UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549

                            FORM 10-Q



[X]Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 2004.


[ ]Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition Period From       to     .


Commission file number 1-2691.



                    American Airlines, Inc.
     (Exact name of registrant as specified in its charter)

        Delaware                            13-1502798
    (State or other                      (I.R.S. Employer
      jurisdiction                      Identification No.)
   of incorporation or
     organization)

 4333 Amon Carter Blvd.
   Fort Worth, Texas                           76155
 (Address of principal                      (Zip Code)
   executive offices)

Registrant's telephone number,   (817) 963-1234
including area code


                         Not Applicable
(Former name, former address and former fiscal year , if changed
                       since last report)


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.  Yes X      No        .

Indicate by check mark whether the registrant is an accelerated
filer (as defined in Exchange Act Rule 12b-2). Yes      No X  .

Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date.


Common Stock, $1 par value - 1,000 shares as of October 15, 2004.

The registrant meets the conditions set forth in, and is filing
this form with the reduced disclosure format prescribed by,
General Instructions H(1)(a) and (b) of Form 10-Q.


                                 INDEX

                        AMERICAN AIRLINES, INC.




PART I:   FINANCIAL INFORMATION


Item 1.  Financial Statements

  Consolidated  Statements of Operations --  Three  and  nine  months
  ended September 30, 2004 and 2003

  Condensed  Consolidated Balance Sheets -- September  30,  2004  and
  December 31, 2003

  Condensed  Consolidated Statements of Cash  Flows  --  Nine  months
  ended September 30, 2004 and 2003

  Notes  to  Condensed Consolidated Financial Statements -- September
  30, 2004

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Item 4.  Controls and Procedures


PART II:  OTHER INFORMATION

Item 1.  Legal Proceedings

Item 5.  Other Information

Item 6.  Exhibits and Reports on Form 8-K


SIGNATURE
                    PART I:  FINANCIAL INFORMATION

Item 1.  Financial Statements

AMERICAN AIRLINES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In millions)
<Table>
<Caption>
                                Three Months Ended      Nine Months Ended
                                   September 30,          September 30,
                                  2004        2003       2004         2003

                             <c>         <c>       <c>          <c>
Revenues
    Passenger                   $3,838      $3,805    $11,411      $10,743
    Regional Affiliates            488         399      1,413        1,112
    Cargo                          149         135        452          409
    Other revenues                 278         257        801          756
      Total operating revenues   4,753       4,596     14,077       13,020

Expenses
  Wages, salaries and benefits   1,569       1,585      4,670        5,335
  Aircraft fuel                    969         655      2,565        1,941
  Regional payments                478         390      1,365        1,149
  Commissions, booking fees and
   credit card expense             289         281        863          796
  Depreciation and amortization    275         306        838          904
  Other rentals and landing fees   266         279        811          822
  Maintenance, materials
   and repairs                     225         190        631          535
  Aircraft rentals                 147         159        443          515
  Food service                     143         158        417          456
  Other operating expenses         503         521      1,518        1,628
  Special charges (credits)        (18)        (24)       (49)          77
  U. S. government grant             -           -          -         (315)
    Total operating expenses     4,846       4,500     14,072       13,843

Operating Income (Loss)            (93)         96          5         (823)

Other Income (Expense)
  Interest income                   18          19         45           40
  Interest expense                (163)       (154)      (485)        (450)
  Interest capitalized              20          15         56           50
  Related party interest - net      (1)          2         (1)           7
  Miscellaneous - net               (6)         (2)       (40)         (13)
                                  (132)       (120)      (425)        (366)

Loss Before Income Taxes          (225)        (24)      (420)      (1,189)
Income tax benefit                   -           -          -            -
Net Loss                         $(225)      $ (24)     $(420)     $(1,189)
</Table>



The accompanying notes are an integral part of these financial statements.

                                   -1-
AMERICAN AIRLINES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (In millions)
<Table>
<Caption>

                                           September 30,  December 31,
                                               2004          2003

                                         <c>            <c>
Assets
Current Assets
  Cash                                      $    111       $   118
  Short-term investments                       2,997         2,474
  Restricted cash and short-term investments     481           527
  Receivables, net                               891           760
  Inventories, net                               481           475
  Other current assets                           256           232
    Total current assets                       5,217         4,586

Equipment and Property
  Flight equipment, net                       12,442        12,803
  Other equipment and property, net            2,336         2,344
  Purchase deposits for flight equipment         277           277
                                              15,055        15,424

Equipment and Property Under Capital Leases
  Flight equipment, net                        1,107         1,279
  Other equipment and property, net               80            86
                                               1,187         1,365

Route acquisition costs and airport
 operating and gate lease rights, net          1,201         1,221
Other assets                                   3,368         3,875
                                            $ 26,028       $26,471
Liabilities and Stockholder's Equity
Current Liabilities
  Accounts payable                          $    982       $   910
  Accrued liabilities                          1,881         1,840
  Air traffic liability                        3,257         2,799
  Payable to affiliates, net                     242           153
  Current maturities of long-term debt           473           465
  Current obligations under capital leases       105           170
    Total current liabilities                  6,940         6,337

Long-term debt, less current maturities        8,991         9,073
Obligations  under  capital  leases,  less
 current obligations                           1,064         1,156
Pension and postretirement benefits            4,733         4,803
Other  liabilities,  deferred  gains   and
 deferred credits                              4,118         4,757

Stockholder's Equity
  Common stock                                     -             -
  Additional paid-in capital                   3,278         3,023
  Accumulated other comprehensive loss          (891)         (893)
  Retained deficit                            (2,205)       (1,785)
                                                 182           345
                                            $ 26,028       $26,471
</Table>

The accompanying notes are an integral part of these financial statements.

                                      -2-

AMERICAN AIRLINES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In millions)
<Table>
<Caption>
                                                 Nine Months Ended
                                                   September 30,
                                                2004          2003

                                             <c>           <c>
Net Cash Provided by Operating Activities       $  598        $  292

Cash Flow from Investing Activities:
  Capital expenditures, including purchase
   deposits for flight equipment                  (266)         (219)
  Net increase in short-term investments          (523)         (721)
  Net decrease in restricted cash and short-
   term investments                                 46           243
  Proceeds from sale of equipment and property      36            41
  Proceeds from sale of interest in Worldspan        -           180
  Other                                            (12)           23
      Net cash used by investing activities       (719)         (453)

Cash Flow from Financing Activities:
  Payments on long-term debt and capital
   lease obligations                              (410)         (557)
  Proceeds from issuance of long-term debt         180           353
  Funds transferred from affiliates, net           344           422
      Net cash provided by financing activities    114           218

Net (decrease) increase in cash                     (7)           57
Cash at beginning of period                        118           100

Cash at end of period                           $  111         $ 157



Activities Not Affecting Cash

Flight equipment acquired through
 seller financing                               $    -         $ 554
Capital lease obligations incurred              $   10         $ 131
Reductions to capital lease obligations due to
 lease modifications                            $    -         $(127)

</Table>











The accompanying notes are an integral part of these financial statements.

                                       -3-





AMERICAN AIRLINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.The   accompanying   unaudited  condensed   consolidated   financial
  statements have been prepared in accordance with generally  accepted
  accounting  principles for interim financial  information  and  with
  the  instructions  to Form 10-Q and Article 10  of  Regulation  S-X.
  Accordingly,  they  do  not  include  all  of  the  information  and
  footnotes  required by generally accepted accounting principles  for
  complete financial statements.  In the opinion of management,  these
  financial  statements contain all adjustments, consisting of  normal
  recurring accruals unless otherwise disclosed, necessary to  present
  fairly the financial position, results of operations and cash  flows
  for  the  periods indicated. Results of operations for  the  periods
  presented  herein  are  not  necessarily indicative  of  results  of
  operations  for  the entire year. American Airlines, Inc.  (American
  or  the  Company)  is a wholly owned subsidiary of  AMR  Corporation
  (AMR).  For further information, refer to the consolidated financial
  statements  and  footnotes thereto included in the  American  Annual
  Report on Form 10-K for the year ended December 31, 2003 (2003  Form
  10-K).   Certain amounts have been reclassified to conform with  the
  2004 presentation.

