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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 2022
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 1-8400
American Airlines Group Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
75-1825172
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1 Skyview Drive,
Fort Worth,
Texas
76155
(682) 278-9000
(Address of principal executive offices, including zip code) (Registrant’s telephone number, including area code)
Commission file number 1-2691
American Airlines, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
13-1502798
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1 Skyview Drive,
Fort Worth, Texas 76155 (682) 278-9000
(Address of principal executive offices, including zip code) (Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, $0.01 par value per share
 
AAL
 
The Nasdaq Global Select Market
Preferred Stock Purchase Rights
(1)
(1) Attached to the Common Stock
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. 
American Airlines Group Inc.
Yes
  No
American Airlines, Inc.
Yes
  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). 
American Airlines Group Inc.
Yes
  No
American Airlines, Inc.
Yes
  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
American Airlines Group Inc.
Large accelerated filer
Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company
American Airlines, Inc. Large accelerated filer Accelerated filer

Non-accelerated filer
Smaller reporting company Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
American Airlines Group Inc.
American Airlines, Inc.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
American Airlines Group Inc. Yes   No
American Airlines, Inc. Yes No
As of July 15, 2022, there were 649,845,927 shares of American Airlines Group Inc. common stock outstanding.
As of July 15, 2022, there were 1,000 shares of American Airlines, Inc. common stock outstanding, all of which were held by American Airlines Group Inc.



American Airlines Group Inc.
American Airlines, Inc.
Form 10-Q
Quarterly Period Ended June 30, 2022
Table of Contents
    Page
PART I: FINANCIAL INFORMATION
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II: OTHER INFORMATION
Item 1.
Item 1A.
Item 6.

1


General
This report is filed by American Airlines Group Inc. (AAG) and its wholly-owned subsidiary American Airlines, Inc. (American). References in this report to “we,” “us,” “our,” the “Company” and similar terms refer to AAG and its consolidated subsidiaries. References in this report to “mainline” refer to the operations of American only and exclude regional operations.
Glossary of Terms
For the convenience of the reader, the definitions of certain capitalized industry and other terms used in this report have been consolidated into a glossary beginning on page 5.
Note Concerning Forward-Looking Statements
Certain of the statements contained in this report should be considered forward-looking statements within the meaning of the Securities Act of 1933, as amended (the Securities Act), the Securities Exchange Act of 1934, as amended (the Exchange Act), and 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 our plans, objectives, expectations, intentions, estimates and strategies for the future, the continuing availability of borrowings under revolving lines of credit, and other statements that are not historical facts. These forward-looking statements are based on our 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, those described below under Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Part II, Item 1A. Risk Factors and other risks and uncertainties listed from time to time in our filings with the Securities and Exchange Commission (the SEC).
All of the forward-looking statements are qualified in their entirety by reference to the factors discussed in Part II, Item 1A. Risk Factors and elsewhere in this report. There may be other factors of which we are 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. In particular, the consequences of the coronavirus (COVID-19) outbreak and subsequent volatility in demand for air travel due to economic conditions and the travel industry in general and our financial position and operating results in particular have been material, are changing rapidly, and cannot be predicted. We do 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 such statements other than as required by law. Any forward-looking statements speak only as of the date of this report or as of the dates indicated in the statements.
2

Summary of Risk Factors
Our business is subject to a number of risks and uncertainties that may affect our business, results of operations and financial condition, or the trading price of our common stock or other securities. We caution the reader that these risk factors may not be exhaustive. We operate in a continually changing business environment, and new risks and uncertainties emerge from time to time. Management cannot predict such new risks and uncertainties, nor can it assess the extent to which any of the risk factors below or any such new risks and uncertainties, or any combination thereof, may impact our business. These risks are more fully described in Part II, Item 1A. Risk Factors. These risks include, among others, the following:
Risks Related to our Business
The outbreak and global spread of COVID-19 and government-imposed measures to prevent or reduce its spread have resulted in significant volatility in demand for air travel, the impacts of which have and will continue to adversely impact our business, operating results, financial condition and liquidity.
Downturns in economic conditions could adversely affect our business.
We will need to obtain sufficient financing or other capital to operate successfully.
Our high level of debt and other obligations may limit our ability to fund general corporate requirements and obtain additional financing, may limit our flexibility in responding to competitive developments and cause our business to be vulnerable to adverse economic and industry conditions.
We have significant pension and other postretirement benefit funding obligations, which may adversely affect our liquidity, results of operations and financial condition.
If our financial condition worsens, provisions in our credit card processing and other commercial agreements may adversely affect our liquidity.
The loss of key personnel upon whom we depend to operate our business or the inability to attract and develop additional qualified personnel could adversely affect our business.
Our business has been and will continue to be affected by many changing economic and other conditions beyond our control, including global events that affect travel behavior, and our results of operations could be volatile and fluctuate due to seasonality.
Union disputes, employee strikes and other labor-related disruptions, or our inability to otherwise maintain labor costs at competitive levels may adversely affect our operations and financial performance.
If we encounter problems with any of our third-party regional operators or third-party service providers, our operations could be adversely affected by a resulting decline in revenue or negative public perception about our services.
Any damage to our reputation or brand image could adversely affect our business or financial results.
Changes to our business model that are designed to increase revenues may not be successful and may cause operational difficulties or decreased demand.
Our intellectual property rights, particularly our branding rights, are valuable, and any inability to protect them may adversely affect our business and financial results.
We may be a party to litigation in the normal course of business or otherwise, which could affect our financial position and liquidity.
Our ability to utilize our NOLs and other carryforwards may be limited.
3

We have a significant amount of goodwill, which is assessed for impairment at least annually. In addition, we may never realize the full value of our intangible assets or long-lived assets, causing us to record material impairment charges.
Risks Related to the Airline Industry
The airline industry is intensely competitive and dynamic.
The commercial relationships that we have with other companies, including any related equity investments, may not produce the returns or results we expect.
Our business is very dependent on the price and availability of aircraft fuel and continued periods of high volatility in fuel costs, increased fuel prices or significant disruptions in the supply of aircraft fuel could have a significant negative impact on consumer demand, our operating results and liquidity.
Our business is subject to extensive government regulation, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions in the demand for air travel, and competitive disadvantages.
We operate a global business with international operations that are subject to economic and political instability and have been, and in the future may continue to be, adversely affected by numerous events, circumstances or government actions beyond our control.
We may be adversely affected by conflicts overseas or terrorist attacks; the travel industry continues to face ongoing security concerns.
We are subject to risks associated with climate change, including increased regulation of our CO2 emissions, changing consumer preferences and the potential increased impacts of severe weather events on our operations and infrastructure.
A shortage of pilots or other personnel could materially adversely affect our business.
We depend on a limited number of suppliers for aircraft, aircraft engines and parts.
Delays in scheduled aircraft deliveries or other loss of anticipated fleet capacity, and failure of new aircraft to perform as expected, may adversely impact our business, results of operations and financial condition.
We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or systems could harm our business, results of operations and financial condition.
Evolving data security and privacy requirements could increase our costs, and any significant data security or privacy incident could disrupt our operations, harm our reputation, expose us to legal risks and otherwise materially adversely affect our business, results of operations and financial condition.
We rely on third-party distribution channels and must manage effectively the costs, rights and functionality of these channels.
If we are unable to obtain and maintain adequate facilities and infrastructure throughout our system and, at some airports, adequate slots, we may be unable to operate our existing flight schedule and to expand or change our route network in the future, which may have a material adverse impact on our operations.
4

