Document:

exhibit10w137.htm

                        Exhibit
10.137

    

    PURCHASE
AGREEMENT No. 1977 SUPPLEMENT No. 24

    

    

    PURCHASE AGREEMENT No. 1977 SUPPLEMENT
No. 24 (this “Agreement”) dated February 11, 2008 between The Boeing Company
(“Boeing”) and American Airlines, Inc. (“Customer”).

    

    R E C I T A L S:

    

    
      	
              A.  

            	
              Boeing
      and Customer have heretofore entered into that certain Purchase Agreement
      No. 1977, dated October 31, 1997, as amended and supplemented,
      (capitalized terms used herein without definition shall have the meanings
      specified therefor in such Purchase
Agreement).

            

    

    

    
      	
              B.  

            	
              Pursuant
      to Letter Agreement No. 6-1162-AKP-075 (the “Rights Letter”), Boeing and
      Customer have agreed to, among other things, treatment of aircraft
      Purchase Rights.

            

    

    

    
      	
              C.  

            	
              Customer
      and Boeing desire to amend and supplement the Purchase Agreement as
      provided below.

            

    

    

    In
consideration of the foregoing premises and other good and sufficient
consideration, Boeing and Customer hereby agree as follows:

    

    

    
      	
              1.  

            	
              Amendment
      to Reflect Customer’s Exercise of MADP
  Rights.

            

    

    

    
      	
              1.1.  

            	
              The Purchase
      Agreement is amended and supplemented to reflect the exercising of
      [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT] Rights Aircraft
      [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT] by Customer with the
      Scheduled Delivery [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT] (“Exercised MADP
      Aircraft”).

            

    

    

    
      	
              1.2.  

            	
              The
      Scheduled Delivery Month and Advanced Payment Schedule for the aircraft is
      set forth in Table 1A (R3), attached
hereto.

            

    

    

    
      	
               
      

            	
              1.3.  In
      recognition of the fact the configuration of Customer’s Model 737-823
      Aircraft is in the process of being updated, the previously selected
      Optional Features that were selected during initial configuration for the
      Deferred Aircraft will be incorporated in Table 1A(R3) as a placeholder
      until Customer selects Optional Features or other desired amendments to
      the Detail Specification (”Configuration Changes”). The effects of all
      Configuration Changes, which are mutually agreed upon between Boeing and
      Customer for incorporation into the Detail Specification will be
      incorporated into Exhibit A by written amendment no later than [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL
TREATMENT].

            

    

    

    
      	
              2.  

            	
              Table
      of Contents.  The Table of
      Contents dated January 2008 is replaced in its entirety with the revised
      Table of Contents dated February 2008 (Attachment A hereto) to reflect
      amendments made to the Purchase Agreement by this
    Agreement.

            

    

    

    
      	
              3.  

            	
              MADP
      Rights.  Pursuant to SA 23, Attachment B (R4) to the
      Rights Letter is hereby replaced in its entirety with the revised
      Attachment B (R5) attached hereto and hereby made part of the Purchase
      Agreement. The revised number of certain Customer MADP rights pursuant to
      this Agreement are reflected in the attached Attachment B (R5)
      hereto.

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              4.

            	
              Supplement
      Exhibit BFE1. Supplement Exhibit
      BFE1 (R4) is hereby replaced in its entirety with the revised Supplement
      Exhibit BFE1 (R5) attached hereto and hereby made part of the Purchase
      Agreement. The updated on-dock dates for all contracted firm Aircraft thru
      December 2013 are reflected in the attached Supplement Exhibit BFE1
      (R5).

            

    

    

    
      	
              5.

            	
              Advance
      Payments for Aircraft.  Due at signing of this Agreement,
      Customer owes Boeing [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT] for the exercised MADP
      aircraft.

            

    

    

    
      	
              6.

            	
              Effect
      on Purchase Agreement.  Except as expressly set forth
      herein, all terms and provisions contained in the Purchase Agreement shall
      remain in full force and effect. This Agreement contains the entire
      agreement between the parties with respect to the subject matter hereof
      and supersedes all previous proposals, and agreements, understandings,
      commitments or representations whatsoever, oral or written, with respect
      to the subject matter hereof and may be changed only in writing signed by
      authorized representatives of the
parties.

