# 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,	2013

# Transition	Report	Pursuant	to	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934

For	the	Transition	Period	From

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

# American	Airlines	Group,	Inc.	was	formerly	known	as	AMR	Corporation

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

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

Name	of	Exchange	on	Which	Registered

Common	Stock,	$0.01	par	value	per	share

Series	A	Convertible	Preferred	Stock,	$0.01	par	value	per	share

NASDAQ 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.

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.					ý		Large	Accelerated	Filer				¨		Accelerated	Filer				¨		Non-accelerated	Filer				¨		Smaller	Reporting	Company

American	Airlines,	Inc.					¨		Large	Accelerated	Filer				¨		Accelerated	Filer				ý		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	21,	2014,	there	were	471,517,102	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,	2013,	was	approximately	$1.35	billion.

As	of	February	21,	2014,	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	2014	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,	2013,	are	incorporated	by	reference	into Part	III	of	this	Annual	Report	on	Form	10-K.

# Table	of	Contents

|  |  | Page |
| :--- | :--- | :--- |
|  | PART\tI |  |
| Item\t1. | Business | 5 |
| Item1A. | Risk\tFactors | 25 |
| Item\t1B. | Unresolved\tStaff\tComments | 42 |
| Item\t2. | Properties | 42 |
| Item\t3. | Legal\tProceedings | 45 |
| Item\t4. | Mine\tSafety\tDisclosures | 46 |
|  | PART\tII |  |
| Item\t5. | Market\tfor\tAmerican\tAirlines\tGroup's\tCommon\tStock,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases | 47 |
| Item\t6. | Selected\tFinancial\tData | 49 |
| Item\t7. | Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 53 |
| Item\t7A. | Quantitative\tand\tQualitative\tDisclosures\tAbout\tMarket\tRisk | 92 |
| Item\t8A. | Consolidated\tFinancial\tStatements\tand\tSupplementary\tData\tof\tAmerican\tAirlines\tGroup\tInc. | 96 |
| Item\t8B. | Consolidated\tFinancial\tStatements\tand\tSupplementary\tData\tof\tAmerican\tAirlines,\tInc. | 158 |
| Item\t9. | Changes\tin\tand\tDisagreements\twith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure | 207 |
| Item\t9A. | Controls\tand\tProcedures | 207 |
| Item\t9B. | Other\tInformation | 211 |
|  | PART\tIII |  |
| Item\t10. | Directors,\tExecutive\tOfficers\tand\tCorporate\tGovernance | 212 |
| Item\t11. | Executive\tCompensation | 212 |
|  | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters |  |
| Item\t12. |  | 212 |
| Item\t13. | Certain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence | 212 |
| Item\t14. | Principal\tAccountant\tFees\tand\tServices | 212 |
|  | PART\tIV |  |
| Item\t15. | Exhibits\tand\tFinancial\tStatement\tSchedules | 213 |
| SIGNATURES | SIGNATURES | 229 |

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).	AAG's	wholly-owned	subsidiaries,	US	Airways	Group,	Inc.	(together	with	its	consolidated	subsidiaries,	US	Airways Group)	and	US	Airways,	Inc.	(US	Airways)	are	filing	an	independent	combined	Annual	Report	on	Form	10-K	for	the	fiscal	year	ended	December	31,	2013.	References in	this	Annual	Report	on	Form	10-K	to	"we,"	"us,"	"our"	and	the	"Company"	refer	to	AAG	and	its	consolidated	subsidiaries,	"AMR"	refers	to	the	Company	during	the period	of	time	prior	to	its	emergence	from	Chapter	11	and	AAG's	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,	Inc.,	as	applicable,	and	exclude	regional	operations.	As	more	fully	described	below,	on	December	9,	2013,	a	subsidiary of	AMR	Corporation	merged	with	and	into	US	Airways	Group,	which	survived	as	a	wholly-owned	subsidiary	of	AMR	Corporation.	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	American	and	American Eagle	for	the	year	ended	December	31,	2013	and	the	results	of	US	Airways	Group	for	the	23	days	ended	December	31,	2013.

# 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	22.

# 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	business	combination	transaction	involving	AAG	and	US	Airways	Group,	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	transaction with	US	Airways	Group,	Inc.;	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;	 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	to	which	the	airline	industry	is subject;	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;	costs	of	ongoing	data security	compliance	requirements	and	the	impact	of	any	significant	data	security	breach;	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	several	lawsuits	that	were	filed	in	connection	with	the	merger	transaction	with	US	Airways Group,	Inc.	and	remain	pending;	an	inability	to	use	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;	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 Certificate	of	Incorporation	and	Bylaws	that	limit	foreign	owners'	ability	to	vote	and	own	our	equity	interests,	including	our	common	stock,	our	preferred	stock	and convertible	notes;	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	our	filings	with	the	Securities	and	Exchange	Commission	(the	SEC),	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	of	this	annual	report	on	Form	10-K,	quarterly	reports	on	Form 10-Q,	current	reports	on	Form	8-K	and	other	SEC	filings;	and	other	risks	and	uncertainties	listed	from	time	to	time	in	our	reports	to	and	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	report	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,	a	Delaware corporation,	and,	as	of	December	9,	2013,	US	Airways	Group,	a	Delaware	corporation.	AAG	was	formed	in	1982	under	the	name	AMR	Corporation	(AMR)	as	the parent	company	of	American	which	was	founded	in	1934.	US	Airways	Group	was	formed	in	1982	and	its	origins	trace	back	to	the	formation	of	All	American	Aviation	in 1939.	AMR	changed	its	name	to	American	Airlines	Group	Inc.	on	December	9,	2013.	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	817-967-1234	and	their	Internet	address	is	www.aa.com.	Information	contained	on	AAG'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	(referred	to	as	AMR	prior	to	December	9,	2013),	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,	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.	As	noted	above,	immediately	following	the	Merger	closing,	AMR	changed	its	name	to	American	Airlines Group	Inc.

As	previously	reported,	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,	and	in	accordance	with	the	Merger	Agreement,	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.	In	addition, AAG's	Series	A	Convertible	Preferred	Stock,	par	value	$0.01	(the	AAG	Series	A	Preferred	Stock),	was	authorized	for	trading	and	listed	on	the	NASDAQ	Global	Select Market	under	the	symbol	"AALCP."

Upon	emergence	from	Chapter	11,	the	Company	issued	approximately	53	million	shares	of	AAG	Common	Stock	to	the	Company's	old	equity	holders	and certain	of	the	Debtors'	employees	and	168	million	shares	of	AAG	Series	A	Preferred	Stock,	which	is	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)).	Holders	of	AAMRQ	received,	for	each	share	of	AMR	common	stock,	an	initial	distribution	of	approximately	0.0665	shares	of	the	AAG	Common	Stock	in connection	with	the	occurrence	of	the	Effective	Date.	AAMRQ	holders,	and	those	deemed	to	be	treated	as	such	in	connection	with	the	elections	made	pursuant	to	the Plan,	have	received	and	may	continue	to	receive	additional	distributions	of	shares	of	AAG	Common	Stock	based	on	the	trading	price	of	AAG	Common	Stock	during	the 120	day	period	after	the	Effective	Date	and	the	total	amount	of	allowed	claims,	in	each	case,	in	accordance	with	the	terms	of	the	Plan.	On	the	Effective	Date,	the	adjusted total	Double-Dip	General	Unsecured	Claims	(as	defined	in	the	Plan)	was	approximately	$2.45	billion,	the	Allowed	Single-Dip	General	Unsecured	Claims	(as	defined	in the	Plan)	were	approximately	$2.45	billion	and	the	Disputed	Claims	Reserve	(as	defined	in	the	Plan)	was	approximately	$755	million.

During	its	Chapter	11	restructuring,	AMR	and	the	other	Debtors	took	numerous	steps	to	become	more	cost	competitive	in	the	airline	industry.	These	measures included	steps	to	realize	labor	cost	savings	and	improve	managerial	efficiencies,	to	reconfigure	their	fleet,	and	to	realize	other	economies.	Through	the	process	under Section	1113	of	the	Bankruptcy	Code	and	consensual	negotiations	with	its	labor	unions,	American	and	AMR	Eagle	Holding	Corporation	(AMR	Eagle)	entered	into	new restructured	collective	bargaining	agreements	(CBAs)	with	each	of	their	respective	union	groups.	The	Debtors	also	froze	their	four	defined	benefit	pension	plans,	and terminated	the	pilot	variable	income	retirement	plan,	putting	in	their	place	a	revised	defined	contribution	retirement	benefit	plan.	The	Debtors	also	amended	the	pilots' defined	benefit	pension	plan	to	eliminate	lump-sum	and	similar	installment	forms	of	benefit	payments	from	such	plan.

The	Debtors	also	took	significant	actions	to	reduce	non-labor	related	liabilities	on	their	balance	sheets.	Specifically,	the	Debtors	rejected	or	renegotiated financing	 on	 more	 than	 400	 aircraft,	 and	 evaluated	 and/or	 renegotiated	 over	 700	 real	 estate	 leases	 and	 over	 9,000	 vendor	 contracts.	 Importantly,	 during	 their restructuring,	the	Debtors	successfully	implemented	their	fleet	renewal	strategy.	The	Debtors	evaluated	their	fleet	based	on	then-current	rates	and	market	values, required	maintenance,	and	the	need	to	phase	out	older	aircraft	to	achieve	necessary	fleet	efficiencies.

See	Part	II,	Item	5.	Market	for	Registrant's	Common	Stock	And	Related	Stockholder	Matters,	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	and	the	Merger.

# 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	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)	is	distributable,	pursuant	to	the	Plan	(see "Chapter	11	-	Emergence"	above)	to	stakeholders,	labor	unions,	and	certain	employees	of	AMR	and	the	other	Debtors	and	such	72%	of	the	diluted	equity	ownership	of AAG	includes	all	shares	of	AAG	Common	Stock	that	are	or	may	become	issuable	upon	conversion	of	shares	of	AAG	Series	A	Preferred	Stock	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,	par	value	$0.01	per	share	(the	US Airways	Group	Common	Stock),	prior	to	the	opening	of	the	market	on	December	9,	2013.	The	NYSE	also	filed	with	the	SEC	a	Form	25	Notification	of	Removal	from Listing	and/or	Registration	under	Section	12(b)	of	the	Exchange	Act,	to	delist	the	US	Airways	Group	Common	Stock	from	the	NYSE	and	terminate	registration	of	the US	Airways	Group	Common	Stock	under	Section	12(b)	of	the	Exchange	Act.

Pursuant	to	the	Merger	Agreement	and	in	accordance	with	the	Plan,	as	of	the	Effective	Date,	the	board	of	directors	of	AAG	was	reconstituted	to	be	comprised of	12	members:	(i)	Thomas	W.	Horton,	AMR's	prior	chairman,	chief	executive	officer	and	president,	who	currently	serves	as	chairman	of	AAG	and	will	continue	to	so serve	until	the	earlier	of	one	year	after	the	closing	of	the	Merger	and	the	day	immediately	prior	to	the	first	annual	meeting	of	stockholders	of	AAG	(provided	that	such meeting	will	not	occur	prior	to	May	1,	2014),	(ii)	W.	Douglas	Parker,	formerly	chief	executive	officer	of	US	Airways,	Inc.,	who	serves	as	chief	executive	officer	of AAG	and	will	serve	as	chairman	of	AAG	following	the	end	of	Mr.	Horton's	term,	(iii)	two	independent	directors	designated	by	AMR,	Alberto	Ibargüen	and	Ray	M. Robinson,	(iv)	three	independent	directors	designated	by	US	Airways	Group,	Matthew	J.	Hart,	Richard	C.	Kraemer,	and	Denise	M.	O'Leary,	and	(v)	five	independent directors,	James	F.	Albaugh,	Jeffrey	D.	Benjamin,	John	T.	Cahill	(lead	independent	director),	Michael	J.	Embler,	and	Richard	P.	Schifter,	who	were	designated	by	a search	committee	consisting	of	representatives	of	the	Official	Committee	of	Unsecured	Creditors	of	the	Debtors	and	certain	representatives	of	creditors	signatory	to support	agreements	with	AMR.

Further,	on	the	Effective	Date,	Mr.	Horton	(formerly	president	and	chief	executive	officer),	Daniel	P.	Garton	(formerly	executive	vice	president),	Isabella	D. Goren	(formerly	senior	vice	president	and	chief	financial	officer),	Gary	F.	Kennedy	(formerly	senior	vice	president,	general	counsel,	and	chief	compliance	officer)	and James	B.	Ream	(formerly	senior	vice	president	of	operations)	ceased	to	be	executive	officers	of	AAG	and	American	and	W.	Douglas	Parker	(chief	executive	officer	of AAG,	American,	and	US	Airways	Group),	J.	Scott	Kirby	(president),	Derek	J.	Kerr	(executive	vice	president	and	chief	financial	officer),	Robert	D.	Isom,	Jr.	(chief operating	officer	and	chief	executive	officer	of	US	Airways),	Elise	R.	Eberwein	(executive	vice	president	-	people	and	communications)	and	Stephen	L.	Johnson (executive	vice	president-corporate	affairs)	were	elected	as	the	executive	officers	of	AAG,	American,	US	Airways	Group	and	US	Airways,	except	as	otherwise	noted.

On	the	Effective	Date	and	pursuant	to	the	Plan	and	in	accordance	with	the	Merger	Agreement,	AAG's	certificate	of	incorporation	and	bylaws	were	amended and	restated	in	their	entirety,	and	an	Amended	and	Restated	Certificate	of	Incorporation

(the	Certificate	of	Incorporation)	and	a	Certificate	of	Designations	with	respect	to	the	AAG	Series	A	Preferred	Stock	was	filed	with	the	Secretary	of	State	of	the	State	of Delaware	immediately	prior	to	the	closing	of	the	Merger.	Upon	issuance	of	the	shares	pursuant	to	the	Plan	and	the	Merger	Agreement,	the	Company	filed	a	Certificate	of Amendment	with	Secretary	of	State	of	the	State	of	Delaware	solely	to	change	its	name	to	American	Airlines	Group	Inc.	Thereafter,	the	Company	filed	a	Restated Certificate	of	Incorporation,	which	integrated	the	Certificate	of	Incorporation	(including	the	Certificate	of	Designations)	and	the	Certificate	of	Amendment,	with	the Secretary	of	State	of	the	State	of	Delaware.

The	Merger	was	intended	to	qualify,	for	federal	income	tax	purposes,	as	a	reorganization	under	the	provisions	of	Section	368(a)	of	the	Internal	Revenue	Code of	1986,	as	amended.

The	Merger	has	been	accounted	for	using	the	acquisition	method	of	accounting	with	AAG	treated	as	the	acquirer	for	accounting	purposes.	US	Airways	Group's identifiable	assets	acquired	and	liabilities	assumed	were	recognized	at	their	estimated	fair	values	as	of	the	Effective	Date.	Goodwill	was	measured	as	the	excess	of	the fair	value	of	the	consideration	transferred	in	the	Merger	over	the	fair	value	of	the	identifiable	net	assets.	Goodwill	is	not	amortized	but	is	tested	for	impairment	at	least annually.

See	 Part	 II,	 Item	 7.	 Management's	 Discussion	 and	Analysis	 of	 Financial	 Condition	 and	 Results	 of	 Operations	 -	"AAG	 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	subsidiaries:	American	and,	as	of	December	9,	2013,	US	Airways.	As	of	December	31,	2013,	American,	together	with	American	Eagle	and	the	third-party regional	carriers	that	provide	regional	feed	to	American,	served	more	than	270	communities	in	more	than	50	countries	using	a	combined	network	fleet	of	903	aircraft. American	is	a	founding	member	of	oneworld®	alliance	and	is	one	of	the	largest	scheduled	air	freight	carriers	in	the	world,	providing	a	wide	range	of	freight	and	mail services	to	shippers	throughout	its	system	onboard	its	passenger	fleet.	American	had	approximately	87	million	passengers	boarding	its	mainline	flights	in	2013.

US	Airways	Group	is	a	holding	company	whose	wholly-owned	subsidiaries	include	US	Airways,	Piedmont	Airlines,	Inc.	(Piedmont)	and	PSA	Airlines,	Inc. (PSA).	As	of	December	31,	2013,	those	carriers	and	the	third-party	regional	carriers	that	provide	regional	feed	to	US	Airways	served	more	than	207	airports	in	more than	20	countries	using	a	combined	network	fleet	of	621	aircraft.

				Following	the	Merger,	AAG	began	moving	toward	operating	under	the	single	brand	name	of	"American	Airlines"	through	its	mainline	operations,	American	and	US Airways.	Until	a	single	operating	certificate	is	issued	by	the	Federal	Aviation	Administration	(FAA)	and	the	operational	integration	is	complete,	American	and	US Airways	will	continue	 to	operate	as	separate	airlines.	This	process	 is	expected	 to	 take	18-24	months.	Through	 its	operating	subsidiaries,	 including	 the	operating subsidiaries	of	US	Airways	Group,	AAG	is	the	largest	airline	in	the	world	as	measured	by	revenue	passenger	miles	(RPMs)	and	available	seat	miles	(ASMs).	The Company	has	primary	hubs	 in	Charlotte,	Chicago,	Dallas/Fort	Worth,	Los	Angeles,	Miami,	New	York	City,	Philadelphia,	Phoenix	and	Washington,	D.C.	As	of December	31,	2013,	the	combined	airline,	together	with	its	third-party	regional	carriers	operated	nearly	6,700	daily	flights	to	339	destinations	in	54	countries.	As	of December	31,	2013,	American	and	US	Airways	operated	965	mainline	jets.	American	continues	to	be	provided	with	regional	feed	by	American	Eagle	and	third-party regional	carriers	and	US	Airways	continues	to	be	provided	with	regional	feed	by	Piedmont,	PSA	and	third-party	regional	carriers.	As	of	December	31,	2013,	the Company's	regional	subsidiaries	and	third-party	regional	carriers	that	provide	it	with	regional	feed	operated	approximately	519	regional	jets	and	approximately	40 turboprops.

See	Part	II,	Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	-	"Results	of	Operations"	for	a	discussion	of AAG's	and	American's	operating	results	and	operating	performance.	See	Note	15	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,	American	Eagle,	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."	As	of	December	31,	2013,	15	regional	aircraft	were	also	provided	by a	third	party	operating	under	the	"American	Connection"	brand,	an	arrangement	that	we	expect	to	end	during	2014.	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	2013,	approximately	22	million passengers	boarded	our	regional,	air	carriers'	planes,	approximately	43%	of	whom	connected	to	or	from	our	mainline	flights.	Of	these	passengers,	approximately	18 million	were	enplaned	by	our	wholly	owned	regional	carriers,	approximately	4	million	were	enplaned	by	third-party	regional	carriers	operating	under	capacity	purchase agreements	and	less	than	1	million	were	enplaned	by	carriers	operating	under	prorate	agreements,	as	described	below.

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	certain	variable	costs,	such	as	airport	landing fees	and	passenger	liability	insurance,	will	be	reimbursed	100%	by	us.	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,	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	2013,	the	U.S.	airline	industry	experienced	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	3.8%	and	2.0%,	respectively,	as	compared	to	2012.	With	respect	to	international	versus	domestic	performance,	Airlines	for	America	reported	that	the	Atlantic and	Latin	America	markets	outperformed	domestic	markets	in	year-over-year	growth	in	passenger	revenues	while	the	Pacific	market	experienced	year-over-year	declines in	passenger	revenues.

Throughout	2013,	jet	fuel	prices	continued	to	follow	the	price	of	Brent	crude	oil	more	closely	than	the	price	of	West	Texas	Intermediate	crude	oil.	On	average, fuel	costs	were	down	slightly	in	2013	as	compared	to	2012.	The	Brent	crude	oil	average	daily	spot	price	was	$109	per	barrel	in	2013	which	is	slightly	lower	than	the average	daily	spot	price	in	2012	of	$112	per	barrel.	However,	on	a	daily	basis,	prices	continued	to	be	volatile.	Throughout	2013,	daily	spot	prices	fluctuated	between	a high	of	$119	per	barrel	in	February	to	a	low	of	$97	per	barrel	in	April	and	closed	the	year	at	$110	per	barrel	on	December	31,	2013.

While	 the	 U.S.	 airline	 industry	 is	 currently	 benefiting	 from	 a	 favorable	 revenue	 environment	 and	 moderating	 fuel	 price	 increases	 as	 described	 above, uncertainty	exists	regarding	the	economic	conditions	driving	these	factors.	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."

# Competition

The	markets	in	which	we	operate	are	highly	competitive.	Domestically,	any	U.S.	airline	deemed	fit	by	the	U.S.	Department	of	Transportation	(DOT)	is generally	free	to	operate	scheduled	passenger	service	between	any	two	points	within	the	U.S.	and	its	possessions,	with	the	exception	of	certain	airports	that	require landing	and	take-off	rights	and	authorizations	and	other	facilities	(Slots).	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	effectively	our	operating	costs.	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.	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	the	Company	serves	by	flying	to	lower	demand	markets	and	providing connections	at	our	hubs.	Many	of	the	Company's	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	40%	of	American's	total	operating	revenues	and approximately	24%	of	US	Airways'	total	operating	revenues	for	2013.	In	providing	international	air	transportation,	we	compete	with	foreign	investor-owned	airlines, foreign	state-owned	airlines,	and	U.S.	airlines	that	have	been	granted	authority	to	provide	scheduled	passenger	and	cargo	service	between	the	U.S.	and	various	overseas locations.

# 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,	Japan	Airlines,	Jet	Airways,	JetStar	Airways,	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	AirBerlin,	British	Airways,	Cathay	Pacific	Airways,	Finnair,	Iberia,	Japan Airlines,	LAN	Airlines,	Malaysia	Airlines,	Qantas,	Qatar	Airways,	Royal	Jordanian,	and	S7	Airlines.	TAM	Airlines	and	SriLankan	Airlines	are	scheduled	to	join	the alliance	 in	 the	 first	 half	 of	 2014.	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	981	destinations	with	over	14,000	daily	flights	to	151	countries.

American	 is	party	 to	antitrust-immunized	cooperation	agreements	with	British	Airways,	Iberia,	Finnair,	and	Royal	Jordanian.	Over	 the	 last	 three	years, American	has	also	established	joint	business	agreements	(JBAs)	with	British	Airways,	Iberia,	Japan	Airlines,	Qantas	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.	In	addition,	in	December	2012,	American	signed	codeshare agreements	with	Sao	Paulo-based	TAM	Airlines	and	Bogota-based	LAN	Colombia.	Generally,	under	a	codeshare	arrangement,	one	carrier	places	its	designator	code and	sells	ticket	on	flights	of	another	carrier.	Once	approved	in	Brazil	and	Colombia,	respectively,	these	new	codeshare	relationships	will	provide	expanded	opportunities for	American	to	serve	new	markets	in	Brazil	and	Colombia	and	for	TAM	Airlines	and	LAN	Colombia	to	serve	new	markets	in	the	U.S.

US	Airways	is	currently	a	member	of	the	Star	Alliance®,	which	offers	similar	member	benefits	as	those	discussed	above	for	the	oneworld	alliance,	and	will transition	to	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	will	be	ending	on	March	30,	2014.	Some	of	the	largest	airlines	that	will	be	phased	out	at that	time	include	United	Airlines,	Lufthansa,	Swiss,	Brussels	Airlines,	and	All	Nippon	Airways,	while	others	will	be	phased	out	in	the	following	months.	We	are	in negotiations	with	International	Airlines	Group	(IAG),	the	parent	company	of	British	Airways	and	Iberia,	concerning	the	terms	by	which	flights	operated	by	US	Airways will	be	added	to	our	existing	transatlantic	joint	business.	We	have	thus	far	been	unable	to	reach	agreement	with	IAG	and	are	uncertain	if	we	will	be	able	to	reach	an agreement.	US	Airways'	entry	into	the	JBA	and	cooperation	with	other	carriers	is	subject	to	compliance	with	all	DOT	regulations	and	applicable	orders	as	well	as obtaining	required	DOT	approvals.	US	Airways	is	expected	to	enter	into	codeshare	cooperation	with	selected	oneworld	member	airlines	and	frequent	flyer	reciprocity with	all	other	members.	US	Airways	is	also	expected	to	enter	into	marketing	relationships	with	selected	other	airlines	that	are	currently	party	to	marketing	agreements with	American.

# 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,	DOT	and	the	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	aircraft	operations.	We	are	also	progressing	toward	the	completion	of	numerous	airworthiness	directives,	a	number	of	which	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	including	in	the	last	session	of	Congress.

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.

We	anticipate	a	third	set	of	consumer	rules	to	be	issued	by	the	DOT	in	2014	and	the	DOT	continues	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	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.	Recently,	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	U.S.	Department	of	Justice	(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	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	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.	The	open	skies	agreement	between	the	U.S.	and	Brazil,	which	was	signed	in	2010	and takes	full	effect	in	2015,	has	resulted	in	increased	competition	in	the	U.S./Brazil	market.	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	such	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.	Further,	pursuant	to	the	Merger	clearance	process	in	the	EU,	we are	required	to	make	available	to	other	carriers	certain	Slots	at	London	Heathrow.	See	"Industry	Regulation	and	Airport	Access	-	Airport	Access	and	Operations," below.

# 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	at	no	charge	of	federal	air	marshals;	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	U.S.	Customs	and	Border	Protection.	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,	is	currently 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	1,	2014.	An	air	carrier	fee,	or	Aviation	Security	Infrastructure	Fee	(ASIF),	has	also been	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	will	go	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

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	the	U.S.,	the	FAA	currently	regulates	the	allocation	of	Slots,	Slot	exemptions,	operating	authorizations,	or	similar	capacity	allocation	mechanisms	at	Reagan National	in	Washington,	D.C.,	LaGuardia	and	JFK	in	New	York	City,	and	Newark.	Our	operations	at	these	airports	generally	require	the	allocation	of	Slots	or	analogous regulatory	authorities.	Similarly,	our	operations	at	Frankfurt,	London	Heathrow,	Paris,	Tokyo	Narita	and	certain	other	international	airports	are	regulated	by	local	Slot coordinators	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	been	able	to	obtain	the	rights	to	expand	our	operations	and	to	change	our schedules.	There	is	no	assurance,	however,	that	we	will	be	able	to	do	so	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	antitrust	litigation	brought	by	the	DOJ	and	certain	states,	we	entered	into	settlement	agreements	that	provide	for	certain asset	divestitures.	In	the	agreement	with	the	United	States	government,	among	other	things,	we	agreed	to	divest	and	not	reacquire	for	ten	years	certain	rights	and	assets consisting	of	52	Slot	pairs	at	Washington	Reagan	National	Airport	and	17	Slot	pairs	at	LaGuardia,	in	each	case	together	with	associated	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,	Dallas	Love	Field, Los	Angeles	International	Airport	and	Miami	International	Airport.	The	agreement	with	the	plaintiff	states	requires	our	airlines,	subject	to	certain	conditions	and exceptions,	to	maintain	certain	hub	operations	in	a	manner	generally	consistent	with	historical	operations	and	to	continue	to	provide	scheduled	daily	service	to	certain specified	communities,	both	for	limited	periods	of	time.	In	addition,	we	entered	into	a	related	settlement	with	the	DOT	related	to	small	community	service	from Washington	Reagan	National	Airport.	Further,	as	a	consequence	of	the	Merger	clearance	process	in	the	EU,	we	are	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,	and,	along	with	our	JBA	partners,	we	are	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.

Amendments	to	the	Wright	Amendment	have	reduced	geographic	restrictions	on	operations	at	Dallas	Love	Field	(DAL)	and	in	October	2014,	will	eliminate	all such	domestic	non-stop	geographic	restrictions	on	operations	there.	Southwest	has	already	announced	plans	to	serve	new	markets	throughout	the	continental	United States	from	DAL	in	October	2014.	Although	we	held	two	gates	at	DAL,	we	did	not	operate	from	there	in	2013	and	instead	operated	solely	at	Dallas	Fort	Worth.	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.

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.	See "Industry	Regulation	and	Airport	Access	-	Environmental	Matters,"	below.

# Civil	Reserve	Air	Fleet

We	are	a	participant	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	 Civil	 Reserve	Air	 Fleet	 program	 in	 order	 to	 receive	 U.S. Government	business.	We	are	reimbursed	at	compensatory	rates	if	aircraft	are	activated	under	the	Civil	Reserve	Air	Fleet	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 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,	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	the	Company's	operations	are	subject	to	increasingly	stringent	environmental	regulations.	Concerns	about	climate	change	and	greenhouse	gas emissions, in	particular,	may	result in the imposition	of	additional international	and	domestic legislation	or	regulation.	For	example, the	EU	has	established the Emissions	Trading	Scheme	(ETS)	to	regulate	carbon	dioxide	emissions	in	the	EU.	The	EU	adopted	a	directive	under	which	each	EU	member	state	is	required	to	extend the	ETS	to	aviation	operations.	This	directive	would	have	required	us,	beginning	in	2012,	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,	to	annually	submit	emission	allowances	equal	to	our	total	carbon	dioxide	emissions	from	those	flights. While	a	certain	portion	of	those	allowances	are	granted	to	us	at	no	cost,	we	may	potentially	need	to	also	purchase	allowances	in	order	to	cover	our	emissions	total	in	a given	year.	However,	in	an	effort	to	allow	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	emissions,	to	be	implemented	in	2020. Subsequently,	the	EU	has	proposed	amending	the	EU	ETS	so	that	the	monitoring,	reporting	and	submission	of	allowances	for	emissions	from	flights	flown	in	2013 would	continue	to	be	limited	to	only	intra-EEA	flights.	For	flights	flown	from	2014	to	2020,	the	scope	of	coverage	under	the	amendment	would	include	intra-EEA flights	and	the	portion	of	aviation	emissions	of	flights	to	and	from	EU	member	states	that	take	place	in	European	regional	airspace.	The	EU	anticipates	approval	of	this amendment	in	April	2014.	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.	While	these	measures	create	some	uncertainty	as	to	the	extent	to	which we	will	be	required	to	participate	in	the	ETS	going	forward,	it	is	nevertheless	increasingly	likely	that	in	the	future	we	will	be	required	to	participate	in	some	form	of international	arrangement	governing	aircraft	emissions.

In	addition,	the	U.S.	Congress	has	considered	legislation	on	climate	change.	Although	Congress	has	not	passed	comprehensive	climate	change	legislation, several	states	have	adopted	mechanisms	to	regulate	greenhouse	gas	emissions.	Even	without	further	federal	legislation,	the	EPA	may	act	to	regulate	greenhouse	gas emissions.	In	2009,	the	EPA	issued	its	final	Endangerment	and	Cause	or	Contribute	Findings	for	Greenhouse	Gases,	which	became	effective	in	January	2010.	This regulatory	finding	sets	the	foundation	for	potential	future	EPA	greenhouse	gas	regulation	under	the	Clean	Air	Act.	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	2013,	salaries,	wages,	and	benefits	were	one	of	our	largest	expenses	and	represented	approximately	22%	of	our operating	expenses.	The	table	below	presents	our	approximate	number	of	active	full-time	equivalent	employees	as	of	December	31,	2013.

|  | American | US	Airways | Wholly-owned	Regional<br>Carriers | Total |
| :--- | :--- | :--- | :--- | :--- |
| Pilots | 7,900 | 4,100 | 3,400 | 15,400 |
| Flight\tattendants | 15,000 | 7,700 | 2,100 | 24,800 |
| Maintenance\tpersonnel | 11,300 | 3,100 | 2,400 | 16,800 |
| Fleet\tservice\tpersonnel | 7,400 | 5,500 | 1,700 | 14,600 |
| Passenger\tservice\tpersonnel | 10,300 | 6,200 | 6,400 | 22,900 |
| Administrative\tand\tother | 8,200 | 5,500 | 2,200 | 15,900 |
| Total | 60,100 | 32,100 | 18,200 | 110,400 |

As	of	December	31,	2013,	approximately	73%	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.

| Union | Class	or	Craft | Employees	(1) | (2) |
| :--- | :--- | :--- | :--- |
| American\tMainline: |  |  |  |
| Allied\tPilots\tAssociation\t(APA) | Premerger\tAA\tPilots | 7,900 |  |
| Association\tof\tProfessional\tFlight\tAttendants\t(APFA) | Premerger\tAA\tFlight\tAttendants | 15,000 |  |
| Transport\tWorkers\tUnion\t(TWU) | \t Mechanics\tand\tRelated | 9,600 |  |
| TWU | Fleet\tService | 7,400 |  |
| TWU | Stock\tClerks | 1,200 |  |
| TWU | Simulator\tTechnicians | 80 |  |
| TWU | Dispatch | 190 |  |
| TWU | Flight\tCrew\tTraining\tInstructors | 180 |  |
| TWU | \t Maintenance\tControl\tTechnicians | 80 |  |
| American\tEagle: |  |  |  |
| Air\tLine\tPilots\tAssociation\t(ALPA) | Pilots | 2,600 | 2/1/2016 |
| AFA | Flight\tAttendants | 1,575 | 1/1/2016 |
| TWU | Ground\tSchool\tInstructors | 10 | 1/1/2019 |
| TWU | \t Mechanics\t&amp;\tRelated | 1,590 | 4/1/2016 |
| TWU | Fleet\tService\tClerks | 2,000 | 1/1/2019 |
| TWU | Dispatchers | 100 | 1/1/2019 |
| US\tAirways\tMainline: |  |  |  |
| US\tAirline\tPilots\tAssociation\t(USAPA) | Premerger\tUS\tAirways\tPilots | 2,800 |  |
| USAPA | Premerger\tAmerica\tWest\tPilots | 1,300 |  |
| Transport\tWorkers\tUnion\t(TWU) | Flight\tCrew\tTraining\tInstructors | 100 |  |
| TWU | Flight\tSimulator\tEngineers | 50 |  |
| Association\tof\tFlight\tAttendants-CWA\t(AFA) | Flight\tAttendants | 7,700 |  |
| International\tAssociation\tof\tMachinists\t&amp;\tAerospace\tWorkers\t(IAM) | \t Mechanics,\tStock\tClerks\tand\tRelated | 3,100 |  |
| IAM | \t Maintenance\tTraining\tInstructors | 30 |  |
| IAM | Fleet\tService | 5,500 |  |
| Airline\tCustomer\tService\tEmployee\tAssociation\t-\tIBT\tand\tCWA\t(the\nAssociation) | Passenger\tService | 6,200 |  |
| TWU | Dispatch | 200 |  |
| Piedmont: |  |  |  |
| Air\tLine\tPilots\tAssociation\t(ALPA) | Pilots | 300 | 3/31/2018 |
| AFA | Flight\tAttendants | 150 | 8/1/2009 |
| International\tBrotherhood\tof\tTeamsters\t(IBT) | \t Mechanics | 250 | 8/23/2012 |
| IBT | Stock\tClerks | 30 | 4/18/2014 |
| Communications\tWorkers\tof\tAmerica\t(CWA) | Fleet\tand\tPassenger\tService | 2,500 | 2/05/2017 |
| IBT | Dispatch | 20 | 6/16/2014 |
| PSA: |  |  |  |
| ALPA | Pilots | 500 | 4/01/2018 |
| AFA | Flight\tAttendants | 300 | 4/30/2017 |
| IAM | \t Mechanics | 150 | 4/24/2016 |
| TWU | Dispatch | 20 | 9/4/2014 |

(1)	Approximate	number	of	active	full-time	equivalent	employees	covered	by	the	contract	as	of	December	31,	2013.

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

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.

					While	the	passenger	service	employees	at	mainline	American	are	not	currently	represented	by	any	labor	organization,	the	passenger	service	employees	of	mainline US	Airways	are	represented	by	the	Airline	Employees	Customer	Service	Association,	CWA-IBT	(CWA-IBT).	When	and	if	the	CWA-IBT	files	a	single	transportation system	application	with	the	NMB,	the	union	is	expected	to	attempt	to	organize	the	passenger	service	employees	of	both	mainline	airlines.	In	the	meantime,	the	US Airways	passenger	service	employees	will	continue	to	be	represented	by	the	CWA-IBT,	and	the	American	passenger	service	employees	will	remain	unrepresented	for labor	relations	purposes.

					Most	of	the	other	mainline	American	ground	employees	are	represented	by	the	Transport	Workers	Union	(TWU)	and	are	covered	by	existing	CBAs.	Although	those agreements	will	not	become	amendable	until	2018,	the	TWU	is	required	under	the	agreements	to	file	a	single	transportation	system	application	in	order	to	represent	the combined	groups	of	mainline	US	Airways	and	mainline	American	employees.	For	the	fleet	service	employees,	the	mechanic	and	related	employees	and	the	stores employees,	the	TWU	may	share	post-merger	representation	rights	with	the	International	Association	of	Machinists	and	Aerospace	Workers	(IAM).	After	the	NMB	has determined	that	a	single	transportation	system	exists	and	has	certified	a	post-merger	representative	of	the	combined	employee	groups,	the	process	for	negotiating	new JCBA	covering	the	combined	employee	groups	will	commence.	That	process	can	take	many	months	or	even	several	years	to	complete.

Under	an	agreement	reached	with	the	American	mainline	and	the	US	Airways	mainline	pilots	and	a	tentative	agreement	with	the	American	and	US	Airways mainline	flight	attendants,	a	different	approach	will	be	used	by	us	to	reach	JCBAs.	The	two	pilot	groups	have	agreed	that,	once	a	post-merger	representative	has	been designated	by	the	NMB,	there	will	be	a	thirty-day	negotiations	period,	and,	if	no	agreement	is	reached,	a	panel	of	arbitrators	will	set	the	remaining	terms	of	the	JCBAs that	will	become	amendable	on	December	31,	2018.	The	economic	terms	of	the	pilot	JCBA	established	by	the	arbitration	panel	must	conform	with	the	contract	that	was reached	with	the	two	pilot	groups.	If	the	tentative	agreement	with	the	American	mainline	and	US	Airways	mainline	flight	attendants	is	approved,	negotiations	over	the terms	of	a	JCBA	will	be	conducted	for	up	to	240	days.	If	no	agreement	can	be	reached,	a	panel	of	arbitrators	will	establish	the	unresolved	terms	of	the	JCBA,	which	is	to be	set	based	on	economics	comparable	to	those	for	flight	attendants	at	other	legacy	airlines.

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

When	a	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.

The	NMB	is	currently	mediating	negotiations	with	the	IAM	covering	the	mainline	US	Airways	fleet	service	employees,	the	mechanic	and	related	employees, and	the	store	employees,	and	with	the	AFA	covering	the	Piedmont	flight	attendants.

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	2014	forecasted	mainline	and	regional	fuel consumption,	we	estimate	that	as	of	December	31,	2013,	a	$1	per	barrel	increase	in	the	price	of	crude	oil	would	increase	our	2014	annual	fuel	expense	by	$104	million (excluding	the	effect	of	our	hedges),	and	by	$87	million	(taking	into	account	such	hedges).

The	following	table	shows	annual	aircraft	fuel	consumption	and	costs,	including	taxes,	for	American,	it's	third-party	regional	carriers	and	American	Eagle,	for 2011	through	2013.	AAG's	consolidated	fuel	requirements	in	2014	are	expected	to	increase	significantly	to	approximately	4.4	billion	gallons	as	a	result	of	a	full	year	of US	Airways	operations.

| Year | Gallons	Consumed<br>(in	millions) | Average	Cost<br>Per	Gallon | Total	Cost<br>(in	millions) | Percent	of	Total	Operating<br>Expenses |
| :--- | :--- | :--- | :--- | :--- |
| 2011 | 2,756 | $3.01 | $8,304 | 33.2% |
| 2012 | 2,723 | $3.20 | $8,717 | 35.3% |
| 2013 | 2,806 | $3.09 | $8,959 | 35.3% |

				Total	fuel	expenses	for	American	Eagle	and	American's	third-party	regional	carriers	operating	under	capacity	purchase	agreements	for	the	years	ended	 December	31, 2013,	2012	and	2011	were	$1.1	billion,	$1.0	billion	and	$946	million,	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.	Prior to	the	Effective	Date,	we	from	time	to	time	entered	into	hedging	contracts,	which	consist	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).	Heating	oil,	jet	fuel	and	crude	oil	are	the	primary	underlying	commodities in	the	hedge	portfolio.	Depending	on	movements	in	the	price	of	fuel,	our	fuel	hedging	can	result	in	gains	or	losses	on	its	fuel	hedges.	For	more	discussion	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."

As	of	January	2014,	we	had	hedges	covering	approximately	19%	of	estimated	consolidated	AAG	(including	the	estimated	fuel	requirements	of	US	Airways) 2014	fuel	requirements.	The	consumption	hedged	for	2014	is	capped	at	an	average	price	of	approximately	$2.91	per	gallon	of	jet	fuel.	One	percent	of	our	estimated	2014 fuel	requirement	is	hedged	using	call	spreads	with	protection	capped	at	an	average	price	of	approximately	$3.18	per	gallon	of	jet	fuel.	Eighteen	percent	of	our	estimated 2014	fuel	requirement	is	hedged	using	collars	with	an	average	floor	price	of	approximately	$2.62	per	gallon	of	jet	fuel.	The	cap	and	floor	prices	exclude	taxes	and transportation	costs.

We	have	not	entered	into	any	fuel	hedges	since	the	Effective	Date	and	our	current	policy	is	not	to	do	so.

See	 Part	 II,	 Item	 7.	 Management's	 Discussion	 and	Analysis	 of	 Financial	 Condition	 and	 Results	 of	 Operations,	 Item	 7(A).	 Quantitative	 and	 Qualitative Disclosures	about	Market	Risk,	Note	10	to	AAG's	Consolidated	Financial	Statements	in	Item	8A	and	Note	9	to	American's	Consolidated	Financial	Statements	in	Item 8B.

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	its	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.

Since	September	11,	2001,	we	and	other	airlines	have	been	unable	to	obtain	coverage	for	liability	to	persons	other	than	employees	and	passengers	for	claims resulting	from	acts	of	terrorism,	war	or	similar	events,	which	is	called	war	risk	coverage,	at	reasonable	rates	from	the	commercial	insurance	market.	We,	therefore, purchased	our	war	risk	coverage	 through	a	special	program	administered	by	 the	FAA,	as	have	most	other	U.S.	airlines.	This	 program,	 which	 currently	 expires September	30,	2014,

has	been	extended	numerous	times	in	the	past.	If	this	program	were	not	to	be	extended,	we	would	likely	face	a	material	increase	in	the	cost	of	war	risk	coverage,	and because	of	competitive	pressures	in	the	industry,	our	ability	to	pass	this	additional	cost	to	passengers	may	be	limited.	In	addition,	we	have	obtained	third-party	war	risk (terrorism)	insurance	through	a	special	program	administered	by	the	FAA,	resulting	in	lower	premiums	than	if	we	had	obtained	this	insurance	in	the	commercial insurance	market.	If	the	federal	insurance	program	terminates,	we	would	likely	face	a	material	increase	in	the	cost	of	war	risk	insurance.	See	Part	I,	Item	1A.	Risk Factors	-	"Increases	in	insurance	costs	or	reductions	in	insurance	coverage	may	adversely	impact	our	operations	and	financial	results."

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	the	Company	or	significantly	increase	its	cost,	the	Company	would	be	materially	adversely	affected.

# Customer	Service

We	 are	 committed	 to	 consistently	 deliver	 safe,	 reliable	 and	 convenient	 service	 to	 our	 customers	 in	 every	 aspect	 of	 our	 operation.	 Our	 2013	 operating performance	was	negatively	impacted	by	more	severe	summer	weather	conditions	as	compared	to	2012.	We	reported	the	following	operating	statistics	to	the	DOT	for American's	mainline	operations	for	the	years	ended	December	31,	2013	and	2012:

|  | 2013 | 2012 | Better	(Worse) |
| :--- | :--- | :--- | :--- |
| On-time\tperformance\t(a) | 77.6% | 76.9% | 0.7\tpts |
| Completion\tfactor\t(b) | 98.2% | 98.2% | — |
| Mishandled\tbaggage\t(c) | 3.02 | 2.92 | (3.4)% |
| Customer\tcomplaints\t(d) | 1.99 | 1.80 | (10.6)% |

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

(b)	Percentage	of	scheduled	flight	operations	completed.

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

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

# Frequent	Flyer	Programs

American	established	AAdvantage®	to	develop	passenger	loyalty	by	offering	awards	to	travelers	for	their	continued	patronage.	We	believe	that	the	AAdvantage program	is	one	of	our	competitive	strengths.	AAdvantage	benefits	from	a	growing	base	of	approximately	74	million	members	with	desirable	demographics	who	have demonstrated	a	strong	willingness	to	collect	AAdvantage	miles	over	other	loyalty	program	incentives	and	are	generally	disposed	to	adjusting	their	purchasing	behavior in	order	to	earn	additional	AAdvantage	miles.	AAdvantage	members	earn	mileage	credits	by	flying	on	American,	the	American	Eagle	carriers,	the	third-party	regional carriers	and	other	participating	airlines	or	by	using	services	of	other	participants	in	the	AAdvantage	program.	Mileage	credits	can	be	redeemed	for	free,	discounted	or upgraded	travel	on	American,	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	sells	mileage	credits	and	related	services	to	other	participants	in	the	AAdvantage	program.	There	are	over	1,000	program	participants,	including	a leading	credit	card	issuer	(Citibank),	hotels,	car	rental	companies	and	other	products	and	services	companies	in	the	AAdvantage	program.	We	believe	that	program participants	benefit	from	the	sustained	purchasing	behavior	of	AAdvantage	members,	which	translates	into	a	recurring	stream	of	revenues	for	AAdvantage.	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.	As	of	December	31,	2013,	AAdvantage	had	approximately	74	million	total	members,	and	622.3	billion	outstanding	award	miles.	During 2013,	AAdvantage	 issued	 approximately	202.8	billion	 miles,	 of	 which	 approximately	64%	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.

US	Airways	offers	a	similar	frequent	flyer	program	under	the	Dividend	Miles	brand	that	allows	participants	to	earn	mileage	credits	for	each	paid	flight	segment on	US	Airways	and	certain	other	airlines	that	participate	in	the	program.	Participants	flying	in	first	class	or	US	Airways'	international	business	class	(Envoy	class)	may receive	additional	mileage	credits.	Participants	can	also	receive	mileage	credits	through	special	promotions	that	US	Airways	periodically	offers	and	may	also	earn mileage	credits	by	utilizing	certain	credit	cards	and	purchasing	services	from	non-airline	partners	such	as	hotels	and	rental	car	agencies.	US

Airways	sells	mileage	credits	to	credit	card	companies,	hotels,	car	rental	agencies	and	others	that	participate	in	the	Dividend	Miles	program.	Mileage	credits	can	be redeemed	for	travel	awards	on	US	Airways	or	other	participating	airlines.

US	Airways	and	the	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.	Award	travel	is	generally	not	permitted	on	blackout	dates,	which	correspond	to	certain	holiday	periods	or	peak	travel	dates. We	charge	various	fees	for	issuing	awards	dependent	upon	destination	and	booking	method	and	for	issuing	awards	within	21	days	of	the	travel	date.	We	reserve	the	right to	terminate	Dividend	Miles	or	portions	of	the	program	at	any	time.	Program	rules,	partners,	special	offers,	blackout	dates,	awards	and	requisite	mileage	levels	for awards	are	subject	to	change.

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.

The	US	Airways	Dividend	Miles	program	will	transition	to	the	AAdvantage	frequent	flyer	program	as	soon	as	commercially	feasible.

# 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	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.	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,	2013	is	included	in	Note	16	to	AAG's	Consolidated	Financial	Statements	in	Part II,	Item	8A	and	Note	15	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.	In	addition, additional	information	is	available	regarding	US	Airways	Group	and	US	Airways	in	the	Annual	Report	on	Form	10-K	for	the	year	ended	December	31,	2013	that	US Airways	Group	and	US	Airways	filed	with	the	SEC,	which	is	available	free	of	charge	at	www.usairways.com	as	soon	as	reasonably	practicable	after	they	electronically file	such	material	with	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	its	plan	of	reorganization	under	Chapter	11	of	the	United	States	Bankruptcy	Code.	Investors	are	encouraged	to	(i)	follow	American	(@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.pinterest.com/ americanair) on Pinterest; (v) follow American (www.instagram.com/americanair) on Instagram; (vi) "like"	 American (www.foursquare.com/americanair)	on	Foursquare;	(vii)	follow	American	(www.linkedin.com/company/american-airlines)	on	LinkedIn;	(viii)	subscribe	to	American (www.youtube.com/user/americanairlines)	on	YouTube;	(ix)	visit	http://www.aa.com/arriving	or	usairways.com/arriving	for	updated	information	regarding	AAG,	US Airways	Group	and	the	Merger	and	(x)	visit	www.amrcaseinfo.com	for	updated	information	regarding	AAG	and	certain	of	its	subsidiaries'	plan	of	reorganization	under Chapter	11	of	the	United	States	Bankruptcy	Code.	Neither	AAG	nor	American	incorporates	the	contents	of	its	social	media	posts	or	websites	into	this	Form	10-K.

"2003	Plan"	means	the	AMR	2003	Employee	Stock	Incentive	Plan.

"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.

"AAdvantage"	means	the	AAdvantage®	frequent	flyer	program.

"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.

"Act"	means	Wright	Amendment	Reform	Act	of	2006.

"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.

"AMR	Eagle"	means	AMR	Eagle	Holding	Corporation.

"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.

"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.

"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.

"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	Amended	and	Restated	Certificate	of	Incorporation.

"CFTC"	means	Commodity	Futures	Trading	Commission.

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

"Chautauqua"	means	Chautauqua	Airlines,	Inc.

"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.

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

"Credit	Facilities"	mean	the	$1.9	billion	term	loan	facility	and	the	$1.0	billion	revolving	credit	facility	provided	for	by	the	credit	and	guaranty	agreement,	as amended,	entered	into	June	27,	2013	between	AAG,	American	and	certain	lenders.

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

"CSARs"	means	cash-settled	stock	appreciation	rights.

"CWA"	means	Communications	Workers	of	America.

"Debtor"	means	AMR	Corporation.

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

"Disputed	Claims	Reserve"	means	shares	of	AAG	Common	Stock	held	in	reserve	for	payment	to	holders	of	disputed	claims	at	the	Effective	Date,	to	the	extent such	disputed	claims	become	allowed	Single-Dip	Unsecured	Claims	after	the	Effective	Date.

"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.

"EETC"	means	enhanced	equipment	trust	certificate.

"Effective	Date"	means	December	9,	2013.

"Embraer"	means	Embraer	S.A.

"Envoy	class"	means	US	Airways'	international	business	class.

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

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

"ETS"	means	EU	emissions	trading	scheme.

"EU"	means	European	Union.

"ExpressJet"	means	ExpressJet,	Inc.

"FAA"	means	Federal	Aviation	Administration.

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

"IBT"	means	International	Brotherhood	of	Teamsters.

"ICAO"	means	International	Civil	Aviation	Organization.

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

"JBAs"	means	joint	business	agreements.

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

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

"MOU"	means	memorandum	of	understanding.

"MSC"	means	Material	Services	Company,	Inc.

"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.

"NYSE"	means	New	York	Stock	Exchange.

"OCI"	means	other	comprehensive	income.

"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.

"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	2014	Annual	Meeting	of	Stockholders	of	American	Airlines	Group	Inc.

"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	7.5%	Senior	Secured	Notes	due	2016.

"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.

"TSA"	means	Transportation	Security	Administration.

"TWU"	means	Transport	Workers	Union.

"USAPA"	means	US	Airline	Pilots	Association.

"US	Airways"	means	US	Airways,	Inc.

"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.

"VIEs"	means	variable	interest	entities.

"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	achieve	or	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	2013.

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.	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."

In	addition,	the	Dodd-Frank	Wall	Street	Reform	and	Consumer	Protection	Act	of	2010	and	regulations	promulgated	by	the	Commodity	Futures	Trading Commission	(CFTC)	introduce	new	requirements	for	centralized	clearing	for	over-the-counter	derivatives.	This	may	include	our	fuel	derivative	contracts.	Our	board	of directors	has	approved	our	election	of	the	CFTC's	end-user	exemption,	which	permits	us	as	a	non-financial	end	user	of	derivatives	to	hedge	commercial	risk	and	be exempt	from	the	CFTC	mandatory	clearing	requirements.	However,	depending	on	the	final	regulations	adopted	by	the	CFTC	and	other	regulators,	our	derivative	contract counterparties	may	be	subject	to	regulatory	requirements	and	resulting	new	practices	that	may	raise	their	costs.	Those	increased	costs	may	in	turn	be	passed	on	to	us, resulting	in	increased	transaction	costs	to	execute	derivative	contracts	and	lower	credit	thresholds	to	post	collateral.

We	have	not	entered	into	any	fuel	hedges	since	the	Effective	Date	and	our	current	policy	is	not	to	do	so.	Assuming	we	continue	to	pursue	this	policy,	once	our existing	hedge	contracts	expire	or	otherwise	terminate,	we	will	be	fully	exposed	to	fluctuations	in	fuel	prices.

# 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,	amendments to	the	Wright	Amendment	have	reduced	geographic	restrictions	on	operations	by	Southwest	Airlines	and	other	carriers	at	DAL	and	will	eliminate	all	domestic	non-stop geographic	restrictions	on	operations	there	in	October	2014.	This	has	increased	low-cost	carrier	competition	for	our	operations	at	Dallas/Fort	Worth	(DFW).	In	addition, we	expect	that	the	two	gates	at	DAL	that	we	divested	as	part	of	our	settlement	of	antitrust	litigation	related	to	the	Merger	will	be	allocated	to	low-cost	carriers.	The actions	of	the	low-cost	carriers,	including	those	described	above,	could	have	a	material	adverse	effect	on	our	operations	and	financial	performance.

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.

We	have	implemented	a	JBA	with	British	Airways,	Iberia	and	Finnair,	and	antitrust-immunized	cooperation	with	British	Airways,	Iberia,	Finnair	and	Royal Jordanian.	We	are	in	negotiations	with	IAG	concerning	the	terms	by	which	flights	operated	by	US	Airways	will	be	added	to	our	existing	transatlantic	joint	business.	We have	thus	far	been	unable	to	reach	agreement	with	IAG	and	are	uncertain	if	we	will	be	able	to	reach	an	agreement.	Failure	to	reach	an	agreement	could	have	a	material adverse	effect	on	the	JBA	or	cause	its	dissolution,	which	could	also	have	a	material	adverse	effect	on	our	results	of	operations	or	financial	position.	In	addition,	we	have implemented	an	antitrust-immunized	JBA	with	Japan	Airlines	and	a	JBA	with	Qantas.	No	assurances	can	be	given	as	to	any	other	arrangements	that	may	ultimately	be implemented	or	any	benefits	that	we	may	derive	from	such	arrangements.

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	DOJ	and	certain	states	prior to	the	closing	of	the	Merger;

•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;

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

•the	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	the	parties	currently	believe	that	such	approval	can	be	obtained	within	two	years	from	the	closing	of	the	Merger,	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	may	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:

•limit	our	ability	to	obtain	additional	funding	for	working	capital,	to	withstand	operating	risks	that	are	customary	in	the	industry,	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	and	catastrophic	external	events;

•contain restrictive covenants that could:

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

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

# 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,	and,	as	a	result,	we	estimate	 that,	based	on	our	commitments	as	of	December	31,	2013,	our	planned	aggregate expenditures	for	aircraft	purchase	commitments	and	certain	engines	on	a	consolidated	basis	for	calendar	years	2014-2018	would	be	approximately	$19.5	billion	of	which $16.3	 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,	and	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,	we	do	not	have	financing	commitments	for	the	following	aircraft	currently	on	order	and	scheduled	to	be	delivered	through	2016:	16	Airbus 320	family	aircraft,	10	Boeing	777-300ER	aircraft	and	18	Boeing	787	aircraft.	In	addition,	we	do	not	have	financing	commitments	in	place	for	the	majority	of	aircraft currently	on	order	and	scheduled	to	be	delivered	in	2017	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	contributed	to	unprecedented	levels	of	volatility	in	the	capital and	credit	markets.	As	a	result	of	these	market	conditions,	the	cost	and	availability	of	credit	have	in	the	recent	past	been	and	may	in	the	future	be	adversely	affected	by illiquid	credit	markets	and	wider	credit	spreads.	These	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	Citicorp	Credit	Facility, the	Credit	Facilities	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	depending	on	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	Citicorp	Credit	Facility	and	the	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	consolidated	results	of	operations	include	the	results	of	US	Airways	Group	and	its subsidiaries	only	for	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,	 CBAs	 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).

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.

We	are	currently	in	negotiations	with	the	IAM	with	respect	to	US	Airways	mechanics,	stock	clerks	and	related	employees,	and	fleet	service	employees,	and	the AFA	with	respect	to	Piedmont	flight	attendants.

None	of	these	unions	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,	2013,	approximately	73%	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 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.

# 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	Ronald	Reagan	Washington	National	Airport	and	three	New	York	City	airports:	Newark, 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.	For	example,	the	FAA	is	planning	a	new	rulemaking	in	2014	to	modify	the current	rules	limiting	flight	operations	at	New	York	City's	JFK	and	LaGuardia	airports.

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.	In	the	agreement	with	the	United	States	government,	among	other	things,	we	agreed	to	divest	and	not	reacquire	for	ten	years	certain	rights and	assets	consisting	of	52	Slot	pairs	at	Washington	Reagan	National	Airport,	and	17	Slot	pairs	at	LaGuardia,	in	each	case	together	with	and	associated	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,	Dallas	Love Field,	Los	Angeles	International	Airport	and	Miami	International	Airport.	The	agreement	with	the	plaintiff	states	requires	our	airlines,	subject	to	certain	conditions	and exceptions,	to	maintain	certain	hub	operations	in	a	manner	generally	consistent	with	historical	operations	and	to	continue	to	provide	scheduled	daily	service	to	certain specified	communities,	both	for	limited	periods	of	time.	In	addition,	we	entered	into	a	related	settlement	with	the	DOT	related	to	small	community	service	from Washington	Reagan	National	Airport.	Further,	as	a	consequence	of	the	Merger	clearance	process	in	the	EU,	we	are	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,	and,	along	with	our	JBA	partners,	we	are	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.

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,	 or	 GDSs	 (e.g.,	Amadeus,	 Sabre	 and Travelport),	conventional	travel	agents	and	online	travel	agents,	or	OTAs	(e.g.,	Expedia,	Orbitz	and	Travelocity),	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.	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	DOT,	the	FAA,	the 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.

Recent	DOT	consumer	rules	require	new	procedures	for	customer	handling	during	long	onboard	delays,	further	regulate	airline	interactions	with	passengers through	the	reservations	process,	at	the	airport,	and	on	board	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.

In	April	2013,	the	FAA	announced	the	imposition	of	furloughs	that	resulted	in	reduced	staffing,	including	among	air	traffic	controllers,	in	connection	with	its implementation	of	budget	reductions	related	to	the	federal	government's	response	to	the	so-called	"sequester"	of	government	funding.	These	furloughs	have	been suspended	as	a	result	of	Congressional	legislation.	However,	we	cannot	predict	whether	there	will	be	further	furloughs	or	the	impact	of	any	such	furloughs	on	our business.	Any	significant	reduction	in	air	traffic	capacity	at	key	airports	in	the	U.S.	could	have	a	material	adverse	effect	on	our	business,	results	of	operations	and financial	condition.	We	also	experienced	delays	in	routine	non-operational	interactions	with	the	FAA	as	a	result	of	the	government	shut-down	in	2013,	and	we	may experience	delays	again	in	the	event	of	any	future	government	shut-down.

