	individual	air	carrier	paid	in calendar	year	2000	for	the	screening	of	passengers	and	property.	The	fee	was	repealed	by	federal	legislation	and	the	repeal	went	into	effect	on	October	1,	2014.

Implementation	of	and	compliance	with	the	requirements	of	the	Aviation	Security	Act	have	resulted	and	will	continue	to	result	in	increased	costs	for	us	and	our passengers	and	have	resulted	and	will	likely	continue	to	result	in	service	disruptions	and	delays.	As	a	result	of	competitive	pressure,	we	and	other	airlines	may	be	unable to	recover	all	of	these	additional	security	costs	from	passengers	through	increased	fares.	In	addition,	we	cannot	forecast	what	new	security	and	safety	requirements	may be	imposed	in	the	future	or	the	costs	or	financial	impact	of	complying	with	any	such	requirements.

# Airline	Fares

Airlines	are	permitted	to	establish	their	own	domestic	fares	without	governmental	regulation.	DOT	maintains	authority	over	certain	international	fares,	rates	and charges,	but	applies	this	authority	on	a	limited	basis.	In	addition,	international	fares	and	rates	are	sometimes	subject	to	the	jurisdiction	of	the	governments	of	the	foreign countries	which	we	serve.	While	air	carriers	are	required	to	file	and	adhere	to	international	fare	and	rate	tariffs,	substantial	commissions,	fare	overrides	and	discounts	to travel	agents,	brokers	and	wholesalers	characterize	many	international	markets.

# Airport	Access	and	Operations

Domestically,	any	U.S.	airline	authorized	by	the	DOT	is	generally	free	to	operate	scheduled	passenger	service	between	any	two	points	within	the	U.S.	and	its territories,	with	the	exception	of	certain	airports	that	require	landing	and	take-off	rights	and	authorizations	and	other	facilities	(Slots),	and	certain	airports	that	impose

geographic	limitations	on	operations	or	curtail	operations	based	on	the	time	of	day.	Operations	at	four	major	domestic	airports	and	certain	foreign	airports	we	serve	are regulated	by	governmental	entities	through	allocations	of	Slots	or	similar	regulatory	mechanisms	which	limit	the	rights	of	carriers	to	conduct	operations	at	those	airports. Each	Slot	represents	the	authorization	to	land	at	or	take	off	from	the	particular	airport	during	a	specified	time	period.	In	addition	to	Slot	restrictions,	operations	at LaGuardia	Airport	in	New	York	City	and	Ronald	Reagan	Washington	National	Airport	(DCA)	are	also	limited	based	on	the	stage	length	of	the	flight.

In	the	U.S.,	the	FAA	currently	regulates	the	allocation	of	Slots,	Slot	exemptions,	operating	authorizations,	or	similar	capacity	allocation	mechanisms	at	DCA	in Washington,	D.C.	and	three	New	York	City	airports:	Newark	Liberty,	John	F.	Kennedy	International	Airport	(JFK)	and	LaGuardia.	There	is	currently	a	Notice	of Proposed	Rulemaking	open	for	public	comment	concerning	the	management	and	use	of	Slots	at	the	three	New	York	City	airports.	Our	operations	at	DCA	and	those New	York	City	airports	generally	require	the	allocation	of	Slots	or	analogous	regulatory	authorities.	Similarly,	our	operations	at	Frankfurt,	London	Heathrow,	Paris	and other	international	airports	outside	the	U.S.	are	regulated	by	local	Slot	authorities	pursuant	to	the	International	Air	Transport	Association's	Worldwide	Scheduling Guidelines	(WSG)	and	applicable	local	law.	We	currently	have	sufficient	Slots	or	analogous	authorizations	to	operate	our	existing	flights	and	we	have	generally,	but	not always,	been	able	to	obtain	the	rights	to	expand	our	operations	and	to	change	our	schedules.	For	example,	we	would	like	to	serve	Tokyo's	Haneda	Airport	but	are	unable to	do	so	because	of	regulatory	restrictions	limiting	the	number	of	flights	available.	In	addition,	pursuant	to	the	Merger	clearance	process	in	the	EU,	we	were	required	to make	available	to	other	carriers	certain	Slots	at	London	Heathrow.	There	is	no	assurance	that	we	will	be	able	to	obtain	sufficient	slots	or	analogous	authorizations	in	the future	because,	among	other	reasons,	such	allocations	are	often	sought	after	by	other	airlines	and	are	subject	to	changes	in	governmental	policies.

In	connection	with	the	settlement	of	litigation	relating	to	the	Merger	brought	by	the	DOJ	and	certain	states,	we	entered	into	settlement	agreements	that	provided	for certain	asset	divestitures,	including	52	Slot	pairs	at	DCA,	17	Slot	pairs	at	LaGuardia	and	gates	and	related	ground	facilities	necessary	to	operate	those	Slot	pairs,	and	two gates	at	each	of	Boston	Logan	International	Airport,	Chicago	O'Hare	International	Airport	(ORD),	Dallas	Love	Field	(DAL),	Los	Angeles	International	Airport	and Miami	International	Airport.	Our	settlement	agreements	also	require	our	airlines	to	maintain	certain	hub	operations	and	continue	to	provide	service	to	certain	specified communities	for	limited	periods	of	time.	In	addition,	we	entered	into	a	related	settlement	with	the	DOT	related	to	small	community	service	from	DCA.	Further,	as	a consequence	of	the	Merger	clearance	process	in	the	EU,	we	made	one	pair	of	London	Heathrow	Slots	available	for	use	by	another	carrier	and,	along	with	our	JBA partners,	we	made	one	pair	of	London	Heathrow	Slots	available	to	competitors	for	use	for	up	to	six	years	in	different	markets.

Our	ability	to	provide	service	can	also	be	impaired	at	airports,	such	as	Chicago	O'Hare	and	Los	Angeles	International,	where	the	airport	gate	and	other	facilities	are inadequate	to	accommodate	all	of	the	service	that	we	would	like	to	provide.

The	Wright	Amendment	Reform	Act	of	2006	(the	Wright	Amendment	Reform	Act)	reduced,	and	has	now	eliminated,	all	domestic	non-stop	geographic	restrictions on	operations	at	DAL.	Although	we	held	two	gates	at	DAL,	we	did	not	operate	from	there	in	2014	or	2013	and	instead,	operated	solely	at	DFW.	An	element	of	our settlement	of	the	antitrust	litigation	brought	by	the	U.S.	Department	of	Justice	and	certain	states	relating	to	the	Merger	included	our	divestiture	of	the	two	gates	we	held at	DAL.	Service	from	DAL	competes	with	our	hub	at	DFW	Airport.

The	DOT	allows	local	airport	authorities	to	implement	procedures	designed	to	abate	special	noise	problems,	provided	such	procedures	do	not	unreasonably	interfere with	interstate	or	foreign	commerce	or	the	national	transportation	system.	Certain	locales,	including	Boston,	Washington	D.C.,	Chicago,	San	Diego	and	San	Francisco, among	others,	have	established	airport	restrictions	to	limit	noise,	including	restrictions	on	aircraft	types	to	be	used	and	limits	on	the	number	of	hourly	or	daily	operations or	the	time	of	these	operations.	In	some	instances,	these	restrictions	have	caused	curtailments	in	service	or	increases	in	operating	costs,	and	these

restrictions	could	limit	the	ability	of	our	airline	subsidiaries	to	expand	their	operations	at	the	affected	airports.	Authorities	at	other	airports	may	adopt	similar	noise regulations.	We	are	continuing	to	see	an	increase	in	these	issues	throughout	the	country.	See	"Industry	Regulation	and	Airport	Access	–	Environmental	Matters,"	below.

# Civil	Reserve	Air	Fleet

We	participate	in	the	Civil	Reserve	Air	Fleet	(CRAF)	program,	which	is	a	voluntary	program	administered	by	the	U.S.	Air	Force	Air	Mobility	Command.	The General	Services	Administration	of	the	U.S.	Government	requires	that	airlines	participate	in	the	CRAF	program	in	order	to	receive	U.S.	Government	business.	We	are reimbursed	at	compensatory	rates	if	aircraft	are	activated	under	the	CRAF	program	or	when	participating	in	Department	of	Defense	business.	If	a	substantial	number	of our	aircraft	are	activated	for	operation	under	the	CRAF	program	at	a	time	of	war	or	other	national	emergency,	our	business	operations	and	financial	condition	may	be adversely	affected.	In	January	2014,	the	U.S.	Air	Force	proposed	a	radical	restructuring	of	the	CRAF	program	to	take	effect	in	October	2015.	We	do	not	support	the	new proposals	as	they	could	adversely	affect	our	business	and,	together	with	other	industry	participants,	we	are	working	with	the	U.S.	Air	Force	to	address	our	concerns.

# Environmental	Matters

The	airline	industry	is	subject	to	various	laws	and	government	regulations	concerning	environmental	matters	in	the	U.S.	and	other	countries.	U.S.	federal	laws	that have	a	particular	impact	on	our	operations	include	the	Airport	Noise	and	Capacity	Act	of	1990	(ANCA),	the	Clean	Air	Act	(CAA),	the	Resource	Conservation	and Recovery	Act,	the	Clean	Water	Act,	the	Safe	Drinking	Water	Act,	and	the	Comprehensive	Environmental	Response,	Compensation	and	Liability	Act	(CERCLA	or	the Superfund	Act).	The	U.S.	Environmental	Protection	Agency	(EPA)	and	other	federal	agencies	have	been	authorized	to	promulgate	regulations	that	have	an	impact	on our	operations.	In	addition	to	these	federal	activities,	various	states	have	been	delegated	certain	authorities	under	the	aforementioned	federal	statutes.	Many	state	and local	governments	have	adopted	environmental	laws	and	regulations	which	are	similar	to	or	stricter	than	federal	requirements.

The	ANCA	recognizes	the	rights	of	airport	operators	with	noise	problems	to	implement	local	noise	abatement	programs	so	long	as	they	do	not	interfere	unreasonably with	interstate	or	foreign	commerce	or	the	national	air	transportation	system.	Authorities	in	several	cities	have	promulgated	aircraft	noise	reduction	programs,	including the	imposition	of	nighttime	curfews.	The	ANCA	generally	requires	FAA	approval	of	local	noise	restrictions	on	aircraft.	While	we	have	had	sufficient	scheduling flexibility	to	accommodate	local	noise	restrictions	imposed	to	date,	our	operations	could	be	adversely	affected	if	locally-imposed	regulations	become	more	restrictive	or widespread.

Many	aspects	of	our	operations	are	subject	to	increasingly	stringent	environmental	regulations	and	concerns	about	climate	change	and	greenhouse	gas	(GHG) emissions.	For	example,	the	EU	has	established	the	Emissions	Trading	Scheme	(ETS)	to	regulate	GHG	emissions	in	the	EU.	The	EU	adopted	a	directive	in	2008	under which	each	EU	member	state	is	required	to	extend	the	ETS	to	aviation	operations.	This	directive	would	have	required	us,	beginning	in	2012,	to	annually	submit emission	allowances	in	order	to	operate	flights	to	and	from	airports	in	the	European	Economic	Area	(EEA),	including	flights	between	the	U.S.	and	EU	member	states. However,	in	an	effort	to	allow	the	International	Civil	Aviation	Organization	(ICAO)	time	to	propose	an	alternate	scheme	to	manage	global	aviation	emissions,	in	April 2013	the	EU	suspended	for	one	year	the	ETS'	application	to	flights	entering	and	departing	the	EEA,	limiting	its	application,	for	flights	flown	in	2012,	to	intra-EEA flights	only.	In	October	2013,	the	ICAO	Assembly	adopted	a	resolution	calling	for	the	development	through	ICAO	of	a	global,	market-based	scheme	for	aviation	GHG emissions,	to	be	finalized	in	2016	and	implemented	in	2020.	Subsequently,	the	EU	has	amended	the	EU	ETS	so	that	the	monitoring,	reporting	and	submission	of allowances	for	aviation	GHG	emissions	will	continue	to	be	limited	to	only	intra-EEA	flights	through	2016,	at	which	time	the	EU	will	evaluate	the	progress	made	by ICAO	and	determine	what,	if	any,	measures	to	take	related	to	aviation	GHG	emissions	from	2017	onwards.	The	U.S.	enacted	legislation	in	November	2012	which encourages	the	DOT

to	seek	an	 international	solution	 through	ICAO	and	 that	will	allow	 the	U.S.	Secretary	of	Transportation	 to	prohibit	U.S.	airlines	from	participating in the	ETS. Ultimately,	the	scope	and	application	of	ETS	or	other	emissions	trading	schemes	to	our	operations,	now	or	in	the	near	future,	remains	uncertain.

Similarly,	within	the	U.S.,	there	is	an	increasing	trend	toward	regulating	GHG	emissions	directly	under	the	CAA.	In	response	to	a	2012	ruling	by	the	U.S.	Court	of Appeals	District	of	Columbia	Circuit	requiring	the	EPA	to	make	a	final	determination	on	whether	aircraft	GHG	emissions	cause	or	contribute	to	air	pollution,	which	may reasonably	be	anticipated	to	endanger	public	health	or	welfare,	the	EPA	announced	in	September	2014	that	it	is	in	the	process	of	making	a	determination	regarding aircraft	GHG	emissions	and	anticipates	proposing	an	endangerment	finding	by	May	2015.	If	the	EPA	makes	a	positive	endangerment	finding,	the	EPA	is	obligated under	the	CAA	to	set	GHG	emission	standards	for	aircraft.	Several	states	are	also	considering	or	have	adopted	initiatives	to	regulate	emissions	of	GHGs,	primarily through	the	planned	development	of	GHG	emissions	inventories	and/or	regional	GHG	cap	and	trade	programs.	These	regulatory	efforts,	both	internationally	and	in	the U.S.	at	the	federal	and	state	levels,	are	still	developing,	and	we	cannot	yet	determine	what	the	final	regulatory	programs	or	their	impact	will	be	in	the	U.S.,	the	EU	or	in other	areas	in	which	we	do	business.	Depending	on	the	scope	of	such	regulation,	certain	of	our	facilities	and	operations	may	be	subject	to	additional	operating	and	other permit	requirements,	potentially	resulting	in	increased	operating	costs.

The	environmental	 laws	 to	which	we	are	subject	 include	 those	related	 to	responsibility	for	potential	soil	and	groundwater	contamination.	We	are	conducting investigation	and	remediation	activities	to	address	soil	and	groundwater	conditions	at	several	sites,	including	airports	and	maintenance	bases.	We	anticipate	that	the ongoing	costs	of	such	activities	will	not	have	a	material	impact	on	our	operations.	In	addition,	we	have	been	named	as	a	potentially	responsible	party	(PRP)	at	certain Superfund	sites.	Our	alleged	volumetric	contributions	at	such	sites	are	relatively	small	in	comparison	to	total	contributions	of	all	PRPs;	we	anticipate	that	any	future payments	of	costs	at	such	sites	will	not	have	a	material	impact	on	our	operations.

# Future	Regulatory	Developments

Future	regulatory	developments	and	actions	could	affect	operations	and	increase	operating	costs	for	the	airline	industry,	including	our	airline	subsidiaries.	See	Part	I, Item	1A.	Risk	Factors	–	"If	we	are	unable	to	obtain	and	maintain	adequate	facilities	and	infrastructure	throughout	our	system	and,	at	some	airports,	adequate	Slots,	we may	be	unable	to	operate	our	existing	flight	schedule	and	to	expand	or	change	our	route	network	in	the	future,	which	may	have	a	material	adverse	impact	on	our operations,"	"Our	business	is	subject	to	extensive	government	regulation,	which	may	result	in	increases	in	our	costs,	disruptions	to	our	operations,	limits	on	our operating	flexibility,	reductions	in	the	demand	for	air	travel,	and	competitive	disadvantages"	and	"We	are	subject	to	many	forms	of	environmental	regulation	and	may incur	substantial	costs	as	a	result"	for	additional	information.

# Employees	and	Labor	Relations

The	airline	business	is	labor	intensive.	In	2014,	salaries,	wages	and	benefits	were	one	of	our	largest	expenses	and	represented	approximately	25%	of	our	operating expenses.	The	table	below	presents	our	approximate	number	of	active	full-time	equivalent	employees	as	of	December	31,	2014.

|  | American | US	Airways | Regional	Carriers | Total |
| :--- | :--- | :--- | :--- | :--- |
| Pilots | 8,600 | 4,400 | 3,200 | 16,200 |
| Flight\tattendants | \t 15,900 | 7,700 | 1,800 | 25,400 |
| Maintenance\tpersonnel | \t 10,800 | 3,600 | 1,700 | 16,100 |
| Fleet\tservice\tpersonnel | 8,600 | 6,200 | 2,500 | 17,300 |
| Passenger\tservice\tpersonnel | 9,100 | 6,100 | 7,300 | 22,500 |
| Administrative\tand\tother | 8,600 | 4,800 | 2,400 | 15,800 |
| Total | \t 61,600 | 32,800 | 18,900 | \t113,300 |

As	of	December	31,	2014,	approximately	82%	of	AAG's	active	employees	were	represented	by	various	labor	unions	and	covered	by	CBAs.	Employees	of	American,

US	Airways	and	AAG's	regional	subsidiaries	are	covered	by	labor	agreements	as	set	forth	in	the	table	below.

(1) Approximate	number	of	active	full-time	equivalent	employees	covered	by	the	contract	as	of	December	31,	2014.

(2) See	discussion	below	regarding	the	process	for	combining	mainline	employee	groups	post-Merger.

(3) Contracts	are	currently	amendable.

Relations	with	such	labor	organizations	are	governed	by	the	Railway	Labor	Act	(RLA).	Under	the	RLA,	the	National	Mediation	Board	(NMB)	is	responsible	for determining	which	union,	if	any,	is	designated	to	represent	employees.	In	an	airline	merger,	when	different	unions	represent	the	employees	at	the	merging	carrier,	a union	may	file	an	application	with	the	NMB	to	represent	the	combined	group	of	post-merger	employees.	The	application	is	reviewed	by	the	NMB,	which	considers whether	the	operations	of	the	merging	carriers	have	been	sufficiently	integrated	to	constitute	a	single	transportation	system.	After	the	integration	process	is	found	to	have created	a	single	 transportation	system,	 the	NMB	 then	conducts	an	 investigation	 to	determine	which	union,	 if	any,	 is	 to	be	 the	representative	of	 the	post-merger employees.	That	union	then	negotiates	a	joint	collective	bargaining	agreement	(JCBA)	covering	the	combined	group	of	post-merger	employees.

When	an	RLA	CBA	becomes	amendable,	if	either	party	to	the	agreement	wishes	to	modify	its	terms,	it	must	notify	the	other	party	in	the	manner	prescribed	under	the RLA	and	as	agreed	by	the	parties.	Under	the	RLA,	the	parties	must	meet	for	direct	negotiations,	and,	if	no	agreement	is	reached,	either	party	may	request	the	NMB	to appoint	a	federal	mediator.	The	RLA	prescribes	no	set	timetable	for	the	direct	negotiation	and	mediation	process.	It	is	not	unusual	for	those	processes	to	last	for	many months	and	even	for	several	years.	If	no	agreement	is	reached	in	mediation,	the	NMB	in	its	discretion	may	declare	under	the	RLA	at	some	time	that	an	impasse	exists, and	if	an	impasse	is	declared,	the	NMB	proffers	binding	arbitration	to	the	parties.	Either	party	may	decline	to	submit	to	binding	arbitration.	If	arbitration	is	rejected	by either	party,	an	initial	30-day	"cooling	off"	period	commences.	Following	the	conclusion	of	that	30-day	"cooling	off"	period,	if	no	agreement	has	been	reached,	"self- help"	(as	described	below)	can	begin	unless	a	Presidential	Emergency	Board	(PEB)	is	established.	A	PEB	examines	the	parties'	positions	and	recommends	a	solution. The	PEB	process	lasts	for	30	days	and	(if	no	resolution	is	reached)	is	followed	by	another	"cooling	off"	period	of	30	days.	At	the	end	of	a	"cooling	off"	period	(unless	an agreement	is	reached,	a	PEB	is	established,	or	action	is	taken	by	Congress),	the	labor	organization	may	exercise	"self-help,"	such	as	a	strike,	and	the	airline	may	resort	to its	own	"self-help,"	including	the	imposition	of	any	or	all	of	its	proposed	amendments	and	the	hiring	of	new	employees	to	replace	any	striking	workers.

On	January	3,	2015,	we	reached	a	tentative	agreement	with	the	APA	on	a	five-year	JCBA,	which	was	ratified	on	January	30,	2015.	The	new,	higher	pay	rates	were implemented	retroactive	to	December	2,	2014.	We	estimate	that	the	ratified	contract	will	increase	our	2015	cost	of	pilot	compensation	and	benefits	by	approximately $650	million.

On	December	18,	2014,	we	reached	a	JCBA	with	the	APFA.	On	December	23,	2014,	the	APFA	JCBA	pay	rates	were	increased	by	4%	due	to	a	corporate	wide initiative	announced	on	that	day.	The	new	agreement	did	not	require	ratification	and	was	effective	immediately,	with	the	wage	increases	under	the	JCBA	becoming effective	on	January	1,	2015.	We	estimate	that	our	total	flight	attendant	costs	in	2015	will	be	approximately	$200	million	higher	as	a	result	of	this	new	agreement.

Prior	to	the	Merger,	the	passenger	service	employees	of	mainline	US	Airways	were	represented	by	the	Airline	Employees	Customer	Service	Association,	CWA-IBT (CWA-IBT).	The	CBA	covering	those	employees	is	now	amendable.	The	CWA-IBT	filed	a	single	carrier	application	with	the	NMB	covering	both	the	US	Airways	and the	American	passenger	service	employees	and,	after	an	NMB	election,	was	certified	to	represent	the	combined	group.	Negotiations	for	a	JCBA	are	now	underway.

Most	of	the	other	mainline	American	ground	employees	are	represented	by	the	TWU	and	covered	by	existing	agreements	that	will	not	become	amendable	until 2018.	The	11,000	US	Airways	mechanics,	fleet	service	agents	and	stores	employees	are	covered	by	IAM	agreements	that	also	become	amendable	in	2018.	In	August 2014,	the	TWU	and	the	IAM	together	filed	single	transportation	system	applications	to	jointly	represent	the	combined	groups	of	mainline	US	Airways	and	mainline American	mechanics,	fleet	service	and	stores	employees.	With

respect	to	the	mainline	American	and	the	mainline	US	Airways	dispatchers,	flight	simulator	engineers	and	flight	crew	training	instructors,	all	of	whom	are	now represented	by	the	TWU,	a	rival	organization,	the	National	Association	of	Airline	Professionals	(NAAP),	filed	single	carrier	applications	seeking	to	represent	those employees.	The	NMB	will	have	to	determine	that	a	single	transportation	system	exists	and	will	certify	a	post-merger	representative	of	the	combined	employee	groups before	the	process	for	negotiating	new	JCBAs	can	begin.

The	Merger	had	no	impact	on	the	CBAs	that	cover	the	employees	of	our	wholly-owned	subsidiary	airlines	which	are	not	being	merged	(Envoy,	Piedmont	and	PSA). For	those	employees,	the	RLA	provides	that	CBAs	do	not	expire,	but	instead	become	amendable	as	of	a	stated	date.

In	2014,	Envoy	pilots	ratified	a	new	10	year	collective	bargaining	agreement,	Piedmont	pilots	ratified	a	new	10	year	collective	bargaining	agreement	and	Piedmont flight	attendants	ratified	a	new	five-year	collective	bargaining	agreement.

With	the	exception	of	the	passenger	service	employees	who	are	now	engaged	in	traditional	RLA	negotiations	that	are	expected	to	result	in	a	JCBA	and	the	US Airways	flight	simulator	engineers	and	flight	crew	training	instructors,	other	union-represented	American	mainline	employees	are	covered	by	agreements	that	are	not currently	amendable.	Until	those	agreements	become	amendable,	negotiations	for	JCBAs	will	be	conducted	outside	the	traditional	RLA	bargaining	process	described above,	and,	in	the	meantime,	no	self-help	will	be	permissible.	The	Piedmont	mechanics	and	stock	clerks	and	the	PSA	and	Piedmont	dispatchers	also	have	agreements that	are	now	amendable	and	are	engaged	in	traditional	RLA	negotiations.

None	of	the	unions	representing	our	employees	presently	may	lawfully	engage	in	concerted	refusals	to	work,	such	as	strikes,	slow-downs,	sick-outs	or	other	similar activity,	against	us.	Nonetheless,	there	is	a	risk	that	disgruntled	employees,	either	with	or	without	union	involvement,	could	engage	in	one	or	more	concerted	refusals	to work	that	could	individually	or	collectively	harm	the	operation	of	our	airline	and	impair	our	financial	performance.

For	more	discussion,	see	Part	I,	Item	1A.	Risk	Factors	–	"Union	disputes,	employee	strikes	and	other	labor-related	disruptions	may	adversely	affect	our	operations."

# Aircraft	Fuel

Our	operations	and	financial	results	are	significantly	affected	by	the	availability	and	price	of	jet	fuel.	Based	on	our	2015	forecasted	mainline	and	regional	fuel consumption,	we	estimate	that,	as	of	December	31,	2014,	a	one	cent	per	gallon	increase	in	aviation	fuel	price	would	increase	our	2015	annual	fuel	expense	by	$43 million.

The	following	table	shows	annual	aircraft	fuel	consumption	and	costs,	including	taxes,	for	our	mainline	operations	for	2012	through	2014	(gallons	and	aircraft	fuel expense	in	millions).

| Year | Gallons | Average	Price<br>per	Gallon | Aircraft	Fuel<br>Expense | Mainline	Operating<br>Expenses |
| :--- | :--- | :--- | :--- | :--- |
| 2014 | \t3,644 | $2.91 | $10,592 | 33.2% |
| 2013\t(a) | \t3,608 | 3.08 | 11,109 | 35.4 |
| 2012\t(a) | \t3,512 | 3.19 | 11,194 | 35.8 |

(a) Represents	"combined"	financial	data,	which	includes	the	financial	results	of	American	and	US	Airways	Group	each	on	a	standalone	basis.

Total	combined	fuel	expenses	for	our	wholly-owned	and	third-party	regional	carriers	operating	under	capacity	purchase	agreements	of	American	and	US	Airways Group,	each	on	a	standalone	basis,	were	$2.0	billion,	$2.1	billion	and	$2.1	billion	for	the	years	ended	December	31,	2014,	2013	and	2012,	respectively.

In	order	to	provide	a	measure	of	control	over	price	and	supply,	we	trade	and	ship	fuel	and	maintain	fuel	storage	facilities	to	support	our	flight	operations.

During	the	second	quarter	of	2014,	we	sold	our	portfolio	of	fuel	hedging	contracts	that	were	scheduled	to	settle	on	or	after	June	30,	2014.	We	have	not	entered	into any	transactions	to	hedge	our	fuel	consumption	since	December	9,	2013	and,	accordingly,	as	of	December	31,	2014,	we	did	not	have	any	fuel	hedging	contracts outstanding.	As	such,	and	assuming	we	do	not	enter	into	any	future	transactions	to	hedge	our	fuel	consumption,	we	will	continue	to	be	fully	exposed	to	fluctuations	in fuel	prices.	Our	current	policy	is	not	to	enter	into	transactions	to	hedge	our	fuel	consumption,	although	we	review	that	policy	from	time	to	time	based	on	market conditions	and	other	factors.

Fuel	prices	have	fluctuated	substantially	over	the	past	several	years.	We	cannot	predict	the	future	availability,	price	volatility	or	cost	of	aircraft	fuel.	Natural	disasters, political	disruptions	or	wars	involving	oil-producing	countries,	changes	in	fuel-related	governmental	policy,	the	strength	of	the	U.S.	dollar	against	foreign	currencies, changes	in	access	to	petroleum	product	pipelines	and	terminals,	speculation	in	the	energy	futures	markets,	changes	in	aircraft	fuel	production	capacity,	environmental concerns	and	other	unpredictable	events	may	result	in	fuel	supply	shortages,	additional	fuel	price	volatility	and	cost	increases	in	the	future.	See	Part	I,	Item	1A.	Risk Factors	–	"Our	business	is	dependent	on	the	price	and	availability	of	aircraft	fuel.	Continued	periods	of	high	volatility	in	fuel	costs,	increased	fuel	prices	and	significant disruptions	in	the	supply	of	aircraft	fuel	could	have	a	significant	negative	impact	on	our	operating	results	and	liquidity."

# Insurance

We	maintain	insurance	of	the	types	that	we	believe	are	customary	in	the	airline	industry,	including	insurance	for	public	liability,	passenger	liability,	property	damage, and	all-risk	coverage	for	damage	to	our	aircraft.	Principal	coverage	includes	liability	for	injury	to	members	of	the	public,	including	passengers,	damage	to	property	of AAG,	its	subsidiaries	and	others,	and	loss	of	or	damage	to	flight	equipment,	whether	on	the	ground	or	in	flight.	We	also	maintain	other	types	of	insurance	such	as workers'	compensation	and	employer's	liability,	with	limits	and	deductibles	that	we	believe	are	standard	within	the	industry.

In	addition,	insurers	significantly	increased	the	premiums	for	aviation	insurance	in	general	following	September	11,	2001.	While	the	price	of	commercial	insurance has	declined	since	the	period	immediately	after	the	terrorist	attacks	of	September	11,	2001,	if	commercial	insurance	carriers	further	reduce	the	amount	of	insurance coverage	available	to	us	or	significantly	increase	its	cost,	we	would	be	materially	adversely	affected.	See	Part	I,	Item	1A.	Risk	Factors	–	"Increases	in	insurance	costs	or reductions	in	insurance	coverage	may	adversely	impact	our	operations	and	financial	results."

# Customer	Service

During	2014,	we	worked	to	enhance	our	customers'	experience	by	continuing	our	fleet	renewal	program,	under	which	we	expect	to	achieve	one	of	the	most	modern and	fuel-efficient	fleets	in	the	industry.	During	2014,	we	took	delivery	of	82	mainline	aircraft	and	retired	69	older	legacy	mainline	aircraft.	Additionally,	in	the	fourth quarter	of	2014,	we	announced	$2.0	billion	in	planned	customer	improvements,	including	new	seats	from	nose	to	tail	on	several	aircraft	types	and	fully	lie-flat	seats	on our	long-haul	international	fleet;	satellite-based	internet	access	providing	connectivity	for	international	flights;	a	refreshed	and	modern	design	for	Admirals	Club	lounges worldwide;	onboard	power	on	new	aircraft;	and	improved	and	updated	kiosks	to	expedite	airport	check-in.

Most	importantly,	we	are	committed	to	consistently	delivering	safe,	reliable,	and	convenient	service	to	our	customers	in	every	aspect	of	our	operation.	Our	2014 operating	performance	was	negatively	impacted	in	part	by	severe	weather	conditions	at	our	hubs	as	well	as	the	September	2014	fire	at	the	FAA's	Chicago	Air	Route Traffic	Control	Center,	which	caused	significant	flight	delays	and	cancellations.	We	reported	the	following	combined	operating	statistics	to	the	DOT	for	mainline operations	for	the	years	ended	December	31,	2014	and	2013:

|  | December	31, |  | Better |
| :--- | :--- | :--- | :--- |
|  | 2014 | 2013\t(a) | (Worse) |
| On-time\tperformance\t(b) | \t77.9 | 79.3 | (1.4)pts |
| Completion\tfactor\t(c) | \t98.4 | 98.5 | (0.1)pts |
| Mishandled\tbaggage\t(d) | \t3.85 | 2.80 | (37.5)% |
| Customer\tcomplaints\t(e) | \t2.12 | 1.76 | (20.5)% |

(a) Represents	the	combined	historical	operating	statistics	for	American	and	US	Airways.

(b) Percentage	of	reported	flight	operations	arriving	on	time	as	defined	by	the	DOT.

(c) Percentage	of	scheduled	flight	operations	completed.

(d) Rate	of	mishandled	baggage	reports	per	1,000	passengers.

(e) Rate	of	customer	complaints	filed	with	the	DOT	per	100,000	enplanements.

# Frequent	Flyer	Programs

American	and	US	Airways	currently	run	two	frequent	flyer	programs,	AAdvantage ®	and	Dividend	Miles,	respectively,	which	were	established	to	develop	passenger loyalty	by	offering	awards	to	travelers	for	their	continued	patronage.	We	believe	that	these	programs	are	one	of	our	competitive	strengths.	The	AAdvantage	and Dividend	Miles	programs	benefit	from	a	growing	base	of	members	with	desirable	demographics	who	have	demonstrated	a	strong	willingness	to	collect	AAdvantage	and Dividend	Miles	over	other	loyalty	program	incentives	and	are	generally	disposed	to	adjusting	their	purchasing	behavior	in	order	to	earn	additional	miles.	AAdvantage and	Dividend	Miles	members	earn	mileage	credits	by	flying	on	American,	US	Airways,	the	American	Eagle	and	US	Airways	Express	carriers,	the	third-party	regional carriers	and	other	participating	airlines	or	by	using	services	of	other	participants	in	these	programs.	Mileage	credits	can	be	redeemed	for	free	or	upgraded	travel	on American,	US	Airways,	the	American	Eagle	carriers	or	other	participating	airlines,	or	for	other	awards.	Once	a	member	accrues	sufficient	mileage	for	an	award,	the member	may	book	award	travel.	Most	travel	awards	are	subject	to	capacity-controlled	seating.	A	member's	mileage	credit	does	not	expire	as	long	as	that	member	has any	type	of	qualifying	activity	at	least	once	every	18	months.

American	and	US	Airways	sell	mileage	credits	and	related	services	to	other	participants	in	the	AAdvantage	and	Dividend	Miles	programs.	There	are	over	1,000 program	participants,	including	leading	credit	card	issuers	(Citibank	and	BarclaycardUS),	hotels,	car	rental	companies	and	other	products	and	services	companies.	We believe	that	program	participants	benefit	from	the	sustained	purchasing	behavior	of	their	members,	which	translates	into	incremental	and	recurring	streams	of	revenues for	us.	Under	our	agreements	with	AAdvantage	members	and	program	participants,	we	reserve	the	right	to	change	the	AAdvantage	program	at	any	time	without	notice, and	may	end	the	program	with	six	months'	notice.	We	also	reserve	the	right	to	terminate	the	Dividend	Miles	program	or	portions	of	the	program	at	any	time.	Program rules,	partners,	special	offers,	awards	and	requisite	mileage	levels	for	awards	are	subject	to	change.	As	of	December	31,	2014,	AAdvantage	and	Dividend	Miles	had approximately	809.0	billion	outstanding	award	miles.	During	2014,	AAdvantage	and	Dividend	Miles	issued	approximately	287.1	billion	miles,	of	which	approximately 61%	were	sold	to	program	participants.	See	Part	II,	Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	–	"Critical Accounting	Policies	and	Estimates"	for	more	information	on	AAdvantage	and	Dividend	Miles.

We	and	other	participating	airline	partners	limit	the	number	of	seats	per	flight	that	are	available	for	redemption	by	award	recipients	by	using	various	inventory management	techniques.	We	charge	various	fees	for	issuing	awards	dependent	upon	destination	and	booking	method	and	for	issuing	awards	within	21	days	of	the	travel date.

Effective	January	7,	2014,	AAdvantage	and	Dividend	Miles	members	can	earn	and	redeem	miles	when	traveling	across	either	airline's	network.	All	travel	on	eligible tickets	on	both	airlines	will	count	toward	qualification	for	elite	status	in	the	customer's	program	of	choice.	Elite	members	of	each	airline	can	enjoy	select	reciprocal benefits	of	both	the	AAdvantage	and	Dividend	Miles	programs,	including	First	and	Business	Class	check-in,	priority	security	and	priority	boarding,	complimentary access	to	Preferred	Seats,	priority	baggage	delivery,	and	checked	bags	at	no	charge,	consistent	with	the	current	baggage	policies	for	each	carrier.

We	plan	to	complete	integration	of	the	Dividend	Miles	program	into	American's	AAdvantage	program	in	the	second	quarter	of	2015,	creating	one	of	the	largest airline	loyalty	programs	in	the	world.

# Ticket	Distribution

Passengers	 can	 book	 tickets	 for	 travel	 on	 American	 or	 US	 Airways	 through	 several	 distribution	 channels	 including	 their	 direct	 websites (www.aa.com and www.usairways.com),	our	reservations	centers	and	third-party	distribution	channels,	including	those	provided	by	or	through	global	distribution	systems	(e.g.,	Amadeus, Sabre	and	Travelport),	conventional	travel	agents	and	online	travel	agents	(e.g.,	Expedia,	Orbitz	and	Travelocity).	To	remain	competitive,	we	will	need	to	successfully manage	our	distribution	costs	and	rights,	increase	our	distribution	flexibility	and	improve	the	functionality	of	third-party	distribution	channels,	while	maintaining	an industry-competitive	cost	structure.	For	more	discussion,	see	Part	I,	Item	1A.	Risk	Factors	–	"We	rely	on	third-party	distribution	channels	and	must	manage	effectively the	costs,	rights	and	functionality	of	these	channels."

# Seasonality	and	Other	Factors

Due	to	the	greater	demand	for	air	and	leisure	travel	during	the	summer	months,	revenues	in	the	airline	industry	in	the	second	and	third	quarters	of	the	year	tend	to	be greater	than	revenues	in	the	first	and	fourth	quarters	of	the	year.	General	economic	conditions,	fears	of	terrorism	or	war,	fare	initiatives,	fluctuations	in	fuel	prices,	labor actions,	weather,	natural	disasters,	outbreaks	of	disease,	and	other	factors	could	impact	this	seasonal	pattern.	Accordingly,	the	results	of	operations	for	any	interim	period are	not	necessarily	indicative	of	those	for	the	entire	year.

Unaudited	quarterly	financial	data	for	the	two-year	period	ended	December	31,	2014	is	included	in	Note	20	to	AAG's	Consolidated	Financial	Statements	in	Part	II, Item	8A	and	Note	17	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B.

# Available	Information

The	SEC	allows	AAG	and	American	to	incorporate	information	by	reference	into	this	Form	10-K.	This	means	that	AAG	and	American	can	disclose	important information	to	you	by	referring	you	to	another	document	filed	separately	with	the	SEC.	Any	information	incorporated	by	reference	into	this	Form	10-K	is	considered	to be	a	part	of	this	Form	10-K,	except	for	any	information	that	is	superseded	by	information	that	is	included	directly	in	this	Form	10-K	or	incorporated	by	reference subsequent	to	the	date	of	this	Form	10-K.	AAG	and	American	do	not	incorporate	the	contents	of	their	website	into	this	Form	10-K.

A	copy	of	this	Annual	Report	on	Form	10-K,	Quarterly	Reports	on	Form	10-Q,	Current	Reports	on	Form	8-K	and	amendments	to	those	reports	filed	or	furnished pursuant	to	Section	13(a)	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	as	amended	(the	Exchange	Act),	are	available	free	of	charge	at	www.aa.com	as	soon	as reasonably	practicable	after	we	electronically	file	such	material	with,	or	furnish	it	to,	the	SEC	and	at	the	website	maintained	by	the	SEC	at	www.sec.gov.

AAG	has	made	and	expects	to	make	public	disclosures	of	certain	information	regarding	AAG	and	its	subsidiaries	to	investors	and	the	general	public	by	means	of social	media	sites,	including,	but	not	limited	to,	Facebook	and	Twitter	and	a	website	maintained	by	us	to	provide	information	regarding	AAG's	reorganization

pursuant	to	the	Plan.	Investors	are	encouraged	to	(i)	join	American's	circle	(@AmericanAir)	on	Twitter,	(ii)	"like"	American	( www.facebook.com/AmericanAirlines)	on its	Facebook	page,	(iii)	follow	American	(www.google.com/+americanairlines)	on	Google+;	(iv)	follow	American	(www.instagram.com/americanair)	on	Instagram; (v)	follow	American	(www.linkedin.com/company/american-airlines)	on	LinkedIn;	(vi)	subscribe	to	American	(www.youtube.com/user/americanairlines)	on	YouTube; and	(vii)	visit	www.amrcaseinfo.com	for	updated	information	regarding	the	Plan.	Neither	AAG	nor	American	incorporates	the	contents	of	its	social	media	posts	or websites	into	this	Annual	Report	on	Form	10-K.

"2011	Plan"	means	the	US	Airways	Group	2011	Incentive	Award	Plan.

"2013	Citicorp	Credit	Facility"	means	the	$1.6	billion	term	loan	facility	provided	for	by	the	loan	agreement,	as	amended,	entered	into	May	23,	2013	among	US	Airways, certain	affiliates	of	US	Airways	and	certain	lenders.

"2013	Credit	Agreement"	means	the	Credit	and	Guaranty	Agreement	entered	into	on	June	27,	2013	among	American,	AAG	and	certain	lenders,	as	amended.

"2013	Credit	Facilities"	means	the	2013	Revolving	Facility	and	2013	Term	Loan	Facility	provided	for	by	the	2013	Credit	Agreement.

"2013	Revolving	Facility"	means	the	$1.4	billion	revolving	credit	facility	provided	for	by	the	2013	Credit	Agreement.

"2013	Term	Loan	Facility"	means	the	$1.9	billion	term	loan	facility	provided	for	under	the	2013	Credit	Agreement.

"2014	Credit	Agreement"	means	the	Credit	and	Guaranty	Agreement	entered	into	on	October	10,	2014	among	AAG,	American,	US	Airways	Group,	US	Airways	and certain	lenders.

"2014	Credit	Facilities"	means	the	2014	Revolving	Facility	and	the	2014	Term	Loan	Facility	provided	for	by	the	2014	Credit	Agreement.

"2014	EETC	Aircraft"	means	the	17	aircraft	owned	by	American	for	which	certain	financing	activities,	including	the	issuance	of	$957	million	aggregate	face	amount	of Series	2014-1	Class	A	and	Class	B	EETCs,	were	undertaken	in	September	2014.

"2014	Revolving	Facility"	means	the	$400	million	revolving	credit	facility	provided	for	by	the	2014	Credit	Agreement.

"2014	Term	Loan	Facility"	means	the	$750	million	term	loan	facility	provided	for	by	the	2014	Credit	Agreement.

"AAdvantage"	means	the	AAdvantage ®	frequent	flyer	program.

"AAdvantage	Loan"	means	the	arrangement	made	in	2009	under	which	Citibank	loaned	American	$1.0	billion	that	could	be	repaid	either	in	AAdvantage	miles	under American's	AAdvantage	program	or	in	cash.

"AAG"	means	American	Airlines	Group	Inc.	(formerly	named	AMR	Corporation).

"AAG	Common	Stock"	means	AAG's	common	stock,	par	value	$0.01	per	share.

"AAG	Series	A	Preferred	Stock"	means	AAG's	Series	A	Convertible	Preferred	Stock,	with	a	stated	value	$25.00	per	share,	and	issued	in	accordance	with	the	Plan.

"ABA"	means	American	Beacon	Advisors,	Inc.

"ABO"	means	accumulated	benefit	obligation.

"AFA"	means	Association	of	Flight	Attendants-CWA.

"Air	Wisconsin"	means	Air	Wisconsin	Airlines	Corporation.

"ALPA"	means	Air	Line	Pilots	Association.

"American"	means	American	Airlines,	Inc.

"American	Eagle"	means	American	Eagle	Airlines,	Inc.

"AMR"	means	AMR	Corporation	and	is	used	to	reference	AAG	prior	to	December	9,	2013.

"AMT"	means	alternative	minimum	tax.

"ANCA"	means	Airport	Noise	and	Capacity	Act	of	1990.

"APA"	means	Allied	Pilots	Association.

"APBO"	means	accumulated	postretirement	benefit	obligation.

"APFA"	means	Association	of	Professional	Flight	Attendants.

"ASC"	means	the	FASB	Accounting	Standards	Codification.

"ASIF"	means	Aviation	Security	Infrastructure	Fee.

"ASM"	means	available	seat	mile	and	is	a	basic	measure	of	production.	One	ASM	represents	one	seat	flown	one	mile.

"ASU"	means	Accounting	Standards	Update.

"ATC"	means	air	traffic	control.

"Average	stage	length"	means	the	average	of	the	distances	flown	on	each	segment	of	every	route.

"Aviation	Act"	means	subtitle	VII	of	Title	49	of	the	United	States	Code,	as	amended.

"Aviation	Security	Act"	means	the	Aviation	and	Transportation	Security	Act	enacted	in	November	2001.

"Bankruptcy	Code"	means	Chapter	11	of	the	United	States	Bankruptcy	Code.

"Bankruptcy	Court"	means	the	United	States	Bankruptcy	Court	for	the	Southern	District	of	New	York.

"Block	hours"	means	the	hours	measured	from	the	moment	an	aircraft	first	moves	under	its	own	power,	including	taxi	time,	for	the	purposes	of	flight	until	the	aircraft	is docked	at	the	next	point	of	landing	and	its	power	is	shut	down.

# "Bylaws"	means	AAG's	Amended	and	Restated	Bylaws.

"CAA"	means	the	Clean	Air	Act.

"CASM"	means	operating	cost	per	available	seat	mile	and	is	equal	to	operating	expenses	divided	by	ASMs.

"CBAs"	means	collective	bargaining	agreements.

"CERCLA"	or	the	"Superfund	Act"	means	Comprehensive	Environmental	Response,	Compensation	and	Liability	Act.

"Certificate	of	Incorporation"	means	AAG's	Restated	Certificate	of	Incorporation.

"Chapter	11	Cases"	means	the	voluntary	petitions	for	relief	filed	on	November	29,	2011	by	the	Debtors.

"Chautauqua"	means	Chautauqua	Airlines,	Inc.

"Code"	means	the	Internal	Revenue	Code	of	1986,	as	amended.

"Company"	means	AAG	and	its	consolidated	subsidiaries.

"Confirmation	Order"	means	the	confirmation	order	entered	by	the	Bankruptcy	Court	October	21,	2013	in	connection	with	the	Chapter	11	Cases.

"COSO"	means	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission.

"CRAF"	means	U.S.	Civil	Reserve	Air	Fleet.

"CRSUs"	means	cash-settled	restricted	stock	unit	awards.

"CSARs"	means	cash-settled	stock	appreciation	rights.

"CWA"	means	Communications	Workers	of	America.

"CWA-IBT"	means	the	Airline	Employees	Customer	Service	Association,	CWA-IBT.

"DAL"	means	Dallas	Love	Field	Airport.

"DCA"	means	Ronald	Reagan	Washington	National	Airport.

"Debtor"	means	AMR	Corporation.

"Debtors"	means	American,	and	certain	of	AMR's	other	direct	and	indirect	domestic	subsidiaries.

"DFW"	means	Dallas/Fort	Worth	International	Airport.

"Disputed	Claims	Reserve"	means	shares	of	AAG	Common	Stock	held	in	reserve	for	payment	to	holders	of	disputed	claims	at	the	Effective	Date.

"Dividend	Miles"	means	the	Dividend	Miles ®	frequent	flyer	program.

"DOJ"	means	the	U.S.	Department	of	Justice.

"Double-Dip	Unsecured	Claims"	means	claims	of	all	creditors	holding	general	unsecured	claims	against	American	that	are	guaranteed	by	AAG	and	general	unsecured claims	against	AAG	that	are	guaranteed	by	American.

"DOT"	means	the	U.S.	Department	of	Transportation.

"EEA"	means	European	Economic	Area.

"EETC"	means	enhanced	equipment	trust	certificate.

"Effective	Date"	means	December	9,	2013.

"Envoy"	means	Envoy	Aviation	Group	Inc.,	formerly	known	as	AMR	Eagle	Holding	Corporation.

"EPA"	means	the	U.S.	Environmental	Protection	Agency.

"ERISA"	means	the	Employee	Retirement	Income	Security	Act	of	1974,	as	amended.

"Ethics	Standards"	means	AAG's	and	American's	Standards	of	Business	Conduct.

"ETS"	means	EU	emissions	trading	scheme.

"EU"	means	European	Union.

"Exchange	Act"	means	Securities	Exchange	Act	of	1934,	as	amended.

"ExpressJet"	means	ExpressJet,	Inc.

"FAA"	means	Federal	Aviation	Administration.

"FASB"	means	the	Financial	Accounting	Standards	Board.

"GAAP"	means	Generally	Accepted	Accounting	Principles	in	the	U.S.

"GDS"	means	global	distribution	systems.

"GHG"	means	greenhouse	gas.

"IAM"	means	International	Association	of	Machinists	&	Aerospace	Workers.

"IASB"	means	the	International	Accounting	Standards	Board.

"IBT"	means	International	Brotherhood	of	Teamsters.

"ICAO"	means	International	Civil	Aviation	Organization.

"IFRS"	means	the	International	Financial	Reporting	Standards.

"Internal	Revenue	Code"	means	the	Internal	Revenue	Code	of	1986,	as	amended.

# "JBAs"	means	joint	business	agreements.

"JCBA"	means	joint	collective	bargaining	agreement.

"JFK"	means	John	F.	Kennedy	International	Airport.

"LIBOR"	means	the	London	interbank	offered	rate	for	deposits	of	U.S.	dollars.

"London	Heathrow"	means	London	Heathrow	Airport.

"Mainline"	means	the	operations	of	American	and	US	Airways,	as	applicable,	and	excludes	regional	operations.

"Merger"	means	the	merger	of	Merger	Sub	with	and	into	US	Airways	Group	in	accordance	with	the	Merger	Agreement.

"Merger	Agreement"	means	Agreement	and	Plan	of	Merger	dated	as	of	February	13,	2013,	as	amended.

"Merger	Sub"	means	AMR	Merger	Sub,	Inc.

"Mesa"	means	Mesa	Airlines,	Inc.

"NAAP"	means	the	National	Association	of	Airline	Professionals.

"NASDAQ"	means	NASDAQ	Global	Select	Market.

"NMB"	means	National	Mediation	Board.

"NOL"	means	net	operating	loss.

"NOL	Carryforwards"	means	a	deduction	in	any	taxable	year	for	net	operating	losses	carried	over	from	prior	taxable	years.

"OCI"	means	other	comprehensive	income.

"OPEB"	means	post-employee	benefits	(other	than	pension).

"ORD"	means	Chicago	O'Hare	International	Airport.

"OTA"	means	online	travel	agent.

"Passenger	enplanements"	means	the	number	of	passengers	on	board	an	aircraft,	including	local,	connecting	and	through	passengers.

"Passenger	load	factor"	means	the	percentage	of	available	seats	that	are	filled	with	revenue	passengers.

"PBO"	means	projected	benefit	obligation.

"PEB"	means	Presidential	Emergency	Board.

"Petition	Date"	means	November	29,	2011,	and	is	the	date	on	which	the	Debtors	filed	voluntary	petitions	for	relief	in	the	Chapter	11	Cases.

# "PFC"	means	passenger	facility	charge.

"Piedmont"	means	Piedmont	Airlines,	Inc.

"Plan"	means	the	Debtors'	fourth	amended	joint	plan	of	reorganization.

"PRASM"	means	passenger	revenue	per	available	seat	mile	and	is	equal	to	passenger	revenues	divided	by	ASMs.

"Proxy	Statement"	means	American	Airlines	Group	Inc.'s	Proxy	Statement	for	the	2015	Annual	Meeting	of	Stockholders	of	American	Airlines	Group	Inc.

"PRP"	means	potentially	responsible	party.

"PSA"	means	PSA	Airlines,	Inc.

"RASM"	means	the	total	revenue	per	available	seat	mile	and	is	equal	to	the	total	revenues	divided	by	total	mainline	and	third-party	regional	carrier	ASMs.

"Republic"	means	Republic	Airline,	Inc.

"RLA"	means	Railway	Labor	Act.

"RPM"	means	revenue	passenger	mile	and	is	a	basic	measure	of	sales	volume.	One	RPM	represents	one	passenger	flown	one	mile.

"RSUs"	means	restricted	stock	units.

"S&P"	means	Standard	and	Poor's	Financial	Services,	LLC.

"Sabre"	means	Sabre	Holdings	Corporation,	Sabre	Inc.	and	Sabre	Travel	International	Limited.

"SARs"	means	stock-settled	stock	appreciation	rights.

"SEC"	means	Securities	and	Exchange	Commission.

"Second	Circuit"	means	the	United	States	Court	of	Appeals	for	the	Second	Circuit.

"Section	382"	means	Section	382	of	the	Internal	Revenue	Code.

"Securities	Act"	means	Securities	Act	of	1933,	as	amended.

"Senior	Secured	Notes"	means	7.50%	Senior	Secured	Notes	due	2016.

"Single-Dip	Equity	Obligations"	means	obligations	owed	to	holders	of	Single-Dip	Unsecured	Claims.

"SkyWest"	means	SkyWest	Airlines,	Inc.

"Slots"	means	landing	and	take-off	rights	and	authorizations	and	other	facilities.

"Stabilization	Act"	means	Air	Transportation	Safety	and	System	Stabilization	Act.

"Standards	of	Business	Conduct"	means	AAG's	code	of	ethics.

"Tranche	B-1"	means	$1.0	billion	of	tranche	B-1	term	loans	that	are	part	of	the	2013	Citicorp	Credit	Facility.

"Tranche	B-2"	means	$600	million	of	tranche	B-2	term	loans	that	are	part	of	the	2013	Citicorp	Credit	Facility.

"TSA"	means	Transportation	Security	Administration.

"TWU"	means	Transport	Workers	Union.

"US	Airways"	means	US	Airways,	Inc.

"US	Airways	Express"	means	the	trade	name	under	which	AAG	offers	certain	regional	flights	under	arrangements	with	certain	of	its	subsidiaries	and	other	third-party regional	carriers.

"US	Airways	Group"	means	US	Airways	Group,	Inc.	and	its	consolidated	subsidiaries.

"US	Airways	Group	Code"	means	US	Airways	Group	Code	of	Business	Conduct	and	Ethics.

"US	Airways	Group	Common	Stock"	means	US	Airways	Group	common	stock,	par	value	$0.01	per	share.

"Wright	Amendment	Reform	Act"	means	Wright	Amendment	Reform	Act	of	2006.

"WSG"	means	International	Air	Transport	Association's	Worldwide	Scheduling	Guidelines.

"Yield"	means	a	measure	of	airline	revenue	derived	by	dividing	passenger	revenue	by	RPMs.

# ITEM	1A.		RISK	FACTORS

Below	are	certain	risk	factors	that	may	affect	our	business,	results	of	operations	and	financial	condition,	or	the	trading	price	of	our	common	stock	or	other	securities. We	caution	the	reader	that	these	risk	factors	may	not	be	exhaustive.	We	operate	in	a	continually	changing	business	environment,	and	new	risks	and	uncertainties	emerge from	time	to	time.	Management	cannot	predict	such	new	risks	and	uncertainties,	nor	can	it	assess	the	extent	to	which	any	of	the	risk	factors	below	or	any	such	new	risks and	uncertainties,	or	any	combination	thereof,	may	impact	our	business.

# Risk	Factors	Relating	to	the	Company	and	Industry-Related	Risks

# We	could	experience	significant	operating	losses	in	the	future.

For	a	number	of	reasons,	including	those	addressed	in	these	risk	factors,	we	might	fail	to	maintain	profitability	and	might	experience	significant	losses.	In	particular, the	condition	of	the	economy,	the	level	and	volatility	of	fuel	prices,	the	state	of	travel	demand	and	intense	competition	in	the	airline	industry	have	had	and	will	continue to	have	an	impact	on	our	operating	results,	and	may	increase	the	risk	that	we	will	experience	losses.

# Downturns	in	economic	conditions	adversely	affect	our	business.

Due	to	the	discretionary	nature	of	business	and	leisure	travel	spending,	airline	industry	revenues	are	heavily	influenced	by	the	condition	of	the	U.S.	economy	and economies	in	other	regions	of	the	world.	Unfavorable	conditions	in	these	broader	economies	have	resulted,	and	may	result	in	the	future,	in	decreased	passenger	demand for	air	travel	and	changes	in	booking	practices,	both	of	which	in	turn	have	had,	and	may	have	in	the	future,	a	strong	negative	effect	on	our	revenues.	In	addition,	during challenging	economic	times,	actions	by	our	competitors	to	increase	their	revenues	can	have	an	adverse	impact	on	our	revenues.	See	"The	airline	industry	is	intensely competitive	and	dynamic"	below.	Certain	labor	agreements	to	which	we	are	a	party	limit	our	ability	to	reduce	the	number	of	aircraft	in	operation,	and	the	utilization	of such	aircraft,	below	certain	levels.	As	a	result,	we	may	not	be	able	to	optimize	the	number	of	aircraft	in	operation	in	response	to	a	decrease	in	passenger	demand	for	air travel.

# Our	business	is	dependent	on	the	price	and	availability	of	aircraft	fuel.	Continued	periods	of	high	volatility	in	fuel	costs,	increased	fuel	prices	and	significant disruptions	in	the	supply	of	aircraft	fuel	could	have	a	significant	negative	impact	on	our	operating	results	and	liquidity.

Our	operating	results	are	materially	impacted	by	changes	in	the	availability,	price	volatility	and	cost	of	aircraft	fuel,	which	represents	one	of	the	largest	single	cost items	in	our	business.	Jet	fuel	market	prices	have	fluctuated	substantially	over	the	past	several	years	and	prices	continued	to	be	volatile	in	2014.

Because	of	the	amount	of	fuel	needed	to	operate	our	business,	even	a	relatively	small	increase	in	the	price	of	fuel	can	have	a	material	adverse	aggregate	effect	on	our operating	results	and	liquidity.	Due	to	the	competitive	nature	of	the	airline	industry	and	unpredictability	of	the	market,	we	can	offer	no	assurance	that	we	may	be	able	to increase	our	fares,	impose	fuel	surcharges	or	otherwise	increase	revenues	sufficiently	to	offset	fuel	price	increases.

Although	we	are	currently	able	to	obtain	adequate	supplies	of	aircraft	fuel,	we	cannot	predict	the	future	availability,	price	volatility	or	cost	of	aircraft	fuel.	Natural disasters,	political	disruptions	or	wars	involving	oil-producing	countries,	changes	in	fuel-related	governmental	policy,	the	strength	of	the	U.S.	dollar	against	foreign currencies,	changes	in	access	to	petroleum	product	pipelines	and	terminals,	speculation	in	the	energy	futures	markets,	changes	in	aircraft	fuel	production	capacity, environmental	concerns	and	other	unpredictable	events	may	result	in	fuel	supply	shortages,	additional	fuel	price	volatility	and	cost	increases	in	the	future.

We	have	a	large	number	of	older	aircraft	in	our	fleet,	and	these	aircraft	are	not	as	fuel	efficient	as	more	recent	models	of	aircraft,	including	those	we	have	on	order. We	intend	to	continue	to	execute	our	fleet	renewal	plans	to,

among	other	things,	improve	the	fuel	efficiency	of	our	fleet,	and	we	are	dependent	on	a	limited	number	of	major	aircraft	manufacturers	to	deliver	aircraft	on	schedule.	If we	experience	delays	in	delivery	of	the	more	fuel	efficient	aircraft	that	we	have	on	order,	we	will	be	adversely	affected.

Our	aviation	fuel	purchase	contracts	generally	do	not	provide	meaningful	price	protection	against	increases	in	fuel	costs.	Prior	to	the	closing	of	the	Merger,	we	sought to	manage	the	risk	of	fuel	price	increases	by	using	derivative	contracts.	During	the	second	quarter	of	2014,	we	sold	our	portfolio	of	fuel	hedging	contracts	that	were scheduled	to	settle	on	or	after	June	30,	2014.	We	have	not	entered	into	any	transactions	to	hedge	our	fuel	consumption	since	December	9,	2013	and,	accordingly,	as	of December	31,	2014,	we	did	not	have	any	fuel	hedging	contracts	outstanding.	As	such,	and	assuming	we	do	not	enter	into	any	future	transactions	to	hedge	our	fuel consumption,	we	will	continue	to	be	fully	exposed	to	fluctuations	in	fuel	prices.	Our	current	policy	is	not	to	enter	into	transactions	to	hedge	our	fuel	consumption, although	we	review	that	policy	from	time	to	time	based	on	market	conditions	and	other	factors.

There	can	be	no	assurance	that,	at	any	given	time,	we	will	have	derivatives	in	place	to	provide	any	particular	level	of	protection	against	increased	fuel	costs	or	that our	counterparties	will	be	able	to	perform	under	our	derivative	contracts.	To	the	extent	we	use	derivative	contracts	that	have	the	potential	to	create	an	obligation	to	pay upon	settlement	if	prices	decline	significantly,	such	derivative	contracts	may	limit	our	ability	to	benefit	from	lower	fuel	costs	in	the	future.	Also,	a	rapid	decline	in	the projected	price	of	fuel	at	a	time	when	we	have	fuel	hedging	contracts	in	place	could	adversely	impact	our	short-term	liquidity,	because	hedge	counterparties	could require	that	we	post	collateral	in	the	form	of	cash	or	letters	of	credit.	See	also	the	discussion	in	Part	II,	Item	7A.	Quantitative	and	Qualitative	Disclosures	About	Market Risk	–	"AAG	Market	Risk	Sensitive	Instruments	and	Positions	–	Aircraft	Fuel"	and	"American	Airlines	Market	Risk	Sensitive	Instruments	and	Positions	–	Aircraft Fuel."

# 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	more	financial	or	other	resources	and/or	lower	cost	structures	than	ours,	as	well	as	other	forms	of	transportation,	including	rail	and	private	automobiles.	In many	of	our	markets	we	compete	with	at	least	one	low-cost	air	carrier.	Our	revenues	are	sensitive	to	the	actions	of	other	carriers	in	many	areas	including	pricing, scheduling,	capacity	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,	as	airlines	under	financial	stress,	or	in	bankruptcy,	may	institute	pricing	structures intended	to	achieve	near-term	survival	rather	than	long-term	viability.

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.	Some	low-cost	carriers,	which	have	cost	structures	lower	than	ours,	have	better	recent	financial	performance	and	have	announced growth	strategies	including	commitments	to	acquire	significant	numbers	of	aircraft	for	delivery	in	the	next	few	years.	These	low-cost	carriers	are	expected	to	continue	to increase	their	market	share	through	growth	and,	potentially,	consolidation,	and	could	continue	to	have	an	impact	on	our	overall	performance.	For	example,	as	a	result	of divestitures	completed	in	connection	with	gaining	regulatory	approval	for	the	Merger,	low-fare,	low-cost	carriers	have	gained	additional	access	in	a	number	of	markets, including	 DCA,	 a	 Slot-controlled	 airport.	 In	 addition,	 the	 Wright	Amendment	 Reform	Act	 reduced,	 and	 has	 now	 eliminated	 all,	 domestic	 non-stop	 geographic restrictions	on	operations	by	Southwest	Airlines	and	other	carriers	at	DAL.	The	two	gates	at	DAL	that	we	divested	as	part	of	our	settlement	of	antitrust	litigation	related to	the	Merger	have	been	allocated	to	Virgin	America,	a	low-cost	carrier.	The	changed	operating	rules	at	DAL	and	that	divestiture	have	increased	low-cost	carrier competition	for	our	hub	at	DFW.	The	actions	of	the	low-cost	carriers,	including	those	described	above,	could	have	a	material	adverse	effect	on	our	operations	and financial	performance.

Our	presence	in	international	markets	is	not	as	extensive	as	that	of	some	of	our	competitors.	We	derived	approximately	33%	of	our	operating	revenues	in	2014	from operations	outside	of	the	U.S.,	as	measured	and

reported	to	the	DOT.	In	providing	international	air	transportation,	we	compete	with	U.S.	airlines	to	provide	scheduled	passenger	and	cargo	service	between	the	U.S.	and various	overseas	locations,	foreign	investor-owned	airlines,	and	foreign	state-owned	or	state-affiliated	airlines,	including	carriers	based	in	the	Middle	East,	the	three largest	of	which	we	believe	benefit	from	significant	government	subsidies.	In	addition,	open	skies	agreements	with	an	increasing	number	of	countries	around	the	world provide	international	airlines	with	open	access	to	U.S.	markets.	During	2014,	international	capacity	grew	more	quickly	than	domestic	service	creating	a	very	competitive operating	environment.	See	"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"	below.

Certain	airline	alliances	have	been,	or	may	in	the	future	be,	granted	immunity	from	antitrust	regulations	by	governmental	authorities	for	specific	areas	of	cooperation, such	as	joint	pricing	decisions.	To	the	extent	alliances	formed	by	our	competitors	can	undertake	activities	that	are	not	available	to	us,	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.

We	have	implemented	a	joint	business	agreement	(JBA)	with	British	Airways,	Iberia	and	Finnair,	and	antitrust-immunized	cooperation	with	British	Airways,	Iberia, Finnair	and	Royal	Jordanian.	In	addition,	we	have	implemented	an	antitrust-immunized	JBA	with	Japan	Airlines	and	a	JBA	with	Qantas	Airways.	No	assurances	can	be given	as	to	any	benefits	that	we	may	derive	from	such	arrangements	or	any	other	arrangements	that	may	ultimately	be	implemented.

Additional	 mergers	 and	 other	 forms	 of	 industry	 consolidation,	 including	 antitrust	 immunity	 grants,	 may	 take	 place	 and	 may	 not	 involve	 us	 as	 a	 participant. Depending	on	which	carriers	combine	and	which	assets,	if	any,	are	sold	or	otherwise	transferred	to	other	carriers	in	connection	with	such	combinations,	our	competitive position	relative	to	the	post-combination	carriers	or	other	carriers	that	acquire	such	assets	could	be	harmed.	In	addition,	as	carriers	combine	through	traditional	mergers or	antitrust	immunity	grants,	their	route	networks	will	grow,	and	that	growth	will	result	in	greater	overlap	with	our	network,	which	in	turn	could	result	in	lower	overall market	share	and	revenues	for	us.	Such	consolidation	is	not	limited	to	the	U.S.,	but	could	include	further	consolidation	among	international	carriers	in	Europe	and elsewhere.

# We	may	be	unable	to	integrate	operations	successfully	and	realize	the	anticipated	synergies	and	other	benefits	of	the	Merger.

The	Merger	involves	the	combination	of	two	companies	that	operated	as	independent	public	companies	prior	to	the	Merger,	and	each	of	which	operated	its	own international	network	airline.	Historically,	the	integration	of	separate	airlines	has	often	proven	to	be	more	time	consuming	and	to	require	more	resources	than	initially estimated.	We	must	devote	significant	management	attention	and	resources	to	integrating	our	business	practices,	cultures	and	operations.	Potential	difficulties	we	may encounter	as	part	of	the	integration	process	include	the	following:

•the	inability	to	successfully	combine	our	businesses	in	a	manner	that	permits	us	to	achieve	the	synergies	and	other	benefits	anticipated	to	result	from	the Merger;

•the	challenge	of	integrating	complex	systems,	operating	procedures,	regulatory	compliance	programs,	technology,	aircraft	fleets,	networks,	and	other	assets	in a	manner	that	minimizes	any	adverse	impact	on	customers,	suppliers,	employees,	and	other	constituencies;

•the	effects	of	divestitures	and	other	operational	commitments	in	connection	with	the	settlement	of	the	litigation	brought	by	the	Department	of	Justice	(DOJ) and	certain	states	prior	to	the	closing	of	the	Merger,	including	those	involving	DAL	and	DCA;

•the	challenge	of	forming	and	maintaining	an	effective	and	cohesive	management	team;

•the	diversion	of	the	attention	of	our	management	and	other	key	employees;

•the	challenge	of	integrating	workforces	while	maintaining	focus	on	providing	consistent,	high	quality	customer	service	and	running	an	efficient	operation;

•the	 risks	 relating	 to	 integrating	 various	 computer,	 communications	 and	 other	 technology	 systems,	 including	 designing	 and	 implementing	 an	 integrated customer	reservations	system,	that	will	be	necessary	to	operate	American	and	US	Airways	as	a	single	airline	and	to	achieve	cost	synergies	by	eliminating redundancies	in	the	businesses;

•the	disruption	of,	or	the	loss	of	momentum	in,	our	ongoing	business;

•branding	or	rebranding	initiatives	may	involve	substantial	costs	and	may	not	be	favorably	received	by	customers;	and

•potential	unknown	liabilities,	liabilities	that	are	significantly	larger	than	we	currently	anticipate	and	unforeseen	increased	expenses	or	delays	associated	with the	Merger,	including	costs	in	excess	of	the	cash	transition	costs	that	we	currently	anticipate.

We	have	submitted	to	the	FAA	a	transition	plan	for	merging	the	day-to-day	operations	of	American	and	US	Airways	under	a	single	operating	certificate.	The	issuance of	a	single	operating	certificate	will	occur	when	the	FAA	agrees	that	we	have	achieved	a	level	of	integration	that	can	be	safely	managed	under	one	certificate.	While	we currently	believe	that	such	approval	can	be	obtained	in	2015,	the	actual	time	required	and	cost	incurred	to	receive	this	approval	cannot	be	predicted.	Any	delay	in	the grant	of	such	approval	or	increase	in	costs	beyond	those	presently	expected	could	have	a	material	adverse	effect	on	the	completion	date	of	our	integration	plan	and receipt	of	the	benefits	expected	from	that	plan.

# See	"We	face	challenges	in	integrating	our	computer,	communications	and	other	technology	systems"	below.

Accordingly,	we	may	not	be	able	to	realize	the	contemplated	benefits	of	the	Merger	fully,	or	at	all,	or	it	may	take	longer	and	cost	more	to	realize	such	benefits	than expected.

# Our	indebtedness	and	other	obligations	are	substantial	and	could	adversely	affect	our	business	and	liquidity.

We	have	significant	amounts	of	indebtedness	and	other	obligations,	including	pension	obligations,	obligations	to	make	future	payments	on	flight	equipment	and property	leases,	and	substantial	non-cancelable	obligations	under	aircraft	and	related	spare	engine	purchase	agreements.	Moreover,	currently	a	substantial	portion	of	our assets	are	pledged	to	secure	our	indebtedness.	Our	substantial	indebtedness	and	other	obligations	could	have	important	consequences.	For	example,	they:

•	 may	make	it	more	difficult	for	us	to	satisfy	our	obligations	under	our	indebtedness;

•	 may	limit	our	ability	to	obtain	additional	funding	for	working	capital,	capital	expenditures,	acquisitions,	investments,	integration	costs,	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	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;

•limit	our	ability	to	respond	to	business	opportunities	and	to	withstand	operating	risks	that	are	customary	in	the	industry;	and

•contain	restrictive	covenants	that	could:

•limit	our	ability	to	merge,	consolidate,	sell	assets,	incur	additional	indebtedness,	issue	preferred	stock,	make	investments	and	pay	dividends;

•significantly	constrain	our	ability	to	respond,	or	respond	quickly,	to	unexpected	disruptions	in	our	own	operations,	the	U.S.	or	global	economies,	or	the businesses	in	which	we	operate,	or	to	take	advantage	of	opportunities	that	would	improve	our	business,	operations,	or	competitive	position	versus	other airlines;

•limit	our	ability	to	withstand	competitive	pressures	and	reduce	our	flexibility	in	responding	to	changing	business	and	economic	conditions;	and

•result	in	an	event	of	default	under	our	indebtedness.

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

Our	business	plan	contemplates	significant	investments	in	modernizing	our	fleet	and	integrating	the	American	and	US	Airways	businesses.	Significant	capital resources	will	be	required	to	execute	this	plan.	We	estimate	that,	based	on	our	commitments	as	of	December	31,	2014,	our	planned	aggregate	expenditures	for	aircraft purchase	 commitments	 and	 certain	 engines	 on	 a	 consolidated	 basis	 for	 calendar	 years	 2015-2019	 would	 be	 approximately	 $22.6	 billion,	 of	 which	 $19.5	 billion represents	commitments	by	American.	We	also	currently	anticipate	cash	transition	costs	to	integrate	our	businesses	following	the	Merger	to	be	approximately	$1.2 billion,	although	these	costs	could	exceed	our	expectations.	Accordingly,	we	will	need	substantial	financing	or	other	capital	resources.	In	addition,	as	of	the	date	of	this report,	we	had	not	secured	financing	commitments	for	some	of	the	aircraft	that	we	have	on	order,	and	we	cannot	be	assured	of	the	availability	or	cost	of	that	financing. In	particular,	as	of	December	31,	2014,	we	did	not	have	financing	commitments	for	the	following	aircraft	currently	on	order	and	scheduled	to	be	delivered	through	2017: 83	Airbus	A320	family	aircraft,	10	Airbus	A320neo	aircraft,	six	Airbus	A350	XWB	aircraft,	13	Boeing	737	family	aircraft,	three	737	MAX	aircraft,	four	Boeing	777- 300	ER	aircraft,	and	35	Boeing	787	family	aircraft.	In	addition,	we	did	not	have	financing	commitments	in	place	for	aircraft	currently	on	order	and	scheduled	to	be delivered	in	2018	and	beyond.	The	number	of	aircraft	for	which	we	do	not	have	financing	may	change	as	we	exercise	purchase	options	or	otherwise	change	our	purchase and	delivery	schedules.	If	we	are	unable	to	arrange	financing	for	such	aircraft	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	such	aircraft	or	may	seek	to	negotiate	deferrals	for	such	aircraft	with	the	aircraft	manufacturers.	Depending	on numerous	factors,	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	at	the	time	we	seek	capital,	the	financing	or	other	capital	resources	that	we	will	need may	not	be	available	to	us,	or	may	only	be	available	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.	An	inability	to	obtain	necessary	financing	on	acceptable	terms	would	have	a	material	adverse	impact	on	our business,	results	of	operations	and	financial	condition.

# Increased	costs	of	financing,	a	reduction	in	the	availability	of	financing	and	fluctuations	in	interest	rates	could	adversely	affect	our	liquidity,	results	of operations	and	financial	condition.

Concerns	about	the	systemic	impact	of	inflation,	the	availability	and	cost	of	credit,	energy	costs	and	geopolitical	issues,	combined	with	continued	changes	in business	activity	levels	and	consumer	confidence,	increased	unemployment	and	volatile	oil	prices,	have	in	the	past	and	may	in	the	future	contribute	to	volatility	in	the capital	and	credit	markets.	These	market	conditions	could	result	in	illiquid	credit	markets	and	wider	credit	spreads.	Any	such	changes	in	the	domestic	and	global financial	markets	may	increase	our	costs	of	financing	and	adversely	affect	our	ability	to	obtain	financing	needed	for	the	acquisition	of	aircraft	that	we	have	contractual commitments	to	purchase	and	for	other	types	of	financings	we	may	seek	in	order	to	refinance	debt	maturities,	raise	capital	or	fund	other	types	of	obligations.	Any downgrades	to	our	credit	rating	may	likewise	increase	the	cost	and	reduce	the	availability	of	financing.

Further,	a	substantial	portion	of	our	indebtedness	bears	interest	at	fluctuating	interest	rates,	primarily	based	on	the	London	interbank	offered	rate	for	deposits	of U.S.	dollars	(LIBOR).	LIBOR	tends	to	fluctuate	based	on

general	economic	conditions,	general	interest	rates,	rates	set	by	the	Federal	Reserve	and	other	central	banks,	and	the	supply	of	and	demand	for	credit	in	the	London interbank	market.	We	have	not	hedged	our	interest	rate	exposure	with	respect	to	our	2013	Credit	Facilities,	the	2013	Citicorp	Credit	Facility,	the	2014	Credit	Facility and	other	of	our	floating	rate	debt,	and	accordingly,	our	interest	expense	for	any	particular	period	may	fluctuate	based	on	LIBOR	and	other	variable	interest	rates.	To	the extent	these	interest	rates	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.	See	also	the	discussion	of	interest	rate	risk	in	Part	II,	Item	7A. Quantitative	and	Qualitative	Disclosures	About	Market	Risk	–	"AAG	Market	Risk	Sensitive	Instruments	and	Positions	–	Interest"	and	"American	Airlines	Market	Risk Sensitive	Instruments	and	Positions	–	Interest."

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

We	 have	 a	 significant	 amount	 of	 fixed	 obligations,	 including	 debt,	 pension	 costs,	 aircraft	 leases	 and	 financings,	 aircraft	 purchase	 commitments, leases	 and developments	of	airport	and	other	facilities	and	other	cash	obligations.	We	also	have	certain	guaranteed	costs	associated	with	our	regional	operations.

As	a	result	of	the	substantial	fixed	costs	associated	with	these	obligations:

•a	decrease	in	revenues	results	in	a	disproportionately	greater	percentage	decrease	in	earnings;

•	 we	may	not	have	sufficient	liquidity	to	fund	all	of	these	fixed	obligations	if	our	revenues	decline	or	costs	increase;	and

•	 we	may	have	to	use	our	working	capital	to	fund	these	fixed	obligations	instead	of	funding	general	corporate	requirements,	including	capital	expenditures.

These	obligations	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.

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

Our	pension	funding	obligations	are	significant.	The	amount	of	these	obligations	will	depend	on	the	performance	of	investments	held	in	trust	by	the	pension	plans, interest	rates	for	determining	liabilities	and	actuarial	experience.	Currently,	our	minimum	funding	obligation	for	our	pension	plans	is	subject	to	temporary	favorable rules	that	are	scheduled	to	expire	at	the	end	of	2017.	Upon	the	expiration	of	those	rules,	our	funding	obligations	are	likely	to	increase	materially.	In	addition,	we	may have	significant	obligations	for	other	post-employment	benefits,	the	ultimate	amount	of	which	depends	on,	among	other	things,	the	outcome	of	an	adversary	proceeding related	to	retiree	medical	and	life	insurance	obligations	filed	in	the	Chapter	11	cases.

# Any	failure	to	comply	with	the	covenants	contained	in	our	financing	arrangements	may	have	a	material	adverse	effect	on	our	business,	results	of	operations	and financial	condition.

The	terms	of	our	2013	Credit	Facilities,	the	2013	Citicorp	Credit	Facility	and	the	2014	Credit	Facilities	require	us	to	ensure	that	AAG	and	its	restricted	subsidiaries maintain	consolidated	unrestricted	cash	and	cash	equivalents	and	amounts	available	to	be	drawn	under	revolving	credit	facilities	in	an	aggregate	amount	not	less	than $2.0	billion,	and	the	2013	Citicorp	Credit	Facility	also	requires	us	and	the	other	obligors	thereunder	to	hold	not	less	than	$750	million	(subject	to	partial	reductions	upon certain	reductions	in	the	outstanding	amount	of	the	loan)	of	that	amount	in	accounts	subject	to	control	agreements.

Our	ability	to	comply	with	these	liquidity	covenants	while	paying	the	fixed	costs	associated	with	our	contractual	obligations	and	our	other	expenses,	including significant	pension	and	other	post-employment	funding	obligations	and	cash	transition	costs	associated	with	the	Merger,	will	depend	on	our	operating	performance	and cash	flow,	which	are	seasonal,	as	well	as	factors	including	fuel	costs	and	general	economic	and	political	conditions.

In	addition,	our	credit	facilities	and	certain	other	financing	arrangements	include	covenants	that,	among	other	things,	limit	our	ability	to	pay	dividends	and	make certain	other	payments,	make	certain	investments,	incur	additional	indebtedness,	enter	into	certain	affiliate	transactions	and	engage	in	certain	business	activities,	in	each case	subject	to	certain	exceptions.

The	 factors	 affecting	 our	 liquidity	 (and	 our	 ability	 to	 comply	 with	 related	 liquidity	 and	 other	 covenants)	 will	 remain	 subject	 to	 significant	 fluctuations	 and uncertainties,	many	of	which	are	outside	our	control.	Any	breach	of	our	liquidity	and	other	covenants	or	failure	to	timely	pay	our	obligations	could	result	in	a	variety	of adverse	consequences,	including	the	acceleration	of	our	indebtedness,	the	withholding	of	credit	card	proceeds	by	our	credit	card	processors	and	the	exercise	of	remedies by	our	creditors	and	lessors.	In	such	a	situation,	we	may	not	be	able	to	fulfill	our	contractual	obligations,	repay	the	accelerated	indebtedness,	make	required	lease payments	or	otherwise	cover	our	fixed	costs.

# If	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 processing	companies,	under	certain	conditions	(including,	with	respect	to	certain	agreements,	the	failure	of	American	to	maintain	certain	levels	of	liquidity)	to	hold	an amount	of	our	cash	(a	holdback)	equal	to	some	or	all	of	the	advance	ticket	sales	that	have	been	processed	by	that	company,	but	for	which	we	have	not	yet	provided	the air	transportation.	We	are	not	currently	required	to	maintain	any	holdbacks	pursuant	to	these	requirements.	These	holdback	requirements	can	be	modified	at	the discretion	of	the	processing	companies	upon	the	occurrence	of	specific	events,	including	material	adverse	changes	in	our	financial	condition.	An	increase	in	the	current holdback	balances	to	higher	percentages	up	to	and	including	100%	of	relevant	advanced	ticket	sales	could	materially	reduce	our	liquidity.	Likewise,	other	of	our commercial	agreements	contain	provisions	that	allow	other	entities	to	impose	less	favorable	terms,	including	the	acceleration	of	amounts	due,	in	the	event	of	material adverse	changes	in	our	financial	condition.

# The	historical	consolidated	financial	information	contained	in	this	report	is	not	directly	comparable	to	our	financial	information	for	prior	or	future	periods.

A	number	of	factors	render	our	historical	consolidated	financial information	not	directly	comparable to	our	financial information	for	prior	or	future	periods, including:

•because	the	Merger	was	completed	on	December	9,	2013,	AAG's	2013	consolidated	results	of	operations	include	the	results	of	US	Airways	Group	and	its subsidiaries	for	only	23	days	of	2013;

•the	Merger	was	accounted	for	using	the	acquisition	method	of	accounting	with	AAG	as	the	acquiring	entity,	resulting	in	an	adjustment	to	the	carrying	values	of the	assets	and	liabilities	of	US	Airways	Group	compared	to	its	historical	carrying	values;

•during	the	course	of	our	Chapter	11	Cases	and	in	connection	with	our	emergence	from	Chapter	11	and	the	effectiveness	of	the	Plan,	we	recorded	material expenses,	charges,	costs	and	other	accounting	entries	related	to	our	restructuring	process,	many	of	which	generally	had	not	been	incurred	in	the	past	and	are not	expected	to	be	incurred	in	the	future;	and

•certain	prior	accounting	presentations,	including	the	manner	in	which	we	report	our	regional	operations,	have	been	changed	and	historical	results	restated	to conform	to	the	current	presentation.

Due	to	these	and	other	factors	largely	related	to	the	Merger	and	the	Plan,	investors	are	cautioned	as	to	the	limitations	of	our	historical	financial	statements	and	urged to	review	carefully	Part	II,	Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations.

# Union	disputes,	employee	strikes	and	other	labor-related	disruptions	may	adversely	affect	our	operations.

Relations	between	air	carriers	and	labor	unions	in	the	U.S.	are	governed	by	the	Railway	Labor	Act	(RLA).	Under	the	RLA,	collective	bargaining	agreements generally	contain	"amendable	dates"	rather	than	expiration	dates,	and	the	RLA	requires	that	a	carrier	maintain	the	existing	terms	and	conditions	of	employment following	the	amendable	date	through	a	multi-stage	and	usually	lengthy	series	of	bargaining	processes	overseen	by	the	National	Mediation	Board	(NMB).	For	the	dates that	the	CBAs	with	our	major	work	groups	become	amendable	under	the	RLA,	see	Part	I,	Item	1.	Business	–	"Employees	and	Labor	Relations."

In	the	case	of	a	CBA	that	is	amendable	under	the	RLA,	if	no	agreement	is	reached	during	direct	negotiations	between	the	parties,	either	party	may	request	that	the NMB	appoint	a	federal	mediator.	The	RLA	prescribes	no	timetable	for	the	direct	negotiation	and	mediation	processes,	and	it	is	not	unusual	for	those	processes	to	last	for many	months	or	even	several	years.	If	no	agreement	is	reached	in	mediation,	the	NMB	in	its	discretion	may	declare	that	an	impasse	exists	and	proffer	binding	arbitration to	the	parties.	Either	party	may	decline	to	submit	to	arbitration,	and	if	arbitration	is	rejected	by	either	party,	a	30-day	"cooling	off"	period	commences.	During	or	after that	period,	a	Presidential	Emergency	Board	(PEB)	may	be	established,	which	examines	the	parties'	positions	and	recommends	a	solution.	The	PEB	process	lasts	for	30 days	and	is	followed	by	another	30-day	"cooling	off"	period.	At	the	end	of	a	"cooling	off"	period,	unless	an	agreement	is	reached	or	action	is	taken	by	Congress,	the labor	organization	may	exercise	"self-help,"	such	as	a	strike,	which	could	materially	adversely	affect	our	business,	results	of	operations	and	financial	condition.

None	of	the	unions	representing	our	employees	presently	may	lawfully	engage	in	concerted	refusals	to	work,	such	as	strikes,	slow-downs,	sick-outs	or	other	similar activity,	against	us.	Nonetheless,	there	is	a	risk	that	disgruntled	employees,	either	with	or	without	union	involvement,	could	engage	in	one	or	more	concerted	refusals	to work	that	could	individually	or	collectively	harm	the	operation	of	our	airline	and	impair	our	financial	performance.	See	Part	I,	Item	1.	Business	–	"Employees	and	Labor Relations."

# The	inability	to	maintain	labor	costs	at	competitive	levels	would	harm	our	financial	performance.

Currently,	we	believe	our	labor	costs	are	competitive	relative	to	the	other	large	network	carriers.	However,	we	cannot	provide	assurance	that	labor	costs	going forward	will	remain	competitive	because	some	of	our	agreements	are	amendable	now	and	others	may	become	amendable,	competitors	may	significantly	reduce	their labor	costs	or	we	may	agree	to	higher-cost	provisions	in	our	current	or	future	labor	negotiations.	As	of	December	31,	2014,	approximately	82%	of	our	employees	were represented	for	collective	bargaining	purposes	by	labor	unions.	Some	of	our	unions	have	brought	and	may	continue	to	bring	grievances	to	binding	arbitration,	including those	related	to	wages.	Unions	may	also	bring	court	actions	and	may	seek	to	compel	us	to	engage	in	bargaining	processes	where	we	believe	we	have	no	such	obligation. If	successful,	there	is	a	risk	these	judicial	or	arbitral	avenues	could	create	material	additional	costs	that	we	did	not	anticipate.

# Interruptions	or	disruptions	in	service	at	one	of	our	hub	airports	could	have	a	material	adverse	impact	on	our	operations.

We	operate	principally	through	hubs	in	Charlotte,	Chicago,	Dallas/Fort	Worth,	Los	Angeles,	Miami,	New	York	City,	Philadelphia,	Phoenix	and	Washington,	D.C. Substantially	all	of	our	flights	either	originate	in	or	fly	into	one	of	these	locations.	A	significant	interruption	or	disruption	in	service	at	one	of	our	hubs	resulting	from ATC	delays,	weather	conditions,	natural	disasters,	growth	constraints,	relations	with	third-party	service	providers,	failure	of	computer	systems,	facility	disruptions,	labor relations,	power	supplies,	fuel	supplies,	terrorist	activities	or	otherwise	could	result	in	the	cancellation	or	delay	of	a	significant	portion	of	our	flights	and,	as	a	result, could	have	a	severe	impact	on	our	business,	results	of	operations	and	financial	condition.

# Ongoing	data	security	compliance	requirements	could	increase	our	costs,	and	any	significant	data	breach	could	disrupt	our	operations	and	harm	our	reputation, business,	results	of	operations	and	financial	condition.

Our	business	requires	the	appropriate	and	secure	utilization	of	customer,	employee,	business	partner	and	other	sensitive	information.	We	cannot	be	certain	that advances	in	criminal	capabilities	(including	cyber-attacks	or	cyber	intrusions	over	the	Internet,	malware,	computer	viruses	and	the	like),	discovery	of	new	vulnerabilities or	attempts	to	exploit	existing	vulnerabilities	in	our	systems,	other	data	thefts,	physical	system	or	network	break-ins	or	inappropriate	access,	or	other	developments	will not	compromise	or	breach	the	technology	protecting	the	networks	that	access	and	store	sensitive	information.	The	risk	of	a	security	breach	or	disruption,	particularly through	 cyber-attack	 or	 cyber	 intrusion,	 including	 by	 computer	 hackers,	 foreign	 governments	 and	 cyber	 terrorists,	 has	 increased	 as	 the	 number,	 intensity	 and sophistication	of	attempted	attacks	and	intrusions	from	around	the	world	have	increased.	Furthermore,	there	has	been	heightened	legislative	and	regulatory	focus	on	data security	in	the	U.S.	and	abroad	(particularly	in	the	EU),	including	requirements	for	varying	levels	of	customer	notification	in	the	event	of	a	data	breach.

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. While	we	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.

A	significant	data	security	breach	or	our	failure	to	comply	with	applicable	U.S.	or	foreign	data	security	regulations	or	other	data	security	standards	may	expose	us	to litigation,	claims	for	contract	breach,	fines,	sanctions	or	other	penalties,	which	could	disrupt	our	operations,	harm	our	reputation	and	materially	and	adversely	affect	our business,	results	of	operations	and	financial	condition.	Failure	to	address	these	issues	appropriately	could	also	give	rise	to	additional	legal	risks,	which,	in	turn,	could increase	the	size	and	number	of	litigation	claims	and	damages	asserted	or	subject	us	to	enforcement	actions,	fines	and	penalties	and	cause	us	to	incur	further	related	costs and	expenses.

If	we	are	unable	to	obtain	and	maintain	adequate	facilities	and	infrastructure	throughout	our	system	and,	at	some	airports,	adequate	Slots,	we	may	be	unable	to operate	our	existing	flight	schedule	and	to	expand	or	change	our	route	network	in	the	future,	which	may	have	a	material	adverse	impact	on	our	operations.

In	order	to	operate	our	existing	and	proposed	flight	schedule	and,	where	appropriate,	add	service	along	new	or	existing	routes,	we	must	be	able	to	maintain	and/or obtain	adequate	gates,	ticketing	facilities,	operations	areas,	and	office	space.	As	airports	around	the	world	become	more	congested,	we	will	not	always	be	able	to	ensure that	our	plans	for	new	service	can	be	implemented	in	a	commercially	viable	manner,	given	operating	constraints	at	airports	throughout	our	network,	including	due	to inadequate	facilities	at	desirable	airports.	Further,	our	operating	costs	at	airports	at	which	we	operate,	including	our	hubs,	may	increase	significantly	because	of	capital improvements	at	such	airports	that	we	may	be	required	to	fund,	directly	or	indirectly.	In	some	circumstances,	such	costs	could	be	imposed	by	the	relevant	airport authority	without	our	approval.

In	addition,	operations	at	four	major	domestic	airports,	certain	smaller	domestic	airports	and	certain	foreign	airports	served	by	us	are	regulated	by	governmental entities	through	the	use	of	Slots	or	similar	regulatory	mechanisms	which	limit	the	rights	of	carriers	to	conduct	operations	at	those	airports.	Each	Slot	represents	the authorization	to	land	at	or	take	off	from	the	particular	airport	during	a	specified	time	period	and	may	have	other	operational	restrictions	as	well.	In	the	U.S.,	the	FAA currently	regulates	the	allocation	of	Slot	or	Slot	exemptions	at	DCA	and	three	New	York	City	airports:	Newark	Liberty,	JFK	and	LaGuardia.	Our	operations	at	these airports	generally	require	the	allocation	of	Slots	or	similar	regulatory	authority.	Similarly,	our	operations	at	international	airports	in	Frankfurt,	London	Heathrow,	Paris and	other	airports	outside	the	U.S.	are	regulated	by	local	Slot	authorities	pursuant	to	the	International	Air	Transport	Association's	Worldwide	Scheduling	Guidelines and	applicable	local	law.	We	cannot	provide	any	assurance	that	regulatory	changes	regarding	the	allocation	of	Slots	or	similar	regulatory	authority	will	not	have	a material	adverse	impact	on	our	operations.

In	connection	with	the	settlement	of	litigation	relating	to	the	Merger	brought	by	the	DOJ	and	certain	states,	we	entered	into	settlement	agreements	that	provide	for certain	asset	divestitures	including	52	slot	pairs	at	DCA,	17	Slot	pairs	at	LaGuardia	and	gates	and	related	ground	facilities	necessary	to	operate	those	Slot	pairs,	and	two gates	at	each	of	Boston	Logan	International	Airport,	Chicago	O'Hare	International	Airport,	DAL,	Los	Angeles	International	Airport	and	Miami	International	Airport. Our	settlement	agreements	also	require	our	airlines	to	maintain	certain	hub	operations	and	continue	to	provide	service	to	certain	specified	communities	for	limited periods	of	time.	In	addition,	we	entered	into	a	related	settlement	with	the	U.S.	Department	of	Transportation	(DOT)	related	to	small	community	service	from	DCA. Further,	as	a	consequence	of	the	Merger	clearance	process	in	the	EU,	we	made	one	pair	of	London	Heathrow	Slots	available	for	use	by	another	carrier	and,	along	with our	JBA	partners,	we	made	one	pair	of	London	Heathrow	Slots	available	to	competitors	for	use	for	up	to	six	years	in	different	markets.

Any	limitation	on	our	ability	to	acquire	or	maintain	adequate	gates,	ticketing	facilities,	operations	areas,	Slots	(where	applicable),	or	office	space	could	have	a material	adverse	effect	on	our	business,	results	of	operations	and	financial	condition.

# If	we	incur	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,	primarily	under	capacity	purchase	agreements.	Due	to	our reliance	on	third	parties	to	provide	these	essential	services,	we	are	subject	to	the	risks	of	disruptions	to	their	operations,	which	may	result	from	many	of	the	same	risk factors	disclosed	in	this	report,	such	as	the	impact	of	adverse	economic	conditions,	and	other	risk	factors,	such	as	a	bankruptcy	restructuring	of	any	of	the	regional operators.	We	may	also	experience	disruption	to	our	regional	operations	if	we	terminate	the	capacity	purchase	agreement	with	one	or	more	of	our	current	operators	and transition	the	services	to	another	provider.	As	our	regional	segment	provides	revenues	to	us	directly	and	indirectly	(by	providing	flow	traffic	to	our	hubs),	any	significant disruption	to	our	regional	operations	would	have	a	material	adverse	effect	on	our	business,	results	of	operations	and	financial	condition.

In	addition,	our	reliance	upon	others	to	provide	essential	services	on	behalf	of	our	operations	may	result	in	our	relative	inability	to	control	the	efficiency	and timeliness	of	contract	services.	We	have	entered	into	agreements	with	contractors	to	provide	various	facilities	and	services	required	for	our	operations,	including distribution	and	sale	of	airline	seat	inventory,	provision	of	information	technology	and	services,	regional	operations,	aircraft	maintenance,	ground	services	and	facilities, reservations	and	baggage	handling.	Similar	agreements	may	be	entered	 into	 in	any	new	markets	we	decide	 to	serve.	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.	Volatility	 in	fuel	prices,	disruptions	 to	capital	markets	and	adverse	economic conditions	in	general	have	subjected	certain	of	these	third-party	regional	carriers	to	significant	financial	pressures,	which	have	led	to	several	bankruptcies	among	these carriers.	Any	material	problems	with	the	efficiency	and	timeliness	of	contract	services,	resulting	from	financial	hardships	or	otherwise,	could	have	a	material	adverse effect	on	our	business,	results	of	operations	and	financial	condition.

# We	rely	on	third-party	distribution	channels	and	must	manage	effectively	the	costs,	rights	and	functionality	of	these	channels.

We	rely	on	third-party	distribution	channels,	including	those	provided	by	or	through	global	distribution	systems	(GDSs)	(e.g.,	Amadeus,	Sabre	and	Travelport), conventional	travel	agents	and	online	travel	agents	(OTAs)	(e.g.,	Expedia	and	Orbitz	and	Travelocity,	both	of	which	will	be	owned	by	Expedia	if	previously

announced	transactions	are	completed),	to	distribute	a	significant	portion	of	our	airline	tickets,	and	we	expect	in	the	future	to	continue	to	rely	on	these	channels	and	hope to	expand	their	ability	to	distribute	and	collect	revenues	for	ancillary	products	(e.g.,	fees	for	selective	seating).	These	distribution	channels	are	more	expensive	and	at present	have	less	functionality	in	respect	of	ancillary	product	offerings	than	those	we	operate	ourselves,	such	as	our	call	centers	and	our	website.	Certain	of	these distribution	channels	also	effectively	restrict	the	manner	in	which	we	distribute	our	products	generally.	To	remain	competitive,	we	will	need	to	manage	successfully	our distribution	costs	and	rights,	increase	our	distribution	flexibility	and	improve	the	functionality	of	third-party	distribution	channels,	while	maintaining	an	industry- competitive	cost	structure.	These	imperatives	may	affect	our	relationships	with	GDSs	and	OTAs,	including	as	consolidation	of	OTAs	continues	or	is	proposed	to continue.	Any	inability	to	manage	our	third-party	distribution	costs,	rights	and	functionality	at	a	competitive	level	or	any	material	diminishment	or	disruption	in	the distribution	of	our	tickets	could	have	a	material	adverse	effect	on	our	business,	results	of	operations	and	financial	condition.

# 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.

Airlines	are	subject	to	extensive	domestic	and	international	regulatory	requirements.	In	the	last	several	years,	Congress	has	passed	laws,	and	the	DOT,	the	FAA,	the U.S.	Transportation	Security	Administration	(TSA)	and	the	Department	of	Homeland	Security	have	issued	a	number	of	directives	and	other	regulations,	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.	Our	failure	to	timely	comply	with	these	requirements	has	in	the	past	and	may	in	the	future	result	in	fines	and	other	enforcement actions	by	the	FAA	or	other	regulators.	In	addition,	the	FAA	recently	issued	its	final	regulations	governing	pilot	rest	periods	and	work	hours	for	all	airlines	certificated under	Part	121	of	the	Federal	Aviation	Regulations.	The	rule,	which	became	effective	on	January	4,	2014,	impacts	the	required	amount	and	timing	of	rest	periods	for pilots	between	work	assignments	and	modifies	duty	and	rest	requirements	based	on	the	time	of	day,	number	of	scheduled	segments,	flight	types,	time	zones,	and	other factors.	These	regulations,	or	other	regulations,	could	have	a	material	adverse	effect	on	us	and	the	industry.

DOT	consumer	rules	 that	 took	effect	 in	2010	require	procedures	for	customer	handling	during	 long	onboard	delays,	further	regulate	airline	 interactions	with passengers	through	the	reservations	process,	at	the	airport,	and	onboard	the	aircraft,	and	require	new	disclosures	concerning	airline	fares	and	ancillary	fees	such	as baggage	fees.	The	DOT	has	been	aggressively	investigating	alleged	violations	of	these	new	rules.	Other	DOT	rules	apply	to	post-ticket	purchase	price	increases	and	an expansion	of	tarmac	delay	regulations	to	international	airlines.

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.

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	which	affect	the	services	that	can	be	offered	by	airlines	in	particular	markets	and	at	particular	airports,	or	the	types	of	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	and	other arrangements	with	other	airlines;

•restrictions	 on	 competitive	 practices	 (for	 example,	 court	 orders,	 or	 agency	 regulations	 or	 orders, that	 would	 curtail	 an	 airline's	 ability to	 respond to	 a competitor);

•the	adoption	of	new	passenger	security	standards	or	regulations	that	impact	customer	service	standards	(for	example,	a	"passenger	bill	of	rights");

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

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.	There	can	be	no	assurance	that	our	compliance	with	new	rules,	anticipated	rules	or	other	forms	of	regulatory	oversight	will	not	have	a	material adverse	effect	on	us.

Any	significant	reduction	in	air	traffic	capacity	at	key	airports	in	the	U.S.	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	managing	the	growing	demand	for	U.S.	air	travel.	ATC	towers	are	frequently	understaffed	in	certain of	our	hubs,	and	air	traffic	controllers	rely	on	outdated	technologies	that	routinely	overwhelm	the	system	and	compel	airlines	to	fly	inefficient,	indirect	routes.	The	ATC system's	inability	to	handle	existing	travel	demand	has	led	government	agencies	to	implement	short-term	capacity	constraints	during	peak	travel	periods	in	certain markets,	resulting	in	delays	and	disruptions	of	air	traffic.	The	outdated	technologies	also	cause	the	ATC	to	be	less	resilient	in	the	event	of	a	failure.	For	example,	the ATC	systems	in	Chicago	took	weeks	to	recover	following	a	fire	in	the	ATC	tower	at	ORD,	which	resulted	in	thousands	of	cancelled	flights.

On	February	14,	2012,	the	FAA	Modernization	and	Reform	Act	of	2012	was	signed.	The	law	provides	funding	for	the	FAA	to	rebuild	its	ATC	system,	including switching	from	radar	to	a	GPS-based	system.	It	is	uncertain	when	any	improvements	to	the	ATC	system	will	take	effect.	Failure	to	update	the	ATC	system	in	a	timely manner	and	the	substantial	funding	requirements	that	may	be	imposed	on	airlines	of	a	modernized	ATC	system	may	have	a	material	adverse	effect	on	our	business.

The	ability	of	U.S.	airlines	to	operate	international	routes	is	subject	to	change	because	the	applicable	arrangements	between	the	U.S.	and	foreign	governments	may	be amended	from	time	to	time	and	appropriate	Slots	or	facilities	may	not	be	made	available.	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	routes,	such	an	event	could	have	a	material	adverse	impact	on	us	and could	result	in	the	impairment	of	material	amounts	of	our	related	tangible	and	intangible	assets.	In	addition,	competition	from	revenue-sharing	joint	ventures,	JBAs,	and other	alliance	arrangements	by	and	among	other	airlines	could	impair	the	value	of	our	business	and	assets	on	the	open	skies	routes.	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,	including	London	Heathrow.	As	a	result	of	the	agreement,	we	face increased	competition	in	these	markets,	including	London	Heathrow.