            

    

    

    IN
WITNESS WHEREOF, Boeing and Customer have each caused this
Agreement

    to be
duly executed as of the day and year first above written.

    

    
      	
              AMERICAN
      AIRLINES, INC.

               

               

               

              By /s/ Beverly
      Goulet                                       

              ItsVP Corporate Development and
      Treasurer

               

            	
              THE
      BOEING COMPANY

               

               

               

              By /s/ Thomas R.
      Winter                             

              Its   
      Attorney-In-Fact                                                                

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              Attachments:

            

    

    

    
      	
               
      

            	
              Attachment
      A, Table of Contents (R5) to Purchase Agreement No.
  1977

            

    

    

    
      	
               
      

            	
              Table
      1A (R3) to Purchase Agreement No. 1977, 737-800 Exercised Option Delivery,
      Description, Price and Advance
Payments

            

    

    

    
      	
               
      

            	
              Attachment
      B (R5) to Letter Agreement 6-1162-AKP-075, Aircraft Purchase Rights and
      Substitution Rights

            

    

    

    
      	
               
      

            	
              Supplement
      Exhibit BFE1 (R5) to Purchase Agreement No. 1977, 737-823 BFE
      Variables

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE OF
CONTENTS

    

    

     SA

    ARTICLES NUMBER

    

    1.                   Quantity,
Model and
Description                                                                                              SA21

    

    2.                   Delivery
Schedule

    

    3.                   Price

    

    4.                   Payment

    

    5.                   Miscellaneous

    

    

    TABLE

    

    1(R3)                 Aircraft
Delivery, Description, Price and SA23

    Advance Payments

    -Schedule 1
(R2) SA23

           1A                      (R3)                                                                                                Option
Aircraft Delivery, Description, Price
and                              SA24

    Advance Payments

    

    EXHIBITS

    

    A.                   Aircraft
Configuration

    

    B.                   Aircraft
Delivery Requirements and Responsibilities

    

    C.                   Defined
Terms

    

    

    SUPPLEMENTAL
EXHIBITS

    

         AE1                      Escalation
Adjustment Airframe and Optional Features SA20

    

    BFE1(R5)                    BFE
Variables SA24

    

    CS1                  Customer
Support Variables

    

    SLP1                   Service
Life Policy Components

    

    EE1                  Engine
Escalation, Engine Warranty and Patent Indemnity

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    LETTER
AGREEMENTS

    

    6-1162-AKP-070                                   Miscellaneous
Commitments for Model 737, 757,

    767 and 777 Aircraft

    

    6-1162-AKP-071                                   Purchase
Obligations

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    6-1162-AKP-074R2                                   Business
Considerations

    

    6-1162-AKP-075                                   Aircraft
Purchase Rights and Substitution Rights

    - Attachment A

    - Attachment B(R5) SA24

    - Attachment
C(R3) SA23

    

    6-1162-AKP-076                                   Aircraft
Performance Guarantees

    

    6-1162-AKP-077                                   Spares
Matters

    

    6-1162-AKP-078                                   Model
737 Miscellaneous Commitments

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    6-1162-AKP-080                                   Installation
of Cabin Systems Equipment

    

    6-1162-AKP-081                                   Model
737 Maintenance Cost Commitment

    

    6-1162-AKP-082                                   Confidentiality

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    6-1162-AKP-117                                   Delivery
Schedule

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Table
1A(R3) to Purchase Agreement No. 1977

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT].

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
B (R5) to Letter Agreement 6-1162-AKP-075 (Model 737)

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT].

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    BUYER
FURNISHED EQUIPMENT VARIABLES

    

    between

    

    THE
BOEING COMPANY

    

    and

    

    AMERICAN
AIRLINES, INC.

    

    

    Supplemental
Exhibit BFE1 to Purchase Agreement Number 1977 – SA24

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    BUYER
FURNISHED EQUIPMENT VARIABLES

    

    relating
to

    

    BOEING
MODEL 737 AIRCRAFT

    

    

    This
Supplemental Exhibit BFE1 contains vendor selection dates, on-dock dates and
other variables applicable to the Aircraft.