In	addition,	the	ATC	system	is	not	successfully	managing	the	growing	demand	for	U.S.	air	travel.	Air	traffic	controllers	rely	on	outdated	technologies	that routinely	overwhelm	the	system	and	compel	airlines	to	fly	inefficient,	indirect	routes.	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	on	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's	Heathrow	Airport.	As	a	result	of	the	agreement, we	face	increased	competition	in	these	markets,	including	Heathrow	Airport.	In	addition,	the	open	skies	agreement	between	the	U.S.	and	Brazil,	which	was	signed	in 2010	and	takes	full	effect	in	2015,	has	resulted	in	increased	competition	in	the	U.S./Brazil	market.

# 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	a	per-ticket	tax	on	passengers	to	fund the	TSA,	which	fee	is	scheduled	to	increase	effective	July	1,	2014),	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.	For	example,	in	January	2014,	Congress	restructured	the September	11	security	fee,	which	will	increase	the	fee	on	some	customers.

# 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	implemented	several	new	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	new	measures	or	any	future	initiatives	will	be successful	in	increasing	our	revenues.	Additionally,	the	implementation	of	these	initiatives	creates	logistical	challenges	that	could	harm	the	operational	performance	of our	airline.	Also,	the	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	continue	to	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	and	attempted	attacks materially	 impacted	and	continue	 to	 impact	air	 travel.	Increased	security	procedures	 introduced	at	airports	since	 the	attacks	and	other	such	measures	as	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	U.S.	Customs	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	American	derived	approximately	40%	of	its	operating	revenues	and	US	Airways derived	approximately	24%	of	its	operating	revenues	in	2013,	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,	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,	 and	 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, 2013,	approximately	$710	million	of	our	unrestricted	cash	balance	was	held	as	Venezuelan	bolivars,	valued	at	a	weighted	average	rate	of	6.04	bolivars	to	the	dollar.	The period	of	time	to	exchange	those	funds	into	dollars	and	repatriate	them	has	been	increasing	and	is	presently	more	than	a	year.	On	January	23,	2014,	the	Venezuelan government

issued	a	regulation	to	implement	a	new	system	for	determining	the	exchange	rate	based	on	the	result	of	limited	periodic	sales	of	dollars	known	as	Sicad	auctions (currently	11.80	to	the	dollar	based	on	the	February	21,	2014	Sicad	auction)	for	repatriation	of	income	from	future	ticket	sales,	and	introduced	new	procedures	for approval	of	conversion	and	repatriation	of	local	currency.	The	government	also	enacted	a	new	law	effective	February	19,	2014	that	authorizes	additional	methods	of exchanging	Venezuelan	bolivars	at	rates	other	than	the	controlled	base	rate	of	6.3	to	the	dollar	or	the	existing	Sicad	auction	rate,	but	the	regulations	necessary	to implement	the	law	are	still	pending	and	it	is	not	clear	at	this	point	whether	or	how	the	new	methods	may	impact	the	pending	balances	of	Venezuelan	bolivars	held	by airlines.	We	are	working	with	Venezuelan	authorities	regarding	the	timing	and	exchange	rate	applicable	to	the	repatriation	of	funds	held	in	local	currency.	Further,	the current,	devalued	rates	may	have	an	ongoing	adverse	effect	on	our	reported	results	if	we	are	unable	to	fully	adjust	prices	on	flights	to	and	from	Venezuela,	of	which there	can	be	no	assurance.	More	generally,	fluctuations	in	foreign	currencies,	including	devaluations,	cannot	be	predicted	by	the	Company	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	all	environmental	laws	and	regulations	can	require	significant	expenditures,	and	violations	can	lead	to	significant	fines	and	penalties.

The	EPA	has	proposed	changes	to	underground	storage	tank	regulations	that	could	affect	certain	airport	fuel	hydrant	systems.	Airport	systems	that	fall	within threshold	requirements	would	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	has	proposed	the	State	Final	Draft	Industrial	General	Permit	for	stormwater	discharges.	This permit	employs	the	use	of	benchmark	values	to	trigger	response	actions	when	exceeding	those	limits	and	eliminates	group	monitoring.	These	permits	have	not	been finalized,	and	cost	estimates	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 objectives.	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	emissions.	For	example,	the	EU	has	established	the	Emissions	Trading Scheme	(ETS)	to	regulate	carbon	dioxide	emissions	in	the	EU.	The	EU	adopted	a	directive	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	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	emissions,	to	be	implemented	in	2020.	Subsequently,	the	EU	has	proposed	amending	the	EU	ETS	so

that	the	monitoring,	reporting	and	submission	of	allowances	for	emissions	from	flights	flown	in	2013	would	continue	to	be	limited	to	only	intra-EEA	flights.	For	flights flown	from	2014	to	2020,	the	scope	of	coverage	under	the	amendment	would	include	intra-EEA	flights	and	the	portion	of	aviation	emissions	of	flights	to	and	from	EU member	states	that	take	place	in	European	regional	airspace.	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	2014.	Beyond	2014,	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	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	greenhouse	gas	emissions	directly	under	the	Clean	Air	Act.	While	the	EPA's	recent regulatory	activity	in	this	area	has	focused	on	industries	other	than	aviation,	it	is	possible	that	future	EPA	regulations,	or	new	legislation,	could	impact	airlines.	Several states	are	also	considering	initiatives	to	regulate	emissions	of	greenhouse	gases,	primarily	through	the	planned	development	of	greenhouse	gas	emissions	inventories and/or	regional	greenhouse	gas	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	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.

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

Our	business	requires	the	appropriate	and	secure	utilization	of	customer	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.

Failure	to	comply	with	the	Payment	Card	Industry	Standards	or	other	privacy	and	data	use	and	security	requirements	of	our	partners	or	related	laws,	rules	and regulations	to	which	we	are	subject	may	expose	us	to	claims	for	contract	breach,	fines,	sanctions	or	other	penalties,	which	could	materially	and	adversely	affect	our business,	results	of	operations	and	financial	condition.	In	addition,	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.

# 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,	the	ability	to	operate	an	optimum	number	and	type	of	aircraft.	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,	including	as	a	result	of	"sequestration"	or	any	other	interruption	in	government funding;

•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	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.	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,	which	could	adversely	affect	us.

# 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.	In	addition, we	have	obtained	third-party	war	risk	(terrorism)	insurance	through	a	special	program	administered	by	the	FAA,	resulting	in	lower	premiums	than	if	we	had	obtained this	insurance	in	the	commercial	insurance	market.	The	program	has	been	extended,	with	the	same	conditions	and	premiums,	until	September	30,	2014.	If	the	federal insurance	program	terminates,	we	would	likely	face	a	material	increase	in	the	cost	of	war	risk	insurance.	The	failure	of	one	or	more	of	our	insurers	could	result	in	a	lack of	coverage	for	a	period	of	time.	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.

# Several	lawsuits	were	filed	in	connection	with	the	Merger	and	remain	pending,	and	these	lawsuits	could	have	a	material	adverse	impact	on	our	business.

US	Airways	Group,	as	well	as	the	members	of	US	Airways	Group's	board	of	directors,	were	named	as	defendants	in	a	lawsuit	brought	by	a	purported	class	of US	Airways	Group's	stockholders	challenging	the	Merger	and	seeking	a	declaration	that	the	Merger	Agreement	is	unenforceable,	an	injunction	against	the	Merger	(or rescission	in	the	event	it	has	been	consummated),	imposition	of	a	constructive	trust,	an	award	of	fees	and	costs,	including	attorneys'	and	experts'	fees,	and	other	relief. US	Airways	Group,	US	Airways,	AMR	and	American	were	also	named	as	defendants	in	a	private	antitrust	lawsuit.	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.	Such	private	lawsuits	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.	See	Part	I,	Item	3.	Legal	Proceedings	-	"Merger	Class	Action"	below.

# Our	ability	to	utilize	our	net	operating	loss	(NOL)	carryforwards	may	be	limited.

Under	the	Internal	Revenue	Code	of	1986,	as	amended	(the	Internal	Revenue	Code),	a	corporation	is	generally	allowed	a	deduction	in	any	taxable	year	for NOLs	carried	over	from	prior	taxable	years	(NOL	Carryforwards).	As	of	December	31,	2013,	we	had	available	NOL	Carryforwards	of	approximately	$10.6	billion	for regular	federal	income	tax	purposes	which	will	expire,	if	unused,	beginning	in	1/1/2022,	and	approximately	$4.7	billion	for	state	income	tax	purposes	which	will	expire, if	unused,	between	1/1/2014	and	12/31/2033.	The	amount	of	NOL	Carryforwards	for	state	income	tax	purposes	that	will	expire,	if	unused,	in	2014	is	$106	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	Internal	Revenue	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	bankruptcy	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.	While	we	anticipate	taking	advantage	of	certain special	rules	for	federal	income	tax	purposes	that	would	permit	approximately	$9.0	billion	of	our	federal	NOL	Carryforwards	to	be	utilized	without	regard	to	the	annual limitation	generally	imposed	by	Section	382,	there	can	be	no	assurance	that	these	special	rules	will	apply	to	the	ownership	change	we	experienced	upon	our	emergence from	bankruptcy,	including	that	we	may	ultimately	elect	not	to	apply	them.	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	bankruptcy	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	Airway	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	our	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;

•the	 conversion of	 AAG Series	 A Preferred Stock issued pursuant to	 AAG's plan of reorganization;

•distributions	of	shares	of	our	common	stock	pursuant	to	our	plan	of	reorganization, including	upon	the	conversion	of	AAL	Preferred	Stock	and 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	our	common	stock	or	issuances	of	our	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;	and

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

# Certain	provisions	of	AAG's	Certificate	of	Incorporation	and	Amended	and	Restated	Bylaws	(the	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	AAG's	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.

AAG's	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.	See	Part	II,	Item	5.	Market	for	Registrant's	Common	Stock	and	Related	Stockholder Matters	-	"Ownership	Restrictions."	These	restrictions	may	adversely	affect	the	ability	of	certain	holders	of	our	common	stock	and	other	equity	interests	to	vote	such interests	and	adversely	affect	the	ability	of	persons	to	acquire	shares	of	our	common	stock	and	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, AAG's	 Certificate	 of	 Incorporation	 contains	 certain	 restrictions	 on	 the	 acquisition	 and	 disposition	 of	AAG's	 common	 stock	 by	 substantial	 stockholders.	 These restrictions	may	adversely	affect	the	ability	of	certain	holders	of	AAG's	common	stock	to	dispose	of	or	acquire	shares	of	AAG's	common	stock.	Although	the	purpose	of these	transfer	restrictions	is	to	prevent	an	"ownership	change"	(as	defined	in	Section	382	of	the	Internal	Revenue	Code)	from	occurring,	no	assurance	can	be	given	that an	ownership	change	will	not	occur	even	with	these	restrictions	in	place.	See	AAG's	Restated	Certificate	of	Incorporation	which	is	filed	as	Exhibit	3.1	hereto.

# ITEM	1B. UNRESOLVED	STAFF	COMMENTS

The	Company	had	no	unresolved	Securities	and	Exchange	Commission	staff	comments	at	December	31,	2013.

# ITEM	2. PROPERTIES

# Flight	Equipment

As	of	December	31,	2013,	American	and	US	Airways	operated	a	mainline	fleet	of	627	and	343	aircraft,	respectively.	During	2013,	American	took	delivery	of 59	new	aircraft	and	retired	46	aircraft	and	US	Airways	took	delivery	of	23	new	aircraft	and	retired	20	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.	American	Eagle	operated	281	regional	jets	at December	31,	2013	and	US	Airways	Express	operated	238	regional	jets	and	40	turboprops	at	December	31,	2013.

# Operating

As	of	December	31,	2013,	American's	and	US	Airways'	combined	mainline	fleet	consisted	of	the	following	aircraft:

|  | Average<br>Seating<br>Capacity | Owned | Capital<br>Leased | Operating<br>Leased | Total | Average<br>Age<br>(Years) | In<br>Temporary<br>Storage1 | Non-<br>Operating<br>Aircraft2 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Airbus\tA319 | 125 | 3 | — | 105 | 108 | 11 | — | — |
| Airbus\tA320 | 150 | 11 | — | 59 | 70 | 15 | — | — |
| Airbus\tA321 | 183 | 72 | — | 24 | 96 | 5 | — | — |
| Airbus\tA330-200 | 258 | 9 | — | 3 | 12 | 3 | — | — |
| Airbus\tA330-300 | 291 | 4 | — | 5 | 9 | 13 | — | — |
| Boeing\t737-400 | 144 | — | — | 14 | 14 | 24 | — | — |
| Boeing\t737-800 | 150 | 86 | — | 140 | 226 | 6 | — | 1 |
| Boeing\t757-200 | 181 | 71 | 2 | 44 | 117 | 19 | 3 | 12 |
| Boeing\t767-200\tER | 186 | 1 | 8 | 11 | 20 | 26 | 1 | 3 |
| Boeing\t767-300\tER | 218 | 45 | — | 13 | 58 | 20 | — | — |
| Boeing\t777-200\tER | 247 | 44 | 3 | — | 47 | 13 | — | — |
| Boeing\t777-300\tER | 310 | 5 | — | 5 | 10 | 1 | — | — |
| Embraer\tERJ\t190 | 99 | 20 | — | — | 20 | 6 | — | — |
| McDonnell\tDouglas\tMD-80 | 140 | 104 | 15 | 44 | 163 | 22 | 1 | 19 |
| Total\t3 |  | 475 | 28 | 467 | 970 | 13 | 5 | 35 |

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

(2) As	of	December	31,	2013,	all	non-operating	aircraft	are	owned.

As	of	December	31,	2013,	the	fleet	of	our	wholly-owned	regional	subsidiary	and	the	wholly-owned	regional	subsidiaries	of	US	Airways	Group	consisted	of	the following	aircraft:

|  | Average<br>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>Aircraft1 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Bombardier\tCRJ\t200 | 50 | 12 | — | 23 | 35 | 10 | — | — |
| Bombardier\tCRJ\t700 | 65 | 54 | — | 7 | 61 | 8 | — | — |
| De\tHavilland\tDash\t8-100 | 37 | 29 | — | — | 29 | 24 | — | — |
| De\tHavilland\tDash\t8-300 | 50 | — | — | 11 | 11 | 22 | — | — |
| Embraer\tERJ\t140 | 44 | 59 | — | — | 59 | 12 | — | — |
| Embraer\tERJ\t145 | 50 | 118 | — | — | 118 | 12 | — | — |
| Saab\t340B | 34 | — | — | — | — | — | — | 41 |
| Total\t2 |  | 272 | — | 41 | 313 | 12 | — | 41 |

(2) Included	 in	 the	 totals	above,	aircraft	operated	by	wholly-owned	regional	subsidiaries	of	US	Airways	Group	consist	of	35	 CRJ	 200s,	14	 CRJ	 700s,	29	 De Havilland	Dash	8-100s,	and	11	De	Havilland	Dash	8-300s,	of	which	48	are	owned	and	41	are	leased.

Our	committed	mainline	and	regional	aircraft	orders	and	scheduled	lease	expirations,	for	the	capital	and	operating	leased	flight	equipment	included	in	the	table above,	as	of	December	31,	2013,	are	presented	in	the	table	below.

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019	and<br>Thereafter |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Firm\torders1: |  |  |  |  |  |  |
| American | 78 | 102 | 84 | 74 | 49 | 175 |
| US\tAirways | 20 | 13 | — | 6 | 10 | 6 |
| Total | 98 | 115 | 84 | 80 | 59 | 181 |
| Scheduled\tmainline\tlease\texpirations: |  |  |  |  |  |  |
| American | 28 | 20 | 10 | 15 | 8 | 194 |
| US\tAirways | 34 | 27 | 5 | 26 | 11 | 117 |
| Total | 62 | 47 | 15 | 41 | 19 | 311 |
| Scheduled\twholly-owned\tregional\nsubsidiaries\tlease\texpirations | — | — | — | 3 | 3 | 35 |

(1)	Includes	orders	for	regional	jets	as	follows:	15	in	2014,	39	in	2015,	24	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.

See	Note	8	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	and	Note	7	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,	2013,	aircraft	contractually	obligated	to	American	and	US	Airways	with	third-party	regional	carriers	included:

|  | Number	of	Aircraft | Number	of	Aircraft |  |
| :--- | :--- | :--- | :--- |
| Carrier | American | US\tAirways | Type\tof\tAircraft |
| Air\tWisconsin | — | 70 | regional\tjets |
| Chautauqua | 15 | — | regional\tjets |
| ExpressJet | 11 | — | regional\tjets |
| Mesa | — | 47 | regional\tjets |
| Republic | 19 | 58 | regional\tjets |
| SkyWest | 12 | 14 | regional\tjets |
|  | 57 | 189 |  |

ExpressJet	and	Republic	began	service	for	American	on	February	14,	2013	and	August	1,	2013,	respectively.	Of	the	aircraft	listed	above,	one	SkyWest	aircraft was	on	operational	reserve	as	of	December	31,	2013.

See	Note	8	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	and	Note	7	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

We	have	agreements	for	44	spare	engines	to	be	delivered	in	2014	and	beyond.

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	8	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	and	Note	4	 and	 Note	7	 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	facilities,	maintenance	facilities	and	other	facilities,	in	each	case	as	necessary	to	support	our	operations in	the	particular	city.

We	lease,	or	have	built	as	leasehold	improvements	on	leased	property,	most	of	our	airport	and	terminal	facilities	in	the	U.S.	and	overseas,	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	 system.	 Our	 US	 Airways	 Operations	 Control	 Center	 is	 located	 near	 Pittsburgh, Pennsylvania,	in	a	facility	leased	from	the	Allegheny	County	Airport	Authority.

# We	own	our	corporate	headquarters	building	in	Fort	Worth,	Texas.

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	8	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	and	Note	4	and	Note 7	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B.

# Terminal	Construction	Projects

We	use	public	airports	for	our	flight	operations	under	lease	or	use	arrangements	with	the	municipalities	or	governmental	agencies	that	own	or	control	them	and lease	certain	other	ground	equipment	for	use	at	such	facilities.	From	time	to	time,	airports	undertake	projects	to	improve	or	construct	new	facilities,	which	are	typically funded	through	proceeds	from	special	or	general	purpose	bond	offerings	made	by	the	respective	airport	governmental	entity.	Our	airport	lease	and	operating	agreements typically	provide	that	any	costs	for	these	new	or	improved	airport	facilities	are	passed	through	to	us	in	the	form	of	higher	occupancy	costs	based	on	our	relative percentage	of	occupancy	at	the	airport.	In	certain	circumstances,	we	agree	to	manage	these	airport	projects.

American	has	entered	into	agreements	with	the	Tulsa	Municipal	Airport	Trust;	the	Alliance	Airport	Authority,	Fort	Worth,	Texas;	the	New	York	City	Industrial Development	Agency;	and	the	Dallas/Fort	Worth,	Chicago	O'Hare,	Newark,	San	Juan,	and	Los	Angeles	airport	authorities	pursuant	to	which	such	entities	issued	special facility	revenue	bonds,	the	proceeds	of	which	were	used	to	pay	a	portion	of	the	cost	of	constructing,	improving	and	modifying	facilities	and	acquiring	equipment	which are	leased	by	us.	Prior	to	the	Chapter	11	Cases,	we	entered	into	agreements	with	certain	airport	authorities	pursuant	to	which	such	entities	issued	special	facility	revenue bonds,	the	proceeds	of	which	were	used	to	pay	a	portion	of	the	cost	of	constructing,	improving	and	modifying	facilities	and	acquiring	equipment	leased	by	the	Company. The	special	facility	revenue	bonds	are	non-recourse	to	the	issuer.	Pursuant	to	the	Plan,	claims	relating	to	special	facility	revenue	bonds	in	connection	with	Alliance Airport,	John	F.	Kennedy	International	Airport	(certain	bond	issuances	only),	Dallas-Fort	Worth	International	Airport,	Chicago	O'Hare,	Newark	Airport,	and	Luis Munoz	Marin	International	Airport	in	San	Juan,	Puerto	Rico	were	treated	as	general	unsecured	claims.

# ITEM	3. LEGAL	PROCEEDINGS

Chapter	11	Cases.	As	previously	disclosed,	on	the	Petition	Date,	November	29,	2011,	the	Debtors	filed	voluntary	petitions	for	relief	under	the	Bankruptcy Code.	On	October	21,	2013,	the	Bankruptcy	Court	entered	the	Confirmation	Order	approving	and	confirming	the	Debtors'	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,	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	Bankruptcy	Court.	However,	certain	pending	litigation	related	to	pre-petition	liabilities	may proceed	in	courts	other	than	the	Bankruptcy	Court	to	the	extent	the	parties	to	such	litigation	have	obtained	relief	from	the	permanent	injunction.

Pursuant	to	rulings	of	the	Bankruptcy	Court,	the	Plan	has	established	a	disputed	claim	reserve	to	hold	shares	of	AAG	Series	A	Preferred	Stock	and	AAG Common	Stock	reserved	for	issuance	to	disputed	claimholders	that	ultimately	become	allowed	Single-Dip	general	unsecured	claimholders	after	emergence.	The	shares provided	for	under	the	Plan	are	determined	based	upon	a	disputed	claim	reserve	amount	of	approximately	$755	million.	As	disputed	claims	are	resolved,	the	claimants receive	distributions	of	shares	from	the	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	the	remaining	disputed	claims,	such	shares	will	not	be	returned	to	AAG	but	rather	will	be	distributed	by	priority first,	if	necessary,	to	satisfy	unsecured	claims	or	labor-related	obligations,	and	then	to	former	AMR	shareholders	as	of	the	Effective	Date.	AAG	is	not	required	to distribute	additional	shares	above	the	756	million	shares	contemplated	by	the	Plan,	even	if	the	shares	remaining	for	distribution	are	not	sufficient	to	fully	pay	all	allowed unsecured	claims.	However,	resolution	of	disputed	claims	could	have	a	material	effect	on	Single-Dip	creditor	recoveries	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	are	not	vested	benefits	and	thus	may	be	terminated	without	liability	to	American.	The	Bankruptcy	Court	has	not	yet	ruled	on	this	matter and	we	cannot	predict	whether	American	will	receive	relief	from	any	of	these	obligations.

Government	Antitrust	Actions.	On	August	13,	2013,	the	U.S.	government,	along	with	the	States	of	Arizona,	Florida,	Tennessee	and	Texas,	the	Commonwealths of	Pennsylvania	and	Virginia,	and	the	District	of	Columbia	(collectively,	the	plaintiff	states),	filed	a	complaint	against	US	Airways	Group	and	AMR	in	the	U.S.	District Court	for	the	District	of	Columbia.	The	plaintiffs	alleged,	among	other	things,	that	the	proposed	Merger	would	substantially	lessen	competition	in	violation	of	Section	7 of	the	Clayton	Act	and	sought	to	permanently	enjoin	the	transaction.	On	September	5,	2013,	the	plaintiffs	filed	an	amended	complaint,	adding	the	State	of	Michigan	as	a plaintiff.	On	October	1,	2013,	the	State	of	Texas	entered	into	an	agreement	with	US	Airways	Group	and	AMR	that	resolved	that	state's	objections	to	the	Merger,	and	its claims	were	dismissed	with	prejudice	on	October	7,	2013.	On	November	11,	2013,	US	Airways	and	American	entered	into	agreements	with	the	U.S.	government	and	the plaintiff	states	resolving	all	claims	in	the	litigation.	The	agreement	with	the	U.S.	government	requires	the	carriers	to	divest	assets	at	certain	airports	and	remains	subject to	public	comment	and	court	approval.	In	the	agreement	with	the	United	States	government,	among	other	things,	we	agreed	to	divest	and	not	reacquire	for	ten	years certain	rights	and	assets	consisting	of	52	Slot	pairs	at	Washington	Reagan	National	Airport,	and	17	Slot	pairs	at	LaGuardia,	in	each	case	together	with	and	associated 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,	Dallas	Love	Field,	Los	Angeles	International	Airport	and	Miami	International

Airport.	The	agreement	with	 the	plaintiff	states,	which	was	entered	by	 the	court	on	November	12,	2013,	requires	our	airlines,	subject	 to	certain	conditions	and exceptions,	to	maintain	certain	hub	operations	in	a	manner	generally	consistent	with	historical	operations	and	to	continue	to	provide	scheduled	daily	service	to	certain specified	communities,	both	for	limited	periods	of	time.	In	addition,	we	entered	into	a	related	settlement	with	the	DOT	related	to	small	community	service	from Washington	Reagan	National	Airport

Merger	Class	Action.	On	March	1,	2013,	a	complaint	captioned	Plumbers	&	Steamfitters	Local	Union	No.	248	Pension	Fund	v.	US	Airways	Group,	Inc.,	et	al., No.	CV2013-051605,	was	filed	as	a	putative	class	action	on	behalf	of	the	stockholders	of	US	Airways	Group	in	the	Superior	Court	for	Maricopa	County,	Arizona.	On July	3,	2013,	an	amended	complaint,	captioned	Dennis	Palkon,	et	al.	v.	US	Airways	Group,	Inc.,	et	al.,	No.	CV2013-051605,	was	filed	with	the	same	court.	The amended	complaint	names	as	defendants	US	Airways	Group	and	the	members	of	its	board	of	directors,	and	alleges	that	the	directors	failed	to	maximize	the	value	of	US Airways	Group	in	connection	with	the	Merger	and	that	US	Airways	Group	aided	and	abetted	those	breaches	of	fiduciary	duty.	The	relief	sought	in	the	amended complaint	includes	an	injunction	against	the	Merger,	or	rescission	in	the	event	it	has	been	consummated.	The	court	in	the	above-referenced	action	denied	the	plaintiff's motion	for	a	temporary	restraining	order	that	had	sought	to	enjoin	the	US	Airways	Group	Annual	Meeting	of	Stockholders.	The	above-referenced	action	was	stayed pending	the	outcome	of	the	antitrust	lawsuit	filed	by	the	U.S.	government	and	various	states	on	August	13,	2013	(described	above).	This	stay	has	now	been	lifted	and	a motion	to	dismiss	this	action	filed	by	US	Airways	Group	is	pending	before	the	court.	We	believe	this	lawsuit	is	without	merit	and	intend	to	vigorously	defend	against	the allegations.

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	a	claim	for	money	damages	and	to	request	injunctive	relief	requiring	the	carriers	to	hold	separate their	assets.	Trial	is	set	for	June	2014.	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	Inc.	filed	an	antitrust	lawsuit	against	Sabre	Holdings	Corporation,	Sabre	Inc.	and	Sabre	Travel International	Limited	(collectively,	Sabre)	in	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	both	injunctive	relief	and	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.	We	intend	to	pursue	our	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.

# 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

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	common	stock	of	AAG	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.

In	the	past	three	years,	no	cash	or	other	dividends	have	been	declared	on	the	AAG	Common	Stock.	Under	the	provisions	of	certain	debt	agreements	our	ability to	pay	dividends	on	or	repurchase	our	common	stock	is	restricted.	Any	future	determination	to	pay	cash	dividends	will	be	at	the	discretion	of	our	board	of	directors, subject	to	applicable	limitations	under	Delaware	law,	and	will	depend	upon	our	results	of	operations,	financial	condition,	contractual	restrictions	and	other	factors deemed	relevant	by	our	board	of	directors.	See	Part	I,	Item	1A.	Risk	Factors	-	"Our	indebtedness	and	other	obligations	are	substantial	and	could	adversely	affect	our business	and	liquidity"	and	"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,"	Part	II,	Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	-	"Liquidity	and Capital	Resources"	and	See	Note	9	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	and	Note	9	to	American's	Consolidated	Financial	Statements	in	Part II.

Information	on	securities	authorized	for	issuance	under	our	equity	compensation	plans	the	information	required	by	this	Item	will	be	set	forth	in	the	Proxy Statement	under	the	caption	"Equity	Compensation	Plan	Information"	and	is	incorporated	by	reference	into	this	Annual	Report	on	Form	10-K.

# 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	our	plan	of	reorganization	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	Restated Certificate	of	Incorporation	and	Amended	and	Restated	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	limiting	voting	and	acquisition	and	disposition	of	our equity	 interests",	and	"In	order	to	protect	our	NOL	carryforwards	and	certain	other	tax	attributes,	our	Certificate	of	Incorporation	includes	certain	limitations	on acquisitions	and	dispositions	of	our	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,	2013,	2012	 and	2011	and	as	of	December	31,	2013	 and	2012	are	derived	from	AAG's	Consolidated	Financial	Statements included	elsewhere	in	this	report.	The	selected	consolidated	financial	data	for	the	years	ended	December	31,	2010	and	2009	and	as	of	December	31,	2011,	2010	and	2009 are	derived	from	AAG's	audited	Consolidated	Financial	Statements	not	included	in	this	report.	To	conform	to	current	year	presentation,	certain	operating	revenue	and expenses	in	prior	years	have	been	reclassified.	As	a	result,	prior	year	amounts	may	not	agree	to	the	amounts	previously	reported.	See	Note	4	to	AAG's	Consolidated Financial	Statements	in	Part	II,	Item	8A	for	additional	information.	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	Ernst	&	Young	LLP,	an	independent	registered	public	accounting	firm. AAG's	Consolidated	Financial	Statements	and	statistical	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.

| Total	operating	revenues | $26,743 | $24,855 | $23,979 | $22,170 | $19,917 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Total\toperating\texpenses | 25,344 | 24,707 | 25,016 | 21,808 | 20,959 |
| Operating\tincome\t(loss) | $1,399 | $148 | $(1,037) | $362 | $(1,042) |
| Reorganization\titems,\tnet\t1 | $(2,655) | $(2,208) | $(118) | $— | $— |
| Net\tincome\t(loss) | $(1,834) | $(1,876) | $(1,979) | $(471) | $(1,468) |
| Earnings\t(loss)\tper\tcommon\tshare: |  |  |  |  |  |
| Basic | $(11.25) | $(14.98) | $(15.83) | $(3.78) | $(13.37) |
| Diluted | $(11.25) | $(14.98) | $(15.83) | $(3.78) | $(13.37) |
| Shares\tused\tfor\tcomputation\t(in\tthousands): |  |  |  |  |  |
| Basic | 163,046 | 125,231 | 124,985 | 124,395 | 109,831 |
| Diluted | 163,046 | 125,231 | 124,985 | 124,395 | 109,831 |
| Consolidated\tBalance\tSheet\tdata\t(at\tend\tof\tperiod): |  |  |  |  |  |
| Total\tassets | $42,278 | $23,510 | $23,848 | $25,088 | $25,438 |
| Long-term\tdebt\tand\tcapital\tleases,\tnet\tof\tcurrent\tmaturities | 15,353 | 7,116 | 6,702 | 9,253 | 10,583 |
| Pension\tand\tpostretirement\tbenefits\t2 | 5,828 | 6,780 | 9,204 | 7,877 | 7,397 |
| Mandatorily\tconvertible\tpreferred\tstock\tand\tother\tbankruptcy\tsettlement\nobligations | 5,928 | — | — | — | — |
| Liabilities\tsubject\tto\tcompromise | — | 6,606 | 4,843 | — | — |
| Stockholders'\tequity\t(deficit)\t2 | (2,731) | (7,987) | (7,111) | (3,945) | (3,489) |
| Consolidated\tstatements\tof\toperations\tdata\texcluding\tspecial\titems\t3: |  |  |  |  |  |
| Operating\tincome\t(loss)\texcluding\tspecial\titems | $1,935 | $535 | $(238) | $444 | $(687) |
| Net\tincome\t(loss)\texcluding\tspecial\titems | 1,244 | (130) | (1,062) | (389) | (1,361) |

(1) 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.	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.

# No	cash	dividends	on	common	stock	were	declared	for	any	period	presented	above.

A	number	of	factors	render	AAG's	historical	consolidated	financial	information	not	directly	comparable	to	our	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	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, |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2013 | 2012 | 2011 | 2010 | 2009 |
|  |  |  | (In\tmillions) |  |  |
| Operating\tincome\t(loss)\t-\tGAAP | $1,399 | $148 | $(1,037) | $362 | $(1,042) |
| Operating\tspecial\titems,\tnet\t1 | 536 | 387 | 799 | 82 | 355 |
| Operating\tincome\t(loss)\texcluding\tspecial\titems | $1,935 | $535 | $(238) | $444 | $(687) |
| Net\tincome\t(loss)\t-\tGAAP | $(1,834) | $(1,876) | $(1,979) | $(471) | $(1,468) |
| Operating\tspecial\titems,\tnet\t1 | 536 | 387 | 799 | 82 | 355 |
| Nonoperating\tspecial\titems,\tnet\t2 | 211 | (280) | — | — | — |
| Reorganization\titems,\tnet\t3 | 2,655 | 2,208 | 118 | — | — |
| Income\ttax\tspecial\titems\t4 | (324) | (569) | — | — | (248) |
| Net\tincome\t(loss)\texcluding\tspecial\titems | $1,244 | $(130) | $(1,062) | $(389) | $(1,361) |

(1)	Includes	the	following	operating	special	charges	(credits):

•In	2013,	special	charges	consisted	primarily	of	a	$192	million	charge	related	to	US	Airways'	pilot	MOU	that	became	effective	upon	the	close	of	the	Merger,	$96 million	related	to	professional	fees	and	fees	for	US	Airways	to	exit	the	Star	Alliance,	a	$107	million	charge	related	to	the	American's	pilot	long-term	disability obligation,	$58	million	 in	 severance,	$56	 million	 related	 to	 employee	 awards	 granted	 in	 connection	 with	 the	 Merger,	 a	$43	 million	 charge	 for	 workers' compensation	claims,	and	a	$33	million	impairment	charge	associated	with	certain	Boeing	757	aircraft	held	for	sale.	These	charges	were	offset	in	part	by	a	$31 million	special	credit	related	to	a	change	in	accounting	method	resulting	from	the	modification	of	American's	AAdvantage	miles	agreement	with	Citibank,	a	$67 million	gain	on	the	sale	of	slots	at	LaGuardia	Airport	as	a	result	of	the	settlement	reached	with	the	DOJ	and	the	cancellation	of	equity	awards	in	connection	with the	Merger.

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

•In	2011,	special	charges	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.

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

•In	2009,	special	charges	consisted	of	restructuring	charges	of	$171	million	primarily	consisted	of	the	grounding	of	the	Airbus	A300	fleet	and	the	impairment	of Embraer	RJ-135	aircraft.	Special	items	in	2009	consisted	of	$184	million	and	include	the	impairment	of	certain	route	and	slot	authorities,	primarily	in	Latin America,	and	losses	on	certain	sale-leaseback	transactions.

(2)	Includes	the	following	nonoperating	special	charges	(credits):

•In	2013,	special	charges	consisted	of	interest	charges	of	$157	million	to	recognize	post-petition	interest	expense	on	unsecured	obligations	pursuant	to	the	Plan,	a $54	million	charge	related	to	the	premium	on	tender	for	existing	enhanced	equipment	trust	certificates	(EETCs)	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	 charges	 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	the	Company's direct	and	indirect	U.S.	subsidiaries	on	November	29,	2011:

•In	2013,	special	charges	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	charges	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	charges	(credits):

•In	2013,	special	charges	consisted	of	a	$538	million	non-cash	income	tax	benefit	resulting	from	gains	recorded	in	Other	Comprehensive	Income,	which	was offset	by	a	$214	million	non-cash	charge	related	to	additional	valuation	allowance	required	to	reduce	deferred	tax	assets	to	the	amount	we	believe	is	more	likely than	not	to	be	realized.

•In	2012,	 special	 charges	 consisted	 of	 a	$569	million	non-cash	income	tax	benefit	resulting	from	gains	recorded	in	Other	Comprehensive Income.

•In	2009,	special	charges	consisted	of	a	$248	million	non-cash	income	tax	benefit	resulting	from	gains	recorded	in	Other	Comprehensive Income.

# 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,	2013,	2012	and	2011	and	as	of	December	31,	2013	and	2012	are	derived	from	American's	Consolidated	Financial	Statements included	elsewhere	in	this	report.	The	selected	consolidated	financial	data	for	the	years	ended	December	31,	2010	and	2009	and	as	of	December	31,	2011,	2010	and	2009 are	derived	from	American's	audited	Consolidated	Financial	Statements	not	included	in	this	report.	To	conform	to	current	year	presentation,	certain	operating	revenue and	expenses	in	prior	years	have	been	reclassified.	As	a	result,	prior	year	amounts	may	not	agree	to	the	amounts	previously	reported.	See	Note	4	 to	American's Consolidated	Financial	Statements	in	Part	II,	Item	8B	for	additional	information.	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	Ernst	&	Young	LLP,	an	 independent	registered	public accounting	firm.

|  |  |  | Year	Ended	December	31, | Year	Ended	December	31, |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2013\t1 |  | 2012\t1,4 | 2011\t1,5 | 2010\t1 | 2009\t1,4 |
|  |  |  | (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 | $25,760 |  | $24,825 | $23,957 | $22,151 | $19,898 |
| Total\toperating\texpenses | 24,226 |  | 24,743 | 25,111 | 21,945 | 21,099 |
| Operating\tincome\t(loss) | $1,534 |  | $82 | $(1,154) | $206 | $(1,201) |
| Reorganization\titems,\tnet\t2 | $(2,640) |  | $(2,179) | $(116) | $— | $— |
| Net\tincome\t(loss) | $(1,526) |  | $(1,926) | $(1,965) | $(469) | $(1,474) |
| Consolidated\tBalance\tSheet\tdata\t(at\tend\tof\tperiod): |  |  |  |  |  |  |
| Total\tassets | $25,612 | 276,000 | $23,264 | $23,589 | $22,422 | $22,964 |
| Long-term\tdebt\tand\tcapital\tleases,\tnet\tof\tcurrent\tmaturities | 9,852 |  | 7,143 | 6,729 | 6,592 | 7,984 |
| Pension\tand\tpostretirement\tbenefits\t3,5 | 5,693 |  | 6,780 | 9,204 | 7,876 | 7,397 |
| Liabilities\tsubject\tto\tcompromise | — |  | 5,694 | 3,952 | — | — |
| Stockholder's\tequity\t(deficit)\t3,5 | (9,660) |  | (9,962) | (9,037) | (6,336) | (5,878) |

(1)	Includes	special	charges	and	other	items,	as	follows:

•In	2013,	special	charges	consisted	primarily	of	a	$107	million	charge	related	to	American's	pilot	long-term	disability	obligation,	$47	million	in	severance	and professional	fees,	$56	million	related	to	employee	equity	awards	granted	in	connection	with	the	merger,	a	$43	million	charge	for	workers'	compensation	claims, and	a	$33	million	impairment	charge	associated	with	certain	Boeing	757	aircraft	held	for	sale.	These	charges	were	offset	in	part	by	a	$31	million	special	credit related	to	a	change	in	accounting	method	resulting	from	the	modification	of	American's	AAdvantage

miles	agreement	with	Citibank	and	a	$67	million	gain	on	the	sale	of	slots	at	LaGuardia	Airport	as	a	result	of	the	settlement	reached	with	the	DOJ	and	the cancellation	of	equity	awards	in	connection	with	the	Merger.

•In	2012,	special	charges	consisted	of	$386	million	of	severance	and	related	charges	and	write-off	of	leasehold	improvements	on	aircraft	and	airport	facilities that	were	rejected	during	the	Chapter	11	process.	American's	2012	results	also	include	a	$280	million	benefit	from	a	settlement	of	a	commercial	dispute.

•In	2011,	special	charges	and	other	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	of	$81	million	and	include	the	impairment	of	certain	route	authorities	in	Latin	America	and	losses	on	Venezuelan	currency remeasurement.

•In	2009,	restructuring	charges	of	$171	million	primarily	consisted	of	the	grounding	of	the	Airbus	A300	fleet	and	the	impairment	of	Embraer	RJ-135	aircraft. Special	items	in	2009	consisted	of	$184	million	and	include	the	impairment	of	certain	route	and	slot	authorities,	primarily	in	Latin	America,	and	losses	on certain	sale-leaseback	transactions.

(2)	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.	See	Note	2	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	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	12	 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.

(4)	Includes	the	impact	of	a	$569	million	and	$248	million	tax	benefit	related	to	the	allocation	of	tax	expense	to	other	comprehensive	income	items	recognized	in	2012 and	2009,	respectively.

(5)	As	a	result	of	actuarial	changes	in	the	discount	rate,	the	Company	recorded	a	$1.3	billion	increase	in	pension	and	retiree	medical	and	other	benefits	obligations	and	a corresponding	decrease	in	stockholder's	equity	in	2011.

A	number	of	factors	render	American's	historical	consolidated	financial	information	not	directly	comparable	to	our	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	and	the	notes	to	American's	Consolidated	Financial	Statements	in Part	II,	Item	8B.

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

# American	Airlines	Group

# Background

As	 previously	 discussed,	 the	 Merger	 was	 consummated	 on	 December	 9,	 2013.	Accordingly,	 the	 Company's	 consolidated	 results include	American	 and American	Eagle	for	the	year	ended	December	31,	2013	and	the	results	of	US	Airways	Group	for	the	23	days	ended	December	31,	2013.

Following	the	Merger,	AAG	began	moving	toward	operating	under	the	single	brand	name	of	"American	Airlines"	through	its	mainline	operations,	American and	US	Airways.	Until	a	single	operating	certificate	is	issued	by	the	Federal	Aviation	Administration	(FAA)	and	the	operational	integration	is	complete,	American	and US	Airways	will	continue	to	operate	as	separate	airlines.	This	process	is	expected	to	take	18-24	months.	Through	its	operating	subsidiaries,	including	the	operating subsidiaries	of	US	Airways	Group,	AAG	is	the	largest	airline	in	the	world	as	measured	by	revenue	passenger	miles	(RPMs)	and	available	seat	miles	(ASMs).	The Company	has	primary	hubs	 in	Charlotte,	Chicago,	Dallas/Fort	Worth,	Los	Angeles,	Miami,	New	York	City,	Philadelphia,	Phoenix	and	Washington,	D.C.	As	of December	31,	2013,	the	combined	airline	operated	nearly	6,700	daily	flights	to	339	destinations	in	54	countries.	As	of	December	31,	2013,	American	and	US	Airways operated	965	mainline	jets.	American	continues	to	be	provided	with	regional	feed	by	American	Eagle	and	third-party	regional	carriers	and	US	Airways	continues	to	be provided	with	regional	feed	by	Piedmont,	PSA	and	third-party	regional	carriers.	As	of	December	31,	2013,	the	Company's	regional	subsidiaries	and	the	third-party regional	carriers	that	provide	it	with	regional	feed	operated	approximately	519	regional	jets	and	approximately	40	turboprops.

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

Throughout	2013,	jet	fuel	prices	continued	to	follow	the	price	of	Brent	crude	oil	more	closely	than	the	price	of	West	Texas	Intermediate	crude	oil.	On	average, fuel	costs	were	down	slightly	in	2013	as	compared	to	2012.	The	Brent	crude	oil	average	daily	spot	price	was	$109	in	2013	which	approximates	the	average	daily	spot price	in	2012.	However,	on	a	daily	basis,	prices	continued	to	be	volatile.	Throughout	2013,	daily	spot	prices	fluctuated	between	a	high	of	$119	per	barrel	in	February	to	a low	of	$97	per	barrel	in	April	and	closed	the	year	at	$110	per	barrel	on	December	31,	2013.

While	the	U.S.	airline	industry	is	currently	benefiting	from	a	favorable	revenue	environment	and	moderating	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."

In	2013,	we	realized	operating	income	of	$1.4	billion	and	a	net	loss	of	$1.8	billion.	We	completed	our	merger	with	US	Airways	Group	on	December	9,	2013, and	accordingly	these	results	include	results	of	US	Airways	Group	for	the	23	day	post-merger	period,	December	9,	2013,	to	December	31,	2013.	The	information	in	the following	paragraph	and	under	"Revenue",	"Fuel",	"Capacity"	and	"Cost	Control"	excludes	the	post-merger	results	of	US	Airways	Group.

Excluding	the	results	of	US	Airways	Group,	we	recognized	operating	income	of	$1.6	billion	in	2013	which	compares	to	operating	income	of	$148	million	in 2012,	a	$1.4	billion	improvement.	This	year-over-year	improvement	was	driven	by	growth	in	operating	revenues	of	$957	million	resulting	from	strong	demand	for	air travel	and	a	$471	million	reduction	in	operating	expenses	primarily	as	a	result	of	steps	taken	in	our	Chapter	11	restructuring.	Our	standalone	net	loss	was	$1.6	billion	in 2013	which	compares	to	a	net	loss	of	$1.9	billion	in	2012.	Our	net	loss	was	impacted	by	the	recognition	of	net	special	charges	of	$2.8	billion	and	$1.7	billion	in	2013	and 2012,	respectively,	principally	 the	result	of	reorganization	expenses	related	 to	 the	recognition	of	allowed	claims.	See	"AAG's	Results	of	Operations"	 below	 for	 a reconciliation	of	the	impact	on	American	Airlines	Group	of	the	post-merger	results	of	US	Airways	Group	and	net	special	charges.

# Revenue

Mainline	and	regional	passenger	revenues	increased	$864	million,	or	4.0%,	as	compared	to	2012.	The	growth	in	revenues	was	driven	by	a	1.7%	increase	in revenue	passenger	miles	and	a	2.3%	increase	in	yield,	as	total	capacity	increased	1.3%	as	compared	to	2012.	Our	mainline	and	regional	passenger	revenue	per	available seat	mile	(PRASM)	was	13.38	cents	in	2013,	a	2.7%	increase,	as	compared	to	13.03	cents	in	2012.

Mainline	and	regional	fuel	expense	was	relatively	flat	at	$8.7	billion	in	each	of	2013	and	2012.	The	average	mainline	and	regional	price	per	gallon	of	fuel	was $3.09	in	2013	as	compared	to	an	average	price	per	gallon	of	$3.20	in	2012,	a	decrease	of	3.3%.	The	decrease	in	fuel	price	per	gallon	was	offset	by	a	3.1%	increase	in consumption	due	in	part	to	increased	capacity	and	a	shift	from	turboprop	to	regional	jet	aircraft.

# Capacity

Total	system	capacity	for	2013 increased	1.3%	primarily	due	to	our	ongoing	fleet	replacement	programs	where	we	are	replacing	older	aircraft	with	larger gauge,	more	modern	aircraft.

# Cost	Control

AAG	is	committed	to	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	mainline	costs	per	available	seat	mile	(CASM)	excluding	special	items,	fuel	and	profit sharing	decreased	0.40	cents	or	4.5%	from	8.90	cents	in	2012	to	8.50	cents	in	2013.	This	decrease	was	primarily	due	to	cost	reductions	achieved	in	our	Chapter	11 restructuring	to	become	more	cost	competitive.

The	table	below	details	our	mainline	CASM	excluding	special	items,	fuel	and	profit	sharing	for	the	years	ended	December	31,	2013	and	2012:

|  | 2013 | 2012 | Percent<br>Increase<br>(Decrease) |
| :--- | :--- | :--- | :--- |
|  | (In\tcents) |  |  |
| Total\tmainline\tCASM | 13.67 | 14.20 | (3.7) |
| Less:\tSpecial\titems,\tnet | (0.18) | (0.25) | (28.0) |
| Less:\tAircraft\tfuel\tand\trelated\ttaxes | (4.94) | (5.05) | (2.2) |
| Less:\tProfit\tsharing | (0.05) | — | nm |
| Total\tmainline\tCASM\texcluding\tspecial\titems,\tfuel\tand\tprofit\tsharing\t1 | 8.50 | 8.90 | (4.5) |

(1) 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	excluding	special	items	and	profit	sharing	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,	fuel	and	profit	sharing	to	evaluate	our	operating	performance.	Amounts	may	not	recalculate	due	to	rounding.

|  | 2013 | 2012 | Better	(Worse) |
| :--- | :--- | :--- | :--- |
| On-time\tperformance\t(a) | 77.6% | 76.9% | 0.7\tpts |
| Completion\tfactor\t(b) | 98.2% | 98.2% | — |
| Mishandled\tbaggage\t(c) | 3.02 | 2.92 | (3.4)% |
| Customer\tcomplaints\t(d) | 1.99 | 1.8 | (10.6)% |

# Liquidity	Position

As	of	December	31,	2013,	AAG's	total	cash	and	short-term	investments	was	$10.3	billion,	of	which	$1.0	billion	was	restricted.	Additional	detail	is	provided	in the	table	below	(in	millions):

|  | December	31, | December	31, |
| :--- | :--- | :--- |
|  | 2013 | 2012 |
| Cash | \t $1,140 | \t $480 |
| Short-term\tinvestments | 8,111 | 3,412 |
| Restricted\tcash\tand\tshort-term\tinvestments\t1 | 1,035 | 850 |
| Total\tcash\tand\tshort-term\tinvestments | \t $10,286 | \t $4,742 |

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

The	improvement	in	our	liquidity	is	due	primarily	to	the	acquisition	of	US	Airways	Group	which	had	a	cash	and	short-term	investments	balance	of	$3.3	billion at	December	31,	2013	as	well	as	proceeds	from	our	$1.9	billion	Term	Loan	Facility,	which	we	entered	into	in	June	2013.	We	also	obtained	a	$1.0	billion	revolving	credit facility.	To	date,	we	have	not	drawn	any	amounts	under	the	revolving	credit	facility.

Pursuant	to	the	Plan	of	Reorganization	and	the	related	Merger	Agreement,	the	Company	issued	a	portion	of	its	shares	of	common	stock	at	emergence	to	certain employees.	In	December	of	2013,	the	Company	withheld	the	issuance	of	a	portion	of	these	shares	and	instead	used	approximately	$300	million	of	cash	in	satisfaction	of employee	tax	obligations.

As	of	December	31,	2013,	approximately	$783	million	of	our	cash	and	short-term	investments	balances	were	held	in	foreign	bank	accounts,	of	which	$710 million	was	held	as	Venezuela	bolivars.

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, 2013,	approximately	$710	million	of	our	unrestricted	cash	balance	was	held	as	Venezuelan	bolivars,	valued	at	a	weighted	average	rate	of	6.04	bolivars	to	the	dollar.	The period	of	time	to	exchange	those	funds	into	dollars	and	repatriate	them	has	been	increasing	and	is	presently	more	than	a	year.	On	January	23,	2014,	the	Venezuelan government	issued	a	regulation	to	implement	a	new	system	for	determining	the	exchange	rate	based	on	the	result	of	limited	periodic	sales	of	dollars	known	as	Sicad auctions	(currently	11.80	to	the	dollar	based	on	the	February	21,	2014	Sicad	auction)	for	repatriation	of	income	from	future	ticket	sales,	and	introduced	new	procedures for	approval	of	conversion	and	repatriation	of	local	currency.	The	government	also	enacted	a	new	law	effective	February	19,	2014	that	authorizes	additional	methods	of exchanging	Venezuelan	bolivars	at	rates	other	than	the	controlled	base	rate	of	6.3	to	the	dollar	or	the	existing	Sicad	auction	rate,	but	the	regulations	necessary	to implement	the	law	are	still	pending	and	it	is	not	clear	at	this	point	whether	or	how	the	new	methods	may	impact	the	pending	balances	of	Venezuelan	bolivars	held	by airlines.	We	are	working	with	Venezuelan	authorities	regarding	the	timing	and	exchange	rate	applicable	to	the	repatriation	of	funds	held	in	local

currency.	Further,	the	current,	devalued	rates	may	have	an	ongoing	adverse	effect	on	our	reported	results	if	we	are	unable	to	fully	adjust	prices	on	flights	to	and	from Venezuela,	of	which	there	can	be	no	assurance.	More	generally,	fluctuations	in	foreign	currencies,	including	devaluations,	cannot	be	predicted	by	the	Company	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.	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	on	currency	risks.

We	 have	 taken	 significant	 actions	 in	 the	 last	 year,	 including	 the	 completion	 of	 our	 restructuring	 and	 merger	 with	 US	Airways	 Group,	 to	 restore	 our competitiveness.	Although	it	is	difficult	to	predict	the	price	of	oil	or	the	strength	of	the	economy,	we	believe	that	our	2013	financial	results	are	evidence	of	the	strong foundation	we	have	in	place	and	can	build	on.

# AAG's	Results	of	Operations

In	2013,	we	realized	operating	income	of	$1.4	billion	and	a	net	loss	of	$1.8	billion.	We	completed	our	merger	with	US	Airways	Group	on	December	9,	2013, and	accordingly	the	results	of	US	Airways	Group	are	included	for	the	23	day	post-merger	period	from	December	9,	2013	to	December	31,	2013.	Excluding	the	results	of US	Airways	Group,	we	recognized	operating	income	of	$1.6	billion	and	a	net	loss	of	$1.6	billion.	Excluding	the	effects	of	net	special	items	we	recognized	standalone	net income	of	$1.2	billion.	In	2013	we	experienced	growth	in	revenues	due	to	the	strong	demand	for	air	travel	and	a	reduction	in	operating	costs	as	a	result	of	steps	taken	in our	Chapter	11	restructuring.

In	2012,	we	realized	operating	income	of	$148	million	and	a	net	loss	of	$1.9	billion.	Excluding	the	effects	of	net	special	items	we	recognized	a	net	loss	of	$130

# million.

In	2011,	we	realized	an	operating	loss	of	$1.0	billion	and	a	net	loss	of	$2.0	billion.	Excluding	the	effects	of	net	special	items	we	recognized	a	net	loss	of	$1.1 billion.	We	filed	for	Chapter	11	on	November	29,	2011.

The	following	table	presents	our	2013	standalone	Operating	income	(loss),	Net	loss,	net	special	charges	and	net	income	excluding	special	charges:

|  | 2013 | Less	23	days<br>US	Airways<br>Group | Stand	Alone<br>2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Operating\tincome\t(loss) | \t $1,399 | \t $(177) | \t $1,576 | \t $148 | \t $(1,037) |
| Net\tloss | (1,834) | (196) | (1,638) | (1,876) | (1,979) |
| Net\tspecial\tcharges | 3,078 | 277 | 2,801 | 1,746 | 917 |
| Net\tincome\t(loss)\texcluding\tspecial\tcharges | \t $1,244 | \t $81 | \t $1,163 | \t $(130) | \t $(1,062) |

(1) To	conform	to	current	year	presentation,	certain	operating	revenue	and	expenses	in	prior	years	have	been	reclassified.	As	a	result,	prior	year	amounts	may	not	agree to	the	amounts	previously	reported.	See	Note	5	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	for	additional	information.

The	components	of	our	net	special	charges,	excluding	the	results	of	US	Airways	Group	for	the	23	day	post-merger	period,	are	as	follows	(in	millions):

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Mainline\toperating\tspecial\titems,\tnet\t1 | $251 | $386 | $799 |
| Regional\toperating\tspecial\titems,\tnet | 8 | 1 | — |
| Nonoperating\tspecial\titems,\tnet\t2 | 211 | (280) | — |
| Reorganization\titems,\tnet | 2,655 | 2,208 | 118 |
| Income\ttax\tspecial\titems,\tnet\t3 | (324) | (569) | — |
| Total | $2,801 | $1,746 | $917 |

(1) In	2013,	special	charges	consisted	primarily	of	a	$107	million	charge	related	to	the	American's	pilot	long-term	disability	obligation,	$58	million	in	severance	and professional	fees,	$56	million	related	to	employee	awards	granted	in	connection	with	the	Merger,	a	$43	million	charge	for	workers'	compensation	claims,	and	a	$33 million	impairment	charge	associated	with	certain	Boeing	757	aircraft	held	for	sale.	These	charges	were	offset	in	part	by	a	$67	million	gain	on	the	sale	of	slots	at LaGuardia	Airport	as	a	result	of	the	settlement	reached	with	the	DOJ	and	a	$31	million	credit	resulting	from	the	modification	of	American's	AAdvantage	miles agreement	with	Citibank.

In	2011,	special	charges	consisted	primarily	of	$725	million	related	to	the	impairment	of	certain	aircraft	and	gates,	$31	million	of	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.

(2) In	2013,	special	charges	consisted	of	interest	charges	of	$157	million	to	recognize	post-petition	interest	expense	on	unsecured	obligations	pursuant	to	the	Plan,	a	$54 million	charge	related	to	the	premium	on	tender	for	existing	secured	notes	and	EETC	financings	and	the	write-off	of	debt	issuance	costs	and	$19	million	in	charges related	to	the	repayment	of	existing	secured	notes	and	EETC	financings.

(3) In	2013	and	2012,	special	charges	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.

# Operating	Statistics

The	table	below	sets	forth	selected	mainline	and	regional	operating	data	for	the	years	ended	December	31,	2013,	2012	and	2011.	The	2013	operating	data	does not	include	the	results	of	US	Airways	Group	for	the	23	day	post-merger	period	from	December	9,	2013	to	December	31,	2013.

|  | 2013 | Year	Ended	December	31,<br>2012 | 2011 | Increase	(Decrease)<br>2013-2012 | Increase	(Decrease)<br>2012-2011 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Mainline |  |  |  |  |  |
| Revenue\tpassenger\tmiles\t(millions)\t(a) | 128,413 | 126,406 | 126,491 | 1.6\t% | (0.1)% |
| Available\tseat\tmiles\t(millions)\t(b) | 154,499 | 152,628 | 154,321 | 1.2\t% | (1.1)% |
| Passenger\tload\tfactor\t(c) | 83.1% | 82.8% | 82.0% | 0.3\tpts | 0.9\tpts |
| Yield\t(cents)\t(d) | 15.26 | 14.83 | 14.19 | 2.9\t% | 4.5\t% |
| Passenger\trevenue\tper\tavailable\tseat\tmile\t(cents)\t(e) | 12.68 | 12.28 | 11.63 | 3.3\t% | 5.6\t% |
| Operating\texpenses\tper\tavailable\tseat\tmile\t(cents)\t(f) | 13.67 | 14.20 | 14.26 | (3.7)% | (0.4)% |
| Passenger\tenplanements\t(thousands)\t(g) | 87,002 | 86,465 | 86,042 | 0.6\t% | 0.3\t% |
| Departures\t(thousands) | 681 | 664 | 671 | 2.7\t% | (1.1)% |
| Block\thours\t(thousands)\t(h) | 2,207 | 2,141 | 2,150 | 3.1\t% | (0.4)% |
| Average\tstage\tlength\t(miles)\t(i) | 1,310 | 1,304 | 1,429 | 0.5\t% | (8.7)% |
| Fuel\tconsumption\t(gallons,\tin\tmillions) | 2,464 | 2,410 | 2,445 | 2.3\t% | (1.5)% |
| Average\taircraft\tfuel\tprice\tincluding\trelated\ttaxes\t(per\tgallon) | $3.10 | $3.20 | $3.01 | (3.2)% | 6.3\t% |
| Operating\taircraft\tat\tend\tof\tperiod | 627 | 614 | 608 | 2.1\t% | 1.0\t% |
| Full-time\tequivalent\temployees\tat\tend\tof\tperiod | 59,550 | 64,550 | 66,975 | (7.7)% | (2.9)% |
| Regional\t(j) |  |  |  |  |  |
| Revenue\tpassenger\tmiles\t(millions)\t(a) | 10,465 | 10,214 | 9,895 | 2.5\t% | 3.2\t% |
| Available\tseat\tmiles\t(millions)\t(b) | 13,841 | 13,595 | 13,507 | 1.8\t% | 0.7\t% |
| Passenger\tload\tfactor\t(c) | 75.6% | 75.1% | 73.3% | 0.5\tpts | 1.9\tpts |
| Yield\t(cents)\t(d) | 27.97 | 28.53 | 27.53 | (1.9)% | 3.6\t% |
| Passenger\trevenue\tper\tavailable\tseat\tmile\t(cents)\t(e) | 21.15 | 21.43 | 20.19 | (1.3)% | 6.1\t% |
| Operating\tcost\tper\tavailable\tseat\tmile\t(cents)\t(f) | 22.48 | 22.27 | 22.61 | 1.0\t% | (1.5)% |
| Passenger\tenplanements\t(thousands)\t(g) | 21,734 | 21,488 | 21,237 | 1.1\t% | 1.2\t% |
| Operating\taircraft\tat\tend\tof\tperiod | 281 | 292 | 314 | (3.8)% | (7.0)% |
| Fuel\tconsumption\t(gallons,\tin\tmillions) | 342 | 313 | 311 | 9.1\t% | 0.6\t% |
| Average\taircraft\tfuel\tprice\tincluding\trelated\ttaxes\t(per\tgallon) | $3.09 | $3.23 | $3.04 | (4.4)% | 6.3\t% |
| Total\tMainline\tand\tRegional |  |  |  |  |  |
| Revenue\tpassenger\tmiles\t(millions)\t(a) | 138,878 | 136,620 | 136,386 | 1.7\t% | 0.2\t% |
| Available\tseat\tmiles\t(millions)\t(b) | 168,340 | 166,223 | 167,828 | 1.3\t% | (1.0)% |
| Cargo\tton\tmiles\t(millions)\t(k) | 1,828 | 1,761 | 1,783 | 3.8\t% | (1.2)% |
| Passenger\tload\tfactor\t(c) | 82.5% | 82.2% | 81.3% | 0.3\tpts | 0.9\tpts |
| Yield\t(cents)\t(d) | 16.22 | 15.85 | 15.16 | 2.3\t% | 4.6\t% |
| Passenger\trevenue\tper\tavailable\tseat\tmile\t(cents)\t(e) | 13.38 | 13.03 | 12.32 | 2.7\t% | 5.8\t% |
| Total\trevenue\tper\tavailable\tseat\tmile\t(cents)\t(l) | 15.33 | 14.95 | 14.29 | 2.5\t% | 4.7\t% |
| Cargo\trevenue\tyield\tper\tton\tmile\t(cents)\t(m) | 36.95 | 38.33 | 39.75 | (3.6)% | (3.6)% |
| Passenger\tenplanements\t(thousands)\t(g) | 108,736 | 107,953 | 107,232 | 0.7\t% | 0.5\t% |
| Operating\taircraft\tat\tend\tof\tperiod | 908 | 906 | 922 | 0.2\t% | (1.7)% |
| Fuel\tconsumption\t(gallons,\tin\tmillions) | 2,806 | 2,723 | 2,756 | 3.1\t% | 0.2\t% |
| Average\taircraft\tfuel\tprice\tincluding\trelated\ttaxes\t(per\tgallon) | $3.09 | $3.20 | $3.01 | (3.3)% | 6.3\t% |
| (a) |  |  |  |  |  |

(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	AMR	Eagle,	as	well	as	operating	and	financial	results	from	American's	capacity	purchase	agreements	with	Chautauqua,	ExpressJet,	Republic	and SkyWest.

