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, 2006.


[ ]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. x   Yes     No

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.
    Large Accelerated Filer      Accelerated Filer
  x Non-accelerated Filer

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 13, 2006.

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, 2006 and 2005

  Condensed  Consolidated Balance Sheets -- September  30,  2006  and
  December 31, 2005

  Condensed  Consolidated Statements of Cash  Flows  --  Nine  months
  ended September 30, 2006 and 2005

  Notes  to  Condensed Consolidated Financial Statements -- September
  30, 2006

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 6.  Exhibits


SIGNATURE


                    PART I:  FINANCIAL INFORMATION

Item 1.  Financial Statements

AMERICAN AIRLINES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In millions)

                                Three Months Ended    Nine Months Ended
                                    September 30,        September 30,
                                  2006       2005        2006      2005
Revenues
 Passenger                      $4,657     $4,428     $13,621   $12,534
 Regional Affiliates               644        570       1,915     1,582
 Cargo                             213        193         605       573
 Other revenues                    316        280         975       815
   Total operating revenues      5,830      5,471      17,116    15,504


Expenses
 Wages, salaries and benefits    1,541      1,521       4,644     4,551
 Aircraft fuel                   1,600      1,432       4,476     3,652
 Regional payments to AMR Eagle    570        530       1,656     1,513
 Other rentals and landing fees    284        306         870       868
 Commissions, booking fees
  and credit card expense          284        292         839       849
 Depreciation and amortization     243        245         726       730
 Maintenance, materials and
  repairs                          201        219         575       621
 Aircraft rentals                  149        143         434       429
 Food service                      130        135         381       383
 Other operating expenses          608        673       1,823     1,824
   Total operating expenses      5,610      5,496      16,424    15,420

Operating Income (Loss)            220        (25)        692        84

Other Income (Expense)
  Interest income                   79         38         198       101
  Interest expense                (202)      (177)       (603)     (514)
  Interest capitalized               7         12          21        58
  Related party interest - net     (15)        (3)        (32)       (7)
  Miscellaneous - net              (88)        (6)       (101)      (13)
                                  (219)      (136)       (517)     (375)

Income (Loss)Before Income Taxes     1       (161)        175      (291)
Income tax                           -          -           -         -
Net Earnings (Loss)              $   1     $ (161)    $   175   $  (291)









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


                                      -1-


AMERICAN AIRLINES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (In millions)

                                            September 30,      December 31,
                                                2006               2005
Assets
Current Assets
  Cash                                      $    111            $   133
  Short-term investments                       4,880              3,637
  Restricted cash and short-term
   investments                                   464                510
  Receivables, net                             1,132                967
  Inventories, net                               463                474
  Other current assets                           278                321
    Total current assets                       7,328              6,042

Equipment and Property
  Flight equipment, net                       11,593             11,696
  Other equipment and property, net            2,310              2,352
  Purchase deposits for flight equipment         177                277
                                              14,080             14,325

Equipment and Property Under Capital Leases
  Flight equipment, net                          783                916
  Other equipment and property, net              104                102
                                                 887              1,018

Route acquisition costs and airport
 operating and gate lease rights, net          1,150              1,167
Other assets                                   3,340              3,489
                                             $26,785            $26,041

Liabilities and Stockholder's Equity (Deficit)
Current Liabilities
  Accounts payable                           $ 1,000            $   998
  Accrued liabilities                          1,853              2,205
  Air traffic liability                        4,067              3,615
  Payable to affiliates, net                     934                544
  Current maturities of long-term debt         1,166                829
  Current obligations under capital leases        99                138
    Total current liabilities                  9,119              8,329

Long-term debt, less current maturities        8,087              8,785
Obligations  under  capital  leases,  less
 current obligations                             836                922
Pension and postretirement benefits            5,460              4,998
Other  liabilities,  deferred  gains   and
 deferred credits                              4,083              4,186

Stockholder's Equity (Deficit)
  Common stock                                     -                  -
  Additional paid-in capital                   3,625              3,406
  Accumulated other comprehensive loss        (1,102)            (1,087)
  Accumulated deficit                         (3,323)            (3,498)
                                                (800)            (1,179)
                                             $26,785            $26,041


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


                                      -2-



AMERICAN AIRLINES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In millions)

                                           Nine Months Ended September 30,
                                                    2006         2005

Net Cash Provided by Operating Activities         $1,520       $  841

Cash Flow from Investing Activities:
  Capital expenditures                              (336)        (296)
  Net increase in short-term investments          (1,243)        (462)
  Net (increase) decrease in restricted cash
   and short-term investments                         46          (21)
  Proceeds from sale of equipment and
   property                                            3           17
  Other                                               (8)           -
      Net cash used by investing activities       (1,538)        (762)

Cash Flow from Financing Activities:
  Payments on long-term debt and capital
   lease obligations                                (491)        (662)
  Reimbursement from construction reserve
   account                                           107            -
  Proceeds from issuance of long-term debt             -          378
  DFW Bond Remarketing                                 -          198
  Funds transferred from affiliates, net             380           17
      Net cash used by financing activities           (4)         (69)

Net increase (decrease) in cash                      (22)          10
Cash at beginning of period                          133          117

Cash at end of period                             $  111       $  127




















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, 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).  The condensed  consolidated  financial
   statements also include the accounts of variable interest entities for
   which the Company is the primary beneficiary. For further information,
   refer to the consolidated financial statements and footnotes thereto
   included in the American Airlines, nc. Annual Report on Form 10-K for
   the  year ended December 31, 2005, as amended on July 17, 2006 (2005
   Form 10-K).

   Cargo  fuel and security surcharge revenues of $41 million and  $113
   million  for  the three months and nine months ended  September  30,
   2005  have  been reclassified from Other revenues to Cargo  revenues
   in  the  consolidated  statement of operations  to  conform  to  the
   current year presentation.

2. Under  the  1998  Long  Term Incentive Plan, as  amended  (the  1998
   LTIP),  officers  and key employees of AMR and its subsidiaries  may
   be   granted  stock  options,  stock  appreciation  rights   (SARs),
   restricted  stock,  deferred  stock, stock  purchase  rights,  other
   stock-based  awards  and/or  performance-related  awards,  including
   cash  bonuses.   The  total number of common shares  authorized  for
   distribution  under  the  1998  Long Term  Incentive  Plan  is  23.7
   million  shares (after giving effect to a one-for-one stock dividend
   in  1998 and the dividend of shares of The Sabre Group, Inc.  via  a
   spin-off  in 2000).  The 1998 LTIP, the successor to the  1988  Long
   Term  Incentive Plan (1988 LTIP), will terminate no later  than  May
   21, 2008.

   In  2003,  AMR  established the 2003 Employee Stock  Incentive  Plan
   (the  2003  Plan) to provide, among other things, equity  awards  to
   employees  as  part  of the 2003 restructuring process.   Under  the
   2003  Plan, employees may be granted stock options, restricted stock
   and  deferred stock. As of April 19, 2006, no additional shares were
   available for distribution under the 2003 Plan.

   Options  granted under the 1988 LTIP, 1998 LTIP and  the  2003  Plan
   are  awarded  with an exercise price equal to the fair market  value
   of  the  stock on date of grant, become exercisable in equal  annual
   installments  over periods ranging from two to five years  following
   the  date of grant and expire no later than ten years from the  date
   of  grant.   As  of  September 30, 2006, approximately  4.0  million
   options/SARs outstanding under the 1998 LTIP and 2003 Plan  had  not
   vested.