GLOSSARY OF TERMS
“2013 Credit Agreement” means the Amended and Restated Credit and Guaranty Agreement dated as of May 21, 2015, among American, AAG, the lenders from time to time party thereto, Deutsche Bank AG New York Branch, as administrative agent, and certain other parties thereto, as amended.
“2013 Revolving Facility” means the revolving credit facility provided for by the 2013 Credit Agreement.
“2013 Term Loan Facility” means the term loan facility provided for under the 2013 Credit Agreement.
“2014 Credit Agreement” means the Amended and Restated Credit and Guaranty Agreement, dated as of April 20, 2015, among American, AAG, the lenders from time to time party thereto, Citibank N.A., as administrative agent, and certain other parties thereto, as amended.
“2014 Revolving Facility” means the revolving credit facility provided for by the 2014 Credit Agreement.
“2014 Term Loan Facility” means the term loan facility provided for by the 2014 Credit Agreement.
“2021 Form 10-K” means AAG’s and American’s Annual Report on Form 10-K for the year ended December 31, 2021.
“2021-1 Aircraft” means the 26 aircraft financed or to be financed by American under the 2021-1 Aircraft EETCs.
“2021-1 Aircraft EETCs” means the two pass-through trusts created by American in November 2021 that have issued approximately $960 million aggregate face amount of Series 2021-1 Class A and Class B EETCs.
“2026 Notes” means the AAdvantage Issuers' 5.50% senior secured notes due 2026.
“2029 Notes” means the AAdvantage Issuers' 5.75% senior secured notes due 2029.
“AAdvantage” means the AAdvantage® frequent flyer program.
“AAdvantage Agreements” means the AAdvantage program agreements provided as collateral under the AAdvantage Financing.
“AAdvantage Financing” means the 2026 Notes, the 2029 Notes and the AAdvantage Term Loan Facility.
“AAdvantage Term Loan Facility” means the $3.5 billion term loan facility provided pursuant to the term loan credit and guaranty agreement, dated as of March 24, 2021, with Barclays Bank PLC, as administrative agent, Wilmington Trust, National Association, as collateral administrator, and the lenders party thereto.
“AAG”, “we”, “us”, “our” and similar terms means American Airlines Group Inc. and its consolidated subsidiaries.
“American” means American Airlines, Inc., a wholly-owned subsidiary of AAG.
“American Eagle” means our regional carriers, including our wholly-owned regional carriers Envoy, PSA and Piedmont, as well as third-party regional carriers including Mesa, Republic and SkyWest.
“AMR” or “AMR Corporation” means AMR Corporation and is used to reference AAG during the period of time prior to its emergence from Chapter 11 and the Merger.
“AOCI” means accumulated other comprehensive income (loss).
“April 2016 Credit Agreement” means the Credit and Guaranty Agreement, dated as of April 29, 2016, among American, AAG, the lenders from time to time party thereto, Barclays Bank PLC, as administrative agent, and certain other parties thereto, as amended.
“April 2016 Revolving Facility” means the revolving credit facility provided for by the April 2016 Credit Agreement.
“ARP” means the American Rescue Plan Act of 2021.
“ASM” means available seat mile and is a basic measure of production. One ASM represents one seat flown one mile.
“ATC system” means the U.S. National Airspace System.
5

“Bankruptcy Court” means the United States Bankruptcy Court for the Southern District of New York.
“Boeing” means The Boeing Company.
“Bylaws” means AAG’s Amended and Restated Bylaws, as amended.
“CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act.
“CASM” means total operating cost per available seat mile and is equal to total operating expenses divided by ASMs.
“CBAs” means collective bargaining agreements.
“CEO” means Chief Executive Officer.
“CFO” means Chief Financial Officer.
“China Southern Airlines” means China Southern Airlines Company Limited.
“CMA” means the United Kingdom Competition and Markets Authority.
“CO2” means carbon dioxide.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company” means AAG and its consolidated subsidiaries.
“Convertible Notes” means AAG’s 6.50% convertible senior notes due 2025.
“Convertible Notes Indenture” means the indenture, dated as of June 25, 2020, between AAG and the Convertible Notes Trustee, as supplemented by the first supplemental indenture, dated as of June 25, 2020, among AAG, American and the Convertible Notes Trustee.
“Convertible Notes Trustee” means Wilmington Trust, National Association, as trustee with respect to the Convertible Notes.
“CORSIA” means the Carbon Offsetting and Reduction Scheme for International Aviation.
“COVID-19” refers to a respiratory illness first detected in 2019 and the ensuing global pandemic that remains ongoing as of the date of this report.
“DCA” means Ronald Reagan Washington National Airport.
“DC Court” means the Federal District Court for the District of Columbia.
“December 2016 Credit Agreement” means the Credit and Guaranty Agreement dated as of December 15, 2016, among American, AAG, the lenders from time to time party thereto, Citibank N.A., as administrative agent, and certain other parties thereto, as amended.
“December 2016 Credit Facilities” means, collectively, the December 2016 Term Loan Facility and the revolving credit facility that may be established under the December 2016 Credit Agreement.
“December 2016 Term Loan Facility” means the term loan facility provided for under the December 2016 Credit Agreement.
“DOJ” means the United States Department of Justice.
“DOT” means the United States Department of Transportation.
“DOT Agreement” means the agreement that had been reached between the DOT, American and JetBlue in January 2021.
“EC” means the European Commission.
“EEA” means European Economic Area.
6

“EETC” means enhanced equipment trust certificate.
“Envoy” means Envoy Air Inc.
“EPA” means the U.S. Environmental Protection Agency.
“EPS” means earnings (loss) per common share.
“ETS” means EU Emissions Trading System.
“EU” means European Union.
"EU-UK Trade and Cooperation Agreement" means the trade and cooperation agreement between the EU and United Kingdom.
“Exchange Act” means Securities Exchange Act of 1934, as amended.
“FAA” means Federal Aviation Administration.
“GAAP” means generally accepted accounting principles in the U.S.
“GDS” means global distribution system.
“GHG” means greenhouse gas.
“GOL” means GOL Linhas Aéreas Inteligentes S.A.
“holdback” means an amount of cash held by our credit card processors in certain circumstances (including, with respect to certain agreements, our failure to maintain certain levels of liquidity).
“IAM” means International Association of Machinists & Aerospace Workers.
“IAM Pension Fund” means the IAM National Pension Fund.
“ICAO” means International Civil Aviation Organization.
“IP Notes” means American’s $1.0 billion in initial principal amount of 10.75% senior secured IP notes.
“JetBlue” means JetBlue Airways Corporation.
“JFK” means John F. Kennedy International Airport.
“LAX” means Los Angeles International Airport.
“LGA/DCA Notes” means American’s $200 million in initial principal amount of 10.75% senior secured LGA/DCA notes.
“LGA” means LaGuardia Airport.
“LGW” or “London Gatwick” means London Gatwick Airport.
“LHR” or “London Heathrow” means London Heathrow Airport.
“LIBOR” means the London interbank offered rate for deposits of U.S. dollars.
“LTV” means loan to value ratio.
“Mainline” means the operations of American and excludes regional operations.
“Merger” means the merger of US Airways Group and AMR Corporation on December 9, 2013.
“Mesa” means Mesa Airlines, Inc.
"NEA" means Northeast Alliance arrangement between American and JetBlue.
“NMB” means National Mediation Board.
7

“NOLs” means net operating losses.
“ORD” means Chicago O’Hare International Airport.
“OSHA” means Occupational Health and Safety Administration.
“OTAs” means online travel agents.
“Passenger load factor” means the percentage of available seats that are filled with revenue passengers.
“PEB” means Presidential Emergency Board.
“PFAS” means per- and polyfluoroalkyl substances.
“Piedmont” means Piedmont Airlines, Inc.
“PRASM” means passenger revenue per available seat mile and is equal to passenger revenues divided by ASMs.
“PSA” means PSA Airlines, Inc.
“PSP1” means the payroll support program established under the CARES Act.
“PSP1 Agreement” means the Payroll Support Program Agreement entered into by the Subsidiaries with Treasury on April 20, 2020.
“PSP1 Promissory Note” means the promissory note issued to Treasury in connection with PSP1.
“PSP1 Warrant Agreement” means the agreement entered into between AAG and Treasury in connection with the PSP1 Agreement, pursuant to which AAG issued PSP1 Warrants to Treasury to purchase up to an aggregate of approximately 14.0 million shares of AAG common stock.
“PSP1 Warrants” means the warrants issued or to be issued to Treasury pursuant to the PSP1 Warrant Agreement.
“PSP2” means the payroll support program established under the PSP Extension Law.
“PSP2 Agreement” means the Payroll Support Program Extension Agreement entered into by the Subsidiaries with Treasury on January 15, 2021.
“PSP2 Promissory Note” means the promissory note issued to Treasury in connection with PSP2.
“PSP2 Warrant Agreement” means the agreement entered into between AAG and Treasury in connection with the PSP2 Agreement, pursuant to which AAG issued PSP2 Warrants to Treasury to purchase up to an aggregate of approximately 6.6 million shares of AAG common stock.
“PSP2 Warrants” means the warrants issued or to be issued to Treasury pursuant to the PSP2 Warrant Agreement.
“PSP3” means the payroll support program established under the ARP.
“PSP3 Agreement” means the Payroll Support Program Agreement entered into by the Subsidiaries with Treasury on April 23, 2021.
“PSP3 Promissory Note” means the promissory note issued to Treasury in connection with PSP3.
“PSP3 Warrant Agreement” means the agreement entered into between AAG and Treasury in connection with the PSP3 Agreement, pursuant to which AAG issued PSP3 Warrants to Treasury to purchase up to an aggregate of approximately 4.4 million shares of AAG common stock.
“PSP3 Warrants” means the warrants issued or to be issued to Treasury pursuant to the PSP3 Warrant Agreement.
“PSP Extension Law” means Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021.
“Rehabilitation Plan” means the rehabilitation plan adopted by the IAM Pension Fund on April 17, 2019.
“Republic” means Republic Airways Inc.
8