    

    

    1.           Supplier
Selection.

    

    Customer will:

    

    1.1           Select
and notify Boeing of the suppliers and part numbers of the following BFE items
by the following dates:

    

    Galley
System                                                                           Complete

    

    Galley
Inserts                                                                           Complete

    

    Seats
(passenger)                                                                Complete

    

    Cabin Systems
Equipment                                                                           Complete

    

    Miscellaneous Emergency
Equipment                                                                [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    Cargo Handling
Systems                                                                Complete

    

    

    For a new certification,
supplier requires notification [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT] prior
to

    Cargo
Handling System on-dock date.

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    2.           On-dock
Dates

    

     On
or before[CONFIDENTIAL PORTION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT], Boeing will provide to Customer a BFE
Requirements On-Dock/Inventory Document (BFE Document) or an electronically
transmitted BFE Report which may be periodically revised, setting forth the
items, quantities, on-dock dates and shipping instructions relating to the
in-sequence installation of BFE.  For planning purposes, a preliminary
BFE on-dock schedule is set forth below:

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
                        Aircraft                            Aircraft

               

               

               

               

               

              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      
	
              Seats

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            
	
              Winglets

            

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
                        Aircraft                                Aircraft

               

               

               

               

               

              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      
	
              Seats

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            
	
              Winglets

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
                        Aircraft                                Aircraft

               

               

               

               

               

              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      
	
              Seats

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            
	
              Winglets

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
                        Aircraft                              Aircraft

               

               

               

               

               

              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      
	
              Seats

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            
	
              Winglets

            

    

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
                        Aircraft                              Aircraft

               

               

               

               

               

              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      
	
              Seats

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            
	
              Winglets

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
                        Aircraft                             Aircraft

               

               

               

               

               

              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      
	
              Seats

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            
	
              Winglets

            

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
                    Aircraft

               

               

              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      
	
              Seats

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	
              Winglets

            

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
                        Aircraft                           Aircraft

               

               

               

               

               

              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      
	
              Seats

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            
	
              Winglets

            

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

     

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
                        Aircraft                                 Aircraft

               

               

               

               

               

              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      
	
              Seats

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            
	
              Winglets

            

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
                        Aircraft                              Aircraft

               

               

               

               

               

              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      
	
              Seats

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            
	
              Winglets

            

    

    

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
                        Aircraft                             Aircraft

               

               

               

               

               

              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      
	
              Seats

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            
	
              Winglets

            

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
                        Aircraft                             Aircraft

               

               

               

               

               

              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      
	
              Seats

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            
	
              Winglets

            

    

    

    

    

    

    Item                                                              Preliminary On-Dock
Dates

    

    
      	 
      	
                   Aircraft

               

               

               

              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT]

            
	 
      
	
              Seats

            
	
              Galleys/Furnishings

            
	
              Antennas
      & Mounting Equipment

            
	
              Avionics

            
	
              Cabin
      Systems Equipment

            
	
              Miscellaneous
      Emergency Equipment

            
	
              Textiles/Raw
      Material

            
	
              Cargo
      Systems

            
	
              Provision
      Kits

            
	
              Winglets

            

    

    

    

    

    

    
      	
              3.  

            	
              Additional
      Delivery Requirements

            

    

    

    Customer
will insure that Customer’s BFE suppliers provide sufficient information to
enable Boeing, when acting as Importer of Record for Customer’s BFE, to comply
with all applicable provisions of the U.S. Customs Service.exhibit10w20.htm

                                       
  AMERICAN
AIRLINES                       
  Exhibit 10.20

    2007
ANNUAL INCENTIVE PLAN, AS AMENDED AND RESTATED

    

    

    Background

    

    As part
of the restructuring process that took place in April 2003, three new
broad-based variable compensation plans were created: the Broad Based Employee
Stock Option Plan, a new Profit Sharing Plan and the Annual Incentive Plan (the
“Plan” or “AIP”).

    

    The
framework for the Plan was developed during the restructuring, but the specific
plan metrics were left to the discretion of the Board of Directors (sometimes
referred to as the “Board”).