   Prior  to  January 1, 2006, American accounted 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 was recognized for  stock  option
   grants if the exercise price of AMR's stock option grants was at  or
   above  the fair market value of the underlying stock on the date  of
   grant.   Effective  January 1, 2006, AMR and  American  adopted  the
   fair   value  recognition  provisions  of  Statement  of   Financial
   Accounting   Standards  No.  123(R),  "Share-Based  Payment"   (SFAS
   123(R))  using  the modified-prospective transition  method.   Under
   this   transition  method,  compensation  cost  recognized  in  2006
   includes:  (a)  compensation  cost  for  all  share-based   payments
   granted  prior to, but not yet vested as of January 1,  2006,  based
   on  the grant-date fair value used for pro forma disclosures and (b)
   compensation  cost  for all share-based payments granted  subsequent
   to  January 1, 2006, based on the grant-date fair value estimated in
   accordance  with the provisions of SFAS 123(R).  Results  for  prior
   periods have not been restated.


                                      -4-



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

   As  a result of adopting SFAS 123(R), American's net income for  the
   three  months  and  nine months ended September  30,  2006,  was  $5
   million  and $20 million lower than if the Company had continued  to
   account  for  share-based compensation for stock options  under  APB
   25.

   Prior  to  January  1, 2006, AMR and American had  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
   earnings   (loss)  if  the  Company  had  applied  the  fair   value
   recognition   provisions  of  SFAS  123  to   stock-based   employee
   compensation (in millions):


                                Three Months Ended      Nine Months Ended
                                  September 30,           September 30,
                                      2005                    2005

  Net earnings (loss), as reported    $ (161)                 $ (291)

  Add:  Stock-based employee
    compensation expense
    included in reported net
    earnings (loss)                        8                      25
  Deduct:  Total stock-based
    employee compensation
    expense determined under
    fair value based methods
    for all awards                       (22)                    (69)
  Pro forma net earnings (loss)       $ (175)                 $ (335)



   On  March  29, 2006, the AMR Board of Directors amended and restated
   the   2003-2005  Performance  Share  Plan  for  Officers   and   Key
   Employees,  the  2004-2006 Performance Share Plan for  Officers  and
   Key   Employees,  and  the  2004  Agreements  for  Deferred   Shares
   (collectively,  the  Amended Plans).  Before  amendment,  the  plans
   allowed  for  settlement only in cash.  The plans  were  amended  to
   permit  settlement in a combination of cash and/or  stock;  however,
   the  amendments  did  not impact the fair value of  the  obligations
   under  the  three Amended Plans.  The Company anticipates using  all
   currently available shares under the 1998 LTIP and the 2003 Plan  to
   satisfy  obligations under the three Amended Plans,  but,  based  on
   current  estimates, a portion of the obligations will be settled  in
   cash.   The Company will account for these obligations prospectively
   as  a  combination  of liability and equity grants.   In  accordance
   with  SFAS  123(R),  the  Company  reclassified  $177  million  from
   Accrued liabilities to Additional paid-in capital, representing  the
   vested  portions of the current estimated fair value of  obligations
   under  all three of the Amended Plans that have been settled or  are
   expected to be settled with stock.


                                      -5-




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

3. As  of  September 30, 2006, the Company  had commitments  to acquire
   an aggregate of 47 Boeing 737-800s and seven Boeing 777-200ERs in 2013
   through  2016.  Future  payments for  all  aircraft,  including  the
   estimated  amounts for price escalation, will be approximately  $2.8
   billion in 2011 through 2016.

4. Accumulated  depreciation  of  owned equipment  and  property   at
   September 30, 2006 and December 31, 2005 was $9.9 billion and  $9.4
   billion,  respectively.  Accumulated amortization of  equipment  and
   property under capital leases was $1.1 billion at September 30, 2006
   and December 31, 2005.

5. As  discussed  in Note 8 to the consolidated  financial  statements
   in the 2005 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 decreased $66 million during the nine
   months ended September 30, 2006 to $1.7 billion as of September  30,
   2006.

6. As of September 30, 2006, American  has issued guarantees covering
   approximately $1.1 billion of AMR's unsecured debt. In addition, as
   of  September  30,  2006,  AMR and American have issued  guarantees
   covering approximately $388 million of AMR Eagle's secured debt.

   On  March  27,  2006, American refinanced its bank credit  facility.
   In  general,  the new credit facility adjusted the amounts  borrowed
   under  the  senior secured revolving credit facility and the  senior
   secured  term  loan facility, reduced the overall interest  rate  on
   the  combined  credit facility and favorably modified  certain  debt
   covenant requirements.


                                      -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, 2006
   and 2005 (in millions):

                                            Pension Benefits
                                 Three Months Ended      Nine Months Ended
                                    September 30,           September 30,
                                  2006       2005          2006       2005

  Components of net periodic benefit cost

   Service cost                  $ 100     $   93        $  299     $  278
   Interest cost                   160        152           481        457
   Expected return on assets      (167)      (164)         (502)      (493)
   Amortization of:
     Prior service cost              4          4            12         12
     Unrecognized net loss          20         13            60         39

   Net periodic benefit cost     $ 117     $   98        $  350     $  293


                                        Other Postretirement Benefits
                                 Three Months Ended     Nine Months Ended
                                    September 30,           September 30,
                                  2006       2005          2006       2005

  Components of net periodic benefit cost

   Service cost                  $  20     $   19        $   58     $   56
   Interest cost                    49         49           145        148
   Expected return on assets        (3)        (3)          (11)       (10)
   Amortization of:
     Prior service cost             (2)        (2)           (7)        (7)
     Unrecognized net loss           -          -             1          1

   Net periodic benefit cost     $  64     $   63        $  186     $  188


   The Company contributed $184 million to its defined benefit pension
   plans  during the nine month period ended September 30,  2006,  and
   completed  its required 2006 calendar year funding by  contributing
   an additional $39 million on October 13, 2006.

   The  Company expects to contribute approximately $364 million to its
   defined  benefit pension plans in 2007.  The Company's estimates  of
   its   defined   benefit  pension  plan  contributions  reflect   the
   provisions  of  the  Pension Funding Equity  Act  of  2004  and  the
   Pension Protection Act of 2006.


                                      -7-



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

8. As  a  result of  the  events of September 11, 2001, the depressed
   revenue environment, high fuel prices and the Company's restructuring
   activities, the Company has recorded a number of charges during  the
   last  few  years. The following table summarizes the  changes  since
   December  31, 2005 in the remaining accruals for these  charges  (in
   millions):

                                     Aircraft     Facility
                                     Charges     Exit Costs    Total
      Remaining accrual at
        December 31, 2005            $  150        $   36     $ 186
      Adjustments                        (6)          (15)      (21)
      Payments                          (18)           (1)      (19)
      Remaining accrual at
        September 30, 2006           $  126        $   20     $ 146


   Cash  outlays  related  to  the accruals for  aircraft  charges  and
   facility exit costs will occur through 2017 and 2018, respectively.

9. 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 income (loss). For
   the  three  months ended September 30, 2006 and 2005,  comprehensive
   income (loss) was $(45) million and $(127)million, respectively, and
   for the nine months ended September 30, 2006 and 2005, comprehensive
   income (loss) was $160 million and $(201) million, respectively.  The
   difference between net earnings (loss) and comprehensive income (loss)
   for the three and nine months ended September 30, 2006 and 2005 is due
   primarily  to the accounting for the Company's derivative  financial
   instruments.