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

(l) Total	revenue	per	available	seat	mile	(RASM)	—	Total	revenues	divided	by	total	mainline	and	regional	ASMs.

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

# Operating	Revenues

|  | 2013 | 2012 | $	Change | $	Change<br>Due	to<br>Merger | Change	Excluding<br>Merger	Impact<br>$% | Change	Excluding<br>Merger	Impact<br>$% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) |  |  |
| Mainline\tpassenger | \t $20,218 | \t $18,743 | \t $1,475 | \t $624 | \t $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 | \t $26,743 | \t $24,855 | \t $1,887 | \t $931 | \t $957 | 3.8 |

The	following	discussion	of	operating	revenues	is	for	AAG	on	a	standalone	basis	and	excludes	the	results	of	US	Airways	Group	for	the	post-merger	period	from December	9,	2013	to	December	31,	2013	in	order	to	make	the	year-over-year	comparison	more	meaningful.

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:

•Regional	passenger	revenues	were	$2.9	billion	which	was	relatively	flat	as	compared	to	2012.	Regional	RPMs	increased	2.5%,	as	regional	capacity,	as	measured	by ASMs,	increased	1.8%	resulting	in	a	0.5	point	increase	in	load	factor.	Regional	passenger	yield	decreased	1.9%	to	27.97	cents	in	2013	from	28.53	cents	 in	2012. Regional	PRASM	decreased	1.3%	to	21.15	cents	in	2013	from	21.43	cents	in	2012.

•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	the	Company's	AAdvantage	miles agreement	with	Citibank.

We	derived	approximately	60%	of	our	total	passenger	revenues	from	domestic	operations	and	approximately	40%	from	international	operations	(flights	serving international	destinations).	Additional	information	regarding	our	domestic	and	international	PRASM	and	capacity,	excluding	the	impact	of	the	Merger,	is	presented below:

PRASM

(cents)

Change

|  | 2013 | 2012 | $	Change | $	Change	Due<br>to	Merger | Change	Excluding	Merger	Impact<br>$% | Change	Excluding	Merger	Impact<br>$% |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | (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\toperating\texpenses | $3,326 | $3,028 | $298 | $214 | $84 | 2.8 |
| Total\toperating\texpenses | $25,344 | $24,707 | $637 | $1,108 | $(471) | (1.9) |

The	following	discussion	of	operating	expenses	and	mainline	operating	expenses	per	ASM	is	for	AAG	on	a	standalone	basis	and	excludes	the	results	of	US Airways	Group	for	the	post-merger	period	from	December	9,	2013	to	December	31,	2013	in	order	to	make	the	year-over-year	comparison	more	meaningful.

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%.	 The	decrease	in	operating expenses	was	primarily	driven	by	a	$941	million,	 or	15.1%	decrease	in	salaries,	wages	and	benefits	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.	This	decrease	was	offset	in	part	by	a	$190 million,	or	34.4%	increase	in	aircraft	rent	as	a	result	of	new	aircraft	deliveries	in	2013	as	we	continue	our	fleet	renewal	program,	a	$69	million,	 or	6.5%	increase	in selling	expenses	due	to	higher	passenger	revenues	and	other	operating	expenses,	which	increased	$225	million,	or	8.4%,	primarily	due	to	higher	costs	associated	with outsourced	services	and	enhanced	customer	product	offerings.	See	detailed	explanations	below	relating	to	other	changes	in	operating	expenses.

# Mainline	Operating	Expenses	per	ASM:

The	table	below	sets	forth	the	major	components	of	our	total	mainline	CASM	and	our	mainline	CASM	excluding	special	items,	fuel	and	profit	sharing	for	the years	ended	December	31,	2013	and	2012:

| Aircraft	fuel	and	related	taxes | 4.94 | 5.05 | (2.2) |
| :--- | :--- | :--- | :--- |
| Salaries,\twages\tand\tbenefits | 3.41 | 4.07 | (16.2) |
| Maintenance,\tmaterials\tand\trepairs | 0.79 | 0.76 | 3.9 |
| Other\trent\tand\tlanding\tfees | 0.72 | 0.71 | 1.4 |
| Aircraft\trent | 0.48 | 0.36 | 33.3 |
| Selling\texpenses | 0.73 | 0.69 | 5.8 |
| Depreciation\tand\tamortization | 0.54 | 0.55 | (1.8) |
| Special\titems,\tnet | 0.18 | 0.25 | nm |
| Other | 1.88 | 1.75 | 7.4 |
| Total\tmainline\tCASM | 13.67 | 14.20 | (3.7) |
| Less:\tSpecial\titems,\tnet | (0.18) | (0.25) |  |
| Less:\tAircraft\tfuel\tand\trelated\ttaxes | (4.94) | (5.05) |  |
| Less:\tProfit\tsharing | (0.05) | — |  |
| Total\tmainline\tCASM\texcluding\tspecial\titems,\tfuel\tand\tprofit\tsharing\t1 | 8.50 | 8.90 | (4.5) |

Significant	changes	in	the	components	of	mainline	operating	expense	per	ASM	are	as	follows:

•Aircraft	fuel	and	related	taxes	per	ASM	decreased	2.2%	primarily	due	to	a	3.2%	decrease	in	the	average	price	per	gallon	of	fuel,	net	of	the	effects	of	hedging, to	$3.10	in	2013	from	$3.20	in	2012,	which	was	offset	in	part	by	an	increase	in	gallons	consumed.

•Salaries,	wages	and	benefits	per	ASM	decreased	16.2%	primarily	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	 per	ASM	increased	33.3%	as	a	result	of	new	aircraft	deliveries in	2013	as	we	continue	our	fleet	renewal program.

•Selling	 expenses	 per	ASM	increased	5.8%	as	a	result	of	higher	commissions	and	credit	card	fees	related to the increase in	passenger revenues.

•Other	 operating	 expenses	 per	ASM	increased	7.4%	 due to increases in	 outsourced	 services,	 costs	 associated	 with	 enhanced	 customer	 product offerings.

# Regional	Operating	Expenses:

Total	regional	expenses	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	costs	on	a	1.8%	increase	in	capacity.	The	increase	in	fuel	costs	was	driven	by higher	fuel	consumption	due	to	the	transition	from	turboprop	to	regional	jet	aircraft.

# Nonoperating	Income	(Expense)

|  |  |  |  | $	Change | Change	Excluding | Change	Excluding |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2013 | 2012 | $\tChange | Due\tto\nMerger | Merger\tImpact\n$% | Merger\tImpact\n$% |
|  |  |  | (In\tmillions,\texcept\tpercentage\tchanges) | (In\tmillions,\texcept\tpercentage\tchanges) |  |  |
| Interest\tincome | \t $20 | \t $26 | \t $(6) | \t $— \t $ | (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 | \t $(924) | \t $(385) | \t $(539) | \t $(19) | \t $(520) | nm |

The	following	discussion	of	interest	expense	is	for	AAG	on	a	standalone	basis	and	excludes	the	results	of	US	Airways	Group	for	the	post-merger	period	from December	9,	2013	to	December	31,	2013	in	order	to	make	the	year-over-year	comparison	more	meaningful.

				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 $157	million	to	recognize	post-petition	interest	expense	on	unsecured	obligations	pursuant	to	the	Plan.

Other	nonoperating	expense,	net	of	$89	million	in	2013	consists	principally	of	net	foreign	currency	losses	of	$56	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,	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,	which	were	filed	in	November	of	2011.	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):

|  | 2013 | 2012 |
| :--- | :--- | :--- |
| Pension\tand\tpostretirement\tbenefits | $— | $(66) |
| Labor-related\tclaim\t1 | 1,733 | — |
| Aircraft\tand\tfacility\tfinancing\trenegotiations\tand\trejections\t2,\t3 | 325 | 1,950 |
| Fair\tvalue\tof\tconversion\tdiscount\t4 | 218 | — |
| Professional\tfees | 199 | 229 |
| Other | 180 | 95 |
| Total\treorganization\titems,\tnet | $2,655 | $2,208 |

(1) 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	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	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,	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	JFK	and	rejected	bonds that	financed	certain	improvements	at	ORD,	which	are	included	in	the	table	above.

(4) The	Plan	allows	unsecured	creditors	receiving	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.

# Income	Tax	Benefit

During	2013,	the	Company	generated	a	pre-tax	loss	of	approximately	$2.2	billion	and	other	comprehensive	income	before	tax	of	approximately	$1.5	billion.	In accordance	with	accounting	standards,	the	Company	must	record	a	net	zero	tax	provision	which	is	required	to	be	allocated	between	operating	loss	and	Accumulated other	comprehensive	income.	Application	of	this	guidance	required	the	recognition	of	a	non-cash	income	tax	benefit	of	$538	million	in	operating	results,	offset	by	a $538	million	charge	to	other	comprehensive	income	for	the	year.	See	Note	11	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	for	additional	information regarding	the	allocation	of	income	tax	benefit	to	Operating	income	and	Accumulated	other	comprehensive	income.	The	Company	recorded	a	similar	non-cash	income tax	benefit	of	$569	million	in	operating	results	in	2012,	offset	by	a	$569	million	charge	to	other	comprehensive	income	for	the	year,	as	discussed	in	Note	11	to	AAG's Consolidated	Financial	Statements	in	Part	II,	Item	8A.

The	Company	has	evaluated	the	realization	of	its	deferred	tax	assets	in	accordance	with	the	principles	provided	in	ASC	740.	In	connection	with	AMR's	fourth quarter	2013	emergence	from	bankruptcy	and	related	accounting	for	the	acquisition	of	US	Airways,	the	Company	determined	that	an	additional	valuation	allowance	of approximately	$214	million	 is	required	 to	reduce	 the	Company's	deferred	 tax	assets	 to	 the	amount	 that	 the	Company	believes	 to	be	more	 likely	 than	not	 to	be realized.	This	$214	million	results	in	a	charge	to	tax	expense	in	continuing	operations	for	the	period.	The	Company's	assessment	of	the	realization	of	its	deferred	tax assets	is	based	primarily	on	the	future	reversal	of	its	existing	taxable	temporary	differences.	The	Company	is	not	relying	on	projections	of	future	income	for	the realization	of	deferred	tax	assets.	See	Note	11	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	for	additional	information	regarding	deferred	taxes.

The	Company	has	also	recorded	an	income	tax	expense	credit	of	approximately	$22	million	in	2013	resulting	from	the	Company's	anticipated	election	under Section	3081	of	the	Housing	and	Economic	Recovery	Act	of	2008	(as	extended	by	the	American	Taxpayer	Relief	Act	of	2012),	allowing	corporations	a	refund	of	certain research	and	alternative	minimum	tax	(AMT)	credit	carryforwards	in	lieu	of	applicable	bonus	depreciation	on	certain	qualifying	capital	investments.

|  | 2012 | 2011 | Percent<br>Increase<br>(Decrease) |
| :--- | :--- | :--- | :--- |
|  | (In\tmillions) |  |  |
| Mainline\tpassenger | \t $18,743 | $17,947 | 4.4 |
| Regional\tpassenger | 2,914 | 2,724 | 7.0 |
| Cargo | 675 | 709 | (4.8) |
| Other | 2,523 | 2,599 | (2.9) |
| Total\toperating\trevenues | \t $24,855 — $ | 23,979 | 3.7 |

Total	operating	revenues	in	2012	were	$24.9	billion	as	compared	to	$24.0	billion	in	2011,	an	increase	of	$876	million	or	3.7%,	driven	by	the	strong	revenue demand	environment.	Significant	changes	in	the	components	of	operating	revenues	are	as	follows:

•Mainline	passenger	revenues	increased	4.4%	to	$18.7	billion	in	2012	as	compared	to	$17.9	billion	in	2011.	The	benefits	of	the	strong	demand	environment	were offset	in	part	by	labor	related	operational	disruptions	and	disruptions	associated	with	Hurricane	Sandy	and	the	early	November	snowstorm	in	the	Northeast	United States,	which	had	an	estimated	impact	on	the	Company's	2012	passenger	revenues	of	$120	million	and	$65	million,	respectively.	Mainline	RPMs	decreased	0.1%,	as mainline	capacity,	as	measured	by	ASMs,	decreased	1.1%	resulting	in	a	0.9	point	increase	in	load	factor	to	82.8%.	Mainline	passenger	yield	increased	4.5%	to	14.83 cents	in	2012	from	14.19	cents	in	2011.	Mainline	PRASM	increased	5.6%	to	12.28	cents	in	2012	from	11.63	cents	in	2011.

•Cargo	revenues	were	$675	million in	2012,	a	decrease	 of	$34	million,	 or	4.8%,	primarily	as	a	result	of	decreased	freight	and	mail	traffic	and yields.

•Other	revenues	were	$2.5	billion	in	2012,	a	decrease	of	$76	million,	or	2.9%,	primarily	due	to	decreased	revenue	associated	with	the	sale	of	mileage	credits	in	the AAdvantage	frequent	flyer	program	and	decreases	in	certain	passenger	service	charge	volumes	and	fees.

We	 derived	 approximately	60%	 of	 passenger	 revenues	 from	 domestic	 operations	 and	 approximately	40%	 from international	 operations (flights	 serving international	destinations).	Additional	information	regarding	our	domestic	and	international	RASM	and	capacity	is	presented	below:

Total	operating	expenses	 in	2012	 were	$24.7	billion	as	compared	 to	$25.0	billion	 in	2011,	a	decrease	 of	$309	million	 or	1.2%.	 The	decrease	in	operating expenses	was	primarily	driven	by	a	$370	million	or	48.9%	decrease	in	special	items,	net.	In	2011,	we	incurred	a	$725	million	charge	related	to	the	impairment	of	certain aircraft	and	gates.	See	Note	6	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	for	more	information	relating	to	special	items.	See	detailed	explanations below	relating	to	other	changes	in	operating	expenses.

| Aircraft	fuel	and	related	taxes | 5.05 | 4.77 | 5.9 |
| :--- | :--- | :--- | :--- |
| Salaries,\twages\tand\tbenefits | 4.07 | 4.12 | (1.2) |
| Maintenance,\tmaterials\tand\trepairs | 0.76 | 0.67 | 13.4 |
| Other\trent\tand\tlanding\tfees | 0.71 | 0.77 | (7.8) |
| Aircraft\trent | 0.36 | 0.42 | (14.3) |
| Selling\texpenses | 0.69 | 0.71 | (2.8) |
| Depreciation\tand\tamortization | 0.55 | 0.59 | (6.8) |
| Special\titems,\tnet | 0.25 | 0.49 | (49.0) |
| Other | 1.75 | 1.71 | 2.3 |
| Total\tmainline\tCASM | 14.20 | 14.25 | (0.4) |
| Less:\tSpecial\titems,\tnet | (0.25) | (0.49) |  |
| Less:\tAircraft\tfuel\tand\trelated\ttaxes | (5.05) | (4.77) |  |
| Total\tmainline\tCASM\texcluding\tspecial\titems,\tfuel\tand\tprofit\tsharing\t1 | 8.90 | 8.99 | (1.0) |

•Aircraft	fuel	and	related	taxes	per	ASM	increased	5.9%	primarily	due	to	a	6.3%	increase	in	the	average	price	per	gallon	of	fuel,	net	of	the	effects	of hedging,	to	$3.20	in	2012	from	$3.01	in	2011.

•Maintenance,	 materials and repairs	 per	 ASM	increased	13.4%	 primarily	 due to the timing	 of	 materials	 and repairs expenses.

•Other	rent	and	landing	fees	per	ASM	decreased	7.8%	primarily	due	to	the	rejection	of	bonds	in	connection	with	the	Company's	Chapter	11	Cases	as described	in	Note	2	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A.

•Aircraft	rent	per	ASM	decreased	14.3%	primarily	as	a	result	of	the	Company's	Chapter	11	Cases	as	described	in	Note	2	to	AAG's	Consolidated	Financial Statements	in	Part	II,	Item	8A.

•Depreciation	and	amortization	per	ASM	decreased	6.8%	as	a	result	of	certain	aircraft	impairment	and	obsolescence	adjustments	recorded	in 2011.

Total	regional	expenses	of	$3.0	billion	were	relatively	flat	and	only	increased	$19	million,	or	0.6%	as	compared	to	2011.

|  | 2012 | 2011 | Percent<br>Increase<br>(Decrease) |
| :--- | :--- | :--- | :--- |
|  | (In\tmillions) |  |  |
| Interest\tincome | \t $26 | \t $26 | (1.7) |
| Interest\texpense,\tnet\tof\tcapitalized\tinterest | (632) | (811) | (22.1) |
| Other,\tnet | 221 | (39) | nm |
| Total\tnonoperating\texpense,\tnet | \t $(385) | \t $(824) | (53.2) |

Interest	expense,	net	of	capitalized	interest	decreased	$179	million,	or	22.1%	to	$632	million	in	2012	from	$811	million	in	2011	primarily	as	a	result	of	the Company's	Chapter	11	Cases	as	described	in	Note	2	in	Part	II,	Item	8A.

Other	nonoperating	expense,	net	of	$221	million	in	2012	consists	principally	of	a	$280	million	special	credit	related	to	the	settlement	of	a	commercial	dispute, which	was	offset	in	part	by	foreign	currency	losses	of	$41	million.

|  | 2012 | 2011 |
| :--- | :--- | :--- |
| Pension\tand\tpostretirement\tbenefits | $(66) | $— |
| Aircraft\tand\tfacility\tfinancing\trenegotiations\tand\trejections\t1 | 1,950 | 102 |
| Professional\tfees | 229 | 14 |
| Other | 95 | 2 |
| Total\treorganization\titems,\tnet | $2,208 | $118 |

During	2012,	the	Company	generated	a	pre-tax	loss	of	approximately	$2.4	billion	and	other	comprehensive	income	before	tax	of	approximately	$1.6	billion.	In accordance	with	accounting	standards,	the	Company's	net	zero	tax	provision	is	required	to	be	allocated	between	operating	loss	and	accumulated	other	comprehensive income.	Application	of	this	guidance	required	the	recognition	of	a	non-cash	income	tax	benefit	of	$569	million	in	operating	results,	offset	by	a	$569	million	charge	to other	comprehensive	 income	for	 the	year.	See	Note	11	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	for	additional	information	regarding	the allocation	of	 income	 tax	benefit	 to	Operating	 income	and	Accumulated	other	comprehensive	 income.	The	Company	did	not	record	a	net	 tax	provision	(benefit) associated	with	its	net	loss	for	2011	due	to	the	Company	providing	a	valuation	allowance,	as	discussed	in	Note	11	to	AAG's	Consolidated	Financial	Statements	in	Part II,	Item	8A.

# American's	Results	of	Operations

In	2013,	American	recognized	operating	income	of	$1.5	billion,	which	compares	to	operating	income	of	$82	million	 in	2012	and	constitutes	a	$1.5	billion improvement	that	was	driven	by	growth	in	operating	revenues	resulting	from	strong	demand	for	air	travel.	American's	net	loss	was	$1.5	billion	in	2013	which	compares to	a	net	loss	 of	$1.9	billion	 in	2012.	American's	net	loss	was	impacted	by	the	recognition	of	net	special	charges	of	$2.8	billion	 and	$1.7	billion	 in	2013	 and	2012, respectively.	To	conform	to	current	year	presentation,	certain	operating	revenues	and	expenses	in	prior	years	have	been	reclassified.	As	a	result,	prior	year	amounts	may not	agree	to	the	amounts	previously	reported.	See	Note	4	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for	additional	information.

In	2011,	American	realized	an	operating	loss	of	$1.2	billion	and	a	net	loss	of	$2.0	billion.	American's	2011	net	loss	was	impacted	by	the	recognition	of	$915 million	in	net	special	charges.

The	table	below	presents	American's	net	special	charges	(in	millions):

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Mainline\toperating\tspecial\titems,\tnet\t1 | $251 | $386 | $799 |
| Nonoperating\tspecial\titems,\tnet\t2 | 222 | (280) | — |
| Reorganization\titems,\tnet | 2,640 | 2,179 | 116 |
| Income\ttax\tspecial\titems,\tnet\t3 | (324) | (569) | — |
| Total | $2,789 | $1,716 | $915 |

(1) In	2013,	special	charges	consisted	primarily	of	a	$107	million	charge	related	to	American's	pilot	long-term	disability	obligation,	$47	million	in	severance	and professional	fees,	$56	million	related	to	employee	awards	granted	in	connection	with	the	Merger,	a	$43	million	charge	for	workers'	compensation	claims,	and	a	$33 million	impairment	charge	associated	with	certain	Boeing	757	aircraft	held	for	sale.	These	charges	were	offset	in	part	by	a	$67	million	gain	on	the	sale	of	slots	at LaGuardia	Airport	as	a	result	of	 the	settlement	reached	with	 the	DOJ	and	a	$31	million	credit	related	to	a	change	in	accounting	method	resulting	from	the modification	of	American's	AAdvantage	miles	agreement	with	Citibank.

In	2011,	special	charges	and	other	items	consisted	primarily	of	$725	million	related	to	the	impairment	of	certain	aircraft	and	gates,	$31	million	of	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.

(2) In	2013,	special	charges	consisted	of	interest	charges	of	$68	million	to	recognize	post-petition	interest	expense	on	unsecured	obligations	pursuant	to	the	Plan,	a	$54 million	charge	related	to	the	premium	on	tender	for	existing	EETC	financings	and	the	write-off	of	debt	issuance	costs	and	$19	million	in	charges	related	to	the repayment	of	existing	EETC	financings.

(3) In	2013	and	2012,	special	charges	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	the	Company	believes	is	more	likely	than	not	to	be	realized.

|  | 2013 | 2012 | Percent<br>Increase<br>(Decrease) |
| :--- | :--- | :--- | :--- |
|  | (In\tmillions) | (In\tmillions) |  |
| Mainline\tpassenger | \t $19,594 | \t $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 | \t $25,760 | \t $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.

American	derived	approximately	60%	of	its	total	passenger	revenues	from	domestic	operations	and	approximately	40%	from	international	operations	(flights serving	international	destinations).	Additional	information	regarding	American's	domestic	and	international	PRASM	and	capacity	is	presented	below:

|  |  | Year	ended	December	31,	2013 | Year	ended	December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | PRASM\n(cents) | Y-O-Y\nChange | ASMs\n(billions) | Y-O-Y\nChange |
| DOT\tDomestic | 12.55 | 3.1\t% | 89.3 | (0.6)% |
| International | 12.86 | 3.5 | 65.2 | 3.9 |
| DOT\tLatin\tAmerica | 14.16 | 2.0 | 33.5 | 7.0 |
| DOT\tAtlantic | 12.23 | 9.4 | 22.1 | (0.8) |
| DOT\tPacific | 9.76 | (6.6) | 9.6 | 5.1 |

# Operating	Expenses

|  | 2013 | 2012 | Percent	Increase<br>(Decrease) |
| :--- | :--- | :--- | :--- |
|  | (In\tmillions) | (In\tmillions) |  |
| 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 | $3,074 | $3,049 | 0.8 |
| Total\toperating\texpenses | $24,226 | $24,743 | (2.1) |

Total	operating	expenses	 in	2013	 were	$24.2	billion	as	compared	 to	$24.7	billion	 in	2012,	a	decrease	 of	$517	million	 or	2.1%.	 The	decrease	in	operating expenses	was	primarily	driven	by	a	$941	million,	 or	15.2%	decrease	in	salaries,	wages	and	benefits	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.	This	decrease	was	offset	in	part	by	a	$189 million,	or	34.2%	increase	in	aircraft	rent	as	a	result	of	new	aircraft	deliveries	in	2013	as	American	continues	its	fleet	renewal	program,	a	$69	million,	or	6.5%	increase in	selling	expenses	due	to	higher	passenger	revenues	and	a	$239	million,	or	8.9%	increase	in	other	operating	expenses	primarily	due	to	higher	costs	associated	with outsourced	services	and	enhanced	customer	product	offerings.	See	detailed	explanations	below	relating	to	other	changes	in	operating	expenses.

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 $42	million,	or	4.2%,	increase	in	fuel	costs	driven	by	higher	fuel	consumption	due	to	the	transition	from	turboprop	to	regional	jet	aircraft,	partially	offset	by	a	decrease	in other	regional	expenses.

|  | 2013 | 2012 | Percent<br>Increase<br>(Decrease) |
| :--- | :--- | :--- | :--- |
|  | (In\tmillions) |  |  |
| Interest\tincome | \t $20 | \t $25 | (21.3) |
| Interest\texpense,\tnet\tof\tcapitalized\tinterest | (700) | (633) | 10.6 |
| Related\tparty\tinterest,\tnet | (10) | (13) | 24.4 |
| Other,\tnet | (84) | 223 | nm |
| Total\tnonoperating\texpense,\tnet | \t $(774) | \t $(398) | (94.2) |

Interest	expense,	net	of	capitalized	interest	increased	$67	million,	or	10.6%	to	$700	million	in	2013	from	$633	million	in	2012	primarily	due	to	special	charges of	$68	million	to	recognize	post-petition	interest	expense	on	unsecured	obligations	pursuant	to	the	Plan.

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,	which	were	filed	in	November	of	2011.	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\tclaim\t1 | 1,733 | — |
| Aircraft\tand\tfacility\tfinancing\trenegotiations\tand\trejections\t2,\t3 | 320 | 1,951 |
| Fair\tvalue\tof\tconversion\tdiscount\t4 | 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	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	allows	unsecured	creditors	receiving	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.

During	2013,	American	generated	a	pre-tax	loss	of	approximately	$1.9	billion	and	other	comprehensive	income	before	tax	of	approximately	$1.5	billion.	In accordance	with	accounting	standards,	American	must	record	a	net	zero	tax	provision	which	is	required	to	be	allocated	between	operating	loss	and	accumulated	other comprehensive	income.	Application	of	this	guidance	required	the	recognition	of	a	non-cash	income	tax	benefit	of	$538	million	in	operating	results,	offset	by	a	$538 million	charge	to	other	comprehensive	income	for	the	year.	See	Note	10	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for	additional	information regarding	the	allocation	of	income	tax	benefit	to	Operating	income	and	Accumulated	other	comprehensive	income.	American	recorded	a	similar	non-cash	income	tax benefit	of	$569	million	in	operating	results	for	2012,	offset	by	a	$569	million	charge	to	other	comprehensive	income	for	the	year,	as	discussed	in	Note	10	to	American's Consolidated	Financial	Statements	in	Part	II,	Item	8B.

American	has	evaluated	the	realization	of	its	deferred	tax	assets	in	accordance	with	the	principles	provided	in	ASC	740.	In	connection	with	AMR's	fourth quarter	emergence	2013	from	bankruptcy	and	related	accounting	for	the	acquisition	of	US	Airways,	American	determined	that	an	additional	valuation	allowance	of approximately	$214	million	is	required	to	reduce	its	deferred	tax	assets	to	the	amount	that	it	believes	to	be	more	likely	than	not	to	be	realized.	This	$214	million	results in	a	charge	to	tax	expense	in	continuing	operations	for	the	period.	American's	assessment	of	the	realization	of	its	deferred	tax	assets	is	based	primarily	on	the	future reversal	of	American's	existing	taxable	temporary	differences.	American	is	not	relying	on	projections	of

future	income	for	the	realization	of	deferred	tax	assets.	See	Note	10	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for	additional	information regarding	deferred	taxes.

American	has	also	recorded	an	income	tax	expense	credit	of	approximately	$30	million	in	2013	resulting	from	its	anticipated	election	under	Section	3081	of the	Housing	and	Economic	Recovery	Act	of	2008	(as	extended	by	the	American	Taxpayer	Relief	Act	of	2012),	allowing	corporations	a	refund	of	certain	research	and alternative	minimum	tax	(AMT)	credit	carryforwards	in	lieu	of	applicable	bonus	depreciation	on	certain	qualifying	capital	investments.

|  | 2012 | 2011 | Percent<br>Increase<br>(Decrease) |
| :--- | :--- | :--- | :--- |
|  | (In\tmillions) | (In\tmillions) |  |
| Mainline\tpassenger | \t $18,743 | \t $17,947 | 4.4 |
| Regional\tpassenger | 2,914 | 2,724 | 7.0 |
| Cargo | 675 | 709 | (4.8) |
| Other | 2,493 | 2,577 | (3.3) |
| Total\toperating\trevenues | \t $24,825 | \t $23,957 | 3.6 |

American	derived	approximately	60%	of	passenger	revenues	from	domestic	operations	and	approximately	40%	from	international	operations	(flights	serving international	destinations).	Additional	information	regarding	American's	domestic	and	international	RASM	and	capacity	is	presented	below:

|  |  | Year	ended	December	31,	2012 | Year	ended	December	31,	2012 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | PRASM\n(cents) | Y-O-Y\nChange | ASMs\n(billions) | Y-O-Y\nChange |
| DOT\tDomestic | 12.18 | 5.5% | 89.9 | (1.9)% |
| International | 12.42 | 5.7 | 62.7 | 0.1 |
| DOT\tLatin\tAmerica | 13.89 | 3.8 | 31.3 | 4.4 |
| DOT\tAtlantic | 11.17 | 5.9 | 22.3 | (6.6) |
| DOT\tPacific | 10.45 | 9.6 | 9.1 | 3.5 |

|  | 2012 | 2011 | Percentage<br>Change |
| :--- | :--- | :--- | :--- |
|  | (In\tmillions) |  |  |
| Aircraft\tfuel\tand\trelated\ttaxes | $7,705 | $7,358 | 4.7 |
| Salaries,\twages\tand\tbenefits | 6,208 | 6,353 | (2.3) |
| Maintenance,\tmaterials\tand\trepairs | 1,158 | 1,038 | 11.6 |
| Other\trent\tand\tlanding\tfees | 1,083 | 1,194 | (9.3) |
| Aircraft\trent | 554 | 645 | (14.2) |
| Selling\texpenses | 1,059 | 1,103 | (4.0) |
| Depreciation\tand\tamortization | 845 | 915 | (7.7) |
| Special\titems,\tnet | 386 | 756 | (48.9) |
| Other | 2,696 | 2,650 | 1.7 |
| Total\tmainline\toperating\texpenses | $21,694 | $22,012 | (1.4) |
| Regional\toperating\texpenses | $3,049 | $3,099 | (1.6) |
| Total\toperating\texpenses | $24,743 | $25,111 | (1.5) |

Total	operating	expenses	 in	2012	 were	$24.7	billion	as	compared	 to	$25.1	billion	 in	2011,	a	decrease	 of	$368	million	 or	1.5%.	 The	decrease	in	operating expenses	was	primarily	driven	by	a	$370	million	or	48.9%	decrease	in	special	items,	net.	In	2011,	American	incurred	a	$725	million	charge	related	to	the	impairment	of certain	aircraft	and	gates.	See	Note	5	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for	more	information	relating	to	special	items.	See	detailed explanations	below	relating	to	other	changes	in	operating	expenses.

|  | 2012 | 2011 | Percent<br>Increase<br>(Decrease) |
| :--- | :--- | :--- | :--- |
|  | (In\tmillions) | (In\tmillions) |  |
| Interest\tincome | \t $25 | \t $25 | (0.5)% |
| Interest\texpense,\tnet\tof\tcapitalized\tinterest | (633) | (672) | (5.8) |
| Related-party\tinterest,\tnet | (13) | (14) | (4.0) |
| Other,\tnet | 223 | (34) | nm |
| Total\tnonoperating\texpense,\tnet | \t $(398) | \t $(695) | (50.9) |

Interest	expense,	net	of	capitalized	interest	decreased	$39	million,	 or	5.8%	 to	$633	million	 in	2012	 from	$672	million in	2011	primarily	as	a	result	of	the Company's	Chapter	11	Cases	as	described	in	Note	2	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B.

Other	nonoperating	expense,	net	of	$223	million	in	2012	consisted	of	a	$280	million	special	credit	related	to	the	settlement	of	a	commercial	dispute,	which	was offset	in	part	by	foreign	currency	losses	of	$41	million.

|  | 2012 | 2011 |
| :--- | :--- | :--- |
| Pension\tand\tpostretirement\tbenefits | $(66) | $— |
| Aircraft\tand\tfacility\tfinancing\trenegotiations\tand\trejections\t1 | 1,951 | 102 |
| Professional\tfees | 227 | 14 |
| Other | 67 | — |
| Total\treorganization\titems,\tnet | $2,179 | $116 |

During	2012,	the	Company	generated	a	pre-tax	loss	of	approximately	$2.5	billion	and	other	comprehensive	income	before	tax	of	approximately	$1.6	billion.	In accordance	with	accounting	standards,	the	Company's	net	zero	tax	provision	is	required	to	be	allocated	between	operating	loss	and	accumulated	other	comprehensive income.	Application	of	this	guidance	required	the	recognition	of	a	non-cash	income	tax	benefit	of	$569	million	in	operating	results,	offset	by	a	$569	million	charge	to other	comprehensive	income	for	the	year.	See	Note	10	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for	additional	information	regarding	the allocation	of	 income	 tax	benefit	 to	Operating	 income	and	Accumulated	other	comprehensive	 income.	The	Company	did	not	record	a	net	 tax	provision	(benefit) associated	with	its	net	loss	for	2011	due	to	the	Company	providing	a	valuation	allowance,	as	discussed	in	Note	10	to	American's	Consolidated	Financial	Statements	in Part	II,	Item	8B.

# Liquidity	and	Capital	Resources

# Cash,	Short-Term	Investments	and	Restricted	Assets

As	of	December	31,	2013,	AAG's	total	cash,	short-term	investments	and	restricted	cash	and	short-term	investments	was	$10.3	billion,	of	which	$1.0	billion	was restricted.	This	 includes	American's	 total	cash	and	short-term	 investments	of	$6.7	billion	($702	million	 restricted)	 and	 US	Airways	 Group's	 cash	 and	 short-term investments	of	$3.6	billion	($333	million	restricted).	Additional	detail	is	provided	in	the	table	below	(in	millions):

|  | AAG | AAG | American | American |
| :--- | :--- | :--- | :--- | :--- |
|  | December\t31, | December\t31, | December\t31, | December\t31, |
|  | 2013 | 2012 | 2013 | 2012 |
| Cash | \t $1,140 | \t $480 | \t $829 | \t $474 |
| Short-term\tinvestments | 8,111 | 3,412 | 5,162 | 3,408 |
| Restricted\tcash\tand\tshort-term\tinvestments\t1 | 1,035 | 850 | 702 | 850 |
| Total\tcash,\tshort-term\tinvestments\tand\trestricted\tcash\tand\tshort-term\ninvestments | \t $10,286 | \t $4,742 | \t $6,693 | \t $4,732 |

As	of	December	31,	2013,	approximately	$783	million	of	American's	cash	and	short-term	investments	balances	were	held	in	foreign	bank	accounts,	of	which $710	million	is	held	as	Venezuela	bolivars.

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, 2013,	approximately	$710	million	of	our	unrestricted	cash	balance	was	held	as	Venezuelan	bolivars,	valued	at	a	weighted	average	rate	of	6.04	bolivars	to	the	dollar.	The period	of	time	to	exchange	those	funds	into	dollars	and	repatriate	them	has	been	increasing	and	is	presently	more	than	a	year.	On	January	23,	2014,	the	Venezuelan government	issued	a	regulation	to	implement	a	new	system	for	determining	the	exchange	rate	based	on	the	result	of	limited	periodic	sales	of	dollars	known	as	Sicad auctions	(currently	11.80	to	the	dollar	based	on	the	February	21,	2014	Sicad	auction)	for	repatriation	of	income	from	future	ticket	sales,	and	introduced	new	procedures for	approval	of	conversion	and	repatriation	of	local	currency.	The	government	also	enacted	a	new	law	effective	February	19,	2014	that	authorizes	additional	methods	of exchanging	Venezuelan	bolivars	at	rates	other	than	the	controlled	base	rate	of	6.3	to	the	dollar	or	the	existing	Sicad	auction	rate,	but	the	regulations	necessary	to implement	the	law	are	still	pending	and	it	is	not	clear	at	this	point	whether	or	how	the	new	methods	may	impact	the	pending	balances	of	Venezuelan	bolivars	held	by airlines.	We	are	working	with	Venezuelan	authorities	regarding	the	timing	and	exchange	rate	applicable	to	the	repatriation	of	funds	held	in	local	currency.	Further,	the current,	devalued	rates	may	have	an	ongoing	adverse	effect	on	our	reported	results	if	we	are	unable	to	fully	adjust	prices	on	flights	to	and	from	Venezuela,	of	which there	can	be	no	assurance.	More	generally,	fluctuations	in	foreign	currencies,	including	devaluations,	cannot	be	predicted	by	the	Company	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.	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	on	currency	risks.

Our	unrestricted	short-term	investment	portfolio	consists	of	a	variety	of	what	we	believe	are	highly	liquid,	lower	risk	instruments	including	money	market funds,	government	agency	investments,	repurchase	agreements,	short-term	obligations,	corporate	obligations,	bank	notes,	certificates	of	deposit	and	time	deposits.	Our objectives	for	our	investment	portfolio	are	(1)	the	safety	of	principal,	(2)	liquidity	maintenance,	(3)	yield	maximization	and	(4)	the	full	investment	of	all	available	funds. Our	risk	management	policy	further	emphasizes	superior	credit	quality	(primarily	based	on	short-term	ratings	by	nationally	recognized	statistical	rating	organizations)	in selecting	and	maintaining	investments	in	our	portfolio	and	enforce	limits	on	the	proportion	of	funds	invested	with	one	issuer,	one	industry	or	one	type	of	instrument.	We regularly	assess	the	market	risks	of	our	portfolio.

# Sources	and	Uses	of	Cash

# Operating	Activities

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.

# Investing	Activities

Net	cash	used	in	investing	activities	was	$3.8	billion	and	$1.6	billion	in	2013	and	2012,	respectively.

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.

# Financing	Activities

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.

Net	cash	provided	by	operating	activities	was	$1.3	billion	and	$743	million	in	2012	and	2011,	respectively,	a	year-over-year	improvement	of	$542	million.	This increase	was	primarily	the	result	of	a	stronger	revenue	environment	and	cost	savings	resulting	from	our	Chapter	11	Cases	as	described	in	Note	2	to	AAG's	Consolidated Financial	Statements	in	Part	II,	Item	8A.

Principal	investing	activities	in	2011	included	expenditures	of	$1.6	billion	for	property	and	equipment	and	new	aircraft,	consisting	primarily	of	the	purchase	of 15	Boeing	737	aircraft	and	certain	aircraft	modifications,	including	pre-delivery	deposits	for	aircraft	on	order	of	$630	million	 and	$288	million	from	an	increase	in restricted	cash	and	short-term	investments.	These	cash	outflows	were	partially	offset	by	proceeds	from	the	net	sales	of	short-term	investments	of	$610	million.

Net	cash	provided	by	financing	activities	was	$483	million	and	$664	million	in	2012	and	2011,	respectively.

Principal	financing	activities	in	2011	included	proceeds	of	$2.6	billion	related	to	the	issuance	of	debt	and	$703	million	related	to	sale-leaseback	transactions. These	proceeds	were	offset	by	payments	on	existing	debt	and	capital	leases	of	$2.5	billion.

# American

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.

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	$1.2	billion	and	$760	million	in	2012	and	2011,	respectively,	a	year-over-year	improvement	of	$394	million.	This increase	was	primarily	the	result	of	a	stronger	revenue	environment	and	cost	savings	resulting	from	our	Chapter	11	Cases	as	described	in	Note	2	to	AAG's	Consolidated Financial	Statements	in	Part	II,	Item	8B.

Principal	 investing	 activities	 in	2011	 included	 expenditures	 of	$1.4	 billion	 for	 new	 aircraft	 consisting	 of	15	 Boeing	 737	 aircraft	 and	 certain	 aircraft modifications,	including	pre-delivery	deposits	for	aircraft	on	order	of	$630	million	and	$288	million	from	an	increase	in	restricted	cash	and	short-term	investments. These	cash	outflows	were	offset	in	part	by	$608	million	in	proceeds	from	the	sale	of	short-term	investments.

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	by	payments	on	existing	debt	and	capital	leases	of	$1.3	billion.

Principal	financing	activities	in	2011	included	proceeds	of	$2.4	billion	related	to	the	issuance	of	debt	and	$703	million	related	to	sale-leaseback	transactions. These	proceeds	were	offset	by	payments	on	existing	debt	and	capital	leases	of	$2.2	billion	and	funds	transferred	from	affiliates	of	$311	million.

# Commitments

# Significant	Indebtedness

As	 of	December	31,	2013,	AAG	 and	American	 had	$16.8	billion	 and	$10.8	billion,	respectively, in long-term	debt	and	capital leases	(including	current maturities	and	before	debt	discount).	Our	significant	indebtedness	includes	the	following	agreements:

# Credit	Facilities	(American)

On	June	27,	2013,	American	and	AAG	entered	into	a	Credit	and	Guaranty	Agreement	(as	amended,	the	Credit	Agreement)	with	certain	lenders.	The	Credit Agreement	provides	for	a	$1.9	billion	term	loan	facility	(the	Term	Loan	Facility)	and	a	$1.0	billion	revolving	credit	facility	(the	Revolving	Facility	and,	together	with	the Term	Loan	Facility,	the	Credit	Facilities).	As	of	December	31,	2013,	American	had	borrowed	$1.9	billion	under	the	Term	Loan	Facility.	The	Credit	Facilities	are	secured obligations	of	American	and	guaranteed	by	AAG.	The	Revolving	Facility	provides	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.	As	of	December	31,	2013,	there	were	no	borrowings outstanding	under	the	Revolving	Facility.

Upon	consummation	of	the	Merger,	US	Airways	Group	and	US	Airways	joined	the	Credit	Facilities	as	guarantors.	Following	the	joinder,	certain	minimum dollar-thresholds	under	the	negative	and	financial	covenants	in	the	Credit	Facilities	were	automatically	increased.	The	Term	Loan	Facility	and	Revolving	Facility	mature on	June	27,	2019	and	June	27,	2018,	respectively,	unless	otherwise	extended	by	the	applicable	parties.	The	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	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	December	27,	2013.	Mandatory	prepayments	at	par	of	term	loans	and	revolving	loans	are	required	to	the	extent	necessary	to	comply	with	American's covenants	regarding	the	collateral	coverage	ratio	and	certain	dispositions	of	collateral.	In	addition,	if	a	"change	of	control"	(as	defined	in	the	Credit	Agreement)	occurs, American	will,	absent	an	amendment	or	waiver,	be	required	to	repay	at	par	the	loans	outstanding	under	the	Credit	Facilities	and	terminate	the	Revolving	Facility.

The	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	Term	Loan)	plus	an	applicable	LIBOR	margin.	The	applicable	LIBOR	margin	is	3.00%	for	borrowings	under	both	the	Term	Loan	Facility	and	the	Revolving Facility.	Subject	to	certain	limitations	and	exceptions,	the	Credit	Facilities	are	secured	by	certain	collateral,	including	liens	on	certain	route	authorities	to	operate between	certain	specified	cities,	certain	take-off	and	landing	rights	at	certain	airports	and	American	is	required	to	maintain	a	certain	minimum	ratio	of	appraised	value	of the	collateral	to	the	outstanding	loans	under	the	Credit	Facilities	as	more	fully	described	below	in	"Collateral	Related	Covenants".

The	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	Credit	Facilities	may	be	accelerated	and	become	due	and	payable	immediately.	The	Credit	Facilities	also include	covenants	that,	among	other	things,	require	AAG	to	maintain	a	minimum	aggregate	liquidity	(as	defined	in	the	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.

# Senior	Secured	Notes	(American)

In	March	2011,	American	issued	$1.0	billion	aggregate	principal	amount	of	senior	secured	notes	due	2016	(the	Senior	Secured	Notes)	guaranteed	on	an unsecured	basis	by	AAG.	In	connection	with	the	closing	of	the	Merger,	US	Airways	and	US	Airways	Group	entered	into	a	First	Supplemental	Indenture,	dated	as	of December	9,	2013,	pursuant	to	which	US	Airways	and	US	Airways	Group	became	guarantors.	The	Senior	Secured	Notes	bear	interest	at	a	rate	of	7.50%	per	annum, payable	semi-annually	on	March	15	and	September	15	of	each	year,	beginning	September	15,	2011.	As	is	customary	for	financings	of	this	nature,	the	indebtedness evidenced	by	the	Senior	Secured	Notes	may	be	accelerated	upon	the	occurrence	of	events	of	default	under	the	related	indenture.	Subject	to	certain	limitations	and exceptions,	the	Senior	Secured	Notes	are	secured	by	certain	route	authorities,	airport	landing	and	takeoff	slots,	and	rights	to	use	or	occupy	space	in	airport	terminals,	in each	case	that	American	uses	to	operate	non-stop	services	between	certain	airports	and	American	is	required	maintain	a	certain	minimum	ratio	of	appraised	value	of	the collateral	to	the	outstanding	amounts	under	the	Senior	Secured	Notes	as	more	fully	described	below	in	"Collateral	Related	Covenants."

American,	at	its	option,	may	redeem	some	or	all	of	the	Senior	Secured	Notes	at	any	time	on	or	after	March	15,	2013,	at	specified	redemption	prices,	plus accrued	and	unpaid	interest,	if	any.	In	addition,	at	any	time	prior	to	March	15,	2014,	American,	at	its	option,	may	redeem	(1)	up	to	35%	of	the	aggregate	principal amount	of	the	Senior	Secured	Notes	with	the	proceeds	of	certain	equity	offerings	at	a	redemption	price	of	107.5%	of	their	principal	amount,	plus	accrued	and	unpaid interest,	if	any,	and	(2)	during	any	12-month	period,	up	to	10%	of	the	original	aggregate	principal	amount	of	the	Senior	Secured	Notes	at	a	redemption	price	of	103%	of their	principal	amount,	plus	accrued	and	unpaid	interest,	if	any.	If	American	sells	certain	assets	or	if	a	"change	of	control"	(as	defined	in	the	indenture)	occurs,	American must	offer	to	repurchase	the	Senior	Secured	Notes	at	prices	specified	in	the	indenture.

The	indenture	for	the	Senior	Secured	Notes	includes	covenants	that,	among	other	things,	limit	the	ability	of	the	Company	and	its	subsidiaries	to	merge, consolidate,	sell	assets,	incur	additional	indebtedness,	issue	preferred	stock,	make	investments	and	pay	dividends.	The	indenture	for	the	Senior	Secured	Notes	also contains	events	of	default	customary	for	similar	financings,	including	cross-default	to	certain	material	indebtedness	of	American.	Upon	the	occurrence	of	certain	events of	default,	the	Senior	Secured	Notes	may	be	accelerated	and	become	due	and	payable.

# 2013	Citicorp	Credit	Facility	(US	Airways)

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.

The	2013	Citicorp	Credit	Facility	consists	of	$1.0	billion	of	tranche	B-1	term	loans	(Tranche	B-1)	and	$600	million	of	tranche	B-2	term	loans	(Tranche	B-2). Voluntary	prepayments	may	be	made	by	US	Airways	Group	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.	Mandatory	prepayments	of	the	term	loans	are	required	to	the	extent	necessary	to	comply	with	US	Airways	Group's	covenants regarding	the	collateral	coverage	ratio	and	certain	dispositions	of	collateral.	In	addition,	under	the	2013	Citicorp	Credit	Facility	agreement,	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.

As	of	the	date	of	this	filing,	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	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.

The	obligations	of	US	Airways	under	the	2013	Citicorp	Credit	Facility	are	secured	by	liens	on	certain	route	authorities,	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	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.	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.

See	Note	9	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	and	Note	8	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for further	information	on	all	indebtedness	as	of	December	31,	2013.

# Collateral	Related	Covenants

Certain	of	American's	and	US	Airways'	debt	financing	agreements	contain	loan	to	value	ratio	covenants	and	require	American	and	US	Airways	under	their respective	financing	agreements	to	periodically	appraise	the	collateral.	Pursuant	to	such	agreements,	if	the	loan	to	value	ratio	exceeds	a	specified	threshold,	American	or US	Airways	is	required,	as	applicable,	to	subject	additional	qualifying	collateral	(which	in	some	cases	may	include	cash	collateral),	or	pay	down	such	financing,	in whole	or	in	part,	with	premium	(if	any),	or	pay	additional	interest	on	the	related	indebtedness,	as	described	below.

Specifically,	American	is	required	to	meet	certain	collateral	coverage	tests	on	a	periodic	basis	on	two	financing	transactions:	(1)	the	Senior	Secured	Notes	and (2)	the	Credit	Facilities,	and	US	Airways	is	required	to	meet	a	collateral	coverage	test	on	a	periodic	basis	on	the	2013	Citicorp	Credit	Facility,	in	each	case,	as	described below:

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

As	of	December	31,	2013,	the	Company,	American	and	US	Airways	were	in	compliance	with	the	most	recently	completed	collateral	coverage	test	for	the	Senior Secured	Notes,	Credit	Facilities	and	the	2013	Citicorp	Credit	Facility,	as	applicable.

# Credit	Ratings

The	following	table	details	our	credit	ratings	as	of	December	31,	2013:

* The	 credit	 agency	 does	 not rate this	 category for the respective 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.	See	Note	9	to	AAG's	Consolidated	Financial	Statements	in	Part	II, Item	8A	and	Note	8	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for	further	information	on	all	indebtedness	as	of	December	31,	2013.

# Aircraft	and	Engine	Purchase	Commitments

We	have	definitive	purchase	agreements	with	Airbus,	Boeing	and	other	manufacturers	for	the	acquisition	of	an	aggregate	of	617	mainline	and	regional	aircraft. We	 also	 have	 agreements	 for	44	spare	engines	 to	be	delivered	 in	2014	and	beyond.	 Under	 all	 of	 our	 aircraft	 and	 engine	 purchase	 agreements,	 our	 total	 future commitments	as	of	December	31,	2013	are	expected	to	be	as	follows	(approximately,	in	millions):

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Payments\tfor\tAmerican\taircraft\ncommitments\tand\tcertain\tengines\t1 | \t $2,817 | \t $2,965 | \t $3,275 | \t $3,204 | \t $4,018 | \t $15,794 | \t $32,073 |
| Payments\tfor\tUS\tAirways\taircraft\ncommitments\tand\tcertain\tengines | \t $977 | \t $560 | \t $107 | \t $679 | \t $943 | \t $552 | \t $3,818 |

(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	American's	purchase	deposits	with	Boeing.	The	Company's	purchase	deposits	totaled	$1.1	billion	as	of	December	31,	2013.

We	do	not	have	financing	commitments	for	the	following	aircraft	currently	on	order	and	scheduled	to	be	delivered	through	2016:	sixteen	Airbus	320	family aircraft,	10	Boeing	777-300ER	aircraft	and	18	Boeing	787	aircraft.	In	addition,	we	do	not	have	financing	commitments	in	place	for	the	majority	of	aircraft	currently	on order	and	scheduled	to	be	delivered	in	2017	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	and	Other	Reserves

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	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 2013	we	contributed	$489	million	to	our	defined	benefit	pension	plans,	which	covered	minimum	contributions	for	periods	prior	to	our	Chapter	11	filing	and	periods thereafter	(see	Note	2	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	and	Note	2	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8A for	further	information),	as	well	as	certain	interest	and	penalty	interest	due	with	respect	to	contributions	for	pre-petition	periods.

American's	minimum	required	contribution	to	our	pension	plans	for	2014	is	$120	million.	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.

# 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	8	to	AAG's	Consolidated	Financial	Statements	included	in	Part	II,	Item	8A	and	Note	7	to	American's	Consolidated Financial	Statements	included	in	Part	II,	Item	8B	of	this	report.

# Special	Facility	Revenue	Bonds

Certain	special	facility	revenue	bonds	were	issued	by	certain	municipalities	primarily	to	purchase	equipment	and	improve	airport	facilities	that	are	leased	by American	and	accounted	for	as	operating	leases.	In	accordance	with	various	orders	of	the	Bankruptcy	Court	and/or	the	Plan,	special	facility	revenue	bond	claims	in connection	with	the	Alliance	Airport,	Dallas-Fort	Worth	International	Airport,	Chicago	O'Hare	International	Airport,	Luis	Munoz	Marin	International	Airport	in	San Juan,	and	certain	special	revenue	bond	claims	in	relation	to	the	John	F.	Kennedy	International	Airport	were	treated	as	general	unsecured	claims.	In	addition,	pursuant	to the	Plan,	the	agreements	with	respect	to	the	special	facility	revenue	bonds	relating	to	the	Tulsa	International	Airport	have	remained	in	full	force	and	effect,	in	accordance with	their	original	terms	and	conditions,	and	constitute	ongoing	obligations	of	American	or	AAG,	as	reflected	in	the	particular	agreement.	Approximately	 $498	million of	the	special	facility	revenue	bonds	(with	total	future	payments	of	approximately	$715	million	as	of	December	31,	2013)	are	guaranteed	by	AAG,	American,	US Airways	Group	or	US	Airways.	Approximately	$112	million	of	these	special	facility	revenue	bonds	contain	mandatory	tender	provisions	that	require	American	to	make operating	lease	payments	sufficient	to	repurchase	the	bonds	in	2014.	Although	American	has	the	right	to	remarket	the	bonds,	there	can	be	no	assurance	that	these	bonds will	be	successfully	remarketed.	Any	payments	to	redeem	or	purchase	bonds	that	are	not	remarketed	would	generally	reduce	existing	rent	leveling	accruals	or	are considered	prepaid	facility	rentals	and	would	reduce	future	operating	lease	commitments.

# Pass-Through	Trusts

We	have	financed	certain	aircraft	and	engines	with	pass-through	trust	certificates,	or	enhanced	equipment	trust	certificates	(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,	2013,	$6.0 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.	Each	lease	does	have	a	fair	market value	or	a	fixed	price	purchase	option	that	allows	American	or	US	Airways	to	purchase	the	aircraft	at	or	near	the	end	of	the	lease	term;	the	fixed	price	approximates	an estimate	of	the	aircraft's	fair	value	at	the	option	date.	Under	this	feature,	American	and	US	Airways	do	not	participate	in	any	increases	in	the	value	of	the	aircraft. American	and	US	Airways	concluded	it	was	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,	2013.

# Income	Taxes

We	experienced	a	statutory	"ownership	change"	on	December	9,	2013	as	defined	for	purposes	of	Section	382	of	the	Internal	Revenue	Code	in	connection	with our	emergence	from	bankruptcy	and	US	Airways	Group	experienced	an	ownership	change	 in	connection	with	 the	Merger.	When	a	company	undergoes	such	an ownership	change,	Section	382	limits	the	company's	future	ability	to	utilize	any	NOL	generated	before	the	ownership	change	and	certain	subsequently	recognized	"built- in"	losses	and	deductions,	if	any,	existing	as	of	the	date	of	the	ownership	change.	The	general	limitation	rules	for	a	debtor	in	a	bankruptcy	case	are	liberalized	where	an ownership	change	occurs	upon	emergence	from	bankruptcy.	We	anticipate	taking	advantage	of	these	certain	special	rules	which	will	permit	approximately	$9.0	billion of	our	federal	NOL	carryforwards	to	be	utilized	without	regard	to	the	annual	limitation	generally	imposed	by	Section	382.	At	December	31,	2013,	the	Company inherited	the	US	Airways	Group	approximate	$1.6	billion	of	NOLs	($1.4	billion	of	which	is	subject	to	Section	382	limitation	due	to	the	ownership	change)	to	reduce	the Company's	future	taxable	income.	The	majority	of	American	Airlines	Group	Inc.'s	NOLs	are	expected	to	be	available	to	reduce	federal	taxable	income	in	the	calendar year	2014.	The	Company's	ability	to	utilize	any	new	NOL	arising	after	the	ownership	change	is	not	affected.

# AAG	Contractual	Obligations

The	following	table	summarizes	AAG's	obligations	and	commitments	as	of	December	31,	2013.	The	table	does	not	include	commitments	that	are	contingent	on	events or	other	factors	that	are	uncertain	or	unknown	at	this	time.

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  | (In\tmillions) |  |  |  |
| Debt\tand\tcapital\tlease\tobligations\t1 | \t $1,446 | \t $1,325 | \t $2,733 | \t $1,223 | \t $1,756 | \t $8,412 | \t $16,895 |
| Interest\tobligations\t2 | 830 | 787 | 660 | 585 | 556 | 1,392 | 4,810 |
| Commitments\tfor\taircraft\tand\tengine\npurchases\tand\toperating\tleases\t3,4 | 6,061 | 5,459 | 5,132 | 5,532 | 6,387 | 23,010 | 51,581 |
| Regional\tcapacity\tpurchase\tagreements\t5 | 1,666 | 1,678 | 1,537 | 1,249 | 1,061 | 5,005 | 12,196 |
| Other\tpurchase\tobligations\tand\tlong-term\nliabilities\t6,7 | 443 | 325 | 299 | 278 | 274 | 3,962 | 5,581 |
| Total\tAAG\tContractual\tObligations\t8 | \t $10,446 | \t $9,574 | \t $10,361 | \t $8,867 | \t $10,034 | \t $41,781 | \t $91,063 |

(2) For	variable-rate	debt,	future interest	obligations	are	estimated	using the	current	rate	at	December	 31, 2013.