“RLA” means Railway Labor Act.
“ROU” means right-of-use.
“RPM” or “RPMs” means revenue passenger mile or miles and is a basic measure of sales volume. One RPM represents one passenger flown one mile.
“SAF” means sustainable aviation fuel.
“SAIB” means special airworthiness information bulletin.
“SEC” means Securities and Exchange Commission.
“Section 382” means Section 382 of the Internal Revenue Code.
“Securities Act” means Securities Act of 1933, as amended.
“SkyWest” means SkyWest Airlines, Inc.
“slots” means landing and take-off rights and authorizations, as required by certain airports.
“SOFR” means the Secured Overnight Financing Rate.
“Subsidiaries” means American, Envoy, PSA and Piedmont, each a wholly-owned subsidiary of AAG.
“Tax Benefits Preservation Plan” means the tax benefits preservation plan adopted by the Board of Directors of AAG in December 2021 in order to preserve the Company's ability to use its NOLs and certain other tax attributes to reduce potential future income tax obligations.
“TRASM” means the total revenue per available seat mile and is equal to the total revenues divided by total mainline and third-party regional carrier ASMs.
“Treasury” means the U.S. Department of the Treasury.
“Treasury Loan Agreement” means the Loan and Guarantee Agreement, dated as of September 25, 2020, between AAG, American and Treasury which provides for the Treasury Term Loan Facility.
“Treasury Loan Warrants” means the warrants issued to Treasury pursuant to the Treasury Loan Warrant Agreement.
“Treasury Term Loan Facility” means the term loan facility provided for under the Treasury Loan Agreement.
“US Airways Group” means US Airways Group, Inc. and its consolidated subsidiaries.
“USTR” means the Office of the U.S. Trade Representative.
“Vertical” means Vertical Aerospace Ltd.
“WTO” means World Trade Organization.
“Yield” means a measure of airline revenue derived by dividing passenger revenue by RPMs.
9

PART I: FINANCIAL INFORMATION
This report on Form 10-Q is filed by both AAG and American and includes the Condensed Consolidated Financial Statements of each company in Item 1A and Item 1B, respectively.
10

ITEM 1A. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
AMERICAN AIRLINES GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share amounts)(Unaudited)
  Three Months Ended June 30, Six Months Ended June 30,
  2022 2021 2022 2021
Operating revenues:
Passenger $ 12,223  $ 6,545  $ 20,041  $ 9,724 
Cargo 328  326  692  641 
Other 871  607  1,588  1,121 
Total operating revenues 13,422  7,478  22,321  11,486 
Operating expenses:
Aircraft fuel and related taxes 4,020  1,611  6,522  2,644 
Salaries, wages and benefits 3,235  2,862  6,389  5,593 
Regional expenses 1,072  635  2,124  1,261 
Maintenance, materials and repairs 647  459  1,264  835 
Other rent and landing fees 694  686  1,372  1,256 
Aircraft rent 345  356  698  706 
Selling expenses 504  277  836  427 
Depreciation and amortization 504  481  995  959 
Special items, net (5) (1,288) 152  (2,996)
Other 1,389  958  2,675  1,675 
Total operating expenses 12,405  7,037  23,027  12,360 
Operating income (loss) 1,017  441  (706) (874)
Nonoperating income (expense):
Interest income 29  37 
Interest expense, net (468) (486) (932) (856)
Other income, net 25  49  118  158 
Total nonoperating expense, net (414) (432) (777) (690)
Income (loss) before income taxes 603  (1,483) (1,564)
Income tax provision (benefit) 127  (10) (324) (333)
Net income (loss) $ 476  $ 19  $ (1,159) $ (1,231)
Earnings (loss) per common share:
Basic $ 0.73  $ 0.03  $ (1.78) $ (1.92)
Diluted $ 0.68  $ 0.03  $ (1.78) $ (1.92)
Weighted average shares outstanding (in thousands):
Basic 650,346  644,123  649,925  639,366 
Diluted 718,532  656,372  649,925  639,366 

See accompanying notes to condensed consolidated financial statements.
11

AMERICAN AIRLINES GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)(Unaudited)
  Three Months Ended June 30, Six Months Ended June 30,
  2022 2021 2022 2021
Net income (loss) $ 476  $ 19  $ (1,159) $ (1,231)
Other comprehensive income (loss), net of tax:
Pension, retiree medical and other postretirement benefits 28  39  56  106 
Investments (2) —  (4) — 
Total other comprehensive income, net of tax 26  39  52  106 
Total comprehensive income (loss) $ 502  $ 58  $ (1,107) $ (1,125)
See accompanying notes to condensed consolidated financial statements.
12

AMERICAN AIRLINES GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share and par value)
June 30, 2022 December 31, 2021
  (Unaudited)  
ASSETS
Current assets
Cash $ 401  $ 273 
Short-term investments 12,121  12,158 
Restricted cash and short-term investments 997  990 
Accounts receivable, net 1,835  1,505 
Aircraft fuel, spare parts and supplies, net 2,273  1,795 
Prepaid expenses and other 898  615 
Total current assets 18,525  17,336 
Operating property and equipment
Flight equipment 38,754  37,856 
Ground property and equipment 9,595  9,335 
Equipment purchase deposits 617  517 
Total property and equipment, at cost 48,966  47,708 
Less accumulated depreciation and amortization (18,972) (18,171)
Total property and equipment, net 29,994  29,537 
Operating lease right-of-use assets 7,510  7,850 
Other assets
Goodwill 4,091  4,091 
Intangibles, net of accumulated amortization of $805 and $786, respectively
2,079  1,988 
Deferred tax asset 3,858  3,556 
Other assets 1,906  2,109 
Total other assets 11,934  11,744 
Total assets $ 67,963  $ 66,467 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Current maturities of long-term debt and finance leases $ 2,106  $ 2,489 
Accounts payable 2,733  1,772 
Accrued salaries and wages 1,505  1,489 
Air traffic liability 8,969  6,087 
Loyalty program liability 3,065  2,896 
Operating lease liabilities 1,483  1,507 
Other accrued liabilities 2,909  2,766 
Total current liabilities 22,770  19,006 
Noncurrent liabilities
Long-term debt and finance leases, net of current maturities 34,963  35,571 
Pension and postretirement benefits 4,755  5,053 
Loyalty program liability 6,189  6,239 
Operating lease liabilities 6,313  6,610 
Other liabilities 1,395  1,328 
Total noncurrent liabilities 53,615  54,801 
Commitments and contingencies
Stockholders’ equity (deficit)
Common stock, $0.01 par value; 1,750,000,000 shares authorized, 649,779,361 shares issued and outstanding at June 30, 2022; 647,727,595 shares issued and outstanding at December 31, 2021
Additional paid-in capital 7,259  7,234 
Accumulated other comprehensive loss (5,890) (5,942)
Retained deficit (9,797) (8,638)
Total stockholders’ deficit (8,422) (7,340)
Total liabilities and stockholders’ equity (deficit) $ 67,963  $ 66,467 
See accompanying notes to condensed consolidated financial statements.
13

AMERICAN AIRLINES GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)(Unaudited)
  Six Months Ended June 30,
  2022 2021
Net cash provided by operating activities $ 2,924  $ 3,644 
Cash flows from investing activities:
Capital expenditures, net of aircraft purchase deposit returns (1,405) 118 
Airport construction projects, net of reimbursements (156) (77)
Proceeds from sale of property and equipment 19  161 
Proceeds from sale-leaseback transactions —  163 
Sales of short-term investments 10,135  2,837 
Purchases of short-term investments (10,083) (13,840)
Increase in restricted short-term investments (10) (404)
Purchase of equity investment (200) — 
Other investing activities — 
Net cash used in investing activities (1,700) (11,036)
Cash flows from financing activities:
Payments on long-term debt and finance leases (1,659) (5,040)
Proceeds from issuance of long-term debt 574  12,096 
Shares withheld for taxes pursuant to employee stock plans (16) (13)
Proceeds from issuance of equity —  460 
Deferred financing costs —  (166)
Other financing activities 121 
Net cash provided by (used in) financing activities (1,095) 7,458 
Net increase in cash and restricted cash 129  66 
Cash and restricted cash at beginning of period 408  399 
Cash and restricted cash at end of period (1)
$ 537  $ 465 
Non-cash transactions:
Right-of-use (ROU) assets acquired through operating leases $ 460  $ 706 
Property and equipment acquired through finance leases 59  61 
Supplemental information:
Interest paid, net 870  687 
Income taxes paid
(1)The following table provides a reconciliation of cash and restricted cash to amounts reported within the condensed consolidated balance sheets:
Cash $ 401  $ 325 
Restricted cash included in restricted cash and short-term investments 136  140 
Total cash and restricted cash $ 537  $ 465 
See accompanying notes to condensed consolidated financial statements.
14