2.The  Company  accounts  for its participation in  AMR's  stock-based
  compensation  plans in accordance with Accounting  Principles  Board
  Opinion No. 25, "Accounting for Stock Issued to Employees" (APB  25)
  and  related Interpretations.  Under APB 25, no compensation expense
  is  recognized for stock option grants if the exercise price of  the
  stock  option  grants is at or above the fair market  value  of  the
  underlying stock on the date of grant.  The Company has adopted  the
  pro  forma  disclosure features of Statement of Financial Accounting
  Standards  No. 123, "Accounting for Stock-Based Compensation"  (SFAS
  123), as amended by Statement of Financial Accounting Standards  No.
  148,   "Accounting   for  Stock-Based  Compensation-Transition   and
  Disclosure."   The  following table illustrates the  effect  on  net
  loss   if  the  Company  had  applied  the  fair  value  recognition
  provisions  of  SFAS  123 to stock-based employee  compensation  (in
  millions):
<Table>
<Caption>
                               Three Months Ended   Nine Months Ended
                                 September 30,       September 30,
                                 2004      2003      2004      2003
  
                           <c>       <c>       <c>       <c>
Net loss, as reported           $(225)    $ (24)    $(420)    $(1,189)
Add/(Deduct):  Stock-based
  employee compensation
  expense included in
  reported net loss                (6)        6        10          11
Deduct:  Total stock-based
  employee compensation
  expense determined under
  fair value based methods
  for all awards                  (10)      (23)      (59)        (53)
Pro forma net loss              $(241)    $ (41)    $(469)    $(1,231)

</Table>
3.As of September 30, 2004, the Company, had commitments to acquire
  an aggregate of 47 Boeing 737-800s and nine Boeing 777-200ERs in 2006
  through  2010.  Future  payments for  all  aircraft,  including  the
  estimated  amounts for price escalation and purchase deposits,  will
  approximate  $106  million in 2005, $667  million  in  2006  and  an
  aggregate of approximately $2.0 billion in 2007 through 2010.

  The  Company  is subject to environmental issues at various  airport
  and  non-airport  locations for which it  has  accrued,  in  Accrued
  liabilities  on  the  accompanying  condensed  consolidated  balance
  sheets,  $70  million  and $72 million at  September  30,  2004  and
  December   31,   2003,  respectively.  Management  believes,   after
  considering  a  number of factors, that the ultimate disposition  of
  these environmental issues is not expected to materially affect  the
  Company's consolidated financial position, results of operations  or
  cash flows.  Amounts recorded for environmental issues are based  on
  the  Company's  current  assessments of the  ultimate  outcome  and,
  accordingly,  could  increase  or  decrease  as  these   assessments
  change.


                                     -4-

AMERICAN AIRLINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)

  In  2003, the Company reached concessionary agreements with  certain
  lessors.   Certain  of these agreements provide that  the  Company's
  obligations  under the related leases revert to the  original  terms
  if  certain events occur prior to December 31, 2005, including:  (i)
  an  event of default under the related lease (which generally occurs
  only  if  a  payment  default occurs), (ii) an event  of  loss  with
  respect  to the related aircraft, (iii) rejection by the Company  of
  the  lease under the provisions of Chapter 11 of the U.S. Bankruptcy
  Code or (iv) the Company's filing for bankruptcy under Chapter 7  of
  the  U.S.  Bankruptcy  Code.  If any one of  these  events  were  to
  occur,  the  Company  would  be responsible  for  approximately  $66
  million  in  additional operating lease payments and $54 million  in
  additional  payments related to capital leases as of  September  30,
  2004.  These amounts will increase to approximately $119 million  in
  operating  lease  payments and $111 million in payments  related  to
  capital  leases prior to the expiration of the provision on December
  31,  2005.  These  amounts  are being accounted  for  as  contingent
  rentals and will only be recognized if they become payable.

  Financial   Accounting  Standards  Board  Interpretation   No.   45,
  "Guarantor's Accounting and Disclosure Requirements for  Guarantees,
  Including   Indirect   Guarantees   of   Indebtedness   of   Others"
  (Interpretation  45),  requires disclosures in  interim  and  annual
  financial  statements  about obligations  under  certain  guarantees
  issued  by  the  Company. The disclosures required by Interpretation
  45  were  included in Notes 4, 5 and 6 to the consolidated financial
  statements  in  the 2003 Form 10-K. There have been  no  significant
  changes  to such disclosures except as disclosed in Note 6  in  this
  Form 10-Q.

4.Accumulated   depreciation  of  owned  equipment  and  property   at
  September 30, 2004 and December 31, 2003 was $8.4 billion  and  $7.8
  billion,  respectively.  Accumulated amortization of  equipment  and
  property  under  capital leases at September 30, 2004  and  December
  31, 2003 was $1.1 billion.

5.As  discussed in Note 8 to the consolidated financial statements  in
  the  2003  Form 10-K, the Company has a valuation allowance  against
  the  full  amount  of  its  net deferred tax  asset.  The  Company's
  deferred  tax  asset  valuation  allowance  increased  $145  million
  during  the nine months ended September 30, 2004 to $1.2 billion  as
  of September 30, 2004.

6.In  February  2004,  American  issued $180  million  of  Fixed  Rate
  Secured Notes due 2009, which bear interest at 7.25 percent.  As  of
  September  30, 2004, these notes are secured by certain spare  parts
  (with a net book value of $218 million), and by $39 million in  cash
  collateral   (classified  as  Other  assets  on   the   accompanying
  condensed consolidated financial statements).

  Also  in February 2004, AMR issued $324 million principal amount  of
  4.50  percent  senior convertible notes due 2024 (the  4.50  Notes).
  Each  note is convertible into AMR common stock at a conversion rate
  of  45.3515  shares  per  $1,000 principal amount  of  notes  (which
  represents  an  equivalent conversion price of  $22.05  per  share),
  subject   to  adjustment  in  certain  instances.  The   notes   are
  convertible  under  certain  circumstances,  including  if  (i)  the
  closing  sale  price of AMR's common stock reaches a  certain  level
  for  a specified period of time, (ii) the trading price of the notes
  as  a  percentage  of the closing sale price of AMR's  common  stock
  falls  below  a certain level for a specified period of time,  (iii)
  AMR  calls  the  notes  for redemption, or  (iv)  certain  corporate
  transactions  occur.  Holders  of  the  notes  may  require  AMR  to
  repurchase  all  or any portion of the notes on February  15,  2009,
  2014  and 2019 at a purchase price equal to the principal amount  of
  the  notes being purchased plus accrued and unpaid interest  to  the
  date  of  purchase. AMR may pay the purchase price in  cash,  common
  stock  or  a  combination of cash and common stock.  After  February
  15,  2009, AMR may redeem all or any portion of the notes  for  cash
  at  a  price  equal  to  the principal amount  of  the  notes  being
  redeemed  plus  accrued and unpaid interest  as  of  the  redemption
  date.  These  notes are guaranteed by American.  In  February  2004,
  AMR  transferred  $315 million in proceeds from the  4.50  Notes  to
  American.  If  the holders of the 4.50 Notes or AMR's  4.25  percent
  senior  convertible notes due 2023 (the 4.25 Notes) require  AMR  to
  repurchase all or any portion of the notes on the repurchase  dates,
  it is AMR's present intention to satisfy the requirement in cash.

                                   -5-

AMERICAN AIRLINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)

  American  has  a  fully  drawn  $834 million  bank  credit  facility
  secured  by  aircraft that expires December 15, 2005.  The  facility
  contains  a  liquidity covenant and an EBITDAR (generally,  earnings
  before  interest,  taxes,  depreciation, amortization  and  rentals,
  adjusted  for  certain non-cash items) to fixed charges  (generally,
  interest  and total rentals) ratio covenant (the EBITDAR  Covenant).
  Prior  to  the  amendment described below, the required  EBITDAR  to
  fixed  charges ratio was 1.3 to 1.0 for the nine-month period ending
  September  30,  2004, 1.4 to 1.0 for the twelve-month period  ending
  December  31, 2004, and 1.5 to 1.0 for each of the four  consecutive
  calendar  quarters  ending after December 31, 2004.   The  liquidity
  covenant  requires  American to maintain a  minimum  level  of  $1.0
  billion  of  unrestricted  cash  and  short-term  investments   (the
  Liquidity  Covenant).   The  Company  was  in  compliance  with  the
  Liquidity Covenant at September 30, 2004 and expects to continue  to
  comply with this covenant.

  On  September  22,  2004,  American obtained  an  amendment  to  the
  EBITDAR  Covenant  to lower the required EBITDAR  to  fixed  charges
  ratio  to 1.0 to 1.0 for the nine-month period ending September  30,
  2004 and 0.9 to 1.0 for the twelve-month period ending December  31,
  2004.   The required ratio remains 1.5 to 1.0 for each of  the  four
  consecutive  calendar quarters ending on or after  March  31,  2005.
  The Company was in compliance with the original EBITDAR Covenant  by
  a  narrow  margin  for  the period ending September  30,  2004,  and
  expects  to  comply with the amended covenant for the period  ending
  December  31,  2004. Without the amendment to the EBITDAR  Covenant,
  the  Company believes it would not have been able to comply with the
  covenant  for the twelve-month period ending December 31, 2004.   In
  addition, the Company believes it will be unable to comply with  the
  EBITDAR  Covenant for the four-quarter period ending March 31,  2005
  and periods ending thereafter.