(3) Certain	special	facility	revenue	bonds	issued	by	municipalities—which	are	supported	by	operating	leases	executed	by	American	or	US	Airways—are	guaranteed	by AAG,	US	Airways	Group,	American	and/or	US	Airways.	The	special	facility	revenue	bonds	with	mandatory	tender	provisions	discussed	above	are	included	in	this table	based	on	lease	payment	terms	rather	than	their	mandatory	tender	provision	date.	See	Note	9	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A for	additional	information.

(4) See	 Note	8 to	 AAG's	 Consolidated	 Financial	 Statements in	 Part II, Item	 8A for	 additional information	 about the	 Company's obligations.

(5) Represents	minimum	payments	under	capacity	purchase	agreements	with	the	Company's	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.	See	Note	8	 to	AAG's Consolidated	Financial	Statements	in	Part	II,	Item	8A	for	additional	information.

(6) Includes	noncancelable	commitments	to	purchase	goods	or	services,	primarily	information	technology	related	support.	The	Company	has	made	estimates	as	to	the timing	of	certain	payments	primarily	for	construction	related	costs.	The	actual	timing	of	payments	may	vary	from	these	estimates.	Substantially	all	of	the	Company's purchase	orders	issued	for	other	purchases	in	the	ordinary	course	of	business	contain	a	30-day	cancellation	clause	that	allows	the	Company	to	cancel	an	order	with 30	days	notice.

(7) Includes	minimum	pension	contributions	based	on	actuarially	determined	estimates	and	other	postretirement	benefit	payments	based	on	estimated	payments	through 2023.	See	Note	13	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A.

(8) Total	contractual	obligations	do	not	include	long-term	contracts	that	represent	a	variable	expense	(based	on	levels	of	operation)	or	where	short-term	cancellation provisions	exist.

# Capital	Raising	Activity	and	Other	Possible	Actions

In	light	of	AAG's	significant	financial	commitments	related	to,	among	other	things,	new	aircraft	and	the	servicing	and	amortization	of	existing	debt	and equipment	leasing	arrangements,	AAG	and	its	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	and	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, aircraft	and	aircraft	engines	and	parts	could	decrease	the	amount	of	cash	available	to	cover	cash	contractual	obligations.	Moreover,	the	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,	the	Company	has	from	time	to	time	refinanced,	redeemed	or	repurchased	its	debt	and	taken	other	steps	to	reduce	or	otherwise	manage	the	aggregate amount	and	cost	of	its	debt	or	lease	obligations	or	otherwise	improve	its	balance	sheet.	Going	forward,	depending	on	market	conditions,	its	cash	position	and	other considerations,	the	Company	may	continue	to	take	such	actions.

We	have	reserved	shares	of	AAG	Common	Stock	and	Preferred	Stock	to	be	distributed	to	holders	of	unsecured	claims	that	were	not	settled	prior	to	emergence and	have	not	yet	been	resolved.

# American	Contractual	Obligations

The	following	table	summarizes	our	obligations	and	commitments	as	of	December	31,	2013.	The	table	does	not	include	commitments	that	are	contingent	on	events	or other	factors	that	are	uncertain	or	unknown	at	this	time.

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  |  | (In\tmillions) |  |  |  |
| Debt\tand\tcapital\tlease\tobligations\t1 | $957 | $880 | $1,801 | $846 | $722 | $5,646 | $10,852 |
| Interest\tobligations\t2 | 544 | 527 | 430 | 384 | 394 | 1,073 | 3,352 |
| Commitments\tfor\taircraft\tand\tengine\tpurchases\tand\noperating\tleases\t3,4 | 4,201 | 4,169 | 4,392 | 4,265 | 5,000 | 21,096 | 43,123 |
| Regional\tcapacity\tpurchase\tagreements\t5 | 521 | 670 | 676 | 520 | 511 | 3,849 | 6,747 |
| Other\tpurchase\tobligations\tand\tlong-term\tliabilities\t6,7 | 443 | 325 | 299 | 278 | 274 | 3,962 | 5,581 |
| Total\tAA\tContractual\tObligations\t8 | $6,666 | $6,571 | $7,598 | $6,293 | $6,901 | $35,626 | $69,655 |
| (1)\nAmounts\trepresent\tcontractual\tamounts\tdue. |  |  |  |  |  |  |  |

(1) Amounts	represent	contractual	amounts	due.

(3) Certain	special	facility	revenue	bonds	issued	by	municipalities—which	are	supported	by	operating	leases	executed	by	American—are	guaranteed	by	AAG	and/or American.	The	special	facility	revenue	bonds	with	mandatory	tender	provisions	discussed	above	are	included	in	this	table	based	on	lease	payment	terms	rather	than their	mandatory	tender	provision	date.	See	Note	8	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B	for	additional	information.

(4) See	 Note	7 to	 American's	 Consolidated	 Financial	 Statements in	 Part II, Item	 8B for	 additional information	 about	 American's obligations.

(5) Represents	minimum	payments	under	capacity	purchase	agreements	with	American's	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.	 See	 Note	7	 to	American's Consolidated	Financial	Statements	in	Part	II,	Item	8B	for	additional	information.

(6) Includes	noncancelable	commitments	to	purchase	goods	or	services,	primarily	information	technology	related	support.	American	has	made	estimates	as	to	the timing	of	certain	payments	primarily	for	construction	related	costs.	The	actual	timing	of	payments	may	vary	from	these	estimates.	Substantially	all	of	American's purchase	orders	issued	for	other	purchases	in	the	ordinary	course	of	business	contain	a	30-day	cancellation	clause	that	allows	American	to	cancel	an	order	with	30 days	notice.

(7) Includes	minimum	pension	contributions	based	on	actuarially	determined	estimates	and	other	postretirement	benefit	payments	based	on	estimated	payments	through 2023.	See	Note	12	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B.

In	light	of	American's	significant	financial	commitments	related	to,	among	other	things,	new	aircraft	and	the	servicing	and	amortization	of	existing	debt	and equipment	leasing	arrangements,	American	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 and	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,	aircraft	and aircraft	engines	and	parts	could	decrease	the	amount	of	cash	available	to	cover	cash	contractual	obligations.	Moreover,	American's	Credit	and	Guaranty	Agreement	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,	American	has	from	time	to	time	refinanced,	redeemed	or	repurchased	its	debt	and	taken	other	steps	to	reduce	or	otherwise	manage	the	aggregate amount	and	cost	of	its	debt	or	lease	obligations	or	otherwise	improve	its	balance	sheet.	Going	forward,	depending	on	market	conditions,	its	cash	position	and	other considerations,	the	American	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	$4.4	billion	and	$2.8	billion	as	of	December	31,	2013	and	2012,	respectively	and	American's	air	traffic	liability	was	$3.1	billion	and	$2.8 billion	as	of	December	31,	2013	and	2012,	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	1st	or	more	frequently	if	events	or	circumstances	indicate.	We	have	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.	As	AAG	acquired	US	Airways on	December	9,	2013,	an	impairment	test	was	unnecessary	in	2013	as	no	events	or	circumstances	were	identified	to	indicate	the	fair	value	of	the	reporting	unit	was	less than	its	carrying	amount.

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	1st	or	more	frequently	if	events	or	circumstances	indicate.	Indefinite-lived	assets	are	measured	for impairment	by	initially	performing	a	qualitative	screen	and,	if	necessary,	then	comparing	the	fair	value	of	the	indefinite-lived	intangible	asset	to	its	carrying	value.	If	the fair	value	of	the	indefinite-lived	intangible	asset	is	lower	than	its	carrying	value,	an	impairment	charge	equal	to	the	difference	is	recorded.	The	fair	values	of	indefinite- lived	intangible	assets	are	primarily	based	on	available	market	pricing	for	comparable	assets	along	with	estimates	of	discounted	future	cash	flows,	using	assumptions based	on	historical	results	adjusted	to	reflect	management's	best	estimate	of	future	market	and	operating	conditions.	Changes	in	industry	capacity,	demand	for	air transportation,	regulatory	considerations	such	as	"open	skies"	arrangements,	and	other	factors	can	significantly	impact	the	fair	value	of	our	indefinite-lived	assets.	Based upon	our	annual	testing,	there	were	no	impairments	of	indefinite-lived	assets	in	2013.

# 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.	Additional	changes	in	the	fair values	of	these	assets	and	liabilities	from	the	current	estimated	values,	as	well	as	changes	in	other	assumptions	could	significantly	impact	the	reported	value	of	goodwill.

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	and	oneworld	carriers	and	US	Airways	and	Star	Alliance	carriers,	respectively,	as	well	as	certain	other	partner	airlines	that	participate	in the	programs.	Effective	March	31,	2014,	US	Airways	will	join	the	oneworld	alliance	and	exit	the	Star	Alliance.	At	that	point,	frequent	travel	reciprocity	will	be discontinued	for	many	Star	Alliance	airlines.	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.	In	addition,	we	also	include	in	the determination	of	incremental	cost	the	amount	of	certain	fees	related	to	redemptions	expected	to	be	collected	from	AAdvantage	and	Dividend	Miles	members.	These redemption	fees	reduce	incremental	cost.	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,	2013,	the	liability	for	outstanding	mileage	credits	expected	to	be	redeemed	for future	travel	awards	for	US	Airways	under	the	Dividend	Miles	program	was	$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,	2013,	the	liability	for	outstanding	mileage	credits	for	the	AAdvantage	program	was	$580	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,	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	the	fourth	quarter	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,	2013	and	2012,	AAG	had	$1.5	billion	and	$1.2	billion,	respectively	and	American	had	$1.2	billion	and	$1.2	billion,	respectively	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,	2013,	2012	and 2011,	the	marketing	component	of	mileage	sales	recognized	at	the	time	of	sale	in	other	revenues	was	approximately	$834	million,	$725	million	 and	$761	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	$23	million	impact	on	the	liability	as	of	December	31,	2013.	A	10%	increase	or	decrease	in	the assumed	price	per	gallon	of	fuel	would	have	a	$21	million	impact	on	the	liability	as	of	December	31,	2013.

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	$89	million	impact	on	revenue	recognized	in	2013.

The	number	of	AAdvantage	and	Dividend	Miles	one	way	travel	award	redemptions	during	the	year	ended	December	31,	2013,	was	approximately	6.1	million and	1.8	 million	 respectively,	 representing	 approximately	8.2%	 and	3.5%	 of	American	 and	 US	Airways'	 total	 mainline	 and	 regional	 RPMs	 during	 that	 period, respectively.	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,	starting in	2007	and	(iv)	the	estimated	age	of	pilot	retirement	(as	discussed	below).	These	assumptions	as	of	December	31	were:

|  | 2013 | 2012 |
| :--- | :--- | :--- |
| Pension\tdiscount\trate\t1 | 5.1% | 4.20% |
| OPEB\tdiscount\trate\t1 | 4.71% | 3.80% |
| Expected\treturn\ton\tplan\tassets\t2 | 8.00% | 8.25% |
| Expected\thealth\tcare\tcost\ttrend\trate\t3: |  |  |
| Pre-65\tindividuals |  |  |
| Initial | 6.5% | 7.0% |
| Ultimate\t(2018) | 4.5% | 4.5% |
| Post-65\tindividuals |  |  |
| Initial | 6.5% | 7.0% |
| Ultimate\t(2018) | 4.5% | 4.5% |
| Pilot\tRetirement\tAge | 63 | 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,	2013	would	increase	our	pension	and	postretirement	benefits obligations	by	approximately	$1.1	billion	and	$55	million,	respectively,	and	increase	(decrease)	estimated	2014	pension	and	postretirement	benefit	expense	by	$4 million	and	$3	million,	respectively.

(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	31%	longer	duration	corporate	and	U.S.	government/agency	bonds,	31%	U.S.	value	stocks,	19%	developed	international	stocks, 10%	emerging	markets	stocks	and	bonds	and	9%	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	8.9%	 as	 of	December	31,	2013.	 Lowering	 the	 expected	 long-term	 rate	 of	 return	 on	 plan	 assets	 by	 50	 basis	 points	 as	 of December	31,	2013	would	increase	estimated	2014	pension	expense	by	approximately	$50	million.

(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	2014	postretirement	benefits	expense	by	$2	million.

See	Note	13	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	and	Note	12	to	American's	Consolidated	Financial	Statements	in	Part	II,	Item	8B for	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

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	new	accounting	pronouncements.

# 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.	We	do not	hold	or	issue	derivative	financial	instruments	for	trading	purposes.	See	Note	10	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	for	accounting policies	and	additional	information	regarding	derivatives.

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	airline,	even	a	relatively	small	increase	in	the	price of	fuel	can	have	a	material	adverse	aggregate	effect	on	the	Company'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	$1.87	per	gallon	to	a	high	of	approximately	$3.38	per	gallon	during	the	period	from	January	1,	2010	to December	31,	2013.	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.	US	Airways	Group	does	not	hedge	price	risk	of	fuel.	American	has	historically	hedged	the	price	risk	of	fuel	costs	through	the	use	of	hedging	contracts,	which consist	primarily	of	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). Heating	oil,	jet	fuel	and	crude	oil	are	the	primary	underlying	commodities	in	the	hedge	portfolio.	Market	risk	is	estimated	as	a	hypothetical	10%	increase	in	the December	31,	2013	and	2012	cost	per	gallon	of	fuel.	Based	on	projected	2014	fuel	usage,	such	an	increase	would	result	in	an	increase	to	American's	Aircraft	fuel	and related	taxes	of	approximately	$1.1	billion	in	2014,	inclusive	of	the	impact	of	effective	fuel	hedge	instruments	outstanding	at	December	31,	2013,	and	assumes	our	fuel hedging	program	remains	effective.	Such	an	increase	would	have	resulted	in	an	increase	to	American's	projected	Aircraft	fuel	and	related	taxes	of	approximately	$718 million	in	2013,	inclusive	of	the	impact	of	fuel	hedge	instruments	outstanding	at	December	31,	2012.

As	of	January	2014,	the	Company	had	cash	flow	hedges	covering	approximately	19%	of	its	estimated	consolidated	2014	fuel	requirements.	Comparatively,	as of	December	31,	2012,	the	Company	had	hedged	approximately	21%	of	its	estimated	2013	fuel	requirements.	The	Company's	consumption	hedged	for	2014	is	capped	at an	average	price	of	approximately	$2.91	per	gallon	of	 jet	fuel.	One	percent	 of	 the	 Company's	 estimated	2014	fuel	requirement	is	hedged	using	call	spreads	with protection	capped	at	an	average	price	of	approximately	$3.18	per	gallon	of	jet	fuel.	Eighteen	percent	of	the	Company's	estimated	2014	fuel	requirement	is	hedged	using collars	with	an	average	floor	price	of	approximately	$2.62	per	gallon	of	jet	fuel.	The	cap	and	floor	prices	exclude	taxes	and	transportation	costs.

Ineffectiveness	is	inherent	in	hedging	jet	fuel	with	derivative	positions	based	in	crude	oil	or	other	crude	oil	related	commodities.	We	assess,	both	at	the inception	of	each	hedge	and	on	an	ongoing	basis,	whether	the	derivatives	that	are	used	in	our	hedging	transactions	are	highly	effective	in	offsetting	changes	in	cash	flows of	the	hedged	items.	In	doing	so,	we	use	a	regression	model	to	determine	the	correlation	of	the	change	in	prices	of	the	commodities	used	to	hedge	jet	fuel	(e.g.,	NYMEX Heating	oil)	to	the	change	in	the	price	of	jet	fuel.	We	also	monitor	the	actual	dollar	offset	of	the	hedges'	market	values	as	compared	to	hypothetical	jet	fuel	hedges.	The fuel	hedge	contracts	are	generally	deemed	to	be	"highly	effective"	if	the	R-squared	is	greater	than	80%	and	the	dollar	offset	correlation	is	within	80%	to	125%.	We discontinue	hedge	accounting	prospectively	if	we	determine	that	a	derivative	is	no	longer	expected	to	be	highly	effective	as	a	hedge	or	if	we	decide	to	discontinue	the hedging	relationship.

# 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	Venezuela	and	Argentina. 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,	2013	and	2012	levels	relative	to	each	of	the	currencies	in	which	we	have	foreign	currency	exposure	would	result	in	an	increase	in	our	Total	non-operating expense,	net	of	approximately	$199	million	and	$164	million,	for	the	years	ending	December	31,	2013	and	2012,	respectively,	and	does	not	address	any	exposure	to foreign	currency	held	on	our	balance	sheet.

# Interest

Our	earnings	are	also	affected	by	changes	in	interest	rates	due	to	the	impact	those	changes	have	on	our	interest	income	from	cash	and	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	26%	and	19%	of	our	total	long-term	debt	at	December	31,	2013	 and	2012, respectively.	If	our	interest	rates	average	10%	more	in	2013	than	they	did	at	December	31,	2013,	our	interest	expense	would	increase	by	approximately	$17	million	and interest	income	from	cash	and	short-term	investments	would	increase	by	approximately	$2	million.	In	comparison,	at	December	31,	2012,	we	estimated	that	if	interest rates	averaged	10	percent	more	in	2012	than	they	did	at	December	31,	2012,	our	interest	expense	would	have	increased	by	approximately	$7	million	and	interest	income from	cash	and	short-term	investments	would	have	increased	by	approximately	$2	million.

Additional	information	regarding	our	debt	obligations	as	of	December	31,	2013	is	as	follows	(in	millions):

|  | 2014 | 2015 | 2016 | 2017 | 2018 | Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Fixed-rate\tdebt | $815 | $783 | $1,730 | $802 | $1,344 | $4,722 | $10,196 |
| Weighted\tavg.\tinterest\trate | 6.1% | 6.3% | 5.6% | 5.9% | 6.1% | 6.7% |  |
| Variable-rate\tdebt | $631 | $543 | $1,004 | $420 | $411 | $3,690 | $6,699 |
| Weighted\tavg.\tinterest\trate | 3.3% | 3.4% | 3.2% | 4.1% | 5.2% | 3.3% |  |

In	accordance	with	ASC	852,	the	Debtors	recorded	interest	expense	only	to	the	extent	(1)	interest	was	paid	during	the	Chapter	11	Cases	or	(2)	it	was	probable that	the	Bankruptcy	Court	would	allow	a	claim	in	respect	of	such	interest.	Interest	expense	AAG	recorded	on	its	Consolidated	Statements	of	Operations	totaled	$856 million	 and	$632	million	 for	 the	 years	 ended	December	31,	2013	 and	2012,	 respectively.	AAG's	 contractual	 interest	 expense	 (including	 interest	 expense	 that	 is associated	with	obligations	in	liabilities	subject	to	compromise)	during	the	years	ended	December	31,	2013	and	2012	totaled	$928	million	and	$766	million,	respectively.

# American'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	American's	exposure	to	such	changes.	Therefore,	actual	results	may	differ. American	does	not	hold	or	issue	derivative	financial	instruments	for	trading	purposes.	See	Note	9	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	$1.87	per	gallon	to	a	high	of	approximately	$3.38	per	gallon	during	the	period	from	January	1,	2010	to	December	31,	2013. 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. American	has	historically	hedged	the	price	risk	of	fuel	costs	through	the	use	of	hedging	contracts,	which	consist	primarily	of	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).	Heating	oil,	jet	fuel	and	crude	oil	are	the	primary	underlying commodities	in	the	hedge	portfolio.	Market	risk	is	estimated	as	a	hypothetical	10%	increase	in	the	December	31,	2013	 and	2012	cost	per	gallon	of	fuel.	Based	on projected	2014	fuel	usage,	such	an	increase	would	result	in	an	increase	to	American's	Aircraft	fuel	and	related	taxes	of	approximately	$519	million	in	2014,	inclusive	of the	impact	of	effective	fuel	hedge	instruments	outstanding	at	December	31,	2013,	and	assumes	American's	fuel	hedging	program	remains	effective.

Such	an	increase	would	have	resulted	in	an	increase	to	American's	projected	Aircraft	fuel	and	related	taxes	of	approximately	$633	million in	2013,	inclusive	of	the impact	of	fuel	hedge	instruments	outstanding	at	December	31,	2012.

As	of	January	2014,	American	had	cash	flow	hedges	covering	approximately	29%	of	its	estimated	2014	fuel	requirements.	Comparatively,	as	of	December	31, 2012,	American	had	hedged	approximately	21%	of	its	estimated	2013	fuel	requirements.	American's	consumption	hedged	for	2014	is	capped	at	an	average	price	of approximately	$2.91	per	gallon	of	jet	fuel.	One	percent	of	American's	estimated	2014	fuel	requirement	is	hedged	using	call	spreads	with	protection	capped	at	an	average price	of	approximately	$3.18	per	gallon	of	jet	fuel.	Twenty-eight	percent	of	American's	estimated	2014	fuel	requirement	is	hedged	using	collars	with	an	average	floor price	of	approximately	$2.62	per	gallon	of	jet	fuel.	The	cap	and	floor	prices	exclude	taxes	and	transportation	costs.

Ineffectiveness	is	inherent	in	hedging	jet	fuel	with	derivative	positions	based	in	crude	oil	or	other	crude	oil	related	commodities.	American	assess,	both	at	the inception	of	each	hedge	and	on	an	ongoing	basis,	whether	the	derivatives	that	are	used	in	its	hedging	transactions	are	highly	effective	in	offsetting	changes	in	cash	flows of	the	hedged	items.	In	doing	so,	American	uses	a	regression	model	to	determine	the	correlation	of	the	change	in	prices	of	the	commodities	used	to	hedge	jet	fuel	(e.g., NYMEX	Heating	oil)	to	the	change	in	the	price	of	jet	fuel.	American	also	monitors	the	actual	dollar	offset	of	the	hedges'	market	values	as	compared	to	hypothetical	jet fuel	hedges.	The	fuel	hedge	contracts	are	generally	deemed	to	be	"highly	effective"	if	the	R-squared	is	greater	than	80%	and	the	dollar	offset	correlation	is	within	80%	to 125%.	American	discontinues	hedge	accounting	prospectively	if	it	determines	that	a	derivative	is	no	longer	expected	to	be	highly	effective	as	a	hedge	or	if	American decides	to	discontinue	the	hedging	relationship.

American	has	not	entered	into	any	fuel	hedges	since	the	Effective	Date	and	its	current	policy	is	not	to	do	so.	Assuming	American	continues	to	pursue	this policy,	once	its	existing	hedge	contracts	expire	or	otherwise	terminate,	American	will	be	fully	exposed	to	fluctuations	in	fuel	prices.

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 Venezuela	 and	Argentina.	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, 2013	and	2012	levels	relative	to	each	of	the	currencies	in	which	American	has	foreign	currency	exposure	would	result	in	an	increase	in	its	non-operating	expense,	net	of approximately	$199	million	and	$164	million,	for	the	years	ending	December	31,	2013	and	2012,	respectively,	and	does	not	address	any	exposure	to	foreign	currency held	on	its	balance	sheet.

American's	earnings	are	also	affected	by	changes	in	interest	rates	due	to	the	impact	those	changes	have	on	its	interest	income	from	cash	and	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	26%	 and	21%	 of	 its	 total	 long-term	 debt	 at December	31,	2013	 and	2012,	respectively.	If	American's	interest	rates	average	10%	more	 in	2013	than	they	did	at	December	31,	2013,	its	interest	expense	would increase	 by	 approximately	$9	million	 and	 interest	 income	 from	 cash	 and	 short-term	 investments	 would	 increase	 by	 approximately	$2	million.	 In	 comparison,	 at December	31,	2012,	American	estimated	that	if	interest	rates	averaged	10	percent	more	in	2012	than	they	did	at	December	31,	2012,	its	interest	expense	would	have increased	by	approximately	$7	million	and	interest	income	from	cash	and	short-term	investments	would	have	increased	by	approximately	$2	million.

Additional	information	regarding	American's	debt	obligations	as	of	December	31,	2013	is	as	follows	(in	millions):

|  | 2014 | 2015 | 2016 | 2017 | 2018 | Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Fixed-rate\tdebt | $457 | $501 | $1,522 | $569 | $479 | $3,311 | $6,839 |
| Weighted\tavg.\tinterest\trate | 5.8% | 6.2% | 5.5% | 5.7% | 5.9% | 7.1% |  |
| Variable-rate\tdebt | $500 | $379 | $279 | $277 | $242 | $2,336 | $4,013 |
| Weighted\tavg.\tinterest\trate | 3.4% | 3.5% | 3.2% | 4.5% | 6.4% | 3.4% |  |

In	accordance	with	ASC	852,	the	Debtors	recorded	interest	expense	only	to	the	extent	(1)	interest	was	paid	during	the	Chapter	11	Cases	or	(2)	it	was	probable that	the	Bankruptcy	Court	would	allow	a	claim	in	respect	of	such	interest.	Interest	expense	American	recorded	on	its	Consolidated	Statements	of	Operations	totaled	$700 million	 and	$633	million	for	the	years	ended	December	31,	2013	 and	2012,	respectively.	American's	contractual	interest	expense	(including	interest	expense	that	is associated	with	obligations	in	liabilities	subject	to	compromise)	during	the	years	ended	December	31,	2013	and	2012	totaled	$772	million	and	$707	million,	respectively.

# AAG	CONSOLIDATED	FINANCIAL	STATEMENTS

# Report	of	Independent	Registered	Public	Accounting	Firm

# The	Board	of	Directors	and	Stockholders

We	have	audited	the	accompanying	consolidated	balance	sheets	of	American	Airlines	Group	Inc.	(the	Company)	(formerly	AMR	Corporation)	as	of	December	31,	2013 and	2012,	and	the	related	consolidated	statements	of	operations,	comprehensive	income	(loss),	stockholders'	equity	(deficit)	and	cash	flows	for	each	of	the	three	years	in the	period	ended	December	31,	2013.	Our	audits	also	included	the	financial	statement	schedule	listed	in	the	Index	at	Item	15(a)(2).	These	consolidated	financial statements	and	schedule	are	the	responsibility	of	the	Company's	management.	Our	responsibility	is	to	express	an	opinion	on	these	financial	statements	and	schedule 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	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	and	the	report	of	other	auditors	provide	a	reasonable basis	for	our	opinion.

In	our	opinion,	based	on	our	audits	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	2012	and	the	consolidated	results	of	its	operations	and	its	cash	flows	for	each	of	the	three years	in	the	period	ended	December	31,	2013,	in	conformity	with	U.S.	generally	accepted	accounting	principles.	Also,	in	our	opinion,	the	related	financial	statement schedule,	when	considered	in	relation	to	the	basic	financial	statements	taken	as	a	whole,	presents	fairly,	in	all	material	respects,	the	information	set	forth	therein.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	Company's	internal	control	over financial	 reporting	 as	 of	 December	 31,	 2013,	 based	 on	 criteria	 established	 in	 Internal	 Control-Integrated	 Framework	 issued	 by	 the	 Committee	 of	 Sponsoring Organizations	of	the	Treadway	Commission	(1992	Framework)	and	our	report	dated	February	27,	2014	expressed	an	unqualified	opinion	thereon.

/s/	Ernst	&	Young	LLP

Dallas,	Texas

The	Board	of	Directors	and	Stockholder

US	Airways	Group,	Inc.:

We	have	audited	the	consolidated	balance	sheet	of	US	Airways	Group,	Inc.	and	subsidiaries	(the	Company)	as	of	December	31,	2013,	and	the	related	consolidated statement	of	operations,	comprehensive	income,	stockholders'	equity,	and	cash	flows	for	the	period	from	December	9,	2013	to	December	31,	2013	(not	presented herein).	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	US	Airways	Group,	Inc.	and subsidiaries	as	of	December	31,	2013,	and	the	results	of	their	operations	and	their	cash	flows	for	the	period	from	December	9,	2013	to	December	31,	2013,	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),	the	Company's	internal	control	over financial	reporting	as	of	December	31,	2013,	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	27,	2014	expressed	an	unqualified	opinion	on	the	effectiveness	of	the	Company's internal	control	over	financial	reporting.

/s/	KPMG	LLP

Phoenix,	Arizona

# CONSOLIDATED	STATEMENTS	OF	OPERATIONS

(In	millions,	except	per	share	amounts)

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Operating\trevenues |  |  |  |
| Mainline\tpassenger | $20,218 | $18,743 | $17,947 |
| Regional\tpassenger | 3,131 | 2,914 | 2,724 |
| Cargo | 685 | 675 | 709 |
| Other | 2,709 | 2,523 | 2,599 |
| Total\toperating\trevenues | 26,743 | 24,855 | 23,979 |
| Operating\texpenses |  |  |  |
| Aircraft\tfuel\tand\trelated\ttaxes | 7,839 | 7,705 | 7,358 |
| Salaries,\twages\tand\tbenefits | 5,460 | 6,217 | 6,361 |
| Regional\texpenses | 3,326 | 3,028 | 3,009 |
| Maintenance,\tmaterials\tand\trepairs | 1,260 | 1,158 | 1,039 |
| Other\trent\tand\tlanding\tfees | 1,152 | 1,083 | 1,194 |
| Aircraft\trent | 768 | 553 | 645 |
| Selling\texpenses | 1,158 | 1,058 | 1,102 |
| Depreciation\tand\tamortization | 853 | 845 | 915 |
| Special\titems,\tnet | 559 | 386 | 756 |
| Other | 2,969 | 2,674 | 2,637 |
| Total\toperating\texpenses | 25,344 | 24,707 | 25,016 |
| Operating\tincome\t(loss) | 1,399 | 148 | (1,037) |
| Nonoperating\tincome\t(expense) |  |  |  |
| Interest\tincome | 20 | 26 | 26 |
| Interest\texpense,\tnet\tof\tcapitalized\tinterest\t(contractual\tinterest\texpense\tequals\t$(928),\n$(766),\tand\t$(858)\tfor\tthe\tyears\tended\tDecember\t31,\t2013,\t2012\tand\t2011,\trespectively) | (856) | (632) | (811) |
| Other,\tnet | (88) | 221 | (39) |
| Total\tnonoperating\texpense,\tnet | (924) | (385) | (824) |
| Income\t(loss)\tbefore\treorganization\titems,\tnet | 475 | (237) | (1,861) |
| Reorganization\titems,\tnet | (2,655) | (2,208) | (118) |
| Income\t(loss)\tbefore\tincome\ttaxes | (2,180) | (2,445) | (1,979) |
| Income\ttax\tprovision\t(benefit) | (346) | (569) | — |
| Net\tincome\t(loss) | $(1,834) | $(1,876) | $(1,979) |
| Earnings\t(loss)\tper\tshare |  |  |  |
| Basic | $(11.25) | $(14.98) | $(15.83) |
| Diluted | $(11.25) | $(14.98) | $(15.83) |
| Weighted\taverage\tshares\toutstanding\t(in\tthousands) |  |  |  |
| Basic | 163,046 | 125,231 | 124,985 |
| Diluted | 163,046 | 125,231 | 124,985 |

See	accompanying	notes	to	Consolidated	Financial	Statements.

# CONSOLIDATED	STATEMENTS	OF	COMPREHENSIVE	INCOME

(In	millions)

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Net\tincome\t(loss) | $(1,834) | $(1,876) | $(1,979) |
| Other\tcomprehensive\tincome\t(loss),\tbefore\ttax: |  |  |  |
| Defined\tbenefit\tpension\tplans\tand\tretiree\tmedical: |  |  |  |
| Amortization\tof\tactuarial\tloss\tand\tprior\tservice\tcost | (142) | 130 | 130 |
| Current\tyear\tchange | 1,577 | (1,910) | (1,216) |
| Benefit\tplan\tmodifications | — | 3,345 | — |
| Derivative\tfinancial\tinstruments: |  |  |  |
| Change\tin\tfair\tvalue | 18 | (12) | 190 |
| Reclassification\tinto\tearnings | 34 | (3) | (313) |
| Unrealized\tgain\t(loss)\ton\tinvestments: |  |  |  |
| Net\tchange\tin\tvalue | (1) | 3 | — |
| Other\tcomprehensive\tincome\t(loss)\tbefore\ttax | 1,486 | 1,553 | (1,209) |
| Non-cash\ttax\tprovision | 538 | 569 | — |
| Comprehensive\tincome\t(loss) | $(886) | $(892) | $(3,188) |

# CONSOLIDATED	BALANCE	SHEETS

(in	millions,	except	shares	and	par	value)

|  | 2013 | 2012 |
| :--- | :--- | :--- |
| ASSETS |  |  |
| Current\tassets |  |  |
| Cash | $1,140 | $480 |
| Short-term\tinvestments | 8,111 | 3,412 |
| Restricted\tcash\tand\tshort-term\tinvestments | 1,035 | 850 |
| Accounts\treceivable,\tnet | 1,560 | 1,124 |
| Aircraft\tfuel,\tspare\tparts\tand\tsupplies,\tnet | 1,012 | 580 |
| Prepaid\texpenses\tand\tother | 1,465 | 626 |
| Total\tcurrent\tassets | 14,323 | 7,072 |
| Operating\tproperty\tand\tequipment |  |  |
| Flight\tequipment | 23,730 | 18,221 |
| Ground\tproperty\tand\tequipment | 5,585 | 5,302 |
| Equipment\tpurchase\tdeposits | 1,077 | 710 |
| Total\tproperty\tand\tequipment,\tat\tcost | 30,392 | 24,233 |
| Less\taccumulated\tdepreciation\tand\tamortization | 11,133 | 10,831 |
| Total\tproperty\tand\tequipment,\tnet | 19,259 | 13,402 |
| Other\tAssets |  |  |
| Goodwill | 4,086 | — |
| Intangibles,\tnet\tof\taccumulated\tamortization | 2,311 | 869 |
| Other\tassets | 2,299 | 2,167 |
| Total\tother\tassets | 8,696 | 3,036 |
| Total\tAssets | $42,278 | $23,510 |
| LIABILITIES\tAND\tSTOCKHOLDERS'\tEQUITY\t(DEFICIT) |  |  |
| Current\tliabilities |  |  |
| Current\tmaturities\tof\tlong-term\tdebt\tand\tcapital\tleases | $1,446 | $1,419 |
| Accounts\tpayable | 1,368 | 975 |
| Accrued\tsalaries\tand\twages | 1,143 | 666 |
| Air\ttraffic\tliability | 4,380 | 2,813 |
| Frequent\tflyer\tliability | 3,005 | 1,711 |
| Other\taccrued\tliabilities | 2,464 | 1,427 |
| Total\tcurrent\tliabilities | 13,806 | 9,011 |
| Noncurrent\tliabilities |  |  |
| Long-term\tdebt\tand\tcapital\tleases,\tnet\tof\tcurrent\tmaturities | 15,353 | 7,116 |
| Pension\tand\tpostretirement\tbenefits | 5,828 | 6,780 |
| Deferred\tgains\tand\tcredits,\tnet | 935 | 223 |
| Mandatorily\tconvertible\tpreferred\tstock\tand\tother\tbankruptcy\tsettlement\tobligations | 5,928 | — |
| Other\tliabilities | 3,159 | 1,761 |
| Total\tnoncurrent\tliabilities | 31,203 | 15,880 |
| Commitments\tand\tcontingencies\t(Note\t8) |  |  |
| Liabilities\tsubject\tto\tcompromise | — | 6,606 |
| Stockholders'\tequity\t(deficit) |  |  |
| authorized\tand\t127,450,390\tshares\tissued. | 3 | 127 |
| Additional\tpaid-in\tcapital | 10,594 | 4,695 |
| Treasury\tshares\tat\tcost:\t2013\t-\t0\tand\t2012\t-\t5,940,399 | — | (367) |
| Accumulated\tother\tcomprehensive\tincome\t(loss) | (2,032) | (2,980) |
| Accumulated\tdeficit | (11,296) | (9,462) |
| Total\tstockholders'\tequity\t(deficit) | (2,731) | (7,987) |
| Total\tliabilities\tand\tstockholders'\tequity\t(deficit) | $42,278 | $23,510 |

# CONSOLIDATED	STATEMENTS	OF	CASH	FLOWS

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Cash\tflow\tfrom\toperating\tactivities: |  |  |  |
| Net\tincome\t(loss) | $(1,834) | $(1,876) | $(1,979) |
| Adjustments\tto\treconcile\tnet\tincome\t(loss)\tto\tnet\tcash\tprovided\tby\t(used\tin)\noperating\tactivities: |  |  |  |
| Depreciation\tand\tamortization | 1,020 | 1,015 | 1,086 |
| Debt\tdiscount\tand\tlease\tamortization | — | (14) | (11) |
| Special\titems,\tnon-cash | 95 | 215 | 725 |
| Pension\tand\tpostretirement | (154) | 287 | 180 |
| Deferred\tincome\ttaxes | (324) | (569) | (1) |
| Share\tbased\tcompensation | 39 | 29 | 40 |
| Reorganization\titems,\tnon-cash | 2,112 | 2,066 | 118 |
| Interest\texpense,\tnon-cash | 181 | — | — |
| Other,\tnet | (76) | 22 | 87 |
| Changes\tin\toperating\tassets\tand\tliabilities: |  |  |  |
| Decrease\t(increase)\tin\taccounts\treceivable | (93) | (222) | (164) |
| Decrease\t(increase)\tin\tother\tcurrent\tassets | (29) | (133) | (146) |
| Decrease\t(increase)\tin\tderivative\tcollateral | 1 | (1) | (73) |
| Increase\t(decrease)\tin\taccounts\tpayable\tand\taccrued\tliabilities | 71 | 449 | 189 |
| Increase\t(decrease)\tin\tair\ttraffic\tliability | 150 | 161 | 374 |
| Increase\t(decrease)\tin\tfrequent\tflyer\tliability | 38 | 140 | 193 |
| Increase\t(decrease)\tin\tother\tassets\tand\tliabilities | (522) | (284) | 125 |
| Net\tcash\tprovided\tby\t(used\tin)\toperating\tactivities | 675 | 1,285 | 743 |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |
| Capital\texpenditures\tand\taircraft\tpurchase\tdeposits | (3,114) | (1,888) | (1,610) |
| Acquisition\tof\tUS\tAirways\tGroup | 206 | — | — |
| Purchases\tof\tshort-term\tinvestments | (3,342) | (1,078) | (2,918) |
| Sales\tof\tshort-term\tinvestments | 2,161 | 1,384 | 3,528 |
| Decrease\t(increase)\tin\trestricted\tcash\tand\tshort-term\tinvestments | 147 | (112) | (288) |
| Proceeds\tfrom\tsale\tof\tproperty\tand\tequipment | 128 | 123 | (4) |
| Net\tcash\tprovided\tby\t(used\tin)\tinvesting\tactivities | (3,814) | (1,571) | (1,292) |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |
| Payments\ton\tlong-term\tdebt\tand\tcapital\tleases | (2,926) | (1,288) | (2,545) |
| Proceeds\tfrom\tissuance\tof\tlong-term\tdebt | 5,134 | 268 | 2,569 |
| Deferred\tfinancing\tcosts | (120) | (6) | (63) |
| Sale-leaseback\ttransactions | 1,700 | 1,509 | 703 |
| Other\tfinancing\tactivities | 11 | — | — |
| Net\tcash\tprovided\tby\t(used\tin)\tfinancing\tactivities | 3,799 | 483 | 664 |
| Net\tincrease\t(decrease)\tin\tcash | 660 | 197 | 115 |
| Cash\tat\tbeginning\tof\tyear | 480 | 283 | 168 |
| Cash\tat\tend\tof\tyear | $1,140 | $480 | $283 |

# CONSOLIDATED	STATEMENTS	OF	STOCKHOLDERS'	EQUITY	(DEFICIT)

(in	millions,	except	share	amounts)

|  | Common<br>Stock | Additional<br>Paid-in<br>Capital | Treasury<br>Stock | Accumulated<br>Other<br>Comprehensive<br>Income	(Loss) | Accumulated<br>Deficit | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tJanuary\t1,\t2011 | $127 | $4,657 | $(367) | $(2,755) | $(5,607) | $(3,945) |
| Net\tincome\t(loss) | — | — | — | — | (1,979) | (1,979) |
| Changes\tin\tpension,\tretiree\tmedical\tand\tother\tliability | — | — | — | (1,086) | — | (1,086) |
| Net\tchanges\tin\tfair\tvalue\tof\tderivative\tfinancial\tinstruments | — | — | — | (123) | — | (123) |
| Total\tcomprehensive\tloss |  |  |  |  |  | (3,188) |
| Share-based\tcompensation\texpense | — | 23 | — | — | — | 23 |
| Issuance\tof\t679,050\tshares\tto\temployees\tpursuant\tto\tstock\toption\tand\ndeferred\tstock\tincentive\tplans | — | (1) | — | — | — | (1) |
| Balance\tat\tDecember\t31,\t2011 | 127 | 4,679 | (367) | (3,964) | (7,586) | (7,111) |
| Net\tincome\t(loss) | — | — | — | — | (1,876) | (1,876) |
| Change\tin\tunrealized\tgain\t(loss)\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) |
| Total\tcomprehensive\tloss |  |  |  |  |  | (892) |
| Share-based\tcompensation\texpense | — | 16 | — | — | — | 16 |
| Balance\tat\tDecember\t31,\t2012 | 127 | 4,695 | (367) | (2,980) | (9,462) | (7,987) |
| Net\tincome\t(loss) | — | — | — | — | (1,834) | (1,834) |
| Change\tin\tunrealized\tgain\t(loss)\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) |
| Total\tcomprehensive\tloss |  |  |  |  |  | (886) |
| Issuance\tof\t3,136,770\tshares\tto\temployees\tpursuant\tto\tstock\toption\tand\ndeferred\tstock\tincentive\tplans | 3 | 5 | — | — | — | 8 |
| Issuance\tof\t18,676,683\tshares\tin\texchange\tfor\tredemption\tof\tAMR\nCorporation\tdebt | 19 | 502 | — | — | — | 521 |
| Cancellation\tof\tpre-reorganization\tcommon\tstock | (149) | (218) | 367 | — | — | — |
| Issuance\tof\t53,675,878\tshares\tof\tpost-reorganization\tcommon\tstock | 1 | 594 | — | — | — | 595 |
| Issuance\tof\t197,363,088\tshares\tin\texchange\tfor\tUS\tAirways\tGroup\ncommon\tstock | 2 | 4,590 | — | — | — | 4,592 |
| Equity\tcomponent\tof\tUS\tAirways\tGroup\tconvertible\tdebt\tassumed\tin\nMerger | — | 88 | — | — | — | 88 |
| Issuance\tof\t9,993,882\tshares\tfor\tOptional\tConversion\tof\tPreferred\nShares | — | 269 | — | — | — | 269 |
| Share\tbased\tcompensation\texpense | — | 69 | — | — | — | 69 |
| Issuance\tof\t35,609\tshares\tto\temployees\tpursuant\tto\tstock\toption\tand\ndeferred\tstock\tincentive\tplans | — | — | — | — | — | — |
| Balance\tat\tDecember\t31,\t2013 | $3 | $10,594 | $— | $(2,032) | $(11,296) | $(2,731) |

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS

# 1.	Nature	of	Operations	and	Operating	Environment

American	Airlines	Group	Inc.	(AAG),	a	Delaware	corporation,	is	a	holding	company	whose	primary	business	activity	is	the	operation	of	a	major	network	air carrier	through	its	subsidiaries	American	Airlines,	Inc.	(American),	US	Airways	Group,	Inc.	(US	Airways	Group).	A	wholly-owned	subsidiary	AMR	Eagle	Holding Corporation	(AMR	Eagle)	owns	American	Eagle	Airlines,	Inc.	(American	Eagle).	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	2013,	the	Company	had	approximately	87 million	and	22	million	passengers	boarding	its	mainline	and	regional	flights,	respectively.	As	of	December	31,	2013,	the	Company	operated	970	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	519	regional	jets	and	40	turboprops.

As	 of	December	31,	2013,	 the	Company	employed	approximately	110,000	active	full-time	equivalent	employees,	of	which	18,000	were	employed	by	its regional	operations.	Approximately	73%	of	employees	are	covered	by	CBAs	with	various	labor	unions.	American's	and	US	Airways'	pilots	and	flight	attendants	are currently	working	under	the	terms	of	their	respective	American	or	US	Airways	CBAs,	as	modified	by	transition	agreements	reached	in	connection	with	the	December 2013	merger	with	US	Airways	Group,	Inc.	(the	Merger).

# 2.	Emergence	From	Chapter	11

On	November	29,	2011	(the	Petition	Date),	AMR	Corporation	(AMR)	(renamed	American	Airlines	Group	Inc.,	AAG	upon	closing	of	the	Merger,	AAG	and, together	with	its	consolidated	subsidiaries,	the	Company),	its	principal	subsidiary,	American	Airlines,	Inc.	(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	the	Company,	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	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	American	Airlines	Group	common	stock	(AAG	Common Stock),	par	value	$0.01	per	share.

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	Corporation	common	stock	outstanding	prior	 to	 the	Effective	Date	were	canceled.	The	Restated	Certificate	of Incorporation,	which	was	approved	in	connection	with	the	Plan,	authorizes	the	issuance	of	1.75	billion	new	shares	of	AAG	Common	Stock,	par	value	$0.01	per	share, and	200	million	shares	of	AAG	Series	A	Preferred	Stock,	par	value	$0.01	per	share.	Of	the	authorized	AAG	Series	A	Preferred	Stock,	approximately	168	million	were designated	"Series	A	Convertible	Preferred	Stock",	with	a	stated	value	$25.00	per	share,	and	issued	in	accordance	with	the	Plan.	AAG	Common	Stock	and	AAG	Series A	Preferred	Stock	are	listed	on	the	NASDAQ	Global	Select	Market	under	the	symbols	"AAL"	and	"AALCP",	respectively,	and	began	trading	on	December	9,	2013.	In addition,	pursuant	to	the	Plan	and	the	Merger	agreement,	up	to	40	million	shares	of	AAG	common	stock	was	authorized	for	issuance	under	the	2013	Incentive	Award Plan	(the	2013	IAP).

The	Plan	contains	the	following	provisions	relating	to	the	treatment	of	pre-petition	claims	against	the	Debtors	and	other	holders	of	allowed	interests	in	AMR Corporation:

•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 are	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,	at	the	Effective	Date,	a	portion	of	their	recovery	in	shares	of	AAG	Series	A	Preferred	Stock	and	a	right,	subject	to	the trading	price	of	the	Company's	common	stock	during	the	120	day	period	after	the	Effective	Date,	to	receive	their	remaining	recovery	in	shares	of AAG	Common	Stock	120	days	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,	 will	 receive	 additional	 shares	 of	AAG	 Common	 Stock	 if,	 among	 other considerations,	the	trading	price	of	the	Company's	common	stock	at	various	points	during	the	120	day	period	after	the	Effective	Date	provides	for	a full	recovery	to	claimholders	and	other	allowed	priority	interests;	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	(Disputed	Claims	Reserve),	beginning	after	120	days	after	the	Effective Date.	Disputed	claimholders	that	subsequently	become	Single-Dip	Unsecured	Claimholders	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	Single-Dip	Unsecured	Claimholder	as	of	the	Effective	Date.

The	Plan	contemplates	the	distribution	of	up	to	756	million	shares	of	common	stock	of	which	approximately	53	million	shares	were	issued	to	the	Debtors' stakeholders	in	connection	with	the	Effective	Date.	In	accordance	with	the	Plan,	the	Company

will	issue	the	remaining	shares	of	AAG	Common	Stock	over	the	120	day	distribution	period	and	as	disputed	claims	are	resolved.	In	addition,	pursuant	to	the	Plan approximately	197	million	common	shares	were	distributed	to	holders	of	outstanding	shares	of	US	Airways	Group	common	stock.

Pursuant	to	rulings	of	the	Bankruptcy	Court,	the	Plan	has	established	a	disputed	claim	reserve	to	hold	shares	of	AAG	Series	A	Preferred	Stock	and	AAG Common	Stock	reserved	for	issuance	to	disputed	claimholders	that	ultimately	become	allowed	Single-Dip	general	unsecured	claimholders	after	emergence.	The	shares provided	for	under	the	Plan	are	determined	based	upon	a	disputed	claim	reserve	amount	of	approximately	$755	million,	representing	the	maximum	amount	of	additional allowable	Single-Dip	claims	under	the	Plan's	provisions.	Approximately	16	million	shares	of	AAG	Series	A	Preferred	Stock	were	reserved	at	the	Effective	Date	for distribution	to	holders	of	disputed	Single-Dip	general	unsecured	claims	whose	claims	ultimately	become	allowed.	Additional	new	shares	of	AAG	Common	Stock	will	be distributed	into	the	reserve	on	or	about	the	120th	day	after	the	Effective	Date.	As	disputed	claims	are	resolved,	the	claimants	receive	distributions	of	shares	from	the 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	the	remaining	disputed	claims,	such	shares	will	not	be	returned	to	the	Company	but	rather	will	be	distributed	by	priority	first,	if	necessary,	to	satisfy unsecured	claims	or	labor-related	obligations,	and	then	to	former	AMR	shareholders	as	of	the	Effective	Date.

We	are	not	required	to	distribute	additional	shares	above	the	756	million	shares	contemplated	by	the	Plan,	even	if	the	shares	remaining	for	distribution	are	not sufficient	to	fully	pay	all	allowed	unsecured	claims.	However,	resolution	of	disputed	claims	could	have	a	material	effect	on	Single-Dip	creditor	recoveries	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.

In	addition,	as	of	December	31,	2013,	the	Company	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	Chapter	11	and	interest	and	penalty	interest thereon;

•$105	million	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;

•Approximately	$300	million	for	payroll	taxes	associated	with	equity	distributions	to

employees.

Several	parties	have	filed	appeals	seeking	reconsideration	of	the	Confirmation	Order.	See	Note	8	to	AAG's	Consolidated	Financial	Statements	for	more information.

As	 noted	 above,	 the	 reconciliation	 process	 with	 respect	 to	 the	 remaining	 claims	 will	 take	 considerable	 time	 post-emergence.	 Included	 in	 mandatorily convertible	preferred	stock	and	other	bankruptcy	settlement	obligations	on	the	Company's	Consolidated	Balance	Sheet	as	of	December	31,	2013,	are	the	Company's estimates	of	the	amounts	of	disputed	claims	that	will	ultimately	become	allowed	Single-Dip	general	unsecured	claims.	As	these	claims	are	resolved,	or	where	better information	becomes	available	and	is	evaluated,	we	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	which	could potentially	limit	the	ability	to	utilize	certain	tax	attributes	including	the	Debtors'	substantial	NOLs.	The	general	limitation	rules	for	a	debtor	in	a	bankruptcy	case	are liberalized	where	the	ownership	change	occurs	upon	emergence	from	bankruptcy.	While	the	Debtors	anticipate	taking	advantage	of	certain	special	rules	for	federal income	tax	purposes	that	would	permit	approximately	$9.0	billion	of	the	federal	NOL	Carryforwards	to	be	utilized	without	regard	to	the	annual	limitation	generally imposed	by	Section	382,	there	can	be	no	assurance	that	these	special	rules	will	apply.

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,	the Restated	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	the Restated	Certificate	of	Incorporation	was	attached	as	Exhibit	3.1	to	a	Form	8-K	filed	on	December	9,	2013,	by	the	Company	with	the	Securities	and	Exchange Commission.

# Liabilities	Subject	to	Compromise

Liabilities	subject	to	compromise	refers	to	pre-petition	obligations	which	may	be	impacted	by	the	Chapter	11	reorganization	process.	These	amounts	represent the	Debtors'	current	estimate	of	known	or	potential	pre-petition	obligations	to	be	resolved	in	connection	with	the	Chapter	11	Cases.

Pursuant	to	the	Plan,	allowed	pre-petition	claims	and	estimated	unresolved	pre-petition	claims	of	$5.1	billion	were	settled	in	cash,	AAG	Series	A	Preferred Stock	and	other	bankruptcy	settlement	obligations	on	the	Effective	Date.	The	pension	and	postretirement	benefits	obligation	included	below	was	reinstated	and	is included	 in	Pension	and	postretirement	benefits	 in	 the	Company's	Consolidated	Balance	Sheets.	Accordingly,	 there	are	no	Liabilities	Subject	 to	Compromise	at December	31,	2013.

The	following	table	summarizes	the	components	of	liabilities	subject	to	compromise	included	on	the	Consolidated	Balance	Sheet	as	of	December	31,	2012	(in millions):

| Secured	variable	and	fixed	rate	indebtedness	due	through	2023	(effective	rates	from	1.00%	-	13.00%	at<br>December	31,	2012) | $172 |
| :--- | :--- |
| 6.00%—8.50%\tspecial\tfacility\trevenue\tbonds\tdue\tthrough\t2036 | 186 |
| 6.25%\tsenior\tconvertible\tnotes\tdue\t2014 | 460 |
| 9.0%—10.20%\tdebentures\tdue\tthrough\t2021 | 214 |
| 7.88%—10.55%\tnotes\tdue\tthrough\t2039 | 166 |

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,	2012	and	2011	(in	millions):

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Pension\tand\tpostretirement\tbenefits | $— | $(66) | $— |
| Labor-related\tdeemed\tclaim | 1,733 | — | — |
| Aircraft\tand\tfacility\tfinancing\trenegotiations\tand\trejections\t1,\t2 | 325 | 1,950 | 102 |
| Fair\tvalue\tof\tconversion\tdiscount\t3 | 218 | — | — |
| Professional\tfees | 199 | 229 | 14 |
| Other | 180 | 95 | 2 |
| Total\treorganization\titems,\tnet | $2,655 | $2,208 | $118 |

(1) 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	agreements	when	the	applicable	motion	was filed	with	the	Bankruptcy	Court	to	reject	or	modify	such	financing	and	the	Debtors	believed	that	it	was	probable	the	motion	would	be	approved,	and	there	was sufficient	information	to	estimate	the	claim.

(3) The	Plan	allows	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,	2013,	the	components	of	Mandatorily	convertible	preferred	stock	and	other	bankruptcy	settlement	obligations	on	the	Consolidated	Balance Sheet	are	as	follows	(in	millions):

The	AAG	Series	A	Preferred	Stock,	while	outstanding,	votes	and	participates	in	accordance	with	the	terms	of	the	underlying	Certificate	of	Designation.	One quarter	of	the	shares	of	AAG	Series	A	Preferred	Stock	initially	issued	is	mandatorily	convertible	on	each	of	the	30 th,	60th,	90th	and	120th	days	after	the	Effective	Date.	In addition,	subject	to	certain	limitations,	holders	of	AAG	Series	A	Preferred	Stock	may	elect	to	convert	up	to	an	additional	10	million	shares	of	AAG	Series	A	Preferred Stock	during	each	30-day	period	following	the	Effective	Date	thereby	reducing	the	number	of	shares	to	be	converted	on	the	120th	day	after	the	Effective	Date.	The	initial stated	value	of	each	share	of	AAG	Series	A	Preferred	Stock	is	$25.00	and	accrues	dividends	at	6.25%	per	annum,	calculated	daily,	while	outstanding.	Additionally, AAG	Series	A	Preferred	Stock	converts	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.	AAG	Series	A	Preferred	Stock	embodies	an	unconditional	obligation	to	transfer	a	variable number	of	shares	based	predominately	on	a	fixed	monetary	amount	known	at	inception,	and,	as	such,	it	is	not	treated	as	equity,	but	rather	as	a	liability	until	such	time that	it	is	converted	to	AAG	Common	Stock.	Accordingly,	AAG	Series	A	Preferred	Stock	outstanding	at	 December	31,	2013	is	included	within	the	"Mandatorily convertible	preferred	stock	and	other	bankruptcy	settlement	obligations"	line	on	the	Company's	Consolidated	Balance	Sheets.	Upon	conversion	of	any	remaining	AAG Series	A	Preferred	Stock	on	the	120th	day	after	the	Effective	Date,	all	AAG	Series	A	Preferred	Stock	will	have	been	converted	to	AAG	Common	Stock	and	no	AAG Series	A	Preferred	Stock	will	then	remain	outstanding.	As	of	February	19,	2014,	approximately	107	million	shares	of	AAG	Series	A	Preferred	Stock	had	been	converted into	an	aggregate	of	95	million	shares	of	AAG	Common	Stock.

The	Company's	Single-Dip	equity	obligations,	while	outstanding,	do	not	vote	or	participate	in	accordance	with	the	terms	of	the	Plan.	These	equity	contract obligations,	representing	the	amount	of	total	Single-Dip	unsecured	creditor	obligations	not	satisfied	through	the	issuance	of	AAG	Series	A	Preferred	Stock	at	the Effective	Date,	represent	an	unconditional	obligation	to	transfer	a	variable	number	of	shares	based	predominantly	on	a	fixed	monetary	amount	known	at	inception,	and, as	such,	are	not	treated	as	equity,	but	rather	as	liabilities	until	the	120th	day	after	emergence.	At	the	120th	day	after	emergence,	the	Company	will	issue	a	variable	amount of	AAG	Common	Stock	necessary	to	satisfy	the	obligation	amount	at	emergence,	plus	accrued	dividends	of	12%	per	annum,	calculated	daily,	through	the	120th	day	after emergence,	based	on	the	volume	weighted	average	price	of	the	shares	of	AAG	Common	Stock	at	a	3.5%	discount,	as	specified	in	the	Plan	and,	subject	to	there	being	a sufficient	number	of	shares	remaining	for	issuance	to	unsecured	creditors	under	the	Plan.

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	was	approximately	$1.7	billion.	On	the	Effective	Date,	the	Company made	an	 initial	distribution	of	$595	million	 in	common	stock	and	American	paid	approximately	$300	million	in	cash	to	cover	payroll	taxes	related	to	the	equity distribution.	As	of	December	31,	2013,	the	remaining	liability	to	certain	AMR	labor	groups	and	employees	of	$849	million	is	based	upon	the	estimated	fair	value	of	the shares	expected	to	be	issued	in	satisfaction	of	such	obligation,	measured	as	if	the	obligation	were	settled	using	the	trading	price	of	AAG	Common	Stock	at	December	31, 2013.	Increases	in	the	trading	price	of	AAG	Common	Stock	after	December	31,	2013,

could	cause	a	decrease	in	the	fair	value	measurement	of	the	remaining	obligation,	and	vice-versa.	The	Company	will	record	this	obligation	at	fair	value	primarily	through the	120th	day	after	emergence,	at	which	time	the	obligation	will	be	materially	settled.

# 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	will	not	be	amortized, but	will	be	tested	for	impairment	at	least	annually.

# Slot	Divestiture

As	a	stipulation	for	the	Merger	to	be	approved	by	the	Department	of	Justice	(DOJ),	the	Company	was	required	to	divest	certain	slots	and	LaGuardia	Airport and	Washington	Regan	National	Airport.	As	of	December	31,	2013,	the	Company	recognized	a	gain	of	$67	million	related	to	the	sale	the	LaGuardia	Airport	slots,	which has	been	included	in	Special	items,	net	in	the	consolidated	statement	of	operations.	The	relevant	Washington	Regan	National	Airport	slots	were	classified	as	assets	held for	sale	and	included	in	Prepaid	expenses	and	other	on	the	Consolidated	Balance	Sheets.

# Tax	Matters

The	Company	experienced	an	"ownership	change"	in	connection	with	its	emergence	from	bankruptcy	which	under	Section	382	could	substantially	constrain the	use	of	a	company's	NOL	carryforwards	and	other	tax	attributes.	However,	the	general	limitation	rules	of	Section	382	are	liberalized	where	the	ownership	change occurs	upon	emergence	from	bankruptcy.	While	the	Company	anticipates	taking	advantage	of	these	special	rules	that	would	permit	the	utilization	of	substantially	all	of the	company's	NOL	carryforwards,	there	can	be	no	assurance	that	those	special	rules	will	apply.	If	the	special	rules	do	not	apply,	our	ability	to	utilize	our	NOL carryforwards	may	be	subject	to	limitation.	See	Note	11	for	additional	information	related	to	tax	matters.