    

    The Board
has determined that for 2007 there will be two components to the Plan – customer
service and financial.  While related, the two components will be
treated separately.  The financial component will provide an award if
the company meets annual financial goals.  The customer service
component will provide an award if the company meets customer satisfaction and
dependability goals, regardless of its financial
performance.  Providing the opportunity for a customer service payout
without meeting financial hurdles recognizes that the company’s performance in
the two areas most important to our customers – dependability and customer
satisfaction – will contribute to improved profitability.

    

    These
broad-based compensation plans have been designed to allow all employees
throughout the American Airlines team to share in the company’s
success.  The Plan provides the opportunity to share immediately in
that success by taking concrete steps in each employee’s everyday work that will
move the company towards profitability.

    

    With
input from our employees, the unions and the Board, these broad-based variable
compensation programs will continue to evolve.  Today, they form the
building blocks necessary to ensure that everyone is able to share in the
company’s success.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Definitions

    

    Capitalized
terms not otherwise defined in the Plan will have the meanings set forth in the
2003 Employee Stock Incentive Plan (the “2003 Stock Plan”).

    

    “AMR” is
defined as AMR Corporation.

    

    “Affiliate”
is defined as a subsidiary of AMR or any entity that is designated by the
Committee as a participating employer under the Plan, provided that AMR directly
or indirectly owns at least 20% of the combined voting power of all classes of
stock of such entity.

    

    “American”
is defined as AMR less AMR subsidiaries other than American Airlines, Inc. and
its subsidiaries.

    

    “American
Airlines” is defined as American Airlines, Inc.

    

    “American’s
Pre-Tax Earnings Margin” is a percentage and is defined as American’s earnings,
relative to its revenues, before any applicable income tax expense and is
exclusive of any profit sharing payments, payments under the Plan and any
special, extraordinary or one-time items as may be determined by the Committee
in its discretion, after consultation with AMR’s independent
auditors.

    

    “Committee”
is defined as the Compensation Committee of the AMR Board of
Directors.

    

    “Competitor”
is defined as one of AirTran Airways, Alaska Airlines, Continental Airlines,
Delta Air Lines, Frontier Airlines, JetBlue Airways, Northwest Airlines,
Southwest Airlines, United Air Lines and US Airways.  During the Plan
year, the Committee delegates to the Incentive Compensation Committee the
authority to modify the universe of companies that comprise the definition of
“Competitor”.

    

    “DOT
Rank” is defined as American’s relative rank with respect to the Competitors in
the category of “arrivals+14 (A+14)” as determined by the U.S. Department of
Transportation (DOT).  This monthly ranking is based on DOT’s
aggregated A+14 data for the period January 1, 2007 through December 31, 2007
inclusive.  To the extent that at any point during the year a
Competitor ceases to report A+14 data, it will be excluded from the calculation
for the month in which it ceases to report A+14 data, and for future months,
until it begins to report A+14 data for a full month.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    “Eligible
Earnings” is defined by the nature of the work group.  For employees
who are represented by a union, the definition of Eligible Earnings will be the
definition contained in the Letter of Agreement between the union and the
company.  For employees who are not represented by a union the
definition of Eligible Earnings will be identical to the term “Qualified
Earnings” under the 2003 American Airlines Employee Profit Sharing
Plan.

    

    "Fund" is
defined as the fund, if any, accumulated in accordance with this
Plan.

    

    “Letters
of Agreement” is defined as the agreements reached with the Allied Pilots
Association, Association of Professional Flight Attendants and the Transport
Workers Union during the April 2003 restructuring process that define the
framework of the Plan.

    

    “Measure”
is defined, as appropriate, as American’s Pre-Tax Earnings Margin, DOT Rank or
Survey America Rank.

    

    “Named
Executive Officers” is defined as the officers of American who are named in the
AMR proxy statement that reports income for the year in which awards under the
Plan are earned.

    

    “Other
Cash Compensation Programs” is defined as cash payments to management employees
that are not predicated upon the criteria and thresholds contained in the Plan.
Per discussions and as specified in the Letters of Agreement, this term does not
include salary, stock-based compensation, severance, retirement benefits or
deferred payments of base compensation, or eligible cash bonuses from prior
years.