AMERICAN AIRLINES GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(In millions, except share amounts)(Unaudited)
Common
Stock
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Deficit
Total
Balance at December 31, 2021 $ $ 7,234  $ (5,942) $ (8,638) $ (7,340)
Net loss —  —  —  (1,635) (1,635)
Other comprehensive income, net —  —  26  —  26 
Issuance of 1,770,173 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes
—  (14) —  —  (14)
Share-based compensation expense
—  23  —  —  23 
Balance at March 31, 2022 7,243  (5,916) (10,273) (8,940)
Net income —  —  —  476  476 
Other comprehensive income, net —  —  26  —  26 
Issuance of 281,593 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes
—  (2) —  —  (2)
Share-based compensation expense —  18  —  —  18 
Balance at June 30, 2022 $ $ 7,259  $ (5,890) $ (9,797) $ (8,422)


























15

AMERICAN AIRLINES GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(In millions, except share amounts)(Unaudited)
Common
Stock
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Deficit
Total
Balance at December 31, 2020 $ $ 6,894  $ (7,103) $ (6,664) $ (6,867)
Net loss —  —  —  (1,250) (1,250)
Other comprehensive income, net —  —  67  —  67 
Impact of adoption of Accounting Standards Update 2020-06 related to convertible instruments —  (320) —  19  (301)
Issuance of 18,194,573 shares of AAG common stock pursuant to an at-the-market offering, net of offering costs
—  316  —  —  316 
Issuance of PSP2 Warrants —  65  —  —  65 
Issuance of 1,700,380 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes
—  (13) —  —  (13)
Share-based compensation expense
—  38  —  —  38 
Balance at March 31, 2021 6,980  (7,036) (7,895) (7,945)
Net income —  —  —  19  19 
Other comprehensive income, net —  —  39  —  39 
Issuance of 5,956,191 shares of AAG common stock pursuant to an at-the-market offering, net of offering costs
—  144  —  —  144 
Issuance of PSP2 and PSP3 Warrants —  56  —  —  56 
Issuance of 115,833 shares of AAG common stock pursuant to employee stock plans net of shares withheld for cash taxes
—  —  —  —  — 
Share-based compensation expense —  20  —  —  20 
Balance at June 30, 2021 $ $ 7,200  $ (6,997) $ (7,876) $ (7,667)
See accompanying notes to condensed consolidated financial statements.
16

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(Unaudited)
1. Basis of Presentation
(a) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of American Airlines Group Inc. (we, us, our and similar terms, or AAG) should be read in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2021. The accompanying unaudited condensed consolidated financial statements include the accounts of AAG and its wholly-owned subsidiaries. AAG’s principal subsidiary is American Airlines, Inc. (American). All significant intercompany transactions have been eliminated.
Management believes that all adjustments necessary for the fair presentation of results, consisting of normally recurring items, have been included in the unaudited condensed consolidated financial statements for the interim periods presented. The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The most significant areas of judgment relate to passenger revenue recognition, the loyalty program, deferred tax assets, as well as pension and retiree medical and other postretirement benefits.
(b) Impact of Coronavirus (COVID-19)
COVID-19 has been declared a global health pandemic by the World Health Organization. COVID-19 has surfaced in nearly all regions of the world, which has driven the implementation of significant, government-imposed measures to prevent or reduce its spread. Ongoing global vaccination efforts and the corresponding lifting of government restrictions in and between many markets resulted in a significant and rapid recovery in demand for air travel. The continued impact of the COVID-19 pandemic, including any increases in infection rates, new variants and renewed governmental action to slow the spread of COVID-19 cannot be estimated.
Our capacity (as measured by available seat miles) continues to be reduced compared to pre-COVID-19 pandemic levels, with total capacity in the second quarter of 2022 down 8.5% as compared to the second quarter of 2019. Domestic capacity in the second quarter of 2022 was down 6.6% while international capacity was down 12.1% as compared to the second quarter of 2019.
While demand for domestic and short-haul international markets has largely recovered to 2019 levels, uncertainty remains regarding the timing of a full recovery. We will continue to match our forward capacity with observed booking trends for future travel and make further adjustments to our capacity as needed.
17

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(Unaudited)
2. Special Items, Net
Special items, net in the condensed consolidated statements of operations consisted of the following (in millions):
  Three Months Ended June 30, Six Months Ended June 30,
  2022 2021 2022 2021
Fleet impairment (1)
$ —  $ —  $ 149  $ — 
PSP Financial Assistance (2)
—  (1,288) —  (3,170)
Severance expenses (3)
—  —  —  168 
Mark-to-market adjustments on bankruptcy obligations, net —  —  — 
Other operating special items, net (5) —  — 
Mainline operating special items, net (5) (1,288) 152  (2,996)
PSP Financial Assistance (2)
—  (167) —  (410)
Fleet impairment (1)
—  —  —  27 
Severance expenses (3)
—  —  — 
Regional operating special items, net —  (167) —  (381)
Operating special items, net (5) (1,455) 152  (3,377)
Mark-to-market adjustments on equity and other investments, net (4)
89  37  90  (13)
Debt refinancing, extinguishment and other, net —  —  26 
Nonoperating special items, net 89  37  92  13 
Income tax special items, net (9) —  (9) — 
(1)Fleet impairment for the six months ended June 30, 2022 included a non-cash impairment charge to write down the carrying value of our retired Airbus A330 fleet to the estimated fair value due to current market conditions for certain used aircraft. We retired our Airbus A330 fleet in 2020 as a result of the decline in demand for air travel due to the COVID-19 pandemic.
Fleet impairment for the six months ended June 30, 2021 included a non-cash impairment charge to write down regional aircraft resulting from the retirement of the remaining Embraer 140 fleet earlier than planned.
(2)The PSP Financial Assistance represents recognition of a portion of the financial assistance received from the U.S. Department of Treasury (Treasury) pursuant to the payroll support program established under the PSP Extension Law (PSP2) and the American Rescue Plan Act of 2021 (ARP) (PSP3).
(3)Severance expenses include salary and medical costs primarily associated with certain team members who opted into voluntary early retirement programs offered as a result of reductions to our operation due to the COVID-19 pandemic. Cash payments related to our voluntary early retirement programs for the three and six months ended June 30, 2022 were approximately $50 million and $140 million, respectively, and approximately $120 million and $290 million for the three and six months ended June 30, 2021, respectively.
(4)Mark-to-market adjustments on equity and other investments, net principally included net unrealized gains and losses associated with our equity investments in GOL Linhas Aéreas Inteligentes S.A. (GOL), Vertical Aerospace Ltd. (Vertical) and China Southern Airlines Company Limited (China Southern Airlines).
18