# 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.

# (in	millions	except	per	share	data)

| Outstanding	shares	of	US	Airways	Group	Common	Stock	at	December	9,	2013	exchanged | 197.4 |
| :--- | :--- |
| Exchange\tratio | 1.0 |
| Assumed\tshares\tof\tAAG\tCommon\tStock | 197.4 |
| Price\tper\tshare | $22.55 |
| Fair\tvalue\tof\tAAG\tCommon\tStock\tissued | $4,451 |
| Fair\tvalue\tof\tAAG\tequity\tawards\tissued\tin\texchange\tfor\toutstanding\tUS\tAirways\tGroup\tequity\tawards | $141 |
| Total\tpurchase\tprice | $4,592 |

# Allocation	of	Consideration	Transferred

The	Merger	has	been	accounted	for	using	the	acquisition	method	of	accounting	in	accordance	with	ASC	805,	"Business	Combinations,"	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.

| impairment	at	least	annually. |  |
| :--- | :--- |
|  | (In\tmillions) |
| Cash | $206 |
| Short-term\tinvestments | 3,517 |
| Other\tcurrent\tassets | 1,459 |
| Operating\tproperty\tand\tequipment | 5,543 |
| Goodwill | 4,086 |
| Identifiable\tintangibles | 1,501 |
| Other\tnoncurrent\tassets | 122 |
| Long-term\tdebt\tand\tcapital\tleases,\tincluding\tcurrent\tportion | (6,026) |
| Air\ttraffic\tliability | (1,417) |
| Frequent\tflyer\tliability | (1,256) |
| Other\tliabilities\tassumed | (3,143) |
| Total\tpurchase\tprice | $4,592 |

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.	In	accordance	with	ASC	805, the	Company	may	periodically	adjust	the	value	of	goodwill	to	reflect	changes	that	occur	as	a	result	of	adjustments	during	the	measurement	period	following	the	date	of acquisition.

# Pro-forma	Impact	of	the	Merger

The	AAG	unaudited	pro-forma	results	presented	below	include	the	effects	of	the	US	Airways	acquisition	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	fair	value	adjustments,	elimination	of any	deferred	gains	or	losses	from	other	comprehensive	income	and	the	impact	of	income	changes	on	profit	sharing	expense,	among	others.	However,	pro-forma	results do	 not	 include	 any	 anticipated	 synergies	 or	 other	 expected	 benefits	 of	 the	 acquisition.	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.

# Reclassifications

Certain	 prior	 period	 amounts	 have	 been	 reclassified	 between	 various	 financial	 statement	 line	 items	 to	 conform to the	 new	 AAG financial statement presentation.	These	reclassifications	do	not	impact	the	historic	net	income	and	are	comprised	principally	of	the	following	items:

•Reclassifications	 between	 various	 operating income line items to	 conform the	 presentation	 of	 Cargo	 and	 Other revenues.

•Reclassifications	 between	 various	 operating expense line items to conform the	 presentation	 of regional airline expenses.

•Reclassifications	between	other	nonoperating	income	(expense),	net	and	operating	expenses	to	conform	the	presentation	of	foreign	currency	gains	and losses.

The	following	table	summarizes	the	historical	and	revised	financial	statement	amounts	for	AAG	(in	millions).

|  | 2012<br>	As	Reclassified | Historical | 2011<br>As	Reclassified | Historical |
| :--- | :--- | :--- | :--- | :--- |
| Operating\trevenues: |  |  |  |  |
| Mainline\tpassenger | $18,743 | $18,743 | $17,947 | $17,947 |
| Regional\tpassenger | 2,914 | 2,914 | 2,724 | 2,724 |
| Cargo | 675 | 669 | 709 | 703 |
| Other | 2,523 | 2,529 | 2,599 | 2,605 |
| Total\toperating\trevenues | 24,855 | 24,855 | 23,979 | 23,979 |
| Operating\texpenses: |  |  |  |  |
| Aircraft\tfuel\tand\trelated\ttaxes | 7,705 | 8,717 | 7,358 | 8,304 |
| Salaries,\twages\tand\tbenefits | 6,217 | 6,897 | 6,361 | 7,053 |
| Regional\texpenses | 3,028 | — | 3,009 | — |
| Maintenance,\tmaterials\tand\trepairs | 1,158 | 1,400 | 1,039 | 1,284 |
| Other\trent\tand\tlanding\tfees | 1,083 | 1,304 | 1,194 | 1,432 |
| Aircraft\trent | 553 | 550 | 645 | 662 |
| Selling\texpenses | 1,058 | 1,050 | 1,102 | 1,062 |
| Depreciation\tand\tamortization | 845 | 1,015 | 915 | 1,086 |
| Special\titems,\tnet | 386 | 387 | 756 | 725 |
| Other | 2,674 | 3,428 | 2,637 | 3,425 |
| Total\toperating\texpenses | 24,707 | 24,748 | 25,016 | 25,033 |
| Operating\tincome\t(loss) | 148 | 107 | (1,037) | (1,054) |
| Nonoperating\tincome\t(expense): |  |  |  |  |
| Interest\tincome | 26 | 26 | 26 | 26 |
| Interest\texpense,\tnet\tof\tcapitalized\tinterest | (632) | (612) | (811) | (786) |
| Other,\tnet | 221 | 242 | (39) | (47) |
| Total\tnonoperating\texpense,\tnet | $(385) | $(344) | $(824) | $(807) |

Additionally,	the	Company	reclassified	approximately	$292	million	from	current	to	noncurrent	liabilities	as	of	December	31,	2012.

# 5.	Basis	of	Presentation	and	Summary	of	Significant	Accounting	Policies

The	Consolidated	Financial	Statements	as	of	and	for	the	years	ended	December	31,	2013,	2012	and	2011	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	AMR	Eagle,	for	periods	ended	prior	to

December	9,	2013	and	consolidated	results	of	AAG,	which	includes	American,	AMR	Eagle	and	US	Airways	Group,	for	periods	ending	on	or	after	December	9,	2013. Accordingly,	the	Consolidated	Financial	Statements	for	the	year	ended	December	31,	2013	include	the	accounts	of	US	Airways	Group	for	the	23	days	ended	December 31,	2013.	Certain	prior	period	amounts	have	been	reclassified	to	conform	to	the	current	year	financial	statement	presentation.	All	significant	intercompany	transactions have	been	eliminated.

# Chapter	11	Matters

In	accordance	with	GAAP,	the	Debtors	applied	ASC	852	"Reorganizations"	(ASC	852),	in	preparing	the	Consolidated	Financial	Statements.	ASC	852	requires that	the	financial	statements,	for	periods	subsequent	to	the	Chapter	11	Cases,	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	are	recorded	in	Reorganization	Items,	Net	on	the	accompanying	Consolidated	Statement	of	Operations.	In	addition,	pre- petition	obligations	that	may	be	impacted	by	the	Chapter	11	reorganization	process	as	of	December	31,	2012	were	classified	on	the	Consolidated	Balance	Sheet	in Liabilities	Subject	to	Compromise.

Certain	of	AMR's	non-U.S.	subsidiaries	were	not	part	of	the	Chapter	11	Cases.	Since	these	non-US	subsidiaries	do	not	have	significant	transactions,	AAG	does not	separately	disclose	the	combined	financial	statements	of	such	non-U.S.	subsidiaries	in	accordance	with	the	requirements	of	reorganization	accounting.

In	accordance	with	ASC	852,	AAG	did	not	meet	the	criteria	for	and	will	not	adopt	"fresh	start"	accounting	as	the	reorganization	value	of	AMR's	assets,	as determined	based	upon	an	estimate	of	the	fair	value	of	AMR's	equity	using	the	trading	market	price	of	US	Airways	Group	and	the	amount	of	post-petition	liabilities	as	of the	Effective	Date	was	greater	than	total	pre-petition	liabilities	and	expected	allowed	claims.	As	a	result,	AAG's	assets	and	liabilities	were	not	adjusted	to	fair	value.

Effective	January	1,	2013,	the	Company	adopted	revised	guidance	on	the	Comprehensive	Income	topic	of	the	FASB	Codification	which	requires	an	entity	to present,	either	parenthetically	on	the	face	of	the	financial	statements	or	in	the	notes,	significant	amounts	reclassified	from	each	component	of	accumulated	other comprehensive	income	(loss)	and	the	income	statement	line	items	affected	by	the	reclassification.	The	adoption	did	not	have	any	impact	on	the	Company's	financial position,	results	of	operations	or	cash	flows.

Effective	January	1,	2013,	the	Company	adopted	revised	guidance	on	Balance	Sheet	topic	of	the	FASB	Codification,	which	clarifies	the	scope	of	disclosures about	offsetting	assets	and	liabilities.	The	clarification	applies	only	to	derivatives,	repurchase	agreements	and	reverse	purchase	agreements,	and	to	certain	securities borrowing	and	securities	lending	transactions,	and	not	to	ordinary	trade	receivables	and	payables.	The	adoption	did	not	have	any	impact	on	the	Company's	financial position,	results	of	operations	or	cash	flows.

# Summary	of	Significant	Accounting	Policies

# Use	of	Estimates

The	preparation	of	financial	statements	in	conformity	with	accounting	principles	generally	accepted	in	the	United	States	(GAAP)	requires	management	to	make estimates	and	assumptions	that	affect	the	amounts	reported	in	the	accompanying	Consolidated	Financial	Statements	and	accompanying	notes.	Actual	results	could	differ from	those	estimates.

# 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,	credit card	processing	holdback	requirements.

# Aircraft	fuel,	spare	parts,	and	supplies,	net

Aircraft	fuel,	spare	parts,	and	supplies,	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.

# 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.

# Goodwill

Goodwill	represents	the	excess	of	the	purchase	price	over	the	net	fair	value	of	the	assets	acquired	and	liabilities	assumed	by	AAG	on	December	9,	2013,	in connection	with	the	Merger.	Goodwill	will	not	be	amortized	but	tested	for	impairment	annually.

# Other	Intangibles,	net

Intangible	assets	consist	primarily	of	airport	take-off	and	landing	rights	(Slots),	customer	relationships,	market	partners,	international	route	authorities,	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.

In	connection	with	the	application	of	acquisition	accounting	as	of	December	9,	2013,	the	intangible	assets	acquired	from	US	Airways	were	measured	at	fair value	using	the	market	and	income	approaches.	The	Company	utilized	the	market	approach	to	value	airport	Slots,	when	sufficient	market	information	was	available,	and included	prices	and	other	relevant	information	generated	by	market	transactions	involving	comparable	assets	as	well	as	pricing	guides	and	other	sources.	The	Company utilized	the	income	approach	to	value	the	customer	relationships	and	marketing	agreements,	certain	international	route	authorities	and	the	US	Airways	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	following	table	provides	information	relating	to	the	Company's	amortized	intangible	assets	as	of	December	31,	2013	and	2012	(in	millions):

|  | 2013 | 2012 |
| :--- | :--- | :--- |
| Airport\tSlots | $332 | $515 |
| Customer\trelationships | 300 | — |
| Marketing\tagreements | 105 | — |
| Tradenames | 35 | — |
| Airport\tgate\tleasehold\trights | 155 | 155 |
| Accumulated\tamortization | (373) | (509) |
| Total | $554 | $161 |

					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	will	be	amortized	over	approximately	nine	years,	30	years	and	15	months, respectively.

The	Company	recorded	amortization	expense	related	to	these	intangible	assets	of	approximately	$20	million,	$25	million,	and	$27	million	for	the	years	ended December	31,	2013,	2012	and	2011,	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	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,	2013,	and	2012,	the	Company	had	$1.8	billion	and	$708	million,	respectively,	of	indefinite-lived	intangible	assets	on	its	Consolidated	Balance	Sheet.

# 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,	2013,	2012	and	2011	was	$47	million,	$50	million	and $40	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%,	except	when	guaranteed	by	a	third-party	for	a different	amount.

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.

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	statement	of	operations	and	recorded	as	a	liability	until	remitted	to	the	appropriate	taxing authority.

The	Company	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	and	oneworld	carriers	and	US	Airways	and	Star	Alliance	carriers,	respectively,	as	well	as	certain	other	partner	airlines	that participate	in	the	programs.	Effective	March	31,	2014,	US	Airways	will	join	the	oneworld	alliance	and	exit	the	Star	Alliance.	At	that	point,	frequent	travel	reciprocity will	be	discontinued	for	many	Star	Alliance	airlines.	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	the	Company pays	a	fee.

The	Company	uses	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	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.	In	addition,	the	Company	also includes	in	the	determination	of	incremental	cost	the	amount	of	certain	fees	related	to	redemptions	expected	to	be	collected	from	AAdvantage	and	Dividend	Miles members.	These	redemption	fees	reduce	incremental	cost.	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.

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,	2013,	the	liability	for	outstanding	mileage	credits	expected	to	be	redeemed	for	future	travel	awards	for	US	Airways under	the	Dividend	Miles	program	was	$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.

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	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,	American	 and	 Citibank	 amended	 their	 current	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	will	apply	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	the	fourth	quarter	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,	2013	and	2012,	the	Company	had	$1.5	billion	and	$1.2	billion,	respectively	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,	2013,	2012	 and	2011,	the	marketing	component	of	mileage	sales recognized	at	the	time	of	sale	in	other	revenues	was	approximately	$834	million,	$725	million	and	$761	million,	respectively.

# Selling	Expenses

Selling	expenses	include	commissions,	credit	card	fees,	computerized	reservations	systems	fees	and	advertising.	Advertising	expenses	are	expensed	on	a straight-line	basis	as	incurred	throughout	the	year.	Advertising	expense	was	$166	million,	$153	million	and	$186	million	for	the	years	ended	December	31,	2013,	2012 and	2011,	respectively.

# 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	and	certain	vendor	incentives.

# 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	12	for	further	discussion	of	share- based	compensation.

# Foreign	Currency	Gains	and	Losses

Foreign	currency	gains	and	losses	are	recorded	as	part	of	other	nonoperating	expense,	net	in	AAG's	Consolidated	Statements	of	Operations.	Foreign	currency losses	for	2013,	2012	and	2011	were	$56	million,	$41	million	and	$17	million,	respectively.

# Subsequent	Events

In	connection	with	preparation	of	the	Consolidated	Financial	Statements	and	in	accordance	U.S.	GAAP,	the	Company	evaluated	subsequent	events	after	the balance	sheet	date	of	December	31,	2013	and	identified	items	as	set	forth	in	Note	20	to	AAG's	Consolidated	Financial	Statements.

# 6.	Special	Items,	Net

The	following	table	summarizes	the	components	of	the	Company's	Special	items,	net,	as	of	December	31,	2013,	2012	and	2011	(in	millions):

|  | 2013 | Year	Ended	December	31,<br>2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Restructuring\tand\tspecial\tcharges: |  |  |  |
| Aircraft\t1 | \t $33 | \t $11 | \t $744 |
| Facilities\tand\tother\tfixed\tassets | 7 | 14 | 12 |
| Personnel\tcosts\t2 | 166 | 361 | — |
| Merger-related\texpenses: |  |  |  |
| Employee-related\t3 | 295 | — | — |
| Professional\tfees | 96 | — | — |
| Slot\tdivestiture\t4 | (67) | — | — |
| Other | 29 | — | — |
| Special\titems,\tnet | \t $559 | \t $386 | \t $756 |

(1)Consists	primarily	of	impairment	charges	to	write-down	certain	Boeing	757	aircraft	and	certain	related	long-lived	assets	to	their	estimated	fair	value	in	connection with	reclassification	of	these	assets	to	held	for	sale.

(2)Consists	primarily	of	a	$107	million	fair	value	adjustment	to	the	pilot	long-term	disability	plan	and	a	$43	million	charge	to	benefits	expense	due	to	a	reorganization related	increase	in	workers'	compensation	claims	in	the	applicable	period	including	adverse	developments	on	older	claims.	Charges	in	2012	are	in	connection	with voluntary	and	involuntary	employee	separations	from	the	Company	and	were	paid	through	the	end	of	2013.

(3)Employee	related	expenses	primarily	consist	of	a	$192	million	charge	resulting	from	the	US	Airways	Group	pilot	MOU	that	became	effective	upon	consummation	of the	Merger,	$58	million	in	severance	to	satisfy	certain	separation	agreements	resulting	from	the	Merger	and	professional	fees	and	$56	million	related	to	equity awards	granted	in	connection	with	the	Merger,	partially	offset	by	the	cancellation	of	equity	awards	in	connection	with	the	Merger.

(4)Recognition	of	a	$67	million	gain	on	the	sale	of	slots	at	LaGuardia	and	Ronald	Regan	Washington	National	Airport	as	part	of	the	settlement	reached	with	the Department	of	Justice.

# 7.	Investments	and	Fair	Value	Measurements

Short-term	investments	consisted	of	(in	millions):

|  | December	31, |  |
| :--- | :--- | :--- |
|  | 2013 | 2012 |
| Overnight\tInvestments,\tTime\tDeposits\tand\tRepurchase\tAgreements | $177 | $308 |
| Corporate\tand\tBank\tNotes | 3,350 | 2,121 |
| U.S.\tGovernment\tAgency\tand\tTreasury\tObligations | 1,513 | 545 |
| Commingled\tFunds | 3,069 | 435 |
| Other | 2 | 3 |
|  | $8,111 | $3,412 |
| Short-term\tinvestments\tat\tDecember\t31,\t2013,\tby\tcontractual\tmaturity\tincluded\t(in\tmillions): |  |  |
| Due\tin\tone\tyear\tor\tless | Due\tin\tone\tyear\tor\tless | $5,257 |
| Due\tbetween\tone\tyear\tand\tthree\tyears |  | 2,443 |
| Due\tafter\tthree\tyears | Due\tafter\tthree\tyears | 411 |

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).

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	consist	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	are	the	primary	underlying	commodities	in	the	hedge	portfolio.	No	changes	in	valuation	techniques	or	inputs	occurred	during	the	year	ended December	31,	2013.

Assets	and	liabilities	measured	at	fair	value	on	a	recurring	basis	are	summarized	below	(in	millions):

|  |  | Fair	Value	Measurements	as	of	December	31,	2013 | Fair	Value	Measurements	as	of	December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- |
| Description | Total | Level\t1 | Level\t2 | Level\t3 |
| Short-term\tinvestments\t1,\t2 |  |  |  |  |
| 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-term\tinvestments\t1 | 1,035 | 979 | 56 | — |
| Fuel\tderivative\tcontracts,\tnet\t1 | 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.	The	Company'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,	2013,	the	Company	had	no	exposure	to	European	sovereign	debt.

# 8.	Commitments,	Contingencies	and	Guarantees

# Aircraft	Acquisition	Commitments

AAG	had	total	aircraft	acquisition	commitments	as	of	December	31,	2013	as	follows:

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Airbus |  |  |  |  |  |  |  |
| A320\tFamily | 52 | 43 | 25 | 20 | — | — | 140 |
| A320\tNeo | — | — | — | 10 | 25 | 95 | 130 |
| A330-200 | 3 | — | — | — | — | — | 3 |
| A350\tXWB | — | — | — | 6 | 10 | 6 | 22 |
| Boeing |  |  |  |  |  |  |  |
| 737\tFamily | 20 | 20 | 20 | 20 | — | — | 80 |
| 737\tMAX | — | — | — | 3 | 17 | 80 | 100 |
| 777-300\tER | 6 | 2 | 2 | — | — | — | 10 |
| 787\tFamily | 2 | 11 | 13 | 9 | 7 | — | 42 |
| Bombardier |  |  |  |  |  |  |  |
| CRJ900 | 15 | 15 | — | — | — | — | 30 |
| Embraer |  |  |  |  |  |  |  |
| ERJ175 | — | 24 | 24 | 12 | — | — | 60 |
| Total | 98 | 115 | 84 | 80 | 59 | 181 | 617 |

As	of	December	31,	2013,	payments	for	the	above	purchase	commitments	and	certain	engines,	and	future	lease	payments	for	all	leased	aircraft,	are	presented	in the	table	below	(in	millions):

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Payments\tfor\tabove\taircraft\ncommitments\tand\tcertain\tengines\t1 | \t $3,794 | \t $3,525 | \t $3,382 | \t $3,883 | \t $4,961 | \t $16,346 | \t $35,891 |

(1) These	amounts	are	net	of	purchase	deposits	currently	held	by	the	manufacturers.	The	Company's	purchase	deposits	totaled	$1.1	billion	as	of	December	31,	2013. American	has	granted	Boeing	a	security	interest	in	American's	purchase	deposits	with	Boeing.

In	February	2013,	American	entered	into	agreements	with	Boeing	that	provide	for,	among	other	things,	the	assumption	and	restructuring	of	certain	existing aircraft	purchase	agreements,	the	entering	into	of	a	definitive	purchase	agreement	with	respect	to	Boeing	737	MAX	aircraft,	the	confirmation	of	the	purchase	of	the Boeing	787	aircraft	(which	previously	had	been	subject	to	certain	reconfirmation	rights)	and	certain	financing	commitments.	American	also	entered	into	an	amendment to	its	agreement	with	Airbus	S.A.S.	in	January	2013.

In	December	2013,	American	entered	into	agreements	with	Bombardier	Inc.	(Bombardier)	and	Embraer	S.A.	(Embraer)	under	which	it	plans	to	acquire	30 Bombardier	CRJ900	aircraft	to	be	delivered	in	2014	and	2015	and	60	Embraer	E175	aircraft	to	be	delivered	between	2015	and	2017.	The	agreement	also	provides	for the	option	to	purchase	up	to	40	additional	CRJ900	aircraft	and	90	additional	E175	aircraft.

# 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):

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Facility\tconstruction\tor\nimprovement\tcontracts | \t $34 | \t $21 | \t $— \t $ | — \t $ | — \t $ | — \t $ | 55 |
| Information\ttechnology\tsupport\ncontract | 129 | 118 | 104 | 87 | 87 | 74 | 599 |

# Capacity	Purchase	Agreements	with	Third-Party	Regional	Carriers

As	of	December	31,	2013,	the	Company's	capacity	purchase	agreements	with	third-party	regional	carriers	had	expiration	dates	ranging	from	2014	to	2025,	with rights	of	American	or	US	Airways,	respectively,	to	extend	the	respective	terms	of	each	agreement.

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,	2013,	the Company's	minimum	fixed	obligations	under	its	capacity	purchase	agreements	with	third-party	regional	airlines	were	as	follows	(approximately,	in	millions):

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Minimum\tfixed\tobligations\tunder\tits |  |  |  |  |  |  |  |
| capacity\tpurchase\tagreements\twith |  |  |  |  |  |  |  |
| third-party\tregional\tcarriers\t1 | \t $1,666 | \t $1,678 | \t $1,537 | \t $1,249 | \t $1,061 | \t $5,005 | \t $12,196 |

(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	our	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	$317	million	in	2014,	$289	million	in	2015,	$220	million	in 2016,	$186	million	in	2017,	$143	million	in	2018	and	$261	million	in	2019	and	thereafter.

# 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, 2013,	the	Company	had	508	aircraft	under	operating	leases,	with	remaining	terms	ranging	from	one	month	to	approximately	14	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,	2013,	obligations	under	noncancellable	operating	leases	for	future	minimum	lease	payments	were	as	follows	(in	millions):

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Future\tminimum\tlease\tpayments\t1 | \t $2,267 | \t $1,934 | \t $1,751 | \t $1,650 | \t $1,426 | \t $6,664 | \t $15,692 |

(1)	As	of	December	31,	2013,	$322	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.

# Sale-leaseback	Arrangements

During	2013,	American	financed	31	Boeing	737-800	and	three	777-300ER	aircraft	under	sale-leaseback	arrangements,	which	are	accounted	for	as	operating leases.	Gains	and	losses	associated	with	these	sale-leaseback	transactions	are	amortized	over	the	respective	remaining	lease	term	and	are	included	in	the	consolidated balance	sheets	as	deferred	gains	and	prepaid	rent,	respectively.

American	has	entered	into	sale-leaseback	arrangements	with	certain	leasing	companies	to	finance	20	Boeing	737-800	scheduled	to	be	delivered	beginning	in January	2014.	The	financings	of	each	aircraft	under	these	arrangements	are	subject	to	certain	terms	and	conditions.

# Aircraft

AAG	has	185	owned	aircraft	and	144	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	is	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	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,	2013,	$6.0	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. Each	lease	does	have	a	fair	market	value	or	a	fixed	price	purchase	option	that	allows	AAG	to	purchase	the	aircraft	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,	2013,	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.	To	the	extent	these	transactions	were	committed	to	prior	to	May	21,	1998,	they	are	accounted	for	as	operating leases.	Approximately	$498	million	of	the	special	facility	revenue	bonds,	with	total	future	payments	of	approximately	$715	million	 as	 of	December	31,	2013,	are guaranteed	by	AAG,	American,	US	Airways	Group	or	US	Airways.	Approximately	 $112	million	of	these	special	facility	revenue	bonds	contain	mandatory	tender provisions	that	require	American	to	make	operating	lease	payments	sufficient	to	repurchase	the	bonds	in	2014.	Although	American	has	the	right	to	remarket	the	bonds, there	can	be	no	assurance	that	these	bonds	will	be	successfully	remarketed.	Any	payments	to	redeem	or	purchase	bonds	that	are	not	remarketed	would	generally	reduce existing	rent	leveling	accruals	or	are	considered	prepaid	facility	rentals	and	would	reduce	future	operating	lease	commitments.

# Legal	Proceedings

Government	Antitrust	Actions.	On	August	13,	2013,	the	U.S.	government,	along	with	the	States	of	Arizona,	Florida,	Tennessee	and	Texas,	the	Commonwealths of	Pennsylvania	and	Virginia,	and	the	District	of	Columbia	(collectively,	the	plaintiff	states),	filed	a	complaint	against	US	Airways	Group	and	AMR	in	the	U.S.	District Court	for	the	District	of	Columbia.	The	plaintiffs	alleged,	among	other	things,	that	the	proposed	Merger	would	substantially	lessen	competition	in	violation	of	Section	7 of	the	Clayton	Act	and	sought	to	permanently	enjoin	the	transaction.	On	September	5,	2013,	the	plaintiffs	filed	an	amended	complaint,	adding	the	State	of	Michigan	as	a plaintiff.	On	October	1,	2013,	the	State	of	Texas	entered	into	an	agreement	with	US	Airways	Group	and	AMR	that	resolved	that	state's	objections	to	the	Merger,	and	its claims	were	dismissed	with	prejudice	on	October	7,	2013.	On	November	11,	2013,	US	Airways	and	American	entered	into	agreements	with	the	U.S.	government	and	the plaintiff	states	resolving	all	claims	in	the	litigation.	The	agreement	with	the	U.S.	government	requires	the	carriers	to	divest	assets	at	certain	airports	and	remains	subject to	public	comment	and	court	approval.	In	the	agreement	with	the	United	States	government,	among	other	things,	we	agreed	to	divest	and	not	reacquire	for	ten	years certain	rights	and	assets	consisting	of	52	Slot	pairs	at	Washington	Reagan	National	Airport,	and	17	Slot	pairs	at	LaGuardia,	in	each	case	together	with	and	associated 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,	Dallas	Love	Field,	Los	Angeles	International	Airport	and	Miami	International	Airport.	The	agreement	with	the	plaintiff	states,	which	was	entered	by	the	court on	November	12,	2013,	requires	our	airlines,	subject	to	certain	conditions	and	exceptions,	to	maintain	certain	hub	operations	in	a	manner	generally	consistent	with historical	operations	and	to	continue	to	provide	scheduled	daily	service	to	certain	specified	communities,	both	for	limited	periods	of	time.	In	addition,	we	entered	into	a related	settlement	with	the	DOT	related	to	small	community	service	from	Washington	Reagan	National	Airport

Merger	Class	Action.	On	March	1,	2013,	a	complaint	captioned	Plumbers	&	Steamfitters	Local	Union	No.	248	Pension	Fund	v.	US	Airways	Group,	Inc.,	et	al., No.	CV2013-051605,	was	filed	as	a	putative	class	action	on	behalf	of	the	stockholders	of	US	Airways	Group	in	the	Superior	Court	for	Maricopa	County,	Arizona.	On July	3,	2013,	an	amended	complaint,	captioned	Dennis	Palkon,	et	al.	v.	US	Airways	Group,	Inc.,	et	al.,	No.	CV2013-051605,	was	filed	with	the	same	court.	The amended	complaint	names	as	defendants	US	Airways	Group	and	the	members	of	its	board	of	directors,	and	alleges	that	the	directors	failed

to	maximize	the	value	of	US	Airways	Group	in	connection	with	the	Merger	and	that	US	Airways	Group	aided	and	abetted	those	breaches	of	fiduciary	duty.	The	relief sought	in	the	amended	complaint	includes	an	injunction	against	the	Merger,	or	rescission	in	the	event	it	has	been	consummated.	The	court	in	the	above-referenced	action denied	the	plaintiff's	motion	for	a	temporary	restraining	order	that	had	sought	to	enjoin	the	US	Airways	Group	Annual	Meeting	of	Stockholders.	The	above-referenced action	was	stayed	pending	the	outcome	of	the	antitrust	lawsuit	filed	by	the	U.S.	government	and	various	states	on	August	13,	2013	(described	above).	This	stay	has	now been	lifted	and	a	motion	to	dismiss	this	action	filed	by	US	Airways	Group	is	pending	before	the	court.	We	believe	this	lawsuit	is	without	merit	and	intend	to	vigorously defend	against	the	allegations.

# Guarantees	and	Indemnifications

US	Airways	assigned	to	Delta	a	lease	agreement	with	the	Port	Authority	of	New	York	and	New	Jersey	related	to	the	East	End	Terminal	at	LaGuardia	airport.	A portion	of	the	rental	payments	under	the	lease	are	used	to	repay	special	revenue	bonds	issued	by	the	Port	Authority.	The	revenue	bonds	have	a	final	scheduled	maturity	in 2015	and	had	an	outstanding	principal	amount	of	approximately	$43	million	 at	December	31,	2013.	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	and	derivative	transactions,	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.

# Venezuela	Cash	and	Short-term	Investments

# 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.	As	of	December	31,	2013,	American	reached	an	agreement	with	JAL	to	settle	the	liability	at	an	amount	already	recorded.

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.

As	a	result	of	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,	2013,	the	remaining	liability	and	the	amount	of	the	offsetting	receivable were	each	$1.0	billion.

# 9.	Indebtedness	and	Leases

Long-term	debt	and	capital	lease	obligations	included	in	the	Consolidated	Balance	Sheets	consisted	of	(in	millions):

|  | December	31,	2013 | December	31,	2012 |
| :--- | :--- | :--- |
| Secured |  |  |
| American |  |  |
|  | $2,111 | $3,297 |
|  | 3,516 | 1,741 |
| 7.00%-8.50%\tspecial\tfacility\trevenue\tbonds\tdue\tthrough\t2031 | 1,282 | 1,313 |
|  | 1,882 | — |
| 7.50%\tsenior\tsecured\tnotes\tdue\t2016 | 1,000 | 1,000 |
|  | 611 | 772 |
|  | 380 | 412 |
| Total\tAmerican\tsecured\tdebt | 10,782 | 8,535 |
| US\tAirways\tGroup\t(Assumed) |  |  |
|  | 1,000 | — |
|  | 600 | — |
| 2013\tto\t2029 | 1,330 | — |
| from\t2014\tto\t2025 | 2,515 | — |
|  | 47 | — |
| Total\tUS\tAirways\tGroup\tsecured\tdebt | 5,492 | — |
| Total\tAAG\tsecured\tdebt | 16,274 | 8,535 |
| Unsecured |  |  |
| US\tAirways\tGroup\t(Assumed) |  |  |
| 6.125%\tsenior\tnotes,\tinterest\tonly\tpayments\tuntil\tdue\tin\t2018 | 500 | — |
|  | 22 | — |
|  | 29 | — |
| Total\tUS\tAirways\tGroup\tunsecured\tdebt | 551 | — |
| Total\tAAG\tunsecured\tdebt | 551 | — |
| Total\tlong-term\tdebt\tand\tcapital\tlease\tobligations | 16,825 | 8,535 |
| Less:\ttotal\tunamortized\tdebt\tdiscount | 26 | — |
| Less:\tcurrent\tmaturities | 1,446 | 1,419 |
| Long-term\tdebt\tand\tcapital\tlease\tobligations,\tless\tcurrent\tmaturities | $15,353 | $7,116 |

For	information	regarding	the	liabilities	subject	to	compromise	as	of	December	31,	2012,	see	Note	2	to	AAG's	Consolidated	Financial	Statements.

# Indebtedness

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,	2013,	the	maturities	of	long-term	debt	and	capital	leases	are	as	follows	(in	millions):

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Total\tPrincipal\tAmount | \t $1,446 | \t $1,325 | \t $2,733 | \t $1,223 | \t $1,756 | \t $8,412 | \t $16,895 |

At	December	31,	2013,	the	Company	was	operating	28	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.

As	of	December	31,	2013,	AAG	had	issued	guarantees	covering	approximately	$1.3	billion	of	American's	tax-exempt	bond	debt	(and	interest	thereon)	and	$4.7 billion	of	American's	secured	debt	(and	interest	thereon).

In	connection	with	the	Merger	and	pursuant	to	the	Plan	on	December	9,	2013,	(i)	the	Company	and	American	entered	into	a	joinder	to	loan	agreement	and became	co-obligors	of	US	Airways	Group's	$1.6	billion	2013	Citicorp	Credit	Facility,	(ii)	the	Company	and	American	entered	into	a	second	supplemental	indenture	that guarantee	the	payment	obligations	associated	with	the	US	Airways	Group's	6.125%	Notes,	due	in	2018	(the	6.125%	senior	notes)	and	(iii)	the	Company	entered	into	a second	supplemental	indenture	which	allows	for	the	conversion	into	AAG	Common	Stock	the	US	Airways	Group's	7.25%	Convertible	Notes,	due	in	2014	(the	7.25% notes).

On	March	12,	2013,	American	closed	 its	private	offering	of	two	tranches	of	enhanced	equipment	trust	certificates	(the	Series	2013-1A/B	EETCs)	in	the aggregate	face	amount	of	$664	million.	The	Series	2013-1A/B	EETCs	are	comprised	of	a	senior	tranche	of	Class	A	Certificates	with	an	interest	rate	of	4.00%	per	annum and	a	final	expected	distribution	date	of	July	15,	2025,	and	a	junior	tranche	of	Class	B	Certificates	with	an	interest	rate	of	5.625%	per	annum	and	a	final	expected distribution	date	of	January	15,	2021.	The	Series	2013-1A/B	EETCs	represent	an	interest	in	the	assets	of	two	separate	pass	through	trusts,	each	of	which	hold	equipment notes	issued	by	American.	Interest	on	the	issued	and	outstanding	equipment	notes	will	be	payable	semiannually	on	January	15	and	July	15	of	each	year,	commencing	on July	15,	2013,	and	principal	on	such	equipment	notes	is	scheduled	for	payment	on	January	15	and	July	15	of	certain	years,	commencing	on	January	15,	2014.	As	of December	31,	2013,	the	equipment	notes	are	secured	by	eight	currently	owned	Boeing	737-823	aircraft,	one	currently	owned	Boeing	777-223ER	aircraft,	and	four currently	owned	Boeing	777-323ER	aircraft.	The	certificates	were	offered	in	the	U.S.	to	qualified	institutional	buyers,	as	defined	in,	and	in	reliance	on,	Rule	144A	under the	Securities	Act	of	1933,	as	amended	(the	Securities	Act).

On	June	5,	2013,	American	closed	its	private	offering	of	Class	C	enhanced	equipment	trust	certificates	(the	Series	2013-1C	EETCs)	in	the	aggregate	face amount	 of	$120	million.	The	Series	2013-1C	EETCs	rank	junior	to	the	Series	2013-1A/B	EETCs.	The	Series	2013-1C	EETCs	were	issued	with	an	interest	rate	of 6.125%	per	annum	and	a	final	expected	distribution	date	of	July	15,	2018.	The	2013-1C	EETCs	represent	an	interest	in	the	assets	of	a	separate	pass	through	trust,	which will	hold	certain	equipment	notes	issued	by	American.	The	Series	2013-1C	EETCs	are	secured	by	the	same	aircraft	securing	the	Series	2013-1A/B	EETCs.	The certificates	were	offered	in	the	U.S.	to	qualified	institutional	buyers,	as	defined	in,	and	in	reliance	on,	Rule	144A	under	the	Securities	Act.

The	Company	filed	a	motion	with	the	Bankruptcy	Court	on	October	9,	2012	requesting	entry	of	an	order	authorizing	American	to,	among	other	things:	(i) obtain	post-petition	financing	in	an	amount	of	up	to	$1.5	billion	secured	on	a	first	priority	basis	by,	among	other	things,	up	to	41	Boeing	737-823	aircraft,	14	Boeing 757-223 aircraft,	one	Boeing	767-323ER	aircraft	and	19	Boeing	777-223ER	aircraft	as	part	of	a	new	enhanced	equipment	trust	certificate	(EETC)	financing	(the Refinancing	EETC)	 to	be	offered	pursuant	 to	Rule	144A	under	 the	Securities	Act,	and	(ii)	use	cash	on	hand	(including	proceeds	of	 the	Refinancing	EETC)	 to indefeasibly	repay	the	existing	pre-petition	obligations	secured	by	such	aircraft,	as	applicable,	which	are	currently	financed	through,	as	the	case	may	be,	an	EETC financing	entered	into	by	American	in	July	2009	(the	Series	2009-1	Pass	Through	Certificates),	a	secured	notes	financing	entered	into	by	American	in	July	2009	(the 2009-2	Senior	Secured	Notes)	and	an	EETC	financing	entered	into	by	American	in	October	2011	(the	Series	2011-2	Pass	Through	Certificates	and,	together	with	the Series	2009-1	Pass	Through	Certificates	and	the	2009-2	Senior	Secured	Notes,	the	Existing	Financings),	in	each	case	without	the	payment	of	any	make-whole	amount or	other	premium	or	prepayment	penalty.

The	Bankruptcy	Court	approved	the	motion	on	January	17,	2013	and	entered	an	order	(the	EETC	Order)	to	such	effect	on	February	1,	2013.	The	trustees	for	the Existing	Financings	appealed	the	EETC	Order	and	judgments	rendered	in	certain	related	adversary	proceedings.	The	appeals	(the	Appeals)	were	briefed	and	oral argument	before	the	United	States	Court	of	Appeals	for	the	Second	Circuit	(the	Second	Circuit)	was	heard	on	June	20,	2013.	On	September	12,	2013,	the	Second	Circuit fully	affirmed	the	Company's	right	to	repay	the	Existing	Financings	without	the	payment	of	any	make-whole	amount	or	other	premium	or	prepayment	penalty.	On September	26,	2013,	the	trustees	for	the	Existing	Financings	filed	a	petition	for	an	en	banc	rehearing	of	the	Appeals	by	the	Second	Circuit.	On	November	18,	2013,	the Second	Circuit	denied	such	request	for	rehearing.	On	February	12,	2014,	the	trustees	for	the	Existing	Financings	filed	a	petition	for	certiorari	to	the	Supreme	Court. American	intends	to	continue	to	assert	vigorously	its	right	to	repay	the	Existing	Financings	without	the	payment	of	any	make-whole	amounts	or	other	premium	or prepayment	penalty.

On	July	31,	2013,	the	Company	closed	its	private	offering	of	the	Refinancing	EETC	(the	Series	2013-2A	EETC)	in	the	aggregate	face	amount	of	$1.4	billion with	an	interest	rate	of	4.95%	per	annum	and	a	final	expected	distribution	date	of	January	15,	2023.	In	September	2013,	American	repaid	the	Existing	Financings, including	securities	tendered	to	the	Company	under	a	tender	offer	for	the	Existing	Financings	that	commenced	on	June	27,	2013,	and	received	the	proceeds	from	the Series	2013-2A	EETC.	In	conjunction	with	the	repayment	of	the	Existing	Financings,	the	Company	incurred	cash	charges	of	$19	million,	included	in	Interest	expense, net	of	capitalized	interest	and	a	charge	of	$54	million,	included	in	Miscellaneous,	net,	of	which	$21	million	is	cash,	related	to	the	premium	on	tender	for	the	Existing Financings,	and	$33	million	is	non-cash,	related	to	the	write-off	of	unamortized	issuance	costs.	The	2013-2A	EETC	represents	an	interest	in	the	assets	of	a	separate	pass through	trust,	which	will	hold	certain	equipment	notes	issued	by	American.	The	Series	2013-2A	EETC	is	secured	by	the	same	aircraft	previously	used	to	secure	the Existing	Financings.	The	certificates	were	offered	in	the	U.S.	to	qualified	institutional	buyers,	as	defined	in,	and	in	reliance	on,	Rule	144A	under	the	Securities	Act.

On	November	27,	2013,	American	closed	its	private	offering	of	Class	B	enhanced	equipment	trust	certificates	(the	Series	2013-2B	EETCs)	in	the	aggregate face	amount	of	$512	million.	The	Series	2013-2B	EETCs	rank	junior	to	the	Series	2013-2A	EETCs.	The	Series	2013-2B	EETCs	were	issued	with	an	interest	rate	of 5.60%	per	annum	and	a	final	expected	distribution	date	of	July	15,	2020.	The	2013-2B	EETCs	represent	an	interest	in	the	assets	of	a	separate	pass	through	trust,	which will	hold	certain	equipment	notes	issued	by	American.	The	Series	2013-2B	EETCs	are	secured	by	the	same	aircraft	securing	the	Series	2013-2A	EETCs.	The	certificates were	offered	in	the	U.S.	to	qualified	institutional	buyers,	as	defined	in,	and	in	reliance	on,	Rule	144A	under	the	Securities	Act.

On	December	20,	2013,	American	closed	its	private	offering	of	Class	C	enhanced	equipment	trust	certificates	(the	Series	2013-2C	EETCs)	in	the	aggregate	face amount	 of	$256	million.	The	Series	2013-2C	EETCs	generally	rank	junior	to	the	Series	2013-2A	and	2B	EETCs.	The	Series	2013-2C	EETCs	were	issued	with	an interest	rate	of	6.00%	per	annum	and	a	final	expected	distribution	date	of	January	15,	2017.	The	2013-2C	EETCs	represent	an	interest	in	the	assets	of	a	separate	pass through	trust,	which	will	hold	certain	equipment	notes	issued	by	American.	The	Series	2013-2C	EETCs	are	secured	by	the	same	aircraft	securing	the	Series	2013-2A and	2B	EETCs.	The	certificates	were	offered	in	the	U.S.	to	qualified	institutional	buyers,	as	defined	in,	and	in	reliance	on,	Rule	144A	under	the	Securities	Act.

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	December	27,	2013.	Mandatory	prepayments	at	par	of	term	loans	and	revolving	loans	are	required	to	the	extent	necessary	to	comply	with	American's covenants	regarding	the	collateral

coverage	ratio	and	certain	dispositions	of	collateral.	In	addition,	if	a	"change	of	control"	(as	defined	in	the	Credit	Agreement)	occurs,	American	will,	absent	an amendment	or	waiver,	be	required	to	repay	at	par	the	loans	outstanding	under	the	Credit	Facilities	and	terminate	the	Revolving	Facility.

The	 Credit	 Facilities	 contain	 events	 of	 default	 customary	 for	 similar	 financings,	 including	 cross-acceleration	 to	 other	 material	 indebtedness.	 Upon	 the occurrence	of	an	event	of	default,	the	outstanding	obligations	under	the	Credit	Facilities	may	be	accelerated	and	become	due	and	payable	immediately.	The	Credit Facilities	also	include	covenants	that,	among	other	things,	require	AAG	and	its	restricted	subsidiaries	to	maintain	a	minimum	aggregate	liquidity	(as	defined	in	the Credit	Agreement)	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.

American,	at	its	option,	may	redeem	some	or	all	of	the	Senior	Secured	Notes	at	any	time	on	or	after	March	15,	2013,	at	specified	redemption	prices,	plus accrued	and	unpaid	interest,	if	any.	In	addition,	at	any	time	prior	to	March	15,	2013,	American,	at	its	option,	may	redeem	some	or	all	of	the	Senior	Secured	Notes	at	a redemption	price	equal	to	100%	of	their	principal	amount	plus	a	"make-whole"	premium	and	accrued	and	unpaid	interest,	if	any.	In	addition,	at	any	time	prior	to	March 15,	2014,	American,	at	its	option,	may	redeem	(1)	up	to	35%	of	the	aggregate	principal	amount	of	the	Senior	Secured	Notes	with	the	proceeds	of	certain	equity	offerings at	a	redemption	price	of	107.5%	of	their	principal	amount,	plus	accrued	and	unpaid	interest,	if	any,	and	(2)	during	any	12-month	period,	up	to	10%	of	the	original aggregate	principal	amount	of	the	Senior	Secured	Notes	at	a	redemption	price	of	103%	of	their	principal	amount,	plus	accrued	and	unpaid	interest,	if	any.	If	American sells	certain	assets	or	if	a	"change	of	control"	(as	defined	in	the	indenture)	occurs,	American	must	offer	to	repurchase	the	Senior	Secured	Notes	at	prices	specified	in	the indenture.

# Senior	Convertible	Notes	(AMR	Corporation)

On	November	29,	2013,	the	substantially	all	holders	of	AMR	Corporation's	6.25%	senior	convertible	notes	elected	to	convert	their	notes	into	shares	of	AMR common	stock	(as	an	allowed	AMR	equity	interest).	Notes	for	which	conversion	was	not	elected	prior	to	the	deadline	of	November	29,	2013	remain	in	the	pool	of general	unsecured	claims	to	be	settled	pursuant	to	the	Plan.

# Other	Financing	Transactions	(American)

# Citibank	Advanced	Purchase	Agreement	(American)

In	2009,	American	entered	into	an	arrangement	under	which	Citibank	paid	to	American	$1.0	billion	in	order	to	pre-purchase	AAdvantage	Miles	(the	Pre- Purchase	Miles)	under	American's	AAdvantage	frequent	flier	 loyalty	program	(the	Pre-Purchase).	Approximately	$890	million	of	 the	Pre-Purchase	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	Pre-Purchase,	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,	the	Pre-Purchase	Miles	to	Citibank	cardholders'	AAdvantage	accounts.

Pursuant	 to	 the	 Pre-Purchase,	 Citibank	 has	 been	 granted	 a	 first-priority	 lien	 on	 certain	 of	 American's	 AAdvantage	 program	 assets.	 Commencing	 on December	31,	2011,	American	has	the	right	to	repay	in	cash,	without	premium	or	penalty,	any	or	all	of	the	amounts	owed	to	Citibank	that	have	not	already	been	satisfied by	the	award	of	Pre-Purchase	Miles	to	Citibank	cardholders'	accounts.	American	is	also	obligated,	in	certain	circumstances	(including	certain	specified	termination events	under	the	Amended	Participation	Agreement,	certain	cross	defaults	and	cross	acceleration	events,	and	if	any	Pre-Purchase	Miles	remain	at	the	end	of	the	term)	to repay	in	cash	all	outstanding	amounts	owed	Citibank.

The	Amended	Participation	Agreement	includes	provisions	that	grant	Citibank	the	right	to	use	Pre-Purchase	Miles	on	an	accelerated	basis	under	specified circumstances.

The	2013	Citicorp	Credit	Facility	agreement	bears	interest	at	an	index	rate	plus	an	applicable	index	margin	or,	at	US	Airways'	option,	LIBOR	(subject	to	an original	floor	of	1.00%)	plus	an	applicable	LIBOR	margin.	As	of	December	31,	2013,	the	interest	rate	was	4.00%	based	on	a	3.00%	LIBOR	margin	for	Tranche	B-1	and 3.25%	based	on	a	2.25%	LIBOR	margin	for	Tranche	B-2.

In	January	2014,	US	Airways	amended	the	2013	Citicorp	Credit	Facility	agreement	to	lower	the	applicable	LIBOR	margin	from	3.00%	to	2.75%	for	Tranche B-1.	In	addition,	the	LIBOR	floor	was	reduced	from	1.00%	to	0.75%	on	both	Tranche	B-1	and	Tranche	B-2.

The	obligations	of	US	Airways	under	the	2013	Citicorp	Credit	Facility	are	secured	by	liens	on	certain	route	authorities,	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".

In	April	2013,	US	Airways	created	two	pass-through	trusts	which	issued	approximately	$820	million	aggregate	face	amount	of	Series	2013-1	Class	A	and Class	B	EETCs	in	connection	with	the	financing	of	18	Airbus	aircraft	scheduled	to	be	delivered	from	September	2013	to	June	2014.	The	2013-1	EETCs	represent fractional	undivided	interests	in	the	respective	pass-through	trusts	and	are	not	obligations	of	US	Airways.	Proceeds	received	from	the	sale	of	EETCs	are	initially	held	by a	depository	in	escrow	for	the	benefit	of	the	certificate	holders	until	US	Airways	issues	equipment	notes	to	the	trust,	which	purchases	the	notes	with	a	portion	of	the escrowed	funds.	These	escrowed	funds	are	not	guaranteed	by	US	Airways	and	are	not	reported	as	debt	on	US	Airways'	condensed	balance	sheet	because	the	proceeds held	by	the	depository	are	not	US	Airways'	assets.

As	of	December	31,	2013,	$261	million	of	the	escrowed	proceeds	from	the	2013-1	EETCs	have	been	used	to	purchase	equipment	notes	issued	by	US	Airways in	two	series:	Series	A	equipment	notes	in	the	amount	of	$198	million	bearing	interest	at	3.95%	per	annum	and	Series	B	equipment	notes	in	the	amount	of	$63	million bearing	interest	at	5.375%	per	annum.	Interest	on	the	equipment	notes	is	payable	semiannually	in	May	and	November	of	each	year,	and	began	in	November	2013. Principal	payments	on	the	equipment	notes	are	scheduled	to	begin	in	November	2014.	The	final	payments	on	the	Series	A	and	Series	B	equipment	notes	will	be	due	in November	2025	and	November	2021,	respectively.	US	Airways'	payment	obligations	under	the	equipment	notes	are	fully	and	unconditionally	guaranteed	by	US Airways	Group.	The	net	proceeds	from	the	issuance	of	these	equipment	notes	were	used	to	finance	six	Airbus	aircraft	delivered	in	2013.	The	equipment	notes	are secured	by	liens	on	aircraft.	The	remaining	$559	million	of	escrowed	proceeds	will	be	used	to	purchase	equipment	notes	as	new	aircraft	are	delivered.

The	net	proceeds	from	the	issuance	of	the	2012-2	EETCs	were	used	to	purchase	equipment	notes	issued	by	US	Airways	in	three	series:	Series	A	equipment notes	in	the	amount	of	$418	million	bearing	interest	at	4.625%	per	annum,	Series	B	equipment	notes	in	the	amount	of	$128	million	bearing	interest	at	6.75%	per	annum and	Series	C	equipment	notes	in	the	amount	of	$100	million	bearing	interest	at	5.45%	per	annum.	Interest	on	the	equipment	notes	is	payable	semiannually	in	June	and December	of	each	year	and	began	in	June	2013	for	Series	A	and	Series	B,	and	December	2013	for	Series	C.	Principal	payments	on	the	Series	A	and	Series	B	equipment notes	began	in	December	2013.	The	final	payments	on	the	Series	A	equipment	notes,	Series	B	equipment	notes	and	Series	C	equipment	notes	will	be	due	in	June	2025, June	2021	and	June	2018,	respectively.	US	Airways'	payment	obligations	under	the	equipment	notes	are	fully	and	unconditionally	guaranteed	by	US	Airways	Group. The	only	principal	payments	due	on	the	Series	C	equipment	notes	are	the	principal	payments	that	will	be	due	on	the	final	payment	date.	The	net	proceeds	from	the issuance	of	these	equipment	notes	were	used	to	finance	11	Airbus	aircraft	delivered	from	May	2013	through	October	2013.	The	equipment	notes	are	secured	by	liens	on aircraft.

In	the	first	quarter	of	2013,	US	Airways	issued	$183	million	of	equipment	notes	in	three	series	under	its	2012-1	EETCs	completed	in	May	2012:	Series	A equipment	notes	in	the	amount	of	$111	million	bearing	interest	at	5.90%	per	annum,	Series	B	equipment	notes	in	the	amount	of	$37	million	bearing	interest	at	8%	per annum	and	Series	C	equipment	notes	in	the	amount	of	$35	million	bearing	interest	at	9.125%	per	annum.	The	equipment	notes	are	secured	by	liens	on	aircraft.

# Industrial	Development	Revenue	Bonds	(US	Airways)

The	industrial	development	revenue	bonds	are	due	April	2023.	Interest	at	6.30%	is	payable	semiannually	on	April	1	and	October	1.	The	bonds	are	subject	to optional	redemption	prior	to	the	maturity	date,	in	whole	or	in	part,	on	any	interest	payment	date	at	a	redemption	price	of	100%.

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.

# 7.25%	Convertible	Notes	(US	Airways)

In	connection	with	the	closing	of	the	Merger	the	7.25%	notes	have	become	convertible	into	cash,	shares	of	AAG	Common	Stock	or	a	combination	thereof	at the	Company's	election.	AAG	fully	and	unconditionally	guaranteed	all	of	the	payment	obligations	of	US	Airways	Group	under	the	7.25%	notes.

Holders	may	convert	their	7.25%	notes	at	their	option	at	any	time	prior	to	the	close	of	business	on	the	second	scheduled	trading	day	immediately	preceding	the maturity	date	for	the	7.25%	notes.	The	initial	conversion	rate	for	the	7.25%	notes	is	218.8184	shares	of	common	stock	per	$1,000	principal	amount	of	notes	(equivalent to	an	initial	conversion	price	of	$4.57	per	share).	Such	conversion	rate	is	subject	to	adjustment	in	certain	events.

As	the	7.25%	notes	can	be	settled	in	cash	upon	conversion,	for	accounting	purposes,	the	7.25%	notes	were	bifurcated	into	a	debt	component	that	was	initially recorded	at	fair	value	and	an	equity	component.	The	following	table	details	the	debt	and	equity	components	recognized	related	to	the	7.25%	notes	(in	millions):

|  | December	31,	2013 |
| :--- | :--- |
| Principal\tamount\tof\t7.25%\tconvertible\tsenior\tnotes | $22 |
| Unamortized\tdiscount\ton\tdebt | — |
| Net\tcarrying\tamount\tof\t7.25%\tconvertible\tsenior\tnotes | 22 |
| Additional\tpaid-in\tcapital | $88 |

At	December	31,	2013,	the	remaining	period	over	which	the	unamortized	discount	will	be	recognized	is	0.4	years.

At	December	31,	2013,	the	if-converted	value	of	the	7.25%	notes	exceeded	the	principal	amount	by	$101	million.

At	December	31,	2013,	the	Company	was	in	compliance	with	the	most	recently	completed	collateral	coverage	tests	for	the	Senior	Secured	Notes,	the	Credit Facilities	and	the	2013	Citicorp	Credit	Facility.

# 10.	Financial	Instruments	and	Risk	Management

# Fuel	Price	Risk	Management

As	of	December	31,	2013,	American	had	fuel	derivative	contracts	outstanding	covering	22	million	barrels	of	jet	fuel	that	will	be	settled	over	the	next	eighteen months.	The	Company	does	not	hold	or	issue	derivative	financial	instruments	for	trading	purposes.	The	Company	has	not	entered	into	any	fuel	hedges	since	the	Effective Date	and	its	current	policy	is	not	to	do	so.

In	accordance	with	U.S.	GAAP,	the	Company	assesses,	both	at	the	inception	of	each	hedge	and	on	an	ongoing	basis,	whether	the	derivatives	that	are	used	in	its hedging	transactions	are	highly	effective	in	offsetting	changes	in	cash	flows	of	the	hedged	items.	Derivatives	that	meet	the	requirements	are	granted	special	hedge accounting	treatment,	and	the	Company's	hedges	generally	meet	these	requirements.	Accordingly,	the	Company's	fuel	derivative	contracts	are	accounted	for	as	cash flow	hedges,	and	the	fair	value	of	the	Company's	hedging	contracts	is	recorded	in	Current	Assets	or	Current	Liabilities	in	the	accompanying	Consolidated	Balance Sheets	until	the	underlying	jet	fuel	is	purchased.	The	Company	determines	the	ineffective	portion	of	its	fuel	hedge	contracts	by	comparing	the	cumulative	change	in	the total	value	of	the	fuel	hedge	contract,	or	group	of	fuel	hedge	contracts,	to	the	cumulative	change	in	a	hypothetical	jet	fuel	hedge.	If	the	total	cumulative	change	in	value	of the	fuel	hedge	contract	more	than	offsets	the	total	cumulative	change	in	a	hypothetical	jet	fuel	hedge,	the	difference	is	considered	ineffective	and	is	immediately recognized	as	a	component	of	Aircraft	fuel	expense.	Effective	gains	or	losses	on	fuel	hedging	contracts	are	deferred	in	Accumulated	other	comprehensive	income	(loss) and	are	recognized	in	earnings	as	a	component	of	Aircraft	fuel	expense	when	the	underlying	jet	fuel	being	hedged	is	used.

Ineffectiveness	is	inherent	in	hedging	jet	fuel	with	derivative	positions	based	in	crude	oil	or	other	crude	oil	related	commodities.	The	Company	assesses,	both	at the	inception	of	each	hedge	and	on	an	ongoing	basis,	whether	the	derivatives	that	are	used	in	its	hedging	transactions	are	highly	effective	in	offsetting	changes	in	cash flows	of	the	hedged	items.	In	doing	so,	the

Company	uses	a	regression	model	to	determine	the	correlation	of	the	change	in	prices	of	the	commodities	used	to	hedge	jet	fuel	(e.g.,	NYMEX	Heating	oil)	to	the	change in	the	price	of	jet	fuel.	The	Company	also	monitors	the	actual	dollar	offset	of	the	hedges'	market	values	as	compared	to	hypothetical	jet	fuel	hedges.	The	fuel	hedge contracts	are	generally	deemed	to	be	"highly	effective"	if	the	R-squared	is	greater	than	80%	and	the	dollar	offset	correlation	is	within	80%	 to	125%.	The	Company discontinues	hedge	accounting	prospectively	if	it	determines	that	a	derivative	is	no	longer	expected	to	be	highly	effective	as	a	hedge	or	if	it	decides	to	discontinue	the hedging	relationship.	Subsequently,	any	changes	in	the	fair	value	of	these	derivatives	are	marked	to	market	through	earnings	in	the	period	of	change.