# The	airline	industry	is	heavily	taxed.

The	airline	industry	is	subject	to	extensive	government	fees	and	taxation	that	negatively	impact	our	revenue.	The	U.S.	airline	industry	is	one	of	the	most	heavily	taxed of	all	industries.	These	fees	and	taxes	have	grown	significantly	in	the	past	decade	for	domestic	flights,	and	various	U.S.	fees	and	taxes	also	are	assessed	on	international flights.	For	example,	as	permitted	by	federal	legislation,	most	major	U.S.	airports	impose	a	passenger	facility	charge	per	passenger	on	us.	In	addition,	the	governments	of foreign	countries	in	which	we	operate	impose	on	U.S.	airlines,	including	us,	various	fees	and	taxes,	and	these	assessments	have	been	increasing	in	number	and	amount	in recent	years.	Moreover,	we	are	obligated	to	collect	a	federal	excise	tax,	commonly	referred	to	as	the	"ticket	tax,"	on	domestic	and	international	air	transportation.	We collect	the	excise	tax,	along

with	certain	other	U.S.	and	foreign	taxes	and	user	fees	on	air	transportation	(such	as	TSA	security	screening	fees,	which	were	recently	increased),	and	pass	along	the collected	amounts	to	the	appropriate	governmental	agencies.	Although	these	taxes	are	not	operating	expenses,	they	represent	an	additional	cost	to	our	customers.	There are	continuing	efforts	in	Congress	and	in	other	countries	to	raise	different	portions	of	the	various	taxes,	fees,	and	charges	imposed	on	airlines	and	their	passengers. Increases	in	such	taxes,	fees	and	charges	could	negatively	impact	our	business,	results	of	operations	and	financial	condition.

Under	DOT	regulations,	all	governmental	taxes	and	fees	must	be	included	in	the	prices	we	quote	or	advertise	to	our	customers.	Due	to	the	competitive	revenue environment,	many	increases	in	these	fees	and	taxes	have	been	absorbed	by	the	airline	industry	rather	than	being	passed	on	to	the	customer.	Further	increases	in	fees	and taxes	may	reduce	demand	for	air	travel,	and	thus	our	revenues.

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

We	have	recently	implemented	several	measures	designed	to	increase	revenue	and	offset	costs.	These	measures	include	charging	separately	for	services	that	had previously	been	included	within	the	price	of	a	ticket	and	increasing	other	pre-existing	fees.	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	you	that	these	measures	or	any	future	initiatives	will	be successful	in	increasing	our	revenues.	Additionally,	the	implementation	of	these	initiatives	may	create	logistical	challenges	that	could	harm	the	operational	performance of	our	airline.	Also,	any	new	and	increased	fees	might	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	charges.

# The	loss	of	key	personnel	upon	whom	we	depend	to	operate	our	business	or	the	inability	to	attract	additional	qualified	personnel	could	adversely	affect	our business.

We	believe	that	our	future	success	will	depend	in	large	part	on	our	ability	to	retain	or	attract	highly	qualified	management,	technical	and	other	personnel.	We	may	not be	successful	in	retaining	key	personnel	or	in	attracting	other	highly	qualified	personnel.	Any	inability	to	retain	or	attract	significant	numbers	of	qualified	management and	other	personnel	would	have	a	material	adverse	effect	on	our	business,	results	of	operations	and	financial	condition.

# We	may	be	adversely	affected	by	conflicts	overseas	or	terrorist	attacks;	the	travel	industry	continues	to	face	ongoing	security	concerns.

Acts	of	 terrorism	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	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.	Customs	and	Border	Protection	Agency	and	enhanced	background	checks.	A	concurrent	 increase	 in	airport	security	charges	and	procedures,	such	as restrictions	on	carry-on	baggage,	has	also	had	and	may	continue	to	have	a	disproportionate	impact	on	short-haul	travel,	which	constitutes	a	significant	portion	of	our flying	and	revenue.

# 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	operations	outside	of	the	U.S.	from	which	AAG	derived	approximately	33%	of	its	operating	revenues	in	2014,	as	measured	and reported	to	the	DOT.	Our	current	international	activities	and	prospects	have	been	and	in	the	future	could	be	adversely	affected	by	reversals	or	delays	in	the	opening	of foreign	markets,	increased	competition	in	international	markets,	exchange	controls	or	other	restrictions	on	repatriation	of	funds,	currency	and	political	risks	(including changes	in	exchange	rates	and	currency	devaluations,	which	are	more	likely	in	countries	with	exchange	controls	such	as	Venezuela	and	Argentina),	environmental regulation,	increases	in	taxes	and	fees	and	changes	in	international	government	regulation	of	our	operations,	including	the	inability	to	obtain	or	retain	needed	route authorities	and/or	Slots.

In	particular,	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.	For	example,	the business	environment	in	Venezuela	has	been	challenging,	with	economic	uncertainty	fueled	by	currency	devaluation,	high	inflation	and	governmental	restrictions, including	currency	exchange	and	payment	controls,	price	controls	and	the	possibility	of	expropriation	of	property	or	other	resources.	As	of	December	31,	2014, approximately	$656	million	of	our	unrestricted	cash	and	short-term	investment	balance	was	held	in	Venezuelan	bolivars.	This	balance	includes	approximately	$621 million	valued	at	6.3	bolivars	and	approximately	$35	million	valued	at	12.0	bolivars,	with	the	rate	depending	on	the	date	we	submitted	our	repatriation	request	to	the Venezuelan	 government.	These	 rates	 are	 materially	 more	 favorable	 than	 the	 exchange	 rates	 currently	 prevailing	 for	 other	 transactions	 conducted	 outside	 of	 the Venezuelan	government's	currency	exchange	system.	Our	cash	balance	held	in	Venezuelan	bolivars	decreased	$54	million	from	the	December	31,	2013	balance	of	$710 million	primarily	due	to	$88	million	in	cash	repatriations	and	$30	million	in	foreign	currency	losses	as	described	below,	partially	offset	by	additional	cash	proceeds	from ticket	sales	in	early	2014.	In	the	second	and	third	quarters	of	2014,	we	repatriated	$65	million	including	$31	million	valued	at	6.3	bolivars	to	the	dollar	and	$34	million valued	at	10.6	bolivars	to	the	dollar.	In	the	fourth	quarter	of	2014,	we	incurred	an	$11	million	foreign	currency	loss	related	to	the	receipt	of	$23	million	at	a	rate	of	6.3 bolivars	to	the	dollar	for	one	of	our	2012	repatriation	requests	originally	valued	at	a	rate	of	4.3	bolivars	to	the	dollar.	Accordingly,	we	revalued	our	remaining	pending 2012	repatriation	requests	from	4.3	to	6.3	bolivars	to	the	dollar	resulting	in	additional	foreign	currency	losses	of	$19	million.	In	total,	we	recognized	a	$30	million special	charge	for	these	foreign	currency	losses	in	the	fourth	quarter	of	2014.

During	2014,	we	significantly	reduced	capacity	in	the	Venezuelan	market	and	we	are	no	longer	accepting	bolivars	as	payment	for	airline	tickets.	We	are	continuing	to work	with	Venezuelan	authorities	regarding	the	timing	and	exchange	rate	applicable	to	the	repatriation	of	our	funds	still	held	in	local	currency.	However,	economic conditions	in	Venezuela	continue	to	deteriorate	with	a	related	adverse	effect	on	the	ability	of	the	Venezuelan	government	to	satisfy	repatriation	requests	on	a	timely basis,	or	at	all.	In	mid-February	2015,	the	Venezuelan	government	announced	new	foreign	exchange	regulations,	creating	three	new	additional	markets,	as	well	as	a	new exchange	rate	to	be	utilized	in	those	markets.	The	new	exchange	rate	for	transactions	effected	on	those	markets	was	to	commence	at	52	bolivars	to	the	dollar,	however, the	rate	is	intended	to	fluctuate	based	on	supply	and	demand	and	was	approximately	172	bolivars	to	the	dollar	as	of	February	23,	2015	as	reported	by	the	Venezuelan Central	Bank.	Although	the	new	regulations	do	not	abolish	the	prior	exchange	rates	at	which	we	are	valuing	our	bolivar	balances,	it	is	still	uncertain	what	impact	these new	 regulations	 will	 have	 on	 the	 foreign	 exchange	 environment	 or	 whether	 the	Venezuelan	 government	 will	 announce	 further	 changes	 to	 the	 foreign	 exchange regulations	that	may	have	the	effect	of	materially	adversely	affecting	our	ability	to	repatriate	the	local	currency	we	hold	in	Venezuela	or	the	exchange	rate	applicable thereto.

We	are	monitoring	this	situation	closely	and	continue	to	evaluate	our	holdings	of	Venezuelan	bolivars	for	additional	foreign	currency	losses,	which	could	be material,	particularly	in	light	of	the	additional	uncertainty	posed	by	the	February	2015	changes	to	the	foreign	exchange	regulations	and	the	continued	deterioration	of

economic	conditions	in	Venezuela.	More	generally,	fluctuations	in	foreign	currencies,	including	devaluations,	cannot	be	predicted	by	us	and	can	significantly	affect	the value	 of	 our	 assets	 located	 outside	 the	 United	 States.	These	 conditions,	 as	 well	 as	 any	 further	 delays,	 devaluations	 or	 imposition	 of	 more	 stringent	 repatriation restrictions,	may	materially	adversely	affect	our	business,	results	of	operations	and	financial	condition.

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

We	are	subject	to	increasingly	stringent	federal,	state,	local	and	foreign	laws,	regulations	and	ordinances	relating	to	the	protection	of	the	environment,	including	those relating	to	emissions	to	the	air,	discharges	to	surface	and	subsurface	waters,	safe	drinking	water,	and	the	management	of	hazardous	substances,	oils	and	waste	materials. Compliance	with	environmental	laws	and	regulations	can	require	significant	expenditures,	and	violations	can	lead	to	significant	fines	and	penalties.

The	U.S.	Environmental	Protection	Agency	(EPA)	has	proposed	changes	to	underground	storage	tank	regulations	that	could	affect	certain	airport	fuel	hydrant systems.	A	final	rule	has	not	yet	been	issued,	but	when	implemented,	airport	systems	that	fall	within	threshold	requirements	may	need	to	be	modified	in	order	to	comply with	applicable	regulations.	Additionally,	 the	EPA	has	proposed	 the	draft	2013	National	Pollutant	Discharge	Elimination	System	General	Permit	for	Stormwater Discharges	from	Industrial	Activities.	This	permit	would	impose	new	limitations	on	certain	discharges	along	with	mandatory	best	management	practices.	Concurrently, California	adopted	a	revised	State	Industrial	General	Permit	for	Stormwater	Discharges	on	April	1,	2014,	which	becomes	effective	July	1,	2015.	This	permit	places additional	reporting	and	monitoring	requirements	on	permittees	and	requires	implementation	of	mandatory	best	management	practices.	Cost	estimates	to	comply	with the	above	permitting	requirements	have	not	been	defined,	but	American	and	US	Airways	along	with	other	airlines	would	share	a	portion	of	these	costs	at	applicable airports.	In	addition	to	the	proposed	EPA	and	state	regulations,	several	U.S.	airport	authorities	are	actively	engaged	in	efforts	to	limit	discharges	of	de-icing	fluid	to	the environment,	often	by	requiring	airlines	to	participate	in	the	building	or	reconfiguring	of	airport	de-icing	facilities.	Such	efforts	are	likely	to	impose	additional	costs	and restrictions	on	airlines	using	those	airports.	We	do	not	believe,	however,	that	such	environmental	developments	will	have	a	material	impact	on	our	capital	expenditures or	otherwise	materially	adversely	affect	our	operations,	operating	costs	or	competitive	position.

We	are	also	subject	to	other	environmental	laws	and	regulations,	including	those	that	require	us	to	investigate	and	remediate	soil	or	groundwater	to	meet	certain remediation	standards.	Under	federal	 law,	generators	of	waste	materials,	and	current	and	former	owners	or	operators	of	facilities,	can	be	subject	 to	 liability	for investigation	and	remediation	costs	at	locations	that	have	been	identified	as	requiring	response	actions.	Liability	under	these	laws	may	be	strict,	joint	and	several, meaning	that	we	could	be	liable	for	the	costs	of	cleaning	up	environmental	contamination	regardless	of	fault	or	the	amount	of	wastes	directly	attributable	to	us.	We	have liability	for	investigation	and	remediation	costs	at	various	sites,	although	such	costs	are	currently	not	expected	to	have	a	material	adverse	effect	on	our	business.

We	have	various	leases	and	agreements	with	respect	to	real	property,	tanks	and	pipelines	with	airports	and	other	operators.	Under	these	leases	and	agreements,	we have	agreed	to	indemnify	the	lessor	or	operator	against	environmental	liabilities	associated	with	the	real	property	or	operations	described	under	the	agreement,	even	if we	are	not	the	party	responsible	for	the	initial	event	that	caused	the	environmental	damage.	We	also	participate	in	leases	with	other	airlines	in	fuel	consortiums	and	fuel committees	at	airports,	where	such	indemnities	are	generally	joint	and	several	among	the	participating	airlines.

There	is	increasing	global	regulatory	focus	on	climate	change	and	greenhouse	gas	(GHG)	emissions.	For	example,	the	EU	has	established	the	Emissions	Trading Scheme	(ETS)	to	regulate	GHG	emissions	in	the	EU.	The	EU	adopted	a	directive	in	2008	under	which	each	EU	member	state	is	required	to	extend	the	ETS	to	aviation operations.	This	directive	would	have	required	us,	beginning	in	2012,	to	annually	submit	emission	allowances	in	order	to	operate	flights	to	and	from	airports	in	the European	Economic	Area	(EEA),	including	flights	between	the	U.S.	and	EU	member	states.	However,	in	an	effort	to	allow	the	International	Civil	Aviation	Organization (ICAO)

time	to	propose	an	alternate	scheme	to	manage	global	aviation	GHG	emissions,	in	April	2013	the	EU	suspended	for	one	year	the	ETS'	application	to	flights	entering	and departing	the	EEA,	limiting	its	application,	for	flights	flown	in	2012,	to	intra-EEA	flights	only.	In	October	2013,	the	ICAO	Assembly	adopted	a	resolution	calling	for	the development	through	ICAO	of	a	global,	market-based	scheme	for	aviation	GHG	emissions,	to	be	finalized	in	2016	and	implemented	in	2020.	Subsequently,	the	EU	has amended	the	EU	ETS	so	that	the	monitoring,	reporting	and	submission	of	allowances	for	aviation	GHG	emissions	will	continue	to	be	limited	to	only	intra-EEA	flights through	2016,	at	which	time	the	EU	will	evaluate	the	progress	made	by	ICAO	and	determine	what,	if	any,	measures	to	take	related	to	aviation	GHG	emissions	from	2017 onwards.	The	U.S.	enacted	legislation	in	November	2012	which	encourages	the	DOT	to	seek	an	international	solution	through	ICAO	and	that	will	allow	the	U.S. Secretary	of	Transportation	to	prohibit	U.S.	airlines	from	participating	in	the	ETS.	Ultimately,	the	scope	and	application	of	ETS	or	other	emissions	trading	schemes	to our	operations,	now	or	in	the	near	future,	remains	uncertain.	We	do	not	anticipate	any	significant	emissions	allowance	expenditures	in	2015.	Beyond	2015,	compliance with	the	ETS	or	similar	emissions-related	requirements	could	significantly	increase	our	operating	costs.	Further,	the	potential	impact	of	ETS	or	other	emissions-related requirements	on	our	costs	will	ultimately	depend	on	a	number	of	factors,	including	baseline	emissions,	the	price	of	emission	allowances	or	offsets	and	the	number	of future	flights	subject	to	ETS	or	other	emissions-related	requirements.	These	costs	have	not	been	completely	defined	and	could	fluctuate.

Similarly,	within	the	U.S.,	there	is	an	increasing	trend	toward	regulating	GHG	emissions	directly	under	the	Clean	Air	Act	(CAA).	In	response	to	a	2012	ruling	by	the U.S.	Court	of	Appeals	District	of	Columbia	Circuit	requiring	the	EPA	to	make	a	final	determination	on	whether	aircraft	GHG	emissions	cause	or	contribute	to	air pollution	which	may	reasonably	be	anticipated	to	endanger	public	health	or	welfare,	the	EPA	announced	in	September	2014	that	it	is	in	the	process	of	making	a determination	regarding	aircraft	GHG	emissions	and	anticipates	proposing	an	endangerment	finding	by	May	2015.	If	the	EPA	makes	a	positive	endangerment	finding, the	EPA	is	obligated	under	the	CAA	to	set	GHG	emission	standards	for	aircraft.	Several	states	are	also	considering	or	have	adopted	initiatives	to	regulate	emissions	of GHGs,	 primarily	 through	 the	 planned	 development	 of	 GHG	 emissions	 inventories	 and/or	 regional	 GHG	 cap	 and	 trade	 programs.	These	 regulatory	 efforts,	 both internationally	and	in	the	U.S.	at	the	federal	and	state	levels,	are	still	developing,	and	we	cannot	yet	determine	what	the	final	regulatory	programs	or	their	impact	will	be in	the	U.S.,	the	EU	or	in	other	areas	in	which	we	do	business.	However,	such	climate	change-related	regulatory	activity	in	the	future	may	adversely	affect	our	business and	financial	results	by	requiring	us	to	reduce	our	emissions,	purchase	allowances	or	otherwise	pay	for	our	emissions.	Such	activity	may	also	impact	us	indirectly	by increasing	our	operating	costs,	including	fuel	costs.

Governmental	authorities	in	several	U.S.	and	foreign	cities	are	also	considering,	or	have	already	implemented,	aircraft	noise	reduction	programs,	including	the imposition	of	nighttime	curfews	and	limitations	on	daytime	take-offs	and	landings.	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.

# We	rely	heavily	on	technology	and	automated	systems	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	technology	and	automated	systems	to	operate	our	business	and	achieve	low	operating	costs.	These	technologies	and	systems	include	our computerized	airline	reservation	systems,	flight	operations	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	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.	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	automated	systems	cannot	be	completely	protected	against	other	events	that	are	beyond	our	control,	including	natural	disasters,	power	failures,	terrorist	attacks, cyber-attacks,	data	theft,	equipment	and	software	failures,	computer	viruses	or	telecommunications	failures.	Substantial	or	sustained	system	failures	could	cause	service delays	or	failures	and	result	in	our	customers	purchasing	tickets	from	other	airlines.	We	cannot	assure	you	that	our	security	measures,	change	control	procedures	or disaster	recovery	plans	are	adequate	to	prevent	disruptions	or	delays.	Disruption	in	or	changes	to	these	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.

# We	face	challenges	in	integrating	our	computer,	communications	and	other	technology	systems.

Among	the	principal	risks	of	integrating	our	businesses	and	operations	are	the	risks	relating	to	integrating	various	computer,	communications	and	other	technology systems,	including	designing	and	implementing	an	integrated	customer	reservations	system,	that	will	be	necessary	to	operate	US	Airways	and	American	as	a	single airline	and	to	achieve	cost	synergies	by	eliminating	redundancies	in	the	businesses.	The	integration	of	these	systems	in	a	number	of	prior	airline	mergers	has	taken longer,	been	more	disruptive	and	cost	more	than	originally	forecast.	The	implementation	process	to	integrate	these	various	systems	will	involve	a	number	of	risks	that could	adversely	impact	our	business,	results	of	operations	and	financial	condition.	New	systems	will	replace	multiple	legacy	systems	and	the	related	implementation	will be	a	complex	and	time-consuming	project	involving	substantial	expenditures	for	implementation	consultants,	system	hardware,	software	and	implementation	activities, as	well	as	the	transformation	of	business	and	financial	processes.

As	with	any	large	project,	there	will	be	many	factors	that	may	materially	affect	the	schedule,	cost	and	execution	of	the	integration	of	our	computer,	communications and	other	technology	systems.	These	factors	include,	among	others:	problems	during	the	design,	implementation	and	testing	phases;	systems	delays	and/or	malfunctions; the	risk	that	suppliers	and	contractors	will	not	perform	as	required	under	their	contracts;	the	diversion	of	management	attention	from	daily	operations	to	the	project; reworks	due	to	unanticipated	changes	in	business	processes;	challenges	in	simultaneously	activating	new	systems	throughout	our	global	network;	difficulty	in	training employees	in	the	operations	of	new	systems;	the	risk	of	security	breach	or	disruption;	and	other	unexpected	events	beyond	our	control.	We	cannot	assure	you	that	our security	measures,	change	control	procedures	or	disaster	recovery	plans	will	be	adequate	to	prevent	disruptions	or	delays.	Disruptions	in	or	changes	to	these	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.

# We	are	at	risk	of	losses	and	adverse	publicity	stemming	from	any	accident	involving	any	of	our	aircraft	or	the	aircraft	of	our	regional	or	codeshare	operators.

If	one	of	our	aircraft,	an	aircraft	that	is	operated	under	our	brand	by	one	of	our	regional	operators,	or	an	aircraft	that	is	operated	by	an	airline	with	which	we	have	a marketing	alliance	or	codeshare	relationship	were	to	be	involved	in	an	accident,	we	could	be	exposed	to	significant	tort	liability.	The	insurance	we	carry	to	cover damages	arising	from	any	future	accidents	may	be	inadequate.	In	the	event	that	our	insurance	is	not	adequate,	we	may	be	forced	to	bear	substantial	losses	from	an accident.	In	addition,	any	accident	involving	an	aircraft	that	we	operate,	an	aircraft	that	is	operated	under	our	brand	by	one	of	our	regional	operators	or	an	aircraft	that	is operated	by	an	airline	that	is	one	of	our	codeshare	partners,	could	create	a	public	perception	that	our	aircraft	or	those	of	our	regional	operators	or	codeshare	partners	are not	safe	or	reliable,	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.

# Delays	in	scheduled	aircraft	deliveries	or	other	loss	of	anticipated	fleet	capacity,	and	failure	of	new	aircraft	to	perform	as	expected,	may	adversely	impact	our business,	results	of	operations	and	financial	condition.

The	success	of	our	business	depends	on,	among	other	things,	effectively	managing	the	number	and	types	of	aircraft	we	operate.	In	many	cases,	the	aircraft	we	intend to	operate	are	not	yet	in	our	fleet,	but	we	have	contractual	commitments	to	purchase	or	lease	them.	If	for	any	reason	we	were	unable	to	accept	or	secure	deliveries	of	new aircraft	on	contractually	scheduled	delivery	dates,	this	could	have	a	negative	impact	on	our	business,	results	of	operations	and	financial	condition.	Our	failure	to integrate	newly	purchased	aircraft	into	our	fleet	as	planned	might	require	us	to	seek	extensions	of	the	terms	for	some	leased	aircraft	or	otherwise	delay	the	exit	of	certain aircraft	from	our	fleet.	Such	unanticipated	extensions	or	delays	may	require	us	to	operate	existing	aircraft	beyond	the	point	at	which	it	is	economically	optimal	to	retire them,	resulting	in	increased	maintenance	costs.	If	new	aircraft	orders	are	not	filled	on	a	timely	basis,	we	could	face	higher	operating	costs	than	planned.	In	addition,	if	the aircraft	we	receive	do	not	meet	expected	performance	or	quality	standards,	including	with	respect	to	fuel	efficiency	and	reliability,	our	business,	results	of	operations	and financial	condition	could	be	adversely	impacted.

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

We	depend	on	a	limited	number	of	suppliers	for	aircraft,	aircraft	engines	and	many	aircraft	and	engine	parts.	As	a	result,	we	are	vulnerable	to	any	problems associated	with	the	supply	of	those	aircraft,	parts	and	engines,	including	design	defects,	mechanical	problems,	contractual	performance	by	the	suppliers,	or	adverse perception	by	the	public	that	would	result	in	customer	avoidance	or	in	actions	by	the	FAA	resulting	in	an	inability	to	operate	our	aircraft.

# Our	business	has	been	and	will	continue	to	be	affected	by	many	changing	economic	and	other	conditions	beyond	our	control,	including	global	events	that	affect travel	behavior,	and	our	results	of	operations	could	be	volatile	and	fluctuate	due	to	seasonality.

Our	business,	results	of	operations	and	financial	condition	has	been	and	will	continue	to	be	affected	by	many	changing	economic	and	other	conditions	beyond	our control,	including,	among	others:

•actual	or	potential	changes	in	international,	national,	regional,	and	local	economic,	business	and	financial	conditions,	including	recession,	inflation,	higher interest	rates,	wars,	terrorist	attacks,	or	political	instability;

•changes	in	consumer	preferences,	perceptions,	spending	patterns,	or	demographic	trends;

•changes	in	the	competitive	environment	due	to	industry	consolidation,	changes	in	airline	alliance	affiliations,	and	other	factors;

•actual	or	potential	disruptions	to	the	ATC	systems;

•increases	in	costs	of	safety,	security,	and	environmental	measures;

•outbreaks	of	diseases	that	affect	travel	behavior;	and

•	 weather	and	natural	disasters.

In	particular,	an	outbreak	of	a	contagious	disease	such	as	the	Ebola	virus,	Severe	Acute	Respiratory	Syndrome,	H1N1	influenza	virus,	avian	flu,	or	any	other influenza-type	illness,	if	it	were	to	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.	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.	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.

# A	higher	than	normal	number	of	pilot	retirements	and	a	potential	shortage	of	pilots	could	adversely	affect	us.

We	currently	have	a	higher	than	normal	number	of	pilots	eligible	for	retirement.	Among	other	things,	the	extension	of	pilot	careers	facilitated	by	the	FAA's	2007 modification	of	the	mandatory	retirement	age	from	age	60	to	age	65	has	now	been	fully	implemented,	resulting	in	large	numbers	of	pilots	in	the	industry	approaching	the revised	mandatory	retirement	age.	If	pilot	retirements	were	to	exceed	normal	levels	in	the	future,	it	may	adversely	affect	us	and	our	regional	partners.	On	January	4, 2014,	more	stringent	pilot	flight	and	duty	time	requirements	under	Part	117	of	the	Federal	Aviation	Regulations	took	effect.	The	FAA	also	recently	issued	regulations that	increase	the	flight	experience	required	for	pilots	working	for	airlines	certificated	under	Part	121	of	the	Federal	Aviation	Regulations.	These	and	other	factors	could contribute	to	a	shortage	of	qualified	pilots,	particularly	for	our	regional	partners,	which	now	face	increased	competition	from	large,	mainline	carriers	to	hire	pilots.	If	we or	our	regional	partners	are	unable	to	hire	adequate	numbers	of	pilots,	we	may	experience	disruptions,	increased	costs	of	operations	and	other	adverse	effects.

# Increases	in	insurance	costs	or	reductions	in	insurance	coverage	may	adversely	impact	our	operations	and	financial	results.

The	terrorist	attacks	of	September	11,	2001	led	to	a	significant	increase	in	insurance	premiums	and	a	decrease	in	the	insurance	coverage	available	to	commercial	air carriers.	Accordingly,	our	insurance	costs	increased	significantly,	and	our	ability	to	continue	to	obtain	insurance	even	at	current	prices	remains	uncertain.	If	we	are unable	to	maintain	adequate	insurance	coverage,	our	business	could	be	materially	and	adversely	affected.	Additionally,	severe	disruptions	in	the	domestic	and	global financial	markets	could	adversely	impact	the	claims	paying	ability	of	some	insurers.	Future	downgrades	in	the	ratings	of	enough	insurers	could	adversely	impact	both	the availability	of	appropriate	insurance	coverage	and	its	cost.	Because	of	competitive	pressures	in	our	industry,	our	ability	to	pass	additional	insurance	costs	to	passengers is	limited.	As	a	result,	further	increases	in	insurance	costs	or	reductions	in	available	insurance	coverage	could	have	an	adverse	impact	on	our	financial	results.

# A	lawsuit	filed	in	connection	with	the	Merger	remains	pending,	and	this	lawsuit	could	have	a	material	adverse	impact	on	our	business.

US	Airways	Group,	US	Airways,	AMR	and	American	were	named	as	defendants	in	a	private	antitrust	lawsuit	in	connection	with	the	Merger.	The	complaint	alleges that	the	effect	of	the	Merger	may	be	to	substantially	lessen	competition	or	tend	to	create	a	monopoly	in	violation	of	Section	7	of	the	Clayton	Antitrust	Act.	The	relief sought	in	the	complaint	includes	an	injunction	against	the	Merger,	or	divestiture.	In	January	2014,	the	complaint	was	amended	to	add	a	claim	for	money	damages	and	to request	injunctive	relief	requiring	the	carriers	to	hold	separate	their	assets.	In	March	2014,	the	Court	allowed	plaintiffs	to	add	certain	allegations	but	denied	plaintiffs' requests	to	add	a	damages	claim	or	seek	preliminary	injunctive	relief	requiring	the	carriers	to	hold	separate	their	assets,	and	in	June	2014	plaintiffs	filed	an	amended motion	for	leave	to	file	a	second	amended	and	supplemental	complaint.	This	lawsuit	could	result	in	an	obligation	to	pay	damages	or	terms,	conditions,	requirements, limitations,	costs	or	restrictions	that	would	impose	additional	material	costs	on	or	materially	limit	our	revenues,	or	materially	limit	some	of	the	synergies	and	other benefits	we	anticipate	following	the	Merger.

# Our	ability	to	utilize	our	NOL	Carryforwards	may	be	limited.

Under	the	Internal	Revenue	Code	of	1986,	as	amended	(the	Code),	a	corporation	is	generally	allowed	a	deduction	for	NOL	Carryforwards.	As	of	December	31,	2014, we	had	available	NOL	Carryforwards	of	approximately	$10.1	billion	for	regular	federal	income	tax	purposes	which	will	expire,	if	unused,	beginning	in	2022,	and approximately	$4.6	billion	for	state	 income	 tax	purposes	which	will	expire,	 if	unused,	between	2015	and	2034.	As	of	December	31,	2014,	 the	amount	of	NOL Carryforwards	for	state	income	tax	purposes	that	will	expire,	if	unused,	in	2015	is	$83	million.	Our	NOL	Carryforwards	are	subject	to	adjustment	on	audit	by	the	Internal Revenue	Service	and	the	respective	state	taxing	authorities.

A	corporation's	ability	to	deduct	its	federal	NOL	Carryforwards	and	to	utilize	certain	other	available	tax	attributes	can	be	substantially	constrained	under	the	general annual	limitation	rules	of	Section	382	of	the	Code	(Section	382)	if	it	undergoes	an	"ownership	change"	as	defined	in	Section	382	(generally	where	cumulative	stock ownership	changes	among	material	shareholders	exceed	50	percent	during	a	rolling	three-year	period).	We	experienced	an	ownership	change	in	connection	with	our emergence	from	the	Chapter	11	Cases	and	US	Airways	Group	experienced	an	ownership	change	in	connection	with	the	Merger.	The	general	limitation	rules	for	a	debtor in	a	bankruptcy	case	are	liberalized	where	the	ownership	change	occurs	upon	emergence	from	bankruptcy.	We	elected	to	be	covered	by	certain	special	rules	for	federal income	tax	purposes	that	permit	approximately	$9.0	billion	of	our	federal	NOL	Carryforwards	to	be	utilized	without	regard	to	the	annual	limitation	generally	imposed	by Section	382.	If	the	special	rules	do	not	apply,	our	ability	to	utilize	such	federal	NOL	Carryforwards	may	be	subject	to	limitation.	Substantially	all	of	our	remaining federal	NOL	Carryforwards	(attributable	to	US	Airways	Group	and	its	subsidiaries)	are	subject	to	limitation	under	Section	382	as	a	result	of	the	Merger;	however,	our ability	to	utilize	such	NOL	Carryforwards	is	not	anticipated	to	be	effectively	constrained	as	a	result	of	such	limitation.	Similar	limitations	may	apply	for	state	income	tax purposes.

Notwithstanding	the	foregoing,	an	ownership	change	subsequent	to	our	emergence	from	the	Chapter	11	Cases	may	severely	limit	or	effectively	eliminate	our	ability to	utilize	our	NOL	Carryforwards	and	other	tax	attributes.	To	reduce	the	risk	of	a	potential	adverse	effect	on	our	ability	to	utilize	our	NOL	Carryforwards,	our Certificate	of	Incorporation	contains	transfer	restrictions	applicable	to	certain	substantial	shareholders.	Although	the	purpose	of	these	transfer	restrictions	is	to	prevent	an ownership	change	from	occurring,	no	assurance	can	be	given	that	such	an	ownership	change	will	not	occur,	in	which	case	our	ability	to	utilize	our	NOL	Carryforwards and	other	tax	attributes	could	be	severely	limited	or	effectively	eliminated.

Our	ability	to	use	our	NOL	Carryforwards	also	will	depend	on	the	amount	of	taxable	income	generated	in	future	periods.	The	NOL	Carryforwards	may	expire	before we	can	generate	sufficient	taxable	income	to	use	them.

The	application	of	the	acquisition	method	of	accounting	resulted	in	AAG	recording	a	significant	amount	of	goodwill,	which	amount	is	tested	for	impairment	at least	annually.	In	addition,	AAG	and	American	may	never	realize	the	full	value	of	their	respective	intangible	assets	or	long-lived	assets,	causing	them	to	record material	impairment	charges.

In	accordance	with	applicable	acquisition	accounting	rules,	AAG	recorded	goodwill	on	its	consolidated	balance	sheet	to	the	extent	the	US	Airways	Group	acquisition purchase	price	exceeded	the	net	fair	value	of	US	Airways	Group's	tangible	and	intangible	assets	and	liabilities	as	of	the	acquisition	date.	Goodwill	is	not	amortized,	but is	tested	for	impairment	at	least	annually.	Also,	in	accordance	with	applicable	accounting	standards,	AAG	and	American	will	be	required	to	test	their	respective indefinite-lived	intangible	assets	for	impairment	on	an	annual	basis,	or	more	frequently	if	conditions	indicate	that	an	impairment	may	have	occurred.	In	addition,	AAG and	American	are	required	to	test	certain	of	their	other	assets	for	impairment	if	conditions	indicate	that	an	impairment	may	have	occurred.

Future	impairment	of	goodwill	or	other	assets	could	be	recorded	in	results	of	operations	as	a	result	of	changes	in	assumptions,	estimates,	or	circumstances,	some	of which	are	beyond	our	control.	Factors	which	could	result	in	an	impairment	could	include,	but	are	not	limited	to:	(i)	reduced	passenger	demand	as	a	result	of	domestic	or global	economic	conditions;	(ii)	higher	prices	for	jet	fuel;	(iii)	lower	fares	or	passenger	yields	as	a	result	of	increased	competition	or	lower	demand;	(iv)	a	significant increase	in	future	capital	expenditure	commitments;	and	(v)	significant	disruptions	to	our	operations	as	a	result	of	both	internal	and	external	events	such	as	terrorist activities,	actual	or	threatened	war,	labor	actions	by	employees,	or	further	industry	regulation.	There	can	be	no	assurance	that	a	material	impairment	charge	of	goodwill or	tangible	or	intangible	assets	will	be	avoided.	The	value	of	our	aircraft	could	be	impacted	in	future	periods	by	changes	in	supply	and	demand	for	these	aircraft.	Such changes	in	supply	and	demand	for	certain	aircraft	types	could	result	from	grounding	of	aircraft	by	us	or	other	airlines.	An	impairment	charge	could	have	a	material adverse	effect	on	our	business,	results	of	operations	and	financial	condition.

# Risks	Relating	to	AAG's	Common	Stock

# The	price	of	our	common	stock	has	recently	been	and	may	in	the	future	be	volatile.

The	market	price	of	AAG	Common	Stock	may	fluctuate	substantially	due	to	a	variety	of	factors,	many	of	which	are	beyond	our	control,	including:

•	 AAG's	operating	and	financial	results	failing	to	meet	the	expectations	of	securities	analysts	or	investors;

•changes	in	financial	estimates	or	recommendations	by	securities	analysts;

•	 material	announcements	by	us	or	our	competitors;

•	 movements	in	fuel	prices;

•new	regulatory	pronouncements	and	changes	in	regulatory	guidelines;

•general	and	industry-specific	economic	conditions;

•the	success	or	failure	of	AAG's	integration	efforts;

•changes	in	our	key	personnel;

•distributions	of	shares	of	AAG	Common	Stock	pursuant	to	the	Plan,	including	distributions	from	the	Disputed	Claims	Reserve	established	under	the	plan	of reorganization	upon	the	resolution	of	the	underlying	claims;

•public	sales	of	a	substantial	number	of	shares	of	AAG	Common	Stock	or	issuances	of	AAG	Common	Stock	upon	the	exercise	or	conversion	of	convertible securities,	options,	warrants,	RSUs,	SARs,	or	similar	rights;

•increases	or	decreases	in	reported	holdings	by	insiders	or	other	significant	stockholders;

•fluctuations	in	trading	volume;

•expectations	regarding	our	capital	deployment	program,	including	our	share	repurchase	program	and	any	future	dividend	payments	that	may	be	declared	by our	Board	of	Directors;	and

•changes	in	market	values	of	airline	companies	as	well	as	general	market	conditions.

We	cannot	guarantee	that	we	will	repurchase	our	common	stock	pursuant	to	our	share	repurchase	program	or	continue	to	pay	dividends	on	our	common	stock or	that	our	capital	deployment	program	will	enhance	long-term	stockholder	value.	Our	capital	deployment	program	could	increase	the	volatility	of	the	price	of our	common	stock	and	diminish	our	cash	reserves.

As	part	of	a	capital	deployment	program,	in	July	2014,	our	Board	of	Directors	authorized	a	$1.0	billion	share	repurchase	program,	which	was	completed	in	2014,	and in	January	2015,	our	Board	of	Directors	authorized	a	new	$2.0	billion	share	repurchase	program	to	be	completed	no	later	than	December	31,	2016.	Share	repurchases under	the	share	repurchase	program	may	be	made	through	a	variety	of	methods,	which	may	include	open	market	purchases,	privately	negotiated	transactions,	block trades	or	accelerated	share	repurchase	transactions.	This	share	repurchase	program	does	not	obligate	us	to	acquire	any	specific	number	of	shares	or	to	repurchase	any specific	number	of	shares	for	any	fixed	period,	and	may	be	suspended	at	any	time	at	management's	discretion.	The	timing	and	amount	of	repurchases,	if	any,	will	be subject	to	market	and	economic	conditions,	applicable	legal	requirements	and	other	relevant	factors.	The	repurchase	program	may	be	limited,	suspended	or	discontinued at	any	time	without	prior	notice.

Although	our	Board	of	Directors	declared	cash	dividends	in	July	2014,	October	2014	and	January	2015	as	part	of	the	capital	deployment	program,	any	future dividends	that	may	be	declared	and	paid	from	time	to	time	under	our	capital	deployment	program	will	be	subject	to	market	and	economic	conditions,	applicable	legal requirements	and	other	relevant	factors.	Our	capital	deployment	program	does	not	obligate	us	to	continue	a

dividend	for	any	fixed	period,	and	payment	of	dividends	may	be	suspended	at	any	time	at	management's	discretion.	We	will	continue	to	retain	future	earnings	to	develop our	business,	as	opportunities	arise,	and	evaluate	on	a	quarterly	basis	the	amount	and	timing	of	future	dividends	based	on	our	operating	results,	financial	condition, capital	requirements	and	general	business	conditions.	The	amount	and	timing	of	any	future	dividends	may	vary,	and	the	payment	of	any	dividend	does	not	assure	that	we will	be	able	to	pay	dividends	in	the	future.

In	addition,	repurchases	of	AAG	Common	Stock	pursuant	to	our	share	repurchase	program	and	any	future	dividends	could	affect	our	stock	price	and	increase	its volatility.	The	existence	of	a	share	repurchase	program	and	any	future	dividends	could	cause	our	stock	price	to	be	higher	than	it	would	otherwise	be	and	could potentially	reduce	the	market	liquidity	for	our	stock.	Additionally,	our	share	repurchase	program	and	any	future	dividends	could	diminish	our	cash	reserves,	which	may impact	our	ability	to	finance	future	growth	and	to	pursue	possible	future	strategic	opportunities	and	acquisitions.	Further,	our	share	repurchase	program	may	fluctuate such	that	our	cash	flow	may	be	insufficient	to	fully	cover	our	share	repurchases.	Although	our	share	repurchase	program	is	intended	to	enhance	long-term	stockholder value,	there	is	no	assurance	that	it	will	do	so	because	the	market	price	of	our	common	stock	may	decline	below	the	levels	at	which	we	repurchased	shares	of	stock	and short-term	stock	price	fluctuations	could	reduce	the	program's	effectiveness.

# Certain	provisions	of	AAG's	Certificate	of	Incorporation	and	Bylaws	make	it	difficult	for	stockholders	to	change	the	composition	of	our	Board	of	Directors	and may	discourage	takeover	attempts	that	some	of	our	stockholders	might	consider	beneficial.

Certain	provisions	of	our	Certificate	of	Incorporation	and	Bylaws	may	have	the	effect	of	delaying	or	preventing	changes	in	control	if	our	Board	of	Directors determines	that	such	changes	in	control	are	not	in	our	best	interest	and	the	best	interest	of	our	stockholders.	These	provisions	include,	among	other	things,	the	following:

•advance	notice	procedures	for	stockholder	proposals	to	be	considered	at	stockholders'	meetings;

•the	ability	of	our	Board	of	Directors	to	fill	vacancies	on	the	Board;

•a	prohibition	against	stockholders	taking	action	by	written	consent;

•a	prohibition	against	stockholders	calling	special	meetings	of	stockholders;

•a	requirement	that	holders	of	at	least	80%	of	the	voting	power	of	the	shares	entitled	to	vote	in	the	election	of	directors	approve	any	amendment	of	our	Bylaws submitted	to	stockholders	for	approval;	and

•super-majority	voting	requirements	to	modify	or	amend	specified	provisions	of	our	Certificate	of	Incorporation.

These	provisions	are	not	intended	to	prevent	a	takeover,	but	are	intended	to	protect	and	maximize	the	value	of	the	interests	of	our	stockholders.	While	these provisions	have	the	effect	of	encouraging	persons	seeking	to	acquire	control	of	our	company	to	negotiate	with	our	Board	of	Directors,	they	could	enable	our	Board	of Directors	to	prevent	a	transaction	that	some,	or	a	majority,	of	our	stockholders	might	believe	to	be	in	their	best	interests	and,	in	that	case,	may	prevent	or	discourage attempts	to	remove	and	replace	incumbent	directors.	In	addition,	we	are	subject	to	the	provisions	of	Section	203	of	the	Delaware	General	Corporation	Law,	which prohibits	business	combinations	with	interested	stockholders.	Interested	stockholders	do	not	include	stockholders	whose	acquisition	of	our	securities	is	approved	by	the Board	of	Directors	prior	to	the	investment	under	Section	203.

# AAG's	Certificate	of	Incorporation	and	Bylaws	include	provisions	that	limit	voting	and	acquisition	and	disposition	of	our	equity	interests.

Our	Certificate	of	Incorporation	and	Bylaws	include	certain	provisions	that	limit	voting	and	ownership	and	disposition	of	our	equity	interests,	including	AAG Common	Stock,	AAG	Series	A	Preferred	Stock	and	convertible	notes.	These	restrictions	may	adversely	affect	the	ability	of	certain	holders	of	AAG	Common	Stock	and our	other	equity	interests	to	vote	such	interests	and	adversely	affect	the	ability	of	persons	to	acquire	shares	of	AAG	Common	Stock	and	our	other	equity	interests.

# In	order	to	protect	AAG's	NOL	Carryforwards	and	certain	other	tax	attributes,	AAG's	Certificate	of	Incorporation	includes	certain	limitations	on	acquisitions and	dispositions	of	AAG's	Common	Stock,	which	may	limit	the	liquidity	of	our	common	stock.

To	reduce	the	risk	of	a	potential	adverse	effect	on	our	ability	to	use	our	NOL	Carryforwards	and	certain	other	tax	attributes	for	federal	income	tax	purposes,	our Certificate	of	Incorporation	contains	certain	restrictions	on	the	acquisition	and	disposition	of	AAG	Common	Stock	by	substantial	stockholders.	These	restrictions	may adversely	affect	the	ability	of	certain	holders	of	AAG	Common	Stock	to	dispose	of	or	acquire	shares	of	AAG	Common	Stock.	Although	the	purpose	of	these	transfer restrictions	is	to	prevent	an	"ownership	change"	(as	defined	in	Section	382)	from	occurring,	no	assurance	can	be	given	that	an	ownership	change	will	not	occur	even with	these	restrictions	in	place.

# ITEM	1B.		UNRESOLVED	STAFF	COMMENTS

The	Company	had	no	unresolved	Securities	and	Exchange	Commission	staff	comments	at	December	31,	2014.

# ITEM	2.		PROPERTIES

# Flight	Equipment

As	of	December	31,	2014,	American	and	US	Airways	operated	a	mainline	fleet	of	643	and	340	aircraft,	respectively.	During	2014,	American	took	delivery	of	61	new aircraft	and	retired	45	aircraft	and	US	Airways	took	delivery	of	21	new	aircraft	and	retired	24	aircraft.	We	are	supported	by	our	regional	airline	subsidiaries	and	third- party	regional	carriers	operating	as	American	Eagle	and	US	Airways	Express	under	capacity	purchase	agreements.	As	of	December	31,	2014,	American	Eagle	and	US Airways	Express	operated	264	and	302	regional	aircraft,	respectively.	During	2014,	American	took	delivery	of	16	new	regional	aircraft.

# Mainline

As	of	December	31,	2014,	American's	and	US	Airways'	combined	mainline	fleet	consisted	of	the	following	aircraft:

|  | Average	Seating<br>Capacity | Owned | Capital<br>Leased | Operating<br>Leased | Total | Average<br>Age<br>(Years) | In<br>Temporary<br>Storage	(1) | Non-<br>Operating<br>Aircraft	(2) |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Airbus\tA319 | 125 | 12 | — | 106 | \t118 | 11 | — | — |
| Airbus\tA320 | 150 | 13 | — | 51 | 64 | 15 | — | 1 |
| Airbus\tA321 | 176 | 97 | — | 42 | \t139 | 5 | — | — |
| Airbus\tA330-200 | 258 | 15 | — | — | 15 | 3 | — | — |
| Airbus\tA330-300 | 291 | 4 | — | 5 | 9 | 14 | — | — |
| Boeing\t737-800 | 150 | 86 | 19 | 141 | \t246 | 7 | — | — |
| Boeing\t757-200 | 182 | 65 | 2 | 39 | \t106 | 20 | 8 | 19 |
| Boeing\t767-200\tER | 204 | — | — | 6 | 6 | 25 | — | 3 |
| Boeing\t767-300\tER | 218 | 45 | — | 13 | 58 | 21 | — | — |
| Boeing\t777-200\tER | 247 | 44 | 3 | — | 47 | 14 | — | — |
| Boeing\t777-300\tER | 310 | 14 | — | 2 | 16 | 1 | — | — |
| Embraer\t190 | 99 | 20 | — | — | 20 | 7 | — | — |
| McDonnell\tDouglas\tMD-80 | 140 | 95 | 13 | 31 | \t139 | 23 | 2 | 22 |
| Total |  | 510 | 37 | 436 | \t983 | 12 | 10 | 45 |

(1) Aircraft	in	temporary	storage	are	included	in	the	count	of	operating	aircraft.

(2) As	of	December	31,	2014,	all	non-operating	aircraft	are	owned.

# Regional

As	of	December	31,	2014,	the	fleet	of	our	wholly-owned	regional	subsidiaries	consisted	of	the	following	aircraft:

|  | Average	Seating<br>Capacity | Owned | Capital<br>Leased | Operating<br>Leased | Total | Average<br>Age<br>(Years) | In<br>Temporary<br>Storage | Non-<br>Operating<br>Aircraft	(1) |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Bombardier\tCRJ\t200 | 50 | 12 | — | 23 | 35 | 12 | — | — |
| Bombardier\tCRJ\t700 | 65 | 54 | — | 7 | 61 | 9 | — | — |
| Bombardier\tCRJ\t900 | 78 | 16 | — | — | 16 | 9 | — | — |
| De\tHavilland\tDash\t8-100 | 37 | 27 | — | — | 27 | 25 | — | 5 |
| De\tHavilland\tDash\t8-300 | 50 | — | — | 11 | 11 | 23 | — | — |
| Embraer\tERJ\t140 | 44 | 34 | — | — | 34 | 12 | — | 25 |
| Embraer\tERJ\t145 | 50 | 118 | — | — | \t118 | 13 | — | — |
| Saab\t340B | 34 | — | — | — | \t — | — | — | 41 |
| Total |  | 261 | — | 41 | \t302 | 12 | — | 71 |

# Aircraft	Purchase	Commitments	and	Lease	Expirations

Our	committed	mainline	and	regional	aircraft	orders	and	scheduled	lease	expirations,	for	the	capital	and	operating	leased	flight	equipment	included	in	the	tables above,	as	of	December	31,	2014,	are	presented	in	the	table	below.

|  | 2015 | 2016 | 2017 | 2018 | 2019 | 2020	and<br>Thereafter |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Firm\torders\t(1): |  |  |  |  |  |  |
| American | \t104 | \t104 | \t 75 | \t 49 | \t 45 | 100 |
| US\tAirways | 12 | \t — | 6 | \t 10 | 6 | — |
| Total | \t116 | \t104 | \t 81 | \t 59 | \t 51 | 100 |
| Scheduled\tmainline\tlease\texpirations: |  |  |  |  |  |  |
| American | 19 | 10 | \t 15 | 8 | 3 | 227 |
| US\tAirways | 31 | 5 | \t 26 | \t 15 | \t 28 | 86 |
| Total | 50 | 15 | \t 41 | \t 23 | \t 31 | 313 |
| Scheduled\twholly-owned\tregional\tsubsidiaries\tlease\texpirations | \t — | \t — | 3 | 3 | \t 10 | 25 |

(1) Includes	orders	for	regional	jets	as	follows:	42	in	2015,	44	in	2016	and	12	in	2017.	These	aircraft	may	be	operated	by	wholly-owned	subsidiaries	or	leased	to third-party	regional	carriers,	which	would	operate	the	aircraft	under	capacity	purchase	arrangements.

We	have	agreements	for	55	spare	engines	to	be	delivered	in	2015	and	beyond.

See	Note	15	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	and	Note	12	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for additional	information	on	aircraft	acquisition	commitments,	payments	and	options.

# Third-Party	Regional	Carriers

As	of	December	31,	2014,	aircraft	contractually	obligated	to	American	and	US	Airways	with	third-party	regional	carriers	included:

|  | Number	of	Aircraft |  | Type	of |
| :--- | :--- | :--- | :--- |
| Carrier | American | US\tAirways | Aircraft |
| Air\tWisconsin | — | 70 | \tRegional\tjets |
| ExpressJet | 11 | — | \tRegional\tjets |
| Mesa | — | 57 | \tRegional\tjets |
| Republic | 42 | 58 | \tRegional\tjets |
| SkyWest | 12 | 14 | \tRegional\tjets |
|  | 65 | 199 |  |

See	Note	15	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	and	Note	12	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for additional	information	on	our	capacity	purchase	agreements	with	third-party	regional	carriers.

# Other	Information

For	information	concerning	the	estimated	useful	lives	and	residual	values	for	owned	aircraft,	lease	terms	for	leased	aircraft	and	amortization	relating	to	aircraft	under capital	leases,	see	Note	5	and	Note	15	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	and	Note	4	and	Note	12	to	American's	Consolidated	Financial Statements	in	Part	II,	Item	8B.

# Ground	Properties

At	each	airport	where	we	conduct	flight	operations,	we	lease	passenger,	operations	and	baggage	handling	space,	generally	from	the	airport	operator,	but	in	some cases	on	a	subleased	basis	from	other	airlines.	Our	main	operational	facilities	are	associated	with	our	hubs.	At	those	locations	and	in	other	cities	we	serve,	we	maintain administrative	offices,	terminal,	catering,	cargo,	training,	maintenance	and	other	facilities,	in	each	case	as	necessary	to	support	our	operations	in	the	particular	city.

We	own	our	corporate	headquarters	buildings	in	Fort	Worth,	Texas.	We	lease,	or	have	built	as	leasehold	improvements	on	leased	property,	most	of	our	airport	and terminal	facilities	in	the	U.S.	and	abroad,	US	Airways'	corporate	office	building	in	Tempe,	Arizona,	our	training	facilities	in	Fort	Worth,	Texas,	our	principal	overhaul and	maintenance	base	in	Tulsa,	Oklahoma,	our	regional	reservation	offices,	and	local	ticket	and	administration	offices	throughout	the	U.S.	and	abroad.	Our	American Airlines	Integrated	Operations	Center	is	located	in	Fort	Worth,	Texas	and	the	US	Airways	Operations	Control	Center	is	located	near	Pittsburgh,	Pennsylvania,	in	a facility	leased	from	the	Allegheny	County	Airport	Authority.	In	2014,	we	began	construction	on	a	new	state-of-the-art	Integrated	Operations	Control	Center	in	Fort Worth,	Texas,	which	will	serve	as	the	new	facility	for	the	combined	airline	and	is	expected	to	be	completed	in	the	last	half	of	2015.

For	information	concerning	the	estimated	lives	and	residual	values	for	owned	ground	properties,	lease	terms	and	amortization	relating	to	ground	properties	under capital	leases,	and	acquisitions	of	ground	properties,	see	Note	5	and	Note	15	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	and	Note	4	and	Note	12	to American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B.

# ITEM	3.		LEGAL	PROCEEDINGS

Chapter	11	Cases.	As	previously	disclosed,	on	the	Petition	Date,	November	29,	2011,	the	Debtors	filed	the	Chapter	11	Cases.	On	October	21,	2013,	the	Bankruptcy Court	entered	the	Confirmation	Order	confirming	the	Plan.	On	the	Effective	Date,	December	9,	2013,	the	Debtors	consummated	their	reorganization	pursuant	to	the Plan,	principally	through	the	transactions	contemplated	by	the	Merger	Agreement	pursuant	to	which	Merger	Sub	merged	with	and	into	US	Airways	Group,	with	US Airways	Group	surviving	as	a	wholly-owned	subsidiary	of	AAG.	From	the	Petition	Date	through	the	Effective	Date,	pursuant	to	automatic	stay	provisions	under	the Bankruptcy	Code	and	orders	granted	by	the	Bankruptcy	Court,	actions	to	enforce	or	otherwise	effect	repayment	of	liabilities	preceding	the	Petition	Date	as	well	as	all pending	litigation	against	the	Debtors	generally	were	stayed.	Following	the	Effective	Date,	actions	to	enforce	or	otherwise	effect	repayment	of	liabilities	preceding	the Petition	Date,	generally	have	been	permanently	enjoined.	Any	unresolved	claims	will	continue	to	be	subject	to	the	claims	reconciliation	process	under	the	supervision	of the	Bankruptcy	Court.	However,	certain	pending	litigation	related	to	pre-petition	liabilities	may	proceed	in	courts	other	than	the	Bankruptcy	Court	to	determine	the amount,	if	any,	of	such	litigation	claims	for	purposes	of	treatment	under	the	Plan.

Pursuant	to	rulings	of	the	Bankruptcy	Court,	the	Plan	established	the	Disputed	Claims	Reserve	to	hold	shares	of	AAG	Common	Stock	reserved	for	issuance	to disputed	claimholders	at	the	Effective	Date	that	ultimately	become	holders	of	allowed	Single-Dip	Unsecured	Claims.	The	shares	provided	for	under	the	Plan	were determined	based	upon	a	Disputed	Claims	Reserve	amount	of	claims	of	approximately	$755	million,	representing	the	maximum	amount	of	additional	distributions	to subsequently	allowed	Single-Dip	Unsecured	Claims	under	the	Plan.	On	July	1,	2014	(the	date	180	days	after	the	Effective	Date),	approximately	2.9	million	shares	of AAG	Common	Stock	held	in	the	Disputed	Claims	Reserve	were	distributed	to	holders	of	allowed	Single-Dip	Unsecured	Claims,	to	holders	of	certain	labor-related deemed	claims,	and	to	holders	of	certain	non-management,	non-union	employee	deemed	claims	as	specified	in	the	Plan,	and	shares	were	withheld	or	sold	on	account	of related	tax	obligations.	In	addition,	on	July	1,	2014,	we	repurchased	0.4	million	shares	of	AAG	Common	Stock	for	an	aggregate	of	$19	million	from	the	Disputed Claims	Reserve	at	the	then	prevailing	market	price	in	order	to	fund	cash	tax	obligations	resulting	from	distributions	by	the	Disputed	Claims	Reserve.	On	November	4, 2014,	approximately	0.7	million	shares	of	AAG	Common	Stock	held	in	the	Disputed	Claims	Reserve	were	distributed	to	holders	of	allowed	Single-Dip	Unsecured Claims,	to	holders	of	certain	labor-related	deemed	claims,	and	to	holders	of	certain	non-management,	non-union	employee	deemed	claims	as	specified	in	the	Plan,	and shares	were	withheld	or	sold	on	account	of	related	tax	obligations.	In	addition,	on	November	4,	2014,	we	repurchased	less	than	0.1	million	shares	of	AAG	Common Stock	for	an	aggregate	of	$2	million	from	the	Disputed	Claims	Reserve	at	the	then	prevailing	market	price	in	order	to	fund	cash	tax	obligations	resulting	from distributions	by	the	Disputed	Claims	Reserve.	As	of	December	31,	2014,	there	were	approximately	26.8	million	shares	of	AAG	Common	Stock	remaining	in	the Disputed	Claims	Reserve.	On	February	10,	2015,	approximately	0.8	million	shares	of	AAG	Common	Stock	held	in	the	Disputed	Claims	Reserve	were	distributed	to holders	of	allowed	Single-Dip	Unsecured	Claims,	to	holders	of	certain	labor-related	deemed	claims,	and	to	holders	of	certain	non-management,	non-union	employee deemed	claims	as	specified	in	the	Plan,	and	shares	were	withheld	or	sold	on	account	of	related	tax	obligations.	In	addition,	on	February	10,	2015,	we	repurchased	less than	0.1	million	shares	of	AAG	Common	Stock	for	an	aggregate	of	$4	million	from	the	Disputed	Claims	Reserve	at	the	then	prevailing	market	price	in	order	to	fund cash	tax	obligations	resulting	from	distributions	by	the	Disputed	Claims	Reserve.	As	disputed	claims	are	resolved,	the	claimants	will	receive	distributions	of	shares	from the	Disputed	Claims	Reserve	on	the	same	basis	as	if	such	distributions	had	been	made	on	or	about	the	Effective	Date.	However,	we	are	not	required	to	distribute additional	shares	above	the	limits	contemplated	by	the	Plan,	even	if	the	shares	remaining	for	distribution	are	not	sufficient	to	fully	pay	any	additional	allowed	unsecured claims.	To	the	extent	that	any	of	the	reserved	shares	remain	undistributed	upon	resolution	of	all	remaining	disputed	claims,	such	shares	will	not	be	returned	to	us	but rather	will	be	distributed	to	former	AMR	shareholders	as	of	the	Effective	Date.	However,	resolution	of	disputed	claims	could	have	a	material	effect	on	recoveries	by holders	of	additional	allowed	Single-Dip	Unsecured	Claims	under	the	Plan	and	the	amount	of	additional	share	distributions,	if	any,	that	are	made	to	former	AMR shareholders	as	the	total	number	of	shares	of	AAG	Common	Stock	that	remain	available	for	distribution	upon	resolution	of	disputed	claims	is	limited	pursuant	to	the Plan.

There	is	also	pending	in	the	Bankruptcy	Court	an	adversary	proceeding	relating	to	an	action	brought	by	American	to	seek	a	determination	that	certain	non-pension, post-employee	benefits	(OPEB)	are	not	vested	benefits	and	thus	may	be	modified	or	terminated	without	liability	to	American.	On	April	18,	2014,	the	Bankruptcy	Court granted	American's	motion	for	summary	judgment	with	respect	to	certain	non-union	employees,	concluding	that	their	benefits	were	not	vested	and	could	be	terminated. The	summary	judgment	motion	was	denied	with	respect	to	all	other	retirees.	The	Bankruptcy	Court	has	not	yet	scheduled	a	trial	on	the	merits	concerning	whether	those retirees'	benefits	are	vested,	and	American	cannot	predict	whether	it	will	receive	relief	from	obligations	to	provide	benefits	to	any	of	those	retirees.	Our	financial statements	presently	reflect	these	retirement	programs	without	giving	effect	to	any	modification	or	termination	of	benefits	that	may	ultimately	be	implemented	based upon	the	outcome	of	this	proceeding.	Separately,	both	the	APFA	and	TWU	have	filed	grievances	asserting	that	American	was	"successful"	in	its	Chapter	11	with	respect to	 matters	 related	 to	 OPEB	 and,	 accordingly,	 by	 operation	 of	 the	 underlying	 collective	 bargaining	 agreements,	American's	 prior	 contributions	 to	 certain	 OPEB prefunding	trusts	attributable	to	active	employees	should	be	returned	to	those	active	employees.	These	amounts	aggregate	approximately	$212	million.	We	have	denied both	grievances	and	intend	to	defend	these	matters	vigorously.

Private	Party	Antitrust	Action.	On	July	2,	2013,	a	lawsuit	captioned	Carolyn	Fjord,	et	al.,	v.	US	Airways	Group,	Inc.,	et	al.,	was	filed	in	the	United	States	District Court	for	the	Northern	District	of	California.	The	complaint	names	as	defendants	US	Airways	Group	and	US	Airways,	and	alleges	that	the	effect	of	the	Merger	may	be to	substantially	lessen	competition	or	tend	to	create	a	monopoly	in	violation	of	Section	7	of	the	Clayton	Antitrust	Act.	The	relief	sought	in	the	complaint	includes	an injunction	against	 the	Merger,	or	divestiture.	On	August	6,	2013,	 the	plaintiffs	re-filed	 their	complaint	 in	 the	Bankruptcy	Court,	adding	AMR	and	American	as defendants,	and	on	October	2,	2013,	dismissed	the	initial	California	action.	The	Bankruptcy	Court	denied	plaintiffs'	motion	to	preliminarily	enjoin	the	Merger.	On January	10,	2014,	the	plaintiffs	moved	to	amend	their	complaint	to	add	additional	factual	allegations,	a	claim	for	money	damages	and	a	request	for	preliminary injunctive	relief	requiring	the	carriers	to	hold	separate	their	assets.	On	March	14,	2014,	the	Court	allowed	plaintiffs	to	add	certain	allegations	but	denied	plaintiffs' requests	to	add	a	damages	claim	or	seek	preliminary	injunctive	relief	requiring	the	carriers	to	hold	separate	their	assets.	On	June	2,	2014,	plaintiffs	filed	an	amended motion	for	leave	to	file	a	second	amended	and	supplemental	complaint,	which	motion	has	been	fully	briefed	by	the	parties	and	is	pending	resolution	by	the	Court.	There is	currently	no	trial	date	set.	We	believe	this	lawsuit	is	without	merit	and	intend	to	vigorously	defend	against	the	allegations.

US	Airways	Sabre	Matter.	On	April	21,	2011,	US	Airways	filed	an	antitrust	lawsuit	against	Sabre	Holdings	Corporation,	Sabre	Inc.	and	Sabre	Travel	International Limited	(collectively,	Sabre)	in	the	Federal	District	Court	for	the	Southern	District	of	New	York.	The	lawsuit,	as	amended	to	date,	alleges,	among	other	things,	that	Sabre has	engaged	in	anticompetitive	practices	to	preserve	its	market	power	by	restricting	our	ability	to	distribute	our	products	to	our	customers.	The	lawsuit	also	alleges	that these	actions	have	permitted	Sabre	to	charge	supracompetitive	booking	fees	and	to	use	technologies	that	are	not	as	robust	and	as	efficient	as	alternatives	in	a	competitive market.	The	lawsuit	seeks	money	damages.	Sabre	filed	a	motion	to	dismiss	the	case,	which	the	court	denied	in	part	and	granted	in	part	in	September	2011,	allowing	two of	the	four	counts	in	the	complaint	to	proceed.	In	January	2015,	the	court	denied	in	part	and	granted	in	part	Sabre's	motions	for	summary	judgment.	A	trial	date	is expected	to	be	set	soon.	We	intend	to	pursue	our	claims	against	Sabre	vigorously,	but	there	can	be	no	assurance	of	the	outcome	of	this	litigation.

General.	We	and	our	subsidiaries	are	also	engaged	in	other	legal	proceedings	from	time	to	time.	Legal	proceedings	can	be	complex	and	take	many	months,	or	even years,	to	reach	resolution,	with	the	final	outcome	depending	on	a	number	of	variables,	some	of	which	are	not	within	our	control.	Therefore,	although	we	will	vigorously defend	ourselves	in	each	of	the	actions	described	above	and	such	other	legal	proceedings,	their	ultimate	resolution	and	potential	financial	and	other	impacts	on	us	are uncertain.

# ITEM	4.		MINE	SAFETY	DISCLOSURES

Not	Applicable.

# PART	II

# ITEM	5.		MARKET	FOR	AMERICAN	AIRLINES	GROUP'S	COMMON	STOCK,	RELATED	STOCKHOLDER	MATTERS	AND	ISSUER	PURCHASES

# OF	EQUITY	SECURITIES

# Stock	Exchange	Listing

Pursuant	to	the	Plan	and	in	accordance	with	the	Merger	Agreement,	effective	December	9,	2013,	all	existing	shares	of	AMR	Corporation	common	stock	(OTCQB: AAMRQ)	were	canceled	and	ceased	trading	on	the	OTCQB	market.	The	newly	authorized	and	issued	AAG	Common	Stock	began	trading	on	the	NASDAQ	Global Select	Market	(NASDAQ)	on	December	9,	2013	under	the	symbol	"AAL."	There	is	no	trading	market	for	the	common	stock	of	American,	which	is	a	wholly-owned subsidiary	of	AAG.

Information	on	securities	authorized	for	issuance	under	our	equity	compensation	plans	will	be	set	forth	in	our	Proxy	Statement	for	the	2015	Annual	Meeting	of Stockholders	of	American	Airlines	Group	Inc.	(the	Proxy	Statement)	under	the	caption	"Equity	Compensation	Plan	Information"	and	is	incorporated	by	reference	into this	Annual	Report	on	Form	10-K.

# Market	Prices	of	Common	Stock

The	following	table	sets	forth,	for	the	periods	indicated,	the	high	and	low	sale	prices	of	AAG	Common	Stock	on	NASDAQ:

| December	31 | Period | High | Low |
| :--- | :--- | :--- | :--- |
| 2014 | Fourth\tQuarter | $53.63 | $28.58 |
|  | Third\tQuarter | \t 43.86 | \t 35.03 |
|  | Second\tQuarter | \t 44.55 | \t 33.37 |
|  | First\tQuarter | \t 39.02 | \t 25.36 |
| 2013 | December\t9-31 | $26.61 | $24.60 |

# Cash	Dividends	Paid

On	July	23,	2014,	as	part	of	our	capital	deployment	program,	our	Board	of	Directors	declared	a	$0.10	per	share	cash	dividend	for	shareholders	of	record	as	of August	4,	2014,	and	payable	on	August	18,	2014.	On	October	22,	2014,	our	Board	of	Directors	declared	a	$0.10	per	share	dividend	for	shareholders	of	record	on November	3,	2014,	and	payable	on	November	17,	2014.	On	January	27,	2015,	we	announced	that	our	Board	of	Directors	had	declared	a	$0.10	per	share	dividend	for shareholders	of	record	on	February	9,	2015,	and	payable	on	February	23,	2015.	The	total	cash	payment	for	dividends	during	the	year	ended	December	31,	2014	was $144	million.	We	did	not	pay	any	dividends	in	2013.

Any	future	dividends	that	may	be	declared	and	paid	from	time	to	time	under	our	capital	deployment	program	will	be	subject	to	market	and	economic	conditions, applicable	legal	requirements	and	other	relevant	factors.	Our	capital	deployment	program	does	not	obligate	us	to	continue	a	dividend	for	any	fixed	period,	and	payment of	dividends	may	be	suspended	at	any	time	at	management's	discretion.

See	Part	II,	Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	–	"American	Airlines	Group	–	Liquidity	and	Capital Resources	–	Commitments	–	Significant	Indebtedness,"	Note	9	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	and	Note	6	to	American's	Consolidated Financial	Statements	in	Part	II,	Item	8B	for	a	discussion	regarding	certain	limitations	on	our	ability	to	pay	dividends.

# Stock	Performance	Graph

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

The	following	stock	performance	graph	compares	our	cumulative	total	shareholder	return	on	an	annual	basis	on	our	common	stock	with	the	cumulative	total	return on	the	Standard	and	Poor's	500	Stock	Index	and	the	AMEX	Airline	Index	from	December	9,	2013	(the	first	trading	day	of	AAG	Common	Stock)	through	December	31, 2014.	The	comparison	assumes	$100	was	invested	on	December	9,	2013	in	AAG	Common	Stock	and	in	each	of	the	foregoing	indices	and	assumes	reinvestment	of dividends.	The	stock	performance	shown	on	the	graph	below	represents	historical	stock	performance	and	is	not	necessarily	indicative	of	future	stock	price	performance.

|  | 12/9/2013 | 12/31/2013 | 12/31/2014 |
| :--- | :--- | :--- | :--- |
| American\tAirlines\tGroup\tInc. | $100 | $103 | $219 |
| Amex\tAirline\tIndex | 100 | 102 | 152 |
| S&amp;P\t500 | 100 | 102 | 114 |

# Purchases	of	Equity	Securities	by	the	Issuer	and	Affiliated	Purchasers

The	following	table	displays	information	with	respect	to	our	purchases	of	shares	of	AAG	Common	Stock	during	the	three	months	ended	December	31,	2014.

| Period | Total	number	of<br>shares<br>purchased | Average<br>				price	paid<br>per	share | Total	number	of	shares<br>purchased	as	part	of	publicly<br>announced<br>plan	or	program	(a) | Maximum	dollar	value		of<br>shares	that	may	be<br>purchased	under	the	plan	or	program<br>(in	millions) |
| :--- | :--- | :--- | :--- | :--- |
| October\t2014 | 3,896,793 | $40.41 | 3,896,793 | $729 |
| November\t2014 | 16,314,374(b) | $43.75 | 16,261,766 | $18 |
| December\t2014 | 367,732 | $48.07 | 367,732 | $— |

(a) As	part	of	a	capital	deployment	program,	in	July	2014	our	Board	of	Directors	authorized	a	$1.0	billion	share	repurchase	program,	which	was	completed	in December	2014.	On	January	27,	2015,	we	announced	that	our	Board	of	Directors	had	authorized	a	new	$2.0	billion	share	repurchase	program	to	be	completed	by the	end	of	2016.	Share	repurchases	under	the	share	repurchase	program	may	be	made	through	a	variety	of	methods,	which	may	include	open	market	purchases, privately	negotiated	transactions,	block	trades	or	accelerated	share	repurchase	transactions.	Any	such	repurchases	will	be	made	from	time	to	time	subject	to market	and	economic	conditions,	applicable	legal	requirements	and	other	relevant	factors.	This	share	repurchase	program	does	not	obligate	us	to	repurchase	any specific	number	of	shares	for	any	fixed	period,	and	may	be	suspended	at	any	time	at	management's	discretion.

(b) Separate	from	our	share	repurchase	program,	in	November	2014	we	repurchased	52,608	shares	of	AAG	Common	Stock	for	an	aggregate	of	$2	million	from	the Disputed	Claims	Reserve	at	the	then	prevailing	market	price	in	order	to	fund	cash	tax	obligations	resulting	from	distributions	by	the	Disputed	Claims	Reserve.

# Ownership	Restrictions

AAG's	Certificate	of	Incorporation	and	Bylaws	provide	that,	consistent	with	the	requirements	of	Subtitle	VII	of	Title	49	of	the	United	States	Code,	as	amended,	or	as the	same	may	be	from	time	to	time	amended	(the	Aviation	Act),	any	persons	or	entities	who	are	not	a	"citizen	of	the	United	States"	(as	defined	under	the	Aviation	Act and	administrative	interpretations	issued	by	the	DOT,	its	predecessors	and	successors,	from	time	to	time),	including	any	agent,	trustee	or	representative	of	such	persons or	entities	(a	non-citizen),	shall	not,	in	the	aggregate,	own	(beneficially	or	of	record)	and/or	control	more	than	(a)	24.9%	of	the	aggregate	votes	of	all	of	our	outstanding equity	securities	(as	defined,	which	definition	includes	our	capital	stock,	securities	convertible	into	or	exchangeable	for	shares	of	our	capital	stock,	including	our outstanding	convertible	notes,	and	any	options,	warrants	or	other	rights	to	acquire	capital	stock)	(the	voting	cap	amount)	or	(b)	49.0%	of	our	outstanding	equity securities	(the	absolute	cap	amount).	If	non-citizens	nonetheless	at	any	time	own	and/or	control	more	than	the	voting	cap	amount,	the	voting	rights	of	the	equity securities	in	excess	of	the	voting	cap	amount	shall	be	automatically	suspended	in	accordance	with	the	provisions	of	our	Certificate	of	Incorporation	and	Bylaws.	Voting rights	of	equity	securities,	if	any,	owned	(beneficially	or	of	record)	by	non-citizens	shall	be	suspended	in	reverse	chronological	order	based	upon	the	date	of	registration in	the	foreign	stock	record.	Further,	if	at	any	time	a	transfer	of	equity	securities	to	a	non-citizen	would	result	in	non-citizens	owning	more	than	the	absolute	cap	amount, such	transfer	shall	be	void	and	of	no	effect,	in	accordance	with	provisions	of	AAG's	Certificate	of	Incorporation	and	Bylaws.	In	the	event	that	we	determine	that	the equity	securities	registered	on	the	foreign	stock	record	or	the	stock	records	of	the	Company	exceed	the	absolute	cap	amount,	sufficient	shares	shall	be	removed	from	the foreign	stock	record	and	the	stock	records	of	the	Company	so	that	the	number	of	shares	entered	therein	does	not	exceed	the	absolute	cap	amount.	Shares	of	equity securities	shall	be	removed	from	the	foreign	stock	record	and	the	stock	records	of	the	Company	in	reverse	chronological	order	based	on	the	date	of	registration	in	the foreign	stock	record	and	the	stock	records	of	the	Company	(subject	to	Article	XIII,	Section	6	of	our	Bylaws,	which	provides	special	rules	applicable	to	equity	securities issued	upon	effectiveness	of	the	Plan	and	consummation	of	the	Merger).	Certificates	for	AAG's	equity	securities	must	bear	a	legend	set	forth	in	our

Certificate	of	Incorporation	stating	that	such	equity	securities	are	subject	to	the	foregoing	restrictions.	Under	our	Bylaws,	it	is	the	duty	of	each	stockholder	who	is	a	non- citizen	to	register	his,	her	or	its	equity	securities	on	our	foreign	stock	record.	In	addition,	our	Bylaws	provide	that	in	the	event	that	non-citizens	shall	own	(beneficially or	of	record)	or	have	voting	control	over	any	equity	securities,	the	voting	rights	of	such	persons	shall	be	subject	to	automatic	suspension	to	the	extent	required	to	ensure that	we	are	in	compliance	with	applicable	provisions	of	law	and	regulations	relating	to	ownership	or	control	of	a	U.S.	air	carrier.	See	AAG's	Certificate	of	Incorporation and	Bylaws,	which	are	filed	at	Exhibits	3.1	and	3.2	hereto.

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

See	Part	I,	Item	1A.	Risk	Factors	–	"AAG's	Certificate	of	Incorporation	and	Bylaws	include	provisions	that	limit	voting	and	acquisition	and	disposition	of	our	equity interests,"	and	"In	order	to	protect	AAG's	NOL	Carryforwards	and	certain	other	tax	attributes,	AAG's	Certificate	of	Incorporation	includes	certain	limitations	on acquisitions	and	dispositions	of	AAG's	Common	Stock,	which	may	limit	the	liquidity	of	our	common	stock."

# ITEM	6.		SELECTED	CONSOLIDATED	FINANCIAL	DATA

# Selected	Consolidated	Financial	Data	of	AAG

The	selected	consolidated	financial	data	presented	below	under	the	captions	"Consolidated	Statements	of	Operations	data"	and	"Consolidated	Balance	Sheet	data" for	the	years	ended	December	31,	2014,	2013	and	2012	and	as	of	December	31,	2014	and	2013	are	derived	from	AAG's	audited	consolidated	financial	statements included	elsewhere	in	this	report.	The	selected	consolidated	financial	data	for	the	years	ended	December	31,	2011	and	2010	and	as	of	December	31,	2012,	2011	and 2010	 are	 derived	 from	AAG's	 audited	 consolidated	 financial	 statements	 not	 included	 in	 this	 report.	The	 selected	 consolidated	 financial	 data	 should	 be	 read	 in conjunction	with	AAG's	consolidated	financial	statements	for	the	respective	periods,	the	related	notes	and	the	related	reports	of	KPMG	LLP	for	2014	and	Ernst	& Young	LLP	for	2010	to	2013,	both	independent	registered	public	accounting	firms.	AAG's	consolidated	financial	data	provided	in	the	tables	below	include	the	results	of US	Airways	Group	for	the	post-Merger	period	from	December	9,	2013	to	December	31,	2013	and	for	the	year	ended	December	31,	2014.

Pursuant	to	the	Plan	and	the	Merger	Agreement,	holders	of	AMR	common	stock	formerly	traded	under	the	symbol	"AAMRQ"	received	shares	of	AAG	Common Stock	principally	over	the	120-day	distribution	period	following	the	Effective	Date.	In	accordance	with	GAAP,	the	2013,	2012,	2011,	and	2010	period	weighted	average shares	and	earnings	(loss)	per	share	calculations	have	been	adjusted	to	retrospectively	reflect	these	distributions,	which	were	each	made	at	the	rate	of	approximately 0.7441	shares	of	AAG	Common	Stock	per	share	of	AAMRQ.	Former	holders	of	AMR	common	stock	as	of	the	Effective	Date	may	in	the	future	receive	additional distributions	of	AAG	Common	Stock	dependent	upon	the	ultimate	distribution	of	shares	of	AAG	Common	Stock	to	holders	of	disputed	claims.	Thus,	the	shares	and related	earnings	per	share	calculations	prior	to	the	Effective	Date	may	change	in	the	future	to	reflect	additional	retrospective	adjustments	for	future	AAG	Common	Stock distributions	to	former	holders	of	AMR	common	stock.

|  |  |  | Year	Ended	December	31, |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2014 | 2013 | 2012 | 2011 | 2010 |
|  |  | (In\tmillions,\texcept\tshare\tand\tper\tshare\tdata) | (In\tmillions,\texcept\tshare\tand\tper\tshare\tdata) | (In\tmillions,\texcept\tshare\tand\tper\tshare\tdata) |  |
| Consolidated\tStatements\tof\tOperations\tdata: |  |  |  |  |  |
| Total\toperating\trevenues | $42,650 | $26,743 | $24,855 | $23,979 | $22,170 |
| Total\toperating\texpenses | 38,401 | 25,344 | 24,707 | 25,016 | 21,808 |
| Operating\tincome\t(loss) | $4,249 | $1,399 | $148 | $(1,037) | $362 |
| Reorganization\titems,\tnet\t(1) | $— | $(2,655) | $(2,208) | $(118) | $— |
| Net\tincome\t(loss) | $2,882 | $(1,834) | $(1,876) | $(1,979) | $(471) |
| Earnings\t(loss)\tper\tcommon\tshare: |  |  |  |  |  |
| Basic | $4.02 | $(6.54) | $(7.52) | $(7.95) | $(1.90) |
| Diluted | $3.93 | $(6.54) | $(7.52) | $(7.95) | $(1.90) |
| Shares\tused\tfor\tcomputation\t(in\tthousands): |  |  |  |  |  |
| Basic | \t 717,456 | \t 280,213 | \t 249,490 | \t 249,000 | \t 247,825 |
| Diluted | \t 734,016 | \t 280,213 | \t 249,490 | \t 249,000 | \t 247,825 |
| Cash\tdividends\tdeclared\tper\tcommon\tshare | $0.20 | $—\t\t\t $—\t\t\t $—\t\t\t $— | $—\t\t\t $—\t\t\t $—\t\t\t $— | $—\t\t\t $—\t\t\t $—\t\t\t $— | $—\t\t\t $—\t\t\t $—\t\t\t $— |
| Consolidated\tBalance\tSheet\tdata\t(at\tend\tof\tperiod): |  |  |  |  |  |
| Total\tassets | $43,771 | $42,278 | $23,510 | $23,848 | $25,088 |
| Long-term\tdebt\tand\tcapital\tleases,\tnet\tof\tcurrent\tmaturities | 16,196 | 15,353 | 7,116 | 6,702 | 9,253 |
| Pension\tand\tpostretirement\tbenefits\t(2) | 7,562 | 5,828 | 6,780 | 9,204 | 7,877 |
| Mandatorily\tconvertible\tpreferred\tstock\tand\tother\tbankruptcy\tsettlement\tobligations | 325 | 5,928 | — | — | — |
| Liabilities\tsubject\tto\tcompromise | — | — | 6,606 | 4,843 | — |
| Stockholders'\tequity\t(deficit) | 2,021 | (2,731) | (7,987) | (7,111) | (3,945) |
| Consolidated\tStatements\tof\tOperations\tdata\texcluding\tspecial\titems\t(3)\t(Unaudited): |  |  |  |  |  |
| Operating\tincome\t(loss)\texcluding\tspecial\titems | $5,073 | $1,935 | $535 | $(238) | $444 |
| Net\tincome\t(loss)\texcluding\tspecial\titems | 4,184 | 1,244 | (130) | (1,062) | (389) |

(1) Reorganization	items	refer	to	revenues,	expenses	(including	professional	fees),	realized	gains	and	losses	and	provisions	for	losses	that	were	realized	or	incurred	as a	direct	result	of	the	Chapter	11	Cases.	See	Note	2	in	Part	II,	Item	8A	to	AAG's	Consolidated	Financial	Statements	for	further	information	on	reorganization items.

(2) American's	 defined	 benefit	 pension	 plans	 were	 frozen	 effective	 November	 1,	 2012	 and	 the	 Pilot	 B	 Plan,	 a	 defined	 contribution	 plan,	 was	 terminated	 on November	30,	2012.	Further,	American	significantly	modified	its	retiree	medical	plans	in	2012	resulting	in	the	recognition	of	a	negative	plan	amendment.	See Note	13	in	Part	II,	Item	8A	to	AAG's	Consolidated	Financial	Statements	for	further	information	on	retirement	benefits,	including	the	financial	impact	of	these plan	changes.

(3) See	reconciliation	of	GAAP	to	non-GAAP	financial	measures	below.

A	number	of	factors	render	AAG's	historical	consolidated	financial	information	not	directly	comparable	to	its	financial	information	for	prior	or	future	periods.	See Part	I,	Item	1A.	Risk	Factors	–	"The	historical	consolidated	financial	information	contained	in	this	report	is	not	directly	comparable	to	our	financial	information	for prior	or	future	periods,"	and	Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	and	the	notes	to	AAG's	Consolidated Financial	Statements	in	Part	II,	Item	8A.

# Reconciliation	of	GAAP	to	Non-GAAP	Financial	Measures

We	are	providing	disclosure	of	the	reconciliation	of	reported	non-GAAP	financial	measures	to	their	comparable	financial	measures	on	a	GAAP	basis.	We	believe that	the	non-GAAP	financial	measures	provide	investors	the	ability	to	measure	financial	performance	excluding	special	items,	which	is	more	indicative	of	our	ongoing performance	and	is	more	comparable	to	measures	reported	by	other	major	airlines.

|  |  | Year	Ended	December	31, | Year	Ended	December	31, |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2014 | 2013 | 2012 | 2011 | 2010 |
|  |  |  | (In\tmillions) |  |  |
| Operating\tincome\t(loss)\t–\tGAAP | $4,249 | $1,399 | $148 | $(1,037) | $362 |
| Operating\tspecial\titems,\tnet\t(1) | 824 | 536 | 387 | 799 | 82 |
| Operating\tincome\t(loss)\texcluding\tspecial\titems | $5,073 | $1,935 | $535 | $(238) | $444 |
| Net\tincome\t(loss)\t–\tGAAP | $2,882 | $(1,834) | $(1,876) | $(1,979) | $(471) |
| Operating\tspecial\titems,\tnet\t(1) | 824 | 536 | 387 | 799 | 82 |
| Nonoperating\tspecial\titems,\tnet\t(2) | 132 | 211 | (280) | — | — |
| Reorganization\titems,\tnet\t(3) | — | 2,655 | 2,208 | 118 | — |
| Income\ttax\tspecial\titems\t(4) | 346 | (324) | (569) | — | — |
| Net\tincome\t(loss)\texcluding\tspecial\titems | $4,184 | $1,244 | $(130) | $(1,062) | $(389) |

(1) Includes	the	following	operating	special	items,	net:

•In	 2014,	 special	 items	 principally	 included	 $818	 million	 of	 Merger	 integration	 expenses	 related	 to	 information	 technology,	 alignment	 of	 labor	 union contracts,	professional	fees,	severance	and	retention,	share-based	compensation,	divestiture	of	London	Heathrow	Slots,	fleet	restructuring,	re-branding	of aircraft	and	airport	facilities,	relocation	and	training.	In	addition,	we	recorded	a	net	charge	of	$81	million	for	bankruptcy	related	items	principally	consisting of	fair	value	adjustments	for	bankruptcy	settlement	obligations,	a	$24	million	charge	due	to	a	new	pilot	labor	contract	at	our	Envoy	regional	subsidiary,	$164 million	in	other	special	charges,	including	an	$81	million	charge	to	revise	prior	estimates	of	certain	aircraft	residual	values,	and	other	spare	parts	asset impairments,	as	well	as	$54	million	in	charges	primarily	relating	to	the	buyout	of	certain	aircraft	leases.	These	charges	were	offset	in	part	by	a	$309	million gain	on	the	sale	of	Slots	at	DCA	and	an	$8	million	gain	on	the	sale	of	certain	spare	parts.

•In	2013,	special	items	included	$449	million	of	primarily	Merger	related	expenses	due	to	the	alignment	of	labor	union	contracts,	professional	fees,	severance, share-based	compensation	and	fees	for	US	Airways	to	exit	the	Star	Alliance	and	its	codeshare	agreement	with	United	Airlines.	In	addition,	we

recorded	a	$107	million	charge	related	to	American's	pilot	long-term	disability	obligation,	a	$45	million	charge	for	workers'	compensation	claims	and	a	$33 million	aircraft	impairment	charge.	These	charges	were	offset	in	part	by	a	$67	million	gain	on	the	sale	of	Slots	at	LaGuardia	Airport	and	a	$31	million special	credit	related	to	a	change	in	accounting	method	resulting	from	the	modification	of	our	AAdvantage	miles	agreement	with	Citibank.

•In	2012,	special	items	consisted	of	$387	million	of	severance	and	related	charges	and	write-off	of	leasehold	improvements	on	aircraft	and	airport	facilities that	were	rejected	in	connection	with	the	Chapter	11	Cases.

•In	2011,	special	items	consisted	primarily	of	$725	million	related	to	the	impairment	of	certain	aircraft	and	gates,	$31	million	of	non-recurring	non-cash charges	related	to	certain	sale/leaseback	transactions	and	a	$43	million	revenue	reduction	as	a	result	of	a	decrease	in	the	breakage	assumption	related	to	the AAdvantage	frequent	flyer	liability.

•In	2010,	special	items	consisted	primarily	of	the	impairment	of	certain	route	authorities	in	Latin	America	and	losses	on	Venezuelan	currency	remeasurement.

(2) Includes	the	following	nonoperating	special	items,	net:

•In	2014,	special	items	consisted	principally	of	$43	million	for	Venezuelan	foreign	currency	losses,	$56	million	of	early	debt	extinguishment	costs	related	to the	prepayment	of	7.50%	senior	secured	notes	and	other	indebtedness	and	$33	million	of	non-cash	interest	accretion	on	bankruptcy	settlement	obligations. See	Part	II,	Item	7A.	Quantitative	and	Qualitative	Disclosures	About	Market	Risk	for	further	discussion	of	our	cash	held	in	Venezuelan	bolivars.

•In	2013,	special	items	consisted	of	interest	charges	of	$138	million	primarily	to	recognize	post-petition	interest	expense	on	unsecured	obligations	pursuant	to the	Plan	and	penalty	interest	related	to	10.5%	secured	notes	and	7.50%	senior	secured	notes,	a	$54	million	charge	related	to	the	premium	on	tender	for existing	enhanced	equipment	trust	certificates	(EETC)	financings	and	the	write-off	of	debt	issuance	costs	and	$19	million	in	charges	related	to	the	repayment of	existing	EETC	financings.

•In	2012,	special	items	consisted	of	a	$280	million	benefit	resulting	from	a	settlement	of	a	commercial	dispute.

(3) Includes	the	following	reorganization	items,	net	resulting	from	the	filing	of	voluntary	petitions	for	reorganization	under	Chapter	11	by	certain	of	AMR's	direct and	indirect	U.S.	subsidiaries	on	November	29,	2011:

•In	2013,	special	items	consisted	primarily	of	a	$1.7	billion	deemed	claim	to	employees	pursuant	to	the	Plan	as	well	as	professional	fees	and	estimated allowed	claim	amounts.

•In	2012	and	2011	special	items	consisted	primarily	of	estimated	claims	associated	with	restructuring	the	financing	arrangements	for	certain	debt,	aircraft leases,	and	rejecting	certain	special	facility	revenue	bonds,	as	well	as	professional	fees.

(4) Includes	the	following	income	tax	special	items:

•In	2014,	special	items	consisted	of	$346	million.	During	2014,	we	sold	our	portfolio	of	fuel	hedging	contracts	that	were	scheduled	to	settle	on	or	after June	30,	2014.	In	connection	with	this	sale,	we	recorded	a	special	non-cash	tax	provision	of	$330	million	in	the	second	quarter	of	2014	that	reversed	the	non- cash	tax	provision	which	was	recorded	in	other	comprehensive	income	(OCI),	a	subset	of	stockholders'	equity,	principally	in	2009.	This	provision	represents the	tax	effect	associated	with	gains	recorded	in	OCI	principally	in	2009	due	to	a	net	increase	in	the	fair	value	of	our	fuel	hedging	contracts.	In	accordance with	GAAP,	we	retained	the	$330	million	tax	provision	in	OCI	until	the	last	contract	was	settled	or	terminated.	In	addition,	we	recorded	a	special	$16	million non-cash	deferred	income	tax	provision	related	to	certain	indefinite-lived	intangible	assets.

•In	2013,	special	items	consisted	of	a	$538	million	non-cash	income	tax	benefit	resulting	from	gains	recorded	in	OCI,	offset	in	part	by	a	$214	million	non- cash	charge	due	to	additional	valuation	allowance	required	to	reduce	deferred	tax	assets.

•In	2012,	special	items	consisted	of	a	$569	million	non-cash	income	tax	benefit	resulting	from	gains	recorded	in	OCI.

# Selected	Consolidated	Financial	Data	of	American

The	selected	consolidated	financial	data	presented	below	under	the	captions	"Consolidated	Statements	of	Operations	data"	and	"Consolidated	Balance	Sheet	data" for	the	years	ended	December	31,	2014,	2013	and	2012	and	as	of	December	31,	2014	and	2013	are	derived	from	American's	audited	consolidated	financial	statements included	elsewhere	in	this	report.	The	selected	consolidated	financial	data	for	the	years	ended	December	31,	2011	and	2010	and	as	of	December	31,	2012,	2011	and 2010	are	derived	from	American's	audited	consolidated	financial	statements	not	included	in	this	report.	The	selected	consolidated	financial	data	should	be	read	in conjunction	with	American's	consolidated	financial	statements	for	the	respective	periods,	the	related	notes	and	the	related	reports	of	KPMG	LLP	for	2014	and	Ernst	& Young	LLP	for	2010	to	2013,	both	independent	registered	public	accounting	firms.

|  | 2014 | 2013 | 2012 | 2011 | 2010 |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | (In\tmillions) |  |  |
| Consolidated\tStatements\tof\tOperations\tdata\t(1): |  |  |  |  |  |
| Total\toperating\trevenues | $27,141 | $25,760 | $24,825 | $23,957 | $22,151 |
| Total\toperating\texpenses | 24,803 | 24,226 | 24,743 | 25,111 | 21,945 |
| Operating\tincome\t(loss) | $2,338 | $1,534 | $82 | $(1,154) | $206 |
| Reorganization\titems,\tnet\t(2) | $— | $(2,640) | $(2,179) | $(116) | $— |
| Net\tincome\t(loss) | $1,310 | $(1,526) | $(1,926) | $(1,965) | $(469) |
| Consolidated\tBalance\tSheet\tdata\t(at\tend\tof\tperiod): |  |  |  |  |  |
| Total\tassets | $26,292 | $25,612 | $23,264 | $23,589 | $22,422 |
| Long-term\tdebt\tand\tcapital\tleases,\tnet\tof\tcurrent\tmaturities | 10,004 | 9,852 | 7,143 | 6,729 | 6,592 |
| Pension\tand\tpostretirement\tbenefits\t(3) | 7,400 | 5,693 | 6,780 | 9,204 | 7,876 |
| Bankruptcy\tsettlement\tobligations | 325 | 5,424 | — | — | — |
| Liabilities\tsubject\tto\tcompromise | — | — | 5,694 | 3,952 | — |
| Stockholder's\tdeficit | (5,572) | (9,660) | (9,962) | (9,037) | (6,336) |

# (1) Includes	the	following	special	items:

•In	2014,	total	special	items	were	$974	million	and	consisted	principally	of	$532	million	of	merger	integration	expenses	related	to	information	technology, alignment	of	 labor	union	contracts,	professional	fees,	severance	and	retention,	share-based	compensation,	divestiture	of	London	Heathrow	Slots,	fleet restructuring,	re-branding	of	aircraft	and	airport	facilities,	relocation	and	training,	a	$328	million	non-cash	tax	charge	relating	to	the	sale	of	American's portfolio	of	fuel	hedging	contracts,	$181	million	in	other	special	charges,	including	an	$81	million	charge	to	revise	prior	estimates	of	certain	aircraft	residual values,	and	other	spare	parts	asset	impairments,	$60	million	for	bankruptcy	related	items,	$48	million	of	early	debt	extinguishment	costs,	$44	million	in charges	primarily	relating	to	the	buyout	of	certain	aircraft	leases,	$43	million	for	Venezuelan	foreign	currency	losses,	$29	million	of	non-cash	interest accretion	on	bankruptcy	settlement	obligations	and	a	$14	million	non-cash	deferred	income	tax	provision	related	to	certain	indefinite-lived	intangible	assets. These	charges	were	offset	in	part	by	a	$305	million	gain	on	the	sale	of	Slots	at	DCA.

•In	2013,	total	special	items	were	$48	million,	excluding	reorganization	items,	net	and	consisted	of	a	$214	million	non-cash	tax	charge	due	to	additional valuation	allowance	required	to	reduce	deferred	tax	assets,	$166	million	of	primarily	merger	related	expenses	due	to	the	alignment	of	labor	union	contracts,

professional	fees,	severance	and	share-based	compensation,	a	$107	million	charge	related	to	American's	pilot	long-term	disability	obligation,	a	$54	million charge	related	to	the	premium	on	tender	for	existing	EETC	financings	and	the	write-off	of	debt	issuance	costs,	$48	million	of	interest	charges	primarily	to recognize	post-petition	interest	expense	on	unsecured	obligations	pursuant	to	the	Plan,	a	$43	million	charge	for	workers'	compensation	claims,	a	$33	million aircraft	impairment	charge	and	$19	million	in	charges	related	to	the	repayment	of	existing	EETC	financings.	These	charges	were	offset	in	part	by	a	$538 million	non-cash	income	tax	benefit	resulting	from	gains	recorded	in	OCI,	a	$67	million	gain	on	the	sale	of	Slots	at	LaGuardia	Airport	and	a	$31	million special	credit	related	to	a	change	in	accounting	method	resulting	from	the	modification	of	American's	AAdvantage	miles	agreement	with	Citibank.

•In	2012,	total	special	items	were	$463	million,	excluding	reorganization	items,	net	and	consisted	primarily	of	a	$569	million	non-cash	income	tax	benefit resulting	from	gains	recorded	in	OCI	and	a	$280	million	benefit	from	a	settlement	of	a	commercial	dispute,	offset	in	part	by	$386	million	of	severance	and related	charges	and	write-off	of	leasehold	improvements	on	aircraft	and	airport	facilities	that	were	rejected	in	connection	with	the	Chapter	11	Cases.

•In	2011,	total	special	items	were	$799	million,	excluding	reorganization	items,	net	and	consisted	primarily	of	$725	million	related	to	the	impairment	of certain	aircraft	and	gates,	$31	million	of	non-recurring	non-cash	charges	related	to	certain	sale/leaseback	transactions	and	a	$43	million	revenue	reduction	as a	result	of	a	decrease	in	the	breakage	assumption	related	to	the	AAdvantage	frequent	flyer	liability.

•In	2010,	total	special	items	were	$81	million	and	primarily	included	the	impairment	of	certain	route	authorities	in	Latin	America	and	losses	on	Venezuelan currency	remeasurement.

(2) Reorganization	items,	net	refer	to	revenues,	expenses	(including	professional	fees),	realized	gains	and	losses	and	provisions	for	losses	that	are	realized	or	incurred as	 a	 direct	 result	 of	 the	 Chapter	 11	 Cases.	 See	 Note	 2	 in	 Part	 II,	 Item	 8B	 to	American's	 Consolidated	 Financial	 Statements	 for	 further	 information	 on reorganization	items.

(3) American's	 defined	 benefit	 pension	 plans	 were	 frozen	 effective	 November	 1,	 2012	 and	 the	 Pilot	 B	 Plan,	 a	 defined	 contribution	 plan,	 was	 terminated	 on November	30,	2012.	Further,	American	significantly	modified	its	retiree	medical	plans	in	2012	resulting	in	the	recognition	of	a	negative	plan	amendment.	See Note	10	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for	further	information	on	retirement	benefits,	including	the	financial	impact	of	these plan	changes.

A	number	of	factors	render	American's	historical	consolidated	financial	information	not	directly	comparable	to	its	financial	information	for	prior	or	future	periods. See	Part	I,	Item	1A.	Risk	Factors	–	"The	historical	consolidated	financial	information	contained	in	this	report	is	not	directly	comparable	to	our	financial	information	for prior	or	future	periods,"	and	Part	II,	Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	and	the	notes	to	American's Consolidated	Financial	Statements	in	Part	II,	Item	8B.

# ITEM	7.	MANAGEMENT'S	DISCUSSION	AND	ANALYSIS	OF	FINANCIAL	CONDITION	AND	RESULTS	OF	OPERATIONS

# American	Airlines	Group

As	previously	discussed,	the	Merger	was	consummated	on	December	9,	2013.	Accordingly,	our	consolidated	results	include	US	Airways	Group	for	the	full	year ended	December	31,	2014.	For	2013,	our	consolidated	results	include	US	Airways	Group	only	for	the	23	days	ended	December	31,	2013.

We	continue	to	move	toward	operating	under	the	single	brand	name	of	"American	Airlines"	through	our	mainline	operating	subsidiaries,	American	and	US	Airways. Together	with	our	wholly-owned	regional	airline	subsidiaries	and	third-party	regional	carriers	operating	as	American	Eagle	and	US	Airways	Express,	our	airlines operate	an	average	of	nearly	6,700	flights	per	day	to	339	destinations	in	54	countries	from	our	hubs	in	Charlotte,	Chicago,	Dallas/Fort	Worth,	Los	Angeles,	Miami,	New York,	 Philadelphia,	 Phoenix	 and	 Washington,	 D.C.	 In	 2014,	 we	 had	 approximately	 197	 million	 passengers	 boarding	 our	 mainline	 and	 regional	 flights.	As	 of December	31,	2014,	we	operated	983	mainline	jets	and	were	supported	by	our	regional	airline	subsidiaries	and	third-party	regional	carriers,	which	operated	an	additional 566	regional	aircraft.	We	have	made	substantial	progress	towards	integrating	the	operations	of	our	mainline	operating	subsidiaries	and	towards	obtaining	a	single operating	certificate,	which	we	expect	to	obtain	in	2015.	The	following	are	additional	significant	integration	accomplishments	in	2014:

•	 Completed	airport	co-locations	for	75%	of	the	airports	where	we	have	joint	operations.

•Launched	a	US	Airways	codeshare	with	British	Airways,	Iberia,	Air	Berlin	and	Finnair,	fully	integrating	it	into	American's	Trans-Atlantic	Joint	Business Agreement	with	British	Airways,	Iberia	and	Finnair.

•	 Reached	 a	 new	 five-year joint	 collective	 bargaining	 agreement	 with the	Association	 of	 Professional	 Flight	Attendants	 for the	 airlines'	 combined	 flight attendants.

•	 Reached	a	new	five-year	collective	bargaining	agreement	with	the	Allied	Pilots	Association	for	the	airlines'	combined	pilots	(ratified	in	January	2015).

•	 Broke	ground	on	the	state-of-the-art	Robert	W.	Baker	Integrated	Operations	Center.