   Ineffectiveness  is  inherent in hedging jet  fuel  with  derivative
   positions   based   in  crude  oil  or  other  crude   oil   related
   commodities.   As  required  by Statement  of  Financial  Accounting
   Standard  No.  133,  "Accounting  for  Derivative  Instruments   and
   Hedging  Activities" (SFAS 133), the Company assesses, both  at  the
   inception  of  each  hedge  and on an on-going  basis,  whether  the
   derivatives  that  are used in its hedging transactions  are  highly
   effective  in offsetting changes in cash flows of the hedged  items.
   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.   As  a  result  of its second  quarter  effectiveness
   assessment,  the  Company  determined  that  the  majority  of   its
   derivatives  settling during the remainder of 2006 and in  2007  are
   no  longer expected to be highly effective in offsetting changes  in
   forecasted  jet fuel purchases.  As a result, effective on  July  1,
   2006,  all  subsequent changes in the fair value of those particular
   derivative  contracts  are  being recognized  directly  in  earnings
   rather than being deferred in Accumulated other comprehensive  loss.
   For  the  three month period ended September 30, 2006, a  charge  of
   $89  million was recognized in Other income (expense) reflecting the
   change  in  market value of the derivative contracts that no  longer
   qualify  for  hedge  accounting.   While  no  longer  deemed  highly
   effective, on an economic basis, these derivatives will continue  to
   largely  offset potential changes in the price of jet  fuel.   Hedge
   accounting will continue to be applied to derivatives used to  hedge
   forecasted  jet  fuel purchases that are expected to  remain  highly
   effective.


                                      -8-




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


10.On  September  29,  2006, the  Financial  Accounting   Standards
   Board  (FASB)  issued  FASB Standard No. 158 "Employers'  Accounting
   for  Defined  Benefit  Pension and Other  Postretirement  Plans,  an
   amendment  of  FASB Statements No. 87, 88, 106,  and  132(R)".   The
   standard, among other things, requires the Company to:

   -   Recognize  the funded  status of the Company's  defined  benefit
       plans in its consolidated financial statements.

   -   Recognize  as  a  component  of  Other  comprehensive  loss  the
       actuarial gains and losses and the prior service costs and credits
       that arise during the period but are not immediately recognized as
       components of net periodic benefit cost.

   The  standard  is effective for fiscal years ending  after  December
   15,  2006.  As of December 31, 2005, the required adjustment to  the
   Company's  balance  sheet would increase the liability  for  pension
   and   postretirement   benefits  and  increase   Accumulated   other
   comprehensive loss by approximately $1.0 billion.


                                      -9-




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,"   "may,"  "will,"  "should," and  similar  expressions  are
intended to identify forward-looking statements. Similarly, statements
that  describe  the Company's objectives, plans or goals  are  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 and industry
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  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:   the  materially  weakened  financial  condition  of  the
Company,  resulting from its significant losses in recent  years;  the
ability   of   the  Company  to  generate  additional   revenues   and
significantly  reduce  its  costs;  changes  in  economic  and   other
conditions  beyond the Company's control, and the volatile results  of
the  Company's operations; the Company's substantial indebtedness  and
other  obligations;  the ability of the Company  to  satisfy  existing
financial  or  other  covenants in certain of its  credit  agreements;
continued high fuel prices and further increases in the price of fuel,
and  the  availability  of  fuel;  the fiercely  competitive  business
environment  faced by the Company, and historically low  fare  levels;
competition with reorganized and reorganizing carriers; the  Company's
reduced  pricing power; the Company's likely need to raise  additional
funds  and  its ability to do so on acceptable terms; changes  in  the
Company's  business strategy; government regulation of  the  Company's
business; conflicts overseas or terrorist attacks; uncertainties  with
respect  to  the  Company's international operations; outbreaks  of  a
disease  (such  as  SARS or avian flu) that affects  travel  behavior;
uncertainties  with  respect  to  the  Company's  relationships   with
unionized  and  other employee work groups; increased insurance  costs
and   potential  reductions  of  available  insurance  coverage;   the
Company's  ability  to  retain  key  management  personnel;  potential
failures  or disruptions of the Company's computer, communications  or
other  technology systems; changes in the price of AMR's common stock;
and  the  ability  of the Company to reach acceptable agreements  with
third  parties.   Additional information concerning  these  and  other
factors   is  contained  in  the  Company's  Securities  and  Exchange
Commission  filings, including but not limited to the  Company's  2005
Form  10-K (see in particular Item 1A "Risk Factors" in the 2005  Form
10-K).

Overview

The  Company  recorded  net earnings of $1 million  during  the  third
quarter of 2006 compared to a loss of $161 million in the same  period
last year.  The Company's third quarter 2006 results were impacted  by
an  improvement in unit revenues (passenger revenue per available seat
mile), offset by the continuing year-over-year increase in fuel prices
(although fuel prices moderated toward the end of the quarter) and  an
$89  million  charge  to mark to market certain  derivatives  that  no
longer qualify for hedge accounting under SFAS 133 (see Note 9 to  the
condensed consolidated financial statements and the discussion below).


                                      -10-



Mainline  passenger unit revenues increased 7.7 percent for the  third
quarter  due  to a 0.5 point load factor increase and  a  7.0  percent
increase  in  passenger yield (passenger revenue per  passenger  mile)
compared   to  the  same  period  in  2005.  Passenger  yield   showed
significant year-over-year improvement as American has been successful
in  implementing  limited  fare  increases  to  partially  offset  the
continuing rise in the cost of fuel; however, passenger yield  remains
depressed   by  historical  standards.   The  Company  believes   this
depressed  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);  pricing  transparency  resulting  from  the  use  of  the
Internet; greater competition from low-cost carriers and from carriers
that  have  recently reorganized or are reorganizing, including  under
the  protection  of  Chapter  11 of the U.S.  Bankruptcy  Code;  other
carriers that are better hedged against rising fuel costs and able  to
better   absorb   the  current  high  jet  fuel   prices;   and   fare
simplification efforts by certain carriers. The Company believes  that
its  reduced  pricing  power  will persist indefinitely  and  possibly
permanently.

The price of jet fuel increased by 28.3 cents per gallon compared  to
the  third  quarter of 2005. This price increase negatively  impacted
fuel  expense  by  $210  million during the  quarter  based  on  fuel
consumption  of  741 million gallons.  Continuing high  fuel  prices,
additional increases in the price of fuel, and/or disruptions in  the
supply of fuel would further adversely affect the Company's financial
condition and its results of operations.

As  a  result  of  its second quarter effectiveness  assessment,  the
Company  determined  that more than 65 percent  of  its  derivatives,
based  on market value, settling during the remainder of 2006 and  in
2007  are  no  longer expected to be highly effective  in  offsetting
changes  in  forecasted  jet  fuel  purchases.  These  contracts  had
previously  risen significantly in value and on June 30, 2006  had  a
market  value  of  approximately $133 million.  As a  result  of  the
ineffectiveness  assessment on these derivatives, changes  in  market
value subsequent to June 30, 2006 are recognized directly in earnings
($89  million charge as a component of Other income (expense) in  the
third  quarter  of 2006), while previously deferred  gains  in  Other
comprehensive loss will continue to be deferred and recognized  as  a
component of fuel expense when the originally hedged jet fuel is used
in  operations.   While  no  longer deemed highly  effective,  on  an
economic  basis,  these derivatives will continue to  largely  offset
potential changes in the price of jet fuel.