For	the	years	ended	December	31,	2013,	2012	and	2011,	American	recognized	net	gains/(losses)	of	approximately	$(12)	million,	$4	million	and	$341	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	net	fair	value	of	the	Company's	fuel	hedging	agreements	at	December	31,	2013	and	2012,	representing	the	amount	American would	receive	upon	 termination	of	 the	agreements	(net	of	settled	contract	assets),	 totaled	$107	million	 and	$62	million,	 respectively.	 As	 of	December	31,	2013, American	estimates	that	during	the	next	twelve	months	it	will	reclassify	from	Accumulated	other	comprehensive	income	(loss)	into	earnings	approximately	$45	million in	net	gains	(based	on	prices	as	of	December	31,	2013)	related	to	its	fuel	derivative	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):

(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 | 2013 | 2012 | 2011 |
| Amount\tof\t(Gain)\tLoss\tReclassified\tfrom\tAccumulated\tOCI | Reclassification\tinto |  |  |  |
| into\tIncome\t1 | Earnings | \t $34 | \t $(3) | \t $(313) |
| Amount\tof\tGain\t(Loss)\tRecognized\tin\tOCI\ton\tDerivative\t1 | Change\tin\tFair\tValue | (2) | (12) | 190 |
| Amount\tof\tGain\t(Loss)\tRecognized\tin\tConsolidated\nStatements\tof\tComprehensive\tIncome |  | \t $32 | \t $(15) | \t $(123) |

While	certain	of	the	Company's	fuel	derivatives	are	subject	to	enforceable	master	netting	agreements	with	its	counterparties,	the	Company	does	not	offset	its fuel	derivative	assets	and	liabilities	in	its	Consolidated	Balance	Sheets.	Certain	of	these	agreements	would	also	allow	for	the	offsetting	of	fuel	derivatives	with	interest rate	derivatives.	The	impact	of	aircraft	fuel	derivative	instruments	(all	cash	flow	hedges)	on	the	Company's	Consolidated	Balance	Sheets,	and	the	impact	of	offsetting aircraft	fuel	derivative	instruments,	is	depicted	below	(in	millions):

|  | As	of	December	31, |  |
| :--- | :--- | :--- |
|  | 2013 | 2012 |
| Gross\tAsset\t1 | $109 | \t $65 |
| Gross\tLiability\t2 | — | — |
| Net\tRecognized\tAsset\t(Liability)\tin\tBalance\tSheet | 109 | 65 |
| Gross\tAsset\t(Liability)\tOffset\tin\tBalance\tSheet: |  |  |
| Financial\tInstruments | — | — |
| Cash\tCollateral\tReceived\t(Posted)\t3 | — | — |
| Net\tAmount | $109 | \t $65 |

(1) Fuel	derivative	assets	are	included	in	Fuel	derivative	contracts	on	the	accompanying	Consolidated	Balance Sheets.

(2) Fuel	derivative	liabilities	are	included	in	Accrued	liabilities	on	the	accompanying	Consolidated	Balance Sheets.

(3) As	of	December	31,	2013,	the	Company	had	posted	cash	collateral	of	an	immaterial amount.

The	Company	is	also	exposed	to	credit	losses	in	the	event	of	non-performance	by	counterparties	to	these	financial	instruments,	and	although	no	assurances	can be	given,	the	Company	does	not	expect	any	of	the	counterparties	to	fail	to	meet	their	obligations.	The	credit	exposure	related	to	these	financial	instruments	is	represented by	the	fair	value	of	contracts	with	a	positive	fair	value	at	the	reporting	date,	reduced	by	the	effects	of	master	netting	agreements.	To	manage	credit	risks,	the	Company selects	counterparties	based	on	credit	ratings,	limits	its	exposure	to	a	single	counterparty	under	defined	guidelines,	and	monitors	the	market	position	of	the	program	and its	relative	market	position	with	each	counterparty.	The	Company	also	maintains	industry-standard	security	agreements	with	a	number	of	its	counterparties	which	may require	the	Company	or	the	counterparty	to	post	collateral	if	the	value	of	selected	instruments	exceeds	specified	mark-to-market	thresholds	or	upon	certain	changes	in credit	ratings.	The	amount	of	collateral	required	to	be	posted	from	time	to	time	may	be	substantial.

# Fair	Values	of	Financial	Instruments

The	fair	values	of	the	Company's	long-term	debt	classified	as	Level	2	were	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.	All	of	the	Company's	long	term	debt	not	classified	as	subject to	compromise	is	classified	as	Level	2.

In	connection	with	the	Merger,	US	Airways	debt	was	recorded	at	fair	value	using	the	acquisition	method	of	accounting	in	accordance	with	ASC	805,	"Business Combinations".	See	Note	4	to	AAG's	Consolidated	Financial	Statements	for	additional	information.

The	carrying	value	and	estimated	fair	values	of	the	Company's	long-term	debt,	including	current	maturities,	not	classified	as	subject	to	compromise,	were	(in millions):

|  | December	31,	2013 | December	31,	2013 | December	31,	2012 | December	31,	2012 |
| :--- | :--- | :--- | :--- | :--- |
|  | Carrying\nValue | Fair\nValue | Carrying\nValue | Fair\nValue |
| Secured\tvariable\tand\tfixed\trate\tdebt | $2,111 | $2,116 | $3,297 | $3,143 |
| Enhanced\tequipment\ttrust\tcertificates | 3,516 | 3,617 | 1,741 | 1,811 |
| 6.0%-8.5%\tspecial\tfacility\trevenue\tbonds | 1,282 | 1,358 | 1,313 | 1,308 |
| 7.5%\tsenior\tsecured\tnotes | 1,000 | 1,034 | 1,000 | 1,074 |
| 31,\t2013) | 1,882 | 1,896 | — | — |
| AAdvantage\tMiles\tadvance\tpurchase | 611 | 617 | 772 | 779 |
| Other\tsecured\tobligations,\tfixed\tinterest\trates\tranging\tfrom\t5.20%\nto\t12.20%,\tmaturing\tfrom\t2014\t-\t2035 | 380 | 380 | 412 | 412 |
| US\tAirways\tlong-term\tdebt,\tnet | 6,017 | 6,017 | — | — |
|  | $16,799 | $17,035 | $8,535 | $8,527 |

The	carrying	value	and	estimated	fair	value	of	the	Company's	long-term	debt,	including	current	maturities,	classified	as	subject	to	compromise,	were	(in

# millions):

|  | December	31,	2012 |  |
| :--- | :--- | :--- |
|  | Carrying\nValue | Fair\nValue |
| Secured\tvariable\tand\tfixed\trate\tdebt | $172 | $154 |
| 6.0%-8.5%\tspecial\tfacility\trevenue\tbonds | 186 | 186 |
| Convertible\tnotes | 460 | 400 |
| Debentures | 214 | 112 |
| Notes | 166 | 33 |
|  | $1,198 | $885 |

All	of	the	Company's	long	term	debt	classified	as	subject	to	compromise	as	of	December	31,	2012	is	classified	as	Level	2.

The	Company	is	also	party	to	certain	interest	rate	swap	agreements	that	are	accounted	for	as	cash	flow	hedges.	Ineffectiveness	for	these	instruments	is	required to	be	measured	at	each	reporting	period.	The	ineffectiveness	and	fair	value	associated	with	all	of	the	Company's	interest	rate	cash	flow	hedges	for	all	periods	presented was	not	material.

The	significant	components	of	the	income	tax	provision	(benefit)	were	(in	millions):

|  |  | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2013 | 2012 | 2011 |
| Current | $(22) | $— | $(25) |
| Deferred | (324) | (569) | 25 |
| Income\ttax\tbenefit | $(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, |  |
| :--- | :--- | :--- | :--- |
|  | 2013 | 2012 | 2011 |
| Statutory\tincome\ttax\tprovision\tbenefit | $(763) | $(857) | $(691) |
| State\tincome\ttax\texpense\t(benefit),\tnet\tof\tfederal\ttax\teffect | (8) | (32) | (37) |
| Book\texpenses\tnot\tdeductible\tfor\ttax\tpurposes | 27 | 19 | 9 |
| Bankruptcy\tadministration\texpenses | 83 | 26 | — |
| Interest\tcutback\tto\tnet\toperating\tloss\t(NOL) | 141 | — | — |
| Alternative\tminimum\ttax\tcredit\trefund | (22) | — | — |
| Change\tin\tvaluation\tallowance | 717 | 839 | 705 |
| Tax\tbenefit\tresulting\tfrom\tOCI\tallocation | (538) | (569) | — |
| Other,\tnet | 17 | 5 | 14 |
| Income\ttax\tbenefit | $(346) | $(569) | $— |

The	merger	of	US	Airways	into	American	Airlines	Group	Inc.	closed	on	December	9,	2013.	For	the	period	beginning	on	December	9,	2013	and	ending	on December	31,	2013,	US	Airways	Group,	Inc.	and	its	subsidiaries	are	now	included	in	the	AAG	consolidated	federal	and	state	income	tax	returns.

The	Company	recorded	a	net	income	tax	benefit	of	$346	million	which	is	composed	of	a	$538	million	non-cash	income	tax	benefit,	a	$214	million	tax	charge for	additional	valuation	allowance,	and	$22	million	income	tax	credit.	The	Company	recorded	a	$538	million	non-cash	income	tax	benefit	from	continuing	operations during	the	fourth	quarter	of	2013.	Under	current	accounting	rules,	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	is	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,	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	for	this	item,	the	Company's	year-end	net	deferred	tax	position	is	not	impacted	by	this	tax allocation.	The	Company	recorded	similar	amounts	when	reporting	other	comprehensive	income	in	2009	and	2012.	The	resulting	residual	income	tax	expense	will remain	in	Accumulated	other	comprehensive	income	(loss)	(AOCI)	until	all	amounts	in	AOCI	that	relate	to	the	plan	or	program	that	gave	rise	to	the	residual	income taxes	are	recognized	in	the	Consolidated	Statement	of	Operations.	The	Company	will	reclassify	to	earnings	all	residual	tax	amounts	relating	to	our	Pension	and	Retiree Medical	Liability	(specifically	relating	to	Pension	and	OPEB	activity)	and	Derivative	Financial	Instruments	(specifically	relating	to	Fuel	Hedging	Contracts	activity)	in the	period	in	which	there	are	no	longer	any	amounts	in	AOCI	associated	with	those	plans	or	programs.	The	Company	anticipates	recognizing	a	non-cash	income	tax expense	of	$313	million	in	continuing	operations	during	2015	upon	the	settlement	of	the	currently	outstanding	Fuel	Hedging	Contract	arrangements.

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.	In	assessing	the	realizability	of	the	deferred	tax	assets,	management	considers

whether	it	is	more	likely	than	not	that	some	portion,	or	all	of	the	deferred	tax	assets,	will	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. The	assessment	of	realization	of	deferred	tax	assets	considers	those	tax	planning	strategies	that	management	believes	to	be	prudent	and	feasible	strategies	the	Company would	implement,	if	necessary,	to	prevent	a	tax	attribute	from	expiring.	During	the	fourth	quarter	of	2013,	the	Company	recorded	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.	US	Airways,	Group Inc	is	required	under	ASC	805,	as	a	result	of	its	merger,	to	use	purchase	accounting	to	establish	the	fair	values	of	its	assets	and	liabilities.	The	resulting	tax	accounting establishes	a	federal	deferred	tax	liability	for	its	indefinite-lived	assets	in	the	amount	of	$306	million	which	has	been	accounted	for	through	goodwill.

A	portion	of	the	change	in	the	valuation	allowance	reflects	the	recording	by	the	Company	in	2013,	2012	 and	2011	of	an	income	tax	expense	(credit)	of approximately	$(22)	 million,	$0	 million	 and	$(25)	 million,	 respectively,	 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	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	increase	 in	 the valuation	allowance	was	$602	million,	$263	million,	and	$1.2	billion	in	2013,	2012	and	2011,	respectively.

The	components	of	AAG's	deferred	tax	assets	and	liabilities	were	(in	millions):

|  | December	31,<br>2013 | 2012 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets: |  |  |
| Postretirement\tbenefits\tother\tthan\tpensions | $643 | $440 |
| Rent\texpense | 355 | 127 |
| Alternative\tminimum\ttax\tcredit\tcarryforwards | 370 | 367 |
| Operating\tloss\tcarryforwards | 3,655 | 2,256 |
| Pensions | 1,765 | 2,455 |
| Frequent\tflyer\tobligation | 1,075 | 657 |
| Gains\tfrom\tlease\ttransactions | 56 | 6 |
| Reorganization\titems | 682 | 864 |
| Other | 871 | 754 |
| Total\tdeferred\ttax\tassets | 9,472 | 7,926 |
| Valuation\tallowance | (5,013) | (4,411) |
| Net\tdeferred\ttax\tassets | 4,459 | 3,515 |
| Deferred\ttax\tliabilities: |  |  |
| Accelerated\tdepreciation\tand\tamortization | (4,460) | (3,318) |
| Other | (519) | (197) |
| Total\tdeferred\ttax\tliabilities | (4,979) | (3,515) |
| Net\tdeferred\ttax\tasset\t(liability) | $(520) | $— |

At	December	31,	2013,	the	Company	had	available	for	federal	income	tax	purposes	an	AMT	credit	carryforward	of	approximately	$370	million,	which	is available	for	an	indefinite	period,	and	federal	net	operating	losses	of	approximately	$10.6	billion	for	regular	tax	purposes,	which	will	expire,	if	unused,	beginning	in 2022.	These	net	operating	losses	include	an	unrealized	benefit	of	approximately	$762	million	related	to	the	implementation	of	share-based	compensation	accounting guidance	that	will	be	recorded	in	equity	when	realized.	The	Company	had	available	for	state	income	tax	purposes	net	operating	losses	of	$4.7	billion,	which	expire,	if unused,	in	years	2014	through	2033.	The	amount	that	will	expire	in	2014	is	$106	million	if	not	used.

We	experienced	a	statutory	"ownership	change"	on	December	9,	2013	as	defined	for	purposes	of	Section	382	of	the	Internal	Revenue	Code	in	connection	with our	emergence	from	bankruptcy	and	US	Airways	Group	experienced	an	ownership

change	in	connection	with	the	Merger.	When	a	company	undergoes	such	an	ownership	change,	Section	382	limits	the	company's	future	ability	to	utilize	any	NOL generated	before	the	ownership	change	and	certain	subsequently	recognized	"built-in"	losses	and	deductions,	if	any,	existing	as	of	the	date	of	the	ownership	change.	The general	limitation	rules	for	a	debtor	in	a	bankruptcy	case	are	liberalized	where	an	ownership	change	occurs	upon	emergence	from	bankruptcy.	We	anticipate	taking advantage	of	these	certain	special	rules	which	will	permit	approximately	$9.0	billion	of	our	federal	NOL	carryforwards	to	be	utilized	without	regard	to	the	annual limitation	generally	imposed	by	Section	382.	At	December	31,	2013,	the	Company	inherited	the	US	Airways	Group	approximate	$1.6	billion	of	NOLs	($1.4	billion	of which	is	subject	to	Section	382	limitation	due	to	the	ownership	change)	to	reduce	the	Company's	future	taxable	income.	The	majority	of	American	Airlines	Group	Inc.'s NOLs	are	expected	to	be	available	to	reduce	federal	taxable	income	in	the	calendar	year	2014.	The	Company's	ability	to	utilize	any	new	NOL	arising	after	the	ownership change	is	not	affected.

The	Company	files	its	tax	returns	as	prescribed	by	the	tax	laws	of	the	jurisdictions	in	which	it	operates.	The	Company's	2004	through	2012	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	additional	assessment(s)	will	be immaterial	to	its	Consolidated	Financial	Statements.

Under	special	tax	rules	(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	net	operating losses	(NOL)	carryforwards	may	be	limited."

The	Company	has	an	unrecognized	tax	benefit	of	approximately	$6	million,	which	did	not	change	during	the	twelve	months	ended	December	31,	2013. 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,	2013.

The	reconciliation	of	the	beginning	and	ending	amounts	of	unrecognized	tax	benefit	are	(in	millions):

|  | 2013 | 2012 |
| :--- | :--- | :--- |
| Unrecognized\tTax\tBenefit\tat\tJanuary\t1 | $6 | $6 |
| No\tActivity | — | — |
| Unrecognized\tTax\tBenefit\tat\tDecember\t31 | $6 | $6 |

The	Company	estimates	that	the	unrecognized	tax	benefit	will	not	significantly	change	within	the	next	twelve	months.

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	2011	Plan	and	shall	only	be	made	to	individuals	who	were	not	providing	services	to	AAG	prior	to	the	Merger.	Award	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, Alignment	and	Equity	Incentive,	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.

In	2013,	share-based	compensation	expense	of	$42	million,	related	to	the	Merger,	was	recorded	under	Special	items,	net	and	$50	million	was	recorded	under Salaries,	wages	and	benefits.	In	2012	 and	2011	the	total	charge	for	share-based	compensation	expense,	included	in	Salaries,	wages,	and	benefits	expense,	was	$29 million	and	$40	million,	respectively.

# Restricted	Stock	Unit	(RSU)	Awards

As	of	December	31,	2013,	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.

# Alignment	Awards

On	December	9,	2013,	alignment	awards	were	granted	in	the	form	of	RSUs	and	are	expected	to	be	settled	in	AAG	Common	Stock	subject	to	potential	NOL restrictions.	The	awards	were	provided	to	legacy	AMR	employees	in	order	to	align	interests	and	create	parity	with	peers	at	US	Airways	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	recorded	in	connection	with	these	awards	have	been	and	will	be charged	to	Merger	related	expenses.

Activity	during	2013	for	the	alignment	awards	is	presented	below:

|  | Number	of	Shares | Weighted	Average<br>Grant	Date	Fair<br>Value |
| :--- | :--- | :--- |
|  | (In\tthousands) |  |
| Outstanding\tat\tJanuary\t1,\t2013 | — \t $ | — |
| Granted | 4,095 | 24.60 |
| Vested\tand\treleased | (1,375) | 24.60 |
| Forfeited | — | — |
| Outstanding\tat\tDecember\t31,\t2013 | 2,720 | \t $24.60 |

As	of	December	31,	2013,	there	was	$47	million	of	total	unrecognized	compensation	cost	related	to	the	alignment	awards	that	is	expected	to	be	recognized	over a	weighted	average	period	of	1.9	years.	The	total	fair	value	of	awards	settled	during	the	year	ended	December	31,	2013	was	$31	million.

# Equity	Incentive	Awards

Equity	incentive	awards	granted	pursuant	to	the	Plan	have	a	vesting	commencement	date	of	April	10,	2013	and	were	granted	in	the	form	of	RSUs	that	are expected	to	be	settled	in	AAG	Common	Stock	subject	to	potential	NOL	restrictions.	Vesting	dates	are	April	2014,	April	2015	and	April	2016	with	pro-rata	vesting	based on	the	number	of	days	served	from	April	10,	2013.	In	addition,	as	mentioned	above,	AAG	assumed	the	outstanding	equity	awards	of	US	Airways	at	the	Merger Effective	Date.	Generally	these	awards	vest	over	a	three	year	period.	Related	expense	has	been	and	will	be	charged	to	Salaries,	Wages	and	benefits.

# Activity	during	2013	for	equity	incentive	awards	is	presented	below:

|  | Number	of	Shares | Weighted	Average	Grant<br>Date	Fair	Value |
| :--- | :--- | :--- |
|  | (In\tthousands) |  |
| Outstanding\tat\tJanuary\t1,\t2013 | — | $— |
| Granted | 2,407 | 24.60 |
| Assumed\tUS\tAirways\tawards | 3,164 | 22.55 |
| Vested\tand\treleased | (11) | 22.55 |
| Forfeited | — | — |
| Outstanding\tat\tDecember\t31,\t2013 | 5,560 | $23.44 |

As	 of	December	31,	2013,	 there	was	$92	million	of	total	unrecognized	compensation	cost	related	to	equity	incentive	share	awards	that	is	expected	to	be recognized	over	a	weighted	average	period	of	1.3	years.	The	total	fair	value	of	equity	incentive	RSUs	vested	during	the	23	day	period	ending	December	31,	2013	was less	than	a	million.

# 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	billion	in	net	synergies	with	respect	to	fiscal	year	2015	or	2016.	Compensation	expenses	recorded	in connection	with	these	awards	have	been	and	will	be	charged	to	Merger	related	expenses.

|  | Number	of	Shares | Weighted	Average<br>Grant	Date	Fair<br>Value |
| :--- | :--- | :--- |
|  | (In\tthousands) |  |
| Outstanding\tat\tJanuary\t1,\t2013 | — \t $ | — |
| Granted | 15,599 | 24.60 |
| Vested\tand\treleased | — | — |
| Forfeited | — | — |
| Outstanding\tat\tDecember\t31,\t2013 | 15,599 | \t $24.60 |

					As	of	December	31,	2013,	there	was	$362	million	of	total	unrecognized	compensation	cost	related	to	the	Merger	RSUs.	These	costs	are	expected	to	be	recognized over	a	weighted	average	period	of	1.9	years.

# Cash-settled	restricted	stock

CRSU	award	activity	during	2013	for	all	plans	is	as	follows	(shares	in	thousands):

| Assumed	US	Airways	awards	at	December	9,	2013 | 320 | $22.55 |
| :--- | :--- | :--- |
| Granted | 309 | 24.60 |
| Vested\tand\treleased | (3) | 25.25 |
| Forfeited | — | — |
| Nonvested\tbalance\tat\tDecember\t31,\t2013 | 626 | \t $25.25 |

As	of	December	31,	2013,	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,	2013,	the	total	unrecognized	compensation	expense	for	CRSUs	was	$10	million	and	is	expected	to	be	recognized	over	a	weighted average	period	of	1.5	years.

# US	Airways	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	effective	with	the	Merger	date	is	as	follows:

|  | Stock	Options	and<br>SARs | Weighted<br>Average	Exercise<br>Price | Weighted	Average<br>Remaining	Contractual<br>Term | Aggregate	Intrinsic<br>Value |
| :--- | :--- | :--- | :--- | :--- |
|  | (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 | 3.3 | $162 |
| Vested\tor\texpected\tto\tvest\tat\tDecember\t31,\t2013 | 11,135 | 12.85 | 3.3 | $162 |
| Exercisable\tat\tDecember\t31,\t2013 | 8,729 | $14.20 | 2.8 | $120 |

CSAR	award	activity	for	all	plans	effective	with	the	Merger	Date	is	as	follows:

|  | CSARs | Weighted<br>Average	Exercise<br>Price | Weighted	Average<br>Remaining	Contractual<br>Term | Aggregate	Intrinsic<br>Value |
| :--- | :--- | :--- | :--- | :--- |
|  | (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 | 3.3 | $54 |
| Vested\tor\texpected\tto\tvest\tat\tDecember\t31,\t2013 | 2,864 | 6.26 | 3.3 | $54 |
| Exercisable\tat\tDecember\t31,\t2013 | 2,415 | $5.91 | 3.1 | $47 |

The	fair	value	of	stock	options	and	stock	appreciation	rights	is	determined	at	the	grant	date	using	a	Black-Scholes	option	pricing	model,	which	requires	several assumptions.	The	risk-free	interest	rate	is	based	on	the	U.S.	Treasury	yield	curve	in	effect	for	the	expected	term	of	the	award	at	the	time	of	grant.	The	dividend	yield	is assumed	to	be	zero	as	the	Company	does	not	pay	dividends.	The	volatility	is	based	on	the	historical	volatility	of	the	Company's	common	stock	over	a	time	period	equal to	the	expected	term	of	the	award.	The	expected	term	of	the	award	is	based	on	the	historical	experience	of	the	Company.	Stock	options	and	stock	appreciation	rights	are expensed	on	a	straight-line	basis	over	the	vesting	period	for	the	entire	award.	There	were	no	stock	options	or	stock	appreciation	rights	granted	subsequent	to	the	Merger closing	date.

As	of	December	31,	2013,	there	were	$22	million	of	total	unrecognized	compensation	costs	related	to	SARs.	These	costs	are	expected	to	be	recognized	over	a weighted	average	period	of	0.7	years.	The	total	intrinsic	value	of	stock	options	and	SARs	exercised	during	the	23	day	period	ending	December	31,	2013	 was	$0.5 million.

As	of	December	31,	2013,	the	weighted	average	fair	value	of	outstanding	CSARs	was	$19.11	per	share	and	the	related	liability	was	$52	million.	These	CSARs will	continue	to	be	remeasured	at	fair	value	at	each	reporting	date	until	all	awards	are	settled.	As	of	December	31,	2013,	the	total	unrecognized	compensation	expense	for CSARs	was	$2	million	and	is	expected	to	be	recognized	over	a	weighted	average	period	of	0.3	years.	Total	cash	paid	for	CSARs	exercised	during	the	during	the	23	day period	ending	December	31,	2013	was	$0.5	million.

# AMR	Incentive	Awards

Prior	to	the	Petition	Date,	AMR	adopted	certain	plans	which	provided	for	the	issuance	of	common	stock	in	connection	with	the	exercise	of	stock	options	and other	share-based	awards.	AMR	granted	stock	compensation	under	three	plans:	the	1998	Long	Term	Incentive	Plan	(the	1998	Plan),	the	2003	Employee	Stock	Incentive Plan	(the	2003	Plan)	and	the	2009	Long	Term	Incentive	Plan	(the	2009	Plan).	Collectively,	the	1998	Plan	and	the	2009	Plan	are	referred	to	as	the	LTIP	Plans.	No	awards were	made	under	AMR's	plans	in	2012	or	2013.	AMR	had	share-based	incentive	awards	including	stock	options/stock	appreciation	rights	granted	under	the	LTIP	Plans and	the	2003	Plan,	performance	share	awards	granted	under	the	LTIP	plans	and	based	upon	a	requisite	service	period	and	contingently	issuable	based	upon	the	AMR's relative	stock	price	performance	compared	to	certain	of	its	competitors	over	a	three	year	period,	deferred	share	awards	granted	under	the	LTIP	plans	and	based	solely	on a	requisite	service	period	and	career	equity	awards	granted	to	certain	employees	of	AMR	vesting	upon	the	retirement	of	those	individuals.	Deferred	share	and	career equity	awards	totaling	5,899,500	shares	vested	in	AMR	common	stock	pursuant	to	the	Plan.	These	plan	participants	become	holders	of	interest	in	AMR	Corporation	and will	receive	distributions	of	AAG	common	stock	in	accordance	with	the	Plan	(See	Note	2	to	AAG's	Consolidated	Financial	Statements	for	information	regarding	the Plan).	All	remaining	outstanding	awards	were	canceled	in	accordance	with	the	Plan	upon	emergence	from	Chapter	11.

Activity	of	all	previous	AMR	awards	is	as	follows:

|  | SARS/Options | Stock	Awards |
| :--- | :--- | :--- |
|  | (In\tthousands) |  |
| Outstanding\tawards\tat\tJanuary\t1,\t2011 | 28,593 | 18,015 |
| Granted | 2,556 | 1,864 |
| Settled\tor\texercised | (90) | (2,809) |
| Forfeited\tor\texpired | (4,166) | (3,457) |
| Outstanding\tat\tDecember\t31,\t2011 | 26,893 | 13,613 |
| Granted | — | — |
| Settled\tor\texercised | — | (25) |
| Forfeited\tor\texpired | (2,943) | (679) |
| Outstanding\tat\tDecember\t31,\t2012 | 23,950 | 12,909 |
| Granted | — | — |
| Settled\tor\texercised | (6,589) | (5,900) |
| Forfeited\tor\texpired | (13,346) | — |
| Canceled\tupon\temergence | (4,015) | (7,009) |
| Outstanding\tat\tDecember\t9,\t2013 | — | — |

# 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,	2013	and	2012,	and	a	statement	of	funded	status	as	of	December	31,	2013	and	2012	(in	millions):

|  | Pension	Benefits<br>2013 | 2012 | Retiree	Medical	and	Other<br>Benefits<br>2013 | 2012 |
| :--- | :--- | :--- | :--- | :--- |
| Reconciliation\tof\tbenefit\tobligation: |  |  |  |  |
| Obligation\tat\tJanuary\t1 | $15,895 | $14,568 | $1,412 | $3,122 |
| Service\tcost | 3 | 341 | — | 46 |
| Interest\tcost | 654 | 729 | 50 | 128 |
| Actuarial\t(gain)\tloss | (1,152) | 2,345 | (82) | 104 |
| Plan\tamendments | — | 301 | — | (1,904) |
| Curtailments | 2 | (1,841) | — | 33 |
| Settlements | (1) | — | — | — |
| Benefit\tpayments | (575) | (548) | (116) | (117) |
| US\tAirways\tplan\tliability\t(Assumed) | 73 | — | 121 | — |
| Obligation\tat\tDecember\t31 | $14,899 | $15,895 | $1,385 | $1,412 |
| Reconciliation\tof\tfair\tvalue\tof\tplan\tassets: |  |  |  |  |
| Fair\tvalue\tof\tplan\tassets\tat\tJanuary\t1 | $9,065 | $8,132 | $211 | $205 |
| Actual\treturn\ton\tplan\tassets | 1,026 | 1,204 | 41 | 26 |
| Employer\tcontributions | 494 | 277 | 103 | 97 |
| Settlements | (1) | — | — | — |
| Benefit\tpayments | (575) | (548) | (116) | (117) |
| US\tAirways\tplan\tassets\t(Assumed) | 48 | — | — | — |
| Fair\tvalue\tof\tplan\tassets\tat\tDecember\t31 | $10,057 | $9,065 | $239 | $211 |
| Funded\tstatus\tat\tDecember\t31 | $(4,842) | $(6,830) | $(1,146) | $(1,201) |
| Amounts\trecognized\tin\tthe\tConsolidated\tBalance\tSheets: |  |  |  |  |
| Current\tliability | $31 | $21 | $129 | $— |
| Noncurrent\tliability | 4,811 | 6,809 | 1,017 | 1,201 |
|  | $4,842 | $6,830 | $1,146 | $1,201 |
| Amounts\trecognized\tin\tother\tcomprehensive\tloss: |  |  |  |  |
| Net\tactuarial\tloss\t(gain) | $2,395 | $3,943 | $(176) | $(78) |
| Prior\tservice\tcost\t(credit) | 273 | 301 | (1,592) | (1,844) |
|  | 2,668 | 4,244 | (1,768) | (1,922) |
| US\tAirways\tplan\tother\tcomprehensive\tloss: | — | — | (12) | — |
|  | $2,668 | $4,244 | $(1,780) | $(1,922) |

|  | Pension	Benefits | Pension	Benefits | Retiree	Medical	and	Other<br>Benefits |  |
| :--- | :--- | :--- | :--- | :--- |
|  | 2013 | 2012 | 2013 | 2012 |
|  |  |  | (in\tmillions) |  |
| For\tplans\twith\taccumulated\tbenefit\tobligations\texceeding\tthe\tfair\nvalue\tof\tplan\tassets: |  |  |  |  |
| Projected\tbenefit\tobligation\t(PBO) | $14,869 | $15,895 | $— | $— |
| Accumulated\tbenefit\tobligation\t(ABO) | 14,858 | 15,866 | — | — |
| Accumulated\tpostretirement\tbenefit\tobligation\t(APBO) | — | — | 1,385 | 1,412 |
| Fair\tvalue\tof\tplan\tassets | 10,024 | 9,065 | 239 | 211 |
| ABO\tless\tfair\tvalue\tof\tplan\tassets | 4,834 | 6,801 | — | — |

The	following	tables	provide	the	components	of	net	periodic	benefit	cost	for	the	years	ended	December	31,	2013,	2012	and	2011	(in	millions):

|  |  | Pension	Benefits |  | Retiree	Medical	and	Other	Benefits | Retiree	Medical	and	Other	Benefits |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 |
| Components\tof\tnet\tperiodic\tbenefit\tcost: |  |  |  |  |  |  |
| Defined\tbenefit\tplans: |  |  |  |  |  |  |
| Service\tcost | $3 | $341 | $386 | $— | $46 | $61 |
| Interest\tcost | 654 | 729 | 757 | 50 | 128 | 174 |
| Expected\treturn\ton\tassets | (720) | (676) | (657) | (16) | (17) | (20) |
| Curtailments | 2 | 58 | — | — | (124) | — |
| Settlements | (1) | — | — | — | — | — |
| Amortization\tof: |  |  |  |  |  |  |
| Prior\tservice\tcost | 28 | 10 | 13 | (251) | (82) | (28) |
| Unrecognized\tnet\tloss\t(gain) | 90 | 211 | 154 | (9) | (9) | (9) |
| Net\tperiodic\tbenefit\tcost\tfor\tdefined\tbenefit\tplans | 56 | 673 | 653 | (226) | (58) | 178 |
| Defined\tcontribution\tplans | 328 | 218 | 179 | N/A | N/A | N/A |
|  | $384 | $891 | $832 | $(226) | $(58) | $178 |

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	$46	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	$8	million.

|  | Pension	Benefits<br>2013 | 2012 | Retiree	Medical	and	Other<br>Benefits<br>2013 | 2012 |
| :--- | :--- | :--- | :--- | :--- |
| Weighted-average\tassumptions\tused\tto\tdetermine\tnet\tperiodic\tbenefit\ncost\tfor\tthe\tyears\tended\tDecember\t31: |  |  |  |  |
| Discount\trate\t1/1\t-\t9/30 | 4.20% | 5.20% | 3.80% | 4.89% |
| Discount\trate\t10/1\t-\t12/31 | 4.20% | 4.10% | 3.80% | 3.80% |
| Salary\tscale\t(ultimate)\t1/1-9/30 | — | 3.78% | — | — |
| Expected\treturn\ton\tplan\tassets | 8.00% | 8.25% | 8.00% | 8.25% |

As	 of	December	31,	2013,	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,	2013,	was approximately	8.93%.

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:

| Asset	Class/Sub-Class | Allowed	Range | Allowed	Range | Allowed	Range |
| :--- | :--- | :--- | :--- |
| Equity | 62% | - | 72% |
| Public: |  |  |  |
| U.S.\tValue | 20% | - | 35% |
| International\tValue | 14% | - | 24% |
| Emerging\tMarkets | 5% | - | 11% |
| Alternative\tInvestments | 0% | - | 18% |
| Fixed\tIncome | 28% | - | 38% |
| U.S.\tLong\tDuration | 26% | - | 36% |
| Emerging\tMarkets | 0% | - | 4% |
| Other | 0% | - | 5% |
| Cash\tEquivalents | 0% | - | 5% |

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	period.

The	fair	value	of	the	Company's	pension	plan	assets	at	December	31,	2013	and	2012,	by	asset	category,	are	as	follows	(in	millions):

# Fair	Value	Measurements	at	December	31,	2013

|  |  | Fair	Value	Measurements	at	December	31,	2013 | Fair	Value	Measurements	at	December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Quoted\tPrices\tin\nActive\tMarkets\tfor\nIdentical\tAssets | Significant\nObservable\tInputs | Significant\nUnobservable\nInputs |  |
| Asset\tCategory | (Level\t1) | (Level\t2) | (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(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\tinvestments: |  |  |  |  |
| 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.

b) There	are	no	significant	concentrations	of	holdings	by	company	or	industry.

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.

d) Includes	 approximately	72%	investments	in	U.S.	domestic	government	securities	and	28%	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.	(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.

|  |  | Fair	Value	Measurements	at	December	31,	2012 |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Quoted\tPrices\tin\nActive\tMarkets\tfor\nIdentical\tAssets | Significant\nObservable\tInputs | Significant\nUnobservable\nInputs |  |
| Asset\tCategory | (Level\t1) | (Level\t2) | (Level\t3) | Total |
| Cash\tand\tcash\tequivalents | $275 | $— | $— | $275 |
| Equity\tsecurities |  |  |  |  |
| International\tmarkets\t(a)(b) | 2,443 | — | — | 2,443 |
| Large-cap\tcompanies\t(b) | 1,601 | — | — | 1,601 |
| Mid-cap\tcompanies\t(b) | 216 | — | — | 216 |
| Small-cap\tcompanies(b) | 21 | — | — | 21 |
| Fixed\tIncome |  |  |  |  |
| Corporate\tbonds\t(c) | — | 2,094 | — | 2,094 |
| Government\tsecurities\t(d) | — | 1,172 | — | 1,172 |
| U.S.\tmunicipal\tsecurities | — | 57 | — | 57 |
| Alternative\tinvestments |  |  |  |  |
| Private\tequity\tpartnerships\t(e) | — | — | 914 | 914 |
| Common/collective\tand\t103-12\tinvestment\ttrusts\t(f) | — | 229 | — | 229 |
| Insurance\tgroup\tannuity\tcontracts | — | — | 2 | 2 |
| Dividend\tand\tinterest\treceivable | 38 | — | — | 38 |
| Due\tto/from\tbrokers\tfor\tsale\tof\tsecurities\t-\tnet | 1 | — | — | 1 |
| Other\tassets\t–\tnet | 2 | — | — | 2 |
| Total | $4,597 | $3,552 | $916 | $9,065 |

a) Holdings	are	diversified	as	follows:	20%	United	Kingdom,	9%	Japan,	9%	 France,	8%	 Switzerland,	8%	 Germany,	5%	 Netherlands,	5%	Republic	of	Korea,	15% emerging	markets	and	the	remaining	21%	with	no	concentration	greater	than	5%	in	any	one	country.

c) Includes	approximately	79%	investments	in	corporate	debt	with	a	Standard	and	Poor's	(S&P)	rating	lower	than	A	and	21%	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.

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.

Not	included	in	the	above	tables	are	receivables	and	payables	for	foreign	currency	forward	contracts	and	futures	contracts	which	net	to	approximately	$7 million	and	collateral	held	on	loaned	securities	and	the	obligation	to	return	collateral	on	loaned	securities	which	effectively	net	to	zero.

         Changes	in	fair	value	measurements	of	Level	3	investments	during	the	year	ended	December	31,	2013,	were	as	follows	(in	millions):

| Changes	in	fair	value	measurements	of	Level	3	investments	during	the	year	ended	December	31,	2013,	were	as	follows	(in	millions): |  |  |
| :--- | :--- | :--- |
|  | Private\tEquity\tPartnerships | Insurance\tGroup\tAnnuity\tContracts |
| 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 |

| Changes	in	fair	value	measurements	of	Level	3	investments	during	the	year	ended	December	31,	2012,	were	as	follows	(in	millions): |  |  |
| :--- | :--- | :--- |
|  | Private\tEquity\nPartnerships | Insurance\tGroup\nAnnuity\tContracts |
| Beginning\tbalance\tat\tDecember\t31,\t2011 | $920 | $2 |
| Actual\treturn\ton\tplan\tassets: |  |  |
| Relating\tto\tassets\tstill\theld\tat\tthe\treporting\tdate | 20 |  |
| Relating\tto\tassets\tsold\tduring\tthe\tperiod | 102 |  |
| Purchases | 96 |  |
| Sales | (224) |  |
| Ending\tbalance\tat\tDecember\t31,\t2012 | $914 | $2 |

The	fair	value	of	the	Company's	other	postretirement	benefit	plan	assets	at	December	31,	2013	by	asset	category,	were	as	follows	(in	millions):

|  | Quoted	Prices	in<br>Active	Markets	for<br>Identical	Assets | Significant<br>Observable	Inputs | Significant<br>Unobservable<br>Inputs |  |
| :--- | :--- | :--- | :--- | :--- |
| Asset\tCategory | (Level\t1) | (Level\t2) | (Level\t3) | Total |
| Money\tmarket\tfund | $4 | $— $— | $— $— | $4 |
| Mutual\tfunds\t-\tAMR\tClass | — | 235 | — | 235 |
| Total | $4 | $235 | $— | $239 |

|  | Quoted	Prices	in<br>Active	Markets	for<br>Identical	Assets | Significant<br>Observable	Inputs | Significant<br>Unobservable<br>Inputs |  |
| :--- | :--- | :--- | :--- | :--- |
| Asset\tCategory | (Level\t1) | (Level\t2) | (Level\t3) | Total |
| Money\tmarket\tfund | $9 | $— $— | $— $— | $9 |
| Mutual\tfunds\t-\tAMR\tClass | — | 202 | — | 202 |
| Total | $9 | $202 | $— | $211 |

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	27%	of	investments	in	non-U.S.	common	stocks	in	2013	and approximately	28%	of	investments	in	non-U.S.	common	stocks	in	2012.	Net	asset	value	is	based	on	the	fair	market	value	of	the	funds'	underlying	assets	and	liabilities	at the	date	of	determination.

The	Company	is	required	to	make	minimum	contributions	to	its	defined	benefit	pension	plans	under	the	minimum	funding	requirements	of	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 st	Century	Act	of	2012.	In 2013	the	Company	contributed	$489	million	to	its	defined	benefit	pension	plans,	which	covered	minimum	contributions	for	periods	prior	to	the	Company's	Chapter	11 filing	and	periods	thereafter	(see	Note	2	to	AAG's	Consolidated	Financial	Statements	for	further	information),	as	well	as	certain	interest	and	penalty	interest	due	with respect	 to	 contributions	 for	 pre-petition	 periods.	 On	January	15,	2014,	 the	 Company	 contributed	 an	 additional	$34	 million	 to	 its	 defined	 benefit	 pension	 plans representing	the	final	quarterly	contribution	for	the	2013	plan	year.

				The	Company's	minimum	required	contribution	to	its	pension	plans	for	2014	is	$120	million.	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):

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019-2023 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Pension | $642 | $642 | $667 | $697 | $731 | $4,252 |
| Retiree\tMedical\tand\tOther | 130 | 125 | 123 | 119 | 114 | 483 |

# Modifications	to	Retirement	and	Life	Insurance	Benefits

Effective	November	1,	2012,	the	Company's	defined	benefit	pension	plans	were	frozen	and	eligible	employees	began	to	receive	a	replacement	benefit	under	the $uper	$aver	401(k)	Plan.	The	Company	matches	employee	contributions	up	to	5.5%	of	eligible	earnings	and,	with	the	ratification	of	a	new	CBA	by	pilots	on	December 7,	2012,	pilots	receive	contributions	of	14%	under	the	same	plan.

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	is	appealing	the	Bankruptcy	Court's	decisions	authorizing	American	to	reject	the	pilot	CBA	and approve	the	new	pilot	CBA.	All	of	these	appeals	have	been	consolidated,	and	are	pending	in	the	U.S.	District	Court	for	the	Southern	District	of	New	York.

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,	we	expect	all	remaining	funds,	which	represent	a	small	group	of	uncashed	distribution	checks,	to	be	distributed	by	the	end	of	second	quarter	2014.

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	Court	held	a	hearing	on	January	23,	2013	and	has	not	ruled on	this	matter	as	of	the	date	of	this	report.	The	Company	has	been	negotiating	with	the	retiree	committee	since	July	2012,	seeking	a	consensual	agreement	to	terminate subsidized	retiree	medical	coverage	and	life	insurance	coverage.

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.	See	Note	2	to	AAG's	Consolidated	Financial	Statements	for	the	breakout	of	liabilities	subject	to	compromise,	including	that	related	to	pension	and	postretirement benefits.

# 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	Retiree<br>Medical	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\nincome\t(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) |

As	of	December	31,	2013,	the	Company	estimates	that	during	the	next	twelve	months	it	will	reclassify	from	Accumulated	Other	Comprehensive	Income	(Loss) into	earnings	approximately	$45	million	in	net	gains	(based	on	prices	as	of	December	31,	2013)	related	to	its	fuel	derivative	hedges.

Reclassifications	out	of	Accumulated	Other	Comprehensive	Income	(Loss)	for	the	years	ended	December	31,	2013	and	2012	are	as	follows	(in	millions):

| Details	about	accumulated	other<br>comprehensive	income	(loss)	components | Year	Ended	December	31,<br>2013 | 2012 | Affected	line	item	in	the	statement<br>where	net	income	(loss)	is	presented |
| :--- | :--- | :--- | :--- |
| Amortization\tof\tpension\tand\tretiree\nmedical\tliability: |  |  |  |
| Prior\tservice\tcost | \t $(223) | \t $(72) | \t Wages,\tsalaries\tand\tbenefits |
| Actuarial\tloss | 81 | 202 | \t Wages,\tsalaries\tand\tbenefits |
| Derivative\tfinancial\tinstruments: |  |  |  |
| Cash\tflow\thedges | 34 | (3) | \t Aircraft\tfuel |
| Total\treclassifications\tfor\tthe\tperiod | \t $(108) | \t $127 |  |

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.	Also,	the	Company	recognized	a	$569	million	non-cash	income	tax	benefit,	offset	by	a	$569	million charge	to	other	comprehensive	income,	during	the	fourth	quarter	of	2012	related	to	gains	in	other	comprehensive	income.	See	Note	11	to	AAG's	Consolidated	Financial Statements	for	further	information.

Amounts	allocated	to	other	comprehensive	income	for	income	taxes	as	further	described	in	Note	11	will	remain	in	Accumulated	Other	Comprehensive	Income (Loss)	until	the	Company	ceases	all	related	activities,	such	as	termination	of	the	pension	plan.

# 15.	Segment	Reporting

The	Company's	operations	of	American,	US	Airways,	AMR	Eagle,	Piedmont	and	PSA	are	treated	as	an	integrated	route	network	and	the	route	scheduling system	maximizes	the	operating	results	of	the	Company.	The	Company's	chief	operating	decision	maker	makes	resource	allocation	decisions	to	maximize	the	Company's consolidated	financial	results.	Based	on	the	way	the	Company	treats	the	network	and	the	manner	in	which	resource	allocation	decisions	are	made,	the	Company	has	only one	operating	segment	for	financial	reporting	purposes	consisting	of	the	operations	of	American,	US	Airways,	AMR	Eagle,	Piedmont	and	PSA.

Revenues	from	other	segments	are	below	the	quantitative	threshold	for	determining	reportable	segments	and	consist	primarily	of	revenues	from	Americas Ground	 Services,	 Inc.	The	 difference	 between	 the	 financial	 information	 of	 the	 Company's	 one	 reportable	 segment	 and	 the	 financial	 information	 included	 in	 the accompanying	consolidated	statements	of	operations	and	balance	sheets	as	a	result	of	these	entities	is	not	material.

The	Company's	operating	revenues	by	geographic	region	(as	defined	by	DOT)	are	summarized	below	(in	millions):

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| DOT\tDomestic | $15,376 | $14,287 | $13,804 |
| DOT\tLatin\tAmerica | 6,288 | 5,813 | 5,460 |
| DOT\tAtlantic | 3,756 | 3,411 | 3,499 |
| DOT\tPacific | 1,323 | 1,344 | 1,216 |
| Total\tconsolidated\trevenues | $26,743 | $24,855 | $23,979 |

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.

# 16.	Quarterly	Financial	Data	(Unaudited)

Unaudited	summarized	financial	data	by	quarter	for	2013	and	2012	(in	millions,	except	per	share	amounts):

|  | First	Quarter | Second	Quarter | Third	Quarter | Fourth	Quarter |
| :--- | :--- | :--- | :--- | :--- |
| 2013\t1 |  |  |  |  |
| Operating\trevenues | $6,098 | $6,449 | $6,828 | $7,367 |
| Operating\texpenses\t1 | 6,026 | 5,937 | 6,128 | 7,252 |
| Operating\tincome\t(loss) | 71 | 512 | 700 | 115 |
| Net\tincome\t(loss) | (341) | 220 | 289 | (2,000) |
| Earnings\t(loss)\tper\tshare\t2: |  |  |  |  |
| Basic | $(2.72) | $1.75 | $2.30 | $(7.24) |
| Diluted | $(2.72) | $1.57 | $2.04 | $(7.24) |
| Shares\tused\tfor\tcomputation\t(in\tthousands)\t2: |  |  |  |  |
| Basic | 125,232 | 125,280 | 125,346 | 276,326 |
| Diluted | 125,232 | 144,817 | 145,081 | 276,326 |
| 2012\t1 |  |  |  |  |
| Operating\trevenues | $6,037 | $6,452 | $6,429 | $5,937 |
| Operating\texpenses\t1 | 6,121 | 6,289 | 6,367 | 5,930 |
| Operating\tincome\t(loss) | (84) | 163 | 62 | 7 |
| Net\tincome\t(loss) | (1,660) | (241) | (238) | 263 |
| Earnings\t(loss)\tper\tshare\t2: |  |  |  |  |
| Basic | $(13.25) | $(1.92) | $(1.90) | $2.09 |
| Diluted | $(13.25) | $(1.92) | $(1.90) | $1.84 |
| Shares\tused\tfor\tcomputation\t(in\tthousands)\t2: |  |  |  |  |
| Basic | 125,229 | 125,232 | 125,232 | 125,232 |
| Diluted | 125,229 | 125,232 | 125,232 | 142,590 |

(1)	To	conform	to	current	year	presentation,	certain	operating	revenue	and	expenses	in	prior	years	have	been	reclassified.	As	a	result,	prior	year	amounts	may	not	agree to	the	amounts	previously	reported.	See	Note	4	for	additional	information.

(2) The	Company's	weighted	average	diluted	shares	outstanding	for	all	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,	2012	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	two	initial	distributions	made	to	date	pursuant	to	the	Company's	Plan,	whereby	holders	of	AAMRQ	received	shares	of	AAG	Common	Stock	on	the	Effective Date,	January	9,	2014	and	February	10,	2014.	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	the	approximate	13	million	shares	withheld	by	the	Company in	satisfaction	of	employee	tax	obligations.

Former	AAMRQ	holders	as	of	the	Effective	Date	have	and	may	in	the	future	receive	additional	distributions	based	on	the	trading	price	of	AAL	common stock	during	the	remaining	120	day	period	after	the	effective	date	and	the	total	amount	of	allowed	claims,	in	accordance	with	the	terms	of	the	Plan.	Accordingly,	the Company's	common	shares	outstanding	and	related	GAAP	basic	and	diluted	EPS	reported	herein	for	all	periods	presented	may	change	in	the	future,	including amounts	reported	herein,	to	reflect	additional	retrospective	adjustments	for	future	common	stock	distributions	to	former	holders	of	AAMRQ.

The	Company's	fourth	quarter	2013	performance	reflects	restructuring	charges	consisting	of	$1.7	billion	related	to	labor-related	claims,	a	$74	million	accrual adjustment	to	the	disputed	claim	reserve	and	a	$218	million	adjustment	to	claims	related	to	the	3.5%	premium	(see	Note	2	to	AAG's	Consolidated	Financial	Statements for	additional	information);	merger-related	charges	include	$192	million	related	to	US	Airways'	pilot	MOU	that	became	effective	upon	the	close	of	the	Merger,	$80 million

related	to	professional	fees	and	fees	for	US	Airways	to	exit	the	Star	Alliance,	$58	million	in	severance	to	satisfy	certain	separation	agreements	resulting	from	the Merger,	$56	million	related	to	employee	awards	granted	in	connection	with	the	merger,	partially	offset	by	a	$67	million	gain	on	the	sale	of	slots	at	LaGuardia	Airport	as a	result	of	the	settlement	reached	with	the	DOJ;	and	special	items	including	$107	million	resulting	from	modifications	and	changes	in	assumptions	for	the	pilot	long- term	disability	plan	in	connection	with	the	Chapter	11	process	and	$33	million	to	write	down	permanently	grounded	aircraft,	partially	offset	by	a	gain	related	to	the modification	of	our	agreement	with	Citibank	related	to	American's	frequent	flyer	program.

The	Company's	fourth	quarter	2012	performance	reflects	restructuring	charges	and	special	items	consisting	of	$361	million	of	severance	related	charges	and write-off	of	leasehold	improvements	on	aircraft	and	at	airport	facilities	that	were	rejected	during	the	Chapter	11	process	and	a	$280	million	benefit	from	a	settlement	of	a commercial	dispute.	The	second	and	third	quarters	of	2012	reflect	$106	million	and	$211	million	of	such	items,	respectively.

# 17.	Regional	Expenses

Regional	expenses	associated	with	the	Company's	wholly-owned	regional	airline,	the	wholly-owned	regional	airlines	of	US	Airways	Group	and	third-party regional	carriers	operating	as	American	Eagle	or	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, |  |
| :--- | :--- | :--- | :--- |
|  | 2013 | 2012 | 2011 |
| Aircraft\tfuel\tand\trelated\ttaxes | \t $1,120 | \t $1,012 | \t $946 |
| Salaries,\twages\tand\tbenefits | 692 | 681 | 692 |
| Capacity\tpurchases\tfrom\tthird-party\tregional\tcarriers | 269 | 129 | 113 |
| Maintenance,\tmaterials\tand\trepairs | 284 | 285 | 286 |
| Other\trent\tand\tlanding\tfees | 236 | 222 | 238 |
| Aircraft\trent | 4 | 6 | 32 |
| Selling\texpenses | 154 | 152 | 154 |
| Depreciation\tand\tamortization | 168 | 170 | 171 |
| Special\titems,\tnet | 8 | 1 | — |
| Other | 391 | 370 | 377 |
| Total\tregional\texpenses | \t $3,326 | \t $3,028 | \t $3,009 |

# 18.	Earnings	(Loss)	Per	Share

Pursuant	to	the	Plan,	all	shares	of	our	common	stock	outstanding	prior	to	the	Effective	Date	were	canceled	and	the	issuance	of	756	million	new	shares	of American	Airlines	 Group Inc.	 common	 stock	 was	 authorized to	 satisfy	 allowed	 unsecured	 claims, labor-related	 deemed	 claims,	 and former	AMR	 Corporation shareholder	interests;	to	consummate	the	Merger;	and	to	issue	shares	pursuant	to	the	AAG	Incentive	Plans.	As	of	the	Effective	Date,	a	combination	of	AAG	Series	A Preferred	Stock	and	other	bankruptcy	settlement	obligations	were	issued	or	placed	into	effect	to	satisfy	allowed	unsecured	claims,	labor-related	deemed	claims,	and former	AMR	Corporation	shareholder	interests.	As	of	December	31,	2013,	approximately	261	million	shares	were	issued	by	the	Company	primarily	to	consummate	the Merger,	distribute	a	specified	number	of	initial	shares	to	holders	of	labor-related	deemed	claims	and	former	AMR	Corporation	shareholder	interests,	and	to	issue	shares pursuant	to	the	AAG	Incentive	Plans.	Additionally,	as	of	the	Effective	Date,	the	Company	paid	approximately	$300	million	in	cash	for	employee	withholding	taxes	in lieu	of	issuing	shares	which	reduced	the	total	number	of	shares	to	be	issued	pursuant	to	the	Plan	by	approximately	13	million.

As	of	December	31,	2013,	approximately	463	million	shares	remain	to	be	distributed	pursuant	to	the	Plan	upon	the	conversion	of	AAG	Series	A	Preferred Stock	and	to	satisfy	other	bankruptcy	settlement	obligations	related	to	allowed	unsecured	claims,	including	disputed	claims,	labor-related	deemed	claims	and	legacy AMR	common	stock	shareholders.	After	the	issuances	of	AAG	Common	Stock	upon	conversion	of	AAG	Series	A	Preferred	Stock	and	after	the	issuance	of	AAG Common	Stock	to	satisfy	the	claim-related	other	bankruptcy	settlement	obligations,	to	the	extent	that	any	shares	of	AAG	Common	Stock	remain	undistributed,	such shares	will	not	be	returned	to	us	but	rather	will	be	distributed	pro-rata	to	former	AMR	Corporation	shareholders	as	of	the	Effective	Date.	Therefore	approximately	743 million	shares	will	have	been	distributed,	however,	the	Company	may	on	future	distributions	to	employees	remit	cash	for	employee	withholding	taxes	in	lieu	of distributing	shares.	Accordingly,	as	of	the	Effective	Date,	although	undistributed	shares	are	not	yet	issued	and	outstanding,	all	conditions	of	distribution	except	the

passage	of	time	have	been	met	and	such	shares	are	considered	issued	and	are	included	in	our	calculation	of	weighted	average	shares	outstanding	for	both	basic	and diluted	earnings	per	share.

The	cancellation	of	all	shares	of	our	common	stock	outstanding	prior	to	the	Effective	Date	and	subsequent	issuance	of,	pursuant	to	the	Plan,	AAG	Common Stock	to	former	AMR	Corporation	shareholder	interests,	represents	a	share	exchange	with	the	Company's	owners	that	is	accounted	for	as	a	reverse	stock	split	applicable to	all	financial	statement	periods	prior	to	the	Effective	Date.	Accordingly,	weighted	average	shares	outstanding	for	all	periods	presented	prior	to	the	Effective	Date include	only	the	weighted	average	of	common	shares	previously	outstanding	(traded	as	AAMRQ)	which	have	been	retroactively	adjusted	to	reflect	the	reverse	stock split.	The	retroactive	adjustment	for	periods	prior	to	the	Effective	Date	has	been	made	at	a	rate	of	0.3735	shares	of	AAG	Common	Stock	for	each	previously	held	share of	AAMRQ,	based	upon	all	distributions	to	former	AMR	Corporation	shareholder	interests	that	have	been	made	on	or	since	the	Effective	Date,	including	those	made	on December	9,	2013,	January	9,	2014,	and	February	10th,	2014.	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	the	approximately	13	million	shares	withheld by	the	Company	in	satisfaction	of	employee	tax	obligations.

Former	AAMRQ	holders	as	of	the	effective	date	have	and	may	in	the	future	receive	additional	distributions	based	on	the	trading	price	of	AAL	common	stock during	the	remaining	120	day	period	after	the	effective	date	and	the	total	amount	of	allowed	claims,	in	accordance	with	the	terms	of	the	Plan.	Further	stock	splits	will occur	as	additional	shares	of	AAG	Common	Stock	are	distributed	to	former	AMR	Corporation	shareholders.	Accordingly,	the	Company's	common	shares	outstanding and	related	basic	and	diluted	earnings	per	share	reported	herein	for	all	periods	presented	may	change	in	the	future.

The	following	table	sets	forth	the	computation	of	basic	and	diluted	earnings	(loss)	per	share	(in	millions,	except	per	share	amounts	in	thousands):

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Basic\tEPS: |  |  |  |
| Net\tincome\t(loss) | $(1,834) | $(1,876) | $(1,979) |
| Weighted-average\tshares\toutstanding | 163,046 | 125,231 | 124,985 |
| Basic\tEPS | $(11.25) | $(14.98) | $(15.83) |
| Diluted\tEPS: |  |  |  |
| Net\tincome\t(loss) | $(1,834) | $(1,876) | $(1,979) |
| Interest\ton\tsenior\tconvertible\tnotes\t1 | — | — | — |
| Net\tincome\t(loss)\tfor\tpurposes\tof\tcomputing\tdiluted\tEPS | $(1,834) | $(1,876) | $(1,979) |
| Share\tcomputation\tfor\tdiluted\tEPS: |  |  |  |
| Weighted-average\tshares\toutstanding | 163,046 | 125,231 | 124,985 |
| Dilutive\teffect\tof\tstock\tawards | — | — | — |
| Senior\tconvertible\tnotes | — | — | — |
| Employee\toptions\tand\tshares | — | — | — |
| Weighted\taverage\tcommon\tshares\toutstanding\t-\tas\tadjusted | 163,046 | 125,231 | 124,985 |
| Diluted\tEPS | $(11.25) | $(14.98) | $(15.83) |
| The\tfollowing\twere\texcluded\tfrom\tthe\tcalculation\tof\tdiluted\tEPS: |  |  |  |
| Convertible\tnotes,\temployee\tstock\toptions\tand\tdeferred\tstock\tbecause\tinclusion\twould\tbe\tanti-\ndilutive | $19 | $17 | $19 |
| 'Employee\tstock\toptions\tbecause\tthe\toptions'\texercise\tprices\twere\tgreater\tthan\tthe\taverage\nmarket\tprice\tof\tshares |  |  |  |
|  | 4 | 9 | 7 |

(1) The	year	ended	December	31,	2013	does	not	include	the	impact	of	post-petition	interest	recorded	in	first	quarter	of	2013.	If	such	amounts	were	included,	results would	have	been	anti-dilutive	and	conversion	would	not	have	been	assumed.

# 19.	Stockholders'	Equity

# Common	Stock

Pursuant	to	the	Plan,	all	securities	of	AMR	Corporation	outstanding	prior	to	December	9,	2013	were	canceled.	In	connection	with	our	emergence	from bankruptcy,	the	Company	began	issuing	shares	of	AAG	Common	Stock,	par	value	$0.01	per	share,	pursuant	to	the	Plan.	The	AAG	Common	Stock	is	subject	to	the	terms of	our	Certificate	of	Incorporation,	which	supersedes	the	Certificate	of	Incorporation	in	effect	prior	to	the	Effective	Date.