See	Part	I,	Item	1.	Business	–	"Chapter	11	Reorganization"	and	"Merger"	for	more	information	related	to	our	emergence	from	Chapter	11	and	Merger.

# Year	in	Review

Our	2014	GAAP	results	are	not	comparable	to	the	GAAP	results	for	2013	as	a	result	of	the	Merger,	which	closed	on	December	9,	2013.	Additionally,	US	Airways Group	applied	acquisition	accounting	as	of	December	9,	2013	and	its	financial	statements	after	December	9,	2013	are	deemed	not	comparable	to	its	financial	statements for	periods	prior	to	the	Merger.

To	provide	a	basis	for	comparison	to	prior	year	results,	we	have	presented	in	the	table	below	certain	"combined"	2013	financial	data	which	includes	the	financial results	of	AAG	and	US	Airways	Group,	each	on	a	standalone	basis.	While	this	is	a	non-GAAP	measure,	management	believes	this	presentation	provides	a	more meaningful	year-over-year	comparison.

|  | Year	Ended |  | Year	Ended	December	31,	2013 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | December\t31, |  | US\tAirways |  | Percent |
|  | 2014 | AAG | Group | Combined\t(3) | Change\t(1) |
|  |  |  | (In\tmillions) |  |  |
| Mainline\tand\tregional\tpassenger\trevenues | $37,124 | $22,521 | $13,021 | $35,542 | 4.5 |
| Total\toperating\trevenues | 42,650 | \t 25,812 | 14,607 | 40,419 | 5.5 |
| Mainline\tand\tregional\taircraft\tfuel\tand\trelated\ttaxes | 12,601 | 8,684 | 4,533 | 13,217 | (4.7) |
| Total\toperating\texpenses | 38,401 | \t 24,236 | 13,604 | 37,840 | 1.5 |
| Operating\tincome | 4,249 | 1,576 | 1,003 | 2,579 | 64.8 |
| Net\tincome\t(loss) | 2,882 | (1,638) | 392 | (1,233) | nm |
| Special\titems: |  |  |  |  |  |
| Operating\tspecial\tcharges,\tnet | 824 | 259 | 403 | 662 |  |
| Nonoperating\tspecial\tcharges,\tnet | 132 | 211 | 20 | 218 |  |
| Income\ttax\tspecial\tcharges\t(credits),\tnet | 346 | (324) | (29) | (353) |  |
| Reorganization\titems,\tnet | — | 2,655 | — | 2,655 |  |
| Total\tnet\tspecial\tcharges\t(2) | 1,302 | 2,801 | 394 | 3,182 |  |

(1) Percent	change	is	a	comparison	of	the	combined	results.

(2) AAG's	2014	results	were	significantly	impacted	by	net	special	charges	of	$1.3	billion.	Significant	components	of	net	special	charges	include	$818	million	of merger	integration	expenses,	a	$330	million	non-cash	special	income	tax	charge	relating	to	the	sale	of	our	portfolio	of	fuel	hedging	contracts,	and	$132	million	of nonoperating	special	charges	primarily	related	to	debt	extinguishments,	bankruptcy	obligations,	and	Venezuela	foreign	currency	losses.	See	Part	II,	Item	7. Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	–	"AAG's	Results	of	Operations"	of	this	report	for	more	information	on net	special	items.

(3) Combined	results	exclude	$13	million	of	US	Airways	Group	special	nonoperating	other,	net	expense,	which	was	eliminated	in	consolidation	with	AAG.	This expense	represented	a	non-cash	mark-to-market	fair	value	adjustment	for	US	Airways	Group's	7.25%	convertible	senior	notes	that	were	convertible	into	shares	of AAG	common	stock	subsequent	to	the	Merger.

Driven	by	growth	in	revenues	resulting	from	strong	demand	for	air	travel,	we	realized	operating	income	of	$4.2	billion	and	net	income	of	$2.9	billion	in	2014.	This compares	to	combined	operating	income	of	$2.6	billion

and	a	combined	net	loss	of	$1.2	billion	for	2013.	Our	2014	net	income	included	net	operating	and	total	net	special	charges	of	$824	million	and	$1.3	billion,	respectively. Excluding	the	effects	of	net	operating	special	charges,	we	recognized	operating	income	of	$5.1	billion	in	2014,	which	is	a	$1.8	billion,	or	57%,	improvement	as compared	to	combined	operating	income	of	$3.2	billion	excluding	net	operating	special	charges	in	2013.	Excluding	the	effects	of	total	net	special	charges,	we	recognized net	income	of	$4.2	billion	in	2014,	which	is	a	$2.2	billion,	or	115%,	improvement	as	compared	to	combined	net	income	of	$1.9	billion	excluding	total	net	special charges	in	2013.	See	Part	II,	Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	–	"AAG's	Results	of	Operations"	of	this report	for	more	information	on	net	special	charges.

# Revenue

In	2014,	we	reported	operating	revenues	of	$42.7	billion.	Mainline	and	regional	passenger	revenues	were	$37.1	billion,	an	increase	of	$1.6	billion,	or	4.5%,	as compared	to	the	2013	combined	mainline	and	regional	passenger	revenues	of	$35.5	billion.	The	growth	in	revenues	was	driven	by	a	3.3%	increase	in	yield	and	1.1% increase	in	revenue	passenger	miles	as	total	capacity	increased	2.2%,	as	compared	to	2013.	Our	combined	mainline	and	regional	passenger	revenue	per	available	seat mile	(PRASM)	was	13.97	cents	in	2014,	a	2.2%	increase,	as	compared	to	a	combined	13.67	cents	in	2013.

Mainline	and	regional	fuel	expense	was	$12.6	billion	in	2014,	which	was	$616	million,	or	4.7%,	lower	as	compared	to	the	combined	mainline	and	regional	fuel expense	in	2013.	This	decrease	was	driven	by	a	5.5%	decrease	in	the	average	price	per	gallon	to	$2.91	in	2014	from	a	combined	average	price	per	gallon	of	$3.08	in 2013.	This	decrease	was	offset	in	part	by	a	0.9%	increase	in	consumption.

# Capacity

Total	system	capacity	for	the	combined	company	increased	2.2%	in	2014	as	compared	to	the	combined	2013	period,	primarily	due	to	more	active	aircraft	and	larger gauge	aircraft	replacing	smaller	legacy	aircraft.

# Cost	Control

We	remain	committed	to	actively	managing	and	maintaining	a	low	cost	structure,	which	we	believe	is	necessary	in	an	industry	whose	economic	prospects	are	heavily dependent	upon	two	variables	we	cannot	control:	the	health	of	the	economy	and	the	price	of	fuel.	Our	2014	mainline	cost	per	available	seat	mile	(CASM)	excluding special	items	and	fuel	was	8.63	cents.	When	compared	to	the	2013	combined	results,	mainline	CASM	excluding	special	items	and	fuel	increased	2.0%	in	2014.	The increase	was	primarily	due	to	higher	salaries,	wages	and	benefits	driven	by	Merger-related	labor	contracts	and	higher	maintenance	costs	driven	by	an	increase	in	the	rate per	engine	overhaul.	See	below	for	the	"Reconciliation	of	GAAP	Financial	Information	to	Non-GAAP	Financial	Information."

During	2014,	we	worked	to	enhance	our	customers'	experience	by	continuing	our	fleet	renewal	program,	under	which	we	expect	to	achieve	one	of	the	most	modern and	fuel-efficient	fleets	in	the	industry.	During	2014,

we	took	delivery	of	82	mainline	aircraft	and	retired	69	older	legacy	mainline	aircraft.	Additionally,	in	the	fourth	quarter	of	2014,	we	announced	$2.0	billion	in	planned customer	improvements,	including	new	seats	from	nose	to	tail	on	several	aircraft	types	and	fully	lie-flat	seats	on	our	long-haul	international	fleet;	satellite-based	internet access	providing	connectivity	for	international	flights;	a	refreshed	and	modern	design	for	Admirals	Club	lounges	worldwide;	onboard	power	on	new	aircraft;	and improved	and	updated	kiosks	to	expedite	airport	check-in.

# Liquidity	Position

As	of	December	31,	2014,	AAG's	total	cash,	short-term	investments	and	restricted	cash	and	short-term	investments	were	$8.1	billion,	of	which	$774	million	was restricted.	We	also	had	a	$1.8	billion	undrawn	revolving	line	of	credit	facility.

|  | December	31,<br>2014 | December	31,<br>2013 |
| :--- | :--- | :--- |
|  | (In\tmillions) |  |
| Cash\tand\tshort-term\tinvestments\t(1) | $7,303 | $9,251 |
| Restricted\tcash\tand\tshort-term\tinvestments\t(2) | 774 | 1,035 |
| Total\tcash,\tshort-term\tinvestments\tand\trestricted\tcash\tand\tshort-term\tinvestments | $8,077 | $10,286 |

(1) As	of	December	31,	2014,	approximately	$656	million	of	our	unrestricted	cash	and	short-term	investment	balance	was	held	in	Venezuelan	bolivars.	This	balance includes	approximately	$621	million	valued	at	6.3	bolivars	and	approximately	$35	million	valued	at	12.0	bolivars,	with	the	rate	depending	on	the	date	we submitted	our	repatriation	request	to	the	Venezuelan	government.	These	rates	are	materially	more	favorable	than	the	exchange	rates	currently	prevailing	for	other transactions	conducted	outside	of	the	Venezuelan	government's	currency	exchange	system	that	we	participate	in.	Our	cash	balance	held	in	Venezuelan	bolivars decreased	$54	million	from	the	December	31,	2013	balance	of	$710	million	primarily	due	to	$88	million	in	cash	repatriations	and	$30	million	in	foreign	currency losses	as	described	below,	partially	offset	by	additional	cash	proceeds	from	ticket	sales	in	early	2014.	In	the	second	and	third	quarters	of	2014,	we	repatriated	$65 million	including	$31	million	valued	at	6.3	bolivars	to	the	dollar	and	$34	million	valued	at	10.6	bolivars	to	the	dollar.	In	the	fourth	quarter	of	2014,	we	incurred an	$11	million	foreign	currency	loss	related	to	the	receipt	of	$23	million	at	a	rate	of	6.3	bolivars	to	the	dollar	for	one	of	our	2012	repatriation	requests	originally valued	at	a	rate	of	4.3	bolivars	to	the	dollar.	Accordingly,	we	revalued	our	remaining

pending	2012	repatriation	requests	from	4.3	to	6.3	bolivars	to	the	dollar	resulting	in	additional	foreign	currency	losses	of	$19	million.	In	total,	we	recognized	a $30	million	special	charge	for	these	foreign	currency	losses	in	the	fourth	quarter	of	2014.	During	2014,	we	significantly	reduced	capacity	in	this	market	and	we are	no	longer	accepting	bolivars	as	payment	for	airline	tickets.	We	are	continuing	to	work	with	Venezuelan	authorities	regarding	the	timing	and	exchange	rate applicable	to	the	repatriation	of	funds	held	in	local	currency.	We	are	monitoring	this	situation	closely	and	continue	to	evaluate	our	holdings	of	Venezuelan bolivars	for	additional	foreign	currency	losses,	which	could	be	material,	particularly	in	light	of	the	uncertainty	posed	by	the	new	foreign	exchange	regulations announced	in	mid-February	2015	and	the	continued	deterioration	of	economic	conditions	in	Venezuela.	See	Part	I,	Item	1A.	Risk	Factors	–	"We	operate	a	global business	with	international	operations	that	are	subject	to	economic	and	political	instability	and	have	been,	and	in	the	future	may	continue	to	be,	adversely affected	by	numerous	events,	circumstances	or	government	actions	beyond	our	control"	for	additional	discussion	of	this	and	other	currency	risks.

(2) Restricted	cash	and	investments	primarily	include	cash	collateral	to	secure	workers'	compensation	claims.

In	2014,	we	utilized	cash	generated	from	operations	to	pay	down	certain	higher	rate	debt	and	lease	obligations,	to	make	supplemental	contributions	to	our	pension plans	and	to	return	value	to	our	shareholders	by	reducing	our	diluted	share	count	through	the	repurchase	program	and	paying	our	first	cash	dividend	since	1980.	We declared	cash	dividends	of	$0.10	per	share	for	shareholders	of	record	on	August	4,	2014	and	have	continued	to	declare	a	dividend	of	$0.10	per	share	in	each	quarter thereafter.

These	cash	outflows	were	offset	in	part	by	certain	new	debt	issuances	to	strengthen	our	liquidity	position.	Further	information	on	our	significant	transactions	affecting our	liquidity	position	in	2014	is	as	follows:

# Debt	Repayments

•	 We	prepaid	$1.0	billion	of	American's	7.50%	senior	secured	notes.

•	 We	prepaid	approximately	$1.2	billion	of	various	high	cost	aircraft	debt	and	lease	obligations.	Of	this	amount,	$155	million	was	a	reduction	of	debt	on	our balance	sheet.	The	remaining	portion	of	these	obligations	was	accounted	for	as	an	operating	lease.

•	 We	prepaid	or	repurchased	$646	million	of	obligations	associated	with	special	facility	revenue	bonds	issued	by	municipalities	to	build	or	improve	certain airport	and	maintenance	facilities.	Of	this	amount,	$366	million	was	a	reduction	of	debt	on	our	balance	sheet.	The	remaining	portion	of	these	obligations	was accounted	for	as	an	operating	lease.

# Reductions	in	Diluted	Share	Count

•In	2014,	we	repurchased	23.4	million	shares	of	AAG	Common	Stock	for	$1.0	billion,	completing	the	$1.0	billion	share	repurchase	program	authorized	by	our Board	of	Directors	on	July	23,	2014.	In	January	2015,	we	announced	that	our	Board	of	Directors	authorized	a	new	$2.0	billion	share	repurchase	program	to	be completed	by	the	end	of	2016.

•In	2014,	we	withheld	approximately	9	million	shares	of	AAG	Common	Stock	and	paid	approximately	$325	million	in	satisfaction	of	certain	tax	withholding obligations	associated	with	distributions	under	the	Plan	and	employee	equity	awards.

•	 We	redeemed	US	Airways	Group's	7.25%	convertible	notes	for	$175	million	in	cash	in	lieu	of	issuing	4	million	shares	of	AAG	Common	Stock.

# Pension	Prefunding

•In	2014,	we	made	$639	million	in	supplemental	contributions	to	fund	our	pension	plans.	These	contributions	are	above	and	beyond	the	$171	million	aggregate amount	of	minimum	required	contributions	made	in	2014.

# New	Debt	Issuances

•In	September	2014,	AAG	issued	$750	million	aggregate	principal	amount	of	5.50%	senior	notes	due	2019	(the	5.50%	senior	notes).	Also	in	September	2014, American	issued	$957	million	in	equipment	notes	related	to	the	2014-1	Enhanced	Equipment	Trust	Certificates	to	finance	unencumbered	aircraft.

•In	October	2014,	American	borrowed	$750	million	under	a	new	term	loan	facility	due	in	2021	and	arranged	a	$400	million	revolving	credit	facility	due	in 2019.	American	also	increased	its	existing	revolving	credit	facility	from	$1.0	billion	to	$1.4	billion	and	extended	its	maturity	date	from	2018	to	2019.

We	have	taken	significant	actions	to	restore	our	competitiveness	and	to	complete	our	integration.	Although	it	is	difficult	to	predict	the	price	of	oil	or	the	strength	of the	economy,	we	believe	that	our	2014	financial	results	are	evidence	of	the	substantial	progress	we	have	made	and	can	continue	to	build	on.

# Reconciliation	of	GAAP	Financial	Information	to	Non-GAAP	Financial	Information

We	believe	that	the	presentation	of	mainline	CASM	excluding	fuel	is	useful	to	investors	as	both	the	cost	and	availability	of	fuel	are	subject	to	many	economic	and political	factors	beyond	our	control,	and	the	exclusion	of	special	items	provides	investors	the	ability	to	measure	financial	performance	in	a	way	that	is	more	indicative	of our	ongoing	performance	and	is	more	comparable	to	measures	reported	by	other	major	airlines.	Management	uses	mainline	CASM	excluding	special	items	and	fuel	to evaluate	our	operating	performance.	Amounts	may	not	recalculate	due	to	rounding.

|  |  |  | Year	Ended	December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Year\tEnded\nDecember\t31,\t2014 | AAG | US\tAirways\nGroup | Combined |
|  |  | (In\tmillions,\texcept\tper\tASM\tamounts) | (In\tmillions,\texcept\tper\tASM\tamounts) |  |
| Total\toperating\texpenses | $38,401 | $24,236 | $13,604 | $37,840 |
| Less:\tRegional\texpenses: |  |  |  |  |
| Fuel | (2,009) | (1,056) | (1,052) | (2,108) |
| Other | (4,507) | (2,056) | (2,253) | (4,309) |
| Total\tmainline\toperating\texpenses | 31,885 | 21,124 | 10,299 | 31,423 |
| Less:\tSpecial\titems,\tnet | (800) | (282) | (415) | (697) |
| Mainline\toperating\texpenses,\texcluding\tspecial\titems | 31,085 | 20,842 | 9,884 | 30,726 |
| Less:\tAircraft\tfuel\tand\trelated\ttaxes | (10,592) | (7,628) | (3,481) | (11,109) |
| Mainline\toperating\texpenses,\texcluding\tspecial\titems\tand\tfuel | $20,493 | $13,214 | $6,403 | $19,617 |
| Available\tSeat\tMiles\t(ASM) | 237,522 | \t 154,499 | 77,374 | \t 231,873 |
| (In\tcents) |  |  |  |  |
| Mainline\toperating\texpenses\tper\tASM | $13.42 |  |  | $13.55 |
| Less:\tSpecial\titems,\tnet\tper\tASM | (0.34) |  |  | (0.30) |
| Mainline\toperating\texpenses\tper\tASM,\texcluding\tspecial\titems | 13.09 |  |  | 13.25 |
| Less:\tAircraft\tfuel\tand\trelated\ttaxes\tper\tASM | (4.46) |  |  | (4.79) |
| Mainline\toperating\texpenses\tper\tASM,\texcluding\tspecial\titems\tand\tfuel | $8.63 |  |  | $8.46 |

# AAG's	Results	of	Operations

In	2014,	we	realized	operating	income	of	$4.2	billion	and	net	income	of	$2.9	million.	Our	2014	net	income	included	net	special	operating	charges	of	$824	million and	total	net	special	charges	of	$1.3	billion.	Excluding	the	effects	of	these	special	charges,	we	realized	operating	income	of	$5.1	billion	and	net	income	of	$4.2	billion.

We	completed	the	Merger	on	December	9,	2013.	Under	GAAP,	AAG's	results	do	not	include	the	financial	results	of	US	Airways	Group	prior	to	the	closing	of	the Merger.	Accordingly,	our	2014	period	GAAP	results	are	not	comparable	to	the	GAAP	results	for	the	2013	or	2012	periods	as	those	periods	exclude	the	results	of	US Airways	Group	except	for	the	23	day	post-Merger	period	from	December	9,	2013	to	December	31,	2013.

When	compared	to	the	combined	separate	company	results	of	AAG	and	US	Airways	Group	for	2013,	our	2014	net	income	excluding	net	special	charges	improved	by $2.2	billion.	In	2013,	on	a	standalone	basis,	AAG	reported	a	net	loss	of	$1.6	billion	and	US	Airways	Group	reported	net	income	of	$392	million.	Excluding	the	effects	of net	special	charges,	AAG	and	US	Airways	Group	reported	2013	net	income	of	$1.2	billion	and	$786	million,	respectively.

When	compared	to	the	combined	separate	company	results	of	AAG	and	US	Airways	Group	for	2012,	our	2013	combined	net	income	excluding	net	special	charges improved	by	$1.5	billion.	In	2012,	on	a	standalone	basis,	AAG	reported	a	net	loss	of	$1.9	billion	and	US	Airways	Group	reported	net	income	of	$637	million.	Excluding the	effects	of	net	special	charges,	AAG	reported	a	2012	net	loss	of	$130	million	and	US	Airways	Group	reported	net	income	of	$537	million.

The	components	of	net	special	items	in	our	accompanying	consolidated	statements	of	operations	are	as	follows	(in	millions):

|  | Year	Ended	December	31, | Year	Ended	December	31, | Year	Ended	December	31, |
| :--- | :--- | :--- | :--- |
|  | 2014 | 2013 | 2012 |
| Other\trevenue\tspecial\titem,\tnet\t(1) | $— | $(31) | $— |
| Mainline\toperating\tspecial\titems,\tnet\t(2) | 800 | 559 | 386 |
| Regional\toperating\tspecial\titems,\tnet | 24 | 8 | 1 |
| Nonoperating\tspecial\titems,\tnet\t(3) | 132 | 211 | (280) |
| Reorganization\titems,\tnet\t(4) | — | \t 2,655 | \t 2,208 |
| Income\ttax\tspecial\titems,\tnet\t(5) | 346 | (324) | (569) |
| Total | $1,302 | $3,078 | $1,746 |

(1) In	2013,	other	revenue	special	item,	net	included	a	credit	to	other	revenues	related	to	a	change	in	accounting	method	resulting	from	the	modification	of	AAG's AAdvantage	miles	agreement	with	Citibank.

(2) In	2014,	mainline	operating	special	items,	net	included	$810	million	of	Merger	integration	expenses	related	to	information	technology,	alignment	of	labor	union contracts,	professional	fees,	severance	and	retention,	share-based	compensation,	divestiture	of	London	Heathrow	Slots,	fleet	restructuring,	re-branding	of	aircraft and	airport	facilities,	relocation	and	training.	In	addition,	we	recorded	a	net	charge	of	$81	million	for	bankruptcy	related	items	principally	consisting	of	fair	value adjustments	for	bankruptcy	settlement	obligations,	$164	million	in	other	special	charges,	including	an	$81	million	charge	to	revise	prior	estimates	of	certain aircraft	residual	values,	and	other	spare	parts	asset	impairments,	as	well	as	$54	million	in	charges	primarily	relating	to	the	buyout	of	certain	aircraft	leases.	These charges	were	offset	in	part	by	a	$309	million	gain	on	the	sale	of	Slots	at	DCA.

In	2013,	mainline	operating	special	 items,	net	 included	$443	million	of	primarily	Merger	related	expenses	due	 to	 the	alignment	of	 labor	union	contracts, professional	fees,	severance,	share-based	compensation	and	fees	for	US	Airways	to	exit	the	Star	Alliance	and	its	codeshare	agreement	with	United	Airlines.	In addition,	we	recorded	a	$107	million	charge	related	to	American's	pilot	long-term	disability	obligation,	a	$43	million

charge	for	workers'	compensation	claims	and	a	$33	million	aircraft	impairment	charge.	These	charges	were	offset	in	part	by	a	$67	million	gain	on	the	sale	of	Slots at	LaGuardia	Airport.

In	2012,	mainline	operating	special	items,	net	consisted	of	$386	million	of	severance	and	related	charges	and	write-off	of	leasehold	improvements	on	aircraft	and airport	facilities	that	were	rejected	in	connection	with	the	Chapter	11	Cases.

(3) In	2014,	nonoperating	special	items,	net	consisted	principally	of	$43	million	for	Venezuelan	foreign	currency	losses,	$56	million	of	early	debt	extinguishment costs	related	to	the	prepayment	of	our	7.50%	senior	secured	notes	and	other	indebtedness	and	$33	million	of	non-cash	interest	accretion	on	bankruptcy	settlement obligations.	See	Part	II,	Item	7A.	Quantitative	and	Qualitative	Disclosures	About	Market	Risk	for	further	discussion	of	our	cash	held	in	Venezuelan	bolivars.

In	 2013,	 nonoperating	 special	 items,	 net	 consisted	 of	 interest	 charges	 of	 $138	 million	 primarily	 to	 recognize	 post-petition	 interest	 expense	 on	 unsecured obligations	pursuant	to	the	Plan	and	penalty	interest	related	to	10.5%	secured	notes	and	7.50%	senior	secured	notes,	a	$54	million	charge	related	to	the	premium on	tender	for	existing	enhanced	equipment	trust	certificates	financings	and	the	write-off	of	debt	issuance	costs	and	$19	million	in	charges	related	to	the	repayment of	existing	EETC	financings.

In	2012,	nonoperating	special	items,	net	consisted	of	a	$280	million	benefit	resulting	from	a	settlement	of	a	commercial	dispute.

(4) In	2013	and	2012,	we	recognized	reorganization	expenses	as	a	result	of	the	filing	of	voluntary	petitions	for	relief	under	Chapter	11.	These	amounts	consisted primarily	of	estimated	allowed	claim	amounts	and	professional	fees.

(5) In	2014,	income	tax	special	items,	net	were	$346	million.	During	2014,	we	sold	our	portfolio	of	fuel	hedging	contracts	that	were	scheduled	to	settle	on	or	after June	30,	2014.	In	connection	with	this	sale,	we	recorded	a	special	non-cash	tax	provision	of	$330	million	in	the	second	quarter	of	2014	that	reversed	the	non-cash tax	provision	which	was	recorded	in	other	comprehensive	income	(OCI),	a	subset	of	stockholders'	equity,	principally	in	2009.	This	provision	represents	the	tax effect	associated	with	gains	recorded	in	OCI	principally	in	2009	due	to	a	net	increase	in	the	fair	value	of	our	fuel	hedging	contracts.	In	accordance	with	GAAP,	we retained	the	$330	million	tax	provision	in	OCI	until	the	last	contract	was	settled	or	terminated.	In	addition,	we	recorded	a	special	$16	million	non-cash	deferred income	tax	provision	related	to	certain	indefinite-lived	intangible	assets.

In	2013	and	2012,	 income	 tax	special	 items,	net	 included,	respectively,	a	$538	million	and	a	$569	million	non-cash	 income	 tax	 benefit	 from	 continuing operations.	We	are	required	to	consider	all	items	(including	items	recorded	in	other	comprehensive	income)	in	determining	the	amount	of	tax	benefit	that	results from	a	loss	from	continuing	operations	and	that	should	be	allocated	to	continuing	operations.	As	a	result,	we	recorded	a	tax	benefit	on	the	loss	from	continuing operations	for	the	year,	which	was	exactly	offset	by	income	tax	expense	on	other	comprehensive	income.	However,	while	the	income	tax	benefit	from	continuing operations	is	reported	on	the	income	statement,	the	income	tax	expense	on	other	comprehensive	income	is	recorded	directly	to	accumulated	other	comprehensive income	(loss),	which	is	a	component	of	stockholders'	equity.	Because	the	income	tax	expense	on	other	comprehensive	income	is	equal	to	the	income	tax	benefit from	continuing	operations,	our	year-end	net	deferred	tax	position	is	not	impacted	by	this	tax	allocation.	The	2013	tax	benefit	was	offset	in	part	by	a	$214	million tax	charge	attributable	to	additional	valuation	allowance	required	to	reduce	deferred	tax	assets	to	the	amount	we	believe	is	more	likely	than	not	to	be	realized.

# Income	Taxes

At	December	31,	2014,	we	had	approximately	$10.1	billion	of	gross	NOL	Carryforwards	to	reduce	future	federal	taxable	income,	substantially	all	of	which	are expected	to	be	available	for	use	in	2015.	The	federal	NOL	Carryforwards	will	expire	beginning	in	2022	if	unused.	These	NOL	Carryforwards	include	an	unrealized	tax benefit	of	$867	million	related	to	the	implementation	of	share-based	compensation	accounting	guidance	that	will

be	recorded	in	equity	when	realized.	We	also	had	approximately	$4.6	billion	of	NOL	Carryforwards	to	reduce	future	state	taxable	income	at	December	31,	2014,	which will	expire	in	years	2015	through	2034	if	unused.	Our	ability	to	deduct	our	NOL	Carryforwards	and	to	utilize	certain	other	available	tax	attributes	can	be	substantially constrained	under	the	general	annual	limitation	rules	of	Section	382	where	an	"ownership	change"	has	occurred.	We	experienced	an	ownership	change	in	connection with	our	emergence	from	the	Chapter	11	Cases,	and	US	Airways	Group	experienced	an	ownership	change	in	connection	with	the	Merger.	As	a	result	of	the	Merger,	US Airways	Group	is	now	included	in	the	AAG	consolidated	federal	and	state	income	tax	return.	The	general	limitation	rules	of	Section	382	for	a	debtor	in	a	bankruptcy case	are	liberalized	where	the	ownership	change	occurs	upon	emergence	from	bankruptcy.	We	elected	to	be	covered	by	certain	special	rules	for	federal	income	tax purposes	that	permit	approximately	$9.0	billion	of	our	federal	NOL	Carryforwards	to	be	utilized	without	regard	to	the	Section	382	annual	limitation	rules.	Substantially all	of	our	remaining	federal	NOL	Carryforwards	(attributable	to	US	Airways	Group)	are	subject	to	limitation	under	Section	382;	however,	our	ability	to	utilize	such NOL	Carryforwards	is	not	anticipated	to	be	effectively	constrained	as	a	result	of	such	limitation.	Similar	limitations	may	apply	for	state	income	tax	purposes.	Our	ability to	utilize	any	new	NOL	Carryforwards	arising	after	the	ownership	changes	is	not	affected	by	the	annual	limitation	rules	imposed	by	Section	382	unless	another ownership	change	occurs.

At	December	31,	2014,	we	had	an	Alternative	Minimum	Tax	(AMT)	credit	carryforward	of	approximately	$341	million	available	for	federal	income	tax	purposes, which	is	available	for	an	indefinite	period.	Our	net	deferred	tax	assets,	which	include	the	NOL	Carryforwards,	are	subject	to	a	full	valuation	allowance.	At	December	31, 2014,	the	federal	and	state	valuation	allowances	were	$4.5	billion	and	$264	million,	respectively.	In	accordance	with	GAAP,	utilization	of	the	NOL	Carryforwards	after December	9,	2013	will	result	in	a	corresponding	decrease	in	the	valuation	allowance	and	offset	our	tax	provision	dollar	for	dollar.

We	provide	a	valuation	allowance	for	deferred	tax	assets	when	it	is	more	likely	than	not	that	some	portion,	or	all	of	our	deferred	tax	assets,	will	not	be	realized.	The ultimate	realization	of	deferred	tax	assets	is	dependent	upon	the	generation	of	future	taxable	income	(primarily	reversals	of	deferred	tax	liabilities)	during	the	periods	in which	those	temporary	differences	will	become	deductible.	In	making	this	determination,	we	consider	all	available	positive	and	negative	evidence	and	make	certain assumptions.	We	consider	many	factors	in	evaluating	the	realizability	of	our	deferred	tax	assets	including	risks	associated	with	merger	integration	as	well	as	other factors,	which	continue	to	be	affected	by	conditions	beyond	our	control,	such	as	the	condition	of	the	economy,	the	level	and	volatility	of	fuel	prices	and	travel	demand. We	have	concluded	as	of	December	31,	2014	that	the	valuation	allowance	was	still	needed	on	our	deferred	tax	asset	based	on	the	weight	of	the	factors	described	above.

For	the	year	ended	December	31,	2014,	we	recorded	a	$330	million	tax	provision.	This	provision	included	$346	million	of	special	tax	charges	as	described	above.	In addition,	we	recorded	$8	million	of	tax	expense	principally	related	to	certain	states	and	countries	where	NOL	Carryforwards	were	limited	or	unavailable	to	be	used. These	charges	were	offset	in	part	by	a	$24	million	federal	income	tax	benefit	resulting	from	our	elections	under	applicable	sections	of	the	Tax	Relief,	Unemployment Insurance	Reauthorization,	and	Job	Creation	Act	of	2010	and	the	Housing	and	Economic	Recovery	Act	of	2008	(as	extended	by	the	Tax	Increase	Prevention	Act	of 2014),	allowing	corporations	to	accelerate	utilization	of	certain	research	and	AMT	credit	carryforwards	in	lieu	of	applicable	bonus	depreciation	on	certain	qualifying capital	investments.

For	the	year	ended	December	31,	2013,	we	recorded	a	$346	million	tax	benefit.	This	benefit	included	$324	million	of	net	special	tax	benefits	as	described	above.	In addition,	we	recorded	a	$22	million	federal	income	tax	benefit	under	the	Housing	and	Economic	Recovery	Act	of	2008	as	described	above.

For	the	year	ended	December	31,	2012,	we	recorded	a	$569	million	special	tax	benefit	as	described	above.

# Operating	Statistics

The	table	below	sets	forth	selected	combined	mainline	and	regional	operating	data:

|  |  |  |  | Increase | Increase |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Year\tEnded\tDecember\t31, |  | (Decrease) | (Decrease) |
|  | 2014 | 2013\t(1) | 2012\t(1) | 2014-2013 | 2013-2012 |
| Mainline |  |  |  |  |  |
| Revenue\tpassenger\tmiles\t(millions)\t(a) | \t195,651 | \t194,026 | \t188,841 | 0.8% | 2.7% |
| Available\tseat\tmiles\t(millions)\t(b) | \t237,522 | \t231,873 | \t226,839 | 2.4% | 2.2% |
| Passenger\tload\tfactor\t(percent)\t(c) | 82.4 | 83.7 | 83.2 | (1.3)pts | 0.5pts |
| Yield\t(cents)\t(d) | 15.74 | 15.08 | 14.66 | 4.4% | 2.9% |
| Passenger\trevenue\tper\tavailable\tseat\tmile\t(cents)\t(e) | 12.97 | 12.62 | 12.20 | 2.7% | 3.4% |
| Operating\tcost\tper\tavailable\tseat\tmile\t(cents)\t(f) | 13.42 | 13.55 | 13.79 | (0.9)% | (1.7)% |
| Passenger\tenplanements\t(thousands)\t(g) | \t145,574 | \t143,747 | \t140,742 | 1.3% | 2.1% |
| Departures\t(thousands) | 1,144 | 1,140 | 1,113 | 0.3% | 2.5% |
| Aircraft\tat\tend\tof\tperiod | 983 | 970 | 954 | 1.3% | 1.7% |
| Block\thours\t(thousands)\t(h) | 3,514 | 3,454 | 3,350 | 1.7% | 3.1% |
| Average\tstage\tlength\t(miles)\t(i) | 1,205 | 1,190 | 1,183 | 1.3% | 0.6% |
| Fuel\tconsumption\t(gallons\tin\tmillions) | 3,644 | 3,608 | 3,512 | 1.0% | 2.8% |
| Average\taircraft\tfuel\tprice\tincluding\trelated\ttaxes\t(dollars\tper\tgallon) | 2.91 | 3.08 | 3.19 | (5.6)% | (3.4)% |
| Full-time\tequivalent\temployees\tat\tend\tof\tperiod | 94,400 | 91,500 | 95,800 | 3.2% | (4.5)% |
| Regional\t(j) |  |  |  |  |  |
| Revenue\tpassenger\tmiles\t(millions)\t(a) | 22,219 | 21,515 | 21,097 | 3.3% | 2.0% |
| Available\tseat\tmiles\t(millions)\t(b) | 28,135 | 28,041 | 27,809 | 0.3% | 0.8% |
| Passenger\tload\tfactor\t(percent)\t(c) | 79.0 | 76.7 | 75.9 | 2.3pts | 0.8pts |
| Yield\t(cents)\t(d) | 28.46 | 29.17 | 29.69 | (2.4)% | (1.7)% |
| Passenger\trevenue\tper\tavailable\tseat\tmile\t(cents)\t(e) | 22.47 | 22.38 | 22.52 | 0.4% | (0.6)% |
| Operating\tcost\tper\tavailable\tseat\tmile\t(cents)\t(f) | 23.16 | 22.88 | 22.81 | 1.2% | 0.3% |
| Passenger\tenplanements\t(thousands)\t(g) | 51,766 | 49,993 | 49,757 | 3.5% | 0.5% |
| Aircraft\tat\tend\tof\tperiod | 566 | 558 | 536 | 1.4% | 4.1% |
| Fuel\tconsumption\t(gallons\tin\tmillions) | 688 | 687 | 658 | 0.1% | 4.4% |
| Average\taircraft\tfuel\tprice\tincluding\trelated\ttaxes\t(dollars\tper\tgallon) | 2.92 | 3.07 | 3.21 | (4.7)% | (4.3)% |
| Full-time\tequivalent\temployees\tat\tend\tof\tperiod\t(k) | 18,900 | 18,200 | 18,700 | 3.8% | (2.7)% |
| Total\tMainline\tand\tRegional |  |  |  |  |  |
| Revenue\tpassenger\tmiles\t(millions)\t(a) | \t217,870 | \t215,541 | \t209,938 | 1.1% | 2.7% |
| Available\tseat\tmiles\t(millions)\t(b) | \t265,657 | \t259,914 | \t254,648 | 2.2% | 2.1% |
| Cargo\tton\tmiles\t(millions)\t(l) | 2,333 | 2,198 | 2,105 | 6.1% | 4.4% |
| Passenger\tload\tfactor\t(percent)\t(c) | 82.0 | 82.9 | 82.4 | (0.9)pts | 0.5pts |
| Yield\t(cents)\t(d) | 17.04 | 16.49 | 16.17 | 3.3% | 2.0% |
| Passenger\trevenue\tper\tavailable\tseat\tmile\t(cents)\t(e) | 13.97 | 13.67 | 13.33 | 2.2% | 2.6% |
| Total\trevenue\tper\tavailable\tseat\tmile\t(cents)\t(m) | 16.05 | 15.54 | 15.17 | 3.3% | 2.5% |
| Cargo\tyield\tper\tton\tmile\t(cents)\t(n) | 37.50 | 37.74 | 39.38 | (0.6)% | (4.2)% |
| Passenger\tenplanements\t(thousands)\t(g) | \t197,340 | \t193,740 | \t190,499 | 1.9% | 1.7% |
| Aircraft\tat\tend\tof\tperiod | 1,549 | 1,528 | 1,490 | 1.4% | 2.6% |
| Fuel\tconsumption\t(gallons\tin\tmillions) | 4,332 | 4,295 | 4,170 | 0.9% | 3.0% |
| Average\taircraft\tfuel\tprice\tincluding\trelated\ttaxes\t(dollars\tper\tgallon) | 2.91 | 3.08 | 3.19 | (5.5)% | (3.6)% |
| Full-time\tequivalent\temployees\tat\tend\tof\tperiod | \t113,300 | \t109,700 | \t114,500 | 3.3% | (4.2)% |

(a) Revenue	passenger	mile	(RPM)	–	A	basic	measure	of	sales	volume.	One	RPM	represents	one	passenger	flown	one	mile.

(b) Available	seat	mile	(ASM)	–	A	basic	measure	of	production.	One	ASM	represents	one	seat	flown	one	mile.

(c) Passenger	load	factor	–	The	percentage	of	available	seats	that	are	filled	with	revenue	passengers.

(d) Yield	–	A	measure	of	airline	revenue	derived	by	dividing	passenger	revenue	by	RPMs.

(e) Passenger	revenue	per	available	seat	mile	(PRASM)	–	Passenger	revenues	divided	by	ASMs.

(f) Operating	cost	per	available	seat	mile	(CASM)	–	Operating	expenses	divided	by	ASMs.

(g) Passenger	enplanements	–	The	number	of	passengers	on	board	an	aircraft,	including	local,	connecting	and	through	passengers.

(h) Block	hours	–	The	hours	measured	from	the	moment	an	aircraft	first	moves	under	its	own	power,	including	taxi	time,	for	the	purposes	of	flight	until	the	aircraft	is docked	at	the	next	point	of	landing	and	its	power	is	shut	down.

(i) Average	stage	length	–	The	average	of	the	distances	flown	on	each	segment	of	every	route.

(j) Regional	statistics	include	our	subsidiaries,	Envoy	Aviation	Group	Inc.	(Envoy,	formerly	known	as	AMR	Eagle	Holding	Corporation),	Piedmont	Airlines,	Inc. (Piedmont)	and	PSA	Airlines,	Inc.	(PSA),	and	operating	and	financial	results	from	our	capacity	purchase	agreements	with	Air	Wisconsin	Airlines	Corporation, Chautauqua	Airlines,	Inc.,	ExpressJet	Airlines,	Inc.,	Mesa	Airlines,	Inc.,	Republic	Airline	Inc.	and	SkyWest	Airlines,	Inc.

(k) Regional	full-time	equivalent	employees	only	include	our	wholly	owned	regional	airline	subsidiaries,	Envoy,	Piedmont	and	PSA.

(l) Cargo	ton	miles	–	A	basic	measure	of	cargo	transportation.	One	cargo	ton	mile	represents	one	ton	of	cargo	transported	one	mile.

(m) Total	revenue	per	available	seat	mile	(RASM)	–	Total	revenues	divided	by	total	mainline	and	regional	ASMs.	Total	revenues	in	the	2013	period	excludes	a	$31 million	special	credit	recorded	to	other	revenues	related	to	a	change	in	accounting	method	resulting	from	the	modification	of	our	AAdvantage	miles	agreement with	Citibank.

(n) Cargo	yield	per	ton	mile	–	Cargo	revenues	divided	by	total	mainline	and	regional	cargo	ton	miles.

# Operating	Revenues

|  |  |  |  | $	Change | Change	Excluding |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Year\tEnded\tDecember\t31, | Year\tEnded\tDecember\t31, |  | due\tto | Merger\tImpact |  |
|  | \t\t\t\t2014 | \t\t\t\t2013 | $\tChange | Merger | \t\t\t\t$\t\t\t\t\t\t\t\t% | \t\t\t\t$\t\t\t\t\t\t\t\t% |
|  |  | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) |  |  |
| Mainline\tpassenger | \t\t $30,802 | $20,218 | $10,584 | $9,833\t\t\t\t $ | 751 | 3.8 |
| Regional\tpassenger | 6,322 | 3,131 | 3,191 | 3,207 | (16) | (0.5) |
| Cargo | 875 | 685 | 190 | 149 | 41 | 6.1 |
| Other | 4,651 | 2,709 | 1,942 | 1,318 | 624 | 23.9 |
| Total\toperating\trevenues | \t\t $42,650 | $26,743 | $15,907 | $14,507\t\t\t\t $ | 1,400 | 5.4 |

The	following	discussion	of	operating	revenues	excludes	the	results	of	US	Airways	Group	in	order	to	provide	a	more	meaningful	year-over-year	comparison.

Total	operating	revenues	in	2014	increased	$1.4	billion,	or	5.4%,	from	the	2013	period,	which	was	driven	by	strong	demand	for	air	travel.	Significant	changes	in	the components	of	operating	revenues,	excluding	the	results	of	US	Airways	Group,	are	as	follows:

•	 Mainline	passenger	revenues	increased	$751	million,	or	3.8%,	in	2014	from	the	2013	period	due	to	higher	yields	and	ASMs,	offset	in	part	by	slightly	lower load	factors.

•	 Cargo	revenues	increased	$41	million,	or	6.1%,	in	2014	from	the	2013	period	driven	primarily	by	an	increase	in	international	freight	volumes.

•	 Other	revenues	increased	$624	million,	or	23.9%,	in	2014	from	the	2013	period	driven	primarily	by	higher	revenues	associated	with	our	frequent	flyer programs	driven	by	our	affinity	card	agreement	with	Citibank.

# Operating	Expenses

|  |  |  |  | $	Change | Change	Excluding |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Year\tEnded\tDecember\t31, |  |  | due\tto | Merger\tImpact |  |
|  | \t\t\t\t2014 | \t\t\t\t2013 | $\tChange | Merger | \t\t\t\t$\t\t\t\t\t\t\t\t% | \t\t\t\t$\t\t\t\t\t\t\t\t% |
|  |  | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) |  |  |
| Aircraft\tfuel\tand\trelated\ttaxes | \t\t $10,592 | $7,839 | $2,753 | $3,190 | $(437) | (5.7) |
| Salaries,\twages\tand\tbenefits | 8,508 | 5,460 | 3,048 | 2,653 | 395 | 7.5 |
| Maintenance,\tmaterials\tand\trepairs | 2,051 | 1,260 | 791 | 679 | 112 | 9.2 |
| Other\trent\tand\tlanding\tfees | 1,727 | 1,152 | 575 | 547 | 28 | 2.5 |
| Aircraft\trent | 1,250 | 768 | 482 | 365 | 117 | 15.7 |
| Selling\texpenses | 1,544 | 1,158 | 386 | 424 | (38) | (3.3) |
| Depreciation\tand\tamortization | 1,295 | 853 | 442 | 375 | 67 | 7.9 |
| Special\titems,\tnet | 800 | 559 | 241 | (1) | 242 | 86.2 |
| Other | 4,118 | 2,969 | 1,149 | 1,079 | 70 | 2.4 |
| Total\tmainline\toperating\texpenses | \t\t $31,885 | $22,018 | $9,867 | $9,311 | $556 | 2.6 |
| Regional\texpenses: |  |  |  |  |  |  |
| Fuel | 2,009 | 1,120 | 889 | 947 | (58) | (5.4) |
| Other | 4,507 | 2,206 | 2,301 | 2,158 | 143 | 7.0 |
| Total\tregional\toperating\texpenses | 6,516 | 3,326 | 3,190 | 3,105 | 85 | 2.8 |
| Total\toperating\texpenses | \t\t $38,401 | $25,344 | $13,057 | $12,416 | $641 | 2.6 |

The	following	discussion	of	operating	expenses	excludes	the	results	of	US	Airways	Group	in	order	to	provide	a	more	meaningful	year-over-year	comparison.

Total	operating	expenses	in	2014	increased	$641	million,	or	2.6%,	from	the	2013	period.	Significant	changes	in	the	components	of	mainline	operating	expenses, excluding	the	results	of	US	Airways	Group,	are	as	follows:

•	 Aircraft	fuel	and	related	taxes	decreased	$437	million,	or	5.7%,	in	2014	from	the	2013	period	primarily	due	to	a	decrease	in	the	average	price	per	gallon	of fuel.

•Salaries,	wages	and	benefits	increased	$395	million,	or	7.5%,	in	2014	from	the	2013	period	primarily	due	to	increased	costs	associated	with	merger	related labor	contracts.

•	 Maintenance,	materials	and	repairs	increased	$112	million,	or	9.2%,	in	2014	from	the	2013	period	primarily	due	to	an	increase	in	the	rate	per	engine	overhaul.

•	 Aircraft	rent	increased	$117	million,	or	15.7%,	in	2014	from	the	2013	period	primarily	as	a	result	of	new	leased	aircraft	deliveries	in	2014	as	we	continued	our fleet	renewal	program.

•	 Depreciation	and	amortization	increased	$67	million,	or	7.9%,	in	2014	from	the	2013	period	primarily	as	a	result	of	new	purchased	aircraft	deliveries	since	the end	of	2013	as	we	continued	our	fleet	renewal	program.

# Regional	Operating	Expenses

Total	regional	expenses,	excluding	the	results	of	US	Airways	Group,	increased	$85	million,	or	2.8%,	in	2014	from	the	2013	period.	Other	regional	operating expenses	increased	$143	million,	or	7.0%,	primarily	due	to	higher	expenses	associated	with	certain	capacity	purchase	agreements,	offset	by	a	$58	million,	or	5.4%, decrease	in	fuel	costs	as	a	result	of	a	decrease	in	the	average	price	per	gallon	of	fuel.

# Nonoperating	Income	(Expense)

|  |  |  |  | $	Change | Change	Excluding |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Year\tEnded\tDecember\t31, |  |  | due\tto | Merger\tImpact |  |
|  | \t\t\t\t2014 | \t\t\t\t2013 | $\tChange | Merger | \t\t\t\t$\t\t\t\t\t\t\t\t% | \t\t\t\t$\t\t\t\t\t\t\t\t% |
|  |  | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) |  |  |
| Interest\tincome | \t\t $31 | $20 | $11 | $6 | $5 | 25.2 |
| Interest\texpense,\tnet\tof\tcapitalized\tinterest | (887) | (856) | (31) | (280) | 249 | (29.8) |
| Other,\tnet | (181) | (88) | (93) | (29) | (64) | 73.1 |
| Total\tnonoperating\texpense,\tnet | \t\t $(1,037) | $(924) | $(113) | $(303) | $190 | (21.0) |

Interest	income	was	$31	million	and	$20	million	in	2014	and	2013,	respectively.	Our	short-term	investments	in	each	period	consisted	of	highly	liquid	investments, which	provided	nominal	returns.

The	following	table	provides	the	components	of	interest	expense,	including	amortization	of	debt	discounts	and	debt	issue	costs,	capitalized	interest	and	special	items:

|  | Year	Ended	December	31,<br>				2014 | 2013 | Increase<br>(Decrease) |
| :--- | :--- | :--- | :--- |
|  | (In\tmillions) |  |  |
| Special\titems | $33 | $182 | $(149) |
| Amortization\tof\tdebt\tissuance\tcosts\tand\tdebt\tdiscounts | 38 | 33 | 5 |
| Interest\texpense\ton\tdebt\tand\tcapital\tlease\tobligations | 568 | 668 | (100) |
| Total\tinterest\texpense | 639 | 883 | (244) |
| Less:\tcapitalized\tinterest | (53) | (48) | (5) |
| Total\tinterest\texpense,\tnet\tof\tcapitalized\tinterest | 586 | 835 | (249) |
| US\tAirways\tGroup\ttotal\tinterest\texpense,\tnet\tof\tcapitalized\tinterest | 301 | 21 | 280 |
| Total\tAAG\tinterest\texpense,\tnet\tof\tcapitalized\tinterest | $887 | $856 | $31 |

The	following	discussion	of	nonoperating	income	and	expense	excludes	the	results	of	US	Airways	Group	in	order	to	provide	a	more	meaningful	year-over-year comparison.

Interest	expense,	net	of	capitalized	interest	decreased	$249	million,	or	29.8%,	in	2014	from	the	2013	period	primarily	due	to	a	$149	million	decrease	in	special charges	recognized	period-over-period	as	further	described	below,	as	well	as	refinancing	activities	that	resulted	in	$100	million	less	interest	expense	recognized	in	2014. In	2014,	we	recognized	$33	million	of	special	charges	relating	to	non-cash	interest	accretion	on	bankruptcy	settlement	obligations.	In	2013,	we	recognized	$138	million of	special	charges	relating	to	post-petition	interest	expense	on	unsecured	obligations	pursuant	to	the	Plan	and	penalty	interest	related	to	American's	10.5%	secured	notes and	7.50%	senior	secured	notes.	In	addition,	in	2013	we	recorded	special	charges	of	$44	million	for	debt

extinguishment	 costs	 incurred	 as	 a	 result	 of	 the	 repayment	 of	 certain	 aircraft	 secured	 indebtedness,	 including	 cash	 interest	 charges	 and	 non-cash	 write	 offs	 of unamortized	debt	issuance	costs.	As	a	result	of	the	2013	refinancing	activities	and	the	early	extinguishment	of	American's	7.50%	senior	secured	notes	in	2014,	we recognized	$100	million	less	interest	expense	in	2014	as	compared	to	the	2013	period.

Other	nonoperating	expense,	net	in	2014	consisted	principally	of	net	foreign	currency	losses	of	$114	million	and	early	debt	extinguishment	charges	of	$56	million. Other	nonoperating	expense,	net	in	2013	consisted	principally	of	net	foreign	currency	losses	of	$56	million	and	early	debt	extinguishment	charges	of	$29	million.	Other nonoperating	expense,	net	increased	$64	million,	or	73.1%,	during	2014	primarily	due	to	special	charges	recognized	as	a	result	of	early	debt	extinguishment	and	an increase	in	foreign	currency	losses	driven	by	the	strengthening	of	the	U.S.	dollar	in	foreign	currency	transactions,	principally	in	Latin	American	markets.	We	recorded	a $43	million	special	charge	for	Venezuelan	foreign	currency	losses	in	2014.	See	Part	II,	Item	7A.	Quantitative	and	Qualitative	Disclosures	About	Market	Risk	for	further discussion	of	our	cash	held	in	Venezuelan	bolivars.	In	addition,	our	2014	nonoperating	special	items	included	$56	million	primarily	related	to	the	early	extinguishment of	American's	7.50%	senior	secured	notes	and	other	indebtedness.

# Reorganization	Items,	Net

Reorganization	items	refer	to	revenues,	expenses	(including	professional	fees),	realized	gains	and	losses	and	provisions	for	losses	that	are	realized	or	incurred	as	a direct	result	of	the	Chapter	11	Cases.	The	following	table	summarizes	the	components	included	in	reorganization	items,	net	on	AAG's	consolidated	statement	of operations	for	the	year	ended	December	31,	2013	(in	millions):

(1) In	exchange	for	employees'	contributions	to	the	successful	reorganization,	including	agreeing	to	reductions	in	pay	and	benefits,	we	agreed	in	the	Plan	to	provide each	employee	group	a	deemed	claim,	which	was	used	to	provide	a	distribution	of	a	portion	of	the	equity	of	the	reorganized	entity	to	those	employees.	Each employee	group	received	a	deemed	claim	amount	based	upon	a	portion	of	the	value	of	cost	savings	provided	by	that	group	through	reductions	to	pay	and	benefits as	well	as	through	certain	work	rule	changes.	The	total	value	of	this	deemed	claim	was	approximately	$1.7	billion.

(2) Amounts	 include	allowed	claims	(claims	approved	by	 the	Bankruptcy	Court)	and	estimated	allowed	claims	relating	 to	(i)	 the	rejection	or	modification	of financings	related	to	aircraft	and	(ii)	entry	of	orders	treated	as	unsecured	claims	with	respect	to	facility	agreements	supporting	certain	issuances	of	special	facility revenue	bonds.	The	Debtors	recorded	an	estimated	claim	associated	with	the	rejection	or	modification	of	a	financing	or	facility	agreement	when	the	applicable motion	was	filed	with	the	Bankruptcy	Court	to	reject	or	modify	such	financing	or	facility	agreement	and	the	Debtors	believed	that	it	was	probable	the	motion would	be	approved,	and	there	was	sufficient	information	to	estimate	the	claim.	See	Note	2	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	for further	information.

(3) Pursuant	to	the	Plan,	the	Debtors	agreed	to	allow	certain	post-petition	unsecured	claims	on	obligations.	As	a	result,	during	the	year	ended	December	31,	2013,	we recorded	reorganization	charges	to	adjust	estimated	allowed	claim	amounts	previously	recorded	on	rejected	special	facility	revenue	bonds	of	$180	million,	allowed general	unsecured	claims	related	to	the	1990	and	1994	series	of	special	facility	revenue	bonds	that	financed	certain	improvements	at	JFK,	and	rejected	bonds	that financed	certain	improvements	at	ORD,	which	are	included	in	the	table	above.

(4) The	Plan	allowed	unsecured	creditors	receiving	AAG	Series	A	Preferred	Stock	a	conversion	discount	of	3.5%.	Accordingly,	we	recorded	the	fair	value	of	such discount	upon	the	confirmation	of	the	Plan	by	the	Bankruptcy	Court.

|  |  |  |  | $	Change | Change	Excluding |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Year\tEnded\tDecember\t31, | Year\tEnded\tDecember\t31, |  | due\tto | Merger\tImpact |  |
|  | \t\t\t\t2013 | \t\t\t\t2012 | $\tChange | Merger | \t\t\t\t$\t\t\t\t\t\t\t\t% | \t\t\t\t$\t\t\t\t\t\t\t\t% |
|  |  | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) |  |  |
| Mainline\tpassenger | $20,218 | $18,743 | $1,475 | $624 | $ 851 | 4.5 |
| Regional\tpassenger | 3,131 | 2,914 | 217 | 204 | 13 | 0.5 |
| Cargo | 685 | 675 | 10 | 9 | 1 | 0.1 |
| Other | 2,709 | 2,523 | 186 | 94 | 92 | 3.6 |
| Total\toperating\trevenues | $26,743 | $24,855 | $1,888 | $931 | $ 957 | 3.8 |

Total	operating	revenues	in	2013	were	$25.8	billion	as	compared	to	$24.9	billion	in	2012,	an	increase	of	$957	million,	or	3.8%,	which	was	driven	by	strong	demand for	air	travel.	Significant	changes	in	the	components	of	operating	revenues	are	as	follows:

•	 Mainline	passenger	revenues	increased	4.5%	to	$19.6	billion	in	2013	as	compared	to	$18.7	billion	in	2012	due	to	an	increase	in	ASMs	and	yield.

•	 Regional	passenger	revenues	were	$2.9	billion,	which	was	relatively	flat	as	compared	to	2012	due	to	an	increase	in	ASMs,	offset	by	a	decrease	in	yield.

•	 Other	revenues	were	$2.6	billion	in	2013,	an	increase	of	$92	million,	or	3.6%,	primarily	due	to	increased	revenues	associated	with	the	sale	of	AAdvantage frequent	flyer	mileage	credits	and	a	$31	million	special	credit	related	to	a	change	in	accounting	method	resulting	from	the	modification	of	our	AAdvantage miles	agreement	with	Citibank.

|  |  |  |  | $	Change | Change	Excluding |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Year\tEnded\tDecember\t31, | Year\tEnded\tDecember\t31, |  | due\tto | Merger\tImpact |  |
|  | \t\t\t\t2013 | \t\t\t\t2012 | $\tChange | Merger | \t\t\t\t$\t\t\t\t\t\t\t\t% | \t\t\t\t$\t\t\t\t\t\t\t\t% |
|  |  | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) |  |  |
| Aircraft\tfuel\tand\trelated\ttaxes | $7,839 | $7,705 | $134 | $211 | $(77) | (1.0) |
| Salaries,\twages\tand\tbenefits | 5,460 | 6,217 | (757) | 184 | (941) | (15.1) |
| Maintenance,\tmaterials\tand\trepairs | 1,260 | 1,158 | 102 | 38 | 64 | 5.5 |
| Other\trent\tand\tlanding\tfees | 1,152 | 1,083 | 69 | 35 | 34 | 3.2 |
| Aircraft\trent | 768 | 553 | 215 | 25 | 190 | 34.4 |
| Selling\texpenses | 1,158 | 1,058 | 100 | 31 | 69 | 6.5 |
| Depreciation\tand\tamortization | 853 | 845 | 8 | 23 | (15) | (1.7) |
| Special\titems,\tnet | 559 | 386 | 173 | 277 | (104) | (26.9) |
| Other | 2,969 | 2,674 | 295 | 70 | 225 | 8.4 |
| Total\tmainline\toperating\texpenses | 22,018 | 21,679 | 339 | 894 | (555) | (2.6) |
| Regional\texpenses: |  |  |  |  |  |  |
| Fuel | 1,120 | 1,012 | 108 | 64 | 44 | 4.4 |
| Other | 2,206 | 2,016 | 190 | 150 | 40 | 2.0 |
| Total\tregional\toperating\texpenses | 3,326 | 3,028 | 298 | 214 | 84 | 2.8 |
| Total\toperating\texpenses | $25,344 | $24,707 | $637 | $1,108 | $(471) | (1.9) |

Total	operating	expenses	in	2013	were	$24.2	billion	as	compared	to	$24.7	billion	in	2012,	a	decrease	of	$471	million,	or	1.9%.	Significant	changes	in	the	components of	operating	expenses	are	as	follows:

•	 Aircraft	fuel	and	related	taxes	decreased	$77	million,	or	1.0%,	due	to	a	decrease	in	the	average	price	per	gallon	of	fuel,	offset	in	part	by	an	increase	in	gallons consumed.

•Salaries,	wages,	and	benefits	decreased	$941	million,	or	15.1%,	due	to	the	results	of	voluntary	and	involuntary	terminations	in	connection	with	the	2012 restructuring	plan	as	well	as	effects	related	to	the	freezing	of	American's	pension	plans	in	2012.

•	 Aircraft	rent	increased	$190	million,	or	34.4%,	as	a	result	of	new	leased	aircraft	deliveries	in	2013	as	we	continued	our	fleet	renewal	program.

•Selling	expenses	increased	$69	million,	or	6.5%,	as	a	result	of	higher	commissions	and	credit	card	fees	related	to	the	increase	in	passenger	revenues.

•	 Other	operating	expenses	increased	$225	million,	or	8.4%,	primarily	due	to	higher	costs	associated	with	outsourced	services	and	enhanced	customer	product offerings.

Total	regional	expenses,	excluding	the	results	of	US	Airways	Group,	increased	$84	million,	or	2.8%,	in	2013	to	$3.1	billion	from	$3.0	billion	in	2012.	The	year-over- year	increase	was	primarily	driven	by	a	$44	million,	or	4.4%,	increase	in	fuel	costs	and	a	$40	million,	or	2.0%,	increase	in	other	regional	operating	expenses	due	to	an increase	in	capacity.	The	increase	in	fuel	costs	was	driven	by	higher	fuel	consumption	due	to	the	transition	from	turboprop	to	regional	jet	aircraft.

|  |  |  |  | $	Change | Change	Excluding | Change	Excluding |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Year\tEnded\tDecember\t31, | Year\tEnded\tDecember\t31, |  | due\tto | Merger\tImpact |  |
|  | \t\t\t\t2013 | \t\t\t\t2012 | $\tChange | Merger | \t\t\t\t$\t\t\t\t\t\t\t\t% | \t\t\t\t$\t\t\t\t\t\t\t\t% |
|  |  | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) |  |  |
| Interest\tincome | $20 | $26 | $(6) | $— | $(6) | (21.8) |
| Interest\texpense,\tnet\tof\tcapitalized\tinterest | (856) | (632) | (224) | (20) | (204) | 32.3 |
| Other,\tnet | (88) | 221 | (309) | 1 | (310) | nm |
| Total\tnonoperating\texpense,\tnet | $(924) | $(385) | $(539) | $(19) | $(520) | nm |

Interest	expense,	net	of	capitalized	interest	increased	$204	million,	or	32.3%,	to	$836	million	in	2013	from	$632	million	in	2012	primarily	due	to	special	charges	of $138	million	to	recognize	post-petition	interest	expense	on	unsecured	obligations	pursuant	to	the	Plan	and	penalty	interest	related	to	10.5%	secured	notes	and	7.50% senior	secured	notes.	In	addition,	in	2013	we	recorded	special	charges	of	$44	million	for	debt	extinguishment	costs	incurred	as	a	result	of	the	repayment	of	certain aircraft	secured	indebtedness,	including	cash	interest	charges	and	non-cash	write	offs	of	unamortized	debt	issuance	costs.

Other	nonoperating	expense,	net	of	$89	million	in	2013	consisted	principally	of	net	foreign	currency	losses	of	$56	million	and	early	debt	extinguishment	charges	of $29	million.	Other	nonoperating	income	in	2012	consisted	principally	of	a	$280	million	special	credit	related	to	the	settlement	of	a	commercial	dispute	partially	offset by	net	foreign	currency	losses.

Reorganization	items	refer	to	revenues,	expenses	(including	professional	fees),	realized	gains	and	losses	and	provisions	for	losses	that	are	realized	or	incurred	as	a direct	result	of	the	Chapter	11	Cases.	The	following	table	summarizes	the	components	included	in	reorganization	items,	net	on	AAG's	consolidated	statements	of operations	for	the	years	ended	December	31,	2013	and	2012	(in	millions):

(2) Amounts	 include	allowed	claims	(claims	approved	by the	Bankruptcy	Court)	and	estimated	allowed	claims	relating to	(i) the	rejection	or	modification	of financings	related	to	aircraft	and	(ii)	entry	of	orders	treated	as

unsecured	claims	with	respect	to	facility	agreements	supporting	certain	issuances	of	special	facility	revenue	bonds.	The	Debtors	recorded	an	estimated	claim associated	with	the	rejection	or	modification	of	a	financing	or	facility	agreement	when	the	applicable	motion	was	filed	with	the	Bankruptcy	Court	to	reject	or modify	such	financing	or	facility	agreement	and	the	Debtors	believed	that	it	was	probable	the	motion	would	be	approved,	and	there	was	sufficient	information	to estimate	the	claim.	See	Note	2	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	for	further	information.

# American's	Results	of	Operations

In	2014,	American	realized	operating	income	of	$2.3	billion	and	net	income	of	$1.3	billion.	American's	2014	period	net	income	included	net	special	operating charges	of	$512	million	and	total	net	special	charges	of	$974	million.	Excluding	the	effects	of	these	special	charges,	American	realized	operating	income	of	$2.9	billion and	net	income	of	$2.3	billion.

In	2013,	American	realized	operating	income	of	$1.5	billion	and	a	net	loss	of	$1.5	billion.	American's	2013	period	net	loss	included	net	special	operating	charges	of $251	million	and	total	net	special	charges	of	$2.7	billion.	Excluding	the	effects	of	these	charges,	American	realized	operating	income	of	$1.8	billion	and	net	income	of $1.2	billion.

In	2012,	American	realized	operating	income	of	$82	million	and	a	net	loss	of	$1.9	billion.	American's	2012	period	net	loss	included	net	special	operating	charges	of $386	million	and	total	net	special	charges	of	$1.7	billion.	Excluding	the	effects	of	these	charges,	American	realized	operating	income	of	$468	million	and	a	net	loss	of $210	million.

The	components	of	American's	net	special	charges	included	in	the	accompanying	consolidated	statements	of	operations	are	as	follows	(in	millions):

|  | Year	Ended	December	31, | Year	Ended	December	31, | Year	Ended	December	31, |
| :--- | :--- | :--- | :--- |
|  | 2014 | 2013 | 2012 |
| Other\trevenue\tspecial\titem,\tnet\t(1) | $ — | $(31) | $— |
| Mainline\toperating\tspecial\titems,\tnet\t(2) | \t 507 | 282 | 386 |
| Regional\toperating\tspecial\titems,\tnet | 5 | — | — |
| Nonoperating\tspecial\titems,\tnet\t(3) | \t 120 | 121 | (280) |
| Reorganization\titems,\tnet\t(4) | — | \t 2,640 | \t 2,179 |
| Income\ttax\tspecial\titems,\tnet\t(5) | \t 342 | (324) | (569) |
| Total | $974 | $2,688 | $1,716 |

(1) In	2013,	other	revenue	special	 item,	net	 included	a	credit to	other	revenues	related to	a	change in	accounting	method	resulting	from the	modification	of American's	AAdvantage	miles	agreement	with	Citibank.

(2) In	2014,	mainline	operating	special	items,	net	principally	included	$527	million	of	Merger	integration	expenses	related	to	information	technology,	alignment	of labor	union	contracts,	professional	fees,	severance

and	retention,	share-based	compensation,	divestiture	of	London	Heathrow	Slots,	fleet	restructuring,	re-branding	of	aircraft	and	airport	facilities,	relocation	and training.	In	addition,	American	recorded	a	net	charge	of	$60	million	for	bankruptcy	related	items	principally	consisting	of	fair	value	adjustments	for	bankruptcy settlement	obligations,	as	well	as	$181	million	in	other	special	charges,	including	an	$81	million	charge	to	revise	prior	estimates	of	certain	aircraft	residual	values, and	other	spare	parts	asset	impairments,	as	well	as	$44	million	in	charges	primarily	relating	to	the	buyout	of	certain	aircraft	leases.	These	charges	were	offset	in part	by	a	$305	million	gain	on	the	sale	of	Slots	at	DCA.

In	2013,	mainline	operating	special	 items,	net	 included	$166	million	of	primarily	Merger	related	expenses	due	 to	 the	alignment	of	 labor	union	contracts, professional	fees,	severance	and	share-based	compensation.	In	addition,	American	recorded	a	$107	million	charge	related	 to	 the	pilot	 long-term	disability obligation,	a	$43	million	charge	for	workers'	compensation	claims	and	a	$33	million	aircraft	impairment	charge.	These	charges	were	offset	in	part	by	a	$67 million	gain	on	the	sale	of	Slots	at	LaGuardia	Airport.

(3) In	2014,	nonoperating	special	items,	net	consisted	principally	of	$43	million	for	Venezuelan	foreign	currency	losses,	$48	million	of	early	debt	extinguishment costs	related	to	the	prepayment	of	7.50%	senior	secured	notes	and	other	indebtedness	and	$29	million	of	non-cash	interest	accretion	on	bankruptcy	settlement obligations.	See	Part	II,	Item	7A.	Quantitative	and	Qualitative	Disclosures	About	Market	Risk	for	further	discussion	of	our	cash	held	in	Venezuelan	bolivars.

In	2013,	nonoperating	special	items,	net	consisted	of	interest	charges	of	$48	million	to	recognize	post-petition	interest	expense	on	unsecured	obligations	pursuant to	the	Plan	and	penalty	interest	related	to	10.5%	secured	notes	and	7.50%	senior	secured	notes,	a	$54	million	charge	related	to	the	premium	on	tender	for	existing enhanced	equipment	trust	certificates	financings	and	the	write-off	of	debt	issuance	costs	and	$19	million	in	charges	related	to	the	repayment	of	existing	EETC financings.

(4) In	2013	and	2012,	American	recognized	reorganization	expenses	as	a	result	of	the	filing	of	voluntary	petitions	for	relief	under	Chapter	11.	These	amounts consisted	primarily	of	estimated	allowed	claim	amounts	and	professional	fees.

(5) In	2014,	income	tax	special	items,	net	were	$342	million.	During	2014,	American	sold	its	portfolio	of	fuel	hedging	contracts	that	were	scheduled	to	settle	on	or after	June	30,	2014.	In	connection	with	this	sale,	American	recorded	a	special	non-cash	tax	provision	of	$328	million	in	the	second	quarter	of	2014	that	reversed the	non-cash	tax	provision	which	was	recorded	in	other	comprehensive	income	(OCI),	a	subset	of	stockholder's	equity,	principally	in	2009.	This	provision represents	the	tax	effect	associated	with	gains	recorded	in	OCI	principally	in	2009	due	to	a	net	increase	in	the	fair	value	of	American's	fuel	hedging	contracts.	In accordance	with	GAAP,	American	retained	the	$328	million	tax	provision	in	OCI	until	the	last	contract	was	settled	or	terminated.	In	addition,	American	recorded a	special	$14	million	non-cash	deferred	income	tax	provision	related	to	certain	indefinite-lived	intangible	assets.

In	2013	and	2012,	 income	 tax	special	 items,	net	 included,	respectively,	a	$538	million	and	a	$569	million	non-cash	 income	 tax	 benefit	 from	 continuing operations.	American	is	required	to	consider	all	items	(including	items	recorded	in	other	comprehensive	income)	in	determining	the	amount	of	tax	benefit	that results	from	a	loss	from	continuing	operations	and	that	should	be	allocated	to	continuing	operations.	As	a	result,	American	recorded	a	tax	benefit	on	the	loss	from continuing	operations	for	the	year,	which	was	exactly	offset	by	income	tax	expense	on	other	comprehensive	income.	However,	while	the	income	tax	benefit	from continuing	operations	is	reported	on	the	income	statement,	the	income	tax	expense	on	other	comprehensive	income	is	recorded	directly	to	accumulated	other comprehensive	income	(loss),	which	is	a	component	of	stockholder's	equity.	Because	the	income	tax	expense	on	other	comprehensive	income	is

equal	to	the	income	tax	benefit	from	continuing	operations,	American's	year-end	net	deferred	tax	position	is	not	impacted	by	this	tax	allocation.	The	2013	tax benefit	was	offset	in	part	by	a	$214	million	tax	charge	attributable	to	additional	valuation	allowance	required	to	reduce	deferred	tax	assets	to	the	amount	American believes	is	more	likely	than	not	to	be	realized.

At	December	31,	2014,	American	had	approximately	$10.3	billion	of	gross	NOL	Carryforwards	to	reduce	future	federal	taxable	income,	substantially	all	of	which	are expected	to	be	available	for	use	in	2015.	American	is	a	member	of	AAG's	consolidated	federal	and	certain	state	income	tax	returns.	The	amount	of	federal	and	state NOL	Carryforwards	available	in	those	returns	is	$10.1	billion	and	$4.6	billion,	respectively,	substantially	all	of	which	is	expected	to	be	available	for	use	in	2015.	The federal	NOL	Carryforwards	will	expire	beginning	in	2022	if	unused.	These	NOL	Carryforwards	include	an	unrealized	tax	benefit	of	$712	million	related	to	the implementation	of	share-based	compensation	accounting	guidance	that	will	be	recorded	in	equity	when	realized.	American	also	had	approximately	$3.9	billion	of	NOL Carryforwards	to	reduce	future	state	taxable	income	at	December	31,	2014,	which	will	expire	in	years	2015	through	2034	if	unused.	American's	ability	to	deduct	its NOL	Carryforwards	and	to	utilize	certain	other	available	tax	attributes	can	be	substantially	constrained	under	the	general	annual	limitation	rules	of	Section	382	where	an "ownership	change"	has	occurred.	American	experienced	an	ownership	change	in	connection	with	its	emergence	from	the	Chapter	11	Cases.	The	general	limitation	rules of	Section	382	for	a	debtor	in	a	bankruptcy	case	are	liberalized	where	the	ownership	change	occurs	upon	emergence	from	bankruptcy.	American	elected	to	be	covered	by certain	special	rules	for	federal	income	tax	purposes	that	permit	approximately	$9.5	billion	of	its	federal	NOL	Carryforwards	to	be	utilized	without	regard	to	the Section	382	annual	limitation	rules.	Similar	limitations	may	apply	for	state	income	tax	purposes.	American's	ability	to	utilize	any	new	NOL	Carryforwards	arising	after the	ownership	change	is	not	affected	by	the	annual	limitation	rules	imposed	by	Section	382	unless	another	ownership	change	occurs.

At	December	31,	2014,	American	had	an	AMT	credit	carryforward	of	approximately	$435	million	available	for	federal	income	tax	purposes,	which	is	available	for an	indefinite	period.	American's	net	deferred	tax	assets,	which	include	the	NOL	Carryforwards,	are	subject	to	a	full	valuation	allowance.	At	December	31,	2014,	the federal	 and	 state	 valuation	 allowances	 were	 $5.1	 billion	 and	 $208	 million,	 respectively.	 In	 accordance	 with	 GAAP,	 utilization	 of	 the	 NOL	 Carryforwards	 after December	9,	2013	will	result	in	a	corresponding	decrease	in	the	valuation	allowance	and	offset	American's	tax	provision	dollar	for	dollar.

American	provides	a	valuation	allowance	for	deferred	tax	assets	when	it	is	more	likely	than	not	that	some	portion,	or	all	of	its	deferred	tax	assets,	will	not	be realized.	The	ultimate	realization	of	deferred	tax	assets	is	dependent	upon	the	generation	of	future	taxable	income	(primarily	reversals	of	deferred	tax	liabilities)	during the	periods	in	which	those	temporary	differences	will	become	deductible.	In	making	this	determination,	American	considers	all	available	positive	and	negative	evidence and	makes	certain	assumptions.	American	considers	many	factors	 in	evaluating	 the	realizability	of	 its	deferred	 tax	assets	 including	risks	associated	with	merger integration	as	well	as	other	factors,	which	continue	to	be	affected	by	conditions	beyond	American's	control,	such	as	the	condition	of	the	economy,	the	level	and	volatility of	fuel	prices	and	travel	demand.	American	has	concluded	as	of	December	31,	2014	that	the	valuation	allowance	was	still	needed	on	its	deferred	tax	asset	based	on	the weight	of	the	factors	described	above.

For	the	year	ended	December	31,	2014,	American	recorded	a	$319	million	tax	provision.	This	provision	included	$342	million	of	special	tax	charges	as	described above.	In	addition,	American	recorded	$6	million	of	tax	expense	principally	related	to	certain	states	and	countries	where	NOL	Carryforwards	were	limited	or	unavailable to	be	used.	These	charges	were	offset	in	part	by	a	$29	million	federal	income	tax	benefit	resulting	from	our	elections	under	applicable	sections	of	the	Tax	Relief, Unemployment	Insurance	Reauthorization,	and	Job	Creation	Act	of	2010	and	the	Housing	and	Economic	Recovery	Act	of	2008	(as	extended	by	the	Tax	Increase Prevention	Act	of	2014),	allowing	corporations	to	accelerate	utilization	of	certain	research	and	AMT	credit	carryforwards	in	lieu	of	applicable	bonus	depreciation	on certain	qualifying	capital	investments.

For	the	year	ended	December	31,	2013,	American	recorded	a	$354	million	tax	benefit.	This	benefit	included	$324	million	of	net	special	tax	benefits	as	described above.	In	addition,	American	recorded	a	$30	million	federal	income	tax	benefit	under	the	Housing	and	Economic	Recovery	Act	of	2008	as	described	above.

For	the	year	ended	December	31,	2012,	American	recorded	a	$569	million	special	tax	benefit	as	described	above.

|  | Year	Ended	December	31, |  | Percent |
| :--- | :--- | :--- | :--- |
|  |  |  | Increase |
|  | \t\t\t\t2014 | \t\t\t\t2013 | (Decrease) |
|  | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) |  |
| Mainline\tpassenger | $20,345 | $19,594 | 3.8 |
| Regional\tpassenger | 2,911 | 2,927 | (0.5) |
| Cargo | 717 | 676 | 6.1 |
| Other | 3,168 | 2,563 | 23.6 |
| Total\toperating\trevenues | $27,141 | $25,760 | 5.4 |

Total	operating	revenues	in	2014	increased	$1.4	billion	or	5.4%,	which	was	driven	by	strong	demand	for	air	travel.	Significant	changes	in	the	components	of	operating revenues	are	as	follows:

•	 Other	revenues	increased	$605	million,	or	23.6%,	in	2014	from	the	2013	period	driven	primarily	by	higher	revenues	associated	with	American's	frequent	flyer program	driven	by	American's	affinity	card	agreement	with	Citibank.

|  | Year	Ended	December	31, |  | Percent |
| :--- | :--- | :--- | :--- |
|  |  |  | Increase |
|  | \t\t\t\t2014 | \t\t\t\t2013 | (Decrease) |
|  | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) |  |
| Aircraft\tfuel\tand\trelated\ttaxes | $7,190 | $7,628 | (5.7) |
| Salaries,\twages\tand\tbenefits | 5,662 | 5,267 | 7.5 |
| Maintenance,\tmaterials\tand\trepairs | 1,334 | 1,222 | 9.2 |
| Other\trent\tand\tlanding\tfees | 1,145 | 1,117 | 2.5 |
| Aircraft\trent | 860 | 743 | 15.7 |
| Selling\texpenses | 1,091 | 1,128 | (3.3) |
| Depreciation\tand\tamortization | 896 | 830 | 7.9 |
| Special\titems,\tnet | 507 | 282 | 80.0 |
| Other | 3,005 | 2,935 | 2.4 |
| Total\tmainline\toperating\texpenses | 21,690 | 21,152 | 2.5 |
| Regional\texpenses: |  |  |  |
| Fuel | 999 | 1,055 | (5.3) |
| Other | 2,114 | 2,019 | 4.7 |
| Total\tregional\toperating\texpenses | 3,113 | 3,074 | 1.3 |
| Total\toperating\texpenses | $24,803 | $24,226 | 2.4 |

Total	operating	expenses	in	2014	increased	$577	million,	or	2.4%,	from	the	2013	period.	Significant	changes	in	the	components	of	mainline	operating	expenses	are	as follows:

•	 Aircraft	rent	increased	$117	million,	or	15.7%,	in	2014	from	the	2013	period	primarily	as	a	result	of	new	leased	aircraft	deliveries	in	2014	as	American continued	its	fleet	renewal	program.

•	 Depreciation	and	amortization	increased	$66	million,	or	7.9%,	in	2014	from	the	2013	period	primarily	as	a	result	of	new	purchased	aircraft	deliveries	since	the end	of	2013	as	American	continues	its	fleet	renewal	program.

Total	regional	expenses	increased	$39	million,	or	1.3%,	in	2014	from	the	2013	period.	Other	regional	operating	expenses	increased	$95	million,	or	4.7%,	primarily due	to	higher	expenses	associated	with	certain	capacity	purchase	agreements,	offset	by	a	$56	million,	or	5.3%,	decrease	in	fuel	costs	as	a	result	of	a	decrease	in	the average	price	per	gallon	of	fuel.

|  | Year	Ended	December	31,<br>				2014 | 2013 | Percent<br>Increase<br>(Decrease) |
| :--- | :--- | :--- | :--- |
|  | (In\tmillions,\texcluding\tpercentage\tchanges) | (In\tmillions,\texcluding\tpercentage\tchanges) |  |
| Interest\tincome | $25 | $20 | 27.7 |
| Interest\texpense,\tnet\tof\tcapitalized\tinterest | (581) | (710) | (18.1) |
| Other,\tnet | (153) | (84) | 81.0 |
| Total\tnonoperating\texpense,\tnet | $(709) | $(774) | (8.4) |

Interest	income	was	$25	million	and	$20	million	in	2014	and	2013,	respectively.	American's	short-term	investments	in	each	period	consisted	of	highly	liquid investments	which	provided	nominal	returns.

|  | Year	Ended	December	31,<br>				2014 | 2013 | Increase<br>(Decrease) |
| :--- | :--- | :--- | :--- |
|  | (In\tmillions) |  |  |
| Special\titems | $29 | $92 | $(63) |
| Amortization\tof\tdebt\tissuance\tcosts\tand\tdebt\tdiscounts | 38 | 33 | 5 |
| Interest\texpense\ton\tdebt\tand\tcapital\tlease\tobligations | 567 | 632 | (65) |
| Total\tinterest\texpense | 634 | 757 | (123) |
| Less:\tcapitalized\tinterest | (53) | (47) | (6) |
| Total\tinterest\texpense,\tnet\tof\tcapitalized\tinterest | $581 | $710 | $(129) |

Interest	expense,	net	of	capitalized	interest	decreased	$129	million,	or	18.1%,	in	2014	from	the	2013	period	primarily	due	to	a	$63	million	decrease	in	special	charges recognized	period-over-period	as	further	described	below,	as	well	as	refinancing	activities	that	resulted	in	$65	million	less	interest	expense	recognized	in	2014.	In	2014, American	recognized	$29	million	of	special	charges	relating	to	non-cash	interest	accretion	on	bankruptcy	settlement	obligations.	In	2013,	American	recognized	$48 million	of	special	charges	relating	to	post-petition	interest	expense	on	unsecured	obligations	pursuant	to	the	Plan	and	penalty	interest	related	to	American's	10.5% secured	notes	and	7.50%	senior	secured	notes.	In	addition,	in	2013	American	recorded	special	charges	of	$44	million	for	debt	extinguishment	costs	incurred	as	a	result of	the	repayment	of	certain	aircraft	secured	indebtedness,	including	cash	interest	charges	and	non-cash	write	offs	of	unamortized	debt	issuance	costs.	As	a	result	of	the 2013	refinancing	activities	and	the	early	extinguishment	of	American's	7.50%	senior	secured	notes	in	2014,	American	recognized	$65	million	less	interest	expense	in 2014	as	compared	to	the	2013	period.

Other	nonoperating	expense,	net	of	$153	million	in	2014	consisted	principally	of	net	foreign	currency	losses	of	$92	million	and	early	debt	extinguishment	charges	of $48	million.	Other	nonoperating	expense,	net	of	$84	million	in	2013	consisted	principally	of	net	foreign	currency	losses	of	$55	million	and	early	debt	extinguishment charges	of	$29	million.	Other	nonoperating	expense,	net	increased	$69	million,	or	81.0%,	during	2014	primarily	due	to	special	charges	recognized	as	a	result	of	early debt	extinguishment	and	an	increase	in	foreign	currency	losses	driven	by	the	strengthening	of	the	U.S.	dollar	in	foreign	currency	transactions,	principally	in	Latin American	markets.	American	recorded	a	$43	million	special	charge	for	Venezuelan	foreign	currency	losses	in	2014.	See	Part	II,	Item	7A.	Quantitative	and	Qualitative Disclosures	About	Market	Risk	for	further	discussion	of	our	cash	held	in	Venezuelan	bolivars.	In	addition,	American's	nonoperating	special	items	included	$48	million in	special	charges	in	the	2014	primarily	related	to	the	early	extinguishment	of	American's	7.50%	senior	secured	notes	and	other	indebtedness.

Reorganization	items	refer	to	revenues,	expenses	(including	professional	fees),	realized	gains	and	losses	and	provisions	for	losses	that	are	realized	or	incurred	as	a direct	result	of	the	Chapter	11	Cases.	The	following	table	summarizes	the	components	included	in	reorganization	items,	net	on	American's	consolidated	statement	of operations	for	the	year	ended	December	31,	2013	(in	millions):

(1) In	exchange	for	employees'	contributions	to	the	successful	reorganization,	including	agreeing	to	reductions	in	pay	and	benefits,	American	agreed	in	the	Plan	to provide	each	employee	group	a	deemed	claim,	which	was	used	to	provide	a	distribution	of	a	portion	of	the	equity	of	the	reorganized	entity	to	those	employees. Each	employee	group	received	a	deemed	claim	amount	based	upon	a	portion	of	the	value	of	cost	savings	provided	by	that	group	through	reductions	to	pay	and benefits	as	well	as	through	certain	work	rule	changes.	The	total	value	of	this	deemed	claim	was	approximately	$1.7	billion.

(2) Amounts	 include	allowed	claims	(claims	approved	by	 the	Bankruptcy	Court)	and	estimated	allowed	claims	relating	 to	(i)	 the	rejection	or	modification	of financings	related	to	aircraft	and	(ii)	entry	of	orders	treated	as	unsecured	claims	with	respect	to	facility	agreements	supporting	certain	issuances	of	special	facility revenue	bonds.	The	Debtors	recorded	an	estimated	claim	associated	with	the	rejection	or	modification	of	a	financing	or	facility	agreement	when	the	applicable motion	was	filed	with	the	Bankruptcy	Court	to	reject	or	modify

such	financing	or	facility	agreement	and	the	Debtors	believed	that	it	was	probable	the	motion	would	be	approved,	and	there	was	sufficient	information	to	estimate the	claim.	See	Note	2	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for	further	information.

(3) Pursuant	to	the	Plan,	the	Debtors	agreed	to	allow	certain	post-petition	unsecured	claims	on	obligations.	As	a	result,	during	the	year	ended	December	31,	2013, American	 recorded	 reorganization	 charges	 to	 adjust	 estimated	 allowed	 claim	 amounts	 previously	 recorded	 on	 rejected	 special	 facility	 revenue	 bonds	 of $180	million,	allowed	general	unsecured	claims	related	to	the	1990	and	1994	series	of	special	facility	revenue	bonds	that	financed	certain	improvements	at	JFK, and	rejected	bonds	that	financed	certain	improvements	at	ORD,	which	are	included	in	the	table	above.

(4) The	Plan	allowed	unsecured	creditors	receiving	AAG	Series	A	Preferred	Stock	a	conversion	discount	of	3.5%.	Accordingly,	American	recorded	the	fair	value	of such	discount	upon	the	confirmation	of	the	Plan	by	the	Bankruptcy	Court.

|  | Year	Ended	December	31,<br>				2013 | 2012 | Percent<br>Increase<br>(Decrease) |
| :--- | :--- | :--- | :--- |
|  | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) |  |
| Mainline\tpassenger | $19,594 | $18,743 | 4.5 |
| Regional\tpassenger | 2,927 | 2,914 | 0.5 |
| Cargo | 676 | 675 | — |
| Other | 2,563 | 2,493 | 2.8 |
| Total\toperating\trevenues | $25,760 | $24,825 | 3.8 |

•	 Other	revenues	were	$2.6	billion	in	2013,	an	increase	of	$70	million,	or	2.8%,	primarily	due	to	increased	revenues	associated	with	the	sale	of	AAdvantage frequent	flyer	mileage	credits	and	a	$31	million	special	credit	related	to	a	change	in	accounting	method	resulting	from	the	modification	of	American's AAdvantage	miles	agreement	with	Citibank.

|  | Year	Ended	December	31, |  | Percent |
| :--- | :--- | :--- | :--- |
|  |  |  | Increase |
|  | \t\t\t\t2013 | \t\t\t\t2012 | (Decrease) |
|  | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) |  |
| Aircraft\tfuel\tand\trelated\ttaxes | $7,628 | $7,705 | (1.0) |
| Salaries,\twages\tand\tbenefits | 5,267 | 6,208 | (15.2) |
| Maintenance,\tmaterials\tand\trepairs | 1,222 | 1,158 | 5.5 |
| Other\trent\tand\tlanding\tfees | 1,117 | 1,083 | 3.2 |
| Aircraft\trent | 743 | 554 | 34.2 |
| Selling\texpenses | 1,128 | 1,059 | 6.5 |
| Depreciation\tand\tamortization | 830 | 845 | (1.7) |
| Special\titems,\tnet | 282 | 386 | (26.9) |
| Other | 2,935 | 2,696 | 8.9 |
| Total\tmainline\toperating\texpenses | $21,152 | $21,694 | (2.5) |
| Regional\texpenses: |  |  |  |
| Fuel | 1,055 | 1,012 | 4.2 |
| Other | 2,019 | 2,037 | (0.9) |
| Total\tregional\texpenses | $3,074 | $3,049 | 0.8 |
| Total\toperating\texpenses | $24,226 | $24,743 | (2.1) |

•Salaries,	wages	and	benefits	decreased	$941	million,	or	15.2%,	due	to	the	results	of	voluntary	and	involuntary	terminations	in	connection	with	the	2012 restructuring	plan,	as	well	as	effects	related	to	the	freezing	of	American's	pension	plan	in	2012.

•	 Aircraft	rent	increased	$189	million,	or	34.2%,	as	a	result	of	new	aircraft	deliveries	in	2013	as	American	continued	its	fleet	renewal	program.

•	 Other	operating	expenses	increased	$239	million,	or	8.9%,	due	to	higher	costs	associated	with	outsourced	services	and	enhanced	customer	product	offerings.

Total	regional	expenses	increased	$25	million,	or	0.8%,	in	2013	to	$3.1	billion	from	$3.0	billion	in	2012.	The	year-over-year	increase	was	primarily	driven	by	a	$43 million,	or	4.2%,	increase	in	fuel	costs	driven	by	higher	fuel	consumption	due	to	the	transition	from	turboprop	to	regional	jet	aircraft.

|  | Year	Ended	December	31,<br>				2013 | 2012 | Percent<br>Increase<br>(Decrease) |
| :--- | :--- | :--- | :--- |
|  | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) |  |
| Interest\tincome | $20 | $25 | (21.3) |
| Interest\texpense,\tnet\tof\tcapitalized\tinterest | (710) | (646) | 9.8 |
| Other,\tnet | (84) | 223 | nm |
| Total\tnonoperating\texpense,\tnet | $(774) | $(398) | (94.2) |

Interest	expense,	net	of	capitalized	interest	increased	$64	million,	or	9.8%,	to	$710	million	in	2013	from	$646	million	in	2012	primarily	due	to	special	charges	of	$92 million	to	recognize	post-petition	interest	expense	on	unsecured	obligations	pursuant	to	the	Plan	and	penalty	interest	related	to	10.5%	secured	notes	and	7.50%	senior secured	notes.

Other	nonoperating	expense,	net	of	$84	million	in	2013	consists	principally	of	net	foreign	currency	losses	of	$55	million	and	early	debt	extinguishment	charges	of $48	million.	Other	nonoperating	income	in	2012	consisted	principally	of	a	$280	million	special	credit	related	to	the	settlement	of	a	commercial	dispute	partially	offset by	net	foreign	currency	losses.

Reorganization	items	refer	to	revenues,	expenses	(including	professional	fees),	realized	gains	and	losses	and	provisions	for	losses	that	are	realized	or	incurred	as	a direct	result	of	the	Chapter	11	Cases.	The	following	table	summarizes	the	components	included	in	reorganization	items,	net	on	American's	consolidated	statements	of operations	for	the	years	ended	December	31,	2013	and	2012	(in	millions):

|  | 2013 | 2012 |
| :--- | :--- | :--- |
| Pension\tand\tpostretirement\tbenefits | $— | $(66) |
| Labor-related\tdeemed\tclaim\t(1) | \t 1,733 | — |
| Aircraft\tand\tfacility\tfinancing\trenegotiations\tand\trejections\t(2),\t(3) | 320 | \t 1,951 |
| Fair\tvalue\tof\tconversion\tdiscount\t(4) | 218 | — |
| Professional\tfees | 199 | 227 |
| Other | 170 | 67 |
| Total\treorganization\titems,\tnet | $2,640 | $2,179 |

(2) Amounts	 include	allowed	claims	(claims	approved	by	 the	Bankruptcy	Court)	and	estimated	allowed	claims	relating	 to	(i)	 the	rejection	or	modification	of financings	related	to	aircraft	and	(ii)	entry	of	orders	treated	as	unsecured	claims	with	respect	to	facility	agreements	supporting	certain	issuances	of	special	facility revenue	bonds.	The	Debtors	recorded	an	estimated	claim	associated	with	the	rejection	or	modification	of	a	financing	or	facility	agreement	when	the	applicable motion	was	filed	with	the	Bankruptcy	Court	to	reject	or	modify	such	financing	or	facility	agreement	and	the	Debtors	believed	that	it	was	probable	the	motion would	be	approved,	and	there	was	sufficient	information	to	estimate	the	claim.	See	Note	2	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for further	information.

# Liquidity	and	Capital	Resources

# Cash,	Short-Term	Investments	and	Restricted	Cash

As	of	December	31,	2014,	AAG's	total	cash,	short-term	investments	and	restricted	cash	and	short-term	investments	was	$8.1	billion,	of	which	$774	million	was restricted.	Additional	detail	is	provided	in	the	table	below	(in	millions):

|  | AAG | AAG | American | American |
| :--- | :--- | :--- | :--- | :--- |
|  | December\t31, |  | December\t31, | December\t31, |
|  | 2014 | 2013 | 2014 | 2013 |
| Cash | $994 | $1,140 | $785 | $829 |
| Short-term\tinvestments | \t 6,309 | 8,111 | \t 3,290 | \t 5,162 |
| Restricted\tcash\tand\tshort-term\tinvestments\t(1) | 774 | 1,035 | 650 | 702 |
| Total\tcash,\tshort-term\tinvestments\tand\trestricted\tcash\tand\tshort-term\tinvestments | $8,077 | $10,286 | $4,725 | $6,693 |

(1) Our	restricted	cash	and	short-term	investments	related	primarily	to	collateral	held	to	support	projected	workers'	compensation	obligations.

As	of	December	31,	2014,	$804	million	of	our	cash	and	short-term	investments	balances	were	held	in	foreign	bank	accounts,	of	which	approximately	$656	million was	held	in	Venezuelan	bolivars.	This	balance	includes	approximately	$621	million	valued	at	6.3	bolivars	and	approximately	$35	million	valued	at	12.0	bolivars,	with the	rate	depending	on	the	date	we	submitted	our	repatriation	request	to	the	Venezuelan	government.	These	rates	are	materially	more	favorable	than	the	exchange	rates currently	prevailing	for	other	transactions	conducted	outside	of	the	Venezuelan	government's	currency	exchange	system	that	we	participate	in.	Our	cash	balance	held	in Venezuelan	bolivars	decreased	$54	million	from	the	December	31,	2013	balance	of	$710	million	primarily	due	to	$88	million	in	cash	repatriations	and	$30	million	in foreign	currency	losses	as	described	below,	partially	offset	by	additional	cash	proceeds	from	ticket	sales	in	early	2014.	In	the	second	and	third	quarters	of	2014,	we repatriated	$65	million	including	$31	million	valued	at	6.3	bolivars	to	the	dollar	and	$34	million	valued	at	10.6	bolivars	to	the	dollar.	In	the	fourth	quarter	of	2014,	we incurred	an	$11	million	foreign	currency	loss	related	to	the	receipt	of	$23	million	at	a	rate	of	6.3	bolivars	to	the	dollar	for	one	of	our	2012	repatriation	requests originally	valued	at	a	rate	of	4.3	bolivars	to	the	dollar.	Accordingly,	we	revalued	our	remaining	pending	2012	repatriation	requests	from	4.3	to	6.3	bolivars	to	the	dollar resulting	in	additional	foreign	currency	losses	of	$19	million.	In	total,	we	recognized	a	$30	million	special	charge	for	these	foreign	currency	losses	in	the	fourth	quarter of	2014.	During	2014,	we	significantly	reduced	capacity	in	this	market	and	we	are	no	longer	accepting	bolivars	as	payment	for	airline	tickets.	We	are	continuing	to	work with	Venezuelan	authorities	regarding	the	timing	and	exchange	rate	applicable	to	the	repatriation	of	funds	held	in	local	currency.	We	are	monitoring	this	situation closely	and	continue	to	evaluate	our	holdings	of	Venezuelan	bolivars	for	additional	foreign	currency	losses,	which	could	be	material,	particularly	in	light	of	the uncertainty	posed	by	the	new	foreign	exchange	regulations	announced	in	mid-February	2015	and	the	continued	deterioration	of	economic	conditions	in	Venezuela.	See Part	I,	Item	1A.	Risk	Factors	–	"We	operate	a	global	business	with	international	operations	that	are	subject	to	economic	and	political	instability	and	have	been,	and	in the	future	may	continue	to	be,	adversely	affected	by	numerous	events,	circumstances	or	government	actions	beyond	our	control"	for	additional	discussion	of	this	and other	currency	risks.

# Share	Repurchase	Programs

In	July	2014,	as	part	of	a	capital	deployment	program,	our	Board	of	Directors	authorized	a	$1.0	billion	share	repurchase	program	which	was	completed	in	December 2014.	During	the	year	ended	December	31,	2014,	we	repurchased	23.4	million	shares	of	AAG	Common	Stock	for	$1.0	billion	at	a	weighted	average	cost	per	share	of $42.72.

On	January	27,	2015,	we	announced	that	our	Board	of	Directors	had	authorized	a	new	$2.0	billion	share	repurchase	program	to	be	completed	by	the	end	of	2016. Shares	repurchased	under	the	program	may	be	made	through	a	variety	of	methods,	which	may	include	open	market	purchases,	privately	negotiated	transactions,	block trades	or	accelerated	share	repurchase	transactions.	Any	such	repurchases	will	be	made	from	time	to	time	subject	to	market	and	economic	conditions,	applicable	legal requirements	and	other	relevant	factors.	The	program	does	not	obligate	us	to	repurchase	any	specific	number	of	shares	and	may	be	suspended	at	any	time	at	our discretion.

Separate	from	our	share	repurchase	programs,	during	2014,	we	also	withheld	approximately	9	million	shares	of	AAG	Common	Stock	and	paid	approximately	$325 million	in	satisfaction	of	certain	tax	withholding	obligations	associated	with	distributions	under	the	Plan	and	employee	equity	awards.

In	July	2014,	as	part	of	our	capital	deployment	program,	our	Board	of	Directors	declared	a	$0.10	per	share	cash	dividend	for	shareholders	of	record	as	of	August	4, 2014,	and	payable	on	August	18,	2014.

In	October	2014,	our	Board	of	Directors	declared	a	$0.10	per	share	dividend	for	shareholders	of	record	on	November	3,	2014,	and	payable	on	November	17,	2014.

In	January	2015,	our	Board	of	Directors	declared	a	$0.10	per	share	dividend	for	shareholders	of	record	on	February	9,	2015,	and	payable	on	February	23,	2015.

The	total	cash	payment	for	dividends	during	the	year	ended	December	31,	2014	was	$144	million.

Any	future	dividends	that	may	be	declared	and	paid	from	time	to	time	under	our	capital	deployment	program	will	be	subject	to	market	and	economic	conditions, applicable	legal	requirements	and	other	relevant	factors.	Our	capital	deployment	program	does	not	obligate	us	to	continue	a	dividend	for	any	fixed	period,	and	payment of	dividends	may	be	suspended	at	any	time	at	our	discretion.

# Sources	and	Uses	of	Cash

# Operating	Activities

Net	cash	provided	by	operating	activities	was	$3.1	billion	and	$675	million	in	2014	and	2013,	respectively,	a	period-over-period	increase	of	$2.4	billion.	This	period- over-period	improvement	in	cash	flow	generated	from	operating	activities	is	principally	due	to	increased	profitability	and	the	inclusion	of	a	full	year	of	US	Airways Group's	net	cash	provided	by	operating	activities	for	the	year	ended	December	31,	2014.	These	increases	were	offset	in	part	by	higher	pension	contributions	made	during 2014.	During	the	year	ended	December	31,	2014	and	2013,	we	contributed	$810	million	and	$494	million,	respectively,	to	fund	our	defined	benefit	pension	plans, representing	a	$316	million	period-over-period	increase	in	contributions.

# Investing	Activities

Net	cash	used	in	investing	activities	was	$2.9	billion	and	$3.8	billion	in	2014	and	2013,	respectively.

Principal	investing	activities	in	the	2014	period	included	expenditures	of	$5.3	billion	for	property	and	equipment,	consisting	primarily	of	the	purchase	of	newly delivered	aircraft	including	20	Boeing	737	family	aircraft,	six	Boeing	777	aircraft,	25	Airbus	A320	family	aircraft,	three	Airbus	A330	family	aircraft	and	16	Bombardier CRJ900	aircraft,	the	purchase	of	aircraft	previously	leased	including	three	Airbus	A330	family

aircraft,	three	Boeing	777	aircraft	and	nine	Airbus	A320	family	aircraft,	as	well	as	pre-delivery	deposits	for	certain	aircraft	on	order.	These	cash	outflows	were	offset	in part	by	$1.8	billion	in	net	sales	of	short-term	investments,	$307	million	in	proceeds	from	the	sale	of	DCA	Slots	and	a	$261	million	decrease	in	restricted	cash	and	short- term	investments	primarily	due	to	lower	collateral	requirements	with	respect	to	projected	workers'	compensation	obligations.