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(Unaudited)
3. Earnings (Loss) Per Common Share
The following table sets forth the computation of basic and diluted earnings (loss) per common share (EPS) (in millions, except share and per share amounts):
  Three Months Ended June 30, Six Months Ended June 30,
  2022 2021 2022 2021
Basic EPS:
Net income (loss) $ 476  $ 19  $ (1,159) $ (1,231)
Weighted average common shares outstanding (in thousands) 650,346  644,123  649,925  639,366 
Basic EPS $ 0.73  $ 0.03  $ (1.78) $ (1.92)
Diluted EPS:
Net income (loss) $ 476  $ 19  $ (1,159) $ (1,231)
Interest expense on 6.50% convertible senior notes
11  —  —  — 
Net income (loss) for purposes of computing diluted EPS $ 487  $ 19  $ (1,159) $ (1,231)
Share computation for diluted EPS (in thousands):
Basic weighted average common shares outstanding 650,346  644,123  649,925  639,366 
Dilutive effect of stock awards 1,477  1,944  —  — 
Dilutive effect of warrants 4,981  10,305  —  — 
Assumed conversion of 6.50% convertible senior notes
61,728  —  —  — 
Diluted weighted average common shares outstanding 718,532  656,372  649,925  639,366 
Diluted EPS $ 0.68  $ 0.03  $ (1.78) $ (1.92)
Securities which were excluded from the calculation of diluted EPS because inclusion of such shares would be antidilutive, are as follows (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
6.50% convertible senior notes —  61,728  61,728  61,728 
Restricted stock unit awards 4,521  1,182  4,965  3,191 
PSP1 Warrants (1)
—  —  3,610  5,632 
Treasury Loan Warrants (2)
—  —  1,127  1,755 
PSP2 Warrants (3)
—  —  456  1,242 
PSP3 Warrants (4)
—  —  —  34 
(1)Pursuant to the payroll support program established under the CARES Act (PSP1), AAG issued to Treasury warrants (PSP1 Warrants) to purchase up to an aggregate of approximately 14.0 million shares of AAG common stock for an exercise price of $12.51 per share, subject to adjustment.
(2)Pursuant to the Loan and Guarantee Agreement with Treasury (the Treasury Loan Agreement), AAG issued to Treasury warrants (Treasury Loan Warrants) to purchase up to an aggregate of approximately 4.4 million shares of AAG common stock for an exercise price of $12.51 per share, subject to adjustment.
(3)Pursuant to PSP2, AAG issued to Treasury warrants (PSP2 Warrants) to purchase up to an aggregate of approximately 6.6 million shares of AAG common stock for an exercise price of $15.66 per share, subject to adjustment.
(4)Pursuant to PSP3, AAG issued to Treasury warrants (PSP3 Warrants) to purchase up to an aggregate of approximately 4.4 million shares of AAG common stock for an exercise price of $21.75 per share, subject to adjustment.
19

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(Unaudited)
4. Revenue Recognition
Revenue
The following are the significant categories comprising our operating revenues (in millions):
  Three Months Ended June 30, Six Months Ended June 30,
  2022 2021 2022 2021
Passenger revenue:
Passenger travel $ 11,400  $ 5,995  $ 18,613  $ 8,888 
Loyalty revenue - travel (1)
823  550  1,428  836 
Total passenger revenue 12,223  6,545  20,041  9,724 
Cargo 328  326  692  641 
Other:
Loyalty revenue - marketing services (2)
740  529  1,336  986 
Other revenue 131  78  252  135 
Total other revenue 871  607  1,588  1,121 
Total operating revenues $ 13,422  $ 7,478  $ 22,321  $ 11,486 
(1)Loyalty revenue included in passenger revenue is principally comprised of mileage credit redemptions, which were earned from travel or co-branded credit card and other partners.
(2)During the three months ended June 30, 2022 and 2021, cash payments from co-branded credit card and other partners were $1.0 billion and $684 million, respectively. During the six months ended June 30, 2022 and 2021, cash payments from co-branded credit card and other partners were $2.4 billion and $1.7 billion, respectively.
The following is our total passenger revenue by geographic region (in millions):
  Three Months Ended June 30, Six Months Ended June 30,
  2022 2021 2022 2021
Domestic $ 9,120  $ 5,444  $ 15,180  $ 8,099 
Latin America 1,534  936  2,761  1,417 
Atlantic
1,481  125  1,947  147 
Pacific 88  40  153  61 
Total passenger revenue $ 12,223  $ 6,545  $ 20,041  $ 9,724 
We attribute passenger revenue by geographic region based upon the origin and destination of each flight segment.
Contract Balances
Our significant contract liabilities are comprised of (1) outstanding loyalty program mileage credits that may be redeemed for future travel and other non-air travel awards, reported as loyalty program liability on the condensed consolidated balance sheets and (2) ticket sales for transportation that has not yet been provided, reported as air traffic liability on the condensed consolidated balance sheets.
June 30, 2022 December 31, 2021
(In millions)
Loyalty program liability $ 9,254  $ 9,135 
Air traffic liability 8,969  6,087 
Total $ 18,223  $ 15,222 
20

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(Unaudited)
The balance of the loyalty program liability fluctuates based on seasonal patterns, which impact the volume of mileage credits issued through travel or sold to co-branded credit card and other partners (deferral of revenue) and mileage credits redeemed (recognition of revenue). Changes in loyalty program liability are as follows (in millions):
Balance at December 31, 2021 $ 9,135 
Deferral of revenue 1,596 
Recognition of revenue (1)
(1,477)
Balance at June 30, 2022 (2)
$ 9,254 
(1)Principally relates to revenue recognized from the redemption of mileage credits for both air and non-air travel awards. Mileage credits are combined in one homogenous pool and are not separately identifiable. As such, the revenue is comprised of miles that were part of the loyalty program deferred revenue balance at the beginning of the period, as well as miles that were issued during the period.
(2)Mileage credits can be redeemed at any time and generally do not expire as long as that AAdvantage member has any type of qualifying activity at least every 24 months or if the AAdvantage member is the primary holder of a co-branded credit card. As of June 30, 2022, our current loyalty program liability was $3.1 billion and represents our current estimate of revenue expected to be recognized in the next 12 months based on historical as well as projected trends, with the balance reflected in long-term loyalty program liability expected to be recognized as revenue in periods thereafter. Given the inherent uncertainty of the current operating environment due to the continued impact of the COVID-19 pandemic, we will continue to monitor redemption patterns and may adjust our estimates in the future.
The air traffic liability principally represents tickets sold for future travel on American and partner airlines, as well as estimated future refunds and exchanges of tickets sold for past travel. The balance in our air traffic liability also fluctuates with seasonal travel patterns. The contract duration of passenger tickets is generally one year. Accordingly, any revenue associated with tickets sold for future travel will be recognized within 12 months. For the six months ended June 30, 2022, $3.6 billion of revenue was recognized in passenger revenue that was included in our air traffic liability at December 31, 2021. In response to the COVID-19 pandemic, we extended the contract duration for certain tickets to September 30, 2022, principally those tickets which were issued in 2020 and 2021. Additionally, we extended the contract duration to December 31, 2022 for tickets to certain international destinations. We also have eliminated change fees for most domestic and international tickets providing more flexibility for customers to change travel plans. Given these changes and the uncertainty surrounding the future demand for air travel, our estimates of revenue that will be recognized from the air traffic liability for future flown or unused tickets as well as our estimates of refunds may be subject to variability and differ from historical experience.
21

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(Unaudited)
5. Debt
Long-term debt included in the condensed consolidated balance sheets consisted of (in millions):
June 30, 2022 December 31, 2021
Secured
2013 Term Loan Facility, variable interest rate of 3.37%, installments through 2025
$ 1,752  $ 1,770 
2014 Term Loan Facility, variable interest rate of 3.40%, installments through 2027
1,196  1,208 
December 2016 Term Loan Facility, variable interest rate of 2.84%, installments through 2023
1,188  1,188 
11.75% senior secured notes, interest only payments until due in July 2025
2,500  2,500 
10.75% senior secured IP notes, interest only payments until due in February 2026
1,000  1,000 
10.75% senior secured LGA/DCA notes, interest only payments until due in February 2026
200  200 
5.50% senior secured notes, installments beginning in July 2023 until due in April 2026 (1)
3,500  3,500 
5.75% senior secured notes, installments beginning in July 2026 until due in April 2029 (1)
3,000  3,000 
AAdvantage Term Loan Facility, variable interest rate of 5.81%, installments beginning in July 2023 through April 2028 (1)
3,500  3,500 
Enhanced equipment trust certificates (EETCs), fixed interest rates ranging from 2.88% to 7.13%, averaging 3.78%, maturing from 2022 to 2034
9,379  9,357 
Equipment loans and other notes payable, fixed and variable interest rates ranging from 2.29% to 4.82%, averaging 3.07%, maturing from 2022 to 2032
3,185  3,433 
Special facility revenue bonds, fixed interest rates ranging from 2.25% to 5.38%, maturing from 2026 to 2036
1,129  1,129 
31,529  31,785 
Unsecured
PSP1 Promissory Note, interest only payments until due in April 2030 1,757  1,765 
PSP2 Promissory Note, interest only payments until due in January 2031 1,030  1,035 
PSP3 Promissory Note, interest only payments until due in April 2031 959  946 
6.50% convertible senior notes, interest only payments until due in July 2025
1,000  1,000 
3.75% senior notes, interest only payments until due in March 2025
500  500 
5.000% senior notes
—  750 
5,246  5,996 
Total long-term debt 36,775  37,781 
Less: Total unamortized debt discount, premium and issuance costs 421  458 
Less: Current maturities 1,933  2,315 
Long-term debt, net of current maturities $ 34,421  $ 35,008 
(1)Collectively referred to as the AAdvantage Financing.
As of June 30, 2022, the maximum availability under our revolving credit and other facilities is as follows (in millions):
2013 Revolving Facility $ 750 
2014 Revolving Facility 1,643 
April 2016 Revolving Facility 450 
Short-term Revolving and Other Facilities 220 
Total $ 3,063 
22