The	New	Certificate	authorizes	us	to	issue	a	total	of	1.75	billion	shares	of	common	stock.	The	Plan	contemplates	the	issuance	of	up	to	756	million	shares	of AAG	Common	Stock,	consisting	of	212	million	shares	to	holders	of	US	Airways	Group	common	stock	and	other	equity	interests	immediately	prior	to	the	Merger,	up	to 544	million	shares	to	holders	of	allowed	general,	unsecured	claims	and	holders	of	AMR	equity	interests	immediately	prior	to	emergence,	and	certain	non-contract,	non- management	employees.	The	Plan	also	contemplates	the	issuance	of	up	to	40	million	shares	of	common	stock	to	certain	officers	and	directors	under	the	2013	Incentive Award	Program	(2013	IAP).	For	additional	information	regarding	the	distribution	of	new	common	stock	under	the	Plan,	see	Note	2	to	AAG's	Consolidated	Financial Statements.

         The	table	below	presents	activity	for	the	AAG	Common	Stock	for	the	year	ended	December	31,	2013	(in	thousands):

Holders	of	AAG	common	stock	are	entitled	to	one	vote	per	share	on	all	matters	submitted	to	a	vote	of	common	shareholders,	except	that	voting	rights	of	non- U.S.	citizens	are	limited	to	the	extent	that	the	shares	of	common	stock	held	by	such	non-U.S.	persons	would	otherwise	be	entitled	to	more	than	24.9%	of	the	aggregate votes	of	all	outstanding	equity	securities	of	US	Airways	Group.

# 20.	Subsequent	Events

Conversions	of	shares	of	AAG	Series	A	Preferred	Stock	into	shares	of	AAG	Common	Stock	subsequent	to	the	reporting	date,	as	of	February	19,	2014,	in accordance	with	the	related	optional	and	mandatory	conversion	provisions,	are	presented	in	the	table	below	(in	thousands).

| Conversion	Date | Conversion	Type | Shares	Converted | Increase	(Decrease)	in	AAG<br>Preferred	Shares	Outstanding | Increase	(Decrease)	in	AAG<br>Common	Shares	Outstanding |
| :--- | :--- | :--- | :--- | :--- |
| January\t8,\t2014 | Mandatory | 41,964 | (41,964) | 41,540 |
| January\t14,\t2014 | Optional | 10,000 | (10,000) | 9,167 |
| February\t7,\t2014 | Mandatory | 41,964 | (41,964) | 32,403 |
| February\t13,\t2014 | Optional | 3,166 | (3,166) | 2,369 |
| February\t14,\t2014 | Optional | 6 | (6) | 4 |
| February\t18,\t2014 | Optional | 21 | (21) | 16 |
|  |  | 97,121 | (97,121) | 85,499 |

On	January	14,	2014,	American	Eagle	Airlines,	Inc.,	AAG's	wholly-owned	regional	subsidiary,	announced	its	intent	to	change	its	corporate	name	to	Envoy beginning	Spring	of	2014.

# In	January	2014,	US	Airways	amended	the	2013	Citicorp	Credit	Facility	to	lower	the	applicable	LIBOR	margin	from	3.00%

addition,	the	LIBOR	floor	was	reduced	from	1.00%	to	0.75%	on	both	Tranche	B-1	and	Tranche	B-2.

# AMERICAN	CONSOLIDATED	FINANCIAL	STATEMENTS

We	have	audited	the	accompanying	consolidated	balance	sheets	of	American	Airlines,	Inc.	(American)	as	of	December	31,	2013	and	2012,	and	the	related	consolidated statements	of	operations,	comprehensive	income	(loss),	stockholder's	equity	(deficit)	and	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2013. Our	audits	also	included	the	financial	statement	schedule	listed	in	the	Index	at	Item	15(a)(2).	These	consolidated	financial	statements	and	schedule	are	the	responsibility of	American's	management.	Our	responsibility	is	to	express	an	opinion	on	these	financial	statements	and	schedule	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	2012	and	the	consolidated	results	of	its	operations	and	its	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2013,	in conformity	with	U.S.	generally	accepted	accounting	principles.	Also,	in	our	opinion,	the	related	financial	statement	schedule,	when	considered	in	relation	to	the	basic financial	statements	taken	as	a	whole,	presents	fairly,	in	all	material	respects,	the	information	set	forth	therein.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	American's	internal	control	over	financial reporting	as	of	December	31,	2013,	based	on	criteria	established	in	Internal	Control-Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the Treadway	Commission	(1992	Framework)	and	our	report	dated	February	27,	2014	expressed	an	unqualified	opinion	thereon.

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Operating\trevenues |  |  |  |
| Mainline\tpassenger | $19,594 | $18,743 | $17,947 |
| Regional\tpassenger | 2,927 | 2,914 | 2,724 |
| Cargo | 676 | 675 | 709 |
| Other | 2,563 | 2,493 | 2,577 |
| Total\toperating\trevenues | 25,760 | 24,825 | 23,957 |
| Operating\texpenses |  |  |  |
| Aircraft\tfuel\tand\trelated\ttaxes | 7,628 | 7,705 | 7,358 |
| Salaries,\twages\tand\tbenefits | 5,267 | 6,208 | 6,353 |
| Regional\texpenses | 3,074 | 3,049 | 3,099 |
| Maintenance,\tmaterials\tand\trepairs | 1,222 | 1,158 | 1,038 |
| Other\trent\tand\tlanding\tfees | 1,117 | 1,083 | 1,194 |
| Aircraft\trent | 743 | 554 | 645 |
| Selling\texpenses | 1,128 | 1,059 | 1,103 |
| Depreciation\tand\tamortization | 830 | 845 | 915 |
| Special\titems,\tnet | 282 | 386 | 756 |
| Other | 2,935 | 2,696 | 2,650 |
| Total\toperating\texpenses | 24,226 | 24,743 | 25,111 |
| Operating\tincome\t(loss) | 1,534 | 82 | (1,154) |
| Nonoperating\tincome\t(expense) |  |  |  |
| Interest\tincome | 20 | 25 | 25 |
| Interest\texpense,\tnet\tof\tcapitalized\tinterest\t(contractual\tinterest\texpense\tequals\t$(772),\n$(707),\tand\t$(714)\tfor\tthe\tyears\tended\tDecember\t31,\t2013,\t2012\tand\t2011,\trespectively) | (700) | (633) | (672) |
| Related\tparty\tinterest,\tnet | (10) | (13) | (14) |
| Other,\tnet | (84) | 223 | (34) |
| Total\tnonoperating\texpense,\tnet | (774) | (398) | (695) |
| Income\t(loss)\tbefore\treorganization\titems,\tnet | 760 | (316) | (1,849) |
| Reorganization\titems,\tnet | (2,640) | (2,179) | (116) |
| Income\t(loss)\tbefore\tincome\ttaxes | (1,880) | (2,495) | (1,965) |
| Income\ttax\tprovision\t(benefit) | (354) | (569) | — |
| Net\tincome\t(loss) | $(1,526) | $(1,926) | $(1,965) |

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Net\tincome\t(loss) | $(1,526) | $(1,926) | $(1,965) |
| Other\tcomprehensive\tincome\t(loss),\tbefore\ttax: |  |  |  |
| Defined\tbenefit\tpension\tplans\tand\tretiree\tmedical: |  |  |  |
| Amortization\tof\tactuarial\tloss\tand\tprior\tservice\tcost | (142) | 130 | 130 |
| Current\tyear\tchange | 1,565 | (1,910) | (1,216) |
| Benefit\tplan\tmodifications | — | 3,345 | — |
| Derivative\tfinancial\tinstruments: |  |  |  |
| Change\tin\tfair\tvalue | 18 | (12) | 190 |
| Reclassification\tinto\tearnings | 34 | (3) | (313) |
| Unrealized\tgain\t(loss)\ton\tinvestments: |  |  |  |
| Net\tchange\tin\tvalue | (1) | 6 | (1) |
| Other\tcomprehensive\tincome\t(loss)\tbefore\ttax | 1,474 | 1,556 | (1,210) |
| Non-cash\ttax\tprovision | 538 | 569 | — |
| Comprehensive\tincome\t(loss) | $(590) | $(939) | $(3,175) |

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Cash\tflow\tfrom\toperating\tactivities: |  |  |  |
| Net\tincome\t(loss) | $(1,526) | $(1,926) | $(1,965) |
| Adjustments\tto\treconcile\tnet\tincome\t(loss)\tto\tnet\tcash\tprovided\tby\t(used\tin)\toperating\nactivities: |  |  |  |
| Depreciation\tand\tamortization | 979 | 999 | 950 |
| Debt\tdiscount\tand\tlease\tamortization | 4 | (14) | (14) |
| Special\titems,\tnon-cash | 82 | 214 | 725 |
| Pension\tand\tpostretirement | (154) | 287 | 180 |
| Deferred\tincome\ttaxes | (324) | (569) | — |
| Share\tbased\tcompensation | 24 | 26 | 35 |
| Reorganization\titems,\tnon-cash | 2,098 | 2,037 | 118 |
| Interest\texpense,\tnon-cash | 45 | — | — |
| Other,\tnet | (77) | 13 | 79 |
| Changes\tin\toperating\tassets\tand\tliabilities: |  |  |  |
| Decrease\t(increase)\tin\taccounts\treceivable | (81) | (222) | (164) |
| Decrease\t(increase)\tin\tother\tcurrent\tassets | (3) | (133) | (172) |
| Decrease\t(increase)\tin\tderivative\tcollateral | 1 | (1) | (73) |
| Increase\t(decrease)\tin\taccounts\tpayable\tand\taccrued\tliabilities | 46 | 423 | 255 |
| Increase\t(decrease)\tin\tair\ttraffic\tliability | 332 | 161 | 374 |
| Increase\t(decrease)\tin\tfrequent\tflyer\tliability | 49 | 140 | 193 |
| Increase\t(decrease)\tin\tother\tassets\tand\tliabilities | (546) | (281) | 239 |
| Net\tcash\tprovided\tby\t(used\tin)\toperating\tactivities | 949 | 1,154 | 760 |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |
| Capital\texpenditures\tand\taircraft\tpurchase\tdeposits | (2,968) | (1,870) | (1,432) |
| Purchases\tof\tshort-term\tinvestments | (3,342) | (1,067) | (2,907) |
| Sales\tof\tshort-term\tinvestments | 1,588 | 1,373 | 3,515 |
| Decrease\t(increase)\tin\trestricted\tcash\tand\tshort-term\tinvestments | 148 | (112) | (288) |
| Proceeds\tfrom\tsale\tof\tproperty\tand\tequipment | 115 | 124 | (4) |
| Net\tcash\tprovided\tby\t(used\tin)\tinvesting\tactivities | (4,459) | (1,552) | (1,116) |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |
| Payments\ton\tlong-term\tdebt\tand\tcapital\tleases | (2,628) | (1,288) | (2,240) |
| Proceeds\tfrom\tissuance\tof\tlong-term\tdebt | 4,850 | 268 | 2,382 |
| Deferred\tfinancing\tcosts | (115) | (6) | (63) |
| Sale-leaseback\ttransactions | 1,700 | 1,509 | 703 |
| Funds\ttransferred\tto\taffiliates,\tnet | 53 | 109 | (311) |
| Other\tfinancing\tactivities | 5 | — | — |
| Net\tcash\tprovided\tby\t(used\tin)\tfinancing\tactivities | 3,865 | 592 | 471 |
| Net\tincrease\t(decrease)\tin\tcash | 355 | 194 | 115 |
| Cash\tat\tbeginning\tof\tyear | 474 | 280 | 165 |
| Cash\tat\tend\tof\tyear | $829 | $474 | $280 |

|  | Common<br>Stock | Additional<br>Paid-in<br>Capital | Treasury<br>Stock | Accumulated<br>Other<br>Comprehensive<br>Income	(Loss) | Accumulated<br>Deficit | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tJanuary\t1,\t2011 | $— | $3,981 | $— | $(2,865) | $(7,452) | $(6,336) |
| Net\tincome\t(loss) | — | — | — | — | (1,965) | (1,965) |
| Changes\tin\tpension,\tretiree\tmedical\tand\nother\tliability | — | — | — | (1,086) | — | (1,086) |
| Net\tchanges\tin\tfair\tvalue\tof\tderivative\nfinancial\tinstruments | — | — | — | (123) | — | (123) |
| Unrealized\tgain\ton\tinvestments | — | — | — | (1) | — | (1) |
| Total\tcomprehensive\tloss |  |  |  |  |  | (3,175) |
| Reclassification\tand\tamortization\tof\nshare-based\tcompensation\texpense | — | 24 | — | — | — | 24 |
| Intercompany\tequity\ttransfer | — | 450 | — | — | — | 450 |
| Balance\tat\tDecember\t31,\t2011 | $— | $4,455 | $— | $(4,075) | $(9,417) | $(9,037) |
| Net\tincome\t(loss) | — | — | — | — | (1,926) | (1,926) |
| Change\tin\tunrealized\tgain\t(loss)\ton\ninvestments | — | — | — | 6 | — | 6 |
| Changes\tin\tpension,\tretiree\tmedical\tand\nother\tliability | — | — | — | 1,565 | — | 1,565 |
| Net\tchanges\tin\tfair\tvalue\tof\tderivative\nfinancial\tinstruments | — | — | — | (15) | — | (15) |
| Non-cash\ttax\tprovision | — | — | — | (569) | — | (569) |
| Total\tcomprehensive\tloss |  |  |  |  |  | (939) |
| Reclassification\tand\tamortization\tof\nshare-based\tcompensation\texpense | — | 14 | — | — | — | 14 |
| Intercompany\tequity\ttransfer | — | — | — | — | — | — |
| Balance\tat\tDecember\t31,\t2012 | $— | $4,469 | $— | $(3,088) | $(11,343) | $(9,962) |
| Net\tincome\t(loss) | — | — | — |  | (1,526) | (1,526) |
| Change\tin\tunrealized\tgain\t(loss)\ton\ninvestments | — | — | — | (1) | — | (1) |
| Changes\tin\tpension,\tretiree\tmedical\tand\nother\tliability | — | — | — | 1,423 | — | 1,423 |
| Net\tchanges\tin\tfair\tvalue\tof\tderivative\nfinancial\tinstruments | — | — | — | 52 | — | 52 |
| Non-cash\ttax\tprovision | — | — | — | (538) | — | (538) |
| Total\tcomprehensive\tloss |  |  |  |  |  | (590) |
| Reclassification\tand\tamortization\tof\nshare\tbased\tcompensation\texpense | — | 68 | — | — | — | 68 |
| Intercompany\tequity\ttransfer | — | 824 | — | — | — | 824 |
| Balance\tat\tDecember\t31,\t2013 | $— | $5,361 | $— | $(2,152) | $(12,869) | $(9,660) |

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	or	the	Company;	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.	American	operates nearly	1,811	flights	per	day	to	166	destinations	in	50	countries.	In	2013,	American	had	approximately	87	million	passengers	boarding	its	flights.	As	of	December	31, 2013,	American	operated	627	mainline	jets.	American	is	supported	by	AAG's	wholly-owned	regional	airline	subsidiary	and	third-party	regional	carriers	operating	as American	Eagle	under	capacity	purchase	agreements.

As	of	December	31,	2013,	American	employed	approximately	60,000	active	full-time	equivalent	employees,	of	which	approximately	69.2%	are	covered	by CBAs	with	various	labor	unions.	American's	pilots	and	flight	attendants	are	currently	working	under	the	terms	of	their	respective	CBAs,	as	modified	by	transition agreements	reached	in	connection	with	the	Merger	in	December	2013.

On	November	29,	2011	(the	Petition	Date),	AMR	Corporation	(renamed	American	Airlines	Group	Inc.,	AAG,	the	Company),	its	principal	subsidiary,	American Airlines,	Inc.	(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).

Pursuant	 to	 the	Plan,	all	shares	of	AMR	Corporation	common	stock	outstanding	prior	 to	 the	Effective	Date	were	canceled.	The	Restated	Certificate	of Incorporation,	which	was	approved	in	connection	with	the	Plan,	authorizes	the	issuance	of	1.75	billion	new	shares	of	AAG	Common	Stock,	par	value	$0.01	per	share, and	200	million	shares	of	AAG	Series	A	Preferred	Stock,	par	value	$0.01	per	share.	Of	the	authorized	AAG	Series	A	Preferred	Stock,	approximately	168	million	were designated	"Series	A	Convertible	Preferred	Stock",	with	a	stated	value	$25.00	per	share,	and	issued	in	accordance	with	the	Plan.	AAG	Common	Stock	and	AAG	Series A	Preferred	Stock	are	listed	on	the	NASDAQ	Global	Select	Market	under	the	symbols	"AAL"

and	"AALCP",	respectively,	and	began	trading	on	December	9,	2013.	In	addition,	pursuant	to	the	Plan,	up	to	40	million	shares	of	AAG	Common	Stock	was	authorized for	issuance	under	the	2013	Incentive	Award	Plan	(the	2013	IAP).

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	including	AMR	Corporation	and	American:

◦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 are	not	guaranteed	by	any	other	Debtor,	other	than	the	claims	of	the	Debtors'	labor	unions.	Holders	of	Single-Dip	Unsecured	Claims	received,	at	the Effective	Date,	a	portion	of	their	recovery	in	shares	of	AAG	Series	A	Preferred	Stock	and	a	right,	subject	to	the	trading	price	of	the	Company's common	stock	during	the	120	day	period	after	the	Effective	Date,	to	receive	their	remaining	recovery	in	shares	of	AAG	Common	Stock	120	days after	the	Effective	Date;

◦holders	of	allowed	interests	in	AMR	Corporation	(primarily	holders	of	AMR	Corporation	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,	will	receive	additional	shares	of	AAG	Common	Stock	if,	among other	considerations,	the	trading	price	of	the	Company's	common	stock	at	various	points	during	the	120	day	period	after	the	Effective	Date	provides for	a	full	recovery	to	claimholders	and	other	allowed	priority	interests;	and

The	Plan	contemplates	the	distribution	of	up	to	756	million	shares	of	common	stock	of	which	approximately	53	million	shares	were	issued	to	the	Debtors' stakeholders	in	connection	with	the	Effective	Date.	In	accordance	with	the	Plan,	the	Company	will	issue	the	remaining	shares	of	AAG	Common	Stock	over	the	120	day distribution	period	and	as	disputed	claims	are	resolved.	In	addition,	pursuant	to	the	Plan	approximately	197	million	common	shares	were	distributed	to	holders	of outstanding	shares	of	US	Airways	Group	common	stock.

Pursuant	to	rulings	of	the	Bankruptcy	Court,	the	Plan	has	established	a	disputed	claim	reserve	to	hold	shares	of	AAG	Series	A	Preferred	Stock	and	AAG Common	Stock	reserved	for	issuance	to	disputed	claimholders	that	ultimately	become	allowed	Single-Dip	general	unsecured	claimholders	after	emergence.	The	shares provided	for	under	the	Plan	are	determined	based	upon	a	disputed	claim	reserve	amount	of	approximately	$755	million,	representing	the	maximum	amount	of	additional allowable	Single-Dip	claims	under	the	Plan's	provisions.	Approximately	16	million	shares	of	AAG	Series	A	Preferred	Stock	have	been

reserved	at	the	Effective	Date	for	distribution	to	holders	of	disputed	Single-Dip	general	unsecured	claims	whose	claims	ultimately	become	allowed.	Additional	new shares	of	AAG	Common	Stock	will	be	distributed	into	the	reserve	on	or	about	the	120th	day	after	the	Effective	Date.	As	disputed	claims	are	resolved,	the	claimants receive	distributions	of	shares	from	the	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	the	remaining	disputed	claims,	such	shares	will	not	be	returned	to	AAG	but	rather	will	be	distributed	by	priority first,	if	necessary,	to	satisfy	unsecured	claims	or	labor-related	obligations,	and	then	to	former	AMR	shareholders	as	of	the	Effective	Date.

AAG	is	not	required	to	distribute	additional	shares	above	the	756	million	shares	contemplated	by	the	Plan,	even	if	the	shares	remaining	for	distribution	are	not sufficient	to	fully	pay	all	allowed	unsecured	claims.	However,	resolution	of	disputed	claims	could	have	a	material	effect	on	Single-Dip	creditor	recoveries	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.

In	addition,	as	of	December	31,	2013,	American	made	the	following	cash	disbursements	under	the	Plan:

•Approximately	$300	 million for payroll taxes associated	 with equity distributions to employees

Several	parties	have	filed	appeals	seeking	reconsideration	of	the	Confirmation	Order.	See	Note	7	to	American's	Consolidated	Financial	Statements	for	more information.

As	noted	above,	the	reconciliation	process	with	respect	to	the	remaining	claims	will	take	considerable	additional	time	post	emergence.	Included	in	Claim	and other	bankruptcy	settlement	obligations	on	American's	Consolidated	Balance	Sheet	as	of	December	31,	2013,	are	American's	estimates	of	the	amounts	of	disputed claims	that	will	ultimately	become	allowed	Single-Dip	general	unsecured	claims.	As	these	claims	are	resolved,	or	where	better	information	becomes	available	and	is evaluated,	AAG	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,	the	Company	experienced	an	"ownership	change"	as	defined	in	Section	382	of	the	Internal	Revenue	Code	which	could potentially	limit	the	ability	to	utilize	certain	tax	attributes	including	the	Company's	substantial	NOLs.	The	general	limitation	rules	for	a	debtor	in	a	bankruptcy	case	are liberalized	where	the	ownership	change	occurs	upon	emergence	from	bankruptcy.	While	the	Company	anticipates	taking	advantage	of	certain	special	rules	for	federal income	tax	purposes	that	would	permit	approximately	$9.5	billion	of	the	federal	NOL	Carryforwards	to	be	utilized	without	regard	to	the	annual	limitation	generally imposed	by	Section	382,	there	can	be	no	assurance	that	these	special	rules	will	apply.

Moreover,	an	ownership	change	subsequent	to	the	Company's	emergence	from	bankruptcy	may	further	limit	or	effectively	eliminate	the	ability	to	utilize	the Company's	NOL	Carryforwards	and	other	tax	attributes.	To	reduce	the	risk	of	a	potential	adverse	effect	on	the	Company's	ability	to	utilize	the	NOL	Carryforwards,	the Restated	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	the Restated	Certificate	of	Incorporation	was	attached	as	Exhibit	3.1	 to	a	Form	8-K	filed	on	December	9,	2013	by	 the	Company	with	 the	Securities	and	Exchange Commission.

Pursuant	to	the	Plan,	American's	allowed	pre-petition	claims	and	estimated	unresolved	pre-petition	claims	of	$4.6	billion	were	settled	in	cash,	AAG	Series	A Preferred	Stock	and	other	bankruptcy	settlement	obligations	on	the	Effective	Date.	The	pension	and	postretirement	benefits	obligation	included	below	was	reinstated	and is	included	in	"Pension	and	postretirement

benefits"	in	American's	Consolidated	Balance	Sheets.	Accordingly	there	are	no	Liabilities	Subject	to	Compromise	at	December	31,	2013.

| millions): |  |
| :--- | :--- |
| Long-term\tdebt | $358 |
| Estimated\tallowed\tclaims\ton\taircraft\tlease\tand\tdebt\tobligations\tand\tfacility\tlease\tand\tbond\tobligations | 3,716 |
| Pension\tand\tpostretirement\tbenefits\t1 | 1,250 |
| Accounts\tpayable\tand\tother\taccrued\tliabilities | 370 |
| Other | — |
| Total\tliabilities\tsubject\tto\tcompromise | $5,694 |

(1) As	a	result	of	the	modifications	to	the	retirement	benefits	as	discussed	in	Note	12	to	American's	Consolidated	Financial	Statements,	a	portion	of	the	pension	and postretirement	benefits	liability,	primarily	relating	to	retiree	medical	and	other	benefits,	was	classified	as	liabilities	subject	to	compromise.

Long-term	debt,	including	undersecured	debt,	classified	as	subject	to	compromise	as	of	December	31,	2012	consisted	of	(in	millions):

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Pension\tand\tpostretirement\tbenefits | $— | $(66) | $— |
| Labor-related\tdeemed\tclaim | 1,733 | — | — |
| Aircraft\tand\tfacility\tfinancing\trenegotiations\tand\trejections\t1,\t2 | 320 | 1,951 | 102 |
| Fair\tvalue\tof\tconversion\tdiscount\t3 | 218 | — | — |
| Professional\tfees | 199 | 227 | 14 |
| Other | 170 | 67 | — |
| Total\treorganization\titems,\tnet | $2,640 | $2,179 | $116 |

(1) 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.	American	recorded	an	estimated	claim	associated	with	the	rejection	or	modification	of	a	financing	or	facility	agreements	when	the	applicable	motion	was filed	with	the	Bankruptcy	Court	to	reject	or	modify	such	financing	and	the	Debtors	believed	that	it	was	probable	the	motion	would	be	approved,	and	there	was sufficient	information	to	estimate	the	claim.

# 3.	Bankruptcy	Settlement	Obligations

As	of	December	31,	2013,	the	components	of	"Claims	and	other	bankruptcy	settlement	obligations"	on	American's	Consolidated	Balance	Sheet	are	as	follows (in	millions):

As	a	mechanism	for	satisfying	Double-Dip	Unsecured	Claims	and	a	portion	of	Single-Dip	Unsecured	Claims,	the	Plan	of	Reorganization	provided	that	such claimholders	 receive	 the	 mandatorily	 convertible	AAG	 Series	A	 Preferred	 Stock.	AAG's	 Series	A	 Preferred	 Stock,	 while	 outstanding,	 votes	 and	 participates	 in accordance	with	the	terms	of	the	underlying	Certificate	of	Designation.	One	quarter	of	the	shares	of	AAG	Series	A	Preferred	Stock	is	mandatorily	convertible	on	each	of the	30th,	60th,	90th	and	120th	days	after	the	Effective	Date.	In	addition,	subject	to	certain	limitations,	holders	of	AAG	Series	A	Preferred	Stock	may	elect	to	convert	up	to 10	million	shares	of	AAG	Series	A	Preferred	Stock	during	each	30-day	period	following	the	Effective	Date	thereby	reducing	the	number	of	AAG	Series	A	Preferred Stock	to	be	converted	on	the	120th	day	after	the	Effective	Date.	The	initial	stated	value	of	each	share	of	AAG	Series	A	Preferred	Stock	is	$25.00	and	accrues	dividends at	6.25%	per	annum,	calculated	daily,	while	outstanding.	Additionally,	AAG	Series	A	Preferred	Stock	converts	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.	AAG	Series	A Preferred	Stock	embodies	an	unconditional	obligation	to	transfer	a	variable	number	of	shares	based	predominately	on	a	fixed	monetary	amount	known	at	inception,	and, as	such,	it	is	not	treated	as	equity	of	AAG,	but	rather	as	a	liability	until	such	time	that	it	is	converted	to	AAG	Common	Stock.	Accordingly,	American	has	reflected	the amount	of	its	claims	satisfied	through	the	issuance	of	the	AAG	Series	A	Preferred	Stock	as	a	liability	included	within	the	"Bankruptcy	settlement	obligations"	line	on American's	Consolidated	Balance	Sheets	and	will	reflect	such	obligations	as	a	liability	until	such	time	where	they	are	satisfied	through	the	issuance	of	AAG	Common Stock.	Upon	the	satisfaction	of	these	bankruptcy	settlement	obligations	with	AAG	Common	Stock,	the	Company	will	record	an	increase	in	additional	paid-in	capital through	an	intercompany	equity	transfer	while	derecognizing	the	related	bankruptcy	settlement	obligation	at	that	time.	As	of	February	19,	2014,	approximately	107 million	shares	of	AAG	Series	A	Preferred	Stock	had	been	converted	into	an	aggregate	of	95	million	shares	of	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	contract	obligations, representing	the	amount	of	total	Single-Dip	unsecured	creditor	obligations	not	satisfied	through	the	issuance	of	AAG	Series	A	Preferred	Stock	at	the	Effective	Date, represent	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,	are	not	treated	as	equity,	but	rather	as	liabilities	until	the	120th	day	after	emergence.	At	the	120th	day	after	emergence,	AAG	will	issue	a	variable amount	of	AAG	Common	Stock	necessary	to	satisfy	the	obligation	amount	at	emergence,	plus	accrued	dividends	of	12%	per	annum,	calculated	daily,	through	the	120th day	after	emergence,	based	on	the	volume	weighted	average	price	of	the	shares	of	AAG	Common	Stock,	at	a	3.5%	discount,	as	specified	in	the	Plan	and	subject	to	there being	a	sufficient	number	of	shares	remaining	for	issuance	to	unsecured	creditors	under	the	Plan.

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	was	approximately	$1.7	billion.	On	the	Effective	Date,	AAG	made	an initial	distribution	of	$595	million	in	common	stock	and	American	paid	approximately	$300	million	in	cash	to	cover	payroll	taxes	related	to	the	equity	distribution.	As	of December	31,	2013,	the	remaining	liability	to	certain	American	labor	groups	and	employees	of	$849	million	is	based	upon	the	estimated	fair	value	of	the	shares	of	AAG Common	Stock	expected	to	be	issued	in	satisfaction	of	such	obligation,	measured	as	if	the	obligation	were	settled	using	the	trading	price	of	AAG	Common	Stock	at December	31,	2013.	Increases	in	the	trading	price	of	AAG	Common	Stock	after	December	31,	2013,	could	cause	a	decrease	in	the	fair	value	measurement	of	the remaining	obligation,	and	vice-versa.	American	will	record	this	obligation	at	fair	value	primarily	through	the	120th	day	after	emergence,	at	which	time	the	obligation	will be	materially	settled.

The	Consolidated	Financial	Statements	as	of	and	for	the	years	ended	December	31,	2013,	2012	and	2011	include	the	accounts	of	American.	Certain	prior	period amounts	have	been	reclassified	to	conform	to	the	current	year	financial	statement	presentation.	All	significant	intercompany	transactions	have	been	eliminated.

Certain	of	American's	non-U.S.	subsidiaries	are	not	part	of	 the	Chapter	11	Cases.	Since	 these	non-US	subsidiaries	do	not	have	significant	 transactions, American	 does	 not	 separately	 disclose	 the	 combined	 financial	 statements	 of	 such	 non-U.S.	 subsidiaries	 in	 accordance	 with	 the	 requirements	 of	 reorganization accounting.

In	accordance	with	ASC	852,	American	did	not	meet	the	criteria	for	and	will	not	adopt	"fresh	start"	accounting	as	the	reorganization	value	of	American's	assets, as	determined	based	upon	an	estimate	of	the	fair	value	of	AMR's	equity	using	the	trading	market	price	of	US	Airways	Group,	the	amount	of	post-petition	liabilities	as	of the	Effective	Date	was	significantly	greater	than	the	total	pre-petition	liabilities	and	expected	allowed	claims.	As	a	result,	our	assets	and	liabilities	were	not	adjusted	to fair	value;	but	rather	liabilities	compromised	by	the	Plan	are	stated	at	present	values	of	amounts	to	be	paid.

•Reclassifications	 between	 various	 operating income line items to	 confirm the	 presentation	 of	 Cargo	 and	 Other revenues.

The	following	table	summarizes	the	historical	and	revised	financial	statement	amounts	for	American	(in	millions).

|  | As<br>Reclassified | Historical | As<br>Reclassified | Historical |
| :--- | :--- | :--- | :--- | :--- |
| Operating\trevenues: |  |  |  |  |
| Mainline\tpassenger | $18,743 | \t $18,743 | \t $17,947 | \t $17,947 |
| Regional\tpassenger | 2,914 | 2,914 | 2,724 | 2,724 |
| Cargo | 675 | 669 | 709 | 703 |
| Other | 2,493 | 2,499 | 2,577 | 2,583 |
| Total\toperating\trevenues | 24,825 | 24,825 | 23,957 | 23,957 |
| Operating\texpenses: |  |  |  |  |
| Aircraft\tfuel\tand\trelated\ttaxes | 7,705 | 8,717 | 7,358 | 7,434 |
| Salaries,\twages\tand\tbenefits | 6,208 | 6,242 | 6,353 | 6,385 |
| Regional\texpenses | 3,049 | 1,142 | 3,099 | 2,418 |
| Maintenance,\tmaterials\tand\trepairs | 1,158 | 1,133 | 1,038 | 1,020 |
| Other\trent\tand\tlanding\tfees | 1,083 | 1,286 | 1,194 | 1,305 |
| Aircraft\trent | 554 | 550 | 645 | 673 |
| Selling\texpenses | 1,059 | 1,050 | 1,103 | 1,062 |
| Depreciation\tand\tamortization | 845 | 999 | 915 | 950 |
| Special\titems,\tnet | 386 | 386 | 756 | 725 |
| Other | 2,696 | 3,279 | 2,650 | 3,155 |
| Total\toperating\texpenses | 24,743 | 24,784 | 25,111 | 25,127 |
| Operating\tincome\t(loss) | 82 | 41 | (1,154) | (1,170) |
| Nonoperating\tincome\t(expense): |  |  |  |  |
| Interest\tincome | 25 | 25 | 25 | 25 |
| Interest\texpense,\tnet\tof\tcapitalized\tinterest | (633) | (612) | (672) | (649) |
| Related-party\tinterest | (13) | (13) | (14) | (14) |
| Other,\tnet | 223 | 243 | (34) | (41) |
| Total\tnonoperating\texpense,\tnet | $(398) | \t $(357) | \t $(695) | \t $(679) |

Effective	January	1,	2013,	American	adopted	revised	guidance	on	the	Comprehensive	Income	topic	of	the	FASB	Codification	which	requires	an	entity	to present	either	parenthetically	on	 the	face	of	 the	financial	statements	or	 in	 the	notes,	significant	amounts	reclassified	from	each	component	of	accumulated	other comprehensive	income	(loss)	and	the	income	statement	line	items	affected	by	the	reclassification.	The	adoption	did	not	have	any	impact	on	American's	financial position,	results	of	operations	or	cash	flows.

Effective	January	1,	2013,	American	adopted	revised	guidance	on	Balance	Sheet	topic	of	the	FASB	Codification,	which	clarifies	the	scope	of	disclosures	about offsetting	assets	and	liabilities.	The	clarification	applies	only	to	derivatives,	repurchase	agreements	and	reverse	purchase	agreements,	and	to	certain	securities	borrowing and	securities	lending	transactions,	and	not	to	ordinary	trade	receivables	and	payables.	The	adoption	did	not	have	any	impact	on	the	American's	financial	position, results	of	operations	or	cash	flows.

The	preparation	of	financial	statements	in	conformity	with	U.S.	GAAP	requires	management	to	make	estimates	and	assumptions	that	affect	the	amounts reported	in	the	accompanying	Consolidated	Financial	Statements	and	accompanying	notes.	Actual	results	could	differ	from	those	estimates.

# Restricted	and	Short-term	Investments

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.

Intangible	assets	consist	primarily	of	airport	take-off	and	landing	rights	(Slots).	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.

Indefinite-lived	intangible	assets	(route	acquisition	costs	and	international	Slots)	are	tested	for	impairment	annually	on	December	31,	rather	than	amortized,	or when	a	triggering	event	occurs,	in	accordance	with	U.S.	GAAP.	Such	triggering	events	may	include	significant	changes	to	the	Company's	network	or	capacity,	or	the implementation	of	open	skies	agreements	in	countries	where	the	Company	operates	flights.

As	there	is	minimal	market	activity	for	the	valuation	of	routes	and	international	Slots,	the	Company	measures	fair	value	with	inputs	using	the	income	approach. The	income	approach	uses	valuation	techniques,	such	as	future	cash	flows,	to	convert	future	amounts	to	a	single	present	discounted	amount.	The	inputs	utilized	for	these valuations	are	unobservable	and	reflect	 the	Company's	assumptions	about	market	participants	and	what	 they	would	use	 to	value	 the	routes	and	accordingly	are considered	Level	3	in	the	fair	value	hierarchy.	The	Company's	unobservable	inputs	are	developed	based	on	the	best	information	available	as	of	December	31,	2013.

|  | 2013 | 2012 |
| :--- | :--- | :--- |
| Airport\tSlots | $277 | $515 |
| Airport\tgate\tleasehold\trights | 155 | 155 |
| Accumulated\tamortization | (375) | (509) |
| Total | $57 | $161 |

					Airport	operating	and	gate	lease	rights	are	being	amortized	on	a	straight-line	basis	over	25	years	to	a	zero	residual	value.	The	Dividend	Miles	customer	relationships, marketing	agreements	and	trademarks	were	identified	as	intangible	assets	subject	to	amortization	and	will	be	amortized	over	approximately	9	years,	30	years	 and	15 months,	respectively.

American	recorded	amortization	expense	related	to	these	intangible	assets	of	approximately	$18	million,	$25	million,	 and	$27	million	for	the	years	ended December	31,	2013,	2012	 and	2011,	respectively.	American	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	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, 2013,	and	2012,	the	Company	had	$755	million	and	$708	million,	respectively,	of	indefinite-lived	intangible	assets	on	its	Consolidated	Balance	Sheet.

# Equipment	and	Property

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,	2013,	2012	and	2011	was	$47	million,	$50	million	and	$40	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:

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	the	Company's	wholly-owned	regional	air	carriers	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.	American's	wholly-owned	regional	air	carriers	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	statement	of	operations	and	recorded	as	a	liability	until	remitted	to	the	appropriate	taxing authority.

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	our	frequent	flyer	liability	incurred	when	AAdvantage	members	earn	mileage	credits by	flying	on	American	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,	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.	In	addition,	American	also includes	 in	 the	determination	of	 incremental	cost	 the	amount	of	certain	fees	related	 to	redemptions	expected	 to	be	collected	from	AAdvantage	members.	These redemption	fees	reduce	incremental	cost.	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.

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	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,	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	will	apply	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	the	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	the	fourth	quarter	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.

As	of	December	31,	2013	and	2012,	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,	2013,	2012	and	2011,	the	marketing	component	of	mileage	sales	recognized	at	the	time	of	sale	in	other revenues	was	approximately	$816	million,	$725	million	and	$761	million,	respectively.

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	2013,	2012	and	2011	were	$55	million,	$41	million	and	$17	million,	respectively.

In	connection	with	preparation	of	the	Consolidated	Financial	Statements	and	in	accordance	U.S.	GAAP,	the	Company	evaluated	subsequent	events	after	the balance	sheet	date	of	December	31,	2013	and	identified	items	as	set	forth	in	Note	17	to	American's	Consolidated	Financial	Statements.

The	following	table	summarizes	the	components	of	American's	Special	items,	net,	as	of	December	31,	2013,	2012	and	2011	(in	millions):

|  | 2013 | Year	Ended	December	31,<br>2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Restructuring\tand\tspecial\tcharges: |  |  |  |
| Aircraft\t1 | \t $33 | \t $11 | \t $744 |
| Facilities\tand\tother\tfixed\tassets | 7 | 14 | 12 |
| Personnel\tcosts\t2 | 166 | 361 | — |
| Merger-related\texpenses: |  |  |  |
| Employee-related\t3 | 103 | — | — |
| Professional\tfees | 24 | — | — |
| Slot\tdivestiture\t4 | (67) | — | — |
| Other | 16 | — | — |
| Special\titems,\tnet | \t $282 | \t $386 | \t $756 |

(2) Consists	primarily	of	charges	resulting	from	a	$107	million	fair	value	adjustment	to	the	pilot	long-term	disability	plan	and	a	$43	million	charge	to	benefits	expense due	to	a	reorganization	related	increase	in	workers'	compensation	claims	in	the	applicable	period	including	adverse	developments	on	older	claims.	Charges	in	2012 are	in	connection	with	voluntary	and	involuntary	employee	separations	from	American	and	were	paid	through	the	end	of	2013.

(3)Employee	related	expenses	consist	of	$47	million	in	severance	to	satisfy	certain	separation	agreements	resulting	from	the	Merger	and	professional	fees	and	$56 million	related	to	equity	awards	granted	in	connection	with	the	Merger,	partially	offset	by	the	cancellation	of	equity	awards	in	connection	with	the	Merger.

See	Note	4	to	AAG's	Consolidated	Financial	Statements	in	Part	II,	Item	8A	for	information	on	the	Merger	Agreement.

|  | December	31, |  |
| :--- | :--- | :--- |
|  | 2013 | 2012 |
| Overnight\tInvestments,\tTime\tDeposits\tand\tRepurchase\tAgreements | $177 | $306 |
| Corporate\tand\tBank\tNotes | 3,350 | 2,121 |
| U.S.\tGovernment\tAgency\tand\tTreasury\tObligations | 1,312 | 545 |
| Commingled\tFunds | 323 | 435 |
| Other | — | 1 |
|  | $5,162 | $3,408 |
| Short-term\tinvestments\tat\tDecember\t31,\t2013,\tby\tcontractual\tmaturity\tincluded\t(in\tmillions): |  |  |
| Due\tin\tone\tyear\tor\tless | Due\tin\tone\tyear\tor\tless | $2,308 |
| Due\tbetween\tone\tyear\tand\tthree\tyears |  | 2,443 |
| Due\tafter\tthree\tyears | Due\tafter\tthree\tyears | 411 |

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	consist	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	are	the	primary	underlying	commodities	in	the	hedge	portfolio.	No	changes	in	valuation	techniques	or	inputs	occurred	during	the	year	ended	December	31, 2013.

|  |  | Fair	Value	Measurements	as	of	December	31,	2013 | Fair	Value	Measurements	as	of	December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- |
| Description | Total | Level\t1 | Level\t2 | Level\t3 |
| Short-term\tinvestments\t1,\t2 |  |  |  |  |
| 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-term\tinvestments\t1 | 702 | 646 | 56 | — |
| Fuel\tderivative\tcontracts,\tnet\t1 | 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.

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,	2013,	American	had	no	exposure	to	European	sovereign	debt.

American	had	total	aircraft	acquisition	commitments	as	of	December	31,	2013	as	follows:

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Airbus |  |  |  |  |  |  |  |
| A320\tFamily | 35 | 30 | 25 | 20 | — | — | 110 |
| A320\tNeo | — | — | — | 10 | 25 | 95 | 130 |
| Boeing |  |  |  |  |  |  |  |
| 737\tFamily | 20 | 20 | 20 | 20 | — | — | 80 |
| 737\tMAX | — | — | — | 3 | 17 | 80 | 100 |
| 777-300\tER | 6 | 2 | 2 | — | — | — | 10 |
| 787\tFamily | 2 | 11 | 13 | 9 | 7 | — | 42 |
| Bombardier |  |  |  |  |  |  |  |
| CRJ900 | 15 | 15 | — | — | — | — | 30 |
| Embraer |  |  |  |  |  |  |  |
| ERJ175 | — | 24 | 24 | 12 | — | — | 60 |
| Total | 78 | 102 | 84 | 74 | 49 | 175 | 562 |

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Payments\tfor\tabove\taircraft\ncommitments\tand\tcertain\tengines\t(1) | \t $2,817 | \t $2,965 | \t $3,275 | \t $3,204 | \t $4,018 | \t $15,794 | \t $32,073 |

(1) These	amounts	are	net	of	purchase	deposits	currently	held	by	the	manufacturers.	American's	purchase	deposits	totaled	$847	million	 as	 of	December	31,	2013. American	has	granted	Boeing	a	security	interest	in	American's	purchase	deposits	with	Boeing.

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):

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Facility\tconstruction\tor\nimprovement\tcontracts | \t $34 | \t $21 | \t $— \t $ | — \t $ | — \t $ | — \t $ | 55 |
| Information\ttechnology\tsupport\ncontract | 129 | 118 | 104 | 87 | 87 | 74 | 599 |

As	of	December	31,	2013,	American's	capacity	purchase	agreements	with	third-party	regional	carriers	had	expiration	dates	ranging	from	2014	to	2025,	with rights	of	American	to	extend	the	respective	terms	of	each	agreement.	See	Part	I,	Item	2.	Properties	for	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,	2013,	American's	minimum	fixed	obligations	under	its	capacity	purchase agreements	with	third-party	regional	carriers	were	as	follows	(approximately,	in	millions):

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Minimum\tfixed\tobligations\tunder\tits |  |  |  |  |  |  |  |
| capacity\tpurchase\tagreements\twith |  |  |  |  |  |  |  |
| third-party\tregional\tcarriers\t1 | \t $521 | \t $670 | \t $676 | \t $520 | \t $511 | \t $3,849 | \t $6,747 |

(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	our	actual	payments	could	differ	materially.

American	leases	certain	aircraft,	engines	and	ground	equipment,	in	addition	to	the	majority	of	its	ground	facilities	and	terminal	space.	As	of	December	31,	2013,	the Company	had	247	aircraft	under	operating	leases,	with	remaining	terms	ranging	from	one	month	to	approximately	14	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.

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Future\tminimum\tlease\tpayments\t1 | \t $1,384 | \t $1,204 | \t $1,117 | \t $1,061 | \t $982 | \t $5,302 | \t $11,050 |

American	has	entered	into	sale-leaseback	arrangements	with	certain	leasing	companies	to	finance	20	Boeing	737-800	scheduled	to	be	delivered	beginning	in 2014.	The	financings	of	each	aircraft	under	these	arrangements	are	subject	to	certain	terms	and	conditions.

American	has	118	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	is	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,	2013,	$3.5 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.	Each	lease	does	have	a	fair	market	value	or	a	fixed	price	purchase	option	that	allows	American	to	purchase	the	aircraft	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,	American	does	not	participate	in	any	increases	in	the	value	of the	aircraft.	American	concluded	it	was	not	the	primary	beneficiary	under	these	arrangements.	Therefore,	American	accounts	for	its	EETC	leveraged	lease	financings	as operating	leases.	American's	has	no	future	obligations	under	these	leveraged	lease	financing	as	of	December	31,	2013.

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.	To	the	extent	these	transactions	were	committed	to	prior	to	May	21,	1998,	they	are	accounted	for	as operating	leases.	Approximately	$426	million	of	the	special	facility	revenue	bonds	are	outstanding	at	December	31,	2013	with	total	future	payments	of	approximately $619	million	as	of	December	31,	2013.	Approximately	$112	million	of	these	special	facility	revenue	bonds	contain	mandatory	tender	provisions	that	require	American	to make	operating	lease	payments	sufficient	to	repurchase	the	bonds	in	2014.	Although	American	has	the	right	to	remarket	the	bonds,	there	can	be	no	assurance	that	these bonds	will	be	successfully	remarketed.	Any	payments	to	redeem	or	purchase	bonds	that	are	not	remarketed	would	generally	reduce	existing	rent	leveling	accruals	or	are considered	prepaid	facility	rentals	and	would	reduce	future	operating	lease	commitments.

Pursuant	to	rulings	of	the	Bankruptcy	Court,	the	Plan	has	established	a	disputed	claim	reserve	to	hold	shares	of	AAG	Series	A	Preferred	Stock	and	AAG Common	Stock	reserved	for	issuance	to	disputed	claimholders	that	ultimately	become	allowed	Single-Dip	general	unsecured	claimholders	after	emergence.	The	shares provided	for	under	the	Plan	are	determined	based	upon

a	disputed	claim	reserve	amount	of	approximately	$755	million.	As	disputed	claims	are	resolved,	the	claimants	receive	distributions	of	shares	from	the	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 the	remaining	disputed	claims,	such	shares	will	not	be	returned	to	AAG	but	rather	will	be	distributed	by	priority	first,	if	necessary,	to	satisfy	unsecured	claims	or	labor- related	obligations,	and	then	to	former	AMR	shareholders	as	of	the	Effective	Date.	AAG	is	not	required	to	distribute	additional	shares	above	the	756	million	shares contemplated	by	the	Plan,	even	if	the	shares	remaining	for	distribution	are	not	sufficient	to	fully	pay	all	allowed	unsecured	claims.	However,	resolution	of	disputed claims	could	have	a	material	effect	on	Single-Dip	creditor	recoveries	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.

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	and	derivative	transactions,	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.

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, 2013,	approximately	$710	million	of	our	unrestricted	cash	balance	was	held	as	Venezuelan	bolivars,	valued	at	a	weighted	average	rate	of	6.04	bolivars	to	the	dollar.	The period	of	time	to	exchange	those	funds	into	dollars	and	repatriate	them	has	been	increasing	and	is	presently	more	than	a

year.	On	January	23,	2014,	the	Venezuelan	government	issued	a	regulation	to	implement	a	new	system	for	determining	the	exchange	rate	based	on	the	result	of	limited periodic	sales	of	dollars	known	as	Sicad	auctions	(currently	11.80	to	the	dollar	based	on	the	February	21,	2014	Sicad	auction)	for	repatriation	of	income	from	future ticket	sales,	and	introduced	new	procedures	for	approval	of	conversion	and	repatriation	of	local	currency.	The	government	also	enacted	a	new	law	effective	February	19, 2014	that	authorizes	additional	methods	of	exchanging	Venezuelan	bolivars	at	rates	other	than	the	controlled	base	rate	of	6.3	to	the	dollar	or	the	existing	Sicad	auction rate,	but	the	regulations	necessary	to	implement	the	law	are	still	pending	and	it	is	not	clear	at	this	point	whether	or	how	the	new	methods	may	impact	the	pending balances	of	Venezuelan	bolivars	held	by	airlines.	We	are	working	with	Venezuelan	authorities	regarding	the	timing	and	exchange	rate	applicable	to	the	repatriation	of funds	held	in	local	currency.	Further,	the	current,	devalued	rates	may	have	an	ongoing	adverse	effect	on	our	reported	results	if	we	are	unable	to	fully	adjust	prices	on flights	to	and	from	Venezuela,	of	which	there	can	be	no	assurance.	More	generally,	fluctuations	in	foreign	currencies,	including	devaluations,	cannot	be	predicted	by	the Company	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.	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	on	currency	risks.

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.

|  | December	31,	2013 | December	31,	2012 |
| :--- | :--- | :--- |
| Secured |  |  |
| 31,\t2013) | $2,111 | $3,297 |
| 2013) | 3,516 | 1,741 |
| 7.00%-8.50%\tspecial\tfacility\trevenue\tbonds\tdue\tthrough\t2031 | 1,282 | 1,313 |
|  | 1,882 | — |
| 7.50%\tsenior\tsecured\tnotes\tdue\t2016 | 1,000 | 1,000 |
|  | 611 | 772 |
|  | 380 | 412 |
|  | 10,782 | 8,535 |
| Unsecured |  |  |
| Affiliate\tunsecured\tobligations | 27 | 27 |
|  | 27 | 27 |
| Total\tlong-term\tdebt\tand\tcapital\tlease\tobligations | 10,809 | 8,562 |
| Less\tcurrent\tmaturities | 957 | 1,419 |
| Long-term\tdebt\tand\tcapital\tlease\tobligations,\tless\tcurrent\tmaturities | $9,852 | $7,143 |

For	information	regarding	the	liabilities	subject	to	compromise	as	of	December	31,	2012,	see	Note	2	to	American's	Consolidated	Financial	Statements.

Secured	financings	are	collateralized	by	assets,	primarily	aircraft,	engines,	simulators,	hangar	and	maintenance	facilities,	route	authorities	and	airport	Slots.	At December	31,	2013,	the	maturities	of	long-term	debt	and	capital	leases	are	as	follows	(in	millions):

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019	and<br>Thereafter | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Total\tPrincipal\tAmount | \t $957 | \t $880 | \t $1,801 | \t $846 | \t $722 | \t $5,646 | \t $10,852 |

In	connection	with	the	Merger	and	pursuant	to	the	Plan	on	December	9,	2013,	(i)	American	entered	into	a	joinder	to	loan	agreement	and	became	an	obligor	of US	Airways	Group's	$1.6	billion	2013	Citicorp	credit	facilities	and	(ii)	American	entered	into	a	second	supplemental	indenture	that	guaranteed	the	payment	obligations associated	with	the	US	Airways	Group's	6.125%	Notes,	due	in	2018.

On	March	12,	2013,	American	closed	 its	private	offering	of	two	tranches	of	enhanced	equipment	trust	certificates	(the	Series	2013-1A/B	EETCs)	in	the aggregate	face	amount	of	$664	million.	The	Series	2013-1A/B	EETCs	are	comprised	of	a

senior	tranche	of	Class	A	Certificates	with	an	interest	rate	of	4.00%	per	annum	and	a	final	expected	distribution	date	of	July	15,	2025,	and	a	junior	tranche	of	Class	B Certificates	with	an	interest	rate	of	5.625%	per	annum	and	a	final	expected	distribution	date	of	January	15,	2021.	The	Series	2013-1A/B	EETCs	represent	an	interest	in the	assets	of	two	separate	pass	through	trusts,	each	of	which	hold	equipment	notes	issued	by	American.	Interest	on	the	issued	and	outstanding	equipment	notes	will	be payable	semiannually	on	January	15	and	July	15	of	each	year,	commencing	on	July	15,	2013,	and	principal	on	such	equipment	notes	is	scheduled	for	payment	on January	15	and	July	15	of	certain	years,	commencing	on	January	15,	2014.	As	of	December	31,	2013,	the	equipment	notes	are	secured	by	eight	currently	owned	Boeing 737-823	aircraft,	one	currently	owned	Boeing	777-223ER	aircraft,	and	four	currently	owned	Boeing	777-323ER	aircraft.	The	certificates	were	offered	in	the	U.S.	to qualified	institutional	buyers,	as	defined	in,	and	in	reliance	on,	Rule	144A	under	the	Securities	Act	of	1933,	as	amended	(the	Securities	Act).

American	filed	a	motion	with	the	Bankruptcy	Court	on	October	9,	2012,	requesting	entry	of	an	order	authorizing	American	to,	among	other	things:	(i)	obtain post-petition	financing	in	an	amount	of	up	to	$1.5	billion	secured	on	a	first	priority	basis	by,	among	other	things,	up	to	41	Boeing	737-823	aircraft,	14	Boeing	757-223 aircraft,	one	Boeing	767-323ER	aircraft	and	19	Boeing	777-223ER	aircraft	as	part	of	a	new	enhanced	equipment	trust	certificate	(EETC)	financing	(the	Refinancing EETC)	to	be	offered	pursuant	to	Rule	144A	under	the	Securities	Act,	and	(ii)	use	cash	on	hand	(including	proceeds	of	the	Refinancing	EETC)	to	indefeasibly	repay	the existing	pre-petition	obligations	secured	by	such	aircraft,	as	applicable,	which	are	currently	financed	through,	as	the	case	may	be,	an	EETC	financing	entered	into	by American	in	July	2009	(the	Series	2009-1	Pass	Through	Certificates),	a	secured	notes	financing	entered	into	by	American	in	July	2009	(the	2009-2	Senior	Secured Notes)	and	an	EETC	financing	entered	into	by	American	in	October	2011	(the	Series	2011-2	Pass	Through	Certificates	and,	together	with	the	Series	2009-1	Pass Through	Certificates	and	the	2009-2	Senior	Secured	Notes,	the	Existing	Financings),	in	each	case	without	the	payment	of	any	make-whole	amount	or	other	premium	or prepayment	penalty.

On	July	31,	2013,	American	closed	its	private	offering	of	the	Refinancing	EETC	(the	Series	2013-2A	EETC)	in	the	aggregate	face	amount	of	$1.4	billion	with an	interest	rate	of	4.95%	per	annum	and	a	final	expected	distribution	date	of	January	15,	2023.	In	September	2013,	American	repaid	the	Existing	Financings,	including securities	tendered	to	the	Company	under	a	tender	offer	for	the	Existing	Financings	that	commenced	on	June	27,	2013,	and	received	the	proceeds	from	the	Series	2013- 2A	EETC.	In	conjunction	with	the	repayment	of	the	Existing	Financings,	American	incurred	cash	charges	of	$19	million,	included	in	Interest	expense,	net	of	capitalized interest	and	a	charge	of	$54	million,	included	in	Miscellaneous,	net,	of	which	$21	million	is	cash,	related	to	the	premium	on	tender	for	the	Existing	Financings,	and	$33 million	is	non-cash,	related	to	the	write-off	of	unamortized	issuance	costs.	The	2013-2A	EETC	represents	an	interest	in	the	assets	of	a	separate	pass	through	trust,	which will	hold	certain	equipment	notes	issued	by	American.	The	Series	2013-2A	EETC	is	secured	by	the	same	aircraft	previously	used	to	secure	the	Existing	Financings.	The certificates	were	offered	in	the	U.S.	to	qualified	institutional	buyers,	as	defined	in,	and	in	reliance	on,	Rule	144A	under	the	Securities	Act.

On	November	27,	2013,	American	closed	its	private	offering	of	Class	B	enhanced	equipment	trust	certificates	(the	Series	2013-2B	EETCs)	in	the	aggregate face	amount	of	$512	million.	The	Series	2013-2B	EETCs	rank	junior	to	the	Series	2013-2A	EETCs.	The	Series	2013-2B	EETCs	were	issued	with	an	interest	rate	of 5.60%	per	annum	and	a	final	expected

distribution	date	of	July	15,	2020.	The	2013-2C	EETCs	represent	an	interest	in	the	assets	of	a	separate	pass	through	trust,	which	will	hold	certain	equipment	notes issued	by	American.	The	Series	2013-2B	EETCs	are	secured	by	the	same	aircraft	securing	the	Series	2013-2A	EETCs.	The	certificates	were	offered	in	the	U.S.	to qualified	institutional	buyers,	as	defined	in,	and	in	reliance	on,	Rule	144A	under	the	Securities	Act.

# Credit	Facilities

The	 Credit	 Facilities	 contain	 events	 of	 default	 customary	 for	 similar	 financings,	 including	 cross-acceleration	 to	 other	 material	 indebtedness.	 Upon	 the occurrence	of	an	event	of	default,	the	outstanding	obligations	under	the	Credit	Facilities	may	be	accelerated	and	become	due	and	payable	immediately.	The	Credit Facilities	also	include	affirmative,	negative,	and	financial	covenants	that,	among	other	things,	require	AAG	and	its	restricted	subsidiaries	to	maintain	a	minimum aggregate	liquidity	(as	defined	in	the	Credit	Agreement)	of	not	less	than	$2.0	billion	and	limit	the	ability	of	AAG	and	its	restricted	subsidiaries,	including	American,	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.

# Senior	Secured	Notes

In	March	2011,	American	 issued	$1.0	billion	aggregate	principal	amount	of	senior	secured	notes	due	2016	(the	Senior	Secured	Notes)	guaranteed	on	an unsecured	basis	by	AAG.	In	connection	with	the	closing	of	the	Merger,	US	Airways	and	US	Airways	Group	entered	into	a	First	Supplemental	Indenture,	dated	as	of December	9,	2013,	pursuant	to	which	US	Airways	and

US	Airways	Group	became	guarantors.	The	Senior	Secured	Notes	bear	interest	at	a	rate	of	7.50%	per	annum,	payable	semi-annually	on	March	15	and	September	15	of each	year,	beginning	September	15,	2011.	As	is	customary	for	financings	of	this	nature,	the	indebtedness	evidenced	by	the	Senior	Secured	Notes	may	be	accelerated upon	the	occurrence	of	events	of	default	under	the	related	indenture.	Subject	to	certain	limitations	and	exceptions,	the	Senior	Secured	Notes	are	secured	by	certain	route authorities,	airport	landing	and	takeoff	slots,	and	rights	to	use	or	occupy	space	in	airport	terminals,	in	each	case	that	American	uses	to	operate	non-stop	services	between certain	airports	and	American	is	required	maintain	a	certain	minimum	ratio	of	appraised	value	of	the	collateral	to	the	outstanding	amounts	under	the	Senior	Secured Notes	as	more	fully	described	above	in	"Collateral	Related	Covenants."