Principal	investing	activities	in	2013	included	expenditures	of	$3.1	billion	for	property	and	equipment,	consisting	primarily	of	the	purchase	of	31	Boeing	737	aircraft and	eight	Boeing	777	aircraft	as	well	as	pre-delivery	deposits	for	certain	aircraft	on	order	and	$1.2	billion	in	net	purchases	of	short-term	investments.	These	cash outflows	were	offset	in	part	by	proceeds	from	the	sale	of	certain	property	and	equipment	and	a	$147	million	decrease	in	restricted	cash	and	short-term	investments primarily	due	to	lower	collateral	requirements	with	respect	to	projected	workers'	compensation	obligations.	Additionally,	in	connection	with	the	Merger,	we	acquired	the $206	million	cash	balance	of	US	Airways	Group.

# Financing	Activities

Net	cash	used	in	financing	activities	was	$315	million	in	2014	as	compared	to	net	cash	provided	by	financing	activities	of	$3.8	billion	in	2013.

Principal	financing	activities	in	the	2014	period	included	$1.0	billion	in	stock	repurchases	and	debt	repayments	of	$3.1	billion,	including	the	$1.0	billion	prepayment of	American's	 7.50%	 senior	 secured	 notes,	 the	 $175	 million	 cash	 settlement	 of	 US	Airways	 Group's	 7.25%	 convertible	 notes,	 the	 $155	 million	 prepayment	 of outstanding	debt	secured	by	certain	aircraft	and	the	$366	million	prepayment	of	certain	airport	facility	revenue	bonds.	These	cash	outflows	were	offset	in	part	by proceeds	from	the	issuance	of	$3.3	billion	of	debt,	primarily	including	the	$750	million	term	loan	under	the	2014	Credit	Facilities,	the	5.50%	senior	notes,	$1.8	billion	of certain	EETC	equipment	notes	and	other	aircraft	related	financings,	as	well	as	$811	million	of	proceeds	from	sale-leaseback	transactions	related	to	the	financing	of	20 Boeing	737	family	aircraft.

Principal	financing	activities	in	2013	included	proceeds	of	$6.8	billion	and	consisted	primarily	of	the	issuance	of	debt	of	$5.1	billion,	including	the	$1.9	billion	2013 Citicorp	Credit	Facility	and	proceeds	from	sale-leaseback	transactions	of	$1.7	billion.	These	cash	inflows	were	offset	in	part	by	debt	repayments	of	$2.9	billion.

Net	cash	provided	by	operating	activities	was	$675	million	and	$1.3	billion	in	2013	and	2012,	respectively,	a	year-over-year	decrease	of	$610	million.	This	year-over- year	decrease	was	primarily	due	to	the	inclusion	of	US	Airways	Group's	net	cash	used	in	operating	activities	of	$327	million,	for	the	post-Merger	period	from December	9,	2013	to	December	31,	2013,	and	our	emergence	from	bankruptcy	in	2013	which	triggered	cash	payments	for	certain	liabilities.

Principal	investing	activities	in	2013	included	expenditures	of	$3.1	billion	for	property	and	equipment	and	consisted	primarily	of	the	purchases	of	31	Boeing	737 aircraft	and	eight	Boeing	777	aircraft	and	pre-delivery	deposits	for	aircraft	on	order	and	$1.2	billion	in	net	purchases	of	short-term	investments.	These	cash	outflows were	offset	in	part	by	proceeds	from	the	sale	of	certain	property	and	equipment	and	a	$147	million	decrease	in	restricted	cash	and	short-term	investments.	Additionally, in	connection	with	the	Merger,	the	Company	acquired	the	$206	million	cash	balance	of	US	Airways	Group.

Principal	investing	activities	in	2012	included	expenditures	of	$1.9	billion	for	property	and	equipment	and	consisted	primarily	of	the	purchase	of	28	Boeing	737 aircraft	and	two	Boeing	777	aircraft	and	pre-delivery	deposits	for	aircraft	on	order	and	$112	million	from	an	increase	in	restricted	cash	and	short-term	investments. These	cash	outflows	were	offset	in	part	by	cash	proceeds	of	$306	million	from	net	sales	of	short-term	investments	and	$123	million	in	proceeds	from	the	sale	of	certain property	and	equipment.

Net	cash	provided	by	financing	activities	was	$3.8	billion	and	$483	million	in	2013	and	2012,	respectively.

Principal	financing	activities	in	2013	included	proceeds	of	$6.8	billion	and	consisted	primarily	of	the	issuance	of	debt	of	$5.1	billion,	including	the	$1.9	billion	Term Loan	Facility	and	proceeds	from	sale-leaseback	transactions	of	$1.7	billion.	These	cash	inflows	were	offset	in	part	by	debt	repayments	of	$2.9	billion.

Principal	financing	activities	in	2012	included	proceeds	of	$1.8	billion	and	consisted	primarily	of	$1.5	billion	in	proceeds	from	sale-leaseback	transactions.	These proceeds	were	offset	in	part	by	debt	repayments	of	$1.3	billion.

# American

Net	cash	provided	by	operating	activities	was	$1.5	billion	and	$949	million	in	2014	and	2013,	respectively,	a	period-over-period	increase	of	$528	million.	This period-over-period	 improvement	 in	 cash	 flow	 generated	 from	 operating	 activities	 is	 principally	 due	 to	 increased	 profitability	 offset	 in	 part	 by	 higher	 pension contributions	made	during	2014.	During	the	years	ended	December	31,	2014	and	2013,	American	contributed	$809	million	and	$494	million,	respectively,	to	fund	its defined	benefit	pension	plans,	representing	a	$315	million	period-over-period	increase	in	contributions.

Principal	investing	activities	in	the	2014	period	included	expenditures	of	$3.9	billion	for	property	and	equipment,	consisting	primarily	of	the	purchase	of	newly delivered	aircraft	including	20	Boeing	737	family	aircraft,	six	Boeing	777	aircraft,	seven	Airbus	A320	family	aircraft	and	16	Bombardier	CRJ900	aircraft,	the	purchase of	aircraft	previously	being	leased	including	three	Boeing	777	aircraft	and	nine	Airbus	A320	family	aircraft,	as	well	as	pre-delivery	deposits	for	certain	aircraft	on	order and	$198	million	of	cash	transferred	to	affiliates.	These	cash	outflows	were	offset	in	part	by	$1.9	billion	in	net	sales	of	short-term	investments,	$299	million	in	proceeds from	the	sale	of	DCA	Slots	and	a	$52	million	decrease	in	restricted	cash	and	short-term	investments	primarily	due	to	lower	collateral	requirements	with	respect	to projected	workers'	compensation	obligations.

Principal	investing	activities	in	2013	included	expenditures	of	$3.0	billion	for	property	and	equipment,	consisting	primarily	of	the	purchase	of	31	Boeing	737	aircraft and	eight	Boeing	777	aircraft	as	well	as	pre-delivery	deposits	for	certain	aircraft	on	order	and	$1.8	billion	in	net	purchases	of	short-term	investments.	These	cash outflows	were	offset	in	part	by	$115	million	in	proceeds	from	the	sale	of	certain	property	and	equipment	and	a	$148	million	decrease	in	restricted	cash	and	short-term investments.

Net	cash	provided	by	financing	activities	was	$368	million	in	2014	as	compared	to	net	cash	provided	by	financing	activities	of	$3.9	billion	in	2013.

Principal	financing	activities	in	the	2014	period	included	debt	repayments	of	$2.3	billion	including	the	$1.0	billion	prepayment	of	American's	7.50%	senior	secured notes,	the	$293	million	prepayment	of	certain	airport	facility	revenue	bonds	and	the	$88	million	prepayment	of	outstanding	debt	secured	by	certain	aircraft.	These	cash outflows	were	offset	in	part	by	proceeds	from	the	issuance	of	$2.0	billion	of	debt,	primarily	including	the	$750	million	term	loan	under	the	2014	Credit	Facilities,	$1.2 billion	of	certain	EETC	equipment	notes	and	other	aircraft	related	financings,	as	well	as	$811	million	of	proceeds	from	sale-leaseback	transactions	related	to	the financing	of	20	Boeing	737	family	aircraft.

Principal	financing	activities	in	2013	included	proceeds	of	$6.6	billion	and	consisted	primarily	of	the	issuance	of	debt	of	$4.8	billion,	including	the	$1.9	billion	Term Loan	and	several	EETC	financings,	and	proceeds	from	sale-leaseback	transactions	of	$1.7	billion.	These	cash	inflows	were	offset	in	part	by	debt	repayments	of $2.6	billion.

Net	cash	provided	by	operating	activities	was	$949	million	and	$1.2	billion	in	2013	and	2012,	respectively,	a	year-over-year	decrease	of	$205	million.	This	decrease was	due	principally	to	emergence	from	bankruptcy	in	2013,	which	triggered	payments	for	several	liabilities.

Principal	investing	activities	in	2013	included	expenditures	of	$3.0	billion	for	property	and	equipment	and	consisted	primarily	of	the	purchases	of	31	Boeing	737 aircraft	and	eight	Boeing	777	aircraft	and	pre-delivery	deposits	for	aircraft	on	order	and	$1.8	billion	in	net	purchases	of	short-term	investments.	These	cash	outflows were	offset	 in	part	by	$115	million	 in	proceeds	from	 the	sale	of	certain	property	and	equipment	and	a	$148	million	decrease	 in	restricted	cash	and	short-term investments.

Principal	investing	activities	in	2012	included	expenditures	of	$1.9	billion	for	property	and	equipment	and	consisted	primarily	of	the	purchase	of	28	Boeing	737 aircraft	and	2	Boeing	777	aircraft	and	pre-delivery	deposits	for	aircraft	on	order.	These	cash	outflows	were	offset	in	part	by	cash	proceeds	of	$306	million	from	net	sales of	marketable	securities	and	$124	million	obtained	in	the	sale	of	certain	property	and	equipment.

# Commitments

# Significant	Indebtedness

As	of	December	31,	2014,	AAG	and	American	had	$18.0	billion	and	$11.3	billion,	respectively,	in	long-term	debt	and	capital	leases	(including	current	maturities	and before	debt	discount).	See	Note	9	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	and	Note	6	to	American's	Consolidated	Financial	Statements	in	Part II,	Item	8B	for	further	information	on	all	indebtedness	as	of	December	31,	2014.	Our	significant	indebtedness	includes	the	2013	Credit	Facilities,	the	2013	Citicorp Credit	Facility	and	the	2014	Credit	Facilities	described	below.

# 2013	Credit	Facilities

On	June	27,	2013,	American	and	AAG	entered	into	a	Credit	and	Guaranty	Agreement	(as	amended,	the	2013	Credit	Agreement)	with	certain	lenders.	The	2013 Credit	Agreement	provides	for	a	term	loan	facility	(the	2013	Term	Loan	Facility)	that	is	scheduled	to	mature	on	June	27,	2019,	unless	otherwise	extended	by	the applicable	parties.	As	of	December	31,	2014,	$1.9	billion	was	outstanding	under	the	2013	Term	Loan	Facility.

The	2013	Credit	Agreement	originally	provided	for	a	$1.0	billion	revolving	credit	facility	(the	2013	Revolving	Facility	and,	together	with	the	2013	Term	Loan Facility,	the	2013	Credit	Facilities)	scheduled	to	mature	on	June	27,	2018,	unless	otherwise	extended	by	the	applicable	parties.	The	2013	Term	Loan	Facility	is	repayable in	quarterly	installments	in	an	amount	equal	to	0.25%	of	the	original	principal	amount	thereof	with	any	unpaid	balance	due	on	the	maturity	date	of	the	2013	Term	Loan Facility.	The	2013	Revolving	Facility	provided	that	American	may	from	time	to	time	borrow,	repay	and	reborrow	loans	thereunder	and	have	letters	of	credit	issued thereunder	in	an	aggregate	amount	outstanding	at	any	time	of	up	to	$1.0	billion.	On	October	10,	2014,	American	and	AAG	amended	the	2013	Credit	Agreement	to extend	the	maturity	date	of	the	2013	Revolving	Facility	to	October	10,	2019	and	increased	the	commitments	thereunder	to	an	aggregate	amount	of	$1.4	billion	while reducing	the	letter	of	credit	commitments	thereunder	to	$300	million.	As	of	December	31,	2014,	there	were	no	borrowings	or	letters	of	credit	outstanding	under	the	2013 Revolving	Facility.

The	2013	Credit	Facilities	bear	interest	at	an	index	rate	plus	an	applicable	index	margin	or,	at	American's	option,	LIBOR	(subject	to	a	floor	of	0.75%,	with	respect	to the	2013	Term	Loan	Facility)	plus	an	applicable	LIBOR	margin.	The	applicable	LIBOR	margin	is	3.00%	for	borrowings	under	both	the	2013	Term	Loan	Facility	and	the 2013	Revolving	Facility.

Upon	consummation	of	the	Merger,	US	Airways	Group	and	US	Airways	joined	the	2013	Credit	Facilities	as	guarantors.	Following	the	joinder,	certain	minimum dollar-thresholds	under	the	negative	and	financial	covenants	in	the	2013	Credit	Facilities	were	automatically	increased.

Subject	to	certain	limitations	and	exceptions,	the	2013	Credit	Facilities	are	secured	by	certain	collateral,	including	certain	route	authorities	and	certain	take-off	and landing	rights	and	gate	leaseholds	at	certain	airports.	American	is	required	to	maintain	a	certain	minimum	ratio	of	appraised	value	of	the	collateral	to	the	outstanding loans	under	the	2013	Credit	Facilities	as	more	fully	described	below	in	"Collateral	Related	Covenants."

The	2013	Credit	Facilities	contain	events	of	default	customary	for	similar	financings,	including	cross	default	to	other	material	indebtedness.	Upon	the	occurrence	of an	event	of	default,	the	outstanding	obligations	under	the	2013	Credit	Facilities	may	be	accelerated	and	become	due	and	payable	immediately.	In	addition,	if	a	"change of	control"	(as	defined	in	the	2013	Credit	Agreement)	occurs,	American	will	(absent	an	amendment	or	waiver)	be	required	to	repay	at	par	the	loans	outstanding	under the	2013	Credit	Facilities	and	terminate	the	2013	Revolving	Facility.	The	2013	Credit	Facilities	also	include	covenants	that,	among	other	things,	require	AAG	to maintain	a	minimum	aggregate	liquidity	(as	defined	in	the	2013	Credit	Facilities)	of	not	less	than	$2.0	billion,	and	limit	the	ability	of	AAG	and	its	restricted	subsidiaries to	pay	dividends	and	make	certain	other	payments,	make	certain	investments,	incur	additional	indebtedness,	incur	liens	on	the	collateral,	dispose	of	the	collateral,	enter into	certain	affiliate	transactions	and	engage	in	certain	business	activities,	in	each	case	subject	to	certain	exceptions.

# 2013	Citicorp	Credit	Facility

On	May	23,	2013,	US	Airways	entered	into	a	term	loan	credit	facility	(the	2013	Citicorp	Credit	Facility)	with	Citicorp	North	America,	Inc.,	as	administrative	agent, and	a	syndicate	of	lenders.	US	Airways	Group	and	certain	other	subsidiaries	of	US	Airways	Group	are	guarantors	of	the	2013	Citicorp	Credit	Facility	agreement.	In connection	with	the	closing	of	the	Merger,	AAG	and	American	entered	into	a	joinder	to	the	2013	Citicorp	Credit	Facility	loan	agreement	pursuant	to	which	AAG	and American	became	guarantors	under	such	agreement.

The	 2013	 Citicorp	 Credit	 Facility	 consists	 of	 tranche	 B-1	 term	 loans	 (Tranche	 B-1)	 and	 tranche	 B-2	 term	 loans	 (Tranche	 B-2).	As	 of	 December	 31,	 2014, $990	million	was	outstanding	under	Tranche	B-1	and	$594	million	was	outstanding	under	Tranche	B-2.	Voluntary	prepayments	may	be	made	at	any	time,	with	a premium	of	1.00%	applicable	to	certain	prepayments	made	prior	to	the	date	that	is	six	months	following	January	16,	2014.

As	of	December	31,	2014,	the	2013	Citicorp	Credit	Facility	bears	interest	at	an	index	rate	plus	an	applicable	index	margin	or,	at	US	Airways'	option,	LIBOR (subject	to	a	floor	of	0.75%)	plus	an	applicable	LIBOR	margin.	The	applicable	LIBOR	margin	is	2.75%	for	Tranche	B-1	and	2.25%	for	Tranche	B-2.

Tranche	B-1	and	Tranche	B-2	mature	on	May	23,	2019	and	November	23,	2016,	respectively	(unless	otherwise	extended	by	the	applicable	parties),	and	each	is repayable	in	annual	installments	to	be	paid	on	each	anniversary	of	the	closing	date	in	an	amount	equal	to	1.00%	of	the	initial	aggregate	principal	amount	of	the	loans with	any	unpaid	balance	due	on	the	maturity	date	of	the	respective	tranche.

Subject	to	certain	limitations	and	exceptions,	the	obligations	of	US	Airways	under	the	2013	Citicorp	Credit	Facility	are	secured	by	liens	on	certain	take-off	and landing	rights	at	certain	airports,	and	certain	other	assets	of	US	Airways.	US	Airways	is	required	to	maintain	a	certain	minimum	ratio	of	appraised	value	of	the	collateral to	the	outstanding	loans	under	the	2013	Citicorp	Credit	Facility	as	more	fully	described	below	in	"Collateral	Related	Covenants."

The	2013	Citicorp	Credit	Facility	agreement	contains	events	of	default	customary	for	similar	financings,	including	a	cross-default	provision	to	certain	other	material indebtedness	of	US	Airways	and	certain	of	its	affiliates.	Upon	the	occurrence	of	an	event	of	default,	the	outstanding	obligations	under	the	2013	Citicorp	Credit	Facility may	be	accelerated	and	become	due	and	payable	immediately.	In	addition,	if	a	"change	of	control"	(as	defined	in	the	2013	Citicorp	Credit	Facility	agreement)	occurs, US	Airways	will	(absent	an	amendment	or	waiver)	be	required	 to	repay	 the	outstanding	 loans	 in	full	 together	with	accrued	 interest	 thereon	 to	 the	date	of	such prepayment.	The	2013	Citicorp	Credit	Facility	agreement	includes	affirmative,	negative	and	financial	covenants	that,	among	other	things,	(a)	require	AAG	and	its restricted	subsidiaries	to	maintain	unrestricted	liquidity	of	not	less	than	$2.0	billion,	with	not	less	than	$750	million	held	in	accounts	subject	to	control	agreements,	and (b)	restrict	the	ability	of	US	Airways	Group,	its	subsidiaries	party	to	the	2013	Citicorp	Credit	Facility,	AAG	and	American	to	make	certain	investments,	pay	dividends and	make	certain	other	payments,	make	certain	acquisitions,	incur	liens	on	the	collateral,	dispose	of	collateral,	enter	into	certain	affiliate	transactions,	enter	into	certain hedging	transactions,	and	engage	in	certain	business	activities,	in	each	case	subject	to	certain	exceptions.

# Senior	Secured	Notes

In	March	2014,	American	prepaid	$100	million	of	its	7.50%	senior	secured	notes	at	a	redemption	price	of	103%	of	their	principal	amount	plus	accrued	and	unpaid interest.	In	July	2014,	American	prepaid	the	remaining	outstanding	principal	balance	of	$900	million	at	a	redemption	price	of	103.75%	of	outstanding	principal	amount plus	accrued	and	unpaid	interest.	In	connection	with	the	prepayment	of	the	outstanding	7.50%	senior	secured	notes,	American	paid	$37	million	of	cash	premiums	and recorded	a	$5	million	non-cash	write	off	of	unamortized	deferred	issuance	costs	during	the	year	ended	December	31,	2014.

# 7.25%	Convertible	Notes

In	March	2014,	we	notified	the	holders	of	US	Airways	Group's	7.25%	convertible	notes	that	we	had	elected	to	settle	solely	in	cash	instead	of	shares	of	AAG Common	Stock	all	conversions	during	the	period	beginning	on	March	15,	2014	and	ending	on,	and	including,	the	second	scheduled	trading	day	immediately	preceding the	maturity	date	of	May	15,	2014.	In	May	2014,	we	settled	all	outstanding	7.25%	convertible	notes	in	cash	for	approximately	$175	million.

# Other	Aircraft	Financing	Transactions

In	May	2014,	we	prepaid	$113	million	principal	amount	of	outstanding	debt	secured	by	certain	aircraft.

During	2014,	American	entered	into	loan	agreements	to	borrow	$286	million	in	connection	with	financing	certain	aircraft	deliveries.	The	notes	mature	in	2026	and bear	interest	at	a	rate	of	LIBOR	plus	an	applicable	margin.

During	2014,	US	Airways	issued	$559	million	of	equipment	notes	in	two	series	under	its	2013-1	EETCs	completed	in	April	2013:	Series	A	equipment	notes	in	the amount	of	$423	million	bearing	interest	at	3.95%	per	annum	and	Series	B	equipment	notes	in	the	amount	of	$136	million	bearing	interest	at	5.375%	per	annum.	As	of December	31,	2014,	the	full	$820	million	of	the	escrowed	proceeds	from	US	Airways'	2013-1	EETCs	have	been	used	to	purchase	Series	A	and	Series	B	equipment notes	issued	by	US	Airways.	The	equipment	notes	are	secured	by	liens	on	aircraft.

In	September	2014,	American	created	two	pass-through	trusts	which	issued	approximately	$957	million	aggregate	face	amount	of	Series	2014-1	Class	A	and	Class	B EETCs	in	connection	with	the	financing	of	17	aircraft	recently	delivered	to,	and	owned	by,	American	(the	2014	EETC	Aircraft).

As	of	December	31,	2014,	the	full	$957	million	of	the	escrowed	proceeds	from	the	2014-1	EETCs	have	been	used	to	purchase	equipment	notes	issued	by	American in	two	series:	Series	A	equipment	notes	in	the	amount	of	$742	million	bearing	interest	at	3.70%	per	annum	and	Series	B	equipment	notes	in	the	amount	of	$215	million bearing	interest	at	4.375%	per	annum.	Interest	and	principal	payments	on	the	equipment	notes	are	scheduled	to	be	made	in	April	and	October	of	each	year,	beginning	in April	2015.	The	final	payments	on	the	Series	A	and	Series	B	equipment	notes	will	be	due	in	October	2026	and	October	2022,	respectively.	The	equipment	notes	are secured	by	liens	on	the	2014	EETC	Aircraft.

# Obligations	Associated	with	Special	Facility	Revenue	Bonds

In	2014,	we	prepaid	$314	million	of	obligations,	of	which	$135	million	was	a	reduction	of	debt	on	our	balance	sheet,	associated	with	special	facility	revenue	bonds issued	by	municipalities	to	build	or	improve	certain	airport	and	maintenance	facilities.	The	remaining	portion	of	these	obligations	was	accounted	for	as	an	operating lease.

In	addition,	in	August	2014,	American	elected	to	exercise	its	option	to	reset	the	interest	rate	on	approximately	$220	million	aggregate	principal	amount	of	special facility	revenue	bonds	reflected	as	debt	on	its	balance	sheet,	related	to	the	Los	Angeles	International	Airport,	resulting	in	the	repurchase	of	these	bonds	by	American	in September	2014.	American	has	the	option	to	remarket	these	bonds	in	the	future.	In	connection	with	the	repurchase	of	these	bonds,	American	paid	$2	million	in	cash premiums	and	recorded	a	$5	million	non-cash	write	off	of	unamortized	debt	discount	and	issuance	costs.

In	December	2014,	American	purchased	approximately	$112	million	aggregate	principal	amount	of	special	facility	revenue	bonds	related	to	the	Tulsa	International Airport,	when	such	bonds	were	mandatorily	tendered	to	American.	Of	this	amount,	$11	million	was	a	reduction	of	debt	on	American's	balance	sheet.	American	has	the option	to	remarket	these	bonds	in	the	future.

In	September	2014,	we	issued	$750	million	aggregate	principal	amount	of	5.50%	senior	notes	due	2019	(the	5.50%	senior	notes).	These	notes	bear	interest	at	a	rate of	5.50%	per	annum,	which	is	payable	semi-annually	in	arrears	on	each	April	1	and	October	1,	beginning	April	1,	2015.	The	5.50%	senior	notes	mature	on	October	1, 2019	and	are	fully	and	unconditionally	guaranteed	by	American,	US	Airways	Group	and	US	Airways.	The	5.50%	senior	notes	are	senior	unsecured	obligations	of	AAG. The	indenture	for	the	5.50%	senior	notes	contains	covenants	and	events	of	default	generally	customary	for	similar	financings.	In	addition,	if	we	experience	specific	kinds of	changes	of	control,	we	must	offer	to	repurchase	the	5.50%	senior	notes	at	a	price	of	101%	of	the	principal	amount	plus	accrued	and	unpaid	interest,	if	any,	to	the repurchase	date.	Upon	the	occurrence	of	certain	events	of	default,	the	5.50%	senior	notes	may	be	accelerated	and	become	due	and	payable.

On	October	10,	2014,	American,	AAG,	US	Airways	Group	and	US	Airways	entered	into	a	Credit	and	Guaranty	Agreement	(the	2014	Credit	Agreement)	with	certain lenders.	The	2014	Credit	Agreement	provides	for	a	$750	million	term	loan	facility	(the	2014	Term	Loan	Facility)	and	a	$400	million	revolving	credit	facility	(the	2014 Revolving	Facility	and,	together	with	the	2014	Term	Loan	Facility,	the	2014	Credit	Facilities).	As	of	December	31,	2014,	$750	million	was	outstanding	under	the	2014 Term	Loan	Facility.	The	2014	Revolving	Facility	provides	that	American	may	from	time	to	time	borrow,	repay	and	reborrow	loans	thereunder.	American	may	have letters	of	credit	issued	under	the	2014	Revolving	Facility	in	an	aggregate	amount	outstanding	at	any	time	up	to	$300	million.	As	of	December	31,	2014,	there	were	no borrowings	or	letters	of	credit	outstanding	under	the	2014	Revolving	Facility.

Subject	to	certain	limitations	and	exceptions,	the	2014	Credit	Facilities	are	secured	by	certain	collateral,	including	certain	route	authorities	and	certain	take-off	and landing	rights	and	gate	leaseholds	at	certain	airports.	The	obligations	of	American	under	the	2014	Credit	Facilities	are	guaranteed	by	AAG,	US	Airways	Group	and	US Airways.	American	is	required	to	maintain	a	certain	minimum	ratio	of	appraised	value	of	the	collateral	to	the	outstanding	loans	under	the	2014	Credit	Facilities	as	more fully	described	below	in	"Collateral	Related	Covenants."

The	2014	Term	Loan	Facility	and	2014	Revolving	Facility	mature	on	October	10,	2021	and	October	10,	2019,	respectively,	unless	otherwise	extended	by	the applicable	parties.	The	2014	Term	Loan	Facility	is	repayable	in	annual	installments	in	an	amount	equal	to	1.00%	of	the	original	principal	balance	with	any	unpaid balance	due	on	the	maturity	date	of	the	2014	Term	Loan	Facility.	Voluntary	prepayments	may	be	made	by	American	at	any	time,	with	a	premium	of	1.00%	applicable	to certain	prepayments	made	prior	to	the	date	that	is	six	months	following	October	10,	2014.

The	2014	Credit	Facilities	bear	interest	at	an	index	rate	plus	an	applicable	index	margin	or,	at	American's	option,	LIBOR	(subject	to	a	floor	of	0.75%	in	the	case	of the	2014	Term	Loan	Facility)	plus	an	applicable	LIBOR	margin.	The	applicable	LIBOR	margins	are	3.50%	and	3.00%	for	borrowings	under	the	2014	Term	Loan Facility	and	the	2014	Revolving	Facility,	respectively.	If	American	has	a	corporate	credit	rating	of	Ba3	or	higher	from	Moody's	and	BB-	or	higher	from	S&P,	the applicable	LIBOR	margin	is	3.25%	under	the	2014	Term	Loan	Facility.

The	2014	Credit	Facilities	contain	events	of	default	customary	for	similar	financings,	including	cross	default	to	other	material	indebtedness.	Upon	the	occurrence	of an	event	of	default,	the	outstanding	obligations	under	the

2014	Credit	Facilities	may	be	accelerated	and	become	due	and	payable	immediately.	In	addition,	if	a	"change	of	control"	(as	defined	in	the	2014	Credit	Agreement) occurs	with	respect	to	AAG,	American	will	(absent	an	amendment	or	waiver)	be	required	to	repay	at	par	the	loans	outstanding	under	the	2014	Credit	Facilities	and terminate	the	2014	Revolving	Facility.	The	2014	Credit	Facilities	also	include	covenants	that,	among	other	things,	require	AAG	to	maintain	a	minimum	aggregate liquidity	(as	defined	in	the	2014	Credit	Facilities)	of	not	less	than	$2.0	billion,	and	limit	the	ability	of	AAG	and	its	restricted	subsidiaries	to	pay	dividends	and	make certain	other	payments,	make	certain	investments,	incur	liens	on	the	collateral,	dispose	of	the	collateral,	enter	into	certain	affiliate	transactions	and	engage	in	certain business	activities,	in	each	case	subject	to	certain	exceptions.

# AAdvantage	Loan

American	had	the	right	to	repay	in	cash,	without	premium	or	penalty,	any	or	all	of	the	amounts	owed	to	Citibank	under	the	AAdvantage	Loan.	Effective	January	2, 2015,	American	exercised	its	loan	repayment	right	with	respect	to	the	full	value	of	the	outstanding	balance	to	Citibank	for	$400	million.	In	connection	with	the repayment,	in	the	first	quarter	of	2015,	American	will	recognize	an	early	debt	extinguishment	gain	of	approximately	$17	million.	The	entire	outstanding	balance	of	the obligation	is	reflected	in	current	maturities	of	long-term	debt	on	the	accompanying	consolidated	balance	sheet	as	of	December	31,	2014.

# Guarantees

In	March	2014,	AAG,	US	Airways	Group	and	US	Airways	entered	into	amended	and	restated	guarantees	of	the	payment	obligations	of	US	Airways	under	the equipment	notes	relating	to	each	of	its	Series	2010-1,	2011-1,	2012-1,	2012-2	and	2013-1	Pass	Through	Certificates,	the	result	of	which	was	to	add	AAG	as	a	guarantor of	such	equipment	notes	on	a	joint	and	several	basis	with	US	Airways	Group.

# Collateral	Related	Covenants

Certain	of	our	debt	financing	agreements	contain	loan	to	value	ratio	covenants	and	require	us	to	periodically	appraise	the	related	collateral.	Pursuant	to	such agreements,	if	the	loan	to	value	ratio	exceeds	a	specified	threshold,	we	are	required,	as	applicable,	to	pledge	additional	qualifying	collateral	(which	in	some	cases	may include	cash	collateral),	or	pay	down	such	financing,	in	whole	or	in	part,	as	described	below.

Specifically,	we	are	required	to	meet	certain	collateral	coverage	tests	on	a	periodic	basis	on	three	Credit	Facilities,	as	described	below:

(1) With	respect	to	spare	parts,	one	physical	appraisal	and	one	desktop	appraisal	are	required	in	each	fiscal	year.

At	December	31,	2014,	we	were	in	compliance	with	the	applicable	collateral	coverage	tests	as	of	the	most	recent	measurement	dates.

# Credit	Ratings

The	following	table	details	our	credit	ratings	as	of	December	31,	2014:

* The	credit	agency	does	not	rate	this	category	for	this	entity.

A	decrease	in	our	credit	ratings	could	cause	our	borrowing	costs	to	increase,	which	would	increase	our	interest	expense	and	could	affect	our	net	income,	and	our credit	 ratings	 could	 adversely	 affect	 our	 ability	 to	 obtain	 additional	 financing.	 If	 our	 financial	 performance	 or	 industry	 conditions	 worsen,	 we	 may	 face	 future downgrades,	which	could	negatively	impact	our	borrowing	costs	and	the	prices	of	our	equity	or	debt	securities.	In	addition,	any	downgrade	of	our	credit	ratings	may indicate	a	decline	in	our	business	and	in	our	ability	to	satisfy	our	obligations	under	our	indebtedness.

# Aircraft	and	Engine	Purchase	Commitments

As	of	December	31,	2014,	we	had	definitive	purchase	agreements	with	Airbus,	Boeing	and	other	manufacturers	for	the	acquisition	of	the	following	mainline	and regional	aircraft:

|  | 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Airbus |  |  |  |  |  |  |  |
| A320\tFamily | 42 | 25 | \t 20 | \t — | \t — | — | 87 |
| A320neo | \t — | \t — | \t 10 | \t 25 | \t 25 | 40 | \t100 |
| A350\tXWB | \t — | \t — | 6 | \t 10 | 6 | — | 22 |
| Boeing |  |  |  |  |  |  |  |
| 737\tFamily | 18 | 20 | \t 20 | \t — | \t — | — | 58 |
| 737\tMAX | \t — | \t — | 3 | \t 17 | \t 20 | 60 | \t100 |
| 777-300\tER | 2 | 2 | \t — | \t — | \t — | — | 4 |
| 787\tFamily | 12 | 13 | \t 10 | 7 | \t — | — | 42 |
| Bombardier |  |  |  |  |  |  |  |
| CRJ900\t(1) | 18 | 20 | \t — | \t — | \t — | — | 38 |
| Embraer |  |  |  |  |  |  |  |
| ERJ175\t(1) | 24 | 24 | \t 12 | \t — | \t — | — | 60 |
| Total | \t116 | \t104 | \t 81 | \t 59 | \t 51 | 100 | \t511 |

(1) These	aircraft	may	be	operated	by	wholly-owned	subsidiaries	or	leased	to	third-party	regional	carriers	which	would	operate	the	aircraft	under	capacity	purchase arrangements.

We	also	had	agreements	for	55	spare	engines	to	be	delivered	in	2015	and	beyond.	Under	all	of	our	aircraft	and	engine	purchase	agreements,	our	total	future commitments	as	of	December	31,	2014	are	expected	to	be	as	follows	(approximately,	in	millions):

|  | 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Payments\tfor\tAmerican\taircraft\tcommitments\tand\tcertain\tengines\t(1) | $4,586 | $4,856 | $4,165 | $3,241 | $2,654 | $5,651 | $25,153 |
| Payments\tfor\tUS\tAirways\taircraft\tcommitments\tand\tcertain\tengines\t(1) | $524 | $122 | $772 | $1,050 | $588 | $— | $3,056 |

(1) These	amounts	are	net	of	purchase	deposits	currently	held	by	the	manufacturers	and	include	all	commitments	for	regional	aircraft.	American	has	granted	Boeing	a security	interest	in	its	purchase	deposits	with	Boeing.	Our	purchase	deposits	totaled	$1.2	billion	as	of	December	31,	2014.

In	April	2014,	we	exercised	our	option	to	purchase,	and	terminated	our	existing	lease	financing	arrangements	with	respect	to,	62	Airbus	A320	family	aircraft scheduled	to	be	delivered	between	the	first	quarter	of	2015	and	the	third	quarter	of	2017.	In	connection	with	our	exercise	of	such	option,	we	also	exercised	our	right	to convert	firm	orders	for	30	Airbus	A320neo	aircraft,	scheduled	to	be	delivered	in	2021	and	2022,	to	options	to	acquire	such	aircraft.	The	table	above	reflects	these changes.

In	December	2014,	we	exercised	our	right	under	our	purchase	agreement	with	Bombardier	to	convert	24	of	our	40	option	order	CRJ900	aircraft	to	firm	orders	to acquire	such	aircraft.

As	of	December	31,	2014,	we	did	not	have	financing	commitments	for	the	following	aircraft	currently	on	order	and	scheduled	to	be	delivered	through	2017:	83 Airbus	A320	family	aircraft,	10	Airbus	A320neo	aircraft,	six	Airbus	A350	XWB	aircraft,	13	Boeing	737	family	aircraft,	three	737	MAX	aircraft,	four	Boeing	777-300 ER	aircraft,	and	35	Boeing	787	family	aircraft.	In	addition,	we	did	not	have	financing	commitments	in	place	for	aircraft	currently	on	order	and	scheduled	to	be	delivered in	2018	and	beyond.	See	Part	I,	Item	1A.	Risk	Factors	–	"We	will	need	to	obtain	sufficient	financing	or	other	capital	to	operate	successfully."

# Credit	Card	Processing	Agreements

We	have	agreements	with	companies	that	process	customer	credit	card	transactions	for	the	sale	of	air	travel	and	other	services.	Credit	card	processors	have	financial risk	associated	with	tickets	purchased	for	travel	because,	although	the	processor	generally	forwards	the	cash	related	to	the	purchase	to	us	soon	after	the	purchase	is completed,	the	air	travel	generally	occurs	after	that	time,	and	the	processor	may	have	liability	if	we	do	not	ultimately	provide	the	air	travel.	Our	agreements	allow	these processing	companies,	under	certain	conditions,	to	hold	an	amount	of	our	cash	(referred	to	as	a	"holdback")	equal	to	a	portion	of	advance	ticket	sales	that	have	been processed	by	that	company,	but	for	which	we	have	not	yet	provided	the	air	transportation.	We	are	not	currently	required	to	maintain	any	holdbacks	pursuant	to	these requirements.	Certain	of	our	agreements	provide	that	these	holdback	requirements	can	be	modified	at	the	discretion	of	the	processing	companies,	up	to	the	estimated liability	for	future	air	travel	purchased	with	the	respective	credit	cards,	upon	the	occurrence	of	specified	events,	including	material	adverse	changes	in	our	financial condition.	The	amount	that	the	processing	companies	may	withhold	also	varies	as	a	result	of	changes	in	financial	risk	due	to	seasonal	fluctuations	in	ticket	volume. Additional	holdback	requirements	will	reduce	our	liquidity	in	the	form	of	unrestricted	cash	by	the	amount	of	the	holdbacks.

# Pension	Funding	Obligation

We	are	required	to	make	minimum	contributions	to	our	defined	benefit	pension	plans	under	the	minimum	funding	requirements	of	Employee	Retirement	Income Security	Act	of	1974	(ERISA),	the	Pension	Funding	Equity	Act	of	2004,	the	Pension	Protection	Act	of	2006,	the	Pension	Relief	Act	of	2010	and	the	Moving	Ahead	for Progress	in	the	21st	Century	Act	of	2012.	In	2014,	we	made	our	aggregate	minimum	required	contributions	for	2014	of	$171	million,	and	made	$639	million	in supplemental	contributions	to	our	pension	plans,	above	and	beyond	the	$171	million	of	minimum	required	contributions.

Based	on	our	current	funding	assumptions,	we	have	no	minimum	required	contributions	until	2019.	Currently,	our	minimum	funding	obligation	for	our	pension plans	is	subject	to	temporary	favorable	rules	that	are	scheduled	to	expire	at	the	end	of	2017.	Upon	expiration	of	these	rules,	our	funding	obligations	are	likely	to	increase materially.	The	amount	of	these	obligations	will	depend	on	the	performance	of	our	investments	held	in	trust	by	the	pension	plans,	interest	rates	for	determining	liabilities and	our	actuarial	experience.

# Labor	Agreements

In	June	2014,	we	reached	three	agreements	with	IAM	covering	11,000	US	Airways	mechanics,	fleet	service	agents	and	maintenance	training	specialists.	In	July 2014,	these	three-year	agreements	that	amend	pre-merger	contracts	were	ratified	by	IAM	and	will	remain	in	effect	until	a	joint	collective	bargaining	agreement	can	be reached	with	their	colleagues	at	the	TWU	to	cover	more	than	30,000	employees	at	the	new	American	Airlines.

On	December	18,	2014,	we	reached	a	JCBA	with	the	APFA.	On	December	23,	2014,	the	APFA	JCBA	pay	rates	were	increased	by	4%	due	to	a	corporate	wide initiative	announced	on	that	day.	The	new	agreement	did	not	require	ratification	and	was	effective	immediately	with	the	wage	increases	under	the	JCBA	becoming effective	January	1,	2015.	We	estimate	that	our	total	flight	attendant	costs	in	2015	will	be	approximately	$200	million	higher	as	a	result	of	this	new	agreement.

# Off-Balance	Sheet	Arrangements

An	off-balance	sheet	arrangement	is	any	transaction,	agreement	or	other	contractual	arrangement	involving	an	unconsolidated	entity	under	which	a	company	has (1)	made	guarantees,	(2)	a	retained	or	a	contingent	interest	in	transferred	assets,	(3)	an	obligation	under	derivative	instruments	classified	as	equity	or	(4)	any	obligation arising	out	of	a	material	variable	interest	in	an	unconsolidated	entity	that	provides	financing,	liquidity,	market	risk	or	credit	risk	support	to	us,	or	that	engages	in	leasing, hedging	or	research	and	development	arrangements	with	us.

We	have	no	off-balance	sheet	arrangements	of	the	types	described	in	the	first	three	categories	above	that	we	believe	may	have	a	material	current	or	future	effect	on financial	condition,	liquidity	or	results	of	operations.	Certain	guarantees	that	we	do	not	expect	to	have	a	material	current	or	future	effect	on	our	financial	condition, liquidity	or	results	of	operations	are	disclosed	in	Note	15	to	AAG's	Consolidated	Financial	Statements	included	in	Part	II,	Item	8A	and	Note	12	to	American's Consolidated	Financial	Statements	in	Part	II,	Item	8B.

# Special	Facility	Revenue	Bonds

We	guarantee	the	payment	of	principal	and	interest	of	certain	special	facility	revenue	bonds	issued	by	municipalities	primarily	to	build	or	improve	airport	facilities and	purchase	equipment	which	is	leased	to	us.	Under	such	leases,	we	are	required	to	make	rental	payments	through	2035,	sufficient	to	pay	maturing	principal	and interest	payments	on	the	related	bonds.	As	of	December	31,	2014,	the	remaining	lease	payments	guaranteeing	the	principal	and	interest	on	these	bonds	are	$449	million, which	are	accounted	for	as	operating	leases.

# Pass-Through	Trusts

We	have	financed	certain	aircraft	and	engines	with	pass-through	trust	certificates,	or	EETCs,	issued	by	pass-through	trusts.	These	trusts	are	off-balance	sheet	entities, the	primary	purpose	of	which	is	to	finance	our	acquisition	of	flight	equipment.	Rather	than	finance	each	aircraft	separately	when	such	aircraft	is	purchased,	delivered	or refinanced,	these	trusts	allow	American	and	US	Airways	to	raise	the	financing	for	several	aircraft	at	one	time	and	place	such	funds	in	escrow	pending	the	purchase, delivery	or	refinancing	of	the	relevant	aircraft.	The	trusts	were	also	structured	to	provide	for	certain	credit	enhancements,	such	as	liquidity	facilities	to	cover	certain interest	payments,	that	reduce	the	risks	to	the	purchasers	of	the	trust	certificates	and,	as	a	result,	reduce	the	cost	of	aircraft	financing	to	American	and	US	Airways.

Each	trust	covered	a	set	amount	of	aircraft	scheduled	to	be	delivered	or	refinanced	within	a	specific	period	of	time.	At	the	time	of	each	covered	aircraft	financing,	the relevant	trust	used	the	funds	in	escrow	to	purchase	equipment	notes	relating	to	the	financed	aircraft.	The	equipment	notes	were	issued,	at	American	or	US	Airways' election,	in	connection	with	a	mortgage	financing	of	the	aircraft	or,	in	certain	cases,	by	a	separate	owner	trust	in	connection	with	a	leveraged	lease	financing	of	the aircraft.	In	the	case	of	a	leveraged	lease	financing,	the	owner	trust	then	leased	the	aircraft	to	American	or	US	Airways.	In	both	cases,	the	equipment	notes	are	secured	by a	security	interest	in	the	aircraft.	The	pass-through	trust	certificates	are	not	direct	obligations	of,	nor	are	they	guaranteed	by,	AAG,	American,	US	Airways	Group	or	US Airways.	However,	in	the	case	of	mortgage	financings,	the	equipment	notes	issued	to	the	trusts	are	direct	obligations	of	American	or	US	Airways	and,	in	certain instances,	are	guaranteed	by	AAG	or	US	Airways	Group	as	applicable.	As	of	December	31,	2014,	$7.0	billion	associated	with	these	mortgage	financings	is	reflected	as debt	in	the	accompanying	consolidated	balance	sheet.

With	respect	to	leveraged	leases,	American	or	US	Airways	evaluated	whether	the	leases	had	characteristics	of	a	variable	interest	entity.	American	or	US	Airways concluded	the	leasing	entities	met	the	criteria	for	variable	interest	entities.	American	and	US	Airways	generally	are	not	the	primary	beneficiary	of	the	leasing	entities	if the

lease	terms	are	consistent	with	market	terms	at	the	inception	of	the	lease	and	do	not	include	a	residual	value	guarantee,	fixed-price	purchase	option	or	similar	feature	that obligates	American	or	US	Airways	to	absorb	decreases	in	value	or	entitles	American	or	US	Airways	to	participate	in	increases	in	the	value	of	the	aircraft.	American	and US	Airways	do	not	provide	residual	value	guarantees	to	the	bondholders	or	equity	participants	in	the	trusts.	American's	existing	lease	arrangements	do	not	contain	fixed- price	purchase	options	or	similar	features.	Certain	US	Airways'	leases	have	a	fair	market	value	or	a	fixed	price	purchase	option	that	allows	it	to	purchase	the	aircraft	at	or near	the	end	of	the	lease	term.	However,	the	option	price	approximates	an	estimate	of	the	aircraft's	fair	value	at	the	option	date.	Under	this	feature,	US	Airways	does	not participate	in	any	increases	in	the	value	of	the	aircraft.	American	and	US	Airways	concluded	they	were	not	the	primary	beneficiary	under	these	arrangements.	Therefore, American	and	US	Airways	account	for	their	EETC	leveraged	lease	financings	as	operating	leases.	American	and	US	Airways'	total	future	obligations	under	these leveraged	lease	financings	are	$2.1	billion	as	of	December	31,	2014.

# AAG	Contractual	Obligations

The	following	table	provides	details	of	our	future	cash	contractual	obligations	as	of	December	31,	2014.	The	table	does	not	include	commitments	that	are	contingent on	events	or	other	factors	that	are	uncertain	or	unknown	at	this	time.

|  | 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| American |  |  |  |  |  |  |  |
| Debt\tand\tcapital\tlease\tobligations\t(1),\t(3) | $1,230 | $698 | $942 | $844 | $2,744 | $4,791 | $11,249 |
| Interest\tobligations\t(2),\t(3) | 525 | 478 | 486 | 497 | 374 | 1,094 | 3,454 |
| Commitments\tfor\taircraft\tand\tengine\tpurchases\t(4) | 4,586 | 4,856 | 4,165 | \t 3,241 | 2,654 | 5,651 | \t 25,153 |
| Operating\tlease\tcommitments\t(5) | 1,391 | 1,293 | 1,240 | \t 1,141 | 1,069 | 4,939 | \t 11,073 |
| Regional\tcapacity\tpurchase\tagreements\t(6) | 502 | 592 | 463 | 446 | 430 | 2,242 | 4,675 |
| Minimum\tpension\tobligations\t(7) | — | — | — | — | 853 | 3,606 | 4,459 |
| Retiree\tmedical\tand\tother\tpurchase\tobligations | 461 | 260 | 215 | 192 | 166 | 374 | 1,668 |
| Total\tAmerican\tContractual\tObligations | $8,695 | $8,177 | $7,511 | $6,361 | $8,290 | $ 22,697 | $61,731 |
| AAG\tParent,\tUS\tAirways\tGroup\tand\tOther\tAAG\tSubsidiaries |  |  |  |  |  |  |  |
| Debt\tand\tcapital\tlease\tobligations\t(1),\t(3) | $478 | $964 | $396 | $1,035 | $2,156 | $1,685 | $6,714 |
| Interest\tobligations\t(2),\t(3) | 321 | 303 | 275 | 239 | 168 | 270 | 1,576 |
| Commitments\tfor\taircraft\tand\tengine\tpurchases\t(4) | 524 | 122 | 772 | \t 1,050 | 588 | — | 3,056 |
| Operating\tlease\tcommitments\t(5) | 719 | 624 | 569 | 417 | 330 | 782 | 3,441 |
| Regional\tcapacity\tpurchase\tagreements\t(6) | 1,082 | 1,024 | 1,016 | 751 | 636 | 860 | 5,369 |
| Retiree\tmedical\tand\tother\tpurchase\tobligations | 9 | 9 | 9 | 9 | 7 | 35 | 78 |
| Total\tAAG\tContractual\tObligations | $11,828 | $11,223 | $10,548 | $9,862 | $12,175 | $ 26,329 | $81,965 |

(1) Amounts	represent	contractual	amounts	due.	For	American,	excludes	$42	million	and	for	US	Airways	Group,	excludes	$17	million	of	unamortized	debt	discount as	of	December	31,	2014.

(2) For	variable-rate	debt,	future	interest	obligations	are	estimated	using	the	current	forward	rates	at	December	31,	2014.

(3) For	American,	includes	$4.3	billion	of	future	principal	payments	and	$1.1	billion	of	future	interest	payments,	respectively,	and	for	US	Airways	Group,	includes $2.7	billion	of	future	principal	payments	and

$867	million	of	future	interest	payments,	respectively,	as	of	December	31,	2014,	related	to	EETCs	associated	with	mortgage	financings	for	the	purchase	of	certain aircraft.

(4) See	Part	II,	Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	–	"Liquidity	and	Capital	Resources"	for	additional information	about	the	obligations	of	American	and	US	Airways	Group.

(5) For	American,	includes	$269	million	and	for	US	Airways	Group,	includes	$1.8	billion	of	future	minimum	lease	payments	related	to	EETC	leverage	leased financings	of	certain	aircraft	as	of	December	31,	2014.

(6) Represents	minimum	payments	under	capacity	purchase	agreements	with	 third-party	regional	carriers.	These	commitments	are	estimates	of	costs	based	on assumed	minimum	levels	of	flying	under	the	capacity	purchase	agreements	and	our	actual	payments	could	differ	materially.

(7) Includes	minimum	pension	contributions	based	on	actuarially	determined	estimates	and	other	postretirement	benefit	payments	based	on	estimated	payments through	2024.	See	Note	10	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B.

# Capital	Raising	Activity	and	Other	Possible	Actions

In	light	of	our	significant	financial	commitments	related	to,	among	other	things,	new	aircraft	and	the	servicing	and	amortization	of	existing	debt	and	equipment leasing	arrangements,	we	and	our	subsidiaries	will	regularly	consider,	and	enter	into	negotiations	related	to,	capital	raising	activity,	which	may	include	the	entry	into leasing	transactions	and	future	issuances	of	secured	or	unsecured	debt	obligations	or	additional	equity	securities	in	public	or	private	offerings	or	otherwise.	The	cash available	from	operations	and	these	sources,	however,	may	not	be	sufficient	to	cover	cash	contractual	obligations	because	economic	factors	may	reduce	the	amount	of cash	generated	by	operations	or	increase	costs.	For	instance,	an	economic	downturn	or	general	global	instability	caused	by	military	actions,	terrorism,	disease	outbreaks or	natural	disasters	could	reduce	the	demand	for	air	travel,	which	would	reduce	the	amount	of	cash	generated	by	operations.	An	increase	in	costs,	either	due	to	an increase	in	borrowing	costs	caused	by	a	reduction	in	credit	ratings	or	a	general	increase	in	interest	rates,	or	due	to	an	increase	in	the	cost	of	fuel,	maintenance,	or	aircraft, aircraft	engines	or	parts,	could	decrease	the	amount	of	cash	available	to	cover	cash	contractual	obligations.	Moreover,	the	2013	Credit	Facilities,	the	2014	Credit Facilities,	the	2013	Citicorp	Credit	Facility	and	certain	of	our	other	financing	arrangements	contain	significant	minimum	cash	balance	requirements.	As	a	result,	we cannot	use	all	of	our	available	cash	to	fund	operations,	capital	expenditures	and	cash	obligations	without	violating	these	requirements.

In	the	past,	we	have	from	time	to	time	refinanced,	redeemed	or	repurchased	our	debt	and	taken	other	steps	to	reduce	or	otherwise	manage	the	aggregate	amount	and cost	 of	 our	 debt	 or	 lease	 obligations	 or	 otherwise	 improve	 our	 balance	 sheet.	 Going	 forward,	 depending	 on	 market	 conditions,	 our	 cash	 position	 and	 other considerations,	we	may	continue	to	take	such	actions.

# Basis	of	Presentation

See	Note	5	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	and	Note	4	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for information	regarding	the	basis	of	presentation.

# Critical	Accounting	Policies	and	Estimates

The	preparation	of	financial	statements	in	accordance	with	accounting	principles	generally	accepted	in	the	United	States	requires	management	to	make	certain estimates	and	assumptions	that	affect	the	reported	amounts	of	assets	and	liabilities,	revenues	and	expenses,	and	the	disclosure	of	contingent	assets	and	liabilities	at	the date	of	the	financial	statements.	We	believe	our	estimates	and	assumptions	are	reasonable;	however,	actual	results

could	differ	from	those	estimates.	Critical	accounting	policies	are	defined	as	those	that	are	reflective	of	significant	judgments	and	uncertainties	and	potentially	result	in materially	different	results	under	different	assumptions	and	conditions.	We	have	identified	the	following	critical	accounting	policies	that	impact	the	preparation	of	our Consolidated	Financial	Statements.	See	the	summary	of	significant	accounting	policies	included	in	Note	5	to	AAG's	Consolidated	Financial	Statements	in	Part	II, Item	8A	and	Note	4	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for	additional	discussion	of	the	application	of	these	estimates	and	other accounting	policies.

# Passenger	revenue

Passenger	revenue	is	recognized	when	transportation	is	provided.	Ticket	sales	for	transportation	that	has	not	yet	been	provided	are	initially	deferred	and	recorded	as air	traffic	liability	on	the	consolidated	balance	sheets.	The	air	traffic	liability	represents	tickets	sold	for	future	travel	dates	and	estimated	future	refunds	and	exchanges	of tickets	sold	for	past	travel	dates.	The	balance	in	the	air	traffic	liability	fluctuates	throughout	the	year	based	on	seasonal	travel	patterns	and	fare	sale	activity.	AAG's	air traffic	liability	was	$4.3	billion	and	$4.4	billion	as	of	December	31,	2014	and	2013,	respectively,	and	American's	air	traffic	liability	was	$3.0	billion	and	$3.1	billion	as of	December	31,	2014	and	2013,	respectively.

The	majority	of	tickets	sold	are	nonrefundable.	A	small	percentage	of	tickets,	some	of	which	are	partially	used	tickets,	expire	unused.	Due	to	complex	pricing structures,	refund	and	exchange	policies,	and	interline	agreements	with	other	airlines,	certain	amounts	are	recognized	in	revenue	using	estimates	regarding	both	the timing	of	the	revenue	recognition	and	the	amount	of	revenue	to	be	recognized.	These	estimates	are	generally	based	on	the	analysis	of	our	historical	data.	We	and members	of	the	airline	industry	have	consistently	applied	this	accounting	method	to	estimate	revenue	from	forfeited	tickets	at	the	date	travel	was	to	be	provided. Estimated	future	refunds	and	exchanges	included	in	the	air	traffic	liability	are	routinely	evaluated	based	on	subsequent	activity	to	validate	the	accuracy	of	our	estimates. Any	adjustments	resulting	from	periodic	evaluations	of	the	estimated	air	traffic	liability	are	included	in	results	of	operations	during	the	period	in	which	the	evaluations are	completed.

# Long-lived	Assets

Long-lived	assets	consist	of	flight	equipment	along	with	other	fixed	assets	and	amortizing	intangible	assets	such	as	certain	domestic	take-off	and	landing	rights, customer	relationships,	marketing	agreements	and	tradenames.	In	addition	to	the	original	cost,	the	recorded	value	of	our	fixed	assets	is	impacted	by	a	number	of estimates	made,	including	estimated	useful	lives,	salvage	values	and	our	determination	as	to	whether	aircraft	are	temporarily	or	permanently	grounded.	Amortizing intangible	assets	are	originally	recorded	at	their	acquired	fair	values	and	are	subsequently	amortized	over	their	estimated	useful	lives.	See	Note	5	to	AAG's	Consolidated Financial	Statements	in	Part	II,	Item	8A	and	Note	4	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for	further	information.

We	record	impairment	charges	on	long-lived	assets	used	in	operations	when	events	and	circumstances	indicate	that	the	assets	may	be	impaired,	the	undiscounted	cash flows	estimated	to	be	generated	by	those	assets	are	less	than	the	carrying	amount	of	those	assets	and	the	net	book	value	of	the	assets	exceeds	their	estimated	fair	value.	If such	assets	are	considered	to	be	impaired,	the	impairment	to	be	recognized	is	measured	by	the	amount	by	which	the	carrying	amount	of	the	assets	exceeds	the	fair	value of	the	assets.	Cash	flow	estimates	are	based	on	historical	results	adjusted	to	reflect	management's	best	estimate	of	future	market	and	operating	conditions,	including	our current	fleet	plan	and	considerations	of	any	modifications	thereto.	Estimates	of	fair	value	represent	management's	best	estimate	based	on	appraisals,	industry	trends	and reference	to	market	rates	and	transactions.

The	majority	of	American's	and	US	Airways'	fleet	types	are	depreciated	over	25-30	years.	It	is	possible	that	the	ultimate	lives	of	our	aircraft	will	be	significantly different	than	the	current	estimate	due	to	unforeseen	events	in	the	future	that	impact	our	fleet	plan,	including	positive	or	negative	developments	in	the	areas	described above.	For	example,	operating	the	aircraft	for	a	longer	period	will	result	in	higher	maintenance,	fuel	and	other	operating	costs	than	if	we	replaced	the	aircraft.

# Goodwill	and	indefinite-lived	assets

Goodwill	represents	the	excess	of	the	purchase	price	over	the	fair	value	of	the	net	assets	acquired	and	liabilities	assumed.	Goodwill	is	not	amortized	but	tested	for impairment	annually	on	October	1 	or	more	frequently	if	events	or	circumstances	indicate.	We	have	one	consolidated	reporting	unit. st

Our	indefinite-lived	intangible	assets	other	than	goodwill	include	certain	international	and	domestic	take-off	and	landing	rights.	Indefinite-lived	intangible	assets	are not	amortized	but	tested	for	impairment	annually	on	October	1 	or	more	frequently	if	events	or	circumstances	indicate. st

Goodwill	and	indefinite-lived	intangible	assets	are	measured	for	impairment	by	initially	performing	a	qualitative	screen.	Under	the	qualitative	approach,	we	analyze the	following	factors	to	determine	if	events	and	circumstances	have	affected	the	fair	value	of	goodwill	and	indefinite-lived	intangible	assets:	(1)	negative	trends	in	our market	capitalization,	(2)	an	increase	in	fuel	prices,	(3)	declining	passenger	mile	yields,	(4)	lower	passenger	demand	as	a	result	of	a	weakened	U.S.	and	global	economy and	(5)	changes	to	the	regulatory	environment.

If	we	determine	that	it	is	more	likely	than	not	that	the	asset	value	may	be	impaired,	we	use	the	quantitative	approach	to	assess	the	asset's	fair	value	and	the	amount	of the	impairment.	Under	the	quantitative	approach,	we	calculate	the	fair	value	of	the	asset	using	the	following	assumptions:	(1)	our	projected	revenues,	expenses	and	cash flows,	(2)	an	estimated	weighted	average	cost	of	capital,	(3)	assumed	discount	rates	depending	on	the	asset	(4)	a	tax	rate	and	(5)	market	prices	for	comparable	assets. These	assumptions	are	consistent	with	those	which	hypothetical	market	participants	would	use.	If	the	asset's	carrying	value	exceeds	its	fair	value	calculated	using	the quantitative	approach,	we	will	record	an	impairment	charge	for	the	difference	in	fair	value	and	carrying	value.

Based	upon	our	annual	testing,	there	were	no	impairments	of	our	goodwill	and	indefinite-lived	assets	in	2014.

# Business	Combination	Measurements

In	 accordance	 with	 applicable	 accounting	 standards,	 we	 estimated	 the	 fair	 value	 of	 US	Airways'	 assets	 and	 liabilities	 as	 of	 the	 closing	 date	 of	 the	 Merger, December	9,	2013.	These	fair	value	adjustments	did	not	result	in	gains	or	losses,	but	were	instead	an	input	to	the	calculation	of	goodwill	related	to	the	excess	of	the purchase	price	over	the	fair	value	of	the	tangible	and	identifiable	intangible	assets	acquired	and	liabilities	assumed	by	us	in	the	Merger.

The	fair	values	of	the	assets	acquired	and	liabilities	assumed	were	determined	using	the	market,	income	and	cost	approaches.	The	fair	value	measurements	were primarily	based	on	significant	inputs	that	are	not	observable	in	the	market,	other	than	certain	long-term	debt	assumed	in	the	Merger.	The	market	approach,	which indicates	value	for	a	subject	asset	based	on	available	market	pricing	for	comparable	assets,	was	utilized	to	estimate	the	fair	value	of	US	Airways'	aircraft	and	operating leases.	The	market	approach	used	includes	prices	and	other	relevant	information	generated	by	market	transactions	involving	comparable	assets,	as	well	as	pricing	guides and	other	sources.	We	considered	the	current	market	for	the	aircraft,	the	maintenance	condition	of	the	aircraft	and	the	expected	proceeds	from	the	sale	of	the	assets, among	other	factors.	We	also	utilized	the	market	approach	to	value	certain	intangible	assets	such	as	airport	take-off	and	landing	slots	when	sufficient	market	information was	available.	The	income	approach	was	primarily	used	to	value	intangible	assets,	including	customer	relationships,	marketing	agreements,	certain	international	route authorities,	and	the	US	Airways	tradename.	The	income	approach	indicates	value	for	a	subject	asset	based	on	the	present	value	of	cash	flows	projected	to	be	generated by	the	asset.	Projected	cash	flows	are	discounted	at	a	required	market	rate	of	return	that	reflects	the	relative	risk	of	achieving	the	cash	flows	and	the	time	value	of	money. The	cost	approach,	which	estimates	value	by	determining	the	current	cost	of	replacing	an	asset	with	another	of	equivalent	economic	utility,	was	used,	as	appropriate,	for certain	assets	for	which	the	market	and	income	approaches	could	not	be	applied	due	to	the	nature	of	the	asset.	The	cost	to	replace	a	given	asset	reflects	the	estimated reproduction	or	replacement	cost	for	the	asset,	less	an	allowance	for	loss	in	value	due	to	depreciation.	The	fair	value	of	the	Dividend	Miles	frequent	flyer	program liability	was	determined	based	on	the	weighted	average	equivalent	ticket	value	of	outstanding	miles	which	were	expected	to	be	redeemed	at	December	9,	2013.	The weighted	average	equivalent	ticket	value	contemplates	differing	classes	of	service,	domestic	and	international	itineraries	and	the	carrier	providing	the	award	travel.

AAG	currently	operates	two	frequent	traveler	programs,	American's	AAdvantage	and	US	Airways'	Dividend	Miles.	These	programs	award	mileage	credits	to passengers	who	fly	on	American,	US	Airways	and	oneworld	carriers,	as	well	as	certain	other	partner	airlines	that	participate	in	the	programs.	Mileage	credits	can	also	be earned	through	purchases	from	other	non-airline	partners	that	participate	in	our	respective	loyalty	programs.	Mileage	credits	can	be	redeemed	for	travel	on	American, US	Airways	or	other	participating	partner	airlines,	in	which	case	we	pay	a	fee.

We	use	the	incremental	cost	method	to	account	for	the	portion	of	our	frequent	flyer	liability	incurred	when	AAdvantage	and	Dividend	Miles	members	earn	mileage credits	by	flying	on	American,	US	Airways	or	our	regional	affiliates.	We	have	an	obligation	to	provide	future	travel	when	these	mileage	credits	are	redeemed	and therefore	have	recorded	a	liability	for	mileage	credits	outstanding.

The	incremental	cost	liability	includes	all	mileage	credits	that	are	expected	to	be	redeemed,	including	mileage	credits	earned	by	members	whose	mileage	account balances	have	not	yet	reached	the	minimum	mileage	credit	level	required	to	redeem	an	award.	Additionally,	outstanding	mileage	credits	are	subject	to	expiration	if unused.	In	calculating	the	liability,	we	estimate	how	many	mileage	credits	will	never	be	redeemed	for	travel	and	exclude	those	mileage	credits	from	the	estimate	of	the liability.	Estimates	are	also	made	for	the	number	of	miles	that	will	be	used	per	award	redemption	and	the	number	of	travel	awards	that	will	be	redeemed	on	partner airlines.	These	estimates	are	based	on	historical	program	experience	as	well	as	consideration	of	enacted	program	changes,	as	applicable.	Changes	in	the	liability	resulting from	members	earning	additional	mileage	credits	or	changes	in	estimates	are	recorded	in	the	statement	of	operations	as	a	part	of	passenger	revenue.

The	liability	for	outstanding	mileage	credits	is	valued	based	on	the	estimated	incremental	cost	of	carrying	one	additional	passenger.	Incremental	cost	primarily includes	unit	costs	incurred	for	fuel,	food,	and	insurance	as	well	as	fees	incurred	when	travel	awards	are	redeemed	on	partner	airlines.	No	profit	or	overhead	margin	is included	in	the	accrual	of	incremental	cost.	These	estimates	are	generally	updated	based	upon	our	12-month	historical	average	of	such	costs.

We	applied	the	acquisition	method	of	accounting	in	connection	with	the	Merger	and	therefore	recorded	the	liability	for	outstanding	US	Airways	mileage	credits	at	fair value,	an	amount	significantly	in	excess	of	incremental	cost.	As	of	December	31,	2014,	the	liability	for	outstanding	mileage	credits	expected	to	be	redeemed	for	future travel	awards	for	US	Airways	under	the	Dividend	Miles	program	was	$638	million	and	is	included	on	the	consolidated	balance	sheets	within	frequent	flyer	liability.	This liability	will	be	reduced	as	miles	are	redeemed	and	new	miles	earned	will	be	recorded	as	a	liability	based	on	the	incremental	cost	method	discussed	above.

As	of	December	31,	2014,	the	liability	for	outstanding	mileage	credits	for	the	AAdvantage	program	was	$647	million	and	is	included	on	the	consolidated	balance sheets	within	frequent	flyer	liability.

American	and	US	Airways	also	sell	frequent	flyer	program	mileage	credits	to	participating	airline	partners	and	non-airline	business	partners.	Sales	of	mileage	credits to	business	partners	is	comprised	of	two	components,	transportation	and	marketing.	Historically,	we	have	used	the	residual	method	of	accounting	to	determine	the	values of	each	component	as	there	had	not	been	a	material	modification	to	any	significant	agreements	since	our	adoption	of	Accounting	Standards	Update	(ASU)	No.	2009-13, "Revenue	Recognition	(Topic	605)	–	Multiple-Deliverable	Revenue	Arrangements"	on	January	1,	2011.

During	the	fourth	quarter	of	2013,	American	and	Citibank	amended	their	current	agreement	which	resulted	in	a	material	modification	of	the	terms	of	the	arrangement. Also,	in	connection	with	our	acquisition	of	US	Airways	on	December	9,	2013,	a	material	modification	occurred	on	all	of	US	Airways'	agreements	in	connection	with	the Merger.	Therefore,	subsequent	to	the	amendments	of	these	arrangements,	we	will	apply	the	relative	selling	price	method	to	determine	the	values	of	each	deliverable. Under	the	relative	selling	price	approach,	we	identified	five	revenue	elements	for	the	co-branded	credit	card	agreements	with	Citibank	and	Barclays:	the	transportation component;	use	of	the

American	 and	 US	 Airways'	 brand	 including	 access	 to frequent flyer	 member lists;	 advertising; lounge	 access;	 and	 baggage services (together	 excluding	 "the transportation	component,"	the	"marketing	component").

The	transportation	component	represents	the	estimated	selling	price	of	future	travel	awards	and	is	determined	using	historical	transaction	information,	including information	related	to	customer	redemption	patterns.	The	transportation	component	is	deferred	based	on	its	relative	selling	price	and	amortized	into	passenger	revenue	on a	straight-line	basis	over	the	period	in	which	the	mileage	credits	are	expected	to	be	redeemed	for	travel.

The	marketing	component	represents	services	provided	to	our	business	partners	and	relates	primarily	to	the	use	of	American's	and	US	Airways'	logo	and	tradenames along	with	access	 to	customers	 lists	of	AAdvantage	and	Dividend	Miles	members.	The	marketing	services	are	provided	periodically,	but	no	 less	 than	monthly. Accordingly,	the	marketing	component	is	considered	earned	and	recognized	in	other	revenues	in	the	period	of	the	mileage	sale.

Upon	application	of	the	relative	selling	price	method	in	2013	for	American's	Citibank	modification,	we	reduced	our	travel	component	liability	and	recorded	other revenue	of	approximately	$31	million.	As	a	result	of	the	change	in	the	marketing	component	value	when	the	relative	selling	price	method	is	applied,	American	and	US Airways	now	defer	less	revenue	per	mile	sold.

For	American's	agreements	where	there	has	not	been	a	material	modification,	we	continue	to	apply	the	residual	method.

As	of	December	31,	2014	and	2013,	AAG	had	$1.5	billion	 in	deferred	revenue	from	 the	sale	of	mileage	credits	(recorded	as	frequent	flyer	 liability	on	 the consolidated	balance	sheets).	For	the	years	ended	December	31,	2014,	2013	and	2012,	AAG's	marketing	component	of	mileage	sales	recognized	at	the	time	of	sale	in other	revenues	was	approximately	$1.4	billion,	$834	million	and	$725	million,	respectively.

As	of	December	31,	2014	and	2013,	American	had	$1.2	billion,	in	deferred	revenue	from	the	sale	of	mileage	credits	(recorded	as	frequent	flyer	liability	on	the consolidated	balance	sheets).	For	the	years	ended	December	31,	2014,	2013	and	2012,	American's	marketing	component	of	mileage	sales	recognized	at	the	time	of	sale in	other	revenues	was	approximately	$1.1	billion,	$816	million	and	$725	million,	respectively.

A	change	to	certain	estimates	used	in	the	calculation	of	incremental	cost	could	have	a	material	impact	on	the	liability.	A	1%	increase	or	decrease	in	the	percentage	of travel	awards	redeemed	on	partner	airlines	would	have	a	$31	million	impact	on	the	liability	as	of	December	31,	2014.	A	10%	increase	or	decrease	in	the	assumed	price per	gallon	of	fuel	would	have	a	$23	million	impact	on	the	liability	as	of	December	31,	2014.

A	change	to	the	estimated	fair	value	of	the	transportation	component	could	have	a	significant	impact	on	revenue.	A	10%	increase	or	decrease	in	the	estimated	fair value	of	the	transportation	component	would	have	an	approximately	$91	million	impact	on	revenue	recognized	in	2014.

The	number	of	one	way	travel	award	redemptions	during	the	year	ended	December	31,	2014,	was	approximately	7.9	million	representing	approximately	5.5%	of	our total	mainline	and	regional	RPMs	during	that	period.	We	believe	displacement	of	revenue	passengers	is	minimal	given	our	load	factors	and	our	ability	to	manage frequent	flyer	seat	inventory.

# Pensions	and	retiree	medical	and	other	benefits

We	recognize	the	funded	status	(i.e.,	the	difference	between	the	fair	value	of	plan	assets	and	the	projected	benefit	obligations)	of	our	pension	and	postretirement plans	in	the	consolidated	balance	sheet	with	a	corresponding	adjustment	to	accumulated	other	comprehensive	income	(loss).

Our	pension	and	other	postretirement	benefit	costs	and	liabilities	are	calculated	using	various	actuarial	assumptions	and	methodologies.	We	use	certain	assumptions including,	but	not	limited	to,	the	selection	of	the:	(i)	discount	rate;	(ii)	expected	return	on	plan	assets;	(iii)	expected	health	care	cost	trend	rate	and	(iv)	the	estimated	age of	pilot	retirement	(as	discussed	below).	These	assumptions	as	of	December	31	were:

|  | 2014 | 2013 |
| :--- | :--- | :--- |
| Pension\tdiscount\trate\t(1) | \t4.30% | \t5.10% |
| OPEB\tdiscount\trate\t(1) | \t4.00% | \t4.71% |
| Expected\treturn\ton\tplan\tassets\t(2) | \t8.00% | \t8.00% |
| Expected\thealth\tcare\tcost\ttrend\trate\t(3): |  |  |
| Pre-65\tindividuals |  |  |
| Initial | \t5.25% | \t6.50% |
| Ultimate\t(2023) | \t4.55% | \t4.50% |
| Post-65\tindividuals |  |  |
| Initial | \t5.25% | \t6.50% |
| Ultimate\t(2023) | \t4.55% | \t4.50% |
| Pilot\tRetirement\tAge | 62 | 63 |

(1) When	 establishing	 our	 discount	 rate	 to	 measure	 our	 obligations,	 we	 match	 high	 quality	 corporate	 bonds	 available	 in	 the	 marketplace	 whose	 cash	 flows approximate	our	projected	benefit	disbursements.	Lowering	the	discount	rate	by	50	basis	points	as	of	December	31,	2014	would	increase	our	pension	and postretirement	benefits	obligations	by	approximately	$1.4	billion	and	$58	million,	respectively,	and	increase	estimated	2015	pension	expense	by	$7	million	and decrease	estimated	2015	postretirement	benefit	expense	by	$2	million.

(2) The	expected	return	on	plan	assets	is	based	upon	an	evaluation	of	our	historical	trends	and	experience	taking	into	account	current	and	expected	market	conditions and	our	target	asset	allocation	of	32%	longer	duration	corporate	and	U.S.	government/agency	bonds,	33%	U.S.	value	stocks,	18%	developed	international	stocks, 9%	emerging	markets	stocks	and	bonds	and	8%	alternative	(private)	investments.	The	expected	return	on	plan	assets	component	of	our	net	periodic	benefit	cost	is calculated	based	on	the	fair	value	of	plan	assets	and	our	target	asset	allocation.	We	monitor	our	actual	asset	allocation	and	believe	that	our	long-term	asset allocation	will	continue	to	approximate	our	target	allocation.	Our	historical	annualized	ten-year	rate	of	return	on	plan	assets,	calculated	using	a	geometric compounding	of	monthly	returns,	is	approximately	8%	as	of	December	31,	2014.	Lowering	the	expected	long-term	rate	of	return	on	plan	assets	by	50	basis	points as	of	December	31,	2014	would	increase	estimated	2015	pension	expense	and	postretirement	benefit	expense	by	approximately	$53	million	and	$1	million, respectively.

(3) The	health	care	cost	trend	rate	is	based	upon	an	evaluation	of	our	historical	trends	and	experience	taking	into	account	current	and	expected	market	conditions. Increasing	the	assumed	health	care	cost	trend	rate	by	100	basis	points	would	increase	estimated	2015	postretirement	benefits	expense	by	$3	million.

During	2014,	we	revised	our	mortality	assumptions	 to	 incorporate	 the	new	set	of	mortality	 tables	 issued	by	 the	Society	of	Actuaries,	adjusted	 to	reflect	our experience	and	future	expectations.	This	resulted	in	an	increase	in	the	projected	benefit	obligation	of	our	pension	and	retiree	medical	programs	of	$682	million	and	$47 million,	respectively.	We	also	reviewed	and	revised	certain	other	economic	and	demographic	assumptions	including	the	pension	and	retiree	medical	discount	rates	and health	care	cost	and	trend	rates.	The	net	effect	of	changing	these	assumptions	for	the	pension	and	retiree	medical	plans	resulted	in	an	increase	of	$1.8	billion	and	a decrease	of	$64	million,	respectively,	in	the	projected	benefit	obligation	at	December	31,	2014	primarily	due	to	the	decrease	in	the	pension	discount	rate.

See	Note	13	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	and	Note	10	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for additional	information	regarding	our	retirement	benefits.

Income	taxes	are	accounted	for	under	the	asset	and	liability	method.	Deferred	tax	assets	and	liabilities	are	recognized	for	the	future	tax	consequences	attributable	to differences	 between	 the	 financial	 statement	 carrying	 amounts	 of	 existing	 assets	 and	 liabilities	 and	 their	 respective	 tax	 bases	 and	 operating	 loss	 and	 tax	 credit carryforwards.	A	valuation	allowance	is	established,	if	necessary,	for	the	amount	of	any	tax	benefits	that,	based	on	available	evidence,	are	not	expected	to	be	realized.

# New	Accounting	Pronouncements

In	May	2014,	the	Financial	Accounting	Standards	Board	(FASB)	issued	Accounting	Standards	Update	(ASU)	2014-09,	"Revenue	from	Contracts	with	Customers (Topic	606)."	ASU	2014-09	completes	the	joint	effort	by	the	FASB	and	International	Accounting	Standards	Board	(IASB)	to	improve	financial	reporting	by	creating common	revenue	recognition	guidance	for	U.S.	GAAP	and	International	Financial	Reporting	Standards	(IFRS).	ASU	2014-09	applies	to	all	companies	that	enter	into contracts	 with	 customers	 to	 transfer	 goods	 or	 services.	 ASU	 2014-09	 is	 effective	 for	 public	 entities	 for	 interim	 and	 annual	 reporting	 periods	 beginning	 after December	15,	2016.	Early	application	is	not	permitted	and	entities	have	the	choice	to	apply	ASU	2014-09	either	retrospectively	to	each	reporting	period	presented	or	by recognizing	the	cumulative	effect	of	applying	ASU	2014-09	at	the	date	of	initial	application	and	not	adjusting	comparative	information.	We	are	currently	evaluating	the requirements	of	ASU	2014-09	and	have	not	yet	determined	its	impact	on	our	consolidated	financial	statements.

# ITEM	7A.	QUANTITATIVE	AND	QUALITATIVE	DISCLOSURES	ABOUT	MARKET	RISK

# AAG's	Market	Risk	Sensitive	Instruments	and	Positions

The	risk	inherent	in	our	market	risk	sensitive	instruments	and	positions	is	the	potential	loss	arising	from	adverse	changes	in	the	price	of	fuel,	foreign	currency exchange	rates	and	interest	rates	as	discussed	below.	The	sensitivity	analyses	presented	do	not	consider	the	effects	that	such	adverse	changes	may	have	on	overall economic	activity,	nor	do	they	consider	additional	actions	management	may	take	to	mitigate	our	exposure	to	such	changes.	Therefore,	actual	results	may	differ.	See Note	11	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	for	accounting	policies	and	additional	information	regarding	derivatives.

Our	operating	results	are	materially	impacted	by	changes	in	the	availability,	price	volatility	and	cost	of	aircraft	fuel,	which	represents	one	of	the	largest	single	cost items	in	our	business.	Because	of	the	amount	of	fuel	needed	to	operate	our	airlines,	even	a	relatively	small	increase	in	the	price	of	fuel	can	have	a	material	adverse aggregate	effect	on	our	costs	and	liquidity.	Jet	fuel	market	prices	have	fluctuated	substantially	over	the	past	several	years	with	market	spot	prices	ranging	from	a	low	of approximately	$1.55	per	gallon	to	a	high	of	approximately	$3.37	per	gallon	during	the	period	from	January	1,	2011	to	December	31,	2014.	In	order	to	provide	a	measure of	control	over	price	and	supply,	we	trade	and	ship	fuel	and	maintain	fuel	storage	facilities	to	support	our	flight	operations.

During	the	second	quarter	of	2014,	we	sold	our	portfolio	of	fuel	hedging	contracts	that	were	scheduled	to	settle	on	or	after	June	30,	2014.	We	have	not	entered	into any	transactions	to	hedge	our	fuel	consumption	since	December	9,	2013	and,	accordingly,	as	of	December	31,	2014,	we	did	not	have	any	fuel	hedging	contracts outstanding.	As	such,	and	assuming	we	do	not	enter	into	any	future	transactions	to	hedge	our	fuel	consumption,	we	will	continue	to	be	fully	exposed	to	fluctuations	in fuel	prices.	Our	current	policy	is	not	to	enter	into	transactions	to	hedge	our	fuel	consumption,	although	we	review	that	policy	from	time	to	time	based	on	market conditions	and	other	factors.	Our	2015	forecasted	mainline	and	regional	fuel	consumption	is	presently	approximately	4.3	billion	gallons,	and	based	on	this	forecast,	a one	cent	per	gallon	increase	in	aviation	fuel	price	would	result	in	a	$43	million	increase	in	annual	expense.

# Foreign	Currency

We	are	exposed	to	the	effect	of	foreign	exchange	rate	fluctuations	on	the	U.S.	dollar	value	of	foreign	currency-denominated	operating	revenues	and	expenses.	Our largest	exposure	comes	from	the	British	pound,	Euro,	Canadian	dollar,	Japanese	yen	and	various	Latin	American	currencies,	particularly	the	Venezuelan	bolivar, Brazilian	real	and	Argentine	peso.	We	do	not	currently	have	a	foreign	currency	hedge	program	related	to	our	foreign	currency-denominated	ticket	sales.	Due	to	our foreign-denominated	revenues	exceeding	our	foreign-denominated	expenses,	a	uniform	10%	relative	strengthening	in	the	value	of	the	U.S.	dollar	from	December	31, 2014	and	2013	levels	relative	to	each	of	the	currencies	in	which	we	have	foreign	currency	exposure	would	have	resulted	in	an	increase	in	our	total	nonoperating	expense, net	of	approximately	$235	million	and	$199	million,	for	the	years	ending	December	31,	2014	and	2013,	respectively,	and	does	not	address	any	exposure	to	foreign currency	held	on	our	balance	sheet.

# Venezuela	Cash	and	Short-term	Investments

As	of	December	31,	2014,	$804	million	of	our	cash	and	short-term	investments	balances	were	held	in	foreign	bank	accounts,	of	which	approximately	$656	million was	held	in	Venezuelan	bolivars.	This	balance	includes	approximately	$621	million	valued	at	6.3	bolivars	and	approximately	$35	million	valued	at	12.0	bolivars,	with the	rate	depending	on	the	date	we	submitted	our	repatriation	request	to	the	Venezuelan	government.	These	rates	are	materially	more	favorable	than	the	exchange	rates currently	prevailing	for	other	transactions	conducted	outside	of	the	Venezuelan	government's	currency	exchange	system	that	we	participate	in.	Our	cash	balance	held 115

in	Venezuelan	bolivars	decreased	$54	million	from	the	December	31,	2013	balance	of	$710	million	primarily	due	to	$88	million	in	cash	repatriations	and	$30	million	in foreign	currency	losses	as	described	below,	partially	offset	by	additional	cash	proceeds	from	ticket	sales	in	early	2014.	In	the	second	and	third	quarters	of	2014,	we repatriated	$65	million	including	$31	million	valued	at	6.3	bolivars	to	the	dollar	and	$34	million	valued	at	10.6	bolivars	to	the	dollar.	In	the	fourth	quarter	of	2014,	we incurred	an	$11	million	foreign	currency	loss	related	to	the	receipt	of	$23	million	at	a	rate	of	6.3	bolivars	to	the	dollar	for	one	of	our	2012	repatriation	requests originally	valued	at	a	rate	of	4.3	bolivars	to	the	dollar.	Accordingly,	we	revalued	our	remaining	pending	2012	repatriation	requests	from	4.3	to	6.3	bolivars	to	the	dollar resulting	in	additional	foreign	currency	losses	of	$19	million.	In	total,	we	recognized	a	$30	million	special	charge	for	these	foreign	currency	losses	in	the	fourth	quarter of	2014.	During	2014,	we	significantly	reduced	capacity	in	this	market	and	we	are	no	longer	accepting	bolivars	as	payment	for	airline	tickets.	We	are	continuing	to	work with	Venezuelan	authorities	regarding	the	timing	and	exchange	rate	applicable	to	the	repatriation	of	funds	held	in	local	currency.	We	are	monitoring	this	situation closely	and	continue	to	evaluate	our	holdings	of	Venezuelan	bolivars	for	additional	foreign	currency	losses,	which	could	be	material,	particularly	in	light	of	the uncertainty	posed	by	the	new	foreign	exchange	regulations	announced	in	mid-February	2015	and	the	continued	deterioration	of	economic	conditions	in	Venezuela.	See Part	I,	Item	1A.	Risk	Factors	–	"We	operate	a	global	business	with	international	operations	that	are	subject	to	economic	and	political	instability	and	have	been,	and	in the	future	may	continue	to	be,	adversely	affected	by	numerous	events,	circumstances	or	government	actions	beyond	our	control"	for	additional	discussion	of	this	and other	currency	risks.

# Interest

Our	earnings	are	also	affected	by	changes	in	interest	rates	due	to	the	impact	those	changes	have	on	our	interest	income	from	short-term	investments,	and	our	interest expense	from	variable-rate	debt	instruments.	Our	largest	exposure	with	respect	to	variable	rate	debt	comes	from	changes	in	the	London	Interbank	Offered	Rate	(LIBOR). We	had	variable	rate	debt	instruments	representing	approximately	36%	of	our	total	long-term	debt	at	December	31,	2014.	If	our	interest	rates	increased	10%	in	2014, our	interest	expense	would	have	increased	by	approximately	$21	million	and	interest	income	from	short-term	investments	would	have	increased	by	approximately	$2 million.

Additional	information	regarding	our	debt	obligations	as	of	December	31,	2014	is	as	follows	(in	millions):

|  |  |  |  | Expected	Maturity	Date |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | Total |
| Fixed-rate\tdebt | $1,281 | $745 | $1,005 | $1,539 | $1,838 | $5,100 | $11,508 |
| Weighted\tavg.\tinterest\trate | 5.6% | 5.6% | 5.6% | 5.6% | 5.6% | 6.0% |  |
| Variable-rate\tdebt | $427 | $917 | $333 | $340 | $3,062 | $1,376 | $6,455 |
| Weighted\tavg.\tinterest\trate | 3.3% | 3.3% | 3.4% | 3.4% | 3.4% | 3.2% |  |

# American's	Market	Risk	Sensitive	Instruments	and	Positions

The	risk	inherent	in	American's	market	risk	sensitive	instruments	and	positions	is	the	potential	loss	arising	from	adverse	changes	in	the	price	of	fuel,	foreign currency	exchange	rates	and	interest	rates	as	discussed	below.	The	sensitivity	analyses	presented	do	not	consider	the	effects	that	such	adverse	changes	may	have	on overall	economic	activity,	nor	do	they	consider	additional	actions	management	may	take	to	mitigate	American's	exposure	to	such	changes.	Therefore,	actual	results	may differ.	See	Note	8	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for	accounting	policies	and	additional	information	regarding	derivatives.

American's	operating	results	are	materially	impacted	by	changes	in	the	availability,	price	volatility	and	cost	of	aircraft	fuel,	which	represents	one	of	the	largest	single cost	items	in	American's	business.	Because	of	the	amount

of	fuel	needed	to	operate	American,	even	a	relatively	small	increase	in	the	price	of	fuel	can	have	a	material	adverse	aggregate	effect	on	American's	costs	and	liquidity. Jet	fuel	market	prices	have	fluctuated	substantially	over	the	past	several	years	with	market	spot	prices	ranging	from	a	low	of	approximately	$1.55	per	gallon	to	a	high	of approximately	$3.37	per	gallon	during	the	period	from	January	1,	2011	to	December	31,	2014.	In	order	to	provide	a	measure	of	control	over	price	and	supply,	American trades	and	ships	fuel	and	maintains	fuel	storage	facilities	to	support	its	flight	operations.

During	the	second	quarter	of	2014,	American	sold	its	portfolio	of	fuel	hedging	contracts	that	were	scheduled	to	settle	on	or	after	June	30,	2014.	American	has	not entered	into	any	transactions	to	hedge	its	fuel	consumption	since	December	9,	2013	and,	accordingly,	as	of	December	31,	2014,	American	did	not	have	any	fuel	hedging contracts	outstanding.	As	such,	and	assuming	American	does	not	enter	into	any	future	transactions	to	hedge	its	fuel	consumption,	American	will	continue	to	be	fully exposed	to	fluctuations	in	fuel	prices.	American's	current	policy	is	not	to	enter	into	transactions	to	hedge	its	fuel	consumption,	although	American	reviews	that	policy from	time	to	time	based	on	market	conditions	and	other	factors.	American's	2015	forecasted	mainline	and	regional	fuel	consumption	is	presently	approximately	2.8 billion	gallons,	and	based	on	this	forecast,	a	one	cent	per	gallon	increase	in	aviation	fuel	price	would	result	in	a	$28	million	increase	in	annual	expense.

American	is	exposed	to	the	effect	of	foreign	exchange	rate	fluctuations	on	the	U.S.	dollar	value	of	foreign	currency-denominated	operating	revenues	and	expenses. American's	largest	exposure	comes	from	the	British	pound,	Euro,	Canadian	dollar,	Japanese	yen	and	various	Latin	American	currencies,	particularly	the	Venezuelan bolivar,	Brazilian	real	and	Argentine	peso.	American	does	not	currently	have	a	foreign	currency	hedge	program	related	to	its	foreign	currency-denominated	ticket	sales. Due	to	American's	foreign-denominated	revenues	exceeding	its	foreign-denominated	expenses,	a	uniform	10%	strengthening	in	the	value	of	the	U.S.	dollar	from December	31,	2014	and	2013	levels	relative	to	each	of	the	currencies	in	which	American	has	foreign	currency	exposure	would	have	resulted	in	an	increase	in	its nonoperating	expense,	net	of	approximately	$195	million	and	$199	million,	for	the	years	ending	December	31,	2014	and	2013,	respectively,	and	does	not	address	any exposure	to	foreign	currency	held	on	its	balance	sheet.

As	of	December	31,	2014,	$745	million	of	American's	cash	and	short-term	investments	balances	were	held	in	foreign	bank	accounts,	of	which	approximately	$656 million	was	held	in	Venezuelan	bolivars.	This	balance	includes	approximately	$621	million	valued	at	6.3	bolivars	and	approximately	$35	million	valued	at	12.0 bolivars,	with	the	rate	depending	on	the	date	American	submitted	its	repatriation	request	to	the	Venezuelan	government.	These	rates	are	materially	more	favorable	than the	exchange	rates	currently	prevailing	for	other	transactions	conducted	outside	of	the	Venezuelan	government's	currency	exchange	system	that	American	participates in.	American's	cash	balance	held	in	Venezuelan	bolivars	decreased	$54	million	from	the	December	31,	2013	balance	of	$710	million	primarily	due	to	$88	million	in cash	repatriations	and	$30	million	in	foreign	currency	losses	as	described	below,	partially	offset	by	additional	cash	proceeds	from	ticket	sales	in	early	2014.	In	the second	and	third	quarters	of	2014,	American	repatriated	$65	million	including	$31	million	valued	at	6.3	bolivars	to	the	dollar	and	$34	million	valued	at	10.6	bolivars	to the	dollar.	In	the	fourth	quarter	of	2014,	American	incurred	an	$11	million	foreign	currency	loss	related	to	the	receipt	of	$23	million	at	a	rate	of	6.3	bolivars	to	the	dollar for	one	of	its	2012	repatriation	requests	originally	valued	at	a	rate	of	4.3	bolivars	to	the	dollar.	Accordingly,	American	revalued	its	remaining	pending	2012	repatriation requests	from	4.3	to	6.3	bolivars	to	the	dollar	resulting	in	additional	foreign	currency	losses	of	$19	million.	In	total,	American	recognized	a	$30	million	special	charge for	these	foreign	currency	losses	in	the	fourth	quarter	of	2014.	During	2014,	American	significantly	reduced	capacity	in	this	market	and	is	no	longer	accepting	bolivars as	payment	for	airline	tickets.	American	is	continuing	to	work	with	Venezuelan	authorities	regarding	the	timing	and	exchange	rate	applicable	to	the	repatriation	of	funds held	in	local	currency.	American	is	monitoring	this	situation	closely	and	continues	to	evaluate	its	holdings	of	Venezuelan	bolivars	for	additional	foreign	currency	losses, which	could	be	material,

particularly	in	light	of	the	uncertainty	posed	by	the	new	foreign	exchange	regulations	announced	in	mid-February	2015	and	the	continued	deterioration	of	economic conditions	in	Venezuela.	See	Part	I,	Item	1A.	Risk	Factors	–	"We	operate	a	global	business	with	international	operations	that	are	subject	to	economic	and	political instability	and	have	been,	and	in	the	future	may	continue	to	be,	adversely	affected	by	numerous	events,	circumstances	or	government	actions	beyond	our	control"	for additional	discussion	of	this	and	other	currency	risks.

American's	earnings	are	also	affected	by	changes	in	interest	rates	due	to	the	impact	those	changes	have	on	its	interest	income	from	short-term	investments,	and	its interest	expense	from	variable-rate	debt	instruments.	American's	largest	exposure	with	respect	to	variable	rate	debt	comes	from	changes	in	the	London	Interbank Offered	Rate	(LIBOR).	American	had	variable	rate	debt	instruments	representing	approximately	35%	of	its	total	long-term	debt	at	December	31,	2014.	If	American's interest	rates	increased	10%	in	2014,	American's	interest	expense	would	have	increased	by	approximately	$14	million	and	interest	income	from	short-term	investments would	have	increased	by	approximately	$2	million.

Additional	information	regarding	American's	debt	obligations	as	of	December	31,	2014	is	as	follows	(in	millions):

|  |  |  |  | Expected	Maturity	Date |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | Total |
| Fixed-rate\tdebt | $968 | $505 | $745 | $658 | $766 | $3,673 | $7,315 |
| Weighted\tavg.\tinterest\trate | 5.4% | 5.4% | 5.4% | 5.5% | 5.6% | 6.2% |  |
| Variable-rate\tdebt | $262 | $193 | $197 | $186 | $1,978 | $1,118 | $3,934 |
| Weighted\tavg.\tinterest\trate | 3.6% | 3.6% | 3.6% | 3.6% | 3.6% | 3.3% |  |

# ITEM	8A.	CONSOLIDATED	FINANCIAL	STATEMENTS	AND	SUPPLEMENTARY	DATA	OF	AMERICAN	AIRLINES	GROUP	INC.

# Report	of	Independent	Registered	Public	Accounting	Firm

# The	Board	of	Directors	and	Stockholders

We	have	audited	the	accompanying	consolidated	balance	sheet	of	American	Airlines	Group	Inc.	and	subsidiaries	(the	Company)	as	of	December	31,	2014,	and	the related	consolidated	statements	of	operations,	comprehensive	income	(loss),	stockholders'	equity	(deficit),	and	cash	flows	for	the	year	then	ended.	These	consolidated financial	statements	are	the	responsibility	of	the	Company's	management.	Our	responsibility	is	to	express	an	opinion	on	these	consolidated	financial	statements	based	on our	audit.

We	conducted	our	audit	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan and	perform	the	audit	to	obtain	reasonable	assurance	about	whether	the	financial	statements	are	free	of	material	misstatement.	An	audit	includes	examining,	on	a	test basis,	evidence	supporting	the	amounts	and	disclosures	in	the	financial	statements.	An	audit	also	includes	assessing	the	accounting	principles	used	and	significant estimates	made	by	management,	as	well	as	evaluating	the	overall	financial	statement	presentation.	We	believe	that	our	audit	provides	a	reasonable	basis	for	our	opinion.

In	our	opinion,	the	consolidated	financial	statements	referred	to	above	present	fairly,	in	all	material	respects,	the	financial	position	of	American	Airlines	Group	Inc. and	subsidiaries	as	of	December	31,	2014,	and	the	results	of	their	operations	and	their	cash	flows	for	the	year	then	ended	in	conformity	with	U.S.	generally	accepted accounting	principles.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	American	Airlines	Group	Inc.'s	internal control	over	financial	reporting	as	of	December	31,	2014,	based	on	criteria	established	in	Internal	Control	–	Integrated	Framework	(1992)	issued	by	the	Committee	of Sponsoring	Organizations	of	the	Treadway	Commission	(COSO),	and	our	report	dated	February	25,	2015	expressed	an	unqualified	opinion	on	the	effectiveness	of	the Company's	internal	control	over	financial	reporting.

Dallas,	Texas

We	have	audited	the	accompanying	consolidated	balance	sheet	of	American	Airlines	Group	Inc.	(the	Company)	(formerly	AMR	Corporation)	as	of	December	31, 2013,	and	the	related	consolidated	statements	of	operations,	comprehensive	income	(loss),	stockholders'	equity	(deficit)	and	cash	flows	for	each	of	the	two	years	in	the period	ended	December	31,	2013.	These	consolidated	financial	statements	are	the	responsibility	of	the	Company's	management.	Our	responsibility	is	to	express	an opinion	on	these	financial	statements	based	on	our	audits.	We	did	not	audit	the	financial	statements	of	US	Airways	Group,	Inc.,	a	wholly-owned	subsidiary	of	the Company,	which	statements	reflect	consolidated	total	assets	constituting	39%	as	of	December	31,	2013,	and	total	operating	revenues	constituting	3%	for	the	year	ended December	31,	2013,	of	the	related	consolidated	totals.	Those	financial	statements	were	audited	by	other	auditors	whose	report	has	been	furnished	to	us,	and	our	opinion, insofar	as	it	relates	to	data	included	for	such	wholly-owned	subsidiary,	is	based	solely	on	the	report	of	other	auditors.

We	conducted	our	audit	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan and	perform	the	audit	to	obtain	reasonable	assurance	about	whether	the	financial	statements	are	free	of	material	misstatement.	An	audit	includes	examining,	on	a	test basis,	evidence	supporting	the	amounts	and	disclosures	in	the	financial	statements.	An	audit	also	includes	assessing	the	accounting	principles	used	and	significant estimates	made	by	management,	as	well	as	evaluating	the	overall	financial	statement	presentation.	We	believe	that	our	audit	and	the	report	of	other	auditors	provide	a reasonable	basis	for	our	opinion.

In	our	opinion,	based	on	our	audit	and	the	report	of	other	auditors,	the	financial	statements	referred	to	above	present	fairly,	in	all	material	respects,	the	consolidated financial	position	of	American	Airlines	Group	Inc.	at	December	31,	2013	and	the	consolidated	results	of	its	operations	and	its	cash	flows	for	each	of	the	two	years	in	the period	ended	December	31,	2013,	in	conformity	with	U.S.	generally	accepted	accounting	principles.

# CONSOLIDATED	STATEMENTS	OF	OPERATIONS

# (In	millions,	except	shares	and	per	share	amounts)

|  | 2014 | Year	Ended	December	31,<br>2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Operating\trevenues: |  |  |  |
| Mainline\tpassenger | $30,802 | $20,218 | $18,743 |
| Regional\tpassenger | 6,322 | 3,131 | 2,914 |
| Cargo | 875 | 685 | 675 |
| Other | 4,651 | 2,709 | 2,523 |
| Total\toperating\trevenues | 42,650 | 26,743 | 24,855 |
| Operating\texpenses: |  |  |  |
| Aircraft\tfuel\tand\trelated\ttaxes | 10,592 | 7,839 | 7,705 |
| Salaries,\twages\tand\tbenefits | 8,508 | 5,460 | 6,217 |
| Regional\texpenses | 6,516 | 3,326 | 3,028 |
| Maintenance,\tmaterials\tand\trepairs | 2,051 | 1,260 | 1,158 |
| Other\trent\tand\tlanding\tfees | 1,727 | 1,152 | 1,083 |
| Aircraft\trent | 1,250 | 768 | 553 |
| Selling\texpenses | 1,544 | 1,158 | 1,058 |
| Depreciation\tand\tamortization | 1,295 | 853 | 845 |
| Special\titems,\tnet | 800 | 559 | 386 |
| Other | 4,118 | 2,969 | 2,674 |
| Total\toperating\texpenses | 38,401 | 25,344 | 24,707 |
| Operating\tincome | 4,249 | 1,399 | 148 |
| Nonoperating\tincome\t(expense): |  |  |  |
| Interest\tincome | 31 | 20 | 26 |
| Interest\texpense,\tnet\tof\tcapitalized\tinterest | (887) | (856) | (632) |
| Other,\tnet | (181) | (88) | 221 |
| Total\tnonoperating\texpense,\tnet | (1,037) | (924) | (385) |
| Income\t(loss)\tbefore\treorganization\titems,\tnet | 3,212 | 475 | (237) |
| Reorganization\titems,\tnet | — | (2,655) | (2,208) |
| Income\t(loss)\tbefore\tincome\ttaxes | 3,212 | (2,180) | (2,445) |
| Income\ttax\tprovision\t(benefit) | 330 | (346) | (569) |
| Net\tincome\t(loss) | $2,882 | $(1,834) | $(1,876) |
| Earnings\t(loss)\tper\tshare: |  |  |  |
| Basic | $4.02 | $(6.54) | $(7.52) |
| Diluted | $3.93 | $(6.54) | $(7.52) |
| Weighted\taverage\tshares\toutstanding\t(in\tthousands): |  |  |  |
| Basic | \t 717,456 | \t 280,213 | \t 249,490 |
| Diluted | \t 734,016 | \t 280,213 | \t 249,490 |
| Cash\tdividends\tdeclared\tper\tcommon\tshare | $0.20 | $— | $— |

See	accompanying	notes	to	consolidated	financial	statements.