  The Company plans to refinance the bank credit facility with one  or
  more  credit facilities or term loans (collectively, the Replacement
  Facility).  While  the Company believes that it should  be  able  to
  obtain  the  Replacement Facility on acceptable terms  before  March
  31,  2005, there can be no assurance that it will be able to do  so.
  Failure  to  comply  with  the EBITDAR  Covenant  or  the  Liquidity
  Covenant under the existing bank credit facility would result  in  a
  default  under  this facility and - - if the Company  did  not  take
  steps  to  cure,  obtain  a  waiver of, or  otherwise  mitigate  the
  default - - could result in a default under a significant amount  of
  the   Company's  other  debt.  The  Company  anticipates  that   the
  Replacement  Facility  will be secured by the aircraft  that  secure
  the  existing  bank  credit facility, as well as  by  a  significant
  amount of other assets to be pledged by the Company.

  As  of  September 30, 2004, American has issued guarantees  covering
  approximately  $1.3 billion of AMR's unsecured debt.   In  addition,
  as  of  September 30, 2004, American has issued guarantees  covering
  approximately $466 million of AMR Eagle's secured debt.






                                   -6-


AMERICAN AIRLINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)

7.The following tables provide the components of net periodic
  benefit cost for the three and nine months ended September 30, 2004
  and 2003 (in millions):
<Table>
<Caption>
                                         Pension Benefits
                              Three Months Ended   Nine Months Ended
                                September 30,        September 30,
                               2004       2003      2004       2003
   
                        <c>       <c>         <c>        <c>
  Components of net periodic benefit cost

   Service cost               $  89     $   85      $  268     $  284
   Interest cost                142        138         425        431
   Expected return on assets   (143)      (118)       (427)      (354)
   Amortization of:
     Prior service cost           4          3          11         14
     Unrecognized net loss       15         24          44         82
   Curtailment loss *             -          -           -         46

   Net periodic benefit cost  $ 107     $  132      $  321     $  503
   </Table>
   * Included in Special charges (credits) in the consolidated
     statement of operations.
<Table>
<Caption>
                                   Other Postretirement Benefits
                             Three Months Ended     Nine Months Ended
                                September 30,        September 30,
                               2004       2003      2004       2003

  Components of net periodic benefit cost
   
                        <c>       <c>         <c>        <c>
   Service cost               $  19     $   20      $   57     $   65
   Interest cost                 51         54         152        164
   Expected return on assets     (3)        (2)         (9)        (7)
   Amortization of:
     Prior service cost          (3)        (2)         (8)        (6)
     Unrecognized net loss        2          5           6         15

   Net periodic benefit cost  $  66     $   75      $  198     $  231
  </Table>
  As  of  September 30, 2004, the Company had contributed the  entire
  $461  million  it  expects to contribute  to  its  defined  benefit
  pension  plans in 2004. The Company expects to contribute a minimum
  of  $421 million to its defined benefit pension plans in 2005.  The
  Company's   estimates   of  its  defined   benefit   pension   plan
  contributions reflect the provisions of the Pension Funding  Equity
  Act  of  2004,  which was enacted in April 2004 (the  2004  Pension
  Act).

                                   -7-

AMERICAN AIRLINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)

  In  December  2003,  the President signed the Medicare  Prescription
  Drug,  Improvement and Modernization Act of 2003 (the  Modernization
  Act),  which  introduced a prescription drug benefit under  Medicare
  into law. The effect of the Modernization Act was (i) to reduce  the
  Company's  accumulated postretirement benefit obligation  (APBO)  as
  of  December 31, 2003 by $415 million by decreasing unrecognized net
  actuarial  losses and (ii) to decrease the Company's full year  2004
  postretirement  benefits expense by approximately $60  million.  The
  decrease  in  the  Company's  APBO is due  to  a  reduction  in  the
  expected  per  capita  claims cost along with  a  reduction  in  the
  expected rates of participation in the plan and is reflected in  the
  Company's  2004 postretirement benefits expense through amortization
  of   unrecognized  gains/losses.   Additionally,  the  service   and
  interest  cost  components  of  the  Company's  2004  postretirement
  benefits  expense have been reduced as a result of the Modernization
  Act.

8.During the last few years, as a result of the events of September 11,
  2001 and the Company's restructuring activities, the Company has
  recorded  a number of special charges. During the nine months  ended
  September  30, 2004 and 2003, the Company recorded the following  to
  Special charges (credits):

                                                    Amount
               Description of Charge              (millions)

   2004

   Aircraft charges

   Adjusted prior accruals for lease return and
   other costs due to lower than anticipated
   lease return costs                               $(20)

   Employee charges

   Adjusted prior accruals for severance costs
   related to the 2003 Management Reductions and
   Labor Agreements* due to fewer furloughs than
   anticipated resulting from the Company's
   operational requirements and the volume of
   pilot retirements                                $(11)

   Facility exit costs

   Adjusted prior accruals for future lease
   commitments upon completion of a space
   reevaluation done in connection with the
   occupation of some of the space by another
   carrier                                          $(18)

   2003

   Aircraft charges

   Retired Boeing 757 leased aircraft and accrued
   future lease commitments and lease return costs  $ 39


   Adjusted prior accruals for lease return and
   other costs                                       (20)
                                                    $ 19



                                     -8-

AMERICAN AIRLINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)

                                                    Amount
             Description of Charge                (millions)

   2003

   Employee charges

   Reduced approximately 8,000 jobs across all
   work groups in conjunction with the Management
   Reductions and the Labor Agreements.  Accrued
   primarily severance costs.                        $ 60

   Recognized curtailment loss**                       46

   Accrued severance charges related to the 2002
   workforce reduction                                 25

   Reduced vacation accrual to reflect new lower
   pay scales and maximum vacation caps and wrote-
   off a note receivable from one of the
   Company's three major unions in conjunction
   with the Labor Agreements and the Management
   Reductions                                         (59)

   Other                                                4
                                                    $  76
   Facility exit costs

   Accrued the fair value of future lease
   commitments and wrote-off certain prepaid
   rental amounts and leasehold improvements
   related to certain excess airport space          $  45

   Other                                                5
                                                    $  50

  * In  February  2003,  American asked  its  employees  for
    approximately $1.8 billion in annual savings through  a
    combination  of  changes in wages,  benefits  and  work
    rules.  In April 2003, American reached agreements with
    its  three  major  unions  (the  Labor  Agreements)  to
    achieve  these  savings  and also  implemented  various
    reductions  in  the  pay plans and  benefits  for  non-
    unionized  personnel,  including  officers  and   other
    management (the Management Reductions).

 ** As a result of workforce reductions related to the
    Labor Agreements and Management Reductions, the Company
    recognized a curtailment loss of $46 million related to
    its  defined benefit pension plans, in accordance  with
    Statement  of  Financial Accounting Standards  No.  88,
    "Employers' Accounting for Settlements and Curtailments
    of  Defined  Benefit Pension Plans and for  Termination
    Benefits" (SFAS 88).



                                    -9-

AMERICAN AIRLINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)

  Other

  As  part  of  the  Vendor Agreements discussed  in  Note  2  to  the
  consolidated  financial statements in the 2003 Form 10-K,  in  2003,
  American  sold  33  Fokker 100 aircraft (with  a  minimal  net  book
  value),  issued a $23 million non-interest-bearing note, payable  in
  installments and maturing in December 2010, entered into  short-term
  leases  on these aircraft and issued shares of AMR common stock.  In
  exchange,  approximately $130 million of debt related to certain  of
  the   Fokker  100  aircraft  was  retired.  However,  the  agreement
  contains  provisions that would require American to repay additional
  amounts  of  the  original debt if certain  events  occur  prior  to
  December  31,  2005,  including: (i)  an  event  of  default  (which
  generally  occurs only if a payment default occurs), (ii)  an  event
  of  loss  with  respect to the related aircraft, (iii) rejection  by
  the  Company of the lease under the provisions of Chapter 11 of  the
  U.S.  Bankruptcy  Code or (iv) the Company's filing  for  bankruptcy
  under  Chapter 7 of the U.S. Bankruptcy Code.  As a result  of  this
  transaction,  including the sale of the 33 Fokker 100 aircraft,  and
  the  termination  of  the Company's interest  rate  swap  agreements
  related to the debt that has been retired, the Company recognized  a
  gain  of  approximately $68 million in the third  quarter  of  2003,
  which  was  recorded as a component of Special charges (credits)  in
  the  accompanying condensed consolidated financial  statements.   If
  the  certain  events  described above  do  not  occur,  the  Company
  expects  to  recognize  an  additional  gain  of  approximately  $37
  million in December 2005.

  The   following  table  summarizes  the  changes  in  the  remaining
  accruals for special charges (in millions):
<Table>
<Caption>
                          Aircraft   Facility    Employee
                          Charges   Exit Costs    Charges    Total
     
                  <c>       <c>          <c>         <c>
     Remaining accrual at
      December 31, 2003   $  194    $   56       $  26       $ 276
     Adjustments             (20)      (18)        (11)        (49)
     Payments                (47)       (7)        (11)        (65)
     Remaining accrual at
      September 30, 2004  $  127    $   31       $   4       $ 162
</Table>
  Cash outlays related to the accruals, as of September 30, 2004,  for
  aircraft  charges,  facility exit costs and  employee  charges  will
  occur through 2014, 2018 and 2004, respectively.