# Other	Financing	Transactions

# Citibank	Advanced	Purchase	Agreement

Certain	of	American's	debt	financing	agreements	contain	loan	to	value	ratio	covenants	and	require	American	to	periodically	appraise	the	collateral.	Pursuant	to such	agreements,	if	the	loan	to	value	ratio	exceeds	a	specified	threshold,	American	is	required,	as	applicable,	to	subject	additional	qualifying	collateral	(which	in	some cases	may	include	cash	collateral),	or	pay	down	such	financing,	in	whole	or	in	part,	with	premium	(if	any),	or	pay	additional	interest	on	the	related	indebtedness,	as described	below.

Specifically,	American	is	required	to	meet	certain	collateral	coverage	tests	on	a	periodic	basis	on	two	financing	transactions:	(1)	the	Senior	Secured	Notes	and (2)	Credit	Facilities,	as	described	below:

At	December	31,	2013,	American	was	in	compliance	with	the	most	recently	completed	collateral	coverage	tests	for	the	Senior	Secured	Notes	and	Credit

# Facilities.

# 9.	Financial	Instruments	and	Risk	Management

As	of	December	31,	2013,	American	had	fuel	derivative	contracts	outstanding	covering	22	million	barrels	of	jet	fuel	that	will	be	settled	over	the	next	eighteen months.	American	does	not	hold	or	issue	derivative	financial	instruments	for	trading	purposes.	American	has	not	entered	into	any	fuel	hedges	since	the	Effective	Date and	our	current	policy	is	not	to	do	so.

In	accordance	with	U.S.	GAAP,	American	assesses,	both	at	the	inception	of	each	hedge	and	on	an	ongoing	basis,	whether	the	derivatives	that	are	used	in	its hedging	transactions	are	highly	effective	in	offsetting	changes	in	cash	flows	of	the	hedged	items.	Derivatives	that	meet	the	requirements	are	granted	special	hedge accounting	treatment,	and	American's	hedges	generally	meet	these	requirements.	Accordingly,	American's	fuel	derivative	contracts	are	accounted	for	as	cash	flow hedges,	and	the	fair	value	of	American's	hedging	contracts	is	recorded	in	Current	Assets	or	Current	Liabilities	in	the	accompanying	Consolidated	Balance	Sheets	until the	underlying	jet	fuel	is	purchased.	American	determines	the	ineffective	portion	of	its	fuel	hedge	contracts	by	comparing	the	cumulative	change	in	the	total	value	of	the fuel	hedge	contract,	or	group	of	fuel	hedge	contracts,	to	the	cumulative	change	in	a	hypothetical	jet	fuel	hedge.	If	the	total	cumulative	change	in	value	of	the	fuel	hedge contract	more	than	offsets	the	total	cumulative	change	in	a	hypothetical	jet	fuel	hedge,	the	difference	is	considered	ineffective	and	is	immediately	recognized	as	a component	of	Aircraft	fuel	expense.	Effective	gains	or	losses	on	fuel	hedging	contracts	are	deferred	in	Accumulated	other	comprehensive	income	(loss)	and	are recognized	in	earnings	as	a	component	of	Aircraft	fuel	expense	when	the	underlying	jet	fuel	being	hedged	is	used.

Ineffectiveness	is	inherent	in	hedging	jet	fuel	with	derivative	positions	based	in	crude	oil	or	other	crude	oil	related	commodities.	American	assesses,	both	at	the inception	of	each	hedge	and	on	an	ongoing	basis,	whether	the	derivatives	that	are	used	in	its	hedging	transactions	are	highly	effective	in	offsetting	changes	in	cash	flows of	the	hedged	items.	In	doing	so,	American

uses	a	regression	model	to	determine	the	correlation	of	the	change	in	prices	of	the	commodities	used	to	hedge	jet	fuel	(e.g.,	NYMEX	Heating	oil)	to	the	change	in	the price	of	jet	fuel.	American	also	monitors	the	actual	dollar	offset	of	the	hedges'	market	values	as	compared	to	hypothetical	jet	fuel	hedges.	The	fuel	hedge	contracts	are generally	deemed	to	be	"highly	effective"	if	the	R-squared	is	greater	than	80%	and	the	dollar	offset	correlation	is	within	80%	to	125%.	American	discontinues	hedge accounting	prospectively	if	it	determines	that	a	derivative	is	no	longer	expected	to	be	highly	effective	as	a	hedge	or	if	it	decides	to	discontinue	the	hedging	relationship. Subsequently,	any	changes	in	the	fair	value	of	these	derivatives	are	marked	to	market	through	earnings	in	the	period	of	change.

For	the	years	ended	December	31,	2013,	2012	and	2011,	American	recognized	net	gains/(losses)	of	approximately	$(12)	million,	$4	million	and	$301	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	net	fair	value	of	American's	fuel	hedging	agreements	at	December	31,	2013	and	2012,	representing	the	amount	American	would receive	upon	termination	of	the	agreements	(net	of	settled	contract	assets),	totaled	$107	million	 and	$62	million,	respectively.	As	of	December	31,	2013,	American estimates	that	during	the	next	twelve	months	it	will	reclassify	from	Accumulated	other	comprehensive	income	(loss)	into	earnings	approximately	$45	million	in	net gains	(based	on	prices	as	of	December	31,	2013)	related	to	its	fuel	derivative	hedges.

The	impact	of	aircraft	fuel	derivative	instruments	(all	cash	flow	hedges)	on	American's	Consolidated	Statements	of	Operations	is	depicted	below	(in	millions):

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, | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Location | 2013 | 2012 | 2011 |
| Amount\tof\t(Gain)\tLoss\tReclassified\tfrom\tAccumulated\tOCI | Reclassification\tinto |  |  |  |
| into\tIncome\t1 | Earnings | \t $34 | \t $(3) | \t $(277) |
| Amount\tof\tGain\t(Loss)\tRecognized\tin\tOCI\ton\tDerivative\t1 | Change\tin\tFair\tValue | (2) | (12) | 190 |
| Amount\tof\tGain\t(Loss)\tRecognized\tin\tConsolidated\nStatements\tof\tComprehensive\tIncome |  | \t $32 | \t $(15) | \t $(87) |

While	certain	of	American's	fuel	derivatives	are	subject	to	enforceable	master	netting	agreements	with	its	counterparties,	American	does	not	offset	its	fuel derivative	assets	and	liabilities	in	its	Consolidated	Balance	Sheets.	Certain	of	these	agreements	would	also	allow	for	the	offsetting	of	fuel	derivatives	with	interest	rate derivatives.	The	impact	of	aircraft	fuel	derivative	instruments	(all	cash	flow	hedges)	on	American's	Consolidated	Balance	Sheets,	and	the	impact	of	offsetting	aircraft fuel	derivative	instruments,	is	depicted	below	(in	millions):

|  | As	of	December	31, |  |
| :--- | :--- | :--- |
|  | 2013 | 2012 |
| Gross\tAsset\t1 | $109 | \t $65 |
| Gross\tLiability\t2 | — | — |
| Net\tRecognized\tAsset\t(Liability)\tin\tBalance\tSheet | 109 | 65 |
| Gross\tAsset\t(Liability)\tOffset\tin\tBalance\tSheet: |  |  |
| Financial\tInstruments | — | — |
| Cash\tCollateral\tReceived\t(Posted)\t3 | — | — |
| Net\tAmount | $109 | \t $65 |

(1) Fuel	derivative	assets	are	included	in	Fuel	derivative	contracts	on	American's	Consolidated	Balance Sheets.

(2) Fuel	derivative	liabilities	are	included	in	Accrued	liabilities	on	American's	Consolidated	Balance Sheets.

(3) As	of	December	31,	2013,	American	had	posted	cash	collateral	of	an	immaterial

amount.

American	is	also	exposed	to	credit	losses	in	the	event	of	non-performance	by	counterparties	to	these	financial	instruments,	and	although	no	assurances	can	be given,	American	does	not	expect	any	of	the	counterparties	to	fail	to	meet	their	obligations.	The	credit	exposure	related	to	these	financial	instruments	is	represented	by	the fair	value	of	contracts	with	a	positive	fair	value	at	the	reporting	date,	reduced	by	the	effects	of	master	netting	agreements.	To	manage	credit	risks,	American	selects counterparties	based	on	credit	ratings,	limits	its	exposure	to	a	single	counterparty	under	defined	guidelines,	and	monitors	the	market	position	of	the	program	and	its relative	market	position	with	each	counterparty.	American	also	maintains	industry-standard	security	agreements	with	a	number	of	its	counterparties	which	may	require American	or	the	counterparty	to	post	collateral	if	the	value	of	selected	instruments	exceeds	specified	mark-to-market	thresholds	or	upon	certain	changes	in	credit	ratings. The	amount	of	collateral	required	to	be	posted	from	time	to	time	may	be	substantial.

The	fair	values	of	American's	long-term	debt	classified	as	Level	2	were	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.	All	of	American's	long	term	debt	not	classified	as	subject	to compromise	is	classified	as	Level	2.

The	carrying	value	and	estimated	fair	values	of	American's	long-term	debt,	including	current	maturities,	not	classified	as	subject	to	compromise,	were	(in millions):

|  | December	31,	2013 | December	31,	2013 | December	31,	2012 | December	31,	2012 |
| :--- | :--- | :--- | :--- | :--- |
|  | Carrying\nValue | Fair\nValue | Carrying\nValue | Fair\nValue |
| Secured\tvariable\tand\tfixed\trate\tdebt | $2,111 | $2,116 | $3,297 | $3,143 |
| Enhanced\tequipment\ttrust\tcertificates | 3,516 | 3,617 | 1,741 | 1,811 |
| 6.0%-8.5%\tspecial\tfacility\trevenue\tbonds | 1,282 | 1,358 | 1,313 | 1,308 |
| 7.5%\tsenior\tsecured\tnotes | 1,000 | 1,034 | 1,000 | 1,074 |
| 31,\t2013) | 1,882 | 1,896 | — | — |
| AAdvantage\tMiles\tadvance\tpurchase | 611 | 617 | 772 | 779 |
| Other\tsecured\tobligations,\tfixed\tinterest\trates\tranging\tfrom\t5.20%\nto\t12.20%,\tmaturing\tfrom\t2014\t-\t2035 | 380 | 380 | 412 | 412 |
| Other | 27 | 27 | 27 | 27 |
|  | $10,809 | $11,045 | $8,562 | $8,554 |

The	carrying	value	and	estimated	fair	value	of	American's	long-term	debt,	including	current	maturities,	classified	as	subject	to	compromise,	were	(in	millions):

|  | December	31,	2012 | December	31,	2012 |
| :--- | :--- | :--- |
|  | Carrying\nValue | Fair\nValue |
| Secured\tvariable\tand\tfixed\trate\tdebt | $172 | $154 |
| 6.0%-8.5%\tSpecial\tfacility\trevenue\tbonds | 186 | 186 |
|  | $358 | $340 |

All	of	American's	long	term	debt	classified	as	subject	to	compromise	as	of	December	31,	2012	is	classified	as	Level	2.

American	is	also	party	to	certain	interest	rate	swap	agreements	that	are	accounted	for	as	cash	flow	hedges.	Ineffectiveness	for	these	instruments	is	required	to be	measured	at	each	reporting	period.	The	ineffectiveness	and	fair	value	associated	with	all	of	American's	interest	rate	cash	flow	hedges	for	all	periods	presented	was	not material.

# 10.	Income	Taxes

|  |  | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2013 | 2012 | 2011 |
| Current | $(30) | $— | $(25) |
| Deferred | (324) | (569) | 25 |
| Income\ttax\tbenefit | $(354) | $(569) | $— |

|  |  | Year	Ended	December	31, |  |
| :--- | :--- | :--- | :--- |
|  | 2013 | 2012 | 2011 |
| Statutory\tincome\ttax\tprovision\tbenefit | $(658) | $(873) | $(686) |
| State\tincome\ttax\tbenefit,\tnet\tof\tfederal\ttax\teffect | (14) | (35) | (32) |
| Book\texpenses\tnot\tdeductible\tfor\ttax\tpurposes | 20 | 20 | 7 |
| Bankruptcy\tadministration\texpenses | 82 | 26 | — |
| Interest\tcutback\tto\tnet\toperating\tloss\t(NOL) | 53 | — | — |
| Alternative\tminimum\ttax\tcredit\trefund | (30) | — | — |
| Change\tin\tvaluation\tallowance | 714 | 858 | 697 |
| Tax\tbenefit\tresulting\tfrom\tOCI\tallocation | (538) | (569) | — |
| Other,\tnet | 17 | 4 | 14 |
| Income\ttax\tbenefit | $(354) | $(569) | $— |

American	recorded	a	net	income	tax	benefit	of	$354	million	which	is	composed	of	a	$538	million	non-cash	income	tax	benefit,	a	$214	million	tax	charge	for additional	valuation	allowance,	and	a	$30	million	income	tax	credit.	American	recorded	a	$538	million	non-cash	income	tax	benefit	from	continuing	operations	during the	fourth	quarter	of	2013.	Under	current	accounting	rules,	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	will	be	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,	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	for	this	item,	American's	year-end	net	deferred	tax	position	is	not	impacted	by	this	tax	allocation.	American recorded	similar	amounts	when	reporting	other

comprehensive	income	in	2009	and	2012.	The	resulting	residual	income	tax	expense	will	remain	in	Accumulated	other	comprehensive	income	(AOCI)	until	all	amounts in	AOCI	that	relate	to	the	plan	or	program	that	gave	rise	to	the	residual	income	taxes	are	recognized	in	the	Consolidated	Statement	of	Operations.	American	will reclassify	to	earnings	all	residual	tax	amounts	relating	to	our	Pension	and	Retiree	Medical	Liability	(specifically	relating	to	Pension	and	OPEB	activity)	and	Derivative Financial	Instruments	(specifically	relating	to	Fuel	Hedging	Contracts	activity)	in	the	period	in	which	there	are	no	longer	any	amounts	in	AOCI	associated	with	those plans	or	programs.	American	anticipates	recognizing	a	non-cash	income	tax	expense	of	$313	million	in	continuing	operations	during	2015	upon	the	settlement	of	the currently	outstanding	Fuel	Hedging	Contract	arrangements.

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.	In	assessing	the	realizability	of	the	deferred	tax	assets,	management	considers	whether	it	is	more	likely	than	not	that	some	portion,	or	all	of	the	deferred	tax assets,	will	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.	The	assessment	of	realization	of	deferred	tax	assets	considers	those	tax planning	strategies	that	management	believes	to	be	prudent	and	feasible	strategies	American	would	implement,	if	necessary,	to	prevent	a	tax	attribute	from	expiring. During	the	fourth	quarter	of	2013,	American	recorded	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.

A	portion	of	change	in	the	valuation	allowance	reflects	the	recording	by	American	in	2013,	2012	and	2011	of	an	income	tax	expense	(credit)	of	approximately $(30)	million,	$0	million	and	$(25)	million,	respectively,	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	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	13	to	American's	Consolidated	Financial	Statements.	The	total	increase	in	the valuation	allowance	was	$155	million,	$282	million,	and	$1.1	billion	in	2013,	2012	and	2011,	respectively.

The	components	of	American's	deferred	tax	assets	and	liabilities	were	(in	millions):

|  | December	31,<br>2013 | 2012 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets: |  |  |
| Postretirement\tbenefits\tother\tthan\tpensions | $342 | $442 |
| Rent\texpense | 55 | 60 |
| Alternative\tminimum\ttax\tcredit\tcarryforwards | 467 | 493 |
| Operating\tloss\tcarryforwards | 3,302 | 2,296 |
| Pensions | 1,747 | 2,455 |
| Frequent\tflyer\tobligation | 620 | 657 |
| Gains\tfrom\tlease\ttransactions | 24 | 5 |
| Reorganization\titems | 675 | 863 |
| Other | 975 | 963 |
| Total\tdeferred\ttax\tassets | 8,207 | 8,234 |
| Valuation\tallowance | (5,239) | (5,084) |
| Net\tdeferred\ttax\tassets | 2,968 | 3,150 |
| Deferred\ttax\tliabilities: |  |  |
| Accelerated\tdepreciation\tand\tamortization | (2,932) | (2,960) |
| Other | (250) | (190) |
| Total\tdeferred\ttax\tliabilities | (3,182) | (3,150) |
| Net\tdeferred\ttax\tasset\t(liability) | $(214) | $— |

At	December	31,	2013,	American	had	available	for	federal	income	tax	purposes	an	AMT	credit	carryforward	of	approximately	$467	million,	which	is	available for	an	indefinite	period,	and	federal	net	operating	losses	of	approximately	$9.5

billion	for	regular	tax	purposes,	which	will	expire,	if	unused,	beginning	in	2022.	These	net	operating	losses	include	an	unrealized	benefit	of	approximately	$647	million related	to	the	implementation	of	share-based	compensation	accounting	guidance	that	will	be	recorded	in	equity	when	realized.	American	had	available	for	state	income tax	purposes	net	operating	losses	of	$3.8	billion,	which	expire,	if	unused,	in	years	2014	through	2033.	The	amount	that	will	expire	in	2014	is	$96	million	if	not	used.

American	files	its	tax	returns	as	prescribed	by	the	tax	laws	of	the	jurisdictions	in	which	it	operates.	American's	2004	through	2012	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	any	additional	assessment(s)	will	be	immaterial	to	its consolidated	financial	statements.

Under	special	tax	rules	(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	-	"Chapter	11	Reorganization	Risks regarding	the	potential	impact	of	these	rules	on	American's	utilization	of	its	net	operating	losses."

American	has	an	unrecognized	tax	benefit	of	approximately	$5	million,	which	did	not	change	during	the	twelve	months	ended	December	31,	2013.	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,	2013.

|  | 2013 | 2012 |
| :--- | :--- | :--- |
| Unrecognized\tTax\tBenefit\tat\tJanuary\t1 | $5 | $5 |
| No\tActivity | — | — |
| Unrecognized\tTax\tBenefit\tat\tDecember\t31 | $5 | $5 |

American	estimates	that	the	unrecognized	tax	benefit	will	not	significantly	change	within	the	next	twelve	months.

In	2013,	share-based	compensation	expense	of	$37	million,	related	to	the	Merger,	was	recorded	under	Special	items,	net	and	$28	million	was	recorded	under Salaries,	wages	and	benefits.	In	2012	 and	2011	the	total	charge	for	share-based	compensation	expense,	included	in	Salaries,	wages,	and	benefits	expense,	was	$26 million	and	$35	million,	respectively.

As	of	December	31,	2013,	American	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	American.

On	December	9,	2013,	Alignment	awards	were	granted	in	the	form	of	restricted	stock	units	(RSUs)	and	are	expected	to	be	settled	in	AAG	Common	Stock subject	to	potential	NOL	restrictions.	The	awards	were	provided	to	legacy	AMR	employees	in	order	to	align	interests	and	create	parity	with	peers	at	US	Airways	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	recorded	in	connection	with	these	awards have	been	and	will	be	charged	to	Merger	related	expenses.

|  | Awards | Weighted	Average<br>Grant	Date	Fair<br>Value |
| :--- | :--- | :--- |
|  | (In\tthousands) |  |
| Outstanding\tat\tJanuary\t1,\t2013 | — \t $ | — |
| Granted | 3,729 | 24.60 |
| Vested\tand\treleased | (1,253) | 24.60 |
| Forfeited\tor\tExpired | — | — |
| Outstanding\tat\tDecember\t31,\t2013 | 2,476 | \t $24.60 |

Equity	incentive	awards	granted	Pursuant	to	the	Plan	have	a	vesting	commencement	date	of	April	10,	2013	and	were	granted	in	the	form	of	RSUs	that	are expected	to	be	settled	in	AAG	Common	Stock	subject	to	potential	NOL	restrictions.	Payment	dates	are	April	2014,	April	2015	and	April	2016	with	pro-rata	vesting based	on	the	number	of	days	served	from	April	10,	2013.	Related	expense	has	been	and	will	be	charged	to	Salaries,	Wages	and	benefits.

|  | Awards | Weighted	Average	Grant<br>Date	Fair	Value |
| :--- | :--- | :--- |
|  | (In\tthousands) |  |
| Outstanding\tat\tJanuary\t1,\t2013 | — | $— |
| Granted | 2,186 | 24.60 |
| Vested\tand\treleased | — | — |
| Forfeited | — | — |
| Outstanding\tat\tDecember\t31,\t2013 | 2,186 | $24.60 |

The	weighted-average	grant	date	fair	value	per	share	of	equity	incentive	share	awards	granted	during	2013	was	$24.60.	As	of	December	31,	2013,	there	was $41	million	of	total	unrecognized	compensation	cost	related	to	equity	incentive	share	awards	that	is	expected	to	be	recognized	over	a	weighted	average	period	of	1.6 years.

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	under	the	program	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	billion	in	net	synergies	with	respect	to	fiscal	year	2015	or	2016.	Compensation	expenses recorded	in	connection	with	these	awards	have	been	and	will	be	charged	to	Merger	related	expenses.

|  | Awards | Weighted	Average<br>Grant	Date	Fair<br>Value |
| :--- | :--- | :--- |
|  | (In\tthousands) |  |
| Outstanding\tat\tJanuary\t1,\t2013 | — \t $ | — |
| Granted | 7,712 | 24.60 |
| Vested\tand\treleased | — | — |
| Forfeited | — | — |
| Outstanding\tat\tDecember\t31,\t2013 | 7,712 | \t $24.60 |

As	of	December	31,	2013,	there	was	$184	million	of	total	unrecognized	compensation	cost	related	to	RSUs.	These	costs	are	expected	to	be	recognized	over	a weighted	average	period	of	1.9	years.

CRSU	award	activity	for	all	plans	is	as	follows	(shares	in	thousands):

|  | Number	of	Shares | Value |
| :--- | :--- | :--- |
|  | (In\tthousands) |  |
| Outstanding\tat\tJanuary\t1,\t2013 | — \t $ | — |
| Granted | 291 | 24.60 |
| Vested\tand\treleased | — | — |
| Forfeited | — | — |
| Outstanding\tat\tDecember\t31,\t2013 | 291 | \t $25.25 |

As	of	December	31,	2013,	the	liability	related	to	CRSUs	was	less	than	a	million	and	will	continue	to	be	remeasured	at	fair	value	at	each	reporting	date	until	all awards	are	vested.	As	of	December	31,	2013,	the	total	unrecognized	compensation	expense	for	CRSUs	was	$7	million	and	is	expected	to	be	recognized	over	a	weighted average	period	of	1.9	years.

Prior	to	the	Petition	Date,	American	adopted	certain	plans	which	provided	for	the	issuance	of	common	stock	in	connection	with	the	exercise	of	stock	options and	other	share-based	awards.	American	granted	stock	compensation	under	three	plans:	the	1998	Long	Term	Incentive	Plan	(the	1998	Plan),	the	2003	Employee	Stock Incentive	Plan	(the	2003	Plan)	and	the	2009	Long	Term	Incentive	Plan	(the	2009	Plan).	Collectively,	the	1998	Plan	and	the	2009	Plan	are	referred	to	as	the	LTIP	Plans. No	awards	were	made	under	American's	plans	in	2012	or	2013.	American	had	share-based	incentive	awards	including	stock	options/stock	appreciation	rights	granted under	the	LTIP	Plans	and	the	2003	Plan,	performance	share	awards	granted	under	the	LTIP	plans	and	based	upon	a	requisite	service	period	and	contingently	issuable based	upon	the	AMR's	relative	stock	price	performance	compared	to	certain	of	its	competitors	over	a	three	year	period,	deferred	share	awards	granted	under	the	LTIP plans	and	based	solely	on	a	requisite	service	period	and	career	equity	awards	granted	to	certain	employees	of	the	Company	vesting	upon	the	retirement	of	those individuals.	Deferred	share	and	career	equity	awards	totaling	5,899,500	shares	vested	in	AMR	common	stock	pursuant	to	the	Plan.	These	plan	participants	become holders	of	interest	in	AMR	Corporation	and	will	receive	distributions	of	AAG	common	stock	in	accordance	with	the	Plan	(See	Note	2	to	American's	Consolidated Financial	Statements	for	information	regarding	the	Plan).	All	remaining	outstanding	awards	were	canceled	in	accordance	with	the	Plan	upon	emergence	from	Chapter 11.

|  | SARS/Options | Stock	Awards |
| :--- | :--- | :--- |
|  | (In\tthousands) |  |
| Outstanding\tawards\tat\tJanuary\t1,\t2011 | 28,593 | 18,015 |
| Granted | 2,556 | 1,864 |
| Settled\tor\texercised | (90) | (2,809) |
| Forfeited | (4,166) | (3,457) |
| Outstanding\tat\tDecember\t31,\t2011 | 26,893 | 13,613 |
| Granted | — | — |
| Settled\tor\texercised | — | (25) |
| Forfeited | (2,943) | (679) |
| Outstanding\tat\tDecember\t31,\t2012 | 23,950 | 12,909 |
| Granted | — | — |
| Settled\tor\texercised | (6,589) | (5,900) |
| Forfeited | (13,346) | — |
| Canceled\tupon\temergence | (4,015) | (7,009) |
| Outstanding\tat\tDecember\t9,\t2013 | — | — |

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.

|  | Pension	Benefits<br>2013 | 2012 | Retiree	Medical	and	Other<br>Benefits<br>2013 | 2012 |
| :--- | :--- | :--- | :--- | :--- |
| Reconciliation\tof\tbenefit\tobligation: |  |  |  |  |
| Obligation\tat\tJanuary\t1 | $15,895 | $14,568 | $1,412 | $3,122 |
| Service\tcost | 3 | 341 | — | 46 |
| Interest\tcost | 654 | 729 | 50 | 128 |
| Actuarial\t(gain)\tloss | (1,152) | 2,345 | (82) | 104 |
| Plan\tamendments | — | 301 | — | (1,904) |
| Curtailments | 2 | (1,841) | — | 33 |
| Settlements | (1) | — | — | — |
| Benefit\tpayments | (575) | (548) | (116) | (117) |
| Obligation\tat\tDecember\t31 | $14,826 | $15,895 | $1,264 | $1,412 |

|  | Pension	Benefits |  | Retiree	Medical	and	Other<br>Benefits |  |
| :--- | :--- | :--- | :--- | :--- |
|  | 2013 | 2012 | 2013 | 2012 |
|  |  | (in\tmillions) |  |  |
| Reconciliation\tof\tfair\tvalue\tof\tplan\tassets: |  |  |  |  |
| Fair\tvalue\tof\tplan\tassets\tat\tJanuary\t1 | $9,065 | $8,132 | $211 | $205 |
| Actual\treturn\ton\tplan\tassets | 1,026 | 1,204 | 41 | 26 |
| Employer\tcontributions | 494 | 277 | 103 | 97 |
| Settlements | (1) | — | — | — |
| Benefit\tpayments | (575) | (548) | (116) | (117) |
| Fair\tvalue\tof\tplan\tassets\tat\tDecember\t31 | $10,009 | $9,065 | $239 | $211 |
| Funded\tstatus\tat\tDecember\t31 | $(4,817) | $(6,830) | $(1,025) | $(1,201) |
| Amounts\trecognized\tin\tthe\tConsolidated\tBalance\tSheets: |  |  |  |  |
| Current\tliability | $31 | $21 | $118 | $— |
| Noncurrent\tliability | 4,786 | 6,809 | 907 | 1,201 |
|  | $4,817 | $6,830 | $1,025 | $1,201 |
| Amounts\trecognized\tin\tother\tcomprehensive\tloss: |  |  |  |  |
| Net\tactuarial\tloss\t(gain) | $2,395 | $3,943 | $(176) | $(78) |
| Prior\tservice\tcost\t(credit) | 273 | 301 | (1,592) | (1,844) |
|  | $2,668 | $4,244 | $(1,768) | $(1,922) |
| For\tplans\twith\taccumulated\tbenefit\tobligations\texceeding\tthe\tfair\tvalue\nof\tplan\tassets: |  |  |  |  |
| Projected\tbenefit\tobligation\t(PBO) | $14,796 | $15,895 | $— | $— |
| Accumulated\tbenefit\tobligation\t(ABO) | 14,788 | 15,866 | — | — |
| Accumulated\tpostretirement\tbenefit\tobligation\t(APBO) | — | — | 1,264 | 1,412 |
| Fair\tvalue\tof\tplan\tassets | 9,976 | 9,065 | 239 | 211 |
| ABO\tless\tfair\tvalue\tof\tplan\tassets | 4,812 | 6,801 | — | — |

|  |  | Pension	Benefits |  | Retiree	Medical		and	Other	Benefits | Retiree	Medical		and	Other	Benefits |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 |
| Components\tof\tnet\tperiodic\tbenefit\tcost: |  |  |  |  |  |  |
| Defined\tbenefit\tplans: |  |  |  |  |  |  |
| Service\tcost | $3 | $341 | $386 | $— | $46 | $61 |
| Interest\tcost | 654 | 729 | 757 | 50 | 128 | 174 |
| Expected\treturn\ton\tassets | (720) | (676) | (657) | (16) | (17) | (20) |
| Curtailments | 2 | 58 | — | — | (124) | — |
| Settlements | (1) | — | — | — | — | — |
| Amortization\tof: |  |  |  |  |  |  |
| Prior\tservice\tcost | 28 | 10 | 13 | (251) | (82) | (28) |
| Unrecognized\tnet\tloss\t(gain) | 90 | 211 | 154 | (9) | (9) | (9) |
| Net\tperiodic\tbenefit\tcost\tfor\tdefined\tbenefit\tplans | 56 | 673 | 653 | (226) | (58) | 178 |
| Defined\tcontribution\tplans | 303 | 202 | 162 | N/A | N/A | N/A |
|  | $359 | $875 | $815 | $(226) | $(58) | $178 |

|  | Pension	Benefits<br>2013 | 2012 | Retiree	Medical	and	Other<br>Benefits<br>2013 | 2012 |
| :--- | :--- | :--- | :--- | :--- |
| Weighted-average\tassumptions\tused\tto\tdetermine\tbenefit\tobligations\nas\tof\tDecember\t31: |  |  |  |  |
| Discount\trate | 5.10% | 4.20% | 4.71% | 3.80% |
| Weighted-average\tassumptions\tused\tto\tdetermine\tnet\tperiodic\tbenefit\ncost\tfor\tthe\tyears\tended\tDecember\t31: |  |  |  |  |
| Discount\trate\t1/1\t-\t9/30 | 4.20% | 5.20% | 3.80% | 4.89% |
| Discount\trate\t10/1\t-\t12/31 | 4.20% | 4.10% | 3.80% | 3.80% |
| Salary\tscale\t(ultimate)\t1/1-9/30 | — | 3.78% | — | — |
| Expected\treturn\ton\tplan\tassets | 8.00% | 8.25% | 8.00% | 8.25% |

As	of	December	31,	2013,	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,	2013,	was approximately	8.93%.

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,	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.	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.

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	period.

# The	fair	values	of	American's	pension	plan	assets	at	December	31,	2013	and	2012,	by	asset	category	are	as	follows	(in	millions):

|  |  | Fair	Value	Measurements	at	December	31,	2013 | Fair	Value	Measurements	at	December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Quoted\tPrices\tin\nActive\tMarkets\tfor\nIdentical\tAssets | Significant\nObservable\t\tInputs | Significant\nUnobservable\nInputs |  |
| Asset\tCategory | (Level\t1) | (Level\t2) | (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(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\tinvestments: |  |  |  |  |
| 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 |

|  |  | Fair	Value	Measurements	at	December	31,	2012 |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Quoted\tPrices\tin\nActive\tMarkets\tfor\nIdentical\tAssets | Significant\nObservable\t\tInputs | Significant\nUnobservable\nInputs |  |
| Asset\tCategory | (Level\t1) | (Level\t2) | (Level\t3) | Total |
| Cash\tand\tcash\tequivalents | $275 | $— | $— | $275 |
| Equity\tsecurities |  |  |  |  |
| International\tmarkets\t(a)(b) | 2,443 | — | — | 2,443 |
| Large-cap\tcompanies\t(b) | 1,601 | — | — | 1,601 |
| Mid-cap\tcompanies\t(b) | 216 | — | — | 216 |
| Small-cap\tcompanies(b) | 21 | — | — | 21 |
| Fixed\tIncome |  |  |  |  |
| Corporate\tbonds\t(c) | — | 2,094 | — | 2,094 |
| Government\tsecurities\t(d) | — | 1,172 | — | 1,172 |
| U.S.\tmunicipal\tsecurities | — | 57 | — | 57 |
| Alternative\tinvestments |  |  |  |  |
| Private\tequity\tpartnerships\t(e) | — | — | 914 | 914 |
| Common/collective\tand\t103-12\tinvestment\ttrusts\t(f) | — | 229 | — | 229 |
| Insurance\tgroup\tannuity\tcontracts | — | — | 2 | 2 |
| Dividend\tand\tinterest\treceivable | 38 | — | — | 38 |
| Due\tto/from\tbrokers\tfor\tsale\tof\tsecurities\t-\tnet | 1 | — | — | 1 |
| Other\tassets\t–\tnet | 2 | — | — | 2 |
| Total | $4,597 | $3,552 | $916 | $9,065 |

|  | Private	Equity	Partnerships | Insurance	Group	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 |

|  | Private	Equity<br>Partnerships | Insurance	Group<br>Annuity	Contracts |
| :--- | :--- | :--- |
| Beginning\tbalance\tat\tDecember\t31,\t2011 | $920 | $2 |
| Actual\treturn\ton\tplan\tassets: |  |  |
| Relating\tto\tassets\tstill\theld\tat\tthe\treporting\tdate | 20 |  |
| Relating\tto\tassets\tsold\tduring\tthe\tperiod | 102 |  |
| Purchases | 96 |  |
| Sales | (224) |  |
| Ending\tbalance\tat\tDecember\t31,\t2012 | $914 | $2 |

The	fair	value	of	American's	other	postretirement	benefit	plan	assets	at	December	31,	2013	by	asset	category,	were	as	follows	(in	millions):

|  |  | Fair	Value	Measurements	at	December	31,	2013 | Fair	Value	Measurements	at	December	31,	2013 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Quoted\tPrices\tin\nActive\tMarkets\tfor\nIdentical\tAssets | Significant\nObservable\t\tInputs | Significant\nUnobservable\nInputs |  |
| Asset\tCategory | (Level\t1) | (Level\t2) | (Level\t3) | Total |
| Money\tmarket\tfund | $4 | $— | $— | $4 |
| Mutual\tfunds\t-\tAMR\tClass | — | 235 | — | 235 |
| Total | $4 | $235 | $— | $239 |

|  |  | Fair	Value	Measurements	at	December	31,	2012 | Fair	Value	Measurements	at	December	31,	2012 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Quoted\tPrices\tin\nActive\tMarkets\tfor\nIdentical\tAssets | Significant\nObservable\t\tInputs | Significant\nUnobservable\nInputs |  |
| Asset\tCategory | (Level\t1) | (Level\t2) | (Level\t3) | Total |
| Money\tmarket\tfund | $9 | $— | $— | $9 |
| Mutual\tfunds\t-\tAMR\tClass | — | 202 | — | 202 |
| Total | $9 | $202 | $— | $211 |

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	27%	of	investments	in	non-U.S.	common	stocks	in	2013	and	approximately	28%	of	investments	in	non-U.S. common	stocks	in	2012.	Net	asset	value	is	based	on	the	fair	market	value	of	the	funds'	underlying	assets	and	liabilities	at	the	date	of	determination.

American	is	required	to	make	minimum	contributions	to	its	defined	benefit	pension	plans	under	the	minimum	funding	requirements	of	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 st	Century	Act	of	2012.	In 2013	American	contributed	$489	million	to	its	defined	benefit	pension	plans,	which	covered	minimum	contributions	for	periods	prior	to	the	American's	Chapter	11 filing	and	periods	thereafter	(see	Note	2	to	American's	Consolidated	Financial	Statements	for	further	information),	as	well	as	certain	interest	and	penalty	interest	due with	 respect	 to	 contributions	 for	 pre-petition	 periods.	 On	January	15,	2014,	American	 contributed	 an	 additional	$34	million	 to	 its	 defined	 benefit	 pension	 plans representing	the	final	quarterly	contribution	for	the	2013	plan	year.

				American's	minimum	required	contribution	to	its	pension	plans	for	2014	is	$120	million.	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.

|  | 2014 | 2015 | 2016 | 2017 | 2018 | 2019-2023 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Pension | $640 | $639 | $664 | $694 | $728 | $4,234 |
| Retiree\tMedical\tand\tOther | 119 | 116 | 114 | 110 | 104 | 443 |

Effective	November	1,	2012,	American's	defined	benefit	pension	plans	were	frozen	and	eligible	employees	began	to	receive	a	replacement	benefit	under	the $uper	$aver	401(k)	Plan.	American	matches	employee	contributions	up	to	5.5%	of	eligible	earnings	and,	with	the	ratification	of	a	new	CBA	by	pilots	on	December	7, 2012,	pilots	receive	contributions	of	14%	under	the	same	plan.

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	expects	all	remaining	funds,	which	represent	a	small	group	of	uncashed	distribution	checks,	to	be	distributed	by	the	end	of	second	quarter	2014.

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	Court	held	a	hearing	on	January	23,	2013	and	has	not	ruled	on	this matter	as	of	the	date	of	this	report.	The	Company

has	been	negotiating	with	the	retiree	committee	since	July	2012,	seeking	a	consensual	agreement	to	terminate	subsidized	retiree	medical	coverage	and	life	insurance coverage.

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.	See	Note	2	to	American's	Consolidated	Financial	Statements	for	the	breakout	of	liabilities	subject	to	compromise,	including that	related	to	pension	and	postretirement	benefits.

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	Retiree<br>Medical	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\nincome\t(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) |

As	of	December	31,	2013,	American	estimates	that	during	the	next	twelve	months	it	will	reclassify	from	Accumulated	Other	Comprehensive	Income	(Loss) into	earnings	approximately	$45	million	in	net	gains	(based	on	prices	as	of	December	31,	2013)	related	to	its	fuel	derivative	hedges.

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.	Also,	American	recognized	a	$569	million	non-cash	income	tax	benefit,	offset	by	a	$569	million	charge	to	other comprehensive	 income,	 during	 the	 fourth	 quarter	 of	 2012	 related	 to	 gains	 in	 other	 comprehensive	 income.	 See	 Note	10	 to	American's	 Consolidated	 Financial Statements	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	American	ceases	all	related	activities,	such	as	termination	of	the	pension	plan.

American's	operations	of	American	and	AMR	Eagle	are	treated	as	an	integrated	route	network	and	the	route	scheduling	system	maximizes	the	operating	results of	American.	American's	chief	operating	decision	maker	makes	resource	allocation	decisions	to	maximize	American's	consolidated	financial	results.	Based	on	the	way American	treats	the	network	and	the	manner	in	which	resource	allocation	decisions	are	made,	American	has	only	one	operating	segment	for	financial	reporting	purposes consisting	of	the	operations	of	American	and	AMR	Eagle.

American's	operating	revenues	by	geographic	region	(as	defined	by	DOT)	are	summarized	below	(in	millions):

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| DOT\tDomestic | $14,603 | $14,257 | $13,782 |
| DOT\tLatin\tAmerica | 6,197 | 5,813 | 5,460 |
| DOT\tAtlantic | 3,638 | 3,411 | 3,499 |
| DOT\tPacific | 1,322 | 1,344 | 1,216 |
| Total\tconsolidated\trevenues | $25,760 | $24,825 | $23,957 |

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.

|  | First	Quarter | Second	Quarter | Third	Quarter | Fourth	Quarter |
| :--- | :--- | :--- | :--- | :--- |
| 2013\t1 |  |  |  |  |
| Operating\trevenues | $6,085 | $6,437 | $6,816 | $6,422 |
| Operating\texpenses | 6,019 | 5,936 | 6,130 | 6,141 |
| Operating\tincome\t(loss) | 66 | 501 | 687 | 280 |
| Net\tincome\t(loss) | (253) | 228 | 290 | (1,791) |
| 2012\t1 |  |  |  |  |
| Operating\trevenues | $6,031 | $6,447 | $6,422 | $5,925 |
| Operating\texpenses | 6,127 | 6,305 | 6,383 | 5,928 |
| Operating\tincome\t(loss) | (96) | 142 | 39 | (3) |
| Net\tincome\t(loss) | (1,676) | (264) | (257) | 271 |

(1)	To	conform	to	current	year	presentation,	certain	operating	revenue	and	expenses	in	prior	years	have	been	reclassified.	As	a	result,	prior	year	amounts	may	not	agree to	the	amounts	previously	reported.	See	Note	4	to	American's	Consolidated	Financial	Statements	for	additional	information.

American's	 fourth	 quarter	2013	performance	reflects	restructuring	charges	consisting	of	$1.7	billion	 related	 to	 labor-related	 claims,	 a	$74	million	 accrual adjustment	to	the	disputed	claim	reserve	and	a	$218	million	adjustment	 to	claims	related	 to	 the	3.5%	 premium	 (see	 Note	2	to	American's	Consolidated	Financial Statements	for	additional	information);	merger-related	charges	include	$47	million	for	severance	to	satisfy	certain	separation	agreements	resulting	from	the	Merger	and professional	fees,	$56	million	in	equity	awards	in	connection	with	the	merger,	partially	offset	by	a	$67	million	gain	on	the	sale	of	slots	at	LaGuardia	Airport	as	a	result of	the	settlement	reached	with	the	Department	of	Justice;	and	special	items	including	$107	million	resulting	from	modifications	and	changes	in	assumptions	for	the	pilot long-term	disability	plan	in	connection	with	the	Chapter	11	process	and	$33	million	to	write	down	permanently	grounded	aircraft,	partially	offset	by	a	gain	related	to	the modification	of	our	agreement	with	Citibank	related	to	American's	frequent	flyer	program.

American's	fourth	quarter	2012	performance	reflects	restructuring	charges	and	special	items	consisting	of	$360	million	of	severance	related	charges	and	write- off	of	leasehold	improvements	on	aircraft	and	at	airport	facilities	that	were	rejected	during	the	Chapter	11	process	and	a	$280	million	benefit	from	a	settlement	of	a commercial	dispute.	The	second	and	third	quarters	of	2012	reflect	$106	million	and	$211	million	of	such	items,	respectively.

Regional	expenses	associated	with	American's	wholly-owned	regional	airline	and	third	party	regional	carriers	operating	as	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, |  |
| :--- | :--- | :--- | :--- |
|  | 2013 | 2012 | 2011 |
| Aircraft\tfuel\tand\trelated\ttaxes | \t $1,055 | \t $1,012 | \t $945 |
| Salaries,\twages\tand\tbenefits | 20 | 33 | 32 |
| Capacity\tpurchases\tfrom\tthird-party\tregional\tcarriers | 1,234 | 1,271 | 1,626 |
| Maintenance,\tmaterials\tand\trepairs | 7 | 5 | 3 |
| Other\trent\tand\tlanding\tfees | 207 | 203 | 111 |
| Aircraft\trent | 1 | 6 | 42 |
| Selling\texpenses | 142 | 152 | 153 |
| Depreciation\tand\tamortization | 149 | 154 | 34 |
| Special\titems,\tnet | — | — | — |
| Other | 259 | 213 | 153 |
| Total\tregional\texpenses | \t $3,074 | \t $3,049 | \t $3,099 |

# Transactions	with	Related	Parties

American	invests	funds,	including	funds	of	certain	affiliates,	if	any,	in	a	combined	short-term	investment	portfolio	and	passes	through	interest	income	on	such funds	at	the	average	rate	earned	on	the	portfolio.	These	amounts	are	classified	as	Payable	to	affiliate	on	the	accompanying	consolidated	balance	sheets.

Pursuant	to	a	capacity	purchase	agreement	between	American	and	the	American	Eagle	carriers,	American	receives	all	passenger	revenue	from	flights	performed for	it	by	the	American	Eagle	carriers	and	pays	the	American	Eagle	carriers	a	fee	for	each	flight.	The	capacity	purchase	agreement	reflects	what	American	believes	are current	market	rates	received	by	third-party	regional	carriers	for	similar	flying.	Amounts	paid	to	the	American	Eagle	carriers	under	the	capacity	purchase	agreement	are available	 to	pay	for	various	operating	expenses	of	 the	American	Eagle	carriers,	such	as	crew	expenses,	maintenance,	and	other	aircraft	related	expenses.	As	of December	31,	2013,	the	American	Eagle	carriers	operated	approximately	1,400	daily	departures,	offering	scheduled	passenger	service	to	over	170	destinations	in	North America,	Mexico	and	the	Caribbean.	On	a	separate	company	basis,	AMR	Eagle	reported	$1.2	billion	in	revenue	in	2013.	However,	this	historical	financial	information is	not	indicative	of	what	AMR	Eagle's	future	revenues	might	be	if	AMR	Eagle	were	a	stand-alone	entity.

In	2013	and	2012,	American	made	payments	to	the	American	Eagle	carriers	of	approximately	$1.0	billion	and	$1.1	billion,	respectively,	related	to	the	capacity purchase	agreement.	In	addition,	American	incurred	costs	associated	with	generating	third-party	regional	carriers'	revenue	for	flights	on	AMR	Eagle	of	$109	million	and $128	million in	2013	 and	2012,	respectively,	recorded	in	Regional	expenses	-	fuel	and	Regional	expenses	-	other	in	the	accompanying	consolidated	statements	of operations.

In	consideration	for	certain	services	provided,	the	AMR	Eagle	carriers	paid	American	approximately	$16	million,	$16	million	and	$18	million	in	2013,	2012 and	2011,	respectively.

American	recognizes	compensation	expense	associated	with	certain	AAG	common	share-based	awards	for	employees	of	American	(see	Note	11).	In	addition, American	incurs	pension	and	postretirement	benefit	expense	for	American	employees	working	at	affiliates	of	American.	American	transfers	pension	and	postretirement benefit	expense	for	these	employees	to	its	affiliates	based	on	a	percentage	of	salaries	and	cost	per	employee,	respectively	(see	Note	12).

In	January	2014,	US	Airways	amended	the	2013	Citicorp	Credit	Facility,	of	which	American	is	an	obligor,	to	lower	the	applicable	LIBOR	margin	from	3%	to 2.75%	for	Tranche	B-1.	In	addition,	the	LIBOR	floor	was	reduced	from	1%	to	0.75%	on	both	Tranche	B-1	and	Tranche	B-2.

# 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	Securities	Exchange	Act	of	1934,	or	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	Securities	and	Exchange	Commission.	An	evaluation was	performed	under	the	supervision	and	with	the	participation	of	the	Company's	management,	including	the	Chief	Executive	Officer	(CEO)	and	Chief	Financial Officer	(CFO),	of	the	effectiveness	of	the	AAG's	and	American's	disclosure	controls	and	procedures	as	of	December	31,	2013.	Based	on	that	evaluation,	the	Company's management,	including	the	CEO	and	CFO,	concluded	that	AAG's	and	American's	disclosure	controls	and	procedures	were	effective	as	of	December	31,	2013.	During the	quarter	ending	on	December	31,	2013,	AAG	acquired	US	Airways	Group.	Other	than	the	addition	of	US	Airways	Group's	internal	control	over	financial	reporting and	any	related	changes	in	control	to	integrate	US	Airways	Group	into	AAG,	there	was	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.

# 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	generally	accepted	accounting	principles.	AAG's and	American's	internal	control	over	financial	reporting	includes	those	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	generally	accepted accounting	principles,	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	America'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,	 2013.	 In	 making	 this assessment,	 management	 used	 the	 criteria	 set	 forth	 by	 the	 Committee	 of	 Sponsoring	 Organizations	 of	 the	 Treadway	 Commission	 in	 Internal	 Control-Integrated Framework	(1992	Framework).

Based	on	our	assessment	and	those	criteria,	management	concludes	that	AAG	and	American	maintained	effective	internal	control	over	financial	reporting	as	of December	31,	2013.

				AAG's	and	American's	independent	registered	public	accounting	firm	has	issued	an	audit	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)	(formerly	AMR	Corporation)	internal	control	over	financial	reporting	as	of	December	31,	2013,	based on	criteria	established	in	Internal	Control-Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(1992	Framework) (the	COSO	criteria).	The	Company'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	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	did	not	audit	the	effectiveness	of	internal control	over	financial	reporting	of	US	Airways	Group,	Inc.,	a	wholly-owned	subsidiary	whose	financial	statements	reflect	total	assets	and	operating	revenues	consisting of	39%	and	3%,	respectively,	of	the	related	consolidated	financial	statement	amounts	as	of	and	for	the	year	ended	December	31,	2013.	The	effectiveness	of	US	Airways Group,	Inc.'s	internal	control	over	financial	reporting,	inclusive	of	controls	over	the	accounting	for	the	Company's	business	combination	with	US	Airways	Group,	Inc., was	audited	by	other	auditors	whose	report	has	been	furnished	to	us,	and	our	opinion,	insofar	as	it	relates	to	the	effectiveness	of	US	Airways	Group,	Inc.'s	internal control	over	financial	reporting,	is	based	solely	on	the	report	of	the	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	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,	testing	and	evaluating	the	design	and operating	effectiveness	of	internal	control	based	upon	the	assessed	risk,	and	performing	such	other	procedures	as	we	considered	necessary	in	the	circumstances.	We believe	that	our	audit	and	the	report	of	other	auditors	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,	based	on	our	audit	and	the	report	of	other	auditors,	American	Airlines	Group	Inc.	maintained,	in	all	material	respects,	effective	internal	control	over financial	reporting	as	of	December	31,	2013,	based	on	the	COSO	criteria.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	consolidated	balance	sheets	of	the Company	as	of	December	31,	2013	and	2012,	and	the	related	consolidated	statements	of	operations,	comprehensive	income	(loss),	stockholders'	equity	(deficit)	and	cash flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2013	of	the	Company	and	our	report	dated	February	27,	2014	expressed	an	unqualified	opinion thereon.

We	have	audited	American	Airlines,	Inc.'s	(the	Company)	internal	control	over	financial	reporting	as	of	December	31,	2013,	based	on	criteria	established	in	Internal Control-Integrated	Framework	 issued	by	 the	Committee	of	Sponsoring	Organizations	of	 the	Treadway	Commission	(1992	Framework)	(the	COSO	criteria).	The Company'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	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,	testing	and	evaluating	the	design	and operating	effectiveness	of	internal	control	based	upon	the	assessed	risk,	and	performing	such	other	procedures	as	we	considered	necessary	in	the	circumstances.	We believe	that	our	audit	provides	a	reasonable	basis	for	our	opinion.

In	our	opinion,	American	Airlines,	Inc.	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	December	31,	2013,	based	on	the COSO	criteria.

We	 have	 audited	 US	Airways	 Group,	 Inc.	 and	 subsidiaries	 (the	 Company)	 internal	 control	 over	 financial	 reporting	 as	 of	 December	 31,	 2013,	 based	 on	 criteria established	in	Internal	Control	-	Integrated	Framework	(1992)	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO).	The Company'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.

In	our	opinion,	US	Airways	Group,	Inc.	and	subsidiaries	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	December	31,	2013, 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	US Airways	Group,	Inc.	and	subsidiaries	as	of	December	31,	2013,	and	the	related	consolidated	statement	of	operations,	comprehensive	income,	stockholders'	equity,	and cash	flows	for	the	period	from	December	9,	2013	to	December	31,	2013,	and	our	report	dated	February	27,	2014	expressed	an	unqualified	opinion	on	those	consolidated financial	statements.

# ITEM	9B. OTHER	INFORMATION

The	AAG	2014	Annual	Meeting	of	Stockholders	(the	2014	Annual	Meeting)	will	be	held	on	June	4,	2014,	at	a	place	and	time	to	be	specified	in	the	Proxy Statement.	Stockholder	proposals	to	be	considered	for	inclusion	in	AAG's	proxy	materials	for	the	2014	Annual	Meeting	in	accordance	with	Rule	14a-8	under	the Exchange	Act	of	1934,	as	amended,	must	be	received	by	AAG	by	March	10,	2014	and	must	comply	with	the	applicable	rules	and	regulations	of	the	Securities	and Exchange	Commission.	In	order	for	a	stockholder	to	present	any	other	proposal	at	the	2014	Annual	Meeting,	a	stockholder's	notice	complying	with	the	requirements	set forth	in	the	Company's	Amended	and	Restated	Bylaws	must	be	delivered	to,	or	mailed	and	received	at,	the	principal	executive	offices	of	the	Company	not	later	than March	10,	2014.

# 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	American	Airlines	Group Inc.'s	Proxy	Statement	for	the	2014	Annual	Meeting	of	Stockholders	of	American	Airlines	Group	Inc.	(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,	Inc.	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	Our	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	2013,	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.	Also	during	2013,	the	board	of	directors	of	AAG	and	American	consisted	of	the	same	persons	through	December	9, 2013.	From	December	9,	2013,	the	directors	of	American	were	Thomas	W.	Horton,	W.	Douglas	Parker	and	Stephen	L.	Johnson.	None	of	such	persons	was	separately compensated	in	connection	with	being	a	director	of	American.	The	information	regarding	such	persons	called	for	by	Item	11	with	respect	to	their	service	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

# 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	Our	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:

| Reports	of	Independent	Registered	Public	Accounting	Firms | 96 |
| :--- | :--- |
| Consolidated\tStatements\tof\tOperations\tfor\tthe\tYears\tEnded\tDecember\t31,\t2013,\t2012\tand\t2011 | 98 |
| Consolidated\tStatements\tof\tComprehensive\tIncome\tfor\tthe\tYears\tEnded\tDecember\t31,\t2013,\t2012\tand\t2011 | 99 |
| Consolidated\tBalance\tSheets\tat\tDecember\t31,\t2013\tand\t2012 | 100 |
| Consolidated\tStatements\tof\tCash\tFlows\tfor\tthe\tYears\tEnded\tDecember\t31,\t2013,\t2012\tand\t2011 | 101 |
| Consolidated\tStatements\tof\tStockholders'\tEquity\t(Deficit)\tfor\tthe\tYears\tEnded\tDecember\t31,\t2013,\t2012\tand\t2011 | 102 |
| Notes\tto\tConsolidated\tFinancial\tStatements | 103 |

The	following	financial	statement	schedule	is	filed	as	part	of	this	report:

# Schedule	II	Valuation	and	Qualifying	Accounts	and	Reserves

The	following	consolidated	financial	statements	of	American	Airlines,	Inc.	and	Independent	Auditors'	Report	are	filed	as	part	of	this	report:

|  | Page |
| :--- | :--- |
| Report\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | 158 |
| Consolidated\tStatements\tof\tOperations\tfor\tthe\tYears\tEnded\tDecember\t31,\t2013,\t2012\tand\t2011 | 159 |
| Consolidated\tStatements\tof\tComprehensive\tIncome\tfor\tthe\tYears\tEnded\tDecember\t31,\t2013,\t2012\tand\t2011 | 160 |
| Consolidated\tBalance\tSheets\tat\tDecember\t31,\t2013\tand\t2012 | 161 |
| Consolidated\tStatements\tof\tCash\tFlows\tfor\tthe\tYears\tEnded\tDecember\t31,\t2013,\t2012\tand\t2011 | 162 |
| Consolidated\tStatements\tof\tStockholders\tEquity\t(Deficit)\tfor\tthe\tYears\tEnded\tDecember\t31,\t2013,\t2012\tand\t2011 | 163 |
| Notes\tto\tConsolidated\tFinancial\tStatements | 164 |

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.

4.5 Second	Supplemental	Indenture	with	The	Bank	of	New	York	Mellon	Trust	Company,	N.A.,	as	trustee,	to	the	indenture	governing	US	Airways	Inc.'s 7.25%	Senior	Convertible	Notes	due	2014	(incorporated	by	reference	to	Exhibit	4.2	to	AAG's	Current	Report	on	Form	8-K	filed	on	December	9,	2013 (Commission	File	No.	1-8400)).

* 	 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.

# 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.

By: /s/	W.	Douglas	Parker

W.	Douglas	Parker

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,	2013, 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/	W.	Douglas	Parker

	 Chief	Executive	Officer	and	Director (Principal	Executive	Officer)

/s/	Thomas	W.	Horton Thomas	W.	Horton,	Chairman

/s/	James	F.	Albaugh James	F.	Albaugh,	Director

/s/	Jeffrey	D.	Benjamin Jeffrey	D.	Benjamin,	Director

/s/	John	T.	Cahill John	T.	Cahill,	Director

/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

/s/	Denise	M.	O'Leary 	 Denise	M.	O'Leary,	Director

/s/	Ray	M.	Robinson 	 Ray	M.	Robinson,	Director

/s/	Richard	P.	Schifter 	 Richard	P.	Schifter,	Director

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:

|  | Balance	at<br>beginning<br>of	year | Changes	charged	to<br>statement	of	operations<br>accounts | Payments | Write-offs<br>(net	of<br>recoveries) | Sales,<br>retirements<br>and<br>transfers | Balance	at<br>end	of	year |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Allowance\tfor\tobsolescence\tof\ninventories |  |  |  |  |  |  |
| Year\tended\tDecember\t31,\t2013 | $546 | $24 | $— | $(23) | $— | $547 |
| Year\tended\tDecember\t31,\t2012 | 575 | 20 | — | (49) | — | 546 |
| Year\tended\tDecember\t31,\t2011 | 530 | 34 | — | — | 11 | 575 |
| Allowance\tfor\tuncollectible\taccounts |  |  |  |  |  |  |
| Year\tended\tDecember\t31,\t2013 | $44 | $3 | $— | $(6) | $— | $41 |
| Year\tended\tDecember\t31,\t2012 | 52 | 3 | — | (11) | — | 44 |
| Year\tended\tDecember\t31,\t2011 | 58 | 4 | — | (10) | — | 52 |
| Reserves\tfor\tenvironmental\nremediation\tcosts |  |  |  |  |  |  |
| Year\tended\tDecember\t31,\t2013 | $13 | $2 | $(1) | $(3) | $— | $11 |
| Year\tended\tDecember\t31,\t2012 | 14 | (1) | — | — | — | 13 |
| Year\tended\tDecember\t31,\t2011 | 17 | (2) | (1) | — | — | 14 |

# American	Airlines

|  | Balance	at<br>beginning	of<br>year | Changes	charged	to<br>statement	of<br>operations	accounts | Payments | Write-off	(net<br>of	recoveries) | Sales,<br>retirements<br>and	transfers | Balance	at<br>end	of	year |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Allowance\tfor\tobsolescence\nof\tinventories |  |  |  |  |  |  |
| Year\tended\tDecember\t31,\n2013 | \t $503 | \t $20 | \t $— | \t $(21) | \t $— \t $ | 502 |
| Year\tended\tDecember\t31,\n2012 | 530 | 18 | — | (45) | — | 503 |
| Year\tended\tDecember\t31,\n2011 | 479 | 31 | — | — | 20 | 530 |
| Allowance\tfor\tuncollectible\naccounts |  |  |  |  |  |  |
| Year\tended\tDecember\t31,\n2013 | \t $43 | \t $2 | \t $— | \t $(5) | \t $— \t $ | 40 |
| Year\tended\tDecember\t31,\n2012 | 51 | 3 | — | (11) | — | 43 |
| Year\tended\tDecember\t31,\n2011 | 57 | 4 | — | (10) | — | 51 |
| Reserves\tfor |  |  |  |  |  |  |
| environmental |  |  |  |  |  |  |
| remediation\tcosts |  |  |  |  |  |  |
| Year\tended\tDecember\t31,\n2013 | \t $13 | \t $2 | \t $(1) | \t $(3) | \t $— \t $ | 11 |
| Year\tended\tDecember\t31,\n2012 | 14 | (1) | — | — | — | 13 |
| Year\tended\tDecember\t31,\n2011 | 17 | (2) | (1) | — | — | 14 |



Question: what is the growth rate in the price of aircraft fuel per gallon from 2012 to 2013?
Answer: -3.4%