### BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, DC

Essential Air Service at WATERLOO, IOWA Under 49 U.S.C 941731 etseq. DOT-OST-2011-0132

AMERICAN AIRLINES PROPOSAL TO PROVIDE ESSENTIAL AIR SERVICE AT WATERLOO, IOWA American Airlines, awholly owned subsidiary ofAMR Corporation, respectfully submits its proposal to continue subsidized Essential Air Service to Waterloo, Iowa. American Airlines seeks to continue service from American's hub, Chicago O'Hare International Airport ("ORD") to the Waterloo Regional Airport ("ALO"), with 13weekly round trips. The service would be operated by the American Airlines regional brand, American Eagle using 50 seatjet aircraft. American Airlines regional feed isoperated under the American Eagle and American Connection brands. American Airlines customers have access to more than 250 cities, 40 countries andmore than 3,400 daily departures. Through our oneworld alliance, customers have access to more than 700 destinations and 140countries. These flights will continue tobe operated with the AA code, pursuant to acodesharing agreement ~ith American Airlines. Additional codes ofthe oneworld carriers are also applied to this route, and would continue tobe. The service proposed by American Airlines continues existing service toAmerican's hub, Chicago O'Hare International Airport. AtORD, American, American Connection, and American Eagle offer more than 460 daily departures to over 120destinations, making itone of the largest hubs inthe country. This direct access to somany places has helped stimulate traffic from Waterloo with significantly easier connecting ?ptions than what had been offered Waterloo travelers prior to our award ofthe current Essential Air Service bid. Waterloo has performed well under subsidized Essential Air Service since American's EAS subsidy award inApril 2012. Passenger bookings have reflected the industry norms over the course ofournearly two years operating inthe market. We have made great progress in developing air-service inWaterloo, bringing new business and industry tothe Waterloo region. Our current bid should reflect ourbelief that the Essential Air Service subsidy isvital, asthe market is onatrajectory to one day be self-sustaining.American would liketo also request that the DOT and Waterloo allow us flexibility in

substituting aBombardier CRJ200 (50 seats) aircraft and Embraer Regional jets when needed for the same rates. Allowing us to substitute 44- or50-seat RJs will provide us the flexibility to match supply with demand, aswell asprovide operational flexibility, which will improve reliability. American also requests that the DOT and Waterloo waive the right tohold-in American Airlines service upon issuance of 120days-notice to terminate service. Although we do not foresee this tobe anissue andplan to continue developing the Waterloo market, we cannot be operationally constrained andkept in amarket indefinitely, without ability to adapt to changing circumstances
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.We believe that ourto-date success inWaterloo isdemonstrative ofthe American Airlines network and marketing programs. American Airlines isthe only airline with adedicated Regional Partnerships group that will continue itspromotion ofthebrand and service in Waterloo. ' We look forward to serving theWaterloo area formany years tocome and appreciate the community's and the Department ofTransportation's consideration ofcontinued American Airlines service.
Sincerely,

Charles Schubert Vice President American Airlines Network PlanningMarket: Waterloo, IA to Chicago O'Hare

Aircraft Number of Seats per Mileage 234 Oep 50 Annual ASMs Annual Oeps (Factored) 1,325 (Factored) 15,502,032 Annual RPMs Block per Oep 1.25 (Factored) 9,177,203 Annual Block Hours (Factored) 1,656 Annual LF 59.2% Completion Percentage 98.0% Revenues Annual Passengers 40,019 Avg Fare - Onboard $1'67 Total Revenues $4,278,179 Expenses Flight Operations (incl Fuel) $3,948,850 Aircraft Ownership $236,088 Pax Variable $494,247 Other $295,792 Total Expenses $4,974,976 Profit J (Loss) ($696,798) Profit Element (@ 5%) $248,749 Subsidy Required $945,546 Previous Subsidy $1,541,824 Subsidy J Departure $714 Previous J Departure $1,160 Subsidy J Pax $23.63 Previous J Pax $35.68
Proposed Schedule Segment Depart ~ Freguency ALO-ORO 6:00 7:20 Oaily ALO-ORO 17:00 18:15 XJ ORO-ALO 15:15 16:25 Oaily ORO-ALO 19:45 20:55 XJ