The  Company's  ability  to become consistently  profitable  and  its
ability to continue to fund its obligations on an ongoing basis  will
depend  on a number of 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 1A (on pages 11-16) in the 2005 Form 10-K.  As
the  Company  seeks  to  improve  its financial  condition,  it  must
continue  to  take  steps  to  generate additional  revenues  and  to
significantly reduce its costs. Although the Company has a number  of
initiatives underway to address its cost and revenue challenges,  the
ultimate  success of these initiatives is not known at this time  and
cannot  be  assured.   It  will be very difficult,  absent  continued
restructuring of its operations, for the Company to continue to  fund
its  obligations  on  an  ongoing basis, or  to  become  consistently
profitable,  if  the  overall industry revenue environment  does  not
continue  to  improve  and fuel prices remain  at  historically  high
levels for an extended period.

On October 13, 2006, the Wright Amendment Reform Act of 2006 (the Act)
was  signed  into  law  by the President.  The  Act  is  based  on  an
agreement  by  the  cities  of  Dallas  and  Fort  Worth,  Texas,  DFW
International  Airport, Southwest Airlines, Inc., and the  Company  to
modify   the   Wright  Amendment,  which  authorizes  certain   flight
operations  at  Dallas  Love  Field within limited  geographic  areas.
Among  other things, the Act eventually eliminates domestic geographic
restrictions on operations while limiting the maximum number of  gates
at Love Field.  The Company believes the Act is a pragmatic resolution
of  the  issues related to the Wright Amendment and the  use  of  Love
Field.


                                      -11-



LIQUIDITY AND CAPITAL RESOURCES

Significant Indebtedness and Future Financing

The  Company  remains heavily indebted and has significant obligations
(including substantial pension funding obligations), as described more
fully under Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the 2005 Form 10-K.  As of the
date of this Form 10-Q, the Company believes it should have sufficient
liquidity to fund its operations for the foreseeable future, including
repayment  of debt and capital leases, capital expenditures and  other
contractual obligations. However, to maintain sufficient liquidity  as
the   Company  continues  to  implement  its  restructuring  and  cost
reduction  initiatives, and because the Company has significant  debt,
lease  and  other obligations in the next several years,  as  well  as
substantial pension funding obligations, the Company will likely  need
access to additional funding. The Company's possible financing sources
primarily include: (i) a limited amount of additional secured aircraft
debt (a very large majority of the Company's owned aircraft, including
virtually  all  of the Company's Section 1110-eligible  aircraft,  are
encumbered)  or sale-leaseback transactions involving owned  aircraft;
(ii)  debt  secured by new aircraft deliveries; (iii) debt secured  by
other  assets;  (iv) securitization of future operating receipts;  (v)
the  sale or monetization of certain assets; and (vi) unsecured  debt.
However, the availability and level of these financing sources  cannot
be  assured,  particularly in light of the Company's recent  financial
results,  substantial indebtedness, reduced credit ratings, high  fuel
prices,  historically  weak  revenues and the  financial  difficulties
being  experienced  in  the airline industry.  The  inability  of  the
Company to obtain any necessary funding on acceptable terms would have
a material adverse impact on the ability of the Company to sustain its
operations over the long-term.

The  Company's  substantial indebtedness and other  obligations  could
have  important consequences.  For example, they could: (i) limit  the
Company's ability to obtain additional financing for working  capital,
capital expenditures, acquisitions and general corporate purposes,  or
adversely  affect the terms on which such financing could be obtained;
(ii) require the Company to dedicate a substantial portion of its cash
flow  from  operations  to  payments on  its  indebtedness  and  other
obligations, thereby reducing the funds available for other  purposes;
(iii)  make  the  Company more vulnerable to economic downturns;  (iv)
limit  its  ability to withstand competitive pressures and reduce  its
flexibility   in   responding  to  changing  business   and   economic
conditions;  and (v) limit the Company's flexibility in planning  for,
or  reacting to, changes in its business and the industry in which  it
operates.

Credit Facility Covenants

American has a credit facility (the Credit Facility) consisting  of  a
fully drawn $305 million senior secured revolving credit facility with
a  final maturity on June 17, 2009 and a fully drawn $446 million term
loan  facility with a final maturity on December 17, 2010. The  Credit
Facility  contains  a  covenant  (the  Liquidity  Covenant)  requiring
American  to  maintain,  as defined, unrestricted  cash,  unencumbered
short  term  investments  and  amounts  available  for  drawing  under
committed  revolving credit facilities of not less than $1.25  billion
for each quarterly period through the life of the Credit Facility.  In
addition,  the  Credit  Facility  contains  a  covenant  (the  EBITDAR
Covenant)  requiring AMR to maintain a ratio of cash flow (defined  as
consolidated  net  income, before interest expense  (less  capitalized
interest),  income taxes, depreciation and amortization  and  rentals,
adjusted  for  certain gains or losses and non-cash  items)  to  fixed
charges  (comprising interest expense (less capitalized interest)  and
rentals).   The required ratio was 1.10 to 1.00 for the  four  quarter
period  ending September 30, 2006 and will increase gradually to  1.50
to  1.00 for the four quarter period ending June 30, 2009 and for each
four quarter period ending on each fiscal quarter thereafter. AMR  and
American  were  in  compliance with the  Liquidity  Covenant  and  the
EBITDAR  covenant as of September 30, 2006 and expect to  be  able  to
continue   to  comply  with  these  covenants.   However,  given   the
historically high price of fuel and the volatility of fuel prices  and
revenues, it is difficult to assess whether AMR and American will,  in
fact,  be able to continue to comply with the Liquidity Covenant  and,
in  particular, the EBITDAR Covenant, and there are no assurances that
AMR and American will be able to comply with these covenants.  Failure
to  comply  with these covenants would result in a default  under  the
Credit  Facility which - - if the Company did not take steps to obtain
a  waiver of, or otherwise mitigate, the default - - could result in a
default  under  a significant amount of the Company's other  debt  and
lease obligations and otherwise adversely affect the Company.


                                      -12-



Pension Funding Obligation

The  Company  contributed $184 million to its defined benefit  pension
plans  during  the nine months ended September 30, 2006 and  completed
its  required 2006 calendar year funding by contributing an additional
$39 million on October 13, 2006.

The Company expects  to contribute  approximately $364 million to its
defined benefit pension plans in 2007.  The Company's estimates of its
defined benefit pension plan contributions reflect the provisions of
the Pension Funding Equity Act of 2004 and the Pension Protection Act
of 2006.

Cash Flow Activity

At  September  30, 2005, the Company had $5.0 billion in  unrestricted
cash  and  short-term investments, an increase of  $1.2  billion  from
December 31, 2005.  Net cash provided by operating activities  in  the
nine-month  period  ended  September 30, 2006  was  $1.5  billion,  an
increase  of $679 million over the same period in 2005.  The  increase
was primarily the result of improved economic conditions which allowed
the  industry  to  increase fare levels. The Company contributed  $184
million to its defined benefit pension plans in the first nine  months
of 2006 compared to $288 million during the first nine months of 2005.