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(Unaudited)
American has an undrawn $150 million short-term revolving credit facility, which was set to expire at the beginning of January 2022 but which has been extended through the beginning of January 2023. American also currently has approximately $70 million of available borrowing base under a cargo receivables facility that was entered into in December 2020 and is set to expire in December 2022. The December 2016 Credit Facilities provide for a revolving credit facility that may be established thereunder in the future.
Secured financings, including revolving credit and other facilities, are collateralized by assets, consisting primarily of aircraft, engines, simulators, aircraft spare parts, airport gate leasehold rights, route authorities, airport slots, certain receivables, certain intellectual property and certain loyalty program assets.
6.50% Convertible Senior Notes
At June 30, 2022, the if-converted value of the 6.50% convertible senior notes due 2025 (the Convertible Notes) did not exceed the principal amount. The last reported sale price per share of our common stock (as defined in the indenture governing our Convertible Notes, the Convertible Notes Indenture) did not exceed 130% of the conversion price of the Convertible Notes for at least 20 of the 30 consecutive trading days ending on June 30, 2022. Accordingly, pursuant to the terms of the Convertible Notes Indenture, the holders of the Convertible Notes cannot convert at their option at any time during the quarter ending September 30, 2022. Each $1,000 principal amount of Convertible Notes is convertible at a rate of 61.7284 shares of our common stock, subject to adjustment as provided in the Convertible Notes Indenture. We may settle conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.
2022 Financing Activities
2021-1 Aircraft EETCs
In November 2021, American created two pass-through trusts which issued approximately $960 million aggregate face amount of Series 2021-1 Class A and Class B EETCs (the 2021-1 Aircraft EETCs) in connection with the financing of 26 aircraft previously delivered or originally scheduled to be delivered to American through September 2022 (the 2021-1 Aircraft). In 2021, approximately $94 million of the proceeds had been used to purchase equipment notes issued by American in connection with the financing of five aircraft under the 2021-1 Aircraft EETCs, all of which was used to repay existing indebtedness. During the six months ended June 30, 2022, approximately $574 million of proceeds had been used to purchase equipment notes issued by American in connection with the financing of 14 aircraft under the 2021-1 Aircraft EETCs. Interest and principal payments on equipment notes issued in connection with the 2021-1 Aircraft EETCs are payable semi-annually in January and July of each year, with interest payments scheduled to begin in July 2022 and with principal payments scheduled to begin in January 2023. The remaining proceeds of approximately $292 million as of June 30, 2022 were being held in escrow with a depositary for the benefit of the holders of the 2021-1 Aircraft EETCs until such time as American issues additional equipment notes with respect to the remaining 2021-1 Aircraft to the pass-through trusts, which will purchase such additional equipment notes with the escrowed funds. These escrowed funds are not guaranteed by American and are not reported as debt on its condensed consolidated balance sheets because the proceeds held by the depositary for the benefit of the holders of the 2021-1 Aircraft EETCs are not American’s assets.
Certain information regarding the 2021-1 Aircraft EETC equipment notes, as of June 30, 2022, is set forth in the table below.
2021-1 Aircraft EETCs
Series A
Series B
Aggregate principal issued
$758 million $202 million
Remaining escrowed proceeds
$231 million $61 million
Fixed interest rate per annum
2.875% 3.95%
Maturity date
July 2034 July 2030
Other Financing Activities
During the six months ended June 30, 2022, we repurchased $349 million of unsecured notes on the open market.
23

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(Unaudited)
6. Income Taxes
At December 31, 2021, we had approximately $17.2 billion of gross federal net operating losses (NOLs) and $3.0 billion of other carryforwards available to reduce future federal taxable income, of which $6.9 billion will expire beginning in 2024 if unused and $13.3 billion can be carried forward indefinitely. We also had approximately $6.0 billion of NOL carryforwards to reduce future state taxable income at December 31, 2021, which will expire in taxable years 2021 through 2041 if unused.
Our ability to use our NOLs and other carryforwards depends on the amount of taxable income generated in future periods. We provide a valuation allowance for our deferred tax assets, which include our NOLs, when it is more likely than not that some portion, or all of our deferred tax assets, will not be realized. We consider all available positive and negative evidence and make certain assumptions in evaluating the realizability of our deferred tax assets. Many factors are considered that impact our assessment of future profitability, including conditions which are beyond our control, such as the health of the economy, the availability and price volatility of aircraft fuel and travel demand. We presently have a $34 million valuation allowance on certain net deferred tax assets related to state NOL carryforwards. There can be no assurance that an additional valuation allowance on our net deferred tax assets will not be required. Such valuation allowance could be material.
During the three and six months ended June 30, 2022, we recorded an income tax provision of $127 million and an income tax benefit of $324 million, respectively.
7. Fair Value Measurements and Other Investments
Assets Measured at Fair Value on a Recurring Basis
We utilize the market approach to measure the fair value of our financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. Our short-term investments, restricted cash and restricted short-term investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuation of these securities. No changes in valuation techniques or inputs occurred during the six months ended June 30, 2022.
Assets measured at fair value on a recurring basis are summarized below (in millions):
  Fair Value Measurements as of June 30, 2022
  Total Level 1 Level 2 Level 3
Short-term investments (1), (2):
Money market funds $ 214  $ 214  $ —  $ — 
Corporate obligations 5,859  —  5,859  — 
Bank notes/certificates of deposit/time deposits 4,633  —  4,633  — 
Repurchase agreements 1,415  —  1,415  — 
12,121  214  11,907  — 
Restricted cash and short-term investments (1), (3)
997  582  415  — 
Long-term investments (4)
231  231  —  — 
Total $ 13,349  $ 1,027  $ 12,322  $ — 
(1)All short-term investments are classified as available-for-sale and stated at fair value. Unrealized gains and losses are recorded in accumulated other comprehensive loss at each reporting period. There were no credit losses.
(2)Our short-term investments mature in one year or less.
(3)Restricted cash and short-term investments primarily include collateral held to support workers' compensation obligations, collateral associated with the payment of interest for the AAdvantage Financing and money market funds to be used to finance a substantial portion of the cost of the renovation and expansion of Terminal 8 at John F. Kennedy International Airport.
(4)Long-term investments include our equity investments in China Southern Airlines, GOL and Vertical. These investments are reflected in other assets on the condensed consolidated balance sheets.
24

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(Unaudited)
Fair Value of Debt
The fair value of our long-term debt was estimated using quoted market prices or discounted cash flow analyses based on our current estimated incremental borrowing rates for similar types of borrowing arrangements. If our long-term debt was measured at fair value, it would have been classified as Level 2 except for $3.7 billion as of June 30, 2022 and December 31, 2021, which would have been classified as Level 3 in the fair value hierarchy. The fair value of the Convertible Notes, which would have been classified as Level 2, was $1.0 billion and $1.4 billion as of June 30, 2022 and December 31, 2021, respectively.
The carrying value and estimated fair value of our long-term debt, including current maturities, were as follows (in millions):
  June 30, 2022 December 31, 2021
 
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Long-term debt, including current maturities $ 36,354  $ 33,472  $ 37,323  $ 38,567 
Other Investments
An important part of our strategy to expand our network has been to initiate or expand our commercial relationships with other airlines, such as by entering into global alliances, joint business and codeshare relationships, and, in certain instances, by making an equity investment in another airline or other companies.
GOL
In April 2022, we completed our definitive investment agreement with GOL and invested $200 million in 22.2 million of newly issued preferred shares, representing a 5.3% economic interest in GOL. The total consideration of $200 million has been allocated as follows based on relative fair values: $81 million to the preferred shares and $119 million to the indefinite-lived intangible asset derived from the related commercial agreements. The ownership interest is accounted for at fair value based on GOL’s stock price and mark-to-market adjustments are recorded to nonoperating other income, net on the condensed consolidated statements of operations.
25