    

     “Profit
Sharing Plan” is defined as the 2007 Employee Profit Sharing Plan.

    

    “Survey
America Rank” is defined as American’s relative rank with respect to its
Competitors in the category of  “Overall Travel Experience”, using a
blended ranking of first class and coach cabin, as reported in Plog Inc.’s
Survey America.  The Survey America ranking is based on monthly data
for American and the Competitors for the period January 1, 2007 through December
31, 2007, inclusive.  To the extent that at any point during such year
a Competitor ceases to participate, it will be excluded from the calculation for
the month in which it ceased to participate, and for future months, until it
begins to participate again for a full month period.

    

    “Target
Award” is defined as the award (stated as a percentage of Eligible Earnings) for
an eligible participant when target level is achieved on the financial
measure.  The Target Award is determined by the employee’s job
level.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Plan
Measures

    

    As
outlined earlier, the Plan is comprised of two components: customer service and
financial.

    

    Customer
Service Component

    

    The
customer service component of the Plan will include two performance metrics –
customer satisfaction and dependability.  The Plan will reward
employees if American achieves at least one of the two metrics.

    

    The
customer satisfaction metric will be based on American’s Survey America
Rank.  The dependability metric will be based on American’s DOT
Rank.

    

    Monthly
awards will be based on the higher of the monthly rankings
for DOT Rank or for Survey America Rank, as per the payout schedule
below.  These award levels are the same for all employees regardless
of full-time or part-time status or job level.

    

    

    
      	 
      	
              Payout

            
	 
      	
              Per
      Person

            
	
              Monthly Rank

            	
              Per Month

            
	
                      First

            	
              $100

            
	
              Second
      - Third

            	
              $  50

            
	
               Fourth
      - Sixth

            	
              $  25

            

    

    

    If both
metrics are achieved in any single month, the awards will not be
additive.  Awards will be based solely on the higher ranking of the
two metrics.

    

    Awards
under the customer service component will be paid regardless of performance
under the financial component.  The awards under the customer service
component will be paid, net of applicable taxes, within 75 days after DOT Rank
and Survey America Rank are available and employee eligibility is
established.  Payment for the fourth quarter will be paid in any event
no later than March 15th of the
succeeding year.

    

    

    For
example:

    

    

    
      	 
      	
              Monthly Ranking

            	
              Higher

            	 
      
	 
      	
              Survey

            	 
      	
              Rank

            	 
      
	 
      	
              America

            	
              DOT

            	
              Achieved

            	
              Payout

            
	
              January

            	
               2

            	
              7

            	
              2

            	
              2nd
      place = $  50

            
	
              February

            	
               4

            	
              5

            	
              4

            	
              4th
      place = $  25

            
	
              March

            	
              3

            	
               1

            	
              1

            	
              1st
      place = $100

            
	 
      	 
      	 
      	
                                          Quarterly
      Payout   $175

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Customer
Service Component One-Time Award

    

    In
addition, in consideration for the unique circumstances faced by American and
its employees in 2007, and as determined at the sole discretion of the
Committee, eligible employees will be paid under the customer service component
of the Plan a one-time payment (the “Customer Service Component One-Time
Award”), on or before March 15, 2008.

    

    

    Financial
Component

    

    The
financial component of the Plan will be based upon American’s Pre-Tax Earnings
Margin for the full-year 2007.  The measure has a threshold
(performance below this level earns no award), a target and a maximum as
reflected below:

    

    
      	 
      	
              American’s
      Pre-Tax

            
	 
      	
              Earnings Margin

            
	
              Threshold

            	
              5%

            
	
              Target

            	
              10%

            
	
              Maximum

            	
              15%

            

    

    

    For
non-management, support staff and management levels 1-4, awards under the
financial component, in combination with the customer service awards, will
provide total annual Plan payouts ranging from 2.5% of Eligible Earnings at
threshold, 5% of Eligible Earnings at target and 10% of Eligible Earnings at
Maximum.  Award levels have a linear progression as American’s Pre-Tax
Earnings Margin increases between the threshold and target levels, and between
the target and maximum levels.