  U.S. Government Grant

  In   April  2003,  the  President  signed  the  Emergency   Wartime
  Supplemental   Appropriations  Act,   which   included   provisions
  authorizing  payment of $2.3 billion to reimburse air carriers  for
  increased security costs in proportion to the amounts each  carrier
  had paid in passenger security and air carrier security fees to the
  Transportation   Security   Administration   (the   Security    Fee
  Reimbursement). The Company's Security Fee Reimbursement  was  $315
  million  (net  of  payments  to  American  Eagle  Airlines,   Inc.,
  Executive  Airlines, Inc. and independent regional affiliates)  and
  is   included   in  U.S.  government  grant  in  the   accompanying
  consolidated statement of operations.

9.In  September  2004,  the  Company  reduced  both  its  accident
  liabilities and related receivables by $417 million based on revised
  estimates from its insurance carriers due primarily to the expiration
  of  certain statutes of limitations. These insurance receivables and
  liabilities are classified as Other assets and Other liabilities and
  deferred credits on the accompanying condensed consolidated  balance
  sheets, respectively.


                                    -10-

AMERICAN AIRLINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)

10.The  Company  includes  changes in the  fair  value  of  certain
  derivative financial instruments that qualify for hedge accounting,
  changes  in  minimum pension liabilities and unrealized  gains  and
  losses  on available-for-sale securities in comprehensive loss.  In
  the second quarter of 2003, as a result of the Labor Agreements and
  Management  Reductions discussed in Note 8 in this Form  10-Q,  the
  Company  remeasured its defined benefit plans. In conjunction  with
  the  remeasurement the Company recorded an increase in its  minimum
  pension  liability,  which  resulted in  an  additional  charge  to
  stockholder's equity as a component of other comprehensive loss  of
  $334 million.

  For   the   three  months  ended  September  30,  2004  and   2003,
  comprehensive  loss was $205 million and $46 million, respectively,
  and  for  the  nine  months  ended September  30,  2004  and  2003,
  comprehensive loss was $418 million and $1.6 billion, respectively.
  The  difference  between net loss and comprehensive  loss  for  the
  three and nine months ended September 30, 2004 and the three months
  ended September 30, 2003 is due primarily to the accounting for the
  Company's derivative financial instruments. The difference  between
  net loss and comprehensive loss for the nine months ended September
  30,  2003  is  due  primarily to the adjustment  to  the  Company's
  minimum  pension  liability and the accounting  for  the  Company's
  derivative financial instruments.

11.American  classifies  certain  receivables  from  its  parent   and
  affiliates  against Additional paid-in capital.  In  February  2004,
  AMR  transferred  the  proceeds from the  4.50  Notes  to  American,
  reducing  American's  receivable  from  AMR  by  approximately  $315
  million.   As of September 30, 2004, the Company classified  a  $128
  million  receivable  from  its  parent  against  Additional  paid-in
  capital  on  the accompanying condensed consolidated balance  sheet.
  Comparatively,  as  of December 31, 2003, the Company  classified  a
  $383  million receivable from its parent against Additional  paid-in
  capital on the accompanying condensed consolidated balance sheet.

















                                     -11-

Item  2.   Management's Discussion and Analysis of Financial Condition
and Results of Operations

Forward-Looking Information

Statements  in this report contain various forward-looking  statements
within  the meaning of Section 27A of the Securities Act of  1933,  as
amended,  and Section 21E of the Securities Exchange Act of  1934,  as
amended,  which  represent  the  Company's  expectations  or   beliefs
concerning future events.  When used in this document and in documents
incorporated  herein  by  reference,  the  words  "expects,"  "plans,"
"anticipates,"   "indicates,"  "believes,"   "forecast,"   "guidance,"
"outlook"  and  similar expressions are intended to identify  forward-
looking   statements.  Forward-looking  statements  include,   without
limitation,  the  Company's  expectations  concerning  operations  and
financial  conditions,  including changes in capacity,  revenues,  and
costs,  future financing plans and needs, overall economic conditions,
plans  and  objectives for future operations, and the  impact  on  the
Company  of  its  results  of  operations  in  recent  years  and  the
sufficiency  of its financial resources to absorb that  impact.  Other
forward-looking  statements include statements  which  do  not  relate
solely  to  historical facts, such as, without limitation,  statements
which  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.
All   forward-looking  statements  in  this  report  are  based   upon
information  available to the Company on the date of this report.  The
Company  undertakes  no obligation to publicly update  or  revise  any
forward-looking  statement, whether as a result  of  new  information,
future events, or otherwise.

Forward-looking  statements are subject to a number  of  risk  factors
that  could  cause  the Company's actual results to differ  materially
from the Company's expectations. The following factors, in addition to
other  possible  factors not listed, could cause the Company's  actual
results  to  differ materially from those expressed in forward-looking
statements:  changes  in economic, business and financial  conditions;
the Company's substantial indebtedness; continued high fuel prices and
the  availability of fuel; further increases in the price of fuel; the
residual effects of the war in Iraq; conflicts in the Middle  East  or
elsewhere;  the highly competitive business environment faced  by  the
Company,  with  increasing  competition from  low  cost  carriers  and
bankrupt carriers and historically low fare levels (which could result
in a further deterioration of the revenue environment); the ability of
the  Company to implement its restructuring program and the effect  of
the   program   on   operational  performance  and   service   levels;
uncertainties with respect to the Company's international  operations;
changes in the Company's business strategy; actions by U.S. or foreign
government  agencies; the possible occurrence of additional  terrorist
attacks;  another  outbreak of a disease (such as SARS)  that  affects
travel   behavior;  uncertainties  with  respect  to   the   Company's
relationships  with  unionized and other  employee  work  groups;  the
ability  of  the  Company  to  satisfy  existing  financial  or  other
covenants  in  certain of its credit agreements; the  availability  of
future   financing   (including  the  proposed  Replacement   Facility
described  in  Note  6  to  the  accompanying  condensed  consolidated
financial  statements); the ability of the Company to reach acceptable
agreements  with  third  parties; and increased  insurance  costs  and
potential  reductions  of  available  insurance  coverage.  Additional
information  concerning these and other factors is  contained  in  the
Company's  Securities and Exchange Commission filings,  including  but
not limited to the 2003 Form 10-K.

Overview

The  Company incurred a $225 million net loss during the third quarter
of  2004 compared to a net loss of $24 million in the same period last
year.  This loss occurred in what is typically the Company's strongest
quarter.   Over  the  course  of the quarter,  the  Company's  results
deteriorated primarily due to the continuing increase in  fuel  prices
and secondarily due to a weakening of the revenue environment.

The  Company's  operating  and  financial  results  are  significantly
affected  by the price of jet fuel.  Fuel price increases  during  the
quarter resulted in a year-over-year increase of 40.4 cents per gallon
for  American's mainline operations for the third quarter. This  price
increase  negatively impacted fuel expense by $312 million during  the
quarter,  based  on mainline fuel consumption of 773 million  gallons.
Continuing  high  fuel prices, additional increases in  the  price  of
fuel,  or  disruptions in the supply of fuel, would further  adversely
affect the Company's financial condition and results of operations.


                                  -12-

Mainline  unit  revenues (passenger revenue per available  seat  mile)
declined  2.5  percent during the third quarter due to a  4.8  percent
decrease  in  passenger yield (passenger revenue per  passenger  mile)
compared to the same period in 2003. For the current period, passenger
yield  declined  from already depressed levels. The  Company  believes
this   decline  in  passenger  yield  is  due  in  large  part  to   a
corresponding  decline in the Company's pricing power.  The  Company's
reduced  pricing  power is the product of several factors,  including:
greater  cost  sensitivity  on  the part  of  travelers  (particularly
business  travelers);  greater  competition  from  low-cost  carriers;
significant  increases in overall capacity in 2004 that have  exceeded
the  growth  in  demand; and more frequent and more deeply  discounted
fare  sales initiated by competitors, including competitors  currently
operating  under the protection of Chapter 11 of the Bankruptcy  Code.
The  Company's third quarter 2004 results were also adversely impacted
by hurricanes.

In the face of these additional challenges, the Company is undertaking
a  number  of new initiatives designed to generate additional revenues
and reduce costs.  Examples include:

- American will continue its expansion in the Asia/Pacific market,
  launching daily nonstop service between Chicago and Nagoya, Japan on
  April 3, 2005 and resuming daily nonstop service between Dallas/Fort
  Worth  and  Osaka,  Japan  on November 1,  2005.  American  is  also
  vigorously seeking authority to begin nonstop service between Chicago
  and Shanghai, China, starting on May 1, 2005.