# CONSOLIDATED	STATEMENTS	OF	COMPREHENSIVE	INCOME	(LOSS)

# (In	millions)

|  | Year	Ended	December	31, | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2014 | 2013 | 2012 |
| Net\tincome\t(loss) | $2,882 | $(1,834) | $(1,876) |
| Other\tcomprehensive\tincome\t(loss),\tbefore\ttax: |  |  |  |
| Defined\tbenefit\tpension\tplans\tand\tretiree\tmedical: |  |  |  |
| Amortization\tof\tactuarial\tgain\t(loss)\tand\tprior\tservice\tcost | (163) | (142) | 130 |
| Current\tyear\tchange | (2,633) | 1,577 | (1,910) |
| Benefit\tplan\tmodifications | — | — | 3,345 |
| Derivative\tfinancial\tinstruments: |  |  |  |
| Change\tin\tfair\tvalue | (54) | 18 | (12) |
| Reclassification\tinto\tearnings | (4) | 34 | (3) |
| Unrealized\tgain\t(loss)\ton\tinvestments: |  |  |  |
| Net\tchange\tin\tvalue | (3) | (1) | 3 |
| Other\tcomprehensive\tincome\t(loss)\tbefore\ttax | (2,857) | 1,486 | 1,553 |
| Non-cash\ttax\tprovision\t(benefit) | (330) | 538 | 569 |
| Comprehensive\tincome\t(loss) | $355 | $(886) | $(892) |

# CONSOLIDATED	BALANCE	SHEETS

# (In	millions,	except	shares	and	par	value)

|  | December	31,<br>2014 | 2013 |
| :--- | :--- | :--- |
| ASSETS |  |  |
| Current\tassets |  |  |
| Cash | $994 | $1,140 |
| Short-term\tinvestments | 6,309 | 8,111 |
| Restricted\tcash\tand\tshort-term\tinvestments | 774 | 1,035 |
| Accounts\treceivable,\tnet | 1,771 | 1,560 |
| Aircraft\tfuel,\tspare\tparts\tand\tsupplies,\tnet | 1,004 | 1,012 |
| Prepaid\texpenses\tand\tother | 1,260 | 1,465 |
| Total\tcurrent\tassets | 12,112 | 14,323 |
| Operating\tproperty\tand\tequipment |  |  |
| Flight\tequipment | 28,213 | 23,730 |
| Ground\tproperty\tand\tequipment | 5,900 | 5,585 |
| Equipment\tpurchase\tdeposits | 1,230 | 1,077 |
| Total\tproperty\tand\tequipment,\tat\tcost | 35,343 | 30,392 |
| Less\taccumulated\tdepreciation\tand\tamortization | (12,259) | (11,133) |
| Total\tproperty\tand\tequipment,\tnet | 23,084 | 19,259 |
| Other\tassets |  |  |
| Goodwill | 4,091 | 4,086 |
| Intangibles,\tnet\tof\taccumulated\tamortization\tof\t$447\tand\t$373,\trespectively | 2,240 | 2,311 |
| Other\tassets | 2,244 | 2,299 |
| Total\tother\tassets | 8,575 | 8,696 |
| Total\tassets | $43,771 | $42,278 |
| LIABILITIES\tAND\tSTOCKHOLDERS'\tEQUITY\t(DEFICIT) |  |  |
| Current\tliabilities |  |  |
| Current\tmaturities\tof\tlong-term\tdebt\tand\tcapital\tleases | $1,708 | $1,446 |
| Accounts\tpayable | 1,377 | 1,368 |
| Accrued\tsalaries\tand\twages | 1,194 | 1,143 |
| Air\ttraffic\tliability | 4,252 | 4,380 |
| Frequent\tflyer\tliability | 2,807 | 3,005 |
| Other\taccrued\tliabilities | 2,097 | 2,464 |
| Total\tcurrent\tliabilities | 13,435 | 13,806 |
| Noncurrent\tliabilities |  |  |
| Long-term\tdebt\tand\tcapital\tleases,\tnet\tof\tcurrent\tmaturities | 16,196 | 15,353 |
| Pension\tand\tpostretirement\tbenefits | 7,562 | 5,828 |
| Deferred\tgains\tand\tcredits,\tnet | 829 | 935 |
| Mandatorily\tconvertible\tpreferred\tstock\tand\tother\tbankruptcy\tsettlement\tobligations | 325 | 5,928 |
| Other\tliabilities | 3,403 | 3,159 |
| Total\tnoncurrent\tliabilities | 28,315 | 31,203 |
| Commitments\tand\tcontingencies\t(Note\t15) |  |  |
| Stockholders'\tequity\t(deficit) |  |  |
| 526,805,522\tshares\tissued\tand\toutstanding\tat\tDecember\t31,\t2013 | 7 | 5 |
| Additional\tpaid-in\tcapital | 15,135 | 10,592 |
| Accumulated\tother\tcomprehensive\tloss | (4,559) | (2,032) |
| Accumulated\tdeficit | (8,562) | (11,296) |
| Total\tstockholders'\tequity\t(deficit) | 2,021 | (2,731) |
| Total\tliabilities\tand\tstockholders'\tequity\t(deficit) | $43,771 | $42,278 |

# CONSOLIDATED	STATEMENTS	OF	CASH	FLOWS

|  | 2014 | December	31,<br>2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Cash\tflows\tfrom\toperating\tactivities: |  |  |  |
| Net\tincome\t(loss) | $2,882 | $(1,834) | $(1,876) |
| Adjustments\tto\treconcile\tnet\tincome\t(loss)\tto\tnet\tcash\tprovided\tby\toperating\tactivities: |  |  |  |
| Depreciation\tand\tamortization | 1,513 | 1,020 | 1,015 |
| Debt\tdiscount\tand\tlease\tamortization | (171) | — | (14) |
| Special\titems,\tnon-cash | 52 | 95 | 215 |
| Pension\tand\tpostretirement | (163) | (154) | 287 |
| Deferred\tincome\ttaxes | 346 | (324) | (569) |
| Share\tbased\tcompensation | 304 | 39 | 29 |
| Reorganization\titems,\tnon-cash | — | 2,112 | 2,066 |
| Interest\texpense,\tnon-cash | — | 181 | — |
| Other,\tnet | 3 | (76) | 22 |
| Changes\tin\toperating\tassets\tand\tliabilities: |  |  |  |
| Increase\tin\taccounts\treceivable | (160) | (93) | (222) |
| Increase\tin\tother\tcurrent\tassets | (45) | (29) | (133) |
| Decrease\t(increase)\tin\tderivative\tcollateral | — | 1 | (1) |
| Increase\tin\taccounts\tpayable\tand\taccrued\tliabilities | 110 | 71 | 449 |
| Increase\t(decrease)\tin\tair\ttraffic\tliability | (97) | 150 | 161 |
| Increase\t(decrease)\tin\tfrequent\tflyer\tliability | (229) | 38 | 140 |
| Contributions\tto\tpension\tplans | (810) | (494) | (277) |
| Decrease\tin\tother\tassets\tand\tliabilities | (455) | (28) | (7) |
| Net\tcash\tprovided\tby\toperating\tactivities | 3,080 | 675 | 1,285 |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |
| Capital\texpenditures\tand\taircraft\tpurchase\tdeposits | (5,311) | (3,114) | (1,888) |
| Acquisition\tof\tUS\tAirways\tGroup | — | 206 | — |
| Purchases\tof\tshort-term\tinvestments | (5,380) | (3,342) | (1,078) |
| Sales\tof\tshort-term\tinvestments | 7,179 | 2,161 | 1,384 |
| Decrease\t(increase)\tin\trestricted\tcash\tand\tshort-term\tinvestments | 261 | 147 | (112) |
| Net\tproceeds\tfrom\tslot\ttransaction | 307 | — | — |
| Proceeds\tfrom\tsale\tof\tproperty\tand\tequipment | 33 | 128 | 123 |
| Net\tcash\tused\tin\tinvesting\tactivities | (2,911) | (3,814) | (1,571) |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |
| Payments\ton\tlong-term\tdebt\tand\tcapital\tleases | (3,132) | (2,926) | (1,288) |
| Proceeds\tfrom\tissuance\tof\tlong-term\tdebt | 3,302 | 5,134 | 268 |
| Deferred\tfinancing\tcosts | (106) | (120) | (6) |
| Sale-leaseback\ttransactions | 811 | 1,700 | 1,509 |
| Exercise\tof\tstock\toptions | 10 | — | — |
| Treasury\tstock\trepurchases | (1,062) | — | — |
| Dividend\tpayment | (144) | — | — |
| Other\tfinancing\tactivities | 6 | 11 | — |
| Net\tcash\tprovided\tby\t(used\tin)\tfinancing\tactivities | (315) | 3,799 | 483 |
| Net\tincrease\t(decrease)\tin\tcash | (146) | 660 | 197 |
| Cash\tat\tbeginning\tof\tyear | 1,140 | 480 | 283 |
| Cash\tat\tend\tof\tyear | $994 | $1,140 | $480 |

# CONSOLIDATED	STATEMENTS	OF	STOCKHOLDERS'	EQUITY	(DEFICIT)

# (In	millions,	except	share	amounts)

|  | Common<br>Stock | Additional<br>Paid-in<br>Capital | Treasury<br>Stock | Other<br>Comprehensive<br>Income	(Loss) | Accumulated<br>Deficit | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tDecember\t31,\t2011 | $254 | $4,552 | $(367) | $(3,964) | $(7,586) | $(7,111) |
| Net\tloss | — | — | — | — | (1,876) | (1,876) |
| Change\tin\tunrealized\tgain\ton\tinvestments | — | — | — | 3 | — | 3 |
| Changes\tin\tpension,\tretiree\tmedical\tand\tother\tliability | — | — | — | 1,565 | — | 1,565 |
| Net\tchanges\tin\tfair\tvalue\tof\tderivative\tfinancial\tinstruments | — | — | — | (15) | — | (15) |
| Non-cash\ttax\tprovision | — | — | — | (569) | — | (569) |
| Share-based\tcompensation\texpense | — | 16 | — | — | — | 16 |
| Balance\tat\tDecember\t31,\t2012 | 254 | 4,568 | (367) | (2,980) | (9,462) | (7,987) |
| Net\tloss | — | — | — | — | (1,834) | (1,834) |
| Change\tin\tunrealized\tloss\ton\tinvestments | — | — | — | (1) | — | (1) |
| Changes\tin\tpension,\tretiree\tmedical\tand\tother\tliability | — | — | — | 1,435 | — | 1,435 |
| Net\tchanges\tin\tfair\tvalue\tof\tderivative\tfinancial\tinstruments | — | — | — | 52 | — | 52 |
| Non-cash\ttax\tprovision | — | — | — | (538) | — | (538) |
| Issuance\tof\t6,249,185\tshares\tto\temployees\tpursuant\tto\tstock\toption\tand\tdeferred\tstock\tincentive\tplans | 6 | 2 | — | — | — | 8 |
| Issuance\tof\t37,208,354\tshares\tin\texchange\tfor\tredemption\tof\tAMR\tCorporation\tdebt | 37 | 484 | — | — | — | 521 |
| Cancellation\tof\tpre-reorganization\tcommon\tstock | (297) | (70) | 367 | — | — | — |
| Issuance\tof\t319,412,943\tshares\tof\tpost-reorganization\tcommon\tstock | 3 | 592 | — | — | — | 595 |
| Issuance\tof\t197,363,088\tshares\tin\texchange\tfor\tUS\tAirways\tGroup\tcommon\tstock | 2 | 4,590 | — | — | — | 4,592 |
| Equity\tcomponent\tof\tUS\tAirways\tGroup\tconvertible\tdebt\tassumed\tin\tMerger | — | 88 | — | — | — | 88 |
| Issuance\tof\t9,993,882\tshares\tfor\tOptional\tConversion\tof\tPreferred\tShares | — | 269 | — | — | — | 269 |
| Share-based\tcompensation\texpense | — | 69 | — | — | — | 69 |
| Issuance\tof\t35,609\tshares\tto\temployees\tpursuant\tto\tstock\toption\tand\tdeferred\tstock\tincentive\tplans | — | — | — | — | — | — |
| Balance\tat\tDecember\t31,\t2013 | 5 | 10,592 | — | (2,032) | (11,296) | (2,731) |
| Net\tincome | — | — | — | — | 2,882 | 2,882 |
| Change\tin\tunrealized\tloss\ton\tinvestments | — | — | — | (3) | — | (3) |
| Changes\tin\tpension,\tretiree\tmedical\tand\tother\tliability | — | — | — | (2,796) | — | (2,796) |
| Net\tchanges\tin\tfair\tvalue\tof\tderivative\tfinancial\tinstruments | — | — | — | (58) | — | (58) |
| Non-cash\ttax\tbenefit | — | — | — | 330 | — | 330 |
| Cash\ttax\twithholding\ton\tshares\tissued | — | (110) | — | — | — | (110) |
| Purchase\tand\tretirement\tof\t23,406,472\tof\tAAG\tCommon\tStock | — | (1,000) | — | — | — | (1,000) |
| Dividends\tdeclared\ton\tcommon\tstock\t($0.20\tper\tshare) | — | — | — | — | (148) | (148) |
| US\tAirways\tGroup\tconvertible\tdebt\tsettled\twith\tcash | — | (154) | — | — | — | (154) |
| Issuance\tof\t5,701,776\tshares\tof\tcommon\tstock\tpursuant\tto\temployee\tstock\tplans | — | 10 | — | — | — | 10 |
| Issuance\tof\t57,393,096\tshares\tof\tpost-reorganization\tcommon\tstock | 1 | 1,604 | — | — | — | 1,605 |
| Issuance\tof\t130,980,613\tshares\tfor\tOptional\tConversion\tof\tPreferred\tShares | 1 | 3,889 | — | — | — | 3,890 |
| Share-based\tcompensation\texpense | — | 304 | — | — | — | 304 |
| Balance\tat\tDecember\t31,\t2014 | $7 | $15,135 | $— | $(4,559) | $(8,562) | $ 2,021 |

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS	OF	AMERICAN	AIRLINES	GROUP	INC.

# 1.		Nature	of	Operations	and	Operating	Environment

American	Airlines	Group	Inc.	(AAG	or	the	Company),	a	Delaware	corporation,	is	a	holding	company	whose	primary	business	activity	is	the	operation	of	two	major network	air	carriers	through	its	subsidiaries	American	Airlines,	Inc.	(American),	US	Airways	Group,	Inc.	(US	Airways	Group)	and	Envoy	Aviation	Group	Inc.	(Envoy, formerly	known	as	AMR	Eagle	Holding	Corporation).	US	Airways	Group's	principal	subsidiary	is	US	Airways,	Inc.	(US	Airways)	and	its	wholly-owned	regional subsidiaries	include	Piedmont	Airlines,	Inc.	(Piedmont),	and	PSA	Airlines,	Inc.	(PSA).

The	Company	operates	the	largest	airline	in	the	world	as	measured	by	revenue	passenger	miles	(RPMs)	and	available	seat	miles	(ASMs).	The	Company	has	hubs	in Charlotte,	 Chicago,	 Dallas/Fort	 Worth,	 Los	Angeles,	 Miami,	 New	York	 City,	 Philadelphia,	 Phoenix	 and	 Washington,	 D.C.	 Together	 with	American	 Eagle	 and US	Airways	Express,	the	Company	operates	an	average	of	nearly	6,700	flights	per	day	to	339	destinations	in	54	countries.	In	2014,	the	Company	had	approximately 146	million	and	52	million	passengers	boarding	its	mainline	and	regional	flights,	respectively.	As	of	December	31,	2014,	the	Company	operated	983	mainline	jets	and	is supported	by	its	regional	airline	subsidiaries	and	third-party	regional	carriers	operating	as	American	Eagle	and	US	Airways	Express	under	capacity	purchase	agreements, which	operated	566	regional	aircraft.

As	of	December	31,	2014,	the	Company	employed	approximately	113,300	active	full-time	equivalent	employees,	of	which	18,900	were	employed	by	its	regional operations.	Approximately	82%	of	employees	are	covered	by	collective	bargaining	agreements	(CBAs)	with	various	labor	unions.

# 2.		Emergence	from	Chapter	11

On	November	29,	2011	(the	Petition	Date),	AMR	Corporation	(AMR,	renamed	American	Airlines	Group	Inc.,	upon	 the	closing	of	 the	Merger),	 its	principal subsidiary,	American,	and	certain	of	the	Company's	other	direct	and	indirect	domestic	subsidiaries	(collectively,	the	Debtors),	filed	voluntary	petitions	for	relief	(the Chapter	11	Cases)	under	Chapter	11	of	the	United	States	Bankruptcy	Code	(the	Bankruptcy	Code)	in	the	United	States	Bankruptcy	Court	for	the	Southern	District	of New	York	(the	Bankruptcy	Court).	On	October	21,	2013,	the	Bankruptcy	Court	entered	an	order	(the	Confirmation	Order)	approving	and	confirming	the	Debtors'	fourth amended	joint	plan	of	reorganization	(as	amended,	the	Plan).

On	December	9,	2013	(the	Effective	Date),	the	Debtors	consummated	their	reorganization	pursuant	to	the	Plan,	principally	through	the	transactions	contemplated	by that	certain	Agreement	and	Plan	of	Merger	(as	amended,	the	Merger	Agreement),	dated	as	of	February	13,	2013,	by	and	among	AMR,	AMR	Merger	Sub,	Inc.	(Merger Sub)	and	US	Airways	Group,	pursuant	to	which	Merger	Sub	merged	with	and	into	US	Airways	Group	(the	Merger),	with	US	Airways	Group	surviving	as	a	wholly- owned	subsidiary	of	the	Company	following	the	Merger.	Pursuant	to	the	Merger	Agreement,	each	share	of	common	stock,	par	value	$0.01	per	share,	of	US	Airways Group	was	converted	into	the	right	to	receive	one	share	of	AAG	common	stock,	par	value	$0.01	per	share	(AAG	Common	Stock).

From	the	Petition	Date	through	the	Effective	Date,	pursuant	to	automatic	stay	provisions	under	the	Bankruptcy	Code	and	orders	granted	by	the	Bankruptcy	Court,	all actions	to	enforce	or	otherwise	effect	repayment	of	liabilities	preceding	the	Petition	Date	as	well	as	all	pending	litigation	against	the	Debtors	generally	were	stayed. Following	the	Effective	Date,	actions	to	enforce	or	otherwise	effect	repayment	of	liabilities	preceding	the	Petition	Date	generally	have	been	permanently	enjoined.	Any unresolved	claims	will	continue	to	be	subject	to	the	claims	reconciliation	process	under	the	supervision	of	the	U.S.	Bankruptcy	Court.	However,	certain	pending litigation	related	to	pre-petition	liabilities	may	proceed	in	courts	other	than	the	U.S.	Bankruptcy	Court	to	the	extent	the	parties	to	such	litigation	have	obtained	relief from	the	permanent	injunction.

# Plan	of	Reorganization

The	Plan	implements	the	Merger	and	incorporates	a	compromise	and	settlement	of	certain	intercreditor	and	intercompany	claim	issues.

Pursuant	to	the	Plan,	all	shares	of	AMR	common	stock	outstanding	prior	to	the	Effective	Date	were	canceled.	AAG's	Certificate	of	Incorporation,	which	was approved	in	connection	with	the	Plan,	authorizes	the	issuance	of	1.75	billion	new	shares	of	AAG	Common	Stock	and	200	million	shares	of	AAG	Series	A	Preferred Stock,	par	value	$0.01	per	share	(AAG	Series	A	Preferred	Stock).	Of	the	authorized	AAG	Series	A	Preferred	Stock,	approximately	168	million	were	designated	"Series A	Convertible	Preferred	Stock,"	with	a	stated	value	of	$25.00	per	share,	and	issued	in	accordance	with	the	Plan.	AAG	Common	Stock	is	listed	on	the	NASDAQ	Global Select	Market	under	the	symbol	"AAL"	and	began	trading	on	December	9,	2013.	AAG	Series	A	Preferred	Stock	was	listed	on	the	NASDAQ	Global	Select	Market under	the	symbol	"AALCP"	from	December	9,	2013	until	its	final	mandatory	conversion	on	April	8,	2014.	In	addition,	the	2013	Incentive	Award	Plan	(the	2013	Plan) authorizes	the	grant	of	awards	for	the	issuance	of	40	million	shares	of	AAG	Common	Stock	plus	any	shares	underlying	awards	granted	under	the	2013	Plan,	or	any	pre- existing	US	Airways	Group	plan,	that	are	forfeited,	terminate	or	are	cash	settled	(in	whole	or	in	part)	without	a	payment	being	made	in	the	form	of	shares.	In	addition, any	shares	that	were	available	for	issuance	under	the	US	Airways	Group	2011	Incentive	Award	Plan	(the	2011	Plan)	as	of	the	effective	date	of	the	Merger	may	be	used for	awards	under	the	2013	Plan;	provided,	that	awards	using	such	available	shares	shall	not	be	made	after	the	date	awards	or	grants	could	have	been	made	under	2011 Plan	and	shall	only	be	made	to	individuals	who	were	not	providing	services	to	AMR	prior	to	the	Merger.

The	Plan	contains	the	following	provisions	relating	to	the	treatment	of	pre-petition	claims	against	the	Debtors	and	other	holders	of	allowed	interests	in	the	Debtors:

•all	secured	claims	against	the	Debtors	have	been	reinstated;

•allowed	administrative	claims,	priority	claims	and	convenience	claims	have	been	or	will	be	paid	in	full	in	cash;

•other	holders	of	allowed	pre-petition	unsecured	claims,	holders	of	allowed	interests	and	certain	employees	of	AMR	received	or	will	receive	72%	of	AAG Common	Stock	(on	a	fully	converted	basis)	authorized	to	be	issued	pursuant	to	the	Plan	and	in	connection	with	the	Merger	under	the	following	provisions:

•all	creditors	holding	general	unsecured	claims	against	American	 that	are	guaranteed	by	AAG	and	general	unsecured	claims	against	AAG	 that	are guaranteed	by	American	(Double-Dip	Unsecured	Claims)	were	treated	the	same	under	the	Plan.	Holders	of	Double-Dip	Unsecured	Claims	received,	at	the Effective	Date,	their	recovery	in	shares	of	AAG	Series	A	Preferred	Stock	with	a	stated	amount	equal	to	the	allowed	amount	of	their	claims,	including post-petition	interest	at	the	non-default	rate;

•all	creditors	holding	Single-Dip	Unsecured	Claims	were	treated	the	same	regardless	of	whether	the	claim	was	asserted	against	the	AAG	Debtors,	the American	Debtors,	or	other	Debtors.	As	used	herein,	"Single-Dip	Unsecured	Claims"	means	the	general	unsecured	claims	against	the	Debtors	that	were not	guaranteed	by	any	other	Debtor,	other	than	the	claims	of	the	Debtors'	labor	unions	representing	mainline	workers.	Holders	of	Single-Dip	Unsecured Claims	received	a	portion	of	their	recovery	in	shares	of	AAG	Series	A	Preferred	Stock	at	the	Effective	Date	and	their	remaining	recovery	in	shares	of AAG	Common	Stock	during	the	120-day	period	after	the	Effective	Date;

•holders	of	certain	labor-related	deemed	claims	and	certain	non-management,	non-union	employees	as	specified	in	the	Plan	received,	at	the	Effective	Date, the	right	to	receive	an	allocation	of	shares	of	AAG	Common	Stock	representing	23.6%	of	the	total	number	of	shares	of	AAG	Common	Stock	ultimately distributed	to	holders	of	pre-petition	general	unsecured	creditors	against	the	Debtors.	On	the	Effective	Date,	pursuant	to	the	Plan,	an	initial	allocation	of approximately	39	million	shares	of

AAG	Common	Stock	was	made	related	to	these	labor	and	employee	groups,	of	which	approximately	27	million	shares	were	distributed	on	the	Effective Date	and	approximately	13	million	shares	of	which	were	withheld	in	connection	with	the	Company	making	a	cash	payment	of	approximately	$300 million	for	certain	required	withholding	taxes;

•holders	of	allowed	 interests	 in	AMR	(primarily	holders	of	AMR	common	stock	existing	 immediately	prior	 to	 the	Effective	Date)	received,	at	 the Effective	Date,	a	distribution	of	approximately	26	million	shares	of	AAG	Common	Stock	representing	3.5%	of	the	total	number	of	shares	of	AAG Common	Stock	contemplated	for	issuance	pursuant	to	the	Plan	and	received	an	additional	267	million	shares	of	AAG	Common	Stock	during	the	120-day period	after	the	Effective	Date;	and

•holders	of	disputed	claims	at	the	Effective	Date,	to	the	extent	such	disputed	claims	become	allowed	Single-Dip	Unsecured	Claims	after	the	Effective	Date, are	eligible	to	receive	shares	of	AAG	Common	Stock	held	in	reserve	(the	Disputed	Claims	Reserve),	beginning	180	days	after	the	Effective	Date. Disputed	claimholders	that	subsequently	become	holders	of	Single-Dip	Unsecured	Claims	will	receive,	subject	to	the	availability	of	sufficient	shares	in the	Disputed	Claims	Reserve,	the	number	of	shares	of	AAG	Common	Stock	that	the	disputed	claimholder	would	have	received	had	such	claimholder	been a	holder	of	Single-Dip	Unsecured	Claims	as	of	the	Effective	Date.

The	Plan	contemplated	the	distribution	of	up	to	756	million	shares	of	AAG	Common	Stock,	however	this	amount	has	been	reduced	by	approximately	20	million shares	because	certain	tax	withholdings	for	employees	were	paid	in	cash	as	permitted	under	the	Plan.	In	accordance	with	the	Plan,	the	Company	issued	the	remaining shares	 of	AAG	 Common	 Stock	 over	 the	 120-day	 distribution	 period,	 except	 for	 shares	 held	 in	 the	 Disputed	 Claims	 Reserve.	 In	 addition,	 pursuant	 to	 the	 Plan, approximately	197	million	shares	of	AAG	Common	Stock	were	distributed	to	holders	of	outstanding	shares	of	US	Airways	Group	common	stock.

Pursuant	to	rulings	of	the	Bankruptcy	Court,	the	Plan	established	the	Disputed	Claims	Reserve	that	was	initially	issued	30.4	million	shares	of	AAG	Common	Stock reserved	for	issuance	to	disputed	claimholders	at	the	Effective	Date	that	ultimately	become	holders	of	allowed	Single-Dip	Unsecured	Claims	(Single-Dip	Equity Obligations)	as	well	as	to	certain	AMR	labor	groups	and	employees	who	received	a	deemed	claim	amount	based	upon	a	fixed	percentage	of	the	distributions	to	be	made to	general	unsecured	claimholders.	On	July	1,	2014	(the	date	180	days	after	the	Effective	Date),	approximately	2.9	million	shares	of	AAG	Common	Stock	held	in	the Disputed	Claims	Reserve	were	distributed	to	holders	of	allowed	Single-Dip	Unsecured	Claims,	to	holders	of	certain	labor-related	deemed	claims,	and	to	holders	of certain	non-management,	non-union	employee	deemed	claims	as	specified	in	the	Plan,	and	shares	were	withheld	or	sold	on	account	of	related	tax	obligations.	In addition,	on	July	1,	2014,	the	Company	repurchased	0.4	million	shares	of	AAG	Common	Stock	for	an	aggregate	of	$19	million	from	the	Disputed	Claims	Reserve	at	the then	prevailing	market	price	in	order	to	fund	cash	tax	obligations	resulting	from	distributions	by	the	Disputed	Claims	Reserve.	On	November	4,	2014,	approximately 0.7	million	shares	of	AAG	Common	Stock	held	in	the	Disputed	Claims	Reserve	were	distributed	to	holders	of	allowed	Single-Dip	Unsecured	Claims,	to	holders	of certain	labor-related	deemed	claims,	and	to	holders	of	certain	non-management,	non-union	employee	deemed	claims	as	specified	in	the	Plan,	and	shares	were	withheld or	sold	on	account	of	related	tax	obligations.	In	addition,	on	November	4,	2014,	the	Company	repurchased	less	than	0.1	million	shares	of	AAG	Common	Stock	for	an aggregate	of	$2	million	from	the	Disputed	Claims	Reserve	at	the	then	prevailing	market	price	in	order	to	fund	cash	tax	obligations	resulting	from	distributions	by	the Disputed	Claims	Reserve.	As	of	December	31,	2014,	there	were	approximately	26.8	million	shares	of	AAG	Common	Stock	remaining	in	the	Disputed	Claims	Reserve. As	disputed	claims	are	resolved,	the	claimants	will	receive	distributions	of	shares	from	the	Disputed	Claims	Reserve	on	the	same	basis	as	if	such	distributions	had	been made	on	or	about	the	Effective	Date.	To	the	extent	that	any	of	the	reserved	shares	remain	undistributed	upon	resolution	of	all	remaining	disputed	claims,	such	shares	will not	be	returned	to	the	Company	but	rather	will	be	distributed	to	former	AMR	shareholders	as	of	the	Effective	Date.	The	Company	is	not	required	to	distribute	additional shares	above	the	limits	contemplated	by	the	Plan	described	above.

In	addition,	from	the	Effective	Date	through	December	31,	2014,	the	Company	has	made	the	following	cash	disbursements	under	the	Plan:

•$385	million	in	cash	to	the	pension	plans	in	connection	with	missed	contributions	to	the	pension	plans	during	the	Chapter	11	Cases	and	interest	and	penalty interest	thereon;

•$108	million	in	cash	to	holders	in	partial	or	full	satisfaction	of	their	claims,	including	to	holders	of	administrative	claims,	and	state	and	local	priority	tax	claims;

•$196	million	in	cure	payments	to	holders	of	secured	debt;	and

•	 Approximately	$563	million	for	payroll	and	other	taxes	associated	with	equity	distributions	to	employees	and	distributions	from	the	Disputed	Claims	Reserve.

Several	parties	have	filed	appeals	seeking	reconsideration	of	the	Confirmation	Order.	See	Note	15	for	more	information.

The	reconciliation	process	with	respect	to	the	remaining	claims	will	take	considerable	time	post-emergence.	The	Company's	estimate	of	the	amounts	of	disputed claims	that	will	ultimately	become	allowed	Single-Dip	Unsecured	Claims	are	included	in	mandatorily	convertible	preferred	stock	and	other	bankruptcy	settlement obligations	on	the	Company's	consolidated	balance	sheet	as	of	December	31,	2014.	As	these	claims	are	resolved,	or	where	better	information	becomes	available	and	is evaluated,	the	Company	will	make	adjustments	to	the	liabilities	recorded	on	the	Company's	consolidated	financial	statements	as	appropriate.	Any	such	adjustments could	be	material	to	the	Company's	financial	position	or	results	of	operations	in	any	given	period.

# Availability	and	Utilization	of	Net	Operating	Losses

Upon	emergence	from	bankruptcy,	the	Debtors	experienced	an	"ownership	change"	as	defined	in	Section	382	of	the	Internal	Revenue	Code	of	1986,	as	amended (Section	382),	which	could	potentially	limit	the	ability	to	utilize	certain	tax	attributes	including	the	Debtors'	substantial	net	operating	losses	(NOLs).	The	general limitation	rules	for	a	debtor	in	a	bankruptcy	case	are	liberalized	where	the	ownership	change	occurs	upon	emergence	from	bankruptcy.	The	Debtors	elected	to	be covered	by	certain	special	rules	for	federal	income	tax	purposes	that	permit	approximately	$9.0	billion	of	the	federal	NOL	Carryforwards	to	be	utilized	without	regard	to the	annual	limitation	generally	imposed	by	Section	382.	See	Note	10	for	additional	information	related	to	tax	matters.

Moreover,	an	ownership	change	subsequent	to	the	Debtors'	emergence	from	bankruptcy	may	further	limit	or	effectively	eliminate	the	ability	to	utilize	the	Debtors' NOL	Carryforwards	and	other	tax	attributes.	To	reduce	the	risk	of	a	potential	adverse	effect	on	the	Debtors'	ability	to	utilize	the	NOL	Carryforwards,	AAG's	Certificate of	Incorporation	contains	transfer	restrictions	applicable	to	certain	substantial	shareholders.	Although	the	purpose	of	these	transfer	restrictions	is	to	prevent	an	ownership change	from	occurring,	there	can	be	no	assurance	that	an	ownership	change	will	not	occur	even	with	these	transfer	restrictions.	A	copy	of	AAG's	Certificate	of Incorporation	was	attached	as	Exhibit	3.1	to	a	Current	Report	on	Form	8-K	filed	by	the	Company	with	the	SEC	on	December	9,	2013.

Reorganization	items	refer	to	revenues,	expenses	(including	professional	fees),	realized	gains	and	losses	and	provisions	for	losses	that	are	realized	or	incurred	in	the Chapter	11	Cases.	The	following	table	summarizes	the	components	included	in	reorganization	items,	net	on	the	consolidated	statements	of	operations	for	the	years	ended December	31,	2013	and	2012	(in	millions):

(1) In	exchange	for	employees'	contributions	to	the	successful	reorganization,	including	agreeing	to	reductions	in	pay	and	benefits,	The	Company	agreed	in	the	Plan to	provide	each	employee	group	a	deemed	claim,	which	was	used	to	provide	a	distribution	of	a	portion	of	the	equity	of	the	reorganized	entity	to	those	employees. Each	employee	group	received	a	deemed	claim	amount	based	upon	a	portion	of	the	value	of	cost	savings	provided	by	that	group	through	reductions	to	pay	and benefits	as	well	as	through	certain	work	rule	changes.	The	total	value	of	this	deemed	claim	was	approximately	$1.7	billion.

(2) Amounts	 include	allowed	claims	(claims	approved	by	 the	Bankruptcy	Court)	and	estimated	allowed	claims	relating	 to	(i)	 the	rejection	or	modification	of financings	related	to	aircraft	and	(ii)	entry	of	orders	treated	as	unsecured	claims	with	respect	to	facility	agreements	supporting	certain	issuances	of	special	facility revenue	bonds.	The	Debtors	recorded	an	estimated	claim	associated	with	the	rejection	or	modification	of	a	financing	or	facility	agreement	when	the	applicable motion	was	filed	with	the	Bankruptcy	Court	to	reject	or	modify	such	financing	or	facility	agreement	and	the	Debtors	believed	that	it	was	probable	the	motion would	be	approved,	and	there	was	sufficient	information	to	estimate	the	claim.

(3) Pursuant	to	the	Plan,	the	Debtors	agreed	to	allow	certain	post-petition	unsecured	claims	on	obligations.	As	a	result,	during	the	year	ended	December	31,	2013,	the Company	 recorded	 reorganization	 charges	 to	 adjust	 estimated	 allowed	 claim	 amounts	 previously	 recorded	 on	 rejected	 special	 facility	 revenue	 bonds	 of $180	million,	allowed	general	unsecured	claims	related	to	the	1990	and	1994	series	of	special	facility	revenue	bonds	that	financed	certain	improvements	at	John F.	Kennedy	International	Airport	(JFK),	and	rejected	bonds	that	financed	certain	improvements	at	Chicago	O'Hare	International	Airport	(ORD),	which	are included	in	the	table	above.

(4) The	Plan	allowed	unsecured	creditors	receiving	AAG	Series	A	Preferred	Stock	a	conversion	discount	of	3.5%.	Accordingly,	the	Company	recorded	the	fair	value of	such	discount	upon	the	confirmation	of	the	Plan	by	the	Bankruptcy	Court.

# 3.		Mandatorily	Convertible	Preferred	Stock	and	Other	Bankruptcy	Settlement	Obligations

As	of	December	31,	2014	and	2013,	the	components	of	mandatorily	convertible	preferred	stock	and	other	bankruptcy	settlement	obligations	on	the	consolidated balance	sheets	are	as	follows	(in	millions):

|  | December	31, | December	31, |
| :--- | :--- | :--- |
|  | 2014 | 2013 |
| AAG\tSeries\tA\tPreferred\tStock | $ — | $3,833 |
| Single-Dip\tEquity\tObligations | \t 248 | \t 1,246 |
| Labor-related\tdeemed\tclaim | 77 | 849 |
| Total | $325 | $5,928 |

The	AAG	Series	A	Preferred	Stock,	while	outstanding,	voted	and	participated	in	accordance	with	the	terms	of	the	underlying	Certificate	of	Designation.	One	quarter of	the	shares	of	AAG	Series	A	Preferred	Stock	initially	issued	was	mandatorily	convertible	on	each	of	the	30th,	60th,	90th	and	120th	days	after	the	Effective	Date, subject	to	additional	voluntary	conversions.	The	initial	stated	value	of	each	share	of	AAG	Series	A	Preferred	Stock	was	$25.00	and	accrued	dividends	at	6.25%	per annum,	calculated	daily,	while	outstanding.	Additionally,	AAG	Series	A	Preferred	Stock	converted	to	AAG	Common	Stock	based	upon	the	volume	weighted	average price	of	the	shares	of	AAG	Common	Stock	on	the	five	trading	days	immediately	preceding	the	conversion	date,	at	a	3.5%	fixed	discount,	subject	to	a	conversion	price floor	of	$10.875	per	share	and	a	conversion	price	cap	of	$33.8080	per	share,	below	or	above	which	the	conversion	rate	remains	fixed.	As	of	April	8,	2014,	all	shares	of AAG	Series	A	Preferred	Stock	had	been	converted	into	AAG	Common	Stock.

The	Single-Dip	Equity	Obligations,	while	outstanding,	do	not	vote	or	participate	in	accordance	with	the	terms	of	the	Plan.	These	equity	obligations,	representing	the amount	of	total	Single-Dip	Unsecured	Claims	not	satisfied	through	the	issuance	of	AAG	Series	A	Preferred	Stock	at	the	Effective	Date,	represented	an	unconditional obligation	to	transfer	a	variable	number	of	shares	of	AAG	Common	Stock	based	predominantly	on	a	fixed	monetary	amount	known	at	inception,	and,	as	such,	were	not treated	as	equity,	but	rather	as	liabilities,	until	the	120th	day	after	emergence,	which	was	April	8,	2014.	As	of	April	8,	2014,	the	Company	has	issued	shares	of	AAG Common	Stock	to	satisfy	the	obligation	amount	at	emergence,	plus	accrued	dividends	of	12%	per	annum,	calculated	daily,	through	such	date,	based	on	the	volume weighted	average	price	of	the	shares	of	AAG	Common	Stock,	at	a	3.5%	discount,	as	specified	in	the	Plan.	The	amount	of	the	remaining	Single-Dip	Equity	Obligations at	December	31,	2014	is	the	Company's	estimate	of	its	obligation	for	disputed	claims	of	$248	million	and	is	calculated	based	on	the	fair	value	of	the	shares	expected	to be	issued,	measured	as	if	the	obligations	were	settled	using	the	closing	price	of	AAG	Common	Stock	at	December	31,	2014.	Additional	allowed	claims	will	receive 30.7553	shares,	subject	to	reduction	for	expenses	of	the	Disputed	Claims	Reserve,	including	tax	liabilities,	for	each	$1,000	of	allowed	claims.	For	accounting	purposes, the	value	of	the	shares	expected	to	be	issued	is	marked-to-market	each	period	until	issued.	Accordingly,	changes	in	the	value	of	AAG	Common	Stock	could	result	in future	increases	and	decreases	in	this	obligation.

In	exchange	for	employees'	contributions	to	the	successful	reorganization	of	the	Company,	including	agreeing	to	reductions	in	pay	and	benefits,	the	Company	agreed in	the	Plan	to	provide	each	employee	group	a	deemed	claim	which	was	used	to	provide	a	distribution	of	a	portion	of	the	equity	of	the	reorganized	entity	to	those employees.	Each	employee	group	received	a	deemed	claim	amount	based	upon	a	fixed	percentage	of	the	distributions	to	be	made	to	general	unsecured	claimholders.	The fair	value	based	on	the	expected	number	of	shares	to	be	distributed	to	satisfy	this	deemed	claim,	as	adjusted,	was	approximately	$1.5	billion.	From	the	Effective	Date through	December	31,	2014,	the	Company	has	made	distributions	of	$988	million	in	AAG	Common	Stock	and	paid	approximately	$553	million	in	cash	to	cover	payroll and	other	taxes	related	to	the	equity	distributions.	As	of	December	31,	2014,	the	liability	to	certain	AMR	labor	groups	and	employees	of	$77	million	represents	the estimated	fair	value	of	the	remaining	shares	expected	to	be	issued	in	satisfaction	of	such

obligation,	measured	as	if	the	obligation	were	settled	using	the	closing	price	of	AAG	Common	Stock	at	December	31,	2014.	For	accounting	purposes,	the	value	of	the remaining	shares	expected	to	be	issued	to	satisfy	the	labor	claim	is	marked-to-market	each	period	until	issued.	Accordingly,	changes	in	the	value	of	AAG	Common Stock	could	result	in	future	increases	and	decreases	in	this	obligation.

On	July	1,	2014,	approximately	2.9	million	shares	of	AAG	Common	Stock	held	in	the	Disputed	Claims	Reserve	were	distributed	to	holders	of	allowed	Single-Dip Unsecured	Claims,	to	holders	of	certain	labor-related	deemed	claims	and	to	holders	of	certain	non-management,	non-union	employee	deemed	claims	as	specified	in	the Plan,	and	shares	were	withheld	or	sold	on	account	of	related	tax	obligations.	In	addition,	on	November	4,	2014,	approximately	0.7	million	shares	of	AAG	Common Stock	held	in	the	Disputed	Claims	Reserve	were	distributed	to	holders	of	allowed	Single-Dip	Unsecured	Claims,	to	holders	of	certain	labor-related	deemed	claims	and	to holders	of	certain	non-management,	non-union	employee	deemed	claims	as	specified	in	the	Plan,	and	shares	were	withheld	or	sold	on	account	of	related	tax	obligations.

On	February	10,	2015,	approximately	0.8	million	shares	of	AAG	Common	Stock	held	in	the	Disputed	Claims	Reserve	were	distributed	to	holders	of	allowed	Single- Dip	Unsecured	Claims,	to	holders	of	certain	labor-related	deemed	claims	and	to	holders	of	certain	non-management,	non-union	employee	deemed	claims	as	specified	in the	Plan,	and	shares	were	withheld	or	sold	on	account	of	related	tax	obligations.

# 4.		Merger	and	Related	Matters

# Description	of	Transaction

As	previously	discussed	in	Note	2,	on	the	Effective	Date,	the	Debtors	consummated	their	reorganization	and	the	Merger	pursuant	to	the	Plan.	The	Merger	has	been accounted	for	as	a	business	acquisition	using	the	acquisition	method	of	accounting	in	accordance	with	ASC	805,	"Business	Combinations,"	with	AAG	considered	the acquirer	of	US	Airways	Group.	The	acquisition	method	of	accounting	requires,	among	other	things,	that	assets	acquired	and	liabilities	assumed	be	recognized	on	the balance	sheet	at	their	fair	values	as	of	the	acquisition	date.	The	acquisition	values	have	also	been	reflected	in	US	Airways	Group's	separate-entity	financial	statements	as of	December	9,	2013.	The	excess	of	the	purchase	price	over	the	net	fair	value	of	assets	and	liabilities	acquired	was	recorded	as	goodwill.	Goodwill	is	not	amortized,	but is	tested	for	impairment	at	least	annually.

# Slot	Divestitures

As	a	stipulation	for	the	Merger	to	be	approved	by	the	Department	of	Justice	(DOJ),	the	Company	was	required	to	divest	certain	airport	take-off	and	landing	rights (Slots)	at	LaGuardia	Airport	and	Ronald	Reagan	Washington	National	Airport	(DCA).	As	of	December	31,	2013,	the	DCA	Slots	to	be	divested	were	recorded	as	assets held	for	sale	and	were	included	in	prepaid	expenses	and	other	on	the	consolidated	balance	sheet.	In	2014,	the	Company	divested	the	required	DCA	Slots	and	received $307	million	in	cash	as	well	as	24	Slots	at	JFK.	The	Company	recognized	a	net	gain	of	$309	million	related	to	these	divestitures,	which	has	been	included	in	special items,	net	in	the	consolidated	statement	of	operations.	In	2013,	the	Company	recognized	a	gain	of	$67	million	related	to	the	sale	of	the	LaGuardia	Airport	Slots,	which has	been	included	in	special	items,	net	in	the	consolidated	statement	of	operations.

In	2013,	the	European	Commission	cleared	under	the	EU	Merger	Regulation	the	proposed	merger	between	US	Airways	and	American.	As	a	consequence	of	the merger	clearance	process	in	the	EU,	the	Company	was	required	to	make	available	one	pair	of	London	Heathrow	Slots	for	use	by	another	carrier	between	London	and Philadelphia,	which	the	acquiring	carrier	can	deploy	on	another	Heathrow	city	pair	after	operating	the	Slots	on	London-Philadelphia	for	a	period	of	not	less	than	three consecutive	years.	In	addition,	along	with	the	Company's	joint	business	agreement	(JBA)	partners,	the	Company	was	required	to	make	available	for	an	initial	period	of up

to	seven	years	one	pair	of	Heathrow	Slots	for	service	between	London	and	Miami	that	may	be	operated	via	an	intermediate	point.	In	connection	with	these	requirements and	upon	making	these	slots	available,	in	2014,	the	Company	recorded	a	$43	million	non-cash	charge,	which	has	been	included	in	special	items,	net	in	the	consolidated statement	of	operations.

# Fair	Value	of	Consideration	Transferred

The	fair	value	of	the	consideration	transferred,	or	the	purchase	price,	was	derived	as	described	below	based	on	the	outstanding	shares	of	US	Airways	Group	common stock	at	December	9,	2013,	the	exchange	ratio	of	one	share	of	AAG	Common	Stock	for	each	share	of	US	Airways	Group	common	stock,	and	a	price	per	share	of	AAG Common	Stock	of	$22.55,	which	represented	the	closing	price	of	US	Airways	Group	common	stock	on	December	6,	2013,	the	last	day	such	shares	traded	on	the	New York	Stock	Exchange.	US	Airways	Group	equity	awards	outstanding	at	the	close	of	the	Merger	converted	into	equity	awards	with	respect	to	AAG	Common	Stock. Vested	equity	awards	held	by	employees	of	US	Airways	Group	are	considered	part	of	the	purchase	price.

# Allocation	of	Consideration	Transferred

The	Merger	has	been	accounted	for	using	the	acquisition	method	of	accounting	in	accordance	with	ASC	805,	"Business	Combinations"	(ASC	805),	with	AAG	treated as	the	acquirer	of	US	Airways	Group	for	accounting	purposes.	The	acquisition	method	of	accounting	requires,	among	other	things,	that	assets	acquired	and	liabilities assumed	be	recognized	on	the	balance	sheet	at	their	fair	values	as	of	the	acquisition	date.	The	excess	of	the	purchase	price	over	the	net	fair	value	of	assets	acquired	and liabilities	assumed	was	recorded	as	goodwill.	Goodwill	is	not	amortized,	but	is	tested	for	impairment	at	least	annually.

The	fair	values	of	the	assets	acquired	and	liabilities	assumed	were	determined	using	the	market,	income	and	cost	approaches.	The	fair	value	measurements	were primarily	based	on	significant	inputs	that	are	not	observable

in	the	market,	other	than	certain	long-term	debt	assumed	in	the	Merger.	The	market	approach,	which	indicates	value	for	a	subject	asset	based	on	available	market	pricing for	comparable	assets,	was	utilized	to	estimate	the	fair	value	of	US	Airways'	aircraft	and	operating	leases.	The	market	approach	included	prices	and	other	relevant information	generated	by	market	transactions	involving	comparable	assets,	as	well	as	pricing	guides	and	other	sources.	The	Company	considered	the	current	market	for the	aircraft,	the	maintenance	condition	of	the	aircraft	and	the	expected	proceeds	from	the	sale	of	the	assets,	among	other	factors.	The	Company	also	utilized	the	market approach	to	value	certain	intangible	assets	such	as	airport	take-off	and	landing	slots	when	sufficient	market	information	was	available.	The	income	approach	was primarily	used	to	value	intangible	assets,	including	customer	relationships,	marketing	agreements,	certain	international	route	authorities,	and	the	US	Airways	logo	and tradenames.	The	income	approach	indicates	value	for	a	subject	asset	based	on	the	present	value	of	cash	flows	projected	to	be	generated	by	the	asset.	Projected	cash	flows are	discounted	at	a	required	market	rate	of	return	that	reflects	the	relative	risk	of	achieving	the	cash	flows	and	the	time	value	of	money.	The	cost	approach,	which estimates	value	by	determining	the	current	cost	of	replacing	an	asset	with	another	of	equivalent	economic	utility,	was	used,	as	appropriate,	for	certain	assets	for	which the	market	and	income	approaches	could	not	be	applied	due	to	the	nature	of	the	asset.	The	cost	to	replace	a	given	asset	reflects	the	estimated	reproduction	or	replacement cost	for	the	asset,	less	an	allowance	for	loss	in	value	due	to	depreciation.	The	fair	value	of	US	Airways'	Dividend	Miles	frequent	flyer	program	liability	was	determined based	on	the	equivalent	ticket	value	of	outstanding	miles	which	were	expected	to	be	redeemed	at	December	9,	2013.	The	equivalent	ticket	value	contemplates	purchased tickets	that	have	similar	restrictions	as	frequent	traveler	awards.

# Pro-forma	Impact	of	the	Merger

The	Company's	unaudited	pro-forma	results	presented	below	include	the	effects	of	the	Merger	with	US	Airways	Group	as	if	it	had	been	consummated	as	of January	1,	2012.	The	pro-forma	results	include	the	depreciation	and	amortization	associated	with	the	acquired	tangible	and	intangible	assets,	lease	and	debt	fair	value adjustments,	the	elimination	of	any	deferred	gains	or	losses,	adjustments	relating	to	reflecting	the	fair	value	of	the	frequent	flyer	liability	and	the	impact	of	income changes	 on	 profit	 sharing	 expense,	 among	 others.	 In	 addition,	 the	 pro-forma	 results	 below	 reflect	 the	 impact	 of	 higher	 wage	 rates	 related	 to	 memorandums	 of understanding	with	US	Airways'	pilots	and	all	labor	groups	of	the	Company	that	became	effective	upon	closing	of	the	Merger	as	well	as	the	elimination	of	the Company's	reorganization	items,	net	and	Merger	transition	costs.	However,	the	pro-forma	results	do	not	include	any	anticipated	synergies	or	other	expected	benefits	of the	Merger.	Accordingly,	the	unaudited	pro-forma	financial	information	below	is	not	necessarily	indicative	of	either	future	results	of	operations	or	results	that	might have	been	achieved	had	the	acquisition	been	consummated	as	of	January	1,	2012.

# 5.		Basis	of	Presentation	and	Summary	of	Significant	Accounting	Policies

# (a)	Basis	of	Presentation

The	consolidated	financial	statements	include	the	accounts	of	the	Company	and	its	wholly-owned	subsidiaries.	As	a	result	of	the	Merger,	the	consolidated	financial statements	presented	include	the	results	of	AMR	and	its	wholly-owned	subsidiaries,	American	and	Envoy,	for	periods	ended	prior	to	December	9,	2013	and	consolidated results	of	AAG,	which	includes	American,	Envoy	and	US	Airways	Group,	for	periods	ending	on	or	after	December	9,	2013.	Accordingly,	the	consolidated	financial statement	for	the	year	ended	December	31,	2013	includes	the	accounts	of	US	Airways	Group	for	the	23	days	ended	December	31,	2013.	All	significant	intercompany transactions	have	been	eliminated.

The	preparation	of	financial	statements	in	accordance	with	accounting	principles	generally	accepted	in	the	United	States	(GAAP)	requires	management	to	make certain	estimates	and	assumptions	that	affect	the	reported	amounts	of	assets	and	liabilities,	revenues	and	expenses,	and	the	disclosure	of	contingent	assets	and	liabilities at	the	date	of	the	financial	statements.	Actual	results	could	differ	from	those	estimates.	The	most	significant	areas	of	judgment	relate	to	passenger	revenue	recognition, impairment	of	goodwill,	impairment	of	long-lived	and	intangible	assets,	the	frequent	traveler	programs,	pensions	and	retiree	medical	and	other	benefits	and	the	deferred tax	asset	valuation	allowance.

# (b)	Chapter	11	Matters

In	accordance	with	GAAP,	 the	Debtors	(as	defined	 in	Note	2	above)	applied	ASC	852	"Reorganizations"	(ASC	852)	 in	preparing	 the	consolidated	financial statements	for	periods	subsequent	to	the	Chapter	11	Cases	(as	defined	in	Note	2	above).	ASC	852	requires	that	the	financial	statements	distinguish	transactions	and events	that	are	directly	associated	with	the	reorganization	from	the	ongoing	operations	of	the	business.	Accordingly,	certain	revenues,	expenses	(including	professional fees),	realized	gains	and	losses	and	provisions	for	losses	that	are	realized	or	incurred	in	the	Chapter	11	Cases	for	the	2013	and	2012	period	are	presented	in	reorganization items,	net	on	the	accompanying	consolidated	statements	of	operations.

# (c)	Restricted	Cash	and	Short-term	Investments

The	Company	has	restricted	cash	and	short-term	investments	related	primarily	to	collateral	held	to	support	projected	workers'	compensation	obligations	and	funds held	for	certain	tax	obligations.

# (d)	Aircraft	Fuel,	Spare	Parts,	and	Supplies,	Net

Aircraft	fuel,	spare	parts,	and	supplies,	net	are	recorded	at	net	realizable	value	based	on	average	costs.	These	items	are	expensed	when	used.	An	allowance	for obsolescence	is	provided	for	aircraft	spare	parts	and	supplies.

# (e)	Operating	Property	and	Equipment

Operating	property	and	equipment	are	recorded	at	cost.	Interest	expense	related	to	the	acquisition	of	certain	property	and	equipment,	including	aircraft	purchase deposits,	is	capitalized	as	an	additional	cost	of	the	asset.	Interest	capitalized	for	the	years	ended	December	31,	2014,	2013	and	2012	was	$61	million,	$47	million	and $50	million,	respectively.	Property	and	equipment	is	depreciated	and	amortized	to	residual	values	over	the	estimated	useful	lives	or	the	lease	term,	whichever	is	less, using	the	straight-line	method.	Costs	of	major	improvements	that	enhance	the	usefulness	of	the	asset	are	capitalized	and	depreciated	over	the	estimated	useful	life	of	the asset	or	the	modifications,	whichever	is	less.	The	depreciable	lives	used	for	the	principal	depreciable	asset	classifications	are:

Residual	values	for	aircraft,	engines,	major	rotable	parts,	avionics	and	assemblies	are	generally	5%	to	10%.

Equipment	and	property	under	capital	leases	are	amortized	over	the	term	of	the	leases	or,	in	the	case	of	certain	aircraft,	over	their	expected	useful	lives.	Lease	terms vary	but	are	generally	16	to	30	years	for	aircraft	and	three	to	30	years	for	other	leased	equipment	and	property.

The	Company	records	impairment	charges	on	long-lived	assets	used	in	operations	when	events	and	circumstances	indicate	that	the	assets	may	be	impaired.	An	asset or	group	of	assets	is	considered	impaired	when	the	undiscounted	cash	flows	estimated	to	be	generated	by	the	asset	are	less	than	the	carrying	amount	of	the	asset	and	the net	book	value	of	the	asset	exceeds	its	estimated	fair	value.	If	such	assets	are	considered	to	be	impaired,	the	impairment	to	be	recognized	is	measured	by	the	amount	by which	the	carrying	amount	of	the	assets	exceeds	the	fair	value	of	the	assets.	Assets	to	be	disposed	of	are	reported	at	the	lower	of	the	carrying	amount	or	fair	value	less cost	to	sell.

# (f)	Income	Taxes

# (g)	Goodwill

Goodwill	represents	the	excess	of	the	purchase	price	over	the	fair	value	of	the	net	assets	acquired	and	liabilities	assumed.	Goodwill	is	not	amortized	but	tested	for impairment	annually	or	more	frequently	if	events	or	circumstances	indicate.	The	Company	has	one	consolidated	reporting	unit.

Goodwill	is	measured	for	impairment	by	initially	performing	a	qualitative	screen	and,	if	necessary,	then	comparing	the	fair	value	of	the	reporting	unit	to	its	carrying value,	including	goodwill.	If	the	fair	value	of	the	reporting	unit	is	less	than	the	carrying	value,	a	second	step	is	performed	to	determine	the	implied	fair	value	of	goodwill. If	the	implied	fair	value	of	goodwill	is	lower	than	its	carrying	value,	an	impairment	charge	equal	to	the	difference	is	recorded.	Based	upon	the	Company's	annual	testing, there	was	no	goodwill	impairment	in	2014.

# (h)	Other	Intangibles,	Net

Intangible	 assets	 consist	 primarily	 of	 airport	 take-off	 and	 landing	 rights	 (Slots),	 customer	 relationships,	 marketing	 agreements,	 international	 Slots	 and	 route authorities,	gate	leasehold	rights	and	tradenames.	Intangible	assets	with	estimable	useful	lives	are	amortized	over	their	respective	estimated	useful	lives	to	their	estimated residual	values	and	reviewed	for	impairment	whenever	events	or	changes	in	circumstances	indicate	that	the	carrying	value	may	not	be	recoverable.

The	following	table	provides	information	relating	to	the	Company's	amortizable	intangible	assets	as	of	December	31,	2014	and	2013	(in	millions):

|  | December	31, | December	31, |
| :--- | :--- | :--- |
|  | 2014 | 2013 |
| Airport\tSlots | $365 | $332 |
| Customer\trelationships | 300 | 300 |
| Marketing\tagreements | 105 | 105 |
| Tradenames | 35 | 35 |
| Airport\tgate\tleasehold\trights | 138 | 155 |
| Accumulated\tamortization | (447) | (373) |
| Total | $496 | $554 |

Airport	operating	and	gate	lease	rights	are	being	amortized	on	a	straight-line	basis	over	25	years	to	a	zero	residual	value.	The	customer	relationships,	marketing agreements	and	tradenames	were	identified	as	intangible	assets	subject	to	amortization	and	are	amortized	on	a	straight-line	basis	over	approximately	nine	years,	30	years and	15	months,	respectively.

The	Company	recorded	amortization	expense	related	to	these	intangible	assets	of	approximately	$81	million,	$20	million	and	$25	million	for	the	years	ended December	31,	2014,	2013	and	2012,	respectively.	The	Company	expects	to	record	annual	amortization	expense	for	the	aforementioned	definite-life	intangible	assets	as follows	(in	millions):

The	Company's	indefinite-lived	assets	include	certain	international	Slots	and	route	authorities	and	domestic	airport	take-off	and	landing	slots.	Indefinite-lived	assets are	not	amortized	but	instead	are	reviewed	for	impairment	annually	and	more	frequently	if	events	or	circumstances	indicate	that	the	asset	may	be	impaired.	As	of December	31,	2014	and	2013,	the	Company	had	$1.7	billion	and	$1.8	billion,	respectively,	of	indefinite-lived	intangible	assets	on	its	consolidated	balance	sheets.

The	Company's	indefinite-lived	intangible	assets	are	reviewed	for	impairment	by	initially	performing	a	qualitative	screen	to	determine	whether	the	Company	believes it	is	more	likely	than	not	that	an	asset	has	been	impaired.	If	the	Company	believes	an	impairment	has	occurred,	the	Company	then	evaluates	for	impairment	by comparing	the	estimated	fair	value	of	assets	to	the	carrying	value.	An	impairment	charge	is	recognized	if	the	asset's	estimated	fair	value	is	less	than	its	carrying	value. Based	upon	the	Company's	annual	testing,	there	was	no	indefinite-lived	intangible	asset	impairment	in	2014.

# (i)	Frequent	Flyer	Programs

AAG	currently	operates	two	frequent	traveler	programs,	American's	AAdvantage	and	US	Airways'	Dividend	Miles.	These	programs	award	mileage	credits	to passengers	who	fly	on	American,	US	Airways	and	oneworld	carriers,	as	well	as	certain	other	partner	airlines	that	participate	in	the	programs.	Mileage	credits	can	also	be

earned	through	purchases	from	other	non-airline	partners	that	participate	in	the	Company's	respective	loyalty	programs.	Mileage	credits	can	be	redeemed	for	travel	on American,	US	Airways	or	other	participating	partner	airlines,	in	which	case	the	Company	pays	a	fee.

The	Company	uses	the	incremental	cost	method	to	account	for	the	portion	of	the	Company's	frequent	flyer	liability	incurred	when	AAdvantage	and	Dividend	Miles members	earn	mileage	credits	by	flying	on	American,	US	Airways	or	its	regional	affiliates.	The	Company	has	an	obligation	to	provide	future	travel	when	these	mileage credits	are	redeemed	and	therefore	has	recorded	a	liability	for	mileage	credits	outstanding.

The	incremental	cost	liability	includes	all	mileage	credits	that	are	expected	to	be	redeemed,	including	mileage	credits	earned	by	members	whose	mileage	account balances	have	not	yet	reached	the	minimum	mileage	credit	level	required	to	redeem	an	award.	Additionally,	outstanding	mileage	credits	are	subject	to	expiration	if unused.	In	calculating	the	liability,	the	Company	estimates	how	many	mileage	credits	will	never	be	redeemed	for	travel	and	excludes	those	mileage	credits	from	the estimate	of	the	liability.	Estimates	are	also	made	for	the	number	of	miles	that	will	be	used	per	award	redemption	and	the	number	of	travel	awards	that	will	be	redeemed on	partner	airlines.	These	estimates	are	based	on	historical	program	experience	as	well	as	consideration	of	enacted	program	changes,	as	applicable.	Changes	in	the liability	resulting	from	members	earning	additional	mileage	credits	or	changes	in	estimates	are	recorded	in	the	statement	of	operations	as	a	part	of	passenger	revenue.

The	liability	for	outstanding	mileage	credits	is	valued	based	on	the	estimated	incremental	cost	of	carrying	one	additional	passenger.	Incremental	cost	primarily includes	unit	costs	incurred	for	fuel,	food,	and	insurance	as	well	as	fees	incurred	when	travel	awards	are	redeemed	on	partner	airlines.	No	profit	or	overhead	margin	is included	in	the	accrual	of	incremental	cost.	These	estimates	are	generally	updated	based	upon	the	Company's	12-month	historical	average	of	such	costs.

The	Company	applied	the	acquisition	method	of	accounting	in	connection	with	the	Merger	and	therefore	recorded	the	liability	for	outstanding	US	Airways	mileage credits	at	fair	value.	As	of	December	31,	2014	and	2013,	the	liability	for	outstanding	mileage	credits	expected	to	be	redeemed	for	future	travel	awards	for	US	Airways under	the	Dividend	Miles	program	was	$638	million	and	$932	million	and	is	included	on	the	consolidated	balance	sheets	within	frequent	flyer	liability.	This	liability will	be	reduced	as	miles	are	redeemed	and	new	miles	earned	will	be	recorded	as	a	liability	based	on	the	incremental	cost	method	discussed	above.

As	of	December	31,	2014	and	2013	the	liability	for	outstanding	mileage	credits	for	the	AAdvantage	program	was	$647	million	and	$580	million,	respectively,	and	is included	on	the	consolidated	balance	sheets	within	frequent	flyer	liability.

American	and	US	Airways	also	sell	frequent	flyer	program	mileage	credits	to	participating	airline	partners	and	non-airline	business	partners.	Sales	of	mileage	credits to	business	partners	is	comprised	of	two	components,	transportation	and	marketing.	Historically,	American	and	US	Airways	have	used	the	residual	method	of	accounting to	determine	the	values	of	each	component	as	there	had	not	been	a	material	modification	to	any	significant	agreements	since	the	adoption	of	Accounting	Standards Update	(ASU)	No.	2009-13,	"Revenue	Recognition	(Topic	605)	–	Multiple-Deliverable	Revenue	Arrangements"	on	January	1,	2011.

In	2013,	American	and	Citibank	amended	 their	AAdvantage	co-branded	credit	card	agreement,	which	resulted	 in	a	material	modification	of	 the	 terms	of	 the arrangement.	Also,	in	connection	with	the	acquisition	of	US	Airways	on	December	9,	2013,	a	material	modification	occurred	on	all	of	US	Airways'	agreements	in connection	with	the	Merger.	Therefore,	subsequent	to	the	amendments	of	these	arrangements,	AAG	applied	the	relative	selling	price	method	to	determine	the	values	of each	deliverable.	Under	the	relative	selling	price	approach,	American	and	US	Airways	identified	five	revenue	elements	for	the	co-branded	credit	card	agreement	with Citibank	and	Dividend	Miles	co-branded	credit	card	agreement	with	Barclays:	the	transportation	component;	use

of	the	American	and	US	Airways'	brand	including	access	to	frequent	flyer	member	lists;	advertising;	lounge	access;	and	baggage	services	(together	excluding	"the transportation	component,"	the	"marketing	component").

The	marketing	component	represents	services	provided	to	the	Company's	business	partners	and	relates	primarily	to	the	use	of	American's	and	US	Airways'	logo	and tradenames	along	with	access	to	customers	lists	of	AAdvantage	and	Dividend	Miles	members.	The	marketing	services	are	provided	periodically,	but	no	less	than monthly.	Accordingly,	the	marketing	component	is	considered	earned	and	recognized	in	other	revenues	in	the	period	of	the	mileage	sale.

Upon	application	of	the	relative	selling	price	method	in	2013	for	American's	Citibank	modification,	American	reduced	its	travel	component	liability	and	recorded other	revenue	of	approximately	$31	million.	As	a	result	of	the	change	in	the	marketing	component	value	when	the	relative	selling	price	method	is	applied,	American	and US	Airways	now	defer	less	revenue	per	mile	sold.	For	American's	agreements	where	there	has	not	been	a	material	modification,	it	continues	to	apply	the	residual method.

As	of	December	31,	2014	and	2013,	the	Company	had	$1.5	billion	in	deferred	revenue	from	the	sale	of	mileage	credits	(recorded	as	frequent	flyer	liability	on	the consolidated	balance	sheets).	For	the	years	ended	December	31,	2014,	2013	and	2012,	the	marketing	component	of	mileage	sales	recognized	at	the	time	of	sale	in	other revenues	was	approximately	$1.4	billion,	$834	million	and	$725	million,	respectively.

# (j)	Passenger	Revenue

Passenger	ticket	sales	are	initially	recorded	as	a	component	of	air	traffic	liability.	Revenue	derived	from	ticket	sales	is	recognized	at	the	time	service	is	provided. However,	due	to	various	factors,	including	the	complex	pricing	structure	and	interline	agreements	throughout	the	industry,	certain	amounts	are	recognized	in	revenue using	estimates	regarding	both	the	timing	of	the	revenue	recognition	and	the	amount	of	revenue	to	be	recognized,	including	breakage.	These	estimates	are	generally based	upon	the	evaluation	of	historical	trends,	including	the	use	of	regression	analysis	and	other	methods	to	model	the	outcome	of	future	events	based	on	the	Company's historical	experience,	and	are	recorded	at	the	scheduled	time	of	departure.

The	Company	purchases	capacity,	or	ASMs,	generated	by	the	Company's	wholly-owned	regional	air	carriers	and	the	capacity	of	Air	Wisconsin	Airlines	Corporation (Air	Wisconsin),	 Republic	Airways	 Holdings'	 subsidiaries	 Republic	Airlines	 (Republic)	 and	 Chautauqua	Airlines	 (Chautauqua),	 Mesa	Airlines,	 Inc.	 (Mesa),	 and SkyWest	Airlines,	Inc.'s	subsidiaries	Sky	West	Airlines	(SkyWest)	and	ExpressJet	Airlines	(ExpressJet)	in	certain	markets.	The	Company's	wholly-owned	regional	air carriers	and	Air	Wisconsin,	Chautauqua,	ExpressJet,	Republic,	Mesa,	and	SkyWest	operate	regional	aircraft	in	these	markets	as	part	of	either	American	Eagle	carriers	or US	Airways	Express.	The	Company	classifies	revenues	generated	from	transportation	on	these	carriers	as	regional	passenger	revenues.	Liabilities	related	to	tickets	sold by	the	Company	for	travel	on	these	air	carriers	are	also	included	in	the	Company's	air	traffic	liability	and	are	subsequently	relieved	in	the	same	manner	as	described above.

Various	taxes	and	fees	assessed	on	the	sale	of	tickets	to	end	customers	are	collected	by	the	Company	as	an	agent	and	remitted	to	taxing	authorities.	These	taxes	and fees	have	been	presented	on	a	net	basis	in	the	accompanying	consolidated	statements	of	operations	and	recorded	as	a	liability	until	remitted	to	the	appropriate	taxing authority.

# (k)	Maintenance,	Materials	and	Repairs

Maintenance	and	repair	costs	for	owned	and	leased	flight	equipment	are	charged	to	operating	expense	as	incurred,	except	costs	incurred	for	maintenance	and	repair under	flight	hour	maintenance	contract	agreements,	which	are	accrued	based	on	contractual	terms	when	an	obligation	exists.

# (l)	Selling	Expenses

Selling	expenses	include	commissions,	credit	card	fees,	computerized	reservations	systems	fees	and	advertising.	Advertising	expenses	are	expensed	as	incurred. Advertising	expense	was	$100	million,	$166	million	and	$153	million	for	the	years	ended	December	31,	2014,	2013	and	2012,	respectively.

# (m)	Share-based	Compensation

The	Company	accounts	for	its	share-based	compensation	expense	based	on	the	fair	value	of	the	stock	award	at	the	time	of	grant,	which	is	recognized	ratably	over	the vesting	period	of	the	stock	award.	The	fair	value	of	stock	options	and	stock	appreciation	rights	is	estimated	using	a	Black-Scholes	option	pricing	model.	The	fair	value	of restricted	stock	units	is	based	on	the	market	price	of	the	underlying	shares	of	common	stock	on	the	date	of	grant.	See	Note	18	for	further	discussion	of	share-based compensation.

# (n)	Deferred	Gains	and	Credits,	Net

Included	within	deferred	gains	and	credits,	net	are	amounts	deferred	and	amortized	into	future	periods	associated	with	the	adjustment	of	leases	to	fair	value	in connection	with	the	application	of	acquisition	accounting,	deferred	gains	on	the	sale	leaseback	of	aircraft	and	certain	vendor	incentives.

# (o)	Foreign	Currency	Gains	and	Losses

Foreign	currency	gains	and	losses	are	recorded	as	part	of	other	nonoperating	expense,	net	in	the	consolidated	statements	of	operations.	Foreign	currency	losses	for 2014,	2013	and	2012	were	$114	million,	$56	million	and	$41	million,	respectively.

# (p)	Regional	Expenses

Expenses	associated	with	the	Company's	wholly-owned	regional	airlines	and	third-party	regional	carriers	operating	under	the	brand	names	American	Eagle	and	US Airways	Express	are	classified	as	regional	expenses	on	the	consolidated	statements	of	operations.	Regional	expenses	consist	of	the	following	(in	millions):

|  | Year	Ended	December	31, | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2014 | 2013 | 2012 |
| Aircraft\tfuel\tand\trelated\ttaxes | $2,009 | $1,120 | $1,012 |
| Salaries,\twages\tand\tbenefits | \t 1,078 | 692 | 681 |
| Capacity\tpurchases\tfrom\tthird-party\tregional\tcarriers\t(1) | \t 1,475 | 269 | 129 |
| Maintenance,\tmaterials\tand\trepairs | 367 | 284 | 285 |
| Other\trent\tand\tlanding\tfees | 419 | 236 | 222 |
| Aircraft\trent | 35 | 4 | 6 |
| Selling\texpenses | 307 | 154 | 152 |
| Depreciation\tand\tamortization | 217 | 168 | 170 |
| Special\titems,\tnet | 24 | 8 | 1 |
| Other | 585 | 391 | 370 |
| Total\tregional\texpenses | $6,516 | $3,326 | $3,028 |

(1) For	the	year	ended	December	31,	2014,	the	component	of	capacity	purchase	expenses	related	to	aircraft	deemed	to	be	leased	was	approximately	$447	million.

# (q)	Recent	Accounting	Pronouncements

In	May	2014,	the	Financial	Accounting	Standards	Board	(FASB)	issued	Accounting	Standards	Update	(ASU)	2014-09,	"Revenue	from	Contracts	with	Customers (Topic	606)."	ASU	2014-09	completes	the	joint	effort	by	the	FASB	and	International	Accounting	Standards	Board	(IASB)	to	improve	financial	reporting	by	creating common	revenue	recognition	guidance	for	U.S.	GAAP	and	International	Financial	Reporting	Standards	(IFRS).	ASU	2014-09	applies	to	all	companies	that	enter	into contracts	 with	 customers	 to	 transfer	 goods	 or	 services.	 ASU	 2014-09	 is	 effective	 for	 public	 entities	 for	 interim	 and	 annual	 reporting	 periods	 beginning	 after December	15,	2016.	Early	application	is	not	permitted	and	entities	have	the	choice	to	apply	ASU	2014-09	either	retrospectively	to	each	reporting	period	presented	or	by recognizing	the	cumulative	effect	of	applying	ASU	2014-09	at	the	date	of	initial	application	and	not	adjusting	comparative	information.	The	Company	is	currently evaluating	the	requirements	of	ASU	2014-09	and	has	not	yet	determined	its	impact	on	the	Company's	consolidated	financial	statements.

# 6.		Special	Items,	Net

   The	Company's	special	items,	net	on	the	consolidated	statements	of	operations	are	as	follows	(in	millions):

(1) The	2014	mainline	operating	special	items	totaled	a	net	charge	of	$800	million,	which	principally	included	$810	million	of	Merger	integration	expenses	related	to information	 technology,	 alignment	 of	 labor	 union	 contracts,	 professional	 fees,	 severance	 and	 retention,	 share-based	 compensation,	 divestiture	 of	 London Heathrow	Slots,	fleet	restructuring,	re-branding	of	aircraft	and	airport	facilities,	relocation	and	training.	In	addition,	the	Company	recorded	a	net	charge	of	$81 million	for	bankruptcy	related	items	principally	consisting	of	fair	value	adjustments	for	bankruptcy	settlement	obligations,	$164	million	in	other	special	charges, including	an	$81	million	charge	to	revise	prior	estimates	of	certain	aircraft	residual	values,	and	other	spare	parts	asset	impairments,	as	well	as	$54	million	in charges	primarily	relating	to	the	buyout	of	certain	aircraft	leases.	These	charges	were	offset	in	part	by	a	$309	million	gain	on	the	sale	of	Slots	at	DCA.

The	2013	mainline	operating	special	items,	net	included	$443	million	of	primarily	Merger	related	expenses	due	to	the	alignment	of	labor	union	contracts, professional	fees,	severance,	share-based	compensation	and	fees	for	US	Airways	to	exit	the	Star	Alliance	and	its	codeshare	agreement	with	United	Airlines.	In addition,	 the	 Company	 recorded	 a	 $107	 million	 charge	 related	 to	 American's	 pilot	 long-term	 disability	 obligation,	 a	 $43	 million	 charge	 for	 workers' compensation	claims	and	a	$33	million	aircraft	impairment	charge.	These	charges	were	offset	in	part	by	a	$67	million	gain	on	the	sale	of	Slots	at	LaGuardia Airport.

The	2012	mainline	operating	special	items,	net	consisted	of	$386	million	of	severance	and	related	charges	and	write-off	of	leasehold	improvements	on	aircraft	and airport	facilities	that	were	rejected	in	connection	with	the	Chapter	11	Cases.

See	Note	4	for	more	information	on	the	Merger	Agreement.

The	following	additional	amounts	are	also	included	in	the	consolidated	statements	of	operations	as	follows	(in	millions):

|  |  | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2014 | 2013 | 2012 |
| Other\trevenue\tspecial\titem,\tnet\t(1) | $ — | $(31) | $— |
| Regional\toperating\tspecial\titems,\tnet | 24 | 8 | 1 |
| Nonoperating\tspecial\titems,\tnet\t(2) | \t 132 | 211 | (280) |
| Reorganization\titems,\tnet\t(3) | — | \t 2,655 | \t 2,208 |
| Income\ttax\tspecial\titems,\tnet\t(4) | \t 346 | (324) | (569) |

(1) The	2013	other	revenue	special	item,	net	included	a	credit	to	other	revenues	related	to	a	change	in	accounting	method	resulting	from	the	modification	of	AAG's AAdvantage	miles	agreement	with	Citibank.

(2) The	2014	nonoperating	special	items	totaled	a	net	charge	of	$132	million,	which	principally	included	a	$43	million	charge	for	Venezuelan	foreign	currency losses,	$56	million	of	early	debt	extinguishment	costs	related	to	the	prepayment	of	7.50%	senior	secured	notes	and	other	indebtedness	and	$33	million	of	non- cash	interest	accretion	on	bankruptcy	settlement	obligations.	See	Note	12	for	further	discussion	on	Venezuela	cash	and	short-term	investments.

The	2013	nonoperating	special	items,	net	consisted	of	interest	charges	of	$138	million	to	recognize	post-petition	interest	expense	on	unsecured	obligations pursuant	to	the	Plan	and	penalty	interest	related	to	10.5%	secured	notes	and	7.50%	senior	secured	notes,	a	$54	million	charge	related	to	the	premium	on	tender	for existing	enhanced	equipment	trust	certificates	financings	and	the	write-off	of	debt	issuance	costs,	and	$19	million	in	charges	related	to	the	repayment	of	existing EETC	financings.

The	2012	nonoperating	special	items,	net	consisted	of	a	$280	million	benefit	resulting	from	a	settlement	of	a	commercial	dispute.

(3) In	2013	and	2012,	the	Company	recognized	reorganization	expenses	as	a	result	of	the	filing	of	voluntary	petitions	for	relief	under	Chapter	11.	These	amounts consisted	primarily	of	estimated	allowed	claim	amounts	and	professional	fees.

(4) In	2014,	income	tax	special	items,	net	were	$346	million.	During	2014,	the	Company	sold	its	portfolio	of	fuel	hedging	contracts	that	were	scheduled	to	settle	on or	after	June	30,	2014.	In	connection	with	this	sale,	the	Company	recorded	a	special	non-cash	tax	provision	of	$330	million	in	the	second	quarter	of	2014	that reversed	the	non-cash	tax	provision	which	was	recorded	in	other	comprehensive	income	(OCI),	a	subset	of	stockholders'	equity,	principally	in	2009.	This provision	represents	the	tax	effect	associated	with	gains	recorded	in	OCI	principally	in	2009	due	to	a	net	increase	in	the	fair	value	of	the	Company's	fuel	hedging contracts.	In	accordance	with	GAAP,	the	Company	retained	the	$330	million	tax	provision	in	OCI	until	the	last	contract	was	settled	or	terminated.	In	addition,	the 2014	period	included	a	special	$16	million	non-cash	deferred	income	tax	provision	related	to	certain	indefinite-lived	intangible	assets.

In	2013	and	2012,	 income	 tax	special	 items,	net	 included,	respectively,	a	$538	million	and	a	$569	million	non-cash	 income	 tax	 benefit	 from	 continuing operations.	The	Company	is	required	to	consider	all	items	(including	items	recorded	in	other	comprehensive	income)	in	determining	the	amount	of	tax	benefit	that results	from	a	loss	from	continuing	operations	and	that	should	be	allocated	to	continuing	operations.	As	a	result,	the	Company	recorded	a	tax	benefit	on	the	loss from	continuing	operations	for	the	year,	which	was	exactly	offset	by	income	tax	expense	on	other	comprehensive	income.	However,	while	the	income	tax	benefit from	continuing	operations	is	reported	on	the	income	statement,	the	income	tax	expense	on	other	comprehensive	income	is	recorded	directly	to	accumulated	other comprehensive	income	(loss),	which	is	a	component	of	stockholders'	equity.	Because	the	income	tax	expense	on	other	comprehensive	income	is	equal	to	the income	tax	benefit	from	continuing	operations,	the	Company's	year-end	net	deferred	tax

position	is	not	impacted	by	this	tax	allocation.	The	2013	tax	benefit	was	offset	in	part	by	a	$214	million	tax	charge	attributable	to	additional	valuation	allowance required	to	reduce	deferred	tax	assets	to	the	amount	the	Company	believes	is	more	likely	than	not	to	be	realized.

# 7.		Earnings	(Loss)	Per	Share

Pursuant	to	the	Plan	and	the	Merger	Agreement,	holders	of	AMR	common	stock	formerly	traded	under	the	symbol	"AAMRQ"	received	shares	of	AAG	Common Stock	principally	over	the	120-day	distribution	period	following	the	Effective	Date.	In	accordance	with	GAAP,	the	2013	and	2012	weighted	average	shares	and	earnings (loss)	per	share	calculations	have	been	adjusted	to	retrospectively	reflect	these	distributions	which	were	each	made	at	the	rate	of	approximately	0.7441	shares	of	AAG Common	Stock	per	share	of	AMR	common	stock.	Former	holders	of	AMR	common	stock	as	of	the	Effective	Date	may	in	the	future	receive	additional	distributions	of AAG	Common	Stock	dependent	upon	the	ultimate	distribution	of	shares	of	AAG	Common	Stock	to	holders	of	disputed	claims.	Thus,	the	shares	and	related	earnings	per share	calculations	prior	to	the	Effective	Date	may	change	in	the	future	to	reflect	additional	retrospective	adjustments	for	future	AAG	Common	Stock	distributions	to former	holders	of	AMR	common	stock.

As	of	December	31,	2014,	all	shares	pursuant	to	the	Plan	have	been	issued	and	are	outstanding	for	purposes	of	the	Company's	basic	and	diluted	earnings	per	share calculation	in	connection	with	the	conversion	of	AAG	Series	A	Preferred	Stock	and	satisfaction	of	other	bankruptcy	settlement	obligations	related	to	allowed	unsecured claims,	including	disputed	claims,	labor-related	deemed	claims	and	former	holders	of	AMR	common	stock.

The	following	table	sets	forth	the	computation	of	basic	and	diluted	earnings	(loss)	per	share	(in	millions,	except	share	and	per	share	amounts	in	thousands):

|  | 2014 | Year	Ended	December	31,<br>2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Basic\tEarnings\t(Loss)\tPer\tShare: |  |  |  |
| Net\tincome\t(loss) | $2,882 | $(1,834) | $(1,876) |
| Weighted-average\tshares\toutstanding\t(in\tthousands) | \t 717,456 | \t 280,213 | \t 249,490 |
| Basic\tearnings\t(loss)\tper\tshare | $4.02 | $(6.54) | $(7.52) |
| Diluted\tEarnings\t(Loss)\tPer\tShare: |  |  |  |
| Net\tincome\t(loss) | $2,882 | $(1,834) | $(1,876) |
|  | 3 | — | — |
| Net\tincome\t(loss)\tfor\tpurposes\tof\tcomputing\tdiluted\tearnings\t(loss)\tper\tshare | $2,885 | $(1,834) | (1,876) |
| Share\tcomputation\tfor\tdiluted\tearnings\t(loss)\tper\tshare\t(in\tthousands): |  |  |  |
| Weighted-average\tshares\toutstanding | \t 717,456 | \t 280,213 | \t 249,490 |
| Dilutive\teffect\tof\tstock\tawards | 15,603 | — | — |
| Assumed\tconversion\tof\tconvertible\tsenior\tnotes | 957 | — | — |
| Weighted\taverage\tcommon\tshares\toutstanding\t–\tas\tadjusted | \t 734,016 | \t 280,213 | \t 249,490 |
| Diluted\tearnings\t(loss)\tper\tshare | $3.93 | $(6.54) | $(7.52) |
| The\tfollowing\twere\texcluded\tfrom\tthe\tcalculation\tof\tdiluted\tearnings\t(loss)\tper\tshare\t(in\tthousands):\nStock\toptions,\tSARs\tand\tRSUs\tbecause\tinclusion\twould\tbe\tantidilutive | 226 | 7,674 | 17,656 |

(a) In	March	2014,	the	Company	notified	the	holders	of	US	Airways	Group's	7.25%	convertible	senior	notes	that	it	had	elected	to	settle	all	future	conversions	solely in	cash	instead	of	shares	of	AAG	Common	Stock	in	accordance	with	the	related	indenture.	Thus,	the	diluted	shares	include	the	weighted	average	impact	of	the

7.25%	convertible	senior	notes	only	for	the	period	from	January	1,	2014	to	March	12,	2014.	In	addition,	under	GAAP,	the	Company	must	adjust	the	numerator for	purposes	of	calculating	diluted	earnings	per	share	by	the	change	in	fair	value	of	the	conversion	feature	from	March	12,	2014	to	May	15,	2014,	which	increased GAAP	net	income	for	purposes	of	computing	diluted	earnings	per	share	by	$3	million	for	the	year	ended	December	31,	2014.

# 8.		Share	Repurchase	Program	and	Dividends

On	July	23,	2014,	as	part	of	a	capital	deployment	program,	the	Company's	Board	of	Directors	authorized	a	$1.0	billion	share	repurchase	program	to	be	completed	no later	 than	December	31,	2015.	During	 the	year	ended	December	31,	2014,	 the	Company	completed	 this	$1.0	billion	share	repurchase	program	by	repurchasing 23.4	million	shares	of	AAG	Common	Stock	for	$1.0	billion	at	a	weighted	average	cost	per	share	of	$42.72.	On	January	27,	2015,	the	Company	announced	that	its Board	of	Directors	had	authorized	a	new	$2.0	billion	share	repurchase	program	to	be	completed	by	the	end	of	2016.	Shares	repurchased	under	the	program	may	be	made through	a	variety	of	methods,	which	may	include	open	market	purchases,	privately	negotiated	transactions,	block	trades	or	accelerated	share	repurchase	transactions. Any	such	repurchases	will	be	made	from	time	to	time	subject	to	market	and	economic	conditions,	applicable	legal	requirements	and	other	relevant	factors.	The	program does	not	obligate	the	Company	to	repurchase	any	specific	number	of	shares	and	may	be	suspended	at	any	time	at	its	discretion.

Also	on	July	23,	2014,	as	part	of	the	Company's	capital	deployment	program,	the	Company's	Board	of	Directors	declared	a	$0.10	per	share	cash	dividend	for shareholders	of	record	as	of	August	4,	2014,	and	payable	on	August	18,	2014.

On	October	22,	2014,	the	Company's	Board	of	Directors	declared	a	$0.10	per	share	dividend	for	stockholders	of	record	on	November	3,	2014,	and	payable	on November	17,	2014.

The	total	cash	payment	for	dividends	during	the	year	ended	December	31,	2014	was	$144	million.	Any	future	dividends	that	may	be	declared	and	paid	from	time	to time	under	the	Company's	capital	deployment	program	will	be	subject	to	market	and	economic	conditions,	applicable	legal	requirements	and	other	relevant	factors.	The Company's	capital	deployment	program	does	not	obligate	the	Company	to	continue	a	dividend	for	any	fixed	period,	and	payment	of	dividends	may	be	suspended	at	any time	at	management's	discretion.

Long-term	debt	and	capital	lease	obligations	included	in	the	consolidated	balance	sheets	consisted	of	(in	millions):

|  | December	31,<br>2014 | 2013 |
| :--- | :--- | :--- |
| Secured |  |  |
|  | $1,872 | $1,891 |
|  | 750 | — |
|  | 990 | 1,000 |
|  | 594 | 600 |
| (d) | 7,028 | 6,031 |
| (e) | 2,952 | 3,441 |
|  | 1,100 | 1,466 |
| 7.50%\tsenior\tsecured\tnotes\t(g) | — | 1,000 |
| AAdvantage\tLoan,\teffective\trate\tof\t8.30%\t(h) | 433 | 611 |
|  | 994 | 303 |
|  | \t 16,713 | \t 16,343 |
| Unsecured |  |  |
|  | 750 | — |
|  | 500 | 500 |
| 7.25%\tconvertible\tsenior\tnotes\t(k) | — | 22 |
| Industrial\tdevelopment\tbonds | — | 29 |
|  | 1,250 | 551 |
| Total\tlong-term\tdebt\tand\tcapital\tlease\tobligations | \t 17,963 | \t 16,894 |
| Less:\tTotal\tunamortized\tdebt\tdiscount | 59 | 95 |
| Less:\tCurrent\tmaturities | 1,708 | 1,446 |
| Long-term\tdebt\tand\tcapital\tlease\tobligations,\tnet\tof\tcurrent\tmaturities | $16,196 | $15,353 |

Secured	financings	are	collateralized	by	assets,	primarily	aircraft,	engines,	simulators,	rotable	aircraft	parts,	hangar	and	maintenance	facilities,	route	authorities	and airport	Slots.	At	December	31,	2014,	the	Company	was	operating	37	jet	aircraft	under	capital	leases.	Leases	can	generally	be	renewed	at	rates	based	on	fair	market	value at	the	end	of	the	lease	term	for	a	number	of	additional	years.	At	December	31,	2014,	the	maturities	of	long-term	debt	and	capital	leases	are	as	follows	(in	millions):

# (a)	2013	Credit	Facilities

# (b)	2014	Credit	Facilities

On	October	10,	2014,	American,	AAG,	US	Airways	Group	and	US	Airways	entered	into	a	Credit	and	Guaranty	Agreement	(the	2014	Credit	Agreement)	with	certain lenders.	The	2014	Credit	Agreement	provides	for	a	$750	million	term	loan	facility	(the	2014	Term	Loan	Facility)	and	a	$400	million	revolving	credit	facility	(the	2014 Revolving	Facility	and,	together	with	the	2014	Term	Loan	Facility,	the	2014	Credit	Facilities).	As	of	December	31,	2014,	$750	million	was	outstanding	under	the	2014 Term	Loan	Facility.	The	2014	Revolving

Facility	provides	that	American	may	from	time	to	time	borrow,	repay	and	reborrow	loans	thereunder.	American	may	have	letters	of	credit	issued	under	the	2014 Revolving	Facility	 in	an	aggregate	amount	outstanding	at	any	 time	up	 to	$300	million.	As	of	December	31,	2014	 there	were	no	borrowings	or	 letters	of	credit outstanding	under	the	2014	Revolving	Facility.

The	2014	Credit	Facilities	contain	events	of	default	customary	for	similar	financings,	including	cross	default	to	other	material	indebtedness.	Upon	the	occurrence	of an	event	of	default,	the	outstanding	obligations	under	the	2014	Credit	Facilities	may	be	accelerated	and	become	due	and	payable	immediately.	In	addition,	if	a	"change of	control"	(as	defined	in	the	2014	Credit	Agreement)	occurs	with	respect	to	AAG,	American	will	(absent	an	amendment	or	waiver)	be	required	to	repay	at	par	the	loans outstanding	under	the	2014	Credit	Facilities	and	terminate	the	2014	Revolving	Facility.	The	2014	Credit	Facilities	also	include	covenants	that,	among	other	things, require	AAG	to	maintain	a	minimum	aggregate	liquidity	(as	defined	in	the	2014	Credit	Facilities)	of	not	less	than	$2.0	billion,	and	limit	the	ability	of	AAG	and	its restricted	subsidiaries	to	pay	dividends	and	make	certain	other	payments,	make	certain	investments,	incur	liens	on	the	collateral,	dispose	of	the	collateral,	enter	into certain	affiliate	transactions	and	engage	in	certain	business	activities,	in	each	case	subject	to	certain	exceptions.

# (c)	2013	Citicorp	Credit	Facility

US	Airways	Group	and	certain	other	subsidiaries	of	US	Airways	Group	are	guarantors	of	the	2013	Citicorp	Credit	Facility	agreement	dated	as	of	May	23,	2013.	In connection	with	the	closing	of	the	Merger,	AAG	and	American	entered	into	a	joinder	to	the	2013	Citicorp	Credit	Facility	loan	agreement	pursuant	to	which	AAG	and American	became	guarantors	under	such	agreement.

Subject	to	certain	limitations	and	exceptions,	the	obligations	of	US	Airways	under	the	2013	Citicorp	Credit	Facility	are	secured	by	liens	on	certain	take-off	and landing	rights	at	certain	airports	and	certain	other	assets	of	US	Airways.	US	Airways	is	required	to	maintain	a	certain	minimum	ratio	of	appraised	value	of	the	collateral to	the	outstanding	loans	under	the	2013	Citicorp	Credit	Facility	agreement	as	more	fully	described	below	in	"Collateral	Related	Covenants".

# (d)	Aircraft	Enhanced	Equipment	Trust	Certificates	(EETCs)

# (e)	Other	Aircraft	Financing	Transactions

In	May	2014,	the	Company	prepaid	$113	million	principal	amount	of	outstanding	debt	secured	by	certain	aircraft.

During	2014,	American	financed	20	Boeing	737-800	aircraft	under	sale-leaseback	arrangements	and	recorded	proceeds	from	the	sale	of	$811	million.	Of	the	20 Boeing	737-800	aircraft,	19	aircraft	were	accounted	for	as	a	capital	lease	and	$747	million	was	reflected	as	debt	on	the	consolidated	balance	sheet,	included	within	other secured	obligations	in	the	table	above.	Gains	associated	with	these	sale-leaseback	transactions	are	amortized	over	the	respective	remaining	lease	terms	and	are	included in	the	consolidated	balance	sheet	as	deferred	gains.

# (f)	Obligations	Associated	with	Special	Facility	Revenue	Bonds

In	2014,	the	Company	prepaid	$314	million	of	obligations,	of	which	$135	million	was	a	reduction	of	debt	on	the	Company's	balance	sheet,	associated	with	special facility	revenue	bonds	issued	by	municipalities	to	build	or	improve	certain	airport	and	maintenance	facilities.	The	remaining	portion	of	these	obligations	was	accounted for	as	an	operating	lease.

# (g)	Senior	Secured	Notes

# (h)	AAdvantage	Loan

In	 2009,	American	 entered	 into	 an	 arrangement	 under	 which	 Citibank	 loaned	American	 $1.0	 billion	 that	 could	 be	 repaid	 either	 in	AAdvantage	 miles	 under American's	AAdvantage	program	or	in	cash	(the	AAdvantage	Loan).	Approximately	$890	million	of	the	AAdvantage	Loan	proceeds	was	accounted	for	as	a	loan	from Citibank	with	the	remaining	$110	million	recorded	as	deferred	revenue	in	other	liabilities	and	deferred	credits.

To	effect	the	AAdvantage	Loan,	American	and	Citibank	entered	into	an	Amended	and	Restated	AAdvantage	Participation	Agreement	(as	so	amended	and	restated, the	Amended	Participation	Agreement).	Under	the

Amended	Participation	Agreement,	American	agreed	that	it	would	apply	in	equal	monthly	installments	over	a	five	year	period	beginning	on	January	1,	2012,	a	credit	for miles	awarded	to	Citibank	cardholders'	AAdvantage	accounts.

In	September	2014,	the	Company	issued	$750	million	aggregate	principal	amount	of	5.50%	senior	notes	due	2019	(the	5.50%	senior	notes).	These	notes	bear	interest at	a	rate	of	5.50%	per	annum,	which	is	payable	semi-annually	in	arrears	on	each	April	1	and	October	1,	beginning	April	1,	2015.	The	5.50%	senior	notes	mature	on October	1,	2019	and	are	fully	and	unconditionally	guaranteed	by	American,	US	Airways	Group	and	US	Airways.	The	5.50%	senior	notes	are	senior	unsecured obligations	of	the	Company.	The	indenture	for	the	5.50%	senior	notes	contains	covenants	and	events	of	default	generally	customary	for	similar	financings.	In	addition,	if the	Company	experiences	specific	kinds	of	changes	of	control,	the	Company	must	offer	to	repurchase	the	5.50%	senior	notes	at	a	price	of	101%	of	the	principal	amount plus	accrued	and	unpaid	interest,	if	any,	to	the	repurchase	date.	Upon	the	occurrence	of	certain	events	of	default,	the	5.50%	senior	notes	may	be	accelerated	and	become due	and	payable.

In	May	2013,	US	Airways	Group	issued	its	6.125%	Senior	Notes	due	2018	(the	6.125%	senior	notes).	The	6.125%	senior	notes	bear	interest	at	a	rate	of	6.125%	per annum,	which	is	payable	semi-annually	on	each	June	1	and	December	1	and	began	December	1,	2013.	The	6.125%	senior	notes	mature	on	June	1,	2018	and	are	fully and	unconditionally	guaranteed	by	US	Airways.	In	connection	with	the	closing	of	the	Merger,	AAG	and	American	provided	a	full	and	unconditional	guarantee	of	the payment	obligations	of	US	Airways	Group	under	the	6.125%	senior	notes.	The	6.125%	senior	notes	are	general	unsecured	senior	obligations	of	the	Company.

In	March	2014,	the	Company	notified	the	holders	of	US	Airways	Group's	7.25%	convertible	notes	that	it	had	elected	to	settle	solely	in	cash	instead	of	shares	of	AAG Common	Stock	all	conversions	during	the	period	beginning	on	March	15,	2014	and	ending	on,	and	including,	the	second	scheduled	trading	day	immediately	preceding the	maturity	date	of	May	15,	2014.	In	May	2014,	the	Company	settled	all	outstanding	7.25%	convertible	notes	in	cash	for	approximately	$175	million.

As	of	December	31,	2014,	AAG	had	issued	guarantees	covering	approximately	$1.1	billion	of	American's	tax-exempt	bond	debt	(and	interest	thereon)	and	$4.4 billion	of	American's	secured	debt	(and	interest	thereon).

In	connection	with	the	Merger	and	pursuant	to	the	Plan	on	December	9,	2013,	the	Company	and	American	entered	into	a	joinder	to	the	loan	agreement	and	became co-obligors	of	US	Airways	Group's	$1.6	billion	2013	Citicorp	Credit	Facility	and	the	Company	and	American	entered	into	a	second	supplemental	indenture	that guarantees	the	payment	obligations	associated	with	the	6.125%	senior	notes.	In	March	2014,	AAG,	US	Airways	Group	and	US	Airways	entered	into	amended	and restated	guarantees	of	the	payment	obligations	of	US	Airways

under	the	equipment	notes	relating	to	each	of	its	Series	2010-1,	2011-1,	2012-1,	2012-2	and	2013-1	Pass	Through	Certificates,	the	result	of	which	was	to	add	AAG	as	a guarantor	of	such	equipment	notes	on	a	joint	and	several	basis	with	US	Airways	Group.	Refer	to	Note	21	for	further	information.

Certain	of	the	Company's	debt	financing	agreements	contain	loan	to	value	ratio	covenants	and	require	it	to	periodically	appraise	the	related	collateral.	Pursuant	to such	agreements,	if	the	loan	to	value	ratio	exceeds	a	specified	threshold,	the	Company	is	required,	as	applicable,	to	pledge	additional	qualifying	collateral	(which	in some	cases	may	include	cash	collateral),	or	pay	down	such	financing,	in	whole	or	in	part,	as	described	below.

Specifically,	the	Company	is	required	to	meet	certain	collateral	coverage	tests	on	a	periodic	basis	on	three	Credit	Facilities,	as	described	below:

At	December	31,	2014,	American	and	US	Airways	were	in	compliance	with	the	applicable	collateral	coverage	tests	as	of	the	most	recent	measurement	dates.

The	significant	components	of	the	income	tax	expense	(benefit)	were	(in	millions):

|  | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Current | $(16) | $(22) | $— |
| Deferred | 346 | (324) | (569) |
| Income\ttax\texpense\t(benefit) | $ 330 | $(346) | $(569) |

The	income	tax	expense	(benefit)	differed	from	amounts	computed	at	the	statutory	federal	income	tax	rate	as	follows	(in	millions):

|  | Year	Ended	December	31, | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2014 | 2013 | 2012 |
| Statutory\tincome\ttax\tprovision\t(benefit) | $1,123 | $(763) | $(857) |
| State\tincome\ttax\texpense\t(benefit),\tnet\tof\tfederal\ttax\teffect | 75 | (8) | (32) |
| Book\texpenses\t(benefits)\tnot\tdeductible\tfor\ttax\tpurposes | (1) | 27 | 19 |
| Bankruptcy\tadministration\texpenses | 95 | 83 | 26 |
| Interest\tcutback\tto\tnet\toperating\tloss\t(NOL) | — | 141 | — |
| Alternative\tminimum\ttax\tcredit\trefund | (24) | (22) | — |
| Change\tin\tvaluation\tallowance | (1,323) | 717 | 839 |
| Tax\texpense\t(benefit)\tresulting\tfrom\tOCI\tallocation | 330 | (538) | (569) |
| Other,\tnet | 55 | 17 | 5 |
| Income\ttax\texpense\t(benefit) | $330 | $(346) | $(569) |

As	a	result	of	the	Merger,	US	Airways	Group	and	its	subsidiaries	are	included	in	the	AAG	consolidated	federal	and	state	income	tax	returns	for	the	period	ended December	31,	2014.

For	the	year	ended	December	31,	2014,	the	Company	recorded	a	$330	million	tax	provision.	This	provision	included	$346	million	of	special	tax	charges.	During 2014,	the	Company	sold	its	portfolio	of	fuel	hedging	contracts	that	were	scheduled	to	settle	on	or	after	June	30,	2014.	In	connection	with	this	sale,	the	Company recorded	a	special	non-cash	 tax	provision	of	$330	million	 in	 the	second	quarter	of	2014	 that	reversed	 the	non-cash	 tax	provision	which	was	recorded	 in	other comprehensive	income	(OCI),	a	subset	of	stockholders'	equity,	principally	in	2009.	This	provision	represents	the	tax	effect	associated	with	gains	recorded	in	OCI principally	in	2009	due	to	a	net	increase	in	the	fair	value	of	our	fuel	hedging	contracts.	In	accordance	with	GAAP,	the	Company	retained	the	$330	million	tax	provision in	OCI	until	the	last	contract	was	settled	or	terminated.	The	Company	also	recorded	a	special	$16	million	non-cash	deferred	income	tax	provision	related	to	certain indefinite-lived	 intangible	 assets.	 In	 addition,	 the	 Company	 recorded	 $8	 million	 of	 tax	 expense	 principally	 related	 to	 certain	 states	 and	 countries	 where	 NOL Carryforwards	were	limited	or	unavailable	to	be	used.	These	charges	were	offset	in	part	by	a	$24	million	federal	income	tax	benefit	resulting	from	the	Company's elections	under	applicable	sections	of	the	Tax	Relief,	Unemployment	Insurance	Reauthorization,	and	Job	Creation	Act	of	2010	and	the	Housing	and	Economic	Recovery Act	of	2008	(as	extended	by	the	Tax	Increase	Prevention	Act	of	2014),	allowing	corporations	to	accelerate	utilization	of	certain	research	and	AMT	credit	carryforwards in	lieu	of	applicable	bonus	depreciation	on	certain	qualifying	capital	investments.