    

    

    
      	 
      	
              American’s
      Pre-Tax

            	
              Award
      as a % of

            
	 
      	
              Earnings Margin

            	
              Eligible Earnings

            
	
              Threshold

            	
              5%

            	
              2.5%

            
	
              Target

            	
              10%

            	
              5.0%

            
	
              Maximum

            	
              15%

            	
              10.0%

            

    

    

    For
management Levels 5 and above, none of whom participate in the Profit Sharing
Plan; the Plan is the successor to the traditional Incentive Compensation
Plan.  As in the past, the awards for employees at Level 5 and above
will be determined by the senior management of AMR or, in certain instances, by
the Board; will vary by level; and will be based on an assessment of individual
performance.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    If the
company does not achieve the threshold level of American’s Pre-Tax Earnings
Margin, there will be no financial performance payout. However, a participant
retains any awards earned in 2007 for customer service
performance.  When the threshold level of American’s Pre-Tax Earnings
Margin is met, participants may be entitled to a payment under the Plan (refer
to the example below).  In this case, any customer service awards
earned during 2007, other than the Customer Service Component One-Time Award,
act as a “deposit” against the amount to be awarded pursuant to the financial
component.   The amount of the financial performance payout a
participant receives will be the difference, if any, between what is earned
under the financial performance formula and what has already been earned through
the customer service awards (net of applicable taxes), excluding the Customer
Service Component One-Time Award.

    

    For
example (an individual employee’s sample annual payout):

    

    Customer
Service

    1 month ~
1st
Place            1 x
$100 = $100

    3 months
~ 2nd -
3rd
Place   3 x $50  = $150

    8 months
~ 4th -
5th
Place    8 x $25  = $200

       Customer
Service
Payout                 $450

    

    Financial ~ achieve
5% American’s pre-tax earnings threshold and have $40,000 in Eligible
Earnings

    2.5% x
$40,000
=                                                             $1,000

    less
Customer Service
payout                                    
 ($450)

       Financial
Payout                                                            $550

    

    Total
Annual payout is $1,000 ($450 + $550), or 2.5% of Eligible Earnings (net of
applicable taxes).

    

    The AIP
Letters of Agreement provide that Other Cash Compensation Programs for
management employees may be no more than 20% of the maximum possible award that
was or could have been earned by the individual management employee under the
Plan formula (the “20% Limitation”).  Any payment under the 20%
Limitation shall be made by March 15, 2008.

    

    The Board
has established a program that, based on an individual’s performance,
anticipates payouts to Level 5 and above management employees up to the 20%
Limitation. (Level 5 and above employees are not eligible for the Profit Sharing
Plan)  This program is designed to commence payments at $500 million
in American’s pre-tax earnings, the same financial threshold as exists in the
Profit Sharing Plan.  This is consistent with the company’s past
practice of restricting payouts under any management incentive compensation
program until payouts occur under the corresponding employee Profit Sharing
Plan.  Payouts under this program will cease when the financial
threshold under the Plan (a 5% Pre-Tax Earnings Margin for American) is
achieved.  Any payment under the program described in this paragraph
shall be made by March 15, 2008.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Although
the Board has determined that a program to use the flexibility provided for in
the Letters of Agreement will not commence until reaching a threshold of $500
million in American’s pre-tax earnings and will be discontinued when the
financial threshold of the Plan is achieved, the company also retains the
ability to make a payment to an individual under the 20% Limitation as provided
for in the Letters of Agreement.

    

    The
Letters of Agreement and related discussions specify that for purposes of the
20% Limitation, Other Cash Compensation Programs does not include salary,
stock-based compensation, severance, retirement benefits or deferred payments of
base compensation, or eligible cash bonuses from prior years.

    

    

    Eligibility for
Participation

    

    Customer
Service Component (including the Customer Service Component One-Time
Award):

    

    To earn
an award under the customer service component of the Plan (including the
Customer Service Component One-Time Award), an individual must have been
employed as a regular full-time or part-time employee at American, in a
participating workgroup (employees in the United States, Puerto Rico and the
U.S. Virgin Islands) during the applicable month to be eligible to participate
in the Plan.