Capital  expenditures  for the first nine months  of  2006  were  $336
million and primarily included the acquisition of two Boeing 777-200ER
aircraft  and the cost of improvements at New York's John  F.  Kennedy
airport (JFK).  Substantially all of the Company's construction  costs
at JFK are being reimbursed through a fund established from a previous
financing transaction


                                      -13-



RESULTS OF OPERATIONS

For the Nine Months Ended September 30, 2006 and 2005

Revenues

The  Company's revenues increased approximately $1.6 billion, or 10.4
percent,  to  $17.1 billion for the nine months ended  September  30,
2006  from the same period last year.  American's passenger  revenues
increased  8.7  percent, or $1.1 billion, while  capacity  (available
seat mile) (ASM) decreased by 1.2 percent.  American's passenger load
factor  increased  1.8 points to 80.6 percent and  passenger  revenue
yield  per  passenger mile increased by 7.5 percent to  12.82  cents.
This  resulted  in  an increase in American's passenger  revenue  per
available  seat mile (RASM) of 10.0 percent to 10.33 cents. Following
is   additional   information  regarding  American's   domestic   and
international RASM and capacity based on geographic areas defined  by
the Department of Transportation (DOT):

                       Nine Months Ended September 30, 2006
                        RASM      Y-O-Y     ASMs      Y-O-Y
                       (cents)    Change  (billions)  Change

   DOT Domestic         10.3      11.4%      84.2     (3.6)%
   International        10.3       7.4       47.7      3.3
     DOT Latin America  10.7      13.8       22.3     (2.9)
     DOT Atlantic       10.5       2.7       19.1      5.4
     DOT Pacific         8.4       1.3        6.3     23.1


Regional  Affiliates  include  two  AMR  wholly  owned  subsidiaries,
American   Eagle   Airlines,  Inc.  and  Executive   Airlines,   Inc.
(collectively,  AMR Eagle), and two independent carriers  with  which
American  has  capacity purchase agreements, Trans  States  Airlines,
Inc. (Trans States) and Chautauqua Airlines, Inc. (Chautauqua).

Regional  Affiliates' passenger revenues, which are based on  industry
standard  proration  agreements  for flights  connecting  to  American
flights, increased $333 million, or 21.0 percent, to $1.9 billion as a
result  of  increased  capacity, load  factors  and  passenger  yield.
Regional  Affiliates' traffic increased 14.2 percent  to  7.5  billion
revenue  passenger miles (RPMs), while capacity increased 7.6  percent
to  10.2  billion  ASMs,  resulting in a 4.3  point  increase  in  the
passenger load factor to 74.0 percent.

Cargo  revenues increased 5.6 percent, or $32 million, to $605 million
as a result of a $28 million increase in fuel surcharges.

Other  revenues  increased  19.6 percent, or  $160  million,  to  $975
million  due  in  part to increased third-party maintenance  contracts
obtained  by  the  Company's maintenance and  engineering  group,  and
increases in certain passenger fees.


                                      -14-



Operating Expenses

The  Company's total operating expenses increased 6.5 percent, or $1.0
billion, to $16.4 billion for the nine months ended September 30, 2006
compared  to  the same period in 2005.  American's mainline  operating
expenses per ASM in the nine months ended September 30, 2006 increased
7.3  percent compared to the same period in 2005 to 10.90 cents. These
increases  are due primarily to a 25.8 percent increase in  American's
price  per gallon of fuel in 2006 relative to the same period in 2005,
including the impact of a $55 million fuel excise tax refund  received
in March 2005.

   (in millions)              Nine Months
                                Ended         Increase/
                              September 30,  (Decrease)   Percentage
    Operating Expenses           2006         from 2005     Change

   Wages, salaries  and
     benefits                 $  4,644         $   93        2.0%
   Aircraft fuel                 4,476            824       22.6   (a)
   Regional payments to AMR
     Eagle                       1,656            143        9.5   (b)
   Other rentals and
     landing fees                  870              2        0.2
   Commissions, booking fees
     and credit card expense       839            (10)      (1.2)
   Depreciation and amortization   726             (4)      (0.5)
   Maintenance, materials
     and repairs                   575            (46)      (7.4)
   Aircraft rentals                434              5        1.2
   Food service                    381             (2)      (0.5)
   Other operating expenses      1,823             (1)      (0.1)
   Total operating expenses   $ 16,424         $1,004        6.5%

  (a)  Aircraft fuel expense increased primarily due to a 25.8 percent
       increase in American's price per gallon of fuel (including the benefit
       of a $55 million fuel excise tax refund received in March 2005 and the
       impact of fuel hedging), partially offset by a 2.6 percent decrease in
       American's fuel consumption.
  (b)  Regional payment to AMR Eagle increased primarily as a result of
       increased capacity and fuel costs.

Other Income (Expense)

Other  income  (expense), historically a net expense,  increased  $142
million due primarily to the impact of the Company's ineffective  fuel
derivatives  as  discussed  in Note 9 to  the  condensed  consolidated
financial statements. Both interest income and interest expense increased
during 2006 versus 2005.   Interest  income increased  due to increases
in  interest  rates and   cash  and  short-term  investment  balances.
Interest  expense  increased  due to an increase in interest rates on
variable rate  debt instruments.

Income Tax

The  Company  did not record a net tax provision (benefit)  associated
with  its  earnings (losses) for the nine months ended  September  30,
2006  and 2005 due to the Company providing a valuation allowance,  as
discussed   in   Note  5  to  the  condensed  consolidated   financial
statements.


                                      -15-




Regional Affiliates

The following table summarizes the combined capacity purchase activity
for the American Connection carriers and AMR Eagle for the nine months
ended September 30, 2006 and 2005 (in millions):

                                  Nine Months Ended
                                    September 30,
                                  2006        2005
       Revenues:
       Regional Affiliates      $1,915      $1,582
       Other                        75          66
                                $1,990      $1,648

       Expenses:
       Payments to Regional
       Affiliates               $1,808      $1,652
       Other incurred expenses     237         208
                                $2,045      $1,860

In addition, passengers connecting to American's flights from American
Connection  and  AMR  Eagle flights generated passenger  revenues  for
American flights of $1.3 billion and $1.1 billion for the nine  months
ended September 30, 2006 and 2005, respectively, which are included in
Revenues - Passenger in the consolidated statements of operations.

Outlook

The  Company currently expects fourth quarter mainline unit  costs  to
decrease  more  than  four  percent  year  over  year.   Capacity  for
American's  mainline jet operations in the fourth quarter is  expected
to decrease approximately 0.5 percent year over year.


                                      -16-



Item 3.  Quantitative and Qualitative Disclosures about Market Risk

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 2005 Form  10-K.   The
change  in  market  risk  for aircraft fuel  is  discussed  below  for
informational  purposes  due  to  the  sensitivity  of  the  Company's
financial results to changes in fuel prices.

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.

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  hedging
contracts.   Market  risk  is estimated as a hypothetical  10  percent
increase in the September 30, 2006 cost per gallon of fuel.  Based  on
projected 2006 and 2007 fuel usage through September 30, 2007, such an
increase  would  result  in an increase to aircraft  fuel  expense  of
approximately  $523 million in the twelve months ended  September  30,
2007,  inclusive  of  the impact of effective fuel  hedge  instruments
outstanding at September 30, 2006.  Comparatively, based on  projected
2006  fuel usage, such an increase would have resulted in an  increase
to  aircraft fuel expense of approximately $477 million in the  twelve
months  ended December 31, 2006, inclusive of the impact of  effective
fuel  hedge instruments outstanding at December 31, 2005.  The  change
in market risk is primarily due to the increase in fuel prices.

Ineffectiveness  is  inherent  in hedging  jet  fuel  with  derivative
positions  based in crude oil or other crude oil related  commodities.
As  required  by Statement of Financial Accounting Standard  No.  133,
"Accounting  for  Derivative Instruments and Hedging Activities",  the
Company  assesses, both at the inception of each hedge and on  an  on-
going  basis,  whether the derivatives that are used  in  its  hedging
transactions are highly effective in offsetting changes in cash  flows
of  the  hedged  items.  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.  As a result of its second quarter effectiveness
assessment,  the Company determined that more than 65 percent  of  its
derivatives,  based on market value, settling during the remainder  of
2006  and  in  2007 are no longer expected to be highly  effective  in
offsetting  changes in forecasted jet fuel purchases.   As  a  result,
effective on July 1, 2006, all subsequent changes in the fair value of
those  particular  hedge  contracts are being recognized  directly  in
earnings rather than being deferred in Accumulated other comprehensive
loss. On an economic basis, these derivatives will continue to largely
offset  potential changes in the price of jet fuel.  Hedge  accounting
will  continue  to be applied to derivatives used to hedge  forecasted
jet fuel purchases that are expected to remain highly effective.