For	the	year	ended	December	31,	2013,	the	Company	recorded	a	$346	million	tax	benefit.	This	benefit	included	a	$538	million	special	non-cash	income	tax	benefit from	continuing	operations.	The	Company	is	required	to	consider	all	items	(including	items	recorded	in	OCI)	in	determining	the	amount	of	tax	benefit	that	results	from	a loss	from	continuing	operations	and	that	should	be	allocated	to	continuing	operations.	As	a	result,	the	Company	recorded	a	tax	benefit	on	the	loss	from	continuing operations	for	the	year,	which	was	exactly	offset	by	income	tax	expense	on	OCI.	However,	while	the	income	tax	benefit	from	continuing	operations	is	reported	on	the income	 statement,	 the	 income	 tax	 expense	 on	 other	 comprehensive	 income	 is	 recorded	 directly	 to	 accumulated	 other	 comprehensive	 income	 (loss),	 which	 is	 a component	of	stockholders'	equity.	Because	the	income	tax	expense	on	other	comprehensive	income	is	equal	to	the	income	tax	benefit	from	continuing	operations,	the Company's	year-end	net	deferred	tax	position	is	not	impacted	by	this	tax	allocation.	The	2013	tax	benefit	was	offset	in	part	by	a	$214	million	tax	charge	attributable	to additional	valuation	allowance	required	to	reduce	deferred	tax	assets	to	the	amount	the	Company	believes	is	more	likely	than	not	to	be	realized.	In	addition,	the Company	recorded	a	$22	million	federal	income	tax	benefit	under	the	Housing	and	Economic	Recovery	Act	of	2008	as	described	above.

For	the	year	ended	December	31,	2012,	the	Company	recorded	a	net	income	tax	benefit	of	$569	million,	which	represents	the	non-cash	income	tax	benefit	resulting from	gains	recorded	in	OCI	as	discussed	above.

The	Company	provides	a	valuation	allowance	for	deferred	tax	assets	when	it	is	more	likely	than	not	that	some	portion,	or	all	of	its	deferred	tax	assets,	will	not	be realized.	The	ultimate	realization	of	deferred	tax	assets	is	dependent	upon	the	generation	of	future	taxable	income	(primarily	reversals	of	deferred	tax	liabilities)	during the	periods	in	which	those	temporary	differences	will	become	deductible.	In	making	this	determination,	the	Company	considers	all	available	positive	and	negative evidence	and	makes	certain	assumptions.	The	Company	considers	many	factors	in	evaluating	the	realizability	of	its	deferred	tax	assets	including	risks	associated	with merger	integration	as	well	as	other	factors,	which	continue	to	be	affected	by	conditions	beyond	the	Company's	control,	such	as	the	condition	of	the	economy,	the	level and	volatility	of	fuel	prices	and	travel	demand.	The	Company	has	concluded	as	of	December	31,	2014	that	the	valuation	allowance	was	still	needed	on	its	deferred	tax asset	based	on	the	weight	of	the	factors	described	above.

A	portion	of	the	change	in	the	valuation	allowance	reflects	the	income	tax	benefit	of	approximately	$24	million	and	$22	million,	respectively,	recorded	in	2014	and 2013	resulting	from	the	Company's	elections	under	applicable	sections	of	the	Tax	Relief,	Unemployment	Insurance	Reauthorization,	and	Job	Creation	Act	of	2010	and the	Housing	and	Economic	Recovery	Act	of	2008	(as	extended	by	the	Tax	Increase	Prevention	Act	of	2014	and	the	American	Taxpayer	Relief	Act	of	2012),	allowing corporations	to	accelerate	utilization	of	certain	research	and	alternative	minimum	tax	(AMT)	credit	carryforwards	in	lieu	of	applicable	bonus	depreciation	on	certain qualifying	capital	investments.

In	addition	to	the	changes	in	the	valuation	allowance	from	operations	described	in	the	table	above,	the	valuation	allowance	was	also	impacted	by	the	changes	in	the components	of	accumulated	other	comprehensive	income	(loss),	described	in	Note	14	to	AAG's	consolidated	financial	statements.	The	total	decrease	in	the	valuation allowance	was	$197	million	in	2014	and	the	total	increase	in	the	valuation	allowance	was	$602	million	and	$263	million	in	2013	and	2012,	respectively.

The	components	of	AAG's	deferred	tax	assets	and	liabilities	were	(in	millions):

|  | 2014 | 2013 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets: |  |  |
| Postretirement\tbenefits\tother\tthan\tpensions | $386 | $643 |
| Rent\texpense | 180 | 355 |
| Alternative\tminimum\ttax\tcredit\tcarryforwards | 346 | 370 |
| Operating\tloss\tcarryforwards | 3,461 | 3,655 |
| Pensions | 2,403 | 1,765 |
| Frequent\tflyer\tobligation | 948 | 1,075 |
| Gains\tfrom\tlease\ttransactions | 207 | 56 |
| Reorganization\titems | 64 | 682 |
| Other | 1,210 | 871 |
| Total\tdeferred\ttax\tassets | 9,205 | 9,472 |
| Valuation\tallowance | (4,816) | (5,013) |
| Net\tdeferred\ttax\tassets | 4,389 | 4,459 |
| Deferred\ttax\tliabilities: |  |  |
| Accelerated\tdepreciation\tand\tamortization | (4,829) | (4,460) |
| Other | (98) | (519) |
| Total\tdeferred\ttax\tliabilities | (4,927) | (4,979) |
| Net\tdeferred\ttax\tliability | $(538) | $(520) |

At	December	31,	2014,	the	Company	had	approximately	$10.1	billion	of	gross	NOL	Carryforwards	to	reduce	future	federal	taxable	income,	substantially	all	of	which are	expected	to	be	available	for	use	in	2015.	The	federal	NOL	Carryforwards	will	expire	beginning	in	2022	if	unused.	These	NOL	Carryforwards	include	an	unrealized tax	benefit	of	$867	million	related	to	the	implementation	of	share-based	compensation	accounting	guidance	that	will	be	recorded	in	equity	when	realized.	The	Company also	had	approximately	$4.6	billion	of	NOL	Carryforwards	to	reduce	future	state	taxable	income	at	December	31,	2014,	which	will	expire	in	years	2015	through	2034	if unused.	The	Company's	ability	to	deduct	its	NOL	Carryforwards	and	to	utilize	certain	other	available	tax	attributes	can	be	substantially	constrained	under	the	general annual	limitation	rules	of	Section	382	where	an	"ownership	change"	has	occurred.	The	Company	experienced	an	ownership	change	in	connection	with	its	emergence from	the	Chapter	11	Cases,	and	US	Airways	Group	experienced	an	ownership	change	in	connection	with	the	Merger.	As	a	result	of	the	Merger,	US	Airways	Group	is now	included	in	the	AAG	consolidated	federal	and	state	income	tax	return.	The	general	limitation	rules	of	Section	382	for	a	debtor	in	a	bankruptcy	case	are	liberalized where	the	ownership	change	occurs	upon	emergence	from	bankruptcy.	The	Company	elected	to	be	covered	by	certain	special	rules	for	federal	income	tax	purposes	that permit	approximately	$9.0	billion	of	its	federal	NOL	Carryforwards	to	be	utilized	without	regard	to	the	Section	382	annual	limitation	rules.	Substantially	all	of	the Company's	remaining	federal	NOL	Carryforwards	(attributable	to	US	Airways	Group)	are	subject	to	limitation	under	Section	382;	however,	the	Company's	ability	to utilize	such	NOL	Carryforwards	is	not	anticipated	to	be	effectively	constrained	as	a	result	of	such	limitation.	Similar	limitations	may	apply	for	state	income	tax purposes.	The	Company's	ability	to	utilize	any	new	NOL	Carryforwards	arising	after	the	ownership	changes	is	not	affected	by	the	annual	limitation	rules	imposed	by Section	382	unless	another	ownership	change	occurs.	Under	the	Section	382	Limitation	cumulative	stock	ownership	changes	among	material	shareholders	exceeding 50%	during	a	rolling	3-year	period	can	potentially	limit	a	company's	future	use	of	net	operating	losses	and	tax	credits.	See	Part	I,	Item	1A.	Risk	Factors	–	"Our	ability	to utilize	our	NOL	Carryforwards	may	be	limited"	for	additional	unaudited	discussion	of	this	risk.

At	December	31,	2014,	the	Company	had	an	AMT	credit	carryforward	of	approximately	$341	million	available	for	federal	income	tax	purposes,	which	is	available for	an	indefinite	period.	The	Company's	net	deferred	tax	assets,	which	include	the	NOL	Carryforwards,	are	subject	to	a	full	valuation	allowance.	At	December	31,	2014, the	federal	and	state	valuation	allowances	were	$4.5	billion	and	$264	million,	respectively.	In	accordance	with	GAAP,	utilization	of	the	NOL	Carryforwards	after December	9,	2013	will	result	in	a	corresponding	decrease	in	the	valuation	allowance	and	offset	our	tax	provision	dollar	for	dollar.

The	Company	files	its	tax	returns	as	prescribed	by	the	tax	laws	of	the	jurisdictions	in	which	it	operates.	The	Company's	2004	through	2013	tax	years	are	still	subject to	examination	by	the	Internal	Revenue	Service.	Various	state	and	foreign	jurisdiction	tax	years	remain	open	to	examination	and	the	Company	is	under	examination,	in administrative	 appeals,	 or	 engaged	 in	 tax	 litigation	 in	 certain	 jurisdictions.	 The	 Company	 believes	 that	 the	 effect	 of	 any	 assessments	 will	 be	 immaterial	 to	 its consolidated	financial	statements.

The	Company	had	an	unrecognized	tax	benefit	of	approximately	$6	million,	which	did	not	change	during	the	twelve	months	ended	December	31,	2014.	Changes	in the	unrecognized	tax	benefit	have	no	impact	on	the	effective	tax	rate	due	to	the	existence	of	the	valuation	allowance.	Accrued	interest	on	tax	positions	is	recorded	as	a component	of	interest	expense	but	was	not	significant	at	December	31,	2014.

The	reconciliation	of	the	beginning	and	ending	amounts	of	unrecognized	tax	benefit	are	(in	millions):

|  | 2014 | 2013 |
| :--- | :--- | :--- |
| Unrecognized\ttax\tbenefit\tat\tJanuary\t1 | $6 | $6 |
| No\tactivity | \t — | \t — |
| Unrecognized\ttax\tbenefit\tat\tDecember\t31 | $6 | $6 |

The	Company	estimates	that	the	unrecognized	tax	benefit	will	be	realized	within	the	next	twelve	months.

# 11.		Risk	Management	and	Financial	Instruments

The	Company's	economic	prospects	are	heavily	dependent	upon	two	variables	it	cannot	control:	the	health	of	the	economy	and	the	price	of	fuel.

Due	to	the	discretionary	nature	of	business	and	leisure	travel	spending,	airline	industry	revenues	are	heavily	influenced	by	the	condition	of	the	U.S.	economy	and economies	in	other	regions	of	the	world.	Unfavorable	conditions	in	these	broader	economies	have	resulted,	and	may	result	in	the	future,	in	decreased	passenger	demand for	air	travel	and	changes	in	booking	practices,	both	of	which	in	turn	have	had,	and	may	have	in	the	future,	a	strong	negative	effect	on	the	Company's	revenues.	In addition,	during	challenging	economic	times,	actions	by	our	competitors	to	increase	their	revenues	can	have	an	adverse	impact	on	the	Company's	revenues.

The	Company's	operating	results	are	materially	impacted	by	changes	in	the	availability,	price	volatility	and	cost	of	aircraft	fuel,	which	represents	one	of	the	largest single	cost	items	in	the	Company's	business.	Because	of	the	amount	of	fuel	needed	to	operate	the	Company's	business,	even	a	relatively	small	increase	in	the	price	of fuel	can	have	a	material	adverse	aggregate	effect	on	the	Company's	operating	results	and	liquidity.	Jet	fuel	market	prices	have	fluctuated	substantially	over	the	past several	years	and	prices	continued	to	be	volatile	in	2014.

These	factors	could	impact	the	Company's	results	of	operations,	financial	performance	and	liquidity.

# (a)	Fuel	Price	Risk	Management

During	the	second	quarter	of	2014,	the	Company	sold	its	portfolio	of	fuel	hedging	contracts	that	were	scheduled	to	settle	on	or	after	June	30,	2014.	The	Company	has not	entered	into	any	transactions	to	hedge	its	fuel	consumption	since	December	9,	2013	and,	accordingly,	as	of	December	31,	2014,	the	Company	did	not	have	any	fuel hedging	contracts	outstanding.	As	such,	and	assuming	the	Company	does	not	enter	into	any	future	transactions	to	hedge	its	fuel	consumption,	the	Company	will	continue to	be	fully	exposed	to	fluctuations	in	fuel	prices.	The	Company's	current	policy	is	not	to	enter	into	transactions	to	hedge	its	fuel	consumption,	although	the	Company reviews	that	policy	from	time	to	time	based	on	market	conditions	and	other	factors.

The	cash	proceeds	on	these	sales	totaled	$71	million	which	exceeded	the	current	value	of	the	portfolio.	Approximately	$25	million	of	the	resulting	gain	was	recorded to	OCI	and	will	be	recognized	as	a	decrease	to	fuel	expense	in	the	period	the	hedged	fuel	is	scheduled	to	be	consumed	(through	the	second	quarter	of	2015).	As	of December	31,	2014,	the	Company	expects	to	recognize	the	remaining	$9	million	of	these	gains	into	earnings	in	2015.	For	the	years	ended	December	31,	2014,	2013	and 2012,	the	Company	recognized	net	gains	of	approximately	$16	million,	net	losses	of	approximately	$12	million	and	net	gains	of	approximately	$4	million,	respectively, as	a	component	of	aircraft	fuel	expense	on	the	accompanying	consolidated	statements	of	operations	related	to	its	fuel	hedging	agreements,	including	the	ineffective portion	of	the	hedges.

The	impact	of	aircraft	fuel	derivative	instruments	(all	cash	flow	hedges)	on	the	Company's	consolidated	statements	of	operations	is	depicted	below	(in	millions):

|  |  | Year	Ended	December	31, | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Location | 2014 | 2013 | 2012 |
| Amount\tof\tgain\t(loss)\treclassified\tfrom\tAOCI\tinto\tincome\t(1) | Aircraft\tfuel\tand |  |  |  |
|  | related\ttaxes | $4 | $(34) | $3 |
| Amount\tof\tgain\t(loss)\trecognized\tin\tincome\ton\tderivative\t(2) | Aircraft\tfuel\tand |  |  |  |
|  | related\ttaxes | 12 | 22 | 1 |
| Amount\tof\tgain\t(loss)\trecognized\tin\tconsolidated\tstatements\tof\toperations\t(3) |  | $16 | $(12) | $4 |

(1) Includes	the	effective	portion	of	hedge	gain	(loss)

(2) Includes	the	ineffective	portion	of	hedge	gain	(loss)

(3) Includes	the	effective	and	ineffective	portion	of	hedge	gain	(loss)

The	impact	of	aircraft	fuel	derivative	instruments	(all	cash	flow	hedges)	on	the	Company's	consolidated	statements	of	comprehensive	income	is	depicted	below	(in millions):

|  |  | Year	Ended	December	31, | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Location | 2014 | 2013 | 2012 |
| Amount\tof\t(gain)\tloss\treclassified\tfrom\tAOCI\tinto\tincome\t(1) | Reclassification |  |  |  |
|  | into\tearnings | $(4) | $34 | $(3) |
| Amount\tof\tgain\t(loss)\trecognized\tin\tOCI\ton\tderivative\t(1) | Change\tin\tfair |  |  |  |
|  | value | (34) | (2) | (12) |
| Amount\tof\tgain\t(loss)\trecognized\tin\tconsolidated\tstatements\tof\tcomprehensive\tincome |  | $(38) | $32 | $(15) |

While	certain	of	the	Company's	fuel	derivatives	were	subject	to	enforceable	master	netting	agreements	with	its	counterparties,	the	Company	did	not	offset	its	fuel derivative	assets	and	liabilities	in	its	consolidated	balance	sheets.	The	Company	had	a	gross	asset	of	$109	million	as	of	December	31,	2013	for	its	aircraft	fuel	derivative instruments,	which	was	reflected	in	prepaid	expenses	and	other	on	the	accompanying	consolidated	balance	sheet.	The	Company	had	no	cash	collateral	posted	or	received as	of	December	31,	2013.

# (b)	Credit	Risk

Most	of	the	Company's	receivables	relate	to	tickets	sold	to	individual	passengers	through	the	use	of	major	credit	cards	or	to	tickets	sold	by	other	airlines	and	used	by passengers	on	American,	US	Airways	or	the	Company's	regional	carriers.	These	receivables	are	short-term,	mostly	being	settled	within	seven	days	after	sale.	Bad	debt losses,	which	have	been	minimal	in	the	past,	have	been	considered	in	establishing	allowances	for	doubtful	accounts.	The	Company	does	not	believe	it	is	subject	to	any significant	concentration	of	credit	risk.

# (c)	Interest	Rate	Risk

The	Company	has	exposure	to	market	risk	associated	with	changes	in	interest	rates	related	primarily	to	its	variable	rate	debt	obligations.	Interest	rates	on	$6.5	billion principal	amount	of	long-term	debt	as	of	December	31,	2014	are	subject	to	adjustment	to	reflect	changes	in	floating	interest	rates.	The	weighted	average	effective	interest rate	on	the	Company's	variable	rate	debt	was	3.3%	at	December	31,	2014.

# 12.		Investments	and	Fair	Value	Measurements

Short-term	investments	consisted	of	(in	millions):

All	short-term	investments	are	classified	as	available-for-sale	and	stated	at	fair	value.	Unrealized	gains	and	losses	are	reflected	as	a	component	of	accumulated	other comprehensive	income	(loss).

# Assets	and	Liabilities	Measured	at	Fair	Value	on	a	Recurring	Basis

The	 Company	 utilizes	 the	 market	 approach	 to	 measure	 fair	 value	 for	 its	 financial	 assets	 and	 liabilities.	The	 market	 approach	 uses	 prices	 and	 other	 relevant information	generated	by	market	 transactions	 involving	 identical	or	comparable	assets	or	 liabilities.	The	Company's	short-term	 investments	classified	as	Level	2 primarily	utilize

broker	quotes	in	a	non-active	market	for	valuation	of	these	securities.	The	Company's	fuel	derivative	contracts,	which	consisted	primarily	of	call	options,	collars (consisting	of	a	purchased	call	option	and	a	sold	put	option)	and	call	spreads	(consisting	of	a	purchased	call	option	and	a	sold	call	option),	are	valued	using	energy	and commodity	market	data	which	is	derived	by	combining	raw	inputs	with	quantitative	models	and	processes	to	generate	forward	curves	and	volatilities.	Heating	oil,	jet	fuel and	 crude	 oil	 were	 the	 primary	 underlying	 commodities	 in	 the	 hedge	 portfolio.	 No	 changes	 in	 valuation	 techniques	 or	 inputs	 occurred	 during	 the	 year	 ended December	31,	2014.

Assets	and	liabilities	measured	at	fair	value	on	a	recurring	basis	are	summarized	below	(in	millions):

|  |  | Fair	Value	Measurements	as	of	December	31,	2014 | Fair	Value	Measurements	as	of	December	31,	2014 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | \t\t\t\tTotal | \t\t\t\tLevel\t1 | \t\t\t\tLevel\t2 | \t\t\t\tLevel\t3 |
| Short-term\tinvestments\t(1),\t(2): |  |  |  |  |
| Money\tmarket\tfunds | $954 | $954 | $— | $— |
| Government\tagency\tinvestments | 101 | — | 101 | — |
| Repurchase\tagreements | 46 | — | 46 | — |
| Corporate\tobligations | 3,927 | — | 3,927 | — |
| Bank\tnotes\t/\tCertificates\tof\tdeposit\t/\tTime\tdeposits | 1,281 | — | 1,281 | — |
|  | 6,309 | 954 | 5,355 | — |
| Restricted\tcash\tand\tshort\tterm\tinvestments\t(1) | 774 | 774 | — | — |
| Total | $7,083 | $1,728 | $5,355 | $— |

(1) Unrealized	gains	or	losses	on	short-term	investments	and	restricted	cash	and	short-term	investments	are	recorded	in	accumulated	other	comprehensive	loss	at	each measurement	date.

(2) The	Company's	short-term	investments	mature	in	one	year	or	less	except	for	$1.1	billion	of	corporate	obligations	and	$575	million	of	bank	notes/certificates	of deposit/time	deposits.

There	were	no	Level	1	to	Level	2	transfers	during	the	year	ended	December	31,	2014.

|  |  | Fair	Value	Measurements	as	of	December	31,	2013 | Fair	Value	Measurements	as	of	December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | \t\t\t\tTotal | \t\t\t\tLevel\t1 | \t\t\t\tLevel\t2 | \t\t\t\tLevel\t3 |
| Short-term\tinvestments\t(1),\t(2): |  |  |  |  |
| Money\tmarket\tfunds | $3,071 | $3,071 | $— | $— |
| Government\tagency\tinvestments | 1,512 | — | 1,512 | — |
| Repurchase\tagreements | 170 | — | 170 | — |
| Corporate\tobligations | 2,750 | — | 2,750 | — |
| Bank\tnotes\t/\tCertificates\tof\tdeposit\t/\tTime\tdeposits | 608 | — | 608 | — |
|  | 8,111 | 3,071 | 5,040 | — |
| Restricted\tcash\tand\tshort\tterm\tinvestments\t(1) | 1,035 | 979 | 56 | — |
| Fuel\tderivative\tcontracts,\tnet\t(1) | 109 | — | 109 | — |
| Total | $9,255 | $4,050 | $5,205 | $— |

(1) Unrealized	gains	or	losses	on	short-term	investments,	restricted	cash	and	short-term	investments	and	derivatives	qualifying	for	hedge	accounting	are	recorded	in accumulated	other	comprehensive	income	(loss)	at	each	measurement	date.

(2) The	Company's	short-term	investments	mature	in	one	year	or	less	except	for	$250	million	of	bank	notes/certificates	of	deposit/time	deposits,	$511	million	of	U.S. Government	agency	investments	and	$2.1	billion	of	corporate	obligations.

A	$56	million	Level	1	restricted	money	market	security	was	liquidated	in	August	2013.	The	cash	proceeds	were	subsequently	reinvested	in	a	Level	2	U.S.	Treasury Obligation.	American's	policy	regarding	the	recording	of	transfers	between	levels	is	to	reflect	any	such	transfers	at	the	end	of	the	reporting	period.

As	of	December	31,	2014,	$804	million	of	the	Company's	cash	and	short-term	investments	balances	were	held	in	foreign	bank	accounts,	of	which	approximately $656	million	was	held	in	Venezuelan	bolivars.	This	balance	includes	approximately	$621	million	valued	at	6.3	bolivars	and	approximately	$35	million	valued	at	12.0 bolivars,	with	the	rate	depending	on	the	date	the	Company	submitted	its	repatriation	request	to	the	Venezuelan	government.	These	rates	are	materially	more	favorable than	the	exchange	rates	currently	prevailing	for	other	transactions	conducted	outside	of	the	Venezuelan	government's	currency	exchange	system	that	the	Company participates	in.	The	Company's	cash	balance	held	in	Venezuelan	bolivars	decreased	$54	million	from	the	December	31,	2013	balance	of	$710	million	primarily	due	to $88	million	in	cash	repatriations	and	$30	million	in	foreign	currency	losses	as	described	below,	partially	offset	by	additional	cash	proceeds	from	ticket	sales	in	early 2014.	In	the	second	and	third	quarters	of	2014,	the	Company	repatriated	$65	million	including	$31	million	valued	at	6.3	bolivars	to	the	dollar	and	$34	million	valued	at 10.6	bolivars	to	the	dollar.	In	the	fourth	quarter	of	2014,	the	Company	incurred	an	$11	million	foreign	currency	loss	related	to	the	receipt	of	$23	million	at	a	rate	of	6.3 bolivars	to	the	dollar	for	one	of	its	2012	repatriation	requests	originally	valued	at	a	rate	of	4.3	bolivars	to	the	dollar.	Accordingly,	the	Company	revalued	its	remaining pending	2012	repatriation	requests	from	4.3	to	6.3	bolivars	to	the	dollar	resulting	in	additional	foreign	currency	losses	of	$19	million.	In	total,	the	Company	recognized a	$30	million	special	charge	for	these	foreign	currency	losses	in	the	fourth	quarter	of	2014.	During	2014,	the	Company	significantly	reduced	capacity	in	this	market	and is	no	longer	accepting	bolivars	as	payment	for	airline	tickets.	The	Company	is	continuing	to	work	with	Venezuelan	authorities	regarding	the	timing	and	exchange	rate applicable	to	the	repatriation	of	funds	held	in	local	currency.	The	Company	is	monitoring	this	situation	closely	and	continues	to	evaluate	its	holdings	of	Venezuelan bolivars	 for	 additional	 foreign	 currency	 losses,	 which	 could	 be	 material,	 particularly	 in	 light	 of	 the	 uncertainty	 posed	 by	 the	 new	 foreign	 exchange	 regulations announced	in	mid-February	2015	and	the	continued	deterioration	of	economic	conditions	in	Venezuela.	See	Part	I,	Item	1A.	Risk	Factors	–	"We	operate	a	global business	with	international	operations	that	are	subject	to	economic	and	political	instability	and	have	been,	and	in	the	future	may	continue	to	be,	adversely	affected	by numerous	events,	circumstances	or	government	actions	beyond	our	control"	for	unaudited	additional	discussion	of	this	and	other	currency	risks.

# Fair	Value	of	Debt

The	fair	value	of	the	Company's	long-term	debt	was	estimated	using	quoted	market	prices	or	discounted	cash	flow	analyses,	based	on	the	Company's	current estimated	incremental	borrowing	rates	for	similar	types	of	borrowing	arrangements.	If	the	Company's	long-term	debt	was	measured	at	fair	value,	it	would	have	been classified	as	Level	2	in	the	fair	value	hierarchy.

The	carrying	value	and	estimated	fair	value	of	the	Company's	long-term	debt,	including	current	maturities,	were	as	follows	(in	millions):

|  | December	31,	2014 | December	31,	2014 | December	31,	2013 | December	31,	2013 |
| :--- | :--- | :--- | :--- | :--- |
|  | Carrying\nValue | Fair\nValue | Carrying\nValue | Fair\nValue |
| Long-term\tdebt,\tincluding\tcurrent\tmaturities | $17,904 | $18,542 | $16,799 | $17,035 |

# 13.		Retirement	Benefits

The	Company	sponsors	defined	benefit	and	defined	contribution	pension	plans	for	eligible	employees.	The	defined	benefit	plans	provide	benefits	for	participating employees	based	on	years	of	service	and	average	compensation	for	a	specified	period	of	time	before	retirement.	The	Company	uses	a	December	31	measurement	date for	all	of	its	defined	benefit	plans.	In	addition,	the	Company	provides	certain	postemployment	benefits	to	its	employees.	These	benefits	include	disability-related	and workers'	compensation	benefits	for	certain	employees.	The	Company	accrues	for	the	cost	of	such	benefit	expenses	once	an	appropriate	triggering	event	has	occurred.

# Year	End	Information

The	following	table	provides	a	reconciliation	of	the	changes	in	the	pension	and	retiree	medical	and	other	benefit	obligations	and	fair	value	of	assets	for	the	years ended	December	31,	2014	and	2013,	and	a	statement	of	funded	status	as	of	December	31,	2014	and	2013	(in	millions):

|  | Pension	Benefits<br>								2014 | 2013 | Retiree	Medical	and	Other<br>Benefits<br>								2014 | 2013 |
| :--- | :--- | :--- | :--- | :--- |
| Reconciliation\tof\tbenefit\tobligation: |  |  |  |  |
| Obligation\tat\tJanuary\t1 | $14,899 | $15,895 | $1,385 | $1,412 |
| Service\tcost | 3 | 3 | 1 | — |
| Interest\tcost | 746 | 654 | 61 | 50 |
| Actuarial\t(gain)\tloss | 2,573 | (1,152) | (39) | (82) |
| Plan\tamendments | — | — | 33 | — |
| Curtailments | — | 2 | — | — |
| Settlements | (20) | (1) | — | — |
| Benefit\tpayments | (607) | (575) | (112) | (116) |
| US\tAirways\tplan\tliability\t(Assumed) | — | 73 | (4) | 121 |
| Obligation\tat\tDecember\t31 | $17,594 | $14,899 | $1,325 | $1,385 |
| Reconciliation\tof\tfair\tvalue\tof\tplan\tassets: |  |  |  |  |
| Fair\tvalue\tof\tplan\tassets\tat\tJanuary\t1 | $10,057 | $9,065 | $239 | $211 |
| Actual\treturn\ton\tplan\tassets | 746 | 1,026 | 11 | 41 |
| Employer\tcontributions | 810 | 494 | 106 | 103 |
| Settlements | (20) | (1) | — | — |
| Benefit\tpayments | (607) | (575) | (112) | (116) |
| US\tAirways\tplan\tassets\t(Assumed) | — | 48 | — | — |
| Fair\tvalue\tof\tplan\tassets\tat\tDecember\t31 | 10,986 | 10,057 | 244 | 239 |
| Funded\tstatus\tat\tDecember\t31 | $(6,608) | $(4,842) | $(1,081) | $(1,146) |
| Amounts\trecognized\tin\tthe\tconsolidated\tbalance\tsheets: |  |  |  |  |
| Current\tliability | $10 | $31 | $117 | $129 |
| Noncurrent\tliability\t(1) | 6,598 | 4,811 | 964 | 1,017 |
|  | $6,608 | $4,842 | $1,081 | $1,146 |
| Amounts\trecognized\tin\tother\tcomprehensive\tincome: |  |  |  |  |
| Net\tactuarial\tloss\t(gain) | $4,961 | $2,395 | $(199) | $(176) |
| Prior\tservice\tcost\t(credit)\t(1) | 245 | 273 | (1,326) | (1,592) |
|  | $5,206 | $2,668 | $(1,525) | $(1,768) |
| US\tAirways\tplan\tother\tcomprehensive\tloss | — | — | — | (12) |
|  | $5,206 | $2,668 | $(1,525) | $(1,780) |

|  | 2014 | 2013 | 2014 | 2013 |
| :--- | :--- | :--- | :--- | :--- |
| For\tplans\twith\taccumulated\tbenefit\tobligations\texceeding\tthe\tfair\tvalue\tof\tplan |  |  |  |  |
| assets: |  |  |  |  |
| Projected\tbenefit\tobligation\t(PBO) | $17,560 | $14,869 | $— | $— |
| Accumulated\tbenefit\tobligation\t(ABO) | 17,548 | 14,858 | — | — |
| Accumulated\tpostretirement\tbenefit\tobligation\t(APBO) | — | — | 1,324 | 1,385 |
| Fair\tvalue\tof\tplan\tassets | 10,950 | 10,024 | 244 | 239 |
| ABO\tless\tfair\tvalue\tof\tplan\tassets | 6,598 | 4,834 | — | — |

The	following	tables	provide	the	components	of	net	periodic	benefit	cost	for	the	years	ended	December	31,	2014,	2013	and	2012	(in	millions):

|  | 2014 | Pension	Benefits<br>				2013 | 2012 | 2014 | Retiree	Medical	and	Other	Benefits<br>				2013 | 2012 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Components\tof\tnet\tperiodic\tbenefit\tcost: |  |  |  |  |  |  |
| Defined\tbenefit\tplans: |  |  |  |  |  |  |
| Service\tcost | $3 | $3 | $341 | $1 | $— | $46 |
| Interest\tcost | 746 | 654 | 729 | 61 | 50 | 128 |
| Expected\treturn\ton\tassets | (786) | (720) | (676) | (19) | (16) | (17) |
| Curtailments | — | 2 | 58 | — | — | (124) |
| Settlements | 4 | (1) | — | — | — | — |
| Amortization\tof: |  |  |  |  |  |  |
| Prior\tservice\tcost\t(1) | 28 | 28 | 10 | (244) | (251) | (82) |
| Unrecognized\tnet\tloss\t(gain) | 43 | 90 | 211 | (8) | (9) | (9) |
| Net\tperiodic\tbenefit\tcost\tfor\tdefined\tbenefit\tplans | 38 | 56 | 673 | (209) | (226) | (58) |
| Defined\tcontribution\tplans | 546 | 328 | 218 | N/A | N/A | N/A |
|  | $584 | $384 | $891 | $(209) | $(226) | $(58) |

(1) The	2014	prior	service	cost	does	not	include	amortization	of	$14	million	related	to	other	post-employment	benefits.

The	estimated	amount	of	unrecognized	net	loss	for	the	defined	benefit	pension	plans	that	will	be	amortized	from	accumulated	other	comprehensive	income	(loss)	into net	periodic	benefit	cost	over	the	next	fiscal	year	is	$111	million.

The	estimated	amount	of	unrecognized	net	gain	for	the	retiree	medical	and	other	postretirement	plans	that	will	be	amortized	from	accumulated	other	comprehensive income	(loss)	into	net	periodic	benefit	cost	over	the	next	fiscal	year	is	$7	million.

|  | 2014 | 2013 | 2014 | 2013 |
| :--- | :--- | :--- | :--- | :--- |
| Weighted-average\tassumptions\tused\tto\tdetermine\tbenefit\tobligations\tas |  |  |  |  |
| of\tDecember\t31: |  |  |  |  |
| Discount\trate | 4.30% | 5.10% | 4.00% | 4.71% |
| Weighted-average\tassumptions\tused\tto\tdetermine\tnet\tperiodic\tbenefit |  |  |  |  |
| cost\tfor\tthe\tyears\tended\tDecember\t31: |  |  |  |  |
| Discount\trate\t1/1\t–\t12/31 | 5.10% | 4.20% | 4.74% | 3.80% |
| Expected\treturn\ton\tplan\tassets | 8.00% | 8.00% | 8.00% | 8.00% |

As	of	December	31,	2014,	the	Company's	estimate	of	the	long-term	rate	of	return	on	plan	assets	was	8.00%	based	on	the	target	asset	allocation.	Expected	returns	on longer	duration	bonds	are	based	on	yields	to	maturity	of	the	bonds	held	at	year-end.	Expected	returns	on	other	assets	are	based	on	a	combination	of	long-term	historical returns,	actual	returns	on	plan	assets	achieved	over	the	last	ten	years,	current	and	expected	market	conditions,	and	expected	value	to	be	generated	through	active management,	currency	overlay	and	securities	lending	programs.	The	Company's	annualized	ten-year	rate	of	return	on	plan	assets	as	of	December	31,	2014,	was approximately	8%.

The	objectives	of	the	Company's	investment	policies	are	to:	maintain	sufficient	income	and	liquidity	to	pay	retirement	benefits;	produce	a	long-term	rate	of	return that	meets	or	exceeds	the	assumed	rate	of	return	for	plan	assets;	limit	the	volatility	of	asset	performance	and	funded	status;	and	diversify	assets	among	asset	classes	and investment	managers.

Based	on	these	investment	objectives,	a	long-term	strategic	asset	allocation	has	been	established.	This	strategic	allocation	seeks	to	balance	the	potential	benefit	of improving	funded	position	with	the	potential	risk	that	the	funded	position	would	decline.	The	current	strategic	target	asset	allocation	is	as	follows:

Each	asset	class	is	actively	managed	and,	historically,	the	plans'	assets	have	produced	returns,	net	of	management	fees,	in	excess	of	the	expected	rate	of	return	over the	last	ten	years.	Public	equity	and	emerging	market	fixed	income	securities	are	used	to	provide	diversification	and	are	expected	to	generate	higher	returns	over	the	long- term	than	longer	duration	U.S.	bonds.	Public	stocks	are	managed	using	a	value	investment	approach	in	order	to	participate	in	the	returns	generated	by	stocks	in	the	long- term,	while	reducing	year-over-year	volatility.	Longer	duration	U.S.	bonds	are	used	to	partially	hedge	the	assets	from	declines	in	interest	rates.	Alternative	(private) investments	are	used	to	provide	expected	returns	in	excess	of	the	public	markets	over	the	long-term.	Additionally,	the	Company	engages	currency	overlay	managers	in an	attempt	to	increase	returns	by	protecting	non-U.S.	dollar	denominated	assets	from	a	rise	in	the	relative	value	of	the	U.S.	dollar.	The	Company	also	participates	in securities	lending	programs	to	generate	additional	income	by	loaning	plan	assets	to	borrowers	on	a	fully	collateralized	basis.	These	programs	are	subject	to	market	risk.

Investments	in	securities	traded	on	recognized	securities	exchanges	are	valued	at	the	last	reported	sales	price	on	the	last	business	day	of	the	year.	Securities	traded	in the	over-the-counter	market	are	valued	at	the	last	bid	price.	The	money	market	fund	is	valued	at	fair	value	which	represents	the	net	asset	value	of	the	shares	of	such	fund as	of	the	close	of	business	at	the	end	of	the	period.	Investments	in	limited	partnerships	are	carried	at	estimated	net	asset	value	as	determined	by	and	reported	by	the general	 partners	 of	 the	 partnerships	 and	 represent	 the	 proportionate	 share	 of	 the	 estimated	 fair	 value	 of	 the	 underlying	 assets	 of	 the	 limited	 partnerships. Common/collective	trusts	are	valued	at	net	asset	value	based	on	the	fair	values	of	the	underlying	investments	of	the	trusts	as	determined	by	the	sponsor	of	the	trusts.	The 103-12	investment	trust	is	valued	at	net	asset	value	which	is	determined	by	the	issuer	at	the	end	of	each	month	and	is	based	on	the	aggregate	fair	value	of	trust	assets	less liabilities,	divided	by	the	number	of	units	outstanding.	No	changes	in	valuation	techniques	or	inputs	occurred	during	the	year.

The	fair	value	of	the	Company's	pension	plan	assets	at	December	31,	2014	and	2013,	by	asset	category,	are	as	follows	(in	millions):

|  |  | Fair	Value	Measurements	as	of	December	31,	2014 | Fair	Value	Measurements	as	of	December	31,	2014 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Quoted\tPrices\tin | Significant | Significant |  |
|  | Active\tMarkets\tfor | Observable | Unobservable |  |
| Asset\tCategory | Identical\tAssets\n(Level\t1) | Inputs\n(Level\t2) | Inputs\n(Level\t3) | Total |
| Cash\tand\tcash\tequivalents | $332 | $— | $— | $332 |
| Equity\tsecurities: |  |  |  |  |
| International\tmarkets\t(a)\t(b) | 2,943 | — | — | 2,943 |
| Large-cap\tcompanies\t(b) | 2,488 | — | — | 2,488 |
| Mid-cap\tcompanies\t(b) | 362 | — | — | 362 |
| Small-cap\tcompanies\t(b) | 21 | — | — | 21 |
| Mutual\tfunds\t–\tUS\tAirways\tplan\t(g) | 51 | — | — | 51 |
| Fixed\tIncome: |  |  |  |  |
| Corporate\tbonds\t(c) | — | 2,384 | — | 2,384 |
| Government\tSecurities\t(d) | — | 1,184 | — | 1,184 |
| U.S.\tmunicipal\tsecurities | — | 65 | — | 65 |
| Alternative\tinstruments: |  |  |  |  |
| Private\tequity\tpartnerships\t(e) | — | — | 818 | 818 |
| Common/collective\tand\t103-12\tinvestment\ttrusts\t(f) | — | 240 | — | 240 |
| Insurance\tgroup\tannuity\tcontracts | — | — | 2 | 2 |
| Dividend\tand\tinterest\treceivable | 52 | — | — | 52 |
| Due\tto/from\tbrokers\tfor\tsale\tof\tsecurities\t–\tnet | 39 | — | — | 39 |
| Other\tassets\t–\tnet | 5 | — | — | 5 |
| Total | $6,293 | $3,873 | $820 | $10,986 |

a) Holdings	are	diversified	as	follows:	18%	United	Kingdom,	11%	Japan,	10%	France,	7%	Switzerland,	7%	Netherlands,	6%	Republic	of	Korea,	13%	emerging markets	and	the	remaining	28%	with	no	concentration	greater	than	5%	in	any	one	country.

b) There	are	no	significant	concentrations	of	holdings	by	company	or	industry.

c) Includes	approximately	74%	investments	in	corporate	debt	with	a	Standard	and	Poor's	(S&P)	rating	lower	than	A	and	26%	investments	in	corporate	debt	with	an S&P	rating	A	or	higher.	Holdings	include	81%	U.S.	companies,	16%	international	companies	and	3%	emerging	market	companies.

d) Includes	approximately	73%	investments	in	U.S.	domestic	government	securities	and	27%	in	emerging	market	government	securities.	There	are	no	significant foreign	currency	risks	within	this	classification.

e) Includes	limited	partnerships	that	invest	primarily	in	U.S.	(91%)	and	European	(9%)	buyout	opportunities	of	a	range	of	privately	held	companies.	The	Master Trust	does	not	have	the	right	to	redeem	its	limited	partnership	investment	at	its	net	asset	value.	Instead,	the	Master	Trust	receives	distributions	as	the	underlying assets	are	liquidated.	It	is	estimated	that	the	underlying	assets	of	these	funds	will	be	gradually	liquidated	over	the	next	one	to	ten	years.	Additionally,	the	Master Trust	has	future	funding	commitments	of	approximately	$403	million	over	the	next	ten	years.

f) Investment	includes	74%	in	an	emerging	market	103-12	investment	trust	with	investments	in	emerging	country	equity	securities,	14%	in	Canadian	segregated balanced	value,	income	growth	and	diversified	pooled	funds	and	12%	in	a	common/collective	trust	investing	in	securities	of	smaller	companies	located	outside the	U.S.,	including	developing	markets.	Requests	for	withdrawals	must	meet	specific	requirements	with	advance	notice	of	redemption	preferred.

g) Investment	includes	mutual	funds	invested	46%	in	equity	securities	of	large-cap,	mid-cap	and	small-cap	US	companies,	35%	in	US	treasuries	and	corporate	bonds and	18%	in	equity	securities	of	international	companies.

|  |  | Fair	Value	Measurements	as	of	December	31,	2013 | Fair	Value	Measurements	as	of	December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Quoted\tPrices\tin | Significant | Significant |  |
|  | Active\tMarkets\tfor | Observable | Unobservable |  |
| Asset\tCategory | Identical\tAssets\n(Level\t1) | Inputs\n(Level\t2) | Inputs\n(Level\t3) | Total |
| Cash\tand\tcash\tequivalents | $360 | $— | $— | $360 |
| Equity\tsecurities: |  |  |  |  |
| International\tmarkets\t(a)\t(b) | 2,908 | — | — | 2,908 |
| Large-cap\tcompanies\t(b) | 2,196 | — | — | 2,196 |
| Mid-cap\tcompanies\t(b) | 227 | — | — | 227 |
| Small-cap\tcompanies\t(b) | 18 | — | — | 18 |
| Mutual\tfunds\t–\tUS\tAirways\tplan\t(g) | 48 | — | — | 48 |
| Fixed\tIncome: |  |  |  |  |
| Corporate\tbonds\t(c) | — | 2,067 | — | 2,067 |
| Government\tSecurities\t(d) | — | 1,035 | — | 1,035 |
| U.S.\tmunicipal\tsecurities | — | 55 | — | 55 |
| Alternative\tinstruments: |  |  |  |  |
| Private\tequity\tpartnerships\t(e) | — | — | 848 | 848 |
| Common/collective\tand\t103-12\tinvestment\ttrusts\t(f) | — | 245 | — | 245 |
| Insurance\tgroup\tannuity\tcontracts | — | — | 2 | 2 |
| Dividend\tand\tinterest\treceivable | 51 | — | — | 51 |
| Due\tto/from\tbrokers\tfor\tsale\tof\tsecurities\t–\tnet | (10) | — | — | (10) |
| Other\tassets\t–\tnet | 7 | — | — | 7 |
| Total | $5,805 | $3,402 | $850 | $10,057 |

a) Holdings	are	diversified	as	follows:	19%	United	Kingdom,	10%	Japan,	11%	France,	7%	Switzerland,	6%	Germany,	5%	Netherlands,	6%	Republic	of	Korea, 15%	emerging	markets	and	the	remaining	21%	with	no	concentration	greater	than	5%	in	any	one	country.

c) Includes	approximately	76%	investments	in	corporate	debt	with	a	Standard	and	Poor's	(S&P)	rating	lower	than	A	and	24%	investments	in	corporate	debt	with	an S&P	rating	A	or	higher.	Holdings	include	80%	U.S.	companies,	17%	international	companies	and	3%	emerging	market	companies.

e) Includes	limited	partnerships	that	invest	primarily	in	U.S.	(92%)	and	European	(8%)	buyout	opportunities	of	a	range	of	privately	held	companies.	The	Master Trust	does	not	have	the	right	to	redeem	its	limited	partnership	investment	at	its	net	asset	value.	Instead,	the	Master	Trust	receives	distributions	as	the	underlying assets	are	liquidated.	It	is	estimated	that	the	underlying	assets	of	these	funds	will	be	gradually	liquidated	over	the	next	one	to	ten	years.	Additionally,	the	Master Trust	has	future	funding	commitments	of	approximately	$376	million	over	the	next	ten	years.

f) Investment	includes	74%	in	an	emerging	market	103-12	investment	trust	with	investments	in	emerging	country	equity	securities,	14%	in	Canadian	segregated balanced	value,	income	growth	and	diversified

pooled	funds	and	12%	in	a	common/collective	trust	investing	in	securities	of	smaller	companies	located	outside	the	U.S.,	including	developing	markets.	Requests for	withdrawals	must	meet	specific	requirements	with	advance	notice	of	redemption	preferred.

g) Investment	includes	mutual	funds	invested	49%	in	equity	securities	of	large-cap,	mid-cap	and	small-cap	US	companies,	30%	in	US	treasuries	and	corporate	bonds and	21%	in	equity	securities	of	international	companies.

Changes	in	fair	value	measurements	of	Level	3	investments	during	the	year	ended	December	31,	2014,	were	as	follows	(in	millions):

|  | Private	Equity<br>Partnerships | Insurance	Group<br>Annuity	Contracts |
| :--- | :--- | :--- |
| Beginning\tbalance\tat\tDecember\t31,\t2013 | $848 | $2 |
| Actual\treturn\ton\tplan\tassets: |  |  |
| Relating\tto\tassets\tstill\theld\tat\tthe\treporting\tdate | (38) | — |
| Relating\tto\tassets\tsold\tduring\tthe\tperiod | 158 | — |
| Purchases | 148 | — |
| Sales | (298) | — |
| Ending\tbalance\tat\tDecember\t31,\t2014 | $818 | $2 |

|  | Private	Equity<br>Partnerships | Insurance	Group<br>Annuity	Contracts |
| :--- | :--- | :--- |
| Beginning\tbalance\tat\tDecember\t31,\t2012 | $914 | $2 |
| Actual\treturn\ton\tplan\tassets: |  |  |
| Relating\tto\tassets\tstill\theld\tat\tthe\treporting\tdate | (21) | — |
| Relating\tto\tassets\tsold\tduring\tthe\tperiod | 99 | — |
| Purchases | 85 | — |
| Sales | (229) | — |
| Ending\tbalance\tat\tDecember\t31,\t2013 | $848 | $2 |

The	fair	value	of	the	Company's	other	postretirement	benefit	plan	assets	at	December	31,	2014	by	asset	category,	were	as	follows	(in	millions):

|  |  | Fair	Value	Measurements	as	of	December	31,	2014 | Fair	Value	Measurements	as	of	December	31,	2014 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Quoted\tPrices\tin | Significant | Significant |  |
|  | Active\tMarkets\tfor | Observable | Unobservable |  |
| Asset\tCategory | Identical\tAssets\n(Level\t1) | Inputs\n(Level\t2) | Inputs\n(Level\t3) | Total |
| Money\tmarket\tfund | $2 | $— | $— | $2 |
| Mutual\tfunds\t–\tAMR\tClass | — | 242 | — | \t 242 |
| Total | $2 | $242 | $— | $244 |

|  |  | Fair	Value	Measurements	as	of	December	31,	2013 | Fair	Value	Measurements	as	of	December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Quoted\tPrices\tin | Significant | Significant |  |
|  | Active\tMarkets\tfor | Observable | Unobservable |  |
| Asset\tCategory | Identical\tAssets\n(Level\t1) | Inputs\n(Level\t2) | Inputs\n(Level\t3) | Total |
| Money\tmarket\tfund | $4 | $— | $— | $4 |
| Mutual\tfunds\t–\tAMR\tClass | — | 235 | — | \t 235 |
| Total | $4 | $235 | $— | $239 |

Investments	in	the	AMR	Class	shares	of	the	mutual	funds	managed	by	American	Beacon	Advisors,	Inc	(ABA)	are	valued	by	quoted	prices	on	the	active	market, which	is	fair	value	and	represents	the	net	asset	value	of	the	shares	of	such	funds	as	of	the	close	of	business	at	the	end	of	the	period.	AMR	Class	shares	are	offered without	a	sales	charge	to	participants	and	have	the	lowest	expense	ratio	among	the	Beacon	Funds.	Purchases	are	restricted	to	retirement	benefit	plans	of	ABA	and	AMR and	its	affiliates,	resulting	in	a	fair	value	classification	of	Level	2.	Investments	include	approximately	28%	of	investments	in	non-U.S.	common	stocks	in	2014	and	27% of	investments	in	non-U.S.	common	stocks	in	2013.	Net	asset	value	is	based	on	the	fair	market	value	of	the	funds'	underlying	assets	and	liabilities	at	the	date	of determination.

   A	one	percentage	point	change	in	the	assumed	health	care	cost	trend	rates	would	have	the	following	effects	(in	millions):

The	Company	is	required	to	make	minimum	contributions	to	its	defined	benefit	pension	plans	under	the	minimum	funding	requirements	of	the	Employee	Retirement Income	Security	Act	of	1974	(ERISA),	the	Pension	Funding	Equity	Act	of	2004,	the	Pension	Protection	Act	of	2006,	the	Pension	Relief	Act	of	2010	and	the	Moving Ahead	for	Progress	in	the	21 	Century	Act	of	2012.	In	2014,	the	Company	has	made	its	aggregate	minimum	required	contributions	for	2014	of	$171	million,	and	has made	$639	million	in	supplemental	contributions	to	its	pension	plans,	above	and	beyond	the	$171	million	of	minimum	required	contributions. st

Based	on	current	funding	assumptions,	the	Company	has	no	minimum	required	contributions	until	2019.	Currently,	American's	minimum	funding	obligation	for	its pension	plans	is	subject	to	temporary	favorable	rules	that	are	scheduled	to	expire	at	the	end	of	2017.	Upon	expiration	of	these	rules,	American's	funding	obligations	are likely	to	increase	materially.

The	following	benefit	payments,	which	reflect	expected	future	service	as	appropriate,	are	expected	to	be	paid	(in	millions):

|  | 2015 | 2016 | 2017 | 2018 | 2019 | 2020-2024 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Pension | $645 | $667 | $699 | $735 | $776 | $4,535 |
| Retiree\tmedical\tand\tother | \t 117 | \t 111 | \t 106 | \t 100 | 95 | 414 |

# Modifications	to	Retirement	and	Life	Insurance	Benefits

Effective	November	1,	2012,	the	Company's	defined	benefit	pension	plans	were	frozen	and	the	Company	began	providing	enhanced	benefits	under	the	$uper	$aver 401(k)	Plan	for	certain	groups.	Effective	November	1,	2012,	the	Company	matches	all	non-flight	crew	employee	contributions	up	to	5.5%	of	eligible	earnings.	Effective November	1,	2012	through	December	31,	2013,	pilots	received	employer	contributions	of	14%	of	eligible	earnings	and	flight	attendants	received	matching	contributions of	up	to	5.5%	of	eligible	earnings.	With	the	ratification	of	a	new	CBA	by	pilots	on	December	9,	2013,	effective	January	1,	2014,	pilots	receive	employer	contributions	of 16%	of	eligible	earnings.	With	the	2013	Conditional	Labor	Agreement,	effective	January	1,	2014,	flight	attendants	on	the	American	seniority	list	as	of	April	12,	2012 receive	age-based	employer	contributions	(under	age	40	–	5.5%	of	eligible	earnings;	age	40	to	49	–	6.75%	of	eligible	earnings;	and	age	50	and	above	–	9.9%	of	eligible earnings)	and	flight	attendants	hired	after	April	12,	2012,	receive	employer	contributions	of	3%	of	eligible	earnings	plus	company	matching	contributions	of	up	to	2.5% of	eligible	earnings.

In	December	2012,	the	Pilot	A	Plan,	a	defined	benefit	plan,	was	amended	to	remove	the	lump-sum	option	and	the	installment	option	forms	of	benefit	effective December	31,	2012.	A	small	group	of	American	pilots	is	appealing	the	Bankruptcy	Court's	decision	authorizing	American	to	eliminate	the	lump	sum	option	and installment	option	forms	of	benefit.	This	is	the	same	group	of	pilots	that	are	appealing	the	Bankruptcy	Court's	decisions	authorizing	American	to	reject	the	pilot	CBA and	approve	the	new	pilot	CBA.	The	U.S.	District	Court	for	the	Southern	District	of	New	York	upheld	the	Bankruptcy	Court	decision.	The	appeals	currently	are	pending in	the	U.S.	Court	of	Appeals	for	the	Second	Circuit.

The	Pilot	B	Plan,	a	defined	contribution	plan,	was	terminated	on	November	30,	2012.	With	the	exception	of	a	small	residual	balance	to	cover	final	plan	expenses,	the Company	has	distributed	all	of	the	funds	in	the	plan.

On	July	6,	2012,	the	Company	commenced	an	adversary	proceeding	in	the	Bankruptcy	Court	seeking	a	determination	on	the	issue	of	vesting	for	former	employees who	retired	before	November	1,	2012	and	were	eligible	for	certain	retiree	medical	coverage.	The	Bankruptcy	Court	granted	in	part	and	denied	in	part	the	Company's motion	for	summary	judgment	concerning	vesting.

As	a	result	of	the	modifications	to	the	retirement	benefits	as	discussed	above,	a	portion	of	the	pension	and	postretirement	benefits	liability,	primarily	relating	to	retiree medical	and	other	benefits,	was	classified	as	liabilities	subject	to	compromise	as	of	December	31,	2012.	This	amount	was	reinstated	upon	emergence	since	there	was	no resolution	in	the	Chapter	11	Cases.

# Curtailment	and	Plan	Amendment	in	the	Third	Quarter	of	2012

In	accordance	with	ASC	715	"Retirement	Benefits"	(ASC	715),	in	the	third	quarter	of	2012,	the	Company	remeasured	its	defined	benefit	pension	and	retiree	medical plans	as	a	result	of	modifications	to	its	retirement	plans	and	reductions	in	certain	work	groups	(see	above	and	Note	2	to	AAG's	consolidated	financial	statements).	The Company	updated	its	significant	actuarial	assumptions	used	for	the	remeasurements	including	the	discount	rate,	which	was	lowered	to	4.10%	and	3.80%	for	the	defined benefit	pension	plans	and	retiree	medical	plans,	respectively.

The	remeasurement	of	the	defined	benefit	plans	resulted	in	an	actuarial	loss	of	$1.9	billion	offset	by	a	curtailment	gain	of	$1.8	billion.	In	addition,	a	loss	of	$58 million,	representing	unamortized	prior	service	cost	as	of	the	remeasurement	date	of	the	frozen	defined	benefit	plans,	is	included	as	a	component	of	reorganization	items, net.

Further,	as	a	result	of	modifications	to	its	retiree	medical	plans,	the	Company	recognized	a	negative	plan	amendment	of	$1.9	billion,	which	is	included	as	a component	of	actuarial	gain	arising	in	current	year	in	other

comprehensive	income	and	will	be	amortized	over	the	future	service	life	of	the	active	plan	participants	for	whom	the	benefit	was	eliminated,	or	approximately	eight years.	In	addition,	a	net	credit	of	$124	million,	representing	unamortized	prior	service	credits	of	$157	million	offset	by	a	curtailment	loss	of	$33	million,	is	included	as	a component	of	reorganization	items,	net.

# 14.		Accumulated	Other	Comprehensive	Income	(Loss)

The	components	of	accumulated	other	comprehensive	income	(loss)	are	as	follows	(in	millions):

|  | Pension	and<br>Retiree	Medical<br>Liability | Unrealized<br>Gain/(Loss)<br>on<br>Investments | Derivative<br>Financial<br>Instruments | Income<br>Tax<br>Benefit<br>(Expense) | Total |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tDecember\t31,\t2012 | $(2,322) | $(1) | $15 | $(672) | $(2,980) |
| Other\tcomprehensive\tincome\t(loss)\tbefore\treclassifications | 1,577 | — | 18 | (538) | 1,057 |
| Amounts\treclassified\tfrom\taccumulated\tother\tcomprehensive\tincome |  |  |  |  |  |
| (loss) | (142) | (1) | 34 | — | (109) |
| Net\tcurrent-period\tother\tcomprehensive\tincome\t(loss) | 1,435 | (1) | 52 | (538) | 948 |
| Balance\tat\tDecember\t31,\t2013 | (887) | (2) | 67 | (1,210) | (2,032) |
| Other\tcomprehensive\tincome\t(loss)\tbefore\treclassifications | (2,633) | — | (54) | — | (2,687) |
| Amounts\treclassified\tfrom\taccumulated\tother\tcomprehensive\tincome |  |  |  |  |  |
| (loss) | (163) | (3) | (4) | 330 | 160 |
| Net\tcurrent-period\tother\tcomprehensive\tincome\t(loss) | (2,796) | (3) | (58) | 330 | (2,527) |
| Balance\tat\tDecember\t31,\t2014 | $(3,683) | $(5) | $9 | $(880) | $(4,559) |

Reclassifications	out	of	accumulated	other	comprehensive	income	(loss)	for	the	years	ended	December	31,	2014	and	2013	are	as	follows	(in	millions):

| Details	about	accumulated	other	comprehensive<br>income	(loss)	components | Year	Ended	December	31,<br>2014 | 2013 | statement	where	net	income<br>(loss)	is	presented |
| :--- | :--- | :--- | :--- |
| Amortization\tof\tpension\tand\tretiree\tmedical\tliability: |  |  |  |
| Prior\tservice\tcost | $(202) | $(223) | Wages,\tsalaries\tand\tbenefits |
| Actuarial\tloss | 39 | 81 | Wages,\tsalaries\tand\tbenefits |
| Derivative\tfinancial\tinstruments: |  |  |  |
| Cash\tflow\thedges | (4) | 34 | Aircraft\tfuel\tand\trelated\ttaxes |
| Net\tunrealized\tchange\ton\tinvestments: |  |  |  |
| Net\tchange\tin\tvalue | (3) | — | Other,\tnet |
| Income\ttax\tbenefit\t(expense): |  |  |  |
| Reversal\tof\tnon-cash\ttax\tprovision | 330 | — | Income\ttax\tprovision\t(benefit) |
| Total\treclassifications\tfor\tthe\tperiod | $160 | $(108) |  |

During	2014,	the	Company	sold	its	portfolio	of	fuel	hedging	contracts	that	were	scheduled	to	settle	on	or	after	June	30,	2014.	In	connection	with	this	sale,	the Company	recorded	a	special	non-cash	tax	provision	of	$330	million	in	the	statement	of	operations	for	the	second	quarter	of	2014	that	reverses	the	non-cash	tax	provision which	was	recorded	in	OCI,	a	subset	of	stockholders'	equity,	principally	in	2009.	This	provision	represents	the	tax	effect	associated	with	gains	recorded	in	OCI principally	in	2009	due	to	a	net	increase	in	the	fair	value	of	the	Company's	fuel	hedging	contracts.	In	accordance	with	GAAP,	the	Company	retained	the	$330	million	tax provision	in	OCI	until	the	last	contract	was	settled	or	terminated.

The	Company	recognized	a	$538	million	non-cash	income	tax	benefit,	offset	by	a	$538	million	charge	to	other	comprehensive	income,	during	the	fourth	quarter	of 2013	related	to	gains	in	other	comprehensive	income.	See	Note	10	for	further	information.

Amounts	allocated	to	other	comprehensive	income	for	income	taxes	as	further	described	in	Note	10	will	remain	in	accumulated	other	comprehensive	income	(loss) until	the	Company	ceases	all	related	activities,	such	as	termination	of	the	pension	plan.

# 15.		Commitments,	Contingencies	and	Guarantees

# (a)	Aircraft	Acquisition	Commitments

AAG	had	total	aircraft	acquisition	commitments	as	of	December	31,	2014	as	follows:

|  | 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Airbus |  |  |  |  |  |  |  |
| A320\tFamily | 42 | 25 | \t 20 | \t — | \t — | — | 87 |
| A320neo | \t — | \t — | \t 10 | \t 25 | \t 25 | 40 | \t100 |
| A350\tXWB | \t — | \t — | 6 | \t 10 | 6 | — | 22 |
| Boeing |  |  |  |  |  |  |  |
| 737\tFamily | 18 | 20 | \t 20 | \t — | \t — | — | 58 |
| 737\tMAX | \t — | \t — | 3 | \t 17 | \t 20 | 60 | \t100 |
| 777-300\tER | 2 | 2 | \t — | \t — | \t — | — | 4 |
| 787\tFamily | 12 | 13 | \t 10 | 7 | \t — | — | 42 |
| Bombardier |  |  |  |  |  |  |  |
| CRJ900 | 18 | 20 | \t — | \t — | \t — | — | 38 |
| Embraer |  |  |  |  |  |  |  |
| ERJ175 | 24 | 24 | \t 12 | \t — | \t — | — | 60 |
| Total | \t116 | \t104 | \t 81 | \t 59 | \t 51 | 100 | \t511 |

As	of	December	31,	2014,	payments	for	the	above	aircraft	commitments	and	certain	engines	are	presented	in	the	table	below	(in	millions):

|  | 2015 | 2016 | 2017 | 2018 | 2019 | 2020	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Payments\tfor\tabove\taircraft\tcommitments\tand\tcertain\tengines\t(1) | $5,110 | $4,978 | $4,937 | $4,291 | $3,242 | $5,651 | $28,209 |

(1) These	amounts	are	net	of	purchase	deposits	currently	held	by	the	manufacturers	and	include	all	commitments	for	regional	aircraft.	American	has	granted	Boeing	a security	interest	in	its	purchase	deposits	with	Boeing.	The	Company's	purchase	deposits	totaled	$1.2	billion	as	of	December	31,	2014.

In	April	2014,	the	Company	exercised	its	option	to	purchase	and	terminated	its	existing	lease	financing	arrangements	with	respect	to	62	Airbus	A320	family	aircraft scheduled	to	be	delivered	between	the	first	quarter	of	2015	and	the	third	quarter	of	2017.	In	connection	with	the	Company's	exercise	of	such	option,	the	Company	also exercised	its	right	to	convert	firm	orders	for	30	Airbus	A320neo	aircraft,	scheduled	to	be	delivered	in	2021	and	2022,	to	options	to	acquire	such	aircraft.	The	table	above reflects	these	changes.

In	December	2014,	the	Company	exercised	its	right	under	its	purchase	agreement	with	Bombardier	to	convert	24	of	the	Company's	40	option	order	CRJ900	aircraft to	firm	orders	to	acquire	such	aircraft.

# (b)	Facility	and	support	commitments

The	Company	has	contracts	related	to	facility	construction	or	improvement	projects,	primarily	at	airport	locations	as	well	as	information	technology	support.	The contractual	obligations	related	to	these	contracts	are	presented	in	the	table	below	(in	millions):

|  | 2015 | 2016 | 2017 | 2018 | 2019 | 2020	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Facility\tconstruction\tor\timprovement\tcontracts | $166 | $6 | $ —\t\t\t\t $—\t\t\t\t $—\t\t\t\t $— | $ —\t\t\t\t $—\t\t\t\t $—\t\t\t\t $— | $ —\t\t\t\t $—\t\t\t\t $—\t\t\t\t $— | $ —\t\t\t\t $—\t\t\t\t $—\t\t\t\t $— | $172 |
| Information\ttechnology\tcontracts | \t 183 | \t 143 | \t 115 | \t 96 | \t 79 | 1 | \t 617 |

# (c)	Capacity	Purchase	Agreements	with	Third-Party	Regional	Carriers

As	of	December	31,	2014,	the	Company's	capacity	purchase	agreements	with	third-party	regional	carriers	had	expiration	dates	ranging	from	2015	to	2027,	with rights	of	American	or	US	Airways,	respectively,	to	extend	the	respective	terms	of	each	agreement.	See	Part	I,	Item	2.	Properties	for	unaudited	information	on	the	aircraft contractually	obligated	to	the	Company	under	such	capacity	purchase	agreements	with	third-party	regional	carriers.

The	Company	has	entered	 into	agreements	with	 the	 third-party	regional	carriers	 that	operate	certain	of	 their	aircraft	using	American's	or	US	Airways'	flight designator	codes.	American	or	US	Airways,	respectively,	controls	the	scheduling,	pricing,	reservations,	ticketing	and	seat	inventories	of	those	aircraft	and	retains	all revenues	associated	with	revenue	flights	by	those	aircraft.	American	or	US	Airways	pays	the	third-party	regional	carriers	an	amount,	as	defined	in	the	applicable agreement,	based	on	the	airlines'	costs	of	operating	those	flights	and	other	factors	intended	to	approximate	market	rates	for	those	services.	As	of	December	31,	2014,	the Company's	minimum	fixed	obligations	under	its	capacity	purchase	agreements	with	third-party	regional	airlines	were	as	follows	(approximately,	in	millions):

| 2015 | 2016 | 2017 | 2018 | 2019 | 2020	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| $1,584 | $1,616 | $1,479 | $1,197 | $1,066 | $3,102 | $10,044 |

(1) Represents	minimum	payments	under	capacity	purchase	agreements	with	 third-party	regional	carriers.	These	commitments	are	estimates	of	costs	based	on assumed	minimum	levels	of	flying	under	the	capacity	purchase	agreements	and	the	Company's	actual	payments	could	differ	materially.	These	obligations	also include	the	portion	of	the	Company's	future	obligations	related	to	aircraft	deemed	to	be	leased	in	the	amount	of	approximately	$492	million	in	2015,	$446	million in	2016,	$382	million	in	2017,	$316	million	in	2018,	$283	million	in	2019	and	$883	million	in	2020	and	thereafter.

# (d)	Operating	Leases

The	Company	leases	certain	aircraft,	engines	and	ground	equipment,	in	addition	to	the	majority	of	its	ground	facilities	and	terminal	space.	As	of	December	31,	2014, the	Company	had	477	aircraft	under	operating	leases,	with	remaining	terms	ranging	from	one	month	to	approximately	13	years.	Airports	are	utilized	for	flight	operations under	lease	arrangements	with	the	municipalities	or	agencies	owning	or	controlling	such	airports.	Substantially	all	leases	provide	that	the	lessee	must	pay	taxes, maintenance,	insurance	and	certain	other	operating	expenses	applicable	to	the	leased	property.	Some	leases	also	include	renewal	and	purchase	options.

As	of	December	31,	2014,	obligations	under	noncancellable	operating	leases	for	future	minimum	lease	payments	were	as	follows	(in	millions):

|  | 2015 | 2016 | 2017 | 2018 | 2019 | 2020	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Future\tminimum\tlease\tpayments\t(1) | $2,110 | $1,917 | $1,809 | $1,558 | $1,399 | $5,721 | $14,514 |

(1) As	of	December	31,	2014,	$267	million	is	included	on	the	accompanying	balance	sheet	in	accrued	liabilities	and	deferred	gains	and	credits,	net	relating	to	rent expense	being	recorded	in	advance	of	future	operating	lease	payments.

# (e)	Off-Balance	Sheet	Arrangements

# Aircraft

AAG	has	214	owned	aircraft	and	138	leased	aircraft	which	were	financed	with	pass	through	trust	certificates,	or	EETCs,	issued	by	pass	through	trusts.	These	trusts are	off-balance	sheet	entities,	the	primary	purpose	of	which	is	to	finance	the	acquisition	of	flight	equipment.	Rather	than	finance	each	aircraft	separately	when	such aircraft	was	purchased,	delivered	or	refinanced,	these	trusts	allowed	AAG	to	raise	the	financing	for	several	aircraft	at	one	time	and	place	such	funds	in	escrow	pending the	purchase,	delivery	or	refinancing	of	the	relevant	aircraft.	The	trusts	were	also	structured	to	provide	for	certain	credit	enhancements,	such	as	liquidity	facilities	to cover	certain	interest	payments,	that	reduce	the	risks	to	the	purchasers	of	the	trust	certificates	and,	as	a	result,	reduce	the	cost	of	aircraft	financing	to	AAG.

Each	trust	covered	a	set	amount	of	aircraft	scheduled	to	be	delivered	or	refinanced	within	a	specific	period	of	time.	At	the	time	of	each	covered	aircraft	financing,	the relevant	trust	used	the	funds	in	escrow	to	purchase	equipment	notes	relating	to	the	financed	aircraft.	The	equipment	notes	were	issued,	at	AAG's	election,	in	connection with	a	mortgage	financing	of	the	aircraft	or,	in	certain	cases,	by	a	separate	owner	trust	in	connection	with	a	leveraged	lease	financing	of	the	aircraft.	In	the	case	of	a leveraged	lease	financing,	the	owner	trust	then	leased	the	aircraft	to	American	or	US	Airways,	as	applicable.	In	both	cases,	the	equipment	notes	are	secured	by	a	security interest	in	the	aircraft.	The	pass	through	trust	certificates	are	not	direct	obligations	of,	nor	are	they	guaranteed	by	AAG,	American,	US	Airways	Group	or	US	Airways. However,	in	the	case	of	mortgage	financings,	the	equipment	notes	issued	to	the	trusts	are	direct	obligations	of	American	or	US	Airways	and	in	certain	instances	are guaranteed	by	AAG	or	US	Airways	Group,	as	applicable.	As	of	December	31,	2014,	$7.0	billion	associated	with	these	mortgage	financings	is	reflected	as	debt	in	the accompanying	consolidated	balance	sheet.

With	respect	to	leveraged	leases,	AAG	evaluated	whether	the	leases	had	characteristics	of	a	variable	interest	entity	and	concluded	the	leasing	entities	met	the	criteria for	variable	interest	entities.	AAG	generally	is	not	the	primary	beneficiary	of	the	leasing	entities	if	the	lease	terms	are	consistent	with	market	terms	at	the	inception	of

the	lease	and	do	not	include	a	residual	value	guarantee,	fixed-price	purchase	option	or	similar	feature	that	obligates	AAG	to	absorb	decreases	in	value	or	entitles	AAG	to participate	in	increases	in	the	value	of	the	aircraft.	AAG	does	not	provide	residual	value	guarantees	to	the	bondholders	or	equity	participants	in	the	trusts.	Some	leases have	a	fair	market	value	or	a	fixed	price	purchase	option	that	allows	AAG	to	purchase	the	aircraft	at	or	near	the	end	of	the	lease	term.	However,	the	option	price approximates	an	estimate	of	the	aircraft's	fair	value	at	the	option	date.	Under	this	feature,	AAG	does	not	participate	in	any	increases	in	the	value	of	the	aircraft.	AAG concluded	it	was	not	the	primary	beneficiary	under	these	arrangements.	Therefore,	AAG	accounts	for	its	EETC	leveraged	lease	financings	as	operating	leases.	AAG's total	future	obligations	under	these	leveraged	lease	financings	are	$2.1	billion	as	of	December	31,	2014,	which	are	included	in	the	future	minimum	lease	payments	table above.

AAG	guarantees	the	payment	of	principal	and	interest	of	certain	special	facility	revenue	bonds	issued	by	municipalities	primarily	to	build	or	improve	airport	facilities and	purchase	equipment	which	is	leased	to	AAG.	Under	such	leases,	AAG	is	required	to	make	rental	payments	through	2035,	sufficient	to	pay	maturing	principal	and interest	payments	on	the	related	bonds.	As	of	December	31,	2014,	the	remaining	lease	payments	guaranteeing	the	principal	and	interest	on	these	bonds	are	$449	million, which	are	accounted	for	as	operating	leases.

# (f)	Legal	Proceedings

Pursuant	to	rulings	of	the	Bankruptcy	Court,	the	Plan	established	the	Disputed	Claims	Reserve	to	hold	shares	of	AAG	Common	Stock	reserved	for	issuance	to disputed	claimholders	at	the	Effective	Date	that	ultimately	become	holders	of	allowed	Single-Dip	Unsecured	Claims.	The	shares	provided	for	under	the	Plan	were determined	based	upon	a	Disputed	Claims	Reserve	amount	of	claims	of	approximately	$755	million,	representing	the	maximum	amount	of	additional	distributions	to subsequently	allowed	Single-Dip	Unsecured	Claims	under	the	Plan.	On	July	1,	2014	(the	date	180	days	after	the	Effective	Date),	approximately	2.9	million	shares	of AAG	Common	Stock	held	in	the	Disputed	Claims	Reserve	were	distributed	to	holders	of	allowed	Single-Dip	Unsecured	Claims,	to	holders	of	certain	labor-related deemed	claims,	and	to	holders	of	certain	non-management,	non-union	employee	deemed	claims	as	specified	in	the	Plan,	and	shares	were	withheld	or	sold	on	account	of related	tax	obligations.	In	addition,	on	July	1,	2014,	the	Company	repurchased	0.4	million	shares	of	AAG	Common	Stock	for	an	aggregate	of	$19	million	from	the Disputed	Claims	Reserve	at	the	then	prevailing	market	price	in	order	to	fund	cash	tax	obligations	resulting	from	distributions	by	the	Disputed	Claims	Reserve.	On November	4,	2014,	approximately	0.7	million	shares	of	AAG	Common	Stock	held	in	the	Disputed	Claims

Reserve	 were	 distributed	 to	 holders	 of	 allowed	 Single-Dip	 Unsecured	 Claims,	 to	 holders	 of	 certain	 labor-related	 deemed	 claims,	 and	 to	 holders	 of	 certain	 non- management,	non-union	employee	deemed	claims	as	specified	in	the	Plan,	and	shares	were	withheld	or	sold	on	account	of	related	tax	obligations.	In	addition,	on November	4,	2014,	the	Company	repurchased	less	than	0.1	million	shares	of	AAG	Common	Stock	for	an	aggregate	of	$2	million	from	the	Disputed	Claims	Reserve	at the	then	prevailing	market	price	in	order	to	fund	cash	tax	obligations	resulting	from	distributions	by	the	Disputed	Claims	Reserve.	As	of	December	31,	2014,	there	were approximately	26.8	million	shares	of	AAG	Common	Stock	remaining	in	the	Disputed	Claims	Reserve.	On	February	10,	2015,	approximately	0.8	million	shares	of	AAG Common	Stock	held	in	the	Disputed	Claims	Reserve	were	distributed	to	holders	of	allowed	Single-Dip	Unsecured	Claims,	to	holders	of	certain	labor-related	deemed claims,	and	to	holders	of	certain	non-management,	non-union	employee	deemed	claims	as	specified	in	the	Plan,	and	shares	were	withheld	or	sold	on	account	of	related tax	obligations.	In	addition,	on	February	10,	2015,	the	Company	repurchased	less	than	0.1	million	shares	of	AAG	Common	Stock	for	an	aggregate	of	$4	million	from the	Disputed	Claims	Reserve	at	the	then	prevailing	market	price	in	order	to	fund	cash	tax	obligations	resulting	from	distributions	by	the	Disputed	Claims	Reserve.	As disputed	claims	are	resolved,	the	claimants	will	receive	distributions	of	shares	from	the	Disputed	Claims	Reserve	on	the	same	basis	as	if	such	distributions	had	been made	on	or	about	the	Effective	Date.	However,	the	Company	is	not	required	to	distribute	additional	shares	above	the	limits	contemplated	by	the	Plan,	even	if	the	shares remaining	for	distribution	are	not	sufficient	to	fully	pay	any	additional	allowed	unsecured	claims.	To	the	extent	that	any	of	the	reserved	shares	remain	undistributed	upon resolution	of	all	remaining	disputed	claims,	such	shares	will	not	be	returned	to	the	Company	but	rather	will	be	distributed	to	former	AMR	shareholders	as	of	the Effective	Date.	However,	resolution	of	disputed	claims	could	have	a	material	effect	on	recoveries	by	holders	of	additional	allowed	Single-Dip	Unsecured	Claims	under the	Plan	and	the	amount	of	additional	share	distributions,	if	any,	that	are	made	to	former	AMR	shareholders	as	the	total	number	of	shares	of	AAG	Common	Stock	that remain	available	for	distribution	upon	resolution	of	disputed	claims	is	limited	pursuant	to	the	Plan.

There	is	also	pending	in	the	Bankruptcy	Court	an	adversary	proceeding	relating	to	an	action	brought	by	American	to	seek	a	determination	that	certain	non-pension, post-employee	benefits	(OPEB)	are	not	vested	benefits	and	thus	may	be	modified	or	terminated	without	liability	to	American.	On	April	18,	2014,	the	Bankruptcy	Court granted	American's	motion	for	summary	judgment	with	respect	to	certain	non-union	employees,	concluding	that	their	benefits	were	not	vested	and	could	be	terminated. The	summary	judgment	motion	was	denied	with	respect	to	all	other	retirees.	The	Bankruptcy	Court	has	not	yet	scheduled	a	trial	on	the	merits	concerning	whether	those retirees'	benefits	are	vested,	and	American	cannot	predict	whether	it	will	receive	relief	from	obligations	to	provide	benefits	to	any	of	those	retirees.	The	Company's financial	statements	presently	reflect	these	retirement	programs	without	giving	effect	to	any	modification	or	termination	of	benefits	that	may	ultimately	be	implemented based	upon	the	outcome	of	this	proceeding.	Separately,	both	the	Association	of	Professional	Flight	Attendants	and	Transport	Workers	Union	have	filed	grievances asserting	that	American	was	"successful"	in	its	Chapter	11	with	respect	to	matters	related	to	OPEB	and,	accordingly,	by	operation	of	the	underlying	collective	bargaining agreements,	American's	prior	contributions	to	certain	OPEB	prefunding	trusts	attributable	to	active	employees	should	be	returned	to	those	active	employees.	These amounts	aggregate	approximately	$212	million.	The	Company	has	denied	both	grievances	and	intends	to	defend	these	matters	vigorously.

Private	Party	Antitrust	Action.	On	July	2,	2013,	a	lawsuit	captioned	Carolyn	Fjord,	et	al.,	v.	US	Airways	Group,	Inc.,	et	al.,	was	filed	in	the	United	States	District Court	for	the	Northern	District	of	California.	The	complaint	names	as	defendants	US	Airways	Group	and	US	Airways,	and	alleges	that	the	effect	of	the	Merger	may	be to	substantially	lessen	competition	or	tend	to	create	a	monopoly	in	violation	of	Section	7	of	the	Clayton	Antitrust	Act.	The	relief	sought	in	the	complaint	includes	an injunction	against	 the	Merger,	or	divestiture.	On	August	6,	2013,	 the	plaintiffs	re-filed	 their	complaint	 in	 the	Bankruptcy	Court,	adding	AMR	and	American	as defendants,	and	on	October	2,	2013,	dismissed	the	initial	California	action.	The	Bankruptcy	Court	denied	plaintiffs'	motion	to	preliminarily	enjoin	the	Merger.	On January	10,	2014,	the	plaintiffs	moved	to	amend	their

complaint	to	add	additional	factual	allegations,	a	claim	for	money	damages	and	a	request	for	preliminary	injunctive	relief	requiring	the	carriers	to	hold	separate	their assets.	On	March	14,	2014,	the	Court	allowed	plaintiffs	to	add	certain	allegations	but	denied	plaintiffs'	requests	to	add	a	damages	claim	or	seek	preliminary	injunctive relief	requiring	the	carriers	to	hold	separate	their	assets.	On	June	2,	2014,	plaintiffs	filed	an	amended	motion	for	leave	to	file	a	second	amended	and	supplemental complaint,	which	motion	has	been	fully	briefed	by	the	parties	and	is	pending	resolution	by	the	Court.	There	is	currently	no	trial	date	set.	The	Company	believes	this lawsuit	is	without	merit	and	intends	to	vigorously	defend	against	the	allegations.

US	Airways	Sabre	Matter.	On	April	21,	2011,	US	Airways	filed	an	antitrust	lawsuit	against	Sabre	Holdings	Corporation,	Sabre	Inc.	and	Sabre	Travel	International Limited	(collectively,	Sabre)	in	the	Federal	District	Court	for	the	Southern	District	of	New	York.	The	lawsuit,	as	amended	to	date,	alleges,	among	other	things,	that	Sabre has	engaged	in	anticompetitive	practices	to	preserve	its	market	power	by	restricting	the	Company's	ability	to	distribute	its	products	to	its	customers.	The	lawsuit	also alleges	that	these	actions	have	permitted	Sabre	to	charge	supracompetitive	booking	fees	and	to	use	technologies	that	are	not	as	robust	and	as	efficient	as	alternatives	in	a competitive	market.	The	lawsuit	seeks	money	damages.	Sabre	filed	a	motion	to	dismiss	the	case,	which	the	court	denied	in	part	and	granted	in	part	in	September	2011, allowing	two	of	the	four	counts	in	the	complaint	to	proceed.	In	January	2015,	the	court	denied	in	part	and	granted	in	part	Sabre's	motions	for	summary	judgment.	A	trial date	is	expected	to	be	set	soon.	The	Company	intends	to	pursue	its	claims	against	Sabre	vigorously,	but	there	can	be	no	assurance	of	the	outcome	of	this	litigation.

General.	The	Company	and	its	subsidiaries	are	also	engaged	in	other	legal	proceedings	from	time	to	time.	Legal	proceedings	can	be	complex	and	take	many	months, or	even	years,	to	reach	resolution,	with	the	final	outcome	depending	on	a	number	of	variables,	some	of	which	are	not	within	the	control	of	the	Company.	Therefore, although	the	Company	will	vigorously	defend	itself	in	each	of	the	actions	described	above	and	such	other	legal	proceedings,	their	ultimate	resolution	and	potential financial	and	other	impacts	on	the	Company	are	uncertain.

# (g)	Guarantees	and	Indemnifications

US	Airways	assigned	to	Delta	a	lease	agreement	with	the	Port	Authority	of	New	York	and	New	Jersey	(the	Port	Authority)	related	to	the	East	End	Terminal	at LaGuardia	airport.	A	portion	of	the	rental	payments	under	the	lease	are	used	to	repay	special	facility	revenue	bonds	issued	by	the	Port	Authority.	The	special	facility revenue	bonds	have	a	final	scheduled	maturity	in	2015	and	had	an	outstanding	principal	amount	of	approximately	$22	million	at	December	31,	2014.	Pursuant	to	the terms	of	the	lease	assignment,	US	Airways	is	contingently	liable	for	Delta's	obligations,	as	assignee,	under	the	lease	agreement	in	the	event	Delta	fails	to	perform	such obligations	including,	without	limitation,	the	payment	of	all	rentals	and	other	amounts	due	under	the	lease	agreement.	US	Airways	has	the	right	to	cure	any	failure	by Delta	to	perform	its	obligations	under	the	lease	agreement	and,	in	addition,	US	Airways	has	the	right	to	reoccupy	the	terminal	if	it	so	chooses	to	cure	any	such	default.

The	Company	is	a	party	to	many	routine	contracts	in	which	it	provides	general	indemnities	in	the	normal	course	of	business	to	third	parties	for	various	risks.	The Company	is	not	able	to	estimate	the	potential	amount	of	any	liability	resulting	from	the	indemnities.	These	indemnities	are	discussed	in	the	following	paragraphs.

In	its	aircraft	financing	agreements,	the	Company	generally	indemnifies	the	financing	parties,	trustees	acting	on	their	behalf	and	other	relevant	parties	against liabilities	(including	certain	taxes)	resulting	from	the	financing,	manufacture,	design,	ownership,	operation	and	maintenance	of	the	aircraft	regardless	of	whether	these liabilities	(or	taxes)	relate	to	the	negligence	of	the	indemnified	parties.

The	Company's	 loan	agreements	and	other	London	Interbank	Offered	Rate	(LIBOR)-based	financing	 transactions	(including	certain	 leveraged	aircraft leases) generally	obligate	the	Company	to	reimburse	the	applicable	lender	for	incremental	costs	due	to	a	change	in	law	that	imposes	(i)	any	reserve	or	special	deposit

requirement	against	assets	of,	deposits	with	or	credit	extended	by	such	lender	related	to	the	loan,	(ii)	any	tax,	duty	or	other	charge	with	respect	to	the	loan	(except standard	income	tax)	or	(iii)	capital	adequacy	requirements.	In	addition,	the	Company's	loan	agreements,	derivative	contracts	and	other	financing	arrangements	typically contain	a	withholding	tax	provision	that	requires	the	Company	to	pay	additional	amounts	to	the	applicable	lender	or	other	financing	party,	generally	if	withholding	taxes are	imposed	on	such	lender	or	other	financing	party	as	a	result	of	a	change	in	the	applicable	tax	law.

These	increased	cost	and	withholding	tax	provisions	continue	for	the	entire	term	of	the	applicable	transaction,	and	there	is	no	limitation	on	the	maximum	additional amounts	the	Company	could	be	obligated	to	pay	under	such	provisions.	Any	failure	to	pay	amounts	due	under	such	provisions	generally	would	trigger	an	event	of default	and,	in	a	secured	financing	transaction,	would	entitle	the	lender	to	foreclose	on	the	collateral	to	realize	the	amount	due.

In	certain	transactions,	including	certain	aircraft	financing	leases	and	loans,	the	lessors,	lenders	and/or	other	parties	have	rights	to	terminate	the	transaction	based	on changes	in	foreign	tax	law,	illegality	or	certain	other	events	or	circumstances.	In	such	a	case,	the	Company	may	be	required	to	make	a	lump	sum	payment	to	terminate the	relevant	transaction.

The	Company	has	general	indemnity	clauses	in	many	of	its	airport	and	other	real	estate	leases	where	the	Company	as	lessee	indemnifies	the	lessor	(and	related parties)	against	liabilities	related	to	the	Company's	use	of	the	leased	property.	Generally,	these	indemnifications	cover	liabilities	resulting	from	the	negligence	of	the indemnified	 parties,	 but	 not	 liabilities	 resulting	 from	 the	 gross	 negligence	 or	 willful	 misconduct	 of	 the	 indemnified	 parties.	 In	 addition,	 the	 Company	 provides environmental	indemnities	in	many	of	these	leases	for	contamination	related	to	the	Company's	use	of	the	leased	property.

Under	certain	contracts	with	third	parties,	the	Company	indemnifies	the	third-party	against	legal	liability	arising	out	of	an	action	by	the	third-party,	or	certain	other parties.	The	terms	of	these	contracts	vary	and	the	potential	exposure	under	these	indemnities	cannot	be	determined.	The	Company	has	liability	insurance	protecting	the Company	for	some	of	the	obligations	it	has	undertaken	under	these	indemnities.

The	Company	is	involved	in	certain	claims	and	litigation	related	to	its	operations.	The	Company	is	also	subject	to	regulatory	assessments	in	the	ordinary	course	of business.	The	Company	establishes	reserves	for	litigation	and	regulatory	matters	when	those	matters	present	loss	contingencies	that	are	both	probable	and	can	be reasonably	estimated.	In	the	opinion	of	management,	liabilities,	if	any,	arising	from	these	regulatory	matters,	claims	and	litigation	will	not	have	a	material	adverse	effect on	the	Company's	consolidated	financial	position,	results	of	operations,	or	cash	flows,	after	consideration	of	available	insurance.

# (h)	Other

In	2010,	American	and	Japan	Airlines	entered	into	a	JBA	under	which,	amongst	other	things,	American	provided	Japan	Airlines	a	guarantee	of	certain	minimum incremental	revenue	resulting	from	the	successful	operation	of	the	joint	business	for	the	first	three	years	following	its	implementation,	subject	to	certain	terms	and conditions.	The	amount	required	to	be	paid	by	the	Company	under	the	guarantee	in	any	one	of	such	years	may	not	exceed	$100	million,	and	is	reduced	if	capacity	for one	of	such	years	is	less	than	a	defined	base	year	period	capacity.	As	of	December	31,	2013,	American	reached	an	agreement	with	Japan	Airlines	to	settle	the	liability for	$90	million.	The	liability	is	expected	to	be	settled	in	2015.

In	the	fourth	quarter	of	2012,	the	Company	entered	into	a	settlement	agreement	resolving	a	commercial	dispute.	The	settlement	agreement	includes	two	elements which	were	valued	at	relative	fair	value	and	will	be	recognized	when	earned.	The	Company	determined	that	the	settlement	includes	a	litigation	gain	of	$280	million, which	was	valued	using	future	cash	flows	and	recognized	in	the	fourth	quarter	of	2012.	The	settlement	also

includes	an	incentive	which	is	contingent	upon	signing	a	future	contract	and	will	be	recognized	over	the	term	of	the	future	contract.	The	contract	was	signed	in	January 2014.	In	connection	with	the	new	contract,	the	Company	recorded	an	additional	$70	million	receivable	with	an	offset	to	other	liabilities	to	be	recognized	over	the	course of	the	remaining	contract	term.

As	a	result	of	the	terrorist	attacks	of	September	11,	2001	(the	Terrorist	Attacks)	and	the	subsequent	liability	protections	provided	for	by	the	Air	Transportation	Safety and	System	Stabilization	Act	(the	Stabilization	Act),	the	Company	recorded	a	liability	for	the	Terrorist	Attacks	claims	equal	to	the	related	insurance	receivable	due	to American.	The	Stabilization	Act	provides	that,	notwithstanding	any	other	provision	of	law,	liability	for	all	claims,	whether	compensatory	or	punitive,	arising	from	the Terrorist	Attacks,	against	any	air	carrier	shall	not	exceed	the	liability	coverage	maintained	by	the	air	carrier.	As	of	December	31,	2014,	the	remaining	liability	and	the amount	of	the	offsetting	receivable	were	each	$974	million.

# 16.		Supplemental	Cash	Flow	Information

Supplemental	disclosure	of	cash	flow	information	and	non-cash	investing	and	financing	activities	are	as	follows	(in	millions):

|  | 2014 | Year	Ended	December	31,<br>2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Non-cash\tinvesting\tand\tfinancing\tactivities: |  |  |  |
| Settlement\tof\tbankruptcy\tobligations | $5,495 | $864 | $ — |
| Acquisition\tof\tUS\tAirways,\tnet | — | \t 4,386 | — |
| Capital\tlease\tobligations | 747 | — | — |
| Supplemental\tinformation: |  |  |  |
| Interest\tpaid,\tnet\tof\tamounts\tcapitalized | 814 | 713 | \t 485 |
| Income\ttaxes\tpaid | 7 | 12 | 6 |

# 17.		Operating	Segments	and	Related	Disclosures

The	Company	is	managed	as	a	single	business	unit	that	provides	air	transportation	for	passengers	and	cargo.	This	allows	it	to	benefit	from	an	integrated	revenue pricing	and	route	network	that	includes	American,	US	Airways,	Envoy,	Piedmont,	PSA	and	third-party	carriers	that	fly	under	capacity	purchase	or	prorate	agreements	as part	of	the	Company's	regional	operations.	The	flight	equipment	of	all	these	carriers	is	combined	to	form	one	fleet	that	is	deployed	through	a	single	route	scheduling system.	When	making	resource	allocation	decisions,	the	chief	operating	decision	maker	evaluates	flight	profitability	data,	which	considers	aircraft	type	and	route economics,	but	gives	no	weight	to	the	financial	impact	of	the	resource	allocation	decision	on	an	individual	carrier	basis.	The	objective	in	making	resource	allocation decisions	is	to	maximize	consolidated	financial	results,	not	the	individual	results	of	American,	US	Airways,	Envoy,	Piedmont	and	PSA.

The	Company's	operating	revenues	by	geographic	region	as	defined	by	the	U.S.	Department	of	Transportation	(DOT)	are	summarized	below	(in	millions):

|  |  | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2014 | 2013 | 2012 |
| DOT\tDomestic | $28,568 | $15,376 | $14,287 |
| DOT\tLatin\tAmerica | 6,964 | 6,288 | 5,813 |
| DOT\tAtlantic | 5,652 | 3,756 | 3,411 |
| DOT\tPacific | 1,466 | 1,323 | 1,344 |
| Total\tconsolidated\trevenues | $42,650 | $26,743 | $24,855 |

The	Company	attributes	operating	revenues	by	geographic	region	based	upon	the	origin	and	destination	of	each	flight	segment.	The	Company's	tangible	assets	consist primarily	of	flight	equipment,	which	are	mobile	across	geographic	markets	and,	therefore,	have	not	been	allocated.

# 18.		Share-based	Compensation

In	December	2013,	the	Board	of	Directors	of	AAG	approved	the	2013	AAG	Incentive	Award	Plan	(the	2013	Plan).	Awards	may	be	in	the	form	of	an	option, restricted	stock	award,	restricted	stock	unit	award,	performance	award,	dividend	equivalent	award,	deferred	stock	award,	deferred	stock	unit	award,	stock	payment award	or	stock	appreciation	right.	The	2013	Plan	authorizes	the	grant	of	awards	for	the	issuance	of	40	million	shares	plus	any	shares	underlying	awards	granted	under the	2013	Plan,	or	any	pre-existing	US	Airways	Group	plan,	that	are	forfeited,	terminate	or	are	cash	settled	(in	whole	or	in	part)	without	a	payment	being	made	in	the form	of	shares.	In	addition,	any	shares	that	are	available	for	issuance	under	the	US	Airways	Group	2011	Incentive	Award	Plan	(the	2011	Plan)	as	of	the	effective	date	of the	Merger	may	be	used	for	awards	under	the	2013	Plan;	provided,	that	awards	using	such	available	shares	under	the	2011	Plan	shall	not	be	made	after	the	date	awards or	grants	could	have	been	made	under	the	2011	Plan	and	shall	only	be	made	to	individuals	who	were	not	providing	services	to	AAG	prior	to	the	Merger.	Awards	granted under	the	2013	Plan	upon	the	assumption	of,	or	in	substitution	for,	outstanding	awards	in	connection	with	a	corporate	transaction,	such	as	a	merger,	will	not	reduce	the shares	authorized	for	issuance	under	the	2013	Plan.

In	addition,	pursuant	to	the	Plan,	and	as	approved	by	the	Bankruptcy	Court,	certain	officers,	directors	and	employees	received	share-based	incentive	awards	related	to the	Merger	and	future	service.	Awards	issued	in	conjunction	with	the	Plan	are	discussed	in	more	detail	below.

All	outstanding	US	Airways	Group	equity	awards	were	converted	into	equity	awards	with	respect	to	AAG	Common	Stock	using	an	exchange	ratio	of	1	to	1	and	had	a fair	value	of	approximately	$141	million	at	the	Merger,	which	was	included	in	the	purchase	price.	These	awards	have	the	same	terms	and	conditions	as	were	applicable to	such	equity	awards	immediately	prior	to	the	Merger	closing	date.

The	Company's	net	income	for	the	years	ended	December	31,	2014,	2013	and	2012	included	$381	million,	$92	million	and	$29	million	respectively,	of	share-based compensation	costs.	Of	the	2014	and	2013	amounts,	$224	million	and	$42	million,	respectively,	were	related	to	the	Merger	and	recorded	in	special	items,	net	on	the accompanying	consolidated	statements	of	operations.

# (a)	Restricted	Stock	Unit	(RSU)	Awards

As	of	December	31,	2014,	the	Company	has	outstanding	restricted	stock	unit	awards	with	service	conditions	(time	vested)	and	performance	conditions.	The	grant- date	fair	value	of	restricted	stock	unit	awards	is	equal	to	the	market	price	of	the	underlying	shares	of	common	stock	on	the	date	of	grant.	For	time	vested	awards,	the expense	is	recognized	on	a	straight-line	basis	over	the	vesting	period	for	the	entire	award.	For	awards	with	performance	conditions,	the	expense	is	recognized	based	on the	expected	achievement	at	each	reporting	period.	Stock-settled	restricted	stock	unit	awards	(RSUs)	are	classified	as	equity	awards	as	the	vesting	results	in	the	issuance of	shares	of	AAG	Common	Stock.	Cash-settled	restricted	stock	unit	awards	(CRSUs)	are	classified	as	liability	awards	as	the	vesting	results	in	payment	of	cash	by	the Company.	The	Company	granted	certain	RSU	awards	in	connection	with	the	Merger	as	follows:

# Alignment	Awards

On	December	9,	2013,	alignment	awards	were	granted	in	the	form	of	RSUs.	The	awards	were	provided	to	legacy	AMR	employees	in	order	to	align	interests	and create	parity	with	peers	at	US	Airways	Group,	and	one-third	of	the	awards	vested	on	the	Company's	emergence	from	bankruptcy.	The	remaining	awards	vest	equally	on

the	one	and	two	year	anniversary	of	emergence.	Employees	terminated	in	connection	with	the	Merger	fully	vest	in	their	awards	on	the	termination	date.	Compensation expenses	for	these	awards	are	recorded	in	special	items,	net	on	the	consolidated	statements	of	operations.

# Merger	Equity	Grant

The	Merger	Equity	Grant	was	granted	on	the	Effective	Date	to	certain	officers	and	directors	and	employees	in	the	form	of	RSUs	and	will	be	settled	in	equity	for domestic	employees	and	in	cash	for	international	employees.	Each	restricted	stock	unit	award	granted	will	vest,	subject	to	the	executive's	continued	employment,	with respect	to	(i)	50%	of	the	restricted	stock	units	on	December	16,	2015;	(ii)	25%	of	the	restricted	stock	units	on	the	earlier	to	occur	of	(a)	December	16,	2015,	if	the Company	is	issued	a	Single	Operating	Certificate	prior	to	or	on	that	date	or	(b)	the	date	on	which	the	Company	is	issued	a	Single	Operating	Certificate,	provided	that such	date	is	prior	to	or	on	December	9,	2016;	and	(iii)	25%	of	the	restricted	stock	units	on	the	date	the	Board	of	Directors	or	compensation	committee	of	the	Board	of Directors	determines	that	the	Company	has	achieved	at	least	$1.0	billion	in	net	synergies	with	respect	to	fiscal	year	2015	or	2016.	Compensation	expenses	for	these awards	are	recorded	in	special	items,	net	on	the	consolidated	statements	of	operations.

RSU	award	activity	for	all	plans	for	the	years	ended	December	31,	2014	and	2013	is	as	follows	(shares	in	thousands):

| Outstanding	at	January	1,	2013 | — | $— |
| :--- | :--- | :--- |
| Granted | 22,101 | 24.60 |
| Assumed\tUS\tAirways\tawards | 3,164 | 22.55 |
| Vested\tand\treleased | (1,386) | 24.58 |
| Forfeited | — | — |
| Outstanding\tat\tDecember\t31,\t2013 | 23,879 | $24.33 |
| Granted | 3,467 | 37.07 |
| Vested\tand\treleased | (4,193) | 23.84 |
| Forfeited | (1,811) | 25.10 |
| Outstanding\tat\tDecember\t31,\t2014 | 21,342 | $26.43 |

As	of	December	31,	2014,	there	was	$308	million	of	total	unrecognized	compensation	cost	related	to	RSUs.	These	costs	are	expected	to	be	recognized	over	a weighted	average	period	of	one	year.	The	total	fair	value	of	RSUs	vested	during	the	years	ended	December	31,	2014	and	2013	was	$154	million	and	$31	million, respectively.

# Cash-settled	restricted	stock

CRSU	award	activity	for	all	plans	for	the	years	ended	December	31,	2014	and	2013	is	as	follows	(shares	in	thousands):

| Outstanding	at	January	1,	2013 | — | $— |
| :--- | :--- | :--- |
| Granted | 309 | 24.60 |
| Assumed\tUS\tAirways\tawards | 320 | 22.55 |
| Vested\tand\treleased | (3) | 25.25 |
| Forfeited | — | — |
| Outstanding\tat\tDecember\t31,\t2013 | 626 | $25.25 |
| Granted | 50 | 40.93 |
| Vested\tand\treleased | (341) | 34.54 |
| Forfeited | (74) | 34.75 |
| Outstanding\tat\tDecember\t31,\t2014 | 261 | $53.63 |

As	of	December	31,	2014,	the	liability	related	to	CRSUs	was	$6	million,	which	will	continue	to	be	remeasured	at	fair	value	at	each	reporting	date	until	all	awards	are vested.	As	of	December	31,	2014,	the	total	unrecognized	compensation	expense	for	CRSUs	was	$8	million	and	is	expected	to	be	recognized	over	a	weighted	average period	of	one	year.	The	total	cash	paid	for	CRSUs	vested	during	the	years	ended	December	31,	2014	and	2013	was	$12	million	and	less	than	$1	million,	respectively.