    

    The
Committee, at its discretion, may permit participation by employees of
Affiliates who have been so employed by the Affiliate since the first day in the
applicable month, if they become employed by American during the applicable
month during 2007.

    

    In
addition to the terms listed above, in order for full-time and part-time
employees to earn a payout under the customer service measure (including the
Customer Service Component One-Time Award), an individual cannot be on any type
of leave during the applicable month, except approved FMLA, injury on duty,
military, overage or time-card leave, as provided for under the company’s
policies, collective bargaining agreement or state law as
applicable.

    

    Moreover,
an individual will not be eligible to earn a customer service award (including
the Customer Service Component One-Time Award) if such individual is, at the
same time, eligible to participate in:

    

    
      	
               
      

            	
              i)

            	
              any
      incentive compensation, profit sharing, commission or other bonus plan
      sponsored by an Affiliate of American,
or

            

    

    
      	
              ii)  

            	
              any
      commission or bonus plan, with the exception of American’s Profit Sharing
      Plan or provisions of the Annual Incentive Plan, sponsored by American,
      any division of American or any Affiliate of
  American

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    In order
to earn a customer service award under the Plan (including
the Customer Service Component One-Time Award), an individual must satisfy the
aforementioned eligibility requirements and must be an employee of American or
an Affiliate at the time an award under the Plan is paid.  If at the
time awards are paid under the Plan, an individual has retired from American or
an Affiliate, has been laid off, is on leave of absence with reinstatement
rights, is Disabled, or has died, the award which the individual otherwise would
have received under the Plan but for such retirement, lay-off, leave,
Disability, or death will be paid (on a pro rata basis) to the individual, or
his/her estate in the event of death.

    

    The
percentage of the payout that an individual receives for any given month will be
determined based upon the percentage of his/her schedule that the individual
fulfills in that month.  For Plan purposes, an individual will be
considered to have fulfilled his/her schedule if he/she actually works at least
50% of his/her scheduled time (50% of monthly guarantee hours for flight crew)
or takes a scheduled vacation or time-card leave, which, together with his/her
actual work time, amounts to at least 50% of his/her scheduled time for the
month. If an individual does not fulfill his scheduled time due to one of the
aforementioned leaves, his award will be pro rated based on actual hours worked
in that month (vis-a-vis hours scheduled in that month); otherwise, no payment
will be made.

    

    Notwithstanding
anything to the contrary in this Plan, American levels 8 and above management
employees are not eligible to receive the Customer Service Component One-Time
Award.

    

    Financial
Component

    

    To earn
an award under the financial component of the Plan, an individual must have been
employed as a regular full-time or part-time employee at American, in a
participating workgroup (employees in the United States, Puerto Rico and the
U.S. Virgin Islands) during 2007 to be eligible to participate in the
Plan.

    

    The
Committee, at its discretion, may permit participation by employees of
Affiliates who have been so employed by the Affiliate during the Plan year, if
they become employed by American during the Plan year.  In such
instances, only eligible earnings at American will be included in the payout
calculation.

    

    Notwithstanding
the forgoing, however, an individual will not be eligible to participate in the
Plan if such individual is, at the same time, eligible to participate
in:

    

    
      	
              i)  

            	
              any
      incentive compensation, profit sharing, commission or other bonus plan
      sponsored by an Affiliate of American,
or

            

    

    
      	
              ii)  

            	
              any
      commission or bonus plan, with the exception of American’s Employee Profit
      Sharing Plan or provisions of the Annual Incentive Plan, sponsored by
      American, any division of American or any Affiliate of
      American

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    In order
to earn an award under the financial component of the Plan, an individual must
satisfy the aforementioned eligibility requirements and must be an employee of
American or an Affiliate at the time such financial award under the Plan is
paid.  If at the time such awards are paid under the Plan, an
individual has retired from American or an Affiliate, has been laid off, is on
leave of absence with reinstatement rights, is Disabled, or has died, the award
which the individual otherwise would have received under the Plan but for such
retirement, lay-off, leave, Disability, or death may be paid (on a pro rata
basis) to the individual, or his/her estate in the event of death, at the
discretion of the Committee.