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,  2006.   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,
2006.  During the quarter ending on September 30, 2006, 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.


                                      -17-



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, American, AMR Eagle,
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).  On  July  9,
2003,  the  court certified a class that included 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 sought 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. On February 24, 2005,
the   court  decertified  the  class.   The  claims  against  Airlines
Reporting Corporation have been dismissed, and in September 2005,  the
Court  granted Summary Judgment in favor of the Company and all  other
defendants.   Plaintiffs have filed an appeal  to  the  United  States
Court of Appeals for the Ninth Circuit.  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 a material adverse impact on the Company.

Between  April 3, 2003 and June 5, 2003, three lawsuits were filed  by
travel  agents,  some of whom opted out of a prior class  action  (now
dismissed) to pursue their claims individually against American, other
airline defendants, and in one case against certain airline defendants
and Orbitz LLC.  The cases, 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 (71 agencies) were consolidated for pre-trial purposes in the
United  States  District  Court for the  Northern  District  of  Ohio,
Eastern  Division.   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.  On September 23,
2005, the Fausky plaintiffs dismissed their claims with prejudice.  On
September 14, 2006, the court dismissed with prejudice 28 of the Swope
plaintiffs.   American continues to vigorously defend these  lawsuits.
A  final adverse court decision awarding substantial money damages  or
placing  material restrictions on the Company's distribution practices
would have a material 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  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,  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.


                                      -18-



American is defending an appeal of a lawsuit, filed as a class  action
but not certified as such, arising from allegedly improper failure  to
refund certain governmental taxes and fees collected by American  upon
the  sale of nonrefundable tickets when such tickets are not used  for
travel.   In  Harrington  v. Delta Air Lines,  Inc.,  et  al.,  (filed
November 24, 2004 in the United States District Court for the District
of  Massachusetts), the plaintiffs sought unspecified  actual  damages
(trebled),   declaratory  judgment,  injunctive  relief,  costs,   and
attorneys'  fees.   The  suit  asserted  various  causes  of   action,
including  breach  of  contract,  conversion,  and  unjust  enrichment
against American and numerous other airline defendants. The defendants
filed a motion to dismiss which was granted.  Plaintiffs have filed  a
notice of appeal with the First Circuit Court of Appeals.  American is
vigorously  defending the suit and believes it to  be  without  merit.
However,  a final adverse court decision requiring American to  refund
collected  taxes and/or fees could have a material adverse  impact  on
the Company.

On  March  11,  2004, a patent infringement lawsuit was filed  against
AMR,  American, AMR Eagle Holding Corporation, and American  Eagle  in
the  United  States District Court for the Eastern District  of  Texas
(IAP  Intermodal,  L.L.C.  v.  AMR  Corp.,  et  al.).  The  case   was
consolidated  with eight similar lawsuits filed against  a  number  of
other unaffiliated airlines, including Continental, Northwest, British
Airways,  Air  France,  Pinnacle Airlines, Korean  Air  and  Singapore
Airlines  (as  well as various regional affiliates of the  foregoing).
The  plaintiff  alleges  that the airline  defendants  infringe  three
patents,  each  of  which relates to a system of  scheduling  vehicles
based  on freight and passenger transportation requests received  from
remote  computer terminals.  The plaintiff is seeking past and  future
royalties  of over $30 billion dollars, injunctive relief,  costs  and
attorneys'  fees. On September 7, 2005, the court issued a  memorandum
opinion that interpreted disputed terms in the patents.  The plaintiff
dismissed  its  claims without prejudice to its right  to  appeal  the
September  7,  2005  opinion, and the plaintiff is  pursuing  such  an
appeal. Although the Company believes that the plaintiff's claims  are
without merit and is vigorously defending the lawsuit, a final adverse
court  decision awarding substantial money damages or placing material
restrictions  on existing scheduling practices would have  a  material
adverse impact on the Company.

On  July  12,  2004, a consolidated class action complaint,  that  was
subsequently amended on November 30, 2004, was filed against  American
and  the  Association  of Professional Flight Attendants  (APFA),  the
Union  which  represents  the American's  flight  attendants  (Ann  M.
Marcoux,  et  al.,  v. American Airlines Inc., et al.  in  the  United
States  District Court for the Eastern District of New York). While  a
class  has not yet been certified, the lawsuit seeks on behalf of  all
of  American's flight attendants or various subclasses to  set  aside,
and  to  obtain  damages  allegedly resulting  from,  the  April  2003
Collective  Bargaining  Agreement referred  to  as  the  Restructuring
Participation  Agreement  (RPA).  The  RPA  was  one  of  three  labor
agreements American successfully reached with its unions in  order  to
avoid  filing  for  bankruptcy in 2003.  In  a  related  case  (Sherry
Cooper, et al. v. TWA Airlines, LLC, et al., also in the United States
District Court for the Eastern District of New York), the court denied
a preliminary injunction against implementation of the RPA on June 30,
2003.  The  Marcoux suit alleges various claims against the Union  and
American relating to the RPA and the ratification vote on the  RPA  by
individual Union members, including: violation of the Labor Management
Reporting  and Disclosure Act (LMRDA) and the APFA's Constitution  and
By-laws, violation by the Union of its duty of fair representation  to
its  members, violation by American of provisions of the Railway Labor
Act  (RLA) through improper coercion of flight attendants into  voting
or  changing  their  vote  for ratification,  and  violations  of  the
Racketeer Influenced and Corrupt Organizations Act of 1970 (RICO).  On
March 28, 2006, the district court dismissed all of various state  law
claims  against American, all but one of the LMRDA claims against  the
APFA,  and  the claimed violations of RICO.  This leaves  the  claimed
violations  of  the  RLA  and the duty of fair representation  against
American  and  the  APFA (as well as one LMRDA  claim  and  one  claim
against the APFA of a breach of the union constitution).  Although the
Company  believes  the  case  against it is  without  merit  and  both
American and the Union are vigorously defending the lawsuit,  a  final
adverse  court decision invalidating the RPA and awarding  substantial
money damages would have a material adverse impact on the Company.