# (b)	Stock	Options	and	Stock	Appreciation	Rights

Stock	options	and	stock	appreciation	rights	are	granted	with	an	exercise	price	equal	to	the	underlying	common	stock's	fair	value	at	the	date	of	each	grant.	Stock options	and	stock	appreciation	rights	have	service	conditions,	become	exercisable	over	a	three-year	vesting	period	and	expire	if	unexercised	at	the	end	of	their	term, which	ranges	from	seven	to	ten	years.	Stock	options	and	stock-settled	stock	appreciation	rights	(SARs)	are	classified	as	equity	awards	as	the	exercise	results	in	the issuance	of	shares	of	AAG	Common	Stock.	Cash-settled	stock	appreciation	rights	(CSARs)	are	classified	as	liability	awards	as	the	exercise	results	in	payment	of	cash	by the	Company.

Stock	option	and	SAR	award	activity	for	all	plans	for	the	years	ended	December	31,	2014	and	2013	is	as	follows	(stock	options	and	SARs	in	thousands):

|  |  | Average | Weighted	Average |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Stock\tOptions\nand\tSARS | Exercise\nPrice | Remaining\nContractual\tTerm | Aggregate\nIntrinsic\tValue |
|  | (In\tthousands) |  | (In\tyears) | (In\tmillions) |
| Assumed\tUS\tAirways\tawards\tat\tDecember\t9,\t2013 | 11,200 | $12.84 |  |  |
| Granted | — | — |  |  |
| Exercised | (42) | 14.42 |  |  |
| Forfeited | — | — |  |  |
| Expired | — | — |  |  |
| Balance\tat\tDecember\t31,\t2013 | 11,158 | $12.84 |  |  |
| Granted | — | — |  |  |
| Exercised | (4,109) | 10.74 |  |  |
| Forfeited | — | — |  |  |
| Expired | (42) | 41.73 |  |  |
| Balance\tat\tDecember\t31,\t2014 | 7,007 | $13.90 | 2.6 | $278 |
| Vested\tor\texpected\tto\tvest\tat\tDecember\t31,\t2014 | 7,006 | $13.90 | 2.6 | $278 |
| Exercisable\tat\tDecember\t31,\t2014 | 6,052 | $14.83 | 2.4 | $235 |

CSAR	award	activity	for	all	plans	for	the	years	ended	December	31,	2014	and	2013	is	as	follows	(CSARs	in	thousands):

|  |  | Average | Weighted	Average |  |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Exercise | Remaining | Aggregate |
|  | CSARs | Price | Contractual\tTerm | Intrinsic\tValue |
|  | (In\tthousands) |  | (In\tyears) | (In\tmillions) |
| Assumed\tUS\tAirways\tawards\tat\tDecember\t9,\t2013 | 2,888 | $6.25 |  |  |
| Granted | — | — |  |  |
| Exercised | (23) | 5.10 |  |  |
| Forfeited | — | — |  |  |
| Expired | — | — |  |  |
| Balance\tat\tDecember\t31,\t2013 | 2,865 | $6.26 |  |  |
| Granted | — | — |  |  |
| Exercised | (1,254) | 6.18 |  |  |
| Forfeited | — | — |  |  |
| Expired | — | — |  |  |
| Balance\tat\tDecember\t31,\t2014 | 1,611 | $6.33 | 2.2 | $76 |
| Vested\tor\texpected\tto\tvest\tat\tDecember\t31,\t2014 | 1,611 | $6.33 | 2.2 | $76 |
| Exercisable\tat\tDecember\t31,\t2014 | 1,610 | $6.33 | 2.2 | $76 |

There	were	no	stock	options	or	stock	appreciation	rights	granted	subsequent	to	the	Merger	closing	date.	Stock	options	and	stock	appreciation	rights	are	expensed	on	a straight-line	basis	over	the	vesting	period	for	the	entire	award.

As	of	December	31,	2014,	there	were	$4	million	of	total	unrecognized	compensation	costs	related	to	SARs.	These	costs	are	expected	to	be	recognized	over	a	weighted average	period	of	0.3	years.	The	total	intrinsic	value	of	stock	options	and	SARs	exercised	during	the	year	ended	December	31,	2014	and	the	23	day	period	ended December	31,	2013	was	$105	million	and	less	than	$1	million,	respectively.

As	of	December	31,	2014,	the	weighted	average	fair	value	of	outstanding	CSARs	was	$47.29	per	share	and	the	related	liability	was	$76	million.	These	CSARs	will continue	to	be	remeasured	at	fair	value	at	each	reporting	date	until	all	awards	are	settled.	As	of	December	31,	2014,	the	total	unrecognized	compensation	expense	for CSARs	was	less	than	a	million	and	is	expected	to	be	recognized	over	a	weighted	average	period	of	0.3	years.	Total	cash	paid	for	CSARs	exercised	during	the	year	ended December	31,	2014	and	the	23	day	period	ended	December	31,	2013	was	$42	million	and	less	than	$1	million,	respectively.

# 19.		Valuation	and	Qualifying	Accounts	(in	millions)

|  | Balance	at<br>beginning<br>of	year | Changes	charged	to<br>statement	of<br>operations<br>accounts | Payments | Write-offs<br>(net	of<br>recoveries) | Sales,<br>retirements<br>and<br>transfers | Balance	at<br>end	of<br>year |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Allowance\tfor\tobsolescence\tof\tinventories |  |  |  |  |  |  |
| Year\tended\tDecember\t31,\t2014 | $547 | $142 | $— | $(4) | $(12) | $673 |
| Year\tended\tDecember\t31,\t2013 | 546 | 24 | — | (23) | — | 547 |
| Year\tended\tDecember\t31,\t2012 | 575 | 20 | — | (49) | — | 546 |
| Allowance\tfor\tuncollectible\taccounts |  |  |  |  |  |  |
| Year\tended\tDecember\t31,\t2014 | $41 | $6 | $— | $(30) | $— | $17 |
| Year\tended\tDecember\t31,\t2013 | 44 | 3 | — | (6) | — | 41 |
| Year\tended\tDecember\t31,\t2012 | 52 | 3 | — | (11) | — | 44 |
| Reserves\tfor\tenvironmental\tremediation\tcosts |  |  |  |  |  |  |
| Year\tended\tDecember\t31,\t2014 | $11 | $— | $(1) | $—\t\t\t $— | $—\t\t\t $— | $10 |
| Year\tended\tDecember\t31,\t2013 | 13 | 2 | (1) | (3) | — | 11 |
| Year\tended\tDecember\t31,\t2012 | 14 | (1) | — | — | — | 13 |

# 20.		Quarterly	Financial	Data	(Unaudited)

Unaudited	summarized	financial	data	by	quarter	for	2014	and	2013	(in	millions,	except	share	and	per	share	amounts):

|  | First	Quarter | Second	Quarter | Third	Quarter | Fourth	Quarter |
| :--- | :--- | :--- | :--- | :--- |
| 2014 |  |  |  |  |
| Operating\trevenues | $9,995 | $11,355 | $11,139 | $10,160 |
| Operating\texpenses | 9,265 | 9,956 | 9,879 | 9,300 |
| Operating\tincome | 730 | 1,399 | 1,260 | 860 |
| Net\tincome | 480 | 864 | 942 | 597 |
| Earnings\tper\tshare: |  |  |  |  |
| Basic | $0.66 | $1.20 | $1.31 | $0.84 |
| Diluted | $0.65 | $1.17 | $1.28 | $0.82 |
| Shares\tused\tfor\tcomputation\t(in\tthousands): |  |  |  |  |
| Basic | 723,971 | 720,600 | 719,067 | 706,185 |
| Diluted | 741,335 | 734,767 | 735,196 | 724,767 |
| 2013 |  |  |  |  |
| Operating\trevenues | $6,098 | $6,449 | $6,828 | $7,367 |
| Operating\texpenses | 6,027 | 5,937 | 6,127 | 7,252 |
| Operating\tincome | 71 | 512 | 701 | 115 |
| Net\tincome\t(loss) | (341) | 220 | 289 | (2,000) |
| Earnings\t(loss)\tper\tshare\t(1): |  |  |  |  |
| Basic | $(1.37) | $0.88 | $1.16 | $(5.38) |
| Diluted | $(1.37) | $0.79 | $1.02 | $(5.38) |
| Shares\tused\tfor\tcomputation\t(in\tthousands)\t(1): |  |  |  |  |
| Basic | 249,491 | 249,588 | 249,719 | 372,055 |
| Diluted | 249,491 | 288,511 | 289,036 | 372,055 |

(1) The	Company's	weighted	average	diluted	shares	outstanding	for	the	2013	quarters	presented	include	the	weighted	effect	of	shares	outstanding	for	both	the	pre	and post-merger	periods.	The	shares	outstanding	for	the	pre-merger	periods	(January	1,	2013	through	December	8,	2013)	consist	only	of	the	AMR	common	stock formerly	 traded	 under	 the	 symbol:	 "AAMRQ".	 In	 accordance	 with	 GAAP,	 these	 former	AAMRQ	 shares	 have	 been	 adjusted	 for	 all	 periods	 presented	 to retrospectively	reflect	the	distributions	made	to	date	pursuant	to	the	Company's	Plan,	whereby	holders	of	AAMRQ	have	received	0.7441	shares	of	AAG	Common Stock	per	share	of	AAMRQ.	The	shares	outstanding	for	the	23	day	post-merger	period	(December	9,	2013	through	December	31,	2013)	include	the	full	amount	of shares	to	be	issued	pursuant	to	the	Plan	over	the	120	day	distribution	period	adjusted	for	approximately	13	million	shares	withheld	by	the	Company	in	satisfaction of	employee	tax	obligations.

Former	holders	of	AAMRQ	shares	as	of	the	Effective	Date	may	in	the	future	receive	additional	distributions	of	AAG	Common	Stock	dependent	upon	the	ultimate distribution	of	shares	of	AAG	Common	Stock	to	holders	of	disputed	claims.	Thus,	the	shares	and	related	earnings	per	share	calculation	prior	to	the	Effective	Date may	change	in	the	future	to	reflect	additional	retrospective	adjustments	for	future	AAG	Common	Stock	distributions	to	former	holders	of	AAMRQ	shares.

The	Company's	fourth	quarter	2014	results	reflect	$507	million	of	net	special	items	consisting	of	$280	million	of	merger	integration	expenses	related	to	information technology,	alignment	of	labor	union	contracts,	professional	fees,	severance	and	retention,	share-based	compensation,	divestiture	of	London	Heathrow	Slots,	fleet restructuring,	re-branding	of	aircraft	and	airport	facilities,	relocation	and	training.	In	addition,	the	Company	recorded	a	net	$116	million	charge	for	bankruptcy	related items	principally	consisting	of	fair	value	adjustments

for	bankruptcy	settlement	obligations,	a	$70	million	charge	related	primarily	to	certain	spare	parts	asset	impairments	as	well	as	a	$24	million	charge	due	to	a	new	pilot labor	contract	at	the	Company's	Envoy	regional	subsidiary.	The	Company	also	recorded	a	$31	million	nonoperating	special	charge	principally	for	Venezuelan	foreign currency	losses.	These	charges	were	offset	in	part	by	an	$8	million	gain	on	the	sale	of	certain	spare	parts	as	well	as	a	$6	million	non-cash	deferred	income	tax	benefit related	to	certain	indefinite-lived	intangible	assets.

The	Company's	fourth	quarter	2013	results	reflect	$2.4	billion	of	net	special	items	consisting	of	$2.2	billion	of	reorganization	items	principally	due	to	a	$1.7	billion deemed	claim	to	employees	pursuant	to	the	Plan	as	well	as	professional	fees	and	estimated	allowed	claim	amounts,	$393	million	of	Merger	related	expenses	due	to	the alignment	of	 labor	union	contracts,	professional	fees,	severance,	share-based	compensation	and	fees	for	US	Airways	 to	exit	 the	Star	Alliance	and	 its	codeshare agreement	with	United	Airlines,	a	$214	million	tax	charge	attributable	to	additional	valuation	allowance	required	to	reduce	deferred	tax	assets	to	the	amount	more	likely than	not	to	be	realized,	a	$107	million	charge	related	to	American's	pilot	long-term	disability	obligation,	a	$33	million	aircraft	impairment	charge	and	$20	million	of interest	charges	to	recognize	post-petition	interest	expense	on	unsecured	obligations	pursuant	to	the	Plan.	These	charges	were	offset	in	part	by	a	$538	million	non-cash income	tax	benefit	resulting	from	gains	recorded	in	OCI,	a	$67	million	gain	on	the	sale	of	Slots	at	LaGuardia	Airport	and	a	$31	million	credit	to	other	revenue	related	to a	change	in	accounting	method	resulting	from	the	modification	of	the	Company's	AAdvantage	miles	agreement	with	Citibank.

# 21.		Financial	Information	for	Subsidiary	Guarantors	and	Non-guarantor	Subsidiaries

There	are	various	cross-guarantees	among	the	Company,	American,	US	Airways	Group	and	US	Airways	with	respect	to	publicly	held	debt	securities.	In	connection with	the	Merger,	the	Company	and	American	entered	into	a	second	supplemental	indenture	under	which	they	jointly	and	severally	guaranteed	the	payment	obligations	of US	Airways	Group	under	the	6.125%	senior	notes.	In	addition,	on	March	31,	2014,	the	Company,	US	Airways	Group	and	US	Airways	entered	into	amended	and restated	guarantees	of	the	payment	obligations	of	US	Airways	under	the	equipment	notes	relating	to	each	of	its	Series	2010-1,	2011-1,	2012-1,	2012-2	and	2013-1	Pass Through	Certificates,	the	result	of	which	was	to	add	AAG	as	a	guarantor	of	such	equipment	notes	on	a	joint	and	several	basis	with	US	Airways	Group.	In	September 2014,	the	Company	issued	$750	million	aggregate	principal	amount	of	the	5.50%	senior	notes,	which	are	fully	and	unconditionally	guaranteed	by	American,	US Airways	Group	and	US	Airways.

In	connection	with	the	issuance	of	these	guarantees,	in	accordance	with	Rule	3-10	of	Regulation	S-X	and	Rule	12h-5	under	the	Securities	Exchange	Act	of	1934,	as amended,	US	Airways	Group	and	US	Airways	discontinued	filing	separate	periodic	and	current	reports	with	the	SEC.	As	a	result,	in	accordance	with	Rule	3-10,	the Company	is	providing	the	following	consolidating	financial	information	for	American	Airlines	Group	(Parent	Company	Only),	American,	US	Airways	Group	(Parent Company	Only),	US	Airways	and	all	other	non-guarantor	subsidiaries,	together	with	the	consolidating	adjustments	necessary	to	present	the	Company's	results	on	a consolidated	basis.	For	the	financial	statements	of	US	Airways	Group	and	US	Airways	for	the	fiscal	year	ended	December	31,	2013,	please	refer	to	the	Annual	Report on	Form	10-K	of	each	such	company	filed	with	the	SEC	on	February	28,	2014.

# CONSOLIDATING	STATEMENT	OF	OPERATIONS

|  | American<br>Airlines	Group<br>(Parent<br>Company<br>Only) | American | Airways<br>Group<br>(Parent<br>Company<br>Only) | US	Airways | Non-<br>Guarantor<br>Subsidiaries | Eliminations<br>and<br>Reclassifications | American<br>Airlines<br>Group	Inc.<br>Consolidated |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Operating\trevenues: |  |  |  |  |  |  |  |
| Mainline\tpassenger | $— | $20,345 | $— | $10,457 | $— | $— | $30,802 |
| Regional\tpassenger | — | 2,911 | — | 3,411 | — | — | 6,322 |
| Cargo | — | 717 | — | 158 | — | — | 875 |
| Other | — | 3,168 | — | 1,600 | 3,278 | (3,395) | 4,651 |
| Total\toperating\trevenues | — | \t 27,141 | — | 15,626 | 3,278 | (3,395) | 42,650 |
| Operating\texpenses: |  |  |  |  |  |  |  |
| Aircraft\tfuel\tand\trelated\ttaxes | — | 7,190 | — | 3,401 | 1 | — | 10,592 |
| Salaries,\twages\tand\tbenefits | — | 5,662 | — | 2,837 | 782 | (773) | 8,508 |
| Regional\texpenses | — | 3,113 | — | 3,452 | — | (49) | 6,516 |
| Maintenance,\tmaterials\tand\trepairs | — | 1,334 | — | 717 | 352 | (352) | 2,051 |
| Other\trent\tand\tlanding\tfees | — | 1,145 | — | 582 | 32 | (32) | 1,727 |
| Aircraft\trent | — | 860 | — | 394 | 94 | (98) | 1,250 |
| Selling\texpenses | — | 1,091 | — | 453 | — | — | 1,544 |
| Depreciation\tand\tamortization | — | 896 | — | 405 | 40 | (46) | 1,295 |
| Special\titems,\tnet | 18 | 507 | — | 276 | 18 | (19) | 800 |
| Other | 5 | 3,005 | 1 | 1,181 | 1,951 | (2,025) | 4,118 |
| Total\toperating\texpenses | 23 | \t 24,803 | 1 | 13,698 | 3,270 | (3,394) | 38,401 |
| Operating\tincome\t(loss) | (23) | 2,338 | (1) | 1,928 | 8 | (1) | 4,249 |
| Nonoperating\tincome\t(expense): |  |  |  |  |  |  |  |
| Interest\tincome | 9 | 25 | — | 7 | 2 | (12) | 31 |
| Interest\texpense,\tnet | (15) | (581) | (36) | (266) | (1) | 12 | (887) |
| Equity\tin\tearnings\tof\tsubsidiaries | 2,919 | — | 1,480 | — | — | (4,399) | — |
| Other,\tnet | — | (153) | (53) | (30) | 2 | 53 | (181) |
| Total\tnonoperating\tincome\t(expense),\tnet | 2,913 | (709) | 1,391 | (289) | 3 | (4,346) | (1,037) |
| Income\tbefore\tincome\ttaxes | 2,890 | 1,629 | 1,390 | 1,639 | 11 | (4,347) | 3,212 |
| Income\ttax\tprovision\t(benefit) | 8 | 319 | (1) | 157 | 16 | (169) | 330 |
| Net\tincome\t(loss) | $2,882 | $1,310 | $1,391 | $1,482 | $(5) | $(4,178) | $2,882 |

# CONSOLIDATING	STATEMENT	OF	COMPREHENSIVE	INCOME	(LOSS)

|  | American<br>Airlines<br>Group<br>(Parent<br>Company<br>Only) | American | US<br>Airways<br>Group<br>(Parent<br>Company<br>Only) | US	Airways | Non-<br>Guarantor<br>Subsidiaries | Eliminations<br>and<br>Reclassifications | American<br>Airlines<br>Group	Inc.<br>Consolidated |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Net\tincome\t(loss) | $2,882 | $1,310 | $1,391 | $1,482 | $(5) | $(4,178) | $2,882 |
| Other\tcomprehensive\tincome\t(loss),\tbefore\ttax: |  |  |  |  |  |  |  |
| Defined\tbenefit\tpension\tplans\tand\tretiree\tmedical: |  |  |  |  |  |  |  |
| Amortization\tof\tactuarial\tloss\tand\tprior\tservice\tcost | — | (159) | — | (4) | — | — | (163) |
| Current\tyear\tchange | — | (2,602) | — | (19) | (12) | — | (2,633) |
| Derivative\tfinancial\tinstruments: |  |  |  |  |  |  |  |
| Change\tin\tfair\tvalue | (2) | (52) | — | — | — | — | (54) |
| Reclassification\tinto\tearnings | — | (4) | — | — | — | — | (4) |
| Unrealized\tgain\t(loss)\ton\tinvestments: |  |  |  |  |  |  |  |
| Net\tchange\tin\tvalue | 1 | (4) | — | — | — | — | (3) |
| Other\tcomprehensive\tincome\t(loss)\tbefore\ttax | (1) | (2,821) | — | (23) | (12) | — | (2,857) |
| Non-cash\ttax\tbenefit | (2) | (328) | — | — | — | — | (330) |
| Comprehensive\tincome\t(loss) | $2,883 | $(1,183) | $1,391 | $1,459 | $(17) | $(4,178) | $355 |

# CONDENSED	CONSOLIDATING	BALANCE	SHEET

|  | American<br>Airlines		Group<br>(Parent<br>Company<br>Only) | American | Airways<br>Group<br>(Parent<br>Company<br>Only) | US	Airways | Non-<br>Guarantor<br>Subsidiaries | Eliminations<br>and<br>Reclassifications | American<br>Airlines<br>Group	Inc.<br>Consolidated |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| ASSETS |  |  |  |  |  |  |  |
| Current\tassets |  |  |  |  |  |  |  |
| Cash | $1 | $785 | $2 | $199 | $7 | $— | $994 |
| Short-term\tinvestments | — | 3,290 | — | 3,016 | 3 | — | 6,309 |
| Restricted\tcash\tand\tshort-term\tinvestments | — | 650 | — | 124 | — | — | 774 |
| Accounts\treceivable,\tnet | — | 1,445 | — | 324 | 15 | (13) | 1,771 |
| Receivables\tfrom\trelated\tparties,\tnet | 1,893 | — | 157 | 933 | 526 | (3,509) | — |
| Aircraft\tfuel,\tspare\tparts\tand\tsupplies,\tnet | — | 625 | — | 294 | 85 | — | 1,004 |
| Prepaid\texpenses\tand\tother | — | 462 | — | 912 | 41 | (155) | 1,260 |
| Total\tcurrent\tassets | 1,894 | 7,257 | 159 | 5,802 | 677 | (3,677) | 12,112 |
| Operating\tproperty\tand\tequipment | — | 16,299 | — | 6,506 | 279 | — | 23,084 |
| Other\tassets |  |  |  |  |  |  |  |
| Investments\tin\tsubsidiaries | 847 | — | 6,870 | — | — | (7,717) | — |
| Goodwill | — | — | — | 4,090 | — | 1 | 4,091 |
| Intangibles,\tnet\tof\taccumulated\tamortization | — | 815 | — | 1,425 | — | — | 2,240 |
| Other\tassets | 53 | 1,921 | — | 267 | 38 | (35) | 2,244 |
| Total\tother\tassets | 900 | 2,736 | 6,870 | 5,782 | 38 | (7,751) | 8,575 |
| Total\tassets | $2,794 | $26,292 | $7,029 | $18,090 | $994 | $(11,428) | $43,771 |
| LIABILITIES\tAND\tSTOCKHOLDERS'\tEQUITY\t(DEFICIT) |  |  |  |  |  |  |  |
| Current\tliabilities |  |  |  |  |  |  |  |
| Current\tmaturities\tof\tlong-term\tdebt\tand\tcapital\tleases | $— | $1,230 | $— | $477 | $1 | $— | $1,708 |
| Accounts\tpayable | — | 1,029 | — | 287 | 61 | — | 1,377 |
| Payables\tto\trelated\tparties,\tnet | — | 2,563 | 634 | 73 | 239 | (3,509) | — |
| Air\ttraffic\tliability | — | 2,989 | — | 1,263 | — | — | 4,252 |
| Frequent\tflyer\tliability | — | 1,823 | — | 984 | — | — | 2,807 |
| Other\taccrued\tliabilities | 14 | 1,886 | 3 | 1,253 | 138 | (3) | 3,291 |
| Total\tcurrent\tliabilities | 14 | 11,520 | 637 | 4,337 | 439 | (3,512) | 13,435 |
| Noncurrent\tliabilities |  |  |  |  |  |  |  |
| Long-term\tdebt\tand\tcapital\tleases,\tnet\tof\tcurrent\tmaturities | 758 | 10,004 | 524 | 4,945 | — | (35) | 16,196 |
| Pension\tand\tpostretirement\tbenefits | — | 7,400 | — | 122 | 40 | — | 7,562 |
| Mandatorily\tconvertible\tpreferred\tstock\tand\tother\tbankruptcy\tsettlement |  |  |  |  |  |  |  |
| obligations | — | 325 | — | — | — | — | 325 |
| Other\tliabilities | 1 | 2,615 | — | 1,861 | 317 | (562) | 4,232 |
| Total\tnoncurrent\tliabilities | 759 | 20,344 | 524 | 6,928 | 357 | (597) | 28,315 |
| Stockholders'\tequity\t(deficit) |  |  |  |  |  |  |  |
| Common\tstock | 7 | — | — | — | — | — | 7 |
| Additional\tpaid-in\tcapital | 15,135 | 10,632 | 4,703 | 5,542 | 199 | (21,076) | 15,135 |
| Accumulated\tother\tcomprehensive\tloss | (4,559) | (4,645) | (16) | (8) | (12) | 4,681 | (4,559) |
| Retained\tearnings\t(deficit) | (8,562) | (11,559) | 1,181 | 1,291 | 11 | 9,076 | (8,562) |
| Total\tstockholders'\tequity\t(deficit) | 2,021 | (5,572) | 5,868 | 6,825 | 198 | (7,319) | 2,021 |
| Total\tliabilities\tand\tstockholders'\tequity\t(deficit) | $2,794 | $26,292 | $7,029 | $18,090 | $994 | $(11,428) | $43,771 |

# CONDENSED	CONSOLIDATING	STATEMENT	OF	CASH	FLOWS

|  | American<br>Airlines		Group<br>(Parent<br>Company<br>Only) | American | Airways<br>Group<br>(Parent<br>Company<br>Only) | US	Airways | Non-<br>Guarantor<br>Subsidiaries | Eliminations<br>and<br>Reclassifications | American<br>Airlines<br>Group	Inc.<br>Consolidated |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Net\tcash\tprovided\tby\toperating\tactivities | $457 | $1,477 | $1 | $1,101 | $44 | $— | $3,080 |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |  |  |  |  |
| Capital\texpenditures\tand\taircraft\tpurchase |  |  |  |  |  |  |  |
| deposits | — | (3,913) | — | (1,145) | (55) | (198) | (5,311) |
| Purchases\tof\tshort-term\tinvestments | — | (3,270) | — | (2,110) | — | — | (5,380) |
| Sales\tof\tshort-term\tinvestments | — | 5,139 | — | 2,040 | — | — | 7,179 |
| Decrease\tin\trestricted\tcash\tand\tshort-term |  |  |  |  |  |  |  |
| investments | — | 52 | — | 209 | — | — | 261 |
| Net\tproceeds\tfrom\tslot\ttransaction | — | 299 | — | 8 | — | — | 307 |
| Funds\ttransferred\tto\taffiliates,\tnet | — | (198) | — | — | — | 198 | — |
| Proceeds\tfrom\tsale\tof\tproperty\tand |  |  |  |  |  |  |  |
| equipment | — | 2 | — | 18 | 13 | — | 33 |
| Net\tcash\tused\tin\tinvesting\tactivities | — | (1,889) | — | (980) | (42) | — | (2,911) |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |  |  |  |  |
| Payments\ton\tlong-term\tdebt\tand\tcapital |  |  |  |  |  |  |  |
| leases | — | (2,343) | — | (612) | (1) | (176) | (3,132) |
| Proceeds\tfrom\tissuance\tof\tlong-term\tdebt | 750 | 1,993 | — | 559 | — | — | 3,302 |
| Deferred\tfinancing\tcosts | (11) | (93) | — | (2) | — | — | (106) |
| Sale-leaseback\ttransactions | — | 811 | — | — | — | — | 811 |
| Exercise\tof\tstock\toptions | 10 | — | — | — | — | — | 10 |
| Treasury\tstock\trepurchases | (1,062) | — | — | — | — | — | (1,062) |
| Dividend\tpayment | (144) | — | — | — | — | — | (144) |
| Funds\ttransferred\tto\taffiliates,\tnet | — | — | — | (176) |  | 176 | — |
| Other\tfinancing\tactivities | — | — | — | 6 | — | — | 6 |
| Net\tcash\tprovided\tby\t(used\tin)\nfinancing\tactivities | (457) | 368 | — | (225) | (1) | — | (315) |
| Net\tincrease\t(decrease)\tin\tcash | — | (44) | 1 | (104) | 1 | — | (146) |
| Cash\tat\tbeginning\tof\tyear | 1 | 829 | 1 | 303 | 6 | — | 1,140 |
| Cash\tat\tend\tof\tyear | $1 | $785 | $2 | $199 | $7 | $— | $994 |

# 22.		Subsequent	Events

# Share	Repurchase	Program	and	Dividend	Declaration

On	January	27,	2015,	the	Company	announced	that	its	Board	of	Directors	had	authorized	a	$2.0	billion	share	repurchase	program	to	be	completed	by	the	end	of 2016.	Shares	repurchased	under	the	program	may	be	made	through	a	variety	of	methods,	which	may	include	open	market	purchases,	privately	negotiated	transactions, block	trades	or	accelerated	share	repurchase	transactions.	Any	such	repurchases	will	be	made	from	time	to	time	subject	to	market	and	economic	conditions,	applicable legal	requirements	and	other	relevant	factors.	The	share	repurchase	program	does	not	obligate	the	Company	to	repurchase	any	specific	number	of	shares	and	may	be suspended	at	any	time	at	management's	discretion.

Also	on	January	27,	2015,	the	Company	announced	that	its	Board	of	Directors	had	declared	a	$0.10	per	share	dividend	for	shareholders	of	record	on	February	9, 2015,	and	payable	on	February	23,	2015.	Any	future	dividends	that	may	be	declared	and	paid	from	time	to	time	under	the	Company's	capital	deployment	program	will be	subject	to	market	and	economic	conditions,	applicable	legal	requirements	and	other	relevant	factors.	The	Company's	capital	deployment	program	does	not	obligate	it to	continue	a	dividend	for	any	fixed	period,	and	payment	of	dividends	may	be	suspended	at	any	time	at	management's	discretion.

# Distribution	of	AAG	Common	Stock

# ITEM	8B.	CONSOLIDATED	FINANCIAL	STATEMENTS	AND	SUPPLEMENTARY	DATA	OF	AMERICAN	AIRLINES,	INC.

We	have	audited	the	accompanying	consolidated	balance	sheet	of	American	Airlines,	Inc.	and	subsidiaries	(American)	as	of	December	31,	2014,	and	the	related consolidated	statements	of	operations,	comprehensive	income	(loss),	stockholder's	equity	(deficit),	and	cash	flows	for	the	year	then	ended.	These	consolidated	financial statements	are	the	responsibility	of	American's	management.	Our	responsibility	is	to	express	an	opinion	on	these	consolidated	financial	statements	based	on	our	audit.

In	our	opinion,	the	consolidated	financial	statements	referred	to	above	present	fairly,	in	all	material	respects,	the	financial	position	of	American	Airlines,	Inc.	and subsidiaries	as	of	December	31,	2014,	and	the	results	of	their	operations	and	their	cash	flows	for	the	year	then	ended	in	conformity	with	U.S.	generally	accepted accounting	principles.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	American	Airlines,	Inc.'s	internal control	over	financial	reporting	as	of	December	31,	2014,	based	on	criteria	established	in	Internal	Control	–	Integrated	Framework	(1992)	issued	by	the	Committee	of Sponsoring	Organizations	of	the	Treadway	Commission	(COSO),	and	our	report	dated	February	25,	2015	expressed	an	unqualified	opinion	on	the	effectiveness	of American's	internal	control	over	financial	reporting.

# The	Board	of	Directors	and	Stockholder

We	have	audited	the	accompanying	consolidated	balance	sheet	of	American	Airlines,	Inc.	(American)	as	of	December	31,	2013,	and	the	related	consolidated statements	of	operations,	comprehensive	income	(loss),	stockholder's	equity	(deficit)	and	cash	flows	for	each	of	the	two	years	in	the	period	ended	December	31,	2013. These	consolidated	financial	statements	and	schedule	are	the	responsibility	of	American's	management.	Our	responsibility	is	to	express	an	opinion	on	these	financial statements	based	on	our	audits.

We	conducted	our	audits	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan and	perform	the	audit	to	obtain	reasonable	assurance	about	whether	the	financial	statements	are	free	of	material	misstatement.	An	audit	includes	examining,	on	a	test basis,	evidence	supporting	the	amounts	and	disclosures	in	the	financial	statements.	An	audit	also	includes	assessing	the	accounting	principles	used	and	significant estimates	made	by	management,	as	well	as	evaluating	the	overall	financial	statement	presentation.	We	believe	that	our	audits	provide	a	reasonable	basis	for	our	opinion.

In	our	opinion,	the	financial	statements	referred	to	above	present	fairly,	in	all	material	respects,	the	consolidated	financial	position	of	American	Airlines,	Inc.	at December	31,	2013	and	the	consolidated	results	of	its	operations	and	its	cash	flows	for	each	of	the	two	years	in	the	period	ended	December	31,	2013,	in	conformity	with U.S.	generally	accepted	accounting	principles.

|  | 2014 | 2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Operating\trevenues: |  |  |  |
| Mainline\tpassenger | $20,345 | $19,594 | $18,743 |
| Regional\tpassenger | 2,911 | 2,927 | 2,914 |
| Cargo | 717 | 676 | 675 |
| Other | 3,168 | 2,563 | 2,493 |
| Total\toperating\trevenues | 27,141 | 25,760 | 24,825 |
| Operating\texpenses: |  |  |  |
| Aircraft\tfuel\tand\trelated\ttaxes | 7,190 | 7,628 | 7,705 |
| Salaries,\twages\tand\tbenefits | 5,662 | 5,267 | 6,208 |
| Regional\texpenses | 3,113 | 3,074 | 3,049 |
| Maintenance,\tmaterials\tand\trepairs | 1,334 | 1,222 | 1,158 |
| Other\trent\tand\tlanding\tfees | 1,145 | 1,117 | 1,083 |
| Aircraft\trent | 860 | 743 | 554 |
| Selling\texpenses | 1,091 | 1,128 | 1,059 |
| Depreciation\tand\tamortization | 896 | 830 | 845 |
| Special\titems,\tnet | 507 | 282 | 386 |
| Other | 3,005 | 2,935 | 2,696 |
| Total\toperating\texpenses | 24,803 | 24,226 | 24,743 |
| Operating\tincome | 2,338 | 1,534 | 82 |
| Nonoperating\tincome\t(expense): |  |  |  |
| Interest\tincome | 25 | 20 | 25 |
| Interest\texpense,\tnet\tof\tcapitalized\tinterest | (581) | (710) | (646) |
| Other,\tnet | (153) | (84) | 223 |
| Total\tnonoperating\texpense,\tnet | (709) | (774) | (398) |
| Income\t(loss)\tbefore\treorganization\titems,\tnet | 1,629 | 760 | (316) |
| Reorganization\titems,\tnet | — | (2,640) | (2,179) |
| Income\t(loss)\tbefore\tincome\ttaxes | 1,629 | (1,880) | (2,495) |
| Income\ttax\tprovision\t(benefit) | 319 | (354) | (569) |
| Net\tincome\t(loss) | $1,310 | $(1,526) | $(1,926) |

# CONSOLIDATED	STATEMENTS	OF	COMPREHENSIVE	LOSS

|  | Year	Ended	December	31, | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2014 | 2013 | 2012 |
| Net\tincome\t(loss) | $1,310 | $(1,526) | $(1,926) |
| Other\tcomprehensive\tincome\t(loss),\tbefore\ttax: |  |  |  |
| Defined\tbenefit\tpension\tplans\tand\tretiree\tmedical: |  |  |  |
| Amortization\tof\tactuarial\tgain\t(loss)\tand\tprior\tservice\tcost | (159) | (142) | 130 |
| Current\tyear\tchange | (2,602) | 1,565 | (1,910) |
| Benefit\tplan\tmodifications | — | — | 3,345 |
| Derivative\tfinancial\tinstruments: |  |  |  |
| Change\tin\tfair\tvalue | (52) | 18 | (12) |
| Reclassification\tinto\tearnings | (4) | 34 | (3) |
| Unrealized\tgain\t(loss)\ton\tinvestments: |  |  |  |
| Net\tchange\tin\tvalue | (4) | (1) | 6 |
| Other\tcomprehensive\tincome\t(loss)\tbefore\ttax | (2,821) | 1,474 | 1,556 |
| Non-cash\ttax\tprovision\t(benefit) | (328) | 538 | 569 |
| Comprehensive\tloss | $(1,183) | $(590) | $(939) |

|  | 2014 | 2013 |
| :--- | :--- | :--- |
| ASSETS |  |  |
| Current\tassets |  |  |
| Cash | $785 | $829 |
| Short-term\tinvestments | 3,290 | 5,162 |
| Restricted\tcash\tand\tshort-term\tinvestments | 650 | 702 |
| Accounts\treceivable,\tnet | 1,445 | 1,186 |
| Aircraft\tfuel,\tspare\tparts\tand\tsupplies,\tnet | 625 | 620 |
| Prepaid\texpenses\tand\tother | 462 | 702 |
| Total\tcurrent\tassets | 7,257 | 9,201 |
| Operating\tproperty\tand\tequipment |  |  |
| Flight\tequipment | 21,646 | 18,534 |
| Ground\tproperty\tand\tequipment | 5,217 | 5,002 |
| Equipment\tpurchase\tdeposits | 1,128 | 847 |
| Total\tproperty\tand\tequipment,\tat\tcost | 27,991 | 24,383 |
| Less\taccumulated\tdepreciation\tand\tamortization | (11,692) | (10,914) |
| Total\tproperty\tand\tequipment,\tnet | 16,299 | 13,469 |
| Other\tassets |  |  |
| Intangibles,\tnet\tof\taccumulated\tamortization\tof\t$376\tand\t$375,\trespectively | 815 | 812 |
| Other\tassets | 1,921 | 2,130 |
| Total\tother\tassets | 2,736 | 2,942 |
| Total\tassets | $26,292 | $25,612 |
| LIABILITIES\tAND\tSTOCKHOLDER'S\tDEFICIT |  |  |
| Current\tliabilities |  |  |
| Current\tmaturities\tof\tlong-term\tdebt\tand\tcapital\tleases | $1,230 | $957 |
| Accounts\tpayable | 1,029 | 1,013 |
| Accrued\tsalaries\tand\twages | 650 | 659 |
| Air\ttraffic\tliability | 2,989 | 3,145 |
| Frequent\tflyer\tliability | 1,823 | 1,760 |
| Payable\tto\taffiliates | 2,563 | 2,807 |
| Other\taccrued\tliabilities | 1,236 | 1,578 |
| Total\tcurrent\tliabilities | 11,520 | 11,919 |
| Noncurrent\tliabilities |  |  |
| Long-term\tdebt\tand\tcapital\tleases,\tnet\tof\tcurrent\tmaturities | 10,004 | 9,852 |
| Pension\tand\tpostretirement\tbenefits | 7,400 | 5,693 |
| Deferred\tgains\tand\tcredits,\tnet | 271 | 278 |
| Bankruptcy\tsettlement\tobligations | 325 | 5,424 |
| Other\tliabilities | 2,344 | 2,106 |
| Total\tnoncurrent\tliabilities | 20,344 | 23,353 |
| Commitments\tand\tcontingencies\t(Note\t12) |  |  |
| Stockholder's\tdeficit |  |  |
|  | — | — |
| Additional\tpaid-in\tcapital | 10,632 | 5,361 |
| Accumulated\tother\tcomprehensive\tloss | (4,645) | (2,152) |
| Accumulated\tdeficit | (11,559) | (12,869) |
| Total\tstockholder's\tdeficit | (5,572) | (9,660) |
| Total\tliabilities\tand\tstockholder's\tdeficit | $26,292 | $25,612 |

|  | 2014 | December	31,<br>2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Cash\tflows\tfrom\toperating\tactivities: |  |  |  |
| Net\tincome\t(loss) | $1,310 | $(1,526) | $(1,926) |
| Adjustments\tto\treconcile\tnet\tincome\t(loss)\tto\tnet\tcash\tprovided\tby\toperating\tactivities: |  |  |  |
| Depreciation\tand\tamortization | 1,051 | 979 | 999 |
| Debt\tdiscount\tand\tlease\tamortization | (5) | 4 | (14) |
| Special\titems,\tnon-cash | 89 | 82 | 214 |
| Pension\tand\tpostretirement | (159) | (154) | 287 |
| Deferred\tincome\ttaxes | 342 | (324) | (569) |
| Share\tbased\tcompensation | 199 | 24 | 26 |
| Reorganization\titems,\tnon-cash | — | 2,098 | 2,037 |
| Interest\texpense,\tnon-cash | — | 45 | — |
| Other,\tnet | 3 | (77) | 13 |
| Changes\tin\toperating\tassets\tand\tliabilities: |  |  |  |
| Increase\tin\taccounts\treceivable | (209) | (81) | (222) |
| Decrease\t(increase)\tin\tother\tcurrent\tassets | 8 | (3) | (133) |
| Decrease\t(increase)\tin\tderivative\tcollateral | — | 1 | (1) |
| Increase\tin\taccounts\tpayable\tand\taccrued\tliabilities | 99 | 46 | 423 |
| Increase\t(decrease)\tin\tair\ttraffic\tliability | (124) | 332 | 161 |
| Increase\tin\tfrequent\tflyer\tliability | 31 | 49 | 140 |
| Contributions\tto\tpension\tplans | (809) | (494) | (277) |
| Decrease\tin\tother\tassets\tand\tliabilities | (349) | (52) | (4) |
| Net\tcash\tprovided\tby\toperating\tactivities | 1,477 | 949 | 1,154 |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |
| Capital\texpenditures\tand\taircraft\tpurchase\tdeposits | (3,913) | (2,968) | (1,870) |
| Purchases\tof\tshort-term\tinvestments | (3,270) | (3,342) | (1,067) |
| Sales\tof\tshort-term\tinvestments | 5,139 | 1,588 | 1,373 |
| Decrease\t(increase)\tin\trestricted\tcash\tand\tshort-term\tinvestments | 52 | 148 | (112) |
| Net\tproceeds\tfrom\tslot\ttransaction | 299 | — | — |
| Funds\ttransferred\tto\taffiliates,\tnet | (198) | — | — |
| Proceeds\tfrom\tsale\tof\tproperty\tand\tequipment | 2 | 115 | 124 |
| Net\tcash\tused\tin\tinvesting\tactivities | (1,889) | (4,459) | (1,552) |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |
| Payments\ton\tlong-term\tdebt\tand\tcapital\tleases | (2,343) | (2,628) | (1,288) |
| Proceeds\tfrom\tissuance\tof\tlong-term\tdebt | 1,993 | 4,850 | 268 |
| Deferred\tfinancing\tcosts | (93) | (115) | (6) |
| Sale-leaseback\ttransactions | 811 | 1,700 | 1,509 |
| Funds\ttransferred\tto\taffiliates,\tnet | — | 53 | 109 |
| Other\tfinancing\tactivities | — | 5 | — |
| Net\tcash\tprovided\tby\tfinancing\tactivities | 368 | 3,865 | 592 |
| Net\tincrease\t(decrease)\tin\tcash | (44) | 355 | 194 |
| Cash\tat\tbeginning\tof\tyear | 829 | 474 | 280 |
| Cash\tat\tend\tof\tyear | $785 | $829 | $474 |

|  | Common<br>Stock | Additional<br>Paid-in<br>Capital | Treasury<br>Stock | Other<br>Comprehensive<br>Income	(Loss) | Accumulated<br>Deficit | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tDecember\t31,\t2011 | $— | $4,455 | $— | $(4,075) | $(9,417) | $(9,037) |
| Net\tloss | — | — | — | — | (1,926) | (1,926) |
| Change\tin\tunrealized\tgain\ton\tinvestments | — | — | — | 6 | — | 6 |
| Changes\tin\tpension,\tretiree\tmedical\tand\tother\tliability | — | — | — | 1,565 | — | 1,565 |
| Net\tchanges\tin\tfair\tvalue\tof\tderivative\tfinancial\tinstruments | — | — | — | (15) | — | (15) |
| Non-cash\ttax\tprovision | — | — | — | (569) | — | (569) |
| Share-based\tcompensation\texpense | — | 14 | — |  | — | 14 |
| Balance\tat\tDecember\t31,\t2012 | — | 4,469 | — | (3,088) | (11,343) | (9,962) |
| Net\tloss | — | — | — | — | (1,526) | (1,526) |
| Change\tin\tunrealized\tloss\ton\tinvestments | — | — | — | (1) | — | (1) |
| Changes\tin\tpension,\tretiree\tmedical\tand\tother\tliability | — | — | — | 1,423 | — | 1,423 |
| Net\tchanges\tin\tfair\tvalue\tof\tderivative\tfinancial\tinstruments | — | — | — | 52 | — | 52 |
| Non-cash\ttax\tprovision | — | — | — | (538) | — | (538) |
| Share-based\tcompensation\texpense | — | 68 | — |  | — | 68 |
| Intercompany\tequity\ttransfer | — | 824 | — |  | — | 824 |
| Balance\tat\tDecember\t31,\t2013 | — | 5,361 | — | (2,152) | (12,869) | (9,660) |
| Net\tincome | — | — | — | — | 1,310 | 1,310 |
| Change\tin\tunrealized\tloss\ton\tinvestments | — | — | — | (4) | — | (4) |
| Changes\tin\tpension,\tretiree\tmedical\tand\tother\tliability | — | — | — | (2,761) | — | (2,761) |
| Net\tchanges\tin\tfair\tvalue\tof\tderivative\tfinancial\tinstruments | — | — | — | (56) | — | (56) |
| Non-cash\ttax\tbenefit | — | — | — | 328 | — | 328 |
| Share-based\tcompensation\texpense | — | 199 | — | — | — | 199 |
| Intercompany\tequity\ttransfer | — | 5,072 | — | — | — | 5,072 |
| Balance\tat\tDecember\t31,\t2014 | $— | $10,632 | $— | $(4,645) | $(11,559) | $(5,572) |

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS	OF	AMERICAN	AIRLINES,	INC.

American	Airlines,	Inc.	(American)	is	a	Delaware	corporation	whose	primary	business	activity	is	the	operation	of	a	major	network	air	carrier.	American	is	a	wholly- owned	subsidiary	of	American	Airlines	Group	Inc.	(AAG;	formerly	AMR	Corporation),	which	owns	all	of	American's	outstanding	common	stock,	par	value	$1.00	per share.

Prior	to	the	Merger,	as	discussed	below,	American	operated	the	third	largest	airline	in	the	U.S.	as	measured	by	revenue	passenger	miles	(RPMs)	and	available	seat miles	(ASMs).	American	operates	in	five	primary	domestic	markets:	Chicago,	Dallas/Fort	Worth,	Los	Angeles,	Miami,	and	New	York	City.

As	of	December	31,	2014,	American	employed	approximately	61,600	active	full-time	equivalent	employees,	of	which	approximately	86%	are	covered	by	collective bargaining	agreements	(CBAs)	with	various	labor	unions.

On	November	29,	2011	(the	Petition	Date),	AMR	Corporation	(AMR,	renamed	American	Airlines	Group	Inc.,	upon	 the	closing	of	 the	Merger),	 its	principal subsidiary,	American,	and	certain	of	AMR's	other	direct	and	indirect	domestic	subsidiaries	(collectively,	the	Debtors),	filed	voluntary	petitions	for	relief	(the	Chapter	11 Cases)	under	Chapter	11	of	the	United	States	Bankruptcy	Code	(the	Bankruptcy	Code)	in	the	United	States	Bankruptcy	Court	for	the	Southern	District	of	New	York	(the Bankruptcy	Court).	On	October	21,	2013,	the	Bankruptcy	Court	entered	an	order	(the	Confirmation	Order)	approving	and	confirming	the	Debtors'	fourth	amended	joint plan	of	reorganization	(as	amended,	the	Plan).

On	December	9,	2013	(the	Effective	Date),	the	Debtors	consummated	their	reorganization	pursuant	to	the	Plan,	principally	through	the	transactions	contemplated	by that	certain	Agreement	and	Plan	of	Merger	(as	amended,	the	Merger	Agreement),	dated	as	of	February	13,	2013,	by	and	among	AMR,	AMR	Merger	Sub,	Inc.	(Merger Sub)	and	US	Airways	Group,	Inc.	(US	Airways	Group),	pursuant	to	which	Merger	Sub	merged	with	and	into	US	Airways	Group	(the	Merger),	with	US	Airways	Group surviving	as	a	wholly-owned	subsidiary	of	AAG	following	the	Merger.	Pursuant	to	the	Merger	Agreement,	each	share	of	common	stock,	par	value	$0.01	per	share,	of US	Airways	Group	was	converted	into	the	right	to	receive	one	share	of	AAG	common	stock,	par	value	$0.01	per	share	(AAG	Common	Stock).

•holders	of	certain	labor-related	deemed	claims	and	certain	non-management,	non-union	employees	as	specified	in	the	Plan	received,	at	the	Effective	Date, the	right	to	receive	an	allocation	of	shares	of	AAG	Common	Stock	representing	23.6%	of	the	total	number	of	shares	of	AAG	Common	Stock	ultimately distributed	to	holders	of	pre-petition	general	unsecured	creditors	against	the	Debtors.	On	the	Effective	Date,	pursuant	to	the	Plan,	an	initial	allocation	of approximately	39	million	shares	of	AAG	Common	Stock	was	made	related	to	these	labor	and	employee	groups,	of	which	approximately	27	million	shares were	distributed	on	the	Effective	Date	and	approximately	13	million	shares	of	which	were	withheld	in	connection	with	American	making	a	cash	payment of	approximately	$300	million	for	certain	required	withholding	taxes;

The	Plan	contemplated	the	distribution	of	up	to	756	million	shares	of	AAG	Common	Stock,	however	this	amount	has	been	reduced	by	approximately	20	million shares	because	certain	tax	withholdings	for	employees	were	paid	in	cash	as	permitted	under	the	Plan.	In	accordance	with	the	Plan,	AAG	issued	the	remaining	shares	of AAG	Common	Stock	over	the	120-day	distribution	period,	except	for	shares	held	in	the	Disputed	Claims	Reserve.	In	addition,	pursuant	to	the	Plan,	approximately 197	million	shares	of	AAG	Common	Stock	were	distributed	to	holders	of	outstanding	shares	of	US	Airways	Group	common	stock.

Pursuant	to	rulings	of	the	Bankruptcy	Court,	the	Plan	established	the	Disputed	Claims	Reserve	that	was	initially	issued	30.4	million	shares	of	AAG	Common	Stock reserved	for	issuance	to	disputed	claimholders	at	the	Effective	Date	that	ultimately	become	holders	of	allowed	Single-Dip	Unsecured	Claims	(Single-Dip	Equity Obligations)	as	well	as	to	certain	AMR	labor	groups	and	employees	who	received	a	deemed	claim	amount	based	upon	a	fixed	percentage	of	the	distributions	to	be	made to	general	unsecured	claimholders.	On	July	1,	2014	(the	date	180	days	after	the	Effective	Date),	approximately	2.9	million	shares	of	AAG	Common	Stock	held	in	the Disputed	Claims	Reserve	were	distributed	to	holders	of	allowed	Single-Dip	Unsecured	Claims,	to	holders	of	certain	labor-related	deemed	claims,	and	to	holders	of certain	non-management,	non-union	employee	deemed	claims	as	specified	in	the	Plan,	and	shares	were	withheld	or	sold	on	account	of	related	tax	obligations.	In addition,	on	July	1,	2014,	American	repurchased	0.4	million	shares	of	AAG	Common	Stock	for	an	aggregate	of	$19	million	from	the	Disputed	Claims	Reserve	at	the then	prevailing	market	price	in	order	to	fund	cash	tax	obligations	resulting	from	distributions	by	the	Disputed	Claims	Reserve.	On	November	4,	2014,	approximately 0.7	million	shares	of	AAG	Common	Stock	held	in	the	Disputed	Claims	Reserve	were	distributed	to	holders	of	allowed	Single-Dip	Unsecured	Claims,	to	holders	of certain	labor-related	deemed	claims,	and	to	holders	of	certain	non-management,	non-union	employee	deemed	claims	as	specified	in	the	Plan,	and	shares	were	withheld or	sold	on	account	of	related	tax	obligations.	In	addition,	on	November	4,	2014,	American	repurchased	less	than	0.1	million	shares	of	AAG	Common	Stock	for	an aggregate	of	$2	million	from	the	Disputed	Claims	Reserve	at	the	then	prevailing	market	price	in	order	to	fund	cash	tax	obligations	resulting	from	distributions	by	the Disputed	Claims	Reserve.	As	of	December	31,	2014,	there	were	approximately	26.8	million	shares	of	AAG	Common	Stock	remaining	in	the	Disputed	Claims	Reserve. As	disputed	claims	are	resolved,	the	claimants	will	receive	distributions	of	shares	from	the	Disputed	Claims	Reserve	on	the	same	basis	as	if	such	distributions	had	been made	on	or	about	the	Effective	Date.	To	the	extent	that	any	of	the	reserved	shares	remain	undistributed	upon	resolution	of	all	remaining	disputed	claims,	such	shares	will not	be	returned	to	AAG	but	rather	will	be	distributed	to	former	AMR	shareholders	as	of	the	Effective	Date.	AAG	is	not	required	to	distribute	additional	shares	above	the limits	contemplated	by	the	Plan	described	above.

In	addition,	from	the	Effective	Date	through	December	31,	2014,	American	has	made	the	following	cash	disbursements	under	the	Plan:

The	reconciliation	process	with	respect	to	the	remaining	claims	will	take	considerable	time	post-emergence.	American's	estimate	of	the	amounts	of	disputed	claims that	will	ultimately	become	allowed	Single-Dip	Unsecured	Claims	are	included	in	bankruptcy	settlement	obligations	on	American's	consolidated	balance	sheet	as	of December	31,	2014.	As	these	claims	are	resolved,	or	where	better	information	becomes	available	and	is	evaluated,	American	will	make	adjustments	to	the	liabilities recorded	 in	American's	 consolidated	 financial	 statements	 as	 appropriate.	Any	 such	 adjustments	 could	 be	 material	 to	American's	 financial	 position	 or	 results	 of operations	in	any	given	period.

Upon	emergence	from	bankruptcy,	American	experienced	an	"ownership	change"	as	defined	in	Section	382	of	the	Internal	Revenue	Code	of	1986,	as	amended (Section	382),	which	could	potentially	limit	the	ability	to	utilize	certain	tax	attributes	including	American's	substantial	net	operating	losses	(NOLs).	The	general limitation	rules	for	a	debtor	in	a	bankruptcy	case	are	liberalized	where	the	ownership	change	occurs	upon	emergence	from	bankruptcy.	American	elected	to	be	covered by	certain	special	rules	for	federal	income	tax	purposes	that	permit	approximately	$9.5	billion	of	the	federal	NOL	Carryforwards	to	be	utilized	without	regard	to	the annual	limitation	generally	imposed	by	Section	382.	See	Note	7	for	additional	information	related	to	tax	matters.

Moreover,	an	ownership	change	subsequent	to	American's	emergence	from	bankruptcy	may	further	limit	or	effectively	eliminate	the	ability	to	utilize	American's NOL	Carryforwards	and	other	tax	attributes.	To	reduce	the	risk	of	a	potential	adverse	effect	on	American's	ability	to	utilize	the	NOL	Carryforwards,	AAG's	Certificate of	Incorporation	contains	transfer	restrictions	applicable	to	certain	substantial	shareholders.	Although	the	purpose	of	these	transfer	restrictions	is	to	prevent	an	ownership change	from	occurring,	there	can	be	no	assurance	that	an	ownership	change	will	not	occur	even	with	these	transfer	restrictions.	A	copy	of	AAG's	Certificate	of Incorporation	was	attached	as	Exhibit	3.1	to	a	Current	Report	on	Form	8-K	filed	by	AAG	with	the	SEC	on	December	9,	2013.

|  | December	31, |  |
| :--- | :--- | :--- |
|  | 2013 | 2012 |
| Pension\tand\tpostretirement\tbenefits | $— | $(66) |
| Labor-related\tdeemed\tclaim\t(1) | \t 1,733 | — |
| Aircraft\tand\tfacility\tfinancing\trenegotiations\tand\trejections\t(2),(3) | 320 | \t 1,951 |
| Fair\tvalue\tof\tconversion\tdiscount\t(4) | 218 | — |
| Professional\tfees | 199 | 227 |
| Other | 170 | 67 |
| Total\treorganization\titems,\tnet | $2,640 | $2,179 |

(3) Pursuant	to	the	Plan,	the	Debtors	agreed	to	allow	certain	post-petition	unsecured	claims	on	obligations.	As	a	result,	during	the	year	ended	December	31,	2013, American	 recorded	 reorganization	 charges	 to	 adjust	 estimated	 allowed	 claim	 amounts	 previously	 recorded	 on	 rejected	 special	 facility	 revenue	 bonds	 of $180	million,	allowed	general	unsecured	claims	related	to	the	1990	and	1994	series	of	special	facility	revenue	bonds	that	financed	certain	improvements	at	John F.	Kennedy	International	Airport	(JFK),	and	rejected	bonds	that	financed	certain	improvements	at	Chicago	O'Hare	International	Airport	(ORD),	which	are included	in	the	table	above.

# 3.		Bankruptcy	Settlement	Obligations

As	of	December	31,	2014	and	2013,	the	components	of	bankruptcy	settlement	obligations	on	American's	consolidated	balance	sheets	are	as	follows	(in	millions):

|  | December	31, | December	31, |
| :--- | :--- | :--- |
|  | 2014 | 2013 |
| Single-Dip\tand\tDouble-Dip\tEquity\tObligations | $248 | $4,575 |
| Labor-related\tdeemed\tclaim | 77 | 849 |
| Total | $325 | $5,424 |

The	Single-Dip	Equity	Obligations,	while	outstanding,	do	not	vote	or	participate	in	accordance	with	the	terms	of	the	Plan.	These	equity	obligations,	representing	the amount	of	total	Single-Dip	Unsecured	Claims	not	satisfied	through	the	issuance	of	AAG	Series	A	Preferred	Stock	at	the	Effective	Date,	represented	an	unconditional obligation	to	transfer	a	variable	number	of	shares	of	AAG	Common	Stock	based	predominantly	on	a	fixed	monetary	amount	known	at	inception,	and,	as	such,	were	not treated	as	equity,	but	rather	as	liabilities,	until	the	120th	day	after	emergence,	which	was	April	8,	2014.	As	of	April	8,	2014,	AAG	has	issued	shares	of	AAG	Common Stock	to	satisfy	the	obligation	amount	at	emergence,	plus	accrued	dividends	of	12%	per	annum,	calculated	daily,	through	such	date,	based	on	the	volume	weighted average	price	of	the	shares	of	AAG	Common	Stock,	at	a	3.5%	discount,	as	specified	in	the	Plan.	The	amount	of	the	remaining	Single-Dip	Equity	Obligations	at December	31,	2014	is	American's	estimate	of	its	obligation	for	disputed	claims	of	$248	million	and	is	calculated	based	on	the	fair	value	of	the	shares	expected	to	be issued,	measured	as	if	the	obligations	were	settled	using	the	closing	price	of	AAG	Common	Stock	at	December	31,	2014.	Additional	allowed	claims	will	receive 30.7553	shares,	subject	to	reduction	for	expenses	of	the	Disputed	Claims	Reserve,	including	tax	liabilities,	for	each	$1,000	of	allowed	claims.	For	accounting	purposes, the	value	of	the	shares	expected	to	be	issued	is	marked-to-market	each	period	until	issued.	Accordingly,	changes	in	the	value	of	AAG	Common	Stock	could	result	in future	increases	and	decreases	in	this	obligation.

In	exchange	for	employees'	contributions	to	the	successful	reorganization	of	AAG,	including	agreeing	to	reductions	in	pay	and	benefits,	AAG	and	American	agreed in	the	Plan	to	provide	each	employee	group	a	deemed	claim	which	was	used	to	provide	a	distribution	of	a	portion	of	the	equity	of	the	reorganized	entity	to	those employees.	Each	employee	group	received	a	deemed	claim	amount	based	upon	a	fixed	percentage	of	the	distributions	to	be	made	to	general	unsecured	claimholders.	The fair	value	based	on	the	expected	number	of	shares	to	be	distributed	to	satisfy	this	deemed	claim,	as	adjusted,	was	approximately	$1.5	billion.	From	the	Effective	Date through	December	31,	2014,	AAG	has	made	distributions	of	$988	million	in	AAG	Common	Stock	and	paid	approximately	$553	million	in	cash	to	cover	payroll	and other	taxes	related	to	the	equity	distributions.	As	of	December	31,	2014,	the	liability	to	certain	AMR	labor	groups	and	employees	of	$77	million	represents	the	estimated fair	value	of	the	remaining	shares	expected	to	be	issued	in	satisfaction	of	such	obligation,	measured	as	if	the	obligation	were	settled	using	the	closing	price	of	AAG Common	Stock	at

December	31,	2014.	For	accounting	purposes,	the	value	of	the	remaining	shares	expected	to	be	issued	to	satisfy	the	labor	claim	is	marked-to-market	each	period	until issued.	Accordingly,	changes	in	the	value	of	AAG	Common	Stock	could	result	in	future	increases	and	decreases	in	this	obligation.

The	consolidated	financial	statements	as	of	and	for	the	years	ended	December	31,	2014,	2013	and	2012	include	the	accounts	of	American.	American	is	a	wholly- owned	subsidiary	of	American	Airlines	Group	Inc.	(AAG).	All	significant	intercompany	transactions	have	been	eliminated.

The	preparation	of	financial	statements	in	accordance	with	accounting	principles	generally	accepted	in	the	United	States	(GAAP)	requires	management	to	make certain	estimates	and	assumptions	that	affect	the	reported	amounts	of	assets	and	liabilities,	revenues	and	expenses,	and	the	disclosure	of	contingent	assets	and	liabilities at	the	date	of	the	financial	statements.	Actual	results	could	differ	from	those	estimates.	The	most	significant	areas	of	judgment	relate	to	passenger	revenue	recognition, impairment	of	long-lived	and	intangible	assets,	the	frequent	traveler	program,	pensions	and	retiree	medical	and	other	benefits	and	the	deferred	tax	asset	valuation allowance.

American	has	restricted	cash	and	short-term	investments	related	primarily	to	collateral	held	to	support	projected	workers'	compensation	obligations	and	funds	held for	certain	tax	obligations.

American	records	impairment	charges	on	long-lived	assets	used	in	operations	when	events	and	circumstances	indicate	that	the	assets	may	be	impaired.	An	asset	or group	of	assets	is	considered	impaired	when	the	undiscounted	cash	flows	estimated	to	be	generated	by	the	asset	are	less	than	the	carrying	amount	of	the	asset	and	the	net book	value	of	the	asset	exceeds	its	estimated	fair	value.	If	such	assets	are	considered	to	be	impaired,	the	impairment	to	be	recognized	is	measured	by	the	amount	by which	the	carrying	amount	of	the	assets	exceeds	the	fair	value	of	the	assets.	Assets	to	be	disposed	of	are	reported	at	the	lower	of	the	carrying	amount	or	fair	value	less cost	to	sell.

# (g)	Other	Intangibles,	Net

Intangible	assets	consist	primarily	of	airport	take-off	and	landing	rights	(Slots),	international	Slots	and	route	authorities	and	gate	leasehold	rights.	Intangible	assets with	estimable	useful	lives	are	amortized	over	their	respective	estimated	useful	lives	to	their	estimated	residual	values	and	reviewed	for	impairment	whenever	events	or changes	in	circumstances	indicate	that	the	carrying	value	may	not	be	recoverable.

The	following	table	provides	information	relating	to	American's	amortizable	intangible	assets	as	of	December	31,	2014	and	2013	(in	millions):

|  | December	31, | December	31, |
| :--- | :--- | :--- |
|  | 2014 | 2013 |
| Airport\tSlots | $310 | $277 |
| Airport\tgate\tleasehold\trights | 138 | 155 |
| Accumulated\tamortization | (376) | (375) |
| Total | $72 | $57 |

Airport	operating	and	gate	lease	rights	are	amortized	on	a	straight-line	basis	over	25	years	to	a	zero	residual	value.

American	 recorded	 amortization	 expense	 related	 to	 these	 intangible	 assets	 of	 approximately	 $14	 million,	 $18	 million	 and	 $25	 million	 for	 the	 years	 ended December	31,	2014,	2013	and	2012,	respectively.	American	expects	to	record	annual	amortization	expense	for	the	aforementioned	definite-life	intangible	assets	as follows	(in	millions):

American's	 indefinite-lived	assets	 include	certain	 international	route	authorities	and	domestic	airport	 take-off	and	 landing	slots.	Indefinite-lived	assets	are	not amortized	but	instead	are	reviewed	for	impairment	annually	and	more	frequently	if	events	or	circumstances	indicate	that	the	asset	may	be	impaired.	As	of	December	31, 2014	and	2013,	American	had	$743	million	and	$755	million,	respectively,	of	indefinite-lived	intangible	assets	on	its	consolidated	balance	sheets.

American's	indefinite-lived	intangible	assets	are	reviewed	for	impairment	by	initially	performing	a	qualitative	screen	to	determine	whether	American	believes	it	is more	likely	than	not	that	an	asset	has	been	impaired.	If	American	believes	an	impairment	has	occurred,	American	then	evaluates	for	impairment	by	comparing	the estimated	fair	value	of	assets	to	the	carrying	value.	An	impairment	charge	is	recognized	if	the	asset's	estimated	fair	value	is	less	than	its	carrying	value.	Based	upon American's	annual	testing,	there	was	no	indefinite-lived	intangible	asset	impairment	in	2014.

As	a	stipulation	for	the	Merger	to	be	approved	by	the	Department	of	Justice	(DOJ),	American	was	required	to	divest	certain	Slots	at	LaGuardia	Airport	and	Ronald Reagan	Washington	National	Airport	(DCA).	As	of	December	31,	2013,	the	DCA	Slots	to	be	divested	were	recorded	as	assets	held	for	sale	and	were	included	in	prepaid expenses	and	other	on	the	consolidated	balance	sheet.	In	2014,	American	divested	the	required	DCA	Slots	and	received	$299	million	in	cash	as	well	as	24	Slots	at	JFK. American	recognized	a	gain	of	$305	million	related	to	these	divestitures,	which	has	been	included	in	special	items,	net	in	the	consolidated	statement	of	operations.	In 2013,	American	recognized	a	gain	of	$67	million	related	to	the	sale	of	the	LaGuardia	Airport	Slots,	which	has	been	included	in	special	items,	net	in	the	consolidated statement	of	operations.

In	2013,	the	European	Commission	cleared	under	the	EU	Merger	Regulation	the	proposed	merger	between	US	Airways	and	American.	As	a	consequence	of	the merger	clearance	process	in	the	EU,	American	was	required	to	make	available	one	pair	of	London	Heathrow	Slots	for	use	by	another	carrier	between	London	and Philadelphia,	which	the	acquiring	carrier	can	deploy	on	another	Heathrow	city	pair	after	operating	the	Slots	on	London-Philadelphia	for	a	period	of	not	less	than	three consecutive	years.	In	addition,	along	with	American's	joint	business	agreement	(JBA)	partners,	American	was	required	to	make	available	for	an	initial	period	of	up	to seven	years	one	pair	of	Heathrow	Slots	for	service	between	London	and	Miami	that	may	be	operated	via	an	intermediate	point.	In	connection	with	these	requirements and	upon	making	these	slots	available,	in	2014,	American	recorded	a	$43	million	non-cash	charge,	which	has	been	included	in	special	items,	net	in	the	consolidated statement	of	operations.

# (h)	Frequent	Flyer	Program

American	currently	operates	the	AAdvantage	frequent	flyer	program.	This	program	awards	mileage	credits	to	passengers	who	fly	on	American	and	oneworld	carriers, as	well	as	certain	other	partner	airlines	that	participate	in	the	programs.	Mileage	credits	can	also	be	earned	through	purchases	from	other	non-airline	partners	that participate	in	American's	loyalty	program.	Mileage	credits	can	be	redeemed	for	travel	on	American,	US	Airways	or	other	participating	partner	airlines,	in	which	case American	pays	a	fee.

American	uses	the	incremental	cost	method	to	account	for	the	portion	of	American's	frequent	flyer	liability	incurred	when	AAdvantage	members	earn	mileage credits	by	flying	on	American,	US	Airways	or	its	regional	affiliates.	American	has	an	obligation	to	provide	future	travel	when	these	mileage	credits	are	redeemed	and therefore	has	recorded	a	liability	for	mileage	credits	outstanding.

The	incremental	cost	liability	includes	all	mileage	credits	that	are	expected	to	be	redeemed,	including	mileage	credits	earned	by	members	whose	mileage	account balances	have	not	yet	reached	the	minimum	mileage	credit	level	required	to	redeem	an	award.	Additionally,	outstanding	mileage	credits	are	subject	to	expiration	if unused.	In	calculating	the	liability,	American	estimates	how	many	mileage	credits	will	never	be	redeemed	for	travel	and	excludes	those	mileage	credits	from	the estimate	of	the	liability.	Estimates	are	also	made	for	the	number	of	miles	that	will	be	used	per	award	redemption	and	the	number	of	travel	awards	that	will	be	redeemed on	partner	airlines.	These	estimates	are	based	on	historical	program	experience	as	well	as	consideration	of	enacted	program	changes,	as	applicable.	Changes	in	the liability	resulting	from	members	earning	additional	mileage	credits	or	changes	in	estimates	are	recorded	in	the	statement	of	operations	as	a	part	of	passenger	revenue.

The	liability	for	outstanding	mileage	credits	is	valued	based	on	the	estimated	incremental	cost	of	carrying	one	additional	passenger.	Incremental	cost	primarily includes	unit	costs	incurred	for	fuel,	food,	and	insurance	as	well	as	fees	incurred	when	travel	awards	are	redeemed	on	partner	airlines.	No	profit	or	overhead	margin	is included	in	the	accrual	of	incremental	cost.	These	estimates	are	generally	updated	based	upon	American's	12-month	historical	average	of	such	costs.

American	also	sells	frequent	flyer	program	mileage	credits	to	participating	airline	partners	and	non-airline	business	partners.	Sales	of	mileage	credits	to	business partners	is	comprised	of	two	components,	transportation	and	marketing.	Historically,	American	has	used	the	residual	method	of	accounting	to	determine	the	values	of each	component	as	there	had	not	been	a	material	modification	to	any	significant	agreements	since	the	adoption	of	Accounting	Standards	Update	(ASU)	No.	2009-13, "Revenue	Recognition	(Topic	605)	–	Multiple-Deliverable	Revenue	Arrangements"	on	January	1,	2011.

In	2013,	American	and	Citibank	amended	their	current	AAdvantage	co-branded	credit	card	agreement	which	resulted	in	a	material	modification	of	the	terms	of	the arrangement.	 Therefore,	 subsequent	 to	 the	 amendment	 of	 the	 arrangement,	American	 applied	 the	 relative	 selling	 price	 method	 to	 determine	 the	 values	 of	 each deliverable.	 Under	 the	 relative	 selling	 price	 approach,	American	 identified	 five	 revenue	 elements	 for	 the	 co-branded	 credit	 card	 agreements	 with	 Citibank:	 the transportation	 component;	 use	 of	American's	 brand	 including	 access	 to	 frequent	 flyer	 member	 lists;	 advertising;	 lounge	 access;	 and	 baggage	 services	 (together excluding	"the	transportation	component,"	the	"marketing	component").

The	marketing	component	represents	services	provided	to	American's	business	partners	and	relates	primarily	to	the	use	of	American's	logo	and	tradename	along	with access	to	customers	lists	of	AAdvantage	members.	The	marketing	services	are	provided	periodically,	but	no	less	than	monthly.	Accordingly,	the	marketing	component	is considered	earned	and	recognized	in	other	revenues	in	the	period	of	the	mileage	sale.

Upon	application	of	the	relative	selling	price	method	in	2013	for	American's	Citibank	modification,	American	reduced	its	travel	component	liability	and	recorded other	revenue	of	approximately	$31	million.	As	a	result	of	the	change	in	the	marketing	component	value	when	the	relative	selling	price	method	is	applied,	American	now defers	less	revenue	per	mile	sold.	For	American's	agreements	where	there	has	not	been	a	material	modification,	it	continues	to	apply	the	residual	method.

As	of	December	31,	2014	and	2013,	American	had	$1.2	billion	in	deferred	revenue	from	the	sale	of	mileage	credits	(recorded	as	frequent	flyer	liability	on	the consolidated	balance	sheets).	For	the	years	ended	December	31,	2014,	2013	and	2012,	the	marketing	component	of	mileage	sales	recognized	at	the	time	of	sale	in	other revenues	was	approximately	$1.1	billion,	$816	million	and	$725	million,	respectively.

# (i)	Passenger	Revenue

Passenger	ticket	sales	are	initially	recorded	as	a	component	of	air	traffic	liability.	Revenue	derived	from	ticket	sales	is	recognized	at	the	time	service	is	provided. However,	due	to	various	factors,	including	the	complex	pricing	structure	and	interline	agreements	throughout	the	industry,	certain	amounts	are	recognized	in	revenue using	estimates	regarding	both	the	timing	of	the	revenue	recognition	and	the	amount	of	revenue	to	be	recognized,	including	breakage.	These	estimates	are	generally based	upon	the	evaluation	of	historical	trends,	including	the	use	of	regression	analysis	and	other	methods	to	model	the	outcome	of	future	events	based	on	American's historical	experience,	and	are	recorded	at	the	scheduled	time	of	departure.

American	purchases	capacity,	or	ASMs,	generated	by	AAG's	wholly-owned	regional	air	carrier	and	 the	capacity	of	Republic	Airways	Holdings'	subsidiaries Republic	Airlines	(Republic)	and	Chautauqua	Airlines	(Chautauqua),	and	SkyWest	Airlines,	Inc.'s	subsidiaries	Sky	West	Airlines	(SkyWest)	and	ExpressJet	Airlines (ExpressJet)	in	certain	markets.	AAG's	wholly-owned	regional	air	carrier	and	Chautauqua,	ExpressJet,	Republic,	and	SkyWest	operate	regional	aircraft	in	these	markets as	part	of	American	Eagle	carriers.	American	classifies	revenues	generated	from	transportation	on	these	carriers	as	regional	passenger	revenues.	Liabilities	related	to tickets	sold	by	American	for	travel	on	these	air	carriers	are	also	included	in	American's	air	traffic	liability	and	are	subsequently	relieved	in	the	same	manner	as	described above.

Various	taxes	and	fees	assessed	on	the	sale	of	tickets	to	end	customers	are	collected	by	American	as	an	agent	and	remitted	to	taxing	authorities.	These	taxes	and	fees have	been	presented	on	a	net	basis	in	the	accompanying	consolidated	statements	of	operations	and	recorded	as	a	liability	until	remitted	to	the	appropriate	taxing authority.

# (j)	Maintenance,	Materials	and	Repairs

# (k)	Selling	Expenses

Selling	expenses	include	commissions,	credit	card	fees,	computerized	reservations	systems	fees	and	advertising.	Advertising	expenses	are	expensed	as	incurred. Advertising	expense	was	$86	million,	$166	million	and	$153	million	for	the	years	ended	December	31,	2014,	2013	and	2012,	respectively.

# (l)	Share-based	Compensation

American	accounts	for	its	share-based	compensation	expense	based	on	the	fair	value	of	the	stock	award	at	the	time	of	grant,	which	is	recognized	ratably	over	the vesting	period	of	the	stock	award.	The	fair	value	of	stock	options	and	stock	appreciation	rights	is	estimated	using	a	Black-Scholes	option	pricing	model.	The	fair	value	of restricted	stock	units	is	based	on	the	market	price	of	the	underlying	shares	of	common	stock	on	the	date	of	grant.	See	Note	15	for	further	discussion	of	share-based compensation.

# (m)	Deferred	Gains	and	Credits,	Net

Included	within	deferred	gains	and	credits,	net	are	amounts	deferred	and	amortized	into	future	periods	associated	with	deferred	gains	on	the	sale	leaseback	of	aircraft and	certain	vendor	incentives.

# (n)	Foreign	Currency	Gains	and	Losses

Foreign	currency	gains	and	losses	are	recorded	as	part	of	other	nonoperating	expense,	net	in	American's	consolidated	statements	of	operations.	Foreign	currency losses	for	2014,	2013,	and	2012	were	$92	million,	$55	million	and	$41	million,	respectively.

# (o)	Regional	Expenses

Expenses	associated	with	American's	third-party	regional	carriers	operating	under	the	brand	name	American	Eagle	are	classified	as	Regional	expenses	on	the consolidated	statements	of	operations.	Regional	expenses	consist	of	the	following	(in	millions):

|  | Year	Ended	December	31, | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2014 | 2013 | 2012 |
| Aircraft\tfuel\tand\trelated\ttaxes | $999 | $1,055 | $1,012 |
| Salaries,\twages\tand\tbenefits | 35 | 20 | 33 |
| Capacity\tpurchases\tfrom\tthird-party\tregional\tcarriers\t(1) | \t 1,253 | \t 1,242 | \t 1,282 |
| Other\trent\tand\tlanding\tfees | 242 | 207 | 203 |
| Selling\texpenses | 151 | 142 | 152 |
| Depreciation\tand\tamortization | 155 | 149 | 154 |
| Special\titems,\tnet | 5 | — | — |
| Other | 273 | 259 | 213 |
| Total\tregional\texpenses | $3,113 | $3,074 | $3,049 |

# (p)	Recent	Accounting	Pronouncements

In	May	2014,	the	Financial	Accounting	Standards	Board	(FASB)	issued	Accounting	Standards	Update	(ASU)	2014-09,	"Revenue	from	Contracts	with	Customers (Topic	606)."	ASU	2014-09	completes	the	joint	effort	by	the	FASB	and	International	Accounting	Standards	Board	(IASB)	to	improve	financial	reporting	by	creating common	revenue	recognition	guidance	for	U.S.	GAAP	and	International	Financial	Reporting	Standards	(IFRS).	ASU	2014-09	applies	to	all	companies	that	enter	into contracts	 with	 customers	 to	 transfer	 goods	 or	 services.	 ASU	 2014-09	 is	 effective	 for	 public	 entities	 for	 interim	 and	 annual	 reporting	 periods	 beginning	 after December	15,	2016.	Early	application	is	not	permitted	and	entities	have	the	choice	to	apply	ASU	2014-09	either	retrospectively	to	each	reporting	period	presented	or	by recognizing	the	cumulative	effect	of	applying	ASU	2014-09	at	the	date	of	initial	application	and	not	adjusting	comparative	information.	American	is	currently	evaluating the	requirements	of	ASU	2014-09	and	has	not	yet	determined	its	impact	on	American's	consolidated	financial	statements.

   American's	special	items,	net	on	the	consolidated	statements	of	operations	are	as	follows	(in	millions):

(1) The	2014	mainline	operating	special	items	totaled	a	net	charge	of	$507	million,	which	principally	included	$527	million	of	Merger	integration	expenses	related	to information	 technology,	 alignment	 of	 labor	 union	 contracts,	 professional	 fees,	 severance	 and	 retention,	 share-based	 compensation,	 divestiture	 of	 London Heathrow	Slots,	fleet	restructuring,	re-branding	of	aircraft	and	airport	facilities,	relocation	and	training.	In	addition,	American	recorded	a	net	charge	of	$60 million	for	bankruptcy	related	items	principally	consisting	of	fair	value	adjustments	for	bankruptcy	settlement	obligations,	$181	million	in	other	special	charges, including	an	$81	million	charge	to	revise	prior	estimates	of	certain	aircraft	residual	values,	and	other	spare	parts	asset	impairments,	as	well	as	$44	million	in charges	primarily	relating	to	the	buyout	of	certain	aircraft	leases.	These	charges	were	offset	in	part	by	a	$305	million	gain	on	the	sale	of	Slots	at	DCA.

The	2013	mainline	operating	special	items,	net	included	$166	million	of	primarily	Merger	related	expenses	due	to	the	alignment	of	labor	union	contracts, professional	fees,	severance	and	share-based	compensation,	a	$107	million	charge	related	to	American's	pilot	long-term	disability	obligation,	a	$43	million charge	for	workers'	compensation	claims,	and	a	$33	million	aircraft	impairment	charge.	These	charges	were	offset	in	part	by	a	$67	million	gain	on	the	sale	of Slots	at	LaGuardia	Airport.

See	Note	4	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	for	information	on	the	Merger	Agreement.

|  |  | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2014 | 2013 | 2012 |
| Other\trevenue\tspecial\titem,\tnet\t(1) | $ — | $(31) | $— |
| Regional\toperating\tspecial\titems,\tnet | 5 | — | — |
| Nonoperating\tspecial\titems,\tnet\t(2) | \t 120 | 121 | (280) |
| Reorganization\titems,\tnet\t(3) | — | \t 2,640 | \t 2,179 |
| Income\ttax\tspecial\titems,\tnet\t(4) | \t 342 | (324) | (569) |

(1) The	2013	other	revenue	special	item,	net	included	a	credit	to	other	revenues	related	to	a	change	in	accounting	method	resulting	from	the	modification	of American's	AAdvantage	miles	agreement	with	Citibank.

(2) The	2014	nonoperating	special	items	totaled	a	net	charge	of	$120	million,	which	principally	included	a	$43	million	charge	for	Venezuelan	foreign	currency losses,	$48	million	of	early	debt	extinguishment	costs	related	to	the	prepayment	of	7.50%	senior	secured	notes	and	other	indebtedness	and	$29	million	of	non- cash	interest	accretion	on	bankruptcy	settlement	obligations.	See	Note	9	for	further	discussion	on	Venezuela	cash	and	short-term	investments.

The	2012	nonoperating	special	items,	net	totaled	a	net	benefit	of	$280	million	resulting	from	a	settlement	of	a	commercial	dispute.

(4) In	2014,	income	tax	special	items,	net	were	$342	million.	During	2014,	American	sold	its	portfolio	of	fuel	hedging	contracts	that	were	scheduled	to	settle	on	or after	June	30,	2014.	In	connection	with	this	sale,	American	recorded	a	special	non-cash	tax	provision	of	$328	million	in	the	second	quarter	of	2014	that	reversed the	non-cash	tax	provision	which	was	recorded	in	other	comprehensive	income	(OCI),	a	subset	of	stockholder's	equity,	principally	in	2009.	This	provision represents	the	tax	effect	associated	with	gains	recorded	in	OCI	principally	in	2009	due	to	a	net	increase	in	the	fair	value	of	American's	fuel	hedging	contracts.	In accordance	with	GAAP,	American	retained	the	$328	million	tax	provision	in	OCI	until	the	last	contract	was	settled	or	terminated.	In	addition,	the	2014	period included	a	special	$14	million	non-cash	deferred	income	tax	provision	related	to	certain	indefinite-lived	intangible	assets.

|  | 2014 | 2013 |
| :--- | :--- | :--- |
| Secured |  |  |
|  | $1,872 | $1,891 |
|  | 750 | — |
| 2026\t(c) | 4,271 | 3,516 |
| 2026\t(d) | 1,860 | 2,140 |
|  | 1,071 | 1,393 |
| 7.50%\tsenior\tsecured\tnotes\t(f) | — | 1,000 |
| AAdvantage\tLoan,\teffective\trate\tof\t8.30%,\t(g) | 433 | 611 |
|  | 992 | 300 |
|  | \t 11,249 | \t 10,851 |
| Unsecured |  |  |
| Affiliate\tunsecured\tobligations | 27 | 27 |
|  | 27 | 27 |
| Total\tlong-term\tdebt\tand\tcapital\tlease\tobligations | \t 11,276 | \t 10,878 |
| Less:\tTotal\tunamortized\tdebt\tdiscount | 42 | 69 |
| Less:\tCurrent\tmaturities | 1,230 | 957 |
| Long-term\tdebt\tand\tcapital\tlease\tobligations,\tnet\tof\tcurrent\tmaturities | $10,004 | $9,852 |

Secured	financings	are	collateralized	by	assets,	primarily	aircraft,	engines,	simulators,	rotable	aircraft	parts,	hangar	and	maintenance	facilities,	route	authorities	and airport	Slots.	At	December	31,	2014,	American	was	operating	37	jet	aircraft	under	capital	leases.	Leases	can	generally	be	renewed	at	rates	based	on	fair	market	value	at the	end	of	the	lease	term	for	a	number	of	additional	years.	At	December	31,	2014,	the	maturities	of	long-term	debt	and	capital	leases	are	as	follows	(in	millions):

# (c)	Aircraft	Enhanced	Equipment	Trust	Certificates	(EETCs)

# (d)	Other	Aircraft	Financing	Transactions

In	May	2014,	American	prepaid	$61	million	principal	amount	of	outstanding	debt	secured	by	certain	aircraft.

# (e)	Obligations	Associated	with	Special	Facility	Revenue	Bonds

In	2014,	American	prepaid	$98	million	of	obligations,	of	which	$62	million	was	a	reduction	of	debt	on	its	balance	sheet,	associated	with	special	facility	revenue bonds	issued	by	municipalities	to	build	or	improve	certain	airport	and	maintenance	facilities.	The	remaining	portion	of	these	obligations	was	accounted	for	as	an operating	lease.

# (f)	Senior	Secured	Notes

# (g)	AAdvantage	Loan

Certain	of	American's	debt	financing	agreements	contain	loan	to	value	ratio	covenants	and	require	American	to	periodically	appraise	the	related	collateral.	Pursuant to	such	agreements,	if	the	loan	to	value	ratio	exceeds	a	specified	threshold,	American	is	required,	as	applicable,	to	pledge	additional	qualifying	collateral	(which	in	some cases	may	include	cash	collateral),	or	pay	down	such	financing,	in	whole	or	in	part,	as	described	below.

Specifically,	American	is	required	to	meet	certain	collateral	coverage	tests	on	a	periodic	basis	on	two	Credit	Facilities,	as	described	below:

At	December	31,	2014,	American	was	in	compliance	with	the	applicable	collateral	coverage	tests	as	of	the	most	recent	measurement	dates.

|  | Year	Ended	December	31, | Year	Ended	December	31, | Year	Ended	December	31, |
| :--- | :--- | :--- | :--- |
|  | 2014 | 2013 | 2012 |
| Current | $ (23) | $(30) | $— |
| Deferred | \t 342 | (324) | (569) |
| Income\ttax\texpense\t(benefit) | $319 | $(354) | $(569) |

|  | Year	Ended	December	31, | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2014 | 2013 | 2012 |
| Statutory\tincome\ttax\tprovision\t(benefit) | $570 | $(658) | $(873) |
| State\tincome\ttax\texpense\t(benefit),\tnet\tof\tfederal\ttax\teffect | 43 | (14) | (35) |
| Book\texpenses\t(benefits)\tnot\tdeductible\tfor\ttax\tpurposes | (20) | 20 | 20 |
| Bankruptcy\tadministration\texpenses | 86 | 82 | 26 |
| Interest\tcutback\tto\tnet\toperating\tloss\t(NOL) | — | 53 | — |
| Alternative\tminimum\ttax\tcredit\trefund | (28) | (30) | — |
| Change\tin\tvaluation\tallowance | (660) | 714 | 858 |
| Tax\texpense\t(benefit)\tresulting\tfrom\tOCI\tallocation | 328 | (538) | (569) |
| Other,\tnet | — | 17 | 4 |
| Income\ttax\texpense\t(benefit) | $319 | $(354) | $(569) |

For	the	year	ended	December	31,	2014,	American	recorded	a	$319	million	tax	provision.	This	provision	included	$342	million	of	special	tax	charges.	During	2014, American	sold	its	portfolio	of	fuel	hedging	contracts	that	were	scheduled	to	settle	on	or	after	June	30,	2014.	In	connection	with	this	sale,	American	recorded	a	special non-cash	tax	provision	of	$328	million	in	the	second	quarter	of	2014	that	reversed	the	non-cash	tax	provision	which	was	recorded	in	other	comprehensive	income	(OCI), a	subset	of	stockholders'	equity,	principally	in	2009.	This	provision	represents	the	tax	effect	associated	with	gains	recorded	in	OCI	principally	in	2009	due	to	a	net increase	in	the	fair	value	of	our	fuel	hedging	contracts.	In	accordance	with	GAAP,	American	retained	the	$328	million	tax	provision	in	OCI	until	the	last	contract	was settled	or	terminated.	American	also	recorded	a	special	$14	million	non-cash	deferred	income	tax	provision	related	to	certain	indefinite-lived	intangible	assets.	In addition,	American	recorded	$6	million	of	tax	expense	principally	related	to	certain	states	and	countries	where	NOL	Carryforwards	were	limited	or	unavailable	to	be used.	These	charges	were	offset	in	part	by	a	$29	million	federal	income	tax	benefit	resulting	from	American's	elections	under	applicable	sections	of	the	Tax	Relief, Unemployment	Insurance	Reauthorization,	and	Job	Creation	Act	of	2010	and	the	Housing	and	Economic	Recovery	Act	of	2008	(as	extended	by	the	Tax	Increase Prevention	Act	of	2014),	allowing	corporations	to	accelerate	utilization	of	certain	research	and	AMT	credit	carryforwards	in	lieu	of	applicable	bonus	depreciation	on certain	qualifying	capital	investments.

For	the	year	ended	December	31,	2013,	American	recorded	a	$354	million	tax	benefit.	This	benefit	included	a	$538	million	special	non-cash	income	tax	benefit	from continuing	operations.	American	is	required	to	consider	all	items	(including	items	recorded	in	OCI)	in	determining	the	amount	of	tax	benefit	that	results	from	a	loss	from continuing	operations	and	that	should	be	allocated	to	continuing	operations.	As	a	result,	American	recorded	a	tax	benefit	on	the	loss	from	continuing	operations	for	the year,	which	was	exactly	offset	by	income	tax	expense	on	OCI.	However,	while	the	income	tax	benefit	from	continuing	operations	is	reported	on	the	income	statement, the

income	tax	expense	on	other	comprehensive	income	is	recorded	directly	to	accumulated	other	comprehensive	income	(loss),	which	is	a	component	of	stockholder's equity.	Because	the	income	tax	expense	on	other	comprehensive	income	is	equal	to	the	income	tax	benefit	from	continuing	operations,	American's	year-end	net deferred	tax	position	is	not	impacted	by	this	tax	allocation.	The	2013	tax	benefit	was	offset	in	part	by	a	$214	million	tax	charge	attributable	to	additional	valuation allowance	required	to	reduce	deferred	tax	assets	to	the	amount	American	believes	is	more	likely	than	not	to	be	realized.	In	addition,	American	recorded	a	$30	million federal	income	tax	benefit	under	the	Housing	and	Economic	Recovery	Act	of	2008	as	described	above.

For	the	year	ended	December	31,	2012,	American	recorded	a	net	income	tax	benefit	of	$569	million,	which	represents	the	non-cash	income	tax	benefit	resulting	from gains	recorded	in	OCI	as	discussed	above.

A	portion	of	the	change	in	the	valuation	allowance	reflects	the	income	tax	benefit	of	approximately	$29	million	and	$30	million,	respectively,	recorded	in	2014	and 2013	resulting	from	American's	elections	under	applicable	sections	of	the	Tax	Relief,	Unemployment	Insurance	Reauthorization,	and	Job	Creation	Act	of	2010	and	the Housing	and	Economic	Recovery	Act	of	2008	(as	extended	by	the	Tax	Increase	Prevention	Act	of	2014	and	the	American	Taxpayer	Relief	Act	of	2012),	allowing corporations	to	accelerate	utilization	of	certain	research	and	alternative	minimum	tax	(AMT)	credit	carryforwards	in	lieu	of	applicable	bonus	depreciation	on	certain qualifying	capital	investments.

In	addition	to	the	changes	in	the	valuation	allowance	from	operations	described	in	the	table	above,	the	valuation	allowance	was	also	impacted	by	the	changes	in	the components	of	accumulated	other	comprehensive	 income	(loss),	described	 in	Note	11	 to	American's	consolidated	financial	statements.	The	 total	 increase	 in	 the valuation	allowance	was	$69	million,	$155	million	and	$282	million	in	2014,	2013	and	2012,	respectively.

The	components	of	American's	deferred	tax	assets	and	liabilities	were	(in	millions):

|  | 2014 | 2013 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets: |  |  |
| Postretirement\tbenefits\tother\tthan\tpensions | $322 | $342 |
| Rent\texpense | 86 | 55 |
| Alternative\tminimum\ttax\tcredit\tcarryforwards | 438 | 467 |
| Operating\tloss\tcarryforwards | 3,536 | 3,302 |
| Pensions | 2,385 | 1,747 |
| Frequent\tflyer\tobligation | 589 | 620 |
| Gains\tfrom\tlease\ttransactions | 22 | 24 |
| Reorganization\titems | 64 | 675 |
| Other | 829 | 975 |
| Total\tdeferred\ttax\tassets | 8,271 | 8,207 |
| Valuation\tallowance | (5,308) | (5,239) |
| Net\tdeferred\ttax\tassets | 2,963 | 2,968 |
| Deferred\ttax\tliabilities: |  |  |
| Accelerated\tdepreciation\tand\tamortization | (2,953) | (2,932) |
| Other | (238) | (250) |
| Total\tdeferred\ttax\tliabilities | (3,191) | (3,182) |
| Net\tdeferred\ttax\tliability | $(228) | $(214) |

American	files	its	tax	returns	as	prescribed	by	the	tax	laws	of	the	jurisdictions	in	which	it	operates.	American's	2004	through	2013	tax	years	are	still	subject	to examination	by	the	Internal	Revenue	Service.	Various	state	and	foreign	jurisdiction	tax	years	remain	open	to	examination	and	American	is	under	examination,	in administrative	 appeals,	 or	 engaged	 in	 tax	 litigation	 in	 certain	 jurisdictions.	American	 believes	 that	 the	 effect	 of	 additional	 assessments	 will	 be	 immaterial	 to	 its consolidated	financial	statements.

American	has	an	unrecognized	tax	benefit	of	approximately	$5	million,	which	did	not	change	during	the	twelve	months	ended	December	31,	2014.	Changes	in	the unrecognized	tax	benefit	have	no	impact	on	the	effective	tax	rate	due	to	the	existence	of	the	valuation	allowance.	Accrued	interest	on	tax	positions	is	recorded	as	a component	of	interest	expense	but	was	not	significant	at	December	31,	2014.

American	estimates	that	the	unrecognized	tax	benefit	will	be	realized	within	the	next	twelve	months.

American's	economic	prospects	are	heavily	dependent	upon	two	variables	it	cannot	control:	the	health	of	the	economy	and	the	price	of	fuel.

Due	to	the	discretionary	nature	of	business	and	leisure	travel	spending,	airline	industry	revenues	are	heavily	influenced	by	the	condition	of	the	U.S.	economy	and economies	in	other	regions	of	the	world.	Unfavorable	conditions	in	these	broader	economies	have	resulted,	and	may	result	in	the	future,	in	decreased	passenger	demand for	air	travel	and	changes	in	booking	practices,	both	of	which	in	turn	have	had,	and	may	have	in	the	future,	a	strong	negative	effect	on	American's	revenues.	In	addition, during	challenging	economic	times,	actions	by	our	competitors	to	increase	their	revenues	can	have	an	adverse	impact	on	American's	revenues.

American's	operating	results	are	materially	impacted	by	changes	in	the	availability,	price	volatility	and	cost	of	aircraft	fuel,	which	represents	one	of	the	largest	single cost	items	in	American's	business.	Because	of	the	amount	of	fuel	needed	to	operate	American's	business,	even	a	relatively	small	increase	in	the	price	of	fuel	can	have	a material	adverse	aggregate	effect	on	American's	operating	results	and	liquidity.	Jet	fuel	market	prices	have	fluctuated	substantially	over	the	past	several	years	and	prices continued	to	be	volatile	in	2014.

These	factors	could	impact	American's	results	of	operations,	financial	performance	and	liquidity.

During	the	second	quarter	of	2014,	American	sold	its	portfolio	of	fuel	hedging	contracts	that	were	scheduled	to	settle	on	or	after	June	30,	2014.	American	has	not entered	into	any	transactions	to	hedge	its	fuel	consumption	since	December	9,	2013	and,	accordingly,	as	of	December	31,	2014,	American	did	not	have	any	fuel	hedging contracts	outstanding.	As	such,	and	assuming	American	does	not	enter	into	any	future	transactions	to	hedge	its	fuel	consumption,	American	will	continue	to	be	fully exposed	to	fluctuations	in	fuel	prices.	American's	current	policy	is	not	to	enter	into	transactions	to	hedge	its	fuel	consumption,	although	American	reviews	that	policy from	time	to	time	based	on	market	conditions	and	other	factors.

The	cash	proceeds	on	these	sales	totaled	$71	million	which	exceeded	the	current	value	of	the	portfolio.	Approximately	$25	million	of	the	resulting	gain	was	recorded to	OCI	and	will	be	recognized	as	a	decrease	to	fuel	expense	in	the	period	the	hedged	fuel	is	scheduled	to	be	consumed	(through	the	second	quarter	of	2015).	As	of December	31,	2014,	American	expects	to	recognize	the	remaining	$9	million	of	these	gains	into	earnings	in	2015.	For	the	years	ended	December	31,	2014,	2013	and 2012,	American	recognized	net	gains	of	approximately	$16	million,	net	losses	of	approximately	$12	million	and	net	gains	of	approximately	$4	million,	respectively,	as	a component	of	aircraft	fuel	expense	on	the	accompanying	consolidated	statements	of	operations	related	to	its	fuel	hedging	agreements,	including	the	ineffective	portion	of the	hedges.

The	impact	of	aircraft	fuel	derivative	instruments	(all	cash	flow	hedges)	on	American's	consolidated	statements	of	operations	is	depicted	below	(in	millions):

|  |  | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
| Location | \t\t\t\t\t\t\t\t2014 | \t\t\t\t\t\t\t\t2013 | \t\t\t\t\t\t\t\t2012 |
| Aircraft\tfuel\tand |  |  |  |
| related\ttaxes | $4 | $(34) | $3 |
| Aircraft\tfuel\tand |  |  |  |
| related\ttaxes | 12 | 22 | 1 |
|  | $16 | $(12) | $4 |

The	impact	of	aircraft	fuel	derivative	instruments	(all	cash	flow	hedges)	on	American's	consolidated	statements	of	comprehensive	income	is	depicted	below	(in millions):

|  |  |  | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Location | \t\t\t\t\t\t\t\t2014 | \t\t\t\t\t\t\t\t2013 | \t\t\t\t\t\t\t\t2012 |
|  | Reclassification |  |  |  |
| Amount\tof\t(gain)\tloss\treclassified\tfrom\tAOCI\tinto\tincome\t(1) | into\tearnings | $(4) | $34 | $(3) |
| Amount\tof\tgain\t(loss)\trecognized\tin\tOCI\ton\tderivative\t(1) | Change\tin\tfair\tvalue | (34) | (2) | (12) |
| Amount\tof\tgain\t(loss)\trecognized\tin\tconsolidated\tstatements\tof\ncomprehensive\tincome |  | $(38) | $32 | $(15) |

While	certain	of	American's	fuel	derivatives	were	subject	to	enforceable	master	netting	agreements	with	its	counterparties,	American	did	not	offset	its	fuel	derivative assets	and	liabilities	in	its	consolidated	balance	sheets.	American	had	a	gross	asset	of	$109	million	as	of	December	31,	2013	for	its	aircraft	fuel	derivative	instruments, which	 was	 reflected	 in	 prepaid	 expenses	 and	 other	 on	 the	 accompanying	 consolidated	 balance	 sheet.	American	 had	 no	 cash	 collateral	 posted	 or	 received	 as	 of December	31,	2013.

Most	of	American's	receivables	relate	to	tickets	sold	to	individual	passengers	through	the	use	of	major	credit	cards	or	to	tickets	sold	by	other	airlines	and	used	by passengers	on	American	or	its	regional	carriers.	These

receivables	are	short-term,	mostly	being	settled	within	seven	days	after	sale.	Bad	debt	losses,	which	have	been	minimal	in	the	past,	have	been	considered	in	establishing allowances	for	doubtful	accounts.	American	does	not	believe	it	is	subject	to	any	significant	concentration	of	credit	risk.

American	has	exposure	to	market	risk	associated	with	changes	in	interest	rates	related	primarily	to	its	variable	rate	debt	obligations.	Interest	rates	on	$3.9	billion principal	amount	of	long-term	debt	as	of	December	31,	2014	are	subject	to	adjustment	to	reflect	changes	in	floating	interest	rates.	The	weighted	average	effective	interest rate	on	American's	variable	rate	debt	was	3.6%	at	December	31,	2014.