    

    

    Allocation of Individual
Awards

    

    The
Committee, in consultation with the Chairman, President and CEO of American,
will approve awards for officers of American, including the Named Executive
Officers.  The award for an officer will be equal to an amount
calculated in accordance with this Plan, as adjusted for individual
performance.  Provided, however, that the sum of all awards made to
officers may not exceed the sum of officer awards as calculated in accordance
with this Plan. Awards for the Named Executive Officers will be equal to the
award earned under the financial component of the Plan.  An award
under the Plan to an officer may not exceed the amount set forth in Section 11
of the 1998 Long Term Incentive Plan, as amended.

    

    The
Chairman, President and CEO of American, in consultation with the executive and
senior vice presidents of American, will approve awards for non-officer eligible
employees (Level 5 and above).  An award for a non-officer will be
equal to an amount calculated in accordance with this Plan, as adjusted for
individual performance.  Provided, however, that the sum of all awards
made to non-officers may not exceed the sum of non-officer awards calculated in
accordance with this Plan.

    

    

    Administration

    

    The
Committee shall have authority to administer and interpret the Plan, establish
administrative rules, approve eligible participants, and take any other action
necessary for the proper and efficient operation of the Plan, consistent with
the Letters of Agreement reached with each of the unions.  The amount,
if any, of the Fund shall be audited by the General Auditor of American based on
a certification of American’s Pre-Tax Earnings Margin by AMR’s independent
auditors.  For the Financial Measure, a summary of awards under the
Plan shall be provided to the Committee at the first regular meeting following
determination of the awards.  To the extent a Measure is no longer
compiled by the DOT or Survey America as applicable, during a Plan year, the
Committee will substitute a comparable performance measure for the remainder of
the Plan year.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Method of
Payment

    

    The
Committee will determine the method of payment of awards.  The
financial awards shall be paid (net of applicable taxes) as soon as practicable
after audited financial statements for the year 2007 are available, but no later
than March 15, 2008.  The customer service measure is paid
independently of the financial measure.  The customer service award
(excluding the Customer Service Component One-Time Award) will be paid (net
applicable taxes) quarterly within 75 days after the DOT Rank and Survey America
Rank are available and employee eligibility is established.  The
Customer Service Component One-Time Award will be paid no later than March
15,  2008.

    

    

    General

    

    Neither
this Plan nor any action taken hereunder shall be construed as giving any
employee or participant the right to be retained in the employ of American or an
Affiliate.

    

    Nothing
in the Plan shall be deemed to give any employee any right, contractually or
otherwise, to participate in the Plan or in any benefits hereunder, other than
the right to receive payment of such incentive compensation as may have been
expressly awarded by the Committee.

    

    In
consideration of the employee’s privilege to participate in the Plan, the
employee agrees (i) not to disclose any trade secrets of, or other
confidential/restricted information of, American or its Affiliates to any
unauthorized party, (ii) not to make any unauthorized use of such trade secrets
or confidential or restricted information during his or her employment with
American or its Affiliates or after such employment is terminated, and (iii) not
to solicit any then current employees of American or any other subsidiaries of
AMR to join the employee at his or her new place of employment after his or her
employment with American or its Affiliates is terminated.

    

    The
employee shall not have the right to defer any payment under the
Plan.  The Committee and American Airlines shall not accelerate any
payment under the plan.

    

    It is
intended that this Plan be exempt from regulation under the Employee Retirement
Income Security Act of 1974, as amended, as a “payroll practice” and a “bonus
program”, as described in U.S. Department of Labor Regulations 2510.3-1(b) and
2510.3-2(c), respectively.  This Plan is intended to provide
“short-term deferrals”, as described in Treasury Regulation 1.409A-1(b)(4) under
section 409A of the Code or successor guidance thereto, and is intended not to
be a “nonqualified deferred compensation plan”, as described in Treasury
Regulation 1.409A-1(a)(1) under section 409A of the Code or successor guidance
thereto.  In the administration and interpretation of the Plan, such
intention is to govern.

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