- American  will  begin adding additional seats to  its  McDonnell
  Douglas MD-80, Boeing 737 and Boeing 767 aircraft in January 2005 and
  its  Boeing 777 aircraft in October 2005.  The additional seats will
  allow American to increase its revenues while still offering customers
  better-than-industry-average legroom.

- American has decided to withdraw capacity equivalent to 15 narrow-
  body aircraft in 2005.

- American will expand the simplification experiment it launched in
  Chicago in the summer of 2004, in which aircraft types are assigned to
  certain stations and crew and aircraft are scheduled together.  This
  approach will be implemented throughout American's system in 2005.

- Other revenue initiatives include: ticketing fees ($5 for tickets
  purchased through U.S. reservations offices and $10 for tickets bought
  at  U.S.  airport  locations); a $250 nonrefundable  co-payment  for
  AAdvantage  mileage Upgrade Awards when used with  certain  discount
  fares; and fare actions in certain markets.  Additionally, the  U.S.
  Department  of  Transportation recently issued a  favorable  ruling,
  allowing  U.S.  carriers to apply fuel surcharges to  all  of  their
  international routes, which should further improve revenue.

The  Company's ability  to  become profitable  and  its  ability  to
continue to fund its obligations on an ongoing basis will depend on a
number  of  risk  factors,  many  of which  are  largely  beyond  the
Company's  control.   Some  of  the  risk  factors  that  affect  the
Company's  business  and  financial results  are  referred  to  under
"Forward-Looking  Information" above and are discussed  in  the  Risk
Factors  listed in Item 7 (on pages 26-29) in the 2003 Form 10-K.  As
the  Company  seeks  to  improve  its financial  condition,  it  must
continue   to   take  steps  to  generate  additional  revenues   and
significantly  reduce its costs.  However, it will be very  difficult
for  the  Company  to  become profitable and  continue  to  fund  its
obligations on an ongoing basis if the revenue environment  does  not
improve  and  fuel prices remain at historically high levels  for  an
extended period.















                                    -13-

LIQUIDITY AND CAPITAL RESOURCES

Cash, Short-Term Investments and Restricted Assets

American  ended  the quarter with $3.1 billion of cash and  short-term
investments  (and  an additional $481 million in restricted  cash  and
short-term  investments).   As of the date  of  this  Form  10-Q,  the
Company  believes it should be able to refinance its fully drawn  bank
credit facility discussed below and have sufficient liquidity to  fund
its  operations  for  the foreseeable future.  Nevertheless,  American
remains  heavily indebted and has significant obligations due in  2005
and  thereafter,  as  described more fully below  and  under  Item  7,
"Management's  Discussion  and Analysis  of  Financial  Condition  and
Results of Operations" in the 2003 Form 10-K.

Credit Facility

American  has a fully drawn $834 million bank credit facility  secured
by  aircraft that expires December 15, 2005.  The facility contains  a
liquidity   covenant  and  an  EBITDAR  (generally,  earnings   before
interest, taxes, depreciation, amortization and rentals, adjusted  for
certain  non-cash  items)  to fixed charges (generally,  interest  and
total  rentals) ratio covenant (the EBITDAR Covenant).  Prior  to  the
amendment described below, the required EBITDAR to fixed charges ratio
was  1.3  to 1.0 for the nine-month period ending September 30,  2004,
1.4  to 1.0 for the twelve-month period ending December 31, 2004,  and
1.5  to  1.0 for each of the four consecutive calendar quarters ending
after December 31, 2004.  The liquidity covenant requires American  to
maintain  a  minimum  level of $1.0 billion of unrestricted  cash  and
short-term investments (the Liquidity Covenant).  The Company  was  in
compliance  with  the  Liquidity Covenant at September  30,  2004  and
expects to continue to comply with this covenant.

On  September 22, 2004, American obtained an amendment to the  EBITDAR
Covenant to lower the required EBITDAR to fixed charges ratio  to  1.0
to  1.0 for the nine-month period ending September 30, 2004 and 0.9 to
1.0  for  the  twelve-month  period ending  December  31,  2004.   The
required  ratio  remains 1.5 to 1.0 for each of the  four  consecutive
calendar  quarters ending on or after March 31, 2005. The Company  was
in  compliance  with the original EBITDAR Covenant by a narrow  margin
for  the period ending September 30, 2004, and expects to comply  with
the  amended covenant for the period ending December 31, 2004. Without
the  amendment to the EBITDAR Covenant, the Company believes it  would
not  have  been able to comply with the covenant for the  twelve-month
period ending December 31, 2004. In addition, the Company believes  it
will  be  unable  to comply with the EBITDAR Covenant  for  the  four-
quarter period ending March 31, 2005 and periods ending thereafter.

The  Company plans to refinance the bank credit facility with  one  or
more  credit  facilities or term loans (collectively, the  Replacement
Facility). While the Company believes that it should be able to obtain
the  Replacement Facility on acceptable terms before March  31,  2005,
there  can be no assurance that it will be able to do so.  Failure  to
comply  with the EBITDAR Covenant or the Liquidity Covenant under  the
existing  bank  credit facility would result in a default  under  this
facility  and - - if the Company did not take steps to cure, obtain  a
waiver  of,  or otherwise mitigate the default - - could result  in  a
default  under a significant amount of the Company's other  debt.  The
Company  anticipates that the Replacement Facility will be secured  by
the aircraft that secure the existing bank credit facility, as well as
by a significant amount of other assets to be pledged by the Company.















                                     -14-

Significant Indebtedness and Future Financing

During  2001,  2002  and  2003, the Company  raised  an  aggregate  of
approximately  $8.4  billion  of  financing  mostly  to  fund  capital
commitments (mainly for aircraft and ground properties) and  operating
losses.  During the nine months ended September 30, 2004, the  Company
raised  an  additional  $180  million of  financing  to  fund  capital
commitments and for general corporate purposes, and ended  the  period
with  $3.1  billion  of  unrestricted cash and short-term  investments
compared  with $2.6 billion at December 31, 2003. As of  the  date  of
this  Form  10-Q,  the  Company believes that it  should  be  able  to
refinance  its  existing  fully drawn bank credit  facility  and  have
sufficient  liquidity  to  fund  its operations  for  the  foreseeable
future,   including   capital  expenditures  and   other   contractual
obligations.  However, to maintain sufficient liquidity as the Company
seeks  to  return to profitability, the Company will  need  access  to
additional  funding  in  the  future. The  Company's  possible  future
financing   sources  primarily  include:  (i)  a  limited  amount   of
additional  secured  aircraft debt (virtually  all  of  the  Company's
Section  1110-eligible aircraft are encumbered), (ii) debt secured  by
other assets, (iii) securitization of future operating receipts,  (iv)
sale-leaseback transactions involving owned aircraft and (v) the  sale
of  certain  assets (including the Company's interest in Orbitz,  Inc.
(Orbitz),  a  travel  planning website  -  -  see  discussion  below).
However, the availability and level of these financing sources  cannot
be  assured,  particularly in light of high fuel prices,  historically
weak  revenues,  the financial difficulties being experienced  in  the
airline  industry  and the fact that the Company  now  has  far  fewer
unencumbered  assets  available than it  has  had  in  the  past.   In
addition,  the Company expects to pledge additional assets  to  secure
the Replacement Facility, as described above.

On  September  29, 2004, Cendant Corporation announced a tender  offer
for  all  shares  of  Orbitz  at  $27.50  per  share.   American  owns
approximately 6.7 million shares of Orbitz.  The estimated proceeds to
American  if  the  transaction is consummated are  $185  million.  The
tender  offer  is still subject to regulatory and other approvals  and
conditions and may not occur in the fourth quarter or at all.  If  and
when this transaction is completed, the Company expects to recognize a
gain of approximately $145 million.

The  Company's  significant indebtedness could have  important  future
consequences,  such as (i) limiting the Company's  ability  to  obtain
additional   financing  for  working  capital,  capital  expenditures,
acquisitions  and  general  corporate  purposes,  (ii)  requiring  the
Company  to  dedicate  a substantial portion of  its  cash  flow  from
operations  to payments on its indebtedness, (iii) making the  Company
more  vulnerable to economic downturns, (iv) limiting its  ability  to
withstand  competitive  pressures  and  reducing  its  flexibility  in
responding  to  changing  business and economic  conditions,  and  (v)
limiting  the  Company's flexibility in planning for, or reacting  to,
changes in its business and the industry in which it operates.

Financing Activity

In  February 2004, American issued $180 million of Fixed Rate  Secured
Notes  due  2009.  These notes are secured by certain spare parts  and
cash collateral and bear interest at 7.25 percent.

In  addition,  in  February  2004, AMR  transferred  $315  million  in
proceeds from the 4.50 Notes to American.

See  Note  6  to  the  accompanying condensed  consolidated  financial
statements for additional information regarding debt guarantees.