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(Unaudited)
8. Employee Benefit Plans
The following table provides the components of net periodic benefit cost (income) (in millions):
  Pension Benefits Retiree Medical and Other
Postretirement Benefits
Three Months Ended June 30, 2022 2021 2022 2021
Service cost $ $ $ $
Interest cost 139  131 
Expected return on assets (285) (271) (3) (3)
Amortization of:
Prior service cost (benefit) (3) (3)
Unrecognized net loss (gain) 38  52  (6) (6)
Net periodic benefit income $ (100) $ (80) $ (2) $ (1)
  Pension Benefits Retiree Medical and Other
Postretirement Benefits
Six Months Ended June 30, 2022 2021 2022 2021
Service cost $ $ $ $
Interest cost 277  262  15  14 
Expected return on assets (569) (543) (6) (6)
Special termination benefits —  —  —  139 
Amortization of:
Prior service cost (benefit) 14  14  (7) (7)
Unrecognized net loss (gain) 77  105  (12) (11)
Net periodic benefit cost (income) $ (199) $ (160) $ (3) $ 134 
Effective November 1, 2012, substantially all of our defined benefit pension plans were frozen.
The service cost component of net periodic benefit cost (income) is included in operating expenses, the cost for the special termination benefits is included in special items, net and the other components of net periodic benefit cost (income) are included in nonoperating other income, net in the condensed consolidated statements of operations.
During the first quarter of 2021, we remeasured our retiree medical and other postretirement benefits to account for enhanced healthcare benefits provided to eligible team members who opted into voluntary early retirement programs offered as a result of reductions to our operation due to the COVID-19 pandemic. For the six months ended June 30, 2021, we recognized a $139 million special charge for these enhanced healthcare benefits and increased our postretirement benefits obligation by $139 million.
On March 11, 2021, the ARP was enacted, which included funding relief provisions benefiting single employer qualified retirement benefit pension plans such as those sponsored by us. Based on the ARP provisions applicable to our pension plans, we will have no additional funding requirements until 2023.
26

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(Unaudited)
9. Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss (AOCI) are as follows (in millions):
  Pension,
Retiree
Medical and
Other
Postretirement
Benefits
Unrealized Loss on Investments
Income Tax
Benefit
(Provision) 
(1)
Total
Balance at December 31, 2021 $ (4,736) $ (2) $ (1,204) $ (5,942)
Other comprehensive income (loss) before reclassifications —  (5) (4)
Amounts reclassified from AOCI 72  —  (16) (2) 56 
Net current-period other comprehensive income (loss) 72  (5) (15) 52 
Balance at June 30, 2022 $ (4,664) $ (7) $ (1,219) $ (5,890)
(1)Relates principally to pension, retiree medical and other postretirement benefits obligations that will not be recognized in net income (loss) until the obligations are fully extinguished.
(2)Relates to pension, retiree medical and other postretirement benefits obligations and is recognized within the income tax provision (benefit) on the condensed consolidated statements of operations.
Reclassifications out of AOCI are as follows (in millions):
  Amounts reclassified from AOCI Affected line items on the
condensed consolidated
statements of operations
AOCI Components Three Months Ended June 30, Six Months Ended
June 30,
2022 2021 2022 2021
Amortization of pension, retiree medical and other postretirement benefits:
Prior service cost $ $ $ $ Nonoperating other income, net
Actuarial loss 25  36  50  73  Nonoperating other income, net
Total reclassifications for the period, net of tax $ 28  $ 39  $ 56  $ 79 
10. Regional Expenses
Our regional carriers provide scheduled air transportation under the brand name “American Eagle.” The American Eagle carriers include our wholly-owned regional carriers as well as third-party regional carriers. Substantially all of our regional carrier arrangements are in the form of capacity purchase agreements. Expenses associated with American Eagle operations are classified as regional expenses on the condensed consolidated statements of operations.
Regional expenses for the three months ended June 30, 2022 and 2021 include $80 million and $77 million of depreciation and amortization, respectively, and $1 million and $2 million of aircraft rent, respectively. Regional expenses for the six months ended June 30, 2022 and 2021 include $160 million and $159 million of depreciation and amortization, respectively, and $3 million and $4 million of aircraft rent, respectively.
During the three months ended June 30, 2022 and 2021, we recognized $160 million and $91 million, respectively, of expense under our capacity purchase agreement with Republic Airways Inc. (Republic). During the six months ended June 30, 2022 and 2021, we recognized $310 million and $218 million, respectively, of expense under our capacity purchase agreement with Republic. We hold a 25% equity interest in Republic Airways Holdings Inc., the parent company of Republic.
27

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES GROUP INC.
(Unaudited)
11. Legal Proceedings
Private Party Antitrust Action Related to Passenger Capacity. We, along with Delta Air Lines, Inc., Southwest Airlines Co., United Airlines, Inc. and, in the case of litigation filed in Canada, Air Canada, were named as defendants in approximately 100 putative class action lawsuits alleging unlawful agreements with respect to air passenger capacity. The U.S. lawsuits were consolidated in the Federal District Court for the District of Columbia (the DC Court). On June 15, 2018, we reached a settlement agreement with the plaintiffs in the amount of $45 million to resolve all class claims in the U.S. lawsuits. That settlement was approved by the DC Court on May 13, 2019, however three parties who objected to the settlement have appealed that decision to the United States Court of Appeals for the District of Columbia. We believe these appeals are without merit and intend to vigorously defend against them.
Private Party Antitrust Action Related to the Merger. On August 6, 2013, a lawsuit captioned Carolyn Fjord, et al., v. AMR Corporation, et al., was filed in the United States Bankruptcy Court for the Southern District of New York (Bankruptcy Court). The complaint named as defendants US Airways Group, US Airways, Inc., AMR Corporation and American, alleged that the effect of the merger of US Airways Group and AMR Corporation (the Merger) may be to create a monopoly in violation of Section 7 of the Clayton Antitrust Act, and sought injunctive relief and/or divestiture. On November 27, 2013, the Bankruptcy Court denied plaintiffs’ motion to preliminarily enjoin the Merger. On August 29, 2018, the Bankruptcy Court denied in part defendants' motion for summary judgment, and fully denied plaintiffs' cross-motion for summary judgment. The parties' evidentiary cases were presented before the Bankruptcy Court in a bench trial in March 2019 and the parties submitted proposed findings of fact and conclusions of law and made closing arguments in April 2019. On January 29, 2021, the Bankruptcy Court published its decision finding in our favor. On March 25, 2022, the U.S. District Court for the Southern District of New York entered judgment affirming the Bankruptcy Court's decision. Plaintiffs have appealed that decision to the United States Court of Appeals for the Second Circuit, and the plaintiffs' opening brief is due August 2, 2022. We believe this lawsuit is without merit and intend to continue to vigorously defend against it, including against any further appeals by plaintiffs.
Government Antitrust Action Related to the Northeast Alliance. On September 21, 2021, the United States Department of Justice (DOJ), joined by Attorneys General from six states and the District of Columbia, filed an antitrust complaint against American and JetBlue Airways Corporation (JetBlue) alleging that American and JetBlue violated U.S. antitrust laws in connection with the previously disclosed Northeast Alliance arrangement (NEA). We believe the complaint is without merit and intend to defend against it vigorously.
Also on September 21, 2021, the United States Department of Transportation (DOT) published a Clarification Notice relating to the agreement that had been reached between the DOT, American, and JetBlue in January 2021, at the conclusion of the DOT’s review of the NEA (DOT Agreement). The DOT Clarification Notice stated, among other things, that the DOT Agreement remains in force during the pendency of the DOJ action against the NEA and, while the DOT retains independent statutory authority to prohibit unfair methods of competition in air transportation, the DOT intends to defer to DOJ to resolve the antitrust concerns that DOJ has identified with respect to the NEA. The DOT simultaneously published a Notice Staying Proceeding in relation to a complaint by Spirit Airlines, Inc. regarding the NEA, pending resolution of the DOJ action described above.
General. In addition to the specifically identified legal proceedings, we and our subsidiaries are also engaged in other legal proceedings from time to time. Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within our control. Therefore, although we will vigorously defend ourselves in each of the actions described above and such other legal proceedings, their ultimate resolution and potential financial and other impacts on us are uncertain but could be material.
28

ITEM 1B. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
AMERICAN AIRLINES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions)(Unaudited)
  Three Months Ended June 30, Six Months Ended June 30,
  2022 2021 2022 2021
Operating revenues:
Passenger $ 12,223  $ 6,545  $ 20,041  $ 9,724 
Cargo 328  326  692  641 
Other 870  607  1,584  1,120 
Total operating revenues 13,421  7,478  22,317  11,485 
Operating expenses:
Aircraft fuel and related taxes 4,020  1,611  6,522  2,644 
Salaries, wages and benefits 3,233  2,860  6,385  5,590 
Regional expenses 1,058  639  2,081  1,264 
Maintenance, materials and repairs 647  459  1,264  835 
Other rent and landing fees 694  686  1,372  1,256 
Aircraft rent 345  356  698  706 
Selling expenses 504  277  836  427 
Depreciation and amortization 501  481  992  959 
Special items, net (5) (1,288) 152  (2,996)
Other 1,390  958  2,676  1,676 
Total operating expenses 12,387  7,039  22,978  12,361 
Operating income (loss) 1,034  439  (661) (876)
Nonoperating income (expense):
Interest income 41  52  18 
Interest expense, net (437) (447) (861) (780)
Other income, net 23  49  117  158 
Total nonoperating expense, net (373) (389) (692) (604)
Income (loss) before income taxes 661  50  (1,353) (1,480)
Income tax provision (benefit) 140  (1) (296) (315)
Net income (loss) $ 521  $ 51  $ (1,057) $ (1,165)
See accompanying notes to condensed consolidated financial statements.