                                      -19-



On  February  14,  2006, the Antitrust Division of the  United  States
Department of Justice (the "DOJ") served the Company with a grand jury
subpoena  as  part of an ongoing investigation into possible  criminal
violations  of the antitrust laws by certain domestic and foreign  air
cargo  carriers. At this time, the Company does not believe  it  is  a
target  of the DOJ investigation.  The New Zealand Commerce Commission
notified   the  Company  on  February  17,  2006  that  it   is   also
investigating  whether the Company and certain  other  cargo  carriers
entered   into  agreements  relating  to  fuel  surcharges,   security
surcharges, war risk surcharges, and customs clearance surcharges.  On
February  22,  2006,  the Company received a  letter  from  the  Swiss
Competition  Commission  informing  the  Company  that   it   too   is
investigating  whether the Company and certain  other  cargo  carriers
entered   into  agreements  relating  to  fuel  surcharges,   security
surcharges,  war  risk  surcharges, and customs clearance  surcharges.
The  Company intends to cooperate fully with these investigations.  In
the  event  that these investigations uncover violations of  the  U.S.
antitrust  laws  or  the competition laws of some other  jurisdiction,
such  findings  and related legal proceedings could  have  a  material
adverse  impact  on  the Company.  Approximately  38  purported  class
action  lawsuits  have  been filed against  the  Company  and  certain
foreign  and  domestic  air  carriers  alleging  that  the  defendants
violated U.S. antitrust laws by illegally conspiring to set prices and
surcharges on cargo shipments: Animal Land, Inc. v. Air Canada et  al.
filed in the United States District Court for the Eastern District  of
New  York on February 17, 2006; Joan Adams v. British Airways  et  al.
filed in the United States District Court for the Eastern District  of
New  York  on February 22, 2006; Rock International Transport  v.  Air
Canada  et  al.  filed  in the United States District  Court  for  the
Eastern  District  of  New York on February 24, 2006;  Helen's  Wooden
Crafting  Co. v. Air Canada et al. filed in the United States District
Court  for the Eastern District of New York on February 24, 2006;  ABM
Int'l,  Inc. v. Ace Aviation Holdings, Inc. et al. filed in the United
States District Court for the Eastern District of New York on February
28,  2006;  Blumex USA, Inc. v. Air Canada et al. filed in the  United
States  District Court for the Northern District of Illinois on  March
1, 2006; Mamlaka Video v. Air Canada et al. filed in the United States
District Court for the Eastern District of New York on March 3,  2006;
Spraying  Systems Co. v. ACE Aviation Holdings, Inc. et al.  filed  in
the  United States District Court for the Eastern District of New York
on March 3, 2006; Mitchell Spitz v. Air France-KLM et al. filed in the
United  States District Court for the Eastern District of New York  on
March  6,  2006; JCK Industries, Inc. v. British Airways, PLC  et  al.
filed in the United States District Court for the Eastern District  of
New York on March 6, 2006; Marc Seligman v. Air Canada et al. filed in
the  United States District Court for the Southern District of Florida
on  March 6, 2006; CID Marketing and Promotion Inc. v. AMR Corporation
et  al.  filed  in  the United States District Court for  the  Eastern
District  of Pennsylvania on March 7, 2006; Lynn Culver v. Air  Canada
et  al. filed in the United States District Court for the District  of
Columbia  on March 8, 2006; JSL Carpet Corp. v. ACE Aviation Holdings,
Inc.  et al. filed in the United States District Court for the Eastern
District  of  New York on March 10, 2006; Y. Hata & Co,  Ltd.  v.  Air
France-KLM  et al. filed in the United States District Court  for  the
Northern  District of California on March 13, 2006; FTS  International
Express  v.  ACE Aviation Holdings, Inc. et al. filed  in  the  United
States District Court for the District of Columbia on March 15,  2006;
Thule,  Inc. v. Air Canada et al. filed in the United States  District
Court  for the Eastern District of New York on March 28, 2006; Rosetti
Handbags and Accessories, Ltd. v. Air France ADS et al. filed  in  the
United  States District Court for the Eastern District of New York  on
March  31, 2006; W.I.T. Entertainment Inc. v. AMR Corporation  et  al.
filed in the United States District Court for the Southern District of
Florida  on  April 3, 2006; Jeff Rapps v. British Airways PLC  et  al.
filed in the United States District Court for the Eastern District  of
New York on April 7, 2006; Funke Design Build, Inc. v. AMR Corporation
et  al.  filed  in the United States District Court for  the  Northern
District of Illinois on April 7, 2006; Sul-American Export Inc. v. Air
France  ADS et al. filed in the United States District Court  for  the
Eastern  District  of New York on April 7, 2006;  La  Regale  Ltd.  v.
British  Airways PLC et al. filed in the United States District  Court
for the Eastern District of New York on April 12, 2006; J.A. Transport
Inc.  v. ACE Aviation Holdings, Inc. et al. filed in the United States
District Court for the District of Columbia on April 12, 2006;  Caribe
Air  Cargo,  Inc. v. ACE Aviation Holdings, Inc. et al. filed  in  the
United States District Court for the District of Columbia on April 13,
2006;  Gold Eye Distributors, Inc. v. Air France ADS et al.  filed  in
the  United States District Court for the Eastern District of New York
on April 14, 2006; Ralph Olarte v. British Airways PLC et al. filed in
the United States District Court for the District of Columbia on April
19, 2006; Capogiro LLC v. ACE Aviation Holdings, Inc. et al. filed  in
the United States District Court for the District of Columbia on April
20, 2006; Ali Fayazi v. British Airways PLC et al. filed in the United
States  District Court for the Eastern District of New York  on  April
26,  2006; Janice Perlman v. British Airways PLC et al. filed  in  the
United  States District Court for the Eastern District of New York  on
May  9, 2006; Leslie Young v. British Airways PLC et al. filed in  the
United  States District Court for the Eastern District of New York  on
May  12, 2006; Craig Antell, M.D. v. British Airways PLC et al.  filed
in  the  United States District Court for the Eastern District of  New
York  on May 16, 2006; Eurotrendz v. British Airways PLC et al.  filed
in  the  United States District Court for the Eastern District of  New
York on May 18, 2006; David Asher Rakoff v. British Airways PLC et al.
filed in the United States District Court for the Eastern District  of
New  York on May 22, 2006; Kalla Hirschbein v. British Airways PLC  et
al. filed in the United States District Court for the Eastern District
of New York on June 1, 2006; Association des Utilisateurs du Transport
de  Fret  v.  ACE Aviation Holdings, Inc. et al. filed in  the  United
States  District Court for the District of Columbia on June  6,  2006;
and  McDuffee  New York, Inc. v. ACE Aviation Holdings,  Inc.  et  al.
filed in the United States District Court for the Northern District of
Illinois on June 27, 2006.  These cases have been consolidated in  the
United  States District Court for the Eastern District  of  New  York,
together  with approximately 47 other class action lawsuits  in  which
the Company has not been named as a defendant.  Plaintiffs are seeking
trebled  money damages and injunctive relief. American will vigorously
defend  these  lawsuits; however, any adverse judgment  could  have  a
material adverse impact on the Company.


