Item 7.01. Regulation FD Disclosure.
On August 5, 2016, American Airlines, Inc. (American) announced that it had reached an interim agreement with the TWU-IAM Association to move
approximately 35,000 maintenance, fleet service, stores and planner employees represented by the TWU-IAM Association to new pay rates and to provide additional flexibility in assigning work to these employees. The new pay rates involve significant
wage increases for these employees and are comparable to the rates prevailing at Delta Air Lines and United Airlines. We presently estimate that the new pay rates will increase our pre-tax operating costs by approximately $75 million in the third
fiscal quarter of 2016 and $120 million in the fourth fiscal quarter. This agreement does not constitute a new joint collective bargaining agreement, and negotiations for such an agreement will continue.
The information in this Item 7.01 is being furnished and shall not be deemed to be filed for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section and shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended,
except as shall be expressly set forth by specific reference in such filing.
Cautionary Statement Regarding Forward-Looking Statements and Information
This document includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements may be identified by words such as may, will, expect, intend, anticipate, believe, estimate, plan, project, could,
should, would, continue, seek, target, guidance, outlook, if current trends continue, optimistic, forecast and other similar
words. Such statements include, but are not limited to, statements about the estimated future costs of the labor agreement referred to herein, and other statements that are not historical facts. These forward-looking statements are based on the
Companys current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in
the forward-looking statements. These risks and uncertainties include, but are not limited to the following: significant operating losses in the future; downturns in economic conditions that adversely affect the Companys business; the impact
of continued periods of high volatility in fuel costs, increased fuel prices and significant disruptions in the supply of aircraft fuel; competitive practices in the industry, including the impact of low-cost carriers, airline alliances and industry
consolidation; the challenges and costs of integrating operations and realizing anticipated synergies and other benefits of the merger transaction with US Airways Group, Inc.; costs of ongoing data security compliance requirements and the impact of
any significant data security breach; the Companys substantial indebtedness and other obligations and the effect they could have on the Companys business and liquidity; an inability to obtain sufficient financing or other capital to
operate successfully and in accordance with the Companys current business plan; increased costs of financing, a reduction in the availability of financing and fluctuations in interest rates; the effect the Companys high level of fixed
obligations may have on its ability to fund general corporate requirements, obtain additional financing and respond to competitive developments and adverse economic and industry conditions; the Companys significant pension and other
postretirement benefit funding obligations; the impact of any failure to comply with the covenants contained in financing arrangements; provisions in credit card processing and other commercial agreements that may materially reduce the
Companys liquidity; the impact of union disputes, employee strikes and other labor-related disruptions; any inability to maintain labor costs at competitive levels; interruptions or disruptions in service at one or more of the Companys
hub airports; any inability to obtain and maintain adequate facilities, infrastructure and slots to operate the Companys flight schedule and expand or change its route network; the Companys reliance on third-party regional operators or
third-party service providers that have the ability to affect the Companys revenue and the publics perception about its services; any inability to effectively manage the costs, rights and functionality of third-party distribution
channels on which the Company relies; extensive government regulation, which may result in increases in the Companys costs, disruptions to the Companys operations, limits on the Companys operating flexibility, reductions in the
demand for air travel, and competitive disadvantages; the impact of the heavy taxation on the airline industry; changes to the Companys business model that may not successfully increase revenues and may cause operational difficulties or
decreased demand; the loss of key personnel or inability to attract and retain additional qualified personnel; the impact of conflicts overseas, terrorist attacks and ongoing security concerns; the global scope of the Companys business and any
associated economic and political instability or adverse effects of events, circumstances or government actions beyond its control, including the impact of foreign currency exchange rate fluctuations and limitations on the repatriation of cash held
in foreign countries; the impact of environmental and noise regulation; the impact associated with climate change, including increased regulation to reduce emissions of greenhouse gases; the Companys reliance on technology and automated
systems and the impact of any failure of
these technologies or systems; challenges in integrating the Companys computer, communications and other technology systems; losses and adverse publicity stemming from any accident
involving any of the Companys aircraft or the aircraft of its regional or codeshare operators; delays in scheduled aircraft deliveries, or other loss of anticipated fleet capacity, and failure of new aircraft to perform as expected; the
Companys dependence on a limited number of suppliers for aircraft, aircraft engines and parts; the impact of changing economic and other conditions beyond the Companys control, including global events that affect travel behavior such as
an outbreak of a contagious disease, and volatility and fluctuations in the Companys results of operations due to seasonality; the effect of a higher than normal number of pilot retirements, more stringent duty-time regulations, increased
flight hour requirements for commercial airline pilots and other factors that have caused a shortage of pilots; the impact of possible future increases in insurance costs or reductions in available insurance coverage; the effect on the
Companys financial position and liquidity of being party to or involved in litigation; an inability to use net operating losses carried forward from prior taxable years (NOL Carryforwards); any impairment in the amount of the Companys
goodwill and an inability to realize the full value of the Companys intangible or long-lived assets and any material impairment charges that would be recorded as a result; price volatility of the Companys common stock; the effects of the
Companys capital deployment program and the limitation, suspension or discontinuation of the Companys share repurchase programs or dividend payments thereunder; delay or prevention of stockholders ability to change the composition
of the Companys board of directors and the effect this may have on takeover attempts that some of the Companys stockholders might consider beneficial; the effect of provisions of the Companys Restated Certificate of Incorporation
and Amended and Restated Bylaws that limit ownership and voting of its equity interests, including its common stock; the effect of limitations in the Companys Restated Certificate of Incorporation on acquisitions and dispositions of its common
stock designed to protect its NOL Carryforwards and certain other tax attributes, which may limit the liquidity of its common stock; and other economic, business, competitive, and/or regulatory factors affecting the Companys business,
including those set forth in the Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 (especially in Part I, Item 2, Managements Discussion and Analysis of Financial Condition and Results of Operations,
and Part II, Item 1A, Risk Factors) and other risks and uncertainties listed from time to time in the Companys other filings with the SEC. There may be other factors of which the Company is not currently aware that may affect matters
discussed in the forward-looking statements and may also cause actual results to differ materially from those discussed. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statements. The Company does
not assume any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these forward-looking statements other than as required by law.