29

AMERICAN AIRLINES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)(Unaudited)
  Three Months Ended June 30, Six Months Ended June 30,
  2022 2021 2022 2021
Net income (loss) $ 521  $ 51  $ (1,057) $ (1,165)
Other comprehensive income (loss), net of tax:
Pension, retiree medical and other postretirement benefits 28  39  56  105 
Investments (2) —  (4) — 
Total other comprehensive income, net of tax 26  39  52  105 
Total comprehensive income (loss) $ 547  $ 90  $ (1,005) $ (1,060)
See accompanying notes to condensed consolidated financial statements.

30

AMERICAN AIRLINES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share and par value)
June 30, 2022 December 31, 2021
(Unaudited)
ASSETS
Current assets
Cash $ 373  $ 265 
Short-term investments 12,118  12,155 
Restricted cash and short-term investments 997  990 
Accounts receivable, net 1,812  1,484 
Receivables from related parties, net 6,403  5,547 
Aircraft fuel, spare parts and supplies, net 2,160  1,692 
Prepaid expenses and other 860  579 
Total current assets 24,723  22,712 
Operating property and equipment
Flight equipment 38,413  37,520 
Ground property and equipment 9,180  8,966 
Equipment purchase deposits 617  517 
Total property and equipment, at cost 48,210  47,003 
Less accumulated depreciation and amortization (18,540) (17,770)
Total property and equipment, net 29,670  29,233 
Operating lease right-of-use assets 7,443  7,810 
Other assets
Goodwill 4,091  4,091 
Intangibles, net of accumulated amortization of $805 and $786, respectively
2,079  1,988 
Deferred tax asset 3,682  3,408 
Other assets 1,697  1,903 
Total other assets 11,549  11,390 
Total assets $ 73,385  $ 71,145 
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities
Current maturities of long-term debt and finance leases $ 2,100  $ 1,742 
Accounts payable 2,615  1,630 
Accrued salaries and wages 1,352  1,385 
Air traffic liability 8,969  6,087 
Loyalty program liability 3,065  2,896 
Operating lease liabilities 1,468  1,496 
Other accrued liabilities 2,781  2,628 
Total current liabilities 22,350  17,864 
Noncurrent liabilities
Long-term debt and finance leases, net of current maturities 29,727  30,352 
Pension and postretirement benefits 4,722  5,020 
Loyalty program liability 6,189  6,239 
Operating lease liabilities 6,259  6,578 
Other liabilities 1,276  1,266 
Total noncurrent liabilities 48,173  49,455 
Commitments and contingencies
Stockholder’s equity
Common stock, $1.00 par value; 1,000 shares authorized, issued and outstanding
—  — 
Additional paid-in capital 17,193  17,152 
Accumulated other comprehensive loss (5,989) (6,041)
Retained deficit (8,342) (7,285)
Total stockholder's equity 2,862  3,826 
Total liabilities and stockholder’s equity $ 73,385  $ 71,145 
See accompanying notes to condensed consolidated financial statements.
31

AMERICAN AIRLINES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)(Unaudited)
  Six Months Ended June 30,
  2022 2021
Net cash provided by operating activities $ 2,100  $ 6,134 
Cash flows from investing activities:
Capital expenditures, net of aircraft purchase deposit returns (1,377) 133 
Airport construction projects, net of reimbursements (156) (77)
Proceeds from sale of property and equipment 19  161 
Proceeds from sale-leaseback transactions —  163 
Sales of short-term investments 10,135  2,837 
Purchases of short-term investments (10,083) (13,827)
Increase in restricted short-term investments (10) (404)
Purchase of equity investment (200) — 
Other investing activities — 
Net cash used in investing activities (1,672) (11,008)
Cash flows from financing activities:
Payments on long-term debt and finance leases (901) (5,016)
Proceeds from issuance of long-term debt 574  10,115 
Deferred financing costs —  (165)
Other financing activities — 
Net cash provided by (used in) financing activities (319) 4,934 
Net increase in cash and restricted cash 109  60 
Cash and restricted cash at beginning of period 400  385 
Cash and restricted cash at end of period (1)
$ 509  $ 445 
Non-cash transactions:
Right-of-use (ROU) assets acquired through operating leases $ 427  $ 704 
Property and equipment acquired through finance leases 59  61 
Supplemental information:
Interest paid, net 795  615 
Income taxes paid
(1)The following table provides a reconciliation of cash and restricted cash to amounts reported within the condensed consolidated balance sheets:
Cash $ 373  $ 305 
Restricted cash included in restricted cash and short-term investments 136  140 
Total cash and restricted cash $ 509  $ 445 
See accompanying notes to condensed consolidated financial statements.

32

AMERICAN AIRLINES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(In millions)(Unaudited)
Common
Stock
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Deficit
Total
Balance at December 31, 2021 $ —  $ 17,152  $ (6,041) $ (7,285) $ 3,826 
Net loss —  —  —  (1,578) (1,578)
Other comprehensive income, net —  —  26  —  26 
Share-based compensation expense —  23  —  —  23 
Balance at March 31, 2022 —  17,175  (6,015) (8,863) 2,297 
Net income —  —  —  521  521 
Other comprehensive income, net —  —  26  —  26 
Share-based compensation expense —  18  —  —  18 
Balance at June 30, 2022 $ —  $ 17,193  $ (5,989) $ (8,342) $ 2,862 
Common
Stock
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Deficit
Total
Balance at December 31, 2020 $ —  $ 17,050  $ (7,194) $ (5,508) $ 4,348 
Net loss —  —  —  (1,215) (1,215)
Other comprehensive income, net —  —  66  —  66 
Share-based compensation expense —  38  —  —  38 
Balance at March 31, 2021 —  17,088  (7,128) (6,723) 3,237 
Net income —  —  —  51  51 
Other comprehensive income, net —  —  39  —  39 
Share-based compensation expense —  20  —  —  20 
Balance at June 30, 2021 $ —  $ 17,108  $ (7,089) $ (6,672) $ 3,347 
See accompanying notes to condensed consolidated financial statements.
33

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN AIRLINES, INC.
(Unaudited)
1. Basis of Presentation
(a) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of American Airlines, Inc. (American) should be read in conjunction with the consolidated financial statements contained in American’s Annual Report on Form 10-K for the year ended December 31, 2021. American is the principal wholly-owned subsidiary of American Airlines Group Inc. (AAG). All significant intercompany transactions have been eliminated.
Management believes that all adjustments necessary for the fair presentation of results, consisting of normally recurring items, have been included in the unaudited condensed consolidated financial statements for the interim periods presented. The preparation of financial statements in accordance with accounting principles generally accepted in the United States (GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The most significant areas of judgment relate to passenger revenue recognition, the loyalty program, deferred tax assets, as well as pension and retiree medical and other postretirement benefits.
(b) Impact of Coronavirus (COVID-19)
COVID-19 has been declared a global health pandemic by the World Health Organization. COVID-19 has surfaced in nearly all regions of the world, which has driven the implementation of significant, government-imposed measures to prevent or reduce its spread. Ongoing global vaccination efforts and the corresponding lifting of government restrictions in and between many markets resulted in a significant and rapid recovery in demand for air travel. The continued impact of the COVID-19 pandemic, including any increases in infection rates, new variants and renewed governmental action to slow the spread of COVID-19 cannot be estimated.
American's capacity (as measured by available seat miles) continues to be reduced compared to pre-COVID-19 pandemic levels, with total capacity in the second quarter of 2022 down 8.5% as compared to the second quarter of 2019. Domestic capacity in the second quarter of 2022 was down 6.6% while international capacity was down 12.1% as compared to the second quarter of 2019.
While demand for domestic and short-haul international markets has largely recovered to 2019 levels, uncertainty remains regarding the timing of a full recovery. American will continue to match its forward capacity with observed booking trends for future travel and make further adjustments to American's capacity as needed.
34

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

2. Special Items, Net
Special items, net in the condensed consolidated statements of operations consisted of the following (in millions):