                                      -20-



On June 20, 2006, DOJ served the Company with a grand jury subpoena as
part of an ongoing investigation into possible criminal violations  of
the antitrust laws by certain domestic and foreign passenger carriers.
At  this time, the Company does not believe it is a target of the  DOJ
investigation.   The  Company intends to  cooperate  fully  with  this
investigation.   In  the   event  that  this  investigation   uncovers
violations of the U.S. antitrust laws or the competition laws of  some
other  jurisdiction, such findings and related legal proceedings could
have  a  material  adverse  impact on the Company.   Approximately  46
purported  class action lawsuits have been filed against  the  Company
and  certain  foreign  and  domestic air carriers  alleging  that  the
defendants violated U.S. antitrust laws by illegally conspiring to set
prices  and  surcharges  for  passenger  transportation:  Saldana   v.
American  Airlines,  Inc. et al. filed in the United  States  District
Court for the Southern District of New York on June 23, 2006; McGovern
v.  AMR Corporation, et al. filed in the United States District  Court
for  the  Northern District of Illinois on June 23, 2006; Baharani  v.
British  Airways PLC et al. filed in the United States District  Court
for  the  Southern  District of Florida on June 23, 2006;  Boccara  v.
British  Airways PLC et al. filed in the United States District  Court
for  the  Northern District of Florida on June 23, 2006; Chin  v.  AMR
Corporation et al. filed in the United States District Court  for  the
Northern  District  of Illinois on June 26, 2006; McDuffee  New  York,
Inc.  v. ACE Aviation Holdings, Inc. et al. filed in the United States
District Court for the Northern District of Illinois on June 27, 2006;
McGrath  v. AMR Corporation et al. filed in the United States District
Court  for the Northern District of Illinois on June 27, 2006;  Fadden
v.  AMR  Corporation et al. filed in the United States District  Court
for  the Northern District of Illinois on June 28, 2006; Szelewski  v.
AMR  Corporation et al. filed in the United States District Court  for
the  Northern  District of Illinois on June 28,  2006;  Golin  v.  AMR
Corporation et al. filed in the United States District Court  for  the
Northern  District  of California on June 29, 2006;  Mazzocco  v.  AMR
Corporation et al. filed in the United States District Court  for  the
Eastern District of New York on June 29, 2006; McIntyre Group, Ltd. v.
AMR  Corporation et al. filed in the United States District Court  for
the  Northern  District  of California on June  29,  2006;  Miller  v.
British  Airways PLC et al. filed in the United States District  Court
for  the Eastern District of Pennsylvania on June 29, 2006; Nelson  v.
AMR  Corporation  filed in the United States District  Court  for  the
Eastern  District  of  New York on June 29,  2006;  Weiss  v.  British
Airways  PLC et al. filed in the United States District Court for  the
Eastern  District of Pennsylvania on June 30, 2006; Marco v.  American
Airlines,  Inc. et al. filed in the United States District  Court  for
the  Central  District  of California on June  30,  2006;  Finegan  v.
British Airways PLC et al., filed in the United States District  Court
for the Eastern District of New York on July 6, 2006; Sederholm v. AMR
Corp.  et  al.  filed  in  the United States District  Court  for  the
Northern  District of Illinois on July 10, 2006; El-Demerdash  v.  AMR
Corp.  et  al.  filed  in  the United States District  Court  for  the
Northern  District of Illinois on July 11, 2006; Molinaro  v.  British
Airways  PLC et al. filed in the United States District Court for  the
Eastern  District  of New York on July 11, 2006; El-Demerdash  v.  AMR
Corp.  et  al.  filed  in  the United States District  Court  for  the
Northern  District of Illinois on July 13, 2006; Hastings v.  American
Airlines,  Inc. et al. filed in the United States District  Court  for
the  Northern District of Illinois on July 13, 2006; Wayman v. British
Airways  PLC et al. filed in the United States District Court for  the
Northern  District  of Illinois on July 13, 2006;  Waters  v.  British
Airways  PLC et al. filed in the United States District Court for  the
Eastern  District  of New York on July 14, 2006;  Olmert  v.  American
Airlines,  Inc. et al. filed in the United States District  Court  for
the  Northern  District of California on July  13,  2006;  Fischer  v.
British  Airways PLC et al. filed in the United States District  Court
for  the  Northern District of Illinois on July 17,  2006;  Carney  v.
British  Airways et al. filed in the United States District Court  for
the  Northern  District of Illinois on July 18,  2006;  Hardingham  v.
British  Airways PLC et al. filed in the United States District  Court
for  the Northern District of California on July 18, 2006; Penrose  v.
British  Airways et al. filed in the United States District Court  for
the  Eastern District of New York on July 21, 2006; Taylor v.  British
Airways  et  al.  filed in the United States District  Court  for  the
Northern  District of California on July 21, 2006;  Wolff  v.  British
Airways  et  al.  filed in the United States District  Court  for  the
Eastern  District  of  New York on July 21, 2006;  Harris  v.  British
Airways  PLC et al. filed in the United States District Court for  the
Northern District of California on July 25, 2006; Comeaux v. AMR Corp.
et  al.  filed  in the United States District Court for  the  Southern
District  of Texas on July 26, 2006; Oliff v. British Airways  et  al.
filed in the United States District Court for the Eastern District  of
Virginia  on  July 26, 2005; Kastin v. AMR Corp. et al. filed  in  the
United States District Court for the Southern District of New York  on
July  28,  2006; Page v. British Airways et al. filed  in  the  United
States District Court for the Northern District of California on  July
31,  2006;  Van  Meter v. British Airways et al. filed in  the  United
States  District Court for the Northern District of Illinois  on  July
31,  2006; Vesely v. British Airways et al. filed in the United States
District  Court for the Northern District of California  on  July  31,
2006;  Davis  v.  British Airways et al. filed in  the  United  States
District  Court for the Northern District of California on  August  1,
2006;  Hecht v. AMR Corp., et al. filed in the United States  District
Court  for  the  Northern  District of Illinois  on  August  3,  2006;
Lockmanese  v.  British  Airways et al. filed  in  the  United  States
District  Court for the Northern District of California on  August  7,
2006;  Martin  v. American Airlines, Inc. et al. filed in  the  United
States  District Court for the Southern District of Florida on  August
9,  2006;  Madnick  v.  AMR Corp. et al. filed in  the  United  States
District  Court  for the Southern District of Florida  on  August  24,
2006;  Szlavik v. American Airlines, Inc. et al. filed in  the  United
States District Court for the District of Maryland on August 31, 2006;
and  Brennan  v.  British Airways, et al. filed in the  United  States
District Court for the Northern District of California on September 6,
2006.   These  cases  are expected to be consolidated  in  an  as  yet
undetermined  court together with approximately 49 other class  action
lawsuits  in  which  the Company has not been named  as  a  defendant.
Plaintiffs  are  seeking trebled money damages and injunctive  relief.
American  will vigorously defend these lawsuits; however, any  adverse
judgment could have a material adverse impact on the Company.


                                      -21-



American is defending a lawsuit (Love Terminal Partners, L.P.  et  al.
v.  The  City of Dallas, Texas et al.) filed on July 17, 2006  in  the
United  States District Court in Dallas.  The suit was brought by  two
lessees  of facilities at Dallas Love Field Airport against  American,
the cities of Fort Worth and Dallas, Southwest Airlines, Inc., and the
Dallas/Fort Worth International Airport Board.  The suit alleges  that
an agreement by and between the five defendants with respect to Dallas
Love  Field  violates Sections 1 and 2 of the Sherman Act.  Plaintiffs
seek   injunctive  relief  and  compensatory  and  statutory  damages.
American  will  vigorously defend this lawsuit; however,  any  adverse
judgment could have a material adverse impact on the Company.

On  August  21, 2006, a patent infringement lawsuit was filed  against
American and American Beacon Advisors, Inc. (a wholly-owned subsidiary
of  the  Company), in the United States District Court for the Eastern
District  of  Texas  (Ronald  A. Katz Technology  Licensing,  L.P.  v.
American Airlines, Inc., et al.).  The plaintiff alleges that American
and American Beacon infringe a number of the plaintiff's patents, each
of  which relates to automated telephone call processing systems.  The
plaintiff  is  seeking past and future royalties,  injunctive  relief,
costs  and  attorneys' fees.  Although the Company believes  that  the
plaintiff's  claims are without merit and is vigorously defending  the
lawsuit,  a  final  adverse court decision awarding substantial  money
damages   or  placing  material  restrictions  on  existing  automated
telephone call system operations would have a material adverse  impact
on the Company.



                                      -22-




Item 6.  Exhibits

The following exhibits are included herein:

10.1 Form of Amendment of Stock Option Agreements Under the 1998 Long-
     Term Incentive Plan to Add Stock Appreciation Rights.

12   Computation of ratio of earnings to fixed charges for the  three
     and nine months ended September 30, 2006 and 2005.

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).









                                      -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 20, 2006        BY: /s/  Thomas W. Horton
                               Thomas W. Horton
                               Executive Vice President and Chief
                               Financial Officer
                               (Principal Financial and Accounting Officer)






                                      -24-