Other Operating and Investing Activities

The Company's cost savings initiatives resulted in improved cash flow
from  operations  during the nine months ended  September  30,  2004,
compared  to the same period in 2003. Net cash provided by  operating
activities in the nine-month period ended September 30, 2004 was $598
million,  an increase of $306 million over the same period  in  2003.
Net  cash provided by operating activities for the nine months  ended
September 30, 2003 included the receipt of a $515 million federal tax
refund and the receipt of $315 million from the U.S. government under
the Appropriations Act, offset by $216 million of redemption payments
under operating leases for special facility revenue bonds.


                                   -15-

Pension Funding Obligation

As  of September 30, 2004, the Company had contributed the entire $461
million it expects to contribute to its defined benefit pension  plans
in  2004. The Company expects to contribute a minimum of $421  million
to  its defined benefit pension plans in 2005. The Company's estimates
of   its  defined  benefit  pension  plan  contributions  reflect  the
provisions of the 2004 Pension Act.

RESULTS OF OPERATIONS

Overview

The Company's operating income (loss) and net loss worsened during the
three  months ended September 30, 2004 compared to the same period  in
2003,  but  improved  for  the nine months ended  September  30,  2004
compared to the same period in 2003.
<Table>
<Caption>
(in millions)             Three Months Ended         Nine Months Ended
                             September 30,             September 30,
                        2004    2003     Change    2004     2003    Change

                     <c>      <c>      <c>      <c>     <c>      <c>
Operating Income (Loss) $ (93)   $ 96     $(189)   $   5   $  (823) $ 828
Net Loss                $(225)   $(24)    $(201)   $(420)  $(1,189) $ 769

</Table>
As  discussed  above,  the  year-over-year decline  in  the  Company's
operating  results  for  the  third quarter  is  largely  due  to  the
continuing  increase  in fuel costs and the weak revenue  environment.
The  year-over-year improvement in the Company's operating results for
the  nine months ended September 30, 2004 reflects the benefit of  the
cost  reduction  initiatives in the Company's  restructuring  program,
which  is  described more fully under Item 7, "Management's Discussion
and  Analysis of Financial Condition and Results of Operations" in the
2003 Form 10-K, dampened by the increase in fuel costs.

For the Nine Months Ended September 30, 2004 and 2003

Revenues

The  Company's revenues increased approximately $1.1 billion, or  8.1
percent,  to  $14.1 billion for the nine months ended  September  30,
2004  from the same period last year.  American's passenger  revenues
increased  by 6.2 percent, or $668 million, on a capacity  (available
seat  mile) (ASM) increase of 5.9 percent.  American's passenger load
factor  increased 1.7 points to 75.0 percent while passenger  revenue
yield  per  passenger mile decreased by 1.9 percent to  11.61  cents.
This  resulted in an increase in passenger revenue per available seat
mile  (RASM)  of 0.3 percent to 8.70 cents. Following  is  additional
information regarding American's domestic and international RASM  and
capacity:
<Table>
<Caption>
                       Nine Months Ended September 30, 2004
                        RASM      Y-O-Y     ASMs      Y-O-Y
                       (cents)   Change   (billions) Change
   
                 <c>       <c>       <c>       <c>
   Domestic              8.53    (1.2)%      89.0      1.5%
   International         9.06     3.6        42.1     16.5
      Latin America      8.86    (2.9)       21.1     20.2
      Europe             9.37     9.0        17.0      9.7
      Pacific            8.78    19.8         4.0     29.9
</Table>
Regional  affiliates' passenger revenues, which are based on industry
standard  mileage  proration agreements  for  flights  connecting  to
American  flights, increased $301 million, or 27.1 percent,  to  $1.4
billion as a result of increased capacity and load factors.  Regional
affiliates'  traffic  increased 33.3 percent to 5.4  billion  revenue
passenger miles (RPMs), while capacity increased 26.6 percent to  8.0
billion  ASMs,  resulting in a 3.4 point increase in  passenger  load
factor to 67.3 percent.


                                    -16-

Cargo  revenues increased 10.5 percent, or $43 million, primarily  due
to a 10.1 percent increase in cargo ton miles.

Operating Expenses

The  Company's total operating expenses increased 1.7 percent, or $229
million, to $14.1 billion for the nine months ended September 30, 2004
compared  to  the  same period in 2003. American's mainline  operating
expenses per ASM in the nine months ended September 30, 2004 decreased
5.5  percent  compared to the same period in 2003 to 9.56 cents.  This
decrease  in  operating  expenses per ASM  is  due  primarily  to  the
Company's cost savings initiatives and occurred despite the receipt of
a  grant  from the U.S. government in 2003 and a 29.1 percent increase
in  American's  price  per gallon of fuel in  the  nine  months  ended
September 30, 2004 relative to the same period in 2003.
<Table>
<Caption>
   (in millions)                Nine Months
                                   Ended     Increase/
                               September 30, (Decrease) Percentage
   Operating Expenses              2004      from 2003  Change

   
                          <c>          <c>        <c>
   Wages, salaries and benefits $ 4,670      $ (665)    (12.5)%  (a)
   Aircraft fuel                  2,565         624      32.1    (b)
   Regional carrier payments      1,365         216      18.8    (c)
   Commissions, booking fees
    and credit card expense         863          67       8.4
   Depreciation and amortization    838         (66)     (7.3)
   Other rentals and landing fees   811         (11)     (1.3)
   Maintenance, materials
    and repairs                     631          96      17.9    (d)
   Aircraft rentals                 443         (72)    (14.0)   (e)
   Food service                     417         (39)     (8.6)
   Other operating expenses       1,518        (110)     (6.8)
   Special charges (credits)        (49)       (126)       NM    (f)
   U.S. government grant              -         315        NM    (g)
   Total operating expenses    $ 14,072      $  229       1.7%
</Table>
(a)Wages, salaries and benefits decreased due to lower wage rates
   and reduced headcount primarily as a result of the Labor Agreements
   and Management Reductions, discussed in the Company's 2003 Form 10-K,
   which became effective in the second quarter of 2003. This decrease
   was offset to some degree by increased headcount related to capacity
   increases.
(b)Aircraft fuel expense increased primarily due to a 29.1 percent
   increase in American's price per gallon of fuel (net of the impact of
   fuel  hedging)  and  a 2.3 percent increase  in  American's  fuel
   consumption.
(c)Regional payments increased primarily due to the 26.6 percent
   increase in Regional Affiliates' capacity.
(d)Maintenance, materials and repairs increased primarily due to
   increased aircraft utilization, the benefit from retiring aircraft
   subsiding and increases in contractual rates in certain flight hour
   agreements for outsourced aircraft engine maintenance.
(e)Aircraft rentals decreased primarily due to the removal of leased
   aircraft from the fleet in the second half of 2003 as part of the
   Company's restructuring initiatives and concessionary agreements with
   certain  lessors, which reduced future lease payment amounts  and
   resulted in the conversion of 30 operating leases to capital leases in
   the second quarter of 2003.
(f)Special charges (credits) for the nine months ended September 30,
   2004 included the reversal of reserves previously established for
   aircraft return costs of $20 million, facility exit costs of  $18
   million  and  employee severance of $11 million. Special  charges
   (credits) for the nine months ended September 30, 2003 included (i) a
   $68 million gain resulting from a transaction involving 33 of the
   Company's Fokker 100 aircraft and related debt, (ii) $76 million in
   employee charges, (iii) $50 million in facility exit costs and (iv)
   $39  million related to aircraft charges offset by a $20  million
   reversal of reserves previously established for aircraft return costs
   (see  Note 8 to the accompanying condensed consolidated financial
   statements).
(g)U.S.  government grant for 2003 included the receipt of  $315
   million from the U.S. government under the Appropriations Act.


                                   -17-

Other Income (Expense)

Other  income  (expense), historically a net  expense,  increased  $59
million  due  primarily to the following:  Interest expense  increased
$35 million, or 7.8 percent, resulting primarily from the increase  in
the Company's long-term debt. Miscellaneous-net increased $27 million,
due primarily to the accrual during the first quarter of 2004 of a $23
million award rendered by an independent arbitrator and relating to  a
grievance filed by the Allied Pilots Association.

Income Tax

The  Company  did  not  record a net tax benefit associated  with  its
losses  for the nine months ended September 30, 2004 and 2003  due  to
the Company providing a valuation allowance, as discussed in Note 5 to
the accompanying condensed consolidated financial statements.

Outlook

As discussed in the Overview section on page 12 in this Form 10-Q, the
Company's  results deteriorated over the course of the  third  quarter
primarily   due  to  the  continuing  increase  in  fuel  prices   and
secondarily  due to a weakening of the revenue environment.   At  this
time,  the  Company  believes it is unlikely  that  fuel  prices  will
decrease  meaningfully  in  the fourth  quarter.   Thus,  the  Company
expects  to  face  continued high fuel prices in  a  quarter  that  is
typically seasonally weak from a revenue perspective. As a result, the
Company  expects  to  incur a fourth quarter 2004  loss  significantly
larger than its third quarter 2004 loss of $225 million.