American	utilizes	the	market	approach	to	measure	fair	value	for	its	financial	assets	and	liabilities.	The	market	approach	uses	prices	and	other	relevant	information generated	by	market	transactions	involving	identical	or	comparable	assets	or	liabilities.	American's	short-term	investments	classified	as	Level	2	primarily	utilize	broker quotes	in	a	non-active	market	for	valuation	of	these	securities.	American's	fuel	derivative	contracts,	which	consisted	primarily	of	call	options,	collars	(consisting	of	a purchased	call	option	and	a	sold	put	option)	and	call	spreads	(consisting	of	a	purchased	call	option	and	a	sold	call	option),	are	valued	using	energy	and	commodity market	data	which	is	derived	by	combining	raw	inputs	with	quantitative	models	and	processes	to	generate	forward	curves	and	volatilities.	Heating	oil,	jet	fuel	and	crude oil	were	the	primary	underlying	commodities	in	the	hedge	portfolio.	No	changes	in	valuation	techniques	or	inputs	occurred	during	the	year	ended	December	31,	2014.

|  |  | Fair	Value	Measurements	as	of	December	31,	2014 | Fair	Value	Measurements	as	of	December	31,	2014 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | \t\t\t\tTotal | \t\t\t\tLevel\t1 | \t\t\t\tLevel\t2 | \t\t\t\tLevel\t3 |
| Short-term\tinvestments\t(1),\t(2): |  |  |  |  |
| Money\tmarket\tfunds | $789 | $789 | $— | $— |
| Repurchase\tagreements | 46 | — | 46 | — |
| Corporate\tobligations | 1,775 | — | 1,775 | — |
| Bank\tnotes\t/\tCertificates\tof\tdeposit\t/\tTime\tdeposits | 680 | — | 680 | — |
|  | 3,290 | 789 | 2,501 | — |
| Restricted\tcash\tand\tshort\tterm\tinvestments\t(1) | 650 | 650 | — | — |
| Total | $3,940 | $1,439 | $2,501 | $— |

(2) American's	short-term	investments	mature	in	one	year	or	less	except	for	$558	million	of	corporate	obligations	and	$200	million	of	bank	notes/certificates	of deposit/time	deposits.

|  |  | Fair	Value	Measurements	as	of	December	31,	2013 | Fair	Value	Measurements	as	of	December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | \t\t\t\tTotal | \t\t\t\tLevel\t1 | \t\t\t\tLevel\t2 | \t\t\t\tLevel\t3 |
| Short-term\tinvestments\t(1),\t(2): |  |  |  |  |
| Money\tmarket\tfunds | $323 | $323 | $— | $— |
| Government\tagency\tinvestments | 1,312 | — | 1,312 | — |
| Repurchase\tagreements | 170 | — | 170 | — |
| Corporate\tobligations | 2,750 | — | 2,750 | — |
| Bank\tnotes\t/\tCertificates\tof\tdeposit\t/\tTime\tdeposits | 607 | — | 607 | — |
|  | 5,162 | 323 | 4,839 | — |
| Restricted\tcash\tand\tshort\tterm\tinvestments\t(1) | 702 | 646 | 56 | — |
| Fuel\tderivative\tcontracts,\tnet\t(1) | 109 | — | 109 | — |
| Total | $5,973 | $969 | $5,004 | $— |

(2) American's	short-term	investments	mature	in	one	year	or	less	except	for	$250	million	of	bank	notes/certificates	of	deposit/time	deposits,	$511	million	of	U.S. Government	agency	investments	and	$2.1	billion	of	corporate	obligations.

As	of	December	31,	2014,	$745	million	of	American's	cash	and	short-term	investments	balances	were	held	in	foreign	bank	accounts,	of	which	approximately	$656 million	was	held	in	Venezuelan	bolivars.	This	balance	includes	approximately	$621	million	valued	at	6.3	bolivars	and	approximately	$35	million	valued	at	12.0

bolivars,	with	the	rate	depending	on	the	date	American	submitted	its	repatriation	request	to	the	Venezuelan	government.	These	rates	are	materially	more	favorable	than the	exchange	rates	currently	prevailing	for	other	transactions	conducted	outside	of	the	Venezuelan	government's	currency	exchange	system	that	American	participates in.	American's	cash	balance	held	in	Venezuelan	bolivars	decreased	$54	million	from	the	December	31,	2013	balance	of	$710	million	primarily	due	to	$88	million	in cash	repatriations	and	$30	million	in	foreign	currency	losses	as	described	below,	partially	offset	by	additional	cash	proceeds	from	ticket	sales	in	early	2014.	In	the second	and	third	quarters	of	2014,	American	repatriated	$65	million	including	$31	million	valued	at	6.3	bolivars	to	the	dollar	and	$34	million	valued	at	10.6	bolivars	to the	dollar.	In	the	fourth	quarter	of	2014,	American	incurred	an	$11	million	foreign	currency	loss	related	to	the	receipt	of	$23	million	at	a	rate	of	6.3	bolivars	to	the	dollar for	one	of	its	2012	repatriation	requests	originally	valued	at	a	rate	of	4.3	bolivars	to	the	dollar.	Accordingly,	American	revalued	its	remaining	pending	2012	repatriation requests	from	4.3	to	6.3	bolivars	to	the	dollar	resulting	in	additional	foreign	currency	losses	of	$19	million.	In	total,	American	recognized	a	$30	million	special	charge for	these	foreign	currency	losses	in	the	fourth	quarter	of	2014.	During	2014,	American	significantly	reduced	capacity	in	this	market	and	is	no	longer	accepting	bolivars as	payment	for	airline	tickets.	American	is	continuing	to	work	with	Venezuelan	authorities	regarding	the	timing	and	exchange	rate	applicable	to	the	repatriation	of	funds held	in	local	currency.	American	is	monitoring	this	situation	closely	and	continues	to	evaluate	its	holdings	of	Venezuelan	bolivars	for	additional	foreign	currency	losses, which	could	be	material,	particularly	in	light	of	the	uncertainty	posed	by	the	new	foreign	exchange	regulations	announced	in	mid-February	2015	and	the	continued deterioration	of	economic	conditions	in	Venezuela.	See	Part	I,	Item	1A.	Risk	Factors	–"We	operate	a	global	business	with	international	operations	that	are	subject	to economic	and	political	instability	and	have	been,	and	in	the	future	may	continue	to	be,	adversely	affected	by	numerous	events,	circumstances	or	government	actions beyond	our	control"	for	unaudited	additional	discussion	of	this	and	other	currency	risks.

The	fair	value	of	American's	long-term	debt	was	estimated	using	quoted	market	prices	or	discounted	cash	flow	analyses,	based	on	American's	current	estimated incremental	borrowing	rates	for	similar	types	of	borrowing	arrangements.	If	American's	long-term	debt	was	measured	at	fair	value,	it	would	have	been	classified	as Level	2	in	the	fair	value	hierarchy.

The	carrying	value	and	estimated	fair	value	of	American's	long-term	debt,	including	current	maturities,	were	as	follows	(in	millions):

|  | December	31,	2014 | December	31,	2014 | December	31,	2013 | December	31,	2013 |
| :--- | :--- | :--- | :--- | :--- |
|  | Carrying\nValue | Fair\nValue | Carrying\nValue | Fair\nValue |
| Long-term\tdebt,\tincluding\tcurrent\tmaturities | $11,234 | $11,618 | $10,809 | $11,045 |

# 10.	Retirement	Benefits

American	sponsors	defined	benefit	and	defined	contribution	pension	plans	for	eligible	employees.	The	defined	benefit	plans	provide	benefits	for	participating employees	based	on	years	of	service	and	average	compensation	for	a	specified	period	of	time	before	retirement.	American	uses	a	December	31	measurement	date	for	all of	its	defined	benefit	plans.	In	addition,	American	provides	certain	postemployment	benefits	to	its	employees.	These	benefits	include	disability-related	and	workers' compensation	benefits	for	certain	employees.	American	accrues	for	the	cost	of	such	benefit	expenses	once	an	appropriate	triggering	event	has	occurred.

|  | 2014 | 2013 | 2014 | 2013 |
| :--- | :--- | :--- | :--- | :--- |
| Reconciliation\tof\tbenefit\tobligation: |  |  |  |  |
| Obligation\tat\tJanuary\t1 | $14,826 | $15,895 | $1,264 | $1,412 |
| Service\tcost | 2 | 3 | — | — |
| Interest\tcost | 742 | 654 | 55 | 50 |
| Actuarial\t(gain)\tloss | 2,559 | (1,152) | (57) | (82) |
| Plan\tamendments | — | — | 33 | — |
| Curtailments | — | 2 | — | — |
| Settlements | (20) | (1) | — | — |
| Benefit\tpayments | (605) | (575) | (102) | (116) |
| Obligation\tat\tDecember\t31 | $17,504 | $14,826 | $1,193 | $1,264 |
| Reconciliation\tof\tfair\tvalue\tof\tplan\tassets: |  |  |  |  |
| Fair\tvalue\tof\tplan\tassets\tat\tJanuary\t1 | $10,009 | $9,065 | $239 | $211 |
| Actual\treturn\ton\tplan\tassets | 742 | 1,026 | 11 | 41 |
| Employer\tcontributions | 809 | 494 | 96 | 103 |
| Settlements | (20) | (1) | — | — |
| Benefit\tpayments | (605) | (575) | (102) | (116) |
| Fair\tvalue\tof\tplan\tassets\tat\tDecember\t31 | \t 10,935 | \t 10,009 | 244 | 239 |
| Funded\tstatus\tat\tDecember\t31 | $(6,569) | $(4,817) | $(949) | $(1,025) |
| Amounts\trecognized\tin\tthe\tconsolidated\tbalance\tsheets: |  |  |  |  |
| Current\tliability | $10 | $31 | $108 | $118 |
| Noncurrent\tliability\t(1) | 6,559 | 4,786 | 841 | 907 |
|  | $6,569 | $4,817 | $949 | $1,025 |
| Amounts\trecognized\tin\tother\tcomprehensive\tincome: |  |  |  |  |
| Net\tactuarial\tloss\t(gain) | $4,949 | $2,395 | $(217) | $(176) |
| Prior\tservice\tcost\t(credit)\t(1) | 245 | 273 | (1,319) | (1,592) |
|  | $5,194 | $2,668 | $(1,536) | $(1,768) |
| For\tplans\twith\taccumulated\tbenefit\tobligations\texceeding\tthe\tfair\tvalue\tof\tplan\tassets: |  |  |  |  |
| Projected\tbenefit\tobligation\t(PBO) | $17,471 | $14,796 | $— | $— |
| Accumulated\tbenefit\tobligation\t(ABO) | \t 17,461 | \t 14,788 | — | — |
| Accumulated\tpostretirement\tbenefit\tobligation\t(APBO) | — | — | 1,193 | 1,264 |
| Fair\tvalue\tof\tplan\tassets | \t 10,899 | 9,976 | 244 | 239 |
| ABO\tless\tfair\tvalue\tof\tplan\tassets | 6,562 | 4,812 | — | — |

(1)	The	2014	noncurrent	liability	does	not	include	$18	million	of	other	post-employment	benefits	or	$2	million	of	prior	service	costs.

|  |  |  |  | Retiree	Medical	and	Other | Retiree	Medical	and	Other |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2014 | Pension\tBenefits\n2013 | 2012 | 2014 | Benefits\n2013 | 2012 |
| Components\tof\tnet\tperiodic\tbenefit\tcost: |  |  |  |  |  |  |
| Defined\tbenefit\tplans: |  |  |  |  |  |  |
| Service\tcost | $2 | $3 | $341 | $—\t\t\t $— | $—\t\t\t $— | $46 |
| Interest\tcost | 742 | 654 | 729 | 55 | 50 | 128 |
| Expected\treturn\ton\tassets | (783) | (720) | (676) | (19) | (16) | (17) |
| Curtailments | — | 2 | 58 | — | — | (124) |
| Settlements | 4 | (1) | — | — | — | — |
| Amortization\tof: |  |  |  |  |  |  |
| Prior\tservice\tcost\t(1) | 28 | 28 | 10 | (240) | (251) | (82) |
| Unrecognized\tnet\tloss\t(gain) | 43 | 90 | 211 | (8) | (9) | (9) |
| Net\tperiodic\tbenefit\tcost\tfor\tdefined\tbenefit\tplans | 36 | 56 | 673 | (212) | (226) | (58) |
| Defined\tcontribution\tplans | 385 | 303 | 202 | \t N/A | \t N/A | \t N/A |
|  | $421 | $359 | $875 | $(212) | $(226) | $(58) |

|  | Pension	Benefits<br>2014 | 2013 | Retiree	Medical	and	Other<br>Benefits<br>2014 | 2013 |
| :--- | :--- | :--- | :--- | :--- |
| Weighted-average\tassumptions\tused\tto\tdetermine\tbenefit\tobligations\tas\tof\tDecember\t31: |  |  |  |  |
| Discount\trate | \t4.30% | \t5.10% | 4.00% | 4.71% |
| Weighted-average\tassumptions\tused\tto\tdetermine\tnet\tperiodic\tbenefit\tcost\tfor\tthe\tyears\tended |  |  |  |  |
| December\t31: |  |  |  |  |
| Discount\trate\t1/1\t–\t12/31 | \t5.10% | \t4.20% | 4.71% | 3.80% |
| Expected\treturn\ton\tplan\tassets | \t8.00% | \t8.00% | 8.00% | 8.00% |

As	of	December	31,	2014,	American's	estimate	of	the	long-term	rate	of	return	on	plan	assets	was	8.00%	based	on	the	target	asset	allocation.	Expected	returns	on longer	duration	bonds	are	based	on	yields	to	maturity	of	the	bonds	held	at	year-end.	Expected	returns	on	other	assets	are	based	on	a	combination	of	long-term	historical returns,	actual	returns	on	plan	assets	achieved	over	the	last	ten	years,	current	and	expected	market	conditions,	and	expected	value	to	be	generated	through	active management,	 currency	 overlay	 and	 securities	 lending	 programs.	 American's	 annualized	 ten-year	 rate	 of	 return	 on	 plan	 assets	 as	 of	 December	 31,	 2014,	 was approximately	8%.

The	objectives	of	American's	investment	policies	are	to:	maintain	sufficient	income	and	liquidity	to	pay	retirement	benefits;	produce	a	long-term	rate	of	return	that meets	or	exceeds	the	assumed	rate	of	return	for	plan	assets;	limit	the	volatility	of	asset	performance	and	funded	status;	and	diversify	assets	among	asset	classes	and investment	managers.

Each	asset	class	is	actively	managed	and,	historically,	the	plans'	assets	have	produced	returns,	net	of	management	fees,	in	excess	of	the	expected	rate	of	return	over the	last	ten	years.	Public	equity	and	emerging	market	fixed	income	securities	are	used	to	provide	diversification	and	are	expected	to	generate	higher	returns	over	the	long- term	than	longer	duration	U.S.	bonds.	Public	stocks	are	managed	using	a	value	investment	approach	in	order	to	participate	in	the	returns	generated	by	stocks	in	the	long- term,	while	reducing	year-over-year	volatility.	Longer	duration	U.S.	bonds	are	used	to	partially	hedge	the	assets	from	declines	in	interest	rates.	Alternative	(private) investments	are	used	to	provide	expected	returns	in	excess	of	the	public	markets	over	the	long-term.	Additionally,	American	engages	currency	overlay	managers	in	an attempt	to	increase	returns	by	protecting	non-U.S.	dollar	denominated	assets	from	a	rise	in	the	relative	value	of	the	U.S.	dollar.	American	also	participates	in	securities lending	programs	to	generate	additional	income	by	loaning	plan	assets	to	borrowers	on	a	fully	collateralized	basis.	These	programs	are	subject	to	market	risk.

The	fair	value	of	American's	pension	plan	assets	at	December	31,	2014	and	2013,	by	asset	category	are	as	follows	(in	millions):

|  |  | Fair	Value	Measurements	as	of	December	31,	2014 | Fair	Value	Measurements	as	of	December	31,	2014 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Quoted\tPrices\tin | Significant | Significant |  |
|  | Active\tMarkets\tfor | Observable | Unobservable |  |
| Asset\tCategory | Identical\tAssets\n(Level\t1) | Inputs\n(Level\t2) | Inputs\n(Level\t3) | Total |
| Cash\tand\tcash\tequivalents | $332 | $— | $— | $332 |
| Equity\tsecurities: |  |  |  |  |
| International\tmarkets\t(a)(b) | 2,943 | — | — | 2,943 |
| Large-cap\tcompanies\t(b) | 2,488 | — | — | 2,488 |
| Mid-cap\tcompanies\t(b) | 362 | — | — | 362 |
| Small-cap\tcompanies\t(b) | 21 | — | — | 21 |
| Fixed\tIncome: |  |  |  |  |
| Corporate\tbonds\t(c) | — | 2,384 |  | 2,384 |
| Government\tSecurities\t(d) | — | 1,184 |  | 1,184 |
| U.S.\tmunicipal\tsecurities | — | 65 |  | 65 |
| Alternative\tinstruments: |  |  |  |  |
| Private\tequity\tpartnerships\t(e) | — | — | 818 | 818 |
| Common/collective\tand\t103-12\tinvestment\ttrusts\t(f) | — | 240 | — | 240 |
| Insurance\tgroup\tannuity\tcontracts | — | — | 2 | 2 |
| Dividend\tand\tinterest\treceivable | 52 | — | — | 52 |
| Due\tto/from\tbrokers\tfor\tsale\tof\tsecurities\t–\tnet | 39 | — | — | 39 |
| Other\tassets\t–\tnet | 5 | — | — | 5 |
| Total | $6,242 | $3,873 | $820 | $10,935 |

|  |  | Fair	Value	Measurements	as	of	December	31,	2013 | Fair	Value	Measurements	as	of	December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Quoted\tPrices\tin | Significant | Significant |  |
|  | Active\tMarkets\tfor | Observable | Unobservable |  |
| Asset\tCategory | Identical\tAssets\n(Level\t1) | Inputs\n(Level\t2) | Inputs\n(Level\t3) | Total |
| Cash\tand\tcash\tequivalents | $360 | $— | $— | $360 |
| Equity\tsecurities: |  |  |  |  |
| International\tmarkets\t(a)(b) | 2,908 | — | — | 2,908 |
| Large-cap\tcompanies\t(b) | 2,196 | — | — | 2,196 |
| Mid-cap\tcompanies\t(b) | 227 | — | — | 227 |
| Small-cap\tcompanies\t(b) | 18 | — | — | 18 |
| Fixed\tIncome: |  |  |  |  |
| Corporate\tbonds\t(c) | — | 2,067 | — | 2,067 |
| Government\tSecurities\t(d) | — | 1,035 | — | 1,035 |
| U.S.\tmunicipal\tsecurities | — | 55 | — | 55 |
| Alternative\tinstruments: |  |  |  |  |
| Private\tequity\tpartnerships\t(e) | — | — | 848 | 848 |
| Common/collective\tand\t103-12\tinvestment\ttrusts\t(f) | — | 245 | — | 245 |
| Insurance\tgroup\tannuity\tcontracts | — | — | 2 | 2 |
| Dividend\tand\tinterest\treceivable | 51 | — | — | 51 |
| Due\tto/from\tbrokers\tfor\tsale\tof\tsecurities\t–\tnet | (10) | — | — | (10) |
| Other\tassets\t–\tnet | 7 | — | — | 7 |
| Total | $5,757 | $3,402 | $850 | $10,009 |

The	fair	value	of	American's	other	postretirement	benefit	plan	assets	at	December	31,	2014	by	asset	category,	were	as	follows	(in	millions):

|  |  | Fair	Value	Measurements	as	of	December	31,	2014 | Fair	Value	Measurements	as	of	December	31,	2014 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Quoted\tPrices\tin | Significant | Significant |  |
|  | Active\tMarkets\tfor | Observable | Unobservable |  |
| Asset\tCategory | Identical\tAssets\n(Level\t1) | Inputs\n(Level\t2) | Inputs\n(Level\t3) | Total |
| Money\tmarket\tfund | $2 | $— | $— | $2 |
| Mutual\tfunds\t–\tAMR\tClass | — | 242 | — | \t 242 |
| Total | $2 | $242 | $— | $244 |

|  |  | Fair	Value	Measurements	as	of	December	31,	2013 | Fair	Value	Measurements	as	of	December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Quoted\tPrices\tin | Significant | Significant |  |
|  | Active\tMarkets\tfor | Observable | Unobservable |  |
| Asset\tCategory | Identical\tAssets\n(Level\t1) | Inputs\n(Level\t2) | Inputs\n(Level\t3) | Total |
| Money\tmarket\tfund | $4 | $— | $— | $4 |
| Mutual\tfunds\t–\tAMR\tClass | — | 235 | — | \t 235 |
| Total | $4 | $235 | $— | $239 |

American	is	required	to	make	minimum	contributions	to	its	defined	benefit	pension	plans	under	the	minimum	funding	requirements	of	the	Employee	Retirement Income	Security	Act	of	1974	(ERISA),	the	Pension	Funding	Equity	Act	of	2004,	the	Pension	Protection	Act	of	2006,	the	Pension	Relief	Act	of	2010	and	the	Moving Ahead	for	Progress	in	the	21st	Century	Act	of	2012.	In	2014,	American	has	made	its	aggregate	minimum	required	contributions	for	2014	of	$170	million,	and	has	made $639	million	in	supplemental	contributions	to	its	pension	plans,	above	and	beyond	the	$170	million	of	minimum	required	contributions.

Based	on	current	funding	assumptions,	American	has	no	minimum	required	contributions	until	2019.	Currently,	American's	minimum	funding	obligation	for	its pension	plans	is	subject	to	temporary	favorable	rules	that	are	scheduled	to	expire	at	the	end	of	2017.	Upon	expiration	of	these	rules,	American's	funding	obligations	are likely	to	increase	materially.

|  | 2015 | 2016 | 2017 | 2018 | 2019 | 2020-2024 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Pension | $643 | $664 | $696 | $732 | $773 | $4,515 |
| Retiree\tmedical\tand\tother | \t 108 | \t 102 | 97 | 91 | 87 | 374 |

Effective	November	1,	2012,	American's	defined	benefit	pension	plans	were	frozen	and	American	began	providing	enhanced	benefits	under	the	$uper	$aver	401(k) Plan	 for	 certain	 groups.	 Effective	 November	 1,	 2012,	American	 matches	 all	 non-flight	 crew	 employee	 contributions	 up	 to	 5.5%	 of	 eligible	 earnings.	 Effective November	1,	2012	through	December	31,	2013,	pilots	received	employer	contributions	of	14%	of	eligible	earnings	and	flight	attendants	received	matching	contributions of	up	to	5.5%	of	eligible	earnings.	With	the	ratification	of	a	new	CBA	by	pilots	on	December	9,	2013,	effective	January	1,	2014,	pilots	receive	employer	contributions	of 16%	of	eligible	earnings.	With	the	2013	Conditional	Labor	Agreement,	effective	January	1,

2014,	flight	attendants	on	the	American	seniority	list	as	of	April	12,	2012	receive	age-based	employer	contributions	(under	age	40	–	5.5%	of	eligible	earnings;	age	40	to 49	–	6.75%	of	eligible	earnings;	and	age	50	and	above	–	9.9%	of	eligible	earnings)	and	flight	attendants	hired	after	April	12,	2012,	receive	employer	contributions	of	3% of	eligible	earnings	plus	company	matching	contributions	of	up	to	2.5%	of	eligible	earnings.

The	Pilot	B	Plan,	a	defined	contribution	plan,	was	terminated	on	November	30,	2012.	With	the	exception	of	a	small	residual	balance	to	cover	final	plan	expenses, American	has	distributed	all	of	the	funds	in	the	plan.

On	July	6,	2012,	American	commenced	an	adversary	proceeding	in	the	Bankruptcy	Court	seeking	a	determination	on	the	issue	of	vesting	for	former	employees	who retired	before	November	1,	2012	and	were	eligible	for	certain	retiree	medical	coverage.	The	Bankruptcy	Court	granted	in	part	and	denied	in	part	American's	motion	for summary	judgment	concerning	vesting.

In	accordance	with	ASC	715	"Retirement	Benefits"	(ASC	715),	in	the	third	quarter	of	2012,	American	remeasured	its	defined	benefit	pension	and	retiree	medical plans	as	a	result	of	modifications	to	its	retirement	plans	and	reductions	in	certain	work	groups	(see	above	and	Note	2	to	American's	consolidated	financial	statements). American	updated	its	significant	actuarial	assumptions	used	for	the	remeasurements	including	the	discount	rate,	which	was	lowered	to	4.10%	and	3.80%	for	the	defined benefit	pension	plans	and	retiree	medical	plans,	respectively.

Further,	as	a	result	of	modifications	to	its	retiree	medical	plans,	American	recognized	a	negative	plan	amendment	of	$1.9	billion,	which	is	included	as	a	component	of actuarial	gain	arising	in	current	year	in	other	comprehensive	income	and	will	be	amortized	over	the	future	service	life	of	the	active	plan	participants	for	whom	the benefit	was	eliminated,	or	approximately	eight	years.	In	addition,	a	net	credit	of	$124	million,	representing	unamortized	prior	service	credits	of	$157	million	offset	by	a curtailment	loss	of	$33	million,	is	included	as	a	component	of	reorganization	items,	net.

|  | Pension	and<br>Retiree	Medical<br>Liability | Unrealized<br>Gain/(Loss)<br>on<br>Investments | Derivative<br>Financial<br>Instruments | Income<br>Tax<br>Benefit<br>(Expense) | Total |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tDecember\t31,\t2012 | $(2,322) | $2 | $13 | $(781) | $(3,088) |
| Other\tcomprehensive\tincome\t(loss)\tbefore\treclassifications | 1,565 | — | 18 | (538) | 1,045 |
| Amounts\treclassified\tfrom\taccumulated\tother\tcomprehensive\tincome |  |  |  |  |  |
| (loss) | (142) | (1) | 34 | — | (109) |
| Net\tcurrent-period\tother\tcomprehensive\tincome\t(loss) | 1,423 | (1) | 52 | (538) | 936 |
| Balance\tat\tDecember\t31,\t2013 | (899) | 1 | 65 | (1,319) | (2,152) |
| Other\tcomprehensive\tincome\t(loss)\tbefore\treclassifications | (2,602) | — | (52) | — | (2,654) |
| Amounts\treclassified\tfrom\taccumulated\tother\tcomprehensive\tincome |  |  |  |  |  |
| (loss) | (159) | (4) | (4) | 328 | 161 |
| Net\tcurrent-period\tother\tcomprehensive\tincome\t(loss) | (2,761) | (4) | (56) | 328 | (2,493) |
| Balance\tat\tDecember\t31,\t2014 | $(3,660) | $(3) | $9 | $(991) | $(4,645) |

| income	(loss)	components | 2014 | 2013 | where	net	income		(loss)	is	presented |
| :--- | :--- | :--- | :--- |
| Amortization\tof\tpension\tand\tretiree\tmedical\tliability: |  |  |  |
| Prior\tservice\tcost | $(198) | $(223) | Wages,\tsalaries\tand\tbenefits |
| Actuarial\tloss | 39 | 81 | Wages,\tsalaries\tand\tbenefits |
| Derivative\tfinancial\tinstruments: |  |  |  |
| Cash\tflow\thedges | (4) | 34 | Aircraft\tfuel\tand\trelated\ttaxes |
| Net\tunrealized\tchange\ton\tinvestments: |  |  |  |
| Net\tchange\tin\tvalue | (4) | — | Other,\tnet |
| Income\ttax\tbenefit\t(expense): |  |  |  |
| Reversal\tof\tnon-cash\ttax\tprovision | 328 | — | Income\ttax\tprovision\t(benefit) |
| Total\treclassifications\tfor\tthe\tperiod | $161 | $(108) |  |

During	2014,	American	sold	its	portfolio	of	fuel	hedging	contracts	that	were	scheduled	to	settle	on	or	after	June	30,	2014.	In	connection	with	this	sale,	American recorded	a	special	non-cash	tax	provision	of	$328	million	in	the	statement	of	operations	for	the	second	quarter	of	2014	that	reverses	the	non-cash	tax	provision	which	was recorded	in	OCI,	a	subset	of	stockholder's	equity,	principally	in	2009.	This	provision	represents	the	tax	effect	associated	with	gains	recorded	in	OCI	principally	in	2009 due	to	a	net	increase	in	the	fair	value	of	American's	fuel	hedging	contracts.	In	accordance	with	GAAP,	American	retained	the	$328	million	tax	provision	in	OCI	until	the last	contract	was	settled	or	terminated.

American	recognized	a	$538	million	non-cash	income	tax	benefit,	offset	by	a	$538	million	charge	to	other	comprehensive	income,	during	the	fourth	quarter	of	2013 related	to	gains	in	other	comprehensive	income.	See	Note	7	for	further	information.

Amounts	allocated	to	other	comprehensive	income	for	income	taxes	as	further	described	in	Note	7	will	remain	in	accumulated	other	comprehensive	income	(loss) until	American	ceases	all	related	activities,	such	as	termination	of	the	pension	plan.

American	had	total	aircraft	acquisition	commitments	as	of	December	31,	2014	as	follows:

|  | 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Airbus |  |  |  |  |  |  |  |
| A320\tFamily | 30 | 25 | \t 20 | \t — | \t — | — | 75 |
| A320neo | \t — | \t — | \t 10 | \t 25 | \t 25 | 40 | \t100 |
| Boeing |  |  |  |  |  |  |  |
| 737\tFamily | 18 | 20 | \t 20 | \t — | \t — | — | 58 |
| 737\tMAX | \t — | \t — | 3 | \t 17 | \t 20 | 60 | \t100 |
| 777-300\tER | 2 | 2 | \t — | \t — | \t — | — | 4 |
| 787\tFamily | 12 | 13 | \t 10 | 7 | \t — | — | 42 |
| Bombardier |  |  |  |  |  |  |  |
| CRJ900 | 18 | 20 | \t — | \t — | \t — | — | 38 |
| Embraer |  |  |  |  |  |  |  |
| ERJ175 | 24 | 24 | \t 12 | \t — | \t — | — | 60 |
| Total | \t104 | \t104 | \t 75 | \t 49 | \t 45 | 100 | \t477 |

|  | 2015 | 2016 | 2017 | 2018 | 2019 | 2020	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Payments\tfor\tabove\taircraft\tcommitments\tand\tcertain\tengines\t(1) | $4,586 | $4,856 | $4,165 | $3,241 | $2,654 | $5,651 | $25,153 |

(1) These	amounts	are	net	of	purchase	deposits	currently	held	by	the	manufacturers	and	include	all	commitments	for	regional	aircraft.	American	has	granted	Boeing	a security	interest	in	its	purchase	deposits	with	Boeing.	American's	purchase	deposits	totaled	$1.1	billion	as	of	December	31,	2014.

In	April	2014,	American	exercised	its	option	to	purchase	and	terminated	its	existing	lease	financing	arrangements	with	respect	to	62	Airbus	A320	family	aircraft scheduled	to	be	delivered	between	the	first	quarter	of	2015	and	the	third	quarter	of	2017.	In	connection	with	American's	exercise	of	such	option,	American	also exercised	its	right	to	convert	firm	orders	for	30	Airbus	A320neo	aircraft,	scheduled	to	be	delivered	in	2021	and	2022,	to	options	to	acquire	such	aircraft.	The	table	above reflects	these	changes.

In	December	2014,	American	exercised	its	right	under	its	purchase	agreement	with	Bombardier	to	convert	24	of	American's	40	option	order	CRJ900	aircraft	to	firm orders	to	acquire	such	aircraft.

American	has	contracts	related	 to	facility	construction	or	 improvement	projects,	primarily	at	airport locations	as	well	as information technology	support.	The contractual	obligations	related	to	these	contracts	are	presented	in	the	table	below	(in	millions):

|  | 2015 | 2016 | 2017 | 2018 | 2019 | Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Facility\tconstruction\tor\timprovement\tcontracts | $166 | $6 | $ —\t\t\t\t $—\t\t\t\t $—\t\t\t\t $— | $ —\t\t\t\t $—\t\t\t\t $—\t\t\t\t $— | $ —\t\t\t\t $—\t\t\t\t $—\t\t\t\t $— | $ —\t\t\t\t $—\t\t\t\t $—\t\t\t\t $— | $172 |
| Information\ttechnology\tcontracts | \t 179 | \t 139 | \t 112 | \t 96 | \t 79 | 1 | \t 606 |

As	of	December	31,	2014,	American's	capacity	purchase	agreements	with	third-party	regional	carriers	had	expiration	dates	ranging	from	2016	to	2027,	with	rights	of American	to	extend	the	respective	terms	of	each	agreement.	See	Part	I,	Item	2.	Properties	for	unaudited	information	on	the	aircraft	contractually	obligated	to	American under	such	capacity	purchase	agreements	with	third-party	regional	carriers.

American	has	entered	into	agreements	with	the	third-party	regional	carriers	that	operate	certain	of	their	aircraft	using	American's	flight	designator	codes.	American controls	the	scheduling,	pricing,	reservations,	ticketing	and	seat	inventories	of	those	aircraft	and	retains	all	revenues	associated	with	revenue	flights	by	those	aircraft. American	pays	the	third-party	regional	carriers	an	amount,	as	defined	in	the	applicable	agreement,	based	on	the	airlines'	costs	of	operating	those	flights	and	other	factors intended	to	approximate	market	rates	for	those	services.	As	of	December	31,	2014,	American's	minimum	fixed	obligations	under	its	capacity	purchase	agreements	with third-party	regional	carriers	were	as	follows	(approximately,	in	millions):

| 2015 | 2016 | 2017 | 2018 | 2019 | 2020	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| $502 | $592 | $463 | $446 | $430 | $2,242 | $4,675 |

(1) Represents	minimum	payments	under	capacity	purchase	agreements	with	 third-party	regional	carriers.	These	commitments	are	estimates	of	costs	based	on assumed	minimum	levels	of	flying	under	the	capacity	purchase	agreements	and	American's	actual	payments	could	differ	materially.	These	obligations	also include	the	portion	of	American's	future	obligations	related	to	aircraft	deemed	to	be	leased	in	the	amount	of	approximately	$173	million	in	2015,	$171	million	in 2016,	$111	million	in	2017,	$107	million	in	2018,	$107	million	in	2019	and	$665	million	in	2020	and	thereafter.

American	leases	certain	aircraft,	engines	and	ground	equipment,	in	addition	to	the	majority	of	its	ground	facilities	and	terminal	space.	As	of	December	31,	2014, American	had	245	aircraft	under	operating	leases,	with	remaining	terms	ranging	from	one	month	to	approximately	13	years.	Airports	are	utilized	for	flight	operations under	lease	arrangements	with	the	municipalities	or	agencies	owning	or	controlling	such	airports.	Substantially	all	leases	provide	that	the	lessee	must	pay	taxes, maintenance,	insurance	and	certain	other	operating	expenses	applicable	to	the	leased	property.	Some	leases	also	include	renewal	and	purchase	options.

|  | 2015 | 2016 | 2017 | 2018 | 2019 | 2020	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Future\tminimum\tlease\tpayments\t(1) | $1,391 | $1,293 | $1,240 | $1,141 | $1,069 | $4,939 | $11,073 |

American	has	135	owned	aircraft	and	32	leased	aircraft	which	were	financed	with	pass	through	trust	certificates,	or	EETCs,	issued	by	pass	through	trusts.	These trusts	are	off-balance	sheet	entities,	the	primary	purpose	of	which	is	to	finance	the	acquisition	of	flight	equipment.	Rather	than	finance	each	aircraft	separately	when	such aircraft	was	purchased,	delivered	or	refinanced,	these	trusts	allowed	American	to	raise	the	financing	for	several	aircraft	at	one	time	and	place	such	funds	in	escrow pending	the	purchase,	delivery	or	refinancing	of	the	relevant	aircraft.	The	trusts	were	also	structured	to	provide	for	certain	credit	enhancements,	such	as	liquidity facilities	to	cover	certain	interest	payments,	that	reduce	the	risks	to	the	purchasers	of	the	trust	certificates	and,	as	a	result,	reduce	the	cost	of	aircraft	financing	to American.

Each	trust	covered	a	set	amount	of	aircraft	scheduled	to	be	delivered	or	refinanced	within	a	specific	period	of	time.	At	the	time	of	each	covered	aircraft	financing,	the relevant	trust	used	the	funds	in	escrow	to	purchase	equipment	notes	relating	to	the	financed	aircraft.	The	equipment	notes	were	issued,	at	American's	election,	in connection	with	a	mortgage	financing	of	the	aircraft	or,	in	certain	cases,	by	a	separate	owner	trust	in	connection	with	a	leveraged	lease	financing	of	the	aircraft.	In	the case	of	a	leveraged	lease	financing,	the	owner	trust	then	leased	the	aircraft	to	American.	In	both	cases,	the	equipment	notes	are	secured	by	a	security	interest	in	the aircraft.	The	pass	through	trust	certificates	are	not	direct	obligations	of,	nor	are	they	guaranteed	by	American.	However,	in	the	case	of	mortgage	financings,	the equipment	notes	issued	to	the	trusts	are	direct	obligations	of	American	and	in	certain	instances	are	guaranteed	by	AAG.	As	of	December	31,	2014,	$4.3	billion associated	with	these	mortgage	financings	is	reflected	as	debt	in	the	accompanying	consolidated	balance	sheet.

With	respect	to	leveraged	leases,	American	evaluated	whether	the	leases	had	characteristics	of	a	variable	interest	entity	and	concluded	the	leasing	entities	met	the criteria	for	variable	interest	entities.	American	generally	is	not	the	primary	beneficiary	of	the	leasing	entities	if	the	lease	terms	are	consistent	with	market	terms	at	the inception	of	the	lease	and	do	not	include	a	residual	value	guarantee,	fixed-price	purchase	option	or	similar	feature	that	obligates	American	to	absorb	decreases	in	value	or entitles	American	to	participate	in	increases	in	the	value	of	the	aircraft.	American	does	not	provide	residual	value	guarantees	to	the	bondholders	or	equity	participants	in the	trusts	and	American's	existing	leasing	arrangements	do	not	contain	fixed-price	purchase	options	or	similar	features.	Therefore,	American	accounts	for	its	EETC leveraged	lease	financings	as	operating	leases.	American's	total	future	obligations	under	these	leveraged	lease	financings	are	$269	million	as	of	December	31,	2014, which	are	included	in	the	future	minimum	lease	payments	table	above.

American	guarantees	the	payment	of	principal	and	interest	of	certain	special	facility	revenue	bonds	issued	by	municipalities	primarily	to	build	or	improve	airport facilities	and	purchase	equipment	which	is	leased	to	American.	Under	such	leases,	American	is	required	to	make	rental	payments	through	2035,	sufficient	to	pay maturing	principal	and	interest	payments	on	the	related	bonds.	As	of	December	31,	2014,	the	remaining	lease	payments	guaranteeing	the	principal	and	interest	on	these bonds	are	$449	million,	which	are	accounted	for	as	operating	leases.

Pursuant	to	rulings	of	the	Bankruptcy	Court,	the	Plan	established	the	Disputed	Claims	Reserve	to	hold	shares	of	AAG	Common	Stock	reserved	for	issuance	to disputed	claimholders	at	the	Effective	Date	that	ultimately	become	holders	of	allowed	Single-Dip	Unsecured	Claims.	The	shares	provided	for	under	the	Plan	were determined	based	upon	a	Disputed	Claims	Reserve	amount	of	claims	of	approximately	$755	million,	representing	the	maximum	amount	of	additional	distributions	to subsequently	allowed	Single-Dip	Unsecured	Claims	under	the	Plan.	On	July	1,	2014	(the	date	180	days	after	the	Effective	Date),	approximately	2.9	million	shares	of AAG	Common	Stock	held	in	the	Disputed	Claims	Reserve	were	distributed	to	holders	of	allowed	Single-Dip	Unsecured	Claims,	to	holders	of	certain	labor-related deemed	claims,	and	to	holders	of	certain	non-management,	non-union	employee	deemed	claims	as	specified	in	the	Plan,	and	shares	were	withheld	or	sold	on	account	of related	tax	obligations.	In	addition,	on	July	1,	2014,	American	repurchased	0.4	million	shares	of	AAG	Common	Stock	for	an	aggregate	of	$19	million	from	the	Disputed Claims	Reserve	at	the	then	prevailing	market	price	in	order	to	fund	cash	tax	obligations	resulting	from	distributions	by	the	Disputed	Claims	Reserve.	On	November	4, 2014,	approximately	0.7	million	shares	of	AAG	Common	Stock	held	in	the	Disputed	Claims	Reserve	were	distributed	to	holders	of	allowed	Single-Dip	Unsecured Claims,	to	holders	of	certain	labor-related	deemed	claims,	and	to	holders	of	certain	non-management,	non-union	employee	deemed	claims	as	specified	in	the	Plan,	and shares	were	withheld	or	sold	on	account	of	related	tax	obligations.	In	addition,	on	November	4,	2014,	American	repurchased	less	than	0.1	million	shares	of	AAG Common	Stock	for	an	aggregate	of	$2	million	from	the	Disputed	Claims	Reserve	at	the	then	prevailing	market	price	in	order	to	fund	cash	tax	obligations	resulting	from distributions	by	the	Disputed	Claims	Reserve.	As	of	December	31,	2014,	there	were	approximately	26.8	million	shares	of	AAG	Common	Stock	remaining	in	the Disputed	Claims	Reserve.	On	February	10,	2015,	approximately	0.8	million	shares	of	AAG	Common	Stock	held	in	the	Disputed	Claims	Reserve	were	distributed	to holders	of	allowed	Single-Dip	Unsecured	Claims,	to	holders	of	certain	labor-related	deemed	claims,	and	to	holders	of	certain	non-management,	non-union	employee deemed	claims	as	specified	in	the	Plan,	and	shares	were	withheld	or	sold	on	account	of	related	tax	obligations.	In	addition,	on	February	10,	2015,	American	repurchased less	than	0.1	million	shares	of	AAG	Common	Stock	for	an	aggregate	of	$4	million

from	the	Disputed	Claims	Reserve	at	the	then	prevailing	market	price	in	order	to	fund	cash	tax	obligations	resulting	from	distributions	by	the	Disputed	Claims	Reserve. As	disputed	claims	are	resolved,	the	claimants	will	receive	distributions	of	shares	from	the	Disputed	Claims	Reserve	on	the	same	basis	as	if	such	distributions	had	been made	on	or	about	the	Effective	Date.	However,	American	is	not	required	to	distribute	additional	shares	above	the	limits	contemplated	by	the	Plan,	even	if	the	shares remaining	for	distribution	are	not	sufficient	to	fully	pay	any	additional	allowed	unsecured	claims.	To	the	extent	that	any	of	the	reserved	shares	remain	undistributed	upon resolution	of	all	remaining	disputed	claims,	such	shares	will	not	be	returned	to	AAG	but	rather	will	be	distributed	to	former	AMR	shareholders	as	of	the	Effective	Date. However,	resolution	of	disputed	claims	could	have	a	material	effect	on	recoveries	by	holders	of	additional	allowed	Single-Dip	Unsecured	Claims	under	the	Plan	and	the amount	of	additional	share	distributions,	if	any,	that	are	made	to	former	AMR	shareholders	as	the	total	number	of	shares	of	AAG	Common	Stock	that	remain	available for	distribution	upon	resolution	of	disputed	claims	is	limited	pursuant	to	the	Plan.

There	is	also	pending	in	the	Bankruptcy	Court	an	adversary	proceeding	relating	to	an	action	brought	by	American	to	seek	a	determination	that	certain	non-pension, post-employee	benefits	(OPEB)	are	not	vested	benefits	and	thus	may	be	modified	or	terminated	without	liability	to	American.	On	April	18,	2014,	the	Bankruptcy	Court granted	American's	motion	for	summary	judgment	with	respect	to	certain	non-union	employees,	concluding	that	their	benefits	were	not	vested	and	could	be	terminated. The	summary	judgment	motion	was	denied	with	respect	to	all	other	retirees.	The	Bankruptcy	Court	has	not	yet	scheduled	a	trial	on	the	merits	concerning	whether	those retirees'	benefits	are	vested,	and	American	cannot	predict	whether	it	will	receive	relief	from	obligations	to	provide	benefits	to	any	of	those	retirees.	American's	financial statements	presently	reflect	these	retirement	programs	without	giving	effect	to	any	modification	or	termination	of	benefits	that	may	ultimately	be	implemented	based upon	the	outcome	of	this	proceeding.	Separately,	both	the	Association	of	Professional	Flight	Attendants	and	Transport	Workers	Union	have	filed	grievances	asserting that	American	was	"successful"	in	its	Chapter	11	with	respect	to	matters	related	to	OPEB	and,	accordingly,	by	operation	of	the	underlying	collective	bargaining agreements,	American's	prior	contributions	to	certain	OPEB	prefunding	trusts	attributable	to	active	employees	should	be	returned	to	those	active	employees.	These amounts	aggregate	approximately	$212	million.	American	has	denied	both	grievances	and	intends	to	defend	these	matters	vigorously.

Private	Party	Antitrust	Action.	On	July	2,	2013,	a	lawsuit	captioned	Carolyn	Fjord,	et	al.,	v.	US	Airways	Group,	Inc.,	et	al.,	was	filed	in	the	United	States	District Court	for	the	Northern	District	of	California.	The	complaint	names	as	defendants	US	Airways	Group	and	US	Airways,	and	alleges	that	the	effect	of	the	Merger	may	be to	substantially	lessen	competition	or	tend	to	create	a	monopoly	in	violation	of	Section	7	of	the	Clayton	Antitrust	Act.	The	relief	sought	in	the	complaint	includes	an injunction	against	 the	Merger,	or	divestiture.	On	August	6,	2013,	 the	plaintiffs	re-filed	 their	complaint	 in	 the	Bankruptcy	Court,	adding	AMR	and	American	as defendants,	and	on	October	2,	2013,	dismissed	the	initial	California	action.	The	Bankruptcy	Court	denied	plaintiffs'	motion	to	preliminarily	enjoin	the	Merger.	On January	10,	2014,	the	plaintiffs	moved	to	amend	their	complaint	to	add	additional	factual	allegations,	a	claim	for	money	damages	and	a	request	for	preliminary injunctive	relief	requiring	the	carriers	to	hold	separate	their	assets.	On	March	14,	2014,	the	Court	allowed	plaintiffs	to	add	certain	allegations	but	denied	plaintiffs' requests	to	add	a	damages	claim	or	seek	preliminary	injunctive	relief	requiring	the	carriers	to	hold	separate	their	assets.	On	June	2,	2014,	plaintiffs	filed	an	amended motion	for	leave	to	file	a	second	amended	and	supplemental	complaint,	which	motion	has	been	fully	briefed	by	the	parties	and	is	pending	resolution	by	the	Court.	There is	currently	no	trial	date	set.	American	believes	this	lawsuit	is	without	merit	and	intends	to	vigorously	defend	against	the	allegations.

General.	American	is	also	engaged	in	other	legal	proceedings	from	time	to	time.	Legal	proceedings	can	be	complex	and	take	many	months,	or	even	years,	to	reach resolution,	with	the	final	outcome	depending	on	a	number	of	variables,	some	of	which	are	not	within	the	control	of	American.	Therefore,	although	American	will vigorously	defend	itself	in	each	of	the	actions	described	above	and	such	other	legal	proceedings,	their	ultimate	resolution	and	potential	financial	and	other	impacts	on American	are	uncertain.

American	is	a	party	to	many	routine	contracts	in	which	it	provides	general	indemnities	in	the	normal	course	of	business	to	third	parties	for	various	risks.	American	is not	able	to	estimate	the	potential	amount	of	any	liability	resulting	from	the	indemnities.	These	indemnities	are	discussed	in	the	following	paragraphs.

In	its	aircraft	financing	agreements,	American	generally	indemnifies	the	financing	parties,	trustees	acting	on	their	behalf	and	other	relevant	parties	against	liabilities (including	certain	taxes)	resulting	from	the	financing,	manufacture,	design,	ownership,	operation	and	maintenance	of	the	aircraft	regardless	of	whether	these	liabilities (or	taxes)	relate	to	the	negligence	of	the	indemnified	parties.

American's	loan	agreements	and	other	London	Interbank	Offered	Rate	(LIBOR)-based	financing	transactions	(including	certain	leveraged	aircraft	leases)	generally obligate	American	to	reimburse	the	applicable	lender	for	incremental	costs	due	to	a	change	in	law	that	imposes	(i)	any	reserve	or	special	deposit	requirement	against assets	of,	deposits	with	or	credit	extended	by	such	lender	related	to	the	loan,	(ii)	any	tax,	duty	or	other	charge	with	respect	to	the	loan	(except	standard	income	tax)	or (iii)	capital	adequacy	requirements.	In	addition,	American's	loan	agreements,	derivative	contracts	and	other	financing	arrangements	typically	contain	a	withholding	tax provision	that	requires	American	to	pay	additional	amounts	to	the	applicable	lender	or	other	financing	party,	generally	if	withholding	taxes	are	imposed	on	such	lender	or other	financing	party	as	a	result	of	a	change	in	the	applicable	tax	law.

These	increased	cost	and	withholding	tax	provisions	continue	for	the	entire	term	of	the	applicable	transaction,	and	there	is	no	limitation	on	the	maximum	additional amounts	American	could	be	obligated	to	pay	under	such	provisions.	Any	failure	to	pay	amounts	due	under	such	provisions	generally	would	trigger	an	event	of	default and,	in	a	secured	financing	transaction,	would	entitle	the	lender	to	foreclose	on	the	collateral	to	realize	the	amount	due.

In	certain	transactions,	including	certain	aircraft	financing	leases	and	loans,	the	lessors,	lenders	and/or	other	parties	have	rights	to	terminate	the	transaction	based	on changes	in	foreign	tax	law,	illegality	or	certain	other	events	or	circumstances.	In	such	a	case,	American	may	be	required	to	make	a	lump	sum	payment	to	terminate	the relevant	transaction.

American	has	general	indemnity	clauses	in	many	of	its	airport	and	other	real	estate	leases	where	American	as	lessee	indemnifies	the	lessor	(and	related	parties) against	liabilities	related	to	American's	use	of	the	leased	property.	Generally,	these	indemnifications	cover	liabilities	resulting	from	the	negligence	of	the	indemnified parties,	but	not	liabilities	resulting	from	the	gross	negligence	or	willful	misconduct	of	the	indemnified	parties.	In	addition,	American	provides	environmental	indemnities in	many	of	these	leases	for	contamination	related	to	American's	use	of	the	leased	property.

Under	certain	contracts	with	third	parties,	American	indemnifies	the	third-party	against	legal	liability	arising	out	of	an	action	by	the	third-party,	or	certain	other parties.	The	 terms	of	 these	contracts	vary	and	 the	potential	exposure	under	 these	 indemnities	cannot	be	determined.	American	has	 liability	 insurance	protecting American	for	some	of	the	obligations	it	has	undertaken	under	these	indemnities.

American	is	involved	in	certain	claims	and	litigation	related	to	its	operations.	American	is	also	subject	to	regulatory	assessments	in	the	ordinary	course	of	business. American	establishes	reserves	for	litigation	and	regulatory	matters	when	those	matters	present	loss	contingencies	that	are	both	probable	and	can	be	reasonably	estimated. In	the	opinion	of	management,	liabilities,	if	any,	arising	from	these	regulatory	matters,	claims	and	litigation	will	not	have	a	material	adverse	effect	on	American's consolidated	financial	position,	results	of	operations,	or	cash	flows,	after	consideration	of	available	insurance.

In	connection	with	the	Merger	and	pursuant	to	the	Plan	on	December	9,	2013,	AAG	and	American	entered	into	a	joinder	to	the	loan	agreement	and	became	co- obligors	of	US	Airways	Group's	$1.6	billion	2013	Citicorp	Credit	Facility	and	AAG	and	American	entered	into	a	second	supplemental	indenture	that	guarantees	the payment	obligations	associated	with	the	6.125%	senior	notes.

In	2010,	American	and	Japan	Airlines	entered	into	a	JBA	under	which,	amongst	other	things,	American	provided	Japan	Airlines	a	guarantee	of	certain	minimum incremental	revenue	resulting	from	the	successful	operation	of	the	joint	business	for	the	first	three	years	following	its	implementation,	subject	to	certain	terms	and conditions.	The	amount	required	to	be	paid	by	American	under	the	guarantee	in	any	one	of	such	years	may	not	exceed	$100	million,	and	is	reduced	if	capacity	for	one	of such	years	is	less	than	a	defined	base	year	period	capacity.	As	of	December	31,	2013,	American	reached	an	agreement	with	Japan	Airlines	to	settle	the	liability	for	$90 million.	The	liability	is	expected	to	be	settled	in	2015.

In	the	fourth	quarter	of	2012,	American	entered	into	a	settlement	agreement	resolving	a	commercial	dispute.	The	settlement	agreement	includes	two	elements	which were	valued	at	relative	fair	value	and	will	be	recognized	when	earned.	American	determined	that	the	settlement	includes	a	litigation	gain	of	$280	million,	which	was valued	using	future	cash	flows	and	recognized	in	the	fourth	quarter	of	2012.	The	settlement	also	includes	an	incentive	which	is	contingent	upon	signing	a	future	contract and	will	be	recognized	over	the	term	of	the	future	contract.	The	contract	was	signed	in	January	2014.	In	connection	with	the	new	contract,	American	recorded	an additional	$70	million	receivable	with	an	offset	to	other	liabilities	to	be	recognized	over	the	course	of	the	remaining	contract	term.

As	a	result	of	the	terrorist	attacks	of	September	11,	2001	(the	Terrorist	Attacks)	and	the	subsequent	liability	protections	provided	for	by	the	Air	Transportation	Safety and	System	Stabilization	Act	(the	Stabilization	Act),	American	recorded	a	liability	for	the	Terrorist	Attacks	claims	equal	to	the	related	insurance	receivable	due	to American.	The	Stabilization	Act	provides	that,	notwithstanding	any	other	provision	of	law,	liability	for	all	claims,	whether	compensatory	or	punitive,	arising	from	the Terrorist	Attacks,	against	any	air	carrier	shall	not	exceed	the	liability	coverage	maintained	by	the	air	carrier.	As	of	December	31,	2014,	the	remaining	liability	and	the amount	of	the	offsetting	receivable	were	each	$974	million.

|  | 2014 | Year	Ended	December	31,<br>				2013 | 2012 |
| :--- | :--- | :--- | :--- |
| Non-cash\tinvesting\tand\tfinancing\tactivities: |  |  |  |
| Settlement\tof\tbankruptcy\tobligations | $5,131 | $833 | $— |
| Capital\tlease\tobligations | 747 | — | — |
| Supplemental\tinformation: |  |  |  |
| Interest\tpaid,\tnet\tof\tamounts\tcapitalized | 525 | 706 | 498 |
| Income\ttaxes\tpaid | 2 | 7 | 5 |

American	is	managed	as	a	single	business	unit	that	provides	air	transportation	for	passengers	and	cargo.	This	allows	it	to	benefit	from	an	integrated	revenue	pricing and	route	network	that	includes	American,	Envoy	and	third-party	carriers	that	fly	under	capacity	purchase	or	prorate	agreements	as	part	of	American's	regional

operations.	The	flight	equipment	of	all	these	carriers	is	combined	to	form	one	fleet	that	is	deployed	through	a	single	route	scheduling	system.	When	making	resource allocation	decisions,	the	chief	operating	decision	maker	evaluates	flight	profitability	data,	which	considers	aircraft	type	and	route	economics,	but	gives	no	weight	to	the financial	impact	of	the	resource	allocation	decision	on	an	individual	carrier	basis.	The	objective	in	making	resource	allocation	decisions	is	to	maximize	consolidated financial	results,	not	the	individual	results	of	American	and	Envoy.

American's	operating	revenues	by	geographic	region	as	defined	by	the	U.S.	Department	of	Transportation	(DOT)	are	summarized	below	(in	millions):

|  |  | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2014 | 2013 | 2012 |
| DOT\tDomestic | $15,873 | $14,603 | $14,257 |
| DOT\tLatin\tAmerica | 6,034 | 6,197 | 5,813 |
| DOT\tAtlantic | 3,768 | 3,638 | 3,411 |
| DOT\tPacific | 1,466 | 1,322 | 1,344 |
| Total\tconsolidated\trevenues | $27,141 | $25,760 | $24,825 |

American	attributes	operating	revenues	by	geographic	region	based	upon	the	origin	and	destination	of	each	flight	segment.	American's	tangible	assets	consist primarily	of	flight	equipment,	which	are	mobile	across	geographic	markets	and,	therefore,	have	not	been	allocated.

AAG's	net	income	for	the	years	ended	December	31,	2014	and	2013	included	$381	million	and	$92	million,	respectively,	of	share-based	compensation	costs.	Of	the $381	million	recorded	by	AAG	in	2014,	$250	million

was	allocated	to	the	financials	of	American.	Of	the	$92	million	recorded	by	AAG	in	2013,	$65	million	was	recorded	by	American.	The	2014	and	2013	amounts	recorded by	AAG	included	$224	million	and	$42	million,	respectively,	related	to	the	Merger	and	recorded	in	special	items,	net	on	the	accompanying	consolidated	statements	of operations.	Of	the	$224	million	recorded	by	AAG	in	2014,	$155	million	was	allocated	to	the	financials	of	American.	Of	the	$42	million	recorded	by	AAG	in	2013,	$37 million	was	recorded	by	American.	In	2012,	American	recorded	$26	million	of	share-based	compensation	costs,	included	in	salaries,	wages,	and	benefits	expense.

As	of	December	31,	2014,	AAG	has	outstanding	restricted	stock	unit	awards	with	service	conditions	(time	vested)	and	performance	conditions.	The	grant-date	fair value	of	restricted	stock	unit	awards	is	equal	to	the	market	price	of	the	underlying	shares	of	common	stock	on	the	date	of	grant.	For	time	vested	awards,	the	expense	is recognized	on	a	straight-line	basis	over	the	vesting	period	for	the	entire	award.	For	awards	with	performance	conditions,	the	expense	is	recognized	based	on	the	expected achievement	at	each	reporting	period.	Stock-settled	restricted	stock	unit	awards	(RSUs)	are	classified	as	equity	awards	as	the	vesting	results	in	the	issuance	of	shares	of AAG	Common	Stock.	Cash-settled	restricted	stock	unit	awards	(CRSUs)	are	classified	as	liability	awards	as	the	vesting	results	in	payment	of	cash	by	AAG.	AAG granted	certain	RSU	awards	in	connection	with	the	Merger	as	follows:

On	December	9,	2013,	alignment	awards	were	granted	in	the	form	of	RSUs.	The	awards	were	provided	to	legacy	AMR	employees	in	order	to	align	interests	and create	parity	with	peers	at	US	Airways	Group,	and	one-third	of	the	awards	vested	on	AAG's	emergence	from	bankruptcy.	The	remaining	awards	vest	equally	on	the	one and	two	year	anniversary	of	emergence.	Employees	terminated	in	connection	with	the	Merger	fully	vest	in	their	awards	on	the	termination	date.	Compensation	expenses for	these	awards	are	recorded	in	special	items,	net	on	the	consolidated	statements	of	operations.

The	Merger	Equity	Grant	was	granted	on	the	Effective	Date	to	certain	officers	and	directors	and	employees	in	the	form	of	RSUs	and	will	be	settled	in	equity	for domestic	employees	and	in	cash	for	international	employees.	Each	restricted	stock	unit	award	granted	will	vest,	subject	to	the	executive's	continued	employment,	with respect	to	(i)	50%	of	the	restricted	stock	units	on	December	16,	2015;	(ii)	25%	of	the	restricted	stock	units	on	the	earlier	to	occur	of	(a)	December	16,	2015,	if	AAG	is issued	a	Single	Operating	Certificate	prior	to	or	on	that	date	or	(b)	the	date	on	which	AAG	is	issued	a	Single	Operating	Certificate,	provided	that	such	date	is	prior	to	or on	December	9,	2016;	and	(iii)	25%	of	the	restricted	stock	units	on	the	date	the	Board	of	Directors	or	compensation	committee	of	the	Board	of	Directors	determines	that AAG	has	achieved	at	least	$1.0	billion	in	net	synergies	with	respect	to	fiscal	year	2015	or	2016.	Compensation	expenses	for	these	awards	are	recorded	in	special	items, net	on	the	consolidated	statements	of	operations.

|  | Number	of	Shares | Value |
| :--- | :--- | :--- |
|  | (In\tthousands) |  |
| Outstanding\tat\tJanuary\t1,\t2013 | — | $— |
| Granted | 22,101 | 24.60 |
| Assumed\tUS\tAirways\tawards | 3,164 | 22.55 |
| Vested\tand\treleased | (1,386) | 24.58 |
| Forfeited | — | — |
| Outstanding\tat\tDecember\t31,\t2013 | 23,879 | $24.33 |
| Granted | 3,467 | 37.07 |
| Vested\tand\treleased | (4,193) | 23.84 |
| Forfeited | (1,811) | 25.10 |
| Outstanding\tat\tDecember\t31,\t2014 | 21,342 | $26.43 |

As	of	December	31,	2014,	there	was	$308	million	of	total	unrecognized	compensation	cost	related	to	RSUs,	which	will	be	allocated	to	American	and	US	Airways Group.	These	costs	are	expected	to	be	recognized	over	a	weighted	average	period	of	one	year.	The	total	fair	value	of	RSUs	vested	during	the	years	ended	December	31, 2014	and	2013	was	$154	million	and	$31	million,	respectively.

|  |  | Weighted	Average |
| :--- | :--- | :--- |
|  | Number\tof\tShares | Fair\tValue |
|  | (In\tthousands) |  |
| Outstanding\tat\tJanuary\t1,\t2013 | — | $— |
| Granted | 309 | 24.60 |
| Assumed\tUS\tAirways\tawards | 320 | 22.55 |
| Vested\tand\treleased | (3) | 25.25 |
| Forfeited | — | — |
| Outstanding\tat\tDecember\t31,\t2013 | 626 | $25.25 |
| Granted | 50 | 40.93 |
| Vested\tand\treleased | (341) | 34.54 |
| Forfeited | (74) | 33.52 |
| Outstanding\tat\tDecember\t31,\t2014 | 261 | $53.63 |

As	of	December	31,	2014,	the	liability	related	to	CRSUs	was	$6	million,	which	was	allocated	to	American	and	US	Airways	Group,	and	will	continue	to	be remeasured	at	fair	value	at	each	reporting	date	until	all	awards	are	vested.	As	of	December	31,	2014,	the	total	unrecognized	compensation	expense	for	CRSUs	was	$8 million,	which	will	be	allocated	to	American	and	US	Airways	Group,	and	is	expected	to	be	recognized	over	a	weighted	average	period	of	one	year.	The	total	cash	paid for	CRSUs	vested	during	the	years	ended	December	31,	2014	and	2013	was	$12	million	and	less	than	$1	million,	respectively.

Stock	options	and	stock	appreciation	rights	are	granted	with	an	exercise	price	equal	to	the	underlying	common	stock's	fair	value	at	the	date	of	each	grant.	Stock options	and	stock	appreciation	rights	have	service	conditions,	become	exercisable	over	a	three-year	vesting	period	and	expire	if	unexercised	at	the	end	of	their	term, which	ranges	from	seven	to	ten	years.	Stock	options	and	stock-settled	stock	appreciation	rights	(SARs)	are	classified	as	equity	awards	as	the	exercise	results	in	the issuance	of	shares	of	AAG	Common	Stock.	Cash-settled	stock	appreciation	rights	(CSARs)	are	classified	as	liability	awards	as	the	exercise	results	in	payment	of	cash	by AAG.

|  |  | Weighted | Weighted	Average |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Stock\tOptions\tand\tSARS | Average\nExercise\tPrice | Remaining\nContractual\tTerm | Aggregate\nIntrinsic\tValue |
|  | (In\tthousands) |  | (In\tyears) | (In\tmillions) |
| Assumed\tUS\tAirways\tawards\tat\tDecember\t9,\t2013 | 11,200 | $12.84 |  |  |
| Granted | — | — |  |  |
| Exercised | (42) | 14.42 |  |  |
| Forfeited | — | — |  |  |
| Expired | — | — |  |  |
| Balance\tat\tDecember\t31,\t2013 | 11,158 | $12.84 |  |  |
| Granted | — | — |  |  |
| Exercised | (4,109) | 10.74 |  |  |
| Forfeited | — | — |  |  |
| Expired | (42) | 41.73 |  |  |
| Balance\tat\tDecember\t31,\t2014 | 7,007 | $13.90 | 2.6 | $278 |
| Vested\tor\texpected\tto\tvest\tat\tDecember\t31,\t2014 | 7,006 | $13.90 | 2.6 | $278 |
| Exercisable\tat\tDecember\t31,\t2014 | 6,052 | $14.83 | 2.4 | $235 |

|  |  | Weighted | Weighted	Average |  |
| :--- | :--- | :--- | :--- | :--- |
|  | CSARs | Average\nExercise\tPrice | Remaining\nContractual\tTerm | Aggregate\nIntrinsic\tValue |
|  | (In\tthousands) |  | (In\tyears) | (In\tmillions) |
| Assumed\tUS\tAirways\tawards\tat\tDecember\t9,\t2013 | 2,888 | $6.25 |  |  |
| Granted | — | — |  |  |
| Exercised | (23) | 5.10 |  |  |
| Forfeited | — | — |  |  |
| Expired | — | — |  |  |
| Balance\tat\tDecember\t31,\t2013 | 2,865 | $6.26 |  |  |
| Granted | — | — |  |  |
| Exercised | (1,254) | 6.18 |  |  |
| Forfeited | — | — |  |  |
| Expired | — | — |  |  |
| Balance\tat\tDecember\t31,\t2014 | 1,611 | $6.33 | 2.2 | $76 |
| Vested\tor\texpected\tto\tvest\tat\tDecember\t31,\t2014 | 1,611 | $6.33 | 2.2 | $76 |
| Exercisable\tat\tDecember\t31,\t2014 | 1,610 | $6.33 | 2.2 | $76 |

As	of	December	31,	2014,	there	were	$4	million	of	total	unrecognized	compensation	costs	related	to	SARs,	which	will	be	allocated	to	American	and	US	Airways Group.	These	costs	are	expected	to	be	recognized	over	a	weighted	average	period	of	0.3	years.	The	total	intrinsic	value	of	stock	options	and	SARs	exercised	during	the year	ended	December	31,	2014	and	the	23	day	period	ended	December	31,	2013	was	$105	million	and	less	than	$1	million,	respectively.

As	of	December	31,	2014,	the	weighted	average	fair	value	of	outstanding	CSARs	was	$47.29	per	share	and	the	related	liability	was	$76	million,	which	was	allocated to	American	and	US	Airways	Group.	These	CSARs	will	continue	to	be	remeasured	at	fair	value	at	each	reporting	date	until	all	awards	are	settled.	As	of	December	31, 2014,	the	total	unrecognized	compensation	expense	for	CSARs	was	less	than	a	million,	which	will	be	allocated	to	American	and	US	Airways	Group,	and	is	expected	to be	recognized	over	a	weighted	average	period	of	0.3	years.	Total	cash	paid	for	CSARs	exercised	during	the	year	ended	December	31,	2014	and	the	23	day	period	ended December	31,	2013	was	$42	million	and	less	than	$1	million,	respectively.

|  | Balance	at<br>beginning<br>of	year | Changes	charged	to<br>statement	of<br>operations<br>accounts | Payments | Write-off<br>(net	of<br>recoveries) | Sales,<br>retirements<br>and	transfers | Balance	at<br>end	of	year |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Allowance\tfor\tobsolescence\tof\tinventories |  |  |  |  |  |  |
| Year\tended\tDecember\t31,\t2014 | $502 | $108 | $— | $— | $1 | $611 |
| Year\tended\tDecember\t31,\t2013 | 503 | 20 | — | (21) | — | 502 |
| Year\tended\tDecember\t31,\t2012 | 530 | 18 | — | (45) | — | 503 |
| Allowance\tfor\tuncollectible\taccounts |  |  |  |  |  |  |
| Year\tended\tDecember\t31,\t2014 | $40 | $— | $— | $(29) | $— | $11 |
| Year\tended\tDecember\t31,\t2013 | 43 | 2 | — | (5) | — | 40 |
| Year\tended\tDecember\t31,\t2012 | 51 | 3 | — | (11) | — | 43 |
| Reserves\tfor\tenvironmental\tremediation\tcosts |  |  |  |  |  |  |
| Year\tended\tDecember\t31,\t2014 | $11 | $— | $(1) | $— | $— | $10 |
| Year\tended\tDecember\t31,\t2013 | 13 | 2 | (1) | (3) | — | 11 |
| Year\tended\tDecember\t31,\t2012 | 14 | (1) | — | — | — | 13 |

# 17.		Quarterly	Financial	Data	(Unaudited)

Unaudited	summarized	financial	data	by	quarter	for	2014	and	2013	(in	millions):

|  | First	Quarter | Second	Quarter | Third	Quarter | Fourth	Quarter |
| :--- | :--- | :--- | :--- | :--- |
| 2014 |  |  |  |  |
| Operating\trevenues | $6,469 | $7,153 | $7,055 | $6,464 |
| Operating\texpenses | 5,891 | 6,435 | 6,357 | 6,120 |
| Operating\tincome | 578 | 718 | 698 | 344 |
| Net\tincome | 401 | 265 | 465 | 179 |
| 2013 |  |  |  |  |
| Operating\trevenues | $6,085 | $6,437 | $6,816 | $6,422 |
| Operating\texpenses | 6,019 | 5,936 | 6,130 | 6,141 |
| Operating\tincome | 66 | 501 | 686 | 281 |
| Net\tincome\t(loss) | (253) | 228 | 290 | (1,791) |

American's	fourth	quarter	2014	results	reflect	$406	million	of	net	special	items	consisting	of	$195	million	of	merger	integration	expenses	related	to	information technology,	alignment	of	labor	union	contracts,	professional	fees,	severance	and	retention,	share-based	compensation,	divestiture	of	London	Heathrow	Slots,	fleet restructuring,	re-branding	of	aircraft	and	airport	facilities,	relocation	and	training.	In	addition,	American	recorded	a	net	$116	million	charge	for	bankruptcy	related	items principally	consisting	of	fair	value	adjustments	for	bankruptcy	settlement	obligations	and	a	$70	million	charge	related	primarily	to	certain	spare	parts	asset	impairments. American	also	recorded	a	$31	million	nonoperating	special	charge	principally	for	Venezuelan	foreign	currency	losses.	These	charges	were	offset	in	part	by	a	$6	million non-cash	deferred	income	tax	benefit	related	to	certain	indefinite-lived	intangible	assets.

American's	fourth	quarter	2013	results	reflect	$2.1	billion	of	net	special	items	consisting	of	$2.2	billion	of	reorganization	items	principally	due	to	a	$1.7	billion deemed	claim	to	employees	pursuant	to	the	Plan	as	well	as	professional	fees	and	estimated	allowed	claim	amounts,	a	$214	million	tax	charge	attributable	to	additional valuation	allowance	required	to	reduce	deferred	tax	assets	to	the	amount	more	likely	than	not	to	be	realized,	$110	million	of	Merger	related	expenses	due	professional fees,	severance	and	share-based	compensation,	a	$107	million	charge	related	to	American's	pilot	long-term	disability	obligation,	a	$33	million	aircraft	impairment charge	and	$20	million	of	interest	charges	to	recognize	post-petition	interest	expense	on	unsecured	obligations	pursuant	to	the	Plan.	These	charges	were	offset	in	part	by a	$538	million	non-cash	income	tax	benefit	resulting	from	gains	recorded	in	OCI,	a	$67	million	gain	on	the	sale	of	Slots	at	LaGuardia	Airport	and	a	$31	million	credit to	other	revenue	related	to	a	change	in	accounting	method	resulting	from	the	modification	of	American's	AAdvantage	miles	agreement	with	Citibank.

# 18.		Transactions	with	Related	Parties

The	following	represents	the	net	payables	to	related	parties	(in	millions):

|  | December	31, | December	31, |
| :--- | :--- | :--- |
|  | 2014 | 2013 |
| American\tAirlines\tGroup\tParent | $1,893 | $2,455 |
| US\tAirways\tGroup,\tInc. | 320 | — |
| Envoy\tAviation\tGroup\t(1)\tand\tother\tsubsidiaries | 350 | 352 |
| Total | $2,563 | $2,807 |

(1) Formerly	known	as	AMR	Eagle	Holding	Corporation	(Envoy),	the	net	payable	to	AAG's	wholly-owned	regional	airline	operating	under	the	brand	name	of American	Eagle	consists	principally	of	amounts	due	under	regional	capacity	purchase	agreements.

Pursuant	to	a	capacity	purchase	agreement	between	American	and	Envoy,	American	recognizes	passenger	revenue	from	flights	operated	by	Envoy	and	American purchases	all	of	the	capacity	from	Envoy.	The	capacity	purchase	agreement	reflects	what	American	believes	are	current	market	rates	received	by	third-party	regional carriers	for	similar	flying.	In	2014,	2013	and	2012,	American	recognized	expense	of	approximately	$894	million,	$1.0	billion	and	$1.1	billion,	respectively,	related	to	the Envoy	capacity	purchase	agreement.

# ITEM	9.		CHANGES	IN	AND	DISAGREEMENTS	WITH	ACCOUNTANTS	ON	ACCOUNTING	AND	FINANCIAL	DISCLOSURE

None.

# ITEM	9A.		CONTROLS	AND	PROCEDURES

# Management's	Evaluation	of	Disclosure	Controls	and	Procedures

The	term	"disclosure	controls	and	procedures"	is	defined	in	Rules	13a-15(e)	and	15d-15(e)	of	the	Exchange	Act.	This	term	refers	to	the	controls	and	procedures	of	a company	that	are	designed	to	ensure	that	information	required	to	be	disclosed	by	a	company	in	the	reports	that	it	files	under	the	Exchange	Act	is	recorded,	processed, summarized	and	reported	within	the	time	periods	specified	by	the	SEC.	An	evaluation	of	the	effectiveness	of	AAG's	and	American's	disclosure	controls	and	procedures as	of	December	31,	2014	was	performed	under	the	supervision	and	with	the	participation	of	AAG's	and	American's	management,	including	AAG's	and	American's Chief	Executive	Officer	(CEO)	and	Chief	Financial	Officer	(CFO).	Based	on	that	evaluation,	AAG's	and	American's	management,	including	AAG's	and	American's CEO	and	CFO,	concluded	that	AAG's	and	American's	disclosure	controls	and	procedures	were	effective	as	of	December	31,	2014.

# Changes	in	Internal	Control	over	Financial	Reporting

On	December	9,	2013,	AAG	acquired	US	Airways	Group	and	its	subsidiaries.	We	are	in	the	process	of	integrating	policies,	processes,	people,	technology	and operations	for	the	post-Merger	combined	company,	and	we	will	continue	to	evaluate	the	impact	of	any	related	changes	to	our	internal	control	over	financial	reporting. Except	for	any	changes	in	internal	controls	related	to	the	integration	of	US	Airways	Group	and	its	subsidiaries	into	the	post-Merger	combined	company,	including	the related	adoption	of	common	financial	reporting	and	internal	control	practices	for	the	combined	company	and	associated	updates	and	improvements	to	the	combined control	environment,	during	the	year	ended	December	31,	2014,	there	has	been	no	change	in	AAG's	or	American's	internal	control	over	financial	reporting	that	has materially	affected,	or	is	reasonably	likely	to	materially	affect,	AAG's	and	American's	internal	control	over	financial	reporting.

# Limitation	on	the	Effectiveness	of	Controls

We	believe	that	a	controls	system,	no	matter	how	well	designed	and	operated,	cannot	provide	absolute	assurance	that	the	objectives	of	the	controls	system	are	met, and	no	evaluation	of	controls	can	provide	absolute	assurance	that	all	control	issues	and	instances	of	fraud,	if	any,	within	a	company	have	been	detected.	Our	disclosure controls	and	procedures	are	designed	to	provide	reasonable	assurance	of	achieving	their	objectives,	and	the	CEO	and	CFO	of	AAG	and	American	believe	that	our disclosure	controls	and	procedures	were	effective	at	the	"reasonable	assurance"	level	as	of	December	31,	2014.

# Management's	Annual	Report	on	Internal	Control	over	Financial	Reporting

Management	of	AAG	and	American	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting	as	defined	in	Rules	13a-15(f) and	15d-15(f)	under	the	Exchange	Act.	AAG's	and	American's	internal	control	over	financial	reporting	is	designed	to	provide	reasonable	assurance	regarding	the reliability	of	financial	reporting	and	the	preparation	of	financial	statements	for	external	purposes	in	accordance	with	GAAP.	AAG's	and	American's	internal	control	over financial	reporting	includes	policies	and	procedures	that:

•pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and	dispositions	of	the	assets	of	AAG	or	American, respectively;

•provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in	accordance	with	GAAP,	and	that receipts	and	expenditures	of	AAG	or	American	are	being	made	only	in	accordance	with	authorizations	of	management	and	directors	of	AAG	or	American, respectively;	and

•provide	reasonable	assurance	regarding	prevention	or	timely	detection	of	unauthorized	acquisition,	use	or	disposition	of	AAG's	or	American's	assets	that could	have	a	material	effect	on	the	financial	statements.

Because	 of	 its	 inherent	 limitations,	 internal	 control	 over	 financial	 reporting	 may	 not	 prevent	 or	 detect	 misstatements.	Also,	 projections	 of	 any	 evaluation	 of effectiveness	to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the policies	or	procedures	may	deteriorate.

Management	assessed	the	effectiveness	of	AAG's	and	American's	internal	control	over	financial	reporting	as	of	December	31,	2014.	In	making	this	assessment, management	used	the	criteria	set	forth	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	in	its	Internal	Control	—	Integrated	Framework (1992	Framework).

Based	on	our	assessment	and	those	criteria,	AAG's	and	American's	management	concludes	that	AAG	and	American,	respectively,	maintained	effective	internal control	over	financial	reporting	as	of	December	31,	2014.

AAG's	and	American's	independent	registered	public	accounting	firm	has	issued	an	attestation	report	on	the	effectiveness	of	AAG's	and	American's	internal	control over	financial	reporting.	That	report	has	been	included	herein.

We	have	audited	American	Airlines	Group	Inc.'s	(the	Company)	internal	control	over	financial	reporting	as	of	December	31,	2014,	based	on	criteria	established	in Internal	Control	–	Integrated	Framework	(1992)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO).	American	Airlines Group	Inc.'s	management	is	responsible	for	maintaining	effective	internal	control	over	financial	reporting	and	for	its	assessment	of	the	effectiveness	of	internal	control over	financial	reporting,	included	in	the	accompanying	Management's	Annual	Report	on	Internal	Control	over	Financial	Reporting.	Our	responsibility	is	to	express	an opinion	on	the	Company's	internal	control	over	financial	reporting	based	on	our	audit.

We	conducted	our	audit	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan and	perform	the	audit	to	obtain	reasonable	assurance	about	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all	material	respects.	Our	audit included	obtaining	an	understanding	of	internal	control	over	financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	and	testing	and	evaluating	the	design and	operating	effectiveness	of	internal	control	based	on	the	assessed	risk.	Our	audit	also	included	performing	such	other	procedures	as	we	considered	necessary	in	the circumstances.	We	believe	that	our	audit	provides	a	reasonable	basis	for	our	opinion.

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	A	company's	internal	control	over	financial reporting	includes	those	policies	and	procedures	that	(1)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and dispositions	of	the	assets	of	the	company;	(2)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are	being	made	only	in	accordance	with	authorizations	of management	 and	 directors	 of	 the	 company;	 and	 (3)	 provide	 reasonable	 assurance	 regarding	 prevention	 or	 timely	 detection	 of	 unauthorized	 acquisition,	 use,	 or disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

In	our	opinion,	American	Airlines	Group	Inc.	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	December	31,	2014,	based on	criteria	established	in	Internal	Control	–	Integrated	Framework	(1992)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO).

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	consolidated	balance	sheet	of American	Airlines	 Group	 Inc.	 and	 subsidiaries	 as	 of	 December	 31,	 2014,	 and	 the	 related	 consolidated	 statements	 of	 operations,	 comprehensive	 income	 (loss), stockholders'	equity	(deficit),	and	cash	flows	for	the	year	then	ended,	and	our	report	dated	February	25,	2015	expressed	an	unqualified	opinion	on	those	consolidated financial	statements.

We	have	audited	American	Airlines,	Inc.'s	(American)	internal	control	over	financial	reporting	as	of	December	31,	2014,	based	on	criteria	established	in	Internal Control	–	Integrated	Framework	(1992) issued	by	 the	Committee	of	Sponsoring	Organizations	of	 the	Treadway	Commission	(COSO).	American	Airlines,	Inc.'s management	is	responsible	for	maintaining	effective	internal	control	over	financial	reporting	and	for	its	assessment	of	the	effectiveness	of	internal	control	over	financial reporting,	included	in	the	accompanying	Management's	Annual	Report	on	Internal	Control	over	Financial	Reporting.	Our	responsibility	is	to	express	an	opinion	on American's	internal	control	over	financial	reporting	based	on	our	audit.

In	our	opinion,	American	Airlines,	Inc.	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	December	31,	2014,	based	on criteria	established	in	Internal	Control	–	Integrated	Framework	(1992)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO).

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	consolidated	balance	sheet	of American	Airlines,	Inc.	and	subsidiaries	as	of	December	31,	2014,	and	the	related	consolidated	statements	of	operations,	comprehensive	income	(loss),	stockholder's equity	(deficit),	and	cash	flows	for	the	year	then	ended,	and	our	report	dated	February	25,	2015	expressed	an	unqualified	opinion	on	those	consolidated	financial statements.

# PART	III

# ITEM	10.		DIRECTORS,	EXECUTIVE	OFFICERS	AND	CORPORATE	GOVERNANCE

Except	as	stated	below,	the	information	required	by	this	Item	will	be	set	forth	under	the	captions	"Proposal	1	–	Election	of	Directors,"	"Executive	Officers,"	"Section 16(a)	Beneficial	Ownership	Reporting	Compliance"	and	"Information	About	Our	Board	of	Directors	and	Corporate	Governance"	 in	 the	Proxy	Statement	and	 is incorporated	by	reference	into	this	Annual	Report	on	Form	10-K.

American	Airlines	Group	and	American	have	adopted	Standards	of	Business	Conduct	(the	Ethics	Standards)	within	the	meaning	of	Item	406(b)	of	Regulation	S-K. The	Ethics	Standards	apply	to	all	officers	and	employees	of	American	Airlines	Group	Inc.	and	its	subsidiaries,	including	American	except	for	the	employees,	officers	and members	of	the	Board	of	Directors	of	US	Airways	Group	and	its	wholly-owned	subsidiaries,	who	are	governed	by	the	US	Airways	Group	Code	of	Business	Conduct and	Ethics	(the	US	Airways	Group	Code).	The	Ethics	Standards	are	available	on	our	website	at	www.aa.com.	If	we	make	substantive	amendments	to	the	Ethics Standards	or	the	US	Airways	Group	Code	or	grant	any	waiver,	including	any	implicit	waiver,	to	our	principal	executive	officer,	principal	financial	officer,	principal accounting	officer	or	controller,	or	persons	performing	similar	functions,	we	will	disclose	the	nature	of	such	amendment	or	waiver	on	our	website	or	in	a	Current	Report on	Form	8-K	in	accordance	with	applicable	rules	and	regulations.

# ITEM	11.		EXECUTIVE	COMPENSATION

Except	as	stated	below,	the	information	required	by	this	Item	will	be	set	forth	in	the	Proxy	Statement	under	the	captions	"Information	About	the	Board	of	Directors and	Corporate	Governance,"	"Director	Compensation,"	"Compensation	Discussion	and	Analysis,"	"Executive	Compensation"	and	"Compensation	Committee	Report" and	is	incorporated	by	reference	into	this	Annual	Report	on	Form	10-K.

During	2014,	the	executive	officers	of	AAG	and	American	were	the	same	persons,	and	the	information	regarding	such	persons	called	for	by	Item	11	with	respect	to American	will	be	set	forth	in	the	Proxy	Statement.

# ITEM	12.		SECURITY	OWNERSHIP	OF	CERTAIN	BENEFICIAL	OWNERS	AND	MANAGEMENT	AND	RELATED	STOCKHOLDER	MATTERS

Except	as	stated	below,	the	information	required	by	this	Item	will	be	set	forth	in	the	Proxy	Statement	under	the	captions	"Security	Ownership	of	Certain	Beneficial Owners	and	Management"	and	"Equity	Compensation	Plan	Information"	and	is	incorporated	by	reference	into	this	Annual	Report	on	Form	10-K.

All	of	the	outstanding	shares	of	common	stock	of	American,	consisting	of	1,000	shares,	par	value	$1.00	per	share,	are	owned	beneficially	and	of	record	by	AAG.

# ITEM	13.		CERTAIN	RELATIONSHIPS	AND	RELATED	TRANSACTIONS,	AND	DIRECTOR	INDEPENDENCE

The	information	required	by	this	Item	will	be	set	forth	in	the	Proxy	Statement	under	the	captions	"Certain	Relationships	and	Related	Party	Transactions"	and "Information	About	the	Board	of	Directors	and	Corporate	Governance"	and	is	incorporated	by	reference	into	this	Annual	Report	on	Form	10-K.

# ITEM	14.		PRINCIPAL	ACCOUNTANT	FEES	AND	SERVICES

The	information	required	by	this	Item	will	be	set	forth	in	the	Proxy	Statement	under	the	caption	"Proposal	2	–	Ratification	of	Appointment	of	Independent	Registered Public	Accounting	Firm"	and	is	incorporated	by	reference	into	this	Annual	Report	on	Form	10-K.

# PART	IV

# ITEM	15.		EXHIBITS	AND	FINANCIAL	STATEMENT	SCHEDULES

# Consolidated	Financial	Statements

   The	following	consolidated	financial	statements	of	American	Airlines	Group	Inc.	and	Independent	Auditors'	Report	are	filed	as	part	of	this	report:

   The	following	consolidated	financial	statements	of	American	Airlines,	Inc.	and	Independent	Auditors'	Report	are	filed	as	part	of	this	report:

| The	following	consolidated	financial	statements	of	American	Airlines,	Inc.	and	Independent	Auditors'	Report	are	filed	as	part	of	this	report: |  |
| :--- | :--- |
|  | Page |
| Reports\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | \t190 |
| Consolidated\tStatements\tof\tOperations\tfor\tthe\tYears\tEnded\tDecember\t31,\t2014,\t2013\tand\t2012 | \t192 |
| Consolidated\tStatements\tof\tComprehensive\tIncome\t(Loss)\tfor\tthe\tYears\tEnded\tDecember\t\t31,\t2014,\t2013\tand\t2012 | \t193 |
| Consolidated\tBalance\tSheets\tat\tDecember\t31,\t2014\tand\t2013 | \t194 |
| Consolidated\tStatements\tof\tCash\tFlows\tfor\tthe\tYears\tEnded\tDecember\t31,\t2014,\t2013\tand\t2012 | \t195 |
| Consolidated\tStatements\tof\tStockholder's\tEquity\t(Deficit)\tfor\tthe\tYears\tEnded\tDecember\t\t31,\t2014,\t2013\tand\t2012 | \t196 |
| Notes\tto\tConsolidated\tFinancial\tStatements | \t197 |

Schedules	not	included	have	been	omitted	because	they	are	not	applicable	or	because	the	required	information	is	included	in	the	Consolidated	Financial	Statements or	notes	thereto.

# Exhibits

The	exhibits	listed	in	the	Exhibit	Index	following	the	signature	pages	to	this	report	are	filed	as	part	of,	or	incorporated	by	reference	into,	this	report.

Exhibits	required	to	be	filed	by	Item	601	of	Regulation	S-K:	Where	the	amount	of	securities	authorized	to	be	issued	under	any	of	our	long-term	debt	agreements	does not	exceed	10	percent	of	our	assets,	pursuant	to	paragraph	(b)(4)	of	Item	601	of	Regulation	S-K,	in	lieu	of	filing	such	as	an	exhibit,	we	hereby	agree	to	furnish	to	the Commission	upon	request	a	copy	of	any	agreement	with	respect	to	such	long-term	debt.

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	the	registrant	has	duly	caused	this	report	to	be	signed	on	its	behalf	by	the undersigned,	thereunto	duly	authorized.

W.	Douglas	Parker

Chairman	and	Chief	Executive	Officer

(Principal	Executive	Officer)

W.	Douglas	Parker Chairman	and	Chief	Executive	Officer (Principal	Executive	Officer)

KNOW	ALL	MEN	BY	THESE	PRESENTS,	that	each	individual	whose	signature	appears	below	constitutes	and	appoints	W.	Douglas	Parker	and	Derek	J.	Kerr	and each	or	any	of	them,	his	or	her	true	and	lawful	attorneys	and	agents,	with	full	power	of	substitution	and	resubstitution,	for	him	or	her	and	in	his	or	her	name,	place	and stead,	in	any	and	all	capacities,	to	sign	any	and	all	amendments	to	the	Registrants'	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	December	31,	2014,	and	to	file the	same	with	all	exhibits	thereto,	and	all	other	documents	in	connection	therewith,	with	the	Securities	and	Exchange	Commission,	granting	unto	said	attorneys	and agents,	and	each	or	any	of	them,	full	power	and	authority	to	do	and	perform	each	and	every	act	and	thing	requisite	and	necessary	to	be	done,	as	fully	to	all	intents	and purposes	as	he	or	she	might	or	could	do	in	person,	hereby	ratifying	and	confirming	all	that	said	attorneys	and	agents,	and	each	of	them,	or	his	substitute	or	substitutes, may	lawfully	do	or	cause	to	be	done	by	virtue	hereof.

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	below	by	the	following	persons	on	behalf	of	American	Airlines Group	Inc.	and	in	the	capacities	and	on	the	dates	noted:

/s/				Michael	J.	Embler Michael	J.	Embler,	Director

/s/				Matthew	J.	Hart Matthew	J.	Hart,	Director

/s/				Alberto	Ibargüen Alberto	Ibargüen,	Director

/s/				Richard	C.	Kraemer Richard	C.	Kraemer,	Director

# Ray	M.	Robinson,	Director

/s/				Richard	P.	Schifter

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	below	by	the	following	persons	on	behalf	of	American	Airlines,	Inc. and	in	the	capacities	and	on	the	dates	noted:

# EXHIBIT	INDEX

		4.12 Participation	Agreement	(N907AN),	dated	as	of	September	9,	2013,	among	American	Airlines,	Inc.,	Wilmington	Trust	Company,	as	Pass	Through Trustee	under	each	of	the	Pass	Through	Trust	Agreements	in	effect	as	of	the	date	thereof,	Wilmington	Trust	Company,	as	Subordination	Agent, Wilmington	Trust	Company,	as	Loan	Trustee,	and	Wilmington	Trust	Company,	in	its	individual	capacity	as	set	forth	therein	(incorporated	by	reference to	Exhibit	4.6	to	AMR's	Current	Report	on	Form	8-K	filed	on	November	27,	2013	(Commission	File	No.	1-8400)).

		4.22 Registration	Rights	Agreement,	dated	as	of	December	20,	2013,	among	American	Airlines,	Inc.,	Wilmington	Trust	Company,	as	Trustee	under	Trust Supplement	No.	2013-2C,	dated	as	of	December	20,	2013,	and	Morgan	Stanley	&	Co.	LLC,	Credit	Suisse	Securities	(USA)	LLC,	Deutsche	Bank Securities	Inc.,	Goldman,	Sachs	&	Co.,	Citigroup	Global	Markets	Inc.	and	J.P.	Morgan	Securities	LLC,	in	their	capacity	as	representatives	of	the	Initial Purchasers	(incorporated	by	reference	to	Exhibit	4.12	to	AMR's	Current	Report	on	Form	8-K	filed	on	December	20,	2013	(Commission	File	No.	1- 8400)).

10.33 Supplemental	Agreement	No.	25,	dated	as	of	July	19,	2011,	to	Purchase	Agreement	No.	1980	by	and	between	American	Airlines,	Inc.	and	The	Boeing Company	(incorporated	by	reference	to	Exhibit	10.1	to	AMR's	report	on	Form	10-Q	for	the	quarter	ended	September	30,	2011	(Commission	File	No.	1- 8400)).*

10.44 A320	Family	Aircraft	Purchase	Agreement,	dated	as	of	July	20,	2011,	by	and	between	American	Airlines,	Inc.	and	Airbus	S.A.S.	(incorporated	by reference	to	Exhibit	10.4	to	AMR's	report	on	Form	10-Q	for	the	quarter	ended	September	30,	2011	(Commission	File	No.	1-8400)).*

10.59 First	Amendment	to	Credit	and	Guaranty	Agreement,	dated	as	of	August	5,	2013,	among	American	Airlines,	Inc.,	as	borrower,	AMR,	as	parent,	the lenders	committing	to	provide	and	providing	new	loans	thereunder,	and	Deutsche	Bank	AG	New	York	Branch,	as	administrative	agent	(incorporated	by reference	to	Exhibit	10.1	to	AMR's	Quarterly	Report	on	Form	10-Q	for	the	quarter	ended	September	30,	2013	(Commission	File	No.	1-8400)). 10.60 Instrument	of	Assumption	of	Joinder,	dated	as	of	December	9,	2013,	by	US	Airways	Group,	Inc.	and	US	Airways,	Inc.	in	favor	of	Deutsche	Bank	AG New	York	Branch,	as	administrative	agent	for	the	Lenders,	guaranteeing	the	obligations	of	American	Airlines,	Inc.	under	the	Credit	and	Guaranty Agreement,	dated	as	of	June	27,	2013,	by	and	among	American	Airlines,	Inc.,	AMR	Corporation,	the	direct	and	indirect	Domestic	Subsidiaries	of	AMR Corporation	from	time	to	time	party	thereto	other	than	American	Airlines,	Inc.,	each	of	the	several	banks	and	other	financial	institutions	or	entities	from time	to	time	party	hereto	as	a	lender	and	Deutsche	Bank	AG	New	York	Branch,	as	administrative	agent	for	the	Lenders	(incorporated	by	reference	to Exhibit	10.2	to	AAG's	Current	Report	on	Form	8-K	filed	on	December	9,	2013	(Commission	File	No.	1-8444)).

10.61 Second	Amendment	to	Credit	and	Guaranty	Agreement,	dated	as	of	December	27,	2013,	among	American	Airlines,	Inc.,	American	Airlines	Group	Inc., the	Consenting	Lenders	(as	defined	therein),	the	New	Lenders	(as	defined	therein)	and	Deutsche	Bank	AG	New	York	Branch,	as	administrative	agent and,	by	Instrument	of	Assumption	and	Joinder,	dated	as	of	December	9,	2013,	US	Airways	Group,	Inc.	and	US	Airways,	Inc.	(incorporated	by reference	to	Exhibit	10.45	to	AAG's	Annual	Report	on	Form	10-K	for	the	year	ended	December	31,	2014	(Commission	File	No.	1-8400)).

10.62 Third	Amendment	to	Credit	and	Guaranty	Agreement,	dated	as	of	October	10,	2014,	among	American	Airlines,	Inc.,	American	Airlines	Group	Inc. (formerly	known	as	AMR	Corporation),	US	Airways	Group,	Inc.,	US	Airways,	Inc.,	the	Existing	Revolving	Lenders	(as	defined	therein)	party	thereto, BNP	Paribas,	Credit	Agricole	Corporate	and	Investment	Bank	and	Deutsche	Bank	AG	New	York	Branch,	as	administrative	agent	and	as	an	issuing lender	(incorporated	by	reference	to	Exhibit	10.2	to	AAG's	Current	Report	on	Form	8-K	filed	on	October	14,	2014	(Commission	File	No.	1-8444)).

Exhibit Number Description 10.63 Credit	and	Guaranty	Agreement,	dated	as	of	October	10,	2014,	by	and	among	American	Airlines,	Inc.,	as	the	Borrower,	American	Airlines	Group	Inc., as	Parent	and	a	Guarantor,	US	Airways	Group,	Inc.	and	US	Airways,	Inc.,	as	Guarantors,	the	lenders	party	thereto,	Citibank	N.A.,	as	Administrative Agent	and	Collateral	Agent,	Citigroup	Global	Markets	Inc.,	as	Left	Lead	Arranger	for	the	Term	Loan	Facility	and	Revolving	Facility,	Citigroup	Global Markets	Inc.,	Bank	of	America,	N.A.,	Barclays	Bank	PLC,	BNP	Paribas	Securities	Corp.,	Credit	Agricole	Corporate	and	Investment	Bank,	Credit Suisse	Securities	(USA)	LLC,	Deutsche	Bank	Securities	Inc.,	Goldman	Sachs	Bank	USA,	J.P.	Morgan	Securities	LLC	and	Morgan	Stanley	Senior Funding,	Inc.,	as	Joint	Lead	Arrangers	and	Bookrunners,	Citigroup	Global	Markets	Inc.,	Bank	of	America,	N.A.,	Barclays	Bank	PLC,	Credit	Suisse Securities	(USA)	LLC,	Deutsche	Bank	Securities	Inc.,	Goldman	Sachs	Bank	USA,	J.P.	Morgan	Securities	LLC	and	Morgan	Stanley	Senior	Funding, Inc.,	as	Syndication	Agents	and	Credit	Agricole	Corporate	and	Investment	Bank	and	BNP	Paribas	Securities	Corp.,	as	Documentation	Agents (incorporated	by	reference	to	Exhibit	10.1	to	AAG's	Current	Report	on	Form	8-K	filed	on	October	14,	2014	(Commission	File	No.	1-8444)).

10.70 Form	of	Participation	Agreement	between	US	Airways,	Inc.,	as	Owner,	and	Wilmington	Trust	Company,	as	Indenture	Trustee,	Subordination	Agent and	Pass	Through	Trustee	(Schedule	I	to	Amendment	No.	1	to	Note	Purchase	Agreement	(2012-2))	(incorporated	by	reference	to	Exhibit	4.10	to	US Airways	Group's	Current	Report	on	Form	8-K	filed	on	June	6,	2013	(Commission	File	No.	1-8444)).

10.91 Amendment	No.	1,	dated	as	of	October	20,	2008,	to	the	Amended	and	Restated	Airbus	A350	XWB	Purchase	Agreement,	dated	as	of	October	2,	2007, between	US	Airways,	Inc.	and	Airbus	S.A.S.,	including	Amended	and	Restated	Letter	Agreement	No.	3,	Amended	and	Restated	Letter	Agreement	No. 5,	and	Amended	and	Restated	Letter	Agreement	No.	9	to	the	Purchase	Agreement	(incorporated	by	reference	to	Exhibit	10.23	to	US	Airways	Group's Annual	Report	on	Form	10-K	for	the	year	ended	December	31,	2008	(Commission	File	No.	1-8444)).*

10.96 Loan	Agreement,	dated	as	of	May	23,	2013,	among	US	Airways,	Inc.,	as	Borrower,	certain	affiliates	of	US	Airways,	Inc.	party	to	the	agreement	from time	to	time,	Citicorp	North	America,	Inc.,	as	Administrative	Agent,	the	lenders	party	to	the	agreement	from	time	to	time,	Citigroup	Global	Markets Inc.,	as	Joint	Lead	Arranger	and	Joint	Bookrunner,	Barclays	Bank	PLC,	as	Joint	Lead	Arranger,	Joint	Bookrunner	and	Syndication	Agent,	Morgan Stanley	Senior	Funding,	Inc.,	as	Joint	Bookrunner	and	Documentation	Agent	and	Goldman	Sachs	Bank	USA,	as	Joint	Bookrunner	and	Documentation Agent	(incorporated	by	reference	to	Exhibit	10.1	to	US	Airways	Group's	Current	Report	on	Form	8-K	filed	on	May	30,	2013	(Commission	File	No.	1- 8444)).

10.97 Amendment	No.	1,	dated	as	of	January	16,	2014,	to	Loan	Agreement,	dated	as	of	May	23,	2013,	among	US	Airways,	Inc.,	as	Borrower,	certain affiliates	of	US	Airways,	Inc.	party	to	the	agreement	from	time	to	time,	Citicorp	North	America,	Inc.,	as	Administrative	Agent,	the	lenders	party	to	the agreement	from	time	to	time,	Citigroup	Global	Markets	Inc.,	as	Joint	Lead	Arranger	and	Joint	Bookrunner,	Barclays	Bank	PLC,	as	Joint	Lead Arranger,	Joint	Bookrunner	and	Syndication	Agent,	Morgan	Stanley	Senior	Funding,	Inc.,	as	Joint	Bookrunner	and	Documentation	Agent	and	Goldman Sachs	Bank	USA,	as	Joint	Bookrunner	and	Documentation	Agent	(incorporated	by	reference	to	Exhibit	10.48	to	US	Airways	Group's	Annual	Report on	Form	10-K	for	the	year	ended	December	31,	2013	(Commission	File	No.	1-8444)).

10.98 Joinder	to	Loan	Agreement,	dated	as	of	December	9,	2013,	by	American	Airlines	Group	Inc.	and	American	Airlines,	Inc.	to	the	$1,600,000,000	Loan Agreement,	dated	as	of	May	23,	2013,	among	US	Airways,	Inc.,	US	Airways	Group,	Inc.	and	certain	affiliates	of	US	Airways,	Inc.	party	thereto	from time	to	time,	the	lenders	party	thereto	and	Citicorp	North	America,	Inc.,	as	administrative	agent	for	the	lenders	(incorporated	by	reference	to	Exhibit 10.1	to	AAG's	Current	Report	on	Form	8-K	filed	on	December	9,	2013	(Commission	File	No.	1-8400)).

10.146 Form	of	Stock	Appreciation	Right	(Stock-Settled)	Award	Grant	Notice	and	Stock	Appreciation	Right	Award	Agreement	under	the	US	Airways	Group, Inc.	2011	Incentive	Award	Plan	(incorporated	by	reference	to	Exhibit	4.4	to	US	Airways	Group's	Registration	Statement	on	Form	S-8	filed	on	July	1, 2011	(Registration	No.	333-175323)).†

		# Pursuant	to	Item	601(b)(2)	of	Regulation	S-K	promulgated	by	the	Securities	and	Exchange	Commission,	certain	exhibits	and	schedules	to	this	agreement	have been	omitted.	Such	exhibits	and	schedules	are	described	in	the	referenced	agreement.	AAG	and	American	hereby	agree	to	furnish	to	the	Securities	and	Exchange Commission,	upon	its	request,	any	or	all	of	such	omitted	exhibits	or	schedules.

		* Confidential	treatment	has	been	granted	with	respect	to	certain	portions	of	this	agreement.

		** Confidential	treatment	has	been	requested	with	respect	to	certain	portions	of	this	agreement.

		† Management	contract	or	compensatory	plan	or	arrangement.



Question: what is the ratio of the flight attendants to pilots
Calculation:   flight_attendants_to_pilots = 25400
 pilots_total = 16200
ratio_flight_attendants_to_pilots = flight_attendants_to_pilots / pilots_total
answer = ratio_flight_attendants_to_pilots
Answer: 1.57