In addition, the Company expects that the initiatives discussed in the
Overview  section  on page 13 in this Form 10-Q  may  result  in  some
special charges being recognized in the fourth quarter. The amount and
scope  of these special charges are not known at the present time.  In
addition, the Company expects to recognize a gain on the sale  of  the
Company's interest in Orbitz, which is discussed in the Liquidity  and
Capital Resources section on page 15 in this Form 10-Q.  However,  the
closing date for the sale of the Company's interest in Orbitz  is  not
known  at the present time and it may not occur in the fourth  quarter
or at all.

Capacity  for  American's  mainline  jet  operations  is  expected  to
increase  about 3.5 percent in the fourth quarter of 2004 compared  to
the  fourth quarter of 2003, and American's mainline unit costs in the
fourth  quarter of 2004 is expected to be approximately 10.3 cents,  a
0.6 percent year-over-year increase. American's average fuel price per
gallon  in  the fourth quarter of 2004 is expected to be approximately
$1.53 per gallon, a 73.5 percent year-over-year increase.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Except  as  discussed  below, there have been no material  changes  in
market risk from the information provided in Item 7A. Quantitative and
Qualitative Disclosures About Market Risk of the Company's  2003  Form
10-K.

The  risk inherent in the Company's fuel related market risk sensitive
instruments  and positions is the potential loss arising from  adverse
changes  in  the price of fuel. 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  the  Company's  exposure  to  such  changes.
Therefore,  actual results may differ.  The Company does not  hold  or
issue derivative financial instruments for trading purposes.





                                    -18-


Aircraft Fuel   The Company's earnings are affected by changes in  the
price  and  availability of aircraft fuel.   In  order  to  provide  a
measure of control over price and supply, the Company trades and ships
fuel  and  maintains  fuel storage facilities to  support  its  flight
operations.  The  Company also manages the price risk  of  fuel  costs
primarily  by  using  jet fuel, heating oil, and crude  oil  swap  and
option  contracts.   Market risk is estimated  as  a  hypothetical  10
percent  increase in the September 30, 2004 cost per gallon  of  fuel.
Based  on  projected  2004 and 2005 fuel usage through  September  30,
2005,  such  an increase would result in an increase to aircraft  fuel
expense of approximately $456 million in the remainder of 2004 and the
first  nine  months  of 2005, inclusive of the impact  of  fuel  hedge
instruments  outstanding  at  September  30,  2004,  and  assumes  the
Company's  fuel hedging program remains effective under  Statement  of
Financial  Accounting  Standards No. 133, "Accounting  for  Derivative
Instruments and Hedging Activities". Comparatively, based on projected
2004  fuel usage, such an increase would have resulted in an  increase
to  aircraft  fuel  expense of approximately  $247  million  in  2004,
inclusive  of  fuel hedge instruments outstanding as of  December  31,
2003.  The change in market risk is due to the increase in fuel prices
and a decrease in the amount of fuel hedged.

As  of  September  30, 2004, the Company had hedged,  with  crude  oil
option  contracts, approximately four percent of its estimated  fourth
quarter 2004 fuel requirements at an average of $30 per barrel and  an
insignificant  percentage of its estimated 2005, 2006  and  2007  fuel
requirements.

Item 4.  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 Company's disclosure controls and procedures  as
of  September  30,  2004.   Based on that  evaluation,  the  Company's
management,  including the CEO and CFO, concluded that  the  Company's
disclosure controls and procedures were effective as of September  30,
2004.   During the quarter ending on September 30, 2004, there was  no
change in the Company's internal control over financial reporting that
has materially affected, or is reasonably likely to materially affect,
the Company's internal control over financial reporting.
















                                       -19-

PART II:  OTHER INFORMATION

Item 1.  Legal Proceedings

On  July  26, 1999, a class action lawsuit was filed, and in  November
1999 an amended complaint was filed, against AMR Corporation, American
Airlines,  Inc.,  AMR  Eagle Holding Corporation,  Airlines  Reporting
Corporation,  and the Sabre Group Holdings, Inc. in the United  States
District  Court  for  the  Central  District  of  California,  Western
Division  (Westways  World Travel, Inc. v. AMR Corp.,  et  al.).   The
lawsuit  alleges that requiring travel agencies to pay debit memos  to
American for violations of American's fare rules (by customers of  the
agencies): (1) breaches the Agent Reporting Agreement between American
and  AMR  Eagle and the plaintiffs; (2) constitutes unjust enrichment;
and  (3)  violates the Racketeer Influenced and Corrupt  Organizations
Act  of 1970 (RICO).  The certified class includes all travel agencies
who  have been or will be required to pay money to American for  debit
memos  for  fare rules violations from July 26, 1995 to  the  present.
The  plaintiffs  seek  to enjoin American from enforcing  the  pricing
rules  in  question and to recover the amounts paid for  debit  memos,
plus  treble damages, attorneys' fees, and costs.  The Company intends
to  vigorously defend the lawsuit.  Although the Company believes that
the  litigation is without merit, a final adverse court decision could
impose   restrictions  on  the  Company's  relationships  with  travel
agencies, which could have an adverse impact on the Company.

On  May  17,  2002,  the named plaintiffs in Hall, et  al.  v.  United
Airlines, et al., pending in the United States District Court for  the
Eastern  District  of  North  Carolina,  filed  an  amended  complaint
alleging that between 1995 and the present, American and over 15 other
defendant  airlines conspired to reduce commissions paid to U.S.-based
travel  agents  in  violation of Section 1 of  the  Sherman  Act.  The
plaintiffs  are seeking monetary damages and injunctive  relief.   The
court  granted  class  action  certification  to  the  plaintiffs   on
September 17, 2002, defining the plaintiff class as all travel  agents
in  the  United  States,  Puerto Rico, and the  United  States  Virgin
Islands, who, at any time from October 1, 1997 to the present,  issued
tickets,  miscellaneous change orders, or prepaid ticket  advices  for
travel on any of the defendant airlines.  The case is stayed as to  US
Airways   and  United  Airlines,  since  they  filed  for  bankruptcy.
American  is  vigorously  defending the lawsuit.   Defendant  carriers
filed  a  motion for summary judgment on December 10, 2002, which  the
court  granted  on  October 30, 2003.  Plaintiffs have  appealed  that
order  to  the  4th Circuit Court of Appeals, and that appeal  remains
pending.  A  final  adverse court decision awarding substantial  money
damages  or placing restrictions on the Company's commission  policies
or practices would have an adverse impact on the Company.

Between  April 3, 2003 and June 5, 2003, three lawsuits were filed  by
travel  agents  some of whom have opted out of the Hall  class  action
(above) to pursue their claims individually against American Airlines,
Inc.,  other  airline  defendants, and in  one  case  against  certain
airline defendants and Orbitz LLC.  (Tam Travel et. al., v. Delta  Air
Lines  et.  al., in the United States District Court for the  Northern
District of California - San Francisco (51 individual agencies), Paula
Fausky  d/b/a  Timeless Travel v. American Airlines, et.  al,  in  the
United States District Court for the Northern District of Ohio Eastern
Division  (29 agencies) and Swope Travel et al. v. Orbitz et.  al.  in
the  United  States District Court for the Eastern District  of  Texas
Beaumont  Division (6 agencies)).  Collectively, these  lawsuits  seek
damages  and  injunctive  relief alleging  that  the  certain  airline
defendants and Orbitz LLC: (i) conspired to prevent travel agents from
acting as effective competitors in the distribution of airline tickets
to  passengers  in  violation of Section 1 of the Sherman  Act;   (ii)
conspired to monopolize the distribution of common carrier air  travel
between airports in the United States in violation of Section 2 of the
Sherman  Act; and that (iii) between 1995 and the present, the airline
defendants  conspired to reduce commissions paid to U.S.-based  travel
agents in violation of Section 1 of the Sherman Act. These cases  have
been consolidated in the United States District Court for the Northern
District  of Ohio Eastern Division.  American is vigorously  defending
these  lawsuits.  A final adverse court decision awarding  substantial
money  damages  or placing restrictions on the Company's  distribution
practices would have an adverse impact on the Company.





                                   -20-


On May 13, 2002, the named plaintiffs in Always Travel, et. al. v. Air
Canada,  et.  al.,  pending  in the Federal  Court  of  Canada,  Trial
Division,  Montreal, filed a statement of claim alleging that  between
1995 and the present, American, the other defendant airlines, and  the
International   Air   Transport  Association   conspired   to   reduce
commissions paid to Canada-based travel agents in violation of Section
45  of  the  Competition  Act of Canada.  The  named  plaintiffs  seek
monetary  damages  and  injunctive  relief  and  seek  to  certify   a
nationwide class of travel agents.  Plaintiffs have filed a motion for
class  certification,  but  that motion  has  not  yet  been  decided.
American  is vigorously defending the lawsuit.  A final adverse  court
decision awarding substantial money damages or placing restrictions on
the  Company's commission policies would have an adverse impact on the
Company.

On  August 14, 2002, a class action lawsuit was filed against American
Airlines,  Inc.  in the United States District Court for  the  Central
District  of  California,  Western Division  (All  World  Professional
Travel  Services,  Inc.  v.  American Airlines,  Inc.).   The  lawsuit
alleges  that  requiring  travel  agencies  to  pay  debit  memos  for
refunding  tickets after September 11, 2001:  (1) breaches  the  Agent
Reporting  Agreement between American and plaintiff;  (2)  constitutes
unjust  enrichment;  and  (3) violates the  Racketeer  Influenced  and
Corrupt  Organizations Act of 1970 (RICO).  The alleged class includes
all  travel  agencies who have or will be required to  pay  moneys  to
American  for  an "administrative service charge," "penalty  fee,"  or
other  fee  for  processing refunds on behalf of passengers  who  were
unable  to  use  their tickets in the days immediately  following  the
resumption of air carrier service after the tragedies on September 11,
2001.  On April 1, 2004, the court denied plaintiff's motion for class
certification.  The plaintiff seeks to enjoin American from collecting
the  debit memos and to recover the amounts paid for the debit  memos,
plus  treble damages, attorneys' fees, and costs.  The Company intends
to  vigorously defend the lawsuit.  Although the Company believes that
the  litigation is without merit, a final adverse court decision could
impose   restrictions  on  the  Company's  relationships  with  travel
agencies which could have an adverse impact on the Company.

On  August  19, 2002, a class action lawsuit seeking monetary  damages
was  filed, and on May 7, 2003 an amended complaint was filed  in  the
United  States District Court for the Southern District  of  New  York
(Power Travel International, Inc. v. American Airlines, Inc., et  al.)
against  American,  Continental  Airlines,  Delta  Air  Lines,  United
Airlines, and Northwest Airlines, alleging that American and the other
defendants breached their contracts with the agency and were  unjustly
enriched  when  these  carriers at various times  reduced  their  base
commissions to zero.  The as yet uncertified class includes all travel
agencies accredited by the Airlines Reporting Corporation "whose  base
commissions on airline tickets were unilaterally reduced to  zero  by"
the  defendants.  The case is stayed as to United Airlines,  since  it
filed  for bankruptcy.  American is vigorously defending the  lawsuit.
Although the Company believes that the litigation is without merit,  a
final  adverse  court decision awarding substantial money  damages  or
forcing  the Company to pay agency commissions would have  an  adverse
impact on the Company.

Miami-Dade   County  (the  County)  is  currently  investigating   and
remediating   various   environmental   conditions   at   the    Miami
International Airport (MIA) and funding the remediation costs  through
landing  fees  and various cost recovery methods.  American  Airlines,
Inc.  and AMR Eagle have been named as potentially responsible parties
(PRPs)  for  the contamination at MIA.  During the second  quarter  of
2001,  the  County  filed a lawsuit against 17  defendants,  including
American Airlines, Inc., in an attempt to recover its past and  future
cleanup  costs (Miami-Dade County, Florida v. Advance Cargo  Services,
Inc.,  et al. in the Florida Circuit Court). The Company is vigorously
defending the lawsuit.  In addition to the 17 defendants named in  the
lawsuit, 243 other agencies and companies were also named as PRPs  and
contributors to the contamination.  The case is currently stayed while
the  parties  pursue an alternative dispute resolution  process.   The
County has proposed draft allocation models for remedial costs for the
Terminal  and  Tank Farm areas of MIA.  While it is  anticipated  that
American  and AMR Eagle will be allocated equitable shares of remedial
costs,  the Company does not expect the allocated amounts  to  have  a
material adverse effect on the Company.

Four  cases  (each  being a purported class action)  have  been  filed
against American arising from the disclosure of passenger name records
by  a vendor of American.  The cases are:  Kimmell v. AMR, et al.  (U.
S.  District  Court, Texas), Baldwin v. AMR, et al.  (U.  S.  District
Court,  Texas),  Rosenberg v. AMR, et al. (U. S. District  Court,  New
York)  and  Anapolsky v. AMR, et al. (U.S. District Court, New  York).
The  Kimmell  suit was filed in April 2004. The Baldwin and  Rosenberg
cases  were  filed  in  May  2004. The Anapolsky  suit  was  filed  in
September  2004.  The suits allege various causes of action, including
but  not  limited  to,  violations of  the  Electronic  Communications
Privacy  Act,  negligent  misrepresentation, breach  of  contract  and
violation  of  alleged  common law rights of privacy.   In  each  case
plaintiffs  seek  statutory  damages  of  $1000  per  passenger,  plus
additional  unspecified monetary damages.  The Company  is  vigorously
defending these suits and believes the suits are without merit.


                                   -21-

Item 5.  Other Information

Relationship with Ernst & Young LLP

Ernst  &  Young  LLP  ("Ernst & Young") is the  Company's  independent
auditor.  Ernst & Young recently notified the SEC, the Public  Company
Accounting  Oversight Board and the Audit Committee of  the  Company's
Board  of  Directors that certain non-audit work it has  performed  in
China  and  Taiwan  has  raised questions regarding  Ernst  &  Young's
independence with respect to its performance of audit services for the
Company.

Ernst  & Young has disclosed that through January 2003 its affiliates
in  China   and  Taiwan held employment tax related  funds  and  made
payment of such funds to the applicable taxing authorities for a  few
employees of American who worked in these countries. The total amount
of the funds transferred by Ernst & Young to the taxing authority was
less  then  $150,000 in any one year.  For these services,  the  fees
paid  to  Ernst  & Young were under $5,000 in any year.     All  such
services were discontinued in January 2003.

Under  the  SEC's  rules regarding auditor independence,  a  company's
independent  auditor  is not permitted to have  custody  of  an  audit
client's assets.

These  services  are  no longer performed by Ernst  &  Young  for  the
Company  and/or American.  Both the Audit Committee and Ernst &  Young
have  considered the effect these services may have  had  on  Ernst  &
Young's  independence.  The conclusion reached by the Audit  Committee
and  Ernst & Young is that the services have had no impact on Ernst  &
Young's independence.  The Audit Committee reached this conclusion  by
considering  the de minimis nature of the fees for the  services,  the
insignificant amounts of the funds involved, the administrative nature
of  the  services and the fact that there are no operations  in  these
locations   subject  to  the  audit  of  our  consolidated   financial
statements.

The  Audit Committee will continue to evaluate and review matters that
are relevant to the maintenance of Ernst & Young's independence.

Item 6.  Exhibits and Reports on Form 8-K

The following exhibits are included herein:

12   Computation of ratio of earnings to fixed charges for the  three
     and nine months ended September 30, 2004 and 2003.

31.1 Certification of Chief Executive Officer pursuant to  Rule  13a-
     14(a).

31.2 Certification of Chief Financial Officer pursuant to  Rule  13a-
     14(a).

32   Certification pursuant to Rule 13a-14(b) and section 906 of  the
     Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350,
     chapter 63 of title 18, United States Code).

Form 8-Ks filed under Item 5 - Other Events or Item 8.01 - Other Events

On July 9, 2004, American filed a report on Form 8-K to provide a
press release issued to report June traffic for American Airlines,
Inc.

On August 3, 2004, American filed a report on Form 8-K to provide a
press release issued to report July traffic for American Airlines,
Inc.

On August 26, 2004, American filed a report on Form 8-K to provide
AMR's Eagle Eye communication to investors.  The document included
actual fuel cost, unit cost and capacity and traffic information for
July as well as current fuel cost, unit cost and capacity and traffic
forecasts for August, September, the third quarter and the full year
2004.



                                      -22-

On September 3, 2004, American filed a report on Form 8-K to provide a
press release issued to report August traffic for American Airlines,
Inc.

On  September 22, 2004, American filed a report on Form 8-K to provide
AMR's Eagle Eye communication to investors.  The document included (a)
actual fuel price, unit cost and capacity and traffic information  for
July  and  August, (b) forecasts of unit cost and revenue performance,
fuel   prices,  capacity  estimates,  liquidity  expectations,   other
income/expense  estimates, statements regarding the  Company's  future
financing activities, and statements regarding the Company's liquidity
and  (c)  information  regarding the fully drawn $834  million  credit
facility of American Airlines, Inc.

Form 8-Ks filed under Item 12 - Disclosure of Results of Operations
and Financial Condition

On July 21, 2004, American furnished a report on Form 8-K to furnish a
press  release  issued  by  AMR to announce its  second  quarter  2004
results.






















                                     -23-




Signature

Pursuant to the requirements 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.


                               AMERICAN AIRLINES, INC.




Date:  October 21, 2004        BY: /s/ James A. Beer
                               James A. Beer
                               Senior Vice President and Chief
                               Financial Officer
                               (Principal Financial  and
                               Accounting Officer)






















